Summary of the 2003 National Health Policy Conference
Medicare Drug Benefit Tops Policy Agenda; Breaux Unveils Universal Coverage Proposal
The third annual Health
Affairs-AcademyHealth national policy conference brought together nearly
800 researchers, policymakers, and journalists in Washington on January 22-23
as a new Congress convened and preliminary signals about the Bush administration's
2004 budget filled the air. The threat of war cast a long shadow over the event,
as the aftermath of September 11 had a year before; and polls suggested that
health policy will drop off the public's radar screen if hostilities erupt.
But other signs indicated that public concern about health care issues remains
high and that Medicare, Medicaid, the uninsured, and health costs are likely
to figure prominently in the congressional agenda and next year's presidential
OPENING REMARKS: PLENARY
Appropriately for an event designed to enhance links between research and policy, opening remarks came from Mark McClellan, a distinguished health economist recently approved by the Senate to head the Food and Drug Administration (FDA), after two years as the president's top adviser on health. McClellan began with a quick roundup of the administration's most pressing policy challenges: rising costs and cost sharing for consumers; enacting a Medicare drug benefit; averting undue physician payment cuts in Medicare; and crafting tax credits for displaced workers. At the FDA, he said, the focus is building a stronger science base for the agency's core function of risk management. Specific objectives include an overhaul of the agency's drug manufacturing standards; an emphasis on risk-based analysis in the drug review process; efforts to reduce adverse events; improved postmarket monitoring; use of the agency's labeling tools to support public health efforts on obesity; and upgrading the FDA's food safety surveillance and enforcement as a precaution against bioterrorism.
Tom Scully, administrator of the Centers for Medicare and Medicaid Services (CMS) and the second of the administration's two most notable voices on health, followed with a characteristically rapid-fire environmental scan accented with a few tantalizing signals about the president's upcoming budget proposal. Scully promised unspecified "major changes" for Medicare in the proposal, a suggestion fleshed out by trial balloons leaked to the media later in the week about linking drug coverage to enrollment in new private plan options. Experiments are under way with a new preferred provider organization (PPO) option that would allow private plans to share risk with the CMS, he noted. Expect the budget to renew, with some changes, last year's neglected proposal for tax credits for the uninsured, Scully said. Among the immediate challenges for the CMS, fixing the scheduled 4.4 percent reduction in Medicare physician payment comes first. In the wake of the successful launch of public nursing home quality reports, plans are moving forward for similar reporting on home health agencies. "The real goal is hospitals," he said.
Framing the major issues from a private-sector viewpoint was Leonard Schaeffer, CEO of WellPoint Health Systems, who stressed the central importance of rising costs. Hospital care - inpatient and outpatient - has reemerged as the largest driver of recent increases, accounting for 50 percent of last year's increase. Legislation and regulation accounted for 22 percent. Hospital consolidation has created market leverage, and Schaeffer noted ten- to fortyfold price differences for various procedures as evidence of how that leverage has worked. Exploding consumer demand for benefits and services adds fuel to the fire, Schaeffer said, driving "dramatic overutilization." Employers called off planned benefit curtailments after September 11, perceiving that workers would not be able to tolerate further blows to their sense of security. Some cost containment tools, including tiered benefits and disease management, show promise. Increased cost sharing and more widely available information about the cost, quality, and benefits of treatment alternatives will eventually have an impact as well. "Don't underestimate the Americans," Schaeffer said. "They know how to shop." In the long run, consumers will gravitate toward "highly customized products" that provide a sense of security but vary widely in price and coverage, he predicted.
Karen Davis, Commonwealth Fund
In the conference's first round of breakout sessions, Karen Davis, president of the Commonwealth Fund, described the condition of the uninsured as worsening with a weak economy and rising health care costs, with one in four nonelderly Americans going without coverage at some point during the year and half of those unable to obtain services. Incremental solutions include proposals for expanded public programs and tax-based subsidies. A Commonwealth Fund task force recommends state demonstrations to pilot a combined approach featuring tax credits for premiums above 5-10 percent of income with default enrollment through the income tax system; Medicaid/SCHIP coverage up to 150 percent of poverty; a new Medicare program for older adults and the disabled; and transitional premium assistance for displaced workers.
Stuart Butler, Heritage Foundation
Heritage Foundation vice-president Stuart Butler described incrementalism as "a process of continuous experimentation" in which competing solutions vie for acceptance in a "policy market." Tax credits are an approach to achieving universal coverage that allow families to choose coverage, with greater equity and an improved tax regime achievable in the process - "a subsidy even Republicans can love." Credits can be designed to target lower-income groups and melded with other subsidies such as state programs, he said. The individual market may work for some, but credits should not be designed too restrictively. "For the vast majority of people, group coverage is the best way to go."
