On Monday and Tuesday, December 7-8th, members representing the Iowa Committee for Value in Healthcare joined citizens and community leaders from six other Fiscal Advisory Councils across the nation in The Concord Coalition's National Conference on Fiscal Stewardship. The Iowa group was able to share with others their health care specific suggestions for why focusing on "VALUE" in health care is key to current and future reform efforts if we hope to improve the quality of care provided in this country at the same time as being fiscally responsible with the dollars spent in health care. The Iowa Committee representatives met with each of Iowa's Congressional delegates (Grassley, Latham, and Boswell) or their staff (Loebsack, Braley, King, and Harkin's offices) at which time they shared their report "Value in Health Care -- Principles for Reform" (link below) and strongly encouraged these Senators and Congressmen to consider value rather than just expansion of coverage as health reform moves forward.
See the following links for additional info:
IOWA COMMITTEE FINAL REPORT: VALUE IN HEALTH CARE -- PRINCIPLES FOR REFORM
Letter to Obama Administration and Congressional Delegation: Principles For Value-Based Health Care Reform (July 27, 2009)
"U.S. should model its health care after Iowa," By Sara Imhof (Cedar Rapids Gazette)
"Committee takes Iowa approach to health reform," By Joe Gardyasz (Des Moines Business Record)
Iowa is recognized for consistently providing high quality health care to its citizens and enacting one of the most ambitious state health care reforms (HF 2539) of 2008. As such, The Concord Coalition has partnered with the College of Public Health to create a committee of health care experts from across the state. The purpose of this committee, named the Iowa Committee for Value in Healthcare, is to identify consensus-based principles for high-value, fiscally-responsible federal healthcare reform. Upon completion, the committee's work will be carried directly to Washington by The Concord Coalition and used to highlight the critical need to increase the value of healthcare provided across the United States.
The first meeting of the Iowa Committee for Value in Healthcare -- on April 2, 2009 -- focused on exposing participants and Committee members to broader federal fiscal challenges and the key role that health care costs play for federal, state, and personal budgets moving forward.
The second meeting was held on May 28, 2009 and focused specifically on value in health care. National panelists were on hand to discuss federal health care reform initiatives being discussed in Washington, DC as well as the extensive variation in both cost and quality outcomes in the provision of health care across the nation. In addition, expert Iowa panelists directed attention to current efforts within the state aimed at gaining value for health care dollars spent and how such practices could inform a transformation in health care more broadly.
Members on the Iowa Committee for Value in Healthcare represent providers, hospitals, insurers, businesses, state government officials, and additional health policy and consumer stakeholders. The Committee will succeed because:
The Concord Coalition is a well-known national organization that will provide superlative individual expertise and technical assistance to the Committee;
the Committee will capitalize on current efforts to improve the state healthcare system by including task forces and workgroups established by the Iowa General Assembly; and
the University of Iowa College of Public Health, which has a strong track record of collaborating with state officials and healthcare constituencies, and the Iowa Healthcare Collaborative, which has proven its ability to engage physician, hospital, and other health care stakeholders in sharing information and working together to improve quality patient outcomes, will coordinate the three meetings in Des Moines and assist The Concord Coalition in producing and disseminating the final report.
