Not two weeks ago Mike Leavitt had no idea what to do about Medicaid. And he certainly had no idea at all about any possibility of a move to block grants. No siree, not a clue, not a whiff of an idea. And he told the Senate committee that fawned all over him while confirming him as HHS secretary that he just didn’t know what the Administration might possibly do about those block grant things.

Well, to paraphrase a certain British prime minister (prize if you know which one), ten days is a long time in politics. Yesterday Leavitt laid out his ideas for the future of Medicaid:

Leavitt called Tuesday for sweeping changes in Medicaid that would cut payments for prescription drugs and give states new power to reduce or reconfigure benefits for millions of low-income people. Leavitt said that Medicaid could save $4.5 billion over the next 10 years if it restricted the ability of elderly people to gain Medicaid coverage of long-term care by transferring assets to their children.

Finally, he said, the federal government could save $40 billion in the next decade if it cracked down on "accounting gimmicks" that he said were used by states to shift costs to the federal treasury. The Government Accountability Office, an investigative arm of Congress, said last week that such moves by the states "generate excessive federal matching payments" and "cost the federal government several billions of dollars each year."

And how exactly might they put a stop to those "accounting gimmicks"? How about if they gave the states freedom to do whatever they liked to their own Medicaid programs and just gave them a big lump sum. But of course they can’t call it a block grant. How about just calling it a "big ol’ pile of cash" and hope that none of those irritating governor fellows notice that the pile will be a little (or, in some states, a lot) smaller than the one they ended up with in previous years by using those "accounting gimmicks." Yup that sounds like a good, and highly original, idea.

Meanwhile, I just hope no one at PhRMA was listening when Leavitt said that Medicaid could save money by paying less for drugs. I’m sure that wasn’t the thinking behind all those campaign contributions. Still I’m sure that the naive man from Utah will soon be taught the ways of Washington on that score!

As you’d expect from the most efficient, transparent, clean-government minded state in the nation, Florida has figured out how to solve its Medicaid cost problem. It’s planning on privatizing Medicaid and making recipients buy in with a voucher into managed care plans. I said plenty about Medicaid in a post last week, so I won’t repeat it all. But three things struck me. First, according to the leader of Florida’s Democrats, the Medicaid budget is about to overtake the education budget. I know they have lots of old and poor people down there, but can that really be true? (I’d like to understand this explanatory page but unless I’m pretty dumb it contradicts itself in the notes below the table). In California where we rival Mississippi in propping up the table on per capita education spending, health spending is only a third of education spending. So is Florida really spending no money on educating its kids? The California state budget division is below, and it shows that we spend a lot less on health than on education.

(From California Budget Basics, by Stephen Levy).

Secondly, 70% of Medicaid dollars in most states go on the care of the poor, elderly and disabled, mostly on nursing home care. No managed care organization has a clue how to deal with those folks, so really we are talking about saving money (potentially) by going after only the other 30% of the dollars. Not really much likelihood of big savings there.

Finally, states are the FILOs of budget deficits (first in, last out). But if you believe the Bush rhetoric about how the economy is getting better (and assuming you are a governor named Bush you should do), shouldn’t this picture be getting better? And if it is, why does it need radical surgery now?

If you want to dive a little deeper into Medicaid, you might take a look at this McKinsey report on what’s wrong with Medicaid which gives some ideas for fixing it. While it’s not dumb as far as it goes, the report doesn’t unfortunately mention the actual ways Medicaid really needs to get fixed which are:a) rolling it into a universal health insurance system,b) creating a national long term care policy, andc) doing something about the scandalous state of the poor in America.

Jonathan Cohn summed it up well in an email in which he said that:

What I love is the constant dismay at the way Medicaid keeps eating up larger shares of state budgets, as if it didn’t have something to do with the fact that more and more people are becoming eligible as employer-sponsored insurance withers away.

The online site FDAweb has put up a page for FDA employees who want to whistleblow on their agency. This follows the negative experience of David Graham among others who’s story is told in the initial posting.