Ron Pollack, Families USA
Ron Pollack, executive director of Families USA, echoed the notion of using both public programs and tax-based subsidies to expand coverage but placed greater emphasis on the former. He criticized the Bush administration's tax credit proposals for not offering adequate subsidy amounts but acknowledged that all parties in the debate should be prepared to accept their own second choice rather than settling for perpetuation of the status quo if they can't get their way. Pollack described the Robert Wood Johnson Foundation's plans for a major public awareness push during "Cover the Uninsured Week" March 10-16 and encouraged a multifaceted strategy including public education, building public-private coalitions, experimentation at the state level, and increased funding for Medicaid.
PANEL DISCUSSION: BIOTERRORISM
Former Institute of Medicine president Kenneth Shine, now director of the RAND Center for Domestic and International Health Security, introduced a panel discussion on preparedness for bioterrorism that emphasized the need for organization at all levels - local, state, and federal - as well as the importance of "risk communication" and the need to invest in capacities that would serve ongoing public health needs as well as specific responses to the bioterrorism threat. Shine identified a long list of challenges including the need to maintain interest and effort in preparedness over time; overcoming territorial conflicts, as between health and law enforcement agencies; civil liberties issues; and research needs, among others. Jerome Hauer, acting secretary of health and human services (HHS) in the newly created Office of Public Health Preparedness, explained that his office is responsible for intergovernmental coordination as well as administration of HHS preparedness grants to state and local agencies. A lack of effective coordination in the wake of the anthrax and World Trade Center/Pentagon attacks in 2001 led to the creation of Hauer's office. As a public health official in New York state, Hauer said, "We never knew who to call" until Margaret Hamburg took charge of bioterrorism preparedness and response at HHS. The department wants to avoid the temptation "to buy toys" in its grant program and will seek instead "to build systems" that will shore up surge capacity at the local level. Shortages of personnel, vaccines, antitoxins, and antivirals could result in agencies' being overwhelmed in the event of a major attack, he warned.
George Gray, acting director of the Harvard Center for Risk Analysis, emphasized the importance of understanding perceived as well as real risks. Effective communication during high-threat episodes requires careful preparation and analysis of both real and perceived dangers. After September 11, for example, fear of flying prompted an increase in highway travel (a much less safe mode of transportation) and gun sales shot up - inappropriate responses to perceived dangers that increased net safety risks. Gray also discussed the example of a 2002 incident in which the threat of a "dirty" (radioactive) bomb received widespread public attention. A rash of conflicting assessments from different public officials, including some that overstated the danger, exacerbated public fears, he noted. The newly created Department of Homeland Security ought to improve coordination and preparation in future situations. "Risk analysis can help identify and characterize threats and prioritize responses. Risk communication is key to reducing the terror in terrorism," Gray said.
Patricia Quinlisk, an epidemiologist with the Iowa Department of Public Health, described the challenges of preparedness from the state point of view and the state's plans for use of preparedness and response funds from the Centers for Disease Control and Prevention (CDC). Involvement in national security and defense is a new and unfamiliar role for public health. State agencies are familiar with the risks associated with most infectious disease and other health threats, but assessing these new types of problems is sometimes complicated by conflicting information, as in the case of plans for smallpox vaccinations, where public health officials "feel at times 'out of the loop' and not trusted," Quinlisk said. The current priority on smallpox has taken resources away from core capacities and non-terrorism-related activities, rather than fitting with the "dual use" principle. Personnel shortages are another concern, with nurses and epidemiologists in short supply and low salary levels impeding recruitment. Quinlisk described miscues in risk communication as well, suggesting that dealing with perceived threats will continue to challenge state agencies.
HOSPITAL REGULATION: UNINTENDED CONSEQUENCES
A session on the unintended
consequences of regulation in the hospital industry was moderated by Princeton
University's Uwe Reinhardt. David Bernd, president and CEO of Virginia-based
Sentara Healthcare and chair-elect of the American Hospital Association (AHA),
considers regulatory reform a top priority. Medicare and Medicaid rules fill
more than 130,000 pages and consume an estimated 30 minutes of hospital staff
time for every hour spent on patient care. Among the AHA's guiding principles
for reform: the need for rules must be clear and well documented; rules should
be cost-effective, linked to specific objectives, and based on sound evidence;
safe havens for innovation should be established; and patient care should not
be disrupted. Bernd said that the initial privacy provisions in the Health Insurance
Portability and Accountability Act (HIPAA) of 1966 were a conspicuous example
of regulation that burdened hospitals' ability to deliver care, but that some
problems were corrected after public comment. He commended the work of HHS Secretary
Tommy Thompson's regulatory reform task force on issues such as critical access,
hospitals' minimum data set requirements, Medicare cost reports, EMTALA, HIPAA,
and home health data reporting. Bruce Cummings, president and CEO of a small
hospital in rural New York State, described in further detail the effect of
regulatory burdens at the local level.
