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Rob Kailey is a working schmuck with no ties or affiliations to any governmental or political organizations, save those of sympathy.

Cost Controls in the Health Care Bill

by: Matt Singer

Mon Mar 22, 2010 at 09:35:35 AM MST

There's still a lot of talk out there that the bills that went through the House last night don't really address the cost of health care. I'm still never sure what critics mean when they drive this point. The only two limitations on costs that didn't make it into this bill are (1) Universal budgeting, which was never seriously considered in this Congress (this is a big way of how single-payer and voucher schemes both control costs, by having the entire annual budget approved by Congress), and (2) a public option, which in its serious, cost-cutting-through-monopsony-power mode, was never approved by either chamber.

There's a bunch of other stuff, though, and Ezra walks through the five most proimising. These changes include Medicare programs to reform payment systems away from fee-for-service. If it works, private insurance will be under fairly significant pressure to follow suit, in large part because the transparency under the exchanges will strengthen competition while the regulations will protect consumers from fake insurance.

The only public option that ever scored significant savings was the one tied to Medicare. That one died way back before the full House moved to a vote. It's still a good idea, but it is only one of many.

And the bottom-line is that the bulk of the other ideas to contain costs are in this bill. Comparative effectiveness, MedPAC, capping the subsidies for the employer-based system, payment reform, etc. There's a whole lot of folks who disagree that these will lower costs in the long-term, but they're every bit as proven and sound of ideas as the public option when it comes to long-term cost containment.

Jay and others are probably offended that I'm referring to their criticisms on this front and disregarding research and science. Fine. I'm gonna call that one like I see it. The President didn't fight the House on the excise tax and payment reform because the issues were political winners in the short term. He did it because they're among the most likely ways to actually contain costs in this country.

Matt Singer :: Cost Controls in the Health Care Bill
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The cost most people care about (0.00 / 0)
Is their premium. And this bill did little to control premium costs.

For instance, it didn't include Diane Feinstein's "Health Insurance Rate Authority" which would have directly controlled premiums, though she tried to get it included.

Specifically the bill would:

  • Require companies to justify potentially unreasonable premium increases, using a process to be established by the HHS Secretary.
  • Give the Secretary authority to deny or modify health insurance rate increases that are found to be unreasonable.  State insurance commissioners that have the authority and capability to conduct rate reviews will retain this ability.
  • Require the Secretary to determine whether states have the capability to conduct rate reviews.  To assist the Secretary, the National Association of Insurance Commissioners will submit a report that examines current state authority, capabilities, and recent rate review actions.  
  • Establish a Medical Insurance Rate Authority to advise the Secretary. It will have seven members -- two consumer representatives, one insurance industry representative, one physician, and three additional experts in the fields of health economics, actuarial science or other sectors of the health care system.

The authority also would issue an annual report informing American consumers about how insurance companies are behaving in the market. The report will examine premium increases by state, medical loss ratios, reserves and solvency of companies and other relevant information.

So we're forced into a mandate with an industry whose rates we cannot control. That's why the public option is a necessity, as it provides the only true competition in the rate structure built by a non-competitive market.

Spin it however you want Matt. But until we force insurers--by limiting their premiums and introducing a nonprofit public competitor--to negotiate with providers to control costs, we've created a Frankenstein system that can charge consumers whatever they want, and the government will have to find the money to provide the subsidy to pay for it. Look to premiums to skyrocket in the next 4 years before most of the bill's provisions take place. What we've seen lately in rate increases is just the tip of the iceberg.

Hmm.. (0.00 / 0)
JC, where did you get this information from? Here's a NY Times article that says Health Insurance Rate Authority is in the bill.


The president's bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators.

I think you're just wrong that this isn't in the bill.

[ Parent ]
No, the language you refer to (0.00 / 0)
isn't the Feinstein bill. Here's the story about her bill being kicked out of the reconciliation package last week:

"The Senate parliamentarian told Dianne Feinstein (D-Calif.) on Wednesday afternoon that her proposal to create a National Insurance Rate Authority runs afoul of reconciliation rules, Feinstein told HuffPost after the conversation.

"I'm crushed it's out," she said. But she added that she would bring it up with him one more time to try to make the case that it would be a legitimate use of reconciliation. "I'm going to make one last effort with the parliamentarian," she said."

Hopefully it will move on a separate track. Just like the House bill on health insurer monopolies does.

It's just funny, how these big things, and include in with this the "doc fix", just don't make it into reform, so they can die their own slow deaths.

