Availability of Health Plans Under Obamacare Exchanges Will Vary
Widely (and Wildly) ... and maybe a backdoor to true health care
delivery payment reform without the profit motivation
When a typical 40-year-old uninsured woman in Maine (with a very
conservative Republican governor) goes to the new state exchange to
buy health insurance this fall, she may have
just two companies to choose from: the one that already sells most
individual policies in the state, and a complete unknown -- a
nonprofit start-up. Her counterpart
in California, however, will have a much wider variety of choices: 13
insurers are likely to offer plans, including the state's largest and
best-known carriers. With only a few months remaining
before Americans will start buying coverage through the new state
insurance exchanges under President Obama's health care law, it is
becoming clear that the millions of people purchasing policies in the
exchanges will find that their choices vary sharply, depending on
where they live.
States like California, Colorado and Maryland have attracted an array
of insurers. But options for people in other states may be limited to
an already dominant local Blue Cross plan and a few newcomers with
little or no track record in providing individual coverage, including
the two dozen new carriers across the country created under the
Patient Protection and Affordable Care Act. Maine residents, for
example, will not see an influx of new insurers.
The state has an older population and strict rules that already
have discouraged many insurers from selling policies, so
choices will probably be limited to the state's dominant carrier,
Anthem Blue Cross, and Maine Community Health Options.
"What we're seeing is a reflection of the
market that already exists," said Timothy Jost, a law
professor at Washington and Lee University in Virginia who is also
closely following Obamacare.
Obama administration officials estimate that
most Americans will have a choice of at least five carriers when open
enrollment begins in October. There are signs of increased
competition, with new insurers and existing providers working harder
to design more affordable and innovative plans. In 31 states,
officials say there will be insurers that offer plans across state
lines. The exchanges will be open to the
millions of Americans who are uninsured or already buying individual
coverage. Many will be eligible for federal subsidies.
But the insurance landscape will be highly varied, with some of
the states that have been slow to embrace the
law potentially offering the fewest options (i.e., "red states"
dominated by TeaParty-supported ultra right wing politicians) --
and plans with the highest premiums -- in the first year.
People in certain parts of the country may not have the robust choice
of insurers that the law sought as a way to keep premiums lower and
customer responsiveness high. These people are likely to
have few brand-name options to choose from, and they will be gambling
on plans offered by insurers new to the individual market as well as
brand-new carriers. The choice of providers and costs could also vary
as a result. As people become aware of the differences among the
exchanges, "some of the
laggard states are going to end up changing," said Ron
Pollack, the executive director for Families
USA, a consumer advocacy group that supports the law.
Whether the law ultimately accomplishes its aim of making the
insurance markets nationwide more competitive -- and plans more
affordable -- will only become clear over time.
Experts expect some insurers to drop out after a year or so, while
some other companies may decide to enter, depending on how the markets
evolve. Insurers will have to figure out how to offer plans
that most people can afford but still provide coverage to those with
expensive medical conditions -- and, for
investor-owned plans, how to make a profit in the meantime.
[Jeanne's Question: Is a system based on
"maximizing corporate profits"
the kind of health care system we should be
"A rush to judgment will be just that,"
said Dan Mendelson, the chief executive of Avalere
Health, a consulting group. "It's not
going to be possible in 2014 to make a strong valid judgment of
whether the exchanges are working or not."
Insurers already active in the market are the most likely to show up
on the exchanges. Blue Cross plans, for example, have already
established relationships with local hospitals and physician groups,
as well as state regulators. "We don't
have to recreate the wheel because the Blue plans are already there,"
said Daniel J. Hilferty, the chief executive of Independence
Blue Cross, a nonprofit headquartered in Philadelphia. In California,
Anthem Blue Cross, Health Net, Kaiser Permanente and Blue Shield of
California will remain big players. Most
likely to be missing from any given exchange are many of the national
insurers, whose business is focused mainly on providing coverage to
workers through their employers -- companies liked
UnitedHealth Group, Aetna and Cigna.
WellPoint, which operates Blue Cross plans (as for-profits) in
14 states and is the nation's largest provider of individual and small
business policies, has little choice but to compete because many of
its customers will be buying insurance on the exchanges. But the other
companies may delay entering any given exchange until they see a real
chance to gain customers. Given the uncertainty over how well the
exchanges will function, and whether enough healthy people will
enroll, insurers are likely to enter only those markets where they
already have a sizable number of existing customers.
"If you're not going to protect your
position, you would more likely take a cautious, wait-and-see-stand,"
Ana Gupte, a health insurance analyst for Dowling & Partners
Once the market becomes more established, some of those companies may
start offering plans, Mr. Jost said. "As
soon as they see there's money to be made there, they will jump right
in," he said. The law has clearly encouraged the entry
of new competitors. As many as a quarter of
the companies vying to offer plans on the 19 exchanges run by the
federal government are new to the market, federal officials
a memo released last
If the experience in Massachusetts is any guide, the fact that a plan
is new and unknown might not keep it from becoming popular quickly. In
that state, a relatively unknown insurer, Neighborhood
Health Plan, captured a large market share. Obamacare
said Kevin J. Counihan, who spent several years in Massachusetts
helping to run its marketplace before coming to Connecticut to head
On the flip side, though, one of the potential new entrants in
Vermont, the Vermont
Health Co-op, has not been able to win licensing approval from
state regulators. Insurers also say they plan to compete aggressively
on price. The new law places strict limits on how much of every dollar
of premium can go to anything other than medical expenses, and the
insurers say success will depend on enrolling as many customers as
possible rather than figuring out how high a premium they can charge
to raise profits. "It's more a volume
game," said Wayne S. DeVeydt, an executive vice
president at WellPoint, which expects to spend about $100 million in
marketing for plans offered on the exchanges.
To compete, insurers will have to find ways to offer inexpensive
plans, he said. In California, for example, WellPoint's Anthem Blue
Cross wants to offer a plan in southern Los Angeles for as little as
$259 a month for a 40-year-old. In Maine, WellPoint has asked
regulators to approve plans in which it will partner with selected
health systems to offer less expensive coverage for people willing to
go to a specific network of doctors and hospitals.
The consumer-operated plans, known as co-ops,
are also expected to put pressure on other insurers to hold down
"We don't have
to return money to stockholders on Wall Street, like for-profit
said Jerry Burgess, the chief executive of
Consumers' Choice Health Plan, the co-op established in South
Carolina. He says the insurer expects to
charge little more than the actual costs of its medical care and will
lower its premiums if possible.
"We would see an opportunity to gain market share by lowering our
price," Mr. Burgess said.
"That's exactly what health reform hopes will happen.
Aside: Are these non-profit co-ops Obamacare's not so secret weapn in
changing the U.S. health care system to a more rational, traditional
system in which true not-for-profits predominate? Has the right-wing
opposition actually backfired and opened a door to true reform?]
The plans offered by insurers like Molina Health Care that specialize
in Medicaid, the government program for low-income individuals, may
also prove to be formidable competitors because of their focus on
serving that population. "These are
players who are going to be aggressive," said Jaime
Estupinan, a vice president at Booz & Company. Experts say large
health systems are also expected to compete. Kaiser and Sharp
Healthcare, a San Diego hospital group that also offers insurance, are
expected to participate in California, and hospital groups and
insurers are increasingly working together to offer new plans.
Insurance "executives concede that it may take years for the new
market to take shape. "We're looking at
three to five years," said Joel Farran, an executive
for the Health Care Service
Corporation, which operates nonprofit Blue Cross plans in four states.
Jeanne's Weakly Lawyer Jokes for the Week of June 17, 2013
A Taste of
another Monday ... to all my lawyer-joke
followers ... lawyers taste like chicken ...
... for more ... go to
MedPAC's June Report to Congress, the Secretary and the Nation (... as
if anyone pays attention to these things)
This year's version of the Medicare Payment Advisory Committee's June
report to Congress, released last week,
addresses a variety of problems in the program ranging from overall
spending growth to wildly varying levels of outpatient therapy
spending in different parts of the country. It's far from
the mother lode of potential payment offsets that more often is found
in MedPAC's other major report to Congress each March. But it reflects
effort in a variety of areas to identify and eliminate inefficient
spending in the program.
Among the topics is one that would have gotten far more attention had
Mitt Romney been elected president: premium
support, which Republicans advocated to trim overall Medicare spending
growth. MedPAC doesn't call it that, using instead the term
"competitively determined plan
contributions," or CPC. It's used to describe
"a federal contribution toward the
coverage of the Medicare benefit, based on the cost of competing
options for the coverage, including those offered by private plans and
by the traditional Medicare fee for service program,"
the report states. Such a system is no simple way to produce savings,
MedPAC says. "Competing private plans ...
do not necessarily lower cost to the Medicare program if the rules
defining how they compete and how they are paid do not encourage them
to do so," according to the report.
"Whether a CPC approach can lower overall
Medicare spending will depend on the characteristics of each market,
the specific design of the model, and how different components of the
model interact," the report says.
Use Most Cost-Effective Setting
A big focus of MedPAC's work is
Medicare's payment rates often vary for
the same or similar ambulatory services provided to similar patients
in different settings, such as physicians' offices and hospital
outpatient departments, it notes.
"Such variations raise questions about how Medicare should pay for the
same service when it is delivered in different settings,"
it adds. If the same service can be safely
provided in different settings, a prudent purchaser should not pay
more for that service in one setting than in another,
commissioners say. "Payment variations
across settings may encourage arrangements among providers that result
in care being provided in higher paid settings, thereby increasing
total Medicare spending and beneficiary cost sharing."
In general, the panel advises Medicare to base its payment
rates on the resources needed to treat patients in the most efficient
setting while adjusting for differences in how sick the patients are
that are taken care of in different settings.
In its March report, MedPAC recommended that
Medicare payment rates should be equal whether a doctor evaluates or
manages a patient's condition in an outpatient department or in a
freestanding office. In the new June report,
the commission identifies 66 groups of
services provided in outpatient departments that are also frequently
performed in physician's offices.
"Changing OPD payment rates for these services to reduce payment
differences between settings would reduce program spending and
beneficiary cost sharing by $900 million in one year,"
the report says. "We also identified 12
groups of services that are commonly performed in ambulatory surgical
centers for which the OPD payment rates could be reduced to the ASC
level. This policy would reduce Medicare program spending and
beneficiary cost sharing by about $600 million per year,"
the commission counsels.
But the panel expressed worry about the
impact of these policies on hospitals that treat many poor patients.
Those patients are more likely to use a hospital outpatient
department as their usual source of care.
Because large reductions in Medicare revenue for the facilities could
cut access to physician services for these patients, the report
suggests a possible "stop-loss policy"
that would limit the hospitals' loss
of Medicare revenue.
But are Americans willing to change the delivery
setting in order to save costs ???
Bundling Could Save Money
The report notes that Medicare rates vary widely for the care
beneficiaries can receive following a hospital stay in the four
post-acute care settings: skilled nursing facilities, home health
care, inpatient rehabilitation hospitals, and long-term care
hospitals. "Nationwide, use rates for post
vary widely for reasons not explained by differences in beneficiaries'
health status." As a possible
remedy, reimbursement for a number of services could be bundled into
one payment. The approach would entail having hospitals and post-acute
care providers coordinating the treatment
of patients. That way, the panel says,
"providers would have an incentive to
coordinate care and provide only clinically necessary services rather
than furnishing more services to generate revenue." The
report illustrates a bundled payment approach for post-acute care in
which CM2 would compare
"actual average spending for a condition with
a benchmark, return some portion of payments if average spending is
below the benchmark, and put providers at some risk for spending above
report also discusses possible refinements to Medicare's hospital
readmissions policy. Congress enacted a readmissions reduction program
in 2010. It includes a penalty that reduces Medicare payments in 2013
to hospitals that had above-average readmission rates from July 2008
through June 2011. One problem with the
policy is that hospitals that treat many poor patients are more likely
to have readmissions and see payments cut as a result. A
possible refinement, the report says, would be to
"evaluate a hospital's readmission rate
against rates for a group of peer hospitals with a similar share of
poor Medicare beneficiaries as a way to adjust readmission penalties
for socioeconomic status."
The report also discusses possible
adjustments to hospice payments, outpatient therapy reimbursement, and
payments for ambulance services.
"Given the magnitude of hospice spending on long-stay patients, who
are more profitable under the current payment system than other
patients, it is important that an initial step toward payment reform
be taken as soon as possible," the panel advises.
Therapy Changes Recommended
The report says that Medicare spending on outpatient therapy in the
highest spending areas of the country "is
five times more than that in the lowest spending areas of the country,
even after controlling for differences in patients' health status."
It makes several recommendations to decrease
inappropriate use of outpatient therapy services. It also
makes recommendations to assure that Medicare pays for
use of ambulances and calls for ending a floor on a payment
The report endorses a geographic adjustment to physician payments. The
"cost of living varies geographically,"
and Medicare payments to doctors should reflect that, it says.
But the current system is flawed because of a
lack of quality data on the earnings of physicians and other
professions, the report says.
"The adjustment should reflect geographic differences in labor costs
per unit of output across markets for physicians and other health
professionals," it says. It also
calls for ending a floor on such geographic adjustments for
payments that keep them from going below a certain level.
CM2 Issues Call for EHR Tests
As part of meaningful
2's transition of care objective, measure #3 requires eligible
professionals (EPs) and eligible hospitals/critical access hospitals (CAHs)
Conduct one or more successful electronic exchanges of a summary of
care document, with a recipient who has Electronic Health Record
(EHR) technology designed by a different EHR technology developer
than the sender's.
Conduct one or more
successful tests with the Centers for Medicare and Medicaid
Services (CM2) designated test EHR during the
EHR reporting period
seeks to designate multiple "test EHRs" for EPs, eligible hospitals
and CAHs to use if they elect to pursue the second approach to meet
measure #3 of Stage 2's transitions of care objective. CM2
and the Office of the National Coordinator (ONC) have worked together
to identify a minimum set of technical capabilities that need to be in
place in order to be designated. Designated test EHRs will be
registered on a software system hosted by the National Institute of
Standards and Technology (NIST). The NIST- hosted software system will
randomly match an EP, eligible hospital, or CAH with a designated test
EHR that is designed by a different EHR technology developer than
and ONC strongly encourage the EHR technology developer community to
participate in the program to become a CM2
designated test EHR.
find out more about becoming a CM2
designated test EHR, please contact Nora Super (Nora.Super@hhs.gov)
Medicare Doctors Choose Brand Name Over Generic Too Often for Patients
A new study suggests that cash-strapped Medicare missed an opportunity
to save more than $1 billion by not addressing the varying costs and
use of prescription drugs.
Comparing Medicare enrollees and those on the U.S. Department of
Veterans Affairs (VA) health plan,
researchers found that Medicare beneficiaries were up to three times
more likely than VA patients to choose higher-cost brand name drugs
over generic brands,
according to the Annals of Internal Medicine report.
main issue, and the only way to fix this, is to change what physicians
said Dr. Walid Gellad, a lead author and internist with the VA
Pittsburgh Healthcare System and the University of Pittsburgh.
Physicians in the VA system follow an approval process that requires
them to try the generic drug before they prescribe a patient the
The system also limits their providers’
interactions with pharmaceutical representatives, which
Gellad said can alter the way a doctor chooses to prescribe certain
Researchers compared diabetic patients of similar ages -- about 75
years old -- and health outcomes. They
calculated that if Medicare Part D followed the VA system, drug
spending would have been $1.4 billion less in 2008. If the
VA had adopted Medicare practices, on the other hand, its spending
would increase by $108 million. The findings echo a larger
conversation among policymakers about pharmaceutical costs, since
brand-named versions can cost significantly
more than their generic counterpart. Both nonprofit patient
assistance programs, like NeedyMeds,
and government legislation, like the Physician Payment Sunshine Act,
have sought to tackle the high costs of prescription drugs and
physicians' prescribing practices.
is not too much transparency when it comes to drug pricing,"
said David Lipschutz, an attorney at the Center for Medicare
Advocacy. "People focus on out-of-pocket
pointed out that lawmakers have offered many proposals to deal with
prescription drugs, with different methods to control the costs
through both market competition and changes in the patient's copay.
Lipschutz said the new study would help inform a debate, even if data
was culled from two "very different
systems with big structural differences."
Meanwhile, Gellad called the results of his study
"startling" and said he
hopes it will spur action as lawmakers seek ways to slow Medicare
spending. "It's an easy solution,"
he said. "You don't have to change
a law or do anything special to decrease costs -- you just have to
change the kind of drugs people are using."
Democrats Hit the Road to Tout (and Support) Obamacare
Three years after it passed, President Barack Obama and fellow
Democrats are still trying to sell the federal health care law to a
by their defeats in the 2010 Congressional elections, when they were
overly defensive rather than actively positive about the law now most
commonly known as "Obamacare," Democratic
lawmakers, armed with tool kits and fact sheets, are fanning out
across the nation to tout the law's benefits. Those charged
with implementing its changes, starting with Health and Human Services
Secretary Kathleen Sebelius, are pushing
companies to donate money to a private group that's working to get the
program up and running. Supporters are organizing armies of volunteers
to go door to door to try to sign up millions of uninsured Americans.
