Health care debate in Congress: Minnesota delegation unites in opposing funding plan

President Obama answers a question during his Wednesday news conference.
REUTERS/Jim Young
President Obama answers a question during his Wednesday news conference.

WASHINGTON, D.C. — When it comes to the complexities of health care reform, there are few issues that Minnesota’s politically diverse congressional delegation can agree on. But changing the Medicare system to reward quality, as opposed to the number of tests, happens to be one of them.

In a strongly worded letter sent to President Obama on Wednesday afternoon, all of the North Star state’s representatives and senators banded together to broadcast this message: Minnesota’s national status as a high-quality, underpaid state is “no longer tolerable.”

“Furthermore, any public insurance option that is based on Medicare’s current reimbursement formula would only further penalize Minnesota and undermine the very success our state has attained in delivering efficient, quality care,” the letter stated. “Please know that we view any health care reform legislation that perpetuates or extends the current inequity in Medicare as harming Minnesota’s health care system which is obviously unacceptable to us and our constituents.”

The geographic inequities in Medicare payments sprung from a formula that was based on the historic cost of health care services. The result has been that states that provide fewer health care services — like Minnesota, Wisconsin, North Dakota and Washington — receive less money. Meanwhile, states that provide a greater volume of health care services — like Florida, New York, and Texas — receive reimbursements that can be more than double those paid to other states.

This would be fine if the greater volume of health care services actually equaled better outcomes and quality of care. But research by the Dartmouth Institute for Health Policy and Clinical Practice over the last 10 years has shown that is not the case.

“The findings are remarkably consistent,” the Dartmouth Atlas Project reported recently. “Higher spending does not result in better care, whether one looks at the technical quality and reliability of hospital or ambulatory care, or survival following such serious conditions as a heart attack or hip fracture.”

Minnesota, for instance, has consistently ranked as one of the top states in the country for providing quality health care. Yet, according to Dartmouth Atlas data from 2006, its Medicare spending was 21 percent below the national average.

In 2006, the Medicare spending per enrollee was $6,600 in Minnesota compared to $9,564 in New York and $9,379 in Florida, which were 15 percent and 13 percent above the national average, respectively.

Across the country, providers have long struggled to make do with Medicare payments, which are 20 to 30 percent lower than private insurance payments. But high quality states like Minnesota argue that their reimbursement rate should be increased because of the service they provide.

Future problems

“If we continue to reimburse [highly] for those that provide the least efficient care, we are going to create a system that the country can’t afford,” said Jeff Korsmo, the executive director of the Mayo Clinic Health Policy Center. “And I worry that some Medicare patients won’t get access to care.”

At the Mayo Clinic, one of the best health care organizations in the world, the total Medicare reimbursements resulted in an $800 million loss in 2008, according to Korsmo.

Making matters worse, the House health care bill calls for about $500 billion in Medicare and Medicaid cuts over 10 years to help pay for insuring an additional 46 million Americans.

More cuts in Medicare could result in more Minnesota doctors reducing the number of Medicare patients that they see.

The public insurance plan that is offered in the House bill could also prove problematic on this front. Currently, it employs the Medicare payment system with only a 10 percent boost in payments.

“We are concerned that if we move forward, as we should, to insure everybody, that we will be bringing millions more people into a health care system that is not delivering on value, and is frankly contributing to the financial mess of our country,” said Korsmo, who emphasized that the Mayo Clinic was still supportive of health care reform and optimistic about the government’s ability to include quality of care as a factor in reimbursements.

The House bill, which is still being worked out in committee, currently attempts to address this issue by creating bonus payments for states that provide high quality care at low costs and implementing a comprehensive study to provide suggestions on revising the payment system.

But for Minnesota lawmakers these measures do not go far enough and do not recognize the fundamental problem, which is that quality should be driving the country’s health care system.

 “Another study is just procrastination, we don’t need to study this,” said Rep. Betty McCollum, D-Minn., who has led the rally in the House to include an index in the bill that would reward quality and efficiency of care. “We know that the current system is broken.”