A.J. Rice, a senior analyst at Merrill Lynch, described the impact of regulatory enforcement from the standpoint of investors. A series of enforcement actions against Tenet Healthcare, after disclosure of questionable Medicare outlier payments to a Tenet hospital in Northern California last year, hurt Tenet's stock value badly and "rekindled old fears" about the volatility of hospital valuations on the stock market, Rice said. Although several indicators for the hospital sector remain positive - including relatively stable Medicare reimbursement, strong pricing, volume gains, and continuing consolidation - investors are worried about several potential clouds. The federal budget deficit may lead to reduced reimbursement; Tenet's problems may trigger increased enforcement and bad press. Malpractice issues are a growing concern, he added, as are signals that the Federal Trade Commission (FTC) plans to increase antitrust scrutiny of hospital mergers and acquisitions.
MIDDAY ADDRESS: UWE REINHARDT
Reinhardt gave a midday address to the conference on the subject of "concierge care," starting with the observation that since the health system - like many other sectors of the economy - is already a tiered market, the outrage that is sometimes expressed over boutique medicine is puzzling. Education, the military, the legal system, and even political representation are all stratified arrangements organized around the participants' income level - where the gap between the low and high ends has been growing rapidly since the mid-1970s. "Why would health care be the one place where we practice egalitarianism?" he asked. "We have embraced a multi-tier system This is permanent. This is not temporary. We will never solve this." Rather than worrying about affluent consumers' ability to obtain unlimited access to the finest health services, Reinhardt said, concern should be redirected to the effects of tiering at the low end of the income distribution, where inadequate coverage and reimbursement result in access barriers and inferior quality of care.
Glenn Hackbarth, MedPAC
A session on Medicare modernization was moderated by Bob Berenson, former acting deputy administrator at the Health Care Financing Administration (now CMS) and coauthor of a Medicare reform proposal published on the Internet by Health Affairs on the opening day of the conference. Glenn Hackbarth summed up the June 2002 recommendations of the Medicare Payment Advisory Commission (MedPAC), which he chairs. Holes in the program's benefit package include both prescription drugs and catastrophic expense protection. The complicated copayment and deductible structure should be simplified. Medicare should be a leader in quality improvement, using new payment incentives and supporting the use of more advanced clinical information systems. The administered price system requires constant refinement, and Hackbarth touched on the challenges of modifying diagnosis-related group (DRG) payments not only for different types of hospitals but also for sensitivity to the particular circumstances and performance of individual hospitals as well.
Kathy King, National Academy for Social Insurance
Kathy King, head of health policy for the National Academy for Social Insurance, described the findings of a NASI study on Medicare management and governance issues completed last year (a second study on chronic care has just been released, and a third on Medicare and markets is due in the spring). A study panel found underfunding to be one persistent problem for the CMS and an overwhelming burden of legislative mandates and congressional micromanagement to be another. The panel found that Congress doesn't give the CMS enough latitude to conduct its affairs on a day-to-day basis. "It needs a little more air, a little more distance from that kind of management," she said. Creating a more independent agency on the model of the Social Security Administration might be an alternative. Relieving the CMS of nonessential duties (for example, CLIA- and HIPAA-related functions) as well as increased, multiyear funding would help, she said.
Nancy-Ann Min DeParle, formerly HCFA
Former CMS administrator Nancy-Ann Min DeParle, now a private consultant, endorsed the NASI recommendations and added a long list of specific improvements to strengthen Medicare benefits and improve program efficiency and quality of care. Increased administrative funding and structural changes are needed not only for the CMS itself but also for the private contractors who review and pay Medicare claims. DeParle echoed MedPAC's call for improving the program's benefit package with a drug benefit, simplified cost sharing, and stop-loss coverage. She called for implementing case management and disease management in the program and for giving the CMS more latitude to add preventive benefits when justified by medical consensus and to make reasonable price adjustments. In quality improvement, the agency should continue to explore the possibility of steering beneficiaries toward high-volume providers - although this approach is controversial. Reform of indirect medical education payments, computerized physician order entry, electronic medical records, paying for performance, and beneficiary information were other areas mentioned in DeParle's inventory.
Robert Berenson, AcademyHealth
Berenson explained that his proposal in Health Affairs and a related discussion in the Duke Law Journal address some of the problems created by legal barriers to employing managed care techniques such as selective contracting in Medicare. The program's enormous market power creates opportunities but carries with it constraints as well, along with the obligation to exercise its power fairly. "I think we can do a better job of setting a floor on quality," he said. "But the kind of selective contracting where I send you volume, you give me a discount I don't think will have a place in Medicare." So the program might seek to steer consumers with information or modest incentives toward high-volume, high-quality providers - but not force them. Similarly, prior authorization might be used, but in moderation: for high-cost services, for example. Physician case managers may be another useful tool for the traditional Medicare fee-for-service program. A transcript of the Medicare modernization session is available at www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=755.
