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September 22, 2008

Washington Health Policy Week in Review Archive 1ffd38ae-cac5-4ad5-a0a0-7ac23b190b51

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Changing Medicare Payment to Help Improve Quality

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 16, 2008 -- Raising the Medicare reimbursement for primary care and having the program test the concept of a "medical home" for beneficiaries could help lead the way for major changes in the nation's health care system, experts told the Senate Finance Committee Tuesday.

Problems with the current health care system include a lack of care coordination, poor quality and high costs, witnesses said. Medicare Payment Advisory Commission (MedPAC) Chairman Mark E. Miller said the payment systems in Medicare's traditional fee-for-service program create separate payment "silos" that do not encourage care coordination.

"We must now move beyond those limitations—creating new payment systems that will encourage providers to change how they interact with each other," Miller said in testimony. "Providers need to increase care coordination and be jointly accountable for quality and resource use."

Panelists discussed the need to increase payments for primary care, stressing that the failure to do so is discouraging medical students from becoming primary care physicians, which they said is creating shortages of primary care doctors, family physicians, general internists, and general surgeons.

Payment disparities are encouraging medical students to enter the specialties of radiology, orthopedics, anesthesiology, and dermatology, "which in addition to being highly remunerative also support gentler lifestyles, usually without emergencies outside of regular work hours," said Robert A. Berenson, senior fellow at the Urban Institute.

Tuesday's session was part of an ongoing series the Finance panel has held to discuss the complicated issues involved in overhauling the nation's health care system. Previous sessions have focused on controlling health care costs, expanding access to care and improving quality.

Problems with the current health care payment system, which pays most often based on the number of services performed rather than on the quality of care delivered, causes patients to receive duplicative tests, "inadvisable prescriptions" and surgeries that cost thousands of dollars "only to be ignored when they leave the hospital," said Finance Chairman Max Baucus, D-Mont. Unnecessary and poor quality care costs wastes more than 30 cents of every health care dollar, or more than $600 billion a year, he said.

Glenn D. Steele Jr., president and CEO of Geisinger Health System, said its patient-centered medical home has reduced costs and improved medical quality. Staff "get to know the patients and their families, follow their care, help them get access to specialists and social services, follow them when they are admitted to a hospital, contact them to confirm that they are taking the appropriate medication dosages and are available for advice 24 hours a day."

Having the Medicare program broadly test the medical home idea, especially for beneficiaries with chronic conditions, would help assess if such programs would help reduce Medicare costs and provide better coordinated care, Miller said. Other payment changes MedPAC proposed in its June report to Congress include changing payments for hospital readmissions and bundling of payments for services around a hospital admission.

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Panelists Discuss Overhauling Medicaid to Cover Low-Income Adults

By Leah Nylen, CQ Staff

September 15, 2008 -- More than half of Americans without health insurance are low-income adults who do not qualify for Medicaid, and the entitlement program would need a significant overhaul if it were to cover that non-eligible group, according to experts at a health panel Monday.

Low-income adults who are ineligible for Medicaid make up a greater number of the uninsured than uninsured parents or children, according to a report recently released by the AARP Public Policy Institute. Of those low-income adults, nearly 80 percent are employed and U.S. citizens. Under current law, people who are eligible for Medicaid must be pregnant, disabled, currently caring for a dependent child, or over age 65. States can apply for a waiver to provide Medicaid coverage to uninsured adults, but the application process is cumbersome and the federal government does not offer any additional funding for coverage of adults, according to Stan Dorn, a research associate at the Urban Institute and author of the AARP report, which was discussed at the session sponsored by the Alliance for Health Reform.

The age groups that make up the majority of the low-income non-eligible class are young people 18-29 and the near elderly between 50 and 64, Dorn said.

"A lot of well-informed people think that as messed up as the health [system] is, at least the poor have Medicaid. But that's not the case," Dorn said. "If you don't fit into one of the categories, you can't get Medicaid no matter how poor you are."

Nearly half—46 percent—of Americans believe that providing coverage for the uninsured is the most important health care issue facing the next president, according to Gary Ferguson, a senior vice president with polling firm American Viewpoint.

When asked about various options for increasing health care coverage, 68 percent of those polled believe the federal government should expand Medicaid to cover more low-income Americans, said Ferguson, citing a February 2008 public opinion survey conducted by American Viewpoint for the Federation of American Hospitals.