Reg required):

In an interview on the PBS news program Now, CDER deputy director of drug safety David Graham said recently he wouldn’t recommend that anyone become a whistleblower. Yet blowing the whistle on management wrongdoing has a long, if not entirely happy, history in government service, and is protected by the Whistleblower Protection Act and by a special government office set up to enhance that status, the Office of Special Counsel. Thomas Devine head of the Government Accountability Project (GAP) which subsequently came to Graham’s aid, put it this way: "Good faith whistleblowers* represent the highest ideals of public service and the American tradition for individuals to challenge abuses of power. They live by the Code of Ethics for Government Service by ‘put[ting] loyalty to the highest moral principles and to country above loyalty to persons, party or government department’ … Even dissenters with the basest of motives can make positive contributions if their disclosures are accurate and significant. They provide the pluralisms of views and competitive diversity of information necessary for the checks and balances in a democracy."

This should be pretty interesting reading over the next little while–assuming that there are people left at the FDA other than Graham who are unhappy with the way things have been going there the last few years. Meanwhile in other FDA related news, the President and Chief Medical Advisor of the Consumers Union have an editorial in the LA Times criticizing the Administration for leaving the agency without a permanent leader. Finally, Lilly is fighting back against the claims in the BMJ over the holiday break that it withheld information from the FDA about the potential adverse effects of Prozac. However, even if Lilly is right in this case it didn’t exactly promote the information widely — it came out as part of a court case. Although if my memory serves me rightly the "church" of Scientology was pretty convinced at the time that Prozac caused suicides, long before the scandal with pediatric use of Paxil. Heaven help us if we’re relying on them for our best medical information.

Continue reading…

The online site FDAweb has put up a page for FDA employees who want to whistleblow on their agency. This follows the negative experience of David Graham among others who’s story is told in the initial posting (Reg required):

In an interview on the PBS news program Now, CDER deputy director of drug safety David Graham said recently he wouldn’t recommend that anyone become a whistleblower. Yet blowing the whistle on management wrongdoing has a long, if not entirely happy, history in government service, and is protected by the Whistleblower Protection Act and by a special government office set up to enhance that status, the Office of Special Counsel. Thomas Devine head of the Government Accountability Project (GAP) which subsequently came to Graham’s aid, put it this way: "Good faith whistleblowers* represent the highest ideals of public service and the American tradition for individuals to challenge abuses of power. They live by the Code of Ethics for Government Service by ‘put[ting] loyalty to the highest moral principles and to country above loyalty to persons, party or government department’ … Even dissenters with the basest of motives can make positive contributions if their disclosures are accurate and significant. They provide the pluralisms of views and competitive diversity of information necessary for the checks and balances in a democracy."

This should be pretty interesting reading over the next little while–assuming that there are people left at the FDA other than Graham who are unhappy with the way things have been going there the last few years.

Meanwhile in other FDA related news, the President and Chief Medical Advisor of the Consumers Union have an editorial in the LA Times criticizing the Administration for leaving the agency without a permanent leader.

Finally, Lilly is fighting back against the claims in the BMJ over the holiday break that it withheld information from the FDA about the potential adverse effects of Prozac. However, even if Lilly is right in this case it didn’t exactly promote the information widely — it came out as part of a court case. Although if my memory serves me rightly the "church" of Scientology was pretty convinced at the time that Prozac caused suicides, long before the scandal with pediatric use of Paxil. Heaven help us if we’re relying on them for our best medical information.

Ever since Bush claimed his "mandate" (meaning he actually got more votes than the other guy in this election), we’ve been hearing a little too much about social security reform. As San Francisco standalone journalist Chris Nolan points out in her blog Politics from Left to Right, the real "reform" in question is the de-linking of social security payments from wages to inflation, which will eventually reduce the value of the benefit. The privitization thing is just a sop to Wall Street.

Turns out that the Brits did this delinking a while ago and then privatized a segment of their state pensions by paying such huge bribes in tax incentives that it actually cost the government money. Then because interest rates dropped well below the levels at which the private plans had forecast their investment returns in the 1980s, they don’t have enough to pay the pensions at the rate that those few who stayed behind in the government plan (called SERPS) are getting. Not a pretty picture, and one well described in this article from the American Prospect, which though it appears in a lefty journal is written by a Financial Times reporter.

