Three Reasons You Won’t Keep Your Doctor Under Single Payer

Over Fourth of July week, liberal activists took solace in the results of a poll that they said demonstrates the popularity of a single-payer health system. The survey showed diminished support for a “‘Medicare for All’ [system] if it diminished the role of private insurers.” However, support rose by nearly ten points if pollsters described single payer as a system that “diminished the role of private insurers but allowed you to keep your preferred doctor and hospital.”

Staff for Sen. Bernie Sanders (I-VT) claimed the survey showed single payer “is wildly popular when you tell people what it would actually do.” That claim misses the mark on several levels. First, most individuals wouldn’t consider a 55 percent approval rating—the level of support for a single-payer plan that allows patients to keep their doctors—as evidence of a “wildly popular,” as opposed to mildly popular, policy.

More fundamentally, though, single payer has precious little to do with keeping one’s doctor. For at least three reasons, many patients will lose access to their preferred physicians and hospitals under a single-payer system.

‘Free Care’ Means People Will Demand More

Second, the Sanders legislation would virtually eliminate medical cost-sharing—deductibles, co-payments, and the like. As a result, individuals who currently have health insurance would use more care once it becomes “free.”

In their analysis of single-payer legislation, both the Rand Corporation and the liberal Urban Institute have estimated that induced demand would result in capacity constraints for health care supply. In other words, so many more people would clamor for “free” care that the system would not have enough doctors or facilities to treat them.

More Work, Less Pay

As I noted last year, single-payer supporters operate under the fanciful premise that doctors and hospitals will perform more procedures for less money. Nearly three-quarters of hospitals already lose money on their Medicare patients—and single payer would extend those Medicare reimbursement rates to all patients nationwide. A study earlier this year in the Journal of the American Medical Association (JAMA) concluded that a single-payer system linked to Medicare payment levels would reduce hospitals’ revenue by $151 billion annually.

More Soul-Crushing Regulations

The federal government has already caused physicians countless hours of paperwork and grief. Thanks to requirements regarding electronic health records introduced in President Obama’s “stimulus,” an emergency room physician makes an average of 4,000 clicks in one shift. Rather than practicing their craft and healing patients, physicians have become button-clicking automatons, forced to respond to Washington’s every whim and demand.

The combination of more work, less pay, and added government intrusion under single payer could cause many physicians to leave the profession. For instance, the electronic records requirements caused my mother’s longtime physician to retire—he didn’t want to spend all his time staring at a computer screen (and who can blame him).

Some physicians could instead eschew the single-payer route, offering their services on a cash basis to wealthy patients who can afford to opt-out of the government system (provided the government will permit them to do so). Still other individuals may make alternative career plans, abandoning medicine even before they begin their formal training.

Here’s hoping that the American people never get an opportunity to discover the fanciful nature of Sanders’s promise that you can keep your doctor and hospital under single payer.

This post was originally published at The Federalist.

Inside the Federal Government’s Health IT Fiasco

Recent surveys of doctors show a sharp rise in frustrated physicians. One study last year analyzed a nearly 10 percentage point increase in burnout from 2011 to 2014, and laid much of the blame for the increase on a single culprit: Electronic health records. Physicians now spend more time staring at computer screens than connecting with patients, and find the drudgery soul-crushing.

What prompted the rise in screen fatigue and physician burnout? Why, government, of course. A recent Fortune magazine expose, titled “Death by 1,000 Clicks,” analyzed the history behind federal involvement in electronic records. The article reveals how electronic health records not only have not met their promise, but have led to numerous unintended and harmful consequences for American’s physicians, and the whole health care market.

Electronic Bridge to Nowhere

The Fortune story details all the ways health information technology doesn’t work:

  • Error-prone and glitch-laden systems;
  • Impromptu work-arounds created by individual physicians and hospitals make it tough to compare systems to each other;
  • An inability for one hospital’s system to interact with another’s—let alone deliver data and records directly to patients; and
  • A morass of information, presented in a non-user-friendly format, that users cannot easily access—potentially increasing errors.

The data behind the EHR debacle illustrate the problem vividly. Physicians spend nearly six hours per day on EHRs, compared to just over five hours of direct time with patients. A study concluding that emergency room physicians average 4,000 mouse clicks per shift, a number that virtually guarantees doctors will make data errors. Thousands of documented medication errors caused by EHRs, and at least one hundred deaths (likely more) from “alert fatigue” caused by electronic systems’ constant warnings.

