Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey, 2007

For those who are into statistics, the CDC just released data on the insured and uninsured in 2007. Click here to see the report.

One highlight:
"Almost one-third of children (32.7%) were covered by a public plan, compared with 12.3% of adults 18-64 years."

Also this graph:

Percentage with health insurance, by coverage type and percentage
uninsured at the time of interview for near poor children under 18 years of age: United States, 1997-2007

Notice how private insurance is getting out of the business of insuring children. Now the majority of children are insured by public insurance plans.

Gil

Health Care Reform in Massachusetts PART II

Today's issue of the NEJM has a "Perspective" piece entitled "Health Care Reform in Massachusetts — Expanding Coverage, Escalating Costs" (click the title for the link to the piece).

It is very similar to the NY TImes editorial we posted last week. It seems very upbeat about the added coverage but also points out:

Not all the news is good, however. Perhaps 5% of the state's population — the exact figure is a matter of conjecture and may be higher — is still uninsured, the financial burden of the reforms is increasing, and the challenges of sustaining the subsidized program have been exacerbated by the economic downturn. The features of plans that decrease the cost of premiums also increase out-of-pocket costs for those who obtain care. Although adults reported lower levels of health care needs that remained unmet because of cost in the fall of 2007 than in the previous year, those with low ncomes reported increased difficulty in getting appointments or in finding a doctor or other provider who would see them.

It also says, and I think this is the most important point:

Health care reform in Massachusetts is not a panacea for the many shortcomings of the health care system. It is worth remembering that California, for example, has more people without health insurance (6.7 million) than Massachusetts has residents (6.4 million) and that the financing and delivery of medical care have not changed. Having health insurance is not having health care.

This brings up what is almost always missed when evaluating these healthcare reform plans; does it improve the health of the population? All we know now is that it costs more (even more than projected) and that more people are covered, but what is the benefit?

Gil

Federal Reserve-Like Board

Interesting story in the NY Times last week that I only saw today.

Some of the highlights are:

The Senate had a daylong bipartisan symposium to lay the groundwork for what leaders of both parties predict will be a major push for health care legislation next year.
Senator Max Baucus, a Montana Democrat who is chairman of the the Senate Finance Committee suggested that “some kind of federal health board” could help Congress make technical policy decisions. “How in the world am I supposed to know what the proper reimbursement rate should be for a certain procedure?” he asked. Mr. Bernanke said Congress could establish an independent health care panel like the one used to recommend the closing of military bases. Congress, he said, could approve or reject the panel’s recommendations, but not amend them.

Sound familiar??
Gil

Medicare Improvements for Patients and Providers Act

The House of Representatives passed the "Medicare Improvements for Patients and Providers Act" yesterday. (The roll call can be viewed here:
http://clerk.house.gov/evs/2008/roll443.xml ) This bill blocks the 10% decrease in Medicare reimbursements that is mandated by the "sustainable growth rate" (SGR) formula built into Medicare financing several years ago that aimed to tie physician reimbursement to actual spending and targeted spending.

Physician payments under the SGR formula are tied to the Gross Domestic Product (GDP), which bears no relationship to patients’ health care needs or physician practice costs. Utilization of physician services grows more rapidly than GDP, so using GDP as the standard for utilization growth in the SGR means that the target is always set too low. The formula also does not make adjustments for new Medicare coverage policies. Omitting the costs of such treatments from the SGR targets increases the likelihood of pay cuts. None of the factors in the SGR recognize Medicare spending due to technological advances.


Because the formula stipulates that the adjustmant is reassessed each year and that almost everyone in Congress understands that the formula is flawed, it has meant that each year payment cuts to doctors are proposed at the start of the year until Congress steps in intervenes. Meanwhile the gap grows each year so that the potential cut continues to grow quicly. In fact, the 2006 Medicare Trustees Report predicts cumulative reductions in Medicare physician payment rates of nearly 40% by the year 2015 as a result of the SGR formula.
It is widely felt in Washington that this formula needs to be changed, but it has been estimated that immediate repeal of the SGR could cost as much as $318 billion, according to the Congressional Budget Office. This has led to complete inaction on the part of Congress.

Several proposals have been made by physician groups, but there has been little action. Hopefully, any new reform bill, will do away with SGR!
Gil

Follow Up: I realize that this is only half the story... It turns out that a similar bill in the Senate was blocked by Senate Republicans: Read about it on the AAFP website.
Gil

The Massachusetts Model

On June 16th the NY Times had an editorial entitled "The Massachusetts Model" about how the Massachusetts healthcare plan is progressing. (click link to see the editorial).