Why am I writing about social security in a health care blog? Good question. My primary focus on health insurance is that it ought to be a form of social insurance because the payments required for it are very uneven (some people are sick–others are not). Theoretically you might be able to design a largely private pension/savings system that might actually work and not compound social inequality. We already have private pensions from both employers and 401K and other plans for individuals that provide some mechanisms for savings and retirement. So there is the basis for a mixed public-private system–not unlike in health care.

Furthermore the separation of social security from general taxation is mostly an accounting sham which also allows the those earning substantially more than $87,000 a year to pay a proportionately lower share of their income in tax than those earning less–something that is clearly regressive but explained away by the concept that it’s a savings plan. So I’m not against reform per se, especially if the tax inequity was changed.

However, Paul Krugman in his latest NY Times op-ed lays out clearly that the attempt by the Bush Administration to privitize social security is going to cost a whole lot of money while these individual accounts are set up. And that lack of money is going to add to the deficit, which in the end will require less money to be spent on other things as we instead spend money servicing the national debt. What are those other things? Well, apart from servicing the debt Federal and state governments really only spend money on three things–defense, education and health care. Guess which one of these will get cut first?Furthermore, the diversion of tax revenues into private accounts leaving a shortfall in the overall amount needed for keeping current benefits in social security has an eerie parallel in the diversion of money from the health insurance risk pool to HSA accounts. And in one more parallel, I have an HSA account with less than $2,000, and I pay a fee of $20 a year to manage it. Not a huge fee by any means, but assuming that it’s related to costs, I suspect that’s a much larger cost than what the government pays to manage social security accounts. In fact the management fees on British private pension accounts were so high the industry was forced into a huge settlement with its customers.

So as we head towards a self-funded, individual insurance funding future, there must be strong questions asked about the impact on health care, and society’s ability to pay for what’s needed for its less wealthy citizens.

A couple of weeks back I suggested that the Medicare CCIP (disease management) demonstration projects were designed at least in part to get private health plans (and the DSM companies that contract with them) involved in the wider management of Medicare FFS patients. The Oliver Stones amongst us think that this is part of a logical attempt by the Administration and its Congressional allies (perhaps I should just start calling them "the Government") to fast-forward the privatization of Medicare. Now a somewhat renegade ex-CMS employee, Robert Berenson of the Urban Institute, has a paper in Health Affairs that accurately recounts the history and likely future of the other larger part of the privatizing Medicare equation.

Berenson shows that, essentially, private plans are being bribed back into Medicare Advantage (the new name for Medicare plus Choice, nee Medicare Risk) with payments that equate to roughly 108% of the equivalent per capita cost of a senior in traditional Medicare. In addition Medicare is introducing regional private PPOs even though:

The traditional Medicare program has enough market power to impose administrative prices on providers at rates that are generally lower than those of commercial PPOs. Medicare beneficiaries already enjoy broader freedom of choice, with limits on balance-billing, than in most PPOs. In other words, the main virtues of the PPO model in commercial markets are not applicable to Medicare, which itself functions in many ways like a PPO.

In addition to the private PPOs, and the improved terms for the private Medicare Advantage plans, the new Part D which will be run by a different set of private actors, the PBMs. And of course many of the most expensive and sickest Medicare patients will be in the CCIP programs which will be expanded if they prove successful, and have been set up to give at the least a very good chance of success. So when private sector Medicare has shown little skill at implementing cost control in the past, why is it being encouraged so much now? Part of this is the ideological preference of the Republicans to see the market work and the government fail. But there’s more than that going on.

Former CMS administrator Tom Scully argued that one main purpose for creating an extensive network of PPOs in Medicare would be to decrease the market power of the traditional program yet to replace it with nongovernmental insurers, which themselves might have sizable market power. In his view, private monopsony payers would be unencumbered by the political interests and regulatory requirements that arguably restrict the flexibility of the traditional Medicare program to act decisively to reduce spending and to respond to market-specific factors related to quality and access.