Other anecdotes prove almost absurdly hysterical. The EHR that presents emergency room physicians 86 separate options to order Tylenol. The parody Twitter account that plays an EHR come to life: “I once saw a doctor make eye contact with a patient. This horror must stop.” The EHR system that warns physicians ordering painkillers for female patients about the dangers of prescribing ibuprofen to women while pregnant—even if the patient is 80 years old.

What caused all this chaos in the American health care market? One doctor explained his theory: “I have an iPhone and a computer and they work the way they’re supposed to work, and then we’re given these incredibly cumbersome and error-prone tools. This is something the government mandated” (emphasis added). Therein lies the problem.

Obama’s ‘Stimulus’ Spending Spree

In June 2011, when talking about infrastructure projects included in the 2009 “stimulus” legislation, President Obama famously admitted that “shovel-ready was not as shovel-ready as we expected.” Electronic health records, another concept included in the “stimulus,” ran into a very similar problem. Farzad Mostashari, who worked on health IT for the Obama administration from 2009-11, admitted to Fortune that creating a useful national records system was “utterly infeasible to get to in a short time frame.”

At the time, however, the Obama administration billeted electronic health records as the “magic bullet” that would practically eliminate medical errors, while also reducing health costs. Every government agency had its own “wish list” of things to include in EHR systems. Mostashari admitted this dynamic led to the typical bureaucratic problem of trying to do too much, too fast: “We had all the right ideas that were discussed and hashed out by the committee, but they were all of the right ideas” (emphasis original).

Meanwhile, records vendors saw dollar signs, and leapt at the business opportunity. As Fortune notes, many systems weren’t ready for prime time, but vendors didn’t focus on solving those types of inconsequential details:

[The] vendor community, then a scrappy $2 billion industry, griped at the litany of requirements but stood to gain so much from the government’s $36 billion injection that it jumped in line. As Rusty Frantz, CEO of EHR vendor NextGen Healthcare, put it: ‘The industry was like, ‘I’ve got this check dangling in front of me, and I have to check these boxes to get there, and so I’m going to do that.’’

The end result: Hospitals and doctors spent billions of dollars—because the government paid them to do so, and threatened to reduce their Medicare and Medicaid payments if they didn’t—to buy records systems that didn’t work well. These providers then became stuck with the systems once they purchased them, because of the systems’ cost, and because providers could not easily switch from one system to another.

David Blumenthal, who served as national coordinator for health IT under Obama, summed up the debacle accurately when he admitted that electronic health records “have not fulfilled their potential. I think few would argue they have.”

Electronic health records therefore provide an illustrative cautionary tale in which a government-imposed scheme spends billions of dollars but fails to live up to its hype, and alienates physicians and providers in the process. When the same thing happens under Democrats’ next proposed big-government health scheme—whether single payer, or some “moderate compromise” that only takes away half of Americans’ existing health coverage—don’t say you weren’t warned.

This post was originally published at The Federalist.

Weekly Newsletter: December 8, 2008

Obama Proposes Massive Government Spending on Health IT

This weekend, President-elect Obama proposed as one of the five components of an economic “stimulus” package new government spending to promote a health information technology infrastructure nationwide. While Saturday’s speech contained no specific dollar amounts or proposals related to health IT, his campaign platform previously committed to spending $50 billion over five years “to move the U.S. health care system to broad adoption of standards-based electronic health information systems.”

While supporting the more widespread adoption of health IT as one way better to manage care and control cost growth, some conservatives may be concerned by both the scale and timing of the Obama proposals. Conservatives may note that the federal government did not need to spend money to develop a nationwide network of ATM machines, for example, and question the need for the significant federal expenditure on health it—particularly if it comes with additional “strings attached” that would result in further federal intervention in the practice of medicine. Instead, some conservatives may support efforts to provide regulatory relief to physicians—including medical liability reform and changes to the “Stark” laws on physician self-referral—that would empower physicians in the private sector to finance their own health IT purchases without the need for more federal spending.

Some conservatives may also be concerned by the implications of the process outlined by the President-elect. Congress has spent many years considering health IT legislation without finding consensus on a way forward, but the timeline envisioned by the incoming Administration would see the years-long impasse brought to a conclusion within a matter of weeks. Conservatives may be concerned that such a rushed process may include provisions advanced by various liberal interest groups—including onerous privacy restrictions that impede efforts to coordinate care, a private right of action related to security breaches likely to breed costly lawsuits, and a patchwork of state and federal laws creating regulatory uncertainty for providers—that may only serve to raise costs and inhibit health IT adoption.

