Graph of the Day: Minnesotans and Pains in the Back

In an impressive example of health policy journalism, the St. Paul based Pioneer Press analyzed data from the Centers for Medicare and Medicaid Services (CMS) and determined that Minnesotans have a higher than average rate of using MRIs for lower pain.  They broke the data down by county and is illustrated below.

As Christopher Snowbeck reports, “Medicare pays about $500 per test and spent about $420 million on low back MRIs nationally in 2009.”  MRIs are very costly tests that don’t often provide benefit for in comparison to recommended treatment of exercise, physical therapy, and injections for this type of pain.  The treatment of an MRI is not recommended.

As Atul Gawande’s now infamous McAllen, Texas article a year ago proved anecdotally, provider services vary based on the provider culture of the area and how patients respond.  Provider and patient induced demand is a controversial explanation for the growing technology dependent cost of health care in this country.  Providers often will not admit to driving demand and patients can only be blamed to a limited extent.

One of the greatest aspects of health care reform is that more data will begin to be collected on procedures like this.  If providers, patients, health policy experts, and most importantly insurers are able to see trends and problem areas costs can be contained and unnecessary care could be avoided.  Information is key and health reform has opened the door for greater information in the health care industry.

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The Newly Released Public Option Proposal Will Reduce the Deficit by $68 Billion

Cross posted at the Wonk Room

Just when you thought the last nail had been driven in the public option coffin months ago, just like a phoenix rising from the ashes, the public option has once again returned to Congress.  As Noam Levey reported last night, “[c]reating a major government health insurance program was roundly rejected last year, but 128 House Democrats are pushing to reconsider the idea, contending that it would hold down federal spending.” The legislation, HR 5808, is sponsored by Rep. Lynn Woolsey (D-CA) and the 128 cosigners are largely progressive caucus members and include all three chairmen of the committees of jurisdiction, Ways and Means, Energy and Commerce, and Education and Labor.

The Congressional Budget Office (CBO) scored the legislation and noted some promising findings.  The public plan, in this form, has always been a deficit reducer and this is no exception.  CBO found the proposal would reduce the deficit by $68 billion from 2014 to 2020. Despite likely lower reimbursements than private plans, CBO found providers would likely participate in large numbers because of the number of enrollees. CBO estimates the average public plan premium would be 5 to 7 percent lower than other private plans available within the exchange, making it more affordable to individuals.  They also estimate approximately 13 million or one in every three individuals eligible for exchange coverage would chose the public option.

The legislation looks very similar to the original House public option that passed the Ways and Means and Education Labor committees. It is important to remember the public option that passed the full House of Representatives in November of last year looked very different from this initial version. Both the original House bill and the new legislation would create an option for a public plan within the health insurance exchanges beginning in 2014.  Providers would be paid Medicare rates plus 5 percent in the initial years.  The providers will not be required to accept Medicare to enroll in the program.

Realistically, this chances of this public option bill passing this Congress, who is exhausted from the last public option fight and in full midterm mode, are slim.  This hasn’t deflated Woolsey who said, “This will be there for the next Congress.” Whether or not this proposal goes anywhere legislatively, it reminds more progressive voters and members of the party that the public option has not been forgotten.  States have already begun showing support for public run insurance systems, this support from the federal government can work to galvanize the effort.

In comparison to the original House version of the public option, as CBO notes, some of the savings are not as large.  This is primarily due to the fact, “that total federal subsidies for exchange participants will be substantially smaller under PPACA than they would have been under the legislation that was considered in the House.”  In other words, because we  aren’t spending as much as we were with the original House bill, we can’t save as much.

In comparison to a very early Senate public plan option, this public plan would cover more individuals and premiums would be cheaper for individuals.  Providers would likely see lower rates which would make them not favor this plan.  A public plan with payments linked to Medicare was never an option for this Senate.

A summary table comparing the three public option proposals is below.

