{"id":3387,"date":"2015-04-06T07:30:55","date_gmt":"2015-04-06T11:30:55","guid":{"rendered":"http:\/\/www.dougsbriefcase.com\/blog\/?p=3387"},"modified":"2015-04-09T08:46:17","modified_gmt":"2015-04-09T12:46:17","slug":"the-gops-gift-to-henry-waxman-part-i","status":"publish","type":"post","link":"https:\/\/www.dougsbriefcase.com\/blog\/the-gops-gift-to-henry-waxman-part-i\/","title":{"rendered":"The GOP\u2019s Gift To Henry Waxman \u2014 Part I"},"content":{"rendered":"
\"Nancy<\/a>

Nan\u00adcy Pelosi (D\u2011CA<\/span>) and House Speak\u00ader John Boehn\u00ader (R\u2011OH<\/span>) took a bow when the House passed a $141 bil\u00adlion health care bill. But Hen\u00adry Wax\u00adman deserves the cred\u00adit. [Cred\u00adit: Politico]<\/p><\/div>\n

\u201c<\/span>What a way to cel\u00ade\u00adbrate a birth\u00adday!\u201d  \u2013 House Minor\u00adi\u00adty Leader Nan\u00adcy Pelosi<\/a> (D\u2011CA<\/span>) after the House passed <\/em>bipar\u00adti\u00adsan health care legislation<\/em><\/p>\n

Sor\u00adry, Nan\u00adcy.  It\u2019s not about you.<\/p>\n

The $141 bil\u00adlion<\/a> health care bill that cleared the House last month and that is expect\u00aded to win Sen\u00adate approval next week is a trib\u00adute from the GOP<\/span>-con\u00adtrolled Con\u00adgress to for\u00admer Con\u00adgress\u00adman Hen\u00adry Wax\u00adman, a man who worked tire\u00adless\u00adly \u2013 and with great suc\u00adcess \u2013 to expand health care-relat\u00aded wel\u00adfare spending.<\/p>\n

Because the mea\u00adsure deals pre\u00addom\u00adi\u00adnant\u00adly with Medicare, most have over\u00adlooked its near\u00adly $30 bil\u00adlion hike in social wel\u00adfare out\u00adlays.  The bill (H.R. 2<\/a>)  increas\u00ades Medicare pay\u00adments to physi\u00adcians, large\u00adly by replac\u00ading one com\u00adpli\u00adcat\u00aded and flawed for\u00admu\u00adla with anoth\u00ader.  It directs the army of bureau\u00adcrats who pop\u00adu\u00adlate CMS<\/span> cube farms to sol\u00addier on with their futile, half-cen\u00adtu\u00adry-long quest to imple\u00adment a work\u00adable sys\u00adtem of admin\u00adis\u00adtered pricing.<\/p>\n

Dur\u00ading its first 27 years, Medicare paid physi\u00adcians \u201crea\u00adson\u00adable\u201d fees for their ser\u00advices, as deter\u00admined by the CMS<\/span> bureau\u00adcra\u00adcy based on a process that took into account both \u201ccus\u00adtom\u00adary\u201d and \u201cpre\u00advail\u00ading\u201d reim\u00adburse\u00adment rates.  The sys\u00adtem rest\u00aded on the mis\u00adguid\u00aded assump\u00adtion that the gov\u00adern\u00adment could mim\u00adic mar\u00adket prices with\u00adout dis\u00adtort\u00ading mar\u00adkets.  Medicare pay\u00adments to physi\u00adcians grew spec\u00adtac\u00adu\u00adlar\u00adly and over\u00adall health spend\u00ading as a per\u00adcent of GDP<\/span> more than dou\u00adbled<\/a>.<\/p>\n

In 1989, Con\u00adgress con\u00adjured a new pay\u00adment sys\u00adtem<\/a> based on the work of a very smart econ\u00ado\u00admist by the name of William C. Hsaio.  Hsaio taught at Har\u00advard(!) and used a com\u00adput\u00ader(!) to devise a for\u00admu\u00adla that pre\u00adcise\u00adly cal\u00adcu\u00adlat\u00aded what Medicare should pay a physi\u00adcian for each of the thou\u00adsands of ser\u00advices he or she might per\u00adform \u2013 from throat swabs to heart and lung trans\u00adplants \u2013 based on the \u201crel\u00ada\u00adtive val\u00adue\u201d of each ser\u00advice.  Hsaio\u2019s com\u00adput\u00ader had them all (actu\u00adal\u00adly 1,400 of the even\u00adtu\u00adal 7,500 cat\u00ade\u00adgories of ser\u00advices) by the time Con\u00adgress passed the law in 1989.<\/p>\n

