What the H*ll Happened?

NOTE: This and Dr. Priver's article contain solicited opinions from two of SDCMS' physician leaders. Neither article reflects the opinions of SDCMS or CMA as a whole. They are published here to provoke thoughtful discussion and consideration of opposing views on the issue of healthcare financing reform currently underway in our nation's capitol. Please feel free to join the discussion by sending your letters to the editor to Editor@SDCMS.org.

Ten months ago, a Democratic president was being inaugurated with an approval rating in excess of 70 percent, and, on the other end of Pennsylvania Avenue, a Congress with Democratic majorities not seen in decades was ready to go to work. And, with all the lessons learned from the failure of the "Clinton Health Plan" in 1993-94, how could significant health system reform not be a fait accompli?

But as this is being written, it appears that not too much and perhaps even nothing of real significance will come to pass this year. How could this happen? What mistakes were made, both on the policy side and the tactical side? And can anything worthwhile for our patients and our practices be salvaged?

Let's start at square one: President Obama is not a healthcare expert. In fact, he spent the Democratic primary season last year being publicly schooled on the issue by no less than current Secretary of State Hillary Clinton — to the point where their interactions were regularly lampooned on TV satire shows such as Saturday Night Live. Included among the president's positions was support for the idea of "guaranteed issue," where one can wait to apply for health insurance until one has a problem — a policy that has more than doubled healthcare premiums for individuals in the states that have tried it. He also "guaranteed" to decrease the average annual family healthcare premium by $2,500 without increasing taxes on 98 percent of Americans (a promise long since abandoned). And in the area of tort reform, he articulated the stock position of the trial bar that high malpractice premiums have little to do with jury awards, but rather the excess profits of med-mal insurers, even though many med-mal insurers are physician-owned and most are nonprofit.

So it was clear from the start this year that the policy positions coming from the White House would be dependent on who the president chose to advise him on healthcare and what advice he would take from them.

That said, the early indications were promising. A major advisory role went to oncologist Ezekiel Emanuel, MD who, on the one hand, was the brother of the president's hard-nosed chief of staff, but on the other hand was someone who had at least some sense of the real world of medicine. In fact, his address to a cynical audience of more than 500 physicians at an AMA legislative conference in early March drew a standing ovation — in marked contrast to similar addresses by senior Clinton officials in a similar setting some 16 years ago.

And the early pronouncements from the president reflected what seemed to be sound advisory input. Four in particular boded well for the process: 1) that the goal of health system reform was not to replace the system but to repair it; 2) that covering the uninsured would in fact require upfront payment, even if cost savings might accrue in the future; 3) that the sustainable growth rate (SGR) formula governing physician payment in Medicare was so flawed that $228 billion should be allocated immediately to block the planned 40 percent, across-the-board cuts to physicians scheduled to take effect by January 2013; and 4) that Congress would take the lead in writing a bill, as opposed to a select secret group in the White House releasing their finished product, à la the Bill Clinton approach.

Perhaps the best of all was that the president seemed to be passing our key litmus test for politicians/elected officials. Those of us who proudly represent the physicians of San Diego County and of California have learned that there are two types of elected officials: those who believe that physicians are part of the solution to the problems facing healthcare, and those who believe that physicians are actually the problem. By responding to the urging of AMA with a "re-basing" of the SGR, and by then reaching out to AMA in a myriad of ways — both subtle and overt — the signal from the White House seemed to be that health reform needed to be done in ways that would make it easier, not harder, to be a practicing physician. This was good news, and stood in contrast to the usual government approach of overpromise, underfund, and then let the physicians and the hospitals pick up the pieces.

So what happened? How did things get so far off track? First, the president's rhetoric about the healthcare issue has shifted back and forth throughout the year, such that even many of his grassroots supporters have been left confused. Second, Congress had much more ambitious goals than anything the president campaigned on, and much more ambitious than what the American people, as it turns out, seem willing to pay for. But most importantly, the president and his White House team of political advisers (who supplanted the influence of the healthcare advisers over time) have underestimated the complexity of the issue of the uninsured.

