Kaiser Daily Health Policy Report
President-Elect Obama Meets With Congressional Leaders To Discuss Economic Stimulus Package
Congressional Democrats Seek To Pass Health Care Legislation This Year
Access to Health Care for Children Ages 10 to 19 Lacking, According to Report
Nursing Shortage Expected To Grow Annually Through 2016, According to U.S. Bureau of Labor Statistics
Proposal To Restrict No-Cost Care at Atlanta Public Hospital Draws Criticism From Patient Advocates
More U.S. Residents Seeking To Participate in Paid Clinical Trials as Economy Weakens
Texas Managed Care Program Continues Amid Complaints From Beneficiaries
Kaiser Daily Health Policy Report Feature Highlights Recent Blog Entries
Health Care Marketplace
Health Care Spending in 2007 Increased at Lowest Rate in Nine Years, With Prescription Drug Spending Growth Slowing to Lowest Rate Since 1963, Study Finds
[Jan 06, 2009]
U.S. health care spending by both the public and private sectors grew at a rate of 6.1% to $2.2 trillion in 2007, down from growth of 6.7% in 2006, according to a study by federal auditors published Tuesday in the journal Health Affairs, the Wall Street Journal reports (Fuhrmans/Zhang, Wall Street Journal, 1/6). The 2007 growth rate is the slowest recorded since 1998, according to the report, which was prepared by analysts from the CMS Office of the Actuary (Young, The Hill, 1/6). However, health care spending consumed 16.2% of the U.S. gross domestic product in 2007, up from 16% in 2006, "suggesting its share of GDP will climb as the economy remains mired in a protracted recession," the Journal reports (Wall Street Journal, 1/6).
More than half of the drop-off in spending growth can be linked to decreased spending on prescription drugs, according to the report (Pugh, McClatchy/Miami Herald, 1/6). Spending on drugs rose by 4.9% to $227.5 billion in 2007, compared with an increase of 8.6% in 2006 and a yearly average of 9.4% from 2001 to 2006. Lead study author Micah Hartman, a statistician for the CMS Office of the Actuary, said the drop in drug outlays can be attributed to increased use of lower-cost generic drugs, slower growth for drug prices and safety concerns that have decreased sales of some drugs (Pear, New York Times, 1/6). FDA in 2007 issued 68 black box warnings -- its most severe warning -- to appear on drug labels, compared with 58 in 2006 and 21 in 2003. Insurers are encouraging the use of generics by charging lower copayments for certain drugs and higher copays for others that they may want consumers to avoid for safety and financial reasons. Several grocery chains and large retailers also have contributed to the trend through generic drug discount programs. In addition, several top-selling brand-name drugs lost patent protection in 2006, allowing generic competitors to enter the market (Freking, AP/Philadelphia Inquirer, 1/6).
Prescription drugs made up 10% of all health care spending in 2007, according to the report. Spending on hospitals, which accounted for 31% of health care outlays in 2007, increased by 7.3% to $696.5 billion, compared with an increase of 6.9% in 2006, the report states. Spending on doctors, which accounted for 18% of health care outlays in 2007, grew by 5.9% to $393.8 billion, compared with an increase of 6.4% in 2006, according to the report (New York Times, 1/6).
The report also showed that the government paid for a larger portion of the nation's health care in 2007. Spending by federal, state and local governments made up 46.2% of total health care outlays, up from 45.3% in 2004 and 37.6% in 1970. Public spending on health care grew faster than spending by employers and other private sources in recent years, according to the report.
The increase in government health care outlays was partially caused by changes in Medicare, according to federal auditors. The Medicare prescription drug benefit cost $47.6 billion in 2007, up from $40.5 billion in 2006 (Wall Street Journal, 1/6). Administrative costs for Medicare increased by 62.5% when the prescription drug benefit was launched in 2006, and Medicare's administrative costs increased by 10.7% in 2007. Overall Medicare spending increased by 7.2% to $431.2 billion in 2007, compared with an increase of 18.5% in 2006. Medicaid spending in 2007 increased by 6.4% to $329.4 billion, the report found.
