Category Archives: Policy and politics

Can Congress agree on the Cadillac tax?

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Cadillac taxi?

Health care is too costly in the US. One reason is that health insurance premiums are fully tax deductible for employers. This distorts the market, causing employers and employees to prefer devoting the next dollar of compensation to healthcare rather than wages. That’s fine in any given year but over time it’s helped drive up healthcare spending and hold down wages.

One of the many things the Affordable Care Act did right was to start to address this issue with the so-called Cadillac Tax, an excise tax on high cost employer plans. Like everything in the ACA it has been attacked and derided by the law’s opponents. But many Republican plans have equivalent measures, which would cap the deductibility of health insurance. Either one of these approaches would help by causing employers to work harder to hold down healthcare spending and by generating tax revenue that could be used for other health law goals or for general purposes. The end of tax deductibility only kicks in at a high threshold, which means the impact in the early years is limited and everyone has time to get used to the new rules. I’d like to see Congressional leaders be brave and embrace some form of cap as a bi-partisan consensus move.

Alas, the caps are opposed by an array of forces: employers don’t want a new tax, labor groups are worried that benefits will be eroded and out-of-pocket costs increased, and the healthcare industry worries about a squeeze on revenue.

Without strong leadership in Congress, it seems doubtful that new legislation will be passed. So maybe the best bet is to leave the Obama era Cadillac tax in place, imperfect as it may be.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

What if the FDA is eliminated?

President Trump’s first couple of weeks have people taking him literally, not just seriously. What does that mean when it comes to the regulation of drugs?

As I wrote in early December (Would an FDA radical make any real difference), I’m not convinced that even a major shift away from regulation will dramatically change the market. Even if the bar for approvals is lowered, third-party payers will still want to see compelling safety and efficacy data before they provide reimbursement. Medicare and Medicaid may also up their game by directly or indirectly discouraging prescribing of medications that are unproven.

The pendulum tends to swing back and forth between the demand for speedy approval and concern about harms to patients from inadequately tested drugs. Recently the pendulum has been swinging toward fast approval, and the newly enacted 21st Century Cures Act continues that trend.

But what will happen when a drug that’s rushed to market causes patient injury and death?

“We’re going to be cutting regulations at a level that nobody’s ever seen before. … And we’re going to have tremendous protection for the people — maybe more protection for the people,” Trump said Tuesday.

Trump is promising the impossible, and it may come back to bite him. Then again, maybe it won’t.

Rerun: We need a liberal immigration policy to support health care reform

I went down to Copley Square, Boston yesterday to protest President Trump’s Executive Order on immigration. I’m very concerned about the direction the country is taking. Beyond that, I’m also saddened at the lack of appreciation for immigrants in building our economy and helping health care reform succeed. Below is a rerun of my blog post from 2011.


Over the last decade, the United States has intentionally made itself less attractive to immigrants, forgetting that immigration has been a huge driver of the country’s economic success. In a recent article (America needs a 21st century immigration policy), leading entrepreneurs, executives and investors including Steve Case and Sheryl Sandberg said:

To some, the link between immigration reform and economic growth may be surprising.  To America’s most innovative industries, it is a link we know is fundamental.

The global economy means companies that drive U.S. job creation and economic growth are in a worldwide competition for talent.  While other countries are aggressively creating policies and incentives to attract a highly educated workforce, America has stagnated.  Once a magnet for the world’s top minds, America now faces a “reverse brain drain” and is no longer the first choice for many entrepreneurs creating new companies and jobs.

America needs a pro-growth immigration system that works for U.S. workers and employers in today’s global economy.  And we need it now.

Openness and encouragement of immigration is vital for the success of health care reform. Why?

  1. Immigrants innovate and create economic growth. This growth is how the country gets wealthier and better able to support health care expenses without raising tax rates
  2. Immigrants tend to be younger, so they mitigate the overall aging of the population, making it easier for the country to afford its commitments to older citizens
  3. Immigrants can use their intellectual capital and training –whether acquired abroad or here– to fill health care jobs such as primary care physician, pharmacist, nurse that would otherwise go unfilled

President Obama actually understands this dynamic, but has to tread carefully since immigrant bashing is so popular on the right. But unfriendliness to immigration is all over in the place. For example in Massachusetts the state has decided –for short-sighted financial reasons– to exclude legal immigrants from subsidized health insurance. With luck, that decision will be overturned as unconstitutional by the state’s Supreme Judicial Court.

I agree with the Republican rhetoric of the need for a “pro-growth agenda.” Low taxes and limited regulation can certainly play a part. But policies that encourage immigration, especially of younger, well educated people, are absolutely essential. We need it for the economy as a whole and for the health care economy in particular.

Medicaid block grants would be ok for Massachusetts

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Look mom, no waivers!