To the latter, I have used the term "Guantanamo-ization of healthcare" to predict and now describe the challenges that the president and Congress have been facing this year in health system reform. Recall that the president precipitously announced his decision to close the infamous Guantanamo prison this past January without a clear plan. At that time most observers realized that the issue of relocating hundreds of committed terrorists was far more complex than the president realized, and that in one form or another, the president would end up with a difficult implementation, and perhaps even backtracking on that decision, as he is presently doing.

Similarly with health reform, it was not going to take long for the realities and the complexities of health system reform to overwhelm the politics. And while one could write an entire article on any one of these, here are just two of many examples of where the ambitions of this year's health system reform efforts have met with reality:

ONE: The uninsured are not nearly as affluent as most observers think. Most Americans who voted for the president and who want to see the uninsured get covered imagine that the uninsured are "just like you and me." That is to say, a person with a home and at least one car, saving for their child's college expenses, who happens to have just lost their job, or who works for some kind of unenlightened employer who does not provide health insurance. Most believe that the low-income worker at minimum wage has access to Medicaid or some other safety net program — perhaps even the president thought this.

However, the hard truth is anything but that. According to the most recent (October 2009) Kaiser Family Foundation survey, in California and 30 other states, childless adults are ineligible for Medicaid coverage, leaving them with only county indigent programs as an option. And parents do little better: Thirty-three states consider them "fat cats," ineligible for Medicaid if their income is at or above the federal poverty level (FPL), even though the FPL is only $10,830 for a single person and about $14,570 for a couple.

Who then makes up the bulk of the uninsured? Well, according to the latest figures from the Congressional Budget Office (CBO), some 29 million (65 percent) of the nation's 47 million uninsured live above their state's Medicaid eligibility level but below 150 percent of FPL, meaning that they are a single person with an income below $16,245 per year or a couple with income below $21,855 per year. These folks are poor, if not flat-out destitute, and cannot become insured with the assistance of a small government subsidy; they need the taxpayers to pay the entire bill. Oh, and by the way, at least 15 percent of those 29 million, and probably more, are undocumented.

TWO: The private-sector health insurers despised by all are not the big pot of money that everyone, including the president, thinks they are. We are all disgusted by the multimillion dollar salaries of the top management of the big insurers, but if you actually look up the compensation numbers and realize that the large private-sector health insurers cover more than 100 million Americans, the "rebate" if all the top managers of all the big for-profit health insurers worked for free would come out to no more than $1 per covered life.

And those much-disdained administrative costs that are there for the taking in a reformed healthcare system? Well, according to the Democratically controlled CBO, the Democratically controlled White House Office of Management and Budget, and the much-respected Kaiser Family Foundation, the amount of the healthcare dollar that goes to private-sector administration is 7 percent. And for those salivating to grab even that 7 percent of the healthcare dollar, it gets worse. Most of that 7 percent goes to: a) eliminating the kind of fraud that is rampant in publically administered programs (5-10 percent in Medicare, up to 20 percent in Medicaid); and to b) forming provider networks. That is why, despite the ongoing political rhetoric about setting up a nonprofit, government-run health insurance plan — or "public option" — to "compete" with private insurers, the CBO has scored zero savings from such a plan, unless such a government option "hijacks" existing Medicare providers at existing and underpaying Medicare rates.

But while these and other challenges may have been underestimated as the health system reform debate took shape this year, there were those who felt certain that the president's calm demeanor and unquestionable intelligence would carry him through.

And he certainly had a great message: Forty-seven million uninsured Americans is a national embarrassment, so a proposal that reduces that number would be a good thing. Even most Republicans agreed with that.

