Policy Thoughts

Reuters Study: $800 Billion Wasted

A new report by Thompson Reuters, parent company of the respected Reuters News Service, finds the US health care system wastes some $800 billion per year.  Citing widely excessive administrative costs, defensive medicine, duplicated tests, unneeded procedures and outright fraud, the report says much of the current health reform proposals now under consideration in the Congress could be financed by simply redirecting these wasted dollars.
 
The Healthiest State Campaign has combined similar studies with citizens' views on health reform to call for exactly this sort of reinvestment of current health care dollars to finance reform, instead of increasing the already staggering share of our nation's wealth our medical system now consumes.
 
This study could not come at a more opportune time to remind us all that our health systems are broken.  Congress has the makings of real progress, if not perfection in reform before it in the form of several bills it will merge into one in the coming weeks.  We urge them to act transparently, clearly, but boldly to promote prevention, assure universal participation and redesign our health system for far greater efficiency at improving health.  We simply cannot afford the extravagance of our medical system's waste any longer.  It taxes our schools, our environment, our competitive position in the world economy to say nothing of its unfairness's tax on our collective sense of simply right and wrong.  Come on Congress.  Step up and fix health care before the snow flies.

Baucus & Prevention: What About Health, Dude?

The long awaited Baucus Mark on health reform was just released. It contains one giant step for prevention and health improvement, especially for health care provider organizations and for all of those who visit their health provider on a regular basis and who eat, sleep, exercise and otherwise live their lives according to doctor's advice no matter how hard that may be to do. 

That is to say, today's Baucus Mark misses the mark on prevention by a wide margin.  Despite expanded coverage for clinical preventive services in Medicare and incentives for states to expand such coverage in Medicaid, the Baucus Mark contains only the smallest of steps to make healthy choices easy.  There is only a few hundred million over the coming half decade or so for "pilot programs" and "demonstration projects" to work with Medicare and Medicaid recipients on health and wellness issues outside the doctor's office. 

This is a far cry from high hopes we had for community preventive services to make healthy choices easy in communities where people live.  It is a far cry even from the Waxman bill that cut the House's $100 billion investment in such programs to $50 billion a few weeks ago.  It doesn't hold a candle to the Senate HELP Committee bill that would establish a disparities, prevention and public health investment fund providing grants to states, local governments and private organizations as well as expand insurance discounts for healthy lifestyle program participation, incentivize employers, and create a temporary Right Choices health promotion program until other reforms take hold.

We know fiscal times are tight, and that prevention costs money.  Perhaps the coming legislative dance will end with the robust prevention elements Senator Baucus first supported last November in his Blueprint for Reform and that is reflected in other leading proposals. 

The Character of our Country

We have written often about the value of health needing to shape reform.  We have written also about how few seem to appreciate that health policy is not just about cost, effectiveness, efficiency and the rest.  We have said health policy is one large share of  “values writ large”. 

Last night, our President went us one better, and in so doing, he elevated the debate to its proper plain.  He told us health reform is not just about the cost of medicine or even about the value of health.  Its about the health of our values --- as a nation.

He recognized we are a proud and independent people, rightly suspicious of too much government.  But he reminded us, we are also a nation of opportunity, justice, tolerance and compassion.  In the end, despite our differences, he called us to recognize that we are a moral nation, with strongly held spiritual values.

He reminded us that beyond our economic position, our political philosophy and our social circumstance, each of us has a better self.  He called each of us to that self and challenged us to reform our health system to express it as a mark of our national identity:  Compassion, creativity, inclusion, efficiency and fairness.  That is our national character.  That’s what a look at our health care system should show.  That is what the health of our values can produce.

Finding Reason In The Health Care Debate

Reason may yet prevail in at least one corner of the health care debate.  A broad group of health advocates, including Washington State’s Healthiest State Campaign, continues to press for Congress to take the Congressional Budget Office’s admonitions about the cost saving limits of prevention with a grain of salt, and to include a hearty prevention element in whatever health reform passes this year.  The well meaning “Green Eye Shades” at CBO have to be a narrow and sober lot.  By law, they may only look for savings in a relatively short time frame using only the dullest of lenses.  This has been pointed out by many national observers, as we have discussed in previous postings.

