Meet the Radical Technocrat Helping Democrats Sell Single-Payer

If anyone had doubts about the radical nature of Democrats’ health care agenda, they needn’t look further than the second name on the witness list for this Wednesday’s House Ways and Means Committee hearing on single-payer health care: Donald Berwick of the Institute for Healthcare Improvement.

If that name sounds familiar, it should. In summer 2010, right after Obamacare’s passage, President Obama gave Berwick a controversial recess appointment to head the Centers for Medicare and Medicaid Services (CMS). Democrats refused to consider Berwick’s nomination despite controlling 59 votes in the Senate at the time, and he had to resign as CMS administrator at the end of his recess appointment in late 2011.

Berwick’s History of Radical Writings

Even a cursory review of Berwick’s writings explains why Obama’s only option was to push him through with a recess appointment, and why Democrats refused to give Berwick so much as a nomination hearing. As someone who read just about everything he wrote until his nomination—thousands of pages of journal articles, books, and speeches—I know the radical nature of Berwick’s thinking all too well. He believes passionately in a society ruled by a technocratic elite, thinking that a core group of government planners can run the country’s health care system better than individual doctors and patients.

Here is what this doctor believes in, in his own words:

  • Socialized Medicine: “Cynics beware: I am romantic about the National Health Service; I love it. All I need to do to rediscover the romance is to look at health care in my own country.”
  • Control by Elites: “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.”
  • Wealth Redistribution: “Any health care funding plan that is just, equitable, civilized, and humane must—must—redistribute wealth from the richer among us to the poorer and less fortunate.”
  • Shutting Medical Facilities: “Reduce the total supply of high-technology medical and surgical care and consolidate high-technology services into regional and community-wide centers … Most metropolitan areas in the United States should reduce the number of centers engaging in cardiac surgery, high-risk obstetrics, neonatal intensive care, organ transplantation, tertiary cancer care, high-level trauma care, and high-technology imaging.”
  • End of Life Care: “Most people who have serious pain do not need advanced methods; they just need the morphine and counseling that have been available for centuries.”
  • Cost-Effectiveness Rationing of Care: “The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”
  • Doctors Putting “The System” over their Patients: “Doctors and other clinicians should be advocates for patients or the populations they service but should refrain from manipulating the system to obtain benefits for them to the substantial disadvantage of others.”
  • Standardized “Cookbook Medicine”: “I would place a commitment to excellence—standardization to the best-known method—above clinician autonomy as a rule for care.”

For those who want a fuller picture of Berwick’s views, in 2010-11 I compiled a nearly 30-page dossier featuring excerpts of his beliefs, based on my comprehensive review of his prior writings and speeches. That document is now available online here, and below.

Where’s the Political Accountability?

Some of Berwick’s greatest admiration is saved for Britain’s National Health Service on the grounds that it was ultimately politically accountable to patients. For instance, Berwick said his “rationing with our eyes open” quote was “distorted,” claiming that

Someone, like your health insurance company, is going to limit what you can get. That’s the way it’s set up. The government, unlike many private health insurance plans, is working in the daylight. That’s a strength.

When running for governor of Massachusetts in 2013, Berwick claimed he “regrets listening to White House orders to avoid reaching out to congressional Republicans.” But that doesn’t absolve the fact that Berwick went to great lengths to avoid the political accountability he previously claimed to embrace.

It also doesn’t answer the significant questions about why Obama waited until after Obamacare’s enactment to nominate Berwick—deliberately keeping the public in the dark about the radical nature of the person he wanted to administer vast swathes of the law.

Thankfully, however, Wednesday’s hearing provides a case of “better late than never.” Republicans will finally get a chance to ask Berwick about the extreme views expressed in his writings. They will also be able to raise questions about why Democrats decided to give him an official platform to talk about single payer (and who knows what else).

This post was originally published at The Federalist.

Single Payer’s Road to Rationing

The reintroduction of Democrats’ single-payer legislation has some families contemplating what total government control of the health-care sector would mean for them. Contrary to the rhetoric coming from liberals, some of the families most affected by a single-payer system want nothing to do with this brave new health care world.

As this father realizes, giving bureaucrats the power to deny access to health care could have devastating consequences for some of the most vulnerable Americans.

Determining the ‘Appropriate’ Use of Medical Resources

To summarize the Twitter thread: The father in question has a 12-year-old son with a rare and severe heart condition. Last week, the son received an implantable cardioverter defibrillator to help control cardiac function.

But because the defibrillator is expensive and cardiologists were implanting the device “off-label”—the device isn’t formally approved for use in children, because few children need such a device in the first place—the father feared that, under a single-payer system, future children in his son’s situation wouldn’t get access to the defibrillator needed to keep them alive.

The father has reason to worry. He cited a 2009 article written by Zeke Emanuel—brother of Rahm, and an advisor in the Obama administration during the debate on Obamacare—which included the following chart:

The chart illustrates the “age-based priority for receiving scarce medical interventions under the complete lives system”—the topic of Emanuel’s article. If a picture is worth a thousand words, then this chart sure speaks volumes.

