Taking Steps Toward Reform

Should an imperfect health reform bill be passed?  Health reform should be about four things: 1) expanding coverage to all; 2) providing health security for those already insured; 3) ending the fragmentation of health care delivery in favor of sound coordination of care; and, 4) constraining cost to ensure that we can afford appropriate care in the future.

The House leadership bill (HR 3962) does a good job on the first, reaching a large proportion of the uninsured — although it will not achieve universal coverage.  It also gets good marks for reforming insurance regulations — although its weak version of the public plan will make true insurance reform more difficult to achieve.  It makes some tentative progress on care coordination, mostly through pilots and demonstrations in public insurance programs.  It provides some cost saving measures in Medicare and through encouraging alignment of financing systems — but cost containment is clearly the weakest aspect of the bill.   So, should the reform be passed, warts and all?

After months of criticism of the majority’s plans and promises of the production of a better plan, House Republicans proposed a substitute to the House leadership bill.   How does it stack up?  The CBO finds that the Republican substitute would reduce the deficit over the next ten years by about $68 billion, which is about $40 billion less than the reduction the CBO projects from the Democratic version.   The CBO also estimates that the Republican bill would reduce the number of uninsured over the next ten years by “about 3 million relative to current law, leaving about 52 million nonelderly residents uninsured,”  compared with its assessment that HR 3962 would reduce the number of nonelderly uninsured by 36 million during that time period.  So, the GOP substitute would do less to reduce the deficit, and cover 33 million fewer uninsured.   It includes some insurance reform provisions, many based on consumer-directed models that tend to further fragment, rather than coordinate care.  HR 3962 is far from perfect, and the CBO’s estimates have been subject to criticism, but the reports provide food for thought for those who hoped that the Republican plan would offer a meaningful alternative.

Sometimes proceeding in steps is necessary, particularly with complex systemic reform.  Massachusetts has in many ways been a model for drafters of federal reform plans, and stands as an example of incremental steps toward full reform.  It enacted sweeping health insurance reforms in 2006, creating a marketplace for regulated private insurance, the addition of public plans, and responsibility shared among businesses, individuals, and providers.  It has been remarkably successful at expanding access, driving the uninsurance rate down to 2.6% as of the spring of this year, and enjoying continuing strong support within Massachusetts.    Costs are a growing concern.  But the coalition of business, consumer, and provider groups behind the reform anticipated the need to circle back and tackle finance.  Cost concerns have only grown with the economic downturn, as tax receipts lag and countercyclical demand for Medicaid coverage strains budgets.  Resolve to push forward appears strong.  Representatives of several stakeholders reported last year that,

Since passage, all stakeholder groups have remained deeply engaged in implementation.  Despite news reports of higher-than-expected costs, the governor, legislative leaders, and stakeholders have repeatedly reiterated support for full implementation.  This consensus, crucial to enactment, has proved equally vital to implementation.

Massachusetts reformers made the decision to proceed in two steps: coverage first, cost control second.   While no one is proposing a two-step process for federal reform, expanding coverage and reforming insurance practices have been the overriding emphases in Washington.  And HR 3962 does advance the cause of care coordination for the chronically ill.  It was interesting to see the Dutch Health Minister in a recent interview emphasize coordinated care as a central feature of reform.  In describing his country’s reforms (from which some draw lessons for our country), he explained:

We are trying to make sure that no one receives health care that is not coordinated. And [we intend] that the general practitioners cannot negotiate any longer with insurance companies unless they are part of a coherent group that is offering coherent care.

What does the GOP bill do for people with chronic illness?   The CBO found that provisions in the proposed substitute would “tend to increase the premiums paid by less healthy enrollees.”   The substitute, then, entails fiscal benefits for the well at the expense of those who most need care and coverage.

HR 3962 reforms the insurance market to safeguard coverage for those who have it now; expands coverage for the uninsured; and begins the arduous task of shifting care delivery from fragmentation to coordination.  The GOP alternative covers one-twelfth as many uninsured, makes coverage for the chronically ill harder to maintain, and does less to reduce the deficit.  Common sense tells us that taking positive steps toward reform is vital, and that the GOP substitute is no reform at all.

Thanks for Sharing, The Republican Party Offers Up a Health Reform Plan

Ezra Klein over at the Washington Post does a fine job of analyzing the political lesson in the recently proffered Republican health care reform plan–and the even more recent initial Congressional Budget Office analysis of the plan:

Late last night, the Congressional Budget Office released its initial analysis of the health-care reform plan that Republican Minority Leader John Boehner offered as a substitute to the Democratic legislation. CBO begins with the baseline estimate that 17 percent of legal, non-elderly residents won’t have health-care insurance in 2010. In 2019, after 10 years of the Republican plan, CBO estimates that …17 percent of legal, non-elderly residents won’t have health-care insurance. The Republican alternative will have helped 3 million people secure coverage, which is barely keeping up with population growth. Compare that to the Democratic bill, which covers 36 million more people and cuts the uninsured population to 4 percent.

But maybe, you say, the Republican bill does a really good job cutting costs. According to CBO, the GOP’s alternative will shave $68 billion off the deficit in the next 10 years. The Democrats, CBO says, will slice $104 billion off the deficit.

The Democratic bill, in other words, covers 12 times as many people and saves $36 billion more than the Republican plan.

Congressman Boehner had this to say: “Not only does the GOP plan lower health care costs, but it also increases access to quality care, including for those with pre-existing conditions, at a price our country can afford.”

In regard to savings, CBO notes that

some provisions of the legislation would tend to decrease the premiums paid by all insurance enrollees, while other provisions would tend to increase the premiums paid by less healthy enrollees or would tend to increase the premiums paid by enrollees in some states relative to enrollees in other states.

As to provisions of the legislation which would “tend to decrease the premiums paid by all,” CBO points out that savings may be derived from

“Changes in the extent of insurance coverage purchased”

Yes, that’s exactly what that says: the Republican plan will afford us all the opportunity of saving money on insurance (but not nearly as much as the Democrats’ plan), by granting us the right and ability to have less insurance coverage.

CBO states:

The second source of change in average insurance premiums is changes in the average extent of coverage purchased. Those changes can reflect both changes in the scope of insurance coverage–the benefits or services that are included–and changes in the share of costs for covered services paid by the insurer–known as the “actuarial value.” With other factors held equal, insurance policies that cover more benefits or services or have smaller copayments or deductibles have higher premiums, while policies that cover fewer benefits or services or have larger copayments or deductibles have lower premiums. Provisions in the amendment that would reduce insurance premiums by affecting the amount of coverage purchased include the State Innovations program, which would encourage states to reduce the number and extent of benefit mandates that they impose, and provisions that would allow individuals or affiliated groups to purchase insurance policies in other states that have less stringent mandates. CBO’s assessment was that the amendment would not have a substantial effect on actuarial values.

So the actuarial costs– “the share of costs for covered services paid by the insurer,” will not be substantially affected; but “the scope of insurance coverage–the benefits or services that are included” for people, will be decreased. Worse insurance, less money–thus a lower premium and Republican “savings.” Couple that with 17 percent uninsured after 10 years, increased premiums for “less healthy” enrollees, some malpractice “reform” and a few other sundry measures and we’ve got us a plan. Thanks for sharing.