Issues Underneath Reform – Scandals, Crises, Inversions, Taxes

In our concerns over a major health care issue – covering the cost of covering the uninsured without breaking the national bank – we lose perspective over the underlying human issues that lie beneath.    You can gain this perspective by reading the Perspective Section of the New England Journal of Medicine, as exemplified in its March 17 edition.

Waiting Time Scandals

Often the scandals that surface in health reform efforts reside in such issues as prolonged waiting times to get care.   In “Scandal as a Sentinel Event – Recognizing Hidden Cost-Quality Events, “ the author, M.G. Bloche, J.D.,  of the Georgetown Law Center and the Transnational Events in London,  suggests waiting time scandals  usually occur when demands for excellence exceed budgets of the accomplishment of  this excellence.   When this occurs, managers and physicians often “game the system” to save their skin and  to  hide the deficiencies of the system.  This “gaming” has led to scandals  over prolonged waiting times in the Veterans Administration hospitals  in the U.S. and in the British National Health System in the United Kingdom

VA Crisis

David Shulkin, MD,   of the Department of Veterans Affairs, in “Beyond the VA Crisis – Becoming a High-Performance Network,” submits the VA has been asked to do too much given its present structure  and its limited budget.  Give us time, he says, to restructure and to consolidate  into a more coordinated  system with adequate resources and with more flexibility  in spending for services provided by the private sector,  and we will do the job.

Perversions of Inversions

H.J. Warraich. MD, and K.A. Schulman, MD, of Duke University and Harvard Business School, in “Health Care  Tax Inversions – Robbing  Both Peter and Paul,” comment on Pfizer and Medtronic moves to Ireland to avoid the U.S. punitive 35% corporate income tax – the highest in the world.  The 35% rate compares to Ireland’s rate of 7.7%.   They recommend ways to avoid these inversions.  These include requiring Congress to pass new rules,  such as lowering the U.S. rate and empowering CMS to negotiate prices with manufacturers.  They conclude “Developing new therapies – not avoiding taxes -  remains the most durable way for pharmaceutical companies to remain profitable.  “

Cadillac Taxes

Jason Furman PhD, and M. Fiedler, PhD, from the Council of Economic Advisors, write in "The Cadillac Tax – A Crucial Tool for Delivery-System Reform,”  that the Cadillac Tax – a   40% tax to be levied in 2000 on employer health plan costs in excess of $29,100 for family coverage and $10,700 for individual coverage is a good thing because it will drive employers to make their health plans more efficient.   Presumably the tax will drive workers towards more efficient providers.   The two authors say the Cadillac tax will save $95 billion by 2015 and $500 billion by 2036. Such a statement requires a belief in the federal tooth and truth fairy, which does not have history of saving money.  In 1965, the government promised Medicare and Medicaid costs would not exceed $9 billion by 1990.   The actual 1990 cost was $67 billion - 7.44 times the original projections In 2016  CMS (Centers for Medicare and Medicaid) will cost over $1 trillion, 15 times the 1990 figure.   So much for government promises and projections to keep costs down.