The good news seems to be that many in Congress do not seem to be following CBOs penchant for considering the price of everything and the value of nothing.  Senators Harkin, Dodd, Baucus and others should be encouraged.  Senator Enzi however, who supports “basic prevention” has famously said, a proposed community preventive services fund is just a “slush fund for pork barrel projects like farmers markets and jungle gyms.”  We hope Senator Enzi will look more closely at the research about how one might sustain diet and exercise improvement, and perhaps consider a grain of salt along with his CBO numbers.

Prevention & Health Reform

The health reform debate is headed for dangerous ground indeed when political actors on either side of the aisle begin pulling down the carefully built structures of prevention to construct their battering rams.

More thoughtful heads, including some of the best respected health philanthropic leaders in our nation,
have struggled in quiet, bi-partisan ways to find common ground on a package of prevention proposals now contained in the leading national reform proposals.

Washington State’s Healthiest State Campaign supports many of these.  They reflect both the best scientific evidence and the most widely shared values among our state’s citizens.  Since health reform emerged as a national issue, our weblogs have added our views to a rational discussion of the merits of these proposals to improve health, be fair to all our residents and control costs. 

Thoughtful voters and policy makers should know there has been substantial and substantive disagreement with the very narrow standards CBO uses to score cost savings in many Congressional proposals.  In recent months, this weblog has noted that Mr. Gingrich is among the national leaders, along with many Congressional Democrats, who have found fault with CBO scoring pronouncements on these grounds. 

But more to the point: If health reform is only cost savings, why not heed the evidence Phillip Morris gave to the Czech Republic in 2003, and teach the population to smoke? 36A.

As we and many national experts have said for some time now, the point of reform needs to be improving the value of health investments; not just containing their costs.  And on that score, there is a wealth of scientific data demonstrating that prevention should play a significant role in the ongoing health reform debate.

Ask yourself: Would current partisans or Congressional green eyeshades suggest we return to the century before last when physicians balked against hand washing before delivering babies, when the public railed against the cost of separating drinking water from sewage or when elected officials begrudged the pennies to remove garbage from urban streets?

This is the 21st Century.  We have known for some time that smoking, obesity and a handful of other habits lead to heart disease, stroke, cancer, diabetes and dozens of other preventable maladies.  Health experts learned years ago that counseling, brochures and websites are necessary, but not sufficient to change those behaviors.  It is to the credit of national leaders that they have recognized the need to place a much heavier emphasis on community wide action to make good nutrition, regular exercise, smoking cessation and more, not just the smart choices, but the easy ones.

Additionally, clinical preventive services like colorectal cancer screenings, mammograms, prenatal care and more, are among the most carefully studied and clearly proven medical interventions available.  Of course they should be universally available, and of course it is in the public interest to promote their use.

To the extent this summer’s health care debate is a partisan war, we should all remember it may not be about health.  We appeal to the thoughtful among us to avoid the impulse to sit idly by and watch that war destroy the honest efforts of the millions of public and private health professionals, researchers and policy makers interested in improving the health of the American population.

What's Up Henry?

Sources close inside the US Capitol reported today that Rep. Henry Waxman quietly tucked several provisions in the House version of health reform last month that could devastate promised funding for public health and community prevention programs.  The amendments, originally attributed to the "Blue Dog Democrats" Waxman needed to accommodate to gain approval of this bill before Congress's August recess, were not the Blue Dog's doing.  According to reports at InsideHealthPolicy.com, Mr. Waxman ordered the cuts to the high value health programs in hopes of appearing more fiscally responsible.

We know he and other seasoned Congressional leaders know these cuts are penny wise and pound foolish.  We hope their constituents will remind them of this amidst the remainder of the August Congressional recess.

Health Reform Shout Out 2009: Part 2

If this month’s National Health Care Shout Out shows nothing else, it shows that health policy is as much “values writ large” as it is “science into practice”.

But all the noise may be masking the essential political problem in reform: How to transfer health care resources from the “health haves” --- including insurers, providers, wealthier patients and yes, even tax payers --- to the “health have lesses”.

One way is to get to the heart of the politics here and to speak directly to likely voters concerned about their own health care bills.  One “All-American” way to do it: with some quick cash.  One obvious vehicle:  tax policy.

There’s been lots of policy chatter about how the government will cover the $1 trillion + or - $400 million cost of its increasingly maligned efforts to reform health care. The chatter already includes changes in federal tax policy, albeit primarily in relation to employer provided health coverage so far. 

But leading reformers seem not to have dwelled much on the cost concerns of likely voters, who probably care about health reform less because business or government cannot afford it. (Although they do care about that, just as they care about the poor and the uninsured and all the rest). 