Also consider some of Emanuel’s quotes from the same article, in which he articulates the principles behind the allocation of scarce medical resources:

Adolescents have received substantial education and parental care, investments that will be wasted without a complete life. Infants, by contrast, have not yet received these investments.
The complete lives system discriminates against older people….[However,] age, like income, is a ‘non-medical criterion’ inappropriate for allocation of medical resources.

If those quotes do not give one pause, consider another quote by Zeke Emanuel, this one from a 1996 work: “[Health care] services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia.” When that quote resurfaced during the debate on Obamacare in 2009, Emanuel attempted to claim he never advocated for this position—but he wrote the words nonetheless.

The Flaw in Centralized Decision-Making

The father in his Twitter thread hit on this very point. Medical device companies have not received Food and Drug Administration approval to implant defibrillators in children in part because so few children need them to begin with, making it difficult to compile the data necessary to prove the devices safe and effective in young people.

Likewise, most clinical trials have historically under-represented women and minorities. The more limited data make it difficult to determine whether a drug or device works better, worse, or the same for these important sub-populations. But if a one-size-fits-all system makes decisions based upon average circumstances, these under-represented groups could suffer.

To put it another way: A single-payer health care system could deny access to a drug or treatment deemed ineffective, based on the results of a clinical trial comprised largely of white males. The system may not even recognize that that same drug or treatment works well for African-American females, let alone adjust its policies in response to such evidence.

A ‘Difficult Democratic Conversation’

The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here….There is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place.

Some would argue that Obama’s mere suggestion of such a conversation hints at his obvious conclusion from it. Instead of having a “difficult democratic conversation” about ways for government bureaucrats deny patients care, such a conversation should center around not giving bureaucrats the right to do so in the first place.

This post was originally published at The Federalist.

Lowlights of Democrats’ New Single-Payer Bill

Some might think that, having embraced socialism and taking away the health coverage of millions of Americans, the Democratic Party couldn’t move further to the left. Think again.

House Democrats introduced their single-payer bill on Wednesday, and claimed that it’s a “significantly different” bill compared to versions introduced in prior Congresses. It definitely meets that definition—because, believe it or not, it’s gotten significantly worse.

What Remains

Abolition of Medicare—and Most Other Insurance Coverage: As I noted last year, the bill would still eliminate the current Medicare program, by prohibiting Title XVIII of the Social Security Act from paying for any service (Section 901(a)(1)(A)) and liquidating the current Medicare trust funds (Section 701(d)). Likewise, the bill would eliminate the existing insurance coverage of all but the 2.2 million who receive care from the Indian Health Service and the 9.3 million enrolled veterans receiving care from the Veterans Administration.

Taxpayer Funding of Abortion: As before, Section 701(b)(3) of the bill contains provisions prohibiting “any other provision of law…restricting the use of federal funds for any reproductive health service” from applying to the single-payer system. This language would put the single-payer system outside the scope of the Hyde Amendment, thereby permitting taxpayer funding for all abortions.

Lack of Accountability: As with the prior bill, the legislation would give massive amounts of power to bureaucrats within the Department of Health and Human Services (HHS). For instance, the legislation would establish new regional directors of the single-payer system—none of whom would be subject to Senate confirmation.

What Lawmakers Added

More Spending: Section 204 of the new bill federalizes the provision of long-term supports and services as part of the single-payer benefit package. Prior versions of the bill had retained those services as part of the Medicaid program, implemented by states with matching funds from the federal government.

In addition, the revised bill eliminated language in Section 202(b) of the Sanders legislation, which permitted co-payments for prescription drugs to encourage the use of generics. With the co-payments (capped at an annual maximum of $200 in the Sanders bill from last Congress) eliminated, the bill envisions the federal government providing all health services without cost-sharing. This change, coupled with the federalization of long-term supports and services, will result in increased spending—as more people demand “free” health care.

Faster Elimination of Private Coverage: Rather than envisioning a four-year transition to the single-payer system, the revised bill would eliminate all private health insurance within a two-year period. Over and above the myriad philosophical concerns associated with single-payer health care, this accelerated transition period raises obvious questions about whether the new system could get up and running so quickly. After all, Obamacare had an implementation period of nearly four years—yet healthcare.gov failed miserably during its initial launch phase.

In theory, moving away from a fee-for-service method of paying medical providers would eliminate their incentive to perform more procedures—a worthy goal. But in practice, global budgets could also lead to de facto rationing, as hospitals that exceed their budgets might have to stop providing care to patients—just as under-funding within Britain’s National Health Service (NHS) has led to chronic hospital overcrowding.

Compensation Caps: Section 611(b)(5) of the new bill would limit “compensation costs for any employee or any contractor or any subcontractor employee of an institutional provider receiving global budgets,” by applying existing pay restrictions on government contractors to hospitals and facilities in the single-payer program. These restrictions might lead some to wonder whether hospitals could truly be considered independent entities, or merely an arm of the state.

