Talking Health

President Obama’s Budget Director, Peter Orszag, spoke to the Senate’s Committee on Finance on March 10th.  Orszag went over some of the points of the president’s proposed budget, including the reductions to Medicare Advantage funds. (Click here to take a look at Orszag’s entire testimony)

The Basics:

• Medicare is currently overpaying Medicare Advantage by 14 percent more than it’s spending on the people in the traditional plan
• Orszag gave some context: “MedPAC estimates that the Federal government pays $1.30 for each $1.00 in Medicare Advantage supplementary benefits, without any compelling evidence of better quality of care.” 
• The Obama administration is proposing a competitive system, where Medicare Advantage payments would be determined by an average of plans’ bids
• “This would allow the market, not Medicare, to set the reimbursement limits,” said Orszag. “Our proposal would save taxpayers more than $175 billion over ten years…” 

America’s Health Insurance Plans (AHIP) put out a statement back on February 26th, just after Obama initially released his proposals.  Part of the statement read: “…his proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system.  A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.” (Keep in mind that AHIP represents insurance companies)

It seems that the biggest part of this debate is: Are those enrolled in Medicare Advantage getting better care than those in the traditional Medicare plan? Orszag says there is no real evidence that they are. AHIP, obviously, disagrees.

Check out one of Trudy’s posts on Medicare Advantage Plans. Take a look at the comments, where one reader wrote “As an insurance agent and viewing this from the inside. Medicare Advantage is a great Dis-Advantage.” Yet, there are many individuals who are happy with their Advantage Plans.

The fact that healthcare has become expensive and unequal in terms of who is covered and the services that are provided is a given. With the growth of umpteen insurance plans with neverending complex terminology, healthcare is a virtual mess of options. One plan, designed for the growing aged population, is Medicare. It is designed so that all Americans 65 or older receive basic healthcare. However, the reality is, as with most healthcare is that Medicare costs are ballooning out of control and the per state bill for Medicare depends on which part of the country you live in (Medicare Spending Still Varies By Region).

Furthermore, Medicare is plagued by what seems like the mantra of modern medicine. The more doctor to patients visits and costly procedures can be performed, the more that I can bill. Unfortunately, its not all the fault of patient care providers. The medical billing system trains patient caretakers to do work that can be somehow quantified. Doctors could spend countless hours and often do spend a lot of time with patients as health counselors but that is not billable beyond an office visit. So, maybe there needs to be a paradigm shift in medicine from seeing the patient as often as possible and referring for as many tests as possible to preventative therapy.  There should be an incentive for doctors to keep their patients out of their waiting rooms, hospitals, and off prescription medication.

Obama has a universal health plan not much unlike his Democratic predecessors Hillary Rodham Clinton and John Kerry that would provide Universal Health Care. The idea of universal health care, is great in theory, but unfortunately the dollars and cents just don’t add up. There are an estimated 46 million Americans without healthcare and that number is growing by the day. Obama hopes to free up around $600 billion dollars that would go in a health reform reserve that he hopes to create off more taxation from the wealthiest Americans and unnecessary payouts to the Medicare Advantage Plan (which would lessen the profits for insurance companies, drug companies. and healthcare providers). Unfortunately, this money is still not enough to cover uninsured Americans and Obama is leaving most of the details of his health plan as well as many others to Congress to flesh out. This, of course, will leave lobbyists, special interest groups, and the lawmakers that serve them in a bitter fight which could stall progress on any sweeping changes.

However, despite all of the money set aside for healthcare and Obama’s vow to keep Medicare honest by refusing to pay for medical mistakes and reducing payouts overall to cut down on unnecessary procedures and pill pushing, it appears that he glosses over one important detai. Healthcare is one of the costliest expenditures in America and it according to the New York Times article with the link “health reform reserve,” it is driving future projections of unsustainable deficits. In other words, there is no quick fix to making healthcare more efficent and cost-effective. The complexity of the healthcare system as well as the endless overhead make it virtually impossible to effectively track dollars and cents or lessen the overall cost of say, an emergency room visit, an inpatient visit, or an outpatient visit. Furthermore, the government only regulates to parts of insurance, Medicaid (for the low income) and Medicare (for the aged). Unfortunately, it seems that cutting costs cannot be selective. Either the government must regulate all of healthcare or none of it. As long as healthcare is left to private insurers on an individual basis, the urge to profit will never subside. Especially, in this economy, most things are thought of as a business. Healthcare is really a business and most of the insurance companies are run in such a way that they are sustainable even in tough times. This comes at great cost to the individual as well as the collective because a largely uninsured populous is disadvantageous to world development but, sadly, even one’s health and well-being (what seems a universal right), is reduced to whether the bottom line is black.

President Obama’s announcements regarding his budget plans and goals for health care reform over the next several years upended existing norms and attitudes towards the long term role of the health insurance industry in the United States.

Although Obama’s budget plan for fiscal year 2010 won’t go into effect until October 1st of this year, its stated cutbacks and other changes are already having an effect on the stock market. According to the Wall Street Journal’s health blog, health insurers’ stocks are being devalued today, with Humana, United and Coventry seeing the biggest losses.