Bobbi Kimball, nurse-executive
A session on "reinventing the health care workplace" was moderated by Bobbi Kimball, a management consultant and former nurse executive, who described the dynamics of current workforce shortages and how they differ from shortages of the past. Population aging has filled hospitals, nursing homes, and the home health rolls with older and sicker patients, increasing the need for services at the same time the workforce, too, is aging. Women have other career options besides nursing and teaching, while stresses on the delivery system and other environmental changes have reduced the appeal of nursing as a profession. Minorities and men have not been recruited in sufficient numbers to fill the gap, although magnet programs have shown that workplace changes and focused strategies are making some headway.
Jeannette Ives Erickson, Mass General
Jeanette Ives Erickson, a senior VP at 900-bed Massachusetts General Hospital, recalled downsizing strategies the hospital initiated in the mid-1990s in expectation of a sharp decline in staffed beds that never occurred. That set the stage for the current shortage, she said. While average length-of-stay has declined, Mass General has seen a 30 percent growth in volume in the past several years, has a 5 percent vacancy rate, is on diversion status "constantly," and has added 600 new FTEs in the past five years. The hospital has launched a major "image campaign" to recruit new nurses, paying staff $1,000 bonuses to lure talent, advertising at football games and on taxicabs, visiting elementary and secondary schools, and targeting minorities and nurses who have left hospitals. Retention efforts include scholarships for professional development and other opportunities to upgrade skill and knowledge.
Louis Cobruzzi, Veterans Affairs Maryland
Louis Cobruzzi, head of pharmacy services for the Veterans Affairs (VA) health system in Maryland, described similar efforts to meet staffing needs in the huge VA system, which filled more than 105 million prescriptions in 2002. Cobruzzi focused on student debt reductions and incentive scholarship programs. Pharmacists received about 17 percent of the VA's 1,849 debt reduction awards last year, with an average amount of about $22,000; and a similar share of the scholarship dollars awarded, worth an average of about $15,000. Recruitment and retention have to be ongoing, said Cobruzzi, who described extensive, multichannel advertising efforts as another part of the VA's strategy. He concluded by emphasizing the necessity of competitive salaries and recommended annual market surveys to stay in touch with salary trends.
Karen Drenkard, Inova Health System
Karen Drenkard, chief nurse executive at the 700-bed, Virginia-based Inova Health System, stressed workplace dynamics in Inova's strategy for attracting 1,000 new nurses to the system's four hospitals in the next five years. Surveys show that next to salary and schedule, participation in decision making figures highest among what matters to nurses on the job. Helping nurses progress up the clinical skills ladder with tuition and scholarships and a culture of learning can improve retention rates. Advertising and professional image building are also part of Inova's strategy, and Drenkard echoed Erickson's comments about the mistakes that were made during the downsizing episodes of the mid-1990s, when nurses were not getting signals that they were valued employees at the institutions where they worked.
Jo Ivey Boufford, New York University
Former deputy assistant HHS secretary and dean at New York University Jo Ivey Boufford moderated a session on healthy lifestyles, reminding her audience that among all causes of premature mortality, behavior is estimated to account for 50 percent, compared to 20 percent for environment, 20 percent for genetics, and 10 percent for medical care. Among behavioral causes of death in 1990, tobacco use ranked highest with 19 percent of the total, and diet and activity patterns came second with 14 percent (of all premature deaths), she said.
Cheryl Healton, American Legacy Foundation
The American Legacy Foundation, created to monitor and reinforce the goals of the multistate tobacco settlement agreement on a budget of $175 million a year, has focused on "countermarketing" efforts geared to middle and high school students, said foundation president Cheryl Healton. Youth smoking is at a twenty-seven-year low, she said, with the foundation's "truth" campaign playing an important role. In communities where the campaign achieved "high" exposure of its message, the prevalence of youth smoking fell from 20.3 percent to 14.8 percent from 2000 to 2002, according to a foundation survey. Two percent reductions were achieved in communities with lower levels of exposure. In an examination of state spending of proceeds from the master settlement agreement, only four states - Maine, Minnesota, Mississippi, and Maryland - have spent a proportion of funds on tobacco that is within the guidelines recommended by the CDC. Thirty states have spent less than half what the CDC recommends, and four have nothing for tobacco in their fiscal year 2003 budgets - Michigan, Missouri, Tennessee, and Washington, D.C.
Joseph Leutzinger, Union Pacific
Joseph Leutzinger, Union Pacific
Joseph Leutzinger described the health promotion program at the Union Pacific Railroad, which he directs and which has received numerous public health awards. UPRR's antismoking campaign has been embraced as a major corporate goal and has progressed with steadily expanding goals for fifteen years. The company began with a ban on smoking in offices in 1987, but it took five years from the first attempts in 1991 to close jobsite smoking rooms. In 1999 smoking was banned entirely on all corporate premises. The program's goal is to reduce the prevalence of smoking to 20 percent of the company's workforce of 50,000 by 2004.
