Posts Tagged ‘Congressional Budget Office’

Was the NY 26th District Upset A Turning Point in the Medicare Debate?

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.”

Polls: Most Americans Oppose Changes to Medicare

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.”

30 Percent of Companies May Drop Employee Health Insurance

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.”

Trading Medicare for the National Debt

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.”

Medicare Cuts To Total $120 Billion

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.”

Medicare Likely Safe From GOP Budget Cutters

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.”

Battle About Medicaid Block Grants Brewing in Congress

Wednesday, May 11th, 2011

Mississippi Governor – and possible presidential hopeful — Haley Barbour and other Republican governors recently demanded that Medicaid, the state-federal health program that covers 50 million poor and disabled, be transformed into block grants.  House Republicans have vowed to tackle expensive programs like Medicaid to cut federal spending.  Any attempt to turn Medicaid into block grants – federal lump-sum payments to states – raises many questions.  Democrats argue that a move of this type could result in loss of healthcare coverage for millions who are poor, sick and old.

Representative Fred Upton (R-MI), chairman of the House Energy and Commerce Health Subcommittee said to expect House bills on the Medicaid program’s maintenance-of-effort requirement and block grant funding to states.  Because Medicaid is an entitlement program, all Americans who are eligible are guaranteed coverage.  The federal government, which foots the bill for approximately 60 percent of Medicaid’s cost, is committed to helping the  states cover costs; in return, it requires them to cover certain groups of people and provide specific benefits.  For example, children, pregnant women who meet explicit income criteria and parents with dependent children must be given coverage.

“The governors have requested flexibility in the way they serve Medicaid patients,” Representative Joseph Pitts (R-PA), the Health Subcommittee’s chairman said.  “They maintain they can provide the service better and cheaper, so we’re looking to give them that flexibility and change this maintenance-of-effort provision.  I won’t be specific on the block grants, but we’re having discussions with governors.”  Pitts’ comments followed a Health Subcommittee hearing in which HHS Secretary Kathleen Sebelius answered extensive questions about the Obama administration’s fiscal 2012 budget and the Patient Protection and Affordable Care Act.

Why are the block grants important?  When the new healthcare law goes into full effect in 2014, approximately 16 million additional people will become eligible for Medicaid.  The debate, which cuts to the heart of the social contract between the government and its citizens, has implications for the other large entitlement programs — Social Security and Medicare.  In 2010, the federal government spent $1.5 trillion on those programs, or approximately 43 percent of the federal budget, according to the Congressional Budget Office.  Speaker of the House John Boehner (R-OH) said House Republicans’ upcoming budget proposal would cut Social Security and Medicare, despite the political risk of taking on such popular programs.  Democrats are skeptical.  Changing Medicaid into a block grant means “you have no guarantee that people who are now covered will continue to be covered, or whether (the states) will simply cut back on their Medicaid program,” said Representative Henry Waxman, (D-CA), who is a primary defender of the program.

200 Economists Come Out in Favor of ObamaCare

Monday, April 25th, 2011

Approximately 200 healthcare economists are urging Congress to reject a premium support model for Medicare and instead “support vigorous implementation” of last year’s health reform law.  The economists – who are primarily academics – sent a letter to Congressional leadership saying there are two general strategies to Medicare spending and the “right” approach can be found in the Patient Protection and Affordable Care Act (ACA). “It supports research on identifying those procedures that work best,” according to the letter.  “It emphasizes payment reforms and new ways of organizing delivery of care to slow spending growth while improving care,” it said, adding that the Congressional Budget Office (CBO) projects that the Affordable Care Act will decelerate annual growth of per-person Medicare spending over the next 10 years below the rate of overall economic growth.

House Republicans recently released their fiscal year 2012 budget, which seeks to convert Medicare to a premium-support system.  Patients would be given a list of health plans from which to choose, and Medicare would subsidize the premiums.  In their letter to congressional leaders, the healthcare economists said the term “premium support” mislabels a voucher program, which they say will end up forcing consumers to pay more.  Citing CBO statistics, the economists expressed concern that current proposals link voucher payments to growth in the Consumer Price Index adjusted for population growth.  “Because medical care costs are rising much more rapidly than the CPI, this guarantees that the value of the proposed Medicare vouchers would erode over time,” according to the CBO.

Some believe that forcing people to pay more out-of-pocket expenses will make them better healthcare consumers.  Writing in The New Republic, Jonathan Cohn says that “The solution, as this argument goes, is to redesign insurance so that it forces people to pay more out-of-pocket expenses.  And, within reason, it’s not a bad idea.  Most economists, even those on the left, would agree that excessive coverage leads to higher health care spending.  But redesigning insurance in a way that actually lowers spending and, by the way, promotes good health, is a lot more complicated than merely giving people “more skin in the game,” as conservatives like to put it.  A new study by researchers affiliated with the Rand Corporation suggests why.