The RSC has released a Policy Brief outlining issues related to health IT implementation, which can be found here.

Baucus Wouldn’t Pay for Health Reform Until After Medicare’s Bankruptcy

Just before Thanksgiving, Senate Finance Committee Chairman Max Baucus (D-MT) spoke with reporters about the comprehensive health reform white paper he released earlier in November. Discussing the possibility floated by some Democrat leaders that Congress should waive pay-as-you-go
requirements for any comprehensive health care overhaul advanced in the 111th Congress, Baucus noted his expectation that such legislation would not be fully paid for in the short-term, but that after a decade “the bulk of the up-front investments will be offset by cost savings and reductions.”

Some conservatives may note an inconvenient truth associated with this statement: In one decade from now—by the time Sen. Baucus envisions actual cost savings from comprehensive reform—the Medicare Part A Trust Fund will be exhausted. The latest Medicare trustees’ report predicted an insolvency date for the Hospital Insurance Trust Fund of 2019—and that date could be moved forward if the current economic slowdown results in an expected decline in payroll tax receipts. If the cost savings from any comprehensive reform legislation will not materialize for a decade, as Sen. Baucus predicted, millions of seniors may face difficult health care choices when Medicare becomes insolvent.

Conservatives may therefore believe that, before even considering whether to expand government programs like the State Children’s Health Insurance Program (SCHIP) or create new health care entitlements, Congress should first work to preserve America’s current entitlements. Failure to do so could unleash a fiscal catastrophe that dwarfs the current economic turmoil, and jeopardize the health care of millions of seniors—not to mention America’s financial security.

Weekly Newsletter: November 17, 2008

  • Baucus’ Plan Exposes Democrat Hypocrisy…

    Last Wednesday, Senate Finance Committee Chairman Max Baucus (D-MT) issued a 98-page report outlining his proposals for reforming the health care system. Although his introduction stated that the platform “is not intended to be a legislative proposal,” Baucus did state his hope that the ideas raised would become a starting point for discussions on comprehensive health care reform during the 111th Congress.

    In reviewing the report’s contents, some conservatives may note several glaring contradictions present within its pages:

  • The Baucus plan proposes tens of billions in unfunded mandates on states—requiring Medicaid programs to cover 7.1 million new low-income individuals, and further requiring 33 states to expand their State Children’s Health Insurance Program (SCHIP) eligibility levels—at a time when Baucus and other Congressional Democrats allege that states’ “fiscal crises” require Congress to bail them out of their current obligations.
  • While expressing his support for cutting payments to private Medicare Advantage (MA), Baucus proposes to repeal a planned premium support project within Medicare, because he wants to bring payments to private insurers in line with traditional Medicare costs while opposing a link between Part B premiums and “how much [private] insurers’ costs differ from traditional Medicare.”
  • Senator Baucus, who at a health reform conference in June questioned Congress’ role in overseeing Medicare payments—“How in the world am I supposed to know what the proper reimbursement should be for a particular procedure?”—proposes numerous attempts to tie reimbursement to various actions by physicians (IT adoption, etc.) in the hope that these will achieve purportedly desirable health outcomes.

    …While Proposing More New Spending, Little Cost Control

    Many conservatives may also be concerned by the substance of the Baucus plan’s broader proposals. Similar in many respects to the less-detailed plan offered by President-elect Obama, the platform would expand the role of government in health care in significant, and historic, ways:

  • Expansion of Medicaid and SCHIP to millions of new individuals, as referenced above;
  • Health insurance subsidies for a family of four making $85,000 per year;
  • Repeal of the current five-year waiting period for legal aliens to become eligible for government benefits, increasing government spending on non-citizens;
  • Two new “temporary” entitlement programs, including a buy-in to the Medicare program for those aged 55-64, that many conservatives may be concerned will be anything but “temporary;”
  • A new publicly-run insurance option available to all citizens, whose low reimbursement rates would likely encourage providers to raise rates for private insurers, potentially leading to a “death spiral” of privately-provided coverage options;
  • A health insurance exchange representing another layer of regulation on the health insurance industry;
  • An individual mandate to purchase insurance, requiring the government to pass judgment on the adequacy of individuals’ coverage; and
  • Tax increases on businesses through a “pay-or-play” mandate that could in future years become an easy way for the government to pass off the cost of rising health care on the private sector.

