From Medscape

Medical-liability reforms such as capping noneconomic damages and tightening the statute of limitation for filing a suit would trim $54 billion from the federal deficit over 10 years, largely by curbing defensive medicine, according to a report released Friday by the Congressional Budget Office (CBO).

Overall, tort reform would reduce the nation’s healthcare spending by 0.5%, the report stated. Forty percent of these savings would stem from lower malpractice insurance premiums for providers. The rest of the savings would result from lower use of healthcare services, as providers would order fewer tests and procedures intended simply to avoid a lawsuit.

The CBO estimate of tort reform’s potential to reduce the deficit is roughly 10 times greater than what it projected last December (a reduction of $54 billion instead of $5.6 billion). At that time, the agency said that evidence about the extent of defensive medicine — and how tort reform could reduce it — was murky. However, more recent research suggests that “lowering the cost of medical malpractice tends to reduce the use of health care services,” according to the latest CBO report.

Read the rest of the story

From the Wall Street Journal

In President Obama’s Washington, medical specialists are slightly more popular than the H1N1 virus. Compared to bread-and-butter primary care doctors, specialists cost more to train and make more use of expensive procedures and technology—and therefore cost the government more money. Even so, the quiet war Democrats are waging on specialists is astonishing.

From Senate Finance Chairman Max Baucus’s health-care bill to changes the Administration is pushing in Medicare, Democrats are systematically attacking specific medical fields like cardiology and oncology. With almost no scrutiny, they’re trying to engineer a “cheaper” system so that government can afford to buy health care for all—even if the price is fewer and less innovative ways of extending and improving lives.

Take a provision in the Baucus bill that would punish any physician whose “resource use” is considered too high. Beginning in 2015, Medicare would rank doctors against their peers based on how much they cost the program—and then automatically cut all payments by 5% to anyone who falls into the 90th percentile or above. In practice, this rule will only apply to specialists.

Read the rest of the column.

Contradictions worthy of the Marx Brothers

Posted from the Wall Street Journal

The thing about the bully pulpit is that Presidents can make the most fantastic claims and it takes days to sort the reality from the myths. So as a public service, let’s try to navigate the, er, remarkable Medicare discussion that President Obama delivered on Wednesday. It isn’t easy.

Mr. Obama began by depicting a crisis in the entitlement state, noting that “our health-care system is placing an unsustainable burden on taxpayers,” especially Medicare. Unless we find a way to cauterize this fiscal hemorrhage, “we will eventually be spending more on Medicare than every other government program combined. Put simply, our health-care program is our deficit problem. Nothing else even comes close.”

On this score he’s right. Medicare’s unfunded liability—the gap between revenues and promised benefits—is currently some $37 trillion over the next 75 years. Yet the President uses this insolvency as an argument to justify the creation of another health-care entitlement, this time for most everyone under age 65. It’s like a variation on the old Marx Brothers routine: “The soup is terrible and the portions are too small.”

As astonishing, Mr. Obama claimed he can finance universal health care without adding “one dime to the deficit, now or in the future, period,” in large part by pumping money out of Medicare. The $880 billion Senate plan he all but blessed this week would cut Medicare by as much as $500 billion, mainly by cutting what Mr. Obama called “waste and abuse.” Perhaps this is related to the “waste and abuse” that Congresses of both parties have targeted dozens of times without ever cutting it.

Read the rest of the column

Posted from the National Center for Policy Analysis

Since June 2009, President Obama has been losing the health care debate when the central contradiction of Obamacare was fatally exposed: from his first address to Congress, Obama insisted on the dire need for restructuring the health-care system because out-of-control costs were bankrupting the Treasury and wrecking the U.S. economy — yet the Democrats’ plans would make the problem worse, says Charles Krauthammer, of the Washington Post.

