PERSPECTIVE Health Care Policy under President Romney

anced-budget requirement, cuts of and propos- 1. Romney M. Replacing Obamacare with real health care reform. N Engl J Med 2012; 40% would still be required by als would irrevocably transform 367:1377-81. 2022. It is difficult to contem- these programs. His budget and 2. MittRomney.com. Health care (http:// plate federal health spending re- tax proposals would threaten the www.mittromney.com/issues/health-care). 3. Meet the Press. Transcripts: September 9: ductions at such unprecedented country’s basic health infrastruc- (http://www.msnbc.msn.com/ levels. As Kaiser Family Founda- ture as few in living memory have id/48959273/ns/meet_the_press-transcripts/ tion tracking polls show, public done. One can only hope that if t/september-mitt-romney-ann-romney-julian -castro-peggy-noonan-ej-dionne-bill-bennett support for Medicare and Medic- elected President, Romney would -chuck-todd/#.UFCnk41lTkc). aid surpasses 80%, with strong surprise the United States as he 4. Ryan P. The path to prosperity: a blueprint support even among Republican did . for American renewal: fiscal year 2013 bud- get resolution. House Budget Committee, and Tea Party–identified voters. Disclosure forms provided by the authors March 20, 2012 (http://www.kaiserhealth Which brings us back to Rom- are available with the full text of this article news.org/~/media/Files/2012/ryan%202013 ney’s record. His fundamental at NEJM.org. %20budget%20section%204%20and%205 policy proposal is to undo the .pdf). From the Warren Alpert Medical School, 5. Holahan J, Buettgens M, Chen V, Carroll ACA, the nation’s most conse- Brown University, Providence, RI (E.Y.A., C, Lawton E. House Republican budget plan: quential health care reform law. K.K.V.); and the Department of Health Poli- state-by-state impact of changes in Medicaid His replacement proposals would cy and Management, Harvard School of financing. Kaiser Commission on Medicaid Public Health, Boston (J.E.M.). and the Uninsured, May 2011 (http://www provide no meaningful security .kff.org/medicaid/upload/8185.pdf). to people who would lose the This article was published on October 10, DOI: 10.1056/NEJMp1210265 law’s coverage protections. His 2012, at NEJM.org. Copyright © 2012 Massachusetts Medical Society.

The Shortfalls of “Obamacare” Gail R. Wilensky, Ph.D.

.S. health care suffers from or to pay a penalty. The objective vices and outpatient prescription Uthree major problems: mil- is to “encourage” people who drugs during the first year in lions of people go without insur- might have decided not to buy which they lack comparable cov- ance, health care costs are ris- insurance to do so. Unfortunate- erage must pay a penalty for every ing at unaffordable rates, and the ly, the mechanisms put in place month they have gone without quality of care is not what it should may instead encourage people to coverage whenever they finally do be. The (ACA) postpone buying insurance until purchase it. This system has pro- primarily addresses the first — they’re sure it will be needed. In- duced high rates of Medicare and easiest — of these problems surers will not be able to refuse enrollment without creating the by expanding coverage to a sub- coverage to anyone and cannot firestorm generated by a mandate. stantial number of the uninsured. charge higher rates to people Moreover, although the ACA Solutions to the other two remain who wait until they clearly need expands coverage, it ignores the aspirations and promises. care. The penalty for not having structural problems in the organi- The ACA’s primary accomplish- insurance is very small, particular- zation and reimbursement of care ment is that approximately 30 mil- ly for younger people with mod- — a limitation that is disap- lion previously uninsured people est incomes. Given the choice, pointing but not surprising: add- may end up with coverage — many people may put off buying ing more people to the insurance about half with subsidized private insurance to save thousands of rolls is politically and technically coverage purchased in the mostly dollars in premium payments. easier than finding a way to en- yet-to-be-formed state insurance A mandate cannot work with- sure that care is effective, high- exchanges and the other half out a credible threat that non- quality, and affordable for both through Medicaid expansions. compliance will be costly. It would the recipients and taxpayers. The law’s most controversial have been smarter to mimic Medi- Despite widespread recognition provision remains the individual care’s policies: seniors who don’t that fee-for-service reimbursement mandate, which requires people purchase the voluntary parts of rewards providers for the quan- either to have insurance coverage Medicare covering physician ser- tity and complexity of services