Obama, too, is touring the nation to talk up the benefits.
most recent speech -- Friday in San Jose, California (see
below). -- focused on the promise of lower premiums in the state
that has the largest insurance market, as well as on the Republicans
who've been relentless in criticizing the law.
"It's basic trench warfare,"
said Stuart Altman, an economist at Brandeis University who
specializes in health care policy. "It's
symbolic of the split in the country."
Ever since the creation of Social Security in the 1930s, the
government often has had to explain or sell new social programs to the
country. But the campaign to sell this law is far greater than any
other in recent history, including the Medicare prescription-drug
benefit enacted in 2006, political and health care experts said.
As ever, politics drives the debate.
Democrats say they have no choice but to sell the law to the public
because Republicans and their allies are
aggressively spreading misinformation, discouraging people from
enrolling and refusing the additional money the
administration says is needed to implement the changes. The law
included $1 billion for implementation, but the nonpartisan
Congressional Budget Office says it will take $5 billion to $10
billion, and Congress won't appropriate any more. Also,
some GOP governors are rebuffing efforts to
expand Medicaid, the government-run health program for the poor and a
key part of the law.
"The Republicans in Congress
are hell bent on doing whatever they can to help this fail,"
said Mo Elleithee, a veteran Democratic political consultant.
Democratic-controlled Congress passed the Patient Protection and
Affordable Care Act,
dubbed Obamacare, in March 2007. The Supreme Court upheld the
constitutionality of the law last year. Republicans haven't given up,
working to eliminate, defund or minimize the law. The House of
Representatives, now run by Republicans, has voted 37 times to repeal
it, symbolic votes that die in the Democratic-led Senate.
"The president has shown over and over
again that he is good at campaigning, but not so good at governing,"
said Senate Minority Leader Mitch McConnell, T/R-Ky.
"All of the campaign-style events in the world won't mask the fact
that Obamacare costs too much: too much for families, too much for
businesses and too much for taxpayers." Whatever the
reason, Americans are skeptical. A new Wall Street Journal/NBC poll
released last week found that 49 percent of Americans think the law is
a bad idea. although 13% of those listed as
"opposed" actually say it is because the law doesn't go far enough and
should be expanded.
That may be part of the reason the Obama administration is working to
arm its allies. Two weeks ago, for example, the White House, the
Health and Human Services Department and the Small Business
Administration held a series of sessions for lawmakers, chiefs of
staff, legislative assistants and press secretaries on the
implementation of the law and how to talk about it. In the House,
Democratic members were issued a tool kit: a
binder of information about the law, including responses to Republican
"myths." [See also:
also the public relations pitch financed in part by the private sector
-- with a push from the government. Under questioning by Congress,
Sebelius testified last week that she'd been forced to ask companies
and organizations -- even some that her department regulates -- to
help a nonprofit group promoting the health care law because
Republican lawmakers refused to provide the millions of dollars
necessary to implement it.
She said she called five companies -- Johnson & Johnson, the drug
maker; Ascension Health, the large Roman Catholic health care system;
Kaiser Permanente, the health insurance plan; H&R Block, the tax
preparation service, which is helping low- and middle-income people
apply for tax credits that can be used to buy private health
insurance; and the Robert Wood Johnson Foundation, which works in
public health. Sebelius said the Public
Health Service Act granted her the authority to urge groups to get
involved and that her actions were similar to those in Bill Clinton's
administration to encourage enrollment in the Children's Health
Insurance Program and George W. Bush’s administration to help Medicare
beneficiaries sign up for prescription drug coverage. The
nonprofit group that's helping to implement the health care law,
Enroll America, is led by and
supported by former Obama aides. Recent reports say that President
Anne Filipic, a former deputy director of the Office of Public
Engagement, will send volunteers door to door to enroll uninsured
Americans while another former White House staffer, Nancy-Ann DeParle,
is raising money for the group.
In his speeches, Obama has avoided the controversies and focused on
facts to make his case (here's one: 25 million uninsured Americans
will gain coverage by 2023, according to the Congressional Budget
Office) while treating the events like campaign rallies, complete with
supporters and Republican jabs. "This is
working the way it's supposed to," the president said
last week in San Jose. "So the bottom line
is you can listen to a bunch of political talk out there -- negative
ads and fear mongering geared towards the next election -- or
alternatively you can actually look at what's happening."
Maximum Out-of-Pocket Spending Limits May Not Be the Maximum for Some
Starting next year, Obamacare sets maximum
limits on how much consumers can be required to pay out-of-pocket
annually for their medical care. But some people with high
drug costs may find the limits don't protect them yet. That's because
the federal government is giving some health plans extra
time to comply with the rules.
the law, the maximum amount a consumer with
single coverage will pay out-of-pocket in 2014 will generally
$6,350 while a family could pay up to $12,700. Those totals
include copayments and deductibles, but not premiums, and they apply
only to plans that are not grandfathered under the law.
the catch. Although all non-grandfathered plans will have to cap the
amount that consumers pay out-of-pocket for major medical expenses,
if health plans use more than one company to
administer their benefits -- as many do for major medical and pharmacy
benefits, for example -- consumers may face
separate caps next year,
or no cap on their pharmacy spending at
According to guidance
from the federal government issued in February, health plans with
more than one benefits administrator don't have to combine their
tallies of members' out of pocket spending into one total until 2015.
So a plan with a separate cap on pharmacy benefits can keep it as long
as the limits don't exceed the new maximum. Plans with no drug
spending limit -- the norm, according to experts -- don't have to cap
members' out-of-pocket spending at all.
What is a grandfathered plan?
Most health insurance plans that existed on March 23, 2010 are
eligible for grandfathered status and
therefore do not have to meet all the requirements of the health care
if an insurer or employer makes significant changes to a plan's
benefits or how much members pay through premiums, copays or
deductibles, then the plan loses that status.
The government's regulations spell
out how much plans can change the amount paid by workers or employers
before losing their status. Both individual plans, the kind you buy
on your own, and group plans, the kind you receive through an
employer, can be grandfathered. If you get coverage through an
employer, you can join a grandfathered plan even if you weren't
enrolled on March 23, 2010.
What rules does a grandfathered plan have to follow?
A grandfathered plan has to follow some of the same
rules other plans do under
For example, the plans cannot impose lifetime limits on how much
health care coverage people may receive, and they must offer dependent
coverage for young adults until age 26 (although until 2014, a
grandfathered group plan does not have to offer such coverage if a
young adult is eligible for coverage elsewhere). They also cannot
retroactively cancel your coverage because of a mistake you made when
applying, a practice known as a rescission.
However, there are many rules grandfathered plans do not have to
For example, they are not required to provide preventive care without
cost-sharing. In addition, they do not have to offer a package of
that individual and small group plans must offer beginning in 2014.
(Large employer plans are not required to offer the essential benefits
package even if they are not grandfathered.)
Furthermore, grandfathered individual plans
the policies you purchase yourself, rather than through work
can still impose annual dollar limits, such as capping key benefits at
$750,000 in a given year. Grandfathered individual policies also can
still lock out children under 19 if they have a pre-existing
June 10, 2013:
Obama Launches High-Profile, High-Stakes Campaign to Sell Health Law
the opening round of what's likely to be steel-cage political combat
over the impact of the health care law on insurance rates, President
Barack Obama said last week in a speech in California that the
overhaul is ushering in a new era of vigorous
competition among plans in the state and elsewhere, resulting in
reliable, affordable coverage. Appearing in San Jose
with local government, media, and philanthropic officials, Obama
touted the state's new insurance exchange as a model.
"If you're one of nearly 6 million
Californians or tens of millions of Americans who don't currently have
health insurance, you'll soon be able to buy quality, affordable care
just like everybody else," Obama said. Thanks to new
online insurance marketplaces opening in the fall,
health plans will actually have to compete,
he said, "and that means new choices."
While in many states Americans now only have a choice of one or two
plans, based on early reports about 9 in ten Americans expected to
enroll in the new marketplaces live in states where they'll be able to
choose between five or more different insurers, he said. Contrary to
"doom and gloom" forecasts,
Obama said that in states that are properly
implementing the overhaul,
"competition and choice are pushing down costs in the individual
market just like the law was designed to do." Premiums
in California's exchange "were lower than
anybody expected," he said. And about 2.6 million
Californians, nearly half of whom are Latinos,
"will qualify for tax credits that will in some cases lower
their premiums a significant amount."
Republicans Starting to Push Back
Health law supporters say Obama's
salesmanship is long overdue and sorely needed if the
administration is to meet its goal next year of enrolling 7 million
uninsured people in the new insurance exchanges. While Obama's
appearance was good news for them,
Republicans are gearing up to make counter claims. The
right-leaning American Action Forum issued a statement last week
saying coverage on the California exchange will limit enrollees'
choice of providers. "What you will not
hear from [Obama] is that if you live in California you could be
losing 64 percent of your provider network,"
said Forum spokeswoman Emily Egan. And in Ohio, Lieutenant Gov.
Mary Taylor, a Republican, said the state insurance department's
initial analysis shows "consumers will
have fewer choices and pay much higher premiums" for
plans to be offered by the federal exchange serving the state. Monthly
premiums in the individual market now average $223, Taylor said,
citing an estimate by the Society of Actuaries. But proposed rates
show that average climbing 88 percent to $420, she added in a recent
Late last week, five Senate Health, Education, Labor and Pensions
Committee Republicans wrote to Health and Human Services Secretary
Kathleen Sebelius asking her to follow up on a May 9 Associated Press
story saying that a California law gave the state's exchange the power
to keep secret certain spending details for the contractors that will
perform most of the marketplace's functions.
The White House made clear in focusing on California that coverage of
the uninsured Latino population is going to be a key part of making
the health care law a success -- not only in California, but
nationally. Not only will that score the administration political
points with a pivotal voting bloc in the 2012 elections, it could
sharply reduce the number of Americans without coverage.
California has a big chunk of the nation's
uninsured population, and nearly two-thirds of it are Latino,
says the California Endowment, a health care philanthropy.
White House officials said in a background briefing that California
provides a good model for the success of enrollment efforts going
forward, Three powerful Spanish-language media companies have agreed
to be part of the California outreach effort, officials noted, and
will hit nearly 100 percent of the target Hispanic communities in the
state, they added. The three -- Univision, Telemundo, and impreMedia
-- are beginning a three-phase campaign that could be copied in other
states, officials said. The opening
"awareness" phase will tell people what Obamacare does
and that the enrollment period is fast approaching. The next is the
"education" phase -- which
will start closer to the fall. That will let people know where to get
more information and to find out what their coverage options are. The
third phase is the actual enrollment
period that will run from October 1 through March.
Particularly critical to the success of the
law is enrolling young and healthy people whose relatively low health
costs would make it possible to keep premiums affordable for older,
sicker Americans. Of the target population of 7 million
covered in exchanges next year, administration officials say it's
important that 2.6 million or 2.7 million are young and healthy. When
you drill down and think about who these folks are, about
one in three live in California, Florida and
Texas, one official said. Obama emphasized the importance
of people stepping forward and signing up for coverage. But the key to
that will be whether rates in exchanges across the country are
affordable -- or perhaps more importantly, are viewed as affordable.
Politics and Rates
States with Democratic governors are more likely to cast exchange
rates in a favorable light and those run by Republican governors in a
negative light. Kaiser Family Foundation Senior Vice President Larry
Leavitt said in an interview that his review
of the Ohio rates shows that they are actually about the same as those
in California. In California, officials helped to create a
favorable impression of the rates in the individual insurance market
next year by noting they would be about the same or lower as the rates
in 2013 for small employer plans. Individual rates would range from 2
percent above to 29 percent below the 2013 average premium for small
employer plans, officials said. Comparing
premiums to those in the small group market is
"a way of testing the reasonableness"
of individual plan premiums, Leavitt said. That's because the benefits
individual plans must provide next year will be comparable to those
that exist in the small group market, he said.
Had insurers come in with 2014 rates for the individual market that
were sharply higher than those in the small group market, it would
have been a sign of insurer price gouging under the health law,
something he said supporters of the measure feared insurers would do
after the law took effect.
officials instead chose to focus on year-to-year comparisons of
individual plans. The 2013 rates they used to
calculate the 88 percent increase were based on much skimpier coverage
than the plans will have next year, analysts said. Kaiser
analyst Karen Pollitz said that in some instances,
plans now sold on Ohio's individual market
barely qualify as health insurance and someone buying such
policies risk bankruptcy if serious illness strikes. But individual
coverage next year in Ohio will be more comprehensive and
"heavily subsidized for 80 to 90 percent
of newly insured Ohioans," she said. The rates cited by
Ohio officials are proposed and could be lower following rate review
in the state.
California officials had only limited data comparing individual plan
premiums in 2013 versus 2014. Blue Shield of California suggested
enrollees in its individual plan would be paying 13 percent more next
Weakly Lawyer Jokes for the Week of Week of June 10, 2013
A WHOLE BUNCH MORE DOCTOR vs. LAWYER COMMENTS
(Both Sides, win a few, lose a few)
... for more go to:
June 8, 2013:
"Patient-Centered Medical Home" ... An Experiment That Seems to Be
nation's largest experiment in delivering medical care in an
innovative way has reduced costs and improved the quality of care even
more in its second year than in its first, according to the insurance
company behind it. The nonprofit CareFirst BlueCross-BlueShield
launched its "Patient-Centered Medical Home"
program in January 2011 among primary-care providers
serving about one-third of its 3.4 million
members in Maryland, Washington, D.C., and northern
other "accountable care organizations"
(ACOs), which are centerpieces of President Barack
care reform, the medical home program ties insurance payments to
health care providers to the quality of care they deliver.
Thursday, CareFirst reported cost savings of
$98 million for the medical home program in 2012, compared with $38
million the year before. Proponents of the model say it
shows that "bending the cost curve
downward," as Obama described one of the goals of his
2010 health care law, is achievable. If innovative models like
CareFirst's deliver as promised, it will ease the financial pressures
on Medicare, the government
health insurance program for the elderly and disabled, and
help make Obamacare more likely to succeed.
"This is a very important finding, that a
major health plan is able to achieve savings" of this
magnitude, said Dr Elliott Fisher, a health policy expert at the
Dartmouth Institute for Health Policy and Clinical Practice and an
architect of accountable care organizations.
homes, like other ACOs, induce physicians to coordinate care to make
sure patients' prescriptions don't interact adversely, for instance,
and to think twice before ordering unnecessary tests. Physicians who
reduce costs while hitting quality metrics such as regularly checking
a diabetic's eyesight receive awards in the form of higher payments.
In CareFirst's program, that incentive is
substantial: a 29 percent bump in physician reimbursement rates.
The insurer can afford to be so generous because
improving primary care, which accounts for only 6 percent of medical
spending, reduces far pricier hospitalizations and specialist visits.
CareFirst's success is likely to accelerate other efforts to
move from a traditional fee-for-service
model, where the more tests and treatments physicians and hospitals do
the more they make, to one that rewards efficiency and quality.
Twenty-nine U.S. states now let primary-care providers act as
patient-centered medical homes for residents on the Medicaid program
for the poor, for instance. Major insurers including UnitedHealth
Group, WellPoint, Aetna, Humana and Cigna are also contracting with
physicians to operate under an accountable care model.
BUILDING UP SAVINGS
Skeptics have warned that any savings in programs like medical homes
would peter out after their first year, as physicians eliminated
the most obvious and easiest-to-cut waste, and that further reductions
woul:d cut necessary care. CareFirst
has found otherwise.
million of its members (almost all employed, with an average age of
42) were in medical homes in 2012, the company reported, and 80
percent of the primary-care providers in CareFirst's network
participate in the program. These members' health care costs were $98
million (2.7 percent) less than CareFirst projected. In 2011, the
savings were 1.5 percent. Most of the savings
came from reduced hospital admissions, less use of emergency rooms and
lower spending on drugs, said CareFirst Chief Executive
Officer Chet Burrell.
Two-thirds of the 3,600 physicians and nurse practitioners
participating in the medical home program
earned higher reimbursements from CareFirst in 2012, based on a
combination of cost savings (which averaged 4.7 percent) and quality
measures. Measuring quality - which also includes having extended
hours and using electronic medical records - keeps doctors from trying
to save money by skimping on needed care.
"This is a measurable and meaningful step
in the right direction of slowing the rise of health care costs,"
At primary-care practices that did not earn
an incentive award, costs averaged 3.6 percent higher than expected.
Their quality scores were also worse, suggesting that
wasteful care often goes hand in hand with poor care.
