The Senate HELP Committee's Affordable Health Choices Act: A Summary and a Recommendation for a Consumer Friendly 'Nutrition Facts Label'

Readers may have already learned that one of the two major Senate Committees that are drafting health reform legislation has finally come up with a long awaited product of the political process called a "bill." While this particular piece of legislation is still a work in progress, Senator Kennedy's Health, Education, Labor and Pensions (‘HELP’) Committee’s bill has already made some progress: it has been preliminarily ‘scored’ by the Congressional Budget Office (CBO).

CBO's analysis makes for very interesting reading. What is helpful about the CBO report is that it gives a readable summary of this ‘Affordable Health Choices Act’ (AHCA), saving the Disease Management Care Blog from having to don its oxygen apparatus and blow tanks for a dive into the original legislative language. CBO then tells us how well this will work and how much this is going to cost. It ain't pretty.

According to CBO, AHCA would either mandate or impose ‘play or pay’ health insurance coverage, provide States grants to establish Massachusetts-style ‘exchanges’ that enable insurance purchasing and subsidize that purchasing on a sliding scale from 150% to 500% of the Federal Poverty Level. The bill assumes that individuals below 150% would qualify for Medicaid.

Because AHCA doesn’t mention it, there is no mention by CBO on the impact of a ‘public insurance option’ or the expansion of Medicaid. Another possibility being considered in Congress is allowing children to be covered as dependents until age 27 years, which could also change things. In addition, administrative costs are unknown and some language in AHCA needs to be clarified. As a result, CBO’s assessment is technically incomplete - which was not only pointed out in their report, but on the Director's Blog.

So with the ‘incomplete’ caveat, CBO projects that, absent any legislation, the number of persons who are less than age 65 years with insurance will go from the current level of 217 million to 228 million over the next ten years. At the same time, the number of persons without insurance will go from the current level of 50 million to 54 million - or 19% of the U.S population.

If the HELP AHCA legislation, as currently written, passes Congress, the number of persons without insurance will decrease to 36 million - or 13% of the U.S. population. About a third of these uninsured would be undocumented aliens or Medicaid eligible individuals who haven’t been signed up. What’s more, the report predicts the number of persons with employer based insurance will decline from 162 million (if things are unchanged) to 147 million.

Cost? The total cost of the sliding scale insurance subsidies is $1.28 trillion, averaging $5000 per individual. $60 billion is needed to set up the insurance exchanges. These costs would be offset by taxes on more employers presumably paying higher wages if they’re not paying for health insurance ($257 billion) plus fewer people using Medicaid and SCHIP ($38 billion) plus ‘pay’ penalties from individuals who refuse to ‘play.’ Bottom line? A whopping $1.042 trillion over ten years.

Wait a minute, says the DMCB: 36 million uninsured? OK, 24 million if we exclude illegals. 13% of the U.S. population? $1 trillion? Fewer persons with employer-based insurance? That sounds like there will still be plenty of uninsureds in 2019, which even ardent liberals find shocking. Heart breaking tales of bankruptcy and lack of access will continue to pepper the health policy landscape and we’ll have 36 million reasons to move to a single payer system.

The DMCB doesn't think it's just about the money. Americans are generally willing to give the government more money if they believe the expense is worthwhile. This is not about the eye-popping sum of $1 trillion, this is about getting $1 trillion of value for the taxpayer.

Unless the DMCB is naively misreading the CBO report, $1 trillion in exchange for ‘only’ 36 million uninsured would not seem to pass muster. The DMCB hasn't done the math, but it suspects that the Federal outlays necessary to reach higher percentages of the uninsured are not a "linear" process. Much like the "last mile" of broadband connectivity, the cost will spiral up on a logarithmic scale. Good intentions, the DMCB would like to introduce you to fiscal reality.

And don't let the notion that the report is 'incomplete' fool you. Here's a quote:

“Although this analysis reflects the proposal’s major provisions, taking all of its provisions into account could change our assessment of the proposal’s effects on the budget and insurance coverage rates—though probably not by substantial amounts relative to the net costs already identified. Public plan and expansion of Medicaid would mean additional costs.”

Given the consternation over the cost of AHCA, the DMCB would like to borrow from the ubiquitous FDA's 'Nutriton Facts Label' that is designed to help consumers quickly navigate through the ingredients and the value of pre-packaged food. A similar label is necessary for AHCA bill, so that consumers can quickly and efficiently understand what they are getting for their hard earned money. If you think about it, the only difference is that the HELP Committee is giving us a pre-packaged health reform solution. If that's a box on the DMCB's fiscial breakfast table, it recommends that the label should look like this:

Congressional Budget Office Says Disease Management May Well Be Cost Effective

On February 25 2009 CBO Director Douglas Elmendorf gave testimony before the US Senate on options for expanding health insurance coverage and controlling costs. It's an impressive 31 page document that effectively describes a host of healthcare reform policy options. The Disease Management Care Blog found some statements about - what else - disease management. The most important quotes are below.

Note that overall, CBO is still describing the industry in supportive terms.

'...disease management services can improve health and may well be cost effective - that is the value of the benefits could exceed the costs. But those efforts may still fail to generate net reductions in spending on health care because the number of people receiving the services is generally much larger than the number who would avoid expensive treatments as a result.'

The DMCB agrees that considering the merits of health care interventions based on their ability to 'save money' is less useful than assessing them on how well they deliver value. Contrast nurse-based coaching aimed at achieving an A1c of 7% (which is typically poorly covered outside of managed care settings, if at all) versus stents for persons with coronary artery disease. Both result in betterment. Both cost. One delivers far greater benefit than the other.

As for the dilution of disease management interventions over large populations, organizations in the business of population-based care management have known about this for a long time. In response, they use predictive modeling to target beneficiaries who are most likely to benefit from the interventions. For this to work, however, the Medicare program will need to consider the implications of unevenly applying a benefit to an eligible population. The DMCB has an ironic paraphrased quote to think about in these these days of expanding central government: from each according to their ability, to each according to their need.

...proposals could include specific elements designed to induce individuals to improve their own health or to encourage changes in how disease are treated. Through a combination (bolding mine) of approaches, proposals could try to change the behavior of both patients and providers by promoting healthy behavior,.... expanding...preventive care, establishing a medical home..., adopting 'disease management' programs,... funding research comparing the effectiveness of different treatment options... expanding the use of health information technology... and modifying the system for... malpractice. In many cases studies... studies do not support claims of reductions in health care spending or budgetary savings.

Not quite. Many of the studies in each of the domains above are restricted to just that domain (for example, just the medical home) or to a particular piece of the domain (for example, the use of physician order entry). There are few, if any, studies that examine the impact of any significant combination of approaches (for example, the medical home plus telephonic-based coaching that promotes the latest effectiveness research findings linked to a personal health record). The DMCB thinks combinations of these interventions will be proven to be greater than the sum of their parts. This will be the next frontier for effectiveness research in population based care, Medicare demonstrations and Medicaid waivers. In addition, this is where we'll see innovations in those pockets of the medical insurance market place left untouched by the Federal tsunami.