The Individual Mandate, a Brief History — Part II, The Republican Alternative (1993-1994)

When President Clinton announced his “Task Force on National Health Reform” in late January, 1993, Republicans (at least initially) felt the need to offer voters a conservative counterpoint. Their primary concern was countering the “employer mandate” proposals, which the right has long opposed as a job-killer. The stakes were raised when, for various reasons, the Task Force’s activities became a political liability for the new President. (The PBS Newshour’s website provides a useful timeline for the entire “Hillarycare” fiasco.)

Politicians on both sides recognized many of the same problems with American health insurance. But without employer mandates or government-run plans at their disposal, Republicans needed a more direct means of containing the cost of health coverage and protecting the insured from “free riders.”

Solutions from the Pauly and Heritage plans soon found their way into Republican- and Democrat-sponsored health bills-including the individual mandate that was vital to both. Lately, liberal pundits have been pushing this fact as some great dramatic irony: Republicans, some of whom are still in office today, loved the mandate back when it was an alternative to President Clinton’s proposals.

That’s a bit of an exaggeration. However much Republicans liked it, conservative legislators wanted to focus on how their bills would enable individuals to choose the insurance they wanted, rather than the consequences for failing to do so.

The “Health Equity and Access Reform Today Act of 1993,” sponsored by Republican Senator John Chafee, was probably the most thorough proposal of the bunch, and even enjoyed some bipartisan support. As has been noted, the bill shared several common elements with the ACA, and would have required all citizens and resident aliens to possess qualifying health coverage by 2005. (This is also the only bill I know of to call this requirement an “individual mandate.”)

Like the ACA, but unlike the think-tank plans or competing Republican proposals, the Chafee bill excludes those with religious objections from the mandate. This proposal didn’t so much enforce the mandate as attempt to make compliance financially attractive-only by possessing qualifying coverage could one take advantage of increased tax credits.

One rejoinder to this history lesson is that two bills without mandates, Representative Rick Santorum and Senator Phil Gramm’s “Comprehensive Family Health Access And Savings Act” and Representative Cliff Stearns and Senator Don Nickels’s “Consumer Choice Health Security Act”, were both more popular among Republicans than the Chafee bill. This is true insofar as neither bill contained a specific provision requiring Americans possess health coverage, but untrue in every other respect.

Based on the Heritage plan, the Stearns-Nickels bill terminated the employer health plan exclusion, and the medical expense and self-employed health insurance deductions. The tax credits and other benefits designed to defray the cost of health care expenses were withheld from those who failed to possess “federally qualified” coverage, as were both itemized health care deductions and even standardized deductions. The Consumer Choice Act would also have followed through with a version of the think tank proposals’ enforcement mechanism, creating state programs to provide coverage “to any individual who . . . who refuses to voluntarily purchase such insurance coverage privately.”^[1]

As with other 1990s reform bills, the Consumer Choice Act didn’t devote a specific provision to spelling out an individual mandate; yet no less an authority than the Heritage Foundation considered the bill to possess an individual mandate as per their own design. Soon after the introduction of Nickels-Stearns, Heritage scholar and conservative health care guru Robert E. Moffitt delivered an eloquent and  detailed apologetic in its support. Moffitt’s reasoning would be echoed, years later, in the Government’s own defense of ACA § 1501(b).

The Santorum-Gramm bill was, at once, more draconian and less detailed than any competing proposal. Title VI of that bill stated that “Any individual with family income exceeding [100%] of the official poverty line^[2] . . . but who fails to purchase [the required] coverage . . . within 1 year of the date of the enactment of this Act, shall not be eligible for the insurance pool program under title V of this Act.” Title V established subsidized insurance pools for those with pre-existing conditions. In addition, “No provision of Federal, State, or local law shall apply that prohibits the use of any statutory procedure for the collection of unpaid debts for medical expenses incurred by [these] individuals . . . .”

In other words, under Senator Gramm’s plan, not only would you suffer the same tax disadvantages in the similarly-structured Stearns bill, but noncompliance at any point apparently nullifies whatever bankruptcy protections that would help relieve medical debt. The uninsured and underinsured would also risk the possibility that a health condition would price you out of health coverage for either a year or until you aged into Medicare (the bill is unclear as to which). That may be a valid exercise of the commerce power, but it’s also begging a closer look at the Eighth Amendment’s use of the phrase “cruel and unusual.”

There were a few conservative and libertarian criticisms of these mandate proposals, but they were comparatively tame to what we hear now. Nobody seemed to consider the individual mandate a constitutional problem of any kind.^[3] The main concern about Stearns-Nickels, it seems, was not that it required states to forcibly insure hold-outs, but that it permitted (but did not require) this by way of state-run plans. At a March, 1994, Heritage Foundation meeting, Senator Nickels promised to delete the provision. But neither Nickels nor Representative Stearns ever altered it.^[4]

This disinterest continued even after Democrats reintroduced the “Health Security Act” in July, 1994. That bill had an express individual mandate, was authored by liberal superhero Ted Kennedy, and would have issued Americans spooky-sounding “Health Security Cards.” Amazingly, at the height of Newt Gingrich’s revolution against government overreach, not a constitutional concern seems to have been raised.

At any rate, all Republican bills were left for dead by the end of 1994. Various forces (including Bill Kristol’s infamous memo) convinced the party that any compromise on health care reform would be good for President Clinton and thus bad for them. Colorado senator Hank Brown went so far as to rescind his co-sponsorship of the Chafee bill a month before the midterm election. The problem wasn’t the individual mandate, itself, but its incompatibility with the new message: there wasn’t a health care crisis in America to begin with.

[Read "The Individual Mandate a Brief History--Part I, Conservative Origins"]

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^[1] Stearns-Nickels § 131(b).

^[2] Note, the original text reads “exceeding 200 percent of the income official poverty line . . . or who is eligible for a partial or full credit to purchase a catastrophic health insurance plan under such section.”  Said tax credits are calculated as “100 percent reduced (but not below zero percent) by 1 percentage point for each 1 percentage point (or portion thereof) the qualified individual’s family income exceeds 100 percent of the income official poverty line . . . .”  Thus, if your income is 101% or greater, you’re subject to the bill’s penalties.