CareFirst's savings are in line with those reported by 10 physician
groups across the United States that treated Medicare patients under
an accountable care model. Annual savings averaged $114 per patient,
researchers led by Fisher reported in the Journal of the American
Medical Association last year. But savings
reached $532, or 5 percent, for patients eligible for both Medicare
CareFirst received a grant from the federal Centers for Medicare and
Services to expand the medical home model to
Medicare patients starting July 1. These older Americans "frequently
have complex health needs and multiple chronic health conditions,"
said Burrell, and so "could benefit
greatly from the coordinated model of care" in medical
June 7, 2013:
Non-Profit Hospital Chain CEOs Gorging at the Hog Trough Too
medical costs is the latest mantra among hospital executives,
government bureaucrats, insurers and benefit managers as they grapple
for ways to contain U.S. health care spending. But executive
compensation in the health care industry shows few signs of hitting a
One sure bet: The salaries and benefits for hospital administrators
will continue to rise.
A recent survey by Equilar,
an executive compensation data firm based in Redwood City, California,
found that -- for the fourth time in five years --
health care chief executives commanded the highest pay packages last
year among publicly traded companies.
On average, Equilar found,
health care CEOs were paid more than their counterparts in six other
industry sectors, including technology, financial services and
The value of executive pay at large, for-profit health companies tends
to be higher than nonprofit organizations, but the gap appears to be
In recent years, executives at nonprofit health organizations have
seen annual double-digit increases of as much as 40 percent in their
total compensation packages,
which typically include salaries, bonuses, pensions and health
Such pay hikes occurred as these nonprofit organizations enjoyed
their largest operating margins in years, and also at a time when
health providers speak of a new era of transparency in pricing,
improved quality of care, and personalized medicine.
care is a remarkably complex business, so in some ways, you might say
they deserve higher pay,"
said Professor Harold Miller, executive director of Center for
Healthcare Quality Payment and Reform at Carnegie Mellon University in
"And the salary that
goes to the CEO is still a small piece of health care costs. ... But
if a health care executive's pay is based on the amount of revenue
they generate, the problem is in the incentive,"
"Basically, hospitals get rewarded by putting
more heads in beds. It works against the goal of affordable health
care. We need to start paying these executives to keep people
Catalyzed by the Patient Care and Affordable Care Act,
a growing number of health executives talk of transforming a broken
health care system by focusing on preventive medicine and primary
care, reducing unnecessary tests and surgeries, and eliminating
Thomas Getzen, executive director of the International Health
Economics Association and a professor at Temple University, said that
"an argument can be
made that an innovative health care CEO is as valuable as a college
But, he added,
"for me the big problem, whether it's a
for-profit or nonprofit, is when executives start chasing their own
compensation rather than the good of the company. We've seen that in
banking, and that can happen in health care."
FOR SERVICES RENDERED
administrators say they have their organizations' best interests at
not in this job because of the salary," said William Thompson, chief executive of Missouri-based SSM
Health Care, a Roman Catholic hospital chain, which operates 18
hospitals in four states. He received total compensation of $2.3
million in 2011 -- a 26 percent increase over 2010.
Some of that pay hike was attributable to a change in jobs. Thompson,
SSM's former chief operating officer, assumed the role of chief
executive in August 2011. In 2010, his pay increased 95 percent from
$918,229 to $1.8 million.
been (at SSM) for 33 years, and for a lot of those years I wasn't paid
nearly the salary I'm paid now,"
"If you look at the revenue, I don't think
I'm over- or underpaid."
Health administrators often justify their salaries by noting the
challenge of running multibillion-dollar systems on thin operating
margins and overseeing hospitals that demand high safety standards.
Health administrators also stress that their pay packages are
determined by independent committees of their boards of directors.
Those panels rely on market surveys and
that examine compensation levels at similar-size health institutions.
Any bonuses and incentive pay are calculated using formulas based on
FOR-PROFIT AND PUBLIC SECTORS
Walter Kopp, a
health care consultant based in San Anselmo, California, said that
executives who run nonprofit health systems
"are generally making a fraction of what their counterparts in
for-profits are making."
One case in point: Tenet Healthcare Corp. The nation's third-largest
for-profit hospital chain operates 49 hospitals in 10 states. The
company's net revenue exceeds $9 billion, but its net income is slim:
$141 million in 2012, and $58 million in 2011. Dallas-based Tenet's
chief executive and president,
Trevor Fetter, received total compensation in 2012 of $11.2 million
-- up nearly 5 percent from 2011, according to Tenet's annual proxy
statement. In contrast,
the CEO of nonprofit Ascension Health Alliance -- whose organization
generates more than 180 percent of Tenet’s revenue -- received only 36
percent of Fetter's compensation package last year.
Defenders of generous health care salaries and benefits speak of
hospital executives' depth of knowledge, leadership skills and
responsibility for tens of thousands of employees as well as patients.
Some public officials bear responsibility for even larger
organizations, but the compensation of public officials is much
smaller than the pay packages of nonprofit health executives. Kathleen
Sebelius, secretary of the U.S. Department of Health and Human
Services, receives a salary of $199,700 a year, plus retirement and
health benefits. Her agency has an $874 billion budget and 74,193
employees. Margaret Donnelly, former director of Missouri's Department
of Health and Senior Services, received a salary and benefits last
year totaling $151,708. The agency's budget is about $1 billion.
NONPROFIT HEALTH SYSTEMS
Labor -- including salaries, wages and benefits -- is often the
leading expense for large health systems, followed by supplies and professional
It's not uncommon for labor to exceed 50 percent of a health system's
But most hospital workers do not see double-digit increases in their
Ascension Health -- a subsidiary of Ascension Health Alliance -- is
the nation's largest Catholic and nonprofit health system. Ascension
operates about 80 hospitals in 20 states and the District of Columbia,
with operating revenue of $16.6 billion in 2012, according to its
annual report. Anthony Tersigni,
chief executive of Ascension Health Alliance, received total
compensation in fiscal year 2012 of $4 million -- a 12 percent increase over the previous year. He declined to
we look for leadership of our ministry, we need to draw from the best
and brightest to serve those who are poor and vulnerable,"
said Jon Glaudemans, chief
advocacy and communications officer for Ascension.
are required to be competitive, but we also have a mission to care for
those who are poor and vulnerable. Candidly, many of our executives
could do better for themselves working in other environments."
Glaudemans said that
Ascension is seeking
"to remain competitive in a market that is
increasingly complex and characterized by challenging regulatory
circumstances, including implementation of the Affordable Care Act."
Nine executives at Ascension's headquarters received total
compensation in fiscal year 2012 exceeding $1 million.
Ascension's labor costs accounted for 48 percent of its annual
expenses. It's employees -- which include a spectrum of jobs from
administrators, physicians and nurses to medical technicians, office
workers and supply clerks -- earn annual salaries and benefits on
average totaling about $55,000.
Ascension’s CEO's pay package of $4 million for 2013 was nearly 73
times greater than the average Ascension employee’s compensation.
They Don't Call the State "Tex-ASS" for Nothing; Texas Stands to Lose
opting not to expand Medicaid, Texas is
passing up an estimated $6 billion in federal funds over the coming
decade, leaving its health care providers, especially
hospitals, in a tough financial spot. Rural
care facilities are especially vulnerable. The Medicaid
enrollment expansions that take effect on January 1, 2014 under the
Patient Protection and Affordable Care Act (Obamacare) are expected to
extend health insurance coverage to as many as 17 million Americans,
depending upon who's doing the calculations and how many states
eventually sign on.
For health care providers in most states, the expansion represents a
windfall of billions of dollars. The federal government will pay for
the entire cost of the expansion through 2016. After that, the cost
will gradually shift toward the states, but the feds will still pay
90% of the cost after 2020.
expansion offers coverage to people who earn as much as 138% of the
federal poverty level, which is $15,400 for one person and $31,800 for
a family of four.
that hospitals and health care are huge economic drivers, those
new Medicaid dollars could prove to be as valuable for economic
activity and job growth as they are for improving
population health. The Medicaid money will
also free up local property and sales taxes that would otherwise be
used to prop up charity care.
such circumstances, expanding the Medicaid rolls would seem like a
no brainer. After all, the need is already there.
People are going to get sick and need medical
care regardless of whether or not they are insured. That care is going
to cost money. Of course, these states could also adopt the
policy shouted from the audience during the Republican president
nominee debates last year; "Let 'em die!"
If they have no health insurance it must be their own fault,
just let them die ... or go to a hospital emergency room under the law
signed by Ronald Reagan, EMTALA.
Medicaid expansion simply answers the question of who is going to pay
for it. The insurance ratepayer and the county taxpayer gets hit one
way or another
However, as we have seen over the last three years, the politics of
Obamacare are so toxic that at least 14 states have said they will not
expand coverage. "If the discussion is
purely about money, it's hard to just walk away," says
Matt Salo, executive director of the National Association of Medicaid
Directors. "But this is not just about
money. This is very much about politics and ideology."
than any other state, Texas has come to represent
"not just 'no' but 'hell no'"
opposition to Obamacare, even though the Lone Star State has the
highest percentage of uninsured
citizens in the United States. It has
been estimated that as many as 1.7 million Texans could gain coverage
with the expansion, which would also funnel about $90
billion in federal dollars into the state over the next decade.
Governor Rick Perry and other key Republican leaders, however, have
led the opposition, with Perry calling the expansion plan
"a misguided, and ultimately doomed, attempt
to mask the shortcomings of Obamacare. It would benefit no one in our
state to see their taxes skyrocket and our economy crushed as our
budget crumbled under the weight of oppressive Medicaid costs.
Instead of another federal mandate, Perry has called for
"the flexibility to care for our own in a
manner that makes sense both effectively and financially."
problem is that the Texas legislature, which meets once every two
years, adjourned this spring without taking any action on an
alternative to the federal expansion plan. They could call a special
legislative session to address the expansion, or it could be done
administratively through the Perry administration, but those options
appear unlikely right now.
result, when January 1, 2014 rolls up,
"the poorest Texans will be left out," says Anne
Dunkelberg, associate director of the nonprofit Center for Public
they live in a big city they might be able to get some help from their
local hospital district and what group gets served depends on what
city they live in. That is going to be funded by 100% local property
tax dollars instead of 100% federal funds. And if they live in a more
rural county they may have no options. There may be no public program
that is going to help them."
Dunkelberg says various studies have estimated that Texas
will lose about $6 billion [PDF] a year over the next decade and
beyond in federal subsidies because it won't expand the Medicaid
rolls. "The funds would have created
hundreds of thousands of jobs, the estimates ranged from between
215,000 to 300,000 jobs a year," Dunkelberg says.
amounts of money that are potentially going through communities --
urban and rural -- are fairly staggering and potentially having a big
boost in terms of economic development in some parts of the state and
certainly offsetting large amounts of uncompensated care that is
currently funded with local property tax dollars. We are leaving that
money on the table."
Left holding the bag, of
course, will be health care providers, especially hospitals. They
get the worst of both ends.
They don't reap the benefit of seeing
more insured patients, and their reimbursements for Medicare and
Medicaid are being cut through the federal budget process and
a difficult financial model,"
says John Hawkins, senior vice president for government relations at
the Texas Hospital Association. "Trying
to balance those cuts without being able to expand coverage is going
to be difficult going forward."
likelihood, dwindling funding could mean that some smaller or
financially strained hospitals will close.
"For rural hospitals that is probably more the reality. In other
areas you will see hospitals limit services which can be equally as
challenging for their communities," Hawkins says.
are going to have worse health outcomes, particularly in areas where
facilities have to limit services. Folks will have to drive farther.
Your workforce isn't going to be as productive because of lack of
coverage. The bigger impact will be poorer health outcomes and
not just the usual public advocacy groups who are calling for
expanding the Medicaid rolls. Leading
business groups in Texas have called
for some sort of action. Hawkins says there has been a
"continued drum beat" for expanding the rolls from a wide
swath of special interest groups that recognize what is at stake.
"Certainly folks are concerned about the level of uninsured. They
are concerned about the cost of health care. They understand the
cost shift to taxpayers and the private market. There is a lot of
discussion about it, but the general political headwind in this
state against Obamacare is difficult to overcome,"
the best hope for states that are ideological entrenched against
Obamacare lies with the so-called Arkansas
Medicaid Model, which would use Medicaid expansion money to
subsidize premiums for commercial plans purchased through health
insurance exchanges. That proposal is still being vetted by the
Centers for Medicare & Medicaid
not clear if Texas would adopt a similar plan. Even if it did it's not
clear if the state could expand its rolls by January 1, 2014 deadline.
remains optimistic that some sort of solution will be reached.
"Actually, in retrospect, we are pleased the debate got as far as it
did where we were actually talking about alternatives because early on
it looked like folks were being reticent even to have that discussion
given the will of the leadership," he says. "But we did advance the
discussion even to the point where if things in other states continue
to move forward we may have a chance to revisit this
June 5, 2013:
Nurse Practitioners to the Rescue ... Again
The U.S. physician workforce is struggling to keep pace with the
demand for health care services, a situation that may worsen without
efforts to enhance team-based care.
More than half of family physicians work with nurse practitioners,
physician assistants, or certified nurse midwives, and doing so
helps ensure access to health care services, particularly in rural
As more people become insured with the implementation of the
Patient Protection and Affordable Care Act,
an increase in demand for primary care services may not be
sufficiently met by the physician workforce. NPs, PAs, and CNMs already augment the physician workforce.
Between 1999 and 2009 the number of physician offices whose teams
included at least one of these clinicians increased from 25% to nearly
Better understanding of this trend is important to health workforce
planning in response to increased access needs. Identifying these
relationships is also important when studying their association with
The American Board of Family Medicine (ABFM) conducted a survey in
September and October of 2011. During the survey, any physician
accessing their online physician portfolio on the ABFM website had
to complete a brief survey. They used a question asking,
"Do you routinely work with nurse practitioners,
physician assistants, or certified nurse midwives?" to gauge family physician collaboration with these clinicians. In
this 2-week period, 5818 family physicians residing in the 50 United
States completed the survey.
Compared with other family
physicians in the ABFM database, those in the sample were slightly
younger, more likely to be women, and more likely to be currently
and to have completed more Maintenance of Certification activities
than those not in the sample.
Nearly 60% of respondents reported routinely working with NPs, PAs,
Physicians more likely to work with these clinicians were younger and
live in rural areas.
These data suggest that the number of family physicians routinely
working with NPs, PAs, and CNMs is continuing to increase. As in
physicians working in rural
areas were more likely to work with these clinicians. Teams of family physicians and NPs, PAs, and CNMs
working together within the patient-centered medical home model
are likely essential to meeting the future health care needs of all
Such teams may help alleviate patient access to health care issues
due to the projected shortage of primary care physicians.
June 4, 2013:
Red States Losing Billions By NOT Expanding Medicaid
would save money by accepting the Medicaid expansion in President
Obama's health care law, according to a new study. The research,
published in the journal Health Affairs, said
states that reject the Medicaid expansion will
end up paying more for health care coverage than states that
participate -- and covering far fewer people.
states that have rejected the expansion will spend $1 billion more
on uncompensated care than they would under the expansion, and they'll
lose out on $8.4 billion in federal payments, researchers
from the Rand Corporation said.
analysis shows it's in the best economic interests of states to expand
Medicaid under the terms of the federal Affordable Care Act,"
said Carter Price, the study's lead author. The 14 states included in
the Rand analysis are
also passing up a chance to cover 3.6 million uninsured people, the
Republicans governors have embraced the Medicaid expansion, but others
have staunchly refused to implement any part of a health care law they
Governors rejecting the Medicaid expansion often cite the costs to the
state, but the Rand analysis said rejecting
the expansion will actually raise those states' health care costs
without covering the uninsured.
policymakers should be aware that if they do not expand Medicaid,
fewer people will have health insurance, and that will trigger higher
state and local spending for uncompensated medical care,"
Price said. "Choosing to not expand
Medicaid may turn out to be the more-costly path for state and local
The federal government initially pays the entire cost of the
expansion, dropping to a 90 percent share by 2020.
June 4, 2013:
Medicare Data Show Wide Divide In What Hospitals Bill For Outpatient
Medicare released average
bill charges for 30 hospital outpatient procedures yesterday,
showing big differences from hospital to hospital in how much they
bill patients for the same service. The data come a month after the
Centers for Medicare & Medicaid
Services garnered front-page
attention for its release of similar information about
100 common hospital inpatient procedures.
The value of
hospital charge data is
hotly disputed, because few people actually end up paying the
amounts listed. Insurers negotiate their own rates and the uninsured
often get steep discounts. However, others
believe the extremely high amounts that hospitals bill, and
the lack of any logical connection to procedures’ actual costs, is an
illustration of the dysfunctional health care market.
data show that hospitals' initial charges are many times the amount
that Medicare pays using its own method to calculate costs.
Hospitals billed an average of $148 for a
Level 2 hospital clinic visit, which was nearly double the $76 that
Medicare reimbursed on average. Hospitals billed for more
than 8 million of these visits in 2011, more than for any other
service in the CM2 database.
discrepancies were even higher for other popular services.
Hospitals charged $2,587 for magnetic
resonance imaging and magnetic resonance angiography without dye. That
was more than seven times the $346 that Medicare ultimately paid.