Why then did the president immediately start to use discredited statistics and hyperbole to sell the idea of health system reform? In his first address to the nation about reform back in February, one of the first things he said was that healthcare costs cause a bankruptcy every 30 seconds (more than 1 million people per year). How does that work? Does taking Lipitor make you miss your mortgage payment? It turns out that the president was advised to rely on discredited studies from single-payer advocates that included as victims of "medical bankruptcy" people whose bankruptcy filing showed that they had had $1,000 in medical bills over the prior year, even if their bankruptcy involved $500,000 or more in other debts. Folks who felt depressed prior to their bankruptcy filing and people who were filing bankruptcy solely from gambling debts were also included as "medically bankrupt," even if they had no medical bills. The true medical bankruptcy rate? At most 5 percent of all bankruptcies.

It just seemed odd. If you have a 70 percent approval rating and health reform is a good idea, why scare people? Why say that 14,000 people a day are losing health insurance when every day 11,000 people are signing up? What is the big rush? Why try to scare the American people, unless you suspect that you are about to try to sell them something that they may not want?

And as the year has proceeded, the president has never stopped trying to scare people and never really left "campaign mode" — yet has dramatically changed his message from month to month. In February, the message was that health system reform was the key to an economic recovery, even though our economic problems related more to a housing bubble than a healthcare crisis. By April, the new message was that health system reform was going to help with our long-term budget deficit, even though it was clear that more than $1 trillion would be spent over the next 10 years without any consensus on where that kind of revenue would be found. Remember, passing Medicare in 1965 was controversial, but the message was clear: Millions of retired seniors without access to job-based health insurance needed a program. Clear; simple.

But despite a need for such clarity, the message from the White House kept changing, alternating between a moral imperative to "do the right thing" and an economic imperative to save money. In May it was "bend the cost curve," highlighted by a series of orchestrated press events where physicians, hospitals, pharma, and others pledged savings — but had no real plans. And in June it was time to show some love to AMA with a nationally televised address skillfully written to draw a nonstop series of standing ovations.

Meanwhile, Congress had no time for speeches and little concern for arguments. The congressional leadership saw a once-in-a-lifetime chance to get all Americans covered and, as such, developed some very extensive legislation. Their bills all mandated that everyone would have to get health insurance (which is, in fact, a necessary step to get the "young invincibles" into the insurance pool and lower costs for everyone else), but the benefit packages mandated by all of the bills were extensive and expensive: comprehensive, all-inclusive insurance with limited co-pays for all, subsidized 100 percent by the taxpayers for at least 65 percent of the currently uninsured.

And most disappointing was that the mechanism for insuring many of the currently uninsured under these congressional proposals would be an expansion of the current Medicaid program, with enhanced funding for primary-care services only. Given that Medicaid has been largely abandoned by specialty physicians and is a major cost drain to most hospitals, calling this an expansion of access to care is at best wishful thinking and at worst a cruel joke.

The entire debate until mid-June was about how extensive the expansion of coverage in health system reform should be. That changed, however, that June day the president addressed AMA. But not because of the speech — it was because one hour after the speech, the CBO began to release a series of analyses detailing just how expensive these plans would be.

Overnight, the debate began to turn on not what was in these $1-trillion proposals, but rather how to make them "budget-neutral," i.e., pay for them. And the reality is that there are not enough rich people to tax to pay for health insurance coverage for 47 million people, nor are there enough vices (cigarettes, liquor, high-fructose soda) to tax. And the president's own idea — decreasing the value of home mortgage and charitable deductions by 30 percent for those families making over $250,000 — was dead on arrival in Congress.

But there remained one revenue source that the CBO estimated could provide more than $400 billion over 10 years, which was to tax those individuals with more luxurious healthcare coverage on the "high end" of their benefits.