n engl j med 367;16 nejm.org october 18, 2012 1479 The New England Journal of Medicine Downloaded from nejm.org by NICOLETTA TORTOLONE on October 18, 2012. For personal use only. No other uses without permission. Copyright © 2012 Massachusetts Medical Society. All rights reserved. PERSPECTIVE The Shortfalls of “Obamacare”

and encourages fragmentation in wards the provision of highly sode of care. Unfortunately and care delivery, the ACA retains all reimbursed services without con- inexplicably, none of the initia- the predominantly fee-for-service sideration of whether clinicians tives focus on alternative reim- reimbursement strategies current- are providing low-cost, high-value bursement arrangements for phy- ly used in Medicare. Much of the care for patients. Given physi- sicians separate from institutional coverage expansion is financed cians’ key role in providing pa- payments or on ways to promote through Medicare budget savings, tient care, it’s impossible to imag- the formation of multispecialty which are produced by reducing ine a reformed delivery system group practices, a known strategy the fees paid by Medicare to in- without a more rational way of for producing high-quality care.3 stitutional providers such as hos- paying physicians — one that en- Pilot projects may seem like pitals, home care agencies, and courages and rewards them for an attractive way to try out inno- nursing homes — but using the providing clinically appropriate vative ideas, but they have not led same perverse reimbursement care efficiently. to much change in Medicare pol- system currently in place. Reduc- Some modest payment reforms, icy. Successful pilots may need to ing payments to institutional pro- such as value-based purchasing be repeated on a larger scale to viders should not be confused and accountable care organiza- see if the results are scalable and with lowering the cost of provid- tions (ACOs), are included in the replicable — all of which takes ing care. legislation. Value-based payment time. The sense of urgency that The ACA also provides Medi- bonuses are being phased in for should surround these activities care “productivity adjustments,” hospitals and nursing homes in has not seemed to be present which assume that inflation ad- 2012 and 2013 and for physi- thus far. justments can be reduced over cians starting in 2016. In princi- Finally, as Medicare has since time because institutions will be- ple, tying payment to quality in- its inception, the ACA focuses all come more productive, whether dicators could promote greater its pressure to reduce spending or not hospitals and other pro- quality and efficiency, but the and improve quality of care on viders actually find ways to in- bonus payments are very modest, clinicians and institutional pro- crease their productivity. Unless which reduces the chances that viders through regulatory means, these institutions find ways to clinical and institutional behav- rather than trying to harness reduce costs, lower Medicare re- ior will be substantially affected. market forces. If the envisioned imbursements will force providers ACOs allow hospitals and phy- spending reductions don’t mate- to bargain for higher payments sicians who are not formally af- rialize, the ACA authorizes an from private insurers. And even- filiated with each other to work Independent Payment Advisory tually, seniors’ access to services together and share savings. It Board (IPAB) to reduce payments will be threatened. The Medicare might have made more sense to to clinicians and institutions un- actuary expects that 15% of insti- pursue this model as a pilot proj- til the desired spending levels are tutional providers will lose money ect, since there are many uncer- achieved. Although Congress can on their Medicare business by tainties about how these organi- override the IPAB’s recommenda- 2019, and the proportion will in- zations should be structured and tions, it can do so only if it acts crease to 25% by 2030 — a situa- whether they will produce the within a limited time and comes tion that he calls unsustainable.1 hoped-for outcomes. up with comparable savings. Most troubling, the ACA con- Most of the payment- and Some supporters of the ACA tains no reform of the way physi- delivery-system reforms in the characterize it as “market-friend- cians are paid, which is the most ACA are part of pilot projects be- ly” — presumably because it en- dysfunctional part of the Medi- ing initiated by the Center for courages exploration of a reim- care program.2 Through the Re- Medicare and Medicaid Innova- bursement system with better source-Based Relative Value Scale, tion (CMMI), a unit of the Cen- incentives than the current one physicians are reimbursed on the ters for Medicare and Medicaid — but they fundamentally mis- basis of more than 8000 differ- Services. CMMI initiatives include understand what it takes to be ent service codes, and payment for strategies for promoting primary market-friendly.4 Having Medi- each physician service is reduced care, as well as bundled-payment care choose which pilot project whenever aggregate spending on initiatives in which a single pay- should become the law of the physician services exceeds a pre- ment is made to cover more of land or which bundled-payment specified limit. This system re- the services delivered in an epi- strategy should be used to pay