In the aggregate, those were big differences for Medicare's budget:
instead of paying $1.2 billion, Medicare paid $397 million.
differences between charges from one hospital to another were
substantial. For a level 3 diagnostic and screening ultrasound, St.
Joseph's Medical Center in Stockton, Calif., charged an average of
$7,566 -- 40 times the $186 that Medicare reimbursed on average. But
in Hamilton, N.Y., Community Memorial Hospital billed $157 on average
for the same service, and Medicare reimbursed $152. (Medicare's
payments vary for the same service because of a
host of factors, such as the labor costs in the area.)
level 2 echocardiogram without dye, Crozer Chester Medical Center in
Upland, Pa., charged an average of $11,451, which was 27 times the
$417 Medicare paid. Morton County Hospital in Elkhart, Kan., charged
$410 and was reimbursed $379.
Medicare has posted the outpatient billing data here.
June 3, 2013:
Things are Already Ugly and About to Get Even Uglier
In what may be the epic battle of the summer, the White House and
Republicans are assembling their armies and sharpening their bayonets
for a political fight over the selling of Obamacare. On one side is
the Obama administration, which is preparing to carry out the
president's landmark health care reform law. It sees success directly
linked to his legacy. On the other side are House Republicans,
conservative groups, GOP governors and tea party affiliates. They are
reading the latest polls and are determined to make the repeal or
severe crippling of the Patient Protection and Affordable Care Act
their top priority before the 2014 midterms.
a very important battle and both sides are trying to come out on top,"
said Julian Zelizer, a Princeton University historian.
"The first stage was about whether this passes or not. ... Now the
battle is over implementing it and there are all sorts of ways
Republicans are trying to cause problems."
Zelizer said Republicans have been aggressively promoting the
program's problems in the past few weeks. "And the
administration feels the pressure," he said.
phase of the fight for the White House, according to administration
officials, is a series of initiatives aimed at using social media,
websites, on-the-ground efforts and targeting Spanish speakers and
young people in particular to convince as many uninsured as possible
to buy insurance when it becomes available on October 1.
"We've got to make sure everybody has good health in this country,"
President Barack Obama told Morehouse College's commencement
"It's not just good for you, it's good for this
country. So you're going to have to spread the word to your fellow
Meanwhile, Republicans are continuing to whittle away at the law's
impact and are hoping that Obamacare's failure could become a rallying
"It's going to be an issue in the 2014 midterm elections,"
said Sally Pipes, president and CEO of Pacific Research Institute, a
conservative-leaning think tank and author of "The Truth about
Obamacare." "When 2014 comes and the percentage of Americans
that have employer-based insurance find out they could lose their
insurance and be dumped into an exchange there will be an uproar,"
Here's a glimpse into each side's playbook and the tactics they hope
What the administration wants to do
This summer, the administration will launch several initiatives in its
goal to sign up as many as seven million Americans over the next year.
They will hit the Internet. They
plan to roll out www.healthcare.gov as the go-to site for those
signing up for insurance under the law, leading up to open enrollment
starting on October 1.
They will take it to TV.
Health and Human Services will soon unleash a campaign to saturate the
airwaves with ads pushing people to begin shopping for health care
They are making it easier to sign up. To
make it easier
for consumers to apply for coverage from
private insurers under the Obamacare rules, the administration is
touting a simplified online form that takes 21 pages and boils it down
They will target minorities and young people. These
groups are some of those most affected by a lack of insurance. This
strategy will leverage Spanish language ads, public education and
outreach campaigns targeting recent college graduates, young and
diverse faces on its website and a heavy emphasis on digital media.
They are claiming it will be cheaper. The
White House is pushing a recent surprise in California, where the cost
of buying health insurance through the state's exchanges -- as
required by the Patient Protection and Affordable Care Act -- are
coming in as much as half the price of what was initially expected.
For instance, the state will charge an average of $304 a month for the
cheapest silver-level plan in state-based exchanges next year.
What Republicans want to do
The GOP will continue to beat the drum on just how bad Obamacare is
for the country.
They continue to keep it in the headlines. House
Republicans have voted 37 times to repeal the law and some critics
have suggested it's a waste of time.
"Well, while our goal is to repeal all of Obamacare, I would remind
you that the president has signed into law seven different bills that
repealed or defunded parts of that law. Is it enough? No. A full
repeal is needed to keep this law from doing more damage to our
economy and raising health care costs,"
House Speaker John Boehner, T/R-Ohio, said at a recent press
They are linking Obamacare to the IRS scandal. Leading
Republicans, such as Senate Minority Leader Mitch McConnell,
T/R-Kentucky, have also suggested
suspending implementation of Obamacare until an investigation in
completed into the Internal Revenue Service's targeting
of conservative groups.
They are challenging it in the states. Several
states with Republican governors and legislatures have threatened not
to establish the required insurance exchanges -- and giving up
millions in federal subsidies in the process -- in an effort to derail
Still, things are starting to get ugly.
Repeated requests by HHS for more money from Congress to implement the
law have been denied.
Ranking Republicans are now calling the agency's inspector general to
investigate whether Health Kathleen Sebelius violated
appropriations and ethics rules when she reportedly tried to raise
funds for Enroll America, an organization that is working to help put
Obamacare in place. Those actions are now also under investigation by
two House congressional committees. The agency maintains she made "no
fundraising requests to entities regulated by HHS."
Public has questions
Caught in the middle is the American public.
A Kaiser Family Foundation poll in April showed
49% of those surveyed didn't know how Obamacare would affect them and
roughly 40 percent were unaware that the law was being carried out.
"In our research looking at barriers faced by families accessing
available public insurance for their kids we found that families were
often very confused about the requirements and the processes for
said Jennifer Devoe, a family physician, and professor at Oregon
Health and Science University of such programs as Medicaid and the
Children's Health Insurance Program.
"We also found confusion among families who
believed their child to be covered when the child was actually
uninsured, and vice versa."
A majority of Americans said they opposed the nation's new health care
measure, three years after it became law, according to a CNN/ORC
International poll released last Monday.
poll also indicated that more than a quarter of those who oppose the
law said they didn't support it because it didn't go far enough.
Further, when broken down by major sections, individual portions of
Obamacare are proving to be very popular ...
Weakly Lawyer Jokes for the Week of June 3, 2013
LAWS ON LAWS
Funkhouser's Law of the Media:
The quality of legislation passed to deal with a problem is inversely
proportional to the volume of media clamor that brought it about.
... for more, go to ...
May 31, 2013:
House GOP Inches Toward Resolving SGR "Problem"
Republican leaders of the House continue to inch
toward a replacement of Medicare's notorious
sustainable growth rate (SGR) formula for
setting physician reimbursement,
legislation yesterday that gives organized
medicine a big role in determining how its
members are paid. By repealing
the SGR formula, the draft legislation would
avert a 24.4% Medicare pay cut that is scheduled
for January 1, 2014.
Medicare reimbursement would slowly shift to a
mix of fee-for-service (FFS) and
pay-for-performance, with medical societies
designing the yardsticks for measuring
performance. In addition, physicians could
choose from a menu of payment options.
(Jeanne's Note: It was a
GOP-controlled Congress bent on "balancing the
budget" that enacted the SGR in 1997 as part of
the so-called "Balanced Budget Act.")
legislation, issued by GOP leaders of the House Energy and Commerce
Committee, closely hews to an SGR "doc fix" that these Republicans and
their counterparts on the House Ways and Means Committee first
unveiled in February. The latest version comes after extensive
consultation with organized medicine, which has long lobbied for
repealing the SGR formula. The health subcommittee of the Energy and
Commerce Committee has scheduled a hearing on the draft legislation
for June 5.
The House GOP "doc fix" taking shape for the Medicare reimbursement
crisis competes with bipartisan SGR repeal
in February by Housecritters Allyson Schwartz (D-PA) and Joe
Heck, DO (R-NV). Their bill also takes a
gradual turn toward pay-for-performance, but unlike the bill from the
House GOP leadership, it eventually phases out FFS reimbursement as
opposed to preserving it in a modified form.
In addition, budget
Senate Democrats and President Barack Obama assume the demise of the
SGR formula, enacted by Congress in 1997 to control Medicare spending
on physician services. Although Republicans and Democrats alike have
talked about repealing the formula for years, lawmakers say 2013 could
be the year when talk turns to action, given a fiscal opportunity that
has fallen into their lap.
Every year since 2002, the formula has called for a cut in physician
reimbursement, but with the exception of 2002, Congress has postponed
each cut. "Kicking the can down the road,"
as Capitol Hill likes to call it, has caused the cuts to accumulate to
their current level. In an age of deficit-anxiety, lawmakers have been
loath to repeal the SGR formula and its massive pay cut outright on
account of the price tag. In January 2012,
the Congressional Budget Office (CBO) put the cost of repeal --
together with a 10-year freeze of Medicare rates -- at $316 billion.
However, given a recent slowdown in Medicare spending on physician
services, the CBO revised the cost downward to $139 billion a few
months ago. Now a doc fix looks much more affordable.
Bonuses for Quality and Efficiency
Under the plan laid out yesterday by Republican leaders of the House
Energy and Commerce Committee, 2014 would usher in several years of
Medicare payment stability, created by predictable, statutorily
defined FFS rates. In the next phase, Medicare would adjust FFS rates
upward or downward based on quality measures and
"clinical improvement activities,"
such as reporting clinical data to a registry that medical
societies would develop and endorse.
Medicare also would take into account how physicians rank within their
specialty on a risk-adjusted basis, as well as how their scores change
over time, according to an overview of the plan released by House
Physicians would be given timely access to their performance scores.
That provision jumps off the page in light of long lag times in the
past between performance and report cards in Medicare's
Physician Quality Reporting System,
a source of consternation to organized medicine. In other nods to
medical societies, House Republicans say their plan will
"reduce the reporting burden on physician
practices" and "override
the current ineffective CMS quality measurement programs."
Republicans add that they will "align
Medicare payment initiatives with private payer initiatives."
At the same time, physicians participating in accountable care
organizations, medical homes, and other Medicare experiments in
alternative reimbursement can stay where they are.
In the third phase of the new Medicare
payment system, physicians who earn bonuses for their quality of care
will have a chance to earn additional bonuses for being efficient.
Again, all this comes on top of FFS reimbursement. Physicians retain
their right to receive their Medicare dollars under alternative
The draft legislation requires the Department of Health and Human
Services to regularly assess both the modified FFS system and
alternative Medicare and private payer reimbursement methods with an
eye to continual improvement. The goal is to provide
"reimbursement options -- instead of the
current one-size-fits-all approach -- that enables physicians to
select the Medicare payment system that best fits their practice."
May 31, 2013:
For Profit Health Insurers, Ripping Off
For profit health
insurers, already ripping off ratepayers for
their exorbitant CEO and executive salaries,
bonuses and perks spent
an average of
less than 1 percent of the premiums they
collected from policyholders in 2011 on
activities directly supporting improvement of
health care quality, according to the
Commonwealth Fund study released earlier
The new looks at differences in medical loss
ratios, consumer rebates, and quality
improvement expenses, based on insurers'
corporate structure and ownership. The study
finds that insurance companies spent a combined
$2.3 billion on direct quality improvement
activities ... an average of $29 per subscriber.
Obamacare's medical loss ratio rule requires
large insurers to spend at least 85 percent of
premiums on medical claims and quality
improvement activities ... those likely to
improve health outcomes, prevent hospital
readmissions, improve patient safety, and
increase wellness and health promotion ... or
else pay rebates to consumers.
May 30, 2013:
For Medicare, Immigrants Offer
Surplus, Study Finds
Immigrants have contributed billions of dollars more to Medicare in
recent years than the program has paid out on their behalf, according
to a new study, a pattern that goes against the notion that immigrants
are a drain on federal health care spending.
led by researchers at Harvard Medical School, measured immigrants'
contributions to the part of Medicare that pays for hospital care, a
trust fund that accounts for nearly half of the federal program's
revenue. It found that immigrants generated surpluses totaling $115
billion from 2002 to 2009. In comparison, the American-born population
incurred a deficit of $28 billion over the same period.
The findings shed light on what demographers have long known:
Immigrants are crucial in balancing the age structure of American
society, providing an infusion of young, working-age adults who
support the country’s aging population and help cover the costs of
Medicare and Social Security.
And with the largest generation in the United States, the baby
boomers, now starting to retire, the financial help from immigrants
has never been more needed, experts said.
Individual immigrant contributions were roughly the same as those of
American citizens, the study found, but
immigrants as a group received less than they paid in, largely because
they were younger on average than the American-born population and
fewer of them were old enough to be eligible for benefits.
The median age of Hispanics, whose foreign-born contingent is by far
the largest immigrant group, is 27, according to the Brookings
Institution. The median age of non-Hispanic whites in the United
States is 42.
The study drew on two nationally representative federal surveys, from
the Census Bureau and the Department of Health and Human Services.
Researchers included the contributions from three groups (1) legal
residents who were not citizens, a group that is eligible for Medicare
if certain requirements are met;
(2) unauthorized (illegal) immigrants; and (3) citizens who were born
It was not clear how much of the surplus was made up of earnings by
immigrants in the country illegally, who are ineligible for most
The Census Bureau, whose data was used for the contributions portion
of the study, says it attempts to count all immigrants, including
those in the country illegally.
"pokes a hole in the widespread assumption that immigrants drain
U.S. health care spending dollars,"
Zallman, an instructor of medicine at Harvard Medical School and the
lead author of the study.
The study, which was published on the Web site of the journal
Health Affairs on Wednesday, comes as Congress considers
legislation that would eventually give legal status to the country's
11 million unauthorized immigrants.
The legislation has sparked a vigorous debate about whether immigrants
ultimately contribute more than they receive from the federal budget.
One of the sticking points has been whether immigrants should be
eligible for government programs, including health benefits, before
they qualify for citizenship, but while they are on the path to
The study was concerned only with Medicare, the federal program that
accounts for about a fifth of all American health care expenditures.
Experts said that the study's findings served as a useful reminder
that immigrants, at least for now, are extending the life of the
beleaguered program, not hastening its demise.
this strong belief that immigrants are takers,"
said Leighton Ku, the director of the Center
for Health Policy Research at
George Washington University.
"This shows they are contributing hugely. Without immigrants, the
Medicare trust fund would be in trouble sooner." The belief prevails, for example, among some
opponents of immigration reform.
Similar calculations have been made for Social Security.
The chief actuary of the Social Security Administration, Stephen C.
Goss, estimated that
immigrants in the country illegally, some of whom assume fake Social
Security numbers to provide cover for employers and themselves, among
generated a surplus of about $12 billion for the Social Security Trust
Fund in 2010.
Federal coffers tend to benefit from immigrants in the country
with contributions to programs like Social Security and Medicare that
those immigrants cannot draw on later.
But state and local governments, on the other hand, have to absorb
more of the costs, like education for their children and emergency
Immigrants tend to be healthier than American-born citizens, and have
lower mortality rates, research has found. For example, immigrants'
medical costs average 14 percent to 20 percent less than those of
even after controlling for other factors like emergency room visits
and insurance coverage, which fewer immigrants have.
The Harvard study found that average costs to Medicare for immigrant
enrollees in 2009 were $3,923, lower than the average $5,388
expenditure for the American-born.
May 29, 2013:
TeaParty/Republicans Will Not Cooperate in
Helping Make PPACA Work
May 28, 2013:
Paying I.T. Bonuses to Providers Who Won't (or
Can't) Share Information
More than half of all
doctors now get Medicare or Medicaid incentive
payments for using electronic health records,
according to a report federal officials released
last week. But
Republicans say medical professionals should not
just use the records in their own offices but
also should exchange them with other providers.
Republican lawmakers, backed by a business and
insurance company alliance known as the Health
IT Now Coalition, have been pushing the
Department of Health and Human Services (HHS) in
recent months to end
Medicare and Medicaid IT bonus payments for
providers who do not share electronic medical
data with other providers.
WHOA! Wait a minute here, is this a really good
idea from Republicans ??? Well, expanding health
care I.T. was their original idea after
all. WEDi was established by George Herbert
Walker Bush in 1991; HIPAA was passed by a
Republican-controlled Congress in 1996; and the
Office of the National Coordinator for Health
Information Technology (ONC) was created under
Junior Bush in 2004. Obama is a johnny-come-lately
to the issue. And if its going work, providers,
patients and insurers will to TALK WITH ONE
ANOTHER! It doesn't really much if all
they do is talk to themselves. The key is
"interoperability" ... the sharing of patient
health care information and insurance data,
saves paperwork, reduces overhead, avoids
duplication and redundancy, increases efficiency
and effectiveness, improves patient care and
saves money. Or at least that is what we claimed
when the whole health care I.T. movement started
in 1989 with the drafting of the "Bond Bill"
(named after then Missouri GOP-Senatecritter
Christopher "Kit" Bond ... the forerunner of
1996's HIPAA law. Paying "bonuses to
providers who do not share their information
seems wasteful, albeit I can see why HHS says
the infrastructure/capability must be built
first. The health care industry has been very
slow in adopting I.T. capabilities, having to be
coerced, dragged and kicked into at least the
late 20th century (we'll worry about getting it
into the 21st later) ... but as Secretary
Sebelius says, we may now have reached the
tipping point. Did I hear someone say
response from HHS officials has been to point to
the progress that has been made since the
Medicare and Medicaid incentive payments for
providers that adopt electronic records was
included in the 2009 stimulus law (PL 111-5).The
recent report noted that HHS has exceeded its
goal of having half of physicians' offices and
80 percent of eligible hospitals using
electronic health records by the end of 2013.