^[3] William Saffire, Let’s Make a Deal on Health, N.Y. Times (May 23, 1994) (available online at http://select.nytimes.com/gst/abstract.html?res=F00713FC355C0C708EDDAC0894DC494D81&scp=10&sq=safire%20health%20care%20let’s%20make%20a%20deal&st=cse); Michael D. Tanner, Health Care Reform: The Good, the Bad, and the Ugly, Cato Institute Policy Analysis No. 184 (Nov. 24, 1992) (available online at http://www.cato.org/pubs/pas/pa184.pdf); Miller, supra.

^[4] Tom Miller, Nickles-Stearns Is Not the Market Choice for Health Care Reform, Cato Institute Policy Analysis No. 210 (June 13, 1994) (available online at http://www.cato.org/pubs/pas/pa210.pdf).

Senate Votes Against Repeal: Out of the Woods but for How Long?

Last Wednesday, the Senate voted 47-51 against the “Repealing the Job-Killing Health Care Law Act.”  50  Democrats and one Independent voted against the Act while all 47 Republicans voted in favor of it (click here to view results).  No surprises there… but where do we go from here?

The Washington Post and the New York Times report that pro-repeal Senators and activists remain energetic and optimistic.  Senator John Cornyn (R-Texas) observes “[t]hese are the first steps in a long road that will culminate in 2012.”  Marilyn Shachter, a tea party activist, predicts a repeal “definitely will happen. It may take until 2012, or after 2012, when we get rid of Mr. Obama and a lot of these borderline senators that are up for reelection are replaced.”  Keith Hennessey, former Assistant to the President for Economic Policy and Director of the National Economic Council, outlines a two-year “path to repeal” the Patient Protection and Affordable Care Act (PPACA):

• Keep up the pressure in 2011 and 2012:
  • maintain and strengthen Republican unity toward full repeal;
  • repeatedly attack the bill legislatively on all fronts, knowing that most votes will pass the House and fail in the Senate;
  • continue legal pressure through the courts; and
  • tee up repeal as a key partisan difference in the 2012 Presidential and Congressional elections;
• In 2012 win the White House, hold the House majority, and pick up a net 3 Republican Senate seats to retake the majority there; and
• In 2013, use reconciliation to repeal ObamaCare, requiring only a simple majority in the Senate.

ABC News notes that the latest repeal attempt “was just one of three ways the Republicans are trying to kill the health care law.”  The second way involves the constitutional challenges filed in the courts.  The third way involves Senator Lindsey Graham (R-SC) and Senator John Barrasso’s (R-WY) proposed legislation allowing states to opt out of certain PPACA provisions, such as the individual mandate.

I would add a fourth way: good ol’ public relations (see my previous post on renaming/rebranding PPACA).  For instance, last Thursday Alaska Governor Sean Parnell announced that he had asked the state attorney general whether implementing and enforcing PPACA would violate his oath of office.  The Governor described himself as being “caught between a federal government that says, ‘You must pursue this, you must pursue this,’ and I have the duty to uphold the rule of law.”  There’s some solid, dramatic PR right there.

Be that as it may, the Senate has spoken.  The lower courts have spoken.  Senators Graham and Barrasso have spoken.  Governor Parnell has spoken.  Members of this blog have spoken.  Must we wait until Mr. Hennessey’s two year “path to repeal” has been successfully implemented or foiled before the Supreme Court chimes in?

Balance Billing: The National Conference of Insurance Legislators’ Plan

This past week I found myself (once again) sitting across a big desk from the surgery scheduler who works for my son’s ear nose and throat doctor.  She had a stack of papers for me to sign and as she passed me each one she offered a brief explanation of what it was.  As required by the March 2009 revisions to New Jersey’s Codey Law, one informed me that the surgery center where my son’s ear tubes were to be inserted was “physician-owned,” another that it was “out-of-network.”  Regarding the latter, the scheduler reassured me that, while the center could “balance bill” me for the portion of the facility fee not covered by my insurance, it would not.  I was told the same thing the first time around and nevertheless received a bill from the center for nearly $5,000; after I got over the shock, I called to ask that it be reduced and breathed a sigh of relief when it was, to $100.

So, balance billing was already on my mind when I received an email from Interim Vice Provost & Professor of Law Kathleen M. Boozang, calling my attention to a recent St. Louis Post-Dispatch article reporting that Steven Powell “has sued Washington University in St. Louis, accusing the university’s doctors and other Missouri health care providers of routinely and illegally over-billing for medical services.”  After Mr. Powell was hospitalized in 2008 at Barnes-Jewish Hospital, the hospital’s owner and Washington University, whose doctors staff Barnes-Jewish, sued Mr. Powell to recover fees not covered by his insurance carrier that he would not or could not pay.  Mr. Powell’s prospects for success are not clear, since Missouri, like most states, does not, at least not explicitly, forbid out-of-network health care providers from billing their patients for the portion of the provider’s fee not covered by insurance.

In 2009, two states, Louisiana and Texas, enacted laws that tackle the problems associated with balance billing not by banning the practice but, among other things, by requiring that the practice be made transparent.  The National Conference of Insurance Legislators, the self-described “voice of state legislators in Washington in the face of mounting federal initiatives to preempt state insurance regulation,” has promulgated a draft Balance Billing Disclosure Model Act modeled on the Louisiana and Texas statutes.  NCOIL will consider adoption of the Model Act at its next meeting, to be held in March of this year.