But, alas, Hsaio\u2019s exquis\u00adite resource-based rel\u00ada\u00adtive val\u00adue sched\u00adule (RBRVS<\/span>) didn\u2019t arrest the rise in Medicare pay\u00adments to doc\u00adtors.  Physi\u00adcians, many of whom turned out to be almost as smart as Hsaio, acquired com\u00adput\u00aders of their own that helped them devise cod\u00ading strate\u00adgies that fat\u00adtened their Medicare reimbursements.<\/p>\n

So Con\u00adgress in 1997 came up with the \u201csus\u00adtain\u00adable growth rate\u201d (SGR<\/span>) method\u00adol\u00ado\u00adgy, which served as a cap on Medicare pay\u00adments to doc\u00adtors.  If aggre\u00adgate Medicare physi\u00adcian pay\u00adments exceed\u00aded the SGR<\/span> cap one year, CMS<\/span> would make an across-the-board cut in the RBRVS<\/span> fee sched\u00adule the fol\u00adlow\u00ading year.  Thus would growth in those pay\u00adments be ren\u00addered sustainable.<\/p>\n

SGR<\/span>, how\u00adev\u00ader, proved polit\u00adi\u00adcal\u00adly unsus\u00adtain\u00adable.  Con\u00adgress\u00ades and Pres\u00adi\u00addents of both par\u00adties refused to let the sched\u00aduled cuts take effect.   Thus devel\u00adoped the Con\u00adgres\u00adsion\u00adal rit\u00adu\u00adal of wait\u00ading until the last minute (and some\u00adtimes longer) before adopt\u00ading a \u201cdoc fix\u201d \u2013 leg\u00adis\u00adla\u00adtion that would pre\u00advent cuts from occur\u00adring, but only on a tem\u00adpo\u00adrary basis.  Con\u00adgress has enact\u00aded 17 such leg\u00adisla\u00adtive patch\u00ades since the ear\u00adly 2000s.<\/p>\n

Mem\u00adbers of both par\u00adties pro\u00adfessed to detest this rit\u00adu\u00adal and vowed to scut\u00adtle the hat\u00aded SGR<\/span>.  The House bill does so, replac\u00ading the RBRVS<\/span>\/SGR<\/span> sys\u00adtem with one that is more com\u00adpli\u00adcat\u00aded, more expen\u00adsive, and equal\u00adly quixot\u00adic, mis\u00adguid\u00aded and unworkable.<\/p>\n

The bill\u2019s authors con\u00adtend<\/a> that the mea\u00adsure would \u201creplace the SGR<\/span> for\u00admu\u00adla with a sta\u00adble pay\u00adment sys\u00adtem that pro\u00admotes high\u00ader qual\u00adi\u00adty of care for seniors.\u201d   Actu\u00adal\u00adly, it would instate two com\u00adplex method\u00adolo\u00adgies \u2014 a \u201cmer\u00adit-based pay\u00adment sys\u00adtem\u201d (MIPS<\/span>) and an \u201calter\u00adna\u00adtive pay\u00adment mod\u00adel\u201d (APM<\/span>) \u2013 which would exist side-by-side, both requir\u00ading adher\u00adence to gov\u00adern\u00adment-devised \u201cclin\u00adi\u00adcal prac\u00adtice improve\u00adment activities.\u201d<\/p>\n

The new pay\u00adment for\u00admu\u00adla will be launched in 2019 and ful\u00adly phased in begin\u00adning in 2026.  In the event I\u2019m not around to say \u201cI told you so,\u201d I\u2019ll say it now: this lat\u00adest gov\u00adern\u00adment for\u00aday into admin\u00adis\u00adtered pric\u00ading will be no more sta\u00adble, no more cost-effi\u00adcient and no more con\u00adducive to qual\u00adi\u00adty than the three that pre\u00adced\u00aded it.<\/p>\n

No cen\u00adtral\u00adized price-set\u00adting sys\u00adtem, despite the genius of its archi\u00adtects and the ele\u00adgance of its algo\u00adrithms, can sub\u00adsti\u00adtute for mar\u00adkets. The only Medicare reform worth doing is one that would get the gov\u00adern\u00adment out of the price-set\u00adting busi\u00adness.  Medicare should be trans\u00adformed from a defined ben\u00ade\u00adfit pro\u00adgram, in which the gov\u00adern\u00adment dic\u00adtates reim\u00adburse\u00adment rates, to a defined con\u00adtri\u00adbu\u00adtion pro\u00adgram, like Medicare drug cov\u00ader\u00adage.  In that pro\u00adgram, the gov\u00adern\u00adment sub\u00adsi\u00addizes pri\u00advate insur\u00adance cov\u00ader\u00adage at an estab\u00adlished lev\u00adel, leav\u00ading insur\u00aders to nego\u00adti\u00adate prices, design poli\u00adcies, estab\u00adlish pre\u00admi\u00adums and com\u00adpete for customers.<\/p>\n

