The Health Reform Dialogue Group Recommends Health Care Overhaul

Photo by Jeffrey Beall via Flickr

Throughout the country, newspapers are reporting on the meeting of the Health Reform Dialogue Group (the “Group”).  The diverse group has been meeting to discuss the overhaul of the current national health care system.

The Associated Press reports:

Eighteen groups representing consumers, business, insurers, doctors and hospitals say they have reached agreement on how they would like to see the nation’s health care system overhauled.

The groups, calling themselves the Health Reform Dialogue, say the uninsured should be covered through a combination of expanded government programs and subsidies to purchase private health coverage.

The 18 organizations in the group have been meeting for six months. While they failed to resolve several major issues, their agreement could serve as a starting point for lawmakers trying to craft a plan this year that can win broad support.

Some of the major health care players within this 18-organization group includes: AARP, American’s Health Insurance Plans, American Hospital Association, American Medical Association, Blue Cross and Blue Shield Association, and U.S. Chamber of Commerce.  This group represents both private and public interest groups.

As a result of the Group’s meetings, the Group issued a Report (PDF) containing multiple recommendations.  The Report states that the meetings have been productive: Read more

Employers Adopt Chronic Disease Management Programs

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Kaiser Family Foundation reports another option for employers attempting to keep health insurance programs affordable.

KFF states:

“Eighty percent of large U.S. companies this year are offering chronic disease management programs for workers in an effort to reduce health care costs, up from 51% last year, according to a new survey by Hewitt Associates, the Houston Chronicle reports. Hewitt surveyed 343 large companies and found that more employers are targeting costly chronic diseases — such as diabetes, heart disease, asthma and depression — rather than workers’ eating or exercise habits. Hewitt estimates that a company with 9,500 workers and 500 retirees younger than age 65 spends between $18 million to $22 million on health care just for those with diabetes.”

Companies are managing chronic disease “by offering employees personal health coaches, on-site health clinics and copayment waivers for needed medications.”

Compared to consumer-directed health plans, chronic disease management is a relatively uncontroversial approach to lowering health care costs for employers.  As we’ve noted in a recent post, “Twenty-five percent of the U.S. community population were reported to have one or more of five major chronic conditions.” Not only does chronic disease management focus on preventative care and employees’ long-term health, employers are saving money in the short-term.  The results, although varying, are generally successful, with employers “spending 10% to 30% less per year on medical care after two to five years (Sixel, Houston Chronicle, 4/2).”  The short-term savings could lead to healthier employees, higher productivity and long-term savings.

The Houston Chronicle reports that:

According to Joseph Jasser, regional medical director for Houston for Concentra, an industrial medicine and urgent care provider, “If you can change their lifestyle — cut out smoking, eat better and exercise — then they’re healthier and companies end up spending less for medical care.”

Taxing Health Benefits, Obama Administration Said To Be “Open”

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In a recent post on this blog, Professor Tim Greaney noted that Senator Max Baucus had recently said that

the tax exclusion for employer health insurance payments was on the table, [with Senator Baucus] noting two characteristics that make it an appealing target:  regressivity and potential source of considerable “revenue.”  On these and other issues, Baucus stressed the critical role OMB scoring will play in shaping the ultimate design of the legislation.

Not to say that OMB “scoring” will be influenced by the predilections of its director, but nevertheless, those predilections may be worth noting. The New York Times reports

At a recent Congressional hearing, Senator Ron Wyden, an Oregon Democrat whose own health plan would make benefits taxable, asked Peter R. Orszag, the president’s budget director, about the issue. Mr. Orszag replied that it “most firmly should remain on the table.”

Mr. Orszag, an economist who has served as director of the Congressional Budget Office, has written favorably of taxing some employer-provided health benefits and using the revenue savings for other health-related incentives. So has another Obama adviser, Jason Furman, the deputy director of the White House National Economic Council.

