How health reform will gradually evolve to single payer system

Leaving aside the pros and cons of a single-payer system (SPS), I'm beginning to believe that a SPS would be an inevitable consequence of any health reform proposal that contained a public option (PO), even one as benign as the current version of the House bill. (See my previous post on good points of that bill.)
I'm basing the scenario on my long-time experience as an enrollee in a prototype health insurance exchange (HIE), namely the Federal Employees' Health Benefits Program (FEHB). FEHB has about 8 million enrollees, including current federal employees, their families, and retirees.
First off, I need to explain that the FEHB program is a regulated marketplace with open season at the end of every year, during which enrollees can choose among roughly 10 plans, depending on their place residence. Government subsidizes about 75% of the arverage plan's premiums (as do many employers.) Less subsidy goes to enrollees in richer plans. None of the plans are POs. All are private, but some are not-for-profit.
Here's what has happened to me over the 30 years of enrollment. When I was young and feeling good, I enrolled in a plan with relatively low premiums (never the lowest, cause I'm risk averse). As I got older and more needy, I opted for a richer plan, paying more in premiums but using health care more. Apparently, so did lots of other aging enrollees, because the costs of that plan began to skyrocket. And, that plan began to add draconian control features to the management of its benefit. And more and more doctors opted out of that plan's network. Finally, the costs got so high and my mistrust of the plan grew so much(especially in the past year) that I chose a low cost plan and paid more for visits and drugs than before. Overall, I might have paid more for health care (counting premiums and out-of-pocket) but at open season last December I was willing to take the gamble. This year, though, I'm torn, because the lower cost plan leaves me exposed to higher drug costs and less generous coverage of some services and devices that I might need in the coming year, given my decrepit state. So, right now I'm weighing a choice between two plans whose premiums vary by a ratio of more than 2 to 1. My choice is based on what I know now about my current state of health, which none of the plans can take into account in deciding to enroll me. That's the beauty of "open season" and "guaranteed issue."
Now fast-forward to a grand health insurance exchange, as envisioned in the House bill. That plan would also have a regulated market place with private insurers offering benefits that can differ within a defined range specified in the legislation. When I say "benefits", I mean things like the deductible, coinsurance or copayments, catastrophic limits on out-of-pocket expenses, networks of physicians, hospitals and other providers, care mangement techniques like prior authorization for expensive procedures, etc. An example of a limit on benefit variation is the requirement in the current House bill that every plan cover well child care visits with no copayment or coinsurance. (i.e., free well child care--costs would be covered through the premium assessed on all enrollees.)
Without a PO, the marketplace would behave similar to the FEHB program. People would check out premiums, networks, deductibles, etc., and would choose the best plan for them. Over time, there would be sorting of enrollees, and the costs of different plans might diverge. If the House bill became law, the young&healthy would enroll in the cheapest plan possible, while the old&sick would enroll in richer plans. This process would be mitigated to some extent because in the new marketplace, plans could vary premiums by age by a ratio of 2:1. (That's not true with FEHB, where we all pay the same premium.) So, in the House bill, the young&healthy would pay less for richer coverage and at least some might be induced to buy richer coverage.
Now, enter the Public Option (PO). Under the House bill, the amount that PO pays doctors and hospitals can never be greater than the average payment rates under private plans in the marketplace. Most likely the PO administrator will "negotiate" with doctors as follows: "We're paying Medicare rates. If you want to participate, fine. If not, hasta la vista." Lots of doctors might opt out of the public option, because right now Medicare rates are about 30% below private insurance rates. Hospitals may be stuck with the Medicare rates, though, because it could be very difficult for the major or only hospital in a community to thumb its nose at a public insurer. (I just don't know what hospitals will do.)
In any case, the PO premium is likely to be lower on average than those of private plans. Who will choose the more limited PO, with its more limited, perhaps less "elite" physician network? The young&healthy, of course. That will make it easier for the PO to pay for itself with lower premiums overall. Lots of young&healthies choosing the PO would mean that their premiums would be low, and the oldster's premiums would also be held down (by the 2:1 rule). Meanwhile, the private plans will attract us old&sicksters, and their premiums will be driven up. Eventually, some of the old&sicksters will give up on the "elite" docs and will enroll in the PO. This yin and yang will continue over time until, gradually, the PO (which still has the cost advantage due to payment of hospitals on Medicare rates) has become the behemoth. With lower and lower market share, private insurers will fail, merge, exit the market, etc., and real competition will be gone.
If you've read this far, I must tell you that I'm not completely sure of my prognostication. Competition is dynamic, innovation is inherent in markets such as this. I could be all wrong. That's why I'm not wringing my hands at the public option currently in the House bill. The uncertainty is great enough for me to say, okay, let's pass a law that makes health insurance affordable and get on with it. But, I'm mindful that the great long-term danger is the decline of the health care system into a single-payer system. Perhaps in the future I'll post something on why I'm so worried about single-payer system.