Nev\u00ader\u00adthe\u00adless, the very prospect of physi\u00adcian pay\u00adment \u201creform\u201d made law\u00admak\u00aders tin\u00adgle with bipar\u00adti\u00adsan ecsta\u00adsy.  The new pay\u00adment system\u2019s sheer com\u00adplex\u00adi\u00adty \u2013 it\u2019s even more inscrutable than the one devised by the estimable Pro\u00adfes\u00adsor Hsaio \u2013 evi\u00addent\u00adly con\u00advinced law\u00admak\u00aders that some very smart peo\u00adple had at last out\u00adsmart\u00aded mar\u00adkets (and doc\u00adtors).  The frac\u00adtious House passed the mea\u00adsure with 392 votes<\/a>,<\/span> con\u00adfin\u00ading oppo\u00adsi\u00adtion to just 37 troglodytes.  A sim\u00adi\u00adlar\u00adly big vote is expect\u00aded next week in the Senate.<\/p>\n

Repub\u00adli\u00adcans jus\u00adti\u00adfy their sup\u00adport for the mea\u00adsure by not\u00ading that it would increase Medicare pre\u00admi\u00adums paid by seniors with income in excess of $133,500 ($267,000 for cou\u00adples) and place cer\u00adtain restric\u00adtions on Medi\u00adgap cov\u00ader\u00adage, pri\u00advate insur\u00adance that cov\u00aders some or all of Medicare deductibles and coin\u00adsur\u00adance.  Begin\u00adning in 2020, it will be ille\u00adgal for insur\u00aders to issue new cus\u00adtomers Medi\u00adgap poli\u00adcies that cov\u00ader Medicare deductibles.  (Exist\u00ading cov\u00ader\u00adage, how\u00adev\u00ader, can be renewed.)<\/p>\n

Mrs. Pelosi spun these two pro\u00advi\u00adsions as enor\u00admous con\u00adces\u00adsions to Repub\u00adli\u00adcan sen\u00adsi\u00adbil\u00adi\u00adties.  Demo\u00adc\u00adra\u00adt\u00adic class war\u00adriors grieve that Repub\u00adli\u00adcans would require the wealth\u00adi\u00adest seniors to pay more for their Medicare.  They demand\u00aded some\u00adthing in return for acqui\u00adesc\u00ading in this GOP<\/span> soak-the-rich proposal.<\/p>\n

Their quid pro quo came in pro\u00advi\u00adsions that enlarge pro\u00adgrams that for\u00admer Con\u00adgress\u00adman Wax\u00adman cham\u00adpi\u00adoned dur\u00ading his tenure: expand\u00ading Med\u00adic\u00adaid, reau\u00adtho\u00adriz\u00ading CHIP<\/span>, show\u00ader\u00ading com\u00admu\u00adni\u00adty health cen\u00adters with more mon\u00adey and dou\u00adbling fund\u00ading for pro\u00adgrams that enroll chil\u00addren (and their par\u00adents) in Med\u00adic\u00adaid, CHIP<\/span> and Oba\u00admacare.  Togeth\u00ader, these changes will increase fed\u00ader\u00adal wel\u00adfare spend\u00ading over the next 10 years by near\u00adly $30 bil\u00adlion, not quite enough to ful\u00adly off\u00adset the esti\u00admat\u00aded $34 bil\u00adlion that wealthy seniors will pay in high\u00ader pre\u00admi\u00adums, but enough to win the sup\u00adport of House Democrats.<\/p>\n

Of course, that social wel\u00adfare spend\u00ading, unlike the pre\u00admi\u00adum increas\u00ades and Medi\u00adgap reform, is front-loaded.  Through 2017, the addi\u00adtion\u00adal spend\u00ading on CHIP<\/span>, com\u00admu\u00adni\u00adty health cen\u00adters and Med\u00adic\u00adaid expan\u00adsions will total $12.2.  Pre\u00admi\u00adums on high\u00ader income seniors won\u2019t take effect until 2018.  Before then, Democ\u00adrats will demand anoth\u00ader increase in social wel\u00adfare spend\u00ading.  And Repub\u00adli\u00adcans will go along.<\/p>\n

They always do. (More on that here<\/a>.)  But in this case, their con\u00adces\u00adsions have come in exchange for lit\u00adtle (the illu\u00adsion of Medicare \u201creform\u201d) and were made with lit\u00adtle reflection.<\/p>\n

