Will The Medicare Payment Advisory Commission Save Us From Our Corrupt Elected Officials?

Two days ago I got a jarring letter from my primary care physician.

Dear ("Howard," written in by nurse),

It has been a privilege and a pleasure to know you, and to be your primary doctor. I think we have an excellent relationship, and this gives me a rewarding feeling. At this time there is an important matter that I would like to discuss with my patients.

My office associates and I have been discussing a difficult problem. Medicare payments to us fall very short of what they should be. Our rent and other expenses just go up and up. Cutbacks by Blue Cross and other insurers are affecting us seriously as well.

We try to deliver very personal care, and give our patients time to discuss their concerns, both in the office and on the phone. Unfortunately, as rent and other expenses rise, many doctors have been forced to squeeze more patients into the schedule. We do not want to accept new Medicare patients, and are dropping out of insurance plans with their severe restrictions. You may have friends whose physicians now require an annual fee of $1500 or more of every patient in their practice.

An article recently in the L.A. Times described a primary care physician who was forced to close her practice for these very reasons.

After much consideration, I have decided to ask for support from my patients. A contribution of $1,000 per person per year would help us continue our current style of practice. I hope this plan will enable us to continue to offer the same high quality service, including same-day emergency appointments, telephone consultations and individualized care that I feel is crucial, while continuing to accept insurance plans. With your payment, please sign and return the enclosed consent form, which is required by your insurance company.

Thank you very much for your trust and friendship over such a long time. Whatever you decide on this matter, I hope we can continue our fine relationship for many good years ahead.

When I retired I was "lucky" that I was in a plan that allowed me to keep COBRA forever. Most people get a few months-- like 3 or 6 or 9 I think-- and then have to go find their own insurance on the (very predatory) market. With a pre-existing condition, it's next to impossible. My COBRA payments come to $9,444 annually. I see my doctor once a year for a check up and some tests. I don't use pharmaceuticals and don't have nearly as much faith in western medicine as my doctor does. My COBRA plan makes good money from me. I'm following the debate over the "public option"-- supposedly a first step towards single-payer, universal health care-- with great interest, both social and personal.

Yesterday the White House released a letter the president sent to Ted Kennedy and Max Baucus, the chairs of the two committees dealing with health care reform-- Kennedy trying to come up with a workable plan, and Baucus shilling for his insurance industry patrons in trying to kill it. The letter was heartening-- at least in terms of knowing which side Obama is on (perhaps). An excerpt:

The plans you are discussing embody my core belief that Americans should have better choices for health insurance, building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as our reforms take hold. But for those who don't have such options, I agree that we should create a health insurance exchange-- a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can. None of these plans should deny coverage on the basis of a preexisting condition, and all of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs. I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.

Even though he works for the Washington Post, Ezra Klein is a health care expert who knows what he's talking about. In yesterday's Post he reported on a meeting Obama had with Senate Democrats from Kennedy's and Baucus' committees and how he plans to control the costs associated with his reform plans.

The Medicare Payment Advisory Commission is an independent congressional agency of technical experts which was formed in 1997 to advise the Congress on matters relating to Medicare. Its recommendations are blocked by the lobbyists who donate to congressional campaign committees and its reports are shelved. Obama wants to bring the commission into the executive branch and give it real power-- sort of like a Federal Reserve for Medicare.

[His] plan would package MedPAC's yearly recommendation and fast track them through Congress for a simple, up-or-down vote. No filibuster. No changes to the package of recommendations. Health reform, under this scenario, would become a yearly legislative project.

And that's how some in the White House would prefer it. The health system changes too quickly for Congress to address through massive, infrequent, efforts at total reform. New technologies and new care structures create new problems. A health care reform package signed in 2009 might miss some real deficiencies, or real opportunities, that present themselves in 2012. A health reform process that recognizes that fact is a health reform process that is continual, rather than episodic.

But the reason health reform is so infrequent is that it's structurally difficult. Small tweaks are too technically complex for Congress to easily conduct and so are dominated by lobbyists. Large reforms attract broad interest but are impeded by polarization and the threat of the filibuster. The MedPAC changes under discussion are, in other words, nothing less than a new process for health care cost reforms. They empower experts who won't be intimidated by the intricacy of the issues and sidestep the filibuster's ability to halt change in its tracks.

