First posted 8/11/11 on Managed Care Matters
Note by Brian: On the day this post was originally published, House Minority Leader Pelosi appointed the three Democrats to the Super-Committee: Chris Van Hollen, Xavier Becerra and James Clyburn.
With nine of the twelve spots on the Super-Committee taken, it looks like energy, tax policy, and political connections (now there’s a surprise!) are well-represented. What isn’t is expertise in health care, Medicare, or Medicaid.
With House Democrats scheduled to name their three panelists by Tuesday, it’s possible that someone with real knowledge of health care policy will be included, butregardless of who Nancy Pelosi names, there won’t be someone from the GOP side who’s got deep experience in the issue, someone(s) who could engage in a real discussion of the issues, represent the other side’s views, and act as the ‘in-house expert’ and counsel the other members of their party.
With Medicare and Medicaid likely to account for over a quarter of the Federal budget, the absence of deep health care policy expertise is rather stunning.
The implications are well worth considering.
When one doesn’t understand the inner workings of a system, sector, industry, or business, there is a tendency to believe in the power of simple solutions to achieve desired results. For example, economists tout the power of ‘consumerism’ to control health care costs, failing to understand the negative impact of high deductibles on health status due to foregone treatment. That’s not to say we don’t need a stiff dose of personal responsibility if we’re going to control health care utilization, but there’s good – and very bad – ways to inject that personal responsibility.
Price controls are another potentially problematic measure. The SGR (mechanism designed to control Medicare physician reimbursement) has had two obvious downfalls; physicians increase utilization to offset declines in procedure-based reimbursement and politicians kowtow to powerful interests when those interests are threatened.
When those simple solutions are rolled out, the long-term effect can be exactly opposite of the desired result.
For example, back in 2004, California implemented a very low fee schedule for drugs dispensed to workers comp patients – a fee schedule that cut reimbursement by around 40%. Yet costs – which are driven by the price of the pill times the number of pills and the type of pills (e.g. OxyContin v ibuprofen) increased 72% over the next few years.
Why? Anecdotal evidence suggests that pharmacy benefit managers could no longer afford to provide clinical management services, as they were barely breaking even on each script.
Back to the Super Committee. While it’s highly doubtful Pat Toomey et al would stomach price controls, remember it only takes seven votes on that committee to pass their plan. When the horse trading starts, there isn’t anyone who can explain exactly why this or that suggestion would not work in the real, messy health care world. With a very short timetable, their staffs will have a very tough time keeping up with projections and forecasts. As the November 23 deadline nears, the pace will pick up as the pressure builds to deliver something – anything – before the deadline.
Thus we may well end up with Congress voting up or down on a ‘plan’ based not on sound policy and solid analysis but on political expediency.
Then again, that would be different exactly…how?
What does this mean for you?
Watch the Super Committee very, very carefully. And be prepared for anything.