To repeat for emphasis: Likely voters are probably most keenly interested in reform because even though they are insured themselves, they worry that they themselves may soon be unable to afford their share. 

If that is so, Congressional proposals produced thus far provide real reason for voters’ skepticism about reform.

Except for the poor or near poor (<300%FPL), Congress seems to feel individuals can afford 10 to 12% of their incomes for their share of health insurance premiums each year in addition to out of pocket costs up to $10,000 per family, with only limited and wildly uneven tax relief. 

Existing federal tax codes provide uneven tax help for individuals based on the source of their coverage.   It is true that employees and their employers share a heavily subsidized ride courtesy of Uncle Sam when it comes to premiums.  Such payments are not taxed at all.  The CBO estimates this to be worth a full 30% of the cost of insurance.

Additionally, workers and their employers willing to submit to the cumbersome, private bureaucratic schemes of Health Savings Accounts or Flexible Savings Accounts can get even more tax relief for a limited amount of funds (usually about $2000/year) 

Beyond that, and for the self employed or those buying their own coverage, including those on Medicare purchasing Med Supps, there is no help save itemizing deductions.  To take these deductions from one’s federal tax bill, individuals or families must incur qualifying medical expenses (excluding already tax free premium shares paid through employer sponsored plans) totaling at least 7.5% of income before any deductions can be taken.  After that, health care costs are not tax credits, only deductions from income.  This means a taxpayer recovers only her marginal tax rate on claimed expenses; seldom more than 35 pennies on the dollar, and that only on the share above 7.5% of her income spent on health care.

Against this backdrop, leading national reform proposals contain three significant possibilities for tax treatment of health benefits.  The first is to impose a stiff tax penalty on those who can afford to, but do not choose to purchase health coverage.  The second is to limit or eliminate employers’ 

tax exemption on premium payments.  The third is to penalize employers who do not offer coverage to employees.

While some of this may be necessary to promote coverage, to pay for reform or for other reasons, none of it is exactly comfort for the likely voter’s angst over their personal finances when it comes to health care.

Instead of real, tangible and immediate relief for the likely voter’s personal health care cost crisis, the policy wonks along the Potomac are offering 10 year projections of federal budget neutrality, cost studies and the promise of their intentions to “bend the curve” on health care costs.  Are we sure what that even means?  

Contrast this with the Bush Administration’s tax cuts.  For most of this first decade of this new millennium Americans were treated to the rapid reward of federal tax policy changes as massive corporate and wealthy individual tax cuts were passed in bills that provided a few hundred dollars of federal tax relief, in the form of ready to cash IRS checks, to millions of ordinary taxpayers.  They arrived just ahead of the very next election.  Not in 10 years; virtually NOW.

Some $240 billion/year in federal tax breaks is now enjoyed by employers who use it to help pay for employee coverage.  No more than about 5% of that amount seems to be going to individual taxpayers directly.  A wide range of our nation’s health policy advisors, including the venerable Robert Wood Johnson Foundation, seem to agree that federal employer health insurance tax policies are now inflationary and regressive, and that tax treatment of individual health expenses is unfair.  

I do not suggest that federal income tax relief be made the center of health reform.  Controlling costs and improving value by increasing health and achieving universal access should be.

But none of these objectives will be attained unless some sort of reform clears Congress.  I hope beleaguered health reformers seize this moment to level the health tax paying field for likely voters, and to put some tangible benefits on the table for them. NOW!  This is one way to make reform as American for its appeal to instant gratification as the drive through at Micky D’s. 

Health Reform Shout Out 2009: Part 1

The Great American Health Care Shout Out (Summer ’09 Edition) fills every inch of the Public Square these days with forthright claims that reform will save or destroy the country.  

You say “public option”.  They say “government take-over”.  You say, “end of life care”.  They say “death panels”.  You say “Free Speech”. They say, “Shout Down”.

We could scarcely find more proof that health is a good deal more than “science into practice”.  It is also shared values writ large in policy.   The health system changes we finally embrace this year will say as much about our values regarding government, liberty, free enterprise, technology and more as they say about our ability to build a rational system for health and healing.   

One such value is immediate gratification.  That and a healthy skepticism about politicians’ promises make most Americans waiting for health reform like Missourians at a fast-food drive- through: “Show me... NOW!”   

Could this be one reason for the flagging reception reform is getting among the two thirds of likely voters who have health insurance and like it?  These folks were with reformers to start: They were worried about costs; but not just government’s.  They were worried they might soon be unable to pay for their own coverage and care.  Could they be peeling off because they have yet to see any direct, immediate and tangible help?   

