Gail Wilensky

It has been incredulous to me that the Obama Administration waited until April of 2010 to announce a CMS candidate, as opposed to making a selection around March/April of 2009 when they announced the FDA commissioner and deputy commissioner. Those have traditionally been the controversial positions in HHS.

Having waited so very long, to my mind they have now compromised Don Berwick’s effectiveness and for sure, limited his tenure to 17 months. Maybe it would have been necessary to make a recess appointment if there had been no movement in his hearing process by the time of the election, or if a Senator had put an indefinite hold on his name, but to have done this two months into the process before his hearing had even been scheduled is inexcusable (and truly inexplicable).

Do Berwick, the administration, and the agency did not need this. It will complicate life for everybody. I normally don’t feel quite so strongly. but I am very frustrated and saddened for Don and the extra burden he will carry. It will be interesting to observe his first Cong

Now that the legislation requires that 80% to 85% of health insurance premiums need to be spent on medical services or quality improvements, regulations need to determine what should count as a medical expenditure. Making health insurance into the equivalent of a regulated public utility introduces all sorts of complications including what should constitute administrative costs, medical costs and profits.

The notion that spending more on direct medical expenses, particularly at the expense of disease management, quality improvement strategies, patient safety initiatives and other such strategies seems to be directly contradicting all that we know of what is wrong with American health care spending. What we really want to do is to encourage spending for health care that is medically appropriate and produced in an efficient environment. That means spending on quality improvements and patient safeguards should be encouraged—not discouraged. Medicare, which has low administrative health care costs, spends the least on quality improvement strategies and improving spending

How quickly declines (or increases) in fringe benefits will be translated into corresponding increases (or decreases) in cash wages will depend on a number of factors including the competitiveness of the industry, the tightness of the labor market in general and for the particular skill set, institutional constraints like minimum wage laws and labor contracts, and so forth. To assume otherwise is to believe employers consider cash wages as the only labpr rated cost of doing business--a strategy that is likely to produce a limited term employer--and that employees think jobs with and without fringes paying the same cash wage are equally attractive. If that were true why would employers ever offer fringe benefits?
How quickly the changes find their way into wage changes is an interesting empirical question.

On the positive side, the reductions in Medicare reimbursement, will extend the life of the HI Trust Fund and reduce some of the financial pressure on general revenue. The amount of the reductions are clearly substantial although on a relative basis, smaller than those that were included in the BBA. Of course, the BBA also produced several pieces of "give-back" legislation when the pain to providers got too great and spending slowed more than anticipated. That could happen again.

More important for reform is how and where the payment reductions occur. This is more troublesome and in general, are rarely supportive of reforms to the delivery system. Reductions in payments to nursing homes, for example, are usually justified on the grounds that on average, Medicare pays more than Medicare's share of the costs. But since Medicaid, the other major payor, substantially underpays, just reducing Medicare is likely to be problematic. Unless there is reason to expect an increase in Medicaid payments --which seems unlikely--reductions in Medicare will financially stress nursing homes--ale