Sunday, December 13, 2009

A liberal's reasons why current HCR must be rejected

As someone who identifies with the Democratic party I write this for anyone who is inclined to support the current Health Care Reform, but is having doubts.  

Any HCR law will, in fact, increase the number of people with health insurance cards, and as such, this particular group who were previously uninsured will have improved health care. So, it is in the interest of such individuals to support this legislation, irrespective of any adverse effects on other groups or society at large.  Yet, surprisingly, according to a recent poll, described in this essay.  
Even among those who presumably stand to benefit most from a major restructuring of the insurance market -- the nearly one in 5 adults without coverage -- there are doubts about the changes under consideration. Those without insurance are evenly divided on the question of whether their care would be better if the system were overhauled.

Beyond this, all the touted benefits are unproven, while the unintended consequences, actual societal harm can be illustrated.

Although there have been isolated serious news reports about the meaninglessness of increasing insurance for a limited provider base, that you can give out all the health insurance cards you want, but this does not manufacture a single health facility or provide a single new doctor, this has gotten no media traction.  There is no short term fix for this shortage, as expansion of human or material medical resources, doctors and hospitals, have lead times of a decade at the least.  Furthermore, since President Obama vows to finance this from within the Health Care System, if this promise were to be kept, there would be no additional money, per capita, for the health care system than we now have.

Provider shortages will be exacerbated by this bill

The difference is after HRC passes there will be more people vying for the same resources. This was expressed well in this article by the President of the San Diego County Medical Society

There is already a growing shortage of physicians, particularly in primary care, as primary care physicians are compensated less than specialists. It has become difficult to recruit physicians to San Diego County, despite its lifestyle benefits. Those physicians who continue to practice may try to see more patients, but that only goes so far without compromising quality. While physician extenders, such as nurse practitioners and physician assistants, provide beneficial services, they should complement, not replace, the knowledge and decision-making skills of the physician.

With greater demand and fewer physicians, wait times will increase. To add millions of the currently uninsured to the Medicaid rolls, as proposed by the House of Representatives, without having sufficient numbers of physicians to see them is not a realistic solution. Chronic underfunding of the Medicare and Medicaid systems threatens the viability of the safety net.

Costs are difficult to reduce, especially in this age of advanced diagnostic and interventional technologies, lifesaving but expensive drugs, and the desire and expectation of patients for immediate diagnosis and return to health.

This article Giving Primary Care More Respect from the N.Y.Times about the travails of being a primary physician included dozens of responses by those in or anticipating being in this field of medicine. Here's one comment from a physician that is illustrative:

In some surveys 45% of primary care doctors are extremely dissatisfied with their jobs and want to leave the field. If even 10 million of the quoted 37 million uninsured get insurance and start knocking on primary care physicians’ doors, no reimagining of a “medical home” will make care of those patients possible. We can’t even care adequately for the patients who have insurance now (the main reason ER’s are so overcrowded now). The dearth of primary care physicians was a decade in the making and won’t be easily improved

The Doctor Drought describes how  quality of care will decline as doctors will be replaced by nurse practitioners

It is clear that if we end up with an expensive health insurance expansion that tries to pay for itself by cutting hundreds of billions from Medicare and extending Medicaid while asking the states to pay for it, physician and hospital reimbursements will be cut drastically as a result. The only way doctors and hospitals will be able to stay in business will be by seeing more and more patients while providing fewer services. Nurse practitioners are cheaper (their average salary is $88,000, compared with nearly $150,000 for a primary care physician) and will be used to make up the difference. Doctors and hospitals will hire them to "farm" their patient populations.
Quality of care will diminish along with the availability of our latest technologies, which only specialists are trained to administer. I believe nurse practitioners are useful, but I also believe my four years of medical school and three years of residency count for something. If primary care doctors become extinct, so will the kind of care our patients are used to receiving.
This explains how it will be possible to increase the number of patients by a third-- by reducing the training and skills of those who diagnose the ill.   This could actually be a reasonable approach if it were part of a concerted plan that acknowledged that this will happen, and defined the responsibilities of the various levels of primary cafe givers.   But because denial of this expected change in skill level of primary care givers, how this will be achieved, who will gain and who will lose, is uncharted territory.

Unintended consequences of more demand on limited supply

Doctors and those in the Medical-Industrial Establishment will be among the big winners in this HCR, as they will have enough customers to refuse more of the lowest payers, those on Medicaid and Medicare. By the way, such de facto refusal occurs by simply lessening the slots for given category, assigning appointments so far in the future to be irrelevant to the existing medical exigency.