Effective Abolition of For-Profit Medicine: Section 614(a) of the revised bill states that “payments to providers…may not take into account…or be used by a provider for” marketing; “the profit or net revenue of the provider, or increasing the profit or net revenue of the provider;” any type of incentive payment—“including any value-based payment;” and political contributions prohibited by government contractors.

Liberals would argue that eliminating the profit motive will encourage doctors to provide better care, by focusing on patients rather than ways to enrich themselves. But the profit motive also encourages individuals to invest in health care—as opposed to other sectors of the economy—by allowing them to recover a return on their investment.

Effective Elimination of Patents: Section 616(c)(1) of the bill states that “if the manufacturer of a covered pharmaceutical, medical supply, medical technology, or medically necessary assistive equipment refuses to negotiation a reasonable price, the Secretary shall waive or void any government-granted exclusivities with respect to such drug or product,” and shall allow other companies to manufacture the product. By allowing the federal government to march in on a whim and seize a company’s intellectual property, the bill would discourage individuals from investing in such intellectual property in the first place.

“Reasonable” Prices and Rationing: As noted above, Section 616 of the bill requires HHS to determine when the prices of drugs and medical devices are “not reasonable,” by taking into account among other things “the therapeutic value of the drug or product, including cost-effectiveness and comparative effectiveness.” This provision could lead to the federal government denying patients access to drugs deemed too expensive, as occurs currently within Britain’s National Health Service.

This post was originally published at The Federalist.

What Is Government’s Role in Comparing Medical Treatments?

The personalized medicine initiative that President Barack Obama announced on Friday was previewed in the State of the Union address and is scheduled for inclusion in the budget to be released Monday. But in devoting federal funds to this, the administration may have made an argument against another type of medical research funded as part of Obamacare.

Section 6301 of the health-care law creates a Patient-Centered Outcomes Research Institute (PCORI), designed to study the comparative effectiveness of treatment options for diseases. Comparative effectiveness research has proven controversial for several reasons. The idea that the price of various treatments are taken into account, using cost metrics to determine coverage decisions for government health programs, raises the specter of rationed care.

But beyond the potential question of government rationing–and whether the restrictions included in Obamacare are sufficient–lies a more nuanced problem: As one administration scientist noted ahead of the president’s announcement on Friday, “Throughout history most medical treatments were designed for the average patient, meaning they can be very successful for some but not for others.” Comparative effectiveness research involves comparing the effects of treatment on average patients or average groups of patients; others may not benefit, or may even be harmed, by the average treatment or course of action.

The challenge for policymakers and medical professionals is how to respond to the growing personalization of medical treatments. In creating PCORI, Obamacare attempted to acknowledge this trend, noting that the institute should engage in “research and evidence synthesis that considers variations in patient subpopulations.” The president’s new initiative may make such research obsolete. It also raises a different question: When personalized medicine may turn patient “groups” into a subpopulation of one, what is the proper role for the federal government in comparing treatments?

This post was originally published at the Wall Street Journal Think Tank blog.

Pediatric Research Bill: Obamacare’s Road to Rationing?

A PDF of this Issue Brief is available on the Heritage Foundation website.

Later this month, the House of Representatives could consider legislation regarding pediatric research.[1] Legislation regarding this issue (H.R. 1724) was first introduced in April, and a new version of the bill (H.R. 2019) was introduced in May.

Although largely similar, H.R. 1724 would require the director of the National Institutes of Health (NIH) to provide a justification for any existing grants studying health economics, and would prohibit new grants until “a federal law has been enacted authorizing the National Institutes of Health to use funding specifically for health economics research.”[2] Press reports indicate that H.R. 2019 excludes the restrictions included in H.R. 1724 “in order to please Democrats who favor the research.”[3]

This is a mistake. The House should ensure that H.R. 1724’s proposed restrictions on health economics research remain in any NIH-related legislation that comes to the House floor. To do otherwise would provide tacit approval to Obamacare’s road to government-rationed health care.

Proposed Restriction a Necessary Protection

The provision omitted from H.R. 2019 would have instituted an important and necessary protection on taxpayer-funded research on cost-effectiveness in health care. In recent years, the federal government has funded numerous such studies. For instance, a June 2011 Government Accountability Office report examining projects funded by the “stimulus” highlighted NIH grants studying the cost-effectiveness of various medical treatments, including:

  • “A Comprehensive Model to Assess the Cost-Effectiveness of Patient Navigation,”
  • “Cost-Effectiveness of Hormonal Therapy for Clinically Localized Prostate Cancer;”
  • “Clinical and Cost-Effectiveness of Biologics in Rheumatoid Arthritis,” and
  • “Cost-Effectiveness of HIV-Related Mental Health Interventions.”[4]

Liberals Favor Cost-Effectiveness Research

Setting aside the wisdom of using taxpayer funds to examine the cost-effectiveness of various treatments, such research could eventually be used to deny patients access to certain kinds of care. Quotes from key policymakers reveal how some would use cost-effectiveness research as a way for government bureaucrats to block access to treatments that are deemed too costly:

