Healthcare Fever

Sonia Sotamayor will be he soap opera du jour this week and will displace he health care debate.
This "time out" should allow up to reconsider some of the isssues and proposed solutions.
In a series of Op Ed presentations in the New York Times this morning the debate concerning some of the issues is played out.
Taxes for health care benefits is a contentious topic. Liberals believe that it is a God given salary increase that must be given by an employer as long as it is not taxed to the employee.
The origins of our health insurance system exist from World War II wage price controls. Unions unable to get wage increases accepted health benefits in lieu of them.
The conservative view point allows for taxation of these benefits, arguing that the individual taxed would then become a more discrimminating purchaser of health care and more appropriate in the use of expensive interventions.
Both points are presented below

July 12, 2009
Op-Ed Contributor
Don't Tax Health Benefits.
By ROGER HICKEY

AMERICANS are demanding health care reform that guarantees them quality, affordable insurance, reduces the burden of health costs on employers and individuals and provides backup coverage through a public health insurance option.

But the suggestion that we pay for these needed reforms by taxing the health benefits that millions of us get through our employers is very unpopular — Americans fear that it could undo the one part of our health care system that now works (sort of). And we worry about new tax burdens on people who have worked hard to get and keep decent health coverage. If Democrats want to avoid a serious reaction against their important reform efforts, they should heed these concerns.

America’s health insurance system has evolved over the decades since World War II, when companies began offering health insurance — untaxed as income by government policy. Today, around 160 million of us get our health insurance from employers. And in these difficult times, millions of workers have repeatedly given up wage increases in order to keep their health benefits.
John McCain, when he was running for president last year, proposed taxing all employer-provided health benefits. Were we to do that, some 20 million Americans would lose employment-based health insurance, according to some estimates. And many employers would stop contributing to group health insurance — forcing their workers into the more expensive individual insurance market.

While many health experts acknowledge that taxing all benefits would cause chaos, some share the conservative view that a lot of people are getting “too much” insurance coverage from their employers and are pushing to get new revenues by taxing plans that are more expensive than average. But several recent studies find that it is almost impossible to design a tax that doesn’t overburden workers in firms with older or low-income employees or companies in regions with higher-than-average insurance premiums.

The Communications Workers of America looked at one proposal (to tax all employer-paid health benefits worth over $13,000 for a family) and found a typical member of its union in Pennsylvania with a working spouse and one child would pay $3,165 more in taxes in the first year, and $27,949 more over eight years. The issue is heating up. The Senate majority leader, Harry Reid, has told colleagues that they should not tax health benefits. But the debate continues.

It is dangerous for politicians to focus the government’s taxing power on the hard-won benefits of middle-class families. Fair and progressive income and wealth taxes are a better way to pay for health reform — and keep workers feeling as though they have a positive stake in achieving good health care for all.

Roger Hickey is a co-director of the Institute for America’s Future and a member of the steering committee of the Health Care for America Now coalition.





July 12, 2009
Op-Ed Contributor
A Loophole Worth Closing
By JONATHAN GRUBER

POLLS show most Americans are in favor of universal health care. But how will we pay for it? There is an obvious place to look for the money: the tax exclusion for employer-sponsored insurance.

When my employer pays me in cash wages, I am taxed. Not taxed is the $10,000 per year that my employer spends on my health insurance, and this leaves me with an effective tax break of about $4,000. Over all, this break costs the federal government $250 billion per year in forgone revenue.
This is more than we would need to cover every American who now lacks health insurance. Ending the exclusion would provide a progressive source of financing for universal coverage, since higher-income taxpayers would contribute most of the revenues. It would stop discrimination against those who can’t obtain insurance through their employers and therefore have to pay with after-tax dollars. And it would end a policy of providing a bigger tax break the more one spends on health insurance, which drives overspending on medical care.