Initial House Proposal HR 3200, Summer 2009 (later became a negotiated rate system) Early Senate Proposal for HR 3590, November 2009 (public option later dropped) Woolsey HR 5808, July 2010
Deficit Reduction
Not separately scored - unofficial estimates had a savings of $110 billion $3 billion 2014-2020 $68 billion 2014-2020
Premiums 10 percent cheaper than private plans in the exchange More expensive than private plans in the exchange 5-7 percent cheaper than private plansin the exchange
Estimated number of individuals enrolling 9-10 million 3-4 million 13 million
Payment Medicare rates with +5% bonus in first three years for physicians enrolled in Medicare Negotiated rates with providers Medicare +5% bonus for first three years
Sexy Fact The public plan can negotiate drug prices from the start. Provider participation is voluntary. Healthier enrollees, states could opt out of the plan, start up costs must be repaid. State based exchanges with a federal Medicare linked payment system.

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What the Healthy San Francisco Supreme Court Decision Means for National Health Care Reform

After a four year extensive legal battle, the Supreme Court abruptly ended one of the longest, most divisive, health insurance battles in recent history.

Contained in the Healthy San Francisco program is a mandate on employers in San Francisco to offer health insurance coverage to their employees. If failing to do so, the employer can meet the requirement by paying into the public program.  Small employers and non-profits are exempt. A very similar approach was adopted in many of the national health care reform proposals. The Golden Gate Restaurant Association unsuccessfully challenged this requirement in the 9th U.S. Circuit Court of Appeals in 2008.

Today, the US Supreme Court decided to not hear the final appeal from the Restaurant Association, ending their battle to eliminate this employer mandate.

While the questions raised by the city-wide employer mandate is far from the federal and constitutional questions raised in the court cases involving national health care reform, the Supreme Court’s willingness to throw aside such a hotly debated issue involving health insurance mandates points to the current vision of the Court.  The Restaurant Association may not have had the strongest legal argument to eliminate a mandate, but the Supreme Court has shown hesitancy to fully address the issues surrounding insurance mandates.

The Association argues the mandate violates federal law, rather than a Constitutional debate like that of the State Attorney General’s case against national reform. The fact that the Court defended state law over federal restrictions does not hurt the proponents of health reform and the constitutionality of national reform.  These are separate questions on federal versus state powers.  In fact, a repeal of the San Francisco employer mandate would have hurt the case for the Attorney Generals.  It would have been a blow to the health insurance regulatory power of the states, in favor of federal law.  So in this case, conservatives hoping for a repeal of health reform should have been rooting for San Francisco.  I imagine that image does not appear likely.

But like I said, these are very different issues, with a great deal of nuanced differences.  Health reform does not limit a state’s ability to set mandates and create additional regulations for insurers.  The employer mandate in San Francisco is designed very differently in terms of penalty than national health reform.

This is why, the most important piece to look at is the attitude of the Supreme Court.  While the individual and employer mandate are very different under a microscope, they are one of the few health insurance mandates that currently exist in this country.  Legal reactions to mandates are important, because there is relatively few legal decisions and little history behind such laws.

The Supreme Court’s desire to avoid this specific issue of insurance mandates gives hope to defenders of health reform that a case against a similar individual mandate will also be refused.

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Graph of the Day: How the Media Covered Health Care Reform

Today, Pew Researchers released a report on how the media covered the health care reform debate.  Igor Volsky beat me to the punch this morning with some great analysis and you should take a look at it.

In his piece, Volsky gives a personal glimpse of how the media and Republicans played to the politics and sensationalism:

Republicans successfully exploited the media’s desire for easy to understand left/right talking points coverage and flooded the airwaves with all kinds of attacks, forcing Democrats to respond and the media to amplify. For instance, during my appearances on cable news shows, the producers would ask me for “my take” on the issue in a pre-show interview and input the answers into the computer without ever interrogating my responses. The more confrontational I became, the more praise I received. During one particularly heated segment, the producer came into my ear and told me what a good job I’ve done ’shouting down’ my conservative opponent. The veracity of my responses or the informational value of the segment was completely irrelevant. It was the back and forth that mattered most.

