Future Now
The IFTF Blog
Background on Health Proposals in the Federal Budget
Below, I collected some basic background on the health related
proposals in the Obama administration's recent budget proposal (and will update as I encounter any other poropsals, etc.) I've
posted this here so others can quickly scan for information/background
as needed.
Highlights:
Background:
- Annual per capita spending on health care totals $8,000/$2.2
trillion; the administration projects that by 2017, it will total $4
trillion and account for nearly 20 percent of per person spending.
- The budget references data saying that 30%/$700 billion in medical
care is unnecessary spending—which suggests that the administration
expects to at least address the unnecessary/overtreatment problem.
The Obama budget proposal sets aside ~$630 billion through letting Bush
tax cuts on wealthier individuals expire, shifts rules about deductions
and other increases on wealthier individuals to be dedicated to
financing health reforms. The idea here is to create a pot of money
(over a decade) that lawmakers can use to shape a proposal to ensure
universal care/access to health insurance. Other additional sources of
financing include:
1) Reducing subsidies for Medicare Advantage
2) Reducing drug prices for Medicaid and encouraging generic drug development
3) Eliminating fraud
4) Preventing readmissions to hospitals through reformed payments to encourage better care coordination
5) Expand pay for performance
6) (Expressing vague interest in reforming the payment system in a more general way)
He is light on specifics and instead plans to have Congress iron out
specific policy/proposal reforms. But in principle, he wants to:
1) Reduce costs/effects of paying for insurance on families
2) Reduce administrative costs, unnecessary tests and increase value out of health spending
3) “Aim for universality” such that the U.S. is “on a clear path” toward universal care.
4) Make insurance portable
5) Guarantee Choice
6) Invest in wellness and prevention
7) Improve safety and care quality
8) Maintain long-term affordability by lowering growth in health spending
Below, I've listed some areas in health care that the administration
specifically called out in the budget along with brief summaries on how
they're thinking about these issues.
Medicare:
The Obama plan substantially reduces and eventually eliminates subsidies to private insurers for Medicare Advantage programs.
Electronic Medical Records:
Sets as the goals implementing EHRs in five years—with stimulus package
to provide $19 billion to make this happen. Future plans to include
incentive payments between 2011 to 2015 in Medicare reimbursements to
doctors who process through EHRs. After 2015, doctors will be penalized
for failing to use EHRs.
Comparative Effectiveness Research:
Puts $1.1 billion into comparative effectiveness research through the stimulus package.
Prevention/Wellness:
Stimulus puts $1 billion into preventing chronic diseases and wellness programs.
Medicare Part D:
Appears to be silent on drug price negotiations.
Cancer
Doubles NIH funding for cancer research to $6 billion
Drugs
Puts more money into the FDA to ensure drug safety. Also supports FDA efforts to allow for drug reimportaiton.
Medicaid/S-Chip
Puts additional funding into Medicaid and S-Chip through the stimulus bill; appears to be silent on future role in reforms.
HIV/AIDS
Increases spending into research and treatment
Workforce
Puts $330 million into loan repayments for doctors, dentists and nurses
who work in underserved areas. (I believe this is designated for
primary care expansion.)
Native American/rural health
Puts $4 billion into expanding coverage for Native Americans/Alaskans.; also expands rural health initiatives
Autism:
Puts $211 million into autism research
Teen Pregnancy
Invests money into preventing teen pregnancy—will do away with
abstinence only education and instead fund programs that “stress the
importance of abstinence” while providing sex education.
Noticeably absent:
Below is a list of items that don’t seem to
make the budget proposal. These are issues that I might have expected
to see mentioned, but were not.
Stem Cells/Stem Cell Research-The budget does not address stem cells. Obama has recently lifted a ban on federal funding into research into stem cell lines; however, a congressional ban prohibits funding into the creation of new stem cell lines.
Genetics
Rare diseases
Global health
Medicare Part D and negotiating drug prices
Mental Health
Additional Points of Interest:
- The proposal focuses more on cost than access to care
(universality)—at least rhetorically… though this may be a language
choice rather than a substantive policy signal, it’s suggestive of a
desire to get more value from health spending.
- Also: A major focus on improving efficiency and eliminating waste.
- The budget seems to be pretty firm in its dedication to paying for these programs without running up additional deficits. This is somewhat unrealistic, but expect the Obama administration to do as much as possible to account for their spending.
- Look for some sort of change to the payroll tax law that limits the exemptions on employer-sponsored benefits (this hasn't been proposed, but it's the likely direction of compromise.)
- My reading of this is that the Obama administration plans to
genuinely invest a lot of political capital and resources into
reforming the health insurance system; I also gather that they plan a
hands-off approach in other areas of healthcare funding (diseases,
public health, research, etc.)
- The principles outlined here tend to mirror the principles you’d
expect of a smart, center-left approach to reforming the health
system—reduce waste, bring down costs, and subsidize insurance payments
for lower income families… Given the lack of details, expect to see a
ton of lobbying around some of the details, such as:
o Will the hardline against Medicare advantage suggest a future
direction for public/private competition and/or a hardline against
insurers in general?
o Will Pharma and other interest groups lobby against/attempt to prevent comparative effectiveness research?
o Will there be any movement on payment reforms? And if so, how will these take place without significant pushback?
o Will hospitals balk at inpatient/outpatient reforms?
o Is the second half of EHR stuff—incentives followed by
penalties—feasible, particularly since it requires short-term increases
in Medicare spending?
- Conceptually, do incentives followed by penalties signal a direction for policy implementation?
-