Posts Tagged ‘Congressional Budget Office’
Wednesday, December 21st, 2011
Congress’ end of year to-do list inevitably includes the “doc fix” – billions of dollars to avoid deep rate cuts for physicians who treat Medicare’s 48 million patients. Congressmen and Senators always defer the cuts demanded by a 1997 reimbursement formula — known as the sustainable growth rate (SGR) – and which most believe needs to be entirely rewritten. The deferrals are temporary, and the doc fix has become increasingly difficult to pass through a divided and deficit-wary Congress. In 2010, Congress put off scheduled cuts five times, with the longest delay lasting one year.
The story is the same heading into 2012. If lawmakers are unable to agree before returning home for the holidays, 500,000 physicians will face a stiff 27 percent cut beginning January 1. Although Congressional leaders have vowed to prevent that, they disagree over how to pay for the fix. There is little doubt some agreement will be reached, but that deal could be delayed until early next year.
The cost of congressional intervention, not surprisingly, has grown: Delaying the cuts — the solution Congress has chosen since 2003 — will cost $21 billion for a one-year delay and $38.6 billion for two years. Repealing the formula would add approximately $300 billion to the deficit, according to the Congressional Budget Office.
No one imagined that the SGR would cause so much trouble when it was passed as a minor element of the Balanced Budget Act of 1997. Nearly 15 years ago, Medicare physician spending, which accounts for a small share of the program’s overall outlay, was growing slowly. The law included other restraints that have since been repealed. Analysts predicted that, at most, the SGR formula would curb physician payments minimally. “It wasn’t viewed as a big deal at the time,” said Paul Van de Water, an economist specializing in Medicare with the research group Center on Budget and Policy Priorities. “They needed a few more billion dollars in savings (for the Balanced Budget Act), so they just tacked on the SGR arrangement.”
Kaiser Health News wonders why Congress doesn’t just scrap the SGR formula. “Money is the biggest problem. It would cost about $300 billion to stop the doc fix cuts over the next decade and Congress can’t agree on where to find that kind of cash. Some lawmakers, including Senator Jon Kyl (R-AZ), have proposed using money saved from winding down the wars in Iraq and Afghanistan to finance a permanent fix. While the idea has found favor among some Democrats, other Republicans oppose it. For physicians, the prospect of facing big payment cuts is a source of mounting frustration. Some say the uncertainty led them to quit the program, while others are threatening to do so. Still, defections have not been significant to date, according to MedPAC. Physician groups continue to lobby Congress to enact a permanent payment fix.”
Dr. Florence C. Barnett recently decided to quit seeing Medicare patients. She said the plan covered approximately 33 percent of what it cost her to see patients — and found herself facing a growing Medicare patient population after other local neurosurgeons left the program in 2010. “This is the way the government will ration healthcare,” Barnett said. “The people who can afford it will have healthcare, and the people who are only on government support — they will not be able to find a doctor or they will have a very long wait. It’s happening now.”
A survey conducted by the Medicare Payment Advisory Commission found that among patients looking for a new primary-care physician in 2010, 79 percent experienced no problems finding one. According to the American Medical Association (AMA), which generally resists limits in reimbursements, nearly 33 percent of primary-care physicians already restrict how many Medicare patients they accept in their practices.
Physicians are once again relying on Congress to put off the impending cut. It’s a scenario that Glen Stream, M.D. and president of the American Academy of Family Physicians, calls a “Lucy and Charlie Brown and the football thing.” In other words, physicians have become numb to the whole situation. This year, that numbness could be risky. “Doctors are sort of numb from this,” Stream said. “It’s concerning because I think there’s a very serious chance that this cut could go into place and yet many practicing physicians have heard this years and years in a row and it always seems to get averted at the last minute. I think that they may not understand the gravity of the situation this time.”
Writing on the MDNews.com website, Maggie Behringer says that “Last year the battle to fund the Medicare deficit — $19 billion for the fiscal year — ended in a one-year measure. The summer saw a hands-off stance from the Center for Medicare and Medicaid Services when the administration instructed providers to temporarily cease filing claims until Congress resolved a standstill over stimulus spending and unemployment benefits. The cut projected for January, 2012, should Congress fail to enact the customary doc-fix, totals to 27.4 percent. The core conflict for legislators — 19 of whom are physicians, themselves — emerges in the inability of the SGR to adapt in today’s economic environment. The formula was originally developed to bind spending to the economy’s growth. Despite initial success, the exponential climb in healthcare costs quickly surpassed the overall market. The subsequent deficits to fund Medicare were further compounded by the recent depression and ongoing recession. Even if Congress is able to act in time with a temporary doc-fix over the holidays, the fundamental dilemma will remain a question of funding just as the patient population eligible for Medicare benefits enters a major boom.”
