Health Care Spending Disparities Stir a Fight

By ROBERT PEAR New York Times June 9, 2009 WASHINGTON — President Obama recently summoned aides to the Oval Office to discuss a magazine article investigating why the border town of McAllen, Tex., was the country’s most expensive place for health care. The article became required reading in the White House, with Mr. Obama even citing it at a meeting last week with two dozen Democratic senators. “He came into the meeting with that article having affected his thinking dramatically,” said Senator Ron Wyden, Democrat of Oregon. “He, in effect, took that article and put it in front of a big group of senators and said, ‘This is what we’ve got to fix.’ ” As part of the larger effort to overhaul health care, lawmakers are trying to address the problem that intrigues Mr. Obama so much — the huge geographic variations in Medicare spending per beneficiary. Two decades of research suggests that the higher spending does not produce better results for patients but may be evidence of inefficiency. Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions. Those proposals have alarmed lawmakers from higher-cost states like Florida, Massachusetts, New Jersey and New York. But they have won tentative support among some lawmakers from Iowa, Minnesota, Montana, North Dakota, Oregon and Washington, who say their states have long been shortchanged by Medicare. Nationally, according to the Dartmouth Atlas of Health Care, Medicare spent an average of $8,304 per beneficiary in 2006. Among states, New York was tops, at $9,564, and Hawaii was lowest, at $5,311. Researchers at Dartmouth Medical School have also found wide variations within states and among cities. Medicare spent $16,351 per beneficiary in Miami in 2006, almost twice the average of $8,331 in San Francisco, they said. The Senate Finance Committee recently suggested that one way to pay for health care overhaul would be to reduce geographic variations by cutting or capping Medicare payments in “areas where per-beneficiary spending is above a certain threshold, compared with the national average.” Another proposal would spare health care providers in low-spending, efficient areas from across-the-board cuts in Medicare payments. The committee chairman, Senator Max Baucus, Democrat of Montana, and the panel’s senior Republican, Senator Charles E. Grassley of Iowa, are from lower-spending states. But the proposals are not just pork-barrel politics. They are based on the research by Dartmouth experts who have documented wide geographic variations in health spending. The research has become phenomenally influential on Capitol Hill since it was popularized by Peter R. Orszag, as director of the Congressional Budget Office and then as President Obama’s budget director. Aides said Mr. Obama had been intrigued by regional variations in health spending since before his inauguration. The topic came up at a meeting with Mr. Orszag in Chicago late last year. The magazine article, by Dr. Atul Gawande in the June 1 issue of The New Yorker, said a major cause of the high costs in McAllen was “overuse of medical care.” Dr. Elliott S. Fisher, one of the Dartmouth researchers, diagnosed the problem this way: “Medicare beneficiaries in higher spending regions are hospitalized more frequently, are referred to specialists more often and have a much smaller proportion of their visits to primary care physicians.” In his blog last month, Mr. Orszag wrote, “The higher-cost areas and hospitals don’t generate better outcomes than the lower-cost ones.” But other researchers and politicians are not so sure. They say it would be a mistake to cut or cap Medicare payments without knowing why spending in some places far exceeds the national average. “There is too much uncertainty about the Dartmouth study to use it as a basis for public policy,” said Senator John Kerry, Democrat of Massachusetts. “Researchers can’t explain why some areas of the country spend more on health care than others. There are many reasons spending could vary: higher costs of living, sicker people or more teaching hospitals.” “States like Massachusetts are concentrated centers of medical innovation where cutting-edge treatments are tested and some of the nation’s finest doctors are trained,” Mr. Kerry added. “This work might cost a little more, but it benefits the entire country.” Madeline H. Otto, an aide to Senator Bill Nelson, Democrat of Florida, said he was “adamantly opposed” to the proposed cuts in higher-spending areas because the cuts did not distinguish between necessary and unnecessary care. Mr. Orszag says health spending could be reduced by as much as 30 percent, or $700 billion a year, without compromising the quality of care, if more doctors and hospitals practiced like those in low-cost areas. The supply of hospitals, medical specialists and high-tech equipment “appears to generate its own demand,” Mr. Orszag has said. A Democrat from a low-spending state said critics were trying to “blow holes in the Dartmouth analysis.” Dr. Michael L. Langberg, senior vice president of Cedars-Sinai Medical Center in Los Angeles, is among the critics. “The statement that Medicare costs can be cut by 30 percent has been repeated so many times that it has come to be viewed as a proven fact by some,” Dr. Langberg said in a recent letter to the Senate Finance Committee. “It is not a fact. It is a gross oversimplification of an untested theory.” Dr. Langberg endorsed the goal of covering the uninsured, but said, “We do not believe that rushing to make large cuts in Medicare payments to hospitals is the right way to fund that coverage.” The Dartmouth team has cited Cedars-Sinai as having very high Medicare spending per beneficiary. Research by Dr. Robert A. Berenson and Jack Hadley of the Urban Institute suggests that much of the geographic variation in health spending can be explained by differences in “individual characteristics, especially patients’ underlying health status and a range of socio-economic factors, including income.” “Some patients may benefit from higher spending,” said Mr. Hadley, who is also a professor at George Mason University in Virginia. “They could be adversely affected if they live in geographic areas where payments are cut.” Dr. Berenson, who was a Medicare official in the Clinton administration, said, “There remains too much uncertainty about the Dartmouth findings to ground public policy on them.”

