There’s plenty for everyone to not like in President Obama’s health care reform plan – the one revealed late yesterday in a conference call with his advisers and media. (Almost) Everyone will find something to object to – higher taxes, lower reimbursement, reduced profits, increased fees – the Administration found every possible way to share the pain.
The plan is projected to raise about $634 billion over the next ten years, money that will be used to expand coverage. Sounds like a lot of money – but remember we’re talking about health care – so it isn’t. More on that in a minute.
It’s a different strategy – because no one can legitimately complain they are suffering more than anyone else, the plan’s architects have leveled the playing field, spreading the burden amongst (almost) all the stakeholders. It will be tough for lobbyists to plead poverty or maltreatment – if they do their contribution to the solution will have to come out of another stakeholder’s hide.
There is one group that wasn’t directly addressed – physicians. Again, more on that in a minute…
Whether it will work to help push reform thru at long last is a very open question – but give the President credit, it is a different approach.
Here are a few of the highlights – more to follow.
– Higher taxes on those making over $250k will be a primary funding source
– As predicted, Medicare Advantage subsidies are history – providing about $175 billion (thanks Hetherjw) over a decade. These funds will contribute about a third of the dollars sought by Obama to expand coverage.
– Hospital reimbursement will be reduced, with one major bite coming from a change in reimbursement – there will be a flat fee for the initial hospitalization and 30 days of follow up care. This is response to studies that indicate 18% of Medicare patients are re-admitted within a month of the initial hospitalization.
– Wealthier seniors will pay higher premiums for Medicare coverage
– Pharma is also hit, with a higher rebate for Medicaid drugs (increased from 15.1% to 22.1%)
– and they may well be unhappy about Obama’s effort to speed approval of generics
With all that, there are a couple key issues that were not addressed in the conference call with the President’s advisers last night. And they are big ones – physician compensation and Federal negotiation with pharma for Medicare Part D drug pricing and/or rebates.
Back to the $634 billion question. As Bob Laszewski points out, the $634 billion that will be ‘raised’ by these steps will not be enough to provide universal coverage. So, where’s the rest of the cash going to come from?
Is it possible that the absence of physician reimbursement cuts from the proposal is part of an overall strategy whereby everyone else complains about docs not doing their part? Is this a calculation on the part of the Administration, who recognizes that the physician lobby is the strongest it will have to contend with? Have they deliberately set up a physicians v. everyone else ‘discussion’?
What does this mean for you?
At this point, it looks like the only ox that is not gored by the plan is owned by physicians. I wouldn’t expect that situation to remain static…

Last night’s not-the-state-of-the-union speech covered a lot of ground, some of it rather superficially. Although health care was one of the President’s three key initiatives, he kept his comments at the proverbial thirty thousand foot level. He did take credit, and deservedly so, for his Administration’s (and Congress’) quick action on a variety of health care issues, stating: “Already, we have done more to advance the cause of health-care reform in the last 30 days than we have in the last decade,” he said. “When it was days old, this Congress passed a law to provide and protect health insurance for 11 million American children whose parents work full-time.”
Although his comments were very general there are three key takeaways.
Most significant is the sense of urgency. President Obama was quite forceful about his commitment to move on health reform quickly. He specifically noted that his 2010 budget will address health care reform, saying “This budget builds on these reforms [SCHIP etc]. It includes a historic commitment to comprehensive health care reform — a down payment on the principle that we must have quality, affordable health care for every American.”
That is the second key takeaway – this will be an incremental process, building towards universal coverage over time, not trying to cover everyone from the outset. This is consistent with Obama’s campaign platform, and also smart politically. If there are no more expansions of coverage this year, then he can point to SCHIP’s expanded coverage, COBRA subsidies, and Medicaid funding support as reforms that are resulting in more coverage and fewer uninsured.
Finally, the President explicitly acknowledged cost as the key barrier. But here he relied once again on the root out waste and inefficiency mantra as the method for reducing cost. That’s true, and comparative effectiveness research is a key weapon in that battle, Congress has already tried to blunt the impact of comparative effectiveness, demonstrating once again how tough this battle to ‘root out waste and inefficiency’ is going to be.
I’m quite sure President Obama understands the political difficulties inherent in reducing cost. And I’m also sure he is going to get what he can, and keep coming back till he gets what he wants.
What does this mean for you?
As I’ve said repeatedly, health care reform will be achieved incrementally, make lots of folks unhappy, and result in multiple bruising battles. And it will be very important for those who advocate sweeping change to reflect back on what has been accomplished. Obama is right – already this year more has been accomplished than in the previous eight.

President Obama will no longer play games with the budget – his administration will include the cost of the wars in the budget, will not count the fake ‘savings’ from the SGR process (the Sustainable Growth Rate is the process that ‘cuts’ Medicare payments for doctors every year), and will acknowledge the alternative minimum tax will be adjusted to reduce its potential impact on taxpayers. The President’s predecessor, Mr Bush, routinely took credit for the latter two, all the while knowing the laws to cut doctors’ payments would be suspended and limit the AMT’s impact would be reduced. And Bush funded the wars via special appropriations and not in the annual budget process.
The historical process of kicking the Medicare physician reimbursement problem down the road (to paraphrase Mr Obama) has served to delay the final day of reckoning, while making that reckoning ever more expensive. Legislators, citizens, and regulators must confront that problem this year – and it appears the SGR wiill be addressed this summer.
It looks like reimbursement for cognitive services – the 99xxx codes for readers expert in CPT-4s (thanks for the correction Mr Gordon); office visits and similar services for others – will be increased while payments for surgeries, imaging, and other ‘procedures’ will be reduced.