My first take on House Health Reform Bill

Ok, okay, so I've gotten through only the first 225 pages of the bill. (Read the 1,990-pages of the House "Affordable Care for America Act" yourself, if you think I should be faster!) I like this bill better than the Senate Finance concoction, but some things are worrisome.

The Good:

1. HIE Membership: All firms would eventually be allowed to enroll their employees through the health insurance exchange (HIE), thus encouraging over time a big pool of enrollees in this new system of competitive health care plans.
2. HIE Administration The HIE would be national in scope (though States may opt out), so the pool of enrollees would be large (very good) and the administrative expertise to set up and regulate the exchange would be centralized. (That's efficient.)
3. Premium Cost Structure within HIE: The range of premiums would be limited to a ratio of 2 to 1, so older people (the 50=64 crowd) wouldn't have to pay exhorbitant premiums.
4. The Public Option - participation: The public option (PO) will not require physicians to participate as a condition for them to participate in Medicare. That is, physician participation in the PO is largely unlinked from participation in Medicare. (This is very important in keeping the whole system from slipping into a single-payer Medicare program for all.
5. PO Payment rates to physicians: Physician payment rates under the PO would be negotiated but couldn't be more than the average rates paid by the private plans in the exchange. (Also can't be less Medicare rates.) So, if the PO administrator wanted to use the Medicare rates as the basis for participation, that would discourage doctors from participating, and the PO would become a bare bones plan in the sense that the availability of doctors to PO enrollees would be somewhat limited. (This would probably vary by area of the country.) You get what you pay for. Maybe quality for those people who choose the PO won't suffer. Who knows? What's quality in health care anyway? (If you think you know, you're wrong..Nobody knows, least of all myself.)
6. Participation of "Other Providers" in PO: The PO administrator would "negotiate" a rate at least as high as Medicare's DRG rates, and perhaps higher. The only practical "negotiation" on the part of the PO is to specify a multiple (say, 1.05) of the Medicare DRG rate. That higher-than-Medicare rate would mollify hospitals and other non-physician providers in the short run, and they would probably choose to participate, given the high fixed costs of hospital operation (volume is the name of the game for hospitals.) Now, this is good news, bad news, in my view, because other insurers may not have the market clout to demand that hospitals pay on a DRG basis, even one that's higher than the Medicare DRG rate. But, maybe insurers SHOULD play hardball with hospitals, and it is possible that this would encourage hospitals to take the lead in developing integrated systems of care (with doctors) that provide their own insurance offerings to people in their regions. That way, hospitals and physicians could share in cost-savings from delivering care more effectively and efficiently. In any case, hospitals' and other providers' ability to refuse to participate in the public option is an important safeguard for competition.

Worrisome things (other than cost, which I think we should pay for through a dedicated gasoline tax that brings prices at the pump to $4.00,..but that's another story and is so far beyond the fringe that I won't continue with it) will come in my next post, if I can ever slog through more pages of this bill.