Possible Approaches

If the federal government chose to expand Medicaid to low-income adults, three approaches emerge as the most viable, Dorn said.

Under the first, the federal government could keep the current process—where states must apply for a waiver to cover low-income adults—but lift the budget neutrality provision. This would potentially allow states a greater share of federal matching funds, Dorn said.

Barbara Coulter Edwards, a principal with Health Management Associates and former director of Ohio's Medicaid program, cautioned that such a proposal could put an additional financial burden on states, which already have been struggling to meet their commitments to Medicaid.

The big question is "whether or not states can commit to covering a large number of uninsured when they already are having problems meeting [expectations]," Edwards said. "States have to balance budgets . . . [and] Medicaid is countercyclical. When the economy is the worst, the demand is the greatest. In the last recession, several states began to back away from eligibility expansions they put in place because they had to balance their budgets."

A second option would be to eliminate the categorical eligibility requirements and simply base Medicaid eligibility on income level. However, panel members warned that this solution could lead to a loss of coverage for some groups that currently qualify, such as pregnant women.

Nina Owcharenko, a senior policy analyst with the Heritage Foundation's Center for Health Policy Studies, noted that for the past several years, Congress has tried to expand health care eligibility for uninsured children. Because of budgetary constraints, it probably would not be possible to expand health care for uninsured children and these low-income adults, she said.

"Policymakers will have to debate: do we want to expand coverage for childless adults or uninsured children and middle class families?" Owcharenko said. "The real challenge will emerge when [we begin] tackling those trade-offs."

The third approach would be to create a new Medicaid eligibility category for all adults with incomes below a certain level. The biggest advantage of this approach, Dorn said, would be that it would not remove coverage from anyone who is currently eligible. However, creating new categories would add more administrative work for states and could require more money.

Although the American Viewpoint poll showed Americans were concerned with the number of uninsured, Owcharenko noted that some people might be less inclined to support specific proposals if they required higher taxes.

"People are concerned with the amount of taxes they have to pay. You have to keep it in context," Owcharenko said. "How much [are] Americans willing to pay for certain reforms?"

Edwards also observed that states have begun to worry about the cost of maintaining Medicaid even in its current form.

"Sustaining Medicaid is going to compete with efforts to use Medicaid to expand to cover working uninsured populations," he said.

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Studies Analyze Costs, Impact of Obama, McCain Health Care Plans

By Shweta Jha, CQ Staff

September 16, 2008 -- Twenty million people will lose coverage provided through their employers under Sen. John McCain's health care plan, while Sen. Barack Obama's proposal will add $100 billion in new spending every year, according to two separate analyses published Tuesday in the journal Health Affairs.

The studies take aim at proposals they say will bring health insurance to the 47 million Americans who currently don't have any.

A key feature of McCain's health care plan is a shift away from employer-sponsored coverage. The Arizona Republican has proposed removing the tax exclusion for employees and instead providing a tax credit of $2,500 for individuals and $5,000 for families toward buying the private health insurance of their choice.

That move will result in 20 million Americans who lose their coverage, said the authors in their analysis of the effects of McCain's plan. In addition, a similar number of Americans would use the tax credits to buy cheaper but less-generous non-group coverage, resulting in about the same number of uninsured Americans, said researchers Thomas Buchmueller of the University of Michigan, Sherry Glied of Columbia University, Anne Royalty of Indiana University-Purdue University at Indianapolis, and Katherine Swartz of Harvard University.

"Studies suggest that many employers would be quick to drop health benefits in response to a major policy change, such as the McCain plan, that greatly altered the business case for offering benefits," the authors said. "These estimates account only for the price effect of eliminating the tax preference; they do not account for the number of low-wage workers who might lose employer-sponsored insurance when employers are no longer bound by the nondiscrimination rules, nor do they capture the impact of breaking up existing risk pools."

Ben Porritt, a spokesman for the McCain campaign, rejected the study's findings, calling it "a blatant attempt to pick and choose certain policies to meet a preconceived and biased notion.

"The McCain plan will offset rising insurance costs with a $5,000 tax credit while giving families their choice of coverage, including the opportunity to keep their employer coverage," Porritt said.

The proposal from Obama, D-Ill., is a mix of private and public coverage. It seeks to reduce the number of uninsured by imposing a mandate for employers to offer health insurance to their workers, or else pay a payroll tax that would help fund a new public program.