Tags: American Academy of Family Physicians, American Medical Association, Balanced Budget Act, Center for Medicare and Medicaid Services, Center on Budget and Policy Priorities, Congress, Congressional Budget Office, deficit, Doc fix, Healthcare rationing, Medicare, Medicare Payment Advisory Commission, MedPAC, recession, Senator Jon Kyl, senior citizens, Sustainable Growth Rate
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Tuesday, October 4th, 2011
The Obama administration’s announcement that Medicare Advantage insurance plans premiums will decline in 2012, at a time when enrollment is expected to rise, is good news for the leading health insurers in that segment. Wall Street analyst Ana Gupte said that the announcement suggests strengthening support in the administration for the privately-run versions of the government’s Medicare program, which covers the elderly and disabled. Medicare Advantage plans offer basic Medicare coverage with extras like vision or dental coverage oratremiums lower than standard Medicare rates. Health and Human Services Secretary Kathleen Sebelius said that Medicare Advantage premiums will average four percent less in 2012, and insurers running the plans believe that enrollment will rise by 10 percent. “Overall, we were very encouraged by the announcement and see this as reinforcing our bullish thesis on the Medicare Advantage and (prescription drug coverage) segments,” according to Gupte.
It’s highly unusual to see healthcare insurance premiums falling. Reduced premiums and growing enrollment are the opposite of what insurers and Republicans predicted would happen to Medicare Advantage after the passage of the Patient Protection and Affordable Care Act (ACA). The ACA cut payments to fee-for-service Medicare Advantage plans by about $136 billion over the next 10 tears. Right before the law passed, American’s Health Insurance Plans predicted that “millions of seniors in Medicare Advantage will lose their coverage, and millions more will face higher premiums and reduced benefits.” So what accounts for the drop? The decrease in premiums doesn’t have a lot to do with policy decisions made in the ACA. It’s three outside factors that are putting downward pressure on Medicare. One is that Medicare costs are growing more slowly. Both in Medicare and in private insurance, the recession has seen patients using fewer medical services. This looks to be especially true in Medicare, where seniors might have more limited resources because they tend to live on a fixed income. The latest S&P Healthcare Economic Indices data indicates that Medicare spending appears to be rising at a slower rate than just a few years ago.
Jonathan Blum, director of the Centers for Medicare and Medicaid Services (CMS) Center for Medicare, said the more affordable costs and growth forecasts demonstrate that companies are still interested in offering such plans despite new consumer protections under the healthcare law and payment caps to insurers. According to Blum, “We can say with complete accuracy that despite projections in 2010 that the program will decline, the program has grown and will continue to grow. The plans have made a very strong statement that they intend to commit to the program. Plans that do a better job serving the needs of their Medicare members should be rewarded and all plans should be encouraged to improve their performance.”
Healthcare insurers warned that seniors can expect more costs and receive fewer benefits from their Medicare Advantage plans after payment cuts take effect. They point to projections from the Congressional Budget Office, which predicted Medicare Advantage enrollment would fall to just 7.8 million participants in 2019. “Medicare Advantage plans remain committed to the program and are doing everything they can to preserve benefits and keep coverage as affordable and possible for beneficiaries,” said Robert Zirkelbach of America’s Health Insurance Plans (AHIP). “However, as these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices.” The group and its insurer members, who opposed many of the healthcare reforms before they passed, are now committed to implementing the law.
“Many people raised fears that under the Affordable Care Act, beneficiaries would see their Medicare Advantage options shrink and their premiums rise,” Sebelius said. “Instead, we have seen just the opposite.”
Some in the industry are looking at other ways to bring Medicare costs down. According to the Fierce Pharma website, “Healthcare industry leaders are poised to make their own deficit-reduction suggestions — including some that might not win them points in a popularity contest. Uncertain what budget cuts the deficit-reduction committee might propose, the Healthcare Leadership Council has come up with its own proposal that would ask Medicare beneficiaries to endure more belt-tightening themselves. The group is aiming to put forward an alternative more palatable than across-the-board Medicare cuts mandated by the deficit-reduction bill if the “supercommittee” doesn’t agree on its own plan. And it’s betting that its proposal will be easier to bear than budget-cutting ideas floated in the past, such as drug re-importation. The council, which includes Big Pharma executives, hospital companies and insurers, crafted a plan that would raise the Medicare-eligibility age little by little to 67 from 65, beginning in 2014. It would hike co-pays and deductibles. It would require well-off seniors to pay higher premiums. And it would add private-sector competition to traditional Medicare coverage, pitting government-subsidized private insurance plans against regular Medicare. Requiring seniors to pay more might be considered a non-starter; after all, consumer groups, particularly AARP, have vociferously fought against such moves in the past. But the council figures that provider-based Medicare cuts will end up costing beneficiaries when all is said and done. ‘This thinking that we’re protecting beneficiaries because we’re only cutting providers — that’s mythical,’ said Mary Grealy, the council’s president.”
Tags: AARP, America’s Health Insurance Plans, Big Pharma, Centers for Medicare and Medicaid Services, Co-pays, Congressional Budget Office, deductibles, Deficit-reduction bill, Department of Health and Human Services, Healthcare Leadership Council, insurance premiums, Kathleen Sebelius, Medicare, Medicare Advantage, Obama administration, Patient Protection and Affordable Care Act, S&P Healthcare Economic Indices, Sanford C. Bernstein, Super-committee, Wall Street
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Tuesday, August 2nd, 2011
At a time when concern about federal deficits and the national debt are growing, few quarrel with the need to reform Medicare. The health insurance program for seniors and people with certain disabilities accounts for 15 percent of the federal budget – in third place behind Social Security and defense spending. That share is rising as healthcare costs continue to rise and more baby boomers retire, threatening the program’s long-term solvency.