Private health insurance premiums increased by 6% to $775 billion in 2007, the same rate as in 2006, but less than the 10.7% increase in 2002. The slower growth rate reflects fewer small employers offering health coverage and increasing enrollment in health savings accounts and high-deductible health plans, according to the study. Out-of-pocket spending by patients increased by 5.3% in 2007 to $268.6 billion, compared with an increase of 3.3% in 2006, the study found. The portion of household income being spent on health care increased to 6% in 2007, up from 5.4% in 2001 (McClatchy/Miami Herald, 1/6). Comments
CMS Chief Actuary Richard Foster said, "In 2007, the cost growth overall was the lowest in quite some time," adding, "True, we're happy about that, but it was still 6.1%. How much did GDP go up in that year? How much did any of your wages increase? The 6.1% was still faster than GDP, so we still have the affordability problem" (The Hill, 1/6). Foster said, "I wouldn't expect the good news to continue" (Reichard, CQ HealthBeat, 1/6).
CMS acting Administrator Kerry Weems said, "This is another reminder that the cost of health care continues to be a real and pressing concern facing the American public and the federal government." He added, "This report is a stark reminder that we must redouble our ongoing efforts to reform the delivery of health care services in this country to bring about the goal of affordable, high-quality health for all Americans" (McClatchy/Miami Herald, 1/6).
 The report is available online.
Election 2008
President-Elect Obama Meets With Congressional Leaders To Discuss Economic Stimulus Package
[Jan 06, 2009]
President-elect Barack Obama on Monday met with Democratic and Republican congressional leaders to discuss an economic stimulus package that includes funds for health care programs, the Chicago Tribune reports (Puzzanghera/Parsons, Chicago Tribune, 1/6). During multiple meetings, Obama met House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), House Minority Leader John Boehner (R-Ohio) and other congressional leaders (Schatz/Clarke, CQ Today, 1/5).
According to Reid, Obama "has indicated that there's at least 20 economists that he's talked with, and all but one of those believe" that the stimulus package "should be from $800 billion to $1.2 or $1.3 trillion" over two years (Sanchez, CongressDaily, 1/6). "Key details" of the package "remain unresolved," but the legislation likely will include a number of health care provisions, the Washington Post reports (Kane et al., Washington Post, 1/6).
The stimulus package likely will include about $200 billion to temporarily increase the Federal Medical Assistance Percentage for state Medicaid programs and to help fund other state programs, according to congressional aides (Elliott, AP/Detroit News, 1/5). In addition, Obama and congressional leaders hope to include a provision to expand health and unemployment benefits for workers, as well as a measure to allow those who lose jobs that did not include health insurance to apply for Medicaid (New York Times graphic, 1/6). Senate Democrats also hope to include additional funds for community health centers, health care information technology, medical research and prevention programs, according to a Democratic aide. "Democrats see the stimulus plan as an opportunity to make early progress on the larger health care overhaul they intend to pursue later this year," the Boston Globe reports (Williams, Boston Globe, 1/6). Prospects
Obama said that he expects to sign the stimulus package into law by the end of January or the first of February (Hurst, AP/Detroit News, 1/6). Republican congressional leaders said that Congress might not pass a stimulus package for six weeks (Ward/Miller, Washington Times, 1/6).
"Despite Obama's active courtship of Republicans, ... he still faces obstacles to getting both fast and broadly bipartisan support for his plan," according to the Tribune (Chicago Tribune, 1/6). Republicans remain "wary of expanding entitlement programs such as Medicaid" (Cohn, CongressDaily, 1/6). However, the large tax cut for the middle class that Obama has proposed to include in the stimulus package "could help the package's chances," according to the Detroit Free Press (Spangler, Detroit Free Press, 1/5). Some Democrats also disagree with Obama about the details of the stimulus package, and although most Democrats "are likely to give Obama what he seeks in his first major legislative initiative," the "fighting over the details could take weeks," the Globe reports (Kranish, Boston Globe, 1/6).
Obama on Thursday plans to deliver a speech in which he will provide additional details about the stimulus package (Weisman/Hitt, Wall Street Journal, 1/6). Editorial
Obama's preliminary stimulus package proposal, presented to congressional leaders on Monday, "goes a long way toward successfully meeting the challenge of spending the money quickly and well," a Baltimore Sun editorial states. Under the plan, at least $200 billion has been allocated to "help states pay for health care for the poor and cover looming budget deficits," the editorial notes, adding, "Much of the rest would go to ... rebuild health care information systems and fund other infrastructure projects."
According to the Sun, lawmakers from "both parties should remember that it's important not to loiter unnecessarily." The editorial concludes, "The faster the money is distributed and spent, the better our chances for a speedy economic recovery" (Baltimore Sun, 1/6). Opinion Piece
The U.S. needs "an economic-recovery plan that is big, bold and broad, and that is exactly what President-elect Barack Obama is considering," Betty Ahrens, executive director of the Iowa Citizen Action Network, writes in a Des Moines Register opinion piece. She continues, "Almost one-fifth of the proposed funds" under Obama's proposal "would go to health care" and the "biggest piece of that would be up to $100 billion to support the states' growing Medicaid caseloads."
