Brookings: Topics - Health

Implementing the Affordable Care Act: Organizational and Political Challenges

Mon, 20 May 2013 14:00:00 -0400

Event Information

May 20, 2013
2:00 PM - 3:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The Affordable Care Act is the single biggest domestic policy accomplishment of the Obama administration, but most Americans have yet to feel its impact, since many of the most far-reaching provisions do not take effect until 2014. Although the Supreme Court upheld the law, it continues to face political opposition and attempts to slow down its full implementation.

On May 20, the Management and Leadership Initiative at Brookings hosted a forum on the organizational challenges of implementing the Affordable Care Act in a difficult political environment. A panel of experts discussed obstacles such as building the state exchanges, expanding Medicaid, the role of the IRS, enforcing the individual mandate, the reaction from the small business community and the effect on premium prices.

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Implementing the Affordable Care Act: Organizational and Political Challenges

Will Obamacare Implementation Really Be a "Train Wreck"?

S. Lawrence Kocot — Mon, 20 May 2013 00:00:00 -0400

Senate Finance Committee Chairman Max Baucus, an architect and supporter of the Affordable Care Act (ACA), recently caught the Administration's attention when he voiced his concerns about the implementation of the health exchanges—the centerpiece of Obamacare now scheduled to go live on October 1—saying that he sees "a huge train wreck coming."

President Obama responded to concerns about implementation, emphasizing that he is 110 percent committed to getting implementation done right, but he also cautioned that there will be mistakes and hiccups.

While the Administration is certainly not going to highlight major problems at this point in the implementation cycle, there are a few key indicators to watch over the next few months to assess how well implementation is progressing:

1. Affordability. Very simply, can individual and small group purchasers of health insurance in the new marketplaces afford the likely cost? A recent report by the Society of Actuaries indicates that we can expect to see per member per month costs of plans in the individual markets increase by as much as 32% under the ACA -- with many states seeing increases even higher. The Administration and some advocates claim that the actuaries' report is misleading or just plain wrong, and that any cost increases will be covered by ACA's generous subsidies that will cushion the blow for most of those eligible for the benefits.

The Qualified Health Plan approval process is still in progress, so we won't know the full extent of the cost increases until later this summer. However, with projected insurance plan costs for some states now available, we can already see that there will be significant variation across the states on average costs in the non-group market. Vermont and Rhode Island are projecting favorable rates to consumers; Washington is mixed depending upon enrollee characteristics; and Maryland costs are projected to rise by 25% on average next year - but with healthy young men seeing their insurance costs rise as much as 150%- contrary to the ACA's goals of providing affordable insurance.

If the Society of Actuaries is right, we can expect that the cost of this new health insurance may be hard to swallow for some consumers who will not be eligible for subsidies - some 1 million persons in 2014, according to CBO. And for the other 6 million expected enrollees eligible for subsidies in 2014, the cost to the federal government could be more than the projected $35 billion. If overall plan and subsidy costs are much higher than anticipated, legitimate questions may be raised about the sustainability of the program.

2. Availability. Even after we know more about the "rate shock" that is predicted to come later this summer, the question then becomes: will state marketplaces be operational by October? This gets to the heart of the "train wreck" comment, as the law requires that subsidies be administered through enrollment in the marketplaces. Sixteen states and the District of Columbia have agreed to run their own state marketplaces, while the remainder have surrendered many of the operational decisions or have deferred completely to the federal government to run theirs.

Even under the best of circumstances, the Centers for Medicare & Medicaid Services (CMS) would have difficulty pulling off the simultaneous operational roll-out of more than 30 federally facilitated/partnership marketplace exchanges (FFEs) at the same time. In order for the FFEs to work as planned, CMS needs a willing state partner that is committed to making it work through precise coordination of technology and business rules, which requires extensive operational planning and resource allocation, as well as close collaboration and constant communication.

Let's face it: not all partners in the states are even willing, much less committed, to providing the time and resources to make a federal marketplace successful in their state. What Baucus is hearing about the FFE progress in Montana is consistent with what many FFE states are reporting -- many of these FFEs are not ready yet and time is running out to get them there.

So what about the 17 state-run marketplaces? They have been given over $3.5 billion in federal grants since 2010 to be ready to enroll consumers in the new insurance benefits on October 1, 2013. While some of these states are clearly ahead of the pack in terms of readiness, despite their best intentions, it is likely that not all state-run marketplaces will be fully operational by the deadline. CMS may have to decide if and when to take responsibility for some of them, which could be viewed by opponents as an early admission of failure.

To be fair, establishing marketplaces in 50 states and D.C. is an ambitious undertaking. With unprecedented cooperation required across multiple federal agencies, states, and quasi-state bodies and agencies coordinating with state insurance commissions and plans, the requirements and deadlines for effective implementation are virtually impossible. Additionally, new data systems that have never been fully tested with live data can't be expected to perform without technical glitches and a period of correction.

3. Outreach. As has been reported, CMS did not get the nearly $1 billion they said they need for outreach and implementation of the marketplaces. While this seems like a lot of money, it is not nearly enough to accomplish the task, especially given the difficulties CMS will have with some of the consumers they are trying to enroll - low-income, less healthy, and "young invincible" consumers, many of whom have not had insurance before. As polls have shown, 78% of subsidy eligible Americans do not know this benefit will be available. Like all marketplace applicants, they will need to fill out a multi-page form and will need help to get educated about subsidies to make the insurance affordable. Experience has shown that the hardest benefits to sell are the ones that cost even a little to those who have the least. This explains why Secretary Kathleen Sebelius has been desperately trying to rally insurers and private organizations such as Enroll America to step up to supplement federal enrollment efforts; the private assistance will help, but it is not likely to be enough.

So, is this really the train wreck Senator Baucus sees? It probably depends on what type of railroad one was expecting. The implementation of Medicare Part D tells us that there are plenty of opportunities for things to go wrong with exchange implementation. No implementation is without challenges and this one will be particularly rough given the size and scope.

At the end of the day, however, the measure of implementation success is probably not the expense of the benefit nor whether technology works as intended; technical problems can eventually be fixed and in the short term, manual processes can hide a lot of sins. Rather, the real measure of success is how many people actually enroll in this new benefit and get the subsidy for which they qualify. If CMS can stay focused on these measures, the light at the end of the implementation tunnel may be much brighter than the light on the political train that continues to barrel down the tracks in their direction.

Authors

S. Lawrence Kocot

Publication: Real Clear Markets

Image Source: © Jessica Rinaldi / Reuters

The Affordable Care Act: From Hiccups to Repeal

Elaine Kamarck — Wed, 15 May 2013 17:34:00 -0400

Note: On Monday, May 20, Elaine Kamarck, director of the Management and Leadership Initiative at Brookings, will moderate a public forum on "Implementing the Affordable Care Act: Organizational and Political Challenges."

It's been a long time since the federal government had to implement a large, new, federal program. Ten years ago we saw the implementation of Medicare Part D and the creation of a new cabinet department, the Department of Homeland Security. In each instance there were predictions of disaster and substantial growing pains. In the case of Medicare Part D implementation exceeded expectations and costs have not been nearly as high as feared. In the case of DHS, implementation was bumpier, nonetheless, ten years later both operate more or less smoothly and, in retrospect, the crisis now seems overblown.

This year, the Obama administration needs to finalize implementation of the Affordable Care Act—a historic piece of legislation and the most significant domestic policy achievement of the Obama administration to date. And the question of how it goes is front and center. Even the president has admitted that there will be “hiccups” along the way. Compared to earlier pieces of health care legislation, the ACA is incredibly complex, involving activity by fifty states, the jurisdiction of fifty state insurance regulators and changes in the entire health care industry. Added to the inherent complexity of the bill is the fact that it had no Republican support and is still adamantly opposed by the Republican party and by half of all those polled.

So the question is: how bad will it be? Imagine a continuum that goes from “hiccup” on one end to repeal on the other end. With plenty of points in the middle. What would that look like?

The hiccup scenario is the most optimistic. Hiccups are more or less normal. If the implementation is successful, the exchanges will be up and running. There will be glitches. Some people who qualify won’t get their subsidies; some who don’t will. The number of companies on the exchanges won’t be as big as hoped for but will grow. Premiums for health care will rise only modestly and the enhanced services in the new health care plans will make most people okay with the price increase.

The delay scenario is not really good nor is it fatal. A less successful outcome is one where the feds and states find they have to pull back from key provisions in the bill at least for a while. There may be delays in opening exchanges which would necessitate delays in enforcing the mandate that everyone buy insurance. The federal hub may not be able to interface with statewide data and eligibility could become a lengthy bureaucratic process. HHS might adopt a generous waiver policy while states work out their systems. Premiums may rise, leading to complaints from the public but no substantial drops in insurance buying.

The repeal scenario is fatal. Obviously Republicans, especially in the House, are rooting for this one. In fact they seem to like taking the repeal vote so much that they’ve done it 37 times in the past three years. So the question is: what would it take to move support for repeal beyond the Republican base? In 1989 Congress repealed the Medicare Catastrophic Coverage Act a short sixteen months after it was passed. Why? It increased costs to seniors and offered them things that they didn’t want. In the context of ACA the repeal scenario is feasible if premium prices rise so high that people who don’t qualify for subsidies (there are more of them than those who do) decide that they really don’t want the enhanced packages envisioned in the law and then get really mad and let their representatives know it.

Where will we end up? Stay tuned.

Authors

Elaine Kamarck

Image Source: © Jonathan Ernst / Reuters

Advancing Reform: Medicare Physicians Payments

Kavita Patel — Tue, 14 May 2013 10:00:00 -0400

Chairman Baucus, Ranking Member Hatch and members of the Committee, thank you for this opportunity to highlight ways to advance physician payment reforms in Medicare. The Medicare program retains a strong commitment to provide care to approximately 50 million beneficiaries across the country; a key partner in the provision of this care are the 900,000 healthcare providers who see beneficiaries in medical offices, hospitals, skilled nursing facilities and other settings.[1] Each day, providers work hard to deliver the best care for their patients yet our current payment system falls short time and time again, with financing mechanisms that perpetuate fragmented care and volume over coordination and value. Fortunately, there are better ways to pay physicians that can enable them to improve care, enhance the patient experience and potentially achieve greater savings for the Medicare system overall. I am honored to present some solutions from my work at the Engelberg Center for Health Care Reform at the Brookings Institution and our Merkin Initiative on Clinical Leadership, as a Commissioner on the National Commission on Physician Payment Reform and perhaps most importantly, as a practicing internal medicine physician.[2]

Current Payment Policies in Medicare

Currently, Medicare pays physicians primarily by a fee-for-service (FFS) schedule that is informed by relative value units (RVUs). Relative value units are determined from the Resource Based Relative Value Scale (RBRVS) which defines the value of a service through a calculation of physician work, practice expense and practice liability.[3] A relative value unit is assigned to every medical service that physicians carry out during a clinical visit. [4] The RVU is then adjusted by geographic region (so a procedure performed in Miami, Florida is worth more than a procedure performed in Salem, Oregon). This value is then multiplied by a fixed conversion factor, which changes annually, to determine the amount of payment to the physician. As the number of billable service codes have grown over time, an extensive regulatory process was enacted to develop RVU weights and update them year over year.