The most telling tale of the media portrayal is illustrated in this chart, below:

The health care reform debate may have centered only on politics within the media, but I doubt that it was what was discussed around kitchen tables all over the county.  The arguments over politics may have contributed to opinions of the bill, but the public has had a greater appetite for ideological battles than the demise of the “gang of six,” Howard Dean’s departure from protocol, or analysis of whether Obama was too slow to step into the legislative process.

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Resource Rich Does Not Mean Economic Prosperity

Last week, The New York Times “discovered” Afghanistan is not a barren war-torn wasteland without natural resources that American public opinion suggests, but rather poised to become “the Saudi Arabia of lithium.”

Lithium is a scarce metal used to produce electronics.  It has value to many growing nations, especially China and the United States.

The details surrounding the “discovery” do more than make a reader raise an eyebrow.  In the Times article, an adviser to the minister of mines proudly proclaims “This will become the backbone of the Afghan economy.” One should be hesitant to trust declarations made by this branch of the Afghan government; as the Wall Street Journal notes, “the Mines Ministry has long been considered among Afghanistan’s most corrupt government departments.”   This is not to question the likelihood of minerals in Afghan hills.  Rather, it is fairly well-known that the country is abundant in natural resources. In 2007 the Bush Administration concluded “that Afghanistan was potentially sitting on a goldmine of mineral resources and that this fact ought to become a central point of U.S. policy in bolstering the government.” The potential to exploit the natural resources of the country were also widely known to the Soviets decades earlier.

There is a widely held belief that countries with abundant natural resources have greater chances to succeed economically.  This belief was made famous by Jared Diamond in Guns, Germ and Steel. But as Dambisa Moyo explains in Dead Aid:

Africa’s broad economic experience shows that the abundance of land and natural resources does not guarantee economic success however.  In the second half of the twentieth century, natural resource dependence has proved to be a developmental curse rather than a blessing.

Last week’s Planet Money on the issue, goes in to greater detail about the curse and is well worth a listen.  Hopefully, the world will watch as Afghanistan decides how to spend the valuable resource and the money will be given fairly to the country.  But as Bolivia and Nigeria have recently proven that is not the case.

Having resources without the political integrity and ability to properly manage the country will do little for the development of Afghanistan.  This is especially the case for a country with very powerful vested foreign interests.

Perhaps, the announcement is meant to play more to the American public perception that investing in Afghanistan is a worthy endeavor than economic revitalization of an opium dependent economy.  Whatever the case, Afghanistan’s leaders must approach this valued commodity with caution and learn from the resource cursed nations that have proceeded it.

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Oil Extraction Threatens Communities in Peruvian Amazon

Amazon oil town of Trompederos

Peruvian indigenous leader Alberto Pizango made headlines today after being arrested on charges of sedition, conspiracy and leading a rebellion. Last summer, Pizango led months of protests which prompted Peruvian President Álan Garcia order police to “use force” to remove a road bock near Bagua Grande. About 50 people were killed, according to Amnesty International.

Official blame for the incident has fallen on Pizango, though indigenous groups refer to the incident as “Peru’s Tiananmen Square.” But behind the conflict which has pitted the Peruvian government against much of its indigenous population is a well-known adversary – the oil industry.

The Peruvian government has sold off vast amounts of previously protected land, and now leases 70 percent of the nation’s rainforest for oil and gas exploration, according to the Council on Hemispheric Affairs. Since then, a broad coalition of indigenous groups and human rights activists has continuously fought to see that this number is not expanded.

“For thousands of years, we’ve run the Amazon forests,” said Servando Puerta, one of the protest leaders. “This is genocide. They’re killing us for defending our lives, our sovereignty, human dignity.”

A pattern of conflict now threatens the stability of a fiercely divided nation. Answering to pressure from multinational corporations, the Peruvian government continues to scale back its protected territories. Each time legislation is proposed, opposition forces organize on a huge scale. Protests begin peacefully and almost always end in bloodshed.