  • Former Senator Tom Daschle (D–SD), President Obama’s first choice for Secretary of Health and Human Services, wrote in 2008 that “we won’t be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective. That means taking a harder look at the real costs and benefits of new drugs and procedures.”[5]
  • In a 2009 interview with The New York Times, President Obama argued that “the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.… There is going to have to be a very difficult democratic conversation that takes place.”[6]
  • Former Medicare Administrator Dr. Donald Berwick, in his infamous 2009 interview, strongly argued in favor of taxpayer-funded cost-effectiveness research when stating that “the decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”[7]

Lawmakers have already expressed their desire to use cost-effectiveness research to restrict access to certain treatments. A report prepared by the House Appropriations Committee in 2009, discussing “stimulus” funding for the types of projects highlighted above, noted that thanks to the research funding, “those items, procedures, and interventions that are most effective to prevent, control, and treat health conditions will be utilized, while those that are found to be less effective and in some cases more expensive will no longer be prescribed.”[8]

Road to Rationing

Although research comparing the relative merits and costs of medical treatments may sound appealing, past experience has demonstrated that such research can, and often is, used as a blunt tool by governments to restrict access to certain kinds of care. At a time when genetic advances have opened the door to personalized medical treatments, Obamacare has moved health policy in the opposite direction, expanding the federal bureaucracy in an attempt to micromanage the health care system.[9]

Imposing the restrictions on cost-effectiveness research included in H.R. 1724 would represent a good first step in restoring the balance between federal bureaucrats and patients.

 



[1]Daniel Newhauser, “Mindful of Previous Defeat, Cantor Pushes Bill to Increase Pediatric Research,” Roll Call, June 10, 2011, http://www.rollcall.com/news/mindful_of_previous_defeat_cantor_pushes_bill_to_increase_pediatric-225436-1.html?zkPrintable=true (accessed June 13, 2013).

[2]The Kids First Research Act of 2013, H.R. 1724, § 4.

[3]Newhauser, “Mindful of Previous Defeat.”

[4]U.S. Government Accountability Office, HHS Research Awards: Use of Recovery Act and Patient Protection and Affordable Care Act Funds for Comparative Effectiveness Research, GAO-11-712R, June 14, 2011, http://www.gao.gov/new.items/d11712r.pdf (accessed June 13, 2013).

[5]Tom Daschle, Scott Greenberger, and Jeanne Lambrew, Critical: What We Can Do about the Health Care Crisis (New York: Thomas Dunne Books, 2008), pp. 172–173.

[6]David Leonhardt, “After the Great Recession,” The New York Times, April 28, 2009, http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html (accessed June 13, 2013).

[7]Biotechnology Healthcare, “Rethinking Comparative Effectiveness Research,” June 2009, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2799075/pdf/bth06_2p035.pdf (accessed June 13, 2013).

[8]Helen Evans, “Comparative Effectiveness in Health Care Reform: Lessons from Abroad,” Heritage Foundation Backgrounder No. 2239, February 4, 2009, note 3, http://www.heritage.org/research/reports/2009/02/comparative-effectiveness-in-health-care-reform-lessons-from-abroad.

[9]Kathryn Nix, “Comparative Effectiveness Research Under Obamacare: A Slippery Slope to Health Care Rationing,” Heritage Foundation Backgrounder No. 2679, April 12, 2012, http://www.heritage.org/research/reports/2012/04/comparative-effectiveness-research-under-obamacare-a-slippery-slope-to-health-care-rationing.

Weekly Newsletter: November 12, 2008

Medicaid Bailout Once Again on Congressional Agenda

This Thursday, the House Energy and Commerce Committee will hold a Subcommittee hearing on various ways to “stimulate” the economy during the current downturn. Witnesses are expected to focus on both additional federal spending, in the form of an enhanced federal Medicaid match and higher funding for the National Institutes of Health, as ways to promote economic growth.

Some conservatives may be skeptical of the effectiveness of both approaches. An enhanced federal Medicaid match would merely substitute federal dollars for state spending, and provide a perverse disincentive for states not to undertake structural Medicaid reforms. Higher NIH funding would similarly lack any short-term “stimulative” effect, as long lead times to evaluate and conduct research trials would likely preclude any impact on economic growth for years. With some experts predicting the federal deficit this fiscal year could top $1 trillion, conservatives may question whether and why Congressional Democrats are attempting to enact all manner of increased federal spending under the guise of economic “stimulus.”

The RSC has prepared a new one-pager articulating 10 reasons why conservatives may oppose a Medicaid bailout for states; the document can be found here.

British U-Turn Illustrates Problems with Comparative Effectiveness

Last Tuesday, the British Department of Health announced a reversal of a ban on “top-up” payments within the National Health Service (NHS). Previously patients who wished to use their own money to purchase drugs not deemed cost-effective by the NHS needed to forfeit their right to basic NHS care. The Government’s reversal will allow patients purchasing their own therapies to maintain their right to NHS care under certain conditions. In addition, the report proposed to raise the National Institute on Clinical Effectiveness’ (NICE) cost-effectiveness threshold for certain drug therapies, potentially allowing British patients access to some cancer drugs which the NHS had previously refused to pay.