Over time, the RVU updating system has placed an increasing importance, evidenced by RVU weights, on procedures, scans, and other technical services that fix certain ailments or problems. Emphasis on technologies and interventions have resulted in a marked disparity between reimbursement for specialties which emphasize procedures such as cardiology and gastroenterology and those that do not such as primary care, endocrinology or infectious diseases, thus exacerbating shortages and the hierarchical culture within medicine.

The 1997 Balanced Budget Act exacerbated the problem with the introduction of the sustainable growth rate or SGR. The SGR was intended to keep the growth in Medicare physician-related spending per beneficiary in line with growth in the nation’s gross domestic product (GDP). In the early years of the SGR, this worked fine, as spending growth was lower than the calculated GDP target and payment rates for physician services increased. But starting with the recession in 2002, spending growth per beneficiary began to exceed GDP growth. In 2002, payment rates were reduced accordingly, by 4.8 percent.

Every year since then, the scheduled SGR payment rate reductions have not taken full effect. Instead, because of concerns about access to care and the sufficiency of payments, Congress has headed off the full payment reductions on a short-term basis. Typically, this has involved offsetting at least some of the budgetary costs with payment reductions affecting other Medicare providers. As Figure 1 illustrates, actual updates as well as the SGR formula update still grow at rates far below input costs (MEI) and payment rates for other providers, thus exacerbating systemic flaws. In short, our system is broken.

Payment Reforms in the Affordable Care Act

The Affordable Care Act included over 100 policy changes in Medicare provider payments, many of which are currently being phased into the current delivery system and affect physicians directly. [5] These reforms include Medicare Accountable Care Organizations (ACOs), Value-based payment modifiers, the Bundled Payments for Care Improvement initiative as well a number of broader efforts for statewide level innovation, multipayer efforts to promote primary care and alignment of payments for Medicare-Medicaid beneficiaries (dual eligibles). These reforms are incredibly effective at encouraging providers to delivery high-quality, coordinated care at a lower cost and enable Medicare to pay for value. As Jonathan Blum, Acting Deputy Administrator and Director of the Center for Medicare recently pointed out in his testimony before this committee, “the Medicare program has been transformed from a passive payer of services into an active purchaser of high-quality, affordable care.” [6] While these reforms will offer a great deal of insight into how we can improve Medicare physician payment through authorities granted in the Patient Protection and Affordable Care Act, they are still largely based on a fee-for-service payment system. We must acknowledge the limitations in implementing payment reforms in the face of a dominant fee-for-service system. One early large-scale Medicare pilot implemented in oncology in 2006 serves as a good example: in conjunction with reductions in Part B drug payments, oncologists received an additional payment to report on whether the chemotherapy care provided by them adhered to certain evidence-based guidelines. This promoted comparisons to the published guidelines and also supported the development of evidence on how widely published guidelines were being followed in practice. [7] However this pilot did not make any changes in the underlying structure of fee-for-service payments and did not explicitly tie payments to measured improvements in performance, resulting in limited feasibility and adoption. In order to move away from our current system and build on the promise of ongoing efforts we must remove the SGR as a constant impediment to true systemic change.

Recommendations of the National Commission on Physician Payment Reform

In an effort to explore new ways that to pay for care that can yield better results for both payers and patients, the Society of General Internal Medicine convened the National Commission on Physician Payment Reform in 2012. Our commission, composed of a broad range of leadership and expertise spanning the public and private sectors, adopted twelve specific recommendations for reforming physician payment:

The SGR adjustment should be eliminated
The transition to an approach based on quality and value should start with the testing of new models of care over a 5-year time period and incorporating them into increasing numbers of practices, with the goal of broad adoption by the end of the decade.
Cost-savings should come from within the Medicare program as a whole. Medicare should where possible, avoid cutting just physician payments to offset the cost of SGR repeal, but should also look for savings from reductions in inappropriate utilization of Medicare services.
The Relative Value Scale Update Committee (RUC) should continue to make changes to become more representative of the medical profession as a whole and to make its decision-making more transparent. CMS has a statutory responsibility to ensure that the relative values it adopts are accurate and appropriate, and therefore it should develop alternative open, evidence-based, and expert processes beyond the recommendations of the RUC to validate the data and methods it uses to establish and update relative values.
For both Medicare and private insurers, annual updates should be increased for evaluation and management codes, which are currently undervalued, and updates for procedural diagnosis codes, which are generally overvalued and thus create incentives for overuse, should be frozen for a period of three years. During this time period, efforts should continue to improve the accuracy of relative values, which may result in some increases as well as some decreases in payments for specific services.
Fee-for-service contracts should always include a component of quality or outcome-based performance reimbursement.
Higher payment for facility-based services that can be performed in a lower cost setting should be eliminated. Additionally, the payment mechanism for physicians should be transparent, and should reimburse physicians roughly equally for equivalent services.
In practices having fewer than five providers, changes in fee-for-service reimbursement should encourage methods for the practices to form virtual relationships and thereby share resources to achieve higher quality care.
Over time, payers should largely eliminate stand-alone fee-for-service payment to physicians because of its inherent inefficiencies and problematic financial incentives.

10. Because fee-for-service will remain an important mode of payment into the future even as the nation shifts to fixed-payment models, future models of physician payment should include appropriate elements of each. Thus, it will be necessary to continue recalibrating fee-for-service payments, even as the nation migrates away from that method of paying physicians.

11. As the nation moves from a fee-for-service system to one that pays physicians through fixed payments, initial payment reforms should focus on areas where significant potential exists for cost savings and higher quality.

12. Measures should be put into place to safeguard access to high quality care, assess the adequacy of risk-adjustment indicators, and promote strong physician commitment to patients.

Moving Beyond the SGR

Eliminating the SGR is a principal recommendation of many expert reports, including our Commission’s Report, MEDPAC, The Brookings Institution, Simpson-Bowles and the Bipartisan Policy Center, but the question remains, repeal and replace with what? [8][9]^,[10]As stated above we (and other clinical groups and societies) recommend a five year transition to newer models of payment which move away from FFS as the dominant payer. But the devil is in the details, and proposals to move towards new models over a period of time leaves policymakers and physicians wondering what their practices will look like next month, next year and beyond. In moving from principle to practice, it is also important to acknowledge that while there will be no one payment model that applies to all physicians, payment models must be relevant to primary care physicians and specialists alike. Additionally, given the growing complexity of caring for Medicare beneficiaries, payment models should encourage collaborations between specialists and primary care physicians rather than focus on a model that is suited for one clinical specialty alone.

Short-Term Steps in Advancing Payment Reforms

To facilitate providers’ transition to alternatives to fee-for-service payments, CMS should harmonize current payment adjustments and quality improvement initiatives and apply those funds towards a care coordination payment which could give physicians more support for broader long-term reform pathways. Medicare has implemented quality reporting systems and payment adjustments for physicians, hospitals, and other providers. But these payments are generally administered as either a flat percentage or adjuster to all FFS payments. In contrast, shifting some existing FFS payments into a care coordination payment would give providers more support in moving toward condition-based, episodic payments, or global payments that allow for management of a population of payments that would otherwise be impossible in the current payment setting.

Table One highlights current efforts within the Medicare to increase value in care; each initiative is important but in isolation results in marginal financial gains and at times and each of these initiatives is limited in scope. For example, quality measures for the Physician Quality Reporting System (PQRS) have flexible annual submission options, with qualification through registries, electronic health records etc. However, the program has suffered from criticism that measures are not as relevant to specialists. And at best, providers will gain approximately an average of $1059 for participation per year, which some might say is not worth the effort, even in a penalty phase of the program. With the passage of the American Taxpayer Relief Act of 2013, a mechanism will be in place by 2014 for specialty specific efforts to satisfy CMS’ reporting requirements for PQRS, which will encourage higher specialist participation in quality improvement efforts and help align clinician-developed quality measures with CMS’ mandate to examine quality of patient care. Applying these measures to help physicians understand how registries can not only benefit their patients but lead to better predictability in a changing payment landscape will facilitate entry into pathways of reform.

Meaningful use measures are also quite detailed with important process metrics but physicians will likely also “perform to the measure” and may have difficulty going beyond unless there are linkages to payment reform. This is reflective of the sentiment that many providers express that they are constantly being asked to measure and perform, all while trying to see just as many patients in a day of work with little to no reward for doing less or changing workflows in order to reduce inappropriate utilization of resources. For example, proposed Stage 2 meaningful use measures include 17 core measures and six additional menu objectives from which a physician would choose at least three. This adds up to a total of 20 distinct actions that often involve all office staff. Rather than adding to these measures, CMS should consider how existing measure components could be applied to a payment update overall or a care coordination payment for the care of a patient with a chronic disease.

In the case of a care coordination payment, providers who opt to enter into a care coordination pathway in the first year can receive a lump sum of payment. This payment would be roughly equivalent to the potential bonus payments for all programs in table one. In return they would have to demonstrate that they are improving clinical practice and implementing outcomes-based clinical measures which are germane to their practice. In this example, a cardiologist would receive a population level care coordination payment derived from bonus payments and some FFS payments who does the following:

Participates in a care coordination pathway for chronic cardiac disease (atrial fibrillation, congestive heart failure, etc)
Subscribes to a cardiac specific registry (thus meeting PQRS requirements)
Implements patient engagement tools for electronic care coordination, medication reminders, therapeutic lab monitoring for anticoagulation (meeting requirements for meaningful use, value-based modifier program, e-prescribing)
Implements a significant practice transformation (potentially a new component which allows for a physician in a small, medium or large practice to individualize their approach to innovation)

The cardiologist would satisfy program requirements and would receive the maximum bonus payments.