If there ever was a tax that could make sense, this is it. Recall that the largest tax break — by far — in our entire tax code is that employees are not taxed on the value of the health insurance that is provided to them by their employers — no matter how generous. So the status quo is that tens of millions of Americans have health insurance that may give them any and all brand-name pharmaceuticals with no co-pay, and any and all scans with no co-pay — in fact little to no co-pay on any service. So while most of our patients in San Diego County have to pay extra for brand-name drugs and the like, these fortunate folks, numbering in the tens of millions (mostly in the unionized Midwest and Northeast), are positioned to receive most any healthcare service they wish — at little or no cost to them. Good for them, except that we taxpayers subsidize them to the tune of tens of billions of dollars per year. A better way would be that everyone could continue to receive health insurance that covers a standard set of services tax-free, but that those who receive so-called "Cadillac plans" costing up to $40,000 per family per year would pay income tax on the difference between a standard benefit package and their "Cadillac" level.

It looked promising. The critically important Senate Finance Committee appeared close to what would have been a bipartisan health reform bill funded half or more by this revenue. But this is where the president made what may end up being viewed as a big mistake by rejecting outright this funding option. Apparently, the labor unions that have negotiated these kinds of benefits were opposed to seeing them subject to taxation, and the president's political advisers reminded him that he had promised not to increase taxes on anyone making less than $250,000. [NOTE: The idea of taxing "Cadillac benefits" has since been resurrected, but now as a tax on the insurance companies themselves. This is not nearly as good an idea, as the insurance companies will just pass on the costs of those new taxes to the price of their premiums.]

However, despite removing the most promising funding source by far from consideration, the president insisted that legislation be fast-tracked to pass both houses by the end of July using other funding sources. That frenzied July effort failed in both the House and the Senate but made the public more uneasy about the whole process.

Heading into the August recess, the president pivoted again, this time to say that passing health system reform legislation was the only way to get insurance reform. The new message was that no one was safe from their private insurer, that any day your policy could be retroactively cancelled, or the life-saving treatment recommended by your physician could be denied. That message certainly had some truth, and certainly polled well, but the American people could not help but ask why eliminating preexisting-condition clauses and the like from their health insurance policies would cost the country $1 trillion.

Next came the town halls, which seemed like democracy reborn to one side of the partisan divide and domestic terrorism to the other. But for all the noise and fury, and putting aside all the death panel rhetoric, extensive polling by entities such as The New York Times and summarized just weeks ago by esteemed pollster Robert Blendon in The New England Journal of Medicine showed just how deep a hole the president and the Democrats in Congress have dug for themselves. No less than 65 percent of Americans now believe that if health system reform passes, their own healthcare costs, if anything, will go higher. An identical 65 percent believe that the quality of their healthcare, if anything, will get worse. And 91 percent believe that if health system reform passes this year, their own taxes will go up in order to help pay for it. (As a side note, 90 percent of Americans believe that they are already paying as much federal tax as they can handle, leaving 1 percent who are OK with having their taxes raised for health system reform.)

The response of health system reform proponents to the town halls was not helpful. Calling people un-American or pawns of insurance companies or spreaders of lies does not help the cause. Neither does a national call to send "fishy emails" to the White House — can one imagine the horror if President Bush had made a similar request?

And then, when the tone of the debate needed to get better rather than more contentious, the president made what in my mind was his biggest mistake of the year, which was to repetitively attack the rank-and-file physician. First came his statement that tonsillectomies are done to pad physician income. This was followed by a statement that implied that rather than counseling a diabetic, we physicians cannot resist the time efficiency and apparent "$30,000, $40,000, or $50,000" fee associated with a foot amputation (actual reimbursements range from $400 to $700 depending on the surgery). Who was won over by those statements and others remains a mystery, but there is no doubt that the president has lost considerable standing among physicians as a result of these statements — and for no apparent reason.

So where do we stand today as a nation? In Washington, DC, the president continues to speak out about health system reform, and has now added the "fiscal responsibility" message that he will sign no bill that adds to the deficit in the first 10 years. Fair enough, but since all the 10-year bills in Congress raise taxes for all 10 years but defer providing any coverage of the uninsured until at least year five, they are all in deficit by year 10 and will all then have a significant negative impact on the deficit in the second 10 years.