The so-called “value index” has been pushed and shaped by about 20 representatives from low-cost states and providers like the Mayo Clinic. It would essentially make “quality” the driving factor in determining reimbursement rates. In general, the quality measures would reflect health outcomes and the health status of the Medicare population, patient safety and patient satisfaction.

 “This is fundamental reform,” said Rep. Tim Walz, D-Minn., who represents southern Minnesota, including the Rochester area. “This isn’t a ‘nice to have.’ This isn’t ‘we’re not getting ours.’ The problem is that we’re saying is, we have a limited number of dollars to spend on health care; let’s spend them wisely.” 

Changes expected to be proposed

An amendment to include a value index is expected to be offered either Friday or early next week in the House Energy and Commerce Committee. Although political momentum in Congress and the White House has been building behind the use of stronger quality measures, lawmakers were still uncertain whether a value index would ultimately be included.

The dilemma is nothing new. The politically fraught fight over Medicare reimbursements has essentially been around since the nation’s biggest health care program, which covers Americans 65 and older, was founded.

“It is a very contentious issue in the [Democratic] caucus,” Walz said. “The big conflict is that there is a belief among some members in the high reimbursements states that this isn’t a fundamental problem.”

In other words, states that benefit from the current funding model may not be so quick to scramble for change. In spite of the administration’s support of restructuring Medicare payments, this reality has prompted some pessimism among policy analysts.

“For every Iowa delegation and Minnesota delegation there is a New York delegation and a California delegation,” said Joseph Antos, a health policy expert at the conservative-leaning American Enterprise Institute. “And it is pretty much a political draw. It is hard to think that anything will be changed substantially.”

In addition, there are concerns that while the idea may be good in theory, there could be difficult ramifications from changing the decades-old model too quickly.

One possible complication is that high quality providers in high cost markets may be punished if the value index is implemented at the regional level, according to Elliot Fisher, who directs the Center for Health Policy Research at Dartmouth.

“There is a lot of risk, there is a lot of concern,” Fisher said. “So, I think we have to think through this more carefully.”

Although Fisher is in favor of changing to a system that rewards value, he said that the current quality measures that are in place are not good enough.

 “I think we know how to [measure quality], but we’re just not doing it,” Fisher said. “The measures we have in place are not good enough to justify the kinds of value-based indexes they are talking about. We need to be looking at health outcomes, we need to be looking at patient’s experience, which are not included in the current measures of quality, and we need to move from regional measures of quality to provider and organizational measures of quality.”

To do this, Fisher advocates aggressively moving forward with a set of pilots. The successes from those pilots should then be rapidly implemented, Fisher said.

This week, health care experts, the White House and Congressional leaders also reached an agreement on creating an independent Medicare advisory commission, which would seek to work out the problems with Medicare payments.

Hospital costs compared

This plan, of course, has stirred up different arguments from lawmakers who want to see Medicare payment authority remain with Congress.

Still, in his speech on health care Wednesday night, President Obama mentioned the negotiations over a potential MedPAC program.

“[We] want to create an independent group of doctors and medical experts who are empowered to eliminate waste and inefficiency in Medicare on an annual basis — a proposal that could save even more money and ensure long-term financial health for Medicare,” said Obama.

The administration has previously acknowledged that adopting models like the Mayo Clinic’s system could result in significant savings.

When looking at end-of-life care, for example, total Medicare spending per enrollee during the last two years of life was $53,432 at St. Mary’s Hospital in Rochester. For the same period, spending was $105,068 at NYU Medical Center in Manhattan and $82,816 at Mount Sinai Medical Center in Miami.  This means that had the other two hospitals performed at the level of St, Mary’s, the government would have saved $130,844,714 and $89,560,320, respectively, according to the Dartmouth Atlas.

During interviews this week, Minnesota lawmakers and the Mayo Clinic said that they are supportive and open to the creation of an independent board and to different ways of implementing a value index or incorporating quality into the equation.

