By Tom Curry
National affairs writer
updated 1:18 p.m. PT, Tues., Aug 11, 2009
With Congress started on what could be an historic overhaul of the nation’s system of paying for medical care, here’s a glossary to help you understand what the policymakers are saying.
'Bend the health care cost curve'
From 2002 to 2007, medical spending in the United States increased by an average of 7.3 percent a year, a far faster pace than the growth in the nation’s income. President Barack Obama and congressional leaders want to “bend the cost curve” — or slow the growth in health care spending — by forcing doctors and hospitals to become more efficient.
Capitation refers to the fixed, per-patient payments made to doctors and other health care providers in return for delivering medical care to patients. Governments, insurers, and managed care organizations use capitation to control health care costs. Capitation contrasts with “fee-for-service” systems in which doctors get separate payments for each service they provide.
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The Congressional Budget Office, the non-partisan budget estimator for Congress, “scores” a proposed bill by calculating the amount it will either increase or decrease federal spending and tax revenues.
The Children's Health Insurance Program provides health insurance to children in low-income families whose parents are not poor enough to qualify for Medicaid. The program is jointly financed by states and the federal government. It is administered by the states.
Under a federal law — the Consolidated Omnibus Reconciliation Act of 1985 — a company’s insurance plan must offer continuation coverage to workers after they lose their jobs. But the laid-off worker must pay the full cost of the premiums.
Comparative effectiveness research examines the relative cost and efficacy of medical procedures in one hospital or region of the country contrasted with another hospital or region, in the hopes of forcing down costs in the more expensive areas.
President Obama has endorsed this approach, saying the Mayo Clinic in Minnesota and other institutions “offer the highest-quality care at costs well below the national norm. We need to learn from their successes and replicate those best practices across our country.”
Under a proposal made by Senate Budget Committee Chairman Kent Conrad, D-N.D., people without health insurance would be able to purchase it from regional co-operatives, almost like farmer co-ops.
These co-ops would not be run by the federal government, but would compete on cost and quality with the for-profit insurance industry.
Conrad called his co-op idea "an alternative to for-profit insurance companies, so that there's a different delivery model for competition."
A "crowd out" is a reduction in private medical insurance coverage caused by an expansion of taxpayer-paid coverage.
Opponents of a taxpayer-paid insurance option say a public plan would compete with private insurance to the point where some private insurers would be "crowded out" of business.
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Obama has pledged that the insurance overhaul will not add to the projected federal deficits when measured over ten years. New spending will need to be offset by cuts in other parts of the health care system. According to the CBO, the cumulative deficits from 2010 to 2019 will be $9.3 trillion, or about 5 percent of gross domestic product.
Under a fee-for-service system, a doctor bills the insurance company or the government for each service he or she provides. This contrasts with a capitation system under which physicians receive a fixed sum for each patient assigned to them and the payment does not increase if more services are provided.
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According the CBO, “providing separate payments for each service encourages physicians to provide a higher volume of services than they would under capitation arrangements.”
Health care rationing
Rationing uses a mechanism such as a waiting list or a strict national medical budget to allocate limited resources.
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In Britain, where overall medical care spending is controlled by the government, the drug rationing agency, the National Institute of Health and Clinical Excellence, refuses to recommend some medications for patients with certain advanced cancers, because it judges them to be not cost effective. Patients who decide to pay on their own for a new drug or treatment which is not approved by the agency are ineligible for further care by the National Health Service.
Health information technology, or health IT, refers to storing patients’ records on computerized databases which would allow more efficient sharing of patients’ medical histories among doctors, nurses, and others. As of 2008, according to the New England Journal of Medicine, only 5 percent of doctors in the United States had adopted comprehensive health IT systems.
Health insurance exchange
A health insurance exchange system would allow uninsured individuals and small employers to purchase insurance by shopping at a federally-regulated, web-based marketplace similar to a travel web site such as Orbitz.
Purchasers would be given a menu of competing plans, mostly private-sector ones, but also one federally-sponsored plan which would compete on cost and quality with the private-sector plans.
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Proposed by some reform advocates, an individual mandate would require that uninsured individuals purchase coverage. It would apply to individuals who were neither poor enough to qualify for Medicaid nor old enough to enter Medicare. Those who failed to comply would be forced to pay a penalty to the federal government.
A proposed Independent Medicare Advisory Commission composed of doctors, economists, and health policy experts which would to set the rates at which doctors and hospital are paid under Medicare.
The panel would also propose cost-saving measures with t he goal of the federal government spending less money on inefficient medical procedures.
If IMAC's recommendations were approved by the president, they would take effect unless explicitly voted down by the Congress within 30 days.
The Obama administration has supported creation of such a commission. According to Obama's budget director, Peter Orszag, such an independent body of experts "would help to insulate Medicare policy decisions from undue political influence" and would help steer the health care market "toward higher quality and more efficient care."
CONTINUED : What about Medicare and Medicaid?
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