Pharmacy companies will do fine, as the manufacturing cost of most drugs is low, a fraction of the cost for those under patent, so they can lower prices ten percent and still make more on the greater volume of such drugs. Private insurers will also do fine, unless the removal of the preexisting condition restriction is not matched with universal mandate. Then the very best policies will soon attract the sickest people due to adverse selection, which will cause them to be eliminated.

Cynicism that this bill is actually designed for the benefit of the powerful members of the Medical Industrial complex was made stronger by not only the rejection of an amendment that would have lowered pharmaceutical costs, but that the vote was not even reported by most of the media, as I described in this essay.  In this example, the "suicide" of the Democrats would not be to the advantage of Republicans, or anyone else, since loss of faith in our system of government will harm us all.

Business Model of Health Insurance will not mean better Health Care

Most insurance has a straight line relationship between number of customers and expense. If life insurance were to be mandated, profit would only increase by the percentage of new clients, since there would be the same incidence of deaths which is the occasion for paying the principle of the insurance.

Health care is different. Payment is not on the occasion of disease or accident, but rather on actual medical care. If there is a shortage of providers, which is the actual case, a large influx of new clients will not be reflected in commensurate expenses. If doctors or hospitals are not available, or if appointments are so far in the future so that effective therapy is useless, the expense will be lower, as care will be reduced for all. Links to articles on such increasing shortages even in the absence of this expansion are in the section on Supply and demand and in reference section.

HCR exemplified by the 1900 pages of complex law in the HR 3962, with dozens of sections each with detailed references to existing law and other clauses in the bill. This makes it all but indecipherable to even those who study and report on it's details. The one group who understands each clause intimately are the special interests that are ostensibly being controlled by the language, and they have the clout to ensure that they the law will not affect their bottom line, and the controls will be ineffective. This was illustrated in this article from the Washington Post, Health insurers could bypass some key reforms.

It took two weeks after passage of the bill in the house and probably months after this was written for a reporter to see the actual defects of this single complex section. With 1900 pages in the house bill, and a new bill written with major imput by special interests in the conference committee, we can only imagine how the final bill will be distorted to de-fang purported controls on industry. And this final bill will be voted on by both houses in a matter of days, with no time for the actual shortfalls to be even discovered, much less made open for public debate.

And it took more than three weeks after the Senate bill had been submitted for this simple contridiction to be noted by the press.  Annual Insurance Caps were no Loophole

This is complex legislation, and rushing this through in days after a major revision subverts democratic principles.

ERISA and its malignant effects 

this is the one area in this log that I have not personally researched, it is based on this dailykos essay.

Why do insurance companies act the way they do?
Because they can.
The vast majority of people who have health insurance, nine out of ten according to the WSJ, get that coverage through their employment.  Therein lies the problem.  The federal law which governs employment based-coverage (including life and disability as well as health insurance) – the Employee Retirement Income Security Act (ERISA) – not only fails to prohibit bad behavior by insurance companies, it affirmatively encourages it.
It appears that nothing in either house of congress current proposals will change the above.

Boutique Practice--when increased demand meets fixed supply prices go up

One method doctors can dramatically raise their fees in by switching to boutique, or retainer practice in more wealthy areas. I describe in this diary how they can cut the number of patients, predominantly the poorer ones, while focusing on those who can pay an upfront fee, $2000-$5000 per year for more extensive service. This will also included facilitated visits to specialists, all paid by medicare, and perhaps some other benefits that the rich can provide. This the concept of universal equal care for all seniors will be subverted....even faster than it is now.

It's as though when we went to war in 1941, we didn't bother to issue ration stamps or impose price controls. This HCR is the embodiment of Joseph Hellers brilliant "Catch 22" It reflects a world where the public can be deluded by a health insurance card with a phone number that is not connected to actual health care structures, since the law that provided the cards never considered the laws of human nature.

Every analysis of this bill that I know of makes the erroneous assumption health care providers will not actively resist attempts to reduce their income. The "scoring" of these bills are static analyses that would only apply in a police state, and even then would be defeated by black markets.

Only the report by the Chief Actuary of Medicare, that I write about extensively in this essay, confirms that active resistance to lowering re-embursement is to be expected, with the effect of higher prices and shortages of service.

There are other ways to conceptualize aggregate quality of a nation's health care. There is quality of medical engagement, average cost per appointment or access delay to physicians or hospitals. These will probable remain the same or get worse, on average, for reasons described below.

"Mandates"  one word for two different issues.
This N.Y. Times article, describes the two distinct issues both, confusingly enough using the same term. The first mandate is the requirement that individuals purchase insurance:

The proposals now before Congress would require just about everyone to buy health insurance or to get it through their employers — which would generally result in lower wages. In other words, millions of people would be compelled to spend lots of money on something they previously did not want, at least not at prevailing prices.