Implementing this kind of approach involves potentially supporting CMS and additional entities to provide data on performance measures and quality improvement at more regular intervals along with technical assistance to understand how to translate incoming data into practice transformation. This process can begin in the year following a SGR repeal and can be supported through the assistance of existing clinical societies and quality improvement organizations. In this manner, assumption of clinical and performance risk becomes more commonplace for physicians. Simply put, physicians understand that they need to be held accountable for payment in a standard fashion, but want to feel that they can bring some degree of personalization into their practice in order to meet the needs of their populations.

Finally, I encourage CMS to continue implementing important changes through the Physician Fee Schedule including recent changes for care coordination.[11] These changes are an important acknowledgment that while we migrate from a payment system dominated by fee-for-service, we need to also enhance the existing system to be aligned with the expected outcomes of policy changes. Recent calls for evaluating the distribution of evaluation and management codes and determining the accuracy and appropriate valuation are also an important step in the short term.

Movement from The Short Term to Longer Term Sustainable Payment Reforms

As clinicians of all specialty types realize that there is a viable pathway to care for patients and work across silos. The appetite for a more attractive option is evidenced by the overwhelming response to applications for the CMMI Challenge Grants, BPCI initiative, Medicare Shared Savings Program and other efforts. Clearly, physicians want an alternative.

Through my work at the Brookings Institution’s Engelberg Center for Health Care Reform and the Richard Merkin Initiative on Clinical Leadership, we have been meeting with physicians in primary care and specialties as well as other healthcare stakeholders. With iterative feedback from clinicians in practice, we have proposed a longer term payment model that takes into account the currently uncompensated critical elements of patient care, the need for more flexibility in the way physicians are able to use their time and treatment resources in the best interest of their patients’ individual circumstances, and the need to implement care reforms in a way that recognizes the intense and growing cost pressures in our health care system.

Our model, outlined in Figure 2, would build on the short term payment advances above with incorporation of a payment for care coordination that is derived from the programs in Table One and identify additional opportunities to improve care and lower costs that are not reimbursed well in traditional fee-for-service payment systems. For example, a common procedure in the outpatient cardiac practice is the echocardiogram (echo), or ultrasound of the heart. This procedure is sometimes performed in place of preventive counseling or watchful monitoring of a patient in coordination with a primary care physician, in large part because a hospital-based outpatient cardiology practice receives up to $450 for an echo compared to $53 for a visit without the procedure. Imagine paying both the cardiologist and primary care physician a fixed payment of $400 that allows for longer term communication and conservative monitoring in return for reporting on clinical outcomes at a population level. The clinicians are take the financial risk involved in the clinical care of their patient using the investments previously made by clinically driven pathways, registries and care coordination solutions.

Column A represents total spending on health care and reflects the current state of physician payment: exclusive reliance on the FFS model for physician payments, with waste and inefficiency in the form of redundant and unnecessary care, breakdowns in coordination, escalation of preventable complications etc. This leaves the total cost of physician care high.

Column B illustrates total spending in our alternative payment model. First, a set of services currently reimbursed for a particular episode of care or part of chronic care management are bundled together into a single payment to physicians as a case management payment. For example in clinical oncology a case management payment would include after hours phone care for breast cancer or a palliative care counselor for patients with lung cancer. This enables clinicians to focus less on volume and more on tighter coordination among providers and settings for patients. In addition, we continue the aforementioned care coordination payment paid to physicians, which is built on concepts such as PQRS/ MU and actually increases the current level of physician payment relative to the fee-for-service baseline in Column A. Care coordination payments allow flexibility for physicians to invest in clinical practices and infrastructure through practice transformations that maximizes their ability to treat patients in clinically appropriate ways while not reducing their income due to reductions in billable procedures that would otherwise occur. The investments in clinical practice can include infrastructure/HIT investments or in the case of a small practice, an investment in a shared clinical social worker with other small practices with similar patient populations.

Continuous quality improvement resulting from adherence to clinician-driven process and outcomes measures and the increased flexibility in income will push physicians to decrease and ultimately eliminate the waste and inefficiencies that plague the current system. Overall physician payments increases, offset by reductions in total Medicare spending and system wide savings. Care coordination payments that enhance total physician income tied to quality measures would encourage physicians to collaborate and focus on elements of patient care that reduce cost and inefficiencies across the spectrum. In oncology, for example, we do not specify which metrics should be used in which case but comment that target metrics would change over time and as efficiency is maximized in certain areas of care (i.e. ED visit rates) bonus payments would not cease because of lack of room for improvement. Measures would have to be selected with flexibility to accommodate various provider circumstances and changes in the long term improved performance in certain areas.

Physicians who enter into broader accountable care arrangements in which there is a shared savings component will likely find that this model could lead to an increased proportion of shared savings beyond the 2% threshold; therefore our described model would not be mutually exclusive to ACO arrangements, but could enhance them given the decreased reliance on fee-for-service reimbursement.

Tools that Enable Financial, Clinical and Performance Risk

As I have mentioned earlier, physicians will need tools to better understand risk- these are not lessons we had in medical school or in clinical training. Financial metrics (such as those available to ACOs), performance metrics in the form of actionable and regular data feeds as well as peer-led initiatives should be considered essential components of a payment reform package.

Conclusion

Our nation is in a sustained period of constrained finances and while the cost to repeal the SGR has been decreased to $138 billion, finding the offsets and mechanism to pay for such a solution will not be easy. But it is essential that this Committee seize the opportunity to finally dispel the notion that we allow for a system that rewards the balkanization of our patients through a payment mechanism which promotes volume over value. I commend Senators Baucus and Hatch in their recent call for proposals and specific suggestions from the clinical community and look forward to working with the Committee to identify a tangible path forward. Thank you for this opportunity and I look forward to your questions and comments.

[1] Report to the Congress: Medicare Payment Policy. Medicare Payment Advisory Commission. http://www.medpac.gov/documents/Mar12_EntireReport.pdf

[2] Frist W, Schroeder S, et al. Report of The National Commission on Physician Payment Reform. The National Commission on Physician Payment Reform. http://physicianpaymentcommission.org/wp-content/uploads/2013/03/physician_payment_report.pdf

[3] The RBRVS has three components. Physician work accounts for the time, skill, physical effort, mental judgment and stress involved in providing a service and is approximately 48 percent of the relative value unit. Practice expense refers to the direct costs incurred by the physician and includes the cost of maintaining an office, staff and supplies and accounts for 48 percent. Professional liability insurance takes into account the malpractice insurance essential for maintaining a practice and is 4 percent of the calculation. Overview of the RBRVS. American Medical Association. http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/the-resource-based-relative-value-scale/overview-of-rbrvs.page

^{^[4]}The Centers for Medicare and Medicaid Services (CMS) uses Current Procedural Terminology (CPT) codes to determine services that it will reimburse for Medicare enrollees and each CPT code has an assigned relative value unit.

[5] Policy Options to Sustain Medicare for the Future. January 2013. Kaiser Family Foundation. http://kaiserfamilyfoundation.files.wordpress.com/2013/02/8402.pdf

[6] Statement of Jonathan Blum on Delivery System Reform: Progress Report from CMS Before the Senate Finance Committee. 28 February 2013. Full transcript available at: http://www.finance.senate.gov/imo/media/doc/CMS%20Delivery%20System%20Reform%20Testimony%202.28.13%20(J.%20Blum).pdf

[7] Doherty J, Tanamor M, Feigert J, et al: Oncologists’ Experience in Reporting Cancer Staging and Guideline Adherence: Lessons from the 2006 Medicare Oncology Demonstration. J Oncol Pract. 6(2): 56–59. 2010.

[8] Antos J, Baicker K, McClellan M, et al. Bending the Curve: Person-Centered Health Care Reform. April 2013. Full report here: http://www.brookings.edu/research/reports/2013/04/person-centered-health-care-reform

[9] Bowles E, Simpson A, et al. A Bipartisan Path Forward to Securing America’s Future. Moment of Truth Project. April 2013. Full report available here: http://www.momentoftruthproject.org/sites/default/files/Full%20Plan%20of%20Securing%20America's%20Future.pdf

[10] Daschle T, Domenici P, Frist W, Rivlin A, et al. A Bipartisan Rx for Patient-Centered Care and System-Wide Cost Containment. Bipartisan Policy Center. April 2013. Full report available here: http://bipartisanpolicy.org/sites/default/files/BPC%20Cost%20Containment%20Report.PDF

[11] Bindman A, Blum J, Kronick R. Medicare's Transitional Care Payment — A Step toward the Medical Home.N Engl J Med 2013; 368:692-694

Authors

Kavita Patel

Publication: U.S. Senate Committee on Finance

The Affordable Care Act and Designing the District of Columbia's Health Benefits Exchange

Alice M. Rivlin — Mon, 13 May 2013 13:59:00 -0400

Before the Health Committee of the District of Columbia Council, Alice Rivlin encourages the Committee to implement the health benefits exchanges of the Affordable Care Act in order to provide universal affordable health care coverage. Explaining that the District has passed tests regarding Medicare and Medicaid, Rivlin describes the District's current health delivery system, explaining the landscape of health care carriers for groups and individuals and recommending that the health exchange become the sole venue for the purchase of individual and small business health insurance.

I am happy to testify on the bill before this Committee, “Better Prices, Better Quality, Better Choices for Health Coverage Amendment Act of 2013,” transmitted by Mayor Vincent C. Gray on behalf of the DC Health Benefit Exchange Authority. I strongly support the bill.

The federal Affordable Care Act (ACA), passed in 2010, is a major step toward an American health care system that covers almost everyone at sustainable cost. Implementation of the ACA is a long-sought opportunity to solve a disgraceful national problem—the fact that a large and growing share of the population cannot afford health insurance—as well as a chance to improve the quality and value of care delivered. As you know, the legislation was controversial at the national level, but the District welcomed it as an opportunity to realize our community’s goal of affordable health care coverage for all.

The District chose to comply with the ACA by creating its own health benefits exchange rather than letting the federal government do it. The District assembled a highly qualified Health Benefit Exchange Board, which recruited a strong professional staff and has implemented the ACA with energy and dispatch. Recently, the District’s exchange passed Phase Two testing with the Centers for Medicare and Medicaid Services. This indicates that the District is expected to be ready to enroll customers on October 1, 2013, and begin coverage on January 1, 2014. We should all be proud of the District for becoming a leader and role model in implementing the ACA, while some States have delayed and are behind schedule.

