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In This Issue:

1.) Health Care Coverage for All Debate Launched in Colorado
2.) A Big Opportunity for Health IT?
3.) Evaluating Doctors on Costs and Quality

1.) Health Care Coverage for All Debate Launched in Colorado

The state-led movement toward health care coverage for all has taken another step forward in Colorado. Following on the heels of Massachusetts' health care reform and big debates in California and Pennsylvania, the Colorado Blue Ribbon Commission for Health Care Reform has recommended a plan for shared responsibility by individuals, employers, and the government for health care coverage. The commission has opened the door for action in the state legislature next year.

The bipartisan commission, which was appointed by Colorado Governor Bill Ritter (D) and Democratic and Republican legislative leaders, approved the recommendations by a vote of 20-2 according to The Denver Post. Here are the key ingredients for reform:

An individual mandate. All Coloradoans will be required to have health insurance or face a tax penalty. The health insurance will have to include a minimum benefit with an average monthly premium of about $200.

Financial assistance. Low and middle-income workers will receive a subsidy based on a sliding scale. Individuals and families with incomes less than three times the poverty level will receive a full subsidy. The subsidy for those between three and four times the poverty level will decline but will ensure that their premium cost is no more than 9 percent of their income. In addition, employers would be required to offer employees the opportunity to pay for health care with pre-tax income, further reducing the employee's health care costs.

Choice and competition. Small businesses and individual could choose their own coverage through a "connector" or purchasing pool that would operate much like the Federal Employee Health Benefits system (FEHB). These pools connect individuals and small businesses to the group insurance market, fostering choice and competition among plans to improve quality and keep costs down.

Gov. Ritter has launched a series of 10 meetings statewide with civic, business, and health care leaders to complement the work of the Blue Ribbon Commission. These meetings will solicit ideas about practical problems like covering the uninsured and paying for it as well as broader questions about the role of government, employers, and individuals in health care. Gov. Ritter has also released a report to stimulate pubic debate about health care. The report, the "Governor's Dialogue on Health Care Vision and Values," does an excellent job of teeing up important questions. For example, it presents arguments for both personal responsibility and common good approaches to health care, and then asks: "What values underpin your vision for health care?"

For their part, Colorado GOP legislators have countered the Commission's call for comprehensive reform with a series of incremental measures that include allowing insurance companies licensed in other states to sell health insurance in Colorado. The chairman of the Commission, Bill Lindsay, a Republican said the GOP proposals "are very incremental and they are not going to move the ball very far," according to the Rocky Mountain News.

With thoughtful and careful leadership, Gov. Ritter is tilling the political ground for action on health care. It's time to add Colorado to the growing list of states where the nation can learn some valuable lessons about health care reform.

For more information:

Blue Ribbon Commission for Health Care Reform:
http://www.colorado.gov/208commission/

"Health Panel Oks Options,"
By Jennifer Brown, The Denver Post, November 20, 2007:
http://origin.denverpost.com/portal/news/
ci_7510811?_loopback=1

"Ritter Sends Health on the Road,"
By Chris Barge, Rocky Mountain News, Tuesday, October 23, 2007:
http://www.rockymountainnews.com/drmn/
government/article/0,2777,DRMN_23906_5728956,00.html

"Governor's Dialogue on Health Care Vision and Values,"
Colorado Governor's Office, November-December 2007:
http://www.colorado.gov/cs/Satellite?c=Document_C
&cid=1193047055442&pagename=GovRitter%2F
Document_C%2FGOVRAddLink

"Republican Legislators Offer Their Own Health Insurance Proposals,"
By Chris Barge, Rocky Mountain News, December 4, 2007:
http://www.rockymountainnews.com/news/2007/dec/04/
republican-legislators-offer-their-own-health/

2.) A Big Opportunity for Health IT?

The administration is making a last-minute push for health IT as part of a debate in Congress over a scheduled 10 percent pay cut to doctors who see Medicare patients. HHS Secretary Mike Leavitt wants Congress to require doctors to use electronic health records in order to avoid the pay cut, as reported in The Hill and The Wall Street Journal.

It's great to see some fresh leadership from the administration on health IT, but their proposal has a major problem in addition to going against a nationwide lobbying campaign by doctors to avoid the pay cut. The problem is that the health IT proposal may not work as intended. Simply getting doctors to convert from paper records to electronic health records does not ensure that a complete record will follow patients as they see a variety of doctors and enter hospitals, each with their own computer systems. Most of the benefits from health IT requires sharing patient records so tests don't get duplicated, patients do not get dangerous combinations of drugs prescribed by different doctors, and patients with chronic conditions who see multiple doctors do not miss critical care.

Instead of focusing directly on getting doctors to use EHRs, Congress should require doctors to create an electronic health record for each patient that any other doctor or patient can use. This approach has been proposed by a group of health care researchers and consultants known as the Mt. Washington Project as well as the Information Technology and Innovation Foundation. It would require doctors and hospitals to create and maintain EHRs and enable trusted third parties, or independent health record trusts, to assemble complete electronic health records from all sources. Unlike directly requiring doctors to use an EHR system, this approach won't freeze in place today's state of the art for health IT. Under Secy. Leavitt's proposal, the government would have to specify in regulations what kind of EHR system doctors would have to buy in order to avoid the pay cut. Instead of micromanaging the software that doctors must purchase to create electronic health records, the government should simply require them to do so under standards for the data that ensures everyone can use and understand the records. Setting standards for sharing patient data can produce a tremendous benefit just as the U.S. Defense Advanced Research Projects Agency (DARPA) did when it created the initial standards for the Internet.

