Category Archives: Politics & Policy

Health law at 3: Remains unpopular – Viewpoint

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Dr. Roger StarkBy Dr. Roger Stark
Health Care Policy Analyst
Washington Policy Center

President Obama signed the federal health care bill, The Affordable Care Act (ACA), into law three years ago.

Let’s look at what has happened over the past three years.

The law remains extremely unpopular with Americans. Since passage, polls have consistently shown at least 50 percent of voters disapprove of the law. A recent Kaiser Family Foundation poll revealed that only 41 percent of respondents actually understood the law while 57 percent did not.

The estimated cost of the law has gone up dramatically. Originally the nonpartisan Congressional Budget Office (CBO) estimated Obamacare would cost $940 billion over its first 10 years. This was based on a deception written into the law of 10 years of revenue starting in 2010 but only six years of benefits starting in 2014.

The CBO now estimates the cost to be $2 trillion over the 10 years starting in 2012. Revenue comes from a $716 billion cut to Medicare providers and over $1 trillion in new or expanded taxes. None of the significant Medicare cuts have taken place as scheduled, so the cost overrun of Obamacare has already started. Health insurance companies are warning of 30 to 116 percent increases in premiums and the government’s own CBO estimates at least 10 to 13 percent increases in rates.

Even President Obama sees the failure of parts of the law. He has signed the repeal of the long-term care provision, or CLASS entitlement. He also signed the repeal of the $1.7 billion Small Business Tax Reporting Requirement, which would have forced businesses to report every vendor transaction over $600 to the IRS.

A bipartisan majority in the U.S. Senate recently voted 79 to 20 to repeal the 2.3 percent tax on medical device makers’ revenue (not profits).

The administration has, to date, granted 1,600 waivers to unions and various favored companies allowing them to opt out of Obamacare. For the rest of us, the government has issued 20,000 pages of new regulations for implementation of the law and will force patients to fill out a 21-page application to receive care under the ACA (that’s the EZ form, the long form is 60 pages).

Medicaid expansion and new government-run insurance brokerages, or exchanges, are fundamental provisions of Obamacare. Yet 18 states have opted to not expand Medicaid and 26 states have no plans to set up a state-run exchange.

The proponents of Obamacare cling to a number of inconsequential benefits. Young adults from ages 19 to 25 can now be covered on their parents’ health insurance plans. These are the young and healthy, however, and the vast majority don’t need health care and don’t have much impact on health care costs. Also, when they turn 26 their parents’ coverage ends. They will then have to pay more than their fair share for health insurance because of the community rating requirement that forces young, healthier people to pay the same premium as older, sicker individuals.

Proponents also tout the mandated preventive care in the law. Yearly physical examinations and other preventive care are not “free” and for large numbers of patients have no impact on health outcomes nor do they save money.

We are also told the law prohibits insurance companies from denying coverage to patients because of pre-existing conditions. Research shows that only 62,000 people in the United States are in this group with no insurance and a pre-existing health problem. Spending $2 trillion to provide coverage to this small group is irresponsible and could be handled by shared-risk pools like the one Washington state already has.

The ACA is a 2,700-page, achingly complex, monstrous law that will soon control one-sixth of our economy. The country continues to dislike Obamacare and remains puzzled by its mind-numbing complexity.

Everyone agrees health care needs to be reformed. Patients making informed choices in a free market, not top-down government mandates that will only result in higher costs not better care, will put patients in charge of their health care decisions and their own health care dollars.

Dr. Roger Stark is a retired physician and a health care policy analyst with Washington Policy Center, a non-partisan independent policy research organization in Washington state. For more information visit washingtonpolicy.org.

 

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Three red and white capsules

Today’s health headlines – August 22, 2012

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By Stephanie Stapleton

Today’s early morning highlights from the major news organizations, including political reports related to the abortion debate and Medicare issues.

The New York Times: Patients Would Pay More If Romney Restores Medicare Savings, Analysts Say

Mitt Romney’s promise to restore $716 billion that he says President Obama “robbed” from Medicare has some health care experts puzzled, and not just because his running mate, Representative Paul D. Ryan, included the same savings in his House budgets. ,,,

While Republicans have raised legitimate questions about the long-term feasibility of the reimbursement cuts, analysts say, to restore them in the short term would immediately add hundreds of dollars a year to out-of-pocket Medicare expenses for beneficiaries.

That would violate Mr. Romney’s vow that neither current beneficiaries nor Americans within 10 years of eligibility would be affected by his proposal to shift Medicare to a voucherlike system in which recipients are given a lump sum to buy coverage from competing insurers (Calmes, 8/21).

 

USA Today: GOP Trying To Keep Focus On Economy Rather Than Abortion

Trying to keep the presidential contest focused on the economy rather than divisive social issues, Republican candidate Mitt Romney joined a growing GOP chorus urging a Missouri Senate candidate to quit the race after inflammatory comments about abortion and rape (Davis, 8/21).

NPR: GOP Platform Anti-Abortion Language Includes No Exceptions For Rape, Incest

With little discussion, the committee on Tuesday adopted the same anti-abortion language it included in GOP platforms in 2004 and 2008. It seeks passage of a constitutional amendment that would extend legal rights to the unborn, essentially banning abortion (Allen, 8/21).

The Washington Post: Akin Comments Expose GOP Rift Over Abortion

Rep. Todd Akin’s controversial comments on abortion and rape — and the Missouri Republican’s vow Tuesday to continue his U.S. Senate campaign — have given Democrats an opening on an issue on which they enjoy broad public support. In the past two days, party leaders in Washington and their supporters across the country have highlighted Akin’s comments to try to raise money, as part of campaign pitches and to revive the “war on women” theme that emerged this year after some Republicans came out against health-care coverage for contraception (O’Keefe and Helderman, 8/21).

Politico: GOP To Akin: You’re Blowing Our Chance To Repeal ‘Obamacare’

National Republicans on Tuesday gave Rep. Todd Akin another reason to back out of the Missouri Senate race: If he stays in, they say, the repeal of the health care reform law is at risk. “By staying in this race, Congressman Akin is putting at great risk many of the issues that he and others in the Republican Party are fighting for, including the repeal of Obamacare,” Brian Walsh, a spokesman for the National Republican Senatorial Committee, said in a statement (Haberkorn, 8/21).

Los Angeles Times: Texas Can Cut Planned Parenthood Clinic Funding, Judges Rule

Texas can cut off funds for Planned Parenthood clinics before a trial concerning the legality of its ban on funding organizations tied to abortion providers, a federal appeals court ruled Tuesday. The U.S. 5th Circuit Court of Appeals in New Orleans lifted a federal judge’s temporary injunction that had protected the funding pending an October trial (Hennessy-Fiske, 8/21).

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

 

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$100-dollar bill inside a capsule

New cancer drugs offer hope — but at an often staggering cost

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High Cost Of New Cancer Drugs Sparks New Care Struggle

By Merrill Goozner, The Fiscal Times
This story comes from our partner 

Julie Grabow, an oncologist at the Fred Hutchinson Cancer Center in Seattle, recently prescribed an exciting new therapy for a 60-year-old woman with metastatic breast cancer.

Three-and-a-half years into her battle against the disease, the patient had already exhausted three different anti-estrogen therapies, each of which only put a temporary check on the spreading tumors.

Box of the drug AfinitorThe newly prescribed drug, Novartis’ Afinitor, is one of the recently approved targeted therapies that have generated a lot of excitement among cancer patients and oncologists in recent years.

Drugs that target just the cancer cells promise the same or better results as toxic chemotherapy, but with far fewer side effects.

There was a catch, though. Like many of the latest cancer drugs, Novartis is charging exorbitant amounts for the treatment – in this case, $10,000 per month.

That quickly put an end to that possibility for Grabow’s patient. Her monthly co-payment, even after her insurance company agreed to pay its share of the off-label use the drug (the Food and Drug Administration has only approved Afinitor for kidney and pancreatic cancer, not breast cancer), was $2,900.

“She can’t afford this, even though it’s potentially a less toxic and potentially equally effective regimen,” Grabow said. “Chemo will help her, and it’s a reasonable choice. But that choice is 100 percent driven by economics.”

Over the past year, official Washington and candidates on the campaign trail have locked horns over the best way to curb rising health insurance costs. The public has been bombarded with dueling slogans – Republicans vowing to fight the “death panels” and “rationing” of Obamacare while Democrats promise “guaranteed access” and “affordability” with the Affordable Care Act.

But an economic drama that neither side wants to confront is playing itself out in cancer wards and oncologists’ offices across the country.

Unaffordable new drugs, even when they’re covered by insurance, are being rationed by price as patients, doctors and hospital officials struggle with what is likely to be the most pressing problem for the nation’s health care system over the next decade: how to pay for the spectacular rise in the cost of cancer care, especially drugs and diagnostic tests.

“In the real world of private practice where most care is delivered, it would be a mistake to say rising costs haven’t affected care,” said Eric Nadler, a head, neck and lung cancer specialist at Baylor University Medical Center.