Korsmo added, however, that the advisory council should be willing to move quickly to reform the Medicare payment system if a value index is ultimately not included in the bill.

“We believe there have been a lot of people gathering and studying the data and drawing conclusions about the data regarding quality and cost for many years,” Korsmo said. “Yet, we still haven’t put any of it into practice. In our experience, if you don’t start using the data, you won’t know how to improve it.”

From a political standpoint, the Minnesota delegation also sees this unique moment as a critical time for action.

“I am fearful that the political pressure of the regional differences will be too strong to overcome this if we miss this opportunity,” said Walz. “It will be hard to get the stars and momentum aligned again.”

Cynthia Dizikes covers Minnesota’s congressional delegation and reports on issues and developments in Washington, D.C. She can be reached at cdizikes[at]minnpost[dot]com.

Comments (21)

  1. Submitted by Glenn Mesaros on 07/23/2009 - 11:39 am.

    “We’re going to need some orthopedists around here to take care of the broken bones and twisted arms” of Democrats forced to vote for the bill, said Democrat Charles Melancon of Louisiana, a member of the House committee whose chairman, Henry Waxman of California, was forced to approve Orszag’s and Obama’s monster. It will cut healthcare expenditures and deny treatments like Britain’s notorious NICE board.

    After a closed session of the House Ways and Means Committee which followed the diktat from Obama, leading Democratic member Pete Stark of California, talking to Dow Jones wire, called Orszag’s national commission “stupid at best, unworkable, childish, [and] idiotic.” Waxman admitted that Ways and Means Chairman Charles Rangel (D-NY) still opposes the commission.

    Stark told a press conference that Obama’s plan would strip Congress of authority over the Medicare program, which insured 45 million elderly and disabled at a cost of $483 billion in 2007. He said doctors and hospitals were immediately barraging him with opposition. “Every major provider group is calling up saying they will oppose the bill [if it contains the national healthcare board demanded by Obama],” Stark said.

  2. Submitted by Paul Scott on 07/23/2009 - 02:46 pm.

    “This week, health care experts, the White House and Congressional leaders also reached an agreement on creating an independent Medicare advisory commission, which would seek to work out the problems with Medicare payments.”

    Could someone explain why the Minnesota delegation concerns are not entirely addressed by this action? Their protest seems to be based on old forms of the legislation.

  3. Submitted by Bernice Vetsch on 07/23/2009 - 06:30 pm.

    The “health care experts” consulted by the White House represented the insurance industry (that AARP was included means nothing, since it is mostly an insurance agency now — and the medical insurance it sells is provided by a division of United Health Care) and other health care INDUSTRY members.

    Does any other country call health care an industry? I find that title very revealing of our unfortunate worship of “the market” as the infallible provider of everything. Government really does do some things both better and cheaper, health care being a prime example.

    For further information on Medicare payment disparities, see the web site of the Medicare Justice Coalition.

  4. Submitted by Paul Scott on 07/23/2009 - 10:12 pm.

    The Medicare panel is intended to put teeth to evidence based medicine. It is about letting science dictate which treatments get paid for with tax dollars. I find it unfortunate that anyone would assume this is about giving a valentine to the insurance industry.

  5. Submitted by Joe Johnson on 07/23/2009 - 10:17 pm.

    “Worship of the market”. Damn right! The American experiment is freedom, personal responsibility, and the Founding Fathers greatest gift capitalism. America has unlike any country in history has granted the individual sole discretion personal success or failure.

    Does any other country in the world call heath care an industry? Does any other country produce the the medical advances of America, NO. It is an industry because it is 17% of our GDP. It is an industry because we provide medical devices, education, and pharmaceuticals like no other country in the world. So yes it is an industry.

    Government does do something better then the market, defend the population, build and maintain infrastructure and tax. Health care is not a right it is a responsibility thereto outside the scope of government.