    Just as worrisome to many conservatives are the lack of true cost-containment measures present in the Baucus proposal. Two of the plan’s prime savings targets—an expansion of the Medicaid drug rebate and one-sided cuts to Medicare Advantage plans—constitute little more than government-imposed price controls, which some conservatives may believe both ineffective and detrimental to new innovation.

    Some conservatives may believe that the true answer to reforming health care and slowing the growth of costs lies in harnessing innovation and competition. Implementing, rather than repealing, the Medicare premium support program would allow insurers to compete directly with Medicare to treat seniors in the most cost-effective manner. Additional means-testing for current entitlements would ensure that scarce government resources will go to those most in need of assistance—meaning that Warren Buffett and George Soros should not pay the same prescription drug premium as a senior making $20,000 per year. These efforts, coupled with initiatives to streamline costly state benefit mandates and other regulations, would expand coverage by slowing the growth of health costs, helping to ensure the future viability of our current entitlement programs.

Health Information Technology

Background:  Over the past several years, Congress and the Administration have focused on ways to improve the adoption of information technology as one way to foster reform within the health care system.  Advocates of health IT and electronic health records believe that their widespread adoption and use by practitioners could improve the quality of care and reduce the incidence of preventable medical errors, which kill up to 100,000 individuals annually.[1]  Some individuals also assert that health IT could generate significant savings within the health care system, though estimates vary and may be based in part on the systems changes that accompany IT adoption.

Legislative Proposals:  Although health IT legislation has been debated in previous Congresses, no proposal was enacted into law.  As a result, several pieces of legislation have been introduced or re-introduced in the 110th Congress.  In the House, the Energy and Commerce Committee approved on July 23, 2008 H.R. 6357, sponsored by Committee Chairman John Dingell (D-MI) and Ranking Member Joe Barton (R-TX).  The bill would codify the Office of the National Coordinator of Health Information Technology (ONCHIT)—previously established by Executive Order in April 2004—within the Department of Health and Human Services, set guidelines for the federal government and relevant stakeholders to develop health IT standards, and authorize grants for adoption of health technology, including electronic health records.  The bill also creates requirements for entities handling medical records to limit the circumstances under which records may be disclosed, and to notify patients in the event of an electronic data breach.

The Ways and Means Committee—which shares jurisdiction over Medicare with Energy and Commerce—is also expected to weigh in with legislative activity.  Ways and Means Health Subcommittee Ranking Member Dave Camp (R-MI) has introduced health IT legislation, H.R. 6179.  The bill would codify ONCHIT into statute, provide for a streamlined process for the promulgation of IT standards (including privacy standards), make permanent a regulatory exception promulgated by the Administration allowing hospitals to purchase IT software for physicians, and create new tax incentives for physicians to expense the cost necessary to implement a system of electronic health records.

In the Senate, the Health, Education, Labor, and Pensions Committee marked up S. 1693, sponsored by Chairman Ted Kennedy (D-MA), on June 27, 2007.  The bill is broadly similar to H.R. 6357, and includes provisions codifying ONCHIT’s role, authorizing grants for health IT promotion, and incorporating stricter privacy standards.  Press reports indicate that staff attempted to “hotline” the legislation before the August recess, but that objections from several offices precluded passage by unanimous consent.

Implications of Legislation:  While most policy-makers agree on the desirability of additional IT adoption by health practitioners, clarifying the federal role in such activity has proved more problematic.  As Congress considers potential legislative action to promote health IT, four key areas remain subject to controversy surrounding the federal government’s proper role.  These include:

Funding:  Several health IT bills—including both H.R. 6357 and S. 1693—authorize grants to promote interoperability among electronic health record systems and the adoption of health information technology.  H.R. 6357 authorizes $575 million over five years for grants to physicians, states, or local health-related entities to promote the effective use of IT, and an additional $20 million over two years for clinical education grants.   Similarly, S. 1693 authorizes $278 million over two years for grants to providers, states seeking to establish health IT loan programs, and the development of local or regional health IT plans, while including additional authorizations for clinical education grants and grants to promote telehealth services.  Some conservatives may question the need to authorize this additional new spending, and agree with the Administration’s position that market forces, not direct subsidies, are the most effective way to stimulate the growth of electronic health records and related technology.

