Each Patient Counts: Massachusetts Medical Society Weblog

Obama's Health Care Budget: New Spending, New Cuts and Tax Hikes

The Obama administration’s budget plan this week features the creation of $635 billion “reserve fund” to pay for changes in the country’s health care system. It includes roughly equal measures of spending cuts and tax increases.

Based on various news summaries and other reports, here’s what Obama proposed. The estimated value of spending, cuts and tax increases come from the Obama administration.

New Spending

• Eliminate scheduled payment cuts to physicians. A 21% cut is scheduled for 2010; 40% over the next decade.
• Spend $330 million to address the shortage of health care providers in certain areas. This includes loan repayment programs for doctors, nurses and dentists who practice in under-served areas. Also, there is assistance for nursing schools.
• Increase cancer research spending at the NIH by $400 million to $6 billion.
• Spend $211 million at the HHS for research into autism, as well as for screening, public awareness and support services for autism patients
• Spend $12 billion in quality incentives to hospitals: $12 billion over 10 years

Spending Cuts

• Eliminate the 14% worth of higher payments that Medicare Advantage plans now get from the federal government and require them to submit to competitive bidding. Savings: $177 billion over 10 years. Medicare Advantage plans cover about 23% of Medicare beneficiaries.
• Set up a "regulatory pathway" to approve generic versions of biologic drugs developed by biotechnology companies. Savings: $9.2 billion over 10 years.
• Require drug makers to provide bigger discounts to Medicaid. Savings: $19.5 billion over 10 years
• Bundle Medicare payments for hospital and post-hospital care, to be split by physicians and hospitals. Savings: $17.8 billion over 10 years
• Cut payments for hospitals for preventable readmissions. $8.4 billion over 10 years.
• Reduce payments to home health agencies by $37 billion over 10 years.
• Use radiology benefit managers in Medicare. Savings: $260 million over 10 years
• Total value of spending cuts: $316 billion

Tax increases

• Increase top tax bracket to 39.6% (currently 35%)
• Limit deductions for mortgage interest and charitable donations by taxpayers in the top two tax brackets to 28%.
• Increase premiums for Medicare prescription drugs plans for high-earning taxpayers ($8 billion over 10 years)
• Allow tax cuts for upper income taxpayers to phase out in 2012
• Block phase out of the estate tax
• Total value of tax increases: $318 billion

What do you think? What's realistic, and what's not?

Worth a read: Understanding Physician-Pharmaceutical Industry Interactions

Much has been written about the relationships between the drug industry and physicians.  Headlines blare: "Doctors reap millions for anemia drugs;" "Pills for Patients, Payday for Docs;" "Posing as pals, drug reps sway doctors' choices." To some, even within our own physician ranks, it appears an insidious relationship exists. Press reports would have you believe most doctors are checking patients with their right hand and looking for a hand-out with their left. Some may; most do not.

Understanding Physician-Pharmaceutical Industry Interactions, a new book for which I had the honor of writing the forward, is long overdue. Written by a young physician, Shaili Jain, M.D., a General Adult Psychiatrist in Milwaukee, Wisconsin, it focuses on a critically important topic for all health professionals who prescribe medicines.

These interactions continue to generate heated debate in academic and public arenas, yet sadly, research shows that physicians and physicians in training remain ignorant of the core issues and poorly trained to face the sophisticated industry promotion which has become ubiquitous in medical environments. This book aims to address this gap in education by providing a single concise resource that explains the essential elements.

Business ethics and medical ethics are different. What Big Pharma, as a business, considers normal, the medical profession considers unethical. But the principles I learned in medical school many years ago -- prescribe as few medicines as possible, but when doing, use medicines that are therapeutically effective, safe, and cost the least -- hold true today. Yet to curtail the rising cost of health care, everyone must become cost conscious, especially for medicines. No other service or product is purchased so blindly.

The achievements in medicine during the 20th century were spectacular. Vaccines have saved millions of lives and prevented countless suffering. More medicines and discoveries are in progress. To continue that advance, the pharmaceutical industry and the medical professional must work in synergy. The relationship must be completely devoid of conflict of self-interest and greed. And the relationship between the prescriber and drug manufacturer must not be self-serving for either. It is - and should be -- all about the patient and the betterment of the health of the world's population. 

Leonard J. Morse, M.D., Commissioner of Public Health, City of Worcester, Past Member and Chair, Council on Ethical and Judicial Affairs, American Medical Association; Past President, Massachusetts Medical Society