Accordingly, Democrats have trotted out various tax proposals to close the gap, all centered on prevention.   Prevention, Mr. Obama claims, will save lives and money.  Because it seems so intuitive, it has become conventional wisdom.  But like most conventional wisdom, it is wrong.  Overall, preventive care increases medical costs, says Krauthammer.

This inconvenient truth comes, once again, from the Congressional Budget Office (CBO):

• In an Aug. 7 letter to Rep. Nathan Deal (R-GA), CBO Director Doug Elmendorf writes: “researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness.”
• For the individual, catching something early generally reduces later spending for that condition; but, explains Elmendorf, we don’t know in advance which patients are going to develop costly illnesses.
• To avert one case, it’s usually necessary to provide preventive care to many patients and this costs society money that would not have been spent otherwise.

However, this doesn’t’ mean we shouldn’t be preventing illness.  But in medicine, as in life, there is no free lunch.  The idea that prevention is somehow intrinsically economically different from treatment is simply nonsense.

Prevention is not, as so widely advertised, healing on the cheap. It is not the magic bullet for health-care costs, concludes Krauthammer.

Source:  Charles Krauthammer, “Obama’s Great ‘Prevention’ Savings Myth,” Washington Poster/Human Events, August 14, 2009

Read the full column at:

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/13/AR2009081302898.html?hpid=opinionsbox1

Posted from Boston Globe

Massachusetts has the most expensive family health insurance premiums in the country, according to a new analysis that highlights the state’s challenge in trying to rein in medical costs after passage of a landmark 2006 law that mandated coverage for nearly everyone.

The report by the Commonwealth Fund, a nonprofit health care foundation, showed that the average family premium for plans offered by employers in Massachusetts was $13,788 in 2008, 40 percent higher than in 2003. Over the same period, premiums nationwide rose an average of 33 percent.

The report did not break out how much premiums have increased in Massachusetts since the 2006 changes went into effect, so it does not show whether the law affected the rate of price increases. Still, with the state’s law often cited as a model for a national health care overhaul, advocates on various sides of the issue said the report underscores the urgency of including cost controls in any large-scale federal or state overhaul.

“While expanding coverage was the logical first step in Massachusetts, cost control is equally as important,’’ said Andrew Dreyfus, an executive vice president at Blue Cross Blue Shield of Massachusetts, the state’s largest private insurer with 3 million members. “And if you don’t face the cost issue directly, then you can jeopardize the progress you’ve made in expanding coverage.’’

President Obama has championed a national health care overhaul that includes cost controls, as well as coverage expansion to nearly every American. But critics have questioned some of his administration’s projected savings, and his proposal for a public insurance plan to compete with private insurers is faltering in Congress.

In Massachusetts, brokering the 2006 overhaul was such a delicate and years-long undertaking that the disparate interest groups – insurers, businesses, consumers, hospital and doctors organizations – all agreed to first tackle health coverage expansion and leave the cost question for a later date.

Now, the Commonwealth Fund report projects that without significant cost reforms, an annual family premium in Massachusetts will soar to $26,730 by 2020.

While Massachusetts residents face the highest premiums in the country, the costs do not eat as big a hole in the typical family budget as in most other states, the report said. That’s because household income in Massachusetts is much higher than the national average. For middle class families that make too much to qualify for state insurance subsidies, however, the premiums can be a significant burden.

One of the first steps to control costs was taken last year, when the Legislature passed a sweeping bill sponsored by Senate President Therese Murray, Democrat of Plymouth. Among other provisions, it restricted some payments and gifts to doctors from pharmaceutical and medical device companies and created a commission to recommend changes in how providers are paid.

Last month, the commission suggested that private and public insurers scrap their method of paying doctors and hospitals negotiated fees for individual visits or procedures, and instead put providers on a “global budget,’’ paying a set amount intended to cover a patient’s medical care for an entire year.

The idea is so controversial and the suggested fix so time-consuming to achieve that the commission recommended phasing it in over five years.

But other efforts to control health spending are already moving ahead.