Ahrens writes, "If Congress moves expeditiously to pass a big, bold and broad economic-recovery package, we can address the problems of joblessness, hunger and lack of access to health care." However, she continues that "[i]f Congress fails to act, conservative and progressive economists agree, our problems will grow worse, with unemployment rapidly increasing, even more Americans going to bed hungry and millions of children cut off from health care."
She concludes, "Congress should work quickly and in a bipartisan manner to pass an economic-recovery package that serves the common good by addressing joblessness, hunger, health care and other pressing needs" (Ahrens, Des Moines Register, 1/6). Broadcast Coverage
 American Public Media's "Marketplace" on Monday reported on the stimulus package. The segment includes comments from Tyler Cowen, an economics professor at George Mason University (Ryssdal, "Marketplace," American Public Media, 1/5).
 ABC's "World News Tonight" on Monday examined possible provisions in the stimulus package (Tapper, "World News Tonight," ABC, 1/5).
- NPR's "Morning Edition" on Tuesday reported on the meetings between Obama and congressional leaders on the stimulus package (Horsley, "Morning Edition," NPR, 1/6).
Capitol Hill Watch
Congressional Democrats Seek To Pass Health Care Legislation This Year
[Jan 06, 2009]
Democratic lawmakers hope to pass an economic stimulus package, as well as legislation that would reauthorize SCHIP and expand federal funding for embryonic stem cell research, in the first few weeks of the new Congress, the Washington Times reports. "Even if it completes those tasks, Congress will have its plate piled high with Democrats' campaign promises for sweeping changes to everything from the health care system to how the country generates and uses energy," the Washington Times reports. According to the Times, Democratic lawmakers also are seeking to pass legislation that would expand health insurance to all residents and establish a national electronic health record system (Miller, Washington Times, 1/5). SCHIP Reauthorization
President-elect Barack Obama and House Speaker Nancy Pelosi (D-Calif.) on Monday discussed the possibility that Congress by Inauguration Day could complete work on a stand-alone bill to reauthorize SCHIP, CongressDaily reports. According to CongressDaily, the legislation "would likely be an easy, early legislative win" for Democrats.
However, Senate Democrats might seek to add the legislation to an economic stimulus package. Several health care lobbyists "view the measure's inclusion in a stimulus package as a bad move that will engulf children's health insurance in the massive bill," but the "benefit of wrapping SCHIP into the stimulus bill lies in how it would be paid for," as provisions in the stimulus package likely will "be exempted from pay/go rules," CongressDaily reports. Passage of legislation to reauthorize SCHIP "unfunded frees up money that could be spent on universal health care legislation that is expected to include an overhaul of the health care system that could cost several hundred billion dollars," according to CongressDaily (Edney, CongressDaily, 1/6).
Coverage & Access
Access to Health Care for Children Ages 10 to 19 Lacking, According to Report
[Jan 06, 2009]
U.S. residents between ages 10 and 19 do not receive adequate medical care, according to a report recently released by the National Research Council and the Institute of Medicine, the AP/Arizona Daily Star reports. The report found that the system of care for adolescents lacks coordination and proper design, as few physicians specialize in care for teens or provide comprehensive care that they trust. According to the report, fewer than 500 doctors had certification as adolescent medicine specialists between 1996 and 2005. Only a small percentage of adolescents have undergone screenings for risky behaviors that would allow physicians to intervene, the report found. Most adolescents visit physicians regularly, but the examinations that they receive often do not adequately assess their health risks, according to the report.
Although rates of pregnancy and smoking among adolescents have decreased in the past 10 years, the report found that improvements in the health of adolescents remain limited. In addition, physical activity among adolescents has decreased in the past 10 years, and rates of chronic diseases such as asthma and diabetes have increased, the report found. The report also found that, although between 10% and 20% of adolescents annually experience a mental health disorder such as anxiety or depression, their access to specialized mental health care has decreased in the past 10 years (Neergaard, AP/Arizona Daily Star, 1/6).
Nursing Shortage Expected To Grow Annually Through 2016, According to U.S. Bureau of Labor Statistics
[Jan 06, 2009]
A "long-standing" shortage of registered nurses in the U.S. is "expected to worsen" over the next seven years, the AP/Denver Post reports. According to the U.S. Bureau of Labor Statistics, about 233,000 additional jobs for registered nurses will open each year through 2016, in addition to about 2.5 million existing positions. However, only about 200,000 candidates passed the Registered Nurse licensing exam last year, and thousands of nurses leave the profession each year, according to the AP/Post.
