The AMA supports the concept of a “defined contribution”— in which Medicare beneficiaries receive a voucher payment toward purchase of either traditional Medicare or another plan in a competitive marketplace—as a an option for restructuring Medicare as entitlement reform becomes an ever more urgent necessity.

And the AMA’s Council on Medical Services will be delivering a report on the subject of defined contribution at the AMA House of Delegates meeting in November examining many of the complex issues surrounding what has become a leading—but highly politicized—option for dramatically restructuring a popular entitlement program.

“There is no doubt that in 2013 after the election in November—and regardless of which way it goes—entitlement reform is going to be on everyone’s agenda,” past APA President John McIntyre, M.D., a long-time delegate from the Section Council on Psychiatry and a member of the AMA Council on Medical Services, told Psychiatric News following last month’s annual meeting of the AMA House of Delegates in Chicago. “There is bipartisan agreement that Medicare as currently structured simply is not viable.”

(For a list of reports and resolutions approved by the house last month that are relevant to psychiatry, see “Mental Health Issues on AMA Agenda” below.)

McIntyre said support for “defined contribution” and individual ownership of insurance is a longstanding policy of the AMA. He noted that in 2003 the AMA house approved a report that used the Federal Employees Health Benefits Program as a model for Medicare reform. That program offers beneficiaries a range of health plan options from which to choose.

But debate about the concept at last month’s AMA meeting became politicized in part because in recent months Republicans in Congress have floated proposals for “premium support”—another name for a reform option superficially similar to defined contribution.

Under Medicare premium support proposals, private health insurance plans that meet certain standards would compete head to head for the enrollment of Medicare beneficiaries.

The federal government would manage the competition between the private insurance plans by (1) setting certain plan standards and (2) providing a fixed contribution toward the plan premium. Beneficiaries would actively participate in the selection of their own insurance and would be required to pay extra for plans costing more than the government’s contribution. (For more information see “The Nuts and Bolts of Medicare Premium Support Proposals” published online in June 2011 by the Kaiser Family Foundation at www.kff.org/medicare/upload/8191.pdf.)

The subject also became a hot topic of debate at the AMA meeting because just prior to the meeting the AMA’s Council on Medical Services withdrew a report on the subject of defined contribution after receiving late recommendations for amendments that the council wanted more time to consider.

But McIntyre and others emphasized that the council was not rescinding its support for “defined contribution,” but only acknowledging that the concept is a complex one requiring indepth analysis.

“We remain committed to the concept of defined contribution,” said Council Chair Thomas Sullivan, M.D., during reference committee hearings on the subject. “On the other hand, we realize that we are making recommendations to change an iconic program that has been around for 50 years. After we received a well-considered analysis of the subject raising a number of questions, we decided to withdraw our report.”

McIntyre said that these are among the issues that need to be fleshed out:

• Ensuring the long-term viability of traditional Medicare as an option for those who want it.

• Ensuring that the sickest patients receive adequate coverage and that defined contribution will not result in adverse selection and the departure of generous plans from the marketplace.

• Determining how the value of voucher supports will be calculated and adjusting support levels to account for health and income status.

• Indexing the support over time to account for inflation and other variables to ensure that beneficiaries have continuing coverage.

McIntyre said these and other issues will be addressed in the council’s report to the house in November. Past AMA President Nancy Nielsen, M.D., particularly highlighted the importance of indexing premium supports over time—a policy that was enacted without taking into account the effects of inflation would risk severe backlash from seniors left with voucher payments that diminish purchasing power over time, she said during testimony at reference committee hearings.

Nielsen also pointed out that the original concept of “defined contribution” was developed in the 1990s following the failure of the Clinton administration’s health care reform plan by health economists Henry Aaron, Ph.D., and Edwin Reischauer, Ph.D. But Nielsen said that current proposals for “premium support” being floated in Congress bear little resemblance to the concept as originally conceived.

After much debate the house did approve a resolution asking the AMA to “refine its policy regarding Medicare financing options, including a defined contribution program that would allow beneficiaries to purchase traditional Medicare or a private health insurance plan through a marketplace of competing health plans.” The resolution also recommended that the AMA “should consider mechanisms to adjust contributions in order to ensure that health insurance coverage remains affordable for all beneficiaries.”

Erik Eiting, M.D., captured the sentiment of his fellow council members and of most delegates in the house when he warned against a simplistic approach to the subject intended to satisfy only short-term political interests. He said, “This is too important for sound-bite politics.”

Following is a list of reports and resolutions of interest to psychiatry that were approved by the AMA House of Delegates last month and are now AMA policy:

• Resolution 116: Maintaining Mental Health Services by State  asks the AMA to support the maintenance of essential mental health services at the state level, state responsibility for developing programs that rapidly identify and refer individuals with significant mental illness for treatment, increased funding for state Mobile Crisis Teams to locate and treat homeless individuals with mental illness, and enforcement of the Mental Health Parity Act at the federal and state levels. It also asks that the AMA consider mental health services when developing policy on essential benefits. Psychiatrist Theodore Zanker, M.D., a member of the Connecticut delegation, which introduced the resolution, talked to Psychiatric News  about a crisis in state mental health services. See video link below.

• Resolution 123: Medicare-Medicaid Dual-Eligible Demonstration Program  asks the AMA to support efforts to better coordinate the care of dual eligibles and to advocate that the Centers for Medicare and Medicaid Services delay implementation of the Medicare-Medicaid dual-eligible demonstration program to allow beneficiaries and providers time to better understand the initiative. “Dual eligibles” are people who are eligible for both Medicare and Medicaid.

• Resolution 201: Support For Drug Courts  asks the AMA to support the establishment of drug courts as an alternative to incarceration and as a more effective means of overcoming drug addiction for drug-abusing individuals convicted of nonviolent crimes and that the AMA encourage legislators to establish drug courts at the state and local level.

• Resolution 301: Increased Emphasis on Education about Mental Health and Psychosocial Support in Medical School  expands AMA support for training and education beyond depression to include other mental illnesses that could be encountered in a general medical setting and increases awareness in general about mental illness.

• Resolution 523: Appropriate Use of Antipsychotic Medications in Nursing-Home Patients Without Penalty  calls on the AMA to ask the Centers for Medicare and Medicaid Services to stop issuing citations or penalties for medically necessary use of antipsychotic medications for individuals with dementia-related psychosis.

• Resolution 102: Improving Mental Health Services for Pregnant and Postpartum Mothers  asks that the AMA support improvements in mental health services for women during pregnancy and postpartum, support inclusive insurance coverage of mental health services during pregnancy through one-year postpartum, and support efforts to improve awareness and education about the risks of mental illness during pregnancy and postpartum.

• Resolution 402: Reducing Suicide Risk Among Lesbian, Gay, Bisexual, Transgender, and Questioning Youth Through Collaboration With Allied Organizations  asks the AMA to work with organizations dedicated to public health and public policy to reduce suicides by gay and lesbian youth.

• Council on Science and Public Health Report 7, Drug Shortages Update  gives key recommendations including asking the AMA to advocate that the FDA and/or Congress require drug manufacturers to establish a plan for continuity of supply of vital and life-sustaining medications and vaccines to avoid production shortages whenever possible and to declare publicly that the problem of unsafe and unverifiable medicines and medicine shortages is a national public-health emergency, requiring the development of a comprehensive federal report on the root causes of drug shortages.

To watch the video with Zanker, go to http://www.youtube.com/watch?v=3_VK_pjwULw&feature=plcp. More information on the AMA’s 2012 Annual Meeting is posted at www.ama-assn.org/ama/pub/meeting/index.shtml.