"Financing Health Reform: What Are The Options?" By Joe Antos (American Enterprise Institute) and Len M. Nichols (New America Foundation)
"Health Care Cost Growth: An Unsustainable Prognosis," By Robert Bixby (The Concord Coalition)
"Quality, Affordable Health Care For All," By Joseph Minarik (Committee For Economic Development)
- "Saving Our Future: Tough Choices In Health Care & For The Budget," By Eugene Steuerle (The Peter G. Peterson Foundation)
"Options for Controlling the Cost and Increasing the Efficiency of Health Care," Testimony from Douglas Elmendorf (Director of The Congressional Budget Office)
"Have Health Refomes Forgotten Medicare?" By Joseph Antos (American Enterprise Institute)
"Big, Small or Working Government," By Eugene Steuerle (The Peter G. Peterson Foundation)
"Health And Budget Reform As Handmaidens," By Eugene Steuerle (The Peter G. Peterson Foundation) and Randall Bovbjerg (The Urban Institute)
"Escalating Health Care Costs and the Federal Budget," By The Concord Coalition
"Is A 'C' Grade Good Enough For Government," By Eugene Steuerle (The Peter G. Peterson Foundation)
"Quality, Affordable Health Care For All," By the Committee for Economic Development
"The Third Fiscal Turning," By Eugene Steuerle (The Peter G. Peterson Foundation)
"What's Next For Health Care?," By Julie Lewis, Dartmouth Institute for Health Policy & Clinical Practice
"Health Care Reform In 2009," By Aaron McKethan, The Brookings Institution
"Fostering Accountable Health Care: Moving Forward In Medicare," Darmouth Institute for Health Policy and Clinical Practice and Engelberg Center for Health Care Reform at The Brookings Institution
"An Agenda for Change," A Darmouth Atlas White Paper
"Slowing the Growth of Health Care Costs -- Lessons from Regional Variation," New England Journal of Medicine
1) How would covering all Americans impact overall health care costs?
Under a system of universal health insurance coverage, individuals would have access to primary and preventative care which is relatively cheaper than relying solely on expensive emergency room health care services, as many uninsured people do. So, in specific instances, such a move could be cost saving. However, from an overall health care spending perspective, a switch to universal coverage - whereby the millions of currently uninsured would have access to care and would take advantage of that access by seeing health professionals more frequently -- would lead to increased overall health spending. The Congressional Budget Office estimates that the uninsured now consume about 60 percent of the health care services consumed by the insured, and that if on average they were to receive equal coverage, their consumption and commensurate spending would match that of the currently insured. Also of note, the Obama Administration's budgeting for their proposed health care reform assumes major costs for the purpose of extending coverage to the uninsured. From a fiscal responsibility perspective, it will be crucial that any move towards universal coverage be fully financed and be paired with a serious effort to combat long-term health care cost inflation.
2) What role can initiatives aimed at improving wellness programs and standardizing health information technology (health IT) play in reducing costs?
There is not much evidence that wellness programs will significantly reduce overall health care costs, even as they improve health. From a public health standpoint, wellness is the right thing to do; but from an economic perspective, wellness will not be a panacea for solving long-term health care cost growth. Many of the options for promoting better health habits do show promise to improve the public's well being and perhaps minimize or avoid expenditures to treat illness or disease brought on by poor life choices. However, they too carry costs. Getting people to believe in and practice preventive medicine, for example, can lead to additional services for some who are generally in good health and don't need costly medical care. And many people now take regular preventive steps in the absence of financial incentives to do so -- hence, some portion of the aggregate spending on the incentives themselves would be unnecessary. Further, spending on diseases caused by unhealthy behavior could decline substantially in the long run, but the impact on federal entitlement spending would rise as people live longer and receive Social Security and Medicare benefits for more years. And although people who drop their harmful habits would likely become healthier, they would probably not be as healthy as people who had never engaged in that behavior. Thus, their consumption of late-life health care is apt to exceed the norm.
The evidence for health IT is more mixed. Again, switching to a more standardized and efficient health IT infrastructure is not a silver bullet that will in-and-of itself bend the curve of long-term health care cost growth. Yet, there are one-time efficiencies that would result in savings and reduced medical errors. The Congressional Budget Office has estimated that requiring health IT as a prerequisite for participation in Medicare -- both for physicians and hospitals -- would reduce administrative costs and unnecessary services, saving roughly $34 billion over 10 years. However, while this amount appears to be quite sizeable, to put it in perspective, national health care spending in 2017 is projected to reach $4.7 trillion.
More promising is the idea that a standardized and efficient health IT infrastructure can provide researchers with data about patient treatments and outcomes that can be analyzed to discover the most effective health care interventions, and ultimately the most cost-effective health care interventions -- information that we don't currently have and information that will be necessary if we are to ever get a handle on growing health care costs. Further, health IT infrastructure can help disseminate and analyze implementation by practitioners of best practices in the most efficient manner.