Despite this environmental and human toll, the government continues to sell off protected lands. Petroperu, the state oil and gas company, recently announced their intention to open 10 million hectares for oil and gas exploration, almost all in the Amazon. The company also announced it would “start auctioning the remaining Amazon oil blocks, adding to the 82 foreign companies who already hold concessions here.”

Many activists are looking to the United States government for a solution, citing the U.S.-Peru Free Trade Agreement as a catalyst for the rapidly expanding encroachment on indigenous territory.

“Whether or not the U.S. intended it, the reality is that the U.S.-Peru Trade Agreement gave license to the [Alan] Garcia administration to roll back indigenous rights and has contributed to increasing social conflict and human rights abuses in Peru,” said Andrew Miller of Amazon Watch.

Activists contest that the United States could revise existing agreements to include stronger safeguards for indigenous peoples and the environment. But such cooperation is unlikely, considering the the amount of sway held by the oil and gas lobby in Washington.

As residents of the Gulf grapple with a massive oil spill, it is important to remember that the oil industry impacts people across the globe. With the livelihoods of entire communities at risk, the importance of developing alternate energy sources has never been more clear.

By Mary Tharin

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First Look at the Kerry Lieberman Energy Bill: Pros and Cons

The long awaited Kerry-Lieberman climate and energy bill was finally unveiled today without a Republican co-sponsor after Lindsey Graham withdrew his support. Still, the American Power Act reflects most of the promises that had been made by the trio over the past months; both good and bad.

A strong push by electric, coal, and gas lobbies to protect their industries is heavily reflected in the bill which promotes nuclear power, “clean” coal, and offshore drilling. Also, carbon caps will be established on a rolling sector-by-sector basis which will not affect certain industries for (like manufacturing) for over 5 years, while others (like agriculture) are completely exempt. This leaves open the possibility for these sectors to produce “offsets” – or free carbon credits – which can be sold to regulated sectors in lieu of making real emissions cuts.

Here is a general overview of the high and low points contained in a draft text released by Kerry’s office today:

Pros

Cons

Carbon Cap:

The bill calls for an economy-wide emissions reduction to 95.25 percent of 2005 levels by 2013, 83 percent by 2020, 58 percent by 2030, and 17 percent by 2050.

Domestic Offsets:

Establishes a nationwide system under which sources not subject to the greenhouse gas emission reduction program may receive credits for making reductions in emissions that can be sold to and used by those subject to reduction requirements.

Coastal Drilling Opt-out:

States have the right to opt-out of drilling up to 75 miles from their shores, and veto projects of nearby states.

Offshore Drilling:

Despite a smattering of new regulations, offshore drilling stays in the nation’s long-term energy plan.

Clean Energy Funding:

Establishes a Clean Energy Technology Fund, though source for funding is not explicitly outlined.

Nuclear Power:

Incentives include a new investment tax credit to promote the construction of new generating facilities, $54 billion in loan guarantees and a manufacturing tax credit to spur the domestic production of nuclear parts.

Clean Transportation:

Supports electric vehicle infrastructure; provides funding to municipal transportation emissions reduction programs.

“Clean” Coal:

Annual $2 billion for research and development of carbon capture and sequestration methods and devices.

Clean Energy Career Development:

Grants and career training in the fields of clean energy, renewable energy, energy efficiency, climate change mitigation, and climate change adaptation.

International Offsets:

Establishes an independent advisory committee to monitor and approve international offset projects which allow US industries to continue polluting.

Customer Refund:

Two thirds of revenues from carbon trading will rebated to consumers, though not directly.

State Pre-emption:

States will not be permitted to operate their own cap-and-trade programs.

The next few weeks will undoubtedly see push-back from both the right and the left on a number of the bill’s more controversial elements. The chance of any legislation passing the Senate before the summer campaign season begins remains murky, but a strong push by the administration and civil society could mean a victory for the comprehensive, albeit less than perfect, bill.

View the full bill text here.

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