Some worry that without this “tax bribe,” employers would no longer offer health insurance, and sicker and older people would not be treated as fairly on their own as they are in employer groups. This is not an issue for medium and large employers, which have continued to offer health insurance as the value of this tax bribe has gone up and down through the years. Small employers might reduce coverage, but this blow would be softened if the policy helped finance a universal plan in which all Americans would get group rates.
Removing the exclusion need not mean an across-the-board tax increase. We might consider merely capping the dollar amount of employer-sponsored health insurance that is excluded from income taxation. Individuals would include in their income taxes the amount of premiums over and above, say, the average cost of employer-sponsored insurance. A typical middle-class employee with premiums of $1,000 a year higher than the average would pay only about $150 in extra taxes, yet such a policy would raise $500 billion in federal revenues over the next decade. This policy would provide strong incentives to purchase insurance more efficiently, since the highest-cost plans would be taxed but lower-cost plans would not. To ensure that the cap was not unfair to employees with relatively high insurance costs, employers could be allowed to compute an adjustment in the cap based on their location or their workers’ ages.

Closing this tax loophole would fix a fundamental flaw in our health care system. Even just capping it would provide the revenues to take us much of the way to universal coverage, without raising taxes on those who purchase average cost insurance.

Jonathan Gruber is a professor of economics at the Massachusetts Institute of Technology.

Medical malpractice is a topic that rapidly arouses physician passions. Most find that such actions are frivolous and the cause of excessive testing breeding a cover your ass culture.
The articles below both written by lawyers argue that medical malpractice has in fact had salutory benefits.
Mr. Baker argues that some of the safety practices adopted in medical institutions are in fact fall outs from a malpractice explosion.
Michelle Mello was one of the authors of the original Harvard Liability Study which purported that malpractice was more prevalent that liability action and injuries due to medical error more prevalent than believed.
Thoufh she does not suggest a cap on payments she does suggest defense by the practice of evidence based medicine. Mr. Baker also supports this though less vigorously.
The sixty four million dollar question who creates the evidence? After all evidence is based on the opinions of experts and every palintiff and defense malpractice lawyer knows such experts are not exactly an endangered species



July 12, 2009
Op-Ed Contributor
Liability = Responsibility
By TOM BAKER

OUR medical liability system needs reform. But anyone who thinks that limiting liability would reduce health care costs is fooling himself. Preventable medical injuries, not patient compensation, are what ring up extra costs for additional treatment. This means taxpayers, employers and everyone else who buys health insurance — all of us — have a big stake in patient safety.

Eighty percent of malpractice claims involve significant disability or death, a 2006 analysis of medical malpractice claims conducted by the Harvard School of Public Health shows, and the amount of compensation patients receive strongly depends on the merits of their claims. Most people injured by medical malpractice do not bring legal claims, earlier studies by the same researchers have found.

On the other hand, medical liability has improved patient safety — by leading hospitals to hire risk managers, for example, and spurring anesthesiologists to improve their safety standards and practices. Even medical societies’ efforts to attack the liability system have helped, by inspiring the research that has documented the surprising extent of preventable injuries in hospitals. That research helped start the patient safety movement.

When it comes to rising medical costs, liability is a symptom, not the disease. Getting rid of liability might save money for hospitals and some high-risk specialists, but it would cost society more by taking away one of the few hard-wired patient safety incentives.

Besides, there’s a better answer for doctors worried about high malpractice insurance premiums.

Critics point to defensive medicine as the hidden burden that liability imposes on health care. Yet research shows that while the fear of liability changes doctors’ behavior, that isn’t necessarily a burden. Some defensive medicine is, like defensive driving, good practice. Too often, we can’t distinguish between treatments that are necessary and those that are wasteful. Better research on what works and what doesn’t — evidence-based medicine — will help. And it will address the more general challenge of avoiding costly but unnecessary care.