In other words, if Medicare is going to be reformed–and yes I agree it needs to be–the Administration believes that the government itself can’t do it. It’s just too political, and the interested parties will resist any significant reform or price cuts. Those interested parties are of course largely America’s providers who have indeed grown fat at the Medicare trough over the last 40 years. Instead the Administration’s hope is to hand it off to a gang of private enforcers who they hope will be as successful with reducing cost in Medicare as they were for their private employer clients in the mid-1990s.

There are of course several potential pitfalls with this approach. First, in order to increase the numbers in Medicare Advantage from the current 12% to a percentage where their weight of numbers might have some impact, the bribes paid to the private plans are (and need to be) rather substantial. In order for the program as a whole to be reformed by the private plans rather than directly by CMS, many, many more seniors have to be tempted into Medicare Advantage. However, although some good policies like real risk adjustment and competitive bidding have been included in the legislation and are due to be implemented in the next couple of years, the current way that they’ve been set up doesn’t really encourage plans to cut costs–rather it will likely result in them pricing to a benchmark that CMS sets. Of course that benchmark and indeed all payments from CMS are vulnerable themselves to yet more political interference. And if the amount of the bribes start going in a direction that the private plans don’t like, well we’ve seen this movie before in 1999-2002 when lots of plans took their ball back and went home.

Secondly, the biggest likely interference will arrive should the so-called conservatives in the Congress remember that being a conservative is supposed to be about reducing government spending. The argument which goes that "we have to increase Medicare spending now in order to put a structure of enough private plans in place so that they can cut spending at some unspecified future date", may not hold much water if Congress ever decides to look at the deficit seriously. Of course if you really want to cut Medicare spending and you can muster the political will to do it, doing it by reducing the amount you pay providers in the traditional program is the most effective way. After all it worked pretty well in 1998-2001. And if you grow the private plan side, instead of having a group of voracious cost cutters, you may just end up with a group of Mr Ten-Percents in the middle who also need to be taken care of politically and will have more power to ensure that they are. It can’t have escaped everyone’s notice that health insurers actually have done better financially in times of big cost increases rather than when they were slashing and burning provider rates.

Finally there are two other sleeper issues with Medicare that shouldn’t be forgotten. One is Teddy Kennedy’s overriding concern that increasing Medicare privatization combined with the (admittedly limited) means-testing for Part D introduced in the MMA will lead to a de-facto defined contribution mindset. He foresees Medicare eventually paying a flat rate voucher for seniors’ membership of plans, and as that amount is cut over time, you’ll see a distinction between the class of private plan for different Medicare recipients, based on whether they can afford bigger premiums out of pocket. Kennedy’s eventual fear is that the "contribution" eventually becomes regarded as a kind of welfare payment. And we all know how the public feels about cutting back on welfare. There are certainly influential Republicans (Grover Norquist is one who wants to "drown government in a bath tub") who regard that as a legitimate end-game.

The other issue is one that Ross at the sadly quiet again Public Health Press has raised many times. Hidden in the MMA legislation is a provision that if Medicare premiums for Part B no longer cover 50% of Part B costs (and that money has to come from the general taxation) benefits/payments will be cut until the premiums do cover 50%. In other words there’s a self-limiting mechanism built in which will likely mean that seniors will end up paying more to get less.

If I had to make a tenuous forecast, my suspicion is that the payments to Medicare private plans end up getting reduced sometime in the near enough future that they never obtain the critical mass that Scully and others want them to get to enable them to reform the system. I believe that the future of Medicare is a fairly straight fight between providers and taxpayers, with an increasingly aggressive CMS pushing P4P and attempting to reduce regional spending variation using the fee-schedule as its main weapon. But trying to privatize this process to stop it being political, well that just sounds un-American to me! Anytime the tax payer is forking over several hundred billion dollars, the process will indeed remain political.