Several of the most prominent solutions under discussion largely derive their savings by shifting a greater share of the cost onto beneficiaries. The plan sponsored by Representative Paul Ryan (R-WI) and passed by the House of Representatives would significantly cut Medicare spending by capping the government’s contribution to the program and transforming it into a system of “premium supports” given to seniors to help subsidize their purchase of private insurance plans, with seniors paying additional costs. This would double out-of-pocket spending by the average senior to $12,500 each year, according to Congressional Budget Office estimates.
The ability of a majority of seniors to shoulder that burden appears dubious. Just five percent of Medicare beneficiaries make $80,000 or more, a figure that includes any income from a spouse. For the 47 percent of seniors who are at or close to poverty, on average they are already spending nearly 25 percent of their budgets on healthcare, according to an analysis by the Kaiser Family Foundation.
“There’s this impression that there’s a great deal of wealth among the Medicare population, this image of wealthy seniors playing golf and enjoying their retirement years,” said Tricia Neuman, director of the Kaiser Family Foundation’s Medicare Policy Project.“But while some are lucky to do so, many are living on a fixed income, struggling to make ends meet…with really limited capacity to absorb rising costs.”
According to the Kaiser Family Foundation’s report, raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree healthcare costs. In addition, the study projects that the change would raise premiums by about three percent both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges. The study assumes both full implementation of the health reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal. In the absence of the health reform law, raising Medicare’s age of eligibility would result in an increase in the uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market in the absence of Medicare. With health reform, virtually all 65- and 66-year-olds would be expected to obtain alternative sources of coverage.”
Healthcare remains a major focus of budget talks on Capitol Hill,Senator Mark Kirk (R-IL) recently told the American College of Surgeons (ACS). Every group that relies on federal funding should expect a 10 to 20 percent drop in that funding. When Dr. L.D. Britt, president of the ACS, warned that such cuts could send some healthcare providers into a “tailspin,” Kirk responded that “the tailspin is the U.S. economy. There is a new audience at play,” Kirk said, referring to U.S. creditors. “The judgments they render, they are swift and severe.” Kirk is optimistic that a solution to the country’s debt-ceiling dilemma “will have a way of concluding itself one day before the August 2 deadline.”
Tags: American College of Surgeons, baby boomers, Congressional Budget Office, Defense spending, Deficits, healthcare costs, Healthcare insurance exchanges, healthcare reform, House of Representatives, Kaiser Family Foundation, Low-income senior citizens, Medicare, Medicare Policy Project, Private insurance plans, Representative Paul Ryan, Senator Mark Kirk, social security
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Tuesday, July 19th, 2011
To control soaring Medicaid costs, several states have started the new fiscal year by cutting payments to doctors, hospitals and other healthcare providers that treat the poor. Some experts say the cuts could add to a shortage of physicians and other providers participating in Medicaid. “Further depressing payment rates can only worsen the situation,” said Sara Rosenbaum, chair of the health policy department at George Washington University. She says some states cutting rates — South Carolina, for example — already have acute Medicaid physician shortages.
Insurers and employers believe that cutting the rates will prompt providers to raise their prices for patients who have private insurance. “It’s always a concern that when providers get less from Medicaid, that they will shift the costs to private insurance so families and employers pay more,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans (AHIP), the healthcare industry’s lobbyist group.
States reducing Medicaid payments to physicians are Colorado, Nebraska, Oregon and South Dakota. Arizona, which cut rates in April, will impose another cut in October. States reducing payments to hospitals include Colorado, Connecticut, Florida, Nebraska, New Hampshire, North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Washington. New York cut hospital payment rates in April. In March, California okayed a 10 percent Medicaid cut to doctors and hospitals; those reductions are pending because of a lawsuit that has not yet been resolved.
The payment cuts, which require federal approval, are part of an effort by states to cut Medicaid costs, typically the largest- or second-largest expense after education. A joint state-federal program, Medicaid serves more than 50 million low-income and disabled Americans. Under the provisions of the Patient Protection and Affordable Care Act (ACA), more than 16 million more people will become eligible 2014, with the federal government picking up the majority of the cost. To lure more physicians to accept Medicaid patients, the law raises rates for primary-care physicians in 2013 and 2014 to match those paid by Medicare. On average, states currently pay Medicaid providers approximately 72 percent of what Medicare pays.
Federal-state Medicaid costs totaled $366 billion in fiscal 2009. The federal stimulus package gave states $100 billion to help pay their share, but that funding ended June 30, and “states are struggling,” said Laura Tobler, a policy analyst at the National Conference of State Legislatures. The ACA does not allow states to restrict eligibility for the program.