If so, it may not be too late to breathe life back into reform by addressing this widely shared concern with a more universal solution.

Whatever other problems health reform may be tied up with, its essential political problem is this:  How to get likely voters to support government action that redistributes resources more evenly across our economically disparate population? 

This formulation should shock no one.  It may have been Voltaire, the Enlightenment philosopher, who captured the essence of all politics for all time in all places by saying, “Politics is the art of taking money from one class in society and giving to another.”  So it is with health care.  Whatever else reform may do, expanding access, containing costs, improving value, and promoting health, will move money from some of the haves --- providers, insurers, and perhaps some of the already well healed --- to the “have nots” ---- those with little or no insurance, with limited access to care or other resources, and to those who care for them.

The “art” of doing this in health care is built in; so long as it is done in the name of something universally valued like “health”, and so long as it doesn’t run afoul of our abiding American myths about privacy, autonomy and self sufficiency.  Otherwise it will be very tough to defend in America’s Culture Wars, at least, against the inevitable claims of socialism. 

But the “art” must be a bit more finely practiced with our health system just now because the system’s core problems are its overall cost and relatively poor health improvement value.  Virtually all parties to the current national debate agree with the Healthiest State Campaign’s long time core tenet: health reform must improve health, but not add significant new costs for governments, businesses or families already robbing other important social objectives to fund it.  So wealth redistribution must occur largely within the health sector; not between health and the rest of society.

Reformers may already have dressed their trillion dollar scheme in just enough of the clothes of health improvement to mollify those of us demanding it.  Although not completely satisfied, public health and prevention groups like our Healthiest State Campaign are generally pleased with promised investments in clinical preventive care, public health infrastructure, chronic disease prevention and overall medical system improvement.  

This simple point needs emphasis:  Health reform is not a top tier national issue --- as we at the Healthiest State Campaign might hope --- because we are a far less healthy nation with a less effective health system than we might be.   It is not a top tier national issue because our system leaves so many out of medical care.   It is not a leading political issue because big changes might tip the scales in favor of one or another side in the Culture Wars.

Health reform is a leading political issue because our health system costs too much.  

No one --- not business --- not government --- and certainly not individuals --- can afford it.

It calls for a simpler, more transparent and a more wide reaching solution.  Some have been proposed.  Sadly they have been assessed for their dollar value to the government or business and for their appeal to Beltway interests more than to those likely voters beginning to wonder whether health reform is the light at the end of the tunnel or a train rushing to run them down.

Leveling the health care “paying” field for taxpayers may be a place to look for answers.

Health Reform: Does Prevention Make Cents?

The Congressional Budget Office (CBO) recently released a letter explaining why its number crunchers do not believe prevention will substantially reduce health care costs. As WHF Policy Director Don Sloma pointed out in his blog on May 11th of this year titled, The Cost of Medicine and the Value of Health, the approach is flawed if one only looks at cost savings because, in that scenario, health improvement is not properly addressed.

If health improvement were the prime mission, the question would not just be, "Will it reduce health care costs?", but instead, "What health improvement value does it produce compared to other investments we might make?"

In response to the CBO's letter and in line with Don Sloma's thoughts, guest blogger Frank de Libero, PhD., shares his insight into some of the arguments contained in the letter. de Libero owns and operates Data2Information, Inc. and his statistical analysis helped the Washington Health Foundation develop its 2008 Healthiest State Report Card.

"Director Elmendorf divides preventive care into Preventive Medical Care and Wellness Services. This distinction is useful. In my naivety I hadn't thought of prevention that way but rather simply lumped the two into preventive care, conceptualizing it mainly, without thinking, as Wellness Services. I now know better. But that doesn't let Elmendorf off the hook. I agree with his letter about Preventive Medical Care, for example, statins with a number-needed-to-treat of 100-250 for three years for one person not to have a heart attack. That is not cost effective. But the interesting part of the letter for me is about Wellness Services (better nutrition, exercise, shunning tobacco...). This section deserves a thoughtful rebuttal. First, the back story for the entire section is "it's the individual's responsibility, not the system." Imagine before the sanitation revolution, you blame the individual because they went out in the night air. Elmendorf then states there are no systematic studies (just case studies and hearsay) for the CBO to base cost savings estimates on. That's like stating that one cannot evaluate the value to mothers of doctors washing their hands before delivering babies because it would be based only on case studies and hearsay, or similarly that lime juice for sailors prevents scurvy. Separately, I was reminded of Taleb's mind experiment about securing airplane cockpits prior to 9/11 (early on in "The Black Swan"). In fact, how DO you evaluate preventive services like securing cockpits, if it prevents a 9/11? So, based on the attached letter, Elmendorf's explanation strikes me as shallow and more as a shield for the CBO's analysis, rather than a thoughtful explanation of why they downplayed the value of Wellness Services." Frank de Libero, Ph.D.