3) How would increasing the retirement age for Medicare impact the outlook for the program?
Currently, the eligibility age for Medicare is 65. Increasing that age to 67 -- consistent with the future eligibility age for full retirement benefits under Social Security -- would improve the fiscal outlook of the program. Instituting a two month age increase every year (beginning in 2014) until the eligibility age reaches 67 in 2025 would save an estimated $86 billion just over the next 10-years and additional savings beyond that period as the eligibility age increase is permanently implemented. People are living much longer and healthier lives than they did when Medicare was adopted in 1965. Life expectancy for a man reaching age 65 this year is more than 4 years longer than those reaching age 65 in 1965. Corresponding life expectancy for a woman is 2 years longer. If people stay productive in the work world and utilize private or personal health insurance policies rather than Medicare for a couple of years, savings to the program can be achieved.
However, it is important to note that this shift does not lower overall societal health care costs, it just shifts them to the private sector. Furthermore, while those ages 65 - 67 are the cheapest individuals for Medicare to cover, they are the most expensive for the private sector to cover. This could put additional strain on the employer provided insurance system. Older individuals also tend to have a difficult time getting health insurance in the individual market due to their age and/or health status. Such barriers either lead to them to going without health insurance, or could push them back towards public programs like Medicaid.
4) Regardless of the solutions offered, it seems implementing any policy proposal or entitlement reform requires political will. What is the best way to ensure political action once a consensus exists?
It seems that most politicians are unwilling to act on our long-term fiscal problem because there are few easy solutions which have consensus. Most choices involve either changes to future benefits or finding additional revenue -- choices they believe are unpopular among their constituents. Perhaps most lacking today is a clear message to the public that "shared sacrifice" is needed ... that providers of service, the insurers, manufacturers, and consumers must all give for the sake of the current and future economy.
The notion that entitlements are funded and paid for by past contributions, that money exists to do more, and that simply eliminating waste will suffice to restore and keep our fiscal house in order must be dispelled. Time is not on the side of piecemeal attempts to wring out the excesses. In years past, it was mostly the excesses of the health care system itself that raised its costs. Within a few short years, the emergence of retiring baby boomers and the medical needs they will have as aging seniors will compound those pressures. Hence, the promise of eliminating wasteful medical practice may be quickly overwhelmed by demand-driven pressures on the entire medical delivery system.
Conveying to your local politician a policy proposal, which you support to tackle the problem, is a conventional way to build political will. However, doing something as simple as discussing the issue with others and educating them on the severity of our government's financial outlook is significant. Most people are simply unaware of just how large our fiscal gap is or the consequences associated with structural deficits. Therefore, it is essential to establish a grassroots movement where fiscal responsibility becomes a priority. Promoting solutions and action from the ground-up is one way to alter the incentives for elected representatives in Congress and encourage a willingness to address the problem.
Once a reform plan is enacted, it should be enforced by pay-as-you-go (PAYGO) rules that require expanded entitlements (or tax cuts) be financed by some combination of tax increases and entitlement cuts so that cost saving goals remain intact. Without such rules, a painfully negotiated agreement is likely to erode over time. In addition, Medicare and Medicaid spending targets including health care tax breaks ("tax entitlements") should be budgeted for the long run, say, 30 years. If unexpected events push spending or tax entitlements above targets, automatic triggers could be used to slow spending growth, increase revenues, or some combination of the two. The key point is to do a better job of actually budgeting for these programs rather than allow them to run on autopilot.
5) Does data exist on a possible relationship between malpractice suits and "overtreatment"?
The evidence suggests that states with limits on damages in medical malpractice suits do not have lower per-capita spending on medical care than states without limits -- suggesting that medical malpractice suits are not a primary or overt cause of overtreatment or high health care spending.