This relationship between the need to pair subscription with coverage, either everyone is forced to buy a policy or you can't have universal coverage, was so clear that Paul Krugman castigated candidate Obama for fudging on this. In fact he felt strongly enough to support Hillary Clinton for being honest about the need for such universal requirement to purchase insurance. But Krugman, Academic credentials and Nobel Prize not withstanding, has wavered, becoming more a partisan democrat then the economist.

This proposal for mandates to buy insurance. is naturally onerous and resented by most Americans. So over time the Democratic majority has watered down this requirement. It had been a firm mandate, backed up by criminal penalties, but this did not poll well. So in a bit of partisan flim flam this was gutted, by having the same bill that had been proposed and rejected by Republicans in the Senate Finance Committee reintroduced by Democrat Charles Schumer. It was then accepted by Democrats thus passing almost unanimously. Even Professor Paul Krugman criticized this, but oh so gently, as I described here.

Other "Mandate" issue, what must be included in every health policy, This is usually determined by political clout rather than scientific principles. The insurance policies that will be mandated (1st usage) to be purchased by every individual, and subsidized by the taxes of all Americans is a complex packages of services. A portion of these are based on scientific verification of efficacy, that part of MDs actions that are verified by "evidence based" principles. The rest is the grab bag of traditional doctor's practice, including demands of patients for such things as useless antibiotics for colds, or the hand-holding placebo function of physicians, which certain people enjoy and others would prefer to get by speaking to their minister, family or the guys at the bar.

More about such provision mandates from the Times article:

A further problem is “mandate creep,” which we’ve seen at the state level, as groups lobby for various types of coverage — whether for acupuncture, alcoholism and fertility treatments, for example, or for chiropractor services or marriage counseling.

There are now about 1,500 insurance mandates among the various states, and hundreds of others are under consideration. The dynamic at work here is that the affected groups have a big incentive to push for mandates, while most other people are unaware of the specific issues and don’t become involved.

Because mandates don’t stay modest for long, health insurance would become all the more expensive. The Obama administration’s cost estimates haven’t considered these longer-run “political economy” issues.

So under this HCR law we will all have to pay for insurance, our own and those whom we subsidize, that include unproven practices mentioned above, but exclude abortions and dental care---something that those who must buy these policies will now find even less affordable. Every mandate is a choice, that had been made by the individual, but now is made by the government for every citizen. Every mandate increases the price of insurance, which means that since there will be a requirement that everyone purchase this, it has the effect of lessening the ability of the every American to have resources to purchase that which is not mandated.

By not mandating Abortion, and going further and according to the house bill having an Negative Mandate, a proscription for this service, it will deny a given number of women the right to an abortion by diverting funds that could have been available to purchase insurance. The post HCR policy will have other services, such as marriage counseling, which is a cruel joke to the pregnant unmarried woman who does not want to carry her fetus to term.

Such mandates will only grow even more under the federal government, which, unlike states, have the authority to "print money" to cover its excesses, thus keeping insurance rates low....right up until the harm to our fiscal integrity reaches the point of no return. In the name of prevention of individual disease, we court economic catastrophe, a national disease, we won't recognize until irreversible economic collapse.

Increase in income levels for subsidies-societal effects

To the best of my knowledge has not been discussed in any media before this diary on November 2. This HCR law represent a hidden expansion of those who will become recipients of government benefits based on annual income, by including subsidies for those earning up to three times the poverty rate, around $88,000 for a family of four. This will increase the value of unreported income, currently estimated in this report at over 2 trillion annually. This means a family who earns 90K a year of reportable income will end up subsidizing those millions who may earn even more if a portion is unreported, as it the case for many small service providers.

Every government program is predicated on widespread acceptance of the legitimacy of our ability to fund programs, otherwise known as taxation. The ultra wealthy can afford the best tax lawyers to skirt the regulations, but for 99% of the population it is just another injustice that is accepted. Under this law, insurance subsidies will extend to those families earning up to $88,000, making the temptation to convert earnings to "off the books" that much greater. That swath of earners, too rich for subsidies and too poor for "creative" tax lawyers, will be the ones to pay, and to become even more antagonistic to government in general.

This legislation will have the effect of creating a line between those who are taxed for subsidies and those who receive it where before there had been a socio-economic gap. (subsidies will be provided for families making $88,000 a year) The middle class were willing to be taxed for those on Medicaid since they were those who, through unknown but perhaps innocent bad luck, were worthy of sympathy. This perception was facilitated by their being different, in a different neighborhood, eating at cheaper restaurants, living without the benefits of those who have "made it."

