Medical Device Daily Washington Editor

WASHINGTON — The Advanced Medical Technology Association (AdvaMed; Washington) jumped into the healthcare reform debate last Thursday with a proposal to knit together a broader medical safety net that would put a substantially larger portion of the healthcare economy in the hands of government.

Ed Ludwig, AdvaMed’s chairman, and president/CEO of Becton Dickinson (Franklin Lakes, New Jersey), said that devices and diagnostics are “key engines driving medical progress and better healthcare” and that AdvaMed’s members “understand that our long-term success depends on the success of the broader healthcare system of which we are a part.

“That system is in trouble,” he asserted. “Too many Americans are left out and left behind because they’re uninsured.”

But Ludwig said that the cost problem “must be solved in a way that enhances medical progress rather than retarding it.”

He said that the plan offered by the AdvaMed board “provides universal quality healthcare but also solves the cost problem at the same time that it stimulates even greater medical progress.”

Stephen Ubl, AdvaMed’s president/CEO, said that those in the audience “may be asking what separates this plan from all the other plans out there.”

Providing the answer, he said that the plan is designed to “target both ends of the political spectrum as well as the broad middle.” He said also that there are “many unique elements” to the AdvaMed proposal, going on to list and describe four of them.

* The first element is a $10 billion-a-year prevention budget that would fund direct-to-consumer advertising on healthy lifestyles. Ubl said this will serve to drive down costs given that “30% of the cause of the increase in healthcare expenditures” is due to obesity. This first prong of the AdvaMed plan also requires insurers to cover preventive services recommended by the U.S. Task Force on Preventive Services.

* The second prong of the plan is based on quality improvement, including incentives for providers to reach quality benchmarks, as well as a chronic care management programs, including remote monitoring technology and extensive patient counseling.

* The third prong, or “pillar,” he said “is related to efficiency standards,” which will be pushed and abetted by healthcare information technology (HIT). He said that “we’re stuck in the 19th Century if not the 18th Century” in terms of HIT, which is essential for quality reporting.

* The fourth area of the AdvaMed proposal involves accelerating medical innovation. Ubl said that “the best way to reduce healthcare cost is to prevent disease in the first place,” and the proposal would beef up the FDA Critical Path Initiative and attempt to accelerate Medicare’s reimbursement for new drugs and devices.

Ubl also said that any future healthcare proposals should be evaluated for their impact on innovation.

AdvaMed’s proposal would use Medicaid to cover all adults whose incomes are at or below the current federal poverty level and would proscribe states from reducing eligibility below current levels. Otherwise, adults would be covered via automatic enrollment.

Enrollees whose incomes are between 100% and 150% of the federal poverty set-point would pay no premium for coverage provided via mandatory enrollment, and those between 150% and 199% would pay no more than 3% of family income toward premiums. Each 50% increment over the poverty level would increase the cap on the share of family income by 1%.

The maximum share of family income would be 10% for families making five times the federal poverty level.

According to AdvaMed’s numbers, the cost of universal coverage would increase the federal budget by $98 billion, which would be offset by savings of $81 billion for a net cost of $17 billion. The savings would be from prevention and improvements in quality and efficiency.

The overall impact on the economy is projected at an increase of $69 billion in expenditures and a savings of $157 billion, which would cut the total cost of care by $88 billion.

Employers would not be required to contribute toward plans, but additional data provided by the Lewin Group suggests that small employers might not care for the proposal.

The plan is projected to increase the employer’s per-employee spending on healthcare by $22 a person for companies employing less than 10, but that number rockets to $158 per employee for companies employing between 10 and 24. Those numbers start to drop again as the number of employees increases, with firms employing more than 1,000 facing a per-employee increase of $44.

The plan drew support from a number of organizations.

Chip Kahn, president of the Federation of American Hospitals (Washington), said, “no other domestic issue is as pressing as the numbers of uninsured,” adding that the cornerstones of the AdvaMed plan “are thoughtful and logical” and are “consistent with the federation’s passport proposal” released in February.

Kahn said that the political feasibility of such a move is improving.

It won’t be solved “maybe not this year, maybe not next,” he said but cited unprecedented momentum in the direction of such a plan.

“The words ‘universal coverage’ are less loaded now than in the past,” Kahn said.

Richard Pollack, the executive VP of the American Hospital Association (AHA; Washington), wrote in a letter that AHA feels “we should seek to expand Medicaid to adults at 100% of the federal poverty level” and that tax credits should be offered to families living at or below 300% of that number.

Pollack said AHA applauds AdvaMed’s “leadership in this area and look forward to working with you further.”