Nico Pronk, HealthPartners
Nico Pronk, VP of the Minnesota-based HealthPartners Center for Health Promotion, described the health plan's ambitious program for working with employers to identify and reduce high employee health risk factors, and to demonstrate the economic value of health promotion to employers. The plan uses a sample of employees over age forty to estimate the per capita cost of care attributable to low physical activity levels and high levels of obesity or overweight status. This data can in turn be used to identify employees at high risk for diabetes and heart disease and to target risk reduction programs to those employees. The plan's strategy also includes care management for workers with chronic diseases. Incentives for employers to help with the process can be built into the package. The combination of targeting, incentives, and integration of promotion and prevention activities with clinical care can effectively make "the business case for quality," Pronk said.
OPINION ABOUT HEALTH
Robert Blendon, Harvard University
Harvard University's Robert Blendon reported on recent trends in public opinion about health issues tracked by his polling with the Henry J. Kaiser Family Foundation and other surveys, which reflect a now-familiar ambivalence about the urgency of cost and access problems and a volatile and contingent relationship between health care and other domestic issues vis-à-vis concerns about war and security. In the event of war, Blendon said, health care will drop off the public's radar screen. "They can deal with the economy and one other thing," he said. But from December 2001 to December 2002 the fraction of Americans dissatisfied with the health system rose from 33 percent to 41 percent, and those worried about affordability grew from 48 percent to 64 percent. Few Americans think government should act directly to control costs, but the fraction who think government should address lack of coverage grew from 23 percent in 2001 to 29 percent in 2002. Worry about losing coverage varies with income but averages 34 percent for all. Those who favor a major government effort on coverage, including taxation, fell from 49 percent in 2001 to 45 percent last year.
Robert Ross, California Endowment
Closing the first day's proceedings, Robert Ross, president and CEO of the California Endowment, highlighted the need for persistence in coverage efforts regardless of the political climate and renewed Ron Pollack's call for participation in Covering the Uninsured Week, March 10-16, which the endowment is cosponsoring with the Robert Wood Johnson Foundation. Ross drew an eloquent analogy to a deliberate and devastating silence on the issue of slavery that prevailed at the time of the U.S. constitutional convention and into the early 1800s, painting the current era in American politics as a period in which social justice and moral issues are out of fashion in public discussion. Ross suggested archly that we might at least try to be "boldly incremental" if we are otherwise unable to do more than leave major reform "to another generation that's got more guts than we do." Organizations participating in Cover the Uninsured Week include the U.S. Chamber of Commerce, AARP, the Business Roundtable, the AMA, the AHA, the American Nurses Association, Families USA, the Health Insurance Association of America, the Healthcare Leadership Council, the Service Employees International Union, the Blue Cross and Blue Shield Association, the Catholic Health Association, and the Federation of American Hospitals. More information is available at www.coveringtheuninsured.org.
FROM CAPITOL HILL
Sen. Max Baucus
Opening the second day of the conference, Sen. Max Baucus (D-MT), ranking minority member of the Senate Finance Committee, reviewed four major issues: State budget shortfalls of $85 billion or more are looming, and Congress needs to include state aid in any economic stimulus package, and look to funding Medicaid eventually with countercyclical protection for downturn effects. In addition to tort reform, reinsurance and no-fault safety reporting are needed to stem yearly malpractice coverage increases now averaging 25 percent, Baucus said. The choice between low and high price tags on Medicare drug benefit proposals is about the risk of disappointing beneficiary expectations that have already been raised, he suggested. The debate about how to deliver such a benefit boils down chiefly to questions about how insurance risk will be shared between government and private plans or benefit managers. Medicare needs broad reforms, but Baucus is opposed to reform models of a few years ago that built on the unsuccessful example of the Medicare+Choice program, with a central role for private plans and a government contribution defined in terms of "premium support." Instead, the focus should be on managing and coordinating high-cost and chronic care and paying for quality and patient safety.
John McManus, staff director of the House Ways and Means Health Subcommittee, described the Medicare drug benefit as "very scary stuff" for his party, but he also said that after two unsuccessful tries at passing the benefit, the unusual gains for Republicans in the mid-term elections might give the majority the momentum it needs. He stressed the importance of price competition and assumption of risk by private entities delivering the benefits and the need for catastrophic protection and subsidies for low-income beneficiaries. McManus's remarks preceded release of the president's budget, which followed a flurry of leaks about plans to link the benefit to enrollment in private plans, although details of the plan were not included in the February 3 budget. Additional Medicare objectives include regulatory streamlining, competitive bidding for durable medical equipment, and blocking scheduled physician payment cuts, he said.
Liz Fowler, chief minority health counsel on the Finance Committee staff, cited last year's Trade Adjustment Assistance Act as evidence of bipartisan action on the uninsured, incorporating tax credits into group coverage subsidies. But "the list of things we didn't do is pretty long," she said, despite apparent or partial agreement on regulatory reform, medical errors and physician payment, mental health parity, patients' rights, Medicare prescriptions, and TANF reauthorization. The president's tax cut proposal will loom large in determining what will happen to the prescription drug issue and whether there will be action on the uninsured this year, she predicted.