Senate Feels Ted Kennedy’s Absence on Health Bill

By DAVID M. HERSZENHORN New York Times June 9, 2009 WASHINGTON — The run-up to major health care legislation is now a full-on frenzy, and some of the main power players were in yet another marathon meeting on Monday afternoon in the not-so-secret hideaway office of Senator Edward M. Kennedy. But Mr. Kennedy, the Democratic chairman of the Health, Education, Labor and Pensions Committee, who has been closely identified with the issue of health care over his nearly 47 years in the Senate, was back home in Massachusetts, where he is still being treated for brain cancer. Though Mr. Kennedy continues to work closely on the unfolding legislation and is in constant touch with staff members and colleagues, he is not expected to return to the Capitol as formal debate begins this month, either for committee hearings or when the legislation moves to the Senate floor. “I think we would all like to see Senator Kennedy here for many, many reasons,” said Senator Jack Reed, Democrat of Rhode Island and a member of the health committee. “But we are going to move forward.” Mr. Kennedy’s close friend, Senator Christopher J. Dodd, Democrat of Connecticut, who is the No. 2 Democrat on the health committee, has taken on the main role. He is supported by the leaders of three health care “working groups” that Mr. Kennedy created in November, which is when he tapped Mr. Dodd to be his “chief deputy.” Mr. Dodd met with Mr. Kennedy about the health legislation and had dinner at his home on Sunday. Mr. Kennedy is also in touch by phone with President Obama. Mr. Dodd, in a conference call with reporters, said he was holding out hope for Mr. Kennedy’s return. “My hope is he’ll be back at any, any one of these days,” he said. “There is also a spirit he brings to, a dynamic that is hard to quantify,” Mr. Dodd said. “And so, he’ll be missed when he’s not there. But my hope is that he will be back as frequently as he can to play that role.” Mr. Kennedy’s absence has raised alarm among Democrats and Republicans who say that his gravitas and the force of his personality, particularly his ability to usher colleagues past minor disputes in pursuit of larger goals, will be missed as the debate heats up. “He is the only guy who can bring us together, temper the demands of liberal advocacy groups and steer people toward a pragmatic solution,” said Senator Orrin G. Hatch, Republican of Utah, who is a member of both the health committee and the Finance Committee and is a longtime collaborator with Mr. Kennedy on health legislation. A draft of a bill by Mr. Kennedy began circulating late last week, including provisions that would guarantee health coverage for all Americans and would penalize employers who do not help provide insurance. Republicans say such a guarantee is unaffordable. As critics began to level sharp criticism of the proposal on Monday, Mr. Kennedy was not on hand to rebut it. A spokesman for Mr. Kennedy, Anthony Coley, said in an interview that the senator is “doing well and balancing his work on health care reform with his treatment plan.” In a statement, Mr. Coley said that universal health coverage for Americans is the “cause of his life” and that “he continues to lead.” He added, “That doesn’t depend on location.” The majority leader, Senator Harry Reid of Nevada, had raised hopes that Mr. Kennedy would return for the health care debate, telling reporters last month that both Mr. Kennedy and Senator Robert C. Byrd, Democrat of West Virginia, who at age 91 is the oldest senator, were recovering from illnesses. But neither man has been able to return, and Mr. Byrd’s staff said Monday that he remained hospitalized for treatment of an infection.