[ Parent ]
Re: No, the language you refer to (0.00 / 0)
Well that's a shame. Reconciliation sucks.

[ Parent ]
That's surprising (0.00 / 0)
that you don't see the difference between cost and price.  Think of this as Hungry Horse Dam.  The water flow and lake upstream are costs.  The outflow is the price. Cutting price doesn't affect what happens to the building pressure upstream of the dam.

Real cost reform would have focused on the cost drivers.  In the past I talked about Safeway Food's self-insured wellness/healthcare program that  achieves dramatic progress towards controlling costs, promoting wellness, providing needed healthcare, and high employee satisfaction. Using the search feature for Safeway comments. Nothing is this faux "reform" does anything close.

correction (0.00 / 0)
s/b:  "Use the search feature for Safeway comments. Nothing in this faux "reform" does anything close."

[ Parent ]
Science & Research (0.00 / 0)
How can you tout science and research, then turn around and claim decreasing the quality of health insurance lowers cost? I'm puzzled by that. When did that become a mantra of reformers? If you want to tax people to fund reform, just say so. Let's not pretend it will actually lead to positive results.

...and... (0.00 / 0)
by "results," I mean health-care outcomes and cost control.

[ Parent ]
Question for you, Jay (0.00 / 0)
Do you agree that currently a lot of unnecessary, expensive tests and treatments are performed on patients in the United States? And that this is a majoy contributor towards costs getting out of control?

[ Parent ]
yes! (0.00 / 0)
But that has nothing to do with the kind of insurance a patient has. That has everything to do with fee structures. And this bill does address that -- a little. That's what Matt's talking about when he says "bundling": Medicare fee structures will be based on a patient's illness treated, not the procedures for that patient.

Do you agree that, if left untreated, illnesses and injuries are likely to cost more, long-term? Because that's the issue here: the incentives we give to consumers to seek early treatments.

[ Parent ]
Of course I agree with that (0.00 / 0)
And I think covering 31 million more people will go a long way toward helping. But I'm just not convinced at all that you need $25,000 plans to get that preventive treatment. Like I said in the past thread, check-ups won't be an out of pocket expense. And I'm not on board with the thought that this has nothing to do with what kind of insurance a patient has. If private insurers can reduce premiums by doing bundling like Medicare does, then maybe now they'll finally have a reason to do it if companies are demanding they lower costs somehow. Maybe private insurance will finally have to start competing on quality, now that all these new regulations will come into place. I obviously can't tell you I know that will happen but I'm way more hopeful than you seem to be about it.  

[ Parent ]
that's fair... (0.00 / 0)
...maybe I am taking a too gloomy stance on the legislation. Maybe you guys are right. I hope so! I hope I come back here in 2014 eating crow, ha ha!

[ Parent ]
Here's a few more "limitations on cost" (0.00 / 0)
that didn't make it into this bill:

1) House health insurance industry antitrust bill. Will the Senate follow suit? Who knows.

2) True universality. This bill doesn't provide for access to insurance to over 20 million citizens, whose health care costs will continue to be subsidized by the rest of the insured, effectively raising their costs

3) The bill excludes access to the exchanges or affordability credits to immigrants, legal or not, shifting all of the unmet costs of those people onto the insured.

You are taking a narrow, technocratic view of costs Matt--costs of procedures, products and delivery--when the real driver behind how expensive health care has become  (meaning the money coming out of our pockets to purchase insurance and out-of-pocket expenses) is structural: monopolistic behavior of insurers; non-universal coverage; and lack of regulation of premiums.

If you're going to have a health care system that relies on the private sector,then you have to address the three points above. This bill does not.  

Here's one more (0.00 / 0)
The "doc fix."

"It's not just the filing deadline for unemployment benefits that's set to arrive at the end of this month. Doctors treating Medicare patients are also scheduled to see an average pay cut of 21 percent beginning March 1, leaving no absence of questions about how the Democrats plan to deal with it.

Today, Senate Majority Leader Harry Reid (D-Nev.) told reporters that he wants to fix the Medicare pay formula "for as long as we can."

"The doctors are right," Reid said. "And it's not just throwing something to the doctors to be nice to them."

Unfortunately for doctors, "as long as we can" likely won't be a very substantial span.

Recall that in October, the Senate shot down a plan to scrap the so-called sustainable growth rate formula altogether. The reason was simple: The price tag is upwards of $240 billion over 10 years, and the Democrats hadn't proposed to pay for it with new revenues or spending cuts elsewhere. With voters well weary of deficit spending, it's hard to imagine such a proposal passing the Senate four months closer to November's midterm elections.