Debbie Curtis, chief of staff for Rep. Pete Stark (D-CA), also noted the potential impact of the president's tax proposal on pending health issues, including the prospects for bipartisan agreement on the breadth if the Medicare drug benefit, which Democrats tend to prefer as a programwide entitlement, rather than a low-income subsidy or private-plan feature. She cited problems with Medicare+Choice as evidence that "privatization is no solution." Democrats are open to using tax credits to cover the uninsured, she said. "The problem is you have to spend an awful lot of money and you have to do an awful lot of insurance regulation." Regulatory reform and medical error are issues where there is hope for bipartisan action, Curtis said.
Sen. John Breaux
Declaring the existing health system "is fundamentally broken" - with costs surging, the number of uninsured people on the rise, and Medicare and Medicaid both in shaky financial condition - Sen. John Breaux (D-LA) graced the conference with the unveiling of an ambitious new proposal for universal coverage. The centerpiece of Breaux's scheme is an individual coverage mandate, on the model of auto insurance, coupled with access to group coverage for individuals in an FEHBP-like consumer choice environment, built around state-run coverage pools, with standardized supplemental benefits and low-income subsidies. Medicaid would remain for the elderly, disabled, and other long-term care patients, while "other Medicaid eligible populations will be transitioned to the new system. "The solution is not a government-run system or a fend-for-yourself marketplace, but instead a middle path" that combines the best public and private capacities with increased individual responsibility, Breaux said. "Congress is not ready for this politically," he continued, but he hopes that next year's presidential election will create an opportunity to push for action. Breaux declined to offer a cost estimate, but he said the price tag would be of a comparable order of magnitude to the president's tax-cut proposal - perhaps $670 billion over ten years - and that "we as a nation will be a stronger and better country by doing this than by doing that."
& THE STATES
Vern Smith, Health Management Associates
State Medicaid programs fighting to control drug spending remind Vern Smith of the World War II general, surrounded by enemy troops, who reportedly quipped, "We now have the advantage of being able to attack in any direction." Thirty-two states have been forced to adopt additional midyear Medicaid cost control measures in FY2003 despite having initiated other measures at the beginning of the year, said Smith, a former Michigan Medicaid director who is now a private consultant with Health Management Associates; and drug costs have been one of the primary targets. Tools used by twenty-five or more states include seeking average wholesale price-based discounts or better; increasing the number of drugs requiring prior authorization, using "preferred drug lists" (that is, formularies), and imposing higher beneficiary copayments. A smaller number of states are using supplemental rebates, required use of generics, and monthly prescription limits.
Peggy Handrich, Wisconsin Medicaid
Peggy Handrich, who directs Wisconsin's Medicaid program, said that although her state had succeeded in holding the percent of state expenditures devoted to Medicaid well below the national average since the early 1990s, new programs - BadgerCare (the state's SCHIP program) and SeniorCare, a new prescription drug assistance program for the elderly - and a worsening economy had driven caseloads up 48 percent from mid-1999 to mid-2002. Drugs have been by far the fastest-growing category of expenditure in that period, at an average annual rate of nearly 17 percent. The state spent $560 million on drugs in Medicaid, BadgerCare, and SeniorCare in FY2002. Antipsychotics ($66.5 million) and antidepressants ($37.2 million) accounted for nearly 20 percent of the total. SeniorCare covers 67,000 low-income elders with high drug costs under a Medicaid waiver that brings in federal funds and allows a $20 enrollment fee and cost sharing geared to income for enrollees under 200 percent of the federal poverty level.
Ray Hanley, formerly Arkansas
Former Arkansas Medicaid director Ray Hanley, now an executive at EDS, noted that in most cases, when waivers like Wisconsin's have not been obtained, federal rules prohibit the kind of tiered cost sharing in Medicaid that private plans have used effectively in recent years to restrain drug spending increases. States are also limited in the tools they can use to leverage lower drug prices in their Medicaid programs, he said. Among the tools that can be used, "counterdetailing" has been effective in Arkansas, employing letters and visits to doctors to explain cost-saving alternatives to pricy brand-name drugs. Information technology is an essential tool for tracking out-of-control spending components, and Hanley described one software program that the state had purchased with grants from the manufacturer of Oxycontin to identify abusers of that drug. A Medicare drug benefit would save "many millions" for Arkansas, he noted. "Appropriately containing drug costs without forcing up other health care costs, navigating a sea of special interests, and finding the resources to get it done are huge challenges."