MedPAC, of course, is restricted to Medicare. But there's little doubt that where Medicare leads, the health care industry follows. Private insurers frequently set their prices in relation to Medicare's payment rates. Hospitals are sufficiently dependent on Medicare that a reform instituted by the entitlement program becomes a de facto change for the whole institution, and thus all patients. A process that empowers Medicare to aggressively and fluidly reform itself would end up dramatically changing the face of American health care in general.

Thus far, we've heard a lot of talk about cost control. But this is the first time, at least to my mind, that we've seen anything that actually looks able to deliver on controlling costs. To flip the old line, this is where health care reform becomes entitlements reform.

Senate Democrats plan to officially unveil their plan next week. Meanwhile it comes as no surprise to anyone who follows the money and the money-tainted politics of the Blue Dog caucus that these right-wing Democrats are abandoning President Obama (and their own constituents) and siding with the Republicans and the medical-industrial complex in opposing health care reform. Their goal is to so disable any public option that no one will want to use it, a significant victory for their patrons at the insurance companies and HMOs. Not all Blue Dogs are Republicans in disguise. One, Maine's Mike Michaud, immediately broke with the caucus' approach and endorsed the need for the real health care reform that Obama and progressives are trying to pass. Another, Patrick Murphy (D-PA) also distanced himself from the extremist and corrupt Blue Dogs, putting out a press release reiterating that he "stands with President Obama in supporting the inclusion of a public option in health care reform legislation."


UPDATE: Will We Be Paying For Medical Care The Way We Pay For Utilities?

A friend of mine, who writes at FDL under the name Scarecrow, sent me a fascinating perspective on this. He said he didn't mind if I shared it:

That letter you quoted from the Doctors asking for $1000 payment/patient tells me we're in a very different paradigm from the one assumed by the public/medial debate. The public debate is in terms of "competition," and "Markets," and public vs private competition, etc, but in fact the paradigm that Obama described (and your letter confirms) is really starting to look like utility regulation, or a cross between partial markets and partial cost-of-service regulation of utilities. The health reform features being discussed have exact counterparts in the quasi market, quasi regulated electricity world I work in. 

The basic commodity in electricity is energy. We pay for energy on a cents/kwh basis.  But there is also a feature called "capacity payments," in which consumers are also required to pay a capacity charge to generators on top of the price they pay for the basic commodity of electrical energy.  This capacity charge is designed to cover capital and other fixed costs of the supplier that are not otherwise covered by the surpressed prices for energy. If they did not receive this extra payment, they would eventually go out of business and you would eventually get shortages, because if you can't cover your capital costs, you won't build enough capacity to meet demand and replace your units as they age and retire.  

Your doctor is asking for the equivalent of a "capacity charge." Basically, he/she's saying that I need this extra payment to cover my fixed costs-- insurance, rent, etc-- to the extent that my payments I get from insurance companies or Medicare don't cover those costs. 

What this tells me is that Obama is moving, perhaps without realizing it, along the path that eventually winds up with single payer-- unless he misunderstands it and screws up the entire system. I think his people are smart enough to figure this out; this appears to be the stealth strategy; the insurance companies also get it;  but I'm not optimistic about Congress. Moreover, I don't know how the politicians are going to explain this to the public. It's a very radical transformation that's occurring, and most people don't know it.

More on the analogy. The utility regulation elements are:

1.  Guaranteed electricity service for all-- if the public health plan is open to all, that's the same concept.

2.  Cost oversight-- state utility regulators (or municipal utilty boards) do this for electricity; they set rates and guarantee service; the MedPAC could do this for the public health plan

3.  Quality oversight = state utility regulators set quality of service including reliability -- same as MedPAC

4.  Mandatory funding-- that is, you must pay for the required service, with subsidies to low income -- that's standards utility rate-setting; in health care, it's a combination of taxes, credits, exemptions, co-pays and premiums. It won't take long to realize this can be simplified into e.g., payroll deductions plus taxes for self-employed simplify/replace the rest, because it's not cost-effective. 

One other thing: in some states with organized markets, consumers can shop among competing private suppliers and sign contracts with them. Just like private health plans.  But they can also just have their utility buy from a public pool open to everyone, where all suppliers contribute based on least-cost, and pass the pool price through on the utility bill. The rules make the pool open to everyone, non-discrimination, and people can use it as much as they want. That's something like the public plan for health.