David Leonhardt on what should change in the House health care proposal

Over at the NYT, David Leonhardt has an interesting column on what could - and should - change in the health insurance reform bill. A few of his ideas:

THE EASY STUFF Each year, about 100,000 people die from preventable infections they contract in a hospital. When 108 hospitals in Michigan instituted a simple process to prevent some of these infections, it nearly eliminated them.

If Medicare reduced payments for the treatment of such infections, it would give hospitals a huge financial incentive to prevent them. The Senate bill takes a small step in this direction by cutting payments to hospitals with high infection rates by 1 percent. The House bill merely requires hospitals to report their rates publicly. There are also other basic patient safety areas in which the bills can do much better.

WHAT WORKS? Earlier this year, I used prostate cancer as an example of how our fee-for-service medical system leads to higher costs and worse outcomes. There are a handful of possible treatments for early-stage prostate cancer, and the fastest-growing are the most expensive. But no one knows which ones work best.

Modern medicine is full of such uncertainty. Again, the federal government could make a big difference here by giving Medicare a moderate amount of money for research, which would pay for itself many times over. The stimulus bill began paying for such research, but the health reform bills fail to pick up where the stimulus leaves off.

A FED FOR HEALTH Twice a year, an outside advisory board sends Congress a list of suggestions for Medicare payment rates, based on the available evidence. Congress generally ignores them, in deference to the various industry groups that oppose any cuts to their payments.

We already have a wonderful model for how to avoid such interference. It’s called the Federal Reserve. The Fed is charged with setting interest rates based on economic conditions, not politics. The Senate bill would create such a commission for Medicare. Unfortunately, it initially applies to doctors and home health care providers but not hospitals, thanks to a deal between the hospitals and the White House. It expands to include everyone in 2019. The House bill has no such commission.

Whether one ends up in the final bill will be a good test of Mr. Obama’s endgame leadership.



THE MCALLEN PROBLEM Both bills would create some promising voluntary programs meant to reward doctors and hospitals that provide good care rather than more care. But the doctors and hospitals providing the most expensive, wasteful care — like those in McAllen, Tex., described by Dr. Atul Gawande in a recent New Yorker article — surely will not sign up for these programs.

And the language in the current bills suggests that Medicare officials cannot make the programs mandatory without new legislation from Congress, which is an invitation for lobbying from places like McAllen. Giving Medicare the authority to expand even a single successful program would be a big improvement.

CHOICE Last week, the Democratic leaders in Congress sent out another e-mail message bragging that for people who didn’t like their insurance, health reform would provide “affordable choices for you that can’t be taken away.” That isn’t true. The bills would do nothing to expand the choices of people with employer-provided insurance.

Senator Ron Wyden, an Oregon Democrat, has been obsessively trying to change this — to give even a small slice of people with the most expensive employer plans a chance to buy insurance on the exchange for small businesses and the uninsured. It’s not yet clear if he will succeed.

THE CADILLAC TAX Along with the Medicare commission, this tax is the biggest single difference between the Senate and House versions. Right now, health insurance — unlike income — is not taxed, effectively creating a subsidy for the costliest plans and health care providers. Labor leaders have helped persuade the House to keep the tax exclusion intact, largely because many of the most generous insurance plans are heldby older unionized workers, who, in turn, have a lot of influence in their unions.

But the tax exclusion is terribly costly for the rest of us. If it were to disappear, employers would have an incentive to sign up for well-run insurance plans, leaving more money available for workers’ salaries. If the Senate’s tax on so-called Cadillac plans were enacted, the average household would be making an additional $1,000 every year (in today’s dollars) by 2019, according to an analysis of Congressional estimates by Mr. Gruber. In my house, $1,000 a year counts as real money.