The old Republican idea of replacing Medicaid with block grants to the states is back on the front burner. In general I oppose it because it is likely to be used as a backdoor way to screw people with low incomes by reducing available funding. And I also fear it will increase healthcare disparities in many states where the commitment to universal coverage is low. Read (Everything you need to know about block grants – The Heart of GOP’s Medicaid Plans) from Kaiser Health News for the ins and outs.

But a shift to block grants would be fine for Massachusetts. It might be preferable to the status quo, even with the threat of a slowdown in funding.

In particular, Massachusetts is operating under a waiver from the Centers for Medicare and Medicaid Services (CMS) that will enable the commonwealth to shift Medicaid recipients into accountable care organizations (ACOs). We need permission from the feds to tackle Medicaid reform, and have had to argue with CMS to get funding for priorities that the state government thinks are important, such as directing funding to providers for the uninsured.

Under a block grant program, Massachusetts (and other states) could do as they please. In Massachusetts, I’m confident that we’d do the right thing. Frankly, under the current system I worry that the Trump Administration could decide to punish Massachusetts and our level-headed, bi-partisan oriented Governor by yanking the waiver.

I’ll go a step further and say it would also be fine for Massachusetts if the whole Affordable Care Act were repealed and not replaced. Even though Obamacare was based on Romneycare, there are enough differences that it has caused painful adjustments in the Massachusetts market that we could do without.

As long as we are exploring radical ideas, we could go a step further and establish that each state receive back from the federal government the same share as it pays in from taxes. Instead of redistributing revenues from Democratic states like Massachusetts and California to Republican ones like Mississippi and Alabama as we do now (ironic isn’t it), we could even things out. That’s kind of agains the ethos of our republic, but hey, times are changing.

In any case, while block grants and repeal of the ACA are bad ideas that will hurt the country as a whole if enacted, in Massachusetts we should be just fine.

Image courtesy of sattva at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

Reform dentistry but don’t blindly copy the medical model

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It’s always struck me as odd that the dental and medical systems are so separate. Oral health and overall health are closely interlinked, and the mouth is just as much a part of the body as anything else. A commentary in Health Affairs (The Dental-Medical Divide) by Elizabeth A. Mertz, a dental professor at UCSF does a good job of laying out the current state and what to expect going forward. While I learned from the article and agree with many of the conclusions, I do think it’s important that dentistry continue to deviate in some ways from the path followed by the medical profession.

Dentists started as barber/surgeons, and when medical education was organized in the 19th century, dentistry was left out. As dentists started to organize themselves, they naturally built up their own, strong organizations that served their interests and perpetuated the status quo. There was no particular pressure (or even opportunity) to integrate with the medical realm, so the separation has persisted.

On the insurance side, there are also some fundamental differences between the medical and dental fields. In medicine, traditional models of insurance make more sense, because there is a need to insure against very high cost, relatively rare events. In dentistry, most of the costs are for routine, preventive care that should not be financially ruinous. Almost everyone has caries (decay/cavities) and about half of adults have periodontal disease, so there’s not a huge pool of healthy people. And at the time Medicare came into existence, it was typical to lose one’s teeth before old age rolled around, so there was less urgency for dental coverage.

Mertz proposes and predicts a number of changes in dentistry that will bring it more into line with the medical profession and which she expects will address some of the current problems. These problems include wide disparities in care and health status, uneven (and unmeasurable) quality, high costs, and lack of accountability. These are all good things to go after, and there is a lot to learn from the transformation to evidence based medicine, coordinated care, and new payment models.

But wait a minute. In the un-reformed world I am a lot more satisfied with my dental practice (Dr. Daniel Whiteman in Brookline, MA –highly recommended) than my physician offices. So before we push dentists all the way down the doctor path let’s consider some of the shortcomings of healthcare delivery system restructuring and try to learn from them in dentistry. I’m thinking of problems like:

  • Too many top-down mandates, like meaningful use –that help achieve uniformity but stifle flexibility and innovation while being costly to implement
  • Consolidation of practices and vertical integration with hospitals –which can hurt service and drive up costs
  • Reduction in autonomy and introduction of inappropriate incentives, which can take the joy out of practice

Here are my hopes for what reform of the dental profession will achieve:

  • Preservation of the viability of the solo practice model. I don’t want to go to an office with a bunch of providers and administrators who don’t know me
  • Keeping dentistry patient focused. I feel like a respected customer –as well as a patient—when I go to the dentist. Partly it’s because I’m responsible for much of the bill, and also because I have free choice of where I get my care
  • A new model of insurance that pays for the big ticket items while providing negotiated discounts for routine care; care that I will pay for myself
  • Encouragement of innovative approaches and technologies that improve outcomes, cost and convenience. UltraTooth –which I plan to cover soon– is one such example
  • Greater involvement in oversight by people who are knowledgeable but committed to progress, rather than the status quo. For example, the professional societies appear to be slowing the acceptance of LANAP, a laser-based alternative to traditional periodontal surgery

What are you hoping for in dentistry? Leave a comment, reply on Twitter @HealthBizBlog or send me a note.

By healthcare business consultant David E. Williams, president of Health Business Group.