Blue Cross, for instance, is already signing up providers to participate in an insurance plan similar to the commission’s recommended “global budget,’’ and it now covers nearly 20 percent of its patients in health maintenance organizations.

Health Care for All, a Boston-based consumer group, is pushing interim steps that include reducing payments to hospitals for patients who have to be readmitted because of preventable complications.

“This report heightens the urgency of doing these short-term steps now,’’ said Health Care for All’s research director, Brian Rosman.

Another panel, created by the 2006 law, is poised to release a report in September that will probably detail specific interim measures that can be taken to rein in costs.

Anya Rader Wallack, a council member, said one of the big cost drivers in the state’s health insurance system is that Massachusetts residents like their big, brand-name hospitals, perhaps too much.

“We tend to use more academic medical centers, which are expensive and are, in general, more expensive than community hospitals or nonhospital settings,’’ Wallack said.

In many other states, she said, patients tend to have more medical tests and procedures done in nonhospital settings. She would not disclose the remedies being considered by her group, but the panel has posted price-comparison data for Massachusetts hospitals on its website.

Bottom line, said Dr. Marylou Buyse, president of the insurers’ trade group, the Massachusetts Association of Health Plans, is that the high cost of health insurance is not necessarily the insurer’s fault.

“The increase [in Massachusetts premiums] is attributed to an increase in charges by physicians and hospitals,’’ Buyse said, referring to a 2008 state report that tracked the trend from 2002 to 2006.

The Commonwealth Fund report concluded that a number of changes, including limits on insurance companies’ administrative costs and profits, as well as changes in the way doctors and hospitals are paid, could bring better-quality patient care and could reduce national costs by an average of 1 to 1.5 percentage points per year over the next decade. That translates to a savings of $2 trillion to $3 trillion nationally, the report said.

Posted from Investor Business Daily

By RUDY BOSCHWITZ AND TIM PENNY-  In considering whether to expand the government’s role in the delivery of health care or in health care insurance, it is worth looking at Medicare and Medicaid.

These two huge programs already make the government the largest player in the health care industry. The profligate nature of these two programs should raise lots of doubt about the Obama program doing anything but “busting” the budget.

In 1968 total spending by the federal government was $178.1 billion dollars. Forty years later in 2007, total spending had risen to $2,728.9 billion dollars. So the budget of the U.S. increased in dollar terms 15.3 times in that 40-year span.

But all programs did not rise in unison. Some rose more, others less.

Outlays for Social Security rose from $23.3 billion in 1968 to $581.4 billion in 2007, an increase of 25 times. So Social Security drove the budget higher at a substantially faster rate than the budget rose as a whole.

ObamaCare plans to expand the government’s role in insuring the American people. The government is already the largest insurer in the health care business through Medicare. We are now told ObamaCare will save money.

What kind of impact did Medicare, the first large government health insurance plan have in budgetary terms? Medicare rose from $5.1 billion in 1968 to $436.0 billion in 2007 an astounding increase of 85.5 times over the 40-year period. Will Obama-Care be better?

Beware of government estimates about the future cost of ObamaCare. When Medicare was being considered in the mid-1960s, the government projected that the outlays for the program 25 years down the road would be $10 billion. Instead, in 1990, 25 years later, the outlays were $107 billion. Government estimates were off by a factor of more than 10!

Medicaid, the other large medical program currently in effect, outdid Medicare. Medicaid outlays in 1968 were $1.8 billion. In 2007 they had risen to $190.6 billion, an increase in dollar terms of 105.9 times.

And that is only the Federal outlay number. There is a roughly equal Medicaid amount spent by the states due to federal mandates. Without those mandates we would not be reading about the large deficits that most states endure.

The idea of expanding the federal role in the medical arena is truly fiscally irresponsible. The claim that money will be saved through government competition with the private insurance system (with government setting the rules!) is the height of fantasy.