Because of cuts in reimbursement, the Government Accounting Office (GAO) has found that fewer physicians are accepting children on Medicaid as patients. More than 75 percent of 932 doctors surveyed by the GAO reported difficulty when referring children with public insurance for specialty care, citing an overall shortage of specialists, and different waiting lists for children receiving Medicaid or Children’s Health Insurance Program (CHIP) benefits than children covered by private insurance. In 2010, more than 40 million children in the country received healthcare through one of the two programs which cost $79 billion in federal and state funds. Physicians serving rural areas are more likely to accept new patients with Medicaid and CHIP than doctors in urban areas. Rural primary-care doctors reported greater difficulty referring their Medicaid and CHIP patients to specialists than urban physicians.
Writing in Forbes, Avik Roy says that “The real problem, however, is that many physicians don’t accept Medicaid patients, primarily because Medicaid underpays them for their time and costs. The Health Tracking Study Physician Survey found that internists are 8.5 times as likely to reject all Medicaid patients versus those with private insurance. The New England Journal of Medicine recently published a study showing that 66 percent of Medicaid children were denied an appointment with a specialist for an urgent medical condition — such as uncontrolled asthma or seizures — compared to only 11 percent for the privately insured. What makes this even more appalling is that we’re spending billions of dollars to take millions of children away from high-quality private insurance, and shoving them in Medicaid instead. As Peter Suderman notes, the Congressional Budget Office has estimated that of the children who have been added to Medicaid’s sibling, the State Children’s’ Health Insurance Program (CHIP), one-quarter to one-half were adequately covered by private insurance beforehand.”
Tags: America’s Health Insurance Plans, Avik Roy, Children’s Health Insurance Program, Congressional Budget Office, George Washington University, Government Accounting Office, Health Tracking Study Physician Survey, Medicaid, Medicare, National Conference of State Legislatures, New England Journal of Medicine, Patient Protection and Affordable Care Act, Physician Fee Schedule, Reimbursement, Sustainable Growth Rate formula
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Monday, July 18th, 2011
Was Kathy Hochul’s upset victory in a special election in New York’s 26th Congressional district a game changer in attempts to eliminate Medicare for Americans currently under the age of 55? Medicare proved to be the decisive issue in the New York election, giving the Democrats a crucial campaign theme for the 2012 presidential election. The party slammed Republican nominee Jane Corwin for her support of Representative Paul Ryan’s (R-WI) controversial budget plan and its proposal to turn Medicare into a voucher-like system. Corwin lost to Hochul (D-NY) by four points in a Republican-leaning district. 
Almost immediately after Hochul was declared the winner, Democrats issued statements crediting her win to opposition to the plan “to end Medicare.” Polling appears to support the Democrats’ approach. A CNN/Opinion Research Corporation poll determined that 58 percent of the public opposes the plan to change Medicare to a voucher program, while just 35 percent support it. “Our message is simply: Take Medicare off the table,” Senator Tom Harkin (D-IA) said.
There is still disagreement across the aisle. According to a senior Republican aide, “Everyone knows that the surest way to destroy Medicare is to pretend like it doesn’t need to be fixed, which is why nearly every Democrat that matters has made clear that Medicare is on the table. But Democrats are in a tough spot. And they’re trying to use Medicare to provide a temporary solution to a much larger political problem they’re facing.” Republicans get “huffy” when you call Ryan’s Medicare plan a voucher scheme, according to the New York Times’ Paul Krugman, who points out that they are trying to replace Medicare with “an entirely different program — call it ‘Vouchercare’. According to Krugman, it isn’t “demagoguery, it’s just pointing out the truth.”
Senate Democrats warned after Hochul’s victory that they’d take their Medicare message to the stump in other contentious races, and that is what they’re doing with locally focused ads targeting Nevada, Florida, Massachusetts, Missouri, Montana, New Mexico, Ohio, and Virginia. The Democratic Senatorial Campaign Committee plans to “mobilize thousands of online activists,” through ads on Google, Facebook, and other websites, to “stand up for Medicare” by calling on their Republican senators to withdraw their support for changes to Medicare.
Writing in the Columbia Missourian, Joseph Sparks explains the dilemma that turning Medicare into a voucher problem can create for people caught in the middle. “Proponents of Representative Paul Ryan’s Medicare proposal have said that people older than 55 would not be affected by his proposal to change Medicare into a voucher system. They forgot about the Medisplit Effect. My wife and I represent the perfect paradigm for this effect. I will be 55 before the end of the year, but my wife is younger. So, while I will get Medicare, my wife, under Ryan’s plan, will get a voucher to buy private insurance, and it will cost my family an extra $6,400 to $7,000 per year after 2022. This Medisplit Effect, depending on the age of someone’s spouse, could still drastically affect people 55 and older. It is disingenuous for Ryan or anybody else to suggest otherwise. After the initial $6,400 hit, the plan’s severe impact on the economic health of future seniors, such as my spouse, just gets worse. Based on a report from the Congressional Budget Office, theCenter for Economic and Policy Research calculated that in 2022, Ryan’s proposal would require that seniors pay 35 percent of their projected median income for health insurance. Since the proposal does not require the government to increase the subsidy enough to match inflation, the percentage of median income required per senior increases to 44 and 68 percent in 2030 and 2050, respectively. Medicare would be ‘saved’ at the expense of seniors being unable to afford it.”