The exchange will require carriers to compete with one another by displaying qualified plans in transparent form in an electronic market place and allowing consumers to select the best plan for them. Some will receive federal income-tested subsidies to make plans more affordable. This is a win-win: DC residents will receive better health insurance at a lower cost and carriers will sell more insurance policies.

Designing the best exchange for the District has been challenging because DC’s health insurance market is small and highly concentrated. There are only four carriers one of which one controls more than three quarters of the individual and small group markets. The individual market is especially small—in part because of DC’s past success in reducing the number of uninsured residents through generous Medicaid eligibility and the creation of the Alliance. The individual market is estimated to fall below the 100,000 participants that the Urban Institute and others estimate to be the minimum size of the risk pool needed for an exchange to operate efficiently. In view of the small size and high concentration of the market, the DC Health Benefit Authority recommended, and the Council supported, merging the individual and small group markets after a transition period. Merging the markets recognizes that separate exchanges for the individual and small group markets would have too few carriers and too few enrollees to achieve the stability and efficiency that can be achieved in a merged market.

Now the Council is considering whether to make the exchange the sole venue for the purchase of individual and small business health insurance in the District. We believe that this measure will maximize competition, transparency, and the insurance choices available to consumers. Conversely, retaining a separate market outside the exchange will reduce the risk pool below critical size and invite carriers to attempt to attract younger, healthier individuals and employer groups outside the exchange, leaving higher risks in the exchange. In a small market with a dominant insurer, it is essential that the exchange risk pool be as inclusive as possible, both to stabilize the exchange—which is the only source of federal subsidies for District residents with modest incomes—and to maximize transparency and competition.

These design decisions are difficult, but, on balance, it seems wise to require that all DC individual and small business plans be purchased on the exchange with a single risk pool, to allow carriers to offer as many different plans as they want on the exchange, and to work hard to make the exchange as transparent and user friendly as possible. Moreover, the Board’s transition plan carefully balances the goal of full and speedy implementation with the needs of individuals and small business. The transition plan will allow small businesses to enter the health exchange over a two-year transition period, permitting small businesses to wait until the market settles should they feel the need.

Over the past couple of decades DC has gone from a city with a shamefully inadequate health system to a leader in provision of affordable health coverage and improving access to good quality care. We can all take pride in the steps DC has made to take advantage of the opportunity offered by the ACA to move to universal affordable coverage by acting quickly to implement it competently and expeditiously.

Thank you for the opportunity to speak today.

Authors

Alice M. Rivlin

Publication: The Health Committee of the DC Council

Image Source: © Joshua Roberts / Reuters

Bending the Cost Curve in Health Care the Right Way—Through Better, More Person-Centered Care

Mark B. McClellan — Thu, 09 May 2013 13:54:00 -0400

The United States spends about 17 percent of GDP annually on health care, a figure that is projected to grow substantially in the years ahead, despite the recent slowdown in health care spending growth. Rising costs mean insurance coverage keeps getting more difficult to afford. Those rising costs, plus the aging demographics of the nation, account for most of the spending side of our nation’s long-term fiscal challenges at both the federal and state level. They mean higher expenditures on Medicare and Medicaid, and the tax subsidies for employer-provided coverage and the new subsidies for private insurance in the individual marketplaces. At the same time, biomedical innovation using genomics, systems biology, information technology, and innovative and convenient ways to deliver care holds the potential for much more effective, personalized care – if we can afford to develop and use it. That’s not the case so far: patients often do not get treatments we know to be effective, innovative treatments and ways of delivering care are hindered by payments that are tied more to the site of services and what we’ve paid for in the past than the value of these treatments for particular patients, and we often pay more for complications than for the coordination of care and person-focused support that could help health care providers and patients get much better results for the money they spend. Something has to change, not just to make sure that healthcare costs can be contained, but also to make sure that the quality of health care gets better by providing better support for what patients need.

Our new report, “Person-Centered Health Care Reform: A Framework for Improving Care and Slowing Health Care Cost Growth” is a system-wide framework to address our cost problems by improving care – by leveraging the large and growing opportunities for more person-focused care. We have developed a set of proposals for saving $1 trillion over 20 years and improving care at the same time. Written in collaboration with leading experts from across the academic and political spectrum, our report proposes a framework for how to improve health care financing and regulation so that we can achieve better, higher-value care for each person. The report describes a specific series of steps to improvement the way care is delivered in each part of our health care system, including Medicare and Medicaid, the employer and individual insurance markets, antitrust enforcement and other regulatory reforms. Focusing on person-level quality of care as the fundamental strategy for addressing health care cost growth is in some ways new, but it builds on promising ideas and trends throughout our health care system. It is an idea whose time as come, and which we should start to adopt as our long-term approach to addressing the health care quality and cost problems now.

This report is the third in our “Bending the Curve” series. While building on the past reports, it also differs from our previous work in some very important ways. First, we have broadened our group of authors. Still with us is the core group of experts who participated in previous reports – people like Joe Antos from AEI, Mike Chernew and David Cutler from Harvard, Mark Pauly from University of Pennsylvania, Dana Goldman from USC, Steve Shortell from UC Berkeley, and others who have a tremendous amount of health policy expertise and experience. We’ve also benefitted from some new expert perspectives, including Kate Baicker from Harvard. And along with that expertise, our group now includes some other experts with extensive policy and political experience – including NGA director Dan Crippen, former Senate Majority Leader Tom Daschle, former CEA chair and Columbia dean Glenn Hubbard, former Utah Governor and former HHS Secretary Mike Leavitt, former HHS Secretary and University of Miami President Donna Shalala, and former budget directors Peter Orszag and Alice Rivlin. Together, this unique group sparked a new and welcome level of discussion about reform. In particular, as Mike Leavitt put it, if Republicans and Democrats were at the point where they had to reach an agreement on reforming care and addressing the challenge of rising costs, what would they agree on – and how could we make sure it would work?

As we worked to answer these very practical questions, we were forced to consider the full range of key technical and political issues involved in health reform. We reviewed the kinds of reforms that we have considered before to improve quality and lower costs, along with new evidence on how those reforms and others being implemented now are working (with different degrees of success) in the public and private sectors. We combined that with consideration of how best to move forward in a way that avoids the need for disruptive short-term payment cuts, provides the policy certainty needed to accelerate the trends toward the availability of much better, more personalized care, and addresses serious short-term weaknesses in in Medicare, including unstable physician payments and a lack of support for beneficiaries to save money when they get better care These considerations led to a plan that involves implementing reforms that are not disruptive in the short term while supporting better quality and coordination of care, leading to a large impact over time on supporting improvements in care that can sustain slower cost growth in the years ahead. Our conclusion is that enacting these health care reforms will not be easy, but we agree that this is the best path forward.

We do need to act now. If enacted, our framework is able to avoid the more aggressive steps that will almost certainly be needed in the years ahead to achieve more urgent reductions in federal spending, like cuts in payment rates as in sequestration, or restrictions in coverage for vulnerable populations and in access to new types of innovative care. And even more importantly, it will speed up the innovations in health care and biomedical technology that lead to better results and lower costs for patients. The bottom line is that the best way to control health care costs is to have health care policies now that do as much as possible to support better care for each patient.

We have a window of opportunity right now for implementing thoughtful health care financing and regulatory reforms that improve care today and promote much better, person-centered health care for the future. This is the best way for the country to achieve its overall deficit reduction targets. We should act now before the window closes, and we are left only with policy options that shift costs, reduce quality, and most importantly, diminish the ability of patients and health care providers to achieve better care and better health.

Downloads

Download the report

Authors

Mark B. McClellan

Image Source: © Keith Bedford / Reuters

Innovative Technologies and Nonprescription Medications: Addressing Undertreated Diseases and Conditions through Technology Enabled Self-Care

Thu, 09 May 2013 09:00:00 -0400

Event Information

May 9, 2013
9:00 AM - 4:00 PM EDT

The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

On May 9, the Engelberg Center for Health Care Reform convened an expert workshop “Innovative Technologies and Nonprescription Medications: Addressing Undertreated Diseases and Conditions through Technology Enabled Self-Care.”

Recognizing the public health impact of undertreatment of common diseases and conditions, the U.S. Food and Drug Administration is exploring how a regulatory expansion of the nonprescription drug class might increase access to important medications and treatments. This initiative is referred to as Nonprescription Safe Use Regulatory Expansion (NSURE).

At this meeting, a wide range of experts and stakeholders explored the use of technologies as a condition to the safe use of medications within a nonprescription setting, discussed perspectives on the role of technology to support the safe and effective use of nonprescription products, and explored the integration of innovative technologies into the health care delivery system.

Event Materials

Promoting the Effective Use of a Common Data Model

Wed, 08 May 2013 09:00:00 -0400

Event Information

May 8, 2013
9:00 AM - 12:15 PM EDT

The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

The passage of the Food and Drug Administration Amendments Act of 2007 mandated that the U.S. Food and Drug Administration (FDA) develop a system for postmarket risk identification and analysis. In response, FDA launched the Sentinel Initiative. FDA’s Mini-Sentinel pilot has made significant strides toward developing a national system for generating post-market safety evidence, and has succeeded in developing an effective distributed research network through a claims-based common data model. As the Sentinel Initiative enters the final year of the Mini-Sentinel pilot, FDA has identified the need to reduce the burden of data collection on the data owners and secondary data users as an area for further exploration.

On May 8, the Engelberg Center for Health Care Reform at Brookings convened an expert workshop, “Promoting the Effective Use of a Common Data Model,” to discuss the opportunities and challenges of adopting a common data model to support a broad range of stakeholder research and data needs. This strategic discussion focused on the potential of using a common data model as a tool to reduce the burden of data collection and the duplication of effort in order to support a stronger national capacity for health research and analysis. Representatives from the FDA, Sentinel data-partners, state all-payer claims databases, and federal agencies discussed their research and data needs, the utility of a common data model or several common data models to meet those needs, and the possibility of utilizing the Mini-Sentinel common data model as a base for broader adoption and expansion.

Event Materials

Singapore's Health Care Lessons for the U.S.