Another approach discussed to promote the adoption of health IT focuses on adjustments to Medicare reimbursement rates—payment increases for adopters and/or payment reductions for non-adopters.  Such an approach was included in e-prescribing provisions attached to the latest Medicare physician payment legislation (P.L. 110-275).  Some conservatives may have both a specific and a general concern with this approach: first that any reimbursement adjustments be implemented in a budget-neutral manner, and second that any linkage between physician payment levels and health IT adoption could be perceived as a further attempt by the federal government to micro-manage the practice of medicine for physicians nationwide.

A third approach would utilize tax incentives—in the form of accelerated depreciation or increased deductions for the purchase of equipment related to electronic health records—as a means to spur greater health IT adoption.  While some conservatives may believe that tax expenditures constitute a more effective means of encouraging adoption of electronic health records than the direct government spending in the two examples above, others may question the necessity of federal involvement to promote health technology when other industries have adopted technological innovations much more quickly.

Some conservatives may believe that this central question—Why did it take only a few years to develop nationwide ATM networks, but decades to spur health IT adoption?—speaks to one of the fundamental drawbacks of the current health system: the distortionary effects of third-party payment.  While patients may be willing to pay for the benefits associated with an electronic health record, or the convenience of an e-mail consultation with a physician, many private insurance companies’ reimbursement and coverage decisions continue to follow the example of a Medicare program frequently slow to respond to changes in medical care.  Therefore, some conservatives may support initiatives like Health Savings Accounts as one way to minimize the effects of third-party payment and better align patient and physician incentives, improving the quality of care and thereby reducing the growth in costs.

Privacy:  Under current law, electronic health records, along with other paper-based health information, are regulated by standards promulgated pursuant to the Health Insurance Portability and Accountability Act (HIPAA, P.L. 104-191).  The law subjects “covered entities”—health plans, health clearinghouses, and providers who transmit any health information in electronic form—to a series of standards issued by the Department of Health and Human Services, commonly called the HIPAA Privacy Rule.[2]  In general, the Privacy Rule requires covered entities to obtain consent for the disclosure of protected health information—defined as health information that identifies the individual, or can reasonably be expected to identify the individual—except when related to “treatment, payment, or health care operations.”[3]  The regulations include several exceptions to the pre-disclosure consent requirement, including public health surveillance, activities related to law enforcement, scientific research, and serious threats to health and safety.[4]

In addition, current HIPAA regulations include a separate Security Rule, requiring covered entities and their business associates to safeguard protected health information held electronically.  The rule includes administrative, physical, and technical safeguards that covered entities must follow, and permits entities to contract with business associates to implement the regulatory requirements.[5]  Covered entities are not in compliance with the HIPAA Security Rule only if they become aware of “a pattern of an activity or practice” by the business associate in breach of its contract and the HIPAA security standards, yet fail to take remedial action.[6]

While supporting the desirability of personal medical information remaining private, some conservatives may also believe that privacy standards should not be implemented in a way that impedes the functioning of the health care system.  For instance, restrictions on “marketing” could be construed in such a way as to preclude pharmacists from e-mailing patient reminders to refill prescriptions, or consider cheaper generic drugs—both of which could be seen as unfortunate outcomes.  Similarly, requiring patient consent to utilize electronic health information for auditing purposes could be an invitation for patients to commit fraud, thereby encouraging criminal activity that raises costs for all individuals.

To the extent that Congress decides to incorporate a breach notification regime into health IT legislation, some conservatives may support setting clear standards for when notification is required, and safe harbor provisions for entities that act promptly to remedy any breaches that may occur.  Some conservatives may also support federal pre-emption with respect to breach notification provisions, so that covered entities will not be subjected to a patchwork of conflicting state laws.  In that same vein, some conservatives may be concerned by the implications of any attempt to introduce or expand a private right of action for individuals affected by security breaches that could serve as a breeding ground for costly litigation.

Physician Self-Referral:  One of the perceived impediments to wider health IT implementation lay in existing laws regarding physician self-referral.  In general, the so-called Stark law prohibits physicians who receive Medicare payments from referring their patients to entities with whom the physician has a financial relationship.[7]  While the statute contains a number of exceptions to the general prohibition, no portion of existing law would provide a safe harbor for a hospital or health system to donate health IT equipment to physician offices.