Conservatives may view both these developments as illustrative of the premise that comparative effectiveness research may not yield the potential savings its adherents claim. Practical political concerns, sparked by an outcry from the British public over rationed health care, prompted the Government’s reversal of measures designed to save NHS funds. Given that efforts to tie Medicare reimbursement and coverage decisions are likely to prompt the same response from the American public as it did in Britain, some conservatives may argue that market-based reforms to Medicare, rather than government-imposed rationing, would have a more beneficial and long-lasting effect at slowing the growth of health care costs.

The RSC has previously issued a Policy Brief analyzing comparative effectiveness research in greater detail; the document can be found here.

Weekly Newsletter: September 15, 2008

Medicaid: More Spending Does Not Equal Reform

Today, Health and Human Services Secretary Mike Leavitt will be addressing a conference on Medicaid reform in Washington. The symposium comes at a time when some want Congress to pass legislation (H.R. 5268) providing more than $10 billion in Medicaid spending to states as a way to “fix” the program’s problems. However, many conservatives may believe that policy-makers should not use additional spending as a way to shirk from their duties to reform what is often an outmoded model of care.

In the past few years, several states have embarked upon novel and innovative reforms to improve the quality of care provided in the Medicaid program. Most recently, Rhode Island submitted a waiver application to the Centers for Medicare and Medicaid Services (CMS), asking for flexibility to revamp its program. Notable elements of this reform proposal include:

  • Incentives to promote wellness and prevention, including consumer-directed accounts and Health Savings Accounts (HSAs);
  • A shift to home and community-based care instead of a traditional nursing home setting for elderly populations;
  • Incentives to purchase long-term care insurance, so as to eliminate the need for Medicaid long-term care financing;
  • Competitive bidding for durable medical equipment; and
  • A novel financing model that ensures that total Medicaid expenses will rise by up to 5% per year.

    Many conservatives may support these and other similar reform initiatives proposed by states, as one way to slow the growth of health care costs and thereby reduce America’s unsustainable entitlement spending. Moreover, some conservatives may believe that time on the legislative calendar debating a Medicaid bailout should instead be used to discuss these types of comprehensive structural reforms to the program—so that the poorest beneficiaries are not subjected to more of the same from a government health system that does not work for many.

    The RSC has prepared a one-pager highlighting the need for comprehensive Medicaid reform based on examples from several states; the document can be found here.

    Cautionary Tales from Across the Pond

    This past week, a British think-tank published a paper that spoke the heretofore unthinkable: the policy group Reform advocated replacing the single-payer National Health Service with a voucher-based private health system. Under the proposal, individuals would receive a £2,000 voucher to purchase private insurance—injecting competition into a health system previously dominated by government, and bringing with it the potential to slow the growth of costs while achieving better value through improved care.

    The Reform proposal comes on the heels of several disturbing developments regarding the National Health Service last month. One survey found that a quarter of cancer specialists are purposely keeping their patients “in the dark” about treatment options—in order to avoid upsetting those patients when they find out the NHS will not pay for their treatments. Several weeks earlier, the National Institute of Health and Clinical Excellence (NICE)—Britain’s comparative effectiveness institute—adopted a policy of refusing to pay for four kidney cancer drugs, even though the pharmaceuticals made “significant gains” in survival times, because NICE did not believe the drugs were cost-effective.

    Conservatives may not be surprised by any of these developments—as the rationing of care frequently leads to demands to reform or abolish the governmental bureaucracies that deny life-saving treatments to patients. Some conservatives may also believe that the type of changes advocated by Reform with respect to the National Health Service, if applied to Medicare, could allow seniors a wide range of options to receive their health care, while achieving cost-savings through competition that could slow the growth of skyrocketing health and entitlement costs.

    Read the BBC News article: “Doctors ‘Keep Cancer Drugs Quiet’”

    Article of Note: The Hospital-Industrial Complex

    An article in the Wall Street Journal last month revealed the continuance of a troubling trend: hospitals using their monopoly power to raise prices for consumers—helping to contribute to the growth in health care costs. Consolidations in recent decades—coupled with state certificate-of-need laws that provide government-sanctioned exclusivity in most states—have allowed regional hospitals to tighten their grip on many markets, and the Journal article tells the tale of Carilion Health System in southwest Virginia:

  • Colonoscopy prices four to 10 times higher than a local clinic;
  • Neck CT scans more than double the price of an imaging center;
  • A significant spike in regional health insurance premiums to the highest level in the state; and
  • Over $105 million in net income achieved by a non-profit hospital over the past five years.

One local businessman called the area a “one-market town…in terms of health care,” noting that the hospital “has the leverage”—and the article demonstrates that its impact on both physician practices and the insurance premiums paid by thousands of Virginians has been significant.

The piece comes at a time when the hospital industry is attempting to eradicate one of its few remaining sources of competition, by asking Congress to place a ban on the development of physician-owned specialty hospitals. Some conservatives may oppose this measure as a high-handed approach by Washington policy-makers to interfere with free markets, further solidifying existing hospitals’ monopolies, and stifling the type of innovation in health care that new entrants like specialty hospitals can create to slow the growth of health care costs.

