The New Health Care System

I have a piece about Medicare spending today on the Web site of the Center for Public Integrity, a nonpartisan investigative journalism organization. It’s the setup for an investigative series that will look at where Medicare is spending its money, and my piece looks at why we should care. (Answer: because its costs are going up so fast that we’re not going to be able to afford  it.)

It’s very hard to write a story like this without sounding like an anti-Medicare screed. I’m hoping the piece strikes the right balance, and that readers will get the point: Medicare has saved millions of people from hardship, it has to continue, but it can’t go on the way it’s going. Some of the issues are unique to Medicare, but for the most part, spending is rising too much for the same reasons all health care spending is rising too much.

Of course, bringing down spending in the right way — cutting out the fat, without hurting people along the way — is the biggest challenge of our time. The book covers the changes that the new law will make to Medicare (Chapter 9) and some of the experiments that will try to bring down health care costs (Chapter 14), but this piece should tie some of those themes together and explain why we’ll all have to have a grown-up conversation about what we can and can’t afford.

Take a look and let me know what you think. Nicely, of course.

Today is the day when several of the earliest, and most popular, patient protections go into effect. Health insurers won’t be able to turn down children with pre-existing conditions, and young adults up to age 26 will be able to stay on their parents’ health plans. If you get health insurance on your own, they won’t be able to limit how much they’ll pay in benefits over your lifetime, and they won’t be able to limit your annual benefits to less than $750,000 a year. And they won’t be able to cancel your coverage unless you have committed fraud or haven’t paid your premiums. (The complete list is in Chapter 8, “While You’re Waiting … “)

So what’s the catch? For one thing, a lot of people won’t see the changes right away. For most of them, you might have to wait until your new health plan year begins. The other issue, unfortunately, is that some health insurers have been raising their premiums and blaming it on the law. Health and Human Services Secretary Kathleen Sebelius recently scolded the health insurance companies for doing this, saying these early protections shouldn’t be that expensive to cover.

In the book, I focused a lot on what would happen to health insurance premiums in the long term. The Congressional Budget Office — which does all the cost estimates for the legislation Congress passes — decided the law shouldn’t raise premiums that much, especially since it would be expanding coverage at the same time and bringing in healthy people to stabilize the prices. Unfortunately, that prediction looked at the long term, not the short term. Right now, there are some new benefits that everyone will have to have, and there is no expansion of coverage to cover those costs.

Still, the administration and top Democrats in Congress insist that these are not expensive protections. Two of the Senate’s leading Democrats on health care — Max Baucus of Montana and Jay Rockefeller of West Virginia — warned insurers that they should explain why their estimates of the costs are so much higher than everyone else’s. These early protections, they said, shouldn’t raise premiums more than 1 to 2 percent.

Most likely, what’s happening is that health insurance premiums are going up anyway — because they always do — and the law might be raising them a bit more. So the insurers are putting as much blame as they can on the law, and that’s the message everyone hears. Still, if you were hoping the law would give you some relief from rising premiums, this will be a disappointment. The law will give you more secure coverage without so many gaps, but it’s hard to do that and bring costs down at the same time.

The new law is going to try a lot of ways to cut health care spending, since there’s a lot of waste and that is part of the reason why health insurance is so ridiculously expensive. The book talks about these experiments in Chapter 14, “How They’ll Cut Costs.” But we’re already seeing how quickly the most promising ideas can get killed by political pressure.

The Boston Globe looks at what happened when Massachusetts political leaders proposed changing the way doctors and hospitals get paid (h/t Shots blog). Instead of getting a payment every time they do a test or procedure, they would get a single payment for each patient that would cover all of the patient’s care for a year. That’s called a “global payment,” and it is similar to some of the ideas that will be tried out under the new law so doctors and hospitals don’t give us more medical care than we need.

What happened, as you might have guessed, is that the idea got completely bogged down in political disagreements. People are arguing over how much freedom patients should still have to choose the doctors and hospitals they want, how much power a new board should have to set the payments, and how much money hospitals should get to help them improve their care. So the idea is off for the rest of this year.

It’s not a good sign. Massachusetts already blazed a trail for the rest of the nation by expanding health coverage with a system that’s something like the new law. But it never got its costs under control, and now its attempts to do that are not going well.

This may be the biggest long-term challenge of the new law. It will make a lot of changes to help people get health coverage, but if it doesn’t bring down health care spending as well, our coverage will just keep getting more and more expensive. The experiments in the coming years will have to find the right way to do that, without hurting patients or putting doctors and hospitals out of business. But it won’t help anybody if we keep overspending on health care just because no one could figure out how to fight through the political pressure.