Taking an opposite viewpoint is the Washington Post’s Jennifer Rubin. In her “Right Turn” column, Rubin says that “Mediscare isn’t working on everyone. Republicans should take heart: There are non-conservatives who are persuadable by reason and specifics. It would be best if they found someone entirely familiar with the facts, calm in his delivery and earnest in his approach to lead their party on this monumentally important issue. Gosh, do we know anyone who fits that bill?”
Jonathan Chait, writing in The New Republic disagrees. According to Chait:
“How are Republicans responding to the unpopularity of the Medicare plan in their budget? Phase one is for anybody not already committed to the plan to slowly, slowly edge toward the door: (Republican presidential candidate Tim) Pawlenty congratulated himself on Tuesday for speaking bold truths. ‘I promised to level with the American people,’ he said. ‘To look them in the eye. And tell them the truth.’ Here’s a truth: The biggest fiscal threat to the country is the exploding growth of healthcare costs, especially through Medicare. Pawlenty’s speech did not mention the word ‘Medicare’ a single time. It will be interesting to see if Republicans let this stand. Pawlenty’s plan involves staggeringly high tax cuts — will that be enough to get him off the hook for leaving healthcare untouched? Phase two is for everybody already committed to Vouchercare to try to get to the left of the Democrats.”
Tags: 2012 presidential election, Center for Economic and Policy Research, CNN/Opinion Research Corporation poll, Congressional Budget Office, Democratic Senatorial Campaign Committee, Facebook, Google, Medicare, Medisplit Effect, New York 26th Congressional District, Paul Krugman, Representative Kathy Hochul, Representative Paul Ryan, Senate, Senator Tom Harkin, Tim Pawlenty, Vouchercare
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Tuesday, June 28th, 2011
Americans have mixed feelings about what changes should be made to the popular Medicare program. Although 53 percent say the program needs fundamental changes, 58 percent say it is working fine the way it is. Americans were asked to decide which of three statements is closest to their viewpoints: “Medicare works pretty well and only minor changes are necessary to make it work better”; “There are some good things about Medicare, but fundamental changes are needed”; or “Medicare has so much wrong with it that we need to completely rebuild it.”
Twenty-seven percent – including 36 percent of Democrats – believe that only minor changes are needed. Another 13 percent said the program needs to be completely rebuilt. Fully 53 percent said Medicare needs fundamental changes — even though the program has many good points. People who want basic changes include a majority of Republicans and independents, though just 43 percent of Democrats support the plan. A majority of Americans between ages 18 and 64 want significant changes. Just 37 percent of those 65 and older agree.
Additionally, respondents were asked if they wanted to see Medicare “continue the way it is set up now, as a program that pays the doctors and hospitals that treat senior citizens” or “if they think it should be transformed into “a program that gives senior citizens payments towards the purchase of private insurance.” Democrats want to retain Medicare in its present form; Republicans want to transform it into a voucher system in which seniors choose their coverage and are given money to cover their insurance premiums.
So strongly does the Senate Democratic leadership feel, they have reaffirmed that Medicare cuts should not be on the table during the debt ceiling discussions. “Seniors can’t afford it,” Senate Majority Leader Harry Reid (D-NV) said. “The vast majority of the American people, including most Republicans, do not support changing Medicare as we know it, as articulated in that piece of legislation that came from the House. That” piece of legislation is the Paul Ryan (R-WI) plan, “The Path to Prosperity”, which slashes the budget deficit by about $5 trillion over the next decade.
Ryan’s plan would overturn the Patient Protection and Affordable Care Act (ACA) and proposes major reforms to Medicaid and Medicare. Medicaid would become a block grant system; the federal government would allocate money to states, giving them greater flexibility to shape their healthcare programs that serve the poor. Currently, the government matches every dollar that states spend on Medicaid; the formula varies from state to state.
Senator Charles Schumer (D-NY) said Democrats will not accept a “mini” Ryan plan. “The Ryan plan to end Medicare as we know it must be taken off the table, but Republicans should know that we will not support any mini version plan of ‘Ryan’ either,” Schumer said. “We want to make our position on Medicare perfectly clear. No matter what we do in these debt-limit talks, we must preserve the program in its current form, and we will not allow cuts to seniors’ benefits.“
Slashing Medicare will be a major issue in the 2012 election. According to Harvard political scientist and pollster Robert Blendon, “Older Americans tend to vote at much higher rates than other voters,” he said. “They are the group that most care about healthcare as a voting issue.”
“Medicare for us is a pillar of health and economic security for our seniors,” said Representative Nancy Pelosi (D-CA), who is the House Minority Leader. “It’s an ethic, it’s a value…and we intend to fight for it. Pelosi is well aware that there is a problem with Medicare and acknowledges that the program is not financially sound enough to support the retirement of 78 million baby boomers who are joining the program. Additionally, she knows that Medicare costs strongly impact the nation’s debt and deficit problem. Additionally, she says that she prefers not to use Medicare as a weapon against Republicans. “Would you rather have success with the issue, or would you rather have a fight in the election? Of course you’d rather have success,” she said. “That’s what you came here to do. That’s what’s important to the well-being of the American people.”
