A new study published in Psychological Science concludes that taxing foods is more effective in reducing consumption of unhealthy products than subsidizing healthy foods. Researchers at the University at Buffalo studied the purchasing habits of 42 mothers from different social economic backgrounds in a simulated grocery store by increasing the prices of unhealthy foods by “12.5%, and then by 25%” and discounting “the price of healthy foods comparably.”

The study found that “taxes were more effective in reducing calories purchased over subsides. Specifically, taxing unhealthy foods reduced overall calories purchased,” while “subsidizing the prices of healthy food actually increased overall calories purchased without changing the nutritional value at all. It appears that mothers took the money they saved on subsidized fruits and vegetables and treated the family to less healthy alternatives”:

Taxing foods had the dual benefit of reducing purchases of HCFN [High-Calorie-for-Nutrient] foods while increasing purchases of LCFN [Low-Calorie-for-Nutrient]foods with lower energy density. From a public-policy standpoint, this strategy had the additional benefit of generating significant tax revenue. If policymakers aim to reduce consumption of HCFN foods to control rising rates of obesity, then taxing these foods may be more effective than subsidizing LCFN foods. In our experiment, a tax that increased the price of HCFN foods by 10% reduced total calories purchased by 6.5%, as a result of a reduction in fat and carbohydrate calories of 12.8% and 6.2%, respectively.

Lawmakers have taken food taxation off the table, but raising additional revenue by taxing consumption of public health hazards would reduce consumption of less healthy foods and offset the costs of poor eating habits (or help fund other priorities). For instance, in 2005, the federal government “pulled in about $8.9 billion from alcohol excise taxes.” By comparison, the economic and social costs of drinking burden “society with an estimated $184 billion per year in health care, criminal justice, social services, property damage, and loss of productivity expenses.”

The study also notes that since 1983, “prices of fresh fruits and vegetables, all fruits and vegetables, fish, and dairy products increased by 190%, 144%, 100%, and 82%, respectively, whereas prices of fats and oils, sugars and sweets, and carbonated beverages increased at much lower rates—70%, 66%, and 32%, respectively.”

Our guest blogger is Mandy Krauthamer Cohen, executive director of Doctors for America.

Retiring Senator Jim Bunning (R-KY) did more than hold up extension of jobless benefits and COBRA coverage with his antics. He also held up passage of a provision to stop the 21% Medicare payment cut to physicians that goes into effect today. The provision would temporarily patch the flawed formula that determines how Medicare reimburses physicians for the work we.

This formula, called the “sustainable growth rate” or SGR, has threatened to cut Medicare reimbursements for nearly a decade. This time, after a two month reprieve passed by Congress in late December, Medicare physician payments are scheduled to be cut by 21 percent.

Since 2002 Congress has been “patching” the SGR formula – preventing any cuts in payment but never really fixing the problem permanently. Each year the problem just piles onto itself – so what was a 2% cut back in 2002 has mushroomed exponentially into a 21% cut due next week. We have kicked the can down the road so many times that it barely resembles a can. The provision currently being held up by Senator Bunning in the Senate is another temporary fix – this one only for 30 days – aligning with the provision passed in the House last week.

So why doesn’t Congress just fix the SGR permanently and be done with it? While there is broad agreement that a 21% cut in physician payment is excessive and threatens access to physicians for our nation’s seniors, a permanent fix of the SGR formula is complex and expensive; some estimates say it will cost $245 billion. Adding to the complications, are the PayGo rules and the generally sour taste focusing on physician salaries leaves behind in a tight budget year.

In November, the House did pass legislation (H.R. 3961; the Medicare Physician Payment Reform Act), that would permanently fix Medicare’s SGR formula and wipe away the accumulated SGR deficit. HR 3961 replaces the current SGR formula in 2010 with a formula linked to the Medicare Economic Index, a gauge of inflation in physician-practice costs, as opposed to the GDP as it does now. In 2011, the formula would again return to being based on the GDP but would split physician services into two independent service targets – with growth targets of GDP plus two percent for primary care and preventive services and GDP plus one percent for all other services. While there is still room to debate whether or not this is the perfect solution – it is certainly better than another temporary “doc fix”.

Unfortunately, the Senate is not going to take up HR 3961 this week and thus another temporary fix is needed immediately. CMS will hold up the payment cuts from going into effect for a few days but physicians and seniors need the Senate to act pronto. Once passed, the clock is already ticking on a 30 day patch and the Senate should act quickly to take up HR 3961 – finally ending this SGR Groundhog Day scenario for good.