The mandate on employers is "a political expedient that conceals who actually pays for the required benefit," said authors Joseph Antos of the American Enterprise Institute, Gail Wilensky of Project Hope and Hanns Kuttner, formerly of the University of Michigan. Wilensky also is a volunteer McCain campaign adviser, according to a press release from Project Hope, which publishes Health Affairs.

"The play-or-pay mandate, which is meant to help workers who do not have insurance gain coverage, could instead undermine their chances for economic success," the authors said.

In addition, Obama's plan could cost approximately $100 billion annually, they said. The estimate is based on cost projections of a proposal released by The Commonwealth Fund that shares certain features with Obama's plan, including a mandate for employer-sponsored insurance.

Neera Tanden, domestic policy director for the Obama campaign, said the plan would only result in $50 billion to $65 billion in net new costs to the government.

She dismissed the study's findings, saying, "The Health Affairs study is an analysis of a plan that is not Sen. Obama's."

The Commonwealth Fund plan used in the study, she noted, "has an individual mandate and a premium cap, which increases the cost of the plan. Our plan is fiscally responsible, will not add to the deficit and lowers health costs for American families by $2,500."

Tanden added, "Under Sen. Obama's plan, the pay-or-play applies to large businesses, the majority of whom already provide coverage, and who recognize the need for shared responsibility, where everyone has a role to play to fix our broken system."

Separately on Tuesday, Commonwealth Fund President Karen Davis said the Obama health plan differs from the fund's plan in other ways. For example, she said, the Obama plan does not require adults to have insurance and it has not specified the level of income-related premium subsidies or income eligibility levels for Medicaid and the State Children's Health Insurance Program.

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Study: Ethnically Diverse Medical Schools Pay Cultural Dividends

By Phil Mattingly and Lydia Gensheimer, CQ Staff

September 15, 2008 -- Students who attend more ethnically diverse medical schools are better prepared to work with a diverse group of patients, according to a new study published in the Journal of the American Medical Association.

Led by Dr. Somnath Saha of the Portland VA Medical Center, a group of researchers defined diversity in the study based on the degree to which medical schools promote interaction between races and the total proportion of minority students at each school.

The researchers found that students who attended classes at the most racially diverse schools felt they were the most comfortable dealing with a diverse patient population after graduation. Researchers also found that the rate of students who felt comfortable increased when their school made a concerted effort to promote interracial interaction.

"We were trying to see—does diversity matter in the way that people speculate it does?" said Saha, who conducted the study. "And we found that it did. The diversity hypothesis did hold true."

Researchers found that 61 percent of students attending schools classified by the study as diverse felt they were prepared to handle diverse patient populations. Just under 54 percent of students from schools lacking diversity felt the same way.

Saha said students at more diverse schools also were more likely to view access to health care as a fundamental right.

"There was a question about whether all people are entitled to health care, and what we saw was that fewer than half of students nationwide strongly agreed with that statement," Saha said. "Students at more diverse schools, though, were more likely to believe that access to care was a fundamental right."

Saha said that in conducting the study, he and his colleagues were attempting to determine whether attention paid to race and ethnicity in admitting students to medical schools is justified.

"Race-conscious policies and programs have been used to achieve racial diversity, and particularly to increase the numbers of black, Latino, and Native American individuals who are underrepresented in the physician workforce," researchers write in the introduction of the study. "In recent years, however, these policies have come under increasing scrutiny as being unnecessary and discriminatory."

The study is prime evidence of the need for diversity in medical schools throughout the country, researchers argued.

"I think the study offers empirical evidence to support education policy perspectives that we've educated for a very long time about the importance of diversity," said Charles Terrell, chief diversity officer at the Association of American Medical Colleges, which administered the questionnaire used in the study. "I think it also continually supports the Supreme Court's advocacy for diversity."

The study was conducted from the compiled surveys of more than 20,000 graduating medical students from 118 medical schools over 2003 and 2004. Minority students were placed in two categories: those that are underrepresented in the field such as blacks, Native Indians, Mexican Americans, and Puerto Ricans, and those minorities that are well-represented, primarily Asians and Southeast Asians.

The study also excluded data from historically black and Puerto Rican medical schools due to the skewed diversity that occurs when minority groups comprise the majority of students.

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Study: Health Care Costs Consume Big Slice of Farmers' Income

By Ben Weyl, CQ Staff

September 17, 2008 -- At a time when food prices are on the rise, farmers across the country are finding cold comfort in their bounty: health care costs are drastically eating away at their income, leading many to financial hardship, according to a new report.