Under NCOIL’s draft Model Act, healthcare facilities would be required to provide “conspicuous written disclosure to a consumer at the time the consumer is first treated on a non-emergency basis at the facility, at pre-admission, or first receives non-emergency or post-stabilization services at the facility,” informing the consumer that the facility is either in- or out-of-network and, if the latter, that “the consumer may be billed for medical services for the amount unpaid by the consumer’s health benefit plan.”  Health benefit plans would also be required to make disclosures about the potential for balance billing, “in conjunction with issuance or renewal of the plan’s insurance policy or evidence of coverage.”  Finally, facility-based healthcare providers  would be required to (1) take steps to include sufficient information in their bills to enable patients to understand why they are being balance billed, (2) provide patients with over-the-phone assistance understanding such bills, and (3) work with patients to implement payment plans.

NCOIL received comments on the draft Model Act from a number of stakeholders.  The American Hospital Assocation wrote that “[a]n approach focused on disclosure sidesteps the key issue here: the adequacy of the insurer’s network with respect to contracts with facility-based physicians.”  Families USA suggested that “[a]s part of requirements that health plans maintain adequate provider networks, health plans should contract with an adequate number of anesthesiologists, emergency room providers, and other facility-based providers to see their members at each in-network facility and should establish reasonable procedures to help both patients and families to identify and locate those participating providers.”

Predictably America’s Health Insurance Plans have a different take, arguing that the most pressing concern is “[p]rotecting consumers from runaway charges billed by some out-of-network providers[.]“  AHIP points out that “[w]hen an individual receives services from a facility and accompanying facility-based practitioners, the consumer rarely has the opportunity to select the radiologist, anesthesiologist or pathologist.  Therefore, the proposed disclosure of charges and participating status of the practitioner would have a very limited practical impact because the consumer generally cannot act on this information.”

Tellingly, everyone agrees that disclosure will not be a magic bullet.

Senate Fails to Repeal Form 1099 Reporting Requirements

On November 30, the Food Safety Modernization Act (Senate Bill 510) passed the Senate with a 73-25 vote.  Despite bipartisan support for the bill, on November 29, the Senate rejected two amendments to repeal Form 1099, a measure which likewise carries bipartisan support.

Form 1099 is an informational return required of any business that pays a vendor or contractor more than $600 in a tax year.  Pursuant to the Patient Protection and Affordable Care Act, all corporations must fill out one Form 1099 for each qualifying payment relationship beginning in 2012.  The tax requirement has been criticized as an onerous and burdensome requirement for small businesses.

Although both proposed amendments would have repealed the new rules, the bipartisan agreement was limited to that single issue.  Democrats and Republicans have not decided how to offset the loss of approximately $20 billion over ten years that will result from repeal of the Form 1099 reporting requirements.  Senate Finance Committee Chairman Max Baucus’s (D-Mont) amendment (S. Admt. 4713) did not include any budgetary offset, an omission which appears to have sunk the amendment.  The Baucus amendment failed in a 44-53 vote.

The competing amendment (S. Admt. 4702) was offered by Senator Mike Johanns (R-Neb) and would likewise repeal the Form 1099 requirements.  In addition, it would have offset the cost of repeal by permanently rescinding $39 billion in discretionary non-defense spending.  The Johanns amendment garnered more support, but ultimately failed in a 61-35 vote (the amendment required 67 votes to pass).

According to BNA, Senators Baucus and Johanns spoke after the vote and have agreed to work together on a bipartisan solution.  Senator Baucus told BNA, “We will probably need to find a revenue bill, but our desire is to get this done. We will do whatever works.”

Senator Chuck Grassley (R-Iowa), also a member of the Senate Finance Committee, stated that negotiations had begun on November 30 to solve the Form 1099 reporting problem.  According to Grassley, the two main issues are (1) how to pay for the repeal and (2) what bill will serve as a legislative vehicle.  “I assume there’s going to be at least one tax bill this year and if there isn’t, there’s something wrong … so some sort of tax bill has to go and you can put it on that.”

Lawmakers still have time to work out these two issues, since the Form 1099 requirements do not go into effect until 2012.

Trouble Brewing for Pharmaceutical Companies

Bribery and recalls.  Federal agencies are turning up the heat on pharmaceutical companies.  Were you surprised by the eight recalls of Johnson & Johnson products this year?  Maybe you shouldn’t be.  As HealthReformWatch.com reported in We May Need More Than a Spoonful of Sugar to Help Our Medicine Go Down, drug recalls reached a record high 1,742 in 2009 — more than four times the amount in 2008.  Bowman Cox, managing editor of the Gold Sheet (which first broke the story) told CNN Money that in light of the 296 recalls issued in the first six months of 2010, there could be 600 or more recalls this year.

Why So Many Recalls?

Analysts and legislators are examining the recall statistics to find sources and solutions to the pharmaceutical safety issue.

1.   Drug repackaging

Advantage Dose, a now-defunct Shreveport, LA based drug repackager, was responsible for more than 1,000 of the 2009 recalls. Companies like Advantage Dose repackage and relabel drugs into smaller units for resale or distribution to health care facilities. After excluding Advantage Dose from the count, there still remains a 50% jump in recalls from 2008 to 2009.

2.   The generic rush

Gold Sheet’s Cox suggests that generic manufacturers cut drug design costs in their rush to be first to market after a branded-drug’s patent protection expires, decreasing quality.  “The first applicant typically gets the lion’s share of the business for the new drug… So they get the application. They make and market the drug, but they could still have problems down the road if they haven’t really understood the optimum way to make that drug.”  One example of a design failure is Caraco Pharmaceutical Laboratories’ “tablet thickness” recalls in March 2009.

3.   Manufacturing lapses

Some experts say the biggest culprits include the quality of raw materials and contamination. Approximately one month ago, HealthReformWatch.com reported in Pharmaceutical Outsourcing: Trading Quality for Lower Costs? that India’s largest pharmaceutical manufacturer had been cited several times in recent years for manufacturing violations.  Additional recalls include vaccines produced by Shantha Biotechnics for Sanofi-Aventis and injectible drugs made by Claris Lifesciences for Pfizer.  The FDA stated its intent on May 5, 2010 to “propose stronger regulation for pharmaceutical companies that outsource manufacturing, putting more responsibility on the companies to ensure the purity and safety of the products…”

4.   Increased FDA scrutiny of manufacturing facilities

Which came first, the chicken or the egg?  Increased FDA oversight may or may not have led to the increased number of recalls; however, the recalls will probably lead to increased FDA regulatory power.

