Cost

We told you about yesterday morning's session of the Health Action 2009 conference, when we heard from members of Congress likely to play key roles in health reform. Now we want to catch you up on the afternoon session, when we heard from some congressional staffers who will actually write the legislation.

The panel featured Yvette Fontenot, who works for Chairman Max Baucus (D-MT) at Senate Finance, Karen Nelson, health policy director for House Energy and Commerce Chairman Henry Waxman (D-CA), and John McDonough, senior advisor to the Senate HELP Chairman Ted Kennedy (D-MA). 

Health Care for America Now's Jason Rosenbaum has excellent summary of the discussion over on HCAN's blog. Here are some of our takeaways from the panel:

"The whole world is in recession. But the United States is the only wealthy country in which the economic catastrophe will also be a health care catastrophe—in which millions of people will lose their health insurance along with their jobs, and therefore lose access to essential care."

That's how Paul Krugman began his latest column, reminding us what's at stake. Today's economic indicators are grim, and the headlines are full of more job cuts.

Krugman asks, "Why has the Obama administration been silent, at least so far, about one of President Obama's key promises during last year's campaign—the promise of guaranteed health care for all Americans?" We aren't quite as impatient. The inauguration was only 10 days ago, HHS Secretary-designate Tom Daschle hasn't been confirmed, we know there's a ton of preparatory work being done on the Hill, and we've been hearing for a while that health reform wouldn't really start moving until March anyway.

But it's still worth listening to Krugman's reminder of why we can't be lulled into thinking health reform can wait:

Let me address three arguments that I suspect Mr. Obama is hearing against moving on health care, and explain why they're wrong.

In today's New England Journal of Medicine, MIT economist Jonathan Gruber asserts that the choice between saving our economy and making high-quality, affordable health insurance available to all Americans is a false one. He continues, "a smart health care reform bill, which has at its center universal health insurance coverage...can improve both individual health and the economy's health, both today and in the long run". We agree wholeheartedly with Gruber's thesis; and, want to highlight how Congress and the White House have recognized the important interplay of health coverage and healing our economy in the pending stimulus bill.

In his article, Gruber outlines five ways that enacting comprehensive health reform will help our economy.

First, health reform will provide resources to cash-strapped states for their public insurance programs. Gruber cites incentive payments in the SCHIP re-authorization bill for enrolling eligible children in health coverage.

Understanding the need to move quickly, the House has already passed the re-authorization of SCHIP and the Senate is likely to follow when it votes today on the bill.

But Sen. Chuck Grassley (R-IA) will still show up at 8 am to give a special breakfast presentation at the Health Action 2009 conference—hosted by Families USA. We were up bright and early as the ranking member on the Senate Finance Committee began the day's events with a spirited town-hall style discussion.
Next up, the opening plenary session featured House Majority Leader Steny Hoyer (D-MD) and Senator Debbie Stabenow with Princeton Professor Uwe Reinhardt giving an entertaining closing presentation. Chairman of House Committee on Energy and Commerce Henry Waxman (D-CA) just gave the luncheon keynote to standing applause from packed house in the Continental Ballroom of the Mayflower Hotel.
Here are some highlights from the morning's action.

A few weeks ago, New America hosted an event with Health CEOs for Health Reform—a diverse coalition of health care leaders that New America has helped organize. Some of those execs later participated at a similar gathering hosted by the Committee for Economic Development, New America, Better Health Care Together, and the McKinsey Global Institute. One of the execs, Dr. Gary S. Kaplan, Chairman and CEO of the Virginia Mason Medical Center in Seattle, posted on the Health Care Blog about what he, his organization and like-minded colleagues involved in Health CEOs for Health Reform are going to do to bring about change.

"Our goals are lofty and the challenges immense. What struck me in recent months, with the current state of the economy, is the tremendous sense of urgency we all feel and the confidence we have that now is the time to truly transform health care," he writes. Read his essay "CEOs Urgent, Shared Commitment to Change" here.

It's worse than we thought. No not just the economy, although we say that pretty much every time we look at the headlines. We're talking about the cost of COBRA.