William Haseltine — Mon, 06 May 2013 12:39:00 -0400

Most people will agree that the U.S. health care system needs systematic restructuring. Americans pay more for their health care then residents of other high income countries but get worse health outcomes. The Affordable Care Act of 2010 addresses some but not all of the most pressing problems. I believe we can reduce health care expenses, saving trillions of dollars a year, by making our health care system more efficient, following the lessons from the best other countries have to offer. Singapore offers an excellent starting point.

In my new book, Affordable Excellence; The Singapore Health Care Story: How to Create and Manage Sustainable Health Care Systems (Brookings, 2013), I examine how Singapore has succeeded in establishing a health system that ranks among the best and most efficient in the world. Globally, Singapore ranks sixth in health care outcomes, yet spends proportionally less on health care than any other high-income country, spending less than one-fourth the cost of health care in the United States and about half that of Western European countries.

In the United States, public and private health care costs account for almost 18% of GDP, more than four times that of Singapore. Yet we rank at the very bottom of all advanced economy nations in terms of measures of health and below many less advantaged countries as well. The rapidly growing numbers of elderly patients who place the heaviest demand on health services burden our system even further. The present course is clearly unsustainable. The Affordable Care Act, if successful, will alter this trajectory only slightly, reducing projected health care costs from $4.8 trillion to $4.4 trillion in the year 2030.

The primary lesson from my study of the Singapore health care system is that the key to controlling costs lies in aligning individual and collective incentives. Individuals must understand that health services costs money and that they should pay those costs they can afford themselves. Government can create a framework of rules to align hospital and doctor incentives that encourage them to provide the best service at the best price. But the framework must also assure that people have the ability to pay and then provide a safety net if they cannot. Finally, the health care system should be monitored to make sure it is transparent and honest. Some of the key lessons from Singapore that I discuss in my book include: transparency in pricing; increased competition; a shift to home- and community-based care; investing in wellness; opt-out catastrophic health insurance; salaried doctors; higher co-pays; and a tiered system.

The lessons from Singapore’s health care system will be of interest to those currently planning the future of health care in emerging economies, as well as those engaged in the urgent debates on health care in the wealthier countries—with their serious long-term challenges in health care financing. Policymakers, legislators, and public health officials responsible for health care systems planning, finance and operations, as well as those working on health care issues in universities and think tanks, should understand how the Singapore system works to achieve affordable excellence.

Affordable Excellence provides proof of principle that it is possible to deliver excellent health to a diverse population at a cost that is sustainable for individuals and nations. I don't expect any country to adopt all of the Singapore system but rather adapt some key features to their own unique circumstances.

Authors

William Haseltine

Image Source: © Staff Photographer / Reuters

How Not to Die: Revolutionizing End-of-Life Health Care

Jonathan Rauch — Tue, 30 Apr 2013 16:32:00 -0400

Editor’s Note: This short blog post is based on the longer The Atlantic article, “How Not to Die,” by Jonathan Rauch. It focuses on revolutionizing end-of-life care by utilizing entrepreneurs in the medical system.

Here in Washington, we talk obsessively about reforming health care as something the government needs to do. Which it surely does. But one thing we forget is that a lot of reform is coming up from the grassroots, and this bottom-up reform, by showing the way forward, will be every bit as important as top-down reform, and a lot less subject to political gridlock.

Example: Dr. Angelo Volandes, of Harvard Medical School and Massachusetts General Hospital, has a gold-plated medical-establishment pedigree. But he’s also a zealous reformer who believes that much of the treatment administered to people nearing the end of life is not only unnecessary but, much worse, actually unwanted—because patients are not given the information they need in order to set treatment goals. He and colleagues are pioneering short, easily understandable videos that illustrate treatment options and goals of care visually, giving patients a clearer idea of what their choices really are.

Read about it here. The U.S. medical system is not friendly to disruptive entrepreneurs. But if we're going to improve value, reduce medical inflation, and make patients' experiences better, we'll need to make the most of entrepreneurs like Volandes.

Authors

Jonathan Rauch

Bending the Curve: Person-Centered Health Care Reform - A Framework for Improving Care and Slowing Health Care Cost Growth

Mon, 29 Apr 2013 13:12:00 -0400

Executive Summary:

We propose a framework for health care reform that focuses on supporting person-centered care. With continued innovation toward more personalized care, this is the best way to improve care and health while also bending the curve of health care cost growth.

Our health care system holds great promise. As a result of fundamental breakthroughs in biomedical science, improvements in data systems and network capabilities, and continuing innovation in health care delivery, care is becoming increasingly individualized and prevention-oriented. The best treatment for a patient involves not just specific services covered under traditional approaches to health insurance financing, but also includes new technologies and new kinds of care and support at home and beyond traditional health care settings. These advances require health care providers to work with patients and their caregivers to target increasingly sophisticated treatments and to coordinate care effectively ways that works best for each patient.

Our report’s person-focused reforms aim to support these changes in care—not as an afterthought or as an addition to our health care financing and regulation, but as the core goal. Instead of having to work around fee-for-service (FFS) payments and regulations that can complicate getting the highest-value care in each case, providers and patients will be able to receive more support for the specific approaches to care delivery that can make the most difference. The support comes from aligning reforms in provider payment, benefit design, regulation, and health plan payment and competition. To avoid short-term disruptions, our systematic framework involves a clear path that builds on existing reforms in the public and private sector, supports transitional steps to assist providers, and includes close evaluation and opportunities for adjustments along the way. While our primary goal is better health through better care, we estimate that our reforms would achieve an estimated $300 billion or more in net federal savings in the next decade, and provide a path to sustaining per capita cost growth that is much more in line with per capita growth in Gross Domestic Product (GDP). After the proposed reforms are implemented in the coming decade, long-term savings from achieving better health and sustainable spending growth will exceed $1 trillion over 20 years. Our proposals can be scaled up or down, and can also be combined with other proposed reforms to achieve additional reductions in health care costs. Our approach enables Congress to focus on overall cost, quality, and access goals that are very difficult to address under current law – so that whatever the spending level, that spending will do more for health.

These issues of health care quality and cost must be addressed. If a clear framework like ours is not implemented, the alternative is likely to be continued reliance on short-term cost controls, including across-the-board cuts in payments like sequestration, or delays and restrictions in both needed coverage updates for vulnerable populations and new types of innovative care—perpetuating large gaps in quality of care.

Our proposals represent an alternative to such care disruptions, cost-shifting, and threats to more innovative, person-focused care. We include proposals for Medicare, Medicaid, and private health insurance. We also propose a set of system-wide regulatory reforms and other initiatives, including antitrust and liability reforms. While some of these proposals are specific to particular programs and regulations, they are all grounded in our core goal of supporting quality care resulting in lower cost. This means a clear path for moving away from FFS payments and benefits and open-ended subsidies for insurance plan choices toward a direct focus on supporting better care and lower costs at the person level. Our proposals encompass significant reforms – such as modifications in Medicare payment mechanisms and benefits, and a change in the tax exclusion for employer-provided health insurance. The proposals reflect ideas that have gathered broad support in the past, but also include new approaches for addressing some of their shortcomings. Implementing our reforms together enables them to reinforce each other and create much more momentum for improving care while bending the cost curve.

Download the full report » (PDF)

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Image Source: Jim Young / Reuters

Bending the Curve: Person-Centered Health Care Reform

Mon, 29 Apr 2013 14:30:00 -0400

Event Information

April 29, 2013
2:30 PM - 3:30 PM EDT

The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Michael Leavitt, Tom Daschle and Mark McClellan present the third report in the "Bending the Curve" series, a reinforcing set of reform steps across the health care system, including Medicare, Medicaid and private health insurance.

Joined by Governor Michael Leavitt and Senator Tom Daschle, Dr. Mark McClellan, Director of the Engelberg Center for Health Care Reform and the Leonard D. Schaeffer Chair in Health Policy Studies at Brookings, presented a comprehensive framework for health care reform on Monday, April 29. This report, the third in the "Bending the Curve" series produced by the Engelberg Center since 2009, recommends a reinforcing set of reform steps across the health care system, including Medicare, Medicaid, and private health insurance, that achieves better care for each person resulting in lower health care cost growth and improved health.

Video

Bending the Curve: Person-Centered Health Care Reform

Transcript

Transcript (.pdf)

Event Materials

Participants

Panelists

Mark B. McClellan

Director, Engelberg Center for Health Care Reform
Senior Fellow, Economic Studies
Leonard D. Schaeffer Chair in Health Policy Studies

Tom Daschle

Mike Leavitt

Reforming Medicare: Fiscal Challenges and Policy Solutions

Mon, 22 Apr 2013 14:30:00 -0400

Event Information

April 22, 2013
2:30 PM - 4:00 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

In recent years, Medicare has moved to the center of public debate about the future of health care and fiscal policy. The retirement of the baby boomer generation, now in its initial stages, will expand the number of beneficiaries significantly over the next two decades, and program costs will continue to rise. There is broad, though not universal, agreement that changes in Medicare are needed, but there is little consensus about the direction of those changes. The most recent report from The Boards of Trustees for Medicare indicates that the program’s long-term problems are worsening and that “lawmakers should not delay” in addressing these financial challenges.

On April 22, Governance Studies at Brookings hosted a forum to analyze Medicare’s problems and explore possible policy solutions and reforms to one of the country’s largest and important social programs. A panel of experts discussed possible future changes to Medicare, implementation challenges and how reforms could affect the current system.

How to Build a Better Health-care System

Tom Daschle, Bill Frist, Pete V. Domenici and Alice M. Rivlin — Thu, 18 Apr 2013 07:00:00 -0400

The four of us came together to change the conversation around how to improve health care and constrain cost growth. What we learned is that, until better care is prioritized over more care, our nation will continue to face a problem with health-care costs. The good news is that, through thoughtful policy, health-care practitioners can be encouraged through rewards to focus far more on what is best for their patients and less on the number of tests and procedures they can order. The even better news is that such a health-care vision can not only produce better care but also cost less.

With the Bipartisan Policy Center, we will release a report Thursday with more than 50 recommendations to achieve the critical goal of improving the quality and affordability of care for all Americans while containing high and rising health-care spending. This report is the culmination of nearly a year of work, including stakeholder outreach, thorough research and substantive analytics to quantify the impact of our proposed policies.

Too often we in Washington talk about health care as though it is little more than a line item on a budget table. Those of us who have experienced the best of health care know that is not how care should be delivered or policy crafted in this most personal of issues. Our country can achieve a higher-value health-care system—meaning both higher quality and greater efficiency.