Health Affairs has published an interesting new study arguing that dominant providers in California are driving up health care costs by using their leverage to demand higher reimbursement rates from private payers. “California providers have implemented various strategies that have strengthened their leverage in negotiating prices with private health plans,” Robert Berenson, Paul Ginsburg, and Nicole Kemper conclude. “When negotiating together, hospitals and physicians enhance their already significant bargaining clout”:

On average nationally, commercial insurers’ hospital and physician payment rates are nearly 30 percent and 20 percent higher, respectively, than Medicare rates. Evidence from two decades of hospital mergers and acquisitions nationally demonstrates that consolidating hospital markets drives up prices, with disagreement only over the magnitude of the increases. Some researchers have concluded that formation of hospital systems has primarily served to increase market power—not improve quality or efficiency of patient care—at least in the short run….A single “must-have” hospital can develop enough clout to obtain payment rates much higher than Medicare’s, acknowledging that many providers believe Medicare payments to be inadequate.

The study warns that certain provisions in the House and Senate health care bill, like the language encouraging providers to establish Accountable Care Organizations (ACO), would increase providers’ bargaining power and drive up private payer rates. It suggests that “[u]nless market mechanisms can be found to discipline providers’ use of their growing market power,” lawmakers should seriously consider lowering spending through “regulatory approaches, such as putting price caps on negotiated private-sector rates and adopting all-payer rate setting.”

In Massachusetts, Gov. Deval Patrick is listening. Last month, Patrck introduced legislation giving the state insurance commissioner “authority to review and reject rates charged by hospitals, physician groups, medical imaging centers, and insurers” after a study of the Massachusetts health insurance system concluded that “insurance companies pay some hospitals and doctors twice as much money as others for essentially the same patient care.”

Patrick is hoping to prevent providers (and payers) from using their leverage to artificially inflate prices by relying on a strategy popular in the 1970s and 1980s, when at least 30 states — including Massachusetts itself — used all-payer rate setting to contain health care spending. Lawmakers established rate boards that considered “the differences in labor markets and how much a hospital pays in wages; the amount of charity care the hospital does; and whether it treats a large number of severely ill patients” and set rates accordingly.

Price setting proved somewhat effective, but most states abandoned the practice in the hopes that managed competition could deliver lower rates. Today, Maryland is the only state that continues to maintain an all-payer rate setting system, but the strategy is also used in France, the Netherlands, Japan, Australia and Germany. In Maryland, hospitals have enjoyed a steady profit margin of 2.5% to 3% and boast the nation’s second-slowest increase in hospital costs.

Still, it’s unclear how much money price setting can save in the rest of the nation. A recent RAND study of 12 options for reducing health care spending in Massachusetts, for instance, ranked traditional hospital all-payer rate setting as the second most likely tool for changing the trajectory of health care growth. The report concluded that, “at a maximum, hospital rate setting could reduce health spending in Massachusetts by nearly 4 percent between 2010 and 2020.” RAND warns however, that providers could try to undermine rate setting by unbundling certain services, increasing admissions or length of stay.

There are no silver bullets that alone would reduce the rate of growth in health spending, but federal lawmakers need to consider solutions to provider price gauging, as it seems that it’s more than a convenient way for insurers to deflect blame for premium increases.

Former Senate parliamentarian Robert Dove appeared on MSNBC this morning to demystify the reconciliation process and reiterate the fact that the Vice President is “the ultimate decider” of what can be included in a reconciliation package. “The parliamentarian can only advise. It is the Vice President who rules,” Dove said suggesting that Vice President Biden — who served in the Senate for 36 years — would be inclined to override the parliamentarian:

TODD: Not since Hubert Humphrey have we had a Vice President this familiar with senate rules either in Joe Biden.

DOVE: That’s why I brought this up, yes. Humphrey had been the majority whip. He had been in the senate since 1948. He felt very comfortable playing an important role. And it’s quite possible Vice President Biden –

Watch it:

Pushing back against the argument that reconciliation hasn’t been used on large pieces of legislation, Dove said, “reconciliation has been used a lot and I would never use the term illegitimate with regard to reconciliation.” “And it has been used starting in 1980 for very large, major bills. And it is a way, of course, of getting around the problem of the senate filibuster.”

Democrats would be using reconciliation to pass a much smaller package of fixes to the Senate health care bill and may have to rely on Biden to secure a new abortion compromise. In 1995, for instance, Dove disqualified a Republican effort to attach a provision banning federal funding for abortion to “a very large reconciliation bill”. “It was my view that that violated the Byrd rule, even though it did score. It would have saved the federal government money, but part of the Byrd rule is that if something is in there, not for its budgetary effect, but for its policy effect, that invokes something called the incidental test and it can be thrown out,” Dove explained.