All this is hardly reassuring to those who assign a high priority to our nation's long-term fiscal stability. And it is terrifying to physicians looking at a 21 percent Medicare fee cut on January 1, 2010, with another 20 percent to follow by 2013. It is impossible to fix the flawed sustained growth rate (SGR) formula without adding to the deficit. [LATE NOTE: An attempt to pass a $228 billion SGR fix as a separate piece of legislation has failed.]

To the general public, peripatetic efforts notwithstanding, the president finds himself facing a situation where support for the current health system reform efforts stands at his Democratic base level of 30 percent, with a comparable number in vehement opposition. The remaining 40 percent tell pollsters that they are deeply confused, and this after the most public exposure ever on a single issue by one of history's most inspirational communicators.

On an individual level, seniors are worried about how they will be affected by hundreds of billions in Medicare "savings." And if there really are hundreds of billions to be saved within Medicare, should not those savings be applied to the looming multi-trillion dollar Medicare deficit?

And young people wonder about being mandated to buy comprehensive insurance when a catastrophic plan is all that most might really need. Can the president persuade more than half of those currently undecided that what he has been talking about 24/7 for months is actually good for them after all?

In Congress, the House of Representatives has 257 Democrats (218 constituting a majority), but 72 of those representatives are in districts that voted Republican for either Congress or president within the past four years, including 50 districts that voted for John McCain in 2008. Passage of comprehensive legislation is still possible, but far from certain.

The Senate has 60 Democrats (including two Independents that usually vote with the Democrats) but has nowhere near 60 votes for the kind of major health reform bill that may come out of the House. More specifically, there are not 60 votes in favor of any significant funding mechanism. The one exception might be the flawed "Cadillac tax" proposal, but 173 House Democrats (and every House Republican) are already on record as opposed to that. With that option gone, where does the Senate go? There are not 60 votes to tax rich people, or tax medical devices, or even to dramatically squeeze the so-called Medicare Advantage plans.

Finally, where do we stand as physicians? After what started out as a promising process that seemed to involve physicians as part of the solution to America's healthcare problems, we find ourselves in the uncomfortable — and incorrect — position of being identified as a big part of the problem. We are also looking at the potential of one more overpromised, underfunded government program that will make it impossible for many thousands of our colleagues to even stay in practice.

One more thing: As physicians, one has to wonder why, in a situation where everyone in healthcare will end up making economic sacrifices, the one group who will apparently walk away unscathed will be the lawyers.

What would have saved this whole process would have been to start over, to learn from this year's mistakes, and to put together policies that could easily garner support of more than 50 percent of the people. One of these would be an individual mandate geared toward catastrophic and preventative care, which would both prevent those medical bankruptcies that do occur, as well as allow for the kind of insurance reforms that Americans want. That is because once everyone has to obtain a minimum level of insurance, it is then feasible to reform the insurance market such that we could have "guaranteed issue" and a reasonable level of community rating.

Another good policy would be to establish insurance exchanges such as have been up and running in Massachusetts. Such exchanges have been very successful and save small businesses the hassle and expense of using brokers to shop for their health insurance (brokers often take 10 percent or more of premium in commission). Subsidies to participate in such an exchange could easily be made available for many millions of the uninsured, funded easily by the aforementioned tax on high-end healthcare benefits.

And still another good policy would be to nationalize the kind of student loan repayment program for primary care physicians that we have in California, where for all of $3.5 million per year, we have 100 full-time, board-eligible physicians working in underserved areas.

But this is not the time to suggest good policies in Washington, DC. Rather, it is the time when urgency, anger, bluster, and panic all come together in a frenzied attempt to "pass a bill." Then the politicians all go home and we physicians hope that they have not actually made things worse.