Maggie Mahar is a Century Foundation fellow and expert on American health care. She is the author of the ground-breaking book,
Money-Driven Medicine: The Real Reason Health Care Costs So Much. Welcome to OpEdNews, Maggie. Well, the
Senate finally managed to pass a health care bill on Christmas Eve.
How should we regard it? Is it a holiday gift or another boondoggle
masquerading as meaningful, far-reaching reform?
bill is a start. Over the next three years, there will be amendements
and more legislation. This is not the final word on reform. For
low-income people and people suffering from pre-existing conditions,
this legislation offers much-needed help. This is important. But
healthcare will remain too expensive for most of us unless the
Independent Medicare Advisory Board (formerly called the Independent
Medicare Advisory Council -- or IMAC) is given the power to change
what Medicare (and other payers) pay for, and how they pay for it.
Some hospitals are overpaid -- they are being rewarded for
being inefficient. In hospitals where more patients contract infections or fall
victim to medical errors, they stay longer and undergo more procedures. As a result, Medicare
winds up paying those hospitals more. Medicare needs to begin using financial sticks to
encourage hospitals to pay more attention to patient safety. Medicare can
also use financial carrots to reward hospitals with good safety records.
We're also over-paying some specialists for some services that offer
little benefit to patients. Medicare should cut those fees-- and raise fees for
primary care and chronic disease management. But none of this will happen unless the Independent Medicare Advisory Board has
teeth, is protected from Congress, and begins its work as soon as possible.
Right now the law says that the Board cannot change reimbursements
to hospitals for 10 years. By then, it will be too late. An amendment
sponsored by Jay Rockefeller, Joe Lieberman and Sheldon Whitehouse
would give the Board the clout it needs. Watch what happens with that
How does this legislation look for small business owners and the vast but shrinking middle class?
I haven't looked into the details of what this means for small
business; I've been focusing on what it will mean for patients. But I would say
that for small business owners, the bill is a mixed bag. Some will benefit, others won't. Much depends on how many
employees they have and their profit margins. "Small businesses" is such a
varied group that you almost need to assess the effect of the bill industry by industry.
For the middle-class, those in the lower half of the statistical middle
class (households with joint income of, say $30,000 to $50,000) will generally get subsidies. For those at the owner-end, the
subsidies should be generous enough to make insurance affordable. Caps on out-of-pocket payments (co-pays and
deductibles) and there again, lower-middle-class families should be okay.
Those who don't have employer-based insurance will finally have access to
But for those on the upper edges of the statistical middle class
(people with joint household income of $50,000 to $65,000) as well as the upper middle-class, (people with joint income of say,
$65,000 to $90,000) insurance is going to be expensive and most will not be
getting subsidies. (Everything depends on the size of the household. A
family of four earning $65,000 would get a subsidy.)
Federal Employee Health Benefits plans are expensive; the Office of
Personnel Management has not done a particularly good job of negotiating
rates. But the government pays a very large share of the premium,
so federal employees are generally okay (though many have very high
deductibles, which means they can't always afford to use the insurance).
Upper-middle-class households in the Exchange who don't qualify for
subsidies, (because they earn more than 400% of the federal poverty level for
a family of their size) are going to be paying the entire premium
themselves. In many cases, they will also have pretty high co-pays and
deductibles. We are going to have to bring down the cost of care itself,
or they are not going to be able to afford health care.
When I say bring down the cost of care, I mean that we have to stop
over-paying inefficient hospitals. We have to cut what we pay some
specialists for very lucrative tests and treaments that provide little
benefit to the patient. We have to lower the cost of drugs -- either by
importing drugs from other countries, or by letting the government negotiate
with drug-makers for better prices. (This is what other countries do.)
Finally, we have to begin paying for value, not volume. Today, by paying
fee-for-service, we encourage providers to do more. We need to reward them
when they provide for higher quality and better outcomes at a lower price.
Finally, I'm very concerned about older, middle-class Americans. Under
the Senate bill, insurers can charge them three times as much as they charge
younger Americans. This will make comprehensive insurance with
reasonable co-pays and deductibles unaffordable for many middle-aged,
middle-class and upper-middle class Americans. And people in their late 50s
and early 60s are at a stage in life when they need care.
But we have three to four years to take a closer look at costs and
amend the law. I hope Medicare uses those years to begin to rein in spending.
As a middle-aged, middle-class American myself, I'm also quite concerned about this legislation. Do you want to comment on the fact that, according to John Nichols
in the Nation, the Democratic leadership seems to be planning to avoid the
traditional conference process of reconciling the two bills? This may
shut out the Republicans but it will also shut out Progressives.
At this point, it appears that Democrats will skip the conference
process and let the Senate bill become the template for final
legislation. I understand why they are doing this; the 60 vote coalition of
moderate and liberal Senate Democrats is so fragile. In conference, it could
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