HEALTH CARE REFORM - WHAT DOES THE "PUBLIC OPTION" MEAN?

June 8, 2009

The New York Times, the Washington Post, The Newsweek, Time Magazine; www.ASAhq.org, www.mgma.com and http://www.healthreform.gov to name a few: you cannot open a newspaper, periodical or health-related website without seeing announcements about new developments in the race to define the future U.S. health care system.

One major proposal is reportedly off the table and we should not need to worry about a single-payer system for years to come. President Obama has said that a single-payer system might make sense if we were writing on a blank slate, but that “we’re not starting from scratch . . . . We don’t want a huge disruption as we go into heath-care reform where suddenly we’re trying to completely reinvent one-sixth of the economy. (Washington Post, June 6, 2009, page A3.)

What the President does strongly support is creating a public insurance option to compete with private carriers. Such an option is a major element in the “American Health Choices Act,” the first comprehensive reform bill to come out of Congress this season. With the release of this legislation on June 5, Senator Ted Kennedy’s Health, Education Labor and Pensions (HELP) Committee took the lead – for now.

The American Health Choices Act is of particular concern to anesthesiologists and nurse anesthetists because fees in the public plan would be set at 110% of Medicare rates. As we noted in our May 26 Announcement, the American Society of Anesthesiologists has urged its members to keep sending the message “that should Congress decide to pursue a public plan option, it must not be built upon the unsound foundation of the Medicare program.” The 2009 Medicare conversion factor for anesthesia services is $20.92. What if, as has been argued, competing public and private health plans are just a run-up to a single-payer system after all? One hundred and ten percent of $20.92 is $23.01. Anesthesia groups in whose payer mix Medicare plays a minor role can survive the Medicare rate. The tipping point would vary from practice to practice, but a broad-based or exclusive public plan that paid one-third of current marketplace rates would transform the practice of anesthesiology beyond recognition. Would McSleepy or SEDASYS® become the dominant anesthesia “providers?”

We strongly encourage you to educate your Senators and Members of Congress now on the catastrophic consequences that a public plan paying 110% of Medicare would have for the specialty in general – and for your own practice in particular.

The Kennedy bill contains many other innovations, including requirements that employers “play or play,” penalties for individuals who do not qualify for an expanded Medicaid program and who fail to purchase coverage, and private health plan exchanges through which employers and individuals can obtain coverage (subsidized for small employers and families earning up to $110,000). Markup in the HELP Committee is set for June 16. The other Senate Committee of jurisdiction, the Finance Committee, which is chaired by Montana Senator Max Baucus, hopes to release its own proposal on June 17 and begin markup on June 22. The Senate bills will need to be harmonized with each other, and with bills yet to emerge on the House side, in the process known as “reconciliation” before legislation is passed and sent to the White House for the President’s signature.

That is the COVERAGE side. In a June 2 letter to Chairmen Kennedy and Baucus, President Obama restated his commitment to fully offset the COST of healthcare reform “by reducing Medicare and Medicaid spending by another $200 to $300 billion over the next 10 years, and by enacting appropriate proposals to generate additional revenues.” The letter also said:

• Indeed, without a serious, sustained effort to reduce the growth rate of health care costs, affordable health care coverage will remain out of reach. So we must attack the root causes of the inflation in health care. That means promoting the best practices, not simply the most expensive. We should ask why places like the Mayo Clinic in Minnesota, the Cleveland Clinic in Ohio, and other institutions can offer the highest quality care at costs well below the national norm.

It is hard to argue with the notion of studying and disseminating “best practices,” something in which anesthesiologists have a long and distinguished track record. Identification of best practices was one of the methods recommended by a group of six large stakeholders representing the gamut of interests in health – the American Medical Association (AMA), the Advanced Medical Technology Association (AdvaMed), America’s Health Insurance Plans (AHIP), the Pharmaceutical Research and Manufacturers of America (PhRMA), the American Hospital Association (AHA), and the Service Employees International Union (SEIU). This group met with President Obama in early May, held a series of meetings among themselves throughout the last month, and on June 1st outlined a series of collective and individual steps to help achieve the Administration’s goal of decreasing by 1.5 percentage points the annual healthcare spending growth rate over the next decade, which could total estimated savings of $2 trillion or more.

It will be interesting to watch the evolution of answers to the question whether many of the steps advocated by the six groups will succeed in “bending the cost curve.” The various steps are designed to reduce costs, strengthen quality and improve access to healthcare through (1) rationalizing the utilization of care, (2) administrative simplification and (3) improving the management of chronic disease. Our community is already familiar with the major issues in (1) and (3). Proposals on administrative simplification from the health insurance industry (AHIP) are innovative and directly applicable to anesthesia. They include standardizing and automatic five key functions:

1. Claims submission
2. Eligibility determinations
3. Claims status
4. Payment, and
5. Remittance.

AHIP calls upon the Secretary of Health and Human Services to require the adoption of common operating rules for all health care information exchange. The health plan industry is undertaking initiatives:

• to create web portals operating on uniform federal guidelines to allow individuals and businesses to engage in comparison shopping for health plans;
• to create portals that will allow medical practices to conduct business with all the insurers in a state or geographic area at a single website – pilot tests are being launched in New jersey and Ohio;
• to improve health literacy through an effort developed with researchers at Emory University, now in pilot testing, that will allow health plans to assess their health literacy across their organizations and to build targeted health literacy programs, and
• to foster the adoption of a standardized personal health record (PHR) model developed by AHIP and the Blue Cross Blue Shield Association.

There are numerous other ideas in the group’s letter to President Obama and its 24-page attachment that may grab readers’ imagination. You may download a copy here.

In an op-ed column on “Obamacare’s Antidote” published in the Washington Post on June 5, 2009, Michael Gerson wrote, “As the debate becomes more complex, the outcome becomes less certain.” We agree, but we hope that we have helped readers to understand some of the complexities du jour. ABC will be committing our own resources to furthering anesthesia’s interests in the debate. More questions and more information will follow.

With best wishes,

Tony Mira
President and CEO