If 45 million Americans are now uninsured, that means 265 million are insured privately, and the government should not disrupt that. If the government becomes the insurer of most Americans, the impact on the budget would be absolutely awesome. Rationing of medical care that is so often mentioned would surely result.

Equally depressing are the estimates which say that even with ObamaCare, millions will remain uninsured.

Nor is government insurance so great. During Boschwitz’s 12 years as a U.S. senator, he never took government insurance. His wife continued working at the company they started. She continued the insurance available to all full-time employees. He was the dependent. It was both cheaper and more comprehensive coverage than the congressional plan. For the same reason, he never signed up for Medicare. He’s back on the company plan!

If in the 40-year span from 1968 through 2007 Social Security went up 25 times, Medicare 85.5 and Medicaid 105.9, why did the total federal budget increase overall only 15.3 times? What held the budget back?

It was largely defense. Defense outlays rose from $82.2 billion in 1968 (or 46.1% of the total budget) to $547.9 billion in 2007 (20.1% of the total budget). In dollars, that is an increase of a bit less than 6.7 times.

Yet on a recent talk show Rep. Barney Frank assured us that we can pay for these new medical programs by decreases in defense outlays and additional taxes on the “rich” — those with incomes exceeding $250,000, he explained.

Medicine over our lifetime has made extraordinary progress. New discoveries and advances continue to be announced almost weekly. Most — but not all — have occurred here in the U. S. where medicine has always attracted the best and the brightest.

The government has played a most significant role by funding research through the National Institute of Health to the tune presently of $30 billion annually. It is a proper role for government and among the best and most admired of programs that receives the broadest bipartisan support.

Will the best and brightest young people be attracted to a career run by government rules, regulations and financial dictates that may well frown upon individual initiative? Our fear is that they will not, and the extraordinary progress of medicine will slow.

That alone is reason enough to oppose the government’s further immersion into the field of medicine.

Boschwitz, a Repubican, served in the Senate from 1978 to 1991 and was a member of the Budget Committee throughout. Penny, a Democrat, served in the House from 1983 to 1995. Both are from Minnesota.

Posted from Washington Post

Congress’s chief budget analyst delivered a devastating assessment yesterday of the health-care proposals drafted by congressional Democrats, fueling an insurrection among fiscal conservatives in the House and pushing negotiators in the Senate to redouble efforts to draw up a new plan that more effectively restrains federal spending.

Under questioning by members of the Senate Budget Committee, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, said bills crafted by House leaders and the Senate health committee do not propose “the sort of fundamental changes” necessary to rein in the skyrocketing cost of government health programs, particularly Medicare. On the contrary, Elmendorf said, the measures would pile on an expensive new program to cover the uninsured.

Though President Obama and Democratic leaders have repeatedly pledged to alter the soaring trajectory — or cost curve — of federal health spending, the proposals so far would not meet that goal, Elmendorf said, noting, “The curve is being raised.” His remarks suggested that rather than averting a looming fiscal crisis, the measures could make the nation’s bleak budget outlook even worse.

Elmendorf’s blunt language startled lawmakers racing to meet Obama’s deadline for approving a bill by the August break. The CBO is the official arbiter of the cost of legislation. Fiscal conservatives in the House said Elmendorf’s testimony would galvanize the growing number of Democrats agitating for changes in the more than $1.2 trillion House bill, which aims to cover 97 percent of Americans by 2015.

A lot of Democrats want to see more savings, said Rep. Mike Ross (D-Ark.), who is leading an effort to amend the bill before next week’s vote in the Energy and Commerce Committee. “There’s no way they can pass this bill on the House floor. Not even close.”

Republicans also seized on Elmendorf’s remarks, with House Minority Leader John A. Boehner (R-Ohio) saying they prove “that one of the Democrats’ chief talking points is pure fiction.” Senate Minority Leader Mitch McConnell (R-Ky.) said Elmendorf’s testimony should serve as a “wake-up call” to Obama and Democratic leaders to heed requests from lawmakers in both parties to slow down the process.