84 percent of oncologists say their patients’ out-of-pocket spending influences treatment recommendations.

A recent survey published in Health Affairs found a stunning 84 percent of oncologists say their patients’ out-of-pocket spending influences treatment recommendations.

The growing cost of cancer care will impose its greatest burden on the nation’s Medicare system, since 55 percent of all cancers are diagnosed in individuals 65 or older.

A recent study by the National Cancer Institute projected the cost of treating the 29 most common cancers in men and women will rise 27 percent by 2020, even though incidence of the disease is going down due to successful public health campaigns like the war on smoking.

Among the six new drugs approved in 2011, the cheapest . . . cost $44,000 a year.

 That estimate is based on a relatively static cost of care per case. If costs increase just 2 percent more a year than previous trends in the first and last years of care, the study said, then costs would soar to $173 billion, a 39 percent increase.

The study pointed out that its projections were based on 2006 Medicare claims data, which predated the development of most of the latest targeted therapies.

There’s no doubt that there will be many new therapies for cancer coming to market in the years ahead. The nation’s $150 billion public investment in understanding the biology of cancer – the science side of the War on Cancer launched by President Richard Nixon in 1971 – is beginning to bear fruit.

The pharmaceutical industry, which draws on that publicly funded science to develop drug candidates, now has 887 new cancer drugs in development, over 30 percent of its total portfolio of new drug candidates, according to the Pharmaceutical Research and Manufacturers of America, the industry trade group. That’s up from 646 or 26 percent of the total devoted to cancer in 2006.

The industry is pouring increased research and development resources in cancer therapeutics in hopes that it will replace the revenue being lost from the expiration of patents on blockbusters like Lipitor.

However, since there are fewer cancer patients than there are people with chronic conditions like elevated cholesterol, and many don’t live very long, the prices needed to support the industry’s current size and structure, and profits must be substantially higher.

“They’re trying to maximize profits given their incentives,” said Peter Neumann, director of the Center for the Evaluation of Value and Risk in Health at Tufts Medical Center, which receives funding from the drug industry.

Possible solutions, he said, include letting Medicare set prices based on the medical value of adding extra months to life. That’s a variation on Great Britain’s cost-effectiveness model, which has been roundly condemned by most U.S. politicians and the press.

The other path is to turn to a bundled payment for every for every episode of cancer care and let the health care delivery organizations and private insurers sort it out. (Bundled payments account for all medical services associated with a given episode of care—doctors, nurses, technicians, etc.) That approach, in essence, would force the marketplace to execute the rationing.

“Bundled payment isn’t a panacea, but it does create incentives,” Neumann said. Some private insurers are experimenting with bundled payments for cancer care.

A quick review of the new cancer drugs approved by the Food and Drug Administration last year reveals how fast drug prices are rising.

Most of the older chemotherapy regimens for cancer, some of which have been around since the 1950s, are generic and relatively inexpensive.

But among the six new drugs approved in 2011, the cheapest – Johnson & Johnson’s Zytiga for advanced prostate cancer – cost $44,000 a year. The drug extended life by an average of less than 5 months to 16 months, according to a company spokesperson.

At the high end of the spectrum was Adcetris, a biotech product from Seattle Genetics that treats recurrences of Hodgkin’s lymphoma. A highly curable disease when initially treated in the 8,830 mostly middle-aged patients who get the disease every year, it is usually fatal if a drug-resistant strain emerges later in life.

Adcetris, the first new treatment to come along since 1977, kept the cancer in check for nearly 7 months in the single small trial that led to its quick FDA approval. It’s price tag: $216,000 for a full course of treatment.

Skin cancer specialists had a lot to cheer about in 2011 with two new therapies coming on the market for metastatic melanoma, which is fatal within one year for about 75 percent of the 10,000 people stricken each year.

But Roche/Genentech’s Zelboraf cost $61,400 a year and Bristol-Myers Squibb’s Yervoy, which nearly doubled the one-year survival rate from 25 percent to 46 percent, cost $120,000 for a four-month course of treatment.

“We price our medicines based on a number of factors including the value they deliver to patients and the scientific innovation they represent,” said Sarah Koenig, a spokeswoman for Bristol-Myers. “We have one of the most robust patient assistance programs for cancer patients in the industry.”

Most drug companies have patient assistance programs for poor or struggling patients, but many only come into play if patients are poor or families have exhausted their savings.

And since many of the latest therapies, like the older chemotherapies they are replacing or supplementing, extend life for brief periods of time, patients wind up weighing whether they want to deplete their children’s inheritances for a couple extra months of being very, very sick.

A study released at last June’s annual conference of the American Society of Clinical Oncology, which represents the nation’s 25,000 oncologists, revealed that patients with co-payments over $500 a month were four times more likely to refuse treatment than those whose co-payments were under $100 a month.

“The price of drugs can’t be set so outrageously high,” study author Lee Schwartzberg told Reuters. Schwartzberg is the chief medical officer at Acorn Research, which conducted the study.

“All stake holders have to get together and compromise to translate this great science into great patient care without breaking the bank.


This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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fountain-pen

View: About that McKinsey report… The critics were right

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By Jonathan Cohn, Senior Editor of The New Republic

Jon Cohn

McKinsey and Company has finally released the details of its controversial paper on the likely effects of health care reform. And it looks like the paper’s critics (including yours truly) were right to raise questions about it.

Based on what the company has said, the paper offers no new reason to think Americans with employer-sponsored insurance will lose that coverage because of the Affordable Care Act.

Politically, that’s good news for President Barack Obama, since he told insured Americans that the law wouldn’t take away the coverage they already had.

But what does it mean in terms of policy? Should we be happy that health care reform is unlikely to reduce substantially the current system’s dependence on employer-based insurance? That’s another, much more complicated question.

Let’s start by looking closely at the paper, which suggested that as many as half of all employers would seriously readjust their employee benefits and as many as a third would drop coverage altogether once the health law took full effect in 2014.

The theory behind the claim was that employers would find it financially advantageous to stop offering insurance because workers could instead get subsidized coverage through the new insurance exchanges.

A quarter of respondents didn’t know the salary breakdowns of their companies.

In other words, workers would happily take salaries — instead of insurance — from their employers.

Even though firms that employ more than 50 employees — which account the majority of American jobs – would have to pay a penalty for failing to offer health benefits, the McKinsey consultants said, the financial advantages of dropping coverage would more than offset that cost.

But the basis for that prediction was a survey of high-ranking corporate officials. And it turns out the survey had a few weaknesses.

For one thing, a quarter of respondents didn’t know the salary breakdowns of their companies — in other words, how many workers were making high salaries and how many were making low salaries.

In addition, more than half of respondents weren’t even aware of what their companies spent on health benefits.

The survey didn’t ask respondents about the ages of their employees. Were they relatively old? Young? A mix of the two?

And when survey administrators “educated” respondents about the health law, they didn’t remind them about the effects of the employer tax exclusion, which makes job-based health insurance worth a lot more to employees.

Surveys asking employers to predict behavior are never that reliable. But these issues make the McKinsey study a particularly poor forecasting tool. In general, younger and poorer workers might be better off getting insurance through the new exchanges, because they will get bigger subsidies from the government and because they benefit less from the tax exclusion. It is a different story for older and richer workers.

More than half of respondents weren’t even aware of what their companies spent on health benefits.

More sophisticated studies of employer behavior account for these and other variables, typically by creating “synthetic” firms and predicting how employers will act, based on data on past employer behavior.

Sure enough, these studies have consistently shown a very different result: that the majority of employers will continue to offer health insurance, even after health care reform.

In fact, just this week, new analyses by Avalere Consulting and the Robert Wood Johnson Foundation came to the same conclusion. (The basis for the Robert Wood Johnson prediction was another projection from the Urban Institute’s model.)

While these predictions could be wrong, obviously, their findings are consistent with what happened in Massachusetts, where a similar coverage scheme actually bolstered employer-sponsored insurance.

Indeed, even McKinsey itself now acknowledges that its study couldn’t make projections as reliably as these other efforts. In its official June 20 press release, it stated flatly that its prediction was “not comparable to the health care research and analysis conducted by others such as the Congressional Budget Office, RAND and the Urban Institute.”

In the long run, though, workplace-based insurance is probably not an arrangement worth preserving.

But here’s the irony: Most people like the insurance they get from their employers, which is why you hear politicians from both parties constantly promising to keep that coverage in place. In the long run, though, workplace-based insurance is probably not an arrangement worth preserving.

Private, employer-based coverage became the norm in the U.S. in the 1940s and 1950s because the arithmetic of health insurance works only with large groups of relatively randomly selected people, and large businesses naturally create such groups.

But employer-based coverage makes workers too dependent on their bosses while saddling employers with a financial liability over which they have only partial control. More importantly, it leaves out people who don’t have steady, full-time work.

An ideal health care system would not merely include everybody. It would also give everybody access to the same set of coverage arrangements, regardless of their place of employment (or lack thereof).

It would also liberate employers from the responsibility of administering health benefits for workers, allowing them to concentrate on other, more productive activities.

