#259: Keeping an Eye on CMS Head Don Berwick

Published February 14, 2011

On Thursday, C-SPAN chose not to broadcast live the Ways and Means subcommittee hearing with Don Berwick, the controversial head of the Centers for Medicare & Medicaid Services, in his first appearance before the House. As a longtime fan of C-SPAN’s efforts to ensure transparency on Capitol Hill, this disappointed me–it’s par for the course for old media to ignore Berwick’s actions since his recess appointment to CMS last year.

In the hearing, Berwick claimed: “I abhor rationing. My entire life has been spent fighting rationing.” But compare that to a quote from Berwick in 2009: “The decision is not whether or not we will ration care – the decision is whether we will ration with our eyes open.” As Rep. Tom Price (R-GA), a physician and leading spokesman on health policy, told us in a post-hearing interview on Thursday, this is what they call a “Pinocchio moment.” But it garnered little attention from the media outside of the health care niche.

Not content to let this standard endure, we’ve launched a new Web site this week tracking Berwick’s activities, news about his decisions, and live-blogging his hearings. You can find Don Berwick Online at DonBerwick.com.

On this new site, we’ve collected videos, podcasts, reports, research, and other material on Berwick. We already have multiple FOIA requests in to CMS regarding Berwick’s activities, and we’ll have more coming out of Thursday’s hearing – the first of many more oversight hearings in the months to come.

We’ve paired the site with a new Twitter account, @donberwick, which will track Berwick’s comments and activity. And we’ve fully integrated Facebook, so people can easily share and recommend their friends check out Berwick’s latest actions and keep track of what CMS is up to as they implement President Barack Obama’s law.

We hope this will serve as a worthwhile standalone resource for anyone who wants to follow Berwick and demand accountability on his actions and decisions, and we hope you’ll find it useful in the future. Please feel free to email me at bdomenech[at]heartland.org with any information or material you find that needs to be included on the site. Through the power of the Internet, there’s no such thing as an untold story any more – and we’ll be tracking this one throughout Berwick’s upcoming renomination hearings this year.

— Benjamin Domenech



A must-read study in the latest Health Affairs authored by two respected health policy experts – Harvard Professor Benjamin Sommers and George Washington University Professor Sara Rosenbaum – found President Obama’s system of subsidies will result in millions of adults and their families bouncing back and forth between Medicaid and state exchanges over periods of just a few months thanks to shifts in eligibility and income:

Sommers and Rosenbaum used national survey data to calculate churning among people initially eligible for Medicaid and those initially eligible for exchange coverage when the relevant provisions of health reform take effect in 2014. They estimate that more than 35 percent of adults with family incomes below 200 percent of the federal poverty level will experience a change in eligibility within six months, and 50 percent will experience a change within one year. In addition, 24 percent will churn at least twice within a year, and 39 percent will experience such churning within two years.

By the end of four years, only 19 percent of adults initially eligible for Medicaid will have been continuously eligible, while only 31 percent of adults eligible for exchange subsidies will have remained continuously eligible. In all, 38 percent will have churned four times or more.

The researchers note that many people who will experience churning will have incomes low enough to exempt them from the federal insurance mandate, which means that fatigue with frequent coverage changes could lead them to simply abandon insurance over time.

This picture is an administrative nightmare and virtually ensures gaps in coverage for millions of Americans after the exchanges begin functioning in 2014. Every governor needs to consider this before setting up an exchange without a sunset clause.

SOURCE: Health Affairs


Politico’s Sarah Kliff had a great report on Friday morning – sadly, behind the paywall of Politico Pro – that details how Virginia Gov. Bob McDonnell is responding to the exchange requirement. According to Kliff, in an interview “McDonnell said that, if his state does sink so many resources into setting up a health exchange, it might just make sense to leave the marketplace standing – even if the health reform law is overturned by the courts or Congress.” And this is, she finds, consistent with what other Republican governors are doing.

So while 21 Republican governors signed on to a Monday letter threatening not to set up their own health exchanges if six specific changes weren’t met, they still continue to move forward on laying the foundation for the new marketplaces.

All Republican governors except for Alaska Gov. Sean Parnell currently have exchange planning grants. And of the seven states that applied for early innovator grants – additional funds for states that serve as exchange prototypes – three are helmed by Republican governors: Oklahoma, Kansas and Wisconsin.

I see the high-level messaging from governors, ‘We don’t like this or that,'” CCIIO’s Joel Ario said this week at the Academy Health conference. “But on the ground, other people are talking in my ear saying, ‘Don’t pay attention [to the rhetoric].’ And I don’t. … People tell me the states are going to deliver in the end … We want states to step up.