On the other hand, the American Medical Association, the nation's largest doctors lobby, has grown tired of Congress applying short-term patches each year to prevent Medicare cuts to physicians. In a letter to lawmakers yesterday, the group warned that "kicking the can down the road with yet another short-term action magnifies the problem and makes it very difficult for physicians to continue caring for seniors and military families." AMA is threatening to withhold its support for health reform unless it includes a longer-term doc fix.

So the choice isn't a good one. Either the Democrats add a quarter-trillion dollars to the debt, or they risk the attacks of the powerful doctors' lobby in what's already certain to be a tough election year. Funny that the only option that doesn't seem to be on the table is finding some way to pay the $240 billion."

[ Parent ]
Joy for the Capitalist slimballs (0.00 / 0)

 i truly believe that Singer is a stockholder in the Medical Industrial Complex and is happy his stock is going up as the pain and suffering of Americas uninsured, under-insured and tax payers goes up as well.
 There can be no jubilation over the passage of this Give-away to the Capitalist Pigs that have heaped this debacle on the American Public. Capitalism owns the legislators thru the Insurance Cartel. Nothing Matt Singer says is anything but tripe from the Medical Industrial Complex to whom he is wedded.
 How much did your stock go up Singer?

 It is not the responsibility of America to maintain the Medical Industrial Complex/ Insurance Cartel; it is our job to demand our Civil Rights and Health Care is a Civil Right. Unfortunately Singer doesn't comprehend that this bill entrenches that which is the cause of Americas pain and suffering - the Insurance Cartel/Corporate Terrorists.  

 Read and be glad Singer, the Capitalist sluts win again.

Wall Street Congratulates Obama Administration / Democrat Congress on Healthcare!

Well, one segment of America has nothing but praise for the Obama Administration / Democrat Congress handling of the Healthcare issue ... the Market!

Headlines from the Dow Jones Newswire (http://online.wsj.com/article/BT-CO-20100322-708982.html?mod=WSJ_latestheadlines): "US Stocks Rise Steadily; Drug Makers Lead Health-Care Climb".

... "U.S. stocks rose steadily on Monday as the end of the health-care debate relieved investors, and drug makers and hospital operators led a climb in health-care stocks" ... "The Dow pharmaceutical components strengthened, as drug makers are expected to profit from the expansion of health-care coverage. Merck rose 2.1%, while Pfizer climbed 1.7%" ... "Companies ranging from hospital operators and pharmacy-benefit managers to drug and medical-device makers are expected to profit from the bill, which will enroll more people in insurance programs. Meanwhile, most new fees and cost-cutting measures aren't seen as a major factor until 2014" ... "Hospital operator Tenet Healthcare rose 7.5%, McKesson, a health-care information technology company, gained 2.1% and Express Scripts, a pharmacy benefit manager, rose 1.7%. Pharmaceutical companies also climbed, with Eli Lilly up 1.5% and Bristol-Myers Squibb up 1.6%" ... "Investors said the legislation didn't diverge wildly from the market's expectations and could benefit a range of companies, particularly those tied to government programs such as Medicaid-managed care companies" ...

The Market Also Rises as Un-Employment Rises ... just gotta love the fact that "in times of trouble" it's a bastion of optimism!  

"Left" and "liberal" are mutually exclusive terms. If you are a "liberal" you can't be Left. "Liberal" means you want a kinder gentler capitalism. "Left" means you are anti-capitalist.

Really? Come on. (0.00 / 0)
You truly believe that "Singer is a stockholder in the Medical Industrial Complex and is happy his stock is going up as the pain and suffering of Americas uninsured, under-insured and tax payers goes up as well. "  

No you don't, so why waste our time by posting it.

[ Parent ]
The real effects of Neo-Liberal care (0.00 / 0)

A false promise of reform

For Immediate Release    
March 22, 2010

Oliver Fein, M.D.
Steffie Woolhandler, M.D., M.P.H.
David Himmelstein, M.D.
Margaret Flowers, M.D.
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

The following statement was released today by leaders of Physicians for a National Health Program, www.pnhp.org. Their signatures appear below.

As much as we would like to join the celebration of the House's passage of the health bill last night, in good conscience we cannot. We take no comfort in seeing aspirin dispensed for the treatment of cancer.

Instead of eliminating the root of the problem - the profit-driven, private health insurance industry - this costly new legislation will enrich and further entrench these firms. The bill would require millions of Americans to buy private insurers' defective products, and turn over to them vast amounts of public money.