Let the car companies make cars and the grocery stores sell groceries and the software firms design software. They don’t need to be running health insurance plans, too.

A single-payer system, with a combination of basic government insurance and private supplemental coverage, would be a much better alternative.

So would a “competition” system that looks like what is currently in place in the Netherlands or Switzerland, or what Sen. Ron Wyden, D-Ore., first proposed back in 2007.

The Affordable Care Act could evolve into such a system, particularly if the new insurance exchanges work well and workers feel comfortable the insurance available there is as good as what they’d get from employers.

But that transition would probably take a lot of time, no matter what corporate officials were telling the survey-takers at McKinsey.

Jonathan Cohn is a senior editor at The New Republic .


This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Rep. Ryan

View: Ryan Plan–an attempt to reduce health care spending, but at a high cost

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Jonathan Cohn, Senior Editor of The New Republic

This column is a collaboration between KHN and The New Republic.

For the better part of two years, the debate over how to control health care costs had a certain one-sided quality to it, because the Democrats had a plan and their critics did not. Democrats were forced to put their ideas on paper, with specifics, and subject them to nonpartisan accounting. All the critics had to do was attack.

Rep. Paul Ryan

And attack they did. Sometimes they said the Democrats’ plan, which eventually became the Affordable Care Act, did too little. (It’ll blow up the deficit! It’ll bankrupt the government!) Sometimes they said it did too much. (It’ll stop innovation! It’ll create death panels!) Sometimes they even said the two things simultaneously, which is the kind of neat rhetorical trick politicians can pull off only when they have no plans of their own.

All of that changed this month, when House Budget Committee Chairman Paul Ryan, R-Wis., released his budget proposal and included within it radically conservative reforms of the nation’s major health care programs.

Ryan would repeal altogether the coverage expansions of the health law. He also would increase the eligibility age for Medicare and then turn it into what most of us would call a “voucher scheme,” eliminating in 2022 the traditional government-run insurance plan for everybody who retires in that year and replacing it with a fixed financial subsidy that seniors can apply toward the cost of regulated private insurance policies.

Last but not least, Ryan would transform Medicaid into a block grant. Instead of guaranteeing federal funds to cover everyone that becomes eligible for the program, Washington would simply give the states a pre-determined, lump sum of money — and let states figure out how best to use it.

On paper, the Ryan plan saves the government a lot of money, at least in the long run. But upon closer inspection, the savings turn out to be illusory, cruel or some combination of the two. In fact, far from proving the superiority of conservative health reforms, Ryan’s plan validates what his political adversaries have said all along.

The Affordable Care Act represents a serious and realistic approach to controlling the cost of medicine — one that would be even more serious and realistic if the long-term budget changes President Barack Obama just recommended become law.

Although privatization has its own ideological appeal to conservatives, the real reason Ryan’s program would reduce government spending and deficits dramatically, at least over the long term, is that it substantially reduces the amount of insurance people would get. Repealing the health law would deprive more than 30 million people of insurance and leave others with more limited benefits.’

Meanwhile, the fixed formula Ryan would use to calculate the Medicaid block grants and Medicare vouchers would cause the value of each to rise far more slowly than the cost of health care. States would end up reducing enrollment or scaling back benefits or both. And, according to the Congressional Budget Office, seniors would end up individually responsible for more than two-thirds of their medical costs.

The theory behind this effort is that, by making individuals more conscious of the cost of health care, they will act more like consumers — thinking twice before getting extra treatments and shopping around for insurance policies that provide better value at lower costs.

But Republicans take this argument, which has some truth, way too far. The Medicare Advantage program, which already offers seniors the option to enroll in private insurance, hasn’t produced vast savings. Experiments with high-deductible coverage suggest it causes beneficiaries to skimp on useful care, including preventive treatments that prevent most costly, acute episodes later on. As Len Nichols, an economist at George Mason University, puts it, Ryan and his allies are “substituting algebra for health care policy.”

And that’s to say nothing of the political perils in Ryan’s strategy. As presently structured, his plan envisions a seismic shift away from traditional Medicare to a voucher worth considerably less money. Older voters are famously sensitive to even modest alterations in government benefit programs for the elderly. The idea that lawmakers would stand behind such an abrupt change, and then let it evolve in a way that so drastically reduces the federal contribution toward retiree health care, is difficult to accept.

The alternative is to control health care costs a bit more gradually, which is what the federal health overhaul does. Like Ryan’s plan, the Affordable Care Act attempts to restrict the federal government’s contribution toward health care expenses, via constraints limiting the growth in Medicare (although not Medicaid) costs as well as the tax subsidy working-age Americans get for employer-sponsored insurance. But the constraints are looser.

For example, unlike Ryan’s plan, which uses a fixed-value voucher to set Medicare spending, the health law sets less restrictive growth targets (which the president’s debt plan would further tighten) and then calls upon an independent commission — the Independent Payment Advisory Board — to recommend reforms when Medicare costs exceed those targets. IPAB’s recommendations can change what Medicare pays the providers of care, but the board, by law, cannot alter Medicare benefits or eligibility.

In addition, the health law’s formula doesn’t attempt to reduce spending by focusing exclusively on direct cuts to individual beneficiaries. On the contrary, the law distributes spending reductions across the health care system, affecting virtually everybody — whether it’s reducing Medicare payments to hospitals, eliminating extra subsidies for private Medicare Advantage plans or demanding greater rebates from pharmaceutical companies that contract with government insurance programs.

Most important, the Affordable Care Act doesn’t merely limit health care spending, in the faint hope that consumers, on their own, will produce a more efficient market. The law also introduces reforms that will put in place technological infrastructure and financial incentives to promote higher quality care. To some extent, that means sweeping, system-wide changes like the introduction of electronic medical records or the creation of an institute that will determine which treatments work better than others. But it also means dozens of more narrowly focused efforts, like a new public-private partnership to promote patient safety or pilot programs in “smart malpractice reform.” The idea is to experiment with virtually every payment reform experts have tried successfully on a small scale, in the hopes of replicating the successful ones across the country.

In short, the Republican vision for health care reform, as expressed by Ryan, is to limit federal spending on medical care, at levels far below what we spend today, and then let individuals make the best of the situation. By contrast, the health law calls for more gradual, more shared sacrifice by everybody involved with health care — with a focus on promoting efficiency so that lower spending needn’t result in lesser care. That’s not only a more realistic approach to controlling costs. It’s also a more humane one.

Jonathan Cohn is a senior editor at The New Republic .

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Repeal and replace — but replace with what?

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This column is a collaboration between KHN and The New Republic.

The Republicans insist they want not just to repeal the Affordable Care Act but also to replace it. But replace it with what, exactly? It’s not an easy question to answer.

Republicans have yet to embrace a specific proposal and, rhetorically, they have made contradictory arguments about what they want.

They have, for example, criticized the new law for reducing Medicare spending. B

ut they’ve also applauded proposals, like the one offered by House Budget Chairman Paul Ryan, R- Wis., which would reduce spending far more dramatically.

Still, there are a few key ideas that virtually all Republicans endorse. One in particular tells you everything you need to know about the GOP’s vision of health care reform — for better and, mostly, for worse.

The idea is to allow the purchase of health insurance across state lines. Today, if you buy coverage on your own, you can only buy a policy from within your state.

Jon Cohn

The Republicans would change that rule, so that somebody in Minnesota could buy a policy from, say, Alabama.

Republicans like this idea because, they maintain, it would help move health care toward a truly free market. As individuals shopped more aggressively for policies, the argument goes, they’d force insurers and, eventually, the whole health care system, to provide better quality and lower prices.

But cross-state purchasing would do more than merely unleash consumer power, the Republicans claim. It would also prevent regulations from driving up the cost of insurance.

Right now, states have rules about what insurance plans must cover and how insurers must behave. And the rules vary by state. States like New Jersey have lots of them — states like Oklahoma, not so much.

On the whole, regulations, where they exist, tend to make health insurance more expensive. The more insurers must cover, the more it’s going to cost consumers.

Cross-state purchasing would allow people to buy coverage from the states with the least regulations.

Cross-state purchasing would allow people to buy coverage from the states with the least regulations. Those who take advantage of it could save a lot of money on their premiums.

It all sounds very sensible, until you start to think through the implications. Many people can’t even get insurance on the individual market, because of pre-existing conditions. And many of those who do get insurance end up with coverage that is, frankly, just plain lousy.

The policies may be cheap, but they also have huge gaps in coverage.

The policies may be cheap, but they also have huge gaps in coverage, in the form of services not covered or out-of-pocket payments that all but the very wealthiest families would find unaffordable.

The people with these policies are known as the “under-insured.” Many if not most of them believed they were getting insurance when they purchased the policies. They discover the gaps only when they file claims and it is too late.

The main reason this problem isn’t worse right now is that some states have regulations forcing insurers to make insurance available to at least some people with pre-existing conditions and to cover at least some services. (The health overhaul strengthens these standards substantially, making insurance effectively available to all, and imposes them nationally.)