Thus far, it seems only Republican Govs. Rick Scott of Florida and Bobby Jindal of Louisiana have said they will not take steps toward creating the exchanges. Yet one has to wonder why Republican governors wouldn’t simply perform due diligence in studying the matter while promising the addition of a sunset provision should the law be struck down by the Supreme Court or repealed by Congress? Any exchange they set up under the current commandment from Washington must meet HHS Sec. Kathleen Sebelius’s measure as of January 1, 2013 – yet by that point, we’ll already likely have a Supreme Court decision that may render the entire program moot.

SOURCE: Politico Pro


In the Richmond Times-Dispatch this weekend, the Pacific Research Institute’s John R. Graham expresses his skepticism as to the utility of health exchanges generally, even beyond the problems caused by subsidies.

Some claim that the Utah Health Exchange is a consumer-friendly model that can blunt the most harmful consequences of Obamacare. However, Utah’s exchange has been a disappointment. Although 20 businesses enrolled on the first day of operations in August 2009, only 13 remained enrolled by the end of 2009. As a result, the exchange is being re-launched with new rules in 2011.

A “successful” exchange is very expensive to operate. Massachusetts’ Commonwealth Connector spent more than $26 million on vendors and contractors in 2009, and $3.4 million on employee compensation. This is fully 3.5 percent of the money that businesses and enrollees paid into the exchange – on top of the bloated administrative costs that already burden our health insurance.

This cash flow explains why information technology vendors and consultants, health insurers who believe that they can dominate an exchange to the detriment of smaller competitors, and brokers who hope to get paid by government to serve as “navigators” in the exchanges, are investing heavily in lobbying states to establish exchanges.

In a radio interview on Friday, Mississippi Gov. Haley Barbour promised that his state’s exchange would come “at no cost to the taxpayers.” It’s a laughable suggestion – whether state or federal, the taxpayers will pour millions in administrative costs into the exchanges. More on the Mississippi angle to this story next week.

SOURCE: Richmond Times-Dispatch


The American Enterprise Institute’s John Hoff and John Calfee write on the waiver-based scandal of HHS’s approach to leniency on so-called consumer protections:

The waivers demonstrate HHS’s recognition that, in 733 instances (to date), requiring insurers to meet its payout regulation for year 2011 will make coverage too expensive or impair access to coverage. This is what happens with centrally mandated determinations of how everyone’s insurance coverage must be structured. Consumer preferences get overturned, and to curtail this impact, HHS is waiving its own determinations.

But this is just for 2011. If waivers are necessary to keep 733 insurance plans in place now, think of what will be necessary in 2013, when the amount policies must cover in a year will be nearly three times that cost, or in 2014, when full-blown PPACA kicks in and insurers are prohibited from offering a policy without unlimited coverage. The waiver option will be gone: nothing in PPACA gives HHS the authority to waive the statutory ban on annual limits. At the same time, other parts of PPACA will require Americans to have more comprehensive insurance than what they have now (unless the Supreme Court has by then voided the law’s individual mandate). Ineluctably, the result will be to require Americans to purchase insurance packages far more comprehensive and far more costly than what HHS has already determined in 733 cases is too expensive to buy.”

For more on this topic, read Cato’s Michael Cannon from a few weeks ago.

SOURCE: The American


A new study in the New England Journal of Medicine on PSRIs functions as a response to Benjamin Zycher’s prior study on the public-sector role in drug research.

Historically, there has been a clear distinction between the roles of public-sector research and corporate research in the discovery of new drugs and vaccines to solve unmet medical needs. Public-sector research institutions (PSRIs) have performed the upstream, basic research to elucidate the underlying mechanisms and pathways of disease and identify promising points of intervention, whereas corporate researchers have performed the downstream, applied research to discover drugs that can be used to treat diseases and have then carried out the development activities to bring the drugs to market. The intellectual property that protects the investment in developing these drugs is created in the applied-research phase.

The results are interesting:

We believe that our study supports the concept that the emergence of biotechnology in the mid-1970s, combined with policy changes implemented in the early 1980s regarding the ownership and management of the intellectual property of PSRIs, allowed these institutions to play an important role in the downstream, applied phase of drug discovery. Our data show that PSRIs have contributed to the discovery of 9.3 to 21.2% of all drugs involved in new-drug applications approved during the period from 1990 through 2007. These proportions are higher than those identified by some earlier researchers. Our data also suggest that PSRIs tend to discover drugs that are expected to have a disproportionately important clinical effect.

The public-sector role here is a significant question, and one where conventional wisdom may be in the wrong. I’ll be following up on this subject with Zycher himself next week, as I’m curious to hear his reactions.

SOURCE: New England Journal of Medicine