Another recent poll, conducted by the Pew Research Center, found that older Americans do not have a favorable opinion about privatizing Medicare. Fifty-one percent of people aged 50 and over oppose the plan, while just 29 percent support it. Even among Republicans, more respondents oppose the plan than support it. The changes are designed to save the program’s finances by trimming government benefits for all Americans under the age of 55. Medicare says it will run out of funds to pay full benefits by 2024. One person polled is Michael A. Smith, a 54-year-old lifelong Republican who is currently unemployed and lives in the Philadelphia suburbs. “A community like this, they want jobs and no changes in the funds they’ve paid into all their lives,” Smith said.
The nonpartisan Congressional Budget Office has stated that Ryan’s plan would not allow insurers to charge sick people more than healthy ones. Insurance companies would set premiums at the same level for everyone of the same age. Although Ryan’s plan would leave Medicare intact for anyone now 55 or older, Jack Pitney, a political science professor at Claremont McKenna College in Claremont, CA, said older voters have a hard time believing that. “Anytime you say, `But this doesn’t affect current senior citizens,’ they think it’s going to affect them,” he said. “Seniors are very, very sophisticated when it comes to these programs. They figure any change could have a loophole or an exception or a provision that could end up hurting them after all. They’re very zealous about safeguarding the programs from which they benefit.”
Tags: 2012 election, Block grant system, Congressional Budget Office, Debt-limit talks, Harvard, House of Representatives, insurance premiums, Medicaid, Medicare, Patient Protection and Affordable Care Act, Pew Research Center, Polls, Representative Nancy Pelosi, Representative Paul Ryan, Robert Blendon, Senate, Senator Charles Schumer, Senator Harry Reid, senior citizens, Voucher system, “Path to Prosperity”
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Monday, June 13th, 2011
As many as 30 percent of American companies plan to drop employee insurance when the Patient Protection and Affordable Care Act becomes fully effective, according to a report in the McKinsey Quarterly.
According to the report, “Many of the law’s relevant provisions take effect in 2014. Our research suggests that when employers become more aware of the new economic and social incentives embedded in the law and of the option to restructure benefits beyond dropping or keeping them, many will make dramatic changes. The Congressional Budget Office (CBO) has estimated that only about seven percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014. However, our early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response.”
If this prediction is true, the number of Americans who could see changes to their health insurance would be far more than the nine to 10 million estimated by the CBO. That means that the cost of subsidizing plans for those people — approximately $19 billion a year, according to the CBO — could grow by more than 30 percent. If the report’s predictions are correct, many Americans will lose their health insurance. The study contradicts at least three others predicting that reform will have a negligible effect on employer-sponsored insurance. A Rand study determined that the number of employees who would lose insurance is “small,” and the Urban Institute believes that the percentage “would not differ significantly.” “History has shown that reform motivates more businesses to offer insurance,” said an administration healthcare expert. “Health reform in Massachusetts uses a similar structure, with an exchange, a personal responsibility requirement, and an employer responsibility requirement. And the number of individuals with employer-sponsored insurance in Massachusetts has increased.”
“At least 30 percent of employers would gain economically from dropping coverage, even if they completely compensated employees for the change through other benefit offerings or higher salaries,” the report said. “Contrary to what employers assume, more than 85 percent of employees would remain at their jobs even if their employers stopped offering (employer-sponsored insurance), although about 60 percent would expect increased compensation.”
According to the McKinsey study, found that those who are informed about the health-reform measure are more likely to consider an alternative to employer-sponsored plans, with 50 percent to 60 percent in this group expected to make a change. It also determined that for some, it makes more sense to switch.
“Employers must quickly examine the implications of health care reform on their benefit and workforce strategies, as well as the opportunities and risks that reform generates,” the McKinsey study notes. “Of course, the type and extent of the changes employers make will vary by industry, collective-bargaining agreements, and other constraints. Most employers, however, will find value-creating options between the extremes of completely dropping employee health coverage and making no changes to the current offering. Even employers that intend to provide benefits similar to those they currently offer can take no-regrets moves, like tailoring plans to maximize what their employees will value most about ESI (employer-sponsored insurance) after 2014. Employers pursuing more radical changes will have to rethink benefit packages for higher-income employees.
“And all employers must continue to keep in mind their employees’ health and wellness needs, even as insurance coverage levels evolve. To serve employers, insurers must retool their business models to provide more consultative support during the transition and develop innovative approaches to support employers’ new benefit strategies. For employers and insurers, success after 2014 will require a better understanding of employee and employer segments, and the development of the right capabilities and partnerships to manage the transition.”
According to the report, “Healthcare reform fundamentally alters the social contract inherent in employer-sponsored medical benefits and how employees value health insurance as a form of compensation. The new law guarantees the right to health insurance regardless of an individual’s medical status. In doing so, it minimizes the moral obligation employers may feel to cover the sickest employees, who would otherwise be denied coverage in today’s individual health insurance market. On the other hand, reform preserves the corporate tax advantages associated with offering health benefits — except for high-premium ‘Cadillac’ insurance plans.”