But the Republican proposal on cross-state purchases would decimate those regulations, opening the door for young, healthy people — whom insurers covet and who are frequently willing to risk flimsy coverage — to start buying the most minimal policies sold from the states with the least regulations.

Eventually the insurers would likely move, as well — congregating in those states in much the same way the credit card industry migrated to low-regulation states like Delaware and South Dakota. Offering more comprehensive insurance or making coverage available to people with serious medical conditions would become financially untenable, since there wouldn’t be enough premiums from healthy people to offset the costs of the sick.

You don’t have to take my word for it. When John McCain embraced this idea as part of his 2008 presidential campaign, the Urban Institute’s Linda Blumberg analyzed it and concluded that it would leave “many more people with health problems unable to purchase private coverage at any price … . The typical coverage would become less comprehensive as well, with benefit exclusions and limitations becoming the norm across the country.” Other experts have reached similar conclusions.

To be sure, allowing the purchase of insurance across state lines is just one part of the Republican agenda. But it reflects the same basic impulse as the other ideas Republicans frequently embrace. Ending the tax break that encourages employers to provide insurance, offering inducements for individuals to buy high-deductible coverage, turning Medicare into a voucher scheme that doesn’t guarantee comprehensive benefits — all of these ideas would make health care expenses less of a collective responsibility and more of an individual one. It’s a lousy deal for people who are sick, many of whom would have to forgo medical care or face financial ruin.

The only ones who benefit are the relatively young and healthy — well, at least until they get old and unhealthy, as everybody inevitably does.

Earlier this week, Republican aides told Politico that they plan, after the repeal vote, to start hearings on crafting a formal alternative to the health law — but that the work might, um, take some time.

“They won’t be rushing to push their own vision of health care through the House anytime soon,” the article explained. Given what that vision looks like, is it any wonder why?

Jonathan Cohn is a senior editor at The New Republic .

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Deadly Spin

Deadly Spin: How insurance companies use PR to fight reform

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Book Review:

If last year’s attacks on the health-care reform law seemed familiar, it’s because you’ve seen same the tactics before, writes Wendell Potter in his new book Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans (Bloomsbury Press).

They are the same tactics used by the tobacco industry against anti-smoking initiatives, by the fossil fuel industry campaign against global warming research, and by the food and beverage industry against taxes on high-sugar snacks and soda pop, he writes.

Indeed, not only are the tactics the same, Potter writes, they are often orchestrated by the same alliance of well-connected PR firms, industry-funded front groups, right-wing think tanks and supportive conservative media outlets, all following a time-tested playbook of PR spin.

Potter is in a good position to know: he was part of that spin machine, a master of the dark arts of PR, serving for 20 years as a communications officer major health insurers, most recently as the senior PR executive for the industry giant CIGNA.

It was a job, Potter writes, that for many years he enjoyed: he enjoyed the work, the pay, the perks and the prestige.

Disillusionment

But as Potter recounts in his book a series of events led him to question the morality of that work, among them: watching Sicko, Michael Moore’s scathing documentary exposé on the U.S. health insurance industry (“Moore had gotten it right,” Potter writes); visiting a health-care charity event in rural Virginia where he saw thousands of uninsured men, women and children standing in line in the rain to get basic health services (“I felt as if I’d stepped into a movie set or a war zone.”, and finally finding himself using his PR skills to defend his company’s decision to refuse to pay for a young girl’s liver transplant, a decision that may well have led to her death (“Just thinking about it caused me to ache.”).

Wendell Potter Photo by Emily Potter

These and other experiences led him to conclude that the  primary interest of his employers and other health insurance companies was to boost profits and stock prices even at the expense of patient welfare

“It became clearer to me than ever,” he writes, “that I was part of an industry that would do whatever it took to perpetuate its extraordinarily profitable existence.”

Ultimately, in 2008, he quit is high-paying job at CIGNA, because, Potter writes, he “could no longer serve in good conscience as a spokesman for an industry whose routine practices amount to a death sentence for thousands of Americans a year.”

Shortly, afterwards, as the debate of health-care reform heated up and he began to see opponents to reform mouthing talking points that he had written, Potter felt compelled to speak out and he soon began writing, giving interviews and testifying repeatedly before Congress about health insurance industry practices.

Potter dedicates a portion of his book to telling the story of how he gradually became disillusioned with his work but most of the book focuses on the art of PR spin and how various industry groups–including insurers, drug companies and the American Medical Association (AMA), for example–have skillfully used PR to block health-care reform for decades.

In the 1960s, for instance, the AMA enlisted an actor named Ronald Reagan to produce a record in which Reagan describes Medicare as a sinister socialist plot. (You can listen to that recording below.)

How-to manual

Potter’s book could serve as a handy “how-to” book for anyone who wants to manipulate public opinion and isn’t too bothered by ethics.

Potter lays out the key elements:

  • First, hire an well-connected PR firm, one that has cultivated friendly relations with influential politicians, journalists and pundits;
  • then launch a “charm offensive” emphasizing your company’s desire to work with its opponents to find solutions, while at the same time creating “front” organizations (which should always have the words “American” or “Freedom” in their names, Potter notes) that can go on the attack;
  • and, finally, enlist the help of conservative think-tanks, columnists and television personalities to give those attacks an air of legitimacy.

This was the exact playbook was followed by the health insurance industry during the debate over the new health-care legislation, Potter says: Publicly, it pledged to work with President Obama and the Democrats on reform, while at the same time behind the scenes supported front groups that alleged reform would bring rationing, death panels and socialism.

Fox News

Leaked emails from Fox News published online yesterday support Potter’s charge that conservative news organizations actively collaborate in these PR initiatives.

In the email, Bill Sammon, Fox New’s Washington managing editor, instructs the network’s reporters to use the phrase “government option” when referring to the “public option”, which at the time was being promoted by the Democrats.

Bill Dimiero, a reporter for MediaWatch, a left-leaning media watchdog group, included the email in his story Fox boss caught slanting news reporting.

From: Sammon, Bill
Sent: Tuesday, October 27, 2009 8:23 AM
To: 054 -FNSunday; 169 -SPECIAL REPORT; 069 -Politics; 030 -Root (FoxNews.Com); 036 -FOX.WHU; 050 -Senior Producers; 051 -Producers
Subject: friendly reminder: let’s not slip back into calling it the “public option”

1)      Please use the term “government-run health insurance” or, when brevity is a concern, “government option,” wheneverpossible.

2)      When it is necessary to use the term “public option” (which is, after all, firmly ensconced in the nation’s lexicon), use the qualifier “so-called,” as in “the so-called public option.”

3)      Here’s another way to phrase it: “The public option, which is the government-run plan.”

4)      When newsmakers and sources use the term “public option” in our stories, there’s not a lot we can do about it, since quotes are of course sacrosanct.

Dimiero points out that just a few months before Republican PR consultant Frank Luntz coached Fox News’ Sean Hannity on just this point:

Potter fears that as traditional news sources, newspapers in particular, contract, more and more of our information will be generated by PR firms and transmitted to us unfiltered without the analysis that professional journalists can bring to bear.

So now it is more important than ever for all of us to be more savvy PR professional works, Potter argues. “To understand why you believe some of the things you believe and do some of the things you do, it’s important for you to understand what PR people do and how they do it.”

His book is a good primer for anyone interested in learning about the science of spin, whether it comes from the right or the left.

Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans. Bloomsbury Press. Hardcover $26.00 288 pp. Kindle $14.30. Bloomsbury Press.

Ronald Reagan on the threat of Medicare:

To learn more:

  • Listen to Ross Reynold’s interview with Wendell Potter on KUOW.
  • Visit the websites of Center for Media and Democracy, a liberal PR industry watchdog that reveals who is behind the spin at www.prwatch.org and their wiki site  www.sourcewatch.org
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Congress

Go ahead. Repeal health care reform.

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Repeal Health Care, Make GOP Cut Costs, says Princeton economist

By John Greenwald, The Fiscal Times
This story comes from KaiserHealthNews partner

Go ahead. Repeal health care reform.

That’s what President Obama should tell Congressional Republicans, according to Princeton economist and health care expert Uwe E. Reinhardt.

His logic: That way the GOP would have to come up with its own solutions to the health care cost crisis, many of which, he wagers, would look much like parts of the current law.

“I think it would be a healthy thing,” he says.

A native of Germany who emigrated to Canada before moving to the United States, Reinhardt has served on many U.S. government commissions and advisory panels. A

mong them: the Physician Payment Review Commission, a congressionally established body that provides advice on Medicare matters, where Reinhardt served from 1986 to 1995.

In a freewheeling interview with The Fiscal Times, he critiques the new health care reform law — including its lack of cost containment — and recent proposals from the president’s deficit-cutting panel.

Most of this bill is actually Republican.

Never one to mince words, Reinhardt also discusses what he sees as the real culprit behind soaring health care costs, why he doubts a single payer health care system could work in the United States — and where he believes the country’s founding fathers went wrong.