    I think Thomas Paine clearly identified the issue with encroaching government.

    “A nation under a well regulated government, should permit none to remain uninstructed. It is monarchical and aristocratical government only that requires ignorance for its support.”

  6. Submitted by Bernice Vetsch on 07/23/2009 - 11:27 pm.

    Joe J: It wouldn’t be 17 percent of our GDP if we didn’t have to spend so much money to support the insurance industry’s bureaucracy.

    Supporting that bureaucracy accounts for 20-30 percent of each health care dollar (including the extra work imposed upon providers in order to cope with hundreds of different plans). Their bureaucratic control of the system gives the insurance industry to power to pay for OR DENY payment for care we and our doctors know we need. Instead of paying for health care, many of the dollars they collect in premiums are spent on advertising and in lobbying Congress for corporate-friendly legislation like the current Daschle/Baucus plan.

    Medicare, a system of publicly funded but privately provided health care, has administrative costs of only about 2 percent. There are no “networks” of providers one must use. There is no need to ask permission before seeing a specialist.

    Enacting a national publicly funded but privately delivered health care plan would do nothing to stifle capitalism. It would just recognize that health care — like police and fire protection, roads and bridges, schools and parks and playgrounds — is a common good that should benefit us all and which therefore should be supported by all.

  7. Submitted by Joe Johnson on 07/24/2009 - 07:47 am.

    BV – The private sector operates for profit and maximizes efficiencies do you really think that the government will reduce the dollars spent on bureaucracy. I think it we be the polar opposite. But the best part of this whole plan is the unintended consequence that the new government bureaucracy will be unionized. Now we enter the nexus evil by turning a functioning market based industry into a unionized function of government.

    Additionally, what happens when the plan is in place and someone is denied coverage. We will be swimming in litigation for the life of the plan.

    How do Daschle have a plan he isn’t a member of congress.

  8. Submitted by Paul Udstrand on 07/24/2009 - 09:29 am.

    Joe,

    The founding fathers didn’t invent capitalism, Adam Smith was a Scott who never even traveled to America. The constitution, which actually is a product of the founding fathers, contains no economic principles whatsoever, it is a political document, not an economic manifesto. You conservatives are supposed to be the keepers of history’s lessons, instead you so frequently pass off historical fantasy as history.

  9. Submitted by Bernice Vetsch on 07/24/2009 - 10:55 am.

    Joe J: Tom Daschle has made a fortune making speeches to groups of insurance professionals. He is not officially a lobbyist, but serves his industry friends as an “advocate.”

    He is one of the authors of the insurance plan put forth by the administration now under consideration by Congress.

    (Anti-union, too? Unions lift the boat for all workers. They have promoted fairness and opportunity for all and many died at the hands of anti-union forces that attacked organizers and members in the late 19th and early 20th centuries. They earned for all workers, not just unionized ones, a shorter workweek, higher salaries and other benefits. In our day, the anti-union forces use propaganda instead of guns and hold “educational seminars” for judges all the way to the Supreme Court, and others, to try to develop anti-labor sentiment wherever they can. Google “anti-labor.”)

  10. Submitted by Gary Lee on 07/24/2009 - 11:07 am.

    We need to keep in m ind that we are talking about two different industries here. There is the clinical care system, doctors and pharmacists and nurses and clinics and hospitals and all the rest who actually provide care. And there is the financing system, the payers, which is primarily includes the insurers, Medicare and Medicaid. These two are related to each other, but in many ways they operate separately from each other, and often at odds with each other. Real reform is going to have to address both systems. But as oithers have already mentioned, when you look at the healthcare financing industry, the overhead costs fro the private payers are 20-30%, whereas the overhead costs for the government payers are 2%. According to market principles this should not be possible, the market is always more efficient, right? When you see a market based solution which is inefficient you are seeing a market distortion. In this case the distortion seems to be caused by the way in which most private insurance is sold, which is not to individuals but to employers, and particularly to large employers. When you have a small number of sellers and a small number of buyers, you get an inefficient market. Learn your basic economics, Joe. The payers are not interested in selling you or me a policy that provides healthcare at a good price, they are interested in selling GM a policy which nets them (and the sales rep) millions in sales for one contract. That distorts the market, and that is why in this case the private market is not doing the job. The market cannot solve every problem efficiently. To keep insisting a private solution must be always be better is to ignore the clear, unambiguous, hardline evidence in front of you, which is a rather stupid way to make decisions.