As Jennifer Jascoll reported, Senator Michael F. Bennet (D-CO) proposed the Drug Safety and Accountability Act of 2010 on August 3, 2010.  According to Bennet’s press release, “[t]he bill would strengthen manufacturer quality standards, enhance the FDA’s ability to protect Americans through improved tracking of foreign manufacturing sites, and give the FDA much-needed authority to recall potentially dangerous drugs.” Currently, the FDA is empowered to issue warnings and recommend that a manufacturer issue a recall.

Two prior bills would also increase FDA powers to mandate a recall:

• The Protect Consumers Act of 2009 (sponsored by Rep. Betty Sutton, D-OH) would require the Secretary of HHS implement a recall if it is determined to be necessary.
• H.R. 6740 (sponsored by Rep. Edolphus Towns, D-NY) would provide the Secretary of HHS with the ability to mandate a recall “if the Secretary has reason to believe that the use or consumption of, or exposure to, a drug (or an ingredient or component used in any such drug) may cause serious adverse health consequences or death to humans or animals.”

According to CNN Money, the FDA has not identified any alarming pattern.  FDA spokeswoman Elaine Gansz Bobo stated, “[s]ince every recall situation is unique, it would be difficult to assess whether there are any trends or increases in recalls this year… At this time, however, we have not identified any trends.”  Despite the FDA’s lack of concern, other federal agencies are interested in the practices of pharmaceutical companies.

Further Federal Investigations

According to the N.Y.Times, federal prosecutors and securities regulators are investigating pharmaceutical companies for potential violations of the Foreign Corrupt Practices Act (FCPA).   The FCPA is an anti-bribery law which bars companies from offering foreign government officials items of value for profit.  For instance, Pfizer disclosed in April “that it paid $35m over six months to 4,500 doctors in private practice for education and the development and marketing of new drugs.”  Although this practice is legal in the U.S., such payments are illegal in many foreign countries where physicians are employed by the government.

On November 17, 2009, Assistant Attorney General Lanny A. Breuer stated that the Department of Justice intended to focus its attention on the pharmaceutical industry:

In some foreign countries and under certain circumstances, nearly every aspect of the approval, manufacture, import, export, pricing, sale and marketing of a drug product may involve a “foreign official” within the meaning of the FCPA. The depth of government involvement in foreign health systems, combined with fierce industry competition and the closed nature of many public formularies, creates, in our view, a significant risk that corrupt payments will infect the process. Our remarkable FCPA unit and our terrific health care fraud unit will be working together to investigate FCPA violations in the pharmaceutical industry in an effort to maximize our ability to effectively enforce the law in this high-risk area.

“Corrupt practices” under the FCPA are not limited to cash in envelopes.  Inappropriate payments for lavish hospitality, consulting, licensing agreements, and even charitable donations may raise red flags for government investigators.

Could bribery be contributing to decreased quality and the sudden rise in recalls?  According to the Financial Times, the DoJ is focusing its efforts elsewhere:

[T]he DoJ is particularly interested in corrupt payments that may have influenced the reliability or integrity of data in clinical trials performed outside the US. A recent report by the Department of Health and Human Services found 80 percent of marketing applications for drugs approved by the Food and Drug Administration in the US had relied on at least one foreign trial.

It appears that the DoJ’s scrutiny of clinical trials is not without merit.  The N.Y.Times reports that “[l]ast month, a federal drug official reported that he found repeated instances in a landmark clinical trial of Avandia, a controversial diabetes medicine, in which patients taking Avandia appeared to suffer serious heart problems that were not counted in the study’s crucial tally of adverse events.”  The clinical trials for Avandia included many foreign trial sites, which were submitted in support of the drugs’ application to enter and remain on the U.S. market.  GlaxoSmithKline, the trial’s sponsor, has not been accused of fraud.

According to recent regulatory filings, the following companies are under investigation for possible violations of the FCPA:

• Merck is cooperating with a federal investigation of company activities in multiple foreign nations.
• Medtronic is cooperating with investigations of company activities in Greece, Poland, Germany, Turkey, Italy, and Malaysia.
• Eli Lilly is cooperating with the investigations of subsidiaries in several countries, including Poland.
• Federal investigators are looking into improper payments related to the sale of Zimmer products abroad.
• Johnson & Johnson voluntary disclosed the possibility that company subsidiaries abroad had made improper payments to government officials in two countries relating to the sale of medical devices.
• Pfizer and Bristol-Myers Squibb have also disclosed that they are subject to federal investigations. AstraZeneca, GlaxoSmithKline, and Baxter SciClone have also received inquiries from federal enforcement agencies.

San Francisco Has Cancer on the Brain

Recently, the San Francisco Chronicle reported that the city’s Board of Supervisors has thrown its hat into the ring of the great cell phone brain cancer debate.  The Board voted 9-1 in favor of an ordinance requiring local retailers to display specific absorption rate (SAR) notices detailing radiation levels in cell phones.  SAR measures the rate at which radiofrequency electromagnetic energy is absorbed in a body when using a cell phone.  The FCC requires that cell phones sold in the U.S. not exceed a SAR level of 1.6 watts per kilogram.  (If you’re curious about your own cell phone, check out CNET’s SAR level list for voice calls).  Mayor Gavin Newsom is expected to sign off on the ordinance and his spokesman says “this is a very reasonable and quite modest measure that will provide greater transparency and information to consumers for whom this is an area of interest or concern.” If this really does come through, it won’t affect retailers until 2011 or so.