The Fiscal Times (TFT): How do you see the health care battle playing out next year, with Republicans in control of the House of Representatives?

Uwe Reinhardt (UR): The House probably will repeal the bill for cosmetic reasons so they can tell their constituency, “We repealed it.” If the Senate went along and repealed it, I think it would be good.

Why? Because then you have a clean slate. You could say, “Okay guys, now the show is yours. Tell us what you’re going to do. Here’s a waitress, she’s got kids, she can’t afford insurance. What are you going to do about her?” And I think it would be a healthy thing to see happen.

TFT: But President Obama would surely veto any repeal of health care reform.

UR: If I were him I wouldn’t. I would say, “All right guys, you have the show. We tried, you do it.” He might or might not do that.

TFT: What if Republicans simply defund health care reform?

It’s the private sector that doesn’t know how to control costs.

UR: Whether that’s smart or not remains to be seen. Their hope is that they can throw sand in the oil of this engine and it grinds to a halt, and then say, “See, we told you this bill wouldn’t work.”

But what if for some reason it could happen that the Democrats actually learn how to communicate? And suppose they could persuade people that these are the benefits that you would have had, but [the Republicans] killed it and now let them come up with something else.

And what Republicans would come up with would actually be fairly similar — that’s the irony of it. Most of this bill is actually Republican. You can trace back in history and find those proposals made by Republicans.

TFT: Where is the cost-containment in the massive health care reform act that Congress passed this year?

UR: There actually isn’t much to speak of. There’s hope and prayer in the bill. There’s a provision for comparative effectiveness analysis of different therapeutic approaches, including different drugs and so on. But I think that’s a fringe thing.

They’re talking about bundled payments instead of fee for service. That could potentially save a lot of money, but I’m not convinced that it actually will because once you specify the bundles then you have to negotiate who will deliver them and it could cost as much. Then they’re distributing some $20 billion for information technology, and that might help. But by and large that is it.

TFT: Why wouldn’t negotiations drive down prices?

UR: The private sector is not very effective in negotiating prices. The public sector can just put a lid on it and say, “That’s all we’re paying.” The private sector is the inflationary component of health care, not Medicare or Medicaid. Medicare and Medicaid haven’t grown faster, even though they deal with the older population. It’s the private sector that doesn’t know how to control costs.

TFT: Why are Medicare and Medicaid better at controlling costs than the private sector?

UR: Medicare and Medicaid are what we economists call monopsony buyers. They are big gorillas. Medicare effectively sets what it takes, take it or leave it. Medicaid does that too.

But in the private sector every insurer negotiates with every hospital and every doctor. And it turns out that the hospital sector in particular is far more consolidated than the insurance industry.

So it is quite possible in the highly splintered buying side that a provider with a big hospital system can just tell insurers to take a walk.

So having more insurers doesn’t mean lower premiums, it means higher premiums. And there’s empirical evidence of that.

TFT: What do you see as the strengths and weaknesses of the health care reform act?

UR: Well, you should understand that the bulk of this bill is simply to extend health insurance to millions of Americans who cannot afford it, either because they are poor or have pre-existing conditions, and that will require $1 trillion of additional federal spending over the period 2014 to 2019.

In fact, I think that the president would have been well advised just to leave it at that and not put all this other stuff in.

TFT: What kinds of other stuff?

UR: I think there is probably more regulation in this bill than was needed. They tried to fix too many things at once. In retrospect, one could have said just do the coverage expansion.

TFT: You have written that the reforms contain steps for getting better value per health care dollar. What did you have in mind?

UR: The most potent tool was this Independent Payment Advisory Board — a commission of stakeholders that would sit and make concrete cost-control proposals for Medicare and maybe Medicaid too. And if Congress rejected the recommendations it would have to come up with similar cost savings in another way.

If that commission worked it would have the power to contain Medicaid spending, which would help the deficit. The problem is that the Republicans, without killing the authorization for this body, could kill it by just not funding it, and they would get some Democrats to go along with this because a lot of Congressmen don’t like some outside body to tie its hands. My own feeling is that this commission that would be powerful is not going to survive.

TFT: Turning to the president’s commission on reducing the federal deficit, how would you evaluate the chairmen’s proposal to hold the growth of federal health care spending to GDP plus 1 percent after 2020?

UR: This, of course, is what everyone is dreaming of. All American health spending had traditionally run two-and-a-half percentage points faster than GDP, and everyone has always said that is not sustainable, because if that happens, by 2030 we’ll have less GDP for everything else.

These are all hope and prayer things.

The problem is that if you make federal health spending — which is V.A., Tricare [for military families], Medicare and Medicaid — grow only 1 percent more than GDP, and the private sector continues to grow 2 percent more than GDP, then eventually what you get is that the fees in the public sector are so low that a lot of doctors won’t take Medicare patients, won’t take Medicaid patients, won’t take Tricare patients.

Ultimately, if you went to GDP plus 1 percent you would have to control prices, and you would get a two-tiered system. Medicare prices would be only half of what the private sector pays and you would have a huge access problem.

TFT: What about the commission chairmen’s recommendation to offset the “Doc Fix,” which reverses a pay cut for physicians whose fees exceeded the budget for treating Medicare patients, by asking health providers and others to slow the growth of health care costs? The chairmen’s recommendations include expanding cost-sharing for Medicaid and adopting comprehensive tort reform.

UR: These are all hope and prayer things. Seems to me you should say, “You want your doctors paid properly? We’re going to raise taxes. Put it on the payroll tax.”

TFT: What would a high-performing national health care system look like?

UR: I think the Germans, the Swiss, the Dutch have a perfectly fine approach. It’s not a single-payer system. While I’m a Canadian I am not for [single payer] in the U.S. because we do not have a political system that can handle it responsibly. Canada has a parliamentary system that insulates considerably the public program from lobbying.

TFT: What do you like about the other countries that you mentioned?

UR: The German system is a payroll-based, private system with 200 nonprofit sickness funds that compete for patients through an exchange with risk adjustment and tight government regulation. The Swiss and the Dutch operate that way. So it’s private but under tight government regulation. And I think these systems function very well. They’re cheaper than ours.

TFT: You have studied hospital pricing systems around the world. What lessons do they offer for restraining prices?

UR: What is needed in hospitals is a management information system, and it’s actually doable — these systems exist. Tracing every order entry of every doctor for every patient by every input, so that you can create files of costliness of treating patients by doctor.

The other innovation we need is not so much in the hospital. We should have an all-payer system where every payer — Blue Cross, Medicare, Medicaid, you name it — pays the same fee for every service. But to do that you really have to have universal coverage.

TFT: So you favor universal coverage but not a single payer system?

UR: For other countries I do [favor single payer] but we can’t run it. You need a responsible system of governance. Whatever you can say about U.S. governance, you cannot call it responsible. You really couldn’t. I think the founding fathers gave us an impotent government that acts quite irresponsibly. I don’t think parliamentary systems are that bad.

______________________

READERS: What do you think? Should the Republicans be told to “put up or shut up”?

____________________

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Dr. Roger Stark

View: Are “death panels” part of health care reform?

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One of the most controversial issues during the debate over federal health care reform was the concept of government committees or agencies deciding who would receive health care and who wouldn’t.

Those who opposed the President’s health care plan called these agencies “death panels” and worried the panels would allow people to die rather than provide costly treatments at government expense.

The President’s supporters called this “fear mongering” and assured Americans the legislation would not establish government agencies to make life and death decisions for us.

It is true the new national health care law does not specifically create a new agency that would dictate patient treatments. It does, however, establish a private nonprofit bureau to carry out comparative effectiveness research (CER) that will affect the medical care we all receive.

CER does several things. It studies the clinical effectiveness of a particular treatment or test and then compares that treatment to alternatives to measure clinical results and cost effectiveness.

It is estimated that up to 30 percent of all health care spending in the United States is wasteful or not effective. CER would theoretically reduce this wasteful spending and would standardize treatments for patients with the same diagnosis.

Supporters of the new law say it specifically prohibits using CER for clinical decision-making or for health guidelines.

CER has been used by the federal government since 1989 and by Washington state since 2006. The purpose at the federal level is to establish clinical guidelines for “best practices” that can be used in both private practice and government programs like Medicare.

Expanding CER via the new legislation will undoubtedly increase the list of the government’s clinical guidelines.

“CER rules represent a real threat to the day-to-day practice of medicine.”

In Washington state, CER is performed by the Health Technology Assessment program (HTA). This is a state-managed agency that uses a committee of eleven professionals to decide the most cost effective treatments for patients in state-funded health care plans such as Medicaid. Providers and medical facilities are not reimbursed by the state if they use non-approved treatments. Other states, as well as the federal government, are monitoring the HTA program for effectiveness and cost savings.

CER rules represent a real threat to the day-to-day practice of medicine. Doctors spend four years in medical school and then four to six years in specialty training.

A large part of that education is learning how to interpret medical treatment research and how to apply those treatments to individual patients. Very few physicians want to practice “cook book medicine” and treat all patients the same.