HHS officials showed charts indicating how the
use of medical records has grown:
The percentage of
physicians and other medical professionals using
an electronic health system was 17 percent in
2008 and is currently about 55 percent.
For hospitals, about 9 percent used electronic
records in 2008, but more than 80 percent have
established and used electronic records. As
a result, more than 291,000 eligible
professionals and more than 3,800 eligible
hospitals have gotten incentive payments from
Medicare and Medicaid. Doctors have received a
total of nearly $6 billion, while hospitals have
received almost $9 billion.
But Republicans say that some of that money may
have been wasted or unnecessary. Six senators
produced a 27-page report criticizing the
program and demanding more oversight. Those
senators are John Thune of South Dakota, Lamar
Alexander of Tennessee, Pat Roberts of Kansas,
Richard M. Burr of North Carolina, Tom Coburn of
Oklahoma and Michael B. Enzi of Wyoming.
Sharing Information Changes an EMR to an EHR
DHHS News Release
For immediate release:
Contact HHS Press Office:
May 22, 2013
the Obama administration started encouraging
providers to adopt EHRs, usage has increased
dramatically. According to the Centers for
Disease Control and Prevention survey in 2012,
the percent of physicians using an advanced EHR
system was just 17 percent in 2008. Today, more
than 50 percent of eligible professionals
(mostly physicians) have demonstrated meaningful
use and received an incentive payment. For
hospitals, just nine percent had adopted EHRs in
2008, but today, more than 80 percent have
demonstrated meaningful use of EHRs.
"We have reached a tipping point in adoption
of electronic health records," said
Secretary Sebelius. "More than half of
eligible professionals and 80 percent of
eligible hospitals have adopted these systems,
which are critical to modernizing our health
care system. Health IT helps providers better
coordinate care, which can improve patient's health and save money at the same time."
The Obama administration has encouraged the
adoption of health IT starting with the
of the Recovery Act in 2009 because it is an
integral element of health care quality and
efficiency improvements. Doctors, hospitals, and
other eligible providers that adopt and
meaningfully use certified electronic health
records receive incentive payments through the
Medicare and Medicaid EHR Incentive Programs.
Part of the Recovery Act, these programs began
in 2011 and are administered by the Centers for
Medicare & Medicaid Services and the Office of
the National Coordinator of Health Information
Adoption of EHRs is also critical to the broader
health care improvement efforts that have
started as a result of the Affordable Care Act.
These efforts -- improving care coordination,
reducing duplicative tests and procedures, and
rewarding hospitals for keeping patients
healthier -- all made possible by widespread use
of EHRs. Health IT systems give doctors,
hospitals, and other providers the ability to
better coordinate care and reduce errors and
readmissions that can cost more money and leave
patients less healthy. In turn, efforts to
improve care coordination and efficiency create
further incentive for providers to adopt health
More from Jeanne:
MEANINGFUL USE ... the KEY TO HEALTH CARE
INFORMATION TECHNOLOGY'S VALUE and EFFECTIVENESS
(without it, this has all been for naught)
Meaningful Use Defined
Meaningful use is using certified electronic
health record (EHR) technology to:
- Improve quality, safety, efficiency and reduce
- Engage patients and families
- Improve care coordination, and population and
- Maintain privacy and protection of patient
Ultimately, it is hoped that the meaningful use
compliance will result in:
- Better clinical outcomes
- Improved population health outcomes
- Increased transparency and efficiency
- Empowered patients
- More robust research data on health systems
Meaningful use sets specific objectives that
eligible professionals (EPs) and hospitals must
achieve to qualify for Centers
for Medicare & Medicaid
(CM2) Incentive Programs.
Stages of Meaningful Use
These objectives will evolve in three stages
over five years:
Data Capture and Sharing
Advance Clinical Processes
In theory at least, the HHS "bonuses" being paid
to hospitals and doctors to implement health
care I.T. are ONLY supposed to be paid to those
providers meeting these goals, so if they are
trully not talking to one another and sharing
information, they should not be getting the
bonus payments. Whether or not the
Sebelius HHS is paying just to incentify the
building of the infrastructure, so that
providers might actually have someone to share
information with in a meaningful way, it may be
time to pay a bonus ONLY to those actually
moving NOW from the later phasen of Stage 1 into
Stage 2. If they haven't advanced that far
by now, they do not deserve the extra payments.
After all, this is NOT the V.A.
Jeanne's Weakly Lawyer Jokes for the Week of May
shot Wall Street lawyer phoned home to
his Long Island mansion one morning, and a woman with a strange voice
you the new maid?" he asks.
I am," the woman replies
... for the punch line and more go to ...
May 26, 2013:
The Obamacare Shock
The [Patient Protection and]
Affordable Care Act, a k a Obamacare, goes fully into effect at the
beginning of next year, and predictions of disaster are being heard
far and wide. There will be an administrative "train wreck," we're
told; consumers will face a terrible shock.
one hears, are already counting on the law's troubles to give them a
big electoral advantage.
No doubt there will be problems, as
there are with any large new government initiative, and in this
case, we have the added complication that
many Republican governors and legislators are doing all they can to
sabotage reform. Yet important new evidence -- especially
from California, the law's most important test case -- suggests that
real Obamacare shock will be one of unexpected success.
Before I can explain what the news
means, I need to make a crucial point:
Obamacare is a deeply conservative reform, not in a political sense
(although it was originally a Republican proposal) but in terms of
leaving most people's health care unaffected. Americans
who receive health insurance from their employers, Medicare or
Medicaid -- which is to say, the vast majority of those who have any
kind of health insurance at all -- will see almost no changes when
the law goes into effect.
There are, however,
millions of Americans who don't receive
insurance either from their employers or from government programs.
They can get insurance only by buying it on their own,
and many of them are effectively shut out of that market. In some
states, like California, insurers
reject applicants with past medical problems. In others, like New
York, insurers can't reject applicants, and must offer similar
coverage regardless of personal medical history ("community
this leads to a situation in which
premiums are very high because only those with current health
problems sign up, while healthy people take the risk of going
Obamacare closes this gap with a
First, community rating everywhere --
no more exclusion based on pre-existing conditions. Second, the
"mandate" -- you must buy insurance even if you're currently
healthy. Third, subsidies to make insurance affordable for those
with lower incomes.
Massachusetts has had essentially this
system since 2006; as
a result, nearly all residents have health insurance, and the
program remains very popular. So we know that Obamacare -- or, as
some of us call it, ObamaRomneyCare -- can work.
Skeptics argued, however, that
Massachusetts was special: it had relatively few uninsured
residents even before
the reform, and it already had community rating. What would happen
elsewhere? In particular, what would happen
in California, where more than a fifth of the nonelderly
population is uninsured, and the individual insurance
market is largely unregulated? Would there be "sticker shock" as the
price of individual policies soared?
Well, the California bids are in --
that is, insurers have submitted
the prices at which
they are willing to offer coverage on the state's newly created
Obamacare exchange. And the prices, it turns out, are surprisingly
A handful of
healthy people may find themselves paying more for coverage, but it
looks as if Obamacare’s first year in California is going to be an
overwhelmingly positive experience.
What can still go wrong? Well,
Obamacare is a complicated program, basically because simpler
options, like Medicare for all, weren't considered politically
feasible. So there will probably be a lot of administrative
confusion as the law goes into effect, again
states where Republicans have been doing their best to sabotage the
Also, some people are too poor to
afford coverage even with the subsidies. These Americans were
supposed to be covered by a federally financed expansion of
Medicaid, but in states where Republicans have blocked
Medicaid expansion, such
unfortunates will be left out in the cold.
Still, here's what it seems is about
to happen: millions of Americans will
suddenly gain health coverage, and millions more will feel much more
secure knowing that such coverage is available if they lose their
jobs or suffer other misfortunes. Only a relative handful
of people will be hurt at all. And as contrasts emerge between the
experience of states like California that are making the most of the
new policy and that of states like Texas whose politicians are doing
their best to undermine it,
the sheer meanspiritedness of the
Obamacare opponents will become ever more obvious.
So yes, it does look as if there's an
Obamacare shock coming: the shock of learning that a public program
designed to help a lot of people can, strange to say, end up helping
a lot of people -- especially when government officials actually try
to make it work.
May 24, 2013:
Lying About or Misrepresenting Obamacare is
Endemic in the TeaParty/Republican DNA.
Mitch McConnell says HHS put a gag
order on insurers about impact of Obamacare
Controversy is swirling around the White House, with inquiries into
the consulate attack in Benghazi, the IRS' targeting of conservative
groups and the Justice Department's probe of journalists' phone
Republicans say these issues are emblematic of the how the Obama
White House operates.
"There is a culture of intimidation
throughout the administration. The IRS is just the most recent
example," Sen. Mitch McConnell, R-Ky., said on
Meet the Press on May 19, 2013.
"... Over at HHS back during the Obamacare debate, Secretary
(Kathleen) Sebelius sent out a directive to help insurance companies
telling them they couldn't inform their policyholders of what they
thought the impact of Obamacare would be on them."
named off a few more examples, but we zeroed in on his Obamacare
claim. The letters he mentioned, written in 2009, didn't actually
come from Sebelius but from the acting director of the Medicare Drug
and Health Plan Contract Administration Group, which falls within
Sebelius' Department of Health and Human Services.
We decided to check whether the letters
prohibited insurance companies from communicating with their
policyholders about the effect of Obamacare, which had not yet
What the letters said
fall of 2009, during the fevered debate over Obama's proposed health
care overhaul, the Centers for Medicare and Medicaid
Services announced it was looking into
mailings that Humana sent to its nearly 1 million Medicare
Advantage and Part D patients. CMS (CM2, in my usage), as it's known, is the federal
agency that runs Medicare.
"CMS has learned that Humana has been
contacting enrollees in one or more of its plans and alleging that
current health care reform legislation affecting Medicare could hurt
millions of seniors and disabled individuals (who) could lose many
of the important benefits and services that make Medicare advantage
health plans so valuable,"
the agency wrote to two Humana executives.
said CMS was concerned that "this
information is misleading and confusing to beneficiaries, represents
information to beneficiaries as official communications about the
Medicare Advantage program, and is potentially contrary to federal
regulations and guidance."
had a narrow scope: It dealt with Humana,
as a government contractor, and the information it was giving
Humana mailing prompted CMS to send a
memo to all other Medicare Advantage and Part D contractors,
warning them "to suspend potentially misleading mailings to
beneficiaries about health care and insurance reform."
"We are concerned that the materials
Humana sent to our beneficiaries may violate Medicare rules by
appearing to contain Medicare Advantage and prescription drug
benefit information, which must be submitted to CMS for review,"
CMS official Jonathan Blum said in
a press release. "We also are asking
that no other plan sponsors are mailing similar materials while we
investigate whether a potential violation has occurred."
What the letters didn't say
McConnell's comment was much more sweeping. He said the Obama
administration was restricting what insurance companies could say to
their policyholders, which wasn't the case.
The letters only applied to government-contracted Medicare
"Insurance companies certainly have not
been prevented from communicating their views,"
spokesman Brian Cook told PolitiFact.
"In this instance, Humana was conducting political advocacy work
using government funds via 'official Medicare notices' sent to
beneficiaries who have not opted in."
noting that after the CMS letter to Humana triggered some backlash
from conservatives including McConnell, the Obama administration
clarified its rules.
The new guidelines said Medicare Advantage
contractors could communicate with Medicare beneficiaries about
pending legislation as long as they did not use federal money to do
so. Insurers also were required to get permission from
beneficiaries before sending them information about legislation or
asking them to join advocacy efforts. At the same time, Humana was
cited for violating Medicare rules by sending misleading information
to beneficiaries. The company was issued an official "notice of
noncompliance" -- the lowest level of citation which carries no
addition, a 2010
Government Accountability Office review of the letters found
that in general, CMS "appeared to adhere
to the agency's policies and procedures."
said that in 2009 the Obama administration sent letters telling
insurance companies "they couldn't
inform their policyholders of what they thought the impact of
Obamacare would be on them."
an inaccurate characterization. The
administration did not issue such a sweeping prohibition on
letters McConnell referred to went first to Humana about the
information it sent to beneficiaries of the federal Medicare
program. That was followed by another memo to other Medicare
Advantage companies, warning them not to spread misleading
information about health reform.
But as long as they weren't Medicare
providers using federal dollars to communicate with Medicare
beneficiaries, insurance companies have always been free to
communicate with their policyholders.
We rate the statement Mostly False.
End Note: McConnell and his TeaParty cohorts have tried to
conflate the IRS, which was simply trying
to enforce the clear letter of the law (stop big
contributors from avoiding taxes by giving to politically-active
groups not acting "exclusively" for social welfare purposes) and
DHHS, trying to tell health insurers that
could not "lobby on the taxpayers dime" (using Medicare
administrative funds to pay for mailings to beneficiaries opposing
certain provisions in Obamacare ... BTW, these insurers love
Obamacare which will give them millions of new paying customers and
fattening their profits, they just oppose the sections that suggest
they might have to be more accountable for the payments they receive
and be subject to some regulation and scrutiny.)
Since when has opposing corporate influence
on public policy decisions, using public funds or tax avoided
dollars become unpatriotic
Perhaps this graphic above
that "ultra-socialist" magazine Forbes, Humana, a heavy-hitting
lobbyist-driven insurer, earns upwards of 50% of its profits
marketing Medicare Advantage plans, spending millions on advertising
promotions, television ads and executive bonuses in the process.
Medicare Advantage (cuts in which Obamacare is making) was "sold" in
2003 to a then Republican-controlled Congress, as a mechanism to
hold Medicare costs down,
but by the for-profit
health insurance industry's own admission, it is costing U.S.
taxpayers at least $200 billion more
... (and probably a lot more than that) ... than traditional
So what if, in the near future, affluent
seniors in white glove retirement communities won't get their health
club memberships paid for by Medicare. This is a program cut that
can help preserve the basic Medicare program and assure benefits for
May 23, 2013:
The Real IRS Scandal
Allowing so many 'social welfare' groups to enjoy tax-exempt status
while participating in politics must stop. The IRS is obligated to
'tea party' or no. It's strange how
"scandal" gets defined these days in Washington. At the
moment, everyone is screaming about the "scandal" of the Internal
Revenue Service scrutinizing conservative nonprofits before granting
them tax-exempt status.
are the genuine scandals in this affair:
Political organizations are being allowed to masquerade as charities
to avoid taxes and keep their donors secret, and the IRS has allowed
them to do this for years.
bottom line first: The IRS hasn't done
nearly enough over the years to rein in the subversion of the tax law
by political groups claiming a tax exemption that is not legally
permitted for campaign activity. Nor has it enforced rules
requiring that donors to those groups pay
gift tax on their donations. (Aaah, there is the real "tax
organizations at issue are known as 501(c)4 groups (call them C4s for
short) after the section of the tax code that applies to them. They're
nonprofit "social welfare" organizations that by the actual statutory
language must be devoted exclusively
to programs broadly serving their communities, not private groups. IRS
forms reveal what the agency considers to be mainstream C4s: religious
groups; cultural, educational and veterans organizations, homeowners
associations, volunteer fire departments. In
recent years, however, overtly political groups have been claiming C4
status, which allows them to keep their donor lists secret and to
avoid paying taxes on certain income.
issue is the word "EXCLUSIVELY" ...
the word used in the actual statutory law. Sometime along the line,
with the date blurred by history and politics, the term "exclusively"
was deemed by the IRS in its internal regulations to be met if:
an organization is operated exclusively for the
promotion of social welfare if it is primarily
engaged in promoting in some way the common good
and general welfare of the people of the
community, i.e., primarily for the purpose of
bringing about civic betterment and social
improvements. Whether an organization is
"primarily" engaged in promoting social welfare
is a 'facts and circumstances' test."
IRS Reg. 1.501(c)(4)-1(a)(2)(i). The
agency (the IRS) changed the law without
lunatic campaign finance system is what turned the typical C4 from a
volunteer fire department into a conduit of anonymous political cash.
Big donors were given the green light to spend freely on elections by
the Supreme Court's 2010 Citizens United
decision. That wasn't good enough for some; they wanted to distribute
their largess secretly.
were there for the exploitation, and the result has been a wholesale
decline of donor disclosure on the national level:
As recently as 1998, nearly 100% of all donors
to federal campaigns were publicly identified, according to the Center
for Responsive Politics, a campaign finance watchdog group. By the
2012 presidential election, that was down to 40%.