LaRhae Knatterud, Minnesota
A session on long-term care was moderated by Georgetown University dean of public policy Judith Feder. In Minnesota, a state that spends $1.4 billion annually on basic and long-term care for the elderly, a task force that met in 2000 concluded that the state needed to reduce its reliance on institutional care, and the state has since sought to expand its capacity to provide community-based care and to support families' ability to provide care, said LaRhae Knatterud, director of the state's aging initiative. Legislation passed in 2001 promoted information and assistance to families and community-based providers and increased funding to provide incentives to reduce nursing home beds and support alternative services with the money saved on reduced institutionalization. The proportion of state funds spent on institutional care dropped from 66.7 percent in 1998 to 58.2 percent in 2001, with a target of 52.5 percent in 2002. The state has also promoted long-term care insurance for state workers and other employee groups. Nearly half of the state's twenty-five largest employers offer long-term care coverage, and the enrollment rate of 18 percent is ten times the median rate for twenty-one other states, Knatterud said.
Carol Raphael, Visiting Nurse Service of New York
Carol Raphael, president and CEO of the Visiting Nurse Service of New York, described challenges for the long-term care workforce, which consists of about 512,000 RNs (20 percent of the nation's total of 2.55 million), 615 paraprofessionals, and 54 million informal caregivers. The share of LTC RNs who are racial or ethnic minorities is 10 percent, compared with an 85-90 percent share of paraprofessionals and a 49 percent share of informal caregivers. Average annual earnings of RNs is about $42,000, compared to $10,000-$14,000 for paraprofessionals. Other factors constraining the supply of paraprofessionals include the difficulty of finding steady, full-time positions; a lack of career mobility; poor respect and recognition on the job; and stressful working conditions including high risk of injuries and unpleasant duties. The result is turnover rates greater than 90 percent in nursing homes and 30 percent in home health care. The number of people potentially available to serve as informal caregivers is expected to drop from eleven (per patient) in 1990 to four in 2050, Raphael said, and these helpers are also burdened by high stress levels, the difficulty of navigating the health system, conflicting demands from paying employment, and physical and emotional strain.
John Williams, Utah
John Williams, long-term care director for the Utah health department, addressed the difficulties of pursuing quality improvement goals in long-term care, beginning with problems of measurement. Part of the problem is that services are delivered over a long period of time and across a wide variety of sites, including home settings where the intrusion of quality overseers is difficult to justify. Indicators of quality are also hard to define, and "there's a real shift in thinking" in which quality of life rather than quality of care is emphasized. A number of national quality improvement initiatives are afoot for long-term care, Williams said, notably the publication of quality data on nursing homes by the CMS. Patient-centered approaches are becoming increasingly salient, he suggested, paralleling delivery and financing innovations such as patient-directed care and cash-and-counseling arrangements and pushing quality improvement efforts in the direction of "knowledgeable consumers, involved in decision-making processes, making informed choices."
OF EMPLOYERS & UNIONS
Arnold Milstein, Pacific Business Group on Health
Arnold Milstein, medical director of the Pacific Business Group on Health, led a session on employers' and unions' role in managing cost and quality, which is limited by several underdeveloped resource sets. They include standardized performance measures for providers and loosely knit plans; connectable electronic clinical information systems; "cost-effectiveness research on consumer incentives to select better providers and treatments"; clear accountability for care management over time; stronger antitrust monitoring; and a critical mass of leadership. Both the Leapfrog Group and the Institute of Medicine reports on quality point toward redesign of care processes as the foundation of quality improvement, stressing better use of information technology, team-based management and coordination of care across settings and time, and the use of performance and outcome measures in continuous quality improvement loops. When such process improvements are embedded in payers' procurement practices, plans and providers will respond with improved performance, he said.
Vincent Kerr, Ford Motor Company
Vincent Kerr, chief medical officer for Ford Motor Company, is responsible for $3 billion in benefits the company purchases annually for 650,000 employees, dependents, and retirees. The amount is rising at 14 percent a year and is Ford's fastest-growing cost factor. As these pressures mount, purchasers will seek to gain steeper discounts from providers, to shift costs and risk, to reduce benefit levels, to create tiered provider networks, and to ration services, Kerr predicted. Ford has joined with United Parcel Service, General Electric, Pacific Gas and Electric, and others to recognize effective disease management programs. Part of the effort is a physician recognition program that offers incentives and certification to providers who meet quality standards. Incentives to patients are another prong of the program. Kerr stressed the need to "engage consumers in quality."
Steven Sleigh, International Association
of Machinists and Aerospace Workers
Steven Sleigh, director of strategic resources for the International Association of Machinists and Aerospace Workers, said that protecting health benefits had become the biggest issue for the 750,000-member union this year for the first time in eight years. Members include employees of huge aerospace companies and tiny auto repair garages. IAM has a Taft-Hartley plan that the small-shop workers belong to where "we've been clobbered with premium increases" of 15 percent in recent years. An analysis of strikes in which the union has been involved in the past five years identified "health care cost shifting" as their biggest single cause. IAM is working with Boeing and other large employers to apply National Committee for Quality Assurance (NCQA) accreditation and Leapfrog standards to the plans and providers these companies contract with. In some areas the union works collaboratively with management and hospitals to develop information about hospitals' quality efforts. Abundant quality information about automobiles is available on the Internet, but not about hospitals, said Sleigh. "It's ridiculous."