This law will not only eliminate the gap, that I see as facilitative of acceptance of being taxed for those on Medicaid, but given the acknowledged underground economy, will result in many people actually being taxed for those who earn more than they do, and are living better than they are able to live.

Malpractice Policy is a window on this Bill 

It can be found in a single section 2531 of HR 3962.  It acknowledges the defects in the current system, by appropriating funds for states that require a "certificate of merit" before a case can even be brought to court. However boldly mandating universal care is defined in this bill by the federal government, it is strangely diffident in addressing this hot button issue of malpractice.

It does not even require such a certificate of merit, acknowledged in the bill to be advantageous, to precede any tort by preemptive federal mandate. One of the hopes, the justifications of this bill is that it will shift our country's health care to more effective, evidence based procedures. A powerful tool to reach this end would be providing safe harbors for any doctor who follows such procedures.

Malpractice policy is more than limiting high doctor's insurance for this, or preventing excess "defensive practice," it could be a tool for promoting the practice of evidence based medicine that acknowledges the limits of any practice and the potential for bad outcomes even give proper procedure.

This article, Is "No-Fault" the Cure for the Medical Liability Crisis?, by David E. Seubert, MD, JD published by the AMA shows how a replacement for the current judicial based system can promote the long range goals of Health care reform.

A no-fault system of compensation for medical injury similar to the workers’ compensation and automobile insurance models may be the answer to the medical malpractice crisis omnipresent in the United States today. Allowing physicians to come forward when an error occurs and join forces with their patient(s) and the hospital system could improve the entire network of health care. The current conspiracy of silence carries great risks for society. Suppose the error that has harmed a patient lies in a faulty system and has potential to do much more damage? Silence and lack of investigation of the problem can have greatly deleterious consequences.

A no-fault system encourages health care professionals to identify the system malfunction and take a proactive approach to fixing it. At the same time, where a patient has suffered harm, the no-fault system must assure appropriate compensation. Such an approach accomplishes two goals: first the patient is compensated for the injury, and, secondly, society’s health care is upgraded and enhanced by fixing an error in the system. Such an error may in fact be a physician with a deficit. The no-fault process can identify this deficit and allow for physician retraining and rehabilitation.

It is interesting that the long articulate refutation of the above article by a malpractice litigation firm at the end of the link above, includes this:

Reforms to the existing system, such as fostering increased communication of errors, limiting the use of juries for determinations of fault but not for determination of damages or using neutral medical experts, may prove more advantageous to both patients and physicians.

This happens to express my proposal pretty exactly. Yet, this pending bill ignores the opportunity to transform this politically defined system, in this case protecting the constituency of plaintiff's lawyers, thus impeding the very goals that are used to justify this comprehensive reform.

Seniors on Medicare will have sharply reduced health care

It is far from proven, or even shown to be probable, that this law will result in aggregate improvement of medical care for the people of this country. More likely it will benefit the currently uninsured by disadvantaging others, most severely medicare patients. The lack of concerted resistance by seniors can only be understood by the conflict of interest of AARP, the organization ostensibly dedicated to their well being. AARP has a clear conflict of interest, as a majority of their profit comes from licensing their name to private insurers, as described in this article. And this segment will grow under this bill:
Rather than destroying the private insurance market, data from the non-partisan CBO show that, under the House bill, private insurance plans will actually grow over the next 10 years – with 15 million MORE Americans enrolled in private plans in 2019 than would be otherwise.

BTW, the above quote is from the house web site that describes the benefits of the bill.

Medicare clients, who by the way include rich and poor who have been paying into this for decades, will not be included among those new patients, including those who could have a family income of $88,000 and actually be subsidized by them. While the original house bill would have given Public Option subscribers priority over medicare, by mandating that they pay more to providers, the current one will be worse.

By allowing administrators of the public option, and private insurers for that matter, to negotiate with providers, the rates they pay could be substantially higher than medicare payments, which for an under supplied geographical region or specific specialty would mean even longer delays than already exist for medicare patients.

As I wrote in the section above on Supply and Demand, illustrated by personal stories of those in the medical profession, with this bill there will be longer waits for appointments, which will be fatal for many. For every uninsured who would get an appointment with a scarce primary provider, a medicare patient will go to the back of the line. And sadly, the improvements in efficiency that could redress this are only suggestions, with no teeth at all to enforce them.