Back to the Summers Blame Game

Frontline had a great program on our gal Brooksley Born, sometime head of the CFTC who tried to regulate the credit default swap market and was blown down by chief bloviator Larry Summers et al. and Sen. Phil Gramm (he of the late night Christmas 2000 law to "modernize" the CDS market by rendering it beyond the purview of regulation). It's on-line at PBS: The Warning. (Read about Brooksley at links provided in my May 26 post about her.)
It got me back in touch with my inner raging populist once again to ask the question: What the heck are Congress/White House doing to reform the financial markets? Brooksley answered this question in her Frontline interview: NADA!
What needs to be reformed? Two things, in my view:

1. The laws that require insurers, pension funds and mutual funds to rely on those heinous ratings agencies (Moody's, S&P, Fitch) for directing their investments. SEC anointed those three as the chosen few, even though they (ratings agencies) were paid by the issuers of the securities for the ratings that would determine how much interest the issuers would have to pay investors. (COI!) Even the FED got into the game, telling the banks it regulated that it could treat AAA securities as good as cash.
2. The easy money policy that led to the big pot of cash for investments in these doggy instruments.

Have you heard anything lately about either of these problems being fixed by Congress? by the FED? By Larry Summers? No? How shocking!

New entries in the growing Vitamin D evidence base.

Friends have been alerting me to new findings on Vitamin D. Stunning evidence on its importance to human health continues to mount monthly.
If you're young and athletic, take a look at the Sept 29 New York Times blog post on Vitamin D and athletic performance. (Thanks, Lisa T.) Take the time to read the comments readers have left on the post; they crystallize the issues that believers and doubters are debating.
From Clare G. comes word of a study of high-dose Vitamin D & physical therapy in preventing falls and hospitalizations in elderly people after hip fractures. This is a clinical trial reported at the annual meeting of the American Society for Bone and Mineral Research. Good summary is in Medscape.com (You'll have to register to see the article, but it's a good site for medical literature, so why not?) The gist is this: Patients taking 2000 IU of vitamin D had a 25% reduction in falls and a 39% reduction in hospital readmissions compared with those taking 800 IU per day. That included a whopping 90% reduction in infections bad enough for hospitalization in the higher-dose Vitamin D group. What's good for the elderly is good for me! (Of course, in a few months, I will be one of the elderly, so that's a tautology.)
Finally, take a look at the following YouTube videos of a Vitamin D conference at the University of California San Diego (Feb 09):
Robert Heaney, M.D., (Creighton University) - Great talk on how much Vitamin D is enough? How much is too much? He and the data will convince you that 2000 IU is a reasonable amount to be taking and it won't hurt you.
Cedric Garland, Ph.D., (UCSD)- an epidemiologist who reviews evidence on Vitamin D and cancer prevention (and treatment). Gets pretty technical, but if you slog through it (as I did )you'll at least get the rough sense (as I did ) that the latest (stunning!) findings regarding breast, prostate, and other cancers make sense scientifically.
Other presentations - including Vitamin D and cardiovascular disease, diabetes, and autoimmune disease are also available at the Conference home page (see right hand panel for clickable presentations).

What the Obama administration is doing wrong on the banks

Here's a great 10-minute interview in the New Yorker's Blog page of Joseph Stiglitz, a liberal economist, who is critical of the Obama Administration's handling of the economic crisis, particularly bank reform. What I like most about what Stiglitz (a Nobel prize winner) has to say is his defense of market mechanisms, properly regulated. This isn't about health reform, but if you keep it in the back of your mind as you listen to Stiglitz, you'll appreciate why I'm such a proponent of a regulated competitive market place for health insurance. Public plan could be in there, provided it doesn't use the leverage of the Medicare program to exact price concessions from hospitals and doctors that private insurers cannot.