Much of our superb health care is based on the development of new drugs and medical devices. Using CER, bureaucrats will pick “best” drugs and devices and refuse to pay for alternatives, which will stifle innovative research into newer and better treatments.

During the debate, the country was assured the reform legislation would bend the cost curve down. After passage, even the chief actuary for the Administration estimated the new law would increase health care costs from 17 percent to 21 percent of our gross domestic product by 2020. Cost will still be the main problem with health care in the United States.

Consequently, government officials will search for ways to control costs within the next ten years. The enlarged CER will be established by 2013 and will decide what patients benefit most from what treatments.

The next step will be to reimburse providers for using only approved treatments. CER, therefore, will become the mechanism for rationing health care in this country.

Great Britain has had socialized medicine since 1948. The country has an agency that uses CER to ration health care – the National Institute for Clinical and Health Excellence (NICE).

The new Director of our country’s Medicare and Medicaid services, Dr. Donald Berwick, says he is a “big fan” of the British system in general and of the NICE program in particular.

Recently the Federal Drug Administration (FDA) banned the use of a cancer drug, Avastin, for patients with breast cancer in the United States. Avastin does not cure breast cancer, but has allowed women the possibility for a longer life. Provenge is a new cancer drug developed in Seattle that the FDA did approve for use. However, Medicare officials have disallowed the costly drug saying Medicare patients don’t need it.

“Death panel” is an inflammatory term. However, under pressure to control costs and by the use of CER, government officials already have a mechanism in place to decide who will receive treatment, which in some cases will mean who lives and who dies.

The Administration’s enthusiasm for the British NICE program and recent bans imposed by the FDA and Medicare should make all Americans worried about the direction our government is taking in managing our health care.

Dr. Roger Stark is a retired physician and a health care policy analyst with Washington Policy Center, a non-partisan independent policy research organization in Washington state. For more information visit washingtonpolicy.org.

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Jon Cohn

View: GOP’s attacks on health law, confusing and incompatible

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Attacking The Health Law: The GOP’s Confusing And Incompatible Arguments

This column is a collaboration between KHN and The New Republic .

Suppose I told you one of the political parties was determined to increase wasteful government spending by hundreds of billions of dollars, to pay the salaries of countless extra bureaucrats and to degrade the quality of medicine in the U.S.

If you’ve been paying attention to politics for the last few months, you’d probably assume I was talking about the Democrats.

Apparently government-run health care is awful, except, um, when it isn’t.

Not so. I’d actually be talking about the Republicans who want to repeal health care reform.

Confused? Well, don’t blame yourself. The Republicans and their allies have spent a lot of time — and a lot of money — attacking the Affordable Care Act and promising to undo it.

And they have done so with such a fury that almost nobody seemed to notice they are making a pair of arguments that are fundamentally incompatible.

The Republicans start their calls for repeal with a familiar, thematic critique of government. The new health law, in this telling, represents an unconscionable government intrusion into the private sector and, ultimately, an encroachment on individual liberty. The federal government will be dictating everything from how employers conduct their businesses to how doctors treat their patients.

And, oh yes, the government will be spending a ton of money it does not now have, increasing the deficit and/or laying new burdens on the taxpayers.

The argument is hyperbolic and, in places, downright inaccurate. But, at least, it is consistent with longtime conservative principles about the role and size of government.

To be fair, the Republican argument makes perfect sense if you think like a campaign operative.But that’s not all the Republicans have been arguing. They’ve also been attacking the health overhaul for what it will do to Medicare. And instead of accusing Democrats of trying to dump more money into a government program, as Republicans would typically do, they’ve attacked Democrats for doing the very opposite — noting that the Affordable Care Act will reduce spending on Medicare somewhere around $400 billion over the next ten years.

Apparently government-run health care is awful, except, um, when it isn’t.

To be fair, the Republican argument makes perfect sense if you think like a campaign operative. Senior citizens are, at the moment, the most conservative age group in the electorate. They were least likely to support President Obama in 2008 and, during the health care fight, were most likely to oppose enactment.

Republicans seized on that fact and have gleefully proclaimed themselves champions of Medicare, despite a long history of opposing it and, as Newt Gingrich once put it, letting this universal social insurance program “wither on the vine.”

Seniors are playing along, since they figure reform means taking money once targeted for Medicare and diverting it to help people under-65 pay for their medical care.

But here’s where things could get complicated for the advocates of repeal. Consider what undoing the cuts in Medicare would entail.

It would start, first of all, with restoring higher payments to the insurers that provide private coverage for people in Medicare, through what’s known as the Medicare Advantage plans.

There’s a reason the health law reduces those payments: Repeated independent studies, including those by the well-respected Medicare Payment Advisory Commission, determined that the government was paying the insurers too much.

Restore those payments, and you’re wasting taxpayer dollars. And a lot of those wasted dollars will go to hiring new people to work at insurance companies. They won’t be government bureaucrats, obviously. They’ll be insurance company bureaucrats.

But is that really better? Is the Tea Party in favor of waste as long as its lines the pockets of insurance executives rather than Uncle Sam?

Meanwhile, restoring the other cuts to Medicare would mean rescinding payment reductions designed to make the program more efficient.

Remember, a major goal of the health reform measure is to push against higher spending while simultaneously promoting higher quality care.

In the case of Medicare, that means slowing down payment increases to providers and penalizing those that provide substandard treatment; while, at the same time, boosting payments to primary care doctors and providing bonuses for those who actually treat patients better.

Reasonable people can argue how well these efforts will work. But allowing Medicare to continue going along as it has been for the last ten to twenty years — which is what repealing the new health law would do — would almost surely force a choice between much higher taxes or much worse access to care.

If you don’t believe me, just look at the plan proposed by Republican Representative Paul Ryan, who is forthright enough to admit that the GOP alternative to the Democrats’ approach to Medicare is to reduce radically its guaranteed benefits.

Of course, the Republican Party’s leadership hasn’t embraced Ryan’s plan in any specificity.

And, at least for the short term, it seems unlikely they’ll advocate such a path, lest they scare off the seniors that just handed them control of the House of Representatives.

But that means Republicans are now on the side of wasting taxpayer dollars on a government program that, in fact, needs some reform. I wonder how long it will be until the Tea Party figures that out.

Jonathan Cohn is a senior editor at The New Republic


This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Three red and white capsules

Health care reform: Prove it works and we’ll pay

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By Merrill Goozner, The Fiscal Times

This story comes from

Savvy consumers know the drill. Toyota takes a high-end Camry, slaps a Lexus nameplate adds bells, whistles and leather seats, and charges customers $10,000 more.

Nobody cares when people spend their own money for the illusion of higher quality.

But when it comes to Medicare, where it is everybody’s money and overpriced technologies are a significant factor undermining the senior citizen health care program’s long-term financial viability, it is no longer acceptable.

Two researchers with past experience setting payment policy at the Centers for Medicare and Medicaid Services (CMS) say the time has come to rip the nameplate off new and higher-priced medical technologies that do not deliver better outcomes than older methods of care.

They have come up with an alternative scheme for setting prices at CMS, where the time-worn method of adding a profit to self-reported industry costs to set prices dates from World War II.

Companies that ask Medicare to begin paying for an ostensibly better mouse trap will get three years to show that it is superior to older treatments.

The technical name for their proposal is “reference pricing.”

Companies that ask Medicare to begin paying for an ostensibly better mouse trap will get three years to show that it is superior to older treatments, whether it is a drug, a device, a diagnostic test or a new surgical technique.

Companies that fail to provide proof of superiority will only receive the same price as the older technology, no matter how much it cost to develop the newer one.

“It’s a way for CMS to combine clinical effectiveness with cost effectiveness in a way that can work in the U.S.,” said Steven D. Pearson, president of the Institute for Clinical and Economic Review in Boston and a former advisor to CMS.

His co-author on a paper that appears in the latest Health Affairs is Peter Bach of Memorial Sloan-Kettering Cancer Center in New York, who served at CMS during the Bush administration.

The government poured $1.1 billion in stimulus funds into making comparisons between competing medical technologies. The Patient Protection and Affordable Care Act earmarked another half billion dollars annually for the effort over the next decade, and last week the Government Accountability Office appointed a 17-member board to oversee the research.

“. . . show me the data or you get the old price.”

The question now is how to make use of this information once it begins getting published in medical journals and government websites.

The authors’ proposed pricing method leaps over the roadblocks to using comparative effectiveness research that were included in the recently enacted health care reform law which specifically prohibited CMS from using comparative effectiveness research to deny patients access to any technology that has been approved by the Food and Drug Administration.

Manufacturers of medical technologies, many patient advocacy groups and their backers on Capitol Hill insisted on that provision.

Under the Pearson-Bach proposal, however, CMS won’t have to say no.

“Companies will be under the gun of a three-year deadline to measure outcomes to maintain their higher prices.”

The agency could simply say, “show me the data or you get the old price.”

“We’re saying let’s pay comparable prices for comparable results,” said Pearson. “It’s a different paradigm.”