Tags: Cadillac insurance plans, Congressional Budget Office, Employer-sponsored healthcare coverage, Individual mandate, Massachusetts, McKinsey Quarterly, Patient Protection and Affordable Care Act, RAND, Urban Institute
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Wednesday, June 8th, 2011
Slashing the soaring national debt will require some hard choices, but our representatives in Washington, D.C., need to do the right thing. Writing in the New Yorker, James Surowiecki says that “Multitrillion-dollar piles of debt have a way of making people nervous, so it’s not really surprising that Washington is now in the throes of budget-cutting hysteria. Republicans risked a government shutdown over a few billion dollars in spending cuts, and are now threatening to refuse to raise the government’s debt ceiling. The ratings agency Standard & Poor’s lowered its outlook on U.S. debt because of concerns about the long-term budget.
“And Barack Obama has been speaking of the need to eliminate two trillion dollars in federal spending in the next ten years. Yet, strange as it may sound, the federal government does not have a spending problem per se. What it has is a healthcare problem. The cost of most budget items typically rises at a reasonable rate, if at all, but the cost of Medicare, Medicaid, and the tax subsidy for employer-provided insurance has been rising much faster than everything else: in the past forty years, Medicare costs increased 8.3 per cent annually. If they’re not controlled, Medicare and Medicaid will eventually be by far our biggest expense. Preventing that is the key to getting our fiscal house in order.”
Representative Paul Ryan (R-WI) has proposed replacing the popular Medicare program by giving seniors less money to cover their healthcare needs. Ryan wants to replace Medicare with a voucher plan that they would use to purchase private insurance. This plan saves money because the value of the vouchers would rise at a much slower pace than healthcare costs; the government’s payments to seniors’ healthcare spending would get smaller. As a result, seniors would have to spend more of their incomes on private insurance and out-of-pocket expenses, or go without. The Congressional Budget Office (CBO) estimates that Ryan’s plan would significantly increase how much Americans spend on healthcare, since private insurers don’t curb costs as effectively as Medicare. The upside to the national debt is that taxpayers would foot less of the bill.
According to Surowiecki, “The healthcare bill that Congress passed last spring represents a different approach. It trims more than four hundred billion dollars from Medicare spending, and contains a host of initiatives designed to make the healthcare system more efficient and effective. In line with that, it creates a body called the Independent Payment Advisory Board (IPAB), which determines how much Medicare will spend annually. The American healthcare system is riddled with waste and unnecessary and ineffective procedures. Relative to every other industrialized nation, we spend more and our health outcomes are no better (and often worse). In American medicine, supply often creates its own demand, and paying doctors on a fee-for-service basis encourages more high-cost procedures. The IPAB, in conjunction with other cost-cutting provisions in the bill, would look to fix the skewed incentives that lead to overtreatment, bargain for better prices, and insure that we’re spending our money more effectively. The Affordable Care Act is far from a perfect law, but the CBO estimates that, if implemented as planned, it could cut the long-term deficit by more than a trillion dollars.”
A Wonkbook poll reported in the Washington Post found that 84 percent of Americans oppose the Ryan plan.
The prospect of replacing Medicare with a voucher plan to bring down the nation debt makes a lot of people uneasy. Americans generally like and trust their doctors and hospitals. Additionally they like the ability to choose their own doctors, and don’t want them to stop treating Medicare patients because the fees are too low. Surowiecki concludes that “This is the fundamental dilemma: we’re unhappy about the rising cost of healthcare, but we’re also unhappy about what we would have to do to curb it. The ideal system, for most voters, would guarantee all seniors reasonable healthcare, stop the debt from getting out of control, and keep paying healthcare providers as before. The problem is that you can only do two of those things at once. The debate between Ryan and Obama is a debate over which of the three we’re willing to give up.”
Tags: Affordable Care and Patient Protection Act, Congress, Congressional Budget Office, High-cost procedures, Independent Payment Advisory Board, Medicaid, Medicare, National debt, President Barack Obama, Representative Paul Ryan, Standard & Poor’s, Voucher plan, Wonkbook
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Tuesday, June 7th, 2011
The Patient Protection and Affordable Care Act will save Medicare $120 billion over the next five years as a result of lower payments to insurers and hospitals. According to the Obama administration additional steps to cut fraud and abuse are providing promising results. Medicare Deputy Administrator Jonathan Blum said that the healthcare overhaul is working, resulting in real savings and making program more efficient. Payment reforms are improving quality, performance and slashing costs. When President Barak Obama signed the healthcare bill, one major goal was to cut spending on Medicare.
“Just a year after passage, we are seeing savings in Medicare begin to materialize from provisions in the Affordable Care Act,” said Donald Berwick, M.D., administrator for the Centers for Medicare and Medicaid Services (CMS). “This work is laying the groundwork for a larger transformation of Medicare and our healthcare delivery system, from simply paying for the volume of services provided to rewarding the quality of care delivered. We remain committed to achieving a healthcare system that pursues better care, better health, and lower cost through improvement.”