The war in Iraq recently passed another grim milestone. 1,000 Americans have died in combat. Many of them are national guardsmen who joined up for the college money. Had they been told that they had a good chance of going half way around the world at extremely high risk, you can be sure that many of them wouldn’t have enrolled. A very sad example of that is described in this heart-rending column from N. Dakota and it’s a devastating read.

It goes without saying that this was a manufactured and unnecessary war/occupation, which made us less safe at home and gave a great boost to Islamo-theocratic fascists abroad. Few people have been allowed direct access to the architects of the war and Kerry decided not to take the meager chances he was given to confront Bush, but today some direct criticism was aimed by fighting men stationed in Kuwait to Rumsfeld, to the cheers of their fellow watching troops. According to the ones on the ground, American troops need to dig in land-fill to get scrap metal to use as armor for their trucks. Rumsfeld basically said "screw you" to the troops and told them that "we go to war with the army that we have". So much for all that neo-con false patriot BS about supporting the troops. Rumsfeld doesn’t have to go to war himself and he’s been in charge of getting the troops the right stuff for nearly four years. It’s three years and 10 months since the first cabinet meeting when invading Iraq was put on the Administration’s agenda. Four years, by the way, is longer than the US was fighting in WWII.

Why am I raising this in a health care blog? Partly because the cost of this war taxes not only our humanity, but it also limits our ability to do things at home–the $150bn a year we’re spending in Iraq could have supplied universal health insurance to al Americans by any measure. But also today the New England Journal of Medicine came out with a photo essay to remind us that many of those wounded would have died in earlier wars–we’re just getting very good at saving people. But those soldiers have to live with their injuries for the rest of their lives. And of course multiply this carnage out some five to ten times on the Iraqi side.

The NEJM will doubtless be lambasted by the wingnuts (and some medbloggers) for running this piece. But until the horror of war is brought home to all of us, including NEJM reading physicians who are influential in their communities, then the chances of this occupation ending are slim. Sadly Iraq will continue on into civil war, with or without us.

And more scenes like this will continue, even if no one seems able to plausibly explain what this war is about. (Photos and captions are copied from the NEJM site). I only slightly apologize if anyone is offended.

A common type of injury associated with roadside improvised explosive device run over by a Humvee.

Damage-control laparotomy with temporary abdominal closure

So apparently Prop 72 really did lose and all the fuss was a clerical error. Pity that 45 million uninsured Americans isn’t a clerical error.

And if you weren’t convinced by the exit poll debacle, the terrorist lockdown in Ohio, the trashing of the optical scan tapes in Florida, and all the other bullshit that’s gone on in the electoral process (not to mention the "spoiled ballots" and felons list of 2000), then get this.

Apparently with all the late votes tallied Proposition 72 actually won in California. Or did it. Maybe it was a clerical error? Who the hell knows, but given that the excess votes came from heavily Democratic LA County and Contra Costa County, there may have been enough to move it over the line.

In any event, THCB is now officially on record as stating that voting and running elections needs to be taken away from the states and counties and given to a non-partisan, non-corruptible government agency that is focused purely on its mission. Perhaps the Hong Kong police force could do the job if the Dalai Lama or the Norwegian foreign ministry is unavailable.

One of the great ironies of American political life is that three of the biggest Blue states have Republican Governors. One of those governors (and of course it’s not Arnie or Pati-Pati-Aki) has developed a plan for universal health care, of sorts. OK so he’s been forced into it by the Democrats who run the rest of the state, and he doesn’t want to put any more money into it but Massachusetts’ own Mormon Mitt Romney is at least talking   about expanding healthcare to the uninsured.

His theory is that he can expand Medicaid (i.e. get the Feds to pay) to more of the uninsured, relax state mandates on insurers so that cheaper plans can be offered to the working poor, and expand the state’s community clinic program. Ideologically this isn’t a million miles away from what Bush sort of hinted at in the campaign. But this is a real announcement, and we haven’t heard Bush say anything nationally–and we won’t. So look to state experiments, and hope that the fate of Tenncare isn’t shared everywhere else they try to extend health coverage. And for the time being we can all go along with the fiction that no real subsidies are needed to get health insurance to the working poor.