Health-care cost drivers are complex and interwoven, but the most problematic ones we identified are the inefficiencies, misaligned incentives and fragmented care delivery in the current fee-for-service reimbursement system. To address these, we seek to promote coordinated and accountable systems of health-care delivery and payment, building on what has proved successful in the private and public sectors. Organized systems of care emphasize the value of care delivered over the volume of care. These systems are often better able to meet patients’ needs and desires and are able to effectively reimburse providers and practitioners for delivering high-quality care.

In all our proposals, we sought to avoid simple cost-shifting as a means to generate federal budgetary savings, instead promoting transparency and protecting patient choice. We also focused on reforms that will incite transformation across the health-care system, not limited to Medicare. We believe, however, that the power of Medicare can be leveraged to lead the way in transforming U.S. health care.

In brief, our recommendations:

Preserve the promise of traditional Medicare while adding more choices and protections for beneficiaries, including accountable systems of care and a stronger, more competitive Medicare Advantage program.
Strengthen and modernize the traditional Medicare benefit, including adding a catastrophic cap, rationalizing cost-sharing and premiums and expanding access to assistance programs for those with low incomes.
Reform the tax treatment of health insurance to limit the taxfavored treatment of overly expensive insurance products.
Empower patients by promoting transparency that is meaningful to consumers, families and businesses, and streamline quality reporting.
Advance the nation’s understanding of potential cost savings from prevention programs, through support for research and innovation on effective strategies to address costly chronic conditions.
Offer incentives to states to promote policies that will support a more organized, value-driven health-care delivery and payment system, such as supporting medical liability reform and strengthening their primary-care workforce.

All of these policies are designed to improve the quality and value of our nation’s health care. That is where every health-reform effort should start. The savings that we achieved — $560 billion over 10 years in debt and deficit reduction — is the outgrowth of our work, not the goal.

No single set of recommendations can fix the health-care system or the nation’s debt and deficit crisis overnight, but we hope this report can start a constructive, pragmatic dialogue among policymakers and political leaders. By presenting this report to federal, state and private-sector leaders, we hope to promote a collaborative dialogue and a shared understanding of strategies to put our nation’s health system, as well as its economic outlook, on a sounder, healthier and more sustainable path.

Authors

Tom Daschle
Bill Frist
Pete V. Domenici
Alice M. Rivlin

Publication: Washington Post

Image Source: © Jim Young / Reuters

The Future of the Affordable Care Act: a Debate on Its Effects

Henry J. Aaron — Fri, 12 Apr 2013 00:00:00 -0400

Editors' note: Henry Aaron delivered the following remarks at the Conference on Equity and Choice in Health Care Access, hosted by the University of Chicago on April 12, 2013. The conference focused on issues related to health care access post-Affordable Care Act.

It’s late in the day. Everyone is probably a bit tired. And most everything has been said, although, as former Representative Morris Udall once said late in a conference, “not everyone has said it.” You are probably more interested in getting to the airport or going home than in anything I might say. So, I have decided that instead of giving a talk, I’d host a debate.

The two debaters are here with me. I’ve known them so long, I feel they are part of me. The topic is “Prospects for The Affordable Care Act.” The first debater is a happy soul, a real “glass is half-full” person, optimistic and upbeat. The first part of her name is Polly; you can guess the last part.

The second speaker sees problems and threats around every corner. He thinks that anything that can go wrong will. He goes by just one name: Murphy. We will hear from them in turn and you can then ask them questions. Polly?

Thank you, Henry.

Let’s agree on one thing...the nation is politically polarized. Half of us supports the Affordable Care Act. Half of us don’t.

That said, the health reform law has survived its two greatest existential threats. The Supreme Court sustained the core element of the legislation. And, of course, the 2012 presidential election reelected Barack Obama, its champion. So, we know that implementation will proceed.

We know some other things too. Analysts have agreed for decades that coverage should be expanded. They have also agreed that costs have been growing too fast. But they disagreed about just what to do to solve those problems. So, for many years the status quo was the winner.

Meanwhile, it was pretty clear that the public was not much interested in radical change. One minority on the political left wanted some form of single payer system—Medicare-for-all. Another minority on the political right wanted individual consumers to buy insurance aided by some sort of voucher.

But most people were insured. They liked what they had. They feared change would harm them. That meant that replacing the current system was a nonstarter. The only politically feasible way to reform was to build on current insurance arrangements.

And that is just what has happened. A lot of us have come to recognize a paradox. Implementation would have been easier had Congress adopted one of these more radical policy options. President Obama and those then in control of Congress were Democrats. They tried very hard to be conservative—in the sense that they sought to disturb current insurance arrangements as little as possible.

The Affordable Care Act contains elements on which there is broad agreement. The current fee-for-service system needs to be replaced. So do certain current practices of insurance companies that are both understandable and deplorable—charging the sick or the old premiums that are unaffordable except for the well-to-do, denying coverage to those in greatest need, canceling coverage for heavy users of services. Fragmented delivery of care makes high quality hard to establish, maintain, and verify. The tax breaks for employer financed health care need to be curbed or eliminated.

On all of these goals liberals and conservatives mostly agree. On all of them, the Affordable Care Act contains, in at least embryonic form, provisions to move the nation in the right direction.

I want to quote from a recent talk by Alice Rivlin on these matters. I—that is, Polly—sit next door to Alice. She is pretty hard-headed and experienced. But, as far as optimism about the ACA is concerned, she is my—that is, Polly’s—soul mate. Alice writes:

“One of the persistent criticisms of the ACA rings absolutely true: it is a complicated law, not easily explained in sound bites. Its effectiveness will depend heavily on how well it is implemented by numerous players, especially the states. But the complexity is not attributable to its radical nature. On the contrary, the ACA is complex because its authors aspired to tweak our complicated, fragmented system of delivering and paying for health care without changing the system in any drastic way. It takes a lot of words to write that tweaking into legislation.”

Further quoting Alice Rivlin:

“In sum, I believe we are close to a workable bipartisan solution to the health care dilemma that could ... provide universal coverage ... and reduce the growth of health spending to sustainable rates. The elements of such a compromise involve retaining and improving the ACA.... These reforms will not involve blowing up the current system and replacing it with either a European-style single payer model or a fully market-based model. At this point in our history, publicly acceptable changes in health delivery must retain and improve the mixed public-private financing structure, including employer-based insurance coverage, Medicare, Medicaid, and federal subsidies to help low- and moderate-income households purchase health insurance coverage. They must focus on gradually altering incentives to providers and beneficiaries to participate in cost- and quality-oriented health delivery systems.

“These reforms will not give us a perfect health care system—just one that we can keep tinkering with and improving on in order to ensure that the system offers good quality care to almost everyone at sustainable costs. We won’t discover the perfect health care system, but we do have a shot at accepting the main features of a pretty satisfactory status quo and continuing to adjust it around the edges--constantly trying to make it more effective, fairer and less costly to the combination of public and private entities that are paying the bills.”

Thank you, Polly—and Alice. Things may look good to you, but while you were talking Murphy has been grimacing and squirming hin his seat. Now it is his turn. Murphy.

I don’t really disagree with Polly’s political analysis of how we have gotten where we are today. I do want to say that I thought that president Obama’s decision to go after full-blown health reform can fairly be described as either gutsy or rash.

Gutsy, if one looks at the history of health reform failure, the analytic complexity of the task, and the political minefields that had to be safely negotiated.
Rash, if one recalls the other problems he faced.
Rash if one recognizes that he was betting his administration on an issue where the chances of failure were—and I will argue, still are—high.

But as one close advisor remarked “those are the kinds of decisions we elect presidents to make.”

Polly says that the 2012 election determined that the Affordable Care Act will be implemented. I don’t think that is quite right. The 2012 election determined that we will try to implement the Affordable Care Act. It didn’t guarantee that the effort will succeed, nor did it assure that the Affordable Care Act will survive. The 2012 presidential kept the Affordable Care Act alive. The 2016 election will determine whether it survives.

Seventeen states and the District of Columbia are now trying to set up state health exchanges. Seven states are partnering with the federal government to perform the same functions. Twenty-six states are leaving the job largely to the Federal government.

Five and one half months from now, the exchanges must start enrolling individuals and small groups in insurance plans that, as of January 1 next year, people must carry. Many of the states started very late. And the federal government’s implementation efforts are short of money.

The tasks that all of the exchanges have to perform are myriad and complex. I agree with Polly that the job would have been easier had Congress tossed out the whole current, messy system. Things would have been easier if the Affordable Care Act were simpler, as it would have been had it gone to a full conference committee.

But we have to go to implementation with the health system and the health law that we have—[why doesn’t that paraphrase comfort me?].

So here is a sample of items on the “to-do” list that we have five and one-half months to complete.

Software must be written and computers purchased to enable people, most of whom know little of insurance and some of whom are close to innumerate, to choose sensibly among perhaps dozens of insurance plans and enroll in one of them— on-line, over the phone, or in person. Data on age, family status, income, and employment status will be used to compute premium subsidies to be paid to the enrollees’ chosen insurance companies and cost sharing subsidies that will be paid to the enrollees.
Data systems have to be developed to permit enrollment officers to check all of that information in real time.
State insurance regulations need to be conformed to the new national law.
Insurance companies must design the plans they will offer through the exchanges and, in most states, the separate products that they will offer outside the exchanges.
The health exchanges must decide what conditions health insurance plans must satisfy in order to be classified as qualified health plans.
The federal law defines four levels of coverage based on the proportion of health care costs for the specified benefits the insurance must cover. Insurers have to provide the middle two, but the state health exchanges may require them to offer plans at the lowest and highest levels.
Small businesses will have to decide what plans to offer their employees. Individuals and employees of those businesses need to be informed of the options they face and decide what products to buy.

Millions of people will start applying for coverage on October 1, 2013. We don’t know exactly how many. That will depend in part on the rules various exchanges apply. It will also depend on whether the public education campaigns yet to be launched, succeed, and on how the press, bloggers, spin-meisters, state officials, and members of Congress handle the mistakes that will inevitably be made by inexperienced officials, overwhelmed call centers, and confused applicants.