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for services does not bring mar- structured delivery systems at trust funds. April 23, 2012 (http://www.cms .gov/Research-Statistics-Data-and-Systems/ ket forces into play. lower prices if that’s what suits Statistics-Trends-and-Reports/ReportsTrust What is needed are reforms them. If market-friendly Medicare Funds/Downloads/TR2012.pdf). that create clear financial incen- reform is your aim, a good place 2. Wilensky GR. Reforming Medicare’s phy- sician payment system. N Engl J Med 2009; tives that promote value over to look is the plan proposed by 360:653-5. volume, with active engagement Senator (D-OR) and 3. Centers for Medicare and Medicaid Ser- by both consumers and the Representative (and vice-presiden- vices. Fact sheet: bundled payments for care improvement initiative. August 23, 2011 health care sector. Market-friendly tial candidate) (R-WI) (http://www.innovations.cms.gov/files/ 5 reforms require empowering in- — not the ACA. fact-sheet/bundled-payment-fact-sheet.pdf). dividuals, armed with good in- Disclosure forms provided by the author 4. Emanuel EJ, Tanden N, Berwick D. The formation and nondistorting sub- are available with the full text of this article Democrats’ market-friendly health-care alter- at NEJM.org. native. Wall Street Journal. September 25, sidies, to choose the type of 2012:A19. Medicare delivery system they From Project HOPE, Bethesda, MD. 5. House of Representatives Committee on want. Being market-friendly means the Budget. Wyden and Ryan advance bipar- This article was published on October 10, tisan plan to strengthen Medicare and ex- allowing seniors to buy more 2012, at NEJM.org. pand health care choices for all. December expensive plans if they wish, by 15, 2011 (www.budget.house.gov/bipartisan paying the extra cost out of 1. Centers for Medicare and Medicaid Ser- healthoptions). vices. 2012 Annual report of the boards of pocket, or to buy coverage in trustees of the federal hospital insurance DOI: 10.1056/NEJMp1210763 health plans with more tightly and federal supplementary medical insurance Copyright © 2012 Massachusetts Medical Society.

HISTORY OF MEDICINE Reform, Regulation, and Pharmaceuticals — The Kefauver– Harris Amendments at 50 Jeremy A. Greene, M.D., Ph.D., and Scott H. Podolsky, M.D.

ifty years ago this month, on Congress’s cutting-room floor FPresident John F. Kennedy in 1962 — and left out of our signed into law the Kefauver– memories since — have not dis- Harris Amendments to the Fed- appeared but continue to confront eral Food, Drug, and Cosmetic those who would ensure access Act (see photo). With the stroke to innovative, safe, efficacious, of a pen, a threadbare Food and and affordable therapeutics. Drug Administration (FDA) was By the time Kefauver began given the authority to require his investigation into the pharma- proof of efficacy (rather than just ceutical industry in the late 1950s, President John F. Kennedy Signing safety) before approving a new the escalating expense of lifesav- the 1962 Kefauver–Harris Amendments. drug — a move that laid the ing prescription drugs was illus- groundwork for the phased sys- trating that the free-market ap- the rising politics of consumer- tem of clinical trials that has proach to medical innovation had ism. For Kefauver, the “captivity” since served as the infrastructure costs as well as benefits. From of the prescription-drug consumer for the production of knowledge the development of insulin in the in the face of price gouging and about therapeutics in this country. 1920s, through the “wonder drug” dubious claims of efficacy under- We often remember the Kefauver– revolutions of sulfa drugs, ste- scored the need for the state to Harris Amendments for the tha- roids, antibiotics, tranquilizers, ensure that innovative industries lidomide scandal that drove their antipsychotics, and cardiovascu- worked to the benefit of the aver- passage in 1962. But there is lar drugs in the ensuing decades, age American. much we have collectively forgot- the American pharmaceutical in- After 17 months of hearings, ten about Senator Estes Kefauver dustry had come to play a domi- in which pharmaceutical execu- (D-TN) and his hearings on ad- nant role in the public under- tives were openly berated for prof­ ministered prices in the drug in- standing of medical science, the iteering and doctors were por- dustry. Many parts of the bill left economics of patient care, and trayed as dupes of pharmaceutical

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