Additionally, conservatives may note a letter from the Department of Health and Human Services’ Inspector General from this April, which publicly rebuked several hospital trade associations for making “several statements that misrepresent our findings and draw[ing] several conclusions that we did not make” in a white paper to Congressional policy-makers on the need for a specialty hospital ban. Some conservatives may therefore be highly skeptical of claims from self-interested parties exhibiting monopolistic tendencies, who have made deceptive and misleading statements to Congress to advance their claims—and apparently lack the integrity to apologize for doing so.

Read the article here: Wall Street Journal: “Non-profit Hospitals Flex Pricing Power

Weekly Newsletter: July 7, 2008

Medicare Votes Likely This Week

After returning from its Independence Day recess, Congress will once again return to debate legislation addressing physician reimbursement levels under Medicare. Because Senate Democrats objected to Republicans’ unanimous consent requests to pass a “clean” physician payment bill before the recess, physicians will take a 10% cut in their reimbursement levels unless and until Congress passes a retroactive fix. Additional Senate votes are likely later in the week on this issue.

While all parties agree on the need to address the physician reimbursement provisions, Senate Republicans have called for passage of bipartisan legislation that would forestall the significant cuts to Medicare Advantage plans made in House-passed legislation (H.R. 6331). Some conservatives may be concerned that the House-passed bill’s significant cuts to Medicare Advantage would have the effect of driving beneficiaries away from a privately-run model of health insurance that has provided enhanced benefits and choice for millions of seniors, especially the 2.2 million beneficiaries in private fee-for-service plans. Some conservatives may also believe that the short-term nature of current physician reimbursement extensions, coupled with their potential to become entwined in unrelated disputes and/or “held hostage” due to various political considerations, makes a powerful argument for more comprehensive reforms to Medicare, including a long-term solution to physician reimbursement policy.

While it is currently unclear whether Democrats will continue to block Republican attempts to pass noncontroversial physician payment legislation, or what precise form a more bipartisan bill designed to address the reimbursement provisions will take, the RSC will weigh in with conservative concerns and updates on H.R. 6331 and any other physician payment legislation which may be introduced or considered.

The Legislative Bulletin on H.R. 6331 can be found here.

There are additional RSC Policy Briefs on issues related to the Medicare bill: Physician Payments; Medicare Advantage; Bidding for Durable Medical Equipment; and the Medicare Trustees Report.

Article of Note: Report Finds Comparative Effectiveness Rationing Not So NICE

A report released in Great Britain last week on the occasion of the National Health Service’s (NHS’) 60th anniversary noted the need for reforms in the way the NHS administers care based on comparative effectiveness research. Health Minister Lord Darzi’s study admitted problems with the existing National Institute for Health and Clinical Excellence (NICE), established in 1999 to review the effectiveness of drugs and other therapies. Specifically, the report conceded that “it has sometimes taken too long for NICE appraisal guidance to be made available on newly licensed drugs” and that “there remains unexplained variation in the way local decisions are made on the funding of new drugs before the appraisal takes place.”

With the Congressional Budget Office (CBO) holding up the British establishment of NICE as one model way to achieve comparative effectiveness research in the United States, some conservatives may be concerned by the implications such an institute would present. At a time when the British government has admitted that NICE’s introduction has led to years-long delays in drug approval times and inherently arbitrary rationing of access to drugs from location to location, some conservatives may believe that such a heavy-handed—to say nothing of bureaucratically ineffective—role for government to play in American health care would be both counter-productive and inappropriate.

Read a summary of the clinical effectiveness provisions from BBC News here.

The RSC has prepared a Policy Brief on comparative effectiveness research, which can be found here.

Comparative Effectiveness Research

Background:  The debate about the growth of health care costs has in recent years begun to focus on disparities in health spending and treatment.  A recent Congressional Budget Office study demonstrated that regional spending on health care varies widely, yet improved care cannot be assumed by higher levels of expenditures.

Amidst rapidly growing health spending and inconsistent levels of care, policy-makers have begun to discuss the development of a research institute to study the comparative effectiveness of medical treatment programs, either by synthesizing and analyzing existing medical data or by conducting firsthand clinical trials to gauge treatments’ efficacy.  Advocates believe that such a center, by generating comprehensive data about the clinical and cost-effectiveness of courses of action for various diseases, could reduce health care cost growth by targeting patients with the most effective treatments and discouraging the use of costly but unproven medical techniques and methods.  While many stakeholders agree that such research should be undertaken, there is less agreement on the composition and funding of the entity that would be empowered to research clinical effectiveness options.

Legislative History:  Last July, the House passed—but the Senate has not considered—health legislation that included the creation of a comparative effectiveness institute.  Section 904 of the Children’s Health and Medicare Protection (CHAMP) Act (H.R. 3162) would create a “Center for Comparative Effectiveness Research” within the Department of Health and Human Services’ Agency for Healthcare Research and Quality (AHRQ).  The center would be tasked with researching “outcomes, effectiveness, and appropriateness of health care services and procedures in order to identify the manner in which diseases, disorders, and other health conditions can most effectively and appropriately be prevented, diagnosed, treated, and managed clinically.”