In addition to the projected savings, Medicare is on track to improve the quality of care members receive. CMS has implemented quality improvements and delivery system efficiencies including providing new preventive benefits, tying payment to quality standards, investing in patient safety and offering new incentives to providers who deliver high-quality, coordinated care. “These actions will produce savings, create incentives for greater efficiency in care delivery and lay the groundwork for a long-term transformation of our healthcare system as well to make it safer and prevent injuries and unnecessary readmissions to hospitals which not only harm patients but increase overall healthcare costs,” according to a CMS analysis.
Cutting Medicare spending was a priority of the healthcare overhaul that President Barack Obama signed into law in March 2010. The law is projected by the Congressional Budget Office to reduce deficits by $143 billion, partly through almost $500 billion in cuts and savings from the Medicare program over a 10-year period. Blum said the savings are in line with expectations by the Obama administration. “We’re very much consistent with where we thought we would be,” he said.
The savings come at a cost, of course. Cuts in physician reimbursement represent a 31 percent reduction. If the cuts are adjusted for practice-cost inflation, the American Medical Association says Medicare payment rates to physicians in 2013 will total less than half of what they were in 1991. “If we can’t fix this, the impact on physicians and physician practices is going to be devastating,” said Alan C. Woodward, M.D., Massachusetts Medical Society president. “Many practices are barely surviving now. Coupled with the ongoing problem of soaring professional liability costs, Medicare reimbursement is a critical issue for physician-practice viability,” Dr. Woodward said. “Failure to solve the Medicare problem will only further endanger older patients’ access to needed healthcare services.”
Writing on the White House Blog, Deputy Chief of Staff and healthcare czar Nancy-Ann DeParle says that “Many of these reforms were made possible by the Affordable Care Act. The new law rewards doctors and hospitals for providing high-quality care and offers new tools to help law enforcement and the Medicare program crack down on waste, fraud and abuse. Other steps like improving care for patients with disabilities and bringing down the cost of durable medical equipment build on initiatives undertaken at CMS that will also reduce costs. And we recently announced the launch of the Partnership for Patients, a new public-private partnership that will help improve the quality, safety, and affordability of health care for all Americans. Already, more than 3,000 organizations, including 1,500 hospitals, have signed a pledge to become part of the Partnership for Patients. This has the potential to save up to $10 billion for Medicare through 2013.”
Tags: American Medical Association, Centers for Medicare and Medicaid Services, Congressional Budget Office, deficit, Dr Donald Berwick, Healthcare czar, Medicare, Nancy-Ann DeParle, Obama administration, Partnership for Patients, Patient Protection and Affordable Care Act, White House blog
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Tuesday, May 24th, 2011
America’s senior citizens can breathe a sigh of relief. Even as the majority Republicans in the House of Representatives wield a surgeon’s scalpel to slash spending from the federal budget, they are unlikely to succeed at making significant changes to the extremely popular Medicare program. The Democratic-controlled Senate rejected serious cuts in the proposed legislation, which also included an attempt to block implementation of the Patient Protection and Affordable Care Act. Congressional Democrats and the Obama Administration pointed out that the Republican budget measure’s block on implementation funding would endanger short-term funding for Medicare.
The legislation would create “significant disruptions in services” to Medicare recipients, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius wrote to Senator Max Baucus (D-MT). The payment delays, Sebelius wrote, would halt the need to undertake a lengthy process to issue new regulations governing Medicare Advantage payment rates since the Patient Protection and Affordable Care Act (ACA) put in place its own set of payment rate rules. The Congressional Budget Office’s (CBO) analysis questioned that claim because it believes that the Republican bill will reduce spending by $1.6 billion through the rest of 2011. Democrats maintain that the CBO’s review of Medicare spending is a separate issue from HHS’s lawful authority to fund the program.
Despite the Senate Democrats’ united front, House Budget Committee Chairman Paul Ryan (R-WI) is “ready to take on health programs” as legislators on both sides of the aisle struggle with long-term spending concerns. Lawmakers continue talks regarding the current year spending measure still under consideration. A new continuing resolution that would fund government operations until April 8 has emerged. Though it includes deeper spending cuts, it is free of controversial riders such as language to restrict ACA implementation funds. Meanwhile, the CBO issued a report that legislation designed to further the defunding goal would add $5.7 billion to the deficit.
Democratic leaders insisted that some form of compromise by the House GOP members is now needed. “We’re looking for some give on the Republican side,” said Sen. Charles Schumer (D-NY). Speaker of the House John Boehner (R-OH), he said, “needs something to bring his freshmen into the real world.” Boehner, referencing the Democrats and the White House, said “I hope the talks are going to continue, but we are not going to get very far if they don’t get serious about doing what the American people expect of us. “This is not going to be easy. Our goal, as I’ve said many times, is to cut spending and keep the government open.”
Tags: Congressional Budget Office, deficit, Democrats, Department of Health and Human Services, Federal budget, GOP, House Budget Committee, House of Representatives, Kathleen Sebelius, Medicare, Obama administration, Patient Protection and Affordable Care Act, Representative John Boehner, Representative Paul Ryan, Senate, Senator Charles Schumer, Senator Max Baucus, senior citizens
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