Even without a new group of previously uninsured who will pay providers more than medicare, this group of seniors are being cut out by providers. The Mayo Clinic, often cited as the benchmark of excellence in medical care has just cut out Medicare clients from their services in some sites, as described in their press release. With the bulk of saving that are promised in the house bill coming from reduced Medicare payments, the facilities that will be available to such clients will be even more sharply curtailed. The Washington Post  article, Report: Bill would reduce senior care,  describes a report Richard S. Foster of the non partisan Centers for Medicare and Medicaid Services that confirms the foregoing.

There is a better approach to universal health care

The argument that seems most compelling for passing this HCR law is, "We can't go on like this, and this bill  is a first step that must be taken." I disagree, as does Howard Dean, someone who is just removed enough from politics to view choices objectively.   There are different approaches, that do not build on the current distorted profit based political model. There could be a parallel system of single payer, that would transform a part of every emergency ward into a federal system for providing basic health care.

Just as the VA preempts state licensing law for it's professional staff, such a national system could also do so. Rather than malpractice prevention being in the judiciary, with it's acknowledged excesses, there could be a better system, where those who report malfeasance would not fear their own legal liability. It would be a blow to plaintiff lawyers, who would be replaced by a system of experts, who in the process of reducing poor medical practice could also foster rational procedures.

This provision would hurt a major Democratic constituency, but there would be other aspects of this program that would sacrifice the interest of traditional republican supporters. This is what bipartisanship really means, sacrificing party interest for the sake of the country.

This parallel universal system could work incrementally, growing with the increase in providers, eventually incorporating existing successful non-profits such as Kaiser Perminante into this network. It would actually realize the ideals of this current bill, cutting waste, promoting evidence based medicine and expanding coverage-- without trying to do the impossible, which is to pander to the existing powerful interests that are perpetuating our current health care defects.

This would be transformative and actually politically possible. Professionals in this system would be chosen by aptitude, responsive to demand for specialized training. As an example, free medical education would be available to those willing to dedicate their career to this system. Unwarranted escalation of professional educational requirements, something that creates artificial shortages, would be tackled frontally, to the benefit of consumers.

It would be a parallel and effective means of providing health care to all


Unlike the 1993 Clinton attempt, President Obama did not design this reform in an academic think tank, but tossed it into the political cauldron of congress, with results that could have been anticipated. Every title, clause and section is designed to appease wealthy interests, what I call the Medical Industrial Complex. The other criteria beyond raw financial clout is public perception, that every aspect must poll well, not necessarily work well. The disconnect, the absurdities, inconsistencies and hidden traps, will be lost in the thicket of thousands of pages of this law. So, while this politically designed bill may, in fact, become law, it is every citizens obligation to seriously evaluate the product, to see whether this particular "sausage" should be required to be consumed by every American.

Sadly, Democrats have avoided a substantive debate on this issue by deflecting all arguments against this bill as partisan political attacks. Obama's soaring rhetoric, that this is an "historic moment coming once in a generation" ignores the ugly defects of this legislation. This approach seems to be effective, due to the particularly low public opinion the other party, and their desperate exaggerations that are easily refuted. So what real dialogue that does occur is with the major beneficiaries of this bill, private health insurers and pharmacy companies for instance, who will both benefit greatly and want to keep it that way.

As someone who is on Medicare, I realize that changes must be made that will adversely affect those in my situation. And, I could accept it, even welcome it, if it were part of a meaningful comprehensive reform that was actually going to improve health care for all segments of society in an equitable manner. The waste, the excesses of testing and treatment, that President Obama says will be cut out of Medicare is never viewed as such by someone facing life threatening illness. Claiming to fund this program by identifying and then drastically cutting this "waste," is actually a cruel joke. It is made more egregious by not tackling the actual waste caused by existing malpractice system, acknowledged as faulty in this very bill, while refusing to restructure it.

Perhaps, real health care reform can never be constructed by a political institution, those who depend on financial support from the industries that they must reform, as is the case with Congress. Allowing this to be a political product, the proverbial sausage that should never be carefully examined, may in fact get this law passed. For those who never dissect this bill, never put it under a microscope or even take a deep whiff of the odor emanating from it, the title of the House bill alone " America's Affordable Health Choices Act of 2009" may seem like progress.

But for those who examine this bill, whatever their party or perspective, the title will be notable as a cruel parody of what could have been. It mocks the potential had there been the political will to actually dismantle the existing power structures, to build something that actually would transform our distorted system that represents both the best and the worst of medical science applied to the needs of a diverse population.

As a society there are times to rise above partisanship to preserve and yet to restructure vital components of our social fabric. It is tragic that such a moment seems to about to be missed.


1-Journal of American Medical Association article describing why health care is higher than other countries, and their solutions. These are not addressed specifically in current HCR.