Obama Urges Quick Action on Insurance

New York Times By ROBERT PEAR and SHERYL GAY STOLBERG Published: June 2, 2009 WASHINGTON — President Obama on Tuesday affirmed his support for the creation of a government-sponsored health insurance plan, but he acknowledged that such a plan would sharply reduce the chances for Republican support of legislation to overhaul the health care system, Democratic senators said. The senators, who met with Mr. Obama at the White House, said he also set forth a timeline, calling on Congress to send him a comprehensive health care bill by October. “He wants the bill through the Senate and the House before the August recess, so we can conference and have it done in September and signed in October,” said Senator Barbara A. Mikulski, Democrat of Maryland. “He said we need to be unflinching and unflagging.” In remarks just before the meeting, Mr. Obama said: “This is going to be a heavy lift. I think everybody understands that. But I’m also confident that people want to get this done this year.” The Senate Democratic leader, Harry Reid of Nevada, said he believed that the full Senate should be able to take up the health care bill and “hopefully finish it” next month. “But, you know, I don’t know,” Mr. Reid added. “We’ll have to see how long things take.” In response to a question from Senator Jeff Bingaman, Democrat of New Mexico, Mr. Obama said that it was important to include a public plan option and that such a plan could help control health costs. Senator Sheldon Whitehouse of Rhode Island, one of two dozen Democratic senators who met with Mr. Obama, said the president “spoke very enthusiastically about a public plan” that would compete directly with private insurers. The president’s words were comforting to Democrats like Senator Sherrod Brown of Ohio. “The sentiment in the room, with the president and the rest of us, was that a public plan option will keep the insurance industry honest, will give people more choices in their health care and can save significant amounts of money,” Mr. Brown said. But other senators at the meeting reported that Mr. Obama also said he wanted a bipartisan health care bill, and they said he recognized that Republicans were strenuously opposed to a government-sponsored plan. Reid H. Cherlin, a White House spokesman, declined to characterize the president’s comments. Other Democrats said Mr. Obama suggested that as “a show of good faith,” Democrats might work with Republicans on other issues, like medical malpractice. Many Republicans would like to limit the amount or types of damages available to patients who sue doctors, hospitals and other health care providers. Another topic at the White House meeting was how to pay for covering millions of the uninsured. Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said Mr. Obama indicated that he “might consider” the idea of taxing some employer-provided health benefits, a proposal favored by Mr. Baucus. “It’s on the table,” Mr. Baucus said. “It’s an option.” The White House pushed back, saying Mr. Obama “made it very clear” that he preferred his own revenue proposals. Mr. Obama campaigned against taxing health benefits last year. Labor unions and many employers adamantly oppose a limit on tax-free health benefits. But in a report on Tuesday, the Center on Budget and Policy Priorities, a liberal-leaning research and advocacy group, said, “Congress is unlikely to be able to finance health reform legislation that includes universal coverage unless it limits the exclusion of employers’ health insurance payments from workers’ income and payroll taxes.” Senator Edward M. Kennedy, Democrat of Massachusetts, who is battling brain cancer, did not attend the White House meeting and is not expected on Capitol Hill this week. But the Committee on Health, Education, Labor and Pensions, of which he is chairman, met for more than an hour Tuesday to sift through options. To help control costs, the administration indicated support on Tuesday for a proposal to strengthen a federal panel that recommends how much Medicare should pay doctors, hospitals, nursing homes and other health care providers. Senator John D. Rockefeller IV, Democrat of West Virginia, recently introduced a bill that would expand the role of the panel, the Medicare Payment Advisory Commission, and give its recommendations the force of law. Senators said Mr. Obama and his aides had expressed general support for such a change, which would establish the panel as an independent rate-setting body in the executive branch. Several senators said Mr. Obama had conveyed a sense of urgency and spoken emphatically about the importance of revamping the health care system in a way that would reduce costs. “The president made clear that history will judge us by whether this bill controls health costs,” said Senator Ron Wyden, Democrat of Oregon.

