Baucus proposing Hillary-redux only worse; Coburn and others propose Republican plan

The Senate Finance Committee released three “policy options” papers, and accepted public comment very briefly.  The details, filling more than 150 pages single-spaced, were not conjured up de novo, but owe much to the briefing books of the Clinton Task Force on Health Care Reform.

We’ve seen the no administrative or judicial review feature before. It also fits in well with the concept of a federal health board, modeled on the Federal Reserve, promoted by Tom Daschle and others. This would apply to such critical items as the definition of “quality” and the method for calculating “value-based payments.”

The Health Fed’s “guidelines” would be backed up by enhanced fines—$10,000 per instance of “medically improper or unnecessary care” (AAPS News, June 2009, p 2).

The second paper outlines insurance reforms, including the establishment of Exchanges. One of their functions would be to decertify and remove health benefit plans that didn’t satisfy their criteria. Minimum benefits would be set, and would include mental health and substance abuse services. There would be no lifetime limits on coverage or annual limits on benefits, and no (or only nominal) cost sharing for “preventive” benefits.

The “public health insurance option” would, like Medicare, be administered by private carriers. Under approach #1, a “Medicare-like plan,” Medicare providers would be required to participate and would be paid Medicare rates plus 0-10%.

The “shared responsibility” section discusses the “personal responsibility coverage requirement” (individual mandate). Insurers as well as individuals would be required to report months of qualified health coverage to the Internal Revenue Service. The penalty would be a phased-in excise tax up to 75% of premiums, with exemptions for undocumented aliens, individuals whose lowest-cost option exceeded 10% of income, and some others.

A proposed “pay or play” employer requirement would include an excise tax based on gross receipts.

Because of evidence showing that the elderly are very price sensitive, and that a $10 copayment increase led to a 20% decrease in physician office visits, the plan would eliminate Medicare copayments for certain certified preventive services (and thus increase demand and expenditures).

The plan to reduce “health disparities” would standardize collection of data on ethnicity and primary language, and require more data on treatment of the disabled. Standards for culturally and linguistically appropriate health care services (CLAS) would be extended to private insurers in the Health Insurance Exchange.

Savings and revenue options are discussed in the third policy paper. Certain sectors (such as imaging and home health services) and geographic areas in which spending per beneficiary is above a certain threshold, are targeted for payment cuts. Assets such as automobiles and cash savings would be considered as well as income in determining beneficiary cost sharing or subsidy.

A very lucrative target for funding is the “tax expenditure” (exclusion from tax) of employer-provided benefits. The deductibility of medical expenses exceeding 7.5% of adjusted gross income, health savings accounts, flexible spending arrangements, and health reimbursement arrangements are also being scrutinized. Additional excise taxes, as on sugar-sweetened drinks, are being proposed.

The short summary is: more taxes, more mandates, more controls, more penalties.

A Republican alternative, the Patient’s Choice Act, is proposed by Sen. Tom Coburn, M.D. (R-OK), Sen. Richard Burr (R-NC), Rep. Paul Ryan (R-WI), and Rep. Devin Nunes (R-CA).

The bill would provide a refundable, advanceable tax credit to apply to the purchase of health insurance. It is not a net overall tax increase or decrease; it just redistributes the tax break (as to people who don’t pay income or payroll taxes) and puts an upper limit on it. John Goodman writes that the bill would cut the number of uninsured in half while remaining revenue neutral; in contrast, the Obama plan would require an increase of $1.5 trillion in spending over 15 years for the same reduction in the uninsured.

Congressman Ryan has posted frequently asked questions.

Under the Coburn plan, insurance Exchanges would be voluntary—but would require guaranteed issue. Purchase of insurance across state lines would be permitted—through interstate compacts and interstate pooling arrangements. Transparency is promised for both price and quality information, through a public-private partnership—a new bureaucracy called the Healthcare Services Commission.

Viewing the short and long summaries prepared by Sen. Coburn’s office, the intention is to put “health care decisions in the hands of patients.” As to why American medicine fails so many patients, Coburn says, “The answer begins and ends with government intervention.”

The plan does not have a “public plan” or individual or employer mandates. Unfortunately, it does laud the Massachusetts plan, and it includes a number of government interventions, including subsidies, “prioritizing,” defining metrics and benefits, and “realigning incentives.”

Additional information:

AAPS analysis of Baucus Call to Action Health Reform 2009.

8 thoughts on “Baucus proposing Hillary-redux only worse; Coburn and others propose Republican plan

  1. The book published by AAPS re: HSA’s is excellent and shoould be shared with our legislators. I found it very readable and an excellent solution to health care as opposed to health insurance. Many patients with health insurance have too much health “care”. Patients can get excellent health care by healthy habits and a fee for service physicians.