This just makes sense. Primary care physicians have seen their total compensation slide year after year, while those doctors specializing in ‘specialties’ have seen slight increases. There is a shortage of primary care docs – newly minted physicians can’t afford their debts on $125k a year, so they have to specialize in one of the more lucrative areas if they are to have any hope of a decent income. Increasing reimbursement for cognitive services will also likely lead to a reduction in the number of patients referred to specialists; if your family practice doc can afford to spend the time to talk through lifestyle issues that may be contributing to your diabetes, low back pain, and/or shortness of breath, the two of you may be able to come up with a strategy that doesn’t require treatment by one or more specialists.
Reducing compensation for specialists is going to ignite a political firefight – one that will be loud, violent, and ugly. It is also long overdue. There are going to be winners and losers in health reform, and one group that looks likely to lose is specialists.
What does this mean for you?
By acknowledging the real cost of Medicare physician compensation, the President is being honest with the public about the program’s costs. That honesty is exactly what we need – a clear understanding of the system’s costs and cost drivers.

Tomorrow, we’ll consider the impact of changing physician compensation on managed care plans.

From the ‘you just can’t make this stuff up’ file comes this gem from Rush Limbaugh:
“The stimulus pork bill being voted on in the Senate contains the nationalization of health care, the computerization of everybody’s health records, rationing of medical care for seasoned citizens. If you’re a seasoned citizen and you go to the doctor, you have an ailment of some kind, the doctor will do a test. The doctor will then consult your medical records. The doctor will then consult federal guidelines to find out if you are to be treated. And if the cost of your treatment as a seasoned citizen is deemed by the government to be too expensive based on how much longer you have to live, then you don’t get treated.[emphasis added] The architect of this is one Tom Daschle, and he says much like Governor Dick Lamm of Colorado, (paraphrasing) “Old people, you gotta come to grips with your circumstances, you gotta come to grips with your diagnosis and understand we’re all going to die sometime and it’s your turn.” This is in the Senate stimulus bill.”
Now, I didn’t read every word of the Senate version of the stimulus bill, but nothing in the bill remotely resembles Limbaugh’s description. And, as I noted last week, the provisions on comparative research in the final bill specifically forbid the use of that research for coverage or reimbursement decisions. Much to my dismay.
Oh, and what exactly is a ‘seasoned’ citizen?
Limbaugh went on to state:
“There is a new bureaucracy created, the National Coordinator of Health Information Technology,[emphasis added] which will monitor treatments to make sure that your doctor is doing what the federal government deems appropriate and cost effective regarding your treatment. It’s going to be just like the UK! When you go to the doctor, your doctor is going to have to consult either a book, a computer program, or maybe even make a phone call to find out what kind of treatment you can get and how much to charge for it based on how much the government’s going to reimburse him for it. As such… The author of this plan, by the way, is former senator from North Dakota — or South Dakota, I’m not sure which one; I get them confused — Tom Daschle…”

Well, Rush, you are confused about a lot more than Tom Daschle’s home state…
The National Coordinator post was actually created by the Bush Administration way back in 2004.
Limbaugh didn’t come up with this all by his lonesome, so where did he get this garbage? A likely source is an immensely-uninformed column penned by Betsy McCaughey Her credentials are truly amazing – according to FactCheck.com, “McCaughey was elected lieutenant governor on George Pataki’s ticket, but when he dropped her from his 1998 reelection campaign, she ran against him as a Democrat. She lost the primary and ran on the Liberal party’s line, getting 1.6 percent of the vote.)”
Boy did she get this wrong. McCaughey claims, as parroted by Limbaugh, that the stimulus bill would establish a national coordinator to “monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective.” McCaughey notes the word “guide” is in the stimulus legislation, saying: “The goal is to reduce costs and ‘guide’ your doctor’s decisions.” If she had actually done any research, like, perhaps, googling “National Coordinator for Health Infornation Technology”, she would have found Bush’s 2004 executive order used that exact language.
Here’s what the good Ms McCaughey would have found if she googled that big mess of tubes known as the internet:
Executive Order 13335, April 27, 2004: “In fulfilling its responsibilities, the work of the National Coordinator shall be consistent with a vision of developing a nationwide interoperable health information technology infrastructure that: (a) Ensures that appropriate information to guide [emphasis added] medical decisions is available at the time and place of care.”
By the Bush administration’s own account, the new office wasn’t effective, lacking strategic goals, performance measures, or efficiency measures. Perhaps what Limbaugh and McCaughey are concerned about is the ability of a heretofore poorly managed agency to actually deliver on its mission.
So, near as I can figure it, Rush quoted a petty party-jumping politician who got her own information wrong. Of course, other wingnuts (here here and here) jumped on the bandwagon, propagating the mis- and dis-information.

What does this mean for you?
Now we know where this massive socialization of medical care began – the Bush administration!