2 Democrats Spearheading Health Bill Are Split

New York Times By ROBERT PEAR Published: May 29, 2009 WASHINGTON — A significant split has developed between the two Democratic senators leading efforts to remake the nation’s health care system. They disagree over the contours of a public health insurance plan, the most explosive issue in the debate. One of the senators, Edward M. Kennedy of Massachusetts, reasserting himself after months of treatment for brain cancer, made clear this week that he favored a robust public health care plan, a government-sponsored entity that would compete with private insurers. As a starting point for his bill, Mr. Kennedy favors a public plan that looks like Medicare, the government-run program for older Americans created in 1965, when he was a young senator. By contrast, Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee, has been working for months with the panel’s senior Republican, Charles E. Grassley of Iowa, in the hope of forging a bipartisan bill, which would probably play down the option of a public plan. Mr. Grassley opposes creation of a new government insurance program and says “we cannot afford the public health plan we have already,” referring to Medicare. President Obama has championed a public plan, saying it would help “keep the private sector honest,” though he has indicated he will be flexible on the details. House Democratic leaders, including three committee chairmen drafting the House bill, are close to Senator Kennedy’s position. Democrats on the Finance Committee said Mr. Baucus was exploring a possible compromise. Under this proposal, the public plan would be created only if private insurance companies had not made meaningful, affordable coverage available to all Americans within several years. Senate Democrats said they believed that Mr. Baucus might settle for this “fallback plan,” which could win some support on both sides of his committee, from people like Senator Ron Wyden of Oregon, a Democrat, and Senator Olympia J. Snowe of Maine, a Republican. Passage of comprehensive health legislation this year is a top priority for Mr. Baucus and Mr. Kennedy, the chairman of the Committee on Health, Education, Labor and Pensions. So they may be able to resolve their differences, aides said. The split reflects not only political differences between the two men but also differences between their committees, racing to write the most ambitious health care legislation in the nation’s history. Over all, Democrats on the Finance Committee tend to be more moderate than those on the health committee, which includes more Democrats who identify themselves as liberals or progressives. The two Senate panels are drafting separate bills that are to be merged before going to the Senate floor. Describing his plan this week, Mr. Kennedy said: “Americans want the choice of enrolling in a health insurance program backed by the government for the public good, not private profit. So that option will be available.” Consumers, he said, will be able to enroll in “a publicly sponsored and guaranteed plan.” Senator Charles E. Schumer of New York, the third-ranking member of the Senate Democratic leadership, said Friday, “It’s pretty certain that Senator Kennedy could not support the Baucus plan, and Senator Baucus could not support the Kennedy plan.” But Mr. Schumer said “it’s possible” that both could support a version he is developing. Under Mr. Schumer’s proposal, any new public plan would have to comply with all the rules and standards that apply to private insurance. A public plan would also have to be self-sustaining, would have to rely on premiums and would not have a pipeline into the federal Treasury. Mr. Baucus said last month that while a government-run insurance plan was still on the table, “it might be a bit on the side of the table.” Erin Shields, a spokeswoman for Mr. Baucus, said Friday, “The Finance Committee has not decided or settled on what a public plan option would look like, if one were to be included in the bill.” Public opinion polls suggest that many consumers would like to have the choice of a public plan. But insurance companies and Republican lawmakers say a public plan could drive private insurers out of business and lead eventually to a single-payer system run by the government. Supporters of a public plan have been putting pressure on Mr. Baucus. Mr. Kennedy and 28 other senators signed up last week as co-sponsors of a resolution supporting creation of a public insurance option. “Health care reform must include insurance reform, and health insurance reform must include the option of a federally backed health insurance plan,” said Senator Sherrod Brown, Democrat of Ohio, the chief sponsor of the resolution. Many doctors and hospital executives fear that a public plan would pay them at Medicare rates, which are often lower than those paid by commercial insurers. Under Mr. Kennedy’s proposal, the government-sponsored plan might pay more than Medicare, perhaps 10 percent more, but less than private insurance. Under the House bill, the public plan would use Medicare fee schedules in setting payments to health care providers. Republicans denounce such rate-setting techniques as price controls or “administered prices.”