Friday, August 6, 2010

Answer to question #10: What is the result of cobbling together various constituencies in trying to pass a health care reform bill?

Apparently because the Obama administration wanted to avoid the intense objections from the various constituencies that defeated the Clinton health plan, these parties were invited to participate in the planning and drafting of the new plan. Horse trading took place at the White House and intense lobbying involving hundreds of millions of dollars was part of the Congressional process. Some of the involved parties were: the AARP (representing those over 50 y/o), pharmaceutical companies, The American Medical Association (AMA), hospitals, unions and insurance companies.

The AARP became a firm supporter although approximately half of the funding for the new plan, $523 billion over ten years, was to come from decreases in Medicare spending, the national insurance plan for those 65 years and older. This age group is a major constituency of the AARP. Spending for regular Medicare enrollees will average a decrease of $22 in 2011 becoming $290 in 2014. For Medicare Advantage, planned cuts will be $195/enrollee in 2011 eventually reaching $1,267 in 2014. Please see question # 6 documenting that attempted decreases in spending during Medicare’s 45 year history have not been successful. What did AARP receive in exchange for this support(1)?

1)AARP provides supplemental (Medigap) insurance for regular Medicare, the numbers of which will increase as Medicare Advantage shrinks.
2)AARP Medigap insurance is exempt from the prohibition of pre-existing condition exclusions.
3)AARP executives are exempt from the $500,000 insurance executive limitation on salary.
4)AARP insurance is except from the planned tax on insurance companies.
5)AARP insurance is exempt from the need to spend 85% of its premium income on medical claims.

I believe AARP like many other non-for-profits serves a national need; however, they should not be allowed to sell commercial products, i.e. insurance, credit cards, etc., for financial gain as these activities subvert its true mission.
The pharmaceutical companies as part of the deal with the White House spent $100 million on T.V. ads in favor of the Obama health care plan. In exchange for their support the industry was able to limit its losses.

1)Nothing in the bill would cost the industry more than $80 billion total, that would include closing the Medicare part D donut hole (the law closing the donut hole is extremely complex and will not be in full effect till 2020, For details see, “ Closing Medicare’s ‘Drug Donut Hole’” by Christopher Weaver ).
2)Medicare would not negotiate drug prices as a single entity.
3)Re-importation of drugs to obtain lower prices would continue to be prohibited.
4)Exclusivity for the new field of biologic drugs (drugs from living cells) will be extended for twelve years versus the originally proposed five years.

Not only did the pharmaceutical industry succeed in protecting its high profits, but there was no attempt to objectify drug research, such as by having the funds funneled through the National Institutes of Health to assure good experimental design and the honest reporting of results.
The American Medical Association (AMA) did not mount an objection to the reform bill and was thus able to obtain several concessions.

1)A $300 tax on physicians who serve Medicare and Medicaid patients (this tax was proposed in spite of the fact that Medicare and Medicaid do not even pay cost for the services received) was defeated.
2)A tax on the lucrative cosmetic surgery industry was defeated.
3)A 5% decrease in payment to the top 10% of Medicare billers was defeated.
4)The AMA was able to obtain a temporary slight increase in reimbursement for primary care doctors instead of a decrease.
5)The AMA was able to maintain its monopoly on billing codes which accounts for about $80 million/year.
Each year since the Balance Budget Act of 1997 which created the sustainable growth rate (SGR) payment method for physicians there was supposed to be a decrease in Medicare physician payments if physician billing costs increased to a greater extent than the overall economy. If in any given year Congress overrides the decrease it becomes cumulative for the succeeding year. Congress has prevented these decreases over the years so that the projected decrease this year was just over 21%. The AMA did not accomplish its major goal of a repeal of this formula because of the billions of dollars this would have added to the cost of health care reform. A temporary halt to the decrease was passed with the resolution of this issue still in doubt. More importantly, the Congress did not require the AMA to develop the tools needed for doctors to care for all Americans at a cost in line with that of other industrialized countries.
Hospitals hoped to come out about even from health care reform.

1)Hospitals gained by having many fewer non-paying patients when the bill is in full effect.
2)Many of these newly insured patients will be covered by Medicaid; therefore the hospitals will still lose money providing care to this population.
3)Hospitals also accepted a further decrease in Medicare payments of $155 billion over the next ten years; thus hospitals with mostly Medicare and Medicaid patients will face severe financial stress while those with mostly privately insured patients will prosper.

Hospitals could have created a physician and nurse mechanism to eliminate non-beneficial care thus saving Medicare and Medicaid substantial amounts, and then they would have been in a better position to argue for higher payments for appropriate care that would more than cover their costs.
Unions’ objective was to postpone or eliminate the proposed tax on Cadillac health insurance plans. In a deal with the White House this tax was postponed till 2018 to allow time for the unions to restructure their contracts with employers. The unions were not asked to develop a system to minimize non-beneficial care which would be in their interest as our excessive health care costs are a major reason why working families have not seen an increase in their standard of living. Our excessive health care cost, by decreasing the competitiveness of our goods in the world market, has also led to a decrease of good paying manufacturing jobs in this country.
The insurance industry was very active politically trying to make this law as friendly as possible to its interests. It received several benefits.

1)The industry successfully blocked a government run public option.
2)The industry gained 30 million new customers with government subsidies.
3)Beginning in 2014 insurers must provide a specified minimum of benefits for which they can charge more than for catastrophic insurance.

On the other hand there were several financial negatives for the insurance industry.

1)Insurance companies will no longer be able to deny coverage because of pre-existing
2)There will be no life time limits on the amount that can be paid.
3)There will be no waiting period before coverage will take effect.
4)There will be no, “rescission”, dropping coverage when adults become sick.
5)Profits on Medicare Advantage programs will be curtailed as payments will significantly
The lobbying activity directed to Congress was intense to ensure that these special interests groups protected their turf (2).

1)In 2009 total lobbying costs were $3.47 billion.
2)The health care sector accounted for $544 million.
3)The pharmaceutical industry spent $267 million, the largest lobbying effort ever spent by a single industry in one year.
4)The entire health industry spent $1.4 million /day.
5)In 2009 more than 3,300 lobbyists were working on health care, 6/Congressperson.
6)About 330 of these lobbyists were former Congressional staffers or a member of Congress.
7)Senator Max Baucus, chair of the Senate Finance Committee that crafted the bill, received $2 million for his reelection campaigns from the health sector over the past five years.
8)Other members of Senate Committee on Finance, Democrats and Republicans, also received large sums for their reelection campaigns.
9)In all the health industry contributed $27.6 million in campaign contributions to members of Congress in 2009 and early 2010.
10)In 2008 President Obama received campaign funds of $19.5 million from the health industry.
In summary the health reform bill, The Patient Protection and Affordable Care Act, is in reality a very expensive insurance law the crafters of which did not make the effort to try to understand the forces presently at work causing us to spend so much more per person than any other modern society. The proven amounts of non-beneficial care delivered in this country are truly staggering. Instead we have a bill that does meet the worthwhile goal of nearly universal coverage, but at a price our nation cannot afford.
(1) (accessed 8/2/2010)
(2) Tomasky M. The Money fighting health care reform. The New York Review of Books 2010; 57:1-8


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Anonymous said...

Are you related to Elliott S. Fisher, M.D., M.P.H. of Dartmouth?

Doctor Kenneth Fisher said...

I am not related to Dr. Elliott S. Fisher of Dartmouth University, thank you for asking. Kenneth A. Fisher, M.D.