  11. Submitted by Joe Johnson on 07/24/2009 - 11:58 am.

    Paul,

    Do think the political documents that were created by the founding fathers allowed for the foundation for American Capitalism by happenstance? Additionally I didn’t say that the founding fathers developed the theory of capitalism they fostered it. All of these years and classes I thought Alexander Hamilton was responsible for developing the American school of economics. Thanks for the clarity. Surely the American school of economics had nothing to do with transforming colonial capitalism to American capitalism. You libs should really think about the depth of your arguments before you call it fantasy.

    BV,

    Unions were a great thing, in the past. Today we have unionization of persons with advanced degrees, total absurd. How can anyone with an advanced degree be so inept that they cannot negotiate their own compensation and working conditions. Businesses today need to fluid to compete in a rapidly changing global market. Unions are large slow organizations that create long term fixed costs. Please find me a unionized industry that is successful.

  12. Submitted by Joe Johnson on 07/24/2009 - 02:33 pm.

    Small number of buyer and sellers. Are you in a hemp shop in uptown. Aircraft sales would be an example of small buyer and sellers. Look at the number of small businesses that shop health care every year let alone individuals. Must be more basic economics maybe even macro. Please name the insurance players that have 20-30% overhead and the reference of 2% for government. We do need uniform standards for what states required to be covered. Why should I be forced to pay for in vitro, child-development assessments, psychiatric assistance, or little blue pills. So in your GM(highly unionized bankrupt company)example employees get a uniform rate. But in reality high mandate states will spread the cost to low mandate states hurting everyone. How would any expect cost effective insurance with these ridiculous mandates. It is the equivalent requiring auto insurance to cover gas and oil changes.

  13. Submitted by Bernice Vetsch on 07/24/2009 - 03:39 pm.

    Joe: Private insurers’ overhead includes marketing/advertising, HUGE amounts spent on lobbying at the federal and state levels, those really big bonuses for executives, and the two million-plus specially trained claims deniers who save them from paying so many claims policy holders thought they had purchased insurance for.

    The administrative costs of doctors, hospitals, clinics and other providers are also included in that 20-30 percent figure. A Canadian hospital might have as few as four or five bookeeping employees, while a U.S. hospital has to employ many times that to handle the multitude of varying private insurance forms and plans, co-pays and deductibes from 400 different insurers.

    Medicare has a standard set of benefits and a single set of forms. It could and should pay higher rates to providers (and Congress is working on that), but its overhead of two percent covers all administrative expenses.

  14. Submitted by Paul Udstrand on 07/24/2009 - 05:53 pm.

    Joe- //Surely the American school of economics had nothing to do with transforming colonial capitalism to American capitalism. You libs should really think about the depth of your arguments before you call it fantasy.

    Again with the fantasy. You think our economy developed as prescribed by some school of economics that Alexander Hamiliton created? Did John Astor attend this school? The US did not emerge as an economic powerhouse until after WWII, and did so because it was the only major economy not in ruins because of the war. By the way, are the Kenesian’s and Chicago School economists alumi of the American School of Economics?

  15. Submitted by Beryl John-Knudson on 07/25/2009 - 10:26 am.

    Interesting earlier discussion here with Joe, a battered debater heading for his prime care physician I suppose after this last discussion.

    What changes in the health care system seem more of the same ‘fixes’; rearranging the same programs…a half-a..ed (like in ‘assets’) attempt to improve by eliminating-some-for-other philosophy that gains little but only guarantees more care but less quality of care…you can’t have a little single payer care and expect it to work the same as a total revamp of a broken system; of who pays, who gains. The whole profit-bating approach needs to be overhauled.

