Pennsylvania governor touts cost control in health reform plan

Washington -- Controlling health care costs is the key to health system reform, Pennsylvania Gov. Ed Rendell said last month in his keynote speech at a Kaiser Family Foundation event in Washington, D.C. Rendell's philosophy is reflected in his reform plan, Prescription for Pennsylvania.

The package aims to expand access by creating Cover All Pennsylvanians, a state-subsidized, privately run insurance pool targeted to small businesses, employees and the uninsured. All but about 185,000 of the state's 767,000 uninsured adults would gain immediate access to coverage, Rendell estimates.

He proposes to keep the price tag in check by eliminating up to 85% of the $7.6 billion in annual costs associated with medical errors, hospital infections and uncompensated care. He also would save money by expanding the use of allied health professionals.

Prescription for Pennsylvania's insurance plan will need $1.37 billion in new revenue, he said. The bill would be split between employer and employee contributions and the state and federal governments.

The Pennsylvania Medical Society has some concerns about the allied health professionals provisions, but the governor has provided a good starting point for major health system reform, said Mark Piasio, MD, MBA, the organization's president. "There's a lot in the bill to like."

After his speech, Rendell spoke to a small group of reporters, including one from American Medical News.

Physician payment a work in progress

Rendell's plan doesn't set physician payment rates for health plans offering coverage through the insurance pool. He hopes to spark competition between insurers, which should help physician reimbursement rates.

Also, Rendell said, for every dollar the state spends on enrollees in Cover All Pennsylvanians who earn less than 300% of the poverty level, the federal government will reimburse the state 55 cents. This should allow insurers to make money and pay doctors at rates higher than Medicaid.

The state Medicaid program needs improvement, he said. The consumer group Public Citizen recently ranked its physician payments 46th out of 50 states. Rendell said the ranking was "correct, and we're trying to change it as part of this plan." His 2008 budget includes $3.6 million for targeted physician fee increases, and Prescription for Pennsylvania calls for a 5% payment increase for doctors in the state's Medicaid managed care plans, said Amy Kelchner, spokeswoman for the Office of Health Care Reform.

Mandating that everyone buy insurance would make it less expensive, Rendell said, but that's not the only way to address costs.

His plan would prohibit insurance companies from using anything other than age, geography and marital status to set rates. This would spread risk and increase the number of people who could buy insurance, which should lower costs. When Rendell was in his 20s, he said, he was one of the young invincibles -- people who thought they would never get sick.

"So my guess is that there will be people who choose not to have health care, but they will all have access to an affordable product. That's the key," he said. His proposal has a mandate that would require college students and those earning more than 300% of the federal poverty level to have insurance.

More work for nonphysicians

Rendell's plan would remove limits on the number of physician assistants, nurse practitioners and other allied health professionals physicians can supervise. Existing law allows a physician to oversee two.

Nurse practitioners can perform most tasks primary care physicians can, Rendell said. That doesn't mean he wants to replace doctors with allied health professionals. "Nurse midwives exercise their own level of control. If a complicated birth comes to them, they know not to do it. And that's true with nurse practitioners."

Pennsylvania law is too restrictive, he said. It doesn't allow a nurse practitioner to order a walker for a patient, for example. But there might be a need to impose a limit on how many allied health professionals a physician can supervise, Rendell said.

Dr. Piasio said the governor is working with the medical society on its concerns about the allied health professionals provisions.

Prescription for Pennsylvania has been well-received by most health care stakeholders, Rendell said. His call for a payroll tax is the biggest question mark. He said his toughest meeting so far was with a National Federation of Independent Businesses representative.

The plan calls for a 3% to 3.5% payroll tax phased in over five years on businesses that don't provide employee health insurance.

The proposal has 70 provisions that need approval from the Legislature. Rendell's goal is to get most of his plan passed by the House before the summer recess and have the Senate take it up in September. "Hopefully, if we do this, universal access would begin down the road in January."