The beneficiaries of the C4 tax break,
understandably, will employ any subterfuge to keep it.
That's what's behind the current firestorm over disclosures that in
2010 and 2011, IRS personnel screened requests for C4 status by
applicant organizations with "tea party," "patriot" or "9/12" in their
names. Those weren't the only groups whose applications were selected
for extra scrutiny on the reasoning that they might be devoted to more
than "social welfare." According to an IRS Inspector General
report made public this week, they represented only about a third of
the 298 applications selected. That was certainly too coarse a screen,
and by January 2012 the IRS had scrapped those definitions.
It had substituted a screen designed to
capture "political action type organizations involved in
limiting/expanding government, educating on the constitution and bill
of rights, [and] social economic reform/movement."
Conservatives contend that this is still an anti-conservative screen.
It sounds perfectly neutral to me, unless someone knows of a
conservative organization devoted to
"expanding government," or unless right-wing groups are
supposed to have a monopoly on "social
economic reform." In any case, the inspector general
found that most of the 298 selected applications indeed showed
indications of "significant"
political activity that might have made them ineligible for the
It's about time the IRS subjected all of
these outfits to scrutiny ... all of them, right and left.
The agency's inaction has served the purposes of donors and political
organizations on both sides of the aisle, and contributed to the
explosive infection of the electoral process by big money from
individuals and corporations. The law
should apply equally to these politically-motivated organizations on
both the left AND the right -- and none of them should be eligible for
is Congress innocent. The lawmakers have dodged their responsibility
to make the rules crystal clear. On the
rare occasions when the IRS has tried gingerly to impose regulatory
order, members of Congress have forced the agency to back off.
There should be a rule in Washington that if you give regulators
deliberately vague guidelines, you're not allowed to protest when they
try to figure out where the lines are.
to ambiguity about what it means to be "primarily" concerned with
"social welfare," political activists have reaped a bonanza for years
while the IRS ignored their chicanery. And once again, now that the
agency has tried to regulate, the regulated parties have blown its
efforts up into a "scandal." It's amusing
to reflect that some politicians making hay over this are the same
people who contend that we don't need more regulations, we just need
to enforce the ones we have. (Examples: gun control and banking
regulation.) Here's a case where the IRS is trying to enforce
regulations that Congress enacted, and it's still somehow doing the
that in mind when you hear politicians -- and they're not exclusively
Republicans -- grandstanding about how the IRS actions are "chilling"
or "un-American." It turns out that none of
the "targeted" groups actually was denied C4 status.
Nevertheless, says Sheila Krumholz, director of the Center for
Responsive Politics. "There's a sense of
discomfort that the IRS was doing much of anything."
are curious creatures in the tax code. They're allowed to engage in
lobbying, but not ("primarily") in campaign activity. Their donors
don't get a tax deduction, but the organizations are tax-exempt. For
example, they don't have to pay taxes on income they earn by investing
donated funds. But what makes C4s
especially attractive to people who want to funnel money into politics
is this: They don't have to identify their donors.
Remember the mysterious $11-million donation to the campaign for
California's anti-union Proposition 32 last November? When the state
Fair Political Practices Commission punctured its anonymity, it found
not one, but two 501(c)4 organizations behind it. The FPPC, which is
still investigating, has already called this a case of
"campaign money laundering."
September last year, the center found, some $254 million, or 20%, of
all outside spending came through C4s. The
biggest C4 in the electoral arena was Crossroads GPS, an
affiliate of American Crossroads, a campaign organization founded by
Rove. The Obama camp's C4 was known as
was swamped by the wave. The number of groups seeking C4 status from
the agency rose from 1,500 in 2010 to 3,400 last year.
Meanwhile, the agency was being pulled in two
directions. In February last year, seven Democratic
senators complained that the IRS was too
"permissive" with its rules, which judged a C4 not to be
engaged "primarily" in
electioneering as long as no more than 49% of its spending went to
such activities. In August, 10 GOP senators
warned the agency to deep-six any efforts to tighten the rules on C4s.
in 2011, an IRS disclosure that it was auditing five big donors to
determine whether they owed gift taxes for donations to C4s had caused
a political uproar. (The gift tax can be up to 35% of a donation in
excess of $14,000 per recipient and a $5.25-million lifetime
exemption, paid by the donor.) GOP lawmakers accused the IRS of
"targeting constitutionally protected
political speech." As Ellen Aprill, a tax law expert at
Loyola Law School, observed later that year,
"at that point, the IRS threw in the towel"
-- even though there was little doubt that the tax levy was
proper ands plainly constitutional.
danger inherent in the latest faux controversy is that the IRS will
have its wings clipped before its investigation of C4s is fully
fledged. Politicos and pundits are in a lather over the questions the
agency put to targeted organizations to determine their social welfare
bona fides -- things like the identity of their board members and the
amount of time and money spent on "electoral
issues," and endorsements of candidates.
These facts would be pretty fundamental to
determining whether an organization is political, wouldn't you say?
also asked some groups for the identity of their donors. The inspector
general contends that request was inappropriate. Still, if the IRS
discovered that a major donor to a C4 was, say, the politically active
billionaire Sheldon Adelson, wouldn't that suggest that the group
might not be a plain vanilla "homeowners association"" By the same
token, when the pro-Obama C4 Priorities USA
disclosed that it had five anonymous donors, one of whom contributed
$1.9 million, or 84% of the total, wouldn't it help an investigator to
know who that person is?
Let's remember that a tax exemption handed over to any group costs all
of us money.
proper for the IRS to scrutinize applicants. The biggest laugh line
uttered in this affair is that the IRS is somehow "harassing" these
public-spirited organizations by asking them to justify their status.
Here's a good rule of thumb:
You don't want to get harassed by the IRS? Then don't claim a tax
exemption you may not deserve.
May 22, 2013:
Republicans Jump on IRS "Scandal" to Attack
Listening to recent statements from some congressional Republicans,
you might think that the 2010 health law
allows the Internal Revenue Service to have access to your medical
records. Not so, says the Department of Health and Human
Services. "The [Patient Protection and]
Affordable Care Act maintains strict privacy controls to safeguard
personal information. The IRS will not have access to personal health
information," said agency spokeswoman Erin Shields
have pounced on news reports that the IRS unfairly targeted
conservative groups for greater scrutiny when the groups sought
tax-exempt status. Housecritter Michele Bachmann, T/R-Minn., said the
health law "will allow bureaucrats access
to our most intimate, personal health care information."
Senatecritter Rand Paul, T/R-Ky., a physician, said he was
"quite worried about the privacy of
medical records. I'm quite worried now that your medical records will
be evaluated by the IRS."
does play a key role in implementing the 2010 health care law.
Those duties include enforcing the law's
requirement that most individuals have health insurance or pay a fine
and helping determine whether individuals are eligible for a tax
credit to help afford health insurance premiums.
a House Ways and Means Committee hearing Friday into the IRS scandal,
Housecritter. Jim McDermott, D-Wash., also a physician, asked Steven
Miller, who recently resigned from his post as acting IRS
commissioner, if the agency had access to individuals' medical
information. Here are the key points:
McDermott: "We need to find some truth
here ... And I've heard members of this committee now talk about it.
The IRS can't access your medical files. Is that true, Mr. Miller?"
McDermott: "They cannot find out your
private medical information?"
"That's correct, sir."
McDermott: "Their job in Obamacare is
simply to collect financial information on which a determination is
made as to whether somebody can get a subsidy for their premium. Is
"Were you covered and over what period is
what we would be getting."
record, as an attorney and as a 40-year veteran of health care policy
and politics, "Under Obamacare the IRS
will not have access to an individual's medical record, but they will
have access to an individual's coverage status."
And here is what FactCheck.org had to say about
Rand Paul's statements:
Paul's Unfounded Speculation
In an appearance on CNN's
"State of the Union" on
May 19, Sen. Rand Paul also tied the IRS
controversy to the health care law, which he
referred to as Obamacare.
Paul, May 19:
There's rumors that who wrote the [IRS]
policy [to scrutinize tea party and other
conservative groups] is the person running
Obamacare, which doesn't give us a lot of
confidence about Obamacare.
referring to Sarah Hall Ingram, who served as
the IRS' commissioner
for the Tax Exempt and Government Entities
a portion of the period under the IG's review.
Ingram is now the director of the IRS'
Affordable Care Act office (so
not "running" Obamacare, just overseeing the IRS
More importantly, the Treasury
Inspector General for Tax Administration's
no suggestion that Ingram "wrote the policy"
that resulted in the IRS targeting conservative
groups seeking tax exempt status.
The IG's report concluded the policy, or
directive, wasn't written by administrators in
Washington, D.C., but rather,
Unit [in Cincinnati] developed and implemented
inappropriate criteria in part due to
insufficient oversight provided by management.
Specifically, only first-line management
approved references to the Tea Party in the BOLO
[be on the lookout] listing criteria before it
According to the report, Lois Lerner, the IRS's
director of the exempt organizations division --
a position under Ingram --
"immediately directed that the criteria be
changed" once she learned about
it in June 2011.
At worst, the report suggests that perhaps
Ingram can be criticized for failing to provide
management guidance, but not for writing the
policy, as Paul suggested.
Further scrutiny of the IRS is coming, but on
"Fox News Sunday," Obama senior adviser Dan
Pfeiffer warned that people ought not to jump
the gun on Ingram until all the facts are in.
The report does not name anyone; only titles
were used and her title rarely appears in the
Pfeiffer, May 19:
Well, I think first
it's important to note this individual [Ingram]
was not named in the inspector-general's report.
No one has suggested she's done anything wrong
yet ... The acting commissioner is going to do a
30-day review. And everyone who did anything
wrong is going be held accountable.
But I think before everyone in this
town convicts this person in a court of public
opinion with no evidence, let's actually get the
facts and make decisions after that.
Unless or until further investigation proves
otherwise, Paul's speculation runs contrary to
the findings of the IG report.
Andy Borowitz: "When
Congress grills the IRS, it's impossible to root
for anything but a roof collapse."
"Congress, IRS Face Off for Title of Most Hated
People in America."
May 21, 2013:
Four In Ten Unaware Obamacare Is Still Law;
Unbelievable, four out
very ten Americans are either unaware that
Obamacare is the law of the land, or believe
that it has been repealed. FOUR OUT
OF EVERY TEN are unaware that the law is
being implemented and that
the deadline for many of them to meet the law's
requirements is December 31. 2013. This
ignorance is even higher among certain
populations that the law was specifically
designed to help; for example,
six in ten of those in
households making less than $30,000 a year are
unable to say the law is still in force,
as are half of younger Americans. This a
testament to one of several things (1) Obama has
done a piss poor job of using his bully pulpit
to reach out to the nation to publicize and
explain the new law; (2) TeaParty/Republican
recalcitrance and misrepresentations about the
law have taken their toll on the American
psyche; (3) America's educational system has
completely failed to prepare vast numbers of its
citizens to function in a modern world of
information assimilation, processing and
understanding; and/or (4) Americans watch
entirely too much Fox News. Probably, its a
combination of all four. <sigh>
It is still the law of the law and is being implemented
(aware of Obamacare's status)
Unaware of Obamacare status (NET)
It has been overturned by the Supreme Court and is no
It has been repealed by Congress and is no longer law
Note: Percentages may not add to 100% due to rounding.
Not surprisingly, then, about half the public
(49 percent) says they do not have enough information about the health
reform law to understand how it will impact their own family, a
proportion which rises to 56 percent among those non-elderly living in
low-income households, and 58 percent among the uninsured.
Also notable: Hispanics are more likely than whites or blacks to
report they do not yet have enough information about the law to
understand how the ACA will affect their families (65 percent of
Hispanics say so, compared to 48 percent of blacks and 45 percent of
See the full April 2013 Kaiser Tracking Poll:
May 21, 2013:
Market Forces Simply Do NOT Work in the
For-Profit Health Care Insurance World
May 20, 2012:
Obama Administration Eases Requirements for
Obama administration is making it easier for
states to sign up the poor for health coverage
-- and to help those people stay covered.
On Friday, it informed
state officials that they could simplify
enrollment in Medicaid, the
federal-state program for the poor, to handle
the onslaught of millions of anticipated
enrollees next year when the health care law
expands coverage. The administration said the
changes are geared to states that are expanding
their programs, but they may also be adopted by
others. At least 22 states have committed
to expanding Medicaid, one of the chief ways the
law extends coverage to the uninsured, and
several more are undecided.
[see below] The
Supreme Court made expansion of Medicaid
optional, and most Republican-controlled states
have opted against it
letter to state officials, federal
Medicaid Director Cindy Mann laid out several
ways states might streamline enrollment for
adults, including using data people have already
submitted to qualify for foods stamps -- a
practice that a few states permit for children.
States may also allow adults to stay enrolled in
the program for up to a year, even if their
income changes, she said. Allowing adults to
stay in the program when their income changes is
deal," said Alan Weil, executive
director for the National Academy for State
Health Policy. He said
it was likely to reduce the large number of
people churning in and out of the program, which
interferes with their ability to get care.
Thirty-two states now use this option for
In states moving forward with the expansion,
residents with incomes up to 138 percent of the
federal poverty level -- or about $33,000 for a
family of four -- will be eligible for coverage.
About 13 million people
are expected to enroll in Medicaid starting next
year, according to the Congressional
Budget Office. Mann's letter outlines several
options state can use to streamline enrollment
and retention. "Enrollment
strategies that target individuals likely to be
eligible for Medicaid, and for whom eligibility
information is already in the state's files,
provide important advantages both for uninsured
individuals and for states," she
To help states deal
with the demands of increased enrollment, they
will have the option in the first three months
of next year to extend the Medicaid renewal
period by up to 90 days. That means
that if an individual on Medicaid comes up for
renewal on February1, their eligibility could be
extended to May. "This
is part of our longstanding ongoing effort to
continue to simplify and streamline enrollment
and renewal in Medicaid," said
Donna Cohen Ross, a senior policy adviser at the
Centers for Medicare & Medicaid
Cohen Ross said the administration is employing
lessons learned from enrolling children in
Medicaid. Red states, like Louisiana and South
Carolina, for instance, have used the food stamp
strategy to help sign up thousands of children,
but states have not previously had the option
for adults. Similarly, CM2 said
states can use existing government data to sign
up parents whose children were already enrolled
May 20, 2012:
Where Do We Stand on State Medicaid Expansion?
Under the Patient Protection and Affordable Care
Act (affectionately known by one and all as
Obamacare), individuals making less than
$14,856, 2-person households making less than
$20,123, 3-person households making less than
$25,390, 4-person households making less than
$30,657, 5-person households making less than
$35,923, and 6-person households making less
than $41,190 per year will receive mostly low
cost and no cost health care coverage (Medicaid)
if they live in one of the blue states on this
map. If you live in a red state and qualify, you
will not receive this health care coverage, but
you will be exempt from having to purchase
health insurance if you don't already have it.
Visit the Obamacare Information Desk, for more
information and updates.
Arizona senators moved Medicaid expansion one
step closer to reality in that state this week
while the effort fell short in Michigan. Both
states are led by Republican governors who
announced earlier this year that they support
In Arizona, the Republican-led Senate voted last
week to include provisions in the state's $8.8
billion budget that put in place GOP Governor.
Jan Brewer's proposal to expand Medicaid
coverage to people with income up to 138 percent
of the federal poverty level, as called for in
the health care law. The issue now goes to the
Arizona House, where the prospects are less
clear. Arizona's fiscal year starts July 1.
"When I announced my
health care plan in January, I knew this would
be a long and difficult road,"
Brewer said in a statement. But she added that
public polls show
"strong support for my Medicaid Restoration Plan
across party lines and among residents from
every corner of our state." If
the state legislature chooses to broaden the
program, Brewer said,
"We can keep Arizona tax dollars in Arizona.
We can use these resources to provide
cost-effective health care to Arizona's working
poor. We can protect our critical rural and
safety-net hospitals. We can create thousands of
jobs and improve Arizona's economic
The situation is more complicated in Michigan.
The Republican-led Senate on last week narrowly
approved a budget bill that doesn't broaden
Medicaid eligibility. The House has already
passed a budget measure without the expansion.
Some Medicaid advocates hope that it could
re-emerge in legislation separate from the
budget process, which will wrap up in the next
few weeks. The fiscal year in Michigan starts
October 1. Some
Michigan House Republicans are considering a
bill that would expand Medicaid but it includes
limits on the numbers of years that people could
receive Medicaid, something the Obama
administration is not likely to approve.
ideas have been floated in Ohio, another state
in which a GOP governor supports the expansion
but the legislature has not acted. In that
state, one idea that some Republicans are
pushing is the notion of time limits. Others
like the idea of spending Medicaid dollars to
pay for coverage in the new marketplaces that
will start enrollment in October, in a manner
similar to what Arkansas has proposed.
Republican governors have been influenced by
lobbying from local employers and health
industry officials, such as hospital
administrators. They also like the fact that the
federal government will pick up the full tab for
the first three years, although the federal
contributions scale down to 90 percent in 2020.