The Times also noted that

When Senator Max Baucus, Democrat of Montana, advocated taxing benefits at a recent hearing of the Finance Committee, which he leads, Treasury Secretary Timothy F. Geithner assured him that the administration was open to all ideas from Congress. Mr. Geithner did, however, allude to the position that Mr. Obama had taken as a candidate.

The Times reports that sentiment elsewhere, however, was not quite as sanguine about the proposal: “Many Democrats, especially House liberals, are opposed. ‘It’s a dumb idea,’ said Representative Pete Stark of California, chairman of the Ways and Means Subcommittee on Health. “We have to maintain as much as we can of the employer payments.”

The Times article is well worth taking a moment or two to read; it relays a number of different viewpoints regarding the matter, and also features a political aspect certainly worth noting: during the presidential election campaign, Obama was quite critical of  a John McCain proposal to tax health benefits. Obama denounced the McCain plan as “the largest middle-class tax increase in history.” The Times reports that

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans. Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so.

Senator Baucus on Delivery System Reform

Professor Tim Greaney

Tim Greaney,

Director, Center for Health Law Studies

Chester A. Myers Professor of Law

Saint Louis University School of Law

Senator Baucus’ March 3 press conference sponsored by the Kaiser Family Foundation Health Care Reform Newsmaker Series: Sen. Max Baucus (D-MT) offered a few insights into the early state of the debate on health reform legislation.

Two points stood out.  First, he observed that “delivery reform” was for him a central element in designing reform legislation. Pressed to define what he meant, Baucus mentioned value based purchasing and the medical home concept.  Second, he stated that the tax exclusion for employer health insurance payments was on the table, noting two characteristics that make it an appealing target:  regressivity and potential source of considerable “revenue.”  On these and other issues, Baucus stressed the critical role OMB scoring will play in shaping the ultimate design of the legislation.

The known unknown here, however, is how some of the relatively novel delivery reforms like medical homes will be defined and implemented — and hence ultimately scored by OMB for their impact on system costs. One problem is that the “medical home” may encompass a wide range of delivery/financing arrangements. In general the medical home has been broadly defined as a physician-directed practice that provides care that is “accessible, continuous, comprehensive and coordinated and delivered in the context of family and community.” But as Bob Berenson and colleagues pointed out in Health Affairs last September,[1] few primary care medical practices are close to having the size, management capabilities and infrastructure (electronic and otherwise) to function as medical homes.  Transitioning to such practices (even on a virtual office basis) will surely take time, money, and a sea change in culture and practice style.  Estimating the pace and effectiveness of such change may prove as daunting as projecting next months Dow Jones average.

Health Benefit Costs Over Time

The U.S Bureau of Labor Statistics (BLS) offers a report: “Program Perspectives, On Health Benefits, recent data on employers’ costs and employees’ access.” The report (which also appears in the “Resources” section of this weblog) is user friendly and well worth the moment or two it would take to peruse it. It offers some interesting information on both relative cost and access. Of particular note, however, is “Chart 1,” which is a graphic representation of the “Employment Cost Index, private industry, 12 month percent change, health benefits and total benefits, 1982-2008.” Although BLS offers a caveat on the numbers, it cuts both ways.

BLS characterizes the data thus: “Over the last 25 years, health benefit costs for employers has moved in fits and starts.” The chart shows rapid accelerations in cost accompanied by periods of deceleration. In March1983 the cost of health benefits spiked 23.5% over the year prior; a similar (but not as large) rise may be seen from mid-1987 to mid-1988, and a protracted ascent may be seen from 1996 to 2002. BLS juxtaposes the health benefit costs with the costs of “total benefits;” in comparison, the movement of “health benefit costs” is precipitous.

BLS does not offer an explanation. It would be interesting to see charts which juxtaposed the cost of health benefits during this time period with the Inflation Rate, Interest Rates, Avg. ROI in the Stock and Bond Markets–and of course, the reported profit of the major commercial Health Insurance providers.

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