2-Why we must ration health care The lead article in the N.Y Times magazine of July 15th by Peter Singer. Provocative and true, affirming the thesis of this diary that this bill is built on refuting the intrinsic irrefutable reality of rationing of the scarce resource of medical care.

3-Dartmouth Study of wide discrepancy in medicare expenses per patient, includes links to commentaries. This N.Y Times article describes the current debate in house bill in dealing with this, and why the solution is not as simple as it may seem.

4-N.Y. Times series called Prescriptions, hundreds of articles and comments that give a realistic view of what can be expected from the current incarnation of Health Care Reform.

5-How this bill will have the unintended consequences of exacerbating shortages of primary physicians and raising prices. It's in this diary, "The secret flaw in Health Care Reform, Boutique Practice"

6-Watering down of requirement for everyone to purchase insurance, something that is seen as necessary for universal coverage, including those with pre-existing conditions. Senate Committee Action described in this diary.

7-My diary, that gives synopsis and link to this powerful New Yorker Article explaining the current approach will not even begin to address the real defects in our medical system.

8-David Leonhardt, the N.Y. Times most prolific writer on health care reform rejects the house bill in this article: Falling Far Short of Reform 

9- HHS actuarial report on cost of HR-3962, pointing out that the estimates for savings on Medicare will either may not be achieved or else result in closing of facilities to Medicare clients, and reduced services

10-From N.Y. Times "Shortage of Doctors....." 
As interesting as the article, describing how this will be a problem for Health Care Reform, are the comments, most of them from physicians describing their own frustrations in the field and trying to make a living.   Lack of Federal licensure would seem an easy fix, as well as more rational malpractice, but the difficult challenges to professional organizations, AMA, are not taken on in the current incarnations of the bill. 

11-Article by the Dean and CEO of Johns Hopkins Medical Center
"Health Reform Could Harm Medicaid Patients A vast expansion of the program will impose unsustainable costs on treatment centers."

12-Here's a link to an early diary that I based this one on, with the same poll.

13-N.Y. Times article describes how medicare savings are counted twice, once to lower the deficit and the second time to increase the duration of solvency of the medicare trust fund. The CBO acknowledges "this is illogical in real life" but does it anyhow.

Thursday, December 3, 2009

How to bury a warning to 45 million people

First we have this  article prominently placed in the Washington Post on November 14th, which should  have been the beginning of this report snowballing in importance.   

It describes a report on the effect of House Bill HR-3962 by the Chief Actuary of the Center for Medicare and Medicaid Services, CMS a division of the Department Health and Human Services. From the Washington Post article:

A plan to slash more than $500 billion from future Medicare spending -- one of the biggest sources of funding for President Obama's proposed overhaul of the nation's health-care system -- would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others, according to a government evaluation released Saturday.


More generally, the report questions whether the country's network of doctors and hospitals would be able to cope with the effects of a reform package expected to add more than 30 million people to the ranks of the insured, many of them through Medicaid, the public health program for the poor.

In the face of greatly increased demand for services, providers are likely to charge higher fees or take patients with better-paying private insurance over Medicaid recipients, "exacerbating existing access problems" in that program, according to the report from Richard S. Foster of the Centers for Medicare and Medicaid Services.

Two agencies with different dedications to precision, CMS and and CBO

The Actuarial Department of the CMS performs some of the same functions as another more well known agency, The Congressional Budget Office, CBO. It is useful to compare how these two agencies reported on a component of the House Bill, a federally sponsored long term disability program called CLASS.

First the CBO from it's analysis of HR-3962 (pg 13):

As noted earlier, the CLASS program included in the bill would generate net receipts for the government in the initial years when total premiums would exceed total benefit, but it would eventually lead to net outlays when benefits exceed premiums.  As a result, the program would reduce deficits by $72 billion during the 10-year budget window and would reduce it a smaller amount in the ensuing decade....In the decade following 2029, the CLASS program would begin to increase budget deficits.  However the magnitude of the increase would be fairly small compared with the effects of the bill's other provisions, so the CLASS program does not substantially alter CBO's assessment of the longer term effects of the legislation.

Compare this with the actuarial report from CMS
(pg 11)
In general, voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants.  Individuals with health problems wold be more likely to participate than those in better than average health.....a classic "assessment spiral" or "insurance death spiral" ......there is significant risk that the problem of adverse selection would make the CLASS program unsustainable.