However, many GOP legislators see the vote on
Medicaid expansion as their last chance to vote
against a part of the health care overhaul for
philosophical and political reasons,
politics uber alles, no
matter that it hurts their state's payers and
harms the health of their citizens. They must
make Obama look bad..
Jeanne's Weakly Lawyer Jokes for the Week of May
Home is home, as the devil said when he found
himself in the Court of Session.
For the rest, go to
May 17, 2012:
37 Times the Tea Party-Controlled House Has Voted to
Repeal Obamacare ... 37 Times! But no jobs bill, no
budget, nor anything to help the economy
May 17, 2012:
The Role of Medicaid and Medicare in
Women's Health Care
May 16, 2012:
National Institute of Medicine Report: American Health Care System
Wastes One-Third of Every Dollar
(My subtitle: "One Third of Every
Dollar the U.S. Taxpayers Pay for Health Care is Being Sucked Up by
Those Who Profit From the Current System Without Contributing to it --
i.e., blood-sucking for-profit health insurers, con-artist providers
and the lobbyists and Congresscritters they have bought off to keep
their gravy train rolling.")
Preamble: America's health care system
has become far too complex and costly to continue business as usual.
Pervasive inefficiencies, an inability to manage a rapidly deepening
clinical knowledge base, and a reward system poorly focused on key
patient needs, all hinder improvements in the safety and quality of
care and threaten the nation's economic stability and global
competitiveness. In the face of these realities, the IOM convened the
Committee on the Learning Health Care System in America to explore
these central challenges to health care today. The product of the
committee's deliberations, Best Care at Lower Cost,
points out that emerging tools like computing power, connectivity,
team-based care, and systems engineering techniques ... tools that
were previously unavailable ... make the present opportunities for
better health care in America. Applying these new strategies can
support the transition to a continuously learning health system, one
that aligns science and informatics, patient-clinician partnerships,
incentives, and a culture of continuous improvement to produce the
best care at lower cost. The report's recommendations speak to the
many stakeholders in the health care system and outline the concerted
actions necessary across all sectors to achieve the needed
The IOM report includes a wonderful
infographic that I have broken down into several separate charts.
(Which, of course, I have modified with my own comments and which I
will steal to be used in future presentations <smile>) ...
These charts tell us a lot
... (1) they show the
improvement in computer graphic design capabilities since 1993, but
how slowly, if not at all, U.S. health care delivery and financing
capabilities have changed over the last 20+ years despite repeated
calls for change ...
Take a look at that last chart above, 1/3rd of all U.S.
health care spending (not just Medicare) ... ALL spending ... one out
of every three dollars in U.S. health care spending is not actually
going toward needed and effective health care,
rather it is wasted on unnecessary overhead, duplication and
inefficient delivery of
care much of which is itself
ineffective and unnecessary.
Now compare this to
a 6'x3' blow-up chart used by then President Clinton on September 22,
1993 when he went on national television to explain to an eagerly
awaiting American nation his plans to reform US health care and offer
universal coverage to all Americans ... a system its opponents
successfully beat back ... Hillarycare ... (This
graphic is from a PowerPoint presentation I used for almost 10 years
after the defeat of Hillarycare in 1994.)
President Clinton's chart was based on a study by the UCLA Medical
Center in 1992-93 and widely reported at the time.
Guess what the study in
1993 showed? 33 1/3% of all US health care
spending was wasteful, duplicative and/or fraudulent We've come along
way ... NOT
So ask yourself the next time you hear Mitt Romney attacking the
President for "stealing" $716 billion from Medicare to fund Obamacare.
Obama is simply saying we can and we will begin to cut into all that
waste in health care spending.
If we can save, over 10
years, $716 Billion, just on Medicare (while adding additional
benefits for seniors and extending the solvency of the program by at
least 8 years) think how much more can be saved out of ALL U.S. health
care by improving systems and cutting out the middlemen in the
financing and delivery of health care.
And remember, the $716 billion Obama says can be saved in Medicare is
actually be used to save Medicare ...
unlike the identical $716 billion Romney's
running mate, House Budget Committee Chair, Paul Ryan, would cut out
of Medicare but would then use to cover tax cuts to millionaires while
leaving Medicare on an early path to insolvency.
May 15, 2013:
Most Doctors Still Waiting On Medicaid Pay Raise
Five months after primary care doctors who treat
Medicaid patients were supposed get a big pay
raise, most physicians have yet to see it.
Only three states have implemented the
pay raise -- Nevada, Michigan and
Massachusetts, according to the American Academy
of Family Physicians.
two-year pay hike is intended to entice more
doctors to treat the millions of residents
expected to enroll in Medicaid in 2014 when the
federal health law expands eligibility.
Critics have said the expansion of the
federal-state program for the poor would
accelerate the shortage of doctors who treat
them. Most states have not started offering the
higher pay rates because the Obama
administration did not issue the rules until
November, and state officials said they didn't
have time to carry out the change and have the
federal government approve the new rates.
All states have applied
with the federal government to start offering
the higher rates, but the Centers for Medicare &
Services has approved only
remains confident that the higher payment rates
ultimately will help increase access to care for
said a CM2 statement.
While Medicaid fees vary by state, they are
generally far below those paid by Medicare and
The change means an average 73 percent pay
increase nationally, according to a 2012
study by the Kaiser Family
Foundation. Earlier this year, CM2
said doctors will be able to get the higher fees
retroactively to January 1, when states do
implement the provision. But many
states have set deadlines for April and May for
doctors to self-attest that they are primary
care physicians in order to get the retroactive
pay. Those that miss
the deadline will only receive the pay raise
once they fill out a form showing they are
licensed as a family doctor, pediatrician or
Several major physician groups, including the
American Medical Association, American Academy
of Pediatrics and the American Academy of Family
Physicians, wrote to CM2 earlier this
month about their frustration with the delays.
increasingly concerned that the brief time frame
which states had to implement this provision has
resulted in confusion both by state employees
responsible for administering the program and
the physician community," stated the
letter to Cindy Mann, who runs the
Medicaid program. "One
overarching concern shared by our organizations
is the lack of a coordinated plan to educate and
communicate to eligible providers about the
payment increase and steps physicians must take
Stephen Zuckerman, senior fellow at the Urban
Institute, said doctors were hesitant to sign on
as a result of the pay raise given that it
expires at the end of 2014, and the
implementation problems won't help.
of the temporary nature of the pay raise, it was
always questionable how many doctors would jump
at treating Medicaid patients if they had not
done in the past,"
he said. "If doctors were tentative
before, they still have a reason to be."
Jeanne's End Note:
The issue of provider reimbursement for Medicaid
has been a thorny issue from the git-go in the
program's history. At the start in 1966, states
were expected to reimburse hospitals and doctors
at or near their standard rates, but that
quickly bogged down. Promises that
people would be able to show up at a doctor's
office with their heads held high, presenting
their Medicaid cards and getting the same
coverage (and presumably respect) as every other
insured patient." (LBJ's
promise in 1965 when he signed the
Medicare-Medicaid law) vanished almost
immediately. It will be interesting to see
whether the so-called
model" for states expanding their Medicaid
program can get off the ground. It could be the
best, albeit potentially the most expensive,
solution to the problem.
May 15, 2013:
Could U.S. Health Care Spending Really Be Going
current health spending slowdown may persist after the U.S. economy
rebounds, with a potentially dramatic impact on deficit reduction
efforts, three leading policy analysts concluded in separate studies
released this week. A host of fundamental changes in the health care
system, such as slower-paced innovation in
the pharmaceutical and medical imaging spheres, increased cost-sharing
by patients, and greater provider efficiency account for most of the
recent slowdown -- not the recession -- said the author of
one of the studies, David Cutler. The Harvard University economist
spoke at a Washington, D.C., forum sponsored by Health Affairs, which
featured his study in its May issue.
2007-09 recession, a one-time event, accounted
for 37 percent of the slowdown between 2003 and
Cutler and coauthor Nikhil Sahni wrote in study.
Sahni is a senior researcher in the economics
department at Harvard.
"The evidence thus suggests at least as
strong a case for structural changes as for
cyclical factors" relating to the
economy, they said. One of the structural
changes relates to a
growth in high deductible health plans.
are now greater than most families have in the
bank," Cutler told the forum.
"I say this is
unrelated to the recession because nobody that I
know of when they are making a forecast about
the future thinks that if economic growth
returns very rapidly, cost sharing is going to
come down," he added.
these trends continue during 2013-22, public
sector health care spending will be as much as
$770 billion less than predicted,"
the authors said in the study.
"Such lower levels
of spending would have an enormous impact on the
U.S. economy and household finances."
By 2021, they would
wipe out 20 percent of the expected budget
deficit in the year 2021,
"the equivalent of doing a
massive deficit reduction effort,"
findings were released on the same day the Congressional Budget Office
estimated that deficit spending is $231 billion lower so far in fiscal
2013 than in the same period in fiscal 2012.
more analysts seem to think the slowdown doesn't just stem from people
having less money to spend because of joblessness or shrinking
incomes, some warn that the current wave of optimism may be overblown.
Speculation that the nation's health
spending problem has somehow been solved or cut down to size is
unrealistic, said a Kaiser Family Foundation study released April 22,
which concluded that 77 percent of the slowdown stems from the weak
economy. It would be a mistake to think deficit reduction
is fading as a political issue even if some recent trends and studies
are creating some cautious optimism.
idea that the spending slowdown isn't going away soon got backing in
two other studies released this week.
health policy professor Michael Chernew, vice chairman of the Medicare
Payment Advisory Commission, said in a
study conducted with other Harvard researchers that from 2009 to 2011,
per capita national health spending grew about 3 percent a year
compared to an average of 5.9 percent annual growth during the
previous ten years. Their study examined two factors that
might account for the slowdown: job loss
and benefit changes that shifted more costs to insured people.
"We conclude that such benefit changes
accounted for about one-fifth of the observed decrease in the rate of
growth," they said.
researchers tried to find a group that was not as affected by the
recession in their study. So they looked at spending patterns among
workers who did not lose their health coverage. They found that
"spending growth slowed even for this
population," Chernew told the forum. So the slowdown
had to involve factors other than the direct effects of job loss, he
said. That suggests "other factors, such
as a reduction in the rate of introduction of new technology,"
were also at work.
findings suggest cautious optimism that the
slowdown in the growth of health spending may
persist -- a change that, if borne out, could
have a major impact on U.S. health spending
projections and fiscal challenges facing the
the study said.
said "I share David's [Cutler] sense of
good news. This is a really big deal." But simply
because spending growth is slow does not mean policymakers should stop
efforts to make spending more efficient, he warned.
more going on than just the recession,"
added John Holohan of the Urban Institute, who
led a third study. In reviewing health spending
growth over the last decade, Holohan and fellow
Urban analyst Stacey McMorrow found that that
growth began to slow
well before the most recent recession.
Medicare spending growth began to slow in 2004,
he said. "A variety
of payment policies for imaging, home health,
durable medical equipment and Medicare Advantage
have contributed to slower Medicare spending
growth," according to the
Medicaid programs have also tightened payment
policies, expanded managed care, and increased
community-based long-term care alternatives
under intense budgetary pressures. Moreover,
slower growth in prescription drug spending has
affected all payers due to the development of
fewer blockbuster drugs, the adoption of tiered
formularies, and increased substitution of
generics for brand-name drugs,"
the study added.
analysts at the Urban Institute were more skeptical that changes such
as medical homes and accountable care organizations are driving the
slowdown. Their study instead pointed to trends over the past decade
such as "declines in real incomes and a
shift towards less generous insurance arrangements,"
that have "slowed the growth in provider revenues and forced
cost-containment efforts. Some of the more recent payment and delivery
system reforms may help to sustain this slow growth, but this remains
to be seen.
Jeanne's End Note: Nowhere in the discussions reported from this
Health Affairs conference was there mention of
the longer term impact of this apparent
reduction in health care utilization (note: costs per service have NOT
gone down, rather fewer services are being provided). The
USA already lags most of the industrialized nations with which it is
competing economically in health care outcomes, life expectancy,
infant mortality, and even quality of life. Yet we continue to spend
almost twice as much per capita than these other nations ...
assuming less health care utilization is our
goal, would not our outcomes worsen over time? And what
would be the longer term impact on this country's competitiveness and
Will Enough "Healthy" People Enroll in the Exchanges or Will They Be
Stuck With Just the Sick?
Obama administration has identified specific
groups of people it would like to focus on as it
promotes enrollment in the state health
insurance exchanges this fall. The
administration plans a localized approach to
reach 2.7 million healthy people who are 18 to
35 years old
and without health insurance.
population group is crucial to stabilizing the
marketplace, because the healthier people will
balance out the costs of covering enrollees who
are older and sicker. The ratio of healthy
people to sicker people who participate in the
exchanges will affect the premium rates in the
Congressional Budget Office (CBO) expects 7 million people to enroll
in the insurance exchanges in the first year, and the administration
expects that nearly 5 million will be those with pre-existing
conditions or those who already buy insurance on the individual
marketplace. Of the 2.7 million young people being pursued, 96 percent
have no chronic conditions, 57 percent are female, and 52 percent are
non-white, according to senior administration officials. In addition,
one-third of the population lives in one of three states: California,
Florida and Texas.
administration's focus now is on consumer outreach and assistance, as
nearly all of the guidances and rules for Obamacare's (PL 111-148, PL
111-152) marketplaces are complete, the officials said.
Speaking at a recent White House event, President Barack Obama touted
the law's benefits and tried to assure people who are anxious about
the law. "I am 110 percent committed to
getting it done right," he said.
"It's not an easy undertaking. If it were easy, it would have
already been done a long time ago. Undoubtedly there will be some
mistakes and hiccups as the thing gets started up, but we're learning
already from them."
administration's enrollment outreach will be tailored to each specific
group, and the plan is to appeal to young
people with a simple insurance application, providing new benefits,
and tax credits to help buy insurance. For example, in
California, 54 percent of the goal population is eligible for tax
credits, and 50 percent is Hispanic.
Administration officials also said they planned on reaching out to
mothers specifically, because they can encourage their children to buy
Assisting in the outreach efforts will be community health centers,
which recently received $150 million from the law to help enroll the
uninsured. Churches and other community organizations can also help
with enrollment, the administration officials said. They noted that
lessons learned from the 2012 presidential campaign have informed
their outreach plan.
Open enrollment for the insurance exchanges begins October 1 and lasts
for six months, with coverage beginning January 1, 2014.
That gives the eligible population an extended period to sign up, so
the outreach efforts can ramp up over time, the officials said. The
officials noted that they recently completed the paper application for
insurance in the exchanges for single adults, which is three pages
long. They are now translating that into an online application.
administration said that once people enroll in the exchanges and begin
receiving insurance benefits, the politics of the law could change.
The GOP message of stopping the law will mean
taking away real benefits, not something abstract, they
said, noting that the House plans to vote on a bill (HR 45) to repeal
the law next week.
Republican leaders criticized Obama's speech and promoted the upcoming
president's health care law is a train wreck for
men and women alike, and that's why a majority
of Americans support Republican efforts to
repeal it to protect their health care -- and
Speaker John A. Boehner, T/R-Ohio, said in a
entire law should be repealed so we can enact a
step-by-step, common-sense approach to health
care that starts with lowering costs and
protecting American jobs."
dismissed the "political bickering"
over the law and told people to get informed about how the law would
affect them personally. "Precisely because
there's been so much misinformation, sometimes people might not have a
sense of what the law actually does. And that misinformation will
continue at least through the next Election Day," he
said. "This is too important for political
games. You stand to benefit, if you're not already benefiting from
this thing," Obama added.
"Don't let people confuse you. Don't let 'em run the okey-doke on you.
Don't be bamboozled."
One of the aims of the for-profit health insurance lobby is assure
that most of the "sick" people (i.e., those with pre-existing
conditions, diabetes, who are obese, or who have other socio-economic
problems that might adversely impact their health status now or in the
future) don't end up enrolled under one of their policies.
Why? Simply, the less they have to pay out,
the more money they can make for their stockholders and to fund the 7
and 8 digit bonuses paid to their corporate executives.
Since the partial privatization of Medicare in 2003 under the
so-called "Medicare Modernization Act," for-profit insurers have honed
their skills at minimizing the accidental enrollment of less healthy
seniors, with result that companies like Humana now earn upwards of
80% of their profits, amounting to billions of dollars, from Medicare.
Now, under Obamacare, these for-profit
insurers are salivating at the opportunity of doing the same in
"cherry-picking" only the healthiest of the 30-40 million people who
will now be signing up for the first time to get health
insurance. If these marketplaces under Obamacare cannot enroll a
manageable mix of healthy and less healthy insured, they are doomed to
failure ... something that has probably been on the GOP agenda all
May 13, 2013:
Transparency in Hospital Charges versus Actual
Following up on last week's report on the widely (and wildly) varying
charges of hospitals for the same identical services, even in the same
metropolitan area, it should be noted that
WHAT A HOSPITAL CHARGES MEDICARE IS NOT WHAT
MEDICARE PAYS THE HOSPITAL. Hospital charges are almost
always discounted, in many cases, significantly. The correlation
between charges and payments has always been a mystery to me, so much
so, that I used to have a presentation on my speaking circuit
Accounting is to Accounting as Military Music is to Music."