I think that the editorial misses the most important objective of healthcare reform: improving the health of the United States population in an efficient and affordable manner. In this respect the Massachusetts plan is unproven or even failing. Like most healthcare reform proposals, the Massachusetts plan aims to achieve universal coverage by expanding either commercial or publicly financed insurance to cover more people. There is little concern about what that coverage actually covers or acknowledgement that different insurance plans offer widely different quality of health care.
This is the reason why the editorial observed that "many of the newly insured reported difficulty finding a primary care physician, and the share of low-income residents using emergency rooms for nonemergency care rose slightly, the opposite of what was supposed to happen." The fact is that Medicaid, the insurance for the poor, is not the same as Medicare or commercial insurance when it comes to paying the provider. For an outpatient consult Medicaid pays less than 20% of the average commercial insurance and 1/3 of Medicare. Since most primary care physicians have staggering levels of overhead and very little "profit margins" in their practice, they cannot afford to take these newly insured patients into their practice. Instead the Medicaid patient continues to use community based clinics or the hospital emergency rooms. This, in turn, provides these patients with lesser or even substandard medical care and still ends up costing more.
Even if the Massachusetts plan is able to reach its goal of universal coverage, it is unlikely that they will be able to show better outcomes for its enrollees. The most effective solutions for health care reform are those that will be able to cover the entire population equally for the most important forms of healthcare; namely, life saving and life extending conditions as well as preventive care. This will require a healthcare system that is predicated on affordable evidenced-based proven therapies available to everyone on an equal basis.
Gil

Common Good

Mark Thompson, the executive director of the Fairfield County Medical Association wrote:

"Any proposal for reforming our health care system (and I like the idea of
tiering of health care benefits based on level of necessity, a federal health board orchestrating the system, a single clearing house for claims, common plan designs to simplify comparison shopping, etc.) must also have corresponding reforms to our legal system for adjudicating medical liability claims.
Special health courts and an administrative compensation system as advocated by the group called Common Good seems like a reasonable approach for injecting some predictability into an otherwise chaotic process that's based more on the whims of the jury and theatrics of the lawyers.
Billions of health care dollars are wasted each year practicing defensive medicine and defending against frivolous cases."

Their website (http://commongood.org/index.html) has details on this plan. The brochure is a must read (http://commongood.org/brochure-hcare.html) . Navigating the website, I have not been able to find more detailed descriptions, but I think that the concept sounds good.

Certainly with a central Board overseeing the "Federal" evidenced based funding and delivery of health care, it will be somewhat easier to adopt "Health Courts" as more local adjudicators.

Gil

The HPfHR proposal

The following is an updated version of the HPfHR 3 tiered plan for reforming healthcare. The plan is based on the tenet that the entire population should be covered for life sustaining and health promoting “basic” healthcare, with the added belief that there should be the ability to obtain higher levels of coverage for those desiring it. In addition, the plan is designed to make healthcare delivery more effective and efficient. The group has strived to use mostly existing and tested concepts, agencies and plans that will make the transition to the new system less difficult.


The HPfHR 3-Tier System
The base level (Tier 1) of the new healthcare system would cover the entire population- “from cradle to grave”. Based on evidenced based data, it would include all medical, surgical and psychiatric issues considered life saving, life sustaining and/or preventative. Examples would include outpatient services for conditions such as hypertension, diabetes, coronary disease, cancer, severe and persistent mental disorders, preventive medicine and pregnancy care. It will also cover most non-elective inpatient care and some elective inpatient admissions for therapies shown to be life saving, life sustaining and/or preventative.
Tier 2 would cover all medical, surgical and psychiatric conditions considered to help with quality of life. These would include general medical conditions such as low back pain, knee replacement or other orthopedic interventions, and milder emotional conditions that do not impair functioning (e.g. adjustment reactions).
Tier 3 would apply to all medical and surgical issues considered as luxury or cosmetic. These would include items such as “face lifts”, Lasik eye surgery and Botox injections.

Oversight

The Tier system would be overseen by a panel of physicians and other healthcare professionals, public health experts and economists specialized in health care, known as “The Board”. This Board’s mission will be to promote the health of the United States in a socially responsible and economically sound way.
Similar to a recently proposed “Federal Health Board”[i], the Board would be a quasi-governmental organization resembling the Federal Reserve, which should make it less beholden to political pressures. It will have oversight of CMS (Centers for Medicare & Medicaid Services), the FDA (Food and Drug Administration) and the NIH (National Institutes of Health). Using the already established DRG (Diagnostic Related Group), APC (Ambulatory Payment Classification) and ICD-9-CM (International Classification of Diseases, Ninth Revision, Clinical Modification) codes, the Board would decide which diagnoses and which services are covered by Tier 1, 2 or 3. For each coverage item, the Board would consider the medical importance (using evidence-based data including practice guidelines developed by expert medical panels, Cochrane Database reviews and other sources), the public health and economic impact. The Board would also be able to direct the FDA and NIH to commission Tier specific research to help it make better Tier determinations (see below).