However, there is a theory that the country's tremendous geographic variations in medical spending, which do not correlate with better quality of care, are instead promoted by the treatment norms and practices among local groups of doctors. It is conceivable that one of the factors, consciously or not, that contribute to doctors' adherence to community treatment norms is that they feel that such adherence at least partially inoculates them from charges of malpractice. Further, many practitioners around the nation complain of the role that "defensive medicine" plays in their everyday practice decision-making.
6) It seems that a significant percentage of Medicare costs go to treatment at end of life. Who decides what care is appropriate at this juncture and can you comment on the moral and fiscal dilemmas associated with this?
This question brings up two main issues. First, there is a good chance that no matter how we reform our health care system, the percentage of spending concentrated in the last months of life will always be disproportionately high -- simply because we never know when intervention will be life-saving and sustaining or when intervention will not work. Second, in order for the country to fully get a handle on health care costs, there needs to be a discussion including not just doctors and patients at the micro level, but also a broader societal discussion including ethicists and scientists about what we should expect from medical care and medical intervention, particularly when considering comorbidities or other circumstances that limit the effectiveness and long-term benefit of some interventions for certain patient populations.
Ultimately, President Obama seems to be on the right track when he suggested in an interview recently that these difficult issues are one reason why this country ultimately needs to establish treatment guidelines for medical care, so that decisions are no longer guided only by the emotion of families, patients and doctors at crucial moments, but are also guided by what the most effective medical treatments might be and what treatments are in society's best interest.
7) How do health care costs in the United States compare to other industrialized countries?
The United States spends more than 17% of its Gross Domestic Product (GDP) on health care. This is substantial especially when compared to other nations. By comparison, Switzerland spends 11.3% of its GDP, Germany spends 10.6%, Canada spends 10%, and the United Kingdom spends 8.4%. In 2003, we spent over $6,700 per person on health care. No other developed country came close to this. In Canada and France, the figure was $3,000. In Great Britain, it was $2,300. Furthermore, there appears to be no additional health benefits for this additional spending. On many measures, health outcomes in the United States are not as good as the outcomes produced in other countries. Americans die sooner and they are more likely to die from unnecessarily conditions that can be treated.
8) Increasing taxes is one way to address the health care problem within the federal budget, yet wouldn't there be a corresponding negative effect on the economy from such an increase?
Increasing taxes -- dependent upon the degree -- will almost certainly have a corresponding effect on the economy. However, it is also certain that failing to increase revenue (or identify cuts in spending) will only leave large structural budget deficits in the future. These deficits would also have a corresponding effect on the economy.
As described by the Congressional Budget Office:
"Sustained and rising budget deficits would affect the economy by absorbing funds from the nation's pool of savings and reducing investment in the domestic capital stock and in foreign assets. As capital investment dwindled, the growth of workers' productivity and of real (inflation-adjusted) wages would gradually slow and begin to stagnate. As capital became scarce relative to labor, real interest rates would rise. In the near term, foreign investors would probably increase their financing of investment in the United States, which would help soften the impact of rising deficits on productivity in the United States, but borrowing from abroad would not be without its costs. Over time, foreign investors would claim larger and larger shares of the nation's output, and fewer resources would be available for domestic consumption."
For most of the past half century, we have been accustomed to hiding excess government spending by borrowing. But the potential magnitude of what lies ahead is too big to borrow our way through. The size of the potential long-range budget deficits is critical. Deficits mean more debt. More debt means greater interest expense. The more we spend on interest the less there is to meet entitlement obligations and the other governmental functions that society has come to rely on. The message is simple: budget deficits that persistently grow faster than the economy ultimately become unsustainable. As the government attempts to finance its interest payments by issuing more debt, the rise in deficits accelerates. That, in turn, leads to a vicious circle in which the government issues ever-larger amounts of debt in order to pay ever-higher interest charges. In the end, the costs of servicing the debt outstrip the economic resources available for financing those expenditures. At some point, then, policy has to change: Taxes must be raised, spending must be reduced, or both.