Just as we need evidence-based medicine, we also need evidence-based medical liability reform. The research shows, overwhelmingly, that the real problem is too much malpractice, not too many malpractice lawsuits. So medical providers should be required to disclose injuries, provide quicker compensation to deserving patients and — here’s the answer for doctors worried about their premiums — shift the responsibility for buying malpractice insurance to hospitals and other large medical institutions. Evidence-based liability reform would give these institutions the incentive they need to cut back on the most wasteful aspect of American health care: preventable medical injuries.

Tom Baker, a professor at the University of Pennsylvania Law School, is the author of “The Medical Malpractice Myth.”





July 12, 2009
Op-Ed Contributors
The Cap Doesn’t Fit
By MICHELLE MELLO and AMITABH CHANDRA

DOCTORS are battered by the medical malpractice system. They complain, with reason, about unpredictable jury awards, escalating insurance premiums, the emotional toll of litigation and the cost to their reputations of being labeled “negligent” because of outcomes beyond their control.

Patients, too, often feel victimized by the system, enduring an average wait of five years for compensation for their injuries, and suffering the same emotional exhaustion from the drawn-out legal battle. The public gets stuck with a large part of the bill. When doctors practice “defensive medicine” to minimize their legal risk, we all pay for it.

Doctors tend to believe capping damages on malpractice awards would solve their troubles. But the best evidence shows that although caps modestly constrain the growth of insurance premiums, they don’t reduce the number of claims or address any of the fundamental pathologies of the system.
Two kinds of reforms are especially promising. First, in areas where we have reliable scientific evidence about what constitutes optimal clinical care, we should enable doctors to defend themselves against malpractice claims by simply showing that they adhered to evidence-based practice guidelines. An emergency room doctor, for example, could invoke well-accepted guidelines to explain his decision to refuse to order a stress test for a patient with chest pain that appeared not to be due to coronary disease.

This would address doctors’ complaints that malpractice suits often succeed even when care was not negligent, and also reduce incentives to practice defensive medicine and encourage doctors to adopt evidence-based practices.

Second, certain medical injuries should be pulled out of the court system and be handled by an alternative process in which the patient needn’t prove negligence. Severe birth injuries are a good place to start, for they can occur even with exceptional care. We should route these claims into a birth injury fund administered by the Department of Health and Human Services or a state-level counterpart, which would assign fair compensation on a no-fault basis.

Florida and Virginia have operated birth injury funds for nearly a quarter-century, and though not perfect, they have done a commendable job of balancing the needs of health care providers and patients. Doctors can buy into the program, avoiding lawsuits for severe neurological birth injuries, for under $6,000 per year (hospitals for about $50 per birth).

Our proposal would not do away with that hobgoblin of the malpractice system, the negligence standard, but it would curb its worst mischief.

Michelle Mello is a professor of public health and Amitabh Chandra is a professor of public policy at Harvard.


The third debate is one over Medicare costs. I found his one especially interesting.
Background:Mr. Obama has exerted his "regulatory authority" to allow the Medicare Payment Commission (MedPAC) to dictate payment policy rather than suggest it and leave its enactment to the regulatory whims of a fractitious Congress.
Nancy Kane is a member of the MedPAC and she publically argues that Medicare payments to hospitals not be cut. She believes that such cost constraints would result in higher out patient costs, an area that is rising far more rapidly than the costs of hospitals.
Interestingly, she argues that a solution is a bundling of payments for hospitals and physicians for episodes of care. There is some validity to her arguments. Though hospital costs are largely opaque to patients and physicians, the latter are responsible for generating them. The most expensive medical instrument is the physician's pen and the illegibility of the product makes an understanding of costs difficult.
It would be interesting to determine who will control the purse strings the physician or the hospital.
Paul Ginsburg a noted health economist argues that cutting hospital costs is necessary. He buttresses his arguments with references to high quality hospitals which have lower costs than those with higher costs and worse outcomes.
As the debate proceeds August will be a warm month in Washington.