Meanwhile, the industry trade group CTIA-The Wireless Association has issued a statement admonishing and punishing the Board for its vote:

“CTIA and the wireless industry are disappointed that the San Francisco Board of Supervisors has approved the so-called ‘Cell Phone Right-to-Know’ ordinance.  Rather than inform, the ordinance will potentially mislead consumers with point of sale requirements suggesting that some phones are ’safer’ than others….  [A]ll phones sold legally in the U.S. must comply with the Federal Communications Commission’s safety standards….  While we have enjoyed bringing our three day fall show to San Francisco five times in the last seven years, which has meant we’ve brought more than 68,000 exhibitors and attendees and had an economic impact of almost $80 million to the Bay Area economy, the Board of Supervisors’ action has led us to decide to relocate our show [starting in 2011].”

So is this just fear-mongering or does San Francisco’s Board know something that the rest of us don’t?  According to the 10 year Interphone study conducted by the World Health Organization’s International Agency for Research on Cancer and published online last month by the International Journal of Epidemiology, there is no conclusive evidence supporting or disaffirming any connection between cell phones and the risk of brain tumors.  The study was not without controversy, though, even among the researchers themselves — and it had nothing to do with industry trade organizations– the Mobile Manufacturers’ Forum and the GSM Association– contributing funds for the study.  Last month, the Wall Street Journal reported that the Interphone researchers were puzzled by their data because

[t]he result is a strange set of numbers.  Many levels of cellphone use appeared to reduce the chance of developing a tumor.  Only the people who talked on cellphones the most had a significantly greater chance of developing glioma [a type of tumor] - 40% greater - than those who didn’t use cellphones.

The use of cell phones might reduce the chance of developing a brain tumor?  Go figure.  For now, our very own FDA supports the Interphone study and refers to others which have shown no increased health risk.

Perhaps San Francisco politicians and consumers, like the rest of us, are really just facing a case of caveat emptor.  However, until there is a study which can definitively support or disaffirm any connection between cell phones and the risk of brain tumors,  I wouldn’t mind knowing whether one phone has a higher or lower SAR level than another.  CTIA needn’t worry though.  Having such information won’t make me break my contract with AT&T or stop me from eagerly awaiting the arrival of my iPhone 4 (whose SAR level, according to FCC documents, appears to be lower than my current iPhone 3G but higher than the iPhone 3GS).  At least I’ve now given some thought about the risks to which I may be exposing myself.  So too have the folks in San Francisco.

Too Much Transparency?

Interesting article in the Wall St. Journal Health blog regarding prospective legislation which would require full pricing disclosure by providers:

Yesterday, a House subcommittee held a hearing on three bills - two sponsored by Republicans, and one by a Democrat - aiming to pull back the veil on prices, the Hill reports. Provisions vary by bill, but include price transparency for hospitals, ambulatory surgical centers, pharmacies and vendors; more complete disclosure by insurance plans and more information on quality.

Here at Health Reform Watch we have written a number of posts calling for transparency, and perhaps most notably the Center for Health & Pharmaceutical Law & Policy has issued two White Papers in the last year calling for such in different aspects of medical relationships. The first White Paper called for broad reforms in the marketing of drugs and devices. Entitled, Drug and Device Promotion: Charting a Course for Policy Reform, the Center proposed legal and policy changes to address conflicts of interest in the relationship of medicine and industry. The Center’s recommendations included “making payments by drug and device companies to doctors transparent, with public disclosure by industry and physicians of their financial relationships.”

In its second White Paper, entitled Conflicts of Interest in Clinical Trial Recruitment & Enrollment: A Call for Increased Oversight, “the Center proposed legal and policy changes to address conflicts of interest in the relationships between industry and doctors that can create unwarranted risks to trial participants and to the scientific integrity of research.” Obviously, transparency here too plays a large role in rooting out such conflicts and apprising potential research subjects of what may amount to vested interests in those who wish to recruit them for such studies.

In a sense, “Transparency” has become somewhat of a mantra. And rightfully so. The prospect of clandestine arrangements in medical care has a nefarious overtone that is well deserved. The ultimate nature of the doctor patient relationship is premised on trust. The doctor, by virtue of his education and profession, is privy to information the vast majority of us do not hold. In a sense, every diagnosis and prescription accepted is an article of faith. It is important to know that the doctor’s information has not been skewed by improprieties in research, and that the doctor’s ultimate diagnosis and prescription has not been skewed by a vested interest.

Generally speaking, except in cases of dire and/or unconscious emergency, the patient must assent to treatment. And assent must be premised on informed consent. A failure of assent, legally speaking, amounts to battery.  Arguably, a failure to disclose vested interests in a particular course of action or procedure can diminish, if not negate, the “informed” aspect of informed consent. Transparency is important.

But the WSJ article raises an issue worth considering as it regards Transparency and pricing: provider competitors in concentrated markets may, in seeing the exact numbers, find the opportunity to raise prices.

What struck us, though, was the concern voiced by Frank Pallone, chairman of the Energy and Commerce health subcommittee. “The concern I guess is about the unintended consequences of too much transparency,” he said, according to the Hill. How could more info on pricing and costs be a problem?

Pallone refers to a 2008 Congressional Budget Office brief on this very issue. It covers the benefits of transparency, but also the chief potential disadvantage: in concentrated markets, providers might look at their competitors’ prices and raise their own to match them. Here’s an excerpt from the prepared remarks of then-CBO Director Peter Orszag (now director of the Office of Management and Budget), discussing the findings before a Senate committee’s health reform summit:

On the consumer side, more than 80 percent of the population is covered by some form of health insurance, which insulates people from the full price of their health care, limiting their incentive to compare prices. Doctors and other health professionals often direct the decisions about what services to buy from whom, as patients may have little information on the care they need or the quality or value of that care. Moreover, for insured and uninsured people alike, awareness of prices will make little difference in emergencies or in the relatively small number of cases that account for a disproportionate share of overall health care spending.

On the provider side, more transparency would make information about the prices that hospitals, physicians, and drug companies charge insurers more visible, but whether such disclosure would lead to higher or lower prices for consumers on average is unclear and depends on the nature of competition in the relevant market. The markets for some health care services are highly concentrated, so increasing transparency in such markets could lead to higher, rather than lower, prices because higher prices are easier to maintain when the prices charged by each provider involved can be observed by all of the others. However, aggregated information or information on average prices would make it more difficult for providers to coordinate higher prices because individual providers’ prices would not be obvious. Whatever the effect on average prices, more transparent prices would probably reduce the range of prices.