Nothing approaching the complexity of this “roll out” has ever taken place in U.S. peacetime history. People will be eligible for coverage in the following ways:

through Medicaid, if their income is below 138 percent of the federal poverty level in those states that choose to extend Medicaid coverage as permitted under the ACA, but only for those with incomes up to 100 percent of federal poverty level in those states that do not extend coverage;
through a “basic health plan” if their income is between the Medicaid level and 200 percent of the FPL in those states that adopt such a plan (but the federal regulations for such plans have not yet been released);
through ordinary insurance purchased through the exchange, with subsidies, if their income is less than 400 percent of the federal poverty level and without subsidies if their income is higher.

The health insurance exchanges have the authority to require insurance sold to individuals and small businesses to be sold through the exchange. So far, only Vermont and the District of Columbia are considering such a requirement. In most places, everyone will also be able to buy insurance directly from insurance companies.

Different people within the same family may be eligible for coverage under two or more categories of coverage. Each person may be covered by one or two insurance carriers, as dental benefits may be offered separately. The category of coverage may change during the year because incomes fluctuate and family composition changes.

The subsidy payable to an individual depends both on his or her own income and on the coverage categories of other family members. Premium subsidies are based on current income or income expected over some future period. These subsidies are paid directly to the particular insurer that the enrollee selects.

But at the end of the year, a final reckoning based on the enrollees’ actual incomes, which may have risen after application, may require enrollees to repay some or all of the subsidy themselves, although they never laid hands on the overpayment.

The federal government has to set up data systems to enable the exchanges to verify earnings. Tax returns and Social Security earnings records won’t do, as they are available now only with delays of many months or even years.

People who fail to carry required insurance are subject to a fine if they fail to do so. The fine is excused if premiums net of subsidy exceed a fractions of income that themselves vary with income. People may pay the fine voluntarily. But if they don’t, the law authorizes no way to enforce the fine other than by subtracting it from tax refunds due people who over-withheld. And many potential enrollees do not file tax returns.

Mistakes and confusion are inevitable. That is the lesson from the rollout of the Medicare drug benefit and the Massachusetts universal coverage plan that closely resembles the Affordable Care Act. One might draw comfort from the fact that after rough starts, they succeeded. But this challenge is vastly harder for at least three reasons.

First, the Medicare drug benefit and the Massachusetts health plan were both passed with substantial bi-partisan support. The same cannot be said of the Affordable Care Act. Opponents have tried, with some success to deny the administration funds for implementation. This year’s budget asks for $1.5 billion—which Congress will probably not give. Opponents will pounce on the normal start-up glitches as proof that the law was a mistake and should be repealed.

Second, even if the ACA were flawlessly enforced, many people and businesses are going to find themselves facing big price increases. Why?

The new law limits premium variations based on age to no more than three to one. Current variations are much larger.
The law permits exchanges to impose community rating, which can mean that age-based variations in premiums are barred altogether. That means that the young will tend to face price increases.
The law permits states to charge smokers a 50 percent surcharge. Some states have announced that they will do so. And none of that surcharge will be covered by subsidies.
The ACA benefit standards will force many individuals and employees to buy more insurance than they are accustomed to having, and that will boost cost.
Small businesses will all be pooled in the exchanges. That means premium decreases for businesses employing older workers, but price increases for those with young workers.

What this all means is that even if overhead expenses are reduced, as I believe they will be, and even if administration were perfect, which I am sure it will not be, a lot of people are going to have high-voltage sticker shock. And what that means in turn is that the exchanges may face nasty adverse selection problems, boosting premiums still more.

Third, real errors will be made. This law is complicated. People don’t understand it. Phone banks will be staffed by inexperienced people. The software will be insufficiently tested. There are only three things absolutely certain in this life: death, taxes, and the law named for me, Murphy.

Wow, Murphy, I don’t know whether to thank you for those comments or crawl into a cave. One thing is for sure...you took a lot more time than Polly did. So, I am going to give her a few moments to respond before we take comments from the audience.

Murphy is right to point to the ferociously challenging implementation problems that we will face. I don’t minimize them. But despite all of these threats, I remain hopeful. Seventeen states and the District of Columbia are running their own exchanges. One of those states is Minnesota—and everything works in Minnesota. And the DC exchange has some pretty good people working for it.

More seriously, I believe that some of the states, or the federal exchanges, are going to get things right or almost right. That is all it will take for those who support the Affordable Care Act to make a persuasive case that, given time and patience, all states and the federal government can do the job right.

They can and will point to the stunning advances that have been and will be achieved under the law—improved coverage of adult students, elimination of the donut hole in drug benefits, the end to practices by insurance companies that everyone deplores—charging staggering premiums or denying coverage altogether for those with preexisting conditions or who are just old, and cancellation of policies for those who need coverage most. They will be able to point to the millions of newly insured and to the hard cash that helps them afford it.

And, there is an increasingly good chance that in one area we might just get lucky. The health cost juggernaut stopped abruptly in 2009. The onset of this respite wasn’t attributable to health reform. The calamitous recession gets some of the credit. And also independently of the health law, hospitals and physicians have been reforming the way health care is delivered and paid for.

But the Affordable Care Act promises to extend this respite. It contains pilots, demonstrations, and experiments of virtually every cost control mechanism that any analyst has thought of. If these trends continue, the new law will get credit if the cost climate stays benign. Some of that credit will be undeserved. But who cares? If even a few of the ACA’s innovations in payments and delivery of care pan out, it will deserve much of that credit.

So, when the presidential election of 2016 rolls around—the one that I agree will really settle the fate of the health reform legislation—I think that there is a good chance that most people—not just Democrats and Independents, but Republicans as well—will realize that the administrative clouds are lifting and that the United States is moving ahead to become a fairer and healthier nation because of the Affordable Care Act.

Now, on behalf of all of you who have listened so patiently, I want to ask you to give Polly and Murphy a big hand. I trust that they will take any questions that you may have.

Authors

Henry J. Aaron

Publication: Conference on Equity and Choice in Health Care Access, The University of Chicago

Physician Leadership in Payment Reform

Wed, 10 Apr 2013 08:30:00 -0400

Event Information

April 10, 2013
8:30 AM - 11:30 AM EDT

B-369
Rayburn House Office Building
Rayburn House Office Building
Washington, DC 20515

Physician leadership provides the critical foundation for health care delivery and payment reform. Patients identify physicians, nurses and other health care professionals as known, trusted partners for guiding decisions and navigating the health care system. Clinicians, at front line of care delivery, are often the best source of practical ideas for identifying opportunities to change health care delivery in ways that improve health and lower costs. However, the current physician payment system does not generally support these innovative ideas, because payments are tied to the volume and intensity of services and not to quality of care and its impact on patient health.

On Wednesday, April 10, The Engelberg Center for Health Care Reform at Brookings convened “Physician Leadership in Payment Reform” to highlight the role that clinical leaders can play in physician payment reform, and included bipartisan perspectives from both legislators and physicians, in an effort to better understand how alternative payment models to our current reimbursement can improve quality and coordination between primary care and specialists.

The Congressional representatives and panelists the event highlighted potential key elements for physician-led payment reform:

Recognize that financing should be aligned with a meaningful clinical relationship between patients and physicians to achieve better health while avoiding unnecessary costs.
Use better quality and cost measures to implement alternative payment models that promote the alignment between effective care and financing.
Improve the data available from Medicare and other sources to clinicians, to generate relevant, timely clinical and cost information to support better decision making.
Provide tools and support such as registries to help physicians interpret and use such data, especially physicians in small practices.
Use latest technology and innovations such as smart apps to help patients work more effectively with their physicians to manage their health.

These reforms can begin modestly, as incremental changes from current fee-for-service payments, but should scale up as experience and evidence on their impact increases. Reforms that are aligning payments and better care can be reinforcing, and include:

Patient-Centered Medical Homes (PCMHs)
Bundled payments for procedures and episodes of care
Accountable Care Organizations (ACOs)

These payment reforms can complement each other, and can rely on complementary performance measures. Quality measures that must accompany these reforms are getting better, and are increasingly focused on patient outcomes and experience.

Improving patient care is the foundation for payment reform, with savings as a result of better and more coordinated care. With new payment policies, policymakers can make it easier for physicians to undertake the kind of leadership necessary to get to better management and coordination of care. But clinician leadership is needed to develop and implement these reforms successfully.

Video

Full Event - Physician Leadership in Payment Reform

How African Governments Should Respond to the Impact of the U.S. Sequester

Julius Agbor and Brandon Routman — Wed, 27 Mar 2013 14:02:00 -0400

Based on the 2011 Budget Control Act, and due to the failure of the “supercommittee” to agree upon discretionary budget cuts in 2012, across-the-board cuts to all discretionary spending accounts in the U.S. federal budget (now known as the sequester) went into effect in March of this year. At the G-20 finance ministers and central bank governors meeting held in Moscow last February, Christine Lagarde, the managing director of the International Monetary Fund (IMF) insinuated that the sequester might not be the optimal path to medium-term fiscal consolidation in the U.S., and its impact could be wide-ranging on the global economy. The sequester would potentially affect African economies directly through reduced foreign aid and indirectly through lower export receipts, remittances and foreign investment should there be an accompanying significant slow down in the U.S. economy.

According to Secretary of State John Kerry, the effects of the sequester will be fairly dramatic. For instance, they will initiate some $1.7 billion worth of cuts in foreign assistance, which will negatively affect Africa in a number of key ways.

According to the State Department’s estimations, foreign aid to the health sector may be cut by about $400 million. The highly successful President’s Emergency Plan for AIDS Relief (PEPFAR) will loose some $280 million, which will mean that more than a quarter million fewer patients will receive HIV/AIDS medication. Other cuts in the sector will translate into 2.5 million women being denied family planning service, 3 million fewer treatments for malaria and 60,000 fewer treatments of tuberculosis. If these cuts only affected health outcomes, they would be tragic enough; however, they are compounded by budgetary slashes in other areas. There will be cuts of approximately $200 million in humanitarian assistance, cuts in international peacekeeping operations by almost $20 million and significant cuts to agricultural programs like Feed the Future. The Millennium Challenge Corporation (MCC)—another tremendously successful program and one which incentivizes good governance on a national scale throughout Africa—will also likely sustain a hit. As a consequence, cuts to this program could set back the agenda of governance reforms on the continent.

It also should be noted that the funding cuts induced by the sequester are really only a small part of the story; the larger part is the dwindling levels of funding for international assistance in the current cash-strapped climate.