Congress and the administration also need to address doctors' concerns that a requirement to create EHRs puts all the burdens on them and offers few benefits. The savings from health IT come from fewer duplicated tests, fewer medical mistakes, and better management of chronic disease. All these savings actually reduce doctors' revenue in today's upside down world of fee-for-service medicine. Doctors today make more money by doing more procedures and spending less time with patients. The savings from health IT goes to the payers: insurance companies, employers, and government health care programs like Medicare. To bridge the gap between payers and providers, patients need independent health record trusts who can act as middlemen and refine a business model for health IT so payers can finance EHR systems for doctors as PPI has proposed.

Finally, both Congress and the administration need to fix the existing patient privacy laws because wide use of EHRs will only exacerbate privacy problems. Under current law, patients have little control over who has access to their records, which are widely distributed to organizations that have nothing to do with health care. For example, life insurance companies routinely see patients' prescription drug records and use them to determine who can buy life insurance. With such far-reaching uses of patient records being legal, it's easy to imagine a day when even more serious problems will arise from illicit activity. In the wake of identity theft and ruined credit ratings, states across the country have been requiring credit reporting agencies to give consumers control over who has access to their credit reports. Congress shouldn't wait for a crisis with patient privacy. It should act now when it's relatively cheap and easy to build privacy protections into health IT systems. It should enable patients to use independent health record trusts to control who has access to their records.

Perhaps the biggest obstacle to using doctor payments under Medicare to advance health IT is the short time frame for action. There's no consensus for bold action on health IT. Indeed, Congress has been stalled over a far less ambitious health IT bill, the Wired Act, for over two years. Still, there's no time like the present. Congress should seize this opportunity to make some real progress on health IT.

For more information:

"White House Wants to Tie Medicare Fee Fix to Overhaul of Information Technology,"
By Jeffrey Young, The Hill, December 5, 2007:
http://thehill.com/business--lobby/
white-house-wants-to-tie-medicare-fee-fix-to-overhaul
-of-information-technology-2007-12-05.html

"HHS Chief: No Pay-for-Performance Without Health IT,"
Posted by Jacob Goldstein, Wall Street Journal, December 4, 2007:
http://blogs.wsj.com/health/2007/12/04/
hhs-chief-no-pay-for-performance-without-health-it/

The Mt. Washington Vision: A Response to ONCHIT's Request for Information,
By Liora Alschuler et al, Intersystems, January 18, 2005:
www.intersystems.com/mt_washington_vision.pdf

"Improving Health Care: Why a Dose of IT May Be Just What the Doctor Ordered,"
By Daniel Castro, Information Technology and Innovation Foundation, October 2007:
http://www.innovationpolicy.org/index.php?id=88

"Building a Health Information Network,"
By David B. Kendall, Progressive Policy Institute, May 24, 2007:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111
&subsecid=140&contentid=254315

3.) Evaluating Doctors on Costs and Quality

An important transformation of health insurance is playing out in New York State. Attorney General Andrew Cuomo has negotiated agreements with insurance companies over new ways to evaluate and rank the performance of doctors. The new doctor ranking methods are important because they can help drive down costs while improving the quality of patient care.

Since the 1990s, health insurance plans have widely used a simple strategy to restrain health care prices. They lowered copayments and deductibles for patients who went to see doctors on a preferred provider list and who agreed to charge lower prices. Doctors would make up for lower prices by seeing more patients. Up to a point, that approach restrained costs, but it also caused doctors to cut corners in ways that drive up costs in the long run. For example, patients with chronic diseases who don't get extra time from health care professionals to learn how to manage their condition end up needing more expensive care. It's cheaper (and more humane) for doctors to help a patient control her diabetes than to amputate her leg.

To do better, health plans are developing new ways to measure, assess, and rank how well doctors improve patients' health and keep overall costs down. Doctors who use their time and resources efficiently to help patients manage chronic conditions successfully should receive higher pay. Preferred providers selected by health plans should be those who deliver the best value care. The new ranking tools haven't been nearly as hard for health plans to develop as getting doctors to accept them. After all, there's not much trust, if any, between doctors and the health plans.

N.Y. Attorney General Andrew Cuomo has stepped into the breach and negotiated a doctor ranking model code that will help patients, doctors, and insurers alike. It requires health plans to disclose their evaluation methods and to use scientifically valid principles. For example, it would be unfair to rate a physician for poor performance when her patients are sicker on average. The Cuomo agreement requires that evaluation methods account for the average sickness of a doctor's group of patients, a process known as risk adjustment.

The nation's largest insurers, United Healthcare Group, Wellpoint, Aetna, and Cigna have agreed to use Cuomo's code in New York and nationwide. In addition, N.Y. Senate Majority Leader Joseph L. Bruno and Assembly Speaker Sheldon Silver have proposed legislation based on Cuomo's doctor ranking model code.

The health insurance companies' ranking of doctors and Cuomo's code will need to be refined continuously as the science behind analyzing the cost-effectiveness of health care evolves. But Cuomo's leadership along with the doctor and consumer groups and health plans who worked with Cuomo, has cleared the political path for full-scale testing of this new approach to financing health care.

For more information:

"Doctor Ranking Legislation,"
Office of the New York State Attorney General Andrew Cuomo, press release, November 26, 2007:
http://www.oag.state.ny.us/press/2007/nov/nov26a_07.html

"Doctor-Ranking Law Proposed,"
By Karen Matthews, AP-Albany Times Union, November 27, 2007:
http://www.timesunion.com/AspStories/story.asp?storyID=642316

"Restaurant ratings firm Zagat, WellPoint Rate Doctors,"
Fierce Healthcare, October 23, 2007:
http://www.fiercehealthcare.com/story/
restaurant-ratings-firm-zagat-wellpoint-rate-doctors/2007-10-23

Newsletter compiled and written by David B. Kendall, PPI's senior fellow for health policy.