The CBO ignores the fact that this program is required to stand alone, precluded from being subsidized by federal funds.  In this way it is similar to the same requirement of the "public option" for general health insurance.  Yet, the CBO scores the revenue from premiums that should be treated as reserves as reducing the deficit,  and then dismisses the anticipated cost when payments to subscribers will be due as "fairly small compared with the effects of the bill's other provisions."   This enables them to ignore the ultimate actuarial inconsistency, and the specific requirement in the bill that this title be evaluated independently.

In contrast the CMS actuarial report describes the program for what it is,  "a classic "insurance death spiral" open to "adverse selection" that would make the CLASS program unsustainable without breaching the stricture of the program standing on its own.   Also not mentioned by either agency, is that because this will require future support, a bailout if you will, the premiums will be cheaper than those of the private insurance industry that are required to be actuarial sound.   This will  increase  the expected growth of this program, and the scale of the bailout when the time comes for it. 

The process of De-Legitimization of the CMS actuarial report

The 27 page actuarial report by Mr. Foster, the product of his 80 person department consisting of economists and actuaries, with additional outsourcing of technical issues, has been excluded from any mention on the CMS, his agencies, website. (After my emailing their Freedom of Information department, after 12 days it was placed on their site) The initial exclusion of this report impeded this valuable report from informing the discussion of this most important legislation. 

Since this report was requested by the Republican Minority in the house, it is only available through their website, and that of "the hill" giving the erroneous impression that this non partisan report is a Republican product. Only the Washington Post and The Hill did a credible job in presenting this report.  The Post article had hundreds of readers comments, including many with the message, "What do you expect from a report requested by Republicans."  The lack of logic doesn't effect the power of the negative association.

The Associated Press Story, picked up by many newspapers including the N.Y.Times, had this headline: GOP Leaps on Study of Rising Health Care Costs, subordinating the content of the report to the "political football" aspect, the slant that dominates all political issues among a mass media desperate for audience share.

AARP, the multi tentacled insurance company-lobbyist has bought into this bill. They are ignoring this actuarial report, not even mentioned on its website.  And as of this writing, the NCPSSM the largest organization dedicated to promoting the interests of medicare beneficiaries does not mention this report on their web site.  This has ironically left promulgation of this report to the extreme right group,, whose spokesman, singer Pat Boone, is almost a parody of radical conservative fundamentalism.   So, the most scientific non partisan report from the government Medicare agency is presented to the public exclusively  in an evolution denying, anti-government package.   

The formality of this actuarial report requires abridgment to be easily understood.  However such translation to the vernacular is made suspect by being placed on a Republican website, along with the report not even being acknowledged by Foster's own agency,  which is under the auspices of the Department of Health and Human Services.  And the TV campaign by is almost designed to associate any actual defects of this bill with the most irrational convictions of the extreme right.  

Incredibly, we are seeing a sharp reduction of Medicare funding by the party of LBJ, one even more abrupt than would be required by demographic shifts over the decades.  The shift by the Democratic party, the creators of this senior safety net, to focus on other groups at the detriment of Medicare clients is both counter intuitive and difficult for the public to accept.  To make the "cognitive dissonance" even greater, it is the Republicans, the party who vehemently fought the original bill, who are publicizing the actual cost to Medicare beneficiaries of this bill..  This transformation, this disconnect between the goals of the two parties is difficult to convey, especially in a bill as monumentally complex as this one.

Limits on ability to prognosticate made clear by CMS actuarial report.

Actually both the WaPo article and the AP version did not report a critical conclusion of the report (pp 4):

The actual future impacts of H.R. 3962 on health expenditures, insured status, individual decisions and employer behavior are very uncertain. The legislation would result in numerous changes in the way that health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation. Consequently, the estimates presented here are subject to a substantially greater degree of uncertainty than is usually the case with more routine health care proposals.

This is an acknowledgment by this professional that there is no way of knowing to any degree of accuracy what this legislation actually will cost, or how effective it will be. This caveat would apply just as aptly to any estimate by the Congressional Budget Office or other agency. As I personally have written, there is no reason to believe that those entities that will be adversely affected by this legislation will not take action, either by market choices or pressure on Congress to alter the proposed effect.

The CMS report on the bill's effect on Medicare:

(pg 8 par. 4) It is important to note that the estimated savings shown in this memorandum for one category of Medicare proposals may be unrealistic. is doubtful that may institutional providers. acute care hospitals, skilled nursing facilities, and home health agencies, could improve their productivity (to compensate for lower medicare payments)....thus, providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and might end their participation in the program, possibly jeopardizing access to care for beneficiaries.