  2. The Bacus ‘Description of Policy Options’ starts with a lie. It says we are the only developed country that doesn’t guarantee health coverage for all its citizens. Actually no country does that, as we in the US define “health coverage.” Try getting renal dialysis at my age in Britain – you’ve got to pay for it yourself. At least in Texas, every county in the state is required to provide health care for their indigent population. It won’t be fancy and there will be waits involved, but it is mandated to be there. In any state in the union, any American citizen who has a health emergency can walk into any emergency room in the US and obtain care. The system is not so bad for the majority of Americans. This is a free country. One is free to put money aside to cover health care expenses or not. The problem is that many people don’t do so, or feel they can’t do so, because they have set their lifestyle high enough that they don’t have budget room. If one sets aside 10 percent for retirement, one should put twice that amount aside for health care. It doesn’t happen. Some will be able to purchase only a part of what is available, others to purchase more expensive tests and treatments. That is the American way. Some can afford a Saturn, some a Cadillac. Under the proposed plan, everyone is going to be forced to drive a Chevy. Socialism is not for our country, but we are in grave danger of having our elected representatives “approve” a socialist program.

  3. The lack of a national program for health care is a disgrace for America. Virtually every developed nation in the world (and many “third-world” nations) have managed to provide medical care, and the fact that the U.S. hasn’t is unfathomable.

    The current presence of insurance companies in health care is unacceptable. Insurance companies currently have a built-in and irresolvable conflict of interest. Insurance companies are really about loaning major money and profiting from the interest. Health care premiums are the revenue source for the money they loan out. So, they love premiums and hate benefits. For this reason they spend hundreds of millions of dollars on schemes to deny, delay, defer or reduce benefits. The fact that almost 39% of every health care dollar spent in the U.S. goes to insurance company “overhead” (magnificent headquarter structures, $55 million corporate jets, “golden parachutes” and other astonishing pay packages for executives, $250-500,000 conferences in exotic resorts, etc.) is unacceptable. Simply ridding ourselves of insurance companies in health care would increase the money available to provide medical services by this percent.

    It seems unlikely that this can be done, given the huge financial clout insurance companies have on Congress. Their lobbyists have attempted to remove the concept of “single payor” from the legislative agenda and almost succeeded. Apparently President Obama’s approach is to create a government-sponsored alternative, to establish competition in price and services to the insurance companies.

    We all know what it is like to deal with government bureaucrats, however. So no one in their right mind would want this alternative to be a classic government operation (the VA, Medicare/Medicaid, the IRS? – God help us.)
    So the only alternative is a quasi-governmental approach, such as the Daschle proposal modeled on the Federal Reserve system. However, if, like the Federal Reserve, it becomes a sinecure for industry insiders, who float in and out of the system and the banking/finance industry, the objectives will be sabotaged. So, as always, the “devil will be in the details”.

    Therefore, organized medicine (and individuals) must be very involved. The issues of guidelines, punishments, mandates, and all the other policy-wonk favorites, must be addressed and modulated. We cannot simply sit on the sidelines and moan and complain. The AMA appears to have an unholy alliance with insurers and big pharma, so we obviously cannot count on the AMA to do our work. AAPS, every state medical society, every professional specialty organization and many, many individual physicians must remain loud and involved about how this national program will be designed.

  4. A planning note to all physicians. If you have a contract with Medicare, you should at your earliest opportunity become a “non-participating” Medicare physician. By doing so, you gain the ability to resign from Medicare at any time, not just during a window at the end of a certain specified time period. If socialized care that includes even more draconian penalties than already exist should pass, you’ll want to be free immediately. You also gain the option of collecting a 7% higher fee AT THE TIME OF SERVICE and not accepting assignment (although you still are forced to submit a claim for the patient without being reimbursed for the service). Being non-participating has worked well for us and should improve cash flow for all physicians who have an office based practice and are not already defacto government employees (e.g. Nephrologists and others whose patient population is 90% percent Medicare).

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  7. GOP plan dictates less than Dems, but also messes.
    As Dr. Jane Orient said to the Clinton Task Force,
    “To reduce health care cost, get government OUT.”

    Prevention succeeds best when patients trust personal physician advice and accept group support (Wt. Watchers).
    I incorporated Health Inspiration in 1972. I know.

    Where have mandates ever helped anyone but the dictators? Messachusets?

    Interstate insurance could be good (Shaddegg).
    Mandates (rehab., massage, etc) cripple it.

    HSA choice in Medicare and Medicaid would bring thrift to primary care. Prefund a high deductible (with only health related requirement, as for IRS). Personal profit, no OPM.

    Deregulating hospitals would sober them. A Clinic could have profited with $3,000 from me for plugging in a new pacer ($7,000), instead of the $35,000 paid by Medicare for doing it with big setup for thoracic surgery .

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