The three-year grace period arises from the fact that many new technologies such as drug-eluting stents open clogged arteries and advanced radiation cancer therapy came to market with very little clinical data backing their approvals and none comparing them to older techniques.

The FDA has asked the Institute of Medicine to recommend ways it can overhaul its device approval system to generate better data on the front end of the approval process.

Drug-eluting stents, for instance, introduced in the early 2000s, quickly seized 90 percent of the market from older bare metal stents without proof of their superiority and despite being much more expensive.

A half decade later, evidence began emerging that the drug-eluting stents may actually have had worse outcomes than the bare-metal variety, and usage dropped sharply.

“Historically, there is a surge whenever new technologies are introduced driven by higher reimbursements” for physicians and manufacturers, Pearson said.

They have no incentive to generate data showing how well it is working once on the market.

Under the proposed reference pricing scheme, however, companies will be under the gun of a three-year deadline to measure outcomes to maintain their higher prices.

Pearson dismissed concerns that reference pricing would discourage innovation in medicine by making companies reluctant to invest in new technology.

“It would be okay if it leads some companies to leave some projects on the drawing room table,” he said. “We want them to prioritize the development of products that really have a superior patient outcome. The system doesn’t work hard to do that now,” he said.

The proposal received a cool reception from device makers, one of the industries that would face new hurdles for raising prices under reference pricing.

“AdvaMed (the industry trade group) supports comparative effectiveness research to inform patients and their providers in selecting the most appropriate care for individual patient needs,” said Ann-Marie Lynch, executive vice president of payment and health care delivery policy. “CER should not be used to deny coverage, or otherwise limit access directly, or indirectly through the reimbursement system.”

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Twenty-dollar bill in a pill bottle

View: Can health reform reduce costs?

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Returning To The Argument: Can Health Reform Reduce Costs?

Jonathan Cohn, Senior Editor of The New Republic

This column is a collaboration between KHN and The New Republic .

Here we are again, having yet another argument about whether health care reform can really reduce costs.

The occasion this time is the recent announcement by several insurers of their intention to raise premiums on policies they sell directly to individuals.

The increases are necessary, the insurers say, because the Patient Protection and Affordable Care Act forces them to enroll sicker patients and provide more benefits.

And both changes will cost them money.

The critics of health reform have been quick to cite this announcement as proof that their suspicions were right all along.

They say it shows that the health overhaul will force us to pay more for our health care — via some combination of higher premiums, higher out-of-pocket payments and higher taxes — because that is what happens when government decides to expand coverage or strengthen benefits for everybody.

Think of health care reform as two separate sets of changes that, from a cost perspective, will push in exactly the opposite direction.

“These may be good things which consumers value,” conservative analyst Grace Marie-Turner wrote this week, “but they are not free.”

It’s an alluringly simple argument — and, if you’re among those people who are suspicious of government intervention anyway, an appealing one.

But is it the correct argument? Don’t be so sure.

Think of health care reform as two separate sets of changes that, from a cost perspective, will push in exactly the opposite direction.

First there are the changes that will make health care more expensive. You got a taste of those this week on the six-month anniversary of the law’s enactment, when a set of new consumer protections went into effect — prohibiting insurers from, for example, refusing to pay emergency room charges just because a beneficiary went to a hospital outside of the normal provider network.

But the really big changes come in 2014, when carriers begin selling policies to individuals directly through new regulated marketplaces called insurance “exchanges.”

At that point, the policies insurers sell through the exchanges will have to include a basic set of benefits — and will have limits on how much out-of-pocket spending they can pass along.

Of course, something else will take place in 2014.

That’s the year that the vast expansions of insurance coverage happen. The government will start enrolling all poor people, rather than just women with children and other select groups, into Medicaid.

The law targets wasteful spending — that is, instances where either individuals or the government is paying too much for what some part of the health care industry is providing

And it will start offering subsidies to people who buy coverage through the exchanges.

More than 30 million additional people will end up getting insurance because of these changes in the health law, according to government projections.

All of these changes will cause more money to flow into the health care system, usually as premiums or taxes.

And you could make a pretty good case (in fact, I would make the case) that the benefits are worth the extra expense, since it means sparing millions of people from serious financial hardship and, in some cases, giving them access to medical care that could literally save their lives.

But that brings us to the second set of changes — the ones that are designed to make health care less expensive.

The law targets wasteful spending — that is, instances where either individuals or the government is paying too much for what some part of the health care industry is providing.

An example of this is the requirement, soon to be enacted, that insurers spend a larger portion of premium dollars on actual medical care.

(In wonk speak, that’s called setting higher “medical loss ratios.”)

Many experts believe this will act as a natural break on premiums in the private sector, since it will limit insurers’ abilities to raise prices if they’re not also providing more care.

But, particularly over the long term, the big savings in health reform will come from efforts to reduce wasteful care rather than wasteful payments.

Scores of studies, dating back decades, have shown that our medical system routinely provides unnecessary treatment — by failing to administer routine preventive measures, by duplicating treatments because of miscommunication among providers, and by doling out care that is at best unproven and at worst harmful.

The health overhaul attacks this problem by, among other things, rewarding use of electronic medical records and creating an institution to study which treatments work best.

It also imposes a tax on the most generous insurance policies — on the theory, widely supported by economists, that the tax will encourage insurers (and consumers) to find ways to save money.

So what’s the upshot, once you add up the ways the health law will make health care expensive and the way it will make care less expensive?

There’s obviously no way to be sure. But the best estimates we have, from government and independent authorities, is that over the first ten years or so total spending will be a little higher but by a trivial amount.

That is, we’ll be spending pretty close to what we would have without the law. That’s actually quite impressive, given all of the new benefits and security these reforms will provide.

More important, after ten years, according to these estimates, spending should actually start to rise a little more slowly. And it’s that long-term trend that really matters for our country’s future.

You shouldn’t be satisfied with that outcome. In order to get the health overhaul through Congress, its proponents had to soften the cost control provisions — by, for example, nixing a public option that could have helped bargain down payments to health care providers even more.

If health care spending doesn’t come down more dramatically, then it’s going to siphon away more and more resources from our society.

But that doesn’t mean health care reform can’t reduce costs. It simply means that, with some modifications, reform could reduce costs even more.

Jonathan Cohn is a senior editor at The New Republic .

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.


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View: A new era for access to health insurance

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By Megan Grover
Director, Regulatory Affairs at Group Health Cooperative

The dawn of a new age in health insurance began Thursday when the first requirements of the Patient Protection and Affordable Care Act (PPACA) went into effect, six months after the enactment of the new law.

Since most of the provisions in the reform law do not take effect until 2014, the intention of these new rules is to ensure individuals have adequate health coverage in the short-term, until the PPACA is fully implemented.

Most consumers will see these changes as their plans renew next year.

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Short-term insurance reforms will be implemented upon renewal for all current groups and for all new groups beginning September 23, 2010. Individual and family plans will implement applicable changes on January 1, 2011. Changes include:

  • No plan lifetime limits or lifetime limits for essential benefits
  • Restricted annual limits for essential benefits
  • No costs shares for in network preventive services
  • No pre-existing condition exclusions for new members under age 19
  • Expand dependent coverage to age 26
  • Restrictions on rescissions (retrospective terminations)
  • Coverage for emergency services the same in and out of network
  • Pediatricians allowed as Primary Care Provider
  • Direct access to OB/GYN without authorization or referral
  • Medical Loss Ratio reporting for calendar year 2010
  • Modified Internal Claims and Appeals Process and External Review

Keep in mind, grandfathered plans are exempt from some of these requirements to allow employers and/or individuals to keep the coverage they have (as promised during the debates).

The exemptions vary between group and individual coverage, but one example is the elimination of cost-sharing for preventive services.

Everyone – from health plans to regulatory agencies – has been working diligently to interpret and comply with the new requirements.

Much has already been completed to prepare Group Health products, processes, systems and communications for these changes, and there’s more to come.

It may feel a little uncomfortable right now as reform is realized incrementally over the next few years. But for those of us who have looked forward to the day when better health care access is provided to each and every person, it’s a great, new day.

To learn more:

  • Visit Group Health Cooperatives’ health policy blog In Our View.

Megan Grover is the Director of Regulatory Affairs, within the Public Policy Team at Group Health Cooperative. In this position, Megan is responsible for monitoring regulatory activity, and acting as Group Health’s voice in response to federal regulations. She also serves as a representative for Group Health’s interest in promoting quality healthcare in industry association meetings.

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View: GOP ‘repeal and replace’ strategy lacks merit

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This column is a collaboration between KHN and The New Republic .

It will force a lot of people to pay higher premiums. It will lavish subsidies on the private insurance industry. It will put life-and-death decisions in the hands of bureaucrats. And it will add hundreds of billions of dollars to the federal debt.

No, I am not talking about the health care reform law. I’m talking about the Republican proposals to repeal it.

Since even before the Patient Protection and Affordable Care Act became law, Republicans have been vowing to get rid of it and to pass their own reforms instead.