FORUM: THE POLITICAL ENVIRONMENT
Thomas Mann, Brookings Institution
In a lunch-hour forum, Thomas Mann, a senior fellow at the Brookings Institution, reviewed the political environment in which President Bush would soon be presenting his budget and health policy agenda. Mann contrasted the "extraordinary victory" of the Republicans in the midterm elections - the first time since 1937 that an incumbent president's party has picked up seats in both chambers in an off-year - with reversals that have occurred since: Mary Landrieu's runoff victory in Louisiana, the Trent Lott debacle, an ominous threat from North Korea, declining poll ratings, skepticism about further tax cuts, shallow and soft support for war plans, and an "energized and embittered" opposition. Despite the difficulty of the road ahead, Bush appears to be intent on pushing an aggressive agenda, including the expanded tax cuts, a refusal to offer a major federal aid package to the fiscally stressed states, and a controversial approach on the Medicare drug benefit, which the administration has since said it would link to enrollment in private HMO or PPO plans. Given his slender majority, Bush's boldness tells us that he is a risk taker, Mann said.
Norman Ornstein, American Enterprise
Norman Ornstein, resident scholar at the American Enterprise Institute, warned that war would preempt all other concerns but that otherwise health policy could be a prominent political issue this year. With a narrowly divided electorate and Congress, both parties need to defuse the opposition's weapons, as Republicans did successfully in the by-election by passing Medicare drug proposals in the House in 2001 and 2002. Ornstein predicted correctly that the president would have an aggressive Medicare proposal in his budget. He interpreted the reform component of the Bush proposal as a tool to achieve offsets in the scoring of the drug benefit that would comport acceptably with tax cuts and the costs of war. With no war or a short war, he said, the health care debate could spread beyond Medicare, because the weakness of the economy has increased insecurity about health coverage well beyond the forty million people who are uninsured, so that a large-scale coverage proposal like Breaux's could gain traction with the electorate in 2004.
SESSION: RESEARCH STRATEGIES
David Helms, AcademyHealth
Research strategies and the role of AcademyHealth were the subject of the conference's concluding session, moderated by AcademyHealth president and CEO David Helms. Researchers need to be aware of the need to address timely and relevant questions. AcademyHealth seeks to build communication links between researchers and policymakers, formulate relevant policy questions for researchers, explain research to policymakers, and help explain limitations. Helms described as an example AcademyHealth's role in brokering exchanges between researchers working on risk adjustment and CMS staff charged with implementing risk adjustment in Medicare+Choice. Research syntheses are another tool for making scholarly work accessible to implementers. AcademyHealth is involved in several database-sharing projects on the Internet.
Ann Barry Flood, Dartmouth Medical
Ann Barry Flood, a professor at Dartmouth Medical School and an editor of Health Services Research, said that HSR is seeking ways to improve its ability to perform the translational function that helps link research to policy. Multidisciplinary work of the kind valued by policymakers is often difficult in traditional university settings, which tend to reinforce distinctions and differences between disciplines; and the journal, too, needs to transcend pigeonholes. Researchers and journal editors also need improve their ability to interpret and probe assumptions underlying the models they study - such as the onetime belief that managed care could be a panacea for cost and coordination problems, or subsequently the opposite belief that it was an utterly failed and discredited model.
Nicole Lurie, RAND
Nicole Lurie, another HSR editor who is a senior scientist at RAND, said that good exchanges between researchers and practitioners took place at the conference but may not otherwise continue, and the journal should seek to involve practitioners more, perhaps as authors (or reviewers, as an audience member later suggested). As a clinician, she said, she is sometimes reminded that wraparound problems such as housing, jobs, education, and income support can be as important as medical treatment for many patients; and that health services research needs to engage with the practical concerns that arise "where the rubber meets the road." While health promotion received some attention at the conference, Lurie said, public health issues are not well represented in HSR; and if the large strides that have been taken in quality research could be applied in the public health field developing metrics, standards, and strategies, it would be a large contribution.
Carolyn Clancy, Agency for Healthcare
Research and Quality
Carolyn Clancy, who was named director of the Agency for Healthcare Research and Quality shortly after the conference, invoked the notion of "user-driven research" as an idea whose time has come. She listed the crucial policy questions that research must help to address: structuring a Medicare drug benefit that promotes patient safety and quality; how "paying for quality" might work; extracting general lessons from experiments in the states; and developing answers for looming workforce problems. Follow-up discussion noted the Breaux universal coverage proposal as an example of a policy challenge that may expand in importance in the future in a way that challenges researchers to look ahead and be ready to answer questions that are sure to arise about the components of a major coverage initiative. "We've got to get smarter about this," said one audience participant.
Slides, transcripts, and webcasts from the conference can be accessed at www.academyhealth.org/nhpc/presentations/index.htm.
©2003 Project HOPEThe People-to-People Health Foundation, Inc.