Weekend edition: How not to argue about health policy

The Physicians for a National Health Program (PNHP) recently released a petition signed by 2,400 doctors. The letter protests the Institute of Medicine’s recommendations on Essential Benefits under the Affordable Care Act.

There are serious issues here. Progressive supporters of health reform disagree about how expansive the essential health benefit (EHB) should really be. An overly restrictive design will leave important therapies uncovered, as happens every day across America. Yet a package designed with too little emphasis on cost (either because too many marginal services are covered, or because prices grow too fast) would be disastrous. This will prove too costly, and thus unsustainable as a platform for near-universal coverage.

There’s no magic formula to balance the need for broad access to essential services with the need to maintain affordability and fiscal discipline.  Defining the EHB with due attention to clinical evidence and—yes—overall health value and cost-effectiveness, is crucial to the long-run success of health reform. This really has to work fiscally; there won’t be many second chances. I was and remain an emphatic supporter of the CLASS act now in limbo. When the actuarial numbers didn’t add up, CLASS went into the freezer, perhaps never to be thawed, because our gridlocked political process precludes sensible midcourse adjustments when the details need work….

One can reasonably disagree with the IOM’s balancing of these concerns. I’m not thrilled by the committee’s statement: “The initial EHB package should be a modification of what small employers are currently offering.” We should be careful not to freeze in place some real problems with what small employers offer. ACA addresses some of these problems, limiting out-of-pocket payments, lifetime benefit caps, and by much more stringent insurance regulation. PNHP’s signatories should read chapters 4 and 5 of the IOM report. It turns out that the profile of covered benefits and average premiums are surprisingly similar across the different sizes of employers. (See e.g. Table 5.6 of the report.)

Are there serious problems with the health plans that small employers can or do choose to offer? Absolutely, but the most serious problems are outside the scope of this EHB fight. Many are addressed in hundreds of pages of crafted language of the ACA.

The Committee attracted particular controversy with this blunt assessment:

Defining a premium target, which is a way to address the affordability issue, became a central tenet of the committee. Why the Secretary should take cost into account, both in defining the initial EHB package and in updating it, is straightforward: if cost is not taken into account, the EHB package becomes increasingly expensive, and individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA—enabling people to purchase health insurance, and covering more of the population—will not be met. At an even more fundamental level, health benefits are a resource and no resource is unlimited. Defining a premium target in conjunction with developing the EHB package simply acknowledges this fundamental reality. How to take cost into account became a major task. The committee’s solution in the determination of the initial EHB package is to tie the package to what small employers would have paid, on average, for their current packages of benefits in 2014, the first year the ACA will apply to insurance purchases in and out of the exchanges. This “premium target” should be updated annually, based on medical inflation. Since, however, this does little to stem health care cost increases, and since the committee did not believe the DHHS Secretary had the authority to mandate premium (or other cost) targets, the committee recommends a concerted and expeditious attempt by all stakeholders to address the problem of health care cost inflation.

Leaving aside the charmingly hortatory final sentence, this is an admirably clear-minded assessment of a main health policy dilemma. It is particularly germane to our current political and fiscal environment. The urgent initial task in health reform is to stand-up the new health insurance exchanges and ACA’s other main pillars in a tough political and fiscal environment. This will improve the lives of millions of people, while becoming an organic component of American life that can never be taken away.

The implementation challenges are immense., and all this must happen within an adverse political environment in which important benefits for millions of people may be squeezed as the federal government seeks to address its long-term fiscal issues.

One thing is clear. The IOM’s work deserves to be taken seriously. PNHP concludes its letter with the following:

The IOM committee was riddled with conflicts of interest, many members having amassed personal wealth through their involvement with health insurers and other for-profit health care firms. Its recommendations were lauded by insurance industry leaders who have sought to undermine real health reform at every turn. As the Lancet noted on its Dec. 5, 2009, cover: “Corporate influence renders the U.S. government incapable of making policy on the basis of evidence and the public interest.”

Sadly, the committee’s damaging recommendations suggest that this corporate bug has also infected the IOM.

I believe that is unfair. The IOM committee included representatives from many affected economic stakeholders. This seems both wise and credible when one contemplates a large reform of our $2.6 trillion medical economy. The IOM’s list of witnesses and reviewers includes many prominent liberals in health policy.

In denigrating the professionalism of a particularly substantial and valuable, though surely imperfect IOM report, PNHP ironically strengthens special interests across the spectrum who would diminish the standing of expert bodies such as IOM that provide a genuine counterweight to corporate and interest-group influence that have so damaged American health policy.

One can make a principled decision to withdraw from the incremental politics of American health policy. I understand why single-payer advocates are tempted to take this course. Most do so with greater awareness of the attendant tensions and costs. PNHP was a sideline, not always very civil participant in the political fight to enact and preserve health care reform. Indeed its leaders denigrate important provisions of ACA that expand access for 32 million people and protect millions against catastrophic financial risks. I wish the group would talk and act rather differently in this debate. (HAP)

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