It should be noted that the above figures are estimates from the State Department and the House Appropriations Committee. While we know for sure that the sequestration cuts will be in effect through 2013, the specifics of how and where these shortfalls occur will be ironed out via a budgetary process over the next few months. It also should be noted that the funding cuts induced by the sequester are really only a small part of the story; the larger part is the dwindling levels of funding for international assistance in the current cash-strapped climate. It should be noted that since 2010, there has been a systematic reduction of about 20 percent in U.S. international aid funding, which is occuring despite the fact that it is less than 1 percent of the total federal budget. Furthermore, in an era where most donors are dealing with fiscal problems of their own, finding alternative funding might be difficult. Thus, continuity of some of those programs that are jointly financed with African governments will critically depend on a greater budgetary participation by African governments themselves.

In formulating policy responses to these economic shocks, it is critical that Africa’s governments preserve the sound macroeconomic framework that has undergirded its remarkable economic growth during the last two decades. The optimal policy response of African governments to the sequester will depend on whether the sequester is percieved as temporary or permanent (the fate of these cuts is uncertain in 2014 and beyond) and on country-specific percularities. The country-specific percularities refer to the exchange regime in place (fixed or flexible) and to the availability of policy space – fiscal, monetary and external buffers. Fiscal buffers refer to the ability of governments to run larger fiscal deficits without creating unfavorable debt dynamics and undue pressures in domestic financial markets, while monetary buffers refer to the ability to ease monetary policy in support of economic activity without triggering significant inflation and exchange rate pressures. External buffers simply refers to the availability of a pile of foreign exchange reserves that can be run down in times of need. Generally, countries with flexible exchange regimes have a greater advantage over fixed exchange regime countries (notably, the African Financial Community, franc zone, member countries) in maneuvering support for affected programs as monetary and exchange rate policies can be fine tuned to support fiscal policy.

If the sequester is perceived as temporary, the optimal response would be to scale up budgetary support for similar, African-groomed programs. Countries with enough buffers could temporarily decrease their stock of foreign exchange reserves and run large fiscal deficits supported, where available, by an expansionary monetary policy stance. For countries with limited buffers, budgetary support could come from borrowing from domestic financial markets (where available) or from the International Monetary Fund and other multilateral funding agencies.

The efforts to mitigate the impact of the sequester on African economies should also be complimented by the continents’ bilateral as well as multilateral development partners.

However, if the sequester is percieved as permanent a different set of policy responses, contingent on each countries’ percularities, can be envisaged:

For countries with limited fiscal buffers (that is, those facing both high budget deficits and high debt-to-GDP ratios), the optimal response depends on the depth of countries’ domestic financial markets as well as on the extent of the pressure imposed by financial markets. Where fiscal buffers are limited, domestic financial markets are well developed but governments are under intense pressure from financial markets. For instance, in South Africa, the optimal response will be to allow a full blown impact of the sequester, which would entail a sharp increase in the price of anti-retroviral drugs in a country where 10 percent of the population is currently living with HIV/AIDS. It should be noted that under the Global Health Initiative, in fiscal year 2012, $469 million was allocated towards South Africa’s fight against HIV/AIDS, which currently tops the list of beneficiary nations. There are other African countries where limited fiscal buffers exist, domestic financial markets are developed, but the government is not under intense pressure from financial markets. For instance, in Botswana, the optimal response might be to borrow from domestic financial markets to partially offset the full blown impact of the sequester. Some sub-Saharan African countries have limited fiscal buffers, thin domestic financial markets, but do have some credibility in international markets, including Kenya, Ghana, Zambia, Angola and Mozambique. These countries could attempt to raise funds internationally through sovereign and diaspora bonds.
Some natural resource-exporting countries in sub-Saharan Africa have accumulated savings in the form of a sovereign wealth fund or in foreign currency denominated assets (for instance, the franc zone countries). They could draw down on those resources to finance the additional cost of maintaining the affected programs.

The efforts to mitigate the impact of the sequester on African economies should also be complimented by the continents’ bilateral as well as multilateral development partners. On its part, the Obama administration and the black congressional caucus should strive to minimize the cuts on some of the highly successful programs like PEPFAR and MCC, and if African governments demonstrate greater commitment to good governance, economic freedom and citizen empowerment, they will be more motivated to do so. The responsibility for ensuring that African citizens continue to receive critical services delivered through U.S. foreign assistance ultimately rests with African governments themselves, notably, their willingness to step up budgetary support to similar African-groomed programs.

Authors

Julius Agbor
Brandon Routman

Accessing and Communicating Device Information: UDI as a Tool for Improved Patient and Provider Connectivity

Mon, 18 Mar 2013 09:00:00 -0400

Event Information

March 18, 2013
9:00 AM - 3:45 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Accessing and Communicating Device Information: UDI as a Tool for Improved Patient and Provider Connectivity

On Monday, March 18, 2013, the Engelberg Center for Health Care Reform at Brookings convened a diverse group of patient groups, providers, academic researchers, and other relevant stakeholders to discuss unique device identification (UDI) as a tool for improving the flow of important device information between and among patients and providers.

At the initial UDI Implementation Work Group meeting and throughout ongoing conversations with the Work Group and other experts, stakeholders emphasized the importance of facilitating seamless communication of device safety information, easy access to important device information for patients and providers, and improved communication regarding devices between patients and providers. Although enabling each of these capabilities will likely require the adoption of UDI by an array of stakeholders (e.g., health care systems capturing UDIs in electronic health records), participants emphasized that patients and providers will likely benefit most from and, therefore, should have an important role in the development of the UDI system. However, participants also recognized that the task of realizing the vision of an effective UDI system is not trivial and will require broad stakeholder input and focus. This workshop provided an opportunity for stakeholders to consider what will likely be the most pressing challenges and workable strategies for achieving these enhanced capabilities.

Event Materials

Payments to Elders Are Harming Our Future

Harry J. Holzer and Isabel V. Sawhill — Fri, 08 Mar 2013 00:00:00 -0500

Foolish, indiscriminate and badly timed cuts in the federal budget have begun. The primary reason is that Republicans have refused to budge any further on taxes. Still, Democrats must share some of the blame. By failing to propose more specific cuts to entitlement spending, they have forfeited the high ground and allowed a small but critical set of programs to absorb all of the pain.

The “sequester” is just the latest chapter in the muddled thinking that has characterized the story of the federal budget for the past several years. Alarmists who call for immediate spending cuts and immediate reductions in our debt-to-GDP ratio (now at 73 percent) overstate the dangers of current levels of spending and debt, and they understate the damage to employment and economic growth that results from recently enacted belt-tightening. That tightening, including the effects of provisions enacted in both 2011 and 2013, is expected to halve the growth rate in the gross domestic product this year, according to the Congressional Budget Office.

This self-inflicted wound to the economy and to jobs makes no sense. If anything, we should be using this period, when workers are underemployed and firms’ physical plant and financial resources are underutilized, to improve productivity by investing more in infrastructure and job training.

At the same time, those who argue that we can put off any serious discussion of debt reduction for a number of years — because of the temporarily stable debt-to-GDP ratio projected for 2015 to 2022 — understate the dangers that loom just beyond this period. The aging population and the growth of health-care costs make enacting reforms to entitlements imperative. Enacting them now would help the economy by reducing uncertainty. This would also instill more confidence in government, give people time to adjust and release the pressure on the small portion of the budget that so far has absorbed virtually all of the cuts.

The reluctance of our fellow progressives to consider sensible reforms to entitlement programs is puzzling. None of us wants to impose new burdens on vulnerable seniors or those who are about to retire. But any new provisions can be phased in gradually and structured in a way that protects the oldest and most fragile members of the population in addition to those with limited incomes.

With these caveats, progressives must begin to acknowledge a hard fact: Our very expensive retirement programs already crowd out public spending on virtually all other priorities — including programs for the poor and those that strengthen the nation’s future — and will do so at even higher rates in the next decade and beyond unless we reform these large programs.

Social Security and Medicare alone cost the federal government about $1.3 trillion last year, accounting for more than 37 percent of federal spending; they are slated, along with interest on the debt, to absorb virtually all currently projected federal revenue within the next several decades. In contrast, all nondefense discretionary spending — which includes outlays on education, job training, transportation, public safety, research and many other growth-enhancing programs — amounted to only 17 percent of the budget, and they will continue shrinking each year.

Given that Americans have always resisted paying high taxes — and we see little sign of that viewpoint changing — what will happen to other priorities as our spending on retirement programs soars? Even if revenue rises, how can we possibly begin to fund the investments — in early-childhood health and education programs, K-12 reforms, effective workforce policies, improvements to crumbling infrastructure and the advancement of science — that are so badly needed to generate broadly shared economic growth? For how long will we continue to sacrifice investments in our nation’s children and youth, as well as its future productivity, to spend more and more on the aged?

Our preference is to restructure the delivery of health care so that it delivers the same benefits in less costly ways. Growth in health-care costs has slowed over the past few years, and the Affordable Care Act may bring further progress. But such changes are likely to be insufficient, requiring some restrictions on eligibility or expenditures. Asking affluent seniors to pay more for their benefits would be a good place to start.

If the issues are fairness and growth, not the size of government per se, then the right thing to do is to ask the affluent to pay more. Cutting programs aimed at providing a way up the ladder for the young and the poor, and doing so at a time when the economy is weak, is just plain dumb.

Authors

Harry J. Holzer
Isabel V. Sawhill

Publication: The Washington Post

Highlights from the Fifth Annual Sentinel Initiative Public Workshop

Thu, 07 Mar 2013 14:30:00 -0500

Event Information

March 7, 2013
2:30 PM - 3:30 PM EST

Live Webinar
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

On March 7, the Engelberg Center for Health Care Reform at Brookings hosted a roundtable webinar, “Highlights from the Fifth Annual Sentinel Initiative Public Workshop.” This webinar featured presentations from Dr. Patrick Archdeacon, a medical officer in the Office of Medical Policy at the U.S. Food and Drug Administration, and Dr. Richard Platt, professor and chair of the Department of Population Medicine at Harvard Medical School and executive director of the Harvard Pilgrim Health Care Institute.

This webinar provided an opportunity for stakeholders to revisit the discussions from the Fifth Annual Sentinel Initiative Public Workshop, which included an update on the status of Mini-Sentinel activities and the progress and future directions of the Sentinel Initiative.

Audio

Highlights from the Fifth Annual Sentinel Initiative Public Workshop

Event Materials

Presentation