In response, the Centers for Medicare and Medicaid Services (CMS) in August 2006 published final regulations under which the Administration used its authority to create a “safe harbor” with respect to the Stark self-referral laws and health IT promotion; the same day, the Inspector General at the Department of Health and Human Services created a similar safe harbor with respect to the federal anti-kickback statute.[8]  Although the exception was intended to encourage the adoption of health IT by physicians and other providers without facing possible adverse legal actions, the regulations contain several potential drawbacks: the exception covers health IT software, but not hardware; requires a 15% payment by physician recipients; and, perhaps most importantly, expires in December 2013.

Some conservatives may support actions that expand the health IT exception created by the Administration to address its limitations and protect physicians from unnecessary regulations and/or legal action by CMS.  The self-referral exception created for electronic prescribing as mandated by Congress in the Medicare Modernization Act (P.L. 108-173) covered electronic hardware, providing little reason to qualify the exception with respect to electronic health records.  The required 15% payment by physician recipients appears contradictory to the exception’s purpose; a gift is either inappropriate or it isn’t—the size of any payment by a physician to the donor bears little semblance to the inherent nature of the relationship.  Finally, some conservatives may believe that eliminating the sunset date would provide important regulatory certainty for both physicians and the health IT community, rather than relying upon a future Administration and future Congresses to determine whether and how the self-referral exception should be extended.

Liability:  Unstated in most discussions about health information technology legislation is the impact which widespread health IT adoption may have on the current medical liability system.  Nevertheless, it may be reasonable to believe that the clarity afforded by electronic health records may have a measurable impact on tort claims—improved coordination of care may eliminate some medical errors before they occur, while the distinctions between frivolous and meritorious claims may become more clear.

Given this dynamic, some conservatives may support provisions in health IT legislation which create safe harbors for providers following accepted standards of care, as one potential way to minimize any increased costs associated with defensive medicine practices.  Additionally, some conservatives may view a health IT bill as a logical vehicle to attach liability reform provisions that reduce the number of frivolous lawsuits, allow for fair and reasonable compensation for individuals with legitimate claims, and encourage providers to utilize adverse events to improve the quality of future care.

Conclusion:  While health IT holds significant progress in terms of its ability to improve the quality of care and its potential to slow the growth in costs, its promise may rise or fall on the regime under which new technology is adopted.  If improperly implemented, costly new health IT mandates could spark senior physicians to take early retirement, depriving patients of well-trained and trusted providers.  Similarly, proposals that impose regulatory burdens that balkanize care in the name of privacy, while encouraging lawsuits against physicians and/or software providers, may well only inhibit the adoption of effective health IT and increase, rather than reduce, the growth of health costs.

Recognizing that the devil does indeed lie in the details, some conservatives may be cautious about assessing the implications of the final legislative product before supporting a health IT bill.  Specifically, while many conservatives may support legislation that reduces unnecessary regulations and avoids imposing new onerous burdens, bills that include significant increases in federal regulations and/or government spending may warrant stricter scrutiny.  Consistent with a belief that smaller government will allow private enterprise to thrive, conservatives may believe that a minimalist approach to health IT provides the best opportunity to allow the health system to create the innovative approaches to care that can slow the growth of costs.

 

[1] Institute of Medicine, To Err Is Human: Building a Safer Health System, summary available online at http://www.iom.edu/Object.File/Master/4/117/ToErr-8pager.pdf (accessed March 1, 2008).

[2] The definition of covered entity can be found at 42 U.S.C. 1320d-1(a); the HIPAA Privacy Rule can be found at 45 C.F.R. 160 and 164.

[3] Definitions of protected health information and individually identifiable health information can be found at 45 C.F.R. 160.103; permitted use for “treatment, payment, or health care operations” can be found at 45 C.F.R. 164.506.

[4] The full list can be found at 45 C.F.R. 164.512.

[5] The safeguards are found at 45 C.F.R. 164.308, 164.310, and 164.312, respectively.

[6] Language can be found at 45 C.F.R. 164.314(a)(1)(ii).

[7] The Stark law can be found at 42 U.S.C. 1395nn.

[8] The regulations can be found at http://www.cms.hhs.gov/PhysicianSelfReferral/Downloads/CMS-1303-F.pdf and http://oig.hhs.gov/authorities/docs/06/OIG%20E-Prescribing%20Final%20Rule%20080806.pdf, respectively (accessed August 25, 2008).