We've posted recently on the high cost of COBRA, and the relatively few people who lose their jobs who can afford to extend their job-linked health insurance this way (here and here). Congress is likely to include significant COBRA subsidies as well as more short-term Medicaid and SCHIP options in the stimulus package to help more people stay covered in the economic crisis. A recent Commonwealth Fund study suggests the problem is more severe than we thought; earlier studies put the COBRA take-up rate at about 12 to 15 percent, but Commonwealth finds that 2007 data suggests that only about one in 9 or 10 percent of unemployed workers have COBRA coverage. (Some are able to get on a spouse's health plan, or find alternative health coverage). Here's the summary:

Two new reports provide further insight into Health IT's potential as both economic stimulus and a building block for broader health reform.

In a letter to Rep. Henry Waxman (D-CA), chair of the House Committee on Energy and Commerce, the CBO estimates that the Health IT provisions of House's economic stimulus package would reduce healthcare spending by 0.3 percent from 2011 to 2019. CBO predicts the savings would come from: "diminishing the number of inappropriate tests and procedures, reducing paperwork and administrative overhead, and decreasing the number of adverse events resulting from medical errors."

A new report from the Commonwealth Fund published in the Archives of Internal Medicine provides even more specific evidence of potential savings by comparing the use of health IT in a diverse group of urban hospitals in Texas. The report's authors conclude that:  "Hospitals with automated notes and records, test results, order entry, and clinical decision support experience fewer complications, lower mortality rates, and lower costs." For a breakdown of the savings, check out this helpful Commonwealth Fund chart below:

We wrote a long post earlier this month on hospice payments, and how some hospices (usually for-profits) are enrolling patients that may need long-term care but don’t necessarily fit the criteria of the Medicare hospice benefit. Alabama's Birmingham News reports on a recent $24.7 million settlement SouthernCare is paying the federal government to settle claims that it fraudulently enrolled elderly people in hospice under the Medicare benefit. The problem: they weren’t dying.

The newspaper reported that the charges stem from two lawsuits unsealed earlier in January that were filed in Birmingham's federal court by two former employees of SouthernCare, a private company with 95 offices in 15 states. In agreeing to the settlement, the company admitted no wrongdoing. Two nurses were the whistle-blowers, and one estimated that half the SouthernCare patients were not appropriate for hospice. In fact, most of the patients, including elderly people approached in church, thought they were getting some extra home care, not end of life care.

Hat tip to Roy Poses, MD of the Health Care Renewal blog.

Not a subtle headline in Sunday's Washington Post Business section. But then it's not a subtle problem. The article, "A Premium Sucker Punch: Soaring Insurance Costs are a Blow, Even When Employers Cover More of the Tab" told us that, guess what, what we are saving on cheaper gas is not coming anywhere near what we are spending on higher health insurance costs.

Premiums are rising. So are out-of-pocket costs and deductibles. Overall, health costs are rising faster than wages.

A growing number of workers in 2009 will pay more for health benefits—and in some cases receive less coverage—as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.

The Corporate Executive Board found in its survey that a quarter of officials from 350 large corporations said they had increased deductibles an average of 9 percent in 2008. But 30 percent of the employers said they expected to raise deductibles an average of 14 percent in 2009. Mercer, a global benefits consulting firm, surveyed nearly 2,000 large corporations in a representative poll and found that 44 percent planned to increase employee-paid portion of premiums in 2009, compared with 40 percent in 2008.

Yesterday, we relayed the framework and fodder of a discussion we co-hosted with the Committee for Economic Development and Better Health Care Together on the business case for health reform. Today, we'll focus on the discussion.

First, a brief recap: the discussion centered on a new analysis by the McKinsey Global Institute (MGI) on U.S. health care spending.

Basically the U.S. spends a lot on health care—$2.1 trillion in 2006. That's more than all the citizens of China spent on personal consumption, according to McKinsey. This spending doesn't just reflect that health care is a normal good and that when income increases we tend to spend more. At least $650 billion of our spending cannot be explained by greater levels of wealth. Instead, it seems the way we pay for and deliver health care in the U.S. creates incentives for inefficiencies, overuse, and excess spending.