The Center would be financed through the establishment of a Health Care Comparative Effectiveness Research Trust Fund within the U.S. Treasury.  The Fund would receive transfers from the Medicare Trust Funds to finance the research program for fiscal years 2008-2010.  Beginning in fiscal year 2011, funding would continue to flow from the Medicare Trust Funds, but it would be supplemented by a new tax on healthcare insurance policies.  The tax would be imposed on most health insurance policies (except for workers’ compensation, tort liabilities, property, credit insurance, or Medicare supplemental coverage) at a per capita amount needed to generate $375 million annually, in conjunction with resources from the Medicare Trust Funds.  The Secretary of the HHS would determine the “fair share” per capita amount, but the bill’s provisions are expected to generate at least $2 billion over ten years.  While H.R. 3162 states that insurance carriers (or the sponsors of self-insured policies) will pay this new tax, it does not (and cannot) account for the fact that this tax will likely be passed along to consumers, raising premium costs and potentially increasing the number of Americans who cannot afford private health insurance.

H.R. 3162 would also draw down substantial funds from the Medicare Trust Funds over time, $300 million over the first three fiscal years and up to $90 million each fiscal year thereafter.  Medicare Part A (hospital services) is financed by payroll taxes, and according to the nonpartisan Medicare Trustees, it is scheduled for bankruptcy in 2019—thus committing its resources for additional research will further expedite its bankruptcy.  In addition, Medicare Part B (supplementary services) is financed in part from beneficiary premiums that rise as the cost of the program rises—thus tapping these funds for research amounts to a tax on every senior enrolled in Medicare Part B.

Future Outlook:  Because provisions unrelated to comparative effectiveness make action on the CHAMP Act unlikely in the Senate, lawmakers and various stakeholder groups continue to engage in discussions about the way to create a research institute.  Senate Finance Committee Chairman Max Baucus (D-MT) and Budget Committee Chairman Kent Conrad (D-ND) have discussed introducing stand-alone legislation on this topic; news reports indicate that their bill would fund a comparative effectiveness research institute solely from federal coffers, while House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) believes that a premium tax should help to fund the institute, so that private insurance carriers would have a financial stake in its work product.

With the current Medicare physician payment “fix” scheduled to expire June 30, and lawmakers on both sides of the aisle promising legislative action to address physician reimbursements, it is entirely possible that some form of comparative effectiveness center could be established as part of such legislation.

Implications of Comparative Effectiveness:  Apart from the concerns some conservatives may have regarding any new federal taxes to finance a comparative effectiveness institute, the research undertaken by such a center could well have significant repercussions for the role of the federal government in health care.  Any research undertaken would likely have an impact on the number and types of services covered by Medicare and Medicaid, as well as the treatment options and techniques utilized by physicians desiring reimbursement.  Congressional Budget Office Director Peter Orszag recently admitted that “the big kick” in savings associated with comparative effectiveness research would stem from insurers—and likely the federal government—implementing “changes in financial incentives tied to the research.”[1]  Although the CHAMP Act did not include provisions altering reimbursement levels to reflect comparative effectiveness research, or empowering the ostensibly non-partisan institute to do the same, such legislative measures would be a likely outcome from creation of an effectiveness center.

In addition, examples of comparative effectiveness institutes established overseas have raised concerns about whether such an approach would lead to delays in obtaining care and/or rationing of services.  In the United Kingdom, Sarah Anderson, an ophthalmologist working in Britain’s National Health Service (NHS), recently published an article criticizing the NHS for inhibiting access to care for her critically ill father.  Her father’s kidney tumor could be treated by a new drug—but while the pharmaceutical has been approved for use in Europe for two years, Britain’s National Institute for Clinical Effectiveness (NICE) will not complete its assessment of the drug’s usefulness until January.  Until then, local NHS branches can refuse to provide the drug, leaving Anderson’s family to pay for their father’s treatment on their own, or face the inevitable consequences that will follow if he cannot obtain it.  Anderson’s ultimate verdict on her family’s dilemma is a sobering one: “If Dad should lose his life to cancer, it would be devastating—but to lose his life to bureaucracy would be far, far worse.”

Some conservatives may find these overseas examples of the delays resulting from a publicly-run comparative effectiveness institute a cautionary tale for those who would establish a similar institute under the aegis of the federal government.  Conservatives may not only believe that such an approach would put bureaucrats, and not doctors and patients, at the center of medical policy, but would also result in the types of costly delays and care rationing that put lives at stake.

Conclusion:  While the goals of a comparative effectiveness institute are certainly commendable in an era of rapidly rising health spending, some conservatives may be concerned at both the means of financing an institute and its impact on the federal role in health care.  Although an institute voluntarily created and funded by private insurance or other groups could be useful, a public-private entity financed by premium taxes may only encourage lawmakers to enact additional legislative measures designed to micro-manage the doctor-patient relationship and expand an already considerable bureaucracy within the Centers for Medicare and Medicaid Services.  In short, some conservatives may be concerned that comparative effectiveness research done by the public sector could become a euphemism for government-rationed health care.