Several factors contribute to the shortage, including a lack of qualified instructors, decreased funding for training programs and difficult working conditions. In addition, some nursing positions -- such as those in emergency departments or intensive care units -- require experience and expertise, preventing hospitals from hiring "newly minted" nurses for the positions, according to the AP/Post.
According to industry experts, the nursing shortage has operated on an eight- to 10-year cycle since World War II. As the shortage reaches a critical level, the government has added funds and hospitals have upgraded working conditions. However, as the shortage is alleviated, retention efforts are relaxed and working conditions become more difficult, "often driving nurses into other professions," the AP/Post reports.
According to the AP/Post, health facilities have struggled to fill positions despite "strong salaries." Registered nurses' average annual income was $62,480 in 2007, and "usually abundantly available" overtime pay can push salaries to more than $100,000 annually. Cheryl Peterson, director of nursing practice and policy for the American Nurses Association, said employers must increase salaries and improve working conditions in order to attract and maintain nurses. "The wages haven't kept up with the level of responsibility and accountability nurses have," she said. Solutions
Recruiters for open nursing positions "have been forced to get increasingly inventive" to fill open positions, the AP/Post reports. Some health facilities and organizations are enticing nurses to interview by offering prizes such as cash, gift cards, gas cards, flat-screen TVs, GPS devices and shopping sprees worth as much as $1,000.
In order to improve the situation, many employers are recruiting nurses from overseas. About one-fourth of the nurses who earned their licenses in 2007 were educated internationally, many in the Philippines and India. Some employers are recruiting more nurses than they need to ensure they will have enough at any time (Ramde, AP/Denver Post, 1/5).
Proposal To Restrict No-Cost Care at Atlanta Public Hospital Draws Criticism From Patient Advocates
[Jan 06, 2009]
A proposal that would restrict the amount of no-cost care that some uninsured patients could receive at Grady Memorial Hospital, a financially troubled public hospital in Atlanta, has raised concerns among patient advocates, the Atlanta Journal-Constitution reports. The "Grady Card" discount program offers subsidized or no-cost care to uninsured area residents. The Journal-Constitution obtained documents about the proposed changes under Georgia's open records law.
Under the current rules of the discount program, patients from Fulton and DeKalb counties with annual incomes up to 250% of the federal poverty level are eligible for no-cost care. Patients with similar income levels from other counties are required to pay 30% of their medical bills. The program currently serves about 250,000 people. Under the proposed changes, patients from Fulton and DeKalb counties with annual incomes of between 126% and 200% of the poverty level would be expected to pay up to 40% of their medical bills and patients from other counties would have to pay up to 70% of their bills. Residents of the two counties with annual incomes up to 125% of the poverty level still would be eligible for no-cost care, while patients from other counties would be eligible for a maximum discount of 50%. The expenses for patients needing costly medical procedures would be capped and dependent on their income.
According to the New Grady Coalition, the proposal could lead some patients to forgo essential care. Leaders of the advocacy group say that proposal reneges on a promise made by hospital officials in early 2008 to continue the system's mission as a safety net hospital for low-income residents.
Hospital officials said they proposed changes to the Grady Card discount program because it has been abused by some patients who can afford to pay a portion of their care costs. The hospital's board was scheduled to meet on Monday to discuss the proposal, but no final vote was expected, officials said. Hospital CEO Michael Young said that the hospital already has begun to closely screen its patients' finances and in December 2008, issued notices to 1,400 patients who were identified as being ineligible for discounted care. He said that the hospital would not turn away patients who need essential care, adding that the hospitals is "having a dialogue" with advocates and community leaders (Schneider, Atlanta Journal-Constitution, 1/1).
Prescription Drugs
More U.S. Residents Seeking To Participate in Paid Clinical Trials as Economy Weakens
[Jan 06, 2009]
Research centers across the U.S. and those familiar with the prescription drug industry say that, as the U.S. economy weakens, more people are seeking to participate in paid clinical trials of new drugs, the AP/Boston Globe reports. Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development, said over the past several years, declining interest among U.S. residents to participate in drug studies led some drug developers to conduct trials in other countries, such as India and China. Ken Getz, founder of the Center for Information & Study on Clinical Research Participation, said there already is evidence that the outsourcing trend is reversing, particularly for early-phase trials, and the recession and changes to the regulatory process have helped start the reversal.
