By Bill Peckham
Where did the Part A/Part B framework of Medicare come from? I'm reading Tom Daschle's book Critical: What We Can Do About the Health-Care Crisis, which starts with the sort of tragic health care failure vignettes a US Senator must hear on a daily basis. The next section of the book covers the political history of health care and health care insurance in the US. Daschle reflects that:
I made some progress on health care during my 26 years on Capitol Hill, but the successes were incremental ones, and frankly they were outweighed by failures. (page 45, Critical).
Indeed, for a litany of reasons beyond the power of a Senator to change, health care successes have been few in the history of the US, if by success we mean federal legislative efforts to bring some sense to a health care system that has always seemed chaotic and arbitrary. The point this all leads to is that we have a system that produces health care failures on a daily basis, it is these failures the new Obama administration with Tom Daschle at the head of DHHS, hopes to address but Daschle acknowledges health care is a tough nut to crack. However, Daschle writes that in the '60s before his time there was a major legislative success - the implementation of Medicare and Medicaid.
The Birth of Part A and Part B
There were three health care bills floating around the new Congress after the Johnson electoral landslide of 1964. H.R. 1, the King-Anderson bill would create a program of compulsory hospital insurance, financed by payroll taxes (as opposed to a needs based program financed by general tax receipts). According to Daschle, lobbyist for Aetna (the insurance giant) worked through Rep. Byrnes, the senior Republican on the House Ways and Means Committee, to introduce "Better-care" which created a noncompulsory health insurance program that would cover both hospital and out of hospital care, financed by government subsidized premiums. And a third American Medical Association (AMA) sponsored bill dubbed "Elder-care" a coverage scheme that Daschle describes as "a slightly expanded version of Kerr-Mills [a need based proposal that did not get through the previous Congress] that would help states pay the health insurance costs of the elderly poor."
Daschle writes that it was a surprise to President Johnson that Mills:
combined all three proposals into a single bill, his "three layer cake." Medicare Part A, the first layer, would pay for hospital care, skilled nursing for a limited time, and some home health care. Part B, which was optional, would cover the cost of doctor's visits. And Medicaid, a separate program, was created to help states finance not just long-term care for poor seniors but health-care coverage for other vulnerable Americans like single-parent families and people with disabilities. (page 62, Critical (my emphasis))
This strategy based on insurance was a purly political maneuver devised to get legislation through the Congress in the face of opposition from the AMA, business groups and insurers, among others. Daschle writes that the three layer cake approach was a surprise to Johnson but in Sue A. Blevins' book Medicare’s Midlife Crisis, Blevins looks at primary sources to find that the three layer cake approach was orchestrated by the consummate Congressional deal maker President Johnson:
Blevins makes an important contribution as a result of her examination of internal White House documents stored in the Lyndon Baines Johnson Library. Using previously unpublicized White House memos, she shows that long-standing claims that President Johnson did not know of Representative Mills’s plan to combine these three bills were false, indeed that Johnson knew of Mills’s plan more than a year in advance. This point is critical because it confirms the deliberateness of the political strategies involved.
I think this explains the Part A, Part B, Medicaid approach. It never pretended to be a thoughtful approach to providing health care, rather it was the result of political necessity. In the end this construct can be deemed a success because it allowed legislation to pass that finally addressed some of some big, hard to address problems.
Health Insurance vs. Health Care
You can think of Mills' three layer cake as a decision tree, with branches at certain binary choices. The first branch takes place between Medicare and Medicaid, a division based on need. Medicaid is means tested Medicare is not. If you are in the Medicaid side then your health care comes through Medicaid regardless of what the health care is for, or where it is provided. The only questions left to answer is: is a procedure covered and does a provider accept Medicaid payment?
On the Medicare branch there is a second binary choice based largely on where the care is provided. In the hospital, Part A or outside a hospital, Part B. Part A is compulsory, Part B is optional. Access to both is mostly based on age (disability generally and severe kidney disease specifically being notable exceptions) and access requires a work history of paying Medicare payroll taxes - neither Part A or Part B is means tested.
Medicare/Medicaid is a health insurance system, it does not really get at the question of health care. Indeed reading the vignettes in the first part of Critical it seems Daschle sees the health care problem as a health insurance problem. That is not how I see the problems we face. When I complain about the way dialysis is provided under Medicare Part B or the disconnect in chronic kidney disease between Part A and Part B, I'm not describing an insurance problem, I'm describing a health care problem. I'm saying reimbursement is creating inefficient and/or dangerously ineffective chronic kidney disease (CKD) care. The structure of the system is creating problems in the delivery of care. The structure of federal health insurance is leading to sub optimal health care.
A Better Three Layer Cake
Today Mills' plan looks more like three separate cakes rather than each a piece of an integrated whole. The divisions look rigid and linear. Dividing up the problem needs to be done in a more flexible way so that each sub group can access any part of the healthcare system and costs can be managed based on the total cost to the system. Rather than dividing up the problem on the basis of insurance and location of care, a better approach would be to divide the problem up on the basis of diagnosis. A three layer Cake of health care would divide the problem into Chronic health care, Acute health care and Preventive health care. The CAP Cake of health care.
Health care with a beginning and an end - acute health care - is very different from the ongoing grind of chronic health care. And both are not at all like preventive health care. The CAP Cake decision tree would start with preventive health care.
If the health care in question is in the interest of the entire health system and is not based on a specific diagnosis or individual problem, then it is preventive health care. Preventive health care should be widely available and encouraged i.e. free CKD screening should be widely available to all Americans with directed efforts to screen at risk groups. Much can be done if CKD is identified early ... the kidney is a window into the vascular system; catching problems early maximizes the impact of lifestyle changes; routine drug regimes e.g. blood pressure control, diabetes management. Preventive health care saves money as it saves human misery - we need a return to government funded public health and make it the purview of Medicaid.
The next branch of the CAP Cake would be on the non-preventive branch between chronic and acute diseases. Both involve health care specific to an individual but they are very different. Our existing acute care model, the part A side, is based on diagnosis-related groups or DRGs. Hospitals/doctors identify which basket of health care you need (which DRG) and once the right DRG is provided it should conclude with you not needing additional health care.
Chronic health care is different, the Part B side is different. With chronic disease the need for health care doesn't end after the appointment. The role of the ill is different too. Chronic health care works best with the active participation of the ill individual while acute health care can be successful with the passive participation of the ill. It is chronic health care that is failed by the current system and it is this chronic health care failure that feeds the demand for Part A services.
To look at the three layer health care cake through the lens of insurance, the CAP cake would make compulsory and universal acute health care coverage (the new Part A). Part A care could be provided anywhere - hospitals, doctor offices or urgent care facilities - under a DRG payment scheme. Government chronic health care insurance would be widely available and subsidized but remain optional (the new Part B). Part B care would span time and venue, the goal would be health care intended to help people live the lives they were meant to live. Neither Part A or Part B would be needs based but the poor would have their Part B participation paid/subsidized but how their participation was funded would not result in differences in access to care and would not rely on employment.
It is effective and efficient health care for chronic disease that is most in need of change, while preventive health care is missing from the current health insurance system. This is a separate problem from who pays for what. Do we have a health insurance problem or a health care problem? From the sharp end of the needle it looks like a health care problem. We need a health care solution rather than another health insurance solution.
(rev 11/27/08 by bp for clarity/typo)
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