Weekly Newsletter: July 28, 2008

Tobacco Bill Coming Soon

This week the House could consider legislation (H.R. 1108) granting the Food and Drug Administration (FDA) the authority to regulate tobacco, possibly under suspension of the rules. The bill would establish a new center within FDA to regulate tobacco products and assess tobacco companies more than $5 billion in “user fees” over the next ten years to pay for this regulation.

Some conservatives may be concerned by the regulatory regime the bill would establish, which would require an agency charged with promoting food and drug safety to regulate a product inherently unsafe and unhealthy. Some conservatives may also object to the multiple layers of regulation the bill would create, by leaving intact the Federal Trade Commission’s ability to regulate tobacco advertising and distribution and providing only limited pre-emption against additional state-based regulations and restrictions. Some conservatives may question whether the highly prescriptive restrictions in the bill— including advertising limitations on the use of color advertising and regulation of the font size of tobacco disclaimer warnings, all of which raise significant constitutional questions about their free-speech implications—constitute good public policy, particularly as the Congressional Budget Office estimates that H.R. 1108 will reduce smoking levels by only 2% over 10 years.

Lastly, some conservatives may object to provisions in the bill that could prompt an international trade dispute. Last week, HHS Secretary Leavitt wrote to Energy and Commerce Committee Ranking Member Barton about H.R. 1108, observing that, because the bill prohibits all tobacco flavorings except menthol, foreign countries which manufacture clove or other flavored cigarettes may take action against the United States for providing unfair and disparate treatment for a particular type of manufactured cigarette. As press reports indicate that H.R. 1108 may be considered under suspension of the rules, some conservatives may be concerned by the lack of procedural opportunities available to address this disparity, such that the United States can live up to its obligations under international free-trade agreements.

A Policy Brief on H.R. 1108 (as reported by the Energy and Commerce Committee) can be found here.

Democrats Ignore Medicare Funding Warning

Last week Democrats responded to the Medicare trustees’ finding that the Medicare program faces significant future funding shortfalls—by resolving to ignore the problem. The resolution concerned a provision inserted into the Medicare Modernization Act at the behest of the RSC, which provided for the President to submit, and Congress to consider under expedited procedures, legislation to remedy Medicare’s funding problems when the program is projected to consume more than 45% of its funding from general revenues (as opposed to the Medicare payroll tax and beneficiary premiums). The Democrat majority’s action turned off this funding “trigger” for the balance of the 110th Congress, preventing those who believe in entitlement reform from taking action to force a House floor vote on Medicare reform legislation.

Many conservatives may be disappointed by the actions of Congressional Democrats, which prevented the President’s reasonable and modest proposals for Medicare reform—means testing that would make wealthier individuals like Warren Buffett and George Soros pay $2 per day more in Part D prescription drug premiums and liability reform to reduce the costs associated with defensive medicine practices— from receiving a vote in Congress. Many conservatives may believe that solving Medicare’s $86 trillion in unfunded obligations—and a Hospital Trust Fund scheduled to be exhausted in little more than a decade—will not be helped by Democrats’ apparent eagerness to ignore the problem. However, when Democrats like Florida’s Alcee Hastings note that “the perceived problem with Medicare funding has already been addressed,” many conservatives may be concerned that this lack of awareness will only hasten the day when Medicare’s funding shortfalls jeopardize the viability of the program—and wonder what policy-makers will tell their senior constituents when it does.

There are RSC Policy Briefs related to the Medicare trigger: Legislative Background; Talking Points on Trigger; Questions for House Democrats; Size of Medicare Program; White House Trigger Bill; Medicare Trustees Report

Article of Note: Fuzzy Math

Last Wednesday the New York Times reported on the many financial discrepancies surrounding the health care plan of Sen. Barack Obama (D-IL). While Sen. Obama has been consistent in saying that his health plan would save every American family $2,500 per year, many observers have come to question the factual basis for a “best guess” assertion by his advisers early last year. Independent estimates, including those by the Congressional Budget Office, have questioned whether the savings from such initiatives as health information technology and chronic care management will materialize, particularly in the four-year timeline Sen. Obama has promised—such that even a statement by Obama’s own advisers backtracked from any assertions that the purported savings would materialize by a date certain.