Medicare, Medicaid, and Mayo Clinic

Today's Washington Post has an article about Mayo Clinic's decisions to opt out of Medicare for primary care in its Scottsdale Arizona campus and to refuse to accept Medicaid patients from certain mid-western states. Here's a link to an Oct. 9 news article in the Arizona Republic covering the Medicare decision .
Doctors all over the country refuse to accept Medicaid because of states' tendencies to pay even less for physician services than does Medicare. So, Mayo's opting out of some states is no big thing, in my view. The miracle is that they do participate in the Medicaid programs of MN, WI, ND and SD.
But, the decision of Mayo Scottsdale to refuse Medicare for primary care needs more consideration. Sounds heartless on its face, but my reading is different.
Here's what Mayo-Scottsdale is probably doing to stay within the confines of the law. It must be designating certain of its doctors (those manning one of its family practice facilities) as "opt-out" physicians. That Medicare jargon means that those doctors will not accept Medicare payment for any of their patients, and Mayo will not submit a bill on behalf of the patient for any of the services rendered by those doctors to Medicare patients. The patient is on the hook for the entire charge, and Medicare won't pay a penny for the services provided by an opt-out physician. Hear me? The patient cannot get a penny from Medicare when treated by an opt-out physician. Mayo is charging the Medicare patient who wishes to have a Mayo primary care physician an annual access fee of $250, plus fees for visits that are higher than the Medicare fee schedule allows.
Once the patient needs to see a specialist of any kind (say a radiologist, an endocrinologist, yada yada), or needs lab work, or special procedures, however, Mayo will bill Medicare on behalf of the patient. And, in that case, by law, Mayo must get no more than about 115% of the fee allowed by Medicare. So, the patient is completely on the hook at Mayo only for the services of the primary care internist.
Now, the unpleasant reality is that most Medicare patients who would pay, say, $1000 each year in excess fees are unlikely to be poor. So, the criticism of Mayo as catering to the elite in its primary care is somewhat valid. (Why do you think they located a new campus in Scottsdale in the first place?) But, --and here I am an expert as a sometime member of the Mayo (Rochester) staff and an occasional patient -- what the patient gets for that extra money is the kind of attention that most of us see only in Norman Rockwell paintings. First off, the Mayo community medicine doctor lets you talk and talk. You NEVER feel rushed. This is really true! He or she takes a thorough history. The visit almost always takes over a half-hour. (Time your next routine visit to your internist to compare.) You feel as if the doctor hears you. It's wonderful. Need a referral to a specialist? You get it, and you get it fast. Need lab work? It's done there, and the results come back quick. You're not left waiting for a month as you schedule that consult across town.
Does this make Mayo infallible? I haven't found it so. Those doctors have missed things in my case. Still, I never feel angry because I chalk it up to the inevitable imperfection of doctors in the face of mind-numbing variability and complexity of human disease. I've never chalked it up to the doctor not caring. Out here in the real world, though, I often do chalk it up to that.
Now, it's no secret that Medicare underpays for primary care services relative to specialist care. See Kaiser Family Foundation's background piece on the shortage of primary care docs. So, rather than start rushing patients through the system to meet its costs, Mayo has taken a stand against Medicare's crazy fee-for-service system. Lower income Medicare patients, or those who take umbrage, will have to see other docs for their primary care; they can still be referred by those doctors for specialty care at Mayo.
This is a signal to the Medicare fee-for-service system. You just don't work!

How to bend the health care cost curve- some good sources of info

The New England Journal of Medicine has three good articles about health reform this week. They are all free to non-subscribers and are easy to read and understand. Obviously, they're intended for doctors, but they explore the possibilities for bringing health care costs under control. The first one is a roundtable hosted by Atul Gawande, the now famous surgeon who writes in the New Yorker on health issues. David Cutler's article, which argues that cost moderation going to happen regardless of reform, is really interesting. But, if you want to know the politics of the Baucus bill, from a polished health journalist, read John Iglehart's summary of what's happening.

New CDC guidelines for Docs for H1N1 treatment

I'm following the University of Minnesota's CIDRAP website for interesting news about H1N1. Yesterday's postings were very useful! They put to rest a lot of rumors about vaccine safety etc. One entry alerted me to new CDC guidelines just put out for doctors to follow in diagnosing and treating suspected H1N1 cases. CDC says these are NOT for laymen, but they're just not that hard for a layman to understand! And saying that assumes that every doctor in the world is going to be right up to speed on the latest. So, here they are for my fellow laymen for easy reference: CDC H1N1 Guidelines