Con\u00adsid\u00ader CHIP<\/span> autho\u00adriza\u00adtion.  CHIP<\/span> was passed in 1997 as a con\u00adso\u00adla\u00adtion prize to Hen\u00adry Wax\u00adman and Ted Kennedy after Hillary Care had crashed and burned and Pres\u00adi\u00addent Clin\u00adton had capit\u00adu\u00adlat\u00aded to Speak\u00ader Gin\u00adgrich by sign\u00ading wel\u00adfare reform and nego\u00adti\u00adat\u00ading enti\u00adtle\u00adment spend\u00ading curbs.  Lib\u00ader\u00adals want\u00aded some\u00adthing they could point to in what became known as the Bal\u00adanced Bud\u00adget Act of 1997, one of the few pieces of leg\u00adis\u00adla\u00adtion that lived up to its name.   (The fed\u00ader\u00adal gov\u00adern\u00adment ran four years of sur\u00adplus\u00ades after its enact\u00adment, in part the result of the law\u2019s restraints on enti\u00adtle\u00adment spend\u00ading growth.)<\/p>\n

Since CHIP\u2019s enact\u00adment, we have seen the imple\u00admen\u00adta\u00adtion of Oba\u00admacare, a glo\u00adri\u00adfied Med\u00adic\u00adaid expan\u00adsion that pri\u00admar\u00adi\u00adly ben\u00ade\u00adfits house\u00adholds with incomes less than 200 per\u00adcent of FPL<\/span><\/a>.   It is dif\u00adfi\u00adcult to under\u00adstand why the CHIP<\/span> pro\u00adgram is still need\u00aded.  Even the heav\u00adi\u00adly-Demo\u00adc\u00adra\u00adt\u00adic Con\u00adgress that cre\u00adat\u00aded Oba\u00admacare allowed it to expire in Octo\u00adber of this year, and it is rea\u00adson\u00adable to assume the new law\u2019s imple\u00admen\u00adta\u00adtion has ren\u00addered the old one redundant.<\/p>\n

As CBO<\/span><\/a> notes in its analy\u00adsis, \u201cmost of the peo\u00adple who would receive cov\u00ader\u00adage through CHIP<\/span> as a result of enact\u00ading HR<\/span> 2 would oth\u00ader\u00adwise have received cov\u00ader\u00adage\u201d through anoth\u00ader source.  CBO<\/span> lists Med\u00adic\u00adaid, Oba\u00admacare and employ\u00ader-spon\u00adsored insur\u00adance as among those oth\u00ader sources.<\/p>\n

So the most Repub\u00adli\u00adcan Con\u00adgress since the 1920s has approved tens of bil\u00adlions of dol\u00adlars in new spend\u00ading, not to cov\u00ader more unin\u00adsured chil\u00addren, but to allow state bureau\u00adcrats to enroll already-insured chil\u00addren in the pro\u00adgram that lever\u00adages the most fed\u00ader\u00adal dollars.<\/p>\n

The pro\u00adgrams Wax\u00adman cham\u00adpi\u00adoned have become so warm\u00adly embraced by Repub\u00adli\u00adcans that they reflex\u00adive\u00adly reau\u00adtho\u00adrize them with bare\u00adly a moment\u2019s thought to their neces\u00adsi\u00adty or cost.<\/p>\n

Con\u00adgrat\u00adu\u00adla\u00adtions, Hen\u00adry.  This one\u2019s for you.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201c<\/span>What a way to cel\u00ade\u00adbrate a birth\u00adday!\u201d  \u2013 House Minor\u00adi\u00adty Leader Nan\u00adcy Pelosi (D\u2011CA<\/span>) after the House passed bipar\u00adti\u00adsan health care leg\u00adis\u00adla\u00adtion Sor\u00adry, Nan\u00adcy.  It\u2019s not about you. The $141 bil\u00adlion health care bill that cleared the House last month and \u2026 Con\u00adtin\u00adue read\u00ading \u2192<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":3393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","wp_typography_post_enhancements_disabled":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"nfd_image_url":"","nfd_onboarding_generated":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[479,375,17,16,60,35,124,552],"tags":[1133,1129,1184,855,1183,1134,197,1188,1131,1130,1132],"class_list":["post-3387","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget","category-congress","category-entitlements","category-health-care","category-medicaid","category-medicare","category-obamacare","category-welfare-spending","tag-doc-fix","tag-henry-waxman","tag-medicaid","tag-medicaid-expansion","tag-medicare","tag-medigap","tag-nancy-pelosi","tag-obamacare","tag-rbrvs","tag-sgr","tag-william-hsiao"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t