Sen. Olympia Snowe (R-Maine) said she delivered that message directly to Obama at the White House yesterday, and strongly urged him to give up his August deadline so bipartisan negotiators in the Senate Finance Committee can craft a new reform plan that does more to control costs.

“I think it would be prudent for the president to be patient,” said Snowe, whom Obama is courting aggressively. Bipartisan approval of a finance bill “can provide huge impetus for the success of this legislation and achieving broader support as it goes through the legislative process.”

Talks in the Senate broke late yesterday, with plans to resume next week. Senate Finance Committee Chairman Max Baucus (D-Mont.) said the group is considering about a dozen options to cover the estimated $1 trillion cost of its package, including reductions in Medicare spending and additional tax increases.

Sen. Charles E. Grassley (R-Iowa), whose support could compel numerous GOP senators to take a serious look at the package, said he is “hoping” to embrace the final product. Otherwise, he said, “I wouldn’t be at the table.” After Elmendorf’s testimony, Grassley said Senate negotiators are determined to “overcome the shortcomings” of the House proposal.

The chairman of the Senate Budget Committee, Sen. Kent Conrad (D-N.D.), also has taken a leading role in the Finance Committee negotiations. Yesterday, when Elmendorf appeared before Conrad’s committee to testify about the nation’s long-term budget problems, Conrad focused his questions on the House and Senate committee measures, which were drafted without Republican input.

“I’m going to really put you on the spot,” Conrad said. “From what you have seen from the products of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?”

Elmendorf responded: “No, Mr. Chairman.” Although the House plan to cover the uninsured, for example, would add more than $1 trillion to federal health spending over the next decade, according to the CBO, it would trim about $500 billion from existing programs — increasing federal health spending overall.

Some provisions of the bill have the potential to trim spending further, Elmendorf said, but “the changes that we have looked at so far do not represent the sort of fundamental change, the order of magnitude that would be necessary, to offset the direct increase in federal health costs that would result from the insurance coverage proposals.”

Asked what provisions should be added, Elmendorf suggested changing the way Medicare reimburses providers to create incentives for reducing costs. He also suggested ending or limiting the tax-free treatment of employer-provided health benefits, calling it a federal “subsidy” that encourages spending on ever-more-expensive health packages.

Key senators, including Conrad, have been pressing to tax employer-provided benefits, but Senate leaders last week objected, saying that the idea, which Obama opposed on the campaign trail, does not have enough support to win passage. Yesterday, Baucus said White House opposition had hindered acceptance of the tax, which critics said would target police and firefighters who receive generous benefits packages.

Grassley said he urged Obama earlier this week to reconsider the tax, which the CBO has repeatedly identified as one of the best tools available for driving down long-term federal health spending. Obama said he could not do that, Grassley recalled. “Does he really want to bend the cost curve? He ought to be out in front on this issue and endorse it,” he said.

The benefits tax is also hugely unpopular in the House, which has instead proposed a surtax of as much as 5.4 percent on income exceeding $350,000 a year to pay for health reform. “You’re not going to get a tax on health benefits,” said Rep. George Miller (D-Calif.), chairman of the House Committee on Education and Labor.

But House Speaker Nancy Pelosi (D-Calif.) said she welcomes other efforts to improve the bill, including demands for additional savings.

“Can there be more? I think so,” Pelosi said. “And that is what the legislative process is about. You don’t write the whole bill, introduce it and then go to the floor. This is the time now for an open process of bipartisan review of the bill in the committees.”

Meanwhile, a growing number of physician groups are also objecting to the House package. Although the chief executive of the American Medical Association pledged yesterday to “help build support” for the legislation, as many as 20 state medical societies have drafted a letter to congressional leaders vowing to fight creation of a government-sponsored health insurance program that could compete with private firms.