Although it’s decisions about Tier allocation will be final, the Board will have hearings similar to those of the Federal Reserve for general appeals (not for individual cases).
Health Information Technology
To address the excessive overhead involved in claim submission by providers and institutions due to myriad payer-specific forms, a universal reimbursement form (URF) would be created by the Board and would include all necessary data required to route payment requests for services rendered to the appropriate tier provider. Ideally, this would be implemented electronically using a web based tool distributed to hospitals and physician offices either through private vendors or a government/private industry coalition.

The Board will also be responsible for overseeing the development of a uniform standard for Health Information Technology (HIT) including electronic medical records (EMRs) and test reporting. This uniform standard will guarantee that as HIT is developed through private and public initiatives, there will be complete compatibility.

Funding

Tier 1: Funds for Tier 1 would be provided through a government subsidized account similar to Medicare. The method of raising this revenue can be similar to the present funding of Medicare (e.g. FICA), other payroll taxes (indexed to salary), a tax on businesses based on the number of employees (and their wages) or a combination of these. Medicaid will be eliminated, and therefore will not require funding. Since the number of items covered by Tier 1 in this new system would be substantially less than what Medicare and Medicaid cover now, there would be funds to redistribute and achieve universal Tier 1 coverage. We believe that this will be a “revenue neutral” redistribution. Theoretically funding also could be achieved through a commercial entity as long as it is regulated to follow the profit margins/overhead now achieved by Medicare.

Tier 2: Private insurance carriers would administer Tier 2 services. The private insurance carriers would be allowed to offer a limited number of plans that would be developed by the Board (similar to the Medigap Plans A to L now stipulated by CMS)[ii]. Although each insurance carrier does not have to offer all the plans, the plans that are offered must cover all the services stipulated by the Board. This in turn assures that consumers (either employers or individuals) can compare the price of the plans and can be confident of their coverage.

These plans can be broad (covering most Tier 2 services) or can be customized for specific groups: a geriatric plan that covers extended care facilities but not fertility care, or a heavy laborer plan that includes chiropractic therapy. The price of this private coverage can either be regulated (variant 1), funded with tax incentives or health savings accounts (variant 2) or left to the “free market” (variant 3).

Tier 3: Tier 3 would not be covered under this system (as is true in the current system) and all bills would go to the patient.

Billing

All billing for services (whether in the hospital or office) would be submitted to one “Clearing House” using the URF previously described. Based on the patient’s diagnoses and the services rendered, the Clearing House, through it’s computer based program, would pay the provider directly for Tier 1 items. Those judged to be Tier 2 items would trigger a search for private insurance coverage and if found would be charged to the private carrier. Those without insurance would be billed directly to the patient.

If the service is determined to be Tier 3, the patient is billed.


Therapeutics and Pharmaceuticals

The Board will be better able to accomplish its overall mission (to improve the health of the country and reduce costs) if it has oversight of the NIH and FDA. This will allow the Board to direct research focused on pharmaceutical and therapeutic issues that it needs to achieve its mission. This may be done with a combination of public/private funding depending on Tier. For Drug development, one possibility is to have public funds go to develop Tier 1 therapies (and then Tier 1 owns the drug) while private funds will finance Tier 2 drugs (with the pharmaceutical company owning part or all the rights to the drug when approved).
Drugs will have similar Tier assignments as medical coverage: Tier 1 will be formulations and therapies that have been shown to treat or prevent life threatening illnesses. Tier 2 will apply to those drugs and therapies that increase the quality of life and Tier 3 will be for “luxury” items. Tier 1 medications will be owned by the Board and distributed either for free or at an affordable rate (can be linked to income). Tier 2 drugs will be owned by the pharmaceutical companies, but these firms will not be allowed to advertise prescription drugs to the public. Like Tier 2 medical coverage, these medications will either be covered by one of the Tier 2 insurance plans or will be paid “out-of-pocket”. Tier 3 will all be out-of-pocket and can be advertised.
[i] Tom Daschle, Scott S. Greenberger, Jeanne M. Lambrew, Critical. What we can do about the health-care crisis (New York: St. Martin’s Press 2008), pp.169-171
[ii] CENTERS FOR MEDICARE & MEDICAID SERVICES , 2008 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare http://www.medicare.gov/publications/pubs/pdf/02110.pdf (Accessed April 28, 2008).

Welcome

I am launching this blog today (Friday the 13th of June, 2008) to begin a discussion on how to change the current healthcare system from the viewpoint of the healthcare provider and the patient. Please visit http://www.healthcare-reform.org/ to view our proposed 3 tiered plan.

Over the next few weeks we will post some important articles and links dealing with healthcare reform. Please feel free to joint the discussion on this blog or join our group (membership@healthcare-reform.org).
Gil