Mike Kueber's Blog

August 26, 2011

Reforming Medicare

Filed under: Issues,Medical,Politics — Mike Kueber @ 4:10 am
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An excellent op-ed column in the NY Times today by Ezekiel Emanuel and Jeffrey Liebman contrasted good and bad budget cuts to Medicare.  It provided three examples of good cuts:

  1. Stop paying for Avastin, an ineffective anti-cancer drug that costs $88,000 per year per patient and causes serious side effects.
  2. Stop paying for colonoscopies on patients older than 75 years because the procedure is ineffective and risky on patients older than 75 years.
  3. Stop paying for placement of stents in patients with stable heart disease because drug therapy is just as effective and costs substantially less.

The column also provided three examples of “ill-conceived” cuts:

  1. Across-the-board cuts in payments to providers.  This will diminish availability of care.
  2. Raising the eligibility age from 65 to 67.  This will (a) shift financial responsibility to private insurers, or (b) result in
    an increase in the number of uninsureds.
  3. Increasing co-pays and deductibles.  This will (a) shift financial responsibility to beneficiaries, or (b) result in deteriorating
    health as beneficiaries decline to see their doctor or use prescription drugs.

I agree that the so-called ill-conceived cuts don’t address the underlying problems associated with escalating healthcare costs in America and that ObamaCare contains the “seeds of a solution” to some of those problems.

But I don’t agree that the cuts are ill-conceived.  Medicare and Medicaid are bankrupting America, and the federal government needs to stem the bleeding by cutting its costs.  (RyanCare with vouchers for Medicare and block grants for Medicaid are examples of similar cutting.)  Then on a parallel track, it can explore methods and policies such as those in ObamaCare that enable healthcare to become more available and affordable.

May 27, 2011

Right-wing social engineering

Congressman Paul Ryan has proposed reforming Medicare into a program that provides senior citizens a voucher to buy private medical
coverage (so-called RyanCare) instead of directly providing unlimited government coverage.  Newt Gingrich recently created some controversy by suggesting that RyanCare was “radical right-wing social engineering.”

My response was, huh?  What is radical about this proposal?  My former employer, USAA, has a reputation for providing a top-of-the-line benefits package, but even USAA had to reform its medical coverage a few years ago to control the skyrocketing medical costs, and its reform is very similar to RyanCare.  Prior to the reform, USAA had historically paid for 90% of its employees’ health insurance premium, with the employees paying the remaining 10%.  After the reform, USAA promised to continue paying 90%, but only up to a certain amount.  If the cost of premiums continued to hyper-inflate, employee would be required to contribute a larger percentage.

The USAA reform made sense because an employer cannot assume unlimited liability for costs that it can’t control.  Ditto for Medicare.  Yes, everyone – government, medical providers, employers, and employees – needs to be working toward controlling the cost of medical care, but that is a separate matter from maintaining fiscally responsible insurance – whether employee health insurance or Medicare.

Gingrich suggested that RyanCare was not only radical, but also right-wing social engineering?  That suggestion was especially jarring because I had never heard the terms right-wing and social engineering used together.  I had only heard the term “social engineering” used in reaction to left-wing, nanny-state big government trying to convert Americans to a commune way of life.  Thus, I needed to do some research.

My research revealed that social engineering is an attempt to influence popular attitudes and social behaviors on a large scale.  Usually the term refers to government action, but it can apply as well to private groups.  Social engineering is not inherently negative, but because of its usage
in the political arena, it has come to have a negative connotation.  Technically, all government laws – such as prohibitions against murder, DUI, theft, and littering – are social engineering.  Governments also engage routinely in social engineering through incentives and disincentives built into economic policy and tax policy.

Conservatives and libertarians often claim that their opponents (the liberals) are engaged in social engineering, and that makes sense because liberals prefer a muscular government while conservatives and libertarians prefer a muscular private society.  But even liberals complain of social
engineering when it comes to prayer in school, abstinence-only sex education, and the English-only movement.

But getting back to Newt Gingrich, how is it social engineering to convert Medicare from an unlimited financial obligation to a limited voucher system?  It isn’t, and I think Newt admitted as much last week when he was questioned on Face the Nation.

NEWT GINGRICH: No, I’m just saying. If you listen to [host David Gregory’s] words, he doesn’t say how do you feel about Paul Ryan?  I like Paul Ryan.  Didn’t even say how do you feel about Ryan’s budget?   I would have voted for Ryan’s budget.  He said should Republicans pass an unpopular plan?   And I made the mistake of accepting his premise.  I wasn’t referring to Ryan.  I was referring to a general principle.  We, the people, should not have Washington impose large-scale change on us…. my context was we Republicans have to go to the country, we have to explain what we’re trying to accomplish to save Medicare, how we would save Medicare.  The country has to have time, the American people have to have time to ask us questions, to modify the plan if necessary, to get to a point where people are comfortable with it and that was my point.  I– I probably used unfortunate language about social engineering. But my point was really a larger one that neither party should impose on the American people something that they are deeply opposed to.