Even though the Agriculture Department estimates food prices have increased 5 percent to 6 percent in 2008—the largest annual jump since 1990—nearly a quarter of farmers surveyed, 23 percent, said health care costs contributed to financial problems for them and their families.

The 2007 Health Insurance Survey of Farmers and Ranchers produced by The Access Project and sponsored by the Robert Wood Johnson Foundation showed that farm families spent an average of 42 percent of their income on insurance premiums and out-of-pocket costs.

Though nine in 10 respondents had health insurance throughout the previous year, fully 44 percent spent more than 10 percent of their annual income on premiums and out-of-pocket costs, according to the report.

Farmers are hit hard in part because they often purchase health insurance from non-group plans, which are usually more expensive. People insured on the non-group market spent a median of $11,200 on premiums and out-of-pocket expenses; those who received insurance elsewhere paid half that, according to the report.

"Unaffordable health care costs saddle people with medical debt and threaten their long-term security by draining their savings and money set aside for retirement and other long-term needs," Bill Lottero, field director of The Access Project and a co-author of the report, said in a news release.

Indeed, 26 percent of those surveyed had to draw on resources to pay for health care. Of those, 65 percent spent some of their family savings and 10 percent withdrew from their retirement accounts; 22 percent incurred or increased credit card debt, according to the report.

"Not being able to pay medical bills affected my credit history, which affects everything else," answered one respondent to a survey question. "I wish that someone could offer health insurance that is not going to break the bank and still pay for office visits, prescriptions," said another.

With a new Congress and a new president likely to consider changes to the current health care system, the report's authors hope that those who will set policy use these findings to guide them.

"Farmers and ranchers, like millions of small-business owners, face serious obstacles paying for health care coverage that is both comprehensive and affordable," said Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, in a statement. "This study can help policy makers think about this as they consider health reform."

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Will the Ailing Economy Make the Case for Health Care Overhaul?

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 18, 2008 -- The nation's worsening economy creates even more pressure for Congress to pass sweeping changes to the U.S. health care system, House Democrats said Thursday.

"Now that we are experiencing an economic downturn, more people will be out of work and needing health care coverage," Rep. Edolphus Towns, D-N.Y., said as the House Energy and Commerce Health Subcommittee convened a hearing to discuss options for overhauling health care.

"Is it okay to let our families, friends and neighbors continue to fall through the cracks of our broken health care system or are we going to finally resolve ourselves to providing affordable, accessible and high quality health care to every American citizen?" asked Subcommittee Chairman Frank Pallone Jr. of New Jersey. "I think the answer is clear."

Witnesses offered the panel several ideas for change that have been heard many times before on Capitol Hill. Some analysts said free-market approaches, such as allowing health care insurance to be sold across state lines or wider use of health savings accounts, would help more Americans afford health insurance. Others said that expanding the federal health program Medicare, Medicaid and the State Children's Health Insurance Program (SCHIP) would be the best way to provide coverage to millions of Americans who do not now have health insurance.

Employers urged lawmakers to keep business in mind as Capitol Hill contemplates a health care overhaul. "The burden of providing health care coverage has created a tremendous competitive disadvantage to American employers," said E. J. Holland, Jr., senior vice president, human resources and communications, of Embarq Corp., a communications services company. "I can tell you that the current system harms American business as it struggles to say competitive with the rest of the world."

Energy and Commerce Committee Chairman John D. Dingell, D-Mich., said next year "there will be new opportunities for reform" not only because a new administration will be in office "but also because support for comprehensive reform has become widespread, and a diverse group of business and health industry leaders are now calling for change."

Separately Thursday, the Business Roundtable unveiled a health care plan the group said would expand make health insurance more affordable and ensure "a stable, secure public safety net." Elements of the plan include greater use of health information technology and providing consumers with more information about quality health care. An "open, all-inclusive market" for health insurance is another provision, as is a requirement that all Americans purchase insurance either from their employers or from the private market.

The American Medical Association (AMA) also on Thursday announced a new series of broadcast, print and online advertisements calling on Congress and the next president to work together to pass legislation that will help all Americans obtain health care coverage. Additional effort is needed, AMA members said, as the economy falters.

"Most privately insured Americans get health insurance through an employer, and their coverage is at risk as unemployment rises," said AMA president Nancy Nielsen. "The most common reason patients have become uninsured this year is because they or someone in their family lost their job."

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