It makes a lot of sense politically. The voters are angry at Washington. The voters are also worried about their access to health care.

By promising to “repeal and replace,” as the slogan goes, Republicans sound like they’re giving the voters exactly what they want.

Repeal reform and the deficits go back up — by more than $100 billion over ten years.

But would the Republican plan make health care better — or worse? Consider, for starters, that the health overhaul will, starting in 2014, expand Medicaid and make subsidies available to lower- and middle-income Americans who buy private insurance.

Multiple estimates, including those from the Congressional Budget Office, suggest that that an additional 30 million people will get insurance because of these changes.

Jon Cohn

The Republicans say they have their own mechanisms for expanding insurance coverage. On the official website for congressional Republicans, party leaders propose such measures as allowing the purchase of coverage across state lines and creating special insurance plans for people with pre-existing conditions.

But studies have repeatedly shown that proposals like these would, at best, bring coverage to just a few million Americans. So if the Republicans succeed in taking the recently enacted reforms off the books, that means they are taking insurance away from a whole lot of people.

. . . most experts believe the mainstream Republican proposals won’t significantly bend the cost curve.

Of course, advocates of repeal have made pretty clear that expanding coverage isn’t that big a deal to them. Their primary concern, they say, is with making health care cheaper for people who already have it.

But it’s hard to see how getting rid of health care reform would accomplish that goal, either. The new law includes a bunch of measures designed to reduce the overall cost of care — first by a little bit, and then by a lot.

It would also establish an insurance exchange that gives individuals and small businesses access to the kind of group policies large employers now have — complete with those subsidies, which will offset some or most of the cost for people who would otherwise struggle to pay the premiums on their own.

Although the effect of these changes on individual premiums will vary a lot from person to person, the CBO concluded that, once you account for the subsidies, reform will mean lower average premiums for people with private insurance.

Repeal reform and these people are stuck paying more (unless Republicans are willing to let benefits get a lot more skimpy).

The official projections also suggest that, ten years from now, government spending on health care will be lower than it might otherwise be.

Repeal reform and the deficits go back up — by more than $100 billion over ten years. And while the nation as a whole will pay slightly more for health care over the next ten years, the rate of growth — which is the figure we care about most — will be lower. Take away reform and, according to the projections, health care costs will rise at a higher rate.

Again, the Republicans have their own ideas about reducing costs. A few of them have merit. (In principle, for example, malpractice reform makes sense, if done right.)

But most experts believe the mainstream Republican proposals won’t significantly bend the cost curve.

If you take away health reform . . . consumers will be more vulnerable to the whims of faceless insurance company bureaucrats, whose goal may be to maximize profits rather than public health.

Rep. Paul Ryan, R-Wis., has famously put forward a more radical plan, to transform Medicare into a voucher system. But the Republican leadership had refused to back up that idea, perhaps because it would control costs only by dramatically reducing the insurance coverage that seniors get.

But wait a minute — wouldn’t that all be worthwhile in order to get the government out of medical care? Given all the stories of “socialized medicine” and “death panels,” it might seem that way.

But those things exist only in the imagination of dishonest and hysterical critics. On the other hand, the health overhaul does include a bunch of consumer protections, many of which are already taking effect.

There are or will be standard benefits that all insurers will have to cover, requirements for more disclosure so that consumers will be able to shop intelligently and find the best plans, and guarantees of the right to appeal treatment denials.

If you take away health reform, all of those protections go away — and consumers will be more vulnerable to the whims of faceless insurance company bureaucrats, whose goal may be to maximize profits rather than public health.

The health law is far from perfect. Critics on the left and right can find plenty to criticize legitimately. But reform also promises a lot of benefits — to individuals and to the country as a whole.

Can Republicans make the case that Americans would be better off without these benefits?

It’s about time somebody forced them to answer that question.

Jonathan Cohn is a senior editor at The New Republic .

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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Four lessons from Social Security’s Disabled Adult Child Program

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Social Security’s Disabled Adult Child Program: A Key Program Often Below The Radar

By Harold Pollack, University of Chicago’s School of Social Service Administration

Portrait of Harold PollackImagine that you are a middle-aged gas station manager with a worrisome health problem and a disabled child. Have you ever wondered how you would provide for that child in the event of your own death or disability?

Now fast forward the tape. Have you ever been to the supermarket and spotted a balding man with Down syndrome pushing a shopping cart for his elderly mother? Have you ever wondered how he pays his medical bills or his rent?

In truth, no single – or entirely comfortable – answer exists to these questions. Intellectual disability is often accompanied by costly illnesses and social service needs.

Even if someone spends his entire life in the house he grew up in, his family may eventually need public help to make ends meet. For many families, a little-known aspect of Social Security, awkwardly labeled the Disabled Adult Child program, makes a huge difference.

Benefits are hardly lavish. Still, they can make the difference between poverty and self-sufficiency for hundreds of thousands of recipients.

I never thought much about this assistance until february 2004, when my mother-in-law suddenly died and we moved my wife’s intellectually disabled brother vincent into our home.

Moving him 700 miles from Oneonta, New York, to suburban Chicago was both a family crisis and a bureaucratic nightmare. His New York Medicaid suddenly wasn’t much use. His connections to local services were severed. There were forms to fill out, waiting lists to join, lawyerly letters to be written and more.

Exactly two things continued seamlessly: Vincent’s Social Security and Medicare benefits. If you pay Social Security taxes, you know that you earn credits towards your retirement benefits.You may not realize that you also have bought the largest life insurance and disability policy most Americans ever own.

If you die or become disabled, your dependents will receive a monthly payment, indexed to the cost of living. Most child recipients receive such payments until adulthood.

Those with severe and lasting disabilities receive these payments for their entire lives. In Social Security parlance, these latter recipients are considered “disabled adult children.”

About 921,000 men and women receive Social Security benefits as disabled adult children. Almost half, 430,000 people, are diagnosed with Down syndrome or other intellectual disabilities.

Benefits are hardly lavish. Still, they can make the difference between poverty and self-sufficiency for hundreds of thousands of recipients.

These benefits are important to caregivers, too. When my wife left the paid workforce to care for her brother, that Social Security check made a real difference.

These same benefits now cover Vincent’s room and board at a modest group home a few miles from our family home.

As I ponder the quiet success of this program, four broad lessons stand out.

Disabled Adult Child program, like other aspects of American disability policy, was implemented by both Democrats and Republicans over many decades

.First, Social Security is a good deal. As late-night TV commercials might note, no medical examination is required, and you can never be turned down.

People with preexisting conditions or with sick children pay no more than anyone else. By one 2001 calculation (updated for inflation), Social Security benefits are equivalent to a $496,000 life insurance policy, and a $434,000 disability insurance policy.

Second, such generosity is possible because Social Security is provided through effectively universal social insurance. Everyone is protected against unlikely but scary risks because no one can opt out from helping.

To the uninformed public, such a requirement that everyone purchase insurance appears to infringe individual freedom. Actually, by allowing us to act collectively, this mandate allows us to protect each other from bad outcomes in life’s lottery that would crush any one family forced to bear that burden alone.

Third, the Disabled Adult Child program, like other aspects of American disability policy, was implemented by both Democrats and Republicans over many decades.

Though hardly free of ideological conflict regarding the proper role of government, the politics of disability have been spared the worst partisan acrimony that disfigured our recent health care reform debate.

Consider this brief history:

Disability insurance and related dependent coverage were added to Social Security during the Eisenhower years. Other key changes to Social Security were added in 1972.

Programs such as the Disabled Adult Child program, admirable as they are, do not provide the economic and health security that people really need.

This Nixon-era legislation established Supplemental Security Income (SSI), a critical pillar to provide income security and health coverage to disabled Americans.

Over time, Democrats such as Edward Kennedy and Hubert Humphrey worked effectively with Republicans such as Lowell Weicker and George H.W. Bush to enact the Americans with Disabilities Act and other key measures.

Many politicians had children or siblings living with serious disabilities. Others, such as Robert Dole, brought very personal experiences of disability and rehabilitation.

Finally, programs such as the Disabled Adult Child program, admirable as they are, do not provide the economic and health security that people really need.

Disabled men and women require diverse medical and social services that Medicare does not cover, or that Medicare covers only with punishing cost-sharing imposed on recipients.

These problems are especially acute in the arena of intellectual disability. Medicaid, not Medicare, finances most required services at the boundaries of health care, education, and social services.

Families must therefore confront the many indignities and logistical challenges associated with means-tested public aid. This is not wise or humane social policy.

During our current economic downturn, many people living with intellectual disabilities and their families are also enduring painful service cuts, as cash-strapped state and local governments are forced to trim important programs that serve the disability community.

Despite these limitations and challenges, this 75th anniversary year of the Social Security Act provides an opportunity to celebrate the ways America has opened its heart and its wallet to help our fellow citizens who live with physical or mental disabilities. We must build on this platform. We have a long way to go.

Harold Pollack is a public health policy researcher at the University of Chicago’s School of Social Service Administration, and faculty chair of the Center for Health Administration Studies.


This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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