“The study, published in the American Journal of Managed Care, compares trends in medical spending by two groups of people — one group with traditional insurance and one with newly purchased high-deductible coverage,” Cohn notes.  “It appears to be the largest study of its kind, and the three authors did their best to adjust for factors like age, occupation and underlying medical conditions.  The result? People with high-deductible plans spent substantially less on their medical care.  That’s good news.  Or is it?  Giving people more skin in the game has distributional consequences.  It shifts the burden of medical expenses onto those people with the most serious medical problems, which is, arguably, what insurance is designed to prevent.  In addition, discriminating medical consumers are not always intelligent medical consumers.  People may decide to skimp on useful medical care rather than the superfluous kind.”

According to White House press secretary Jay Carney, healthcare savings are necessary to control the deficit. Carney said that the president would build on the work of his debt commission, whose recommendations he initially refrained from endorsing.  Carney also praised a small group of senators from both parties, known as the “Gang of Six”, which is establishing a framework where a sharply divided Congress can compromise on deficits.  “The president understands very well that healthcare spending is a major driver of our deficit and debt problem,” Carney said.  “He believes we can achieve those savings in ways that protect the people that these programs are supposed to, and were designed to, support and help.”

Will Proposed Medicare Reform Leave Seniors Out in the Cold?

Monday, April 11th, 2011

A Congressional proposal to reform Medicare will transfer a significant share of the cost to the nation’s senior citizens – a constituency that is known for high voter turnout in elections.  The Congressional Budget Office (CBO) added fodder for critics, concluding that the majority of future retirees would pay considerably more for healthcare under the “Path to Prosperity” approach — which turns Medicare into a voucher-like plan for Americans who are currently 54 and younger.  Representative Paul Ryan

(R-WI), who introduced the plan, said “We don’t want to turn the safety net into a hammock that lulls people to lives of complacencies and dependencies, into a permanent condition where they never get on their feet.”  Instead of coverage for a set of prescribed benefits, Americans in their mid-50s and younger would receive a federal payment to purchase private insurance from a choice of government-regulated plans.  If the proposal becomes law, beginning in 2022, Americans would have a vastly different experience when they became eligible for Medicare.  The age for eligibility would rise from 65 to 67, according to the CBO.

Ryan’s proposal slashes $1.4 trillion from Medicaid over the next decade.  He proposes to cut $630 billion off the budget by more or less repealing the Patient Protection and Affordable Care Act’s provisions that extend coverage to include anyone living on less than 133 percent of the poverty rate — just under $30,000 for a family of four.  Additionally, Ryan’s plan eliminates subsidies for private insurance premiums for those just above the poverty line.  According to CBO estimates, nearly 17 million people without insurance would have been covered by the Medicaid expansion.

Representative Chris Van Hollen (D-MD), the ranking Budget Committee Democrat, said Republicans are protecting tax breaks for corporations and the wealthy to the detriment of the middle class and the poor.  “It doesn’t reform Medicare, it deforms and dismantles it,” Van Hollen said.  As for Medicaid, Ryan’s proposal “rips apart the safety net” for poor and older people.  “A typical beneficiary would spend more for healthcare under the proposal,” according to the CBO analysis.  “Although the uncertainty in future federal spending on healthcare would decrease under the proposal, that uncertainty would be transferred to future beneficiaries,” the CBO analysis said.  “If the volume, complexity, and costs of medical services turned out to be greater than expected, future beneficiaries would pay higher premiums and cost-sharing amount than are currently projected.”

Ryan’s budget resolution would improve the nation’s overall fiscal health, cutting projected deficits in President Obama‘s budget and moving the federal government towards a surplus by 2040, according to the non-partisan CBO.  Ryan believes that the cuts are necessary to save the programs.  “This is not a budget.  This is a cause,” he said.  “The social safety net is fraying at the seams.”  Chip Kahn, president of the Federation of American Hospitals, said that Ryan’s proposal would “result in the loss of health coverage for millions of low-income Americans, reduce critical benefits for others, and make it more difficult for hospitals, clinicians and other healthcare providers to deliver the care so many need.”  Other critics maintain that Ryan’s approach will shift the higher costs to individuals, much as the change from defined-benefit pensions to 401(k) plans has increased retirement risk.  Senior citizens, the disabled and the poor likely will pay more for healthcare, even as Washington pays less.  Additionally, Ryan’s plan would permanently extend George W. Bush’s tax cuts.

“The idealized notion that older consumers would be making these annual choices may have some merit as an idea, but it doesn’t seem to be taking place in practice,” said Patricia Neuman, director of the Medicare Policy Project at the non-partisan Kaiser Family Foundation.  Picking the right health plan could become even more critical if premiums outpace federal subsidies.  In 2010, 50 percent of the nation’s Medicare recipients reported incomes of less than $21,000 a year, according to a Kaiser Family Foundation analysis.