    One thing leaves me wondering, in all discussions and cuts suggested, when congress or those in power to effect change, turn to professional experts in the field to recommend positive changes, those experts offer cuts for everybody but themselves (generalitiesunfair, but…)…why consult with administrators and medical professionals?

  16. Submitted by Beryl John-Knudson on 07/25/2009 - 10:39 am.

    end of comment:

    When breadlines curl down Main Street for blocks, which could happen the way our economy is going…then count the medical professionals on a street corner with a tin cup or a sign reading, “WILL GIVE HEALTH CARE FOR BREAD” because they lost their exorbitant salaries…no cuts there so far?
    Show me an administrator from Rochestor who will say, “I’m ready to cut my salary by half” and I’ll swallow by words and my prideless soul and say I’m talking rubbish…

  17. Submitted by Joe Johnson on 07/26/2009 - 10:24 am.

    Paul do you have a scrabble bag that you dump out to get your facts. Please see the Gilded Age or the economic history of the United States per wiki. By the late 1880’s the US had overtaken Britain as the world’s most powerful economy. I seem to remember something about Laissez-faire in that time frame of US economic growth…pre Keynes fyi

  18. Submitted by David Brauer on 07/26/2009 - 02:02 pm.

    Ah, yes, Joe — unfettered capitalism and the 1880s. You might want to reconsider your example:

    http://en.wikipedia.org/wiki/Panic_of_1893

  19. Submitted by Joe Johnson on 07/26/2009 - 07:57 pm.

    DBra, thanks for piping in with the unfettered liberalism, and I did hear you on the radio Friday(not bad for a writer). How much do you think immigration played into the unemployment numbers you referenced? Come on the panic of 1893, we are not exactly talking Black Thursday. If you can’t handle the flows of capitalism try a socialist country.

  20. Submitted by Bernice Vetsch on 07/27/2009 - 01:41 pm.

    Joe J (#17): We may have had a powerhouse economy, but all the wealth was concentrated at the top. Right where the Bush-people have tried so hard these last 8 years to achieve again.

    Read Upton Sinclair’s “The Jungle” to see how life was for workers — specifically in this book non-English speaking immigrants in Chicago’s meat-packing plants — during that era. And perhaps Jacob Riis’s book of photos and text about life for the poor in New York City’s tenements.

    Life was good. If you could afford a home on Fifth Avenue or Chicago’s lakefront.

  21. Submitted by Paul Udstrand on 07/28/2009 - 09:14 am.

    //Joe, as per your Wiki:

    “By the beginning of the twentieth century, per capita income and industrial production in the United States exceeded that of any other country except Britain.”

    Note, it says “except” Britain.

    Furthermore:

    “This period overlaps with the nadir of American race relations, during which African Americans lost many of the civil rights obtained during the Reconstruction period. Increased racial violence, as well as emigration of African Americans from the Southern states to the Midwest, started as soon as 1879. The end of the Gilded Age coincided with the Panic of 1893, a deep depression. The depression lasted until 1897 and marked a major political realignment in the election of 1896. After that came the Progressive Era.”

    Hardly the utopia era neo-cons pretend to remember. And finally:

    “The Gilded Age was rooted in industrialization, especially heavy industry like factories, railroads and coal mining”

    You started this exchange by claiming that the founding fathers, specifically Alexander Hamilton- created a school of economics that was responsible for capitalism. You repeat that fantasy in your latest post’s reference to “Laissez-faire” economics. The problem is none of the founding fathers witnessed the industrial revolution. Half of the them ran slave economies and the other half would have recoiled in horror if given a glimpse of workers living and working conditions during the industrial age.

    Real conservatives study real history. You promote fantasy posing as nostalgia pretending to be history. Any analysis that flows out this is fatally flawed.

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