As in warfare, the truism that, "no battle plan survives contact with the enemy," holds true for contact with special interests who are supposed to be conquered, or controlled, by legislation. Actually the above was express by Mr. Foster in formal actuarial language. In this paragraph he describes the expected consequences when additional demand meets fixed supply:

(pp15, par 3)  In estimating the financial impacts of H.R.3962, we assumed that the increased demand for health care services could be met without market disruptions.  In practice, supply constraints might interfere with providing the services desired by the additional 34 million insured persons.  Price reactions-that is, providers successfully negotiating higher fees in response to greater demand-could result in higher total expenditures or in some of this demand being unsatisfied. Alternatively, providers might tend to accept more patients who have private insurance and fewer Medicaid patients  (AR note: This will apply for Medicare patients also, especially if the provision of this bill for parity of payment for primary physicians with Medicaid is implemented) exacerbating existing access problems for the latter group. Either outcome (or a combination of both) should be considered plausible and even probable. 

From a consummate professional actuary who avoids impassioned verbiage, this statement, "Either outcome (or a combination of both) He's talking about shortages and higher prices should be considered plausible and even probable" is the equivalent of shouting a warning to the rafters for all to hear.

"Bending the cost curve of health care" the ultimate goal of this reform

While universal coverage is the goal, President Obama and all experts agree that this will only be possible if costs are lowered from the current rate of twice the general inflation rate. Here's what the report has to say on this vital point (pg 10):
Comparative Effectiveness Research

We reviewed literature and consulted experts to determine the potential cost savings that could be derived from comparative effectiveness research (CER), We found that the magnitude of potential savings varies widely depending upon the scope and influence of comparative effectiveness efforts. Small savings could be achieved through the wide availability of non-binding research, while substantial savings could be generated by a comparative effectiveness board with authority over payment and coverage policies.

Such a board with authority over policy, even as a possibility, has been explicitly excluded by President Obama, as this is exactly what he meant by promising that "nothing will come between you and your doctor"

The report continues giving the estimate based on two important measures, one is the important aggregate of all Medical expenses, both individual and all levels of government called "National Health Expenditures or NHE, the other is the savings in Federal Outlay, which is represented by the national deficit:

Our interpretation of the CER provisions in H.R. 3962 is consistent with the least stringent of these levels of influence (AR note, as promised by the President and in the law that was passed) translating into an estimated total reduction in national health expenditures of $8 billion for calendar years 2010 through 2019......

Thus, according to this report, the centerpiece of this Health Reform Effort, "bending the cost curve" for the first decade will amount to $8 billion dollars. While that may sound like a considerable amount, the total of NHE for this period will be approximately $20,000 billion. To put it in everyday terms that's like someone offering a rebate on a purchase, saying that it will be sizable and make a difference in its affordability; and after you paid a thousand dollars, the rebate, the savings, came to 40 cents. This is the same ratio of "bending the cost curve of medical expense" that is reasonable to expect from all of the cost savings in the Health Care Reform bill as represented by the version passed by the House of Representatives.


This CMS actuarial report will go not only unread but largely unreported.   Those whom this report focuses on, Medicare beneficiaries, will not read about it in their monthly AARP magazine, nor will it be discussed on cable news, as the details are just too complex.   The ultimate insult to a media editor or programmer is not that the content is trivial, or in poor taste, or that it insults the intelligence of the audience.   These  are all acceptable.   The ultimate fear is "eyes glazing over" audience tuning out, or not buying a publication,  because the concepts are too complex and devoid of instant emotional response.

While this report of the House Bill may seem to be superseded by the current debate on the Senate Bill, this is not the case. The two bills from each house of congress must be reconciled, so the House bill will be a major part of any combined bill that must be passed by both houses. Since the Senate bill will be in flux right up to the time it is passed, and the conference committee of both houses work in secret, the final combined legislation will be presented to both houses with little time for serious analysis of such transformational legislation with hundreds interrelated clauses. This inability to provide a serious evaluation of legislation before it is voted on is described in the article from The Hill on this report on the house bill:

Though House Republicans pressed to have this analysis completed before the lower chamber voted on the Democrats' sweeping healthcare reform bill last week, it was not ready until late Friday. Chief CMS Actuary Richard Foster, who prepared the report, recently told The Hill that he and his staff had only a few days to review the bill before it was voted on.

While I focus on the effect of this Health Care Reform Legislation on Medicare, this bill will transform our country in profound ways for all. Shamefully, the Democrats are attempting, with considerable success, in keeping the very best, the most scientific evaluations of the effects of this bill from informing the public debate.

Nothing illustrates this phenomenon more than the short life, and disappearance of this most important actuarial report warning of the danger of debasement of a health care program for retirees that had seemed, only months ago, to be a staple of American life.