In an opinion piece in the Seattle Post-Intelligencer, the “Monday Morning Economist” Stephen Herrington writes “The tax cut proposal is not getting the attention it deserves.  If it shapes up to be anything like was described in Ryan’s Road Map, it will create massive dislocations and disruptions in the economy.  Ryan’s plan was/is to cut the top tax bracket from 35 percent to 25 percent with the promise/expectation that this would not impact revenues.  In a departure from the standard ‘trickle down’ excuse for tax cuts, Ryan meant/means to offset the admitted loss in revenues by eliminating all manner of deductions.  The deductions in our current tax code, such as medical, mortgage and state income tax expense are there for a purpose.  Eliminating them will introduce wild distortions in markets and effectively push the tax cuts for the rich onto the other 98 percent of us.  Elimination of the medical expense deduction will intensify the impact of the Medicare/Medicaid part of the plan.  It is as if Ryan thinks the magic of the free market can absorb any shock in real time.  No more mortgage deduction?  No problem, I just won’t buy a house at all until the lack of the mortgage deduction causes prices to fall by half.”

Republicans Vow to Take on Healthcare Entitlement Programs

Wednesday, March 23rd, 2011

With the power shift in the House of Representatives, Medicare, Medicaid and Social Security are being targeted in proposed budget cuts designed to bring down the deficit. “It will likely be the first time you see a House have a prescription for Social Security, Medicare and Medicaid,” House Majority Leader Eric Cantor (R-VA) said at the Federation of American Hospitals’ annual public policy conference and business exposition in Washington.

Mississippi Governor Haley Barbour, a Republican, said that members of Mississippi’s Medicaid program saw its enrollment drop approximately 23 percent to 580,000 beneficiaries from 750,000 after the state started requiring beneficiaries to establish their eligibility in person.  Barbour began this practice in his first year as governor in 2004.  Senator Orrin Hatch (R-UT), the ranking Republican on the Senate Finance Committee, slammed the Patient Protection and Affordable Care Act (ACA), noting that its expansion of Medicaid will “bankrupt” the states, which already have strained budgets.  Hatch also cited Congressional Budget Office figures that say the ACA’s Medicaid expansion will cost taxpayers $435 billion over the next decade.

President Barack Obama said his proposed 2012 budget was a “down payment,” on cutting the federal budget deficit, and said that more work is needed to address “long term challenges”. Cantor said that on “individual items” there were “probably some areas of agreement” between the President and Republicans.  “But we can’t keep taking the savings and going to spend it,” he said.  “The object here is to cut.”  According to Cantor, the President’s plan “just misses the mark of living up to the expectations” Obama laid out in his State of the Union speech in January.  Asked if Cantor expected adjustments to Social Security and Medicare, Cantor said he was “hopeful that we can get some cooperation from [Senate Majority Leader] Harry Reid [D-NV] and the President, because these are programs that touch the lives of every American and we don’t want, nor can we, make these changes by ourselves.”

Writing on the Huffington Post, Richard Eskow took an alarmist tone, saying that “entitlement reform” is a euphemism for allowing the elderly to die if they become ill. “’The President’s budget punts on entitlement reform,’ reads a statement by House Republicans.  ‘Our budget will lead where the President has failed, and it will include real entitlement reforms.’  ‘You have to do entitlement reforms if you are serious about this budget,’ according to Representative Paul Ryan (R-WI).”  Eskow counters “Reality check: Nobody’s proposing ‘entitlement reform.’ That term is a cloaking device for some very ugly intentions.  It’s a meaningless manufactured phrase cooked up by some highly-paid consultant, and it diminishes the sum total of human understanding every time it’s used.  The phrase is a euphemism for deep cuts to programs that are vital and even life-saving for millions of elderly and poor people, but it’s politically unpalatable to say that.  So it became necessary to come up with yet another cognition-killing term designed to numb us from the human toll of our political actions.  ‘Entitlement reform’ is the new ‘collateral damage.’”

The Washington Post’s Ezra Klein is more diplomatic in his assessment of the possibility of entitlement reform. “We’ll see.  I wouldn’t be surprised if Obama has his name on a broader deficit-reduction bill at this time next year.  If he takes the deficit away from Republicans before 2012, his reelection campaign becomes considerably easier.  And on a less cynical level, his administration is stocked with deficit hawks — the same folks who actually balanced the budget under Bill Clinton.  And similarly, Republicans want to deliver on the deficit-reduction promises they’ve made to their base.  In theory, everyone’s incentives and ideologies are pointing in the same direction.  That’s a good sign for progress.”