In tact as the mantra of Transparency may be in regard to medical relationships, in a marketplace unfettered by fee regulation, Orszag’s  analysis and Frank Pallone’s concern regarding Transparency and pricing gives weight to the counter-intuitive prospect of “Too much Transparency.” We fail to consider such at our own peril.

IT PASSED!

In what is surely a watershed moment in American social and political history, the Health Reform bill passed on Sunday, March 21, 2010. In the company of historic enactments such as  Social Security and Medicare, the bill passed, 219 Yea, 212 Nay. The bill required 216 votes to pass.

Republican members of the House voted en masse against and vowed to further obstruct enactment of the bill through any means at their disposal.

To say that the battle to pass a health reform bill was long and arduous is not to engage in hyperbole. The debate raged on throughout the year, with a raucous and often maddening to and fro in an attempt to reach at first bipartisan consensus, and then just critical mass in a parliamentary sense.

To say, however, that the passage of this bill is an end to the battle to bring about health care reform is to miss the point. It is, I believe, a first but crucial step in what must be an ongoing effort. The bill encompasses well over a thousand pages; like anything that large it will have to be adjusted as need requires. The health care system is, perhaps, today one step closer to being just that– a system, as opposed to just an ill-fit hodgepodge of perverse incentives and dysfunction.

Last year, as President Obama took office, considering health care and national productivity, I wrote that

One of the first national health lessons this country received came on the heels of World War I.

“With the United States’ entry into the battle, hundreds of thousands of military personnel were drafted and trained for combat. After the war was fought and won, statistics were released from the draft with disturbing data regarding fitness levels. It was found that one out of every three drafted individuals was unfit for combat and many of those drafted were highly unfit prior to military training. Government legislation was passed that ordered the improvement of physical education programs within the public schools.”

“During the period from September 1917 through November 1918, records show that 2,801,635 men were inducted into the Army. Out of the approximately 10,000,000 registered men, roughly 2,510,000 were examined by local draft boards. During the first 4 months of mobilization, roughly one in three men were rejected on physical grounds, but the rejection rate dropped to one in four during the following 8 months.” (p. 149)

Having put forth the effort to remedy such, we were better physically prepared when it came time to fight World War II. We will be fortunate if some cataclysmic event does not lead us now to some statistical reckoning of our “unfit” and “extremely unfit” as regards our national productivity.

I do not point this out as a means of suggesting that we need to actively prepare ourselves for some form of larger global military conflict. But perhaps in some ways the “event” has already occurred, and only the reckoning remains. In his inaugural address President Barack Obama entreated us:

“Let it be told to the future world … that in the depth of winter, when nothing but hope and virtue could survive…that the city and the country, alarmed at one common danger, came forth to meet (it).”

“America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words. With hope and virtue, let us brave once more the icy currents, and endure what storms may come. Let it be said by our children’s children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God’s grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.”

He’s right. We must “come forth to meet it.” We cannot turn back and we cannot falter as we struggle to deliver this hard won gift of freedom to future generations. And it would be best if– as we brave these icy currents in this winter of our hardship– we were not sick. And if we were sick, that we all had doctors. And if we all had doctors, that they were not too busy filling out paperwork designed to frustrate them. As we learned through World War I, as a nation, we simply cannot afford to squander our physical and intellectual capital.

And now, on March 21, 2010 we have come further forth to meet that challenge. It is reckoned that because of the enactment of the bill an additional 32 million people will now have health insurance. That is 32 million people who can see a doctor when they get sick. 32 million people who mostly will not show up in emergency rooms in a critical and costly condition which they could have avoided had they merely gone to a doctor sooner.  32 million people who stand a far better chance of not having to declare bankruptcy related to medical costs. And 32 million people who will not contribute to the shameful amount of deaths each year attributed in this country to a lack of health insurance.

A good start.

Reform Rodeo: Latest News & Interviews; CER; the Constitution; HIT; Robotic Surgery

1. News: Kaiser Health News keeps you up to date by rounding up various stories on the Dems’ latest down-to-the-wire push on health reform. Their coverage of Representative Dennis Kucinich’s (and other reluctant Dems’) endorsement of the bill is here.

2. Betting on Health Care: The New York Times asks health wonks for opinions on the chances of passing health reform. Respondents include Robert Reich, former secretary of labor Gail Wilensky, Project Hope; Paul Starr, professor of public policy;  James C. Capretta, Ethics and Public Policy Center; Karen Davenport, Center for American Progress; Jacob S. Hacker, political science professor.

3. Evidence-based Medicine: A group at the New England Journal of Medicine proposes 5 steps to advance one of the most promising–yet often ignored–means of reforming our health care system: comparative effectiveness research.

4. Deem and Pass: Jonathan Adler at the Volokh Conspiracy discusses the constitutionality of the “deem and pass.” Regardless of its constitutionality, Ezra Klein exposes some factual inaccuracies in recent reporting on the tactic.

5. The Blues: The Pittsburgh Post-Gazette alerts us to a lawsuit by Highmark Inc. against the Pennsylvania Department of Insurance, which claims that the Department exceeded its authority when challenging Highmark’s proposed merger with Independence Blue Cross.

6. Meaningful Use Partial Credit: John Halamka at Life As A Healthcare CIO discusses the aggressive thresholds for meaningful use that have been set in the most recent rules, and what the HIT Policy Committee is doing to assuage those concerns.

7. Wild Card: A new TED talk about the current state of robotic surgery. An article covering the topic can be found here.