The hype surrounding the new health bill is belied by the facts:

   * About 23 million people will remain uninsured nine years out. That figure translates into an estimated 23,000 unnecessary deaths annually and an incalculable toll of suffering.
   * Millions of middle-income people will be pressured to buy commercial health insurance policies costing up to 9.5 percent of their income but covering an average of only 70 percent of their medical expenses, potentially leaving them vulnerable to financial ruin if they become seriously ill. Many will find such policies too expensive to afford or, if they do buy them, too expensive to use because of the high co-pays and deductibles.
   * Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it their ability to block future reform.
   * The bill will drain about $40 billion from Medicare payments to safety-net hospitals, threatening the care of the tens of millions who will remain uninsured.
   * People with employer-based coverage will be locked into their plan's limited network of providers, face ever-rising costs and erosion of their health benefits. Many, even most, will eventually face steep taxes on their benefits as the cost of insurance grows.
   * Health care costs will continue to skyrocket, as the experience with the Massachusetts plan (after which this bill is patterned) amply demonstrates.
   * The much-vaunted insurance regulations - e.g. ending denials on the basis of pre-existing conditions - are riddled with loopholes, thanks to the central role that insurers played in crafting the legislation. Older people can be charged up to three times more than their younger counterparts, and large companies with a predominantly female workforce can be charged higher gender-based rates at least until 2017.
   * Women's reproductive rights will be further eroded, thanks to the burdensome segregation of insurance funds for abortion and for all other medical services.

It didn't have to be like this. Whatever salutary measures are contained in this bill, e.g. additional funding for community health centers, could have been enacted on a stand-alone basis.

Similarly, the expansion of Medicaid - a woefully underfunded program that provides substandard care for the poor - could have been done separately, along with an increase in federal appropriations to upgrade its quality.

But instead the Congress and the Obama administration have saddled Americans with an expensive package of onerous individual mandates, new taxes on workers' health plans, countless sweetheart deals with the insurers and Big Pharma, and a perpetuation of the fragmented, dysfunctional, and unsustainable system that is taking such a heavy toll on our health and economy today.

This bill's passage reflects political considerations, not sound health policy. As physicians, we cannot accept this inversion of priorities. We seek evidence-based remedies that will truly help our patients, not placebos.

A genuine remedy is in plain sight. Sooner rather than later, our nation will have to adopt a single-payer national health insurance program, an improved Medicare for all. Only a single-payer plan can assure truly universal, comprehensive and affordable care to all.

By replacing the private insurers with a streamlined system of public financing, our nation could save $400 billion annually in unnecessary, wasteful administrative costs. That's enough to cover all the uninsured and to upgrade everyone else's coverage without having to increase overall U.S. health spending by one penny.

Moreover, only a single-payer system offers effective tools for cost control like bulk purchasing, negotiated fees, global hospital budgeting and capital planning.

Polls show nearly two-thirds of the public supports such an approach, and a recent survey shows 59 percent of U.S. physicians support government action to establish national health insurance. All that is required to achieve it is the political will.

The major provisions of the present bill do not go into effect until 2014. Although we will be counseled to "wait and see" how this reform plays out, we cannot wait, nor can our patients. The stakes are too high.

We pledge to continue our work for the only equitable, financially responsible and humane remedy for our health care mess: single-payer national health insurance, an expanded and improved Medicare for All.

Oliver Fein, M.D.

Garrett Adams, M.D.

Claudia Fegan, M.D.
Past President

Margaret Flowers, M.D.
Congressional Fellow    

David Himmelstein, M.D.

Steffie Woolhandler, M.D.

Quentin Young, M.D.
National Coordinator

Don McCanne, M.D.
Senior Health Policy Fellow


Physicians for a National Health Program (www.pnhp.org) is an organization of 17,000 doctors who support single-payer national health insurance. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

"Left" and "liberal" are mutually exclusive terms. If you are a "liberal" you can't be Left. "Liberal" means you want a kinder gentler capitalism. "Left" means you are anti-capitalist.

You guys are such Debbie Downers. (0.00 / 0)
Are you saying you want to re-open the donut hole for prescription drugs for seniors? Kick 25 year olds off their parents health plans? Get rid of the tax credits for small businesses?  What about the budgets of these seniors, families, and small businesses?

Ezra and Matt and Blue Sky (0.00 / 0)
Ezra, Ezra, Ezra,

Another Ezra fan? Not so much.


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