That passage seems to suggest that Newt didn’t want the Republicans to ram RyanCare down the public’s throat like the Democrats did with ObamaCare.  Fair enough.  But he sure made a mess of it by misusing the term “radical right-wing social engineering.”

May 26, 2011

RyanCare and the special congressional election in New York

On Tuesday, there was a special congressional election in a conservative New York district to replace Republican Christopher Lee, who had resigned in disgrace following the publication of some bare-chested internet-dating photos.   Based on the results of the special election, the Republicans could be in for a world of hurt come 2012.

Republicans selected a solid candidate, Jane Corwin, to replace Lee, and Corwin was heavily favored because Lee had won the previous election with 74% of the vote and John McCain had defeated President Obama in the district. 

But then the RyanCare hit the fan, and all bets were off.  The Democratic candidate, Kathy Hochul, hammered Corwin for wanting to kill Medicare.  There were political commercials showing Paul Ryan pushing his grandmother off a cliff.  Corwin, who is a wealthy, former Wall Street analyst, failed to effectively respond – “When she started making these comments, I thought, ‘This is so outrageous no one would ever believe it.’ Apparently some people did.”

I admit to being part of the crowd that didn’t think the Democrats would be able to demagogue RyanCare to old people because the plan specifically exempted people 55 and older.  Based on this special election, I was wrong.  Hochul won with 47% of the vote to 43% for Corwin and 9% for a Tea Party candidate who lost in the Republican primary to Corwin.  

The result remind me of Scott Brown’s shocking victory in Massachusetts that served as a referendum on ObamaCare.

I thought RyanCare would be palatable to Americans because it establishes financing that ensures the long-term viability of Medicare.  Although it reduces benefits for those under the age of 55, those are precisely the people who often claim that they don’t expect Social Security and Medicare to be around for them.  You would think that they would be happy to be getting more than they expected.

NY Times columnists Gail Collins and David Brooks had a interesting conversation in today’s paper about the special election, and David made the following comment:

  • I agree this is mostly about Medicare. I also believe it was entirely predictable. It’s not exactly a secret that touching Medicare in any way is deeply unpopular with voters. The average American, earning the median salary, pays about $150,000 into Medicare over the course of their career. They get back somewhere in the neighborhood of $350,000 to $450,000 in benefits. Their grandchildren are involuntarily footing a huge portion of that gap, so naturally today’s voters want to preserve this sweet deal. The Ryan plan threatens their grip on hundreds of thousands of dollars in free money.”

I have always rejected the pundits who say that America is fiscally irresponsible because the voters will kill any politician who insists on being fiscally responsible.  Let’s hope that is not the case in 2012.

April 27, 2011

Comparative-effectiveness research and healthcare rationing

A few days ago I blogged about the Independent Payment Advisory Board (IPAB), which was created by ObamaCare to reduce the rate of growth in the cost of Medicare.  Although IPAP is intended to recommend changes to Medicare reimbursement rates and is specifically prohibited from making any recommendation to ration health care, Republicans and some Democrats are actively attempting to terminate the Board because they believe that draconian cuts to reimbursement rates would be equivalent to rationing. 

Rationing is currently a dirty word in Washington.  Any program that arguably leads to healthcare rationing is at risk.  Although Republicans are loathe to admit it, RyanCare is a variation of rationing because its Medicare vouchers will not be adequate to buy today’s full-coverage Medicare.  We can fully expect partisan Democrats to demagogue this issue as much as Republicans do.  Let’s hope this bipartisan demagoguery fails to damage the invaluable comparative-effectiveness research (CER) contained in ObamaCare.

CER has been defined as the generation and synthesis of evidence that compares the benefits and harms of alternative methods to prevent, diagnose, or treat a clinical condition or to improve the delivery of care. CER attempts to measure the relative effectiveness of treatment, whereas standard research focuses on efficacy (whether the treatment works or not). 

An expert in the field of CER who has studied geographic variation in healthcare that patients in the U.S. receive – a phenomenon called practice-pattern variation – has concluded that if unwarranted variation were eliminated, the quality of care would increase and healthcare savings up to 30% would be possible.

Another study has revealed that patients in the highest-spending regions of the country receive 60 percent more health services than those in the lowest-spending regions, yet this additional care is not associated with improved outcomes.

Council for Comparative-Effectiveness Research

President Obama is a big supporter of CER, and he took advantage of the American Recovery and Reinvestment Act of 2009 (the Stimulus Act) to set aside $1.1 billion for CER and to create a Council for CER to coordinate the research across the federal government.  In the development of the law, there was disagreement over whether CER could be used to limit (rationing?) healthcare options, and ultimately, the law provided that CER should only be used to increase the quality of treatment, not to limit options.  That doesn’t make any sense – why should government pay for treatment that is relatively ineffective? 

Because of the explicit prohibition on rationing and the fast-moving nature of the Stimulus Act, the $1.1 billion for CER stayed under the radar.  That changed, however, when President Obama made further changes to CER under the Patient Protection and Affordable Care Act of 2010 (so-called ObamaCare).  When Sarah Palin and her cohorts demagogued ObamaCare for rationing and death panels, they never identified the provisions in the law that prompted this concern.  Subsequent commentators, however, have focused on the Patient-Centered Outcomes Research Institute (PCORI), which replaced the Council for Comparative Effectiveness Research.

