Friday, October 30, 2009

Close to a Health Reform Score

I was wrong when I thought that President Obama would be carrying th ball much on health reform. It seems that Harry and Nancy making all the plays, and Obama is staying mostly on the sidelines. And it looks like health reform efforts are inside the ten yard line and driving in for a possible touchdown. The recent CBO scoring of the House health bill (see below), while only preliminary, gives some momentum to advocates. However, the devil is in the details and with almost 2000 pages to read, that is a LOT of details.

However, the CBO report's conclusion raises doubts about promises that the public option would provide a lower cost alternative for consumers. It also raises doubts about the effectiveness since only 6 million people would enroll in the plan (hardly a government take over).

On page 6:
Roughly one-fifth of the people purchasing coverage through the exchanges would enroll in the public plan, meaning that total enrollment in that plan would be about 6 million.

That estimate of enrollment reflects CBO’s assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the “risk adjustment” procedures that would apply to all plans operating in the exchanges.)
At the end of the CBO's summary is a strong a warning from the usually cautious CBO that this bill will only be deficit neutral is if it's followed strictly to the letter:
Those longer-term projections assume that the provisions of H.R. 3962 are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the “sustainable growth rate” mechanism governing Medicare’s payments to physicians has frequently been modified to avoid reductions in those payments, and legislation to do so again is currently under consideration in the Congress. The bill would put into effect (or leave in effect) a number of procedures that might be difficult to maintain over a long period of time. It would leave in place the 21 percent reduction in the payment rates for physicians currently scheduled for 2010. At the same time, the bill includes a number of provisions that would constrain payment rates for other providers of Medicare services. In particular, increases in payment rates for many providers would be held below the rate of inflation (in expectation of ongoing productivity improvements in the delivery of health care).
It really seems more like politics as usual with healthcare reform, and it is only going to get worse as the the House and Senate versions get amended to gain votes and then are eventually reconciled. Whatever finally lands on the President's desk may be a far cry from what we had been expecting.

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