According to the AP/Globe, clinical trials can pay participants "upward of thousands of dollars in exchange for a few weekends or more committed to testing new drugs." Steve Peck, director of operations at Nebraska-based Qualia Clinical Services, said the pool of potential participants also has become more diverse, and the company's database of participants has nearly doubled from 9,000 one year ago to about 16,000 currently.
The AP/Globe reports that as a result of the weakening economy, there also has been an increase in plasma donations. According to John Penrod, vice president of the Source division of the Plasma Protein Therapeutics Association, plasma donations topped 15 million in 2007, up from 10 million in 2005. Penrod said that reasons for the increase trend vary by region but noted the importance of compensation in generating enough of a plasma supply for worldwide use (Ortiz, AP/Boston Globe, 1/5).
State Watch
Texas Managed Care Program Continues Amid Complaints From Beneficiaries
[Jan 06, 2009]
The Dallas Morning News on Sunday examined how Evercare of Texas -- contracted to coordinate medical and long-term care for more than 80,000 elderly, disabled or blind state residents -- continues to receive state support despite being fined millions of dollars by the state and garnering complaints from many beneficiaries and advocates. Evercare, a unit of UnitedHealth, is contracted by Texas' Star Plus Program, which uses an HMO model to deliver care to elderly and disabled Medicaid beneficiaries in 29 northern Texas counties. The plan was expanded from a single county in 2007 -- a move the state said would save $110 million over two years by encouraging preventive care that could reduce emergency department visits and hospital admissions.
However, many have complained that Evercare has failed to provide adequate access to care for beneficiaries. From February 2008 to December 2008, the Texas Health and Human Services Commission filed more than 1,300 complaints about Evercare. In addition, the state has fined Evercare more than $1 million in the last year, ordering it to increase the size of its staff and fix other problems. The state has not conducted research into the "financial and human costs" of problems linked to privatizing government-provided care, the Morning News reports.
The firm said the problems experienced by beneficiaries are typical for a start-up program that aims to serve tens of thousands of people. "It was a massive undertaking," Evercare regional Executive Director Beth Mandell said, adding, "In working out the different systems, the workflows, there were some challenges," but "Evercare has a history of delivering these kinds of programs pretty successfully, and that is what we're focused on right now" (Jones, Dallas Morning News, 1/4).
The Morning News in several other articles profiled Texas residents affected by Evercare. The "State of Neglect" series is available online.
Blog Watch
Kaiser Daily Health Policy Report Feature Highlights Recent Blog Entries
[Jan 06, 2009]
"Blog Watch" offers readers a roundup of health policy-related blog posts.
The American Prospect's Ezra Klein looks at a New York Review of Books piece examining pharmaceutical research and physicians' conflicts of interest with the pharmaceutical industry.
Michael Cannon of Cato@Liberty looks at Gov. Bobby Jindal's (R-La.) proposed Medicaid reforms and says, "Jindal's plan is not market-based reform. ... Discerning consumers of market-based ideas should keep shopping."
Hygeia of Disruptive Women in Health Care posts a list of "what's right with the health care system" that was compiled at a community meeting -- one of many held nationwide -- to encourage grassroots participation in a health care system overhaul.
Karen Hein on the Health Affairs Blog writes, "It's time for us to redefine the Surgeon General's role as someone who can not only diagnose what's wrong with our health care system but work with us, as a team, to fix it."
Niko Karvounis of the Century Foundation's Health Beat Blog discusses the role of the media in the health reform debate, saying, "When Congress begins to talk about health reform in earnest, the important news that will affect all of us will be about policy and institutional changes. ... Any way you slice it, health care policy is tough stuff, and the media doesn't seem all that ready, or willing, to cover it appropriately."
Michael Miller of Health Care Policy and Communications Blog writes that "one of the most challenging parts of health reform will be to actually get more people enrolled in whatever expanded coverage plans are developed and implemented" and suggests methods to overcome such enrollment barriers.
Bob Laszewski of Health Care Policy and Marketplace Review explains why he believes commonly suggested health system improvements to save money for comprehensive health reform are "myths."
Health Populi's Jane Sarasohn-Kahn prognosticates on trends in health care, policy and spending in 2009.
John Goodman of his eponymous blog looks at elements of other health reform plans that President-elect Barack Obama "needs" to incorporate into his own proposal, including from former Republican presidential candidate Sen. John McCain (Ariz.).
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