Nelson Rockefeller was the last Vice President to play a role in the reconciliation process. Since then, “they have kind of been co-opted by the president and given an office down in the West Wing. Their interest in playing Senate politics has become attenuated.”

In an earlier interview with Lester Feder, Dove said the senate majority leader can also replace the Parliamentarian. “Various parliamentarians have been replaced over the years by the Secretary of the Senate when the Majority Leader was unhappy. Parliamentarians were asked to leave by the secretary of the Senate in 1980, in 1986, in 1994, and in 2001.”

Sen. Lamar Alexander (R-TN) appeared on Fox News today to warn Democrats that if they manage to pass a health care bill, “we’ll spend the rest of the year in the campaign to try to repeal it.” Saying he has “never seen” an electoral effort to repeal unpopular legislation, Alexander argued that “the American people don’t want the bill’:

ALEXANDER: If the Democrats push this through, an unpopular health care bill, at a time when the real issues are jobs, terrorism, and debt, the health care bill is going to define every Democratic candidate for every public office in November and Republicans are going to try to elect a majority who’ll come in here and try to provide a check and a balance to more taxes and more spending.

Watch it:

Given the growing momentum for passing health care reform, Republicans are renewing their threat to campaign in future elections on a platform of repealing health reform. Before the Massachusetts election, when passage of health care reform seemed almost inevitable, Newt Gingrich predicted that “every Republican running in ‘10 and again in ‘12 will run on an absolute pledge to repeal this bill” and several GOP candidates had begun questioning the constitutionality of the pending legislation. Yesterday on Meet the Press, House Minority Whip Eric Cantor (R-VA) predicted that “[i]f Speaker Pelosi rams through this bill through the House using the reconciliation process, they will lose their majority in Congress in November.”

Moreover, legislatures in approximately 30 states — organized by the American Legislative Exchange Council [ALEC], a “business-friendly conservative group that coordinates activity among statehouses — have also introduced initiatives to ratify constitutional amendments that would repeal all or parts of the pending health care reform legislation. “Earlier this month Tennessee enacted legislation that would require its attorney general to defend people who refuse insurance, and Virginia, pending the governor’s expected signature, may soon be the first state to tell residents they would not need to comply.”

The effort may be well organized, but it’s not very effective. If Congress passes reform legislation, federal law would override state rules and most constitutional scholars believe that state-based Tenther arguments are unlikely to prevail in court. The goal of the repeal movement is to intimidate Democrats into inaction and raise money. Alexander and the Republicans are pretending that if Democrats abandon their pursuit of comprehensive legislation, they won’t use their first vote against them. It’s a specious argument to be sure, and one that will get Democrats in double trouble. They’ll be attacked for voting for an unpopular bill and portrayed as weak for abandoning an effort they fervently championed. Then again, if Democrats are willing to their campaign advice from Republicans, maybe they shouldn’t be in Congress in the first place.

President Barack Obama may have cut off Sen. John McCain (R-AZ) at Thursday’s health care summit, but Meet the Press gave McCain the last word this Sunday. During yesterday’s appearance McCain announced that he will introduce legislation preventing the Democrats from using reconciliation to change Medicare spending:

MCCAIN: And let me also say that Robert Byrd also in the ’70s exempted Social Security. Social Security cannot be considered in reconciliation. We should do the same thing with Medicare. Lindsay Graham and I will be introducing legislation. Entitlements should not be part of a reconciliation process, i.e., 51 votes. It’s too important.

As McCain gears up for the toughest re-election campaign of his career, he has abandoned his support for cutting Medicare and Medicaid by some $1.3 trillion over 10 years and has grown increasingly protective of the government-sponsored program. At the summit, the Senator accused Obama of approving an ‘unsavory’ special deal for Floridians on Medicare Advantage and has spent hours defending the Medicare program during floor debate.

To my ears, the McCain/Graham amendment is another political ploy that’s designed to communicate a message rather than stop the reconciliation process. After all, Congress has already approved the Medicare changes in the Senate health care bill and the reconciliation package of fixes will only include a change to the payroll tax (used to fund the Medicare program). A McCain/Grahm amendment that prohibits reconciliation changes to the Medicare trust fund could complicate the package, but it won’t derail the entire effort.

But on the whole, this is really a cynical move (and highly unlikely, since any rule change would require 67 votes). Republicans have consistantly supported far larger cuts to the Medicare program than what Democrats are currently proposing and are always complaining that the Medicare “entitlement” program will bankrupt the nation. Now they’re preparing to unveil an amendment designed to prohibit Democrats from reducing Medicare spending and extending the life of the program.