National Health Reform Forecast

By: Don Sloma, WHF Director of Policy

National health reform is as hot as Seattle's weather this week.  The Senate may soon unveil its health reform forecast.  Expect it to include cooling among the mandates and some precipitation resulting in the dilution or even the evaporation of the public option.  Everyone is predicting storms in the  Democrats. But that's only one forecast.  The House may weigh in with its own summer health reform forecast by the end of the week if some key Republicans get assurances that their deals will survive the inevitable Congressional Conference Committee and the President's final judgment.  

This is truly the great American debate.  Everyone is playing and the result should be something that reflects all the best of America's virtues:  It should be inventive, entrepreneurial, pluralistic, compassionate and inclusive.

Three things seem clear at this point.  First, "We the People" will see the bulk of the TV airtime for August reruns paid for by every major health interest group.  Second, the major reform priorities of business, labor, insurers, health care providers, and consumers will remain alive at least until the leaves begin to change along that Mall on the Potomac.  Third, our leaders are trying to do as our President has asked, to deliver health reform by the end of the year.

We wish them Godspeed and good luck.  We urge you all to encourage them to Progress (if not perfection), Prevention (not just cure) and above all,  Passage of the best plan they can move (as opposed to gridlock).

All of that said, we urge our readers not to get lost in the ads and TV talk in the days ahead.  The Healthiest State Campaign agrees with the President and most of the American people that health care costs too much.  We believe reform can "bend the cost curve down" by adhering to our three principles for national reform: "prevention", "universiality" and "system redesign". 

So far, we are pleased to report wide acceptance by our leaders for Prevention.  Virtually every viable health reform plan under discussion in Congress at this point expands coverage for proven preventive care and community preventive services including public health infrastructure.  What is more, in just the past few days, we were encouraged to hear a bipartisan proposal embraced by health reform leaders to create insurance premium pricing incentives for adherence to healthy lifestyles and use of preventive care.

Our second principle, System Redesign, is about turning the health care system to the purposes of people --- supporting their health needs and interests by delivering higher value care more consistently and with greater continuity, eliminating duplication and complexity wherever possible and incentivizing good behavior by health providers and patients.  These are the smart and relatively painless ways to control costs.  They don't involve public rationing or sacrifice.  They involve balance, moderation, honesty and precision.  That said, its no mystery that, in truth, these things are far easier said than done.

Still, we must also say that the current proposals in Congress lead one to believe that hard as these things are to do in the real world of health care, they are easier there than they are in Health Policyland.  That's probably because here too are the sacred cows of the health industrial complex: provider payments, insurance company profits, government and health plan bureaucracies and more.   Here, present policy proposals remain lacking.   There are lots of good ideas, but few are included widely enough or deeply enough in anyone's proposals to give us confidence that system wide redesign will be the result.  The number of tentative steps in the bills so far might lead a cynic to suggest that national health reform should be renamed "The American Health Systems Study and Pilot Programs Act".

Finally, the Healthiest State Campaign advocates "universiality" in health reform.  Everyone should be included at least to the extent we know how to prevent illness or spot it early, and to the extent that a catastrophic illness should not sink them financially.  Here too, we remain unconvinced.  Early reform proposals this year promised adequate personal and other mandates, enough public subsidies, and enough new public revenue streams and cost controls that it looked like nearly everyone would be insured.  Not so anymore.  As the state's balked over their share of medicaid expansions, and CBO brought some hard realities (and a little too much skepticism) to some prevention proposals, and as the anti-taxers weighed in, "universiality" suffered.

We will leave this subject to your reflection during these dog days of summer with just these two questions:  "If most Americans believe everyone should have health care, how can our Congress be saying we cannot afford to include everyone?  Shouldn't they instead be asking who within this richest of free market enterprises in the history of the planet can afford to tighten their belts so that each of us can see compassion, inclusiveness and opportunity when we look at how America does health?"