July 12, 2009
Op-Ed Contributor
Keep Hospitals Whole
By NANCY KANE

ONE way that the Obama administration proposes to pay for universal coverage is by cutting Medicare payments to hospitals. True, at 35 percent of 2007 Medicare spending, hospitals represent the largest provider group, but they are not necessarily the most rational target for draconian payment cuts. Cutting payments to specific provider types is not the answer. When payments go down in one area, they end up increasing elsewhere. For instance, Medicare has more constraints for inpatient payments than for outpatient, home health care or skilled nursing care.

As a result, per beneficiary inpatient costs grew only 18 percent from 2002 to 2007, while outpatient costs increased 47 percent and skilled nursing and home health costs each rose more than 50 percent. These differences partly reflect the trend of hospitals discharging Medicare patients “quicker and sicker” so that they go from a tightly controlled inpatient payment system to a less constrained one. Another problem is that the more Medicare restricts payments to hospitals, the more hospitals ask of their privately insured patients.
Real, sustainable containment of medical costs will require an approach in which one government agency at the state or federal level sets uniform rates for all payers, public and private. Also, units of payment like doctor visits and lab tests need to be packaged into a single amount that covers all services related to that spell of illness, so that constraints on one part of the system do not create explosive cost growth in another. An all-payer feature would limit the ability of providers to raise private sector rates to make up for public sector constraints on rates. An integrated payment unit across all providers involved with treating an illness or medical condition would also encourage better coordination of care for patients with multiple chronic diseases.

Integrated payment units might start as bundled payments for services by all providers delivered during a hospitalization and a post-acute stay. Such payment units would encourage individual provider types like hospitals, skilled nursing facilities and primary-care doctors to come together in “accountable care organizations” that take responsibility for the cost and quality of all medical services.
The Medicare program’s long-term viability, as well as hopes for universal coverage, rest on our ability to get payment reform right.

Nancy Kane is a professor of management at the Harvard School of Public Health and a commissioner on the Medicare Payment Advisory Commission.



July 12, 2009
Op-Ed Contributor
Cut Medicare With a Scalpel
By PAUL B. GINSBURG

THE deal struck by the Obama administration and the hospital industry to reduce the growth of annual Medicare payment increases by about $100 billion over 10 years deserves scrutiny. In the weeks before the deal, the hospital industry predictably screamed foul at proposals to rein in the growth of those payments, pointing out that 58 percent of hospitals lost money treating Medicare patients in 2007.

But what about the 42 percent of hospitals that didn’t lose money? Is the problem that Medicare is a stingy payer? Or that too many hospitals have grown cavalier about controlling costs and have the market power to demand higher payment rates from private insurers to stay in the black regardless of Medicare rates?
A report in March by the Medicare Payment Advisory Commission makes a good case for the latter, suggesting there is room to trim the fat from Medicare payments without hitting bone in many hospitals.

According to the commission, high payments by private insurers — which exceeded hospitals’ actual costs by 32 percent in 2007 — resulted in overall hospital profit/surplus margins of 6 percent in 2007, the highest since 1997. The commission points to hospital consolidation and consumer and employer pressure on insurers to offer a broad choice of hospitals as tilting the balance of power toward hospitals in price negotiations.

But not all hospitals can increase fees for private insurers, especially not hospitals that treat a relatively large number of Medicaid patients. Not surprisingly, many of these hospitals did a much better job of holding their costs down.

The commission found that nonprofit hospitals facing the least financial pressure, those with high non-Medicare profits, spent more per unit of service. Nonprofit hospitals facing the most financial pressure, those with little income outside Medicare, controlled their costs better.

Worried that financial pressures might lead to lower quality of care, the Medicare commission also examined how hospitals that did a good job of controlling costs compared on measures like mortality rates and readmissions. These hospitals typically had higher quality and lower costs, and will likely be the ones hit hardest by across-the board reductions.
The recent deal between Mr. Obama and the hospital industry can hardly be called “health reform.” What is clear, however, is that hospital market power, left unchecked, will pose a formidable obstacle to the president’s promise to make health care more affordable.

Paul B. Ginburg is the president of the Center for Studying Health System Change, a policy research organization