If the federal government wishes to slow the growth of Medicare spending, some conservatives might find a better solution in comprehensive Medicare reform that transforms the current program into a system similar to that under the Federal Employee Health Benefits Program (FEHBP), whereby beneficiaries would receive a defined contribution from Medicare to select a health plan of their own choosing.  These health plans could employ the results of comparative effectiveness research in their reimbursement policies, and consumers could use those criteria—as well as any “Consumer Reports”-type publications released by private entities—in evaluating both a health plan to purchase and treatment options for a particular medical condition.

 

[1] Quoted in Fawn Johnson, “Bills Pushed to Gauge Effectiveness of Medical Treatments,” CongressDaily 17 March 2008, available online at http://nationaljournal.com/pubs/congressdaily/dj080317.htm#5 (accessed March 18, 2008).

Weekly Newsletter: May 19, 2008

Democrats Advance Provisions to Expand SCHIP to Wealthier Families

This past week, Democrats in both the House and the Senate took actions to block guidance from the Administration that would keep the State Children’s Health Insurance Program (SCHIP) on mission. On Thursday, the House Energy and Commerce Health Subcommittee held a hearing on legislation (HR 5998) that would override guidance issued by the Centers for Medicare and Medicaid Services (CMS) last August. That guidance is intended to ensure first that individuals with private health insurance do not drop their coverage in order to join a government-funded program, and second that states target their SCHIP funds at the low-income families for whom the program was created before expanding their state health plans to cover children from wealthier families.

That same day, Sen. Frank Lautenberg (D-NJ) attached legislative provisions mirroring HR 5998 to the wartime supplemental appropriations measure. The provisions were attached along with language similar to a House bill (HR 5613) that would suspend several Medicaid anti-fraud regulations. Sen. Lautenberg’s home state of New Jersey—which extends government-funded health insurance to “low-income” families making over $70,000 for a family of four—is one that has taken legal action against CMS to block the SCHIP guidance.

Some conservatives may be troubled, but not surprised, by the Democrat attempts to ensure that states can expand their SCHIP programs up the income ladder—consistent with legislation that passed the House last year permitting “low-income” families with over $80,000 in income to be added to government rolls. Given that the Administration has clarified the guidance to ensure that no child need be dropped off the SCHIP rolls as a result of the CMS policy, many conservatives would support the Administration’s attempts to keep the SCHIP program targeted on the populations for whom it was created, and oppose Democrat efforts to override these reasonable limits.

An RSC Policy Brief on this issue can be found here.

Ways and Means Hearing Examines HSAs

Last week, the House Ways and Means Health Subcommittee held a hearing analyzing the growth of Health Savings Accounts (HSAs). The Subcommittee heard testimony from the CEO of Alegent Health, a Nebraska-based health system that has implemented consumer-driven health care for its employees.

Since embarking on a consumer-driven model in 2005, Alegent has provided free preventive care and other incentives for healthy behaviors, while increasing price and quality transparency for its employees and patients alike. The results have been impressive: 92% participation by employees in consumer-directed plans, with high contribution rates to HSAs from low-income employees, lower costs, and healthier workers.

Many conservatives may believe that Alegent Health represents a successful model of how the growth of HSAs and consumer-driven health care can reduce rising health care costs. By empowering employees to take control of their lifestyle and health decisions, HSAs can encourage healthy behaviors that will reverse the growth of chronic diseases such as those linked to obesity, while incentivizing workers to accumulate real and portable savings that can be used to pay for health expenses. Some conservatives may believe the testimony at the Ways and Means hearing provided a welcome example of HSAs’ effectiveness, and a reminder why Democrat attempts further to regulate this new form of health care should be viewed with significant caution.

An RSC Policy Brief providing background on HSA enrollment can be found here.

Article of Note: Rationed Care Kills

From the United Kingdom comes a story in the Daily Mail by Sarah Anderson, an ophthalmologist fighting twin battles: to save her father’s life and against Britain’s National Health Service. Her father’s kidney tumor could be treated by a new drug—but while the pharmaceutical has been approved for use in Europe for two years, Britain’s National Institute for Clinical Effectiveness (NICE) will not complete its assessment of the drug’s usefulness until January. Until then, local NHS branches can refuse to provide the drug, leaving Anderson’s family to pay for their father’s treatment on their own, or face the inevitable consequences that will follow if he cannot obtain it.

Some conservatives may be concerned by this story’s cautionary tale, particularly in the context of efforts by Democrats to establish a similar “comparative effectiveness” institute under the aegis of the federal government. Conservatives may not only believe that such an approach would put bureaucrats, and not doctors and patients, at the center of medical policy, but would also result in the types of costly delays and care rationing that put lives at stake.

Anderson’s ultimate verdict on her family’s dilemma is a sobering one with which many conservatives would agree: “If Dad should lose his life to cancer, it would be devastating—but to lose his life to bureaucracy would be far, far worse.”

Read the article here: “How the NHS Is Letting My Father Die