Obama in Ohio, a Letter from Natoma Canfield

As the Health Care Reform debate winds to a frenzied conclusion, President Obama visited Ohio to reach out in favor of the bill’s passage. I’ll let the President speak for himself, but there’s a letter below this video that you should read. Natoma Canfield sent the letter to President Obama back in December; it epitomizes, I believe, the every day tragedy which is the current state of health care and health care finance. Since then, it’s gotten even worse. Facing the prospect of unaffordable increases in her insurance premiums, Ms. Canfield took, and lost, the gamble that no one wants to take. Unable to pay, she discontinued insurance coverage; she was just recently diagnosed with leukemia.

A Win/Win: Health Reform Passes, Limbaugh Leaves

If you weren’t committed to Health Care Reform before… perhaps on the fence about a few aspects of the bill or the process? How about this as a pot sweetener: if the Health Care Reform bill passes, Rush Limbaugh says he’ll leave the country.

As David Knowles over at AOL News points out, on Limbaugh’s radio show a “caller asked Limbaugh where he would go for health care if Congress were to enact reform.

‘I don’t know,’ Limbaugh responded. ‘I’ll just tell you this, if this passes and it’s five years from now and all that stuff gets implemented, I am leaving the country. I’ll go to Costa Rica.’”

One can hope.

Interestingly enough, as Knowles points out, Costa Rica has universal health care.

Obama, Health Reform, Plan B

Interesting article in the Washington Post worth taking a quick view. According to WaPo:

Increasingly, the White House appears to favor having the House pass a version of the measure that cleared the Senate with 60 votes in December. The Senate would then pass changes to the bill to satisfy some demands of House Democrats. That Senate vote would take place under a parliamentary procedure known as reconciliation, which requires 51 votes rather than 60.

It remains unclear whether Democrats have enough votes within their ranks for this strategy to work. At the same time, it is only “one option” the president is considering, a senior White House official said Sunday.

In addition, the Washington Post points out that White House adviser Nancy-Ann DeParle “said on Sunday she thinks Democrats will secure enough ayes on the measure and signaled that the administration could be moving toward trying to pass it along party lines.”

The Wall St. Journal’s Health Blog points out, however, that there may be some difficulty in implementing such a plan:

But the process of keeping enough Democrats in line for even a simple majority is tricky: House members in particular still like their bill better than the Senate version and the changes they seek from the Senate also aren’t a sure thing before the House votes.

The President is expected to unveil his strategy later in the week.

High-Risk Pools: a Precarious Pillar of Republican Reform

At the Health Summit last week we were able to more fully observe the Republican vision for reforming health care. A constant idea that the Republican leadership came back to was the concept of “high risk pools.” But what are high risk pools, and what potential do they have to lower costs?

High-risk pools are state-run programs that provide insurance for those who suffer from pre-existing conditions or have some other issue that makes them “medically uninsurable.”  They are often utilized by those in limbo who were previously covered by an employer’s group coverage, but for whatever reason are now relegated to the veritable disaster that is the individual market. Currently, 34 states have high-risk pools, with the combined number of insured from those pools at 200,000. (See Kaiser Family Foundation, State High Risk Pools: An Overview). As noted by Kaiser, coverage is typically at 125% to 200% of the standard market rate for health insurance.  In some states, the high-risk pool insurance costs as much as $14,000 per year. Thirty states offering high-risk pool coverage have waiting periods before pre-existing medical conditions can be covered.

Edmund Haislmaier of the Heritage Foundation has provided a succinct and helpful discussion of the relationship between high-risk pools and the related concept of “reinsurance.”  Haislmaier breaks down these risk-transfer tools into two groups: “inclusionary” and “exclusionary” risk-transfer mechanisms:

The “exclusionary” mechanisms segregate high-risk individuals from the low-risk population, subsidizing them in a separate pool. The “inclusionary” mechanisms keep high-risk individuals in the same pool as everyone else but seek to redistribute and/or subsidize their more expensive claims.

A common exclusionary mechanism is a state-run “high-risk pool” for the individual health insurance market. The pool offers coverage to people who have been refused coverage in the individual market due to poor health status. Although coverage carries high premiums, the premiums are not enough to cover the cost of claims by enrollees. To make up the difference, lawmakers use a mix of assessments on private insurers and public subsidies. In some states, the losses are funded entirely out of assessments on insurers and, thus, ultimately included in the premiums paid by everyone with health insurance coverage. In other states, the losses are funded primarily out of general revenue appropriations and, thus, are ultimately born by all the state’s taxpayers. Still other states use a mix of both funding sources.

Inclusionary risk transfer mechanisms operate on essentially the same principle, except that high-cost individuals are not given separate coverage. Instead, some portion of their claims is pooled and then proportionately redistributed among the carriers in the market. As with high-risk pools, public subsidies may also be used to offset some of the cost of claims. This type of mechanism is often called, somewhat inaccurately, a “reinsurance pool.” A more precise termed is “risk-transfer pool.”

Notably, Haislmaier recognizes that high-risk pools offer little help when it comes to the true goal of health reform: reducing costs:

Regardless of design, risk transfer mechanisms only shift or redistribute costs among funding sources. Specifically, risk transfer mechanisms offer ways to more equitably redistribute the costs of a small number of expensive cases or individuals across a broader population. While these features enable health insurance markets to function more smoothly, they are not a solution for controlling health care costs in general.

This is noteworthy coming from the Heritage Foundation. However, to be sure, high-risk pools are not peculiar to Republican health reform proposals. Both the House and the Senate bills provide for high-risk pools. The follow table is from The Kaiser Foundation’s paper “High-risk Pools: An Overview”:

The important row of the above table is “Timeline.” Whereas the House and Senate bills utilize high-risk pools as a temporary measure to provide insurance to those with pre-existing conditions before the exchanges take shape, the Republican proposal would implement risk transfer mechanisms as the primary means by which individuals with pre-existing conditions can obtain coverage. For those purchasing on the individual market, the Republican proposal would provide federal funding for state-run high-risk pools. Reinsurance mechanisms would operate in the small group market.