Patient-Centered Outcomes Research Institute (PCORI)

Section 6301 of ObamaCare provides, “The Secretary may […..] use evidence and findings from research conducted […..] by the Patient-Centered Outcomes Research Institute.”  According to Republican senator Kyl, “That means the government, not patients and doctors, has the power to make health care decisions that affect you. A bureaucrat decides if your health care is an effective use of government resources.”

ObamaCare also says the following about comparative-effectiveness research:

  • Defines comparative clinical effectiveness research as “research evaluating and comparing health outcomes and the clinical effectiveness, risks, and benefits of 2 or more medical treatments, services, and items.”
  • Establishes that the purpose of the Institute is “to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items.”
  • Provides that the Institute “shall identify national priorities for research, taking into account factors of disease incidence, prevalence, and burden in the United States (with emphasis on chronic conditions), gaps in evidence in terms of clinical outcomes, practice variations and health disparities in terms of delivery and outcomes of care, the potential for new evidence to improve patient health, well-being, and the quality of care, the effect on national expenditures associated with a health care treatment, strategy, or health conditions, as well as patient needs, outcomes, and preferences, the relevance to patients and clinicians in making informed health decisions, and priorities in the National Strategy for quality care established under section 399H of the Public Health Service Act that are consistent with this section.”
  • Instructs that the Office of Communication and Knowledge Transfer, “in consultation with the National Institutes of Health, shall broadly disseminate the research findings that are published by the Patient Centered Outcomes Research Institute … and other government-funded research relevant to comparative clinical effectiveness research…. The Office shall provide for the dissemination of the Institute’s research findings and government-funded research relevant to comparative clinical effectiveness research to physicians, health care providers, patients, vendors of health information technology focused on clinical decision support, appropriate professional associations, and Federal and private health plans….   Shall not be construed as mandates, guidelines, or recommendations for payment, coverage, or treatment.”

Section 1182 of the Act explicitly limits the Secretary’s use of comparative-effectiveness research:

  • “The Secretary may only use evidence and findings from research conducted under section 1181 to make a determination regarding coverage under title XVIII if such use is through an iterative and transparent process which includes public comment and considers the effect on subpopulations.”  (This provision was quoted above out of context by the Republican Senator Kyl.)
  • Nothing in section 1181 shall be construed as (1) superceding or modifying the coverage of items or services under title XVIII that the Secretary determines are reasonable and necessary under section 1862(l)(1); or (2) authorizing the Secretary to deny coverage of items or services under such title solely on the basis of comparative clinical effectiveness research.”
  • The Secretary shall not use evidence or findings from comparative clinical effectiveness research conducted under section 1181 in determining coverage, reimbursement, or incentive programs under title XVIII in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill.”
  • “Paragraph (1) shall not be construed as preventing the Secretary from using evidence or findings from such comparative clinical effectiveness research in determining coverage, reimbursement, or incentive programs under title XVIII based upon a comparison of the difference in the effectiveness of alternative treatments in extending an individual’s life due to the individual’s age, disability, or terminal illness.”
  • The Secretary shall not use evidence or findings from comparative clinical effectiveness research conducted under section 1181 in determining coverage, reimbursement, or incentive programs under title XVIII in a manner that precludes, or with the intent to discourage, an individual from choosing a health care treatment based on how the individual values the tradeoff between extending the length of their life and the risk of disability.

Thus, the language appears to give the Secretary authority to rely on research from the Patient- Centered Outcomes Research Institute to assist in making coverage decisions.  But the Institute’s research focuses on the relative effectiveness of various treatment options, not on rationing coverage based on a cost-benefit analysis.  Thus, the 85-year-old guy appears able to get his knee replaced. 

Deficit hawks have complained that the Council for CER in the Stimulus Act had greater promise for slowing the growth of healthcare spending and that its replacement PCORI is currently precluded from examining the most important component of CER – i.e., cost-effectiveness.


Cost-effectiveness analysis considers the comparative effectiveness and costs of different treatments. The goal is to provide evidence of which treatments provide the most health benefit per dollar of expenditure. Deficit hawks argue that the expanded use of cost-effectiveness analysis is desirable and inevitable to limit growth in U.S. medical costs.  Incorporating costs into the analysis of comparative effectiveness can help focus resources on treatments and interventions that provide greater value for the money. But conducting and using formal cost-effectiveness analysis in treatment and insurance coverage decisions is highly controversial. Cost-effectiveness analysis raises the prospect of formal rationing of medical care because it costs too much.

The concept of cost-effectiveness is central in the economics of healthcare.  Although cost-effectiveness for Medicare is currently hugely controversial, it is already being applied by the Veterans Administration and, thought the states, in Medicaid.   Big-government types believe that cost assessments and judgments of benefits in relation to costs should be left to patients and physicians, but deficit hawks like me believe that a centralized government system for comparing cost-effectiveness is an essential part of CER.  American government has limited resources, and it needs to decide how much to spend on healthcare and how to most effectively spend it.