Many conservatives may be skeptical of Sen. Obama’s claims, particularly as the liberal Commonwealth Fund released a report in December with a menu of options for savings that would by their estimates achieve a total reduction in spending of only 6% in 10 years. Some conservatives may also be concerned that, in an attempt to reduce health care costs—whether by 8%, 6%, or some lesser amount— Sen. Obama would rely first and foremost on imposing price controls on physicians, pharmaceutical manufacturers, and insurance companies, along with rationing care through a government-controlled comparative effectiveness institute. Many conservatives may believe that such bureaucratic restrictions would in the long run prove far more effective at growing the size of government than slowing the growth of health care costs.

Read the article here: New York Times: “Health Plan from Obama Sparks Debate

Weekly Newsletter: June 2, 2008

Health Centers Bill Would Authorize Significant Spending Increase

This week, the House is expected to take up under suspension of the rules legislation (HR 1343) reauthorizing the community health center program. The bill authorizes $14 billion in spending over the next five fiscal years, subject to annual appropriations. In addition, the bill would expand the scope of an existing government program to extend federal liability protection to volunteer medical practitioners working at community health centers.

Some conservatives may be concerned that the amount of spending contemplated by this legislation—a 40% increase in funding over a bill the House passed in 2006—may be inappropriate as a matter of fiscal policy, and further should not be considered under expedited House procedures. Some conservatives may also be concerned that the legislation’s stated goal of doubling the number of patients treated at community health centers by 2015 may be used as a justification for further spending increases in future years. Lastly, some conservatives may be concerned with a proposed expansion of a federal liability program for health center workers that has its roots in the flaws of the current medical liability system. Some conservatives may instead champion the comprehensive liability reform that all medical practitioners—private and public, volunteer and paid—need in order to restore the integrity of the doctor-patient relationship and reduce the amount of harmful litigation.

The Outlook Ahead

As Congress returns from its Memorial Day recess, several health care items remain ripe for legislative activity in the coming weeks. Democrat leaders have advised that a final version of mental health parity legislation may be voted on by both chambers, and recent reports indicate that negotiations in the Senate on health IT may yield activity prior to the August recess. In addition, legislative provisions repealing Medicaid fiscal integrity regulations, providing incentives for states to expand the State Children’s Health Insurance Program (SCHIP) to wealthier families, and imposing restrictions on physician-owned specialty hospitals remain under consideration as part of the wartime supplemental appropriations measure. The RSC has weighed in with conservative concerns on several aspects of these proposals, and will continue to do so as the process moves forward.

However, the most prominent health debate will center on the scheduled July 1 reduction in Medicare physician reimbursements under the sustainable growth rate (SGR) mechanism, and any action Congress may take to forestall such reductions. In anticipation of the debate on the Medicare legislative package, the RSC has prepared two Policy Briefs providing background on comparative effectiveness research and the Medicare Advantage program.

Articles of Note: A Tale of Two States

Last Thursday’s Wall Street Journal contained two editorials on the diverging status of health insurance markets across the 50 states. One article highlighted several key reforms enacted by Gov. Charlie Crist (R-FL) and the legislature to reform Florida’s insurance market. With the legislation’s passage, Florida became the largest of a growing number of states that are permitting carriers to offer comprehensive, lowcost insurance policies free from onerous state benefit mandates. Supporters of the concept believe that such a reform could reduce health insurance premiums by permitting carriers to create innovative insurance products and consumers to buy the plan that most suits their needs—allowing, for instance, a 20-something single male to decline maternity coverage in exchange for a lower insurance rate.

Meanwhile, a Republican Assemblyman in New Jersey introduced legislation permitting Garden State residents to purchase health insurance policies offered in other states. The initiative closely resembles federal legislation (HR 4460) offered by Congressman John Shadegg (R-AZ), and would, like the Florida legislation, attempt to reduce health insurance premiums by circumventing costly state regulations and increasing the options for consumers to find affordable coverage. Such a proposal could have significant implications in New Jersey, where guaranteed issue regulations—which encourage individuals to wait to purchase health insurance until they become sick—have raised premiums to nearly twice the national average, pricing many younger New Jerseyans out of purchasing coverage.

Many conservatives may support both these efforts, and hope that the success of Florida’s experiment provides the incentive for New Jersey and other states to follow its lead. The Journal editorial notes that the plans created by the Florida measure are “not a cure-all,” but conservatives may believe that these and similar efforts to create a more consumer-friendly health care environment could play a significant role in reducing the growth of health care costs over time.

Read the articles here: “The Florida Revelation…
…And Escape from New Jersey