This is in contrast to both the House and Senate proposal which both prohibit the insurance exchanges  from denying coverage because of an applicant’s pre-existing condition–thus negating the need for high-risk pools.  Instead of subsidizing high-risk pools that would segregate the sick from the healthy, the individual mandate in the Democrats’ bill would ensure that the costs of high-risk and currently sick individuals would be spread throughout the exchange.

As Haislmaier noted, it is unclear how risk transfer mechanisms would lower health care costs. For example, whereas exchanges would increase competition by making the purchase of health insurance more accessible, high-risk pools and reinsurance would not alter the current maze that is the individual insurance market.   It is somewhat remarkable that the Republicans opt for high-risk pools instead of a proscription against pre-existing condition preclusions, especially given the public disdain for pre-existing condition preclusions. But the Republicans have little choice. Since they are wholly opposed to the individual mandate, insurers and states running high-risk pools under the Republican plan would not have healthy individuals paying into the system to offset the cost of sick insureds.

Excise & Health Reform, Part I, or: “What is an Excise & How Would this Tax on Cadillac Plans Work?”

[Ed. Note: We are very pleased to introduce James Christiano to the blog. He is a law student here at Seton Hall Law and, after receiving his B.A. in psychology in 2002, worked from 2003 to 2008 as a District Adjudications Officer for the United States Citizenship and Immigration Services (USCIS), an agency within the Department of Homeland Security.  During his time with USCIS, James was primarily responsible for adjudicating applications for immigration benefits, including naturalization, lawful permanent resident status, and work authorization. As you might imagine, James has an eye for regulatory analysis, and will be offering a series of posts (to start) on provisions in the health reform bill regarding  "excise" along with analysis as to their potential impact.]

One of the many controversial aspects of healthcare reform is the Senate’s proposed excise on high-cost health insurance plans.  Such high-cost plans have often been referred to, arguably inappropriately, as “Cadillac plans.”  This post provides an introduction to the proposed excise on high-cost plans as provided in the Senate Bill.  Subsequent posts will address the ramifications and controversies of the excise.  (Note: The Senate Bill contains other excise provisions, including a 5% excise on elective cosmetic surgery procedures, which this post does not discuss.)

What is an excise?

Black’s Law Dictionary defines excise as “[a] tax imposed on the manufacture, sale, or use of goods (such as a cigarette tax), or on an occupation or activity (such as a license tax or an attorney occupation fee).”  Excises are commonly, and redundantly, referred to as “excise taxes.”

A quick skim of Subtitles D and E of Title 26 of the United State Code provides one an idea of the types of goods and activities that Congress has deemed deserving of an excise.  A few examples are luxury passenger automobiles, certain vaccines, communications services, authorized and unauthorized wagers (i.e., gambling), petroleum, firearms, cigarettes, and “excess expenditures to influence legislation.”

Excise currently imposed on group health plans

Federal law already subjects group health plans to an excise under certain circumstances.  For instance, 26 USC § 5000 imposes an excise on certain group and large group health plans deemed “nonconforming” — i.e., those that do not comply with the requirements of particular subsections of 42 USC § 1395y(b)(1) and (2).  Additionally, 26 USC § 4980B and D impose an excise (as a form of penalty) on group health plans that fail to meet HIPAA and COBRA requirements.

Excise on high-cost plans in the Senate Bill

The Senate Bill includes a provision imposing a 40% excise tax on high-cost, employer-sponsored health insurance plans.  High-cost plans would include those costing $8,500 for individuals and $23,000 for those other than self-only, beginning in the year 2013.  Starting in 2014, the threshold for high-cost plans would be increased annually by the change in the Consumer Price Index (CPI) plus 1%.  These thresholds are further increased for individuals employed (or previously employed) in certain high-risk professions or the repair or installation of electrical or communications lines.  Also, residents of states that rank in the top 17 among the highest-costing average employer-sponsored health insurance plans would be subject to more lenient thresholds for the years 2013, 2014, and 2015 (120%, 110%, and 105% of the threshold, respectively).

For each given high-cost plan, the coverage provider would be responsible for paying a 40% tax on the amount equal to the cost of the coverage exceeding the threshold.  For example, a coverage provider would be subject to an excise of $400 for a plan costing $24,000 in 2013 ($24,000 - $23,000 = $1,000; $1,000 x 40% = $400).  A coverage provider may be the insurance issuer, the benefits plan administrator, or the employer, depending on the coverage arrangement.

Brown Wins Kennedy’s Senate Seat, Health Reform Plot Thickens

This just in from the Washington Post:

Massachusetts state Sen. Scott Brown was elected to the U.S. Senate on Tuesday, winning a special election over two opponents, the Associated Press projected. Brown — the first Republican senator from the Bay State in 31 years — willgive the GOP 41 seats in the Senate, enhancing the party’s ability to demand changes in legislation.

“Enhancing the party’s ability to demand changes in legislation.” That is certainly one way of saying it. As we live under the yoke of the Senate’s filibuster rule, and the stated aim of soon-to-be (or maybe not so soon) U.S. Senator Brown is to put a halt to the health reform legislation currently poised for informal reconciliation between the two houses of Congress, it is dizzying to think that the life’s work of Senator Ted Kennedy may well be torn asunder by the man who’ll take his seat. It is a biting irony of classical greek proportions.

And I find myself wondering, honestly, “What would Ted Kennedy do?” A consummate politician and a superb tactician, I doubt, considering the stakes, he would be adverse to the Massachusetts Secretary of State’s position:

Secretary of State William F. Galvin, citing state law, says city and town clerks must wait at least 10 days for absentee ballots to arrive before they certify the results of the Jan. 19 election. They then have five more days to file the returns with his office.

Galvin bypassed the provision in 2007 so his fellow Democrats could gain a House vote they needed to override a veto of then-Republican President George W. Bush, but the secretary says U.S. Senate rules would preclude a similar rush today.

Ah! The Senate Rules. As that yoke of the modern filibuster draws nearer round the throat of health care reform, and the phrase “in the nick of time” begins to hang in the air like a concrete goal, these words to the opponents of health care reform seem apt:  Live by the sword….

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