They are virtually unrelated. Never has this dichotomy been made more
(hopefully) understandable to the general public (who often complain
bitterly about $10 aspirins) than in reading through the spread sheets
from last week's CM2 report.
example, Alaska Regional, in Anchorage, charges Medicare $46,252 for a
patient with heart failure and a major complication. Alaska Native
Medical Center, also in Anchorage, charges $20,839. In both cases,
Medicare doesn't pay anywhere close to the full charge. The government
reimburses Regional $13,950 and Alaska Native, $12,935.
note this kind of "discounting" from charges to payment is not limited
to Medicare. Private fee-for-service insurance plans usually pay more
than Medicare, but they also usually have negotiated the amount down
significantly from charges. Private managed care plans (HMOs, PPOs) in
many cases pay less than Medicare.]
system doesn't make much sense, but Rick Davis, the CEO of Central
Peninsula General Hospital in Soldotna, Alaska
more transparency will help: "For
there to be pressure on pricing on the consumer side, the consumer has
to understand what it's going to cost them. And so, I think this is a
good report. I think it's going to force hospitals to address their
pricing." Davis says the data show the prices at his
own hospital, Central Peninsula, are fair. And he doesn't expect to
make any adjustments.
Bruce Lamoureux, CEO of the Providence health system, says his
hospital will consider changing some prices, down or even up, based on
are some instances where our charges for a particular procedure are,
in one case, half of a different provider's, and in a different case,
twice a different provider."
Lamoureux thinks the information actually gives consumers some
negotiating power when it comes to health care costs, something
they've never had before. He says the
system of hospital pricing and reimbursement is badly broken and this
step toward more transparency is long overdue.
hospital bill is only one part of the overall health care cost
kind of like a rack rate in the hotel room,"
says Karen Perdue, president of the Alaska
State Hospital & Nursing Home Association.
"Most people aren't
paying that one rate in the hotel. Different
payers are demanding different deals at the
hospital, so I think what consumers need is not
only a more accurate way to determine what their
costs are going to be, but also what the full
cost will be, not just the hospital cost."
the charges from doctors and anesthesiologists,
which aren't included on a hospital bill. Perdue
says her board is looking at ways to make
hospital cost data easily available to
consumers. But health care is a complicated
industry and it's not an easy task.
for us, feels like the future and where we
should be going, and where we should be putting
she says. "How we should do that in a way
that is meaningful to the consumer is the
challenge ahead of us."
Jeanne's End Note:
Charts like these above can be duplicated for
every state and every metropolitan region. But
will patients (consumers) actually use them, or
will they blindly follow their doctor's orders
(even if in some cases, the physician may have a
financial stake in the hospital)? For the
Providence system's Karen Perdue, I have this to
Karen, transparency was a major goal of the Bush
administration too, but it was stymied at almost
every turn by organized physician groups who
didn't want the public to compare Dr. Smith to
The AMA and other physician
groups have fought tooth and nail against almost
any kind of physician-to-physician comparison
whether it be on prices or, heavens forbid,
quality, i.e., results. The
hospital industry had to finally relent as part
of Obamacare's quality care initiative
and future reports will
compare not only hospital prices, but also
hospital outcomes, with patient reviews and
For the doc, on the other hand the battle
continues. A few of the medical groups,
associations and societies have agreed to reveal
pricing and we should see new comparison reports
in this area. But a word of caution,
remember back to 1966 when Medicare Part B began
and physicians were to be paid their "usual and
customary fees" ... the net result of that LBJ
give-away was that every doctor below the
highest UCF in the area, quickly moved his or
her fee schedule up to what was then the new
standard. Physician simply leapfrogged on that
scale. Of course that was remedied (somewhat) in
1983 when the UCF was replaced by
"resourced-based relative value scales"
now reporting their fees may simply be
encouraging their medical brethren to move their
prices to the highest quartile. And
for the time being, reporting on quality is not
in the works for docs ...
BUT hospitals facing
penalties and lost revenues for poor outcomes
can be expected to step in and demand more and
more accountability from their docs ... welcome
to the brave new world of ACCOUNTABLE CARE ...
being brought to you by Obamacare.
Jeanne's Weakly Lawyer Jokes for the Week of May
But First There is Law School
School Admission Form
Sue U. University
School for the Ethically Disadvantaged
Sainte Marie, Michigan
... for more law school jokes go to:
May 10, 2013:
Boehner Says NO to Any GOP Nominations to PPACA
Board (What Else is New?)
the Obama administration: Don't wait by the phone for those GOP
nominations to the
Independent Payment Advisory Board, a panel created in the health
law to make recommendations to Congress on how to control Medicare
Speaker John Boehner, T/R-Ohio, made it clear yesterday that neither
he nor Senate Minority Leader Mitch McConnell, T/R-Ky., would be
sending in any names for consideration.
is the 15 unelected, unaccountable individuals who have the authority
to deny seniors' access to care,"
Boehner told reporters. "The American
people don't want the federal government making decisions that doctors
and patients should be making."
[No Bonehead, we should continue to allow unelected, unaccountable
corporate lackeys seeking to maximize profits to continue to make
those decisions behind corporate veils of secrecy and without
oversight or appeal, as they have doing all along.]
as IPAB, the panel is charged with making
proposals to reduce Medicare spending if government funding of the
program grows beyond a target rate. Congress can pass alternative
changes of the same size instead, but if it fails to act, the IPAB
plans would become law. But recent
slowdowns in the growth of Medicare spending means there's no
immediate pressure for the panel, which has not yet been assembled, to
make spending recommendations to Congress.
[By the way, be sure to call the White House and
put my name in nomination to serve on the IPAB,
I'd be a great addition <smile>]
May 10, 2013:
Red States Get Obamacare
Four states that have snubbed the federal health
law by defaulting to the federal government
to build new online insurance marketplaces and
not agreeing to expand Medicaid are getting new
jobs at call centers that will help consumers
understand their new coverage options
this fall. Up to
9,000 jobs are expected to be created at call
centers to support the new federally run
marketplaces. A Department of Health
and Human Services spokeswoman said some of them
will be added to existing Medicare call centers
in Phoenix, Chester, Va., Lawrence, Kan., and
Tampa -- all states
with Republican leaders who oppose the law.
A fifth center in Coralville, Iowa and a sixth
in Corbin, Ky., will also be expanded, she said.
Plans are still being finalized for other
locations, she said. Of those states, only
Kentucky is setting up its own online insurance
marketplace that will help people shop for
individual or small employer coverage.
Iowa, will run its exchange in partnership with
the federal government. The other states are
relying entirely on the federal government.
six states getting call centers, only Kentucky has committed to
expanding Medicaid in 2014, even though governors in Florida and
Arizona say they support it. So far, 22 states have agreed to expand
are through Vangent, a General Dynamics Information Technology
subsidiary, which was awarded a $530 million one-year
contract by the federal government to set up call centers to
answer inquiries related to the insurance marketplaces in 34 states
where they will be run in whole or part by the federal government. The
government estimates that next October, when the marketplaces go live,
the call centers will be open seven days of
the week, 24 hours a day, handling 6.1 million phone calls and 23,000
e-mails. The contract could be renewed for up to nine more
years, making it potentially worth more than $5 billion.
States running their own marketplaces will
have their own call centers. The marketplaces are
expected to expand health coverage to about 27 million people by 2016.
Under the federal contract awarded to
Fairfax, Va.-based Vangent, the company will also field inquiries
about Medicare, Medicare Advantage and "other relevant programs," the
award announcement stated.
Apparently for blue states, no good deed goes unpunished by the Obama
May 8, 2013:
NEW GOVERNMENT REPORT: Hospital Charges Vary
Dramatically, Even in the Same City
Wednesday will finally get some answers about one of modern life's
most persistent mysteries:
how much medical care
For the first time, the federal government will release the prices
that hospitals charge for the 100 most common inpatient procedures.
Until now, these charges have been closely held by facilities that see
a competitive advantage in shielding their fees from competitors.
What the numbers reveal is a health-care system with tremendous,
seemingly random variation in the costs of services
As part of the Obama administration's work to make our health care
system more affordable and accountable through transparency, data are
being released that show significant variation across the country and
within communities in what hospitals charge for common inpatient
services. The data provided today include
hospital-specific charges for the more than 3,000 U.S. hospitals that
receive Medicare Inpatient Prospective Payment System (IPPS) payments
for the top 100 most frequently billed discharges, paid under Medicare
based on a rate per discharge using the Medicare Severity Diagnosis
Related Group (MS-DRG) for Fiscal Year (FY) 2011.
These DRGs represent almost 7 million discharges or 60 percent of
total Medicare IPPS discharges. Hospitals determine what they will
charge for items and services provided to patients and these charges
are the amount the hospital bills for an item or service.
The Total Payment amount includes the MS-DRG
amount, bill total per diem, beneficiary primary payer claim payment
amount, beneficiary Part A coinsurance amount, beneficiary deductible
amount, beneficiary blood deducible amount and DRG outlier amount.
For these DRGs, average charges and average Medicare payments are
calculated at the individual hospital level. Users will be able to
make comparisons between the amount charged by individual hospitals
within local markets, and nationwide, for services that might be
furnished in connection with a particular inpatient stay.
Inpatient Charge Data, FY2011, Microsoft Excel version
Inpatient Charge Data, FY2011, Comma Separated Values (CSV) version
The New York Times has an interactive map --
May 8, 2013:
NEW STUDY: Medicare Advantage Plans are Costing Far More and Saving
Health plans participating in Medicare
Advantage (MA), the private mostly for-profit insurance option
for Medicare beneficiaries, have long been
paid considerably more to provide coverage of hospital and physician
services than what the government spends to deliver the same benefits
to enrollees in traditional Medicare.
Unveiled as part of a Republican-driven
"privatization plan" for Medicare as part of the Medicare
Modernization Act of 2003 (passed without a single Democratic vote, at
3:30am in the morning after holding the House floor vote open for
nearly 6 hours while GOP whips rounded up the needed votes -- the
normal time limit is 15 minutes -- and signed by President George W.
Bush on December 3, 2003) these private, mostly for-profit plans now
enroll almost a quarter of all Medicare beneficiaries.
Republicans originally argued that
competition among these plans would hold down Medicare cost growth.
Instead, they have consistently cost far more than traditional
Medicare. Under the Patient Protection and Affordable Care
Act, affectionately known by many as "Obamacare," overpayments to
these plans are gradually being pared back.
But will these private Medicare plans be able
to cope with the reduced payments?
Using newly available information on 2009 MA plan costs, analysts have
compared MA plans’ estimates of per capita
costs for providing Parts A and B benefits to their enrollees, on a
risk-adjusted basis, against what government data show to be the same
costs for traditional Medicare program beneficiaries residing in the
same county. In doing so,
analysts have found that on average, risk-adjusted MA plan costs
were 4 percent higher than traditional Medicare costs (104%). Among
plan types, only HMOs had lower average costs than traditional
Medicare. Among local PPOs and private fee-for service plans, over 75
percent had costs exceeding those in traditional Medicare.
The wide variation seen in MA plan costs
relative to traditional Medicare suggests there is room for greater
efficiency in care delivery.
Tackling Medicare, The Rand Corporation Looks at Three Options.
are looking for ways to tackle the growth of
Medicare spending, which the Congressional
Budget Office estimates will account for 24 percent of the federal
budget by 2037. But some strategies to cut program costs
could leave millions of beneficiaries
from the Rand Corporation, a nonprofit research organization, compared
the impact of three proposals that have been discussed by Congress
or the White House to curb the costs of the government health care
program for seniors and the disabled. The study is published in the
May issue of Health Affairs.
are the three policy changes the study modeled:
Means-Testing Part A: Medicare
Part A includes coverage of care in hospitals and nursing homes, and
unlike Part B (which covers doctor visits, labs and equipment), the
Part A premium is the same no matter how much a beneficiary earns.
The idea of making wealthier seniors pay more
for Part A has been around for a long time: It was
suggested by the
bipartisan Kerrey-Danforth commission back in the mid-1990s.
Premium Support: Premium
support would give seniors a set amount of money to purchase a private
or Medicare-like health insurance plan. It's a proposal similar
to the one championed by House Budget Committee Chairman Paul Ryan
Raising the Eligibility Age:
If Medicare mirrored Social Security, the
eligibility age would be 67. This proposal has been floated
by both parties and has
stoked heated debate. Medicare's age
requirement has not changed since the program's inception in 1965,
though life expectancy has increased by eight years in that time.
magnitude of savings can vary quite
said author Christine Eibner, a senior
economist at RAND, about the results of the
The researchers found that premium support and raising the eligibility
age were the most effective changes to curb costs.
Increasing the eligibility age, for example, reduced federal spending
by 7.2 percent through 2036, compared to 2.4 percent if a premium for
Part A was added. And the premium support plan resulted in the most
savings after 2019 of all three options.
The savings from raising the eligibility age in the RAND study
was different from earlier Congressional Budget Office estimates
because the Rand authors modeled the outcome with the idea of raising
the age in 2014. The government office instead assumed the age would
gradually be raised and not be in full effect until 2027.
But all three scenarios had downsides and the two scenarios that
produced the greatest potential savings also produced the greatest
possible burden for Medicare enrollees both financially and in terms
of access to health care.
In the means-tested strategy, somewhere between 2 and 20 percent of
eligible beneficiaries may choose not to enroll in Medicare Part A,
researchers found. For the premium support plan, the authors estimate
13 percent of seniors would forgo coverage. And raising the
eligibility age to 67 also would reduce enrollment by approximately 13
percent, according to the study.
Jeanne's End Note: "Premium
support," AKA the end of Medicare as we know it.
doesn't reduce costs, it merely transfers costs
from the Medicare system to some of the most
financially challenged citizens.
May 7, 2013:
Most Veterans Will Get More Under Obamacare ...
veterans will have more health insurance options under the Patient
Protection and Affordable Care Act,
but some vets, like many Americans, may
still struggle to find affordable, accessible care that meets their
needs. Roughly 40 percent of the 22.3 million military
veterans receive health-care services from the Veterans Health
Administration, which operates a nationwide network of medical
centers, hospitals and clinics. Many
veterans are eligible for both VA health care and Medicare, Medicaid
or Tricare. About half of veterans have private insurance;
approximately one in 10 veterans younger
than 65 are uninsured.
Veterans who were honorably discharged after
being on active duty for at least two years may qualify for VA health
services. Since funding for the VA health program is
limited, however, priority is given to veterans who have
service-related disabilities or low incomes. Although there are no
premiums for VA health care, some veterans may owe co-payments for
services. Veterans who return from active
military duty are typically eligible for free VA health care for five
Obamacare, most people will have to have health insurance starting in
January or pay a penalty. Veterans who are
enrolled in VA health care won't have to buy additional coverage,
although they can supplement their coverage if they want to.
Example: Mike Sage, 64, a Vietnam War combat veteran, pays $15 per
visit for primary-care services and $50 for specialist care at the VA
clinic near his home in Monmouth, Ill. Prescription drugs are $8 for a
30-day supply. But his wife, Kay, like many
veterans' spouses, doesn't qualify for VA health care. They
plan to check out the policies offered on the Illinois health
insurance exchange this fall to see if there's a better option than
the catastrophic-coverage plan with a $5,000 deductible that she
currently carries. Sage was relieved to learn that his
VA health care counts as coverage under the
PPACA. "As long as I'm not
subject to a penalty [for not having insurance], we'll do some
comparative shopping for her," he says. Kay Sage might
qualify for a premium tax credit for coverage on the exchange if the
couple's household income is between 100 percent and 400 percent of
poverty level ($15,510 to $62,040 for a family of two in
2013), according to the Treasury Department.
expansion of Medicaid under the Patient Protection and Affordable Care
Act -- which "red" states are currently wrestling over whether to
implement -- could also affect veterans' health care.
The law allows the expansion of the
federal-state program for low-income people to include adults with
incomes up to 138 percent of the federal poverty level ($15,856 in
According to an
analysis published by the Urban Institute last month,
four in 10 uninsured veterans have incomes
138 percent of the federal poverty level,
potentially enabling them to qualify for
Medicaid if their states expand the program. Most of those
veterans have incomes below 100 percent of the poverty level.
these veterans, it's critical that their state expand Medicaid,"
says Jennifer Haley, a research associate at the Urban
Institute who co-authored the report.
In states that don't expand their programs, veterans whose income
falls below 100 percent of the poverty level will generally not
qualify for Medicaid, nor for subsidized coverage on the exchanges.
though a non-disabled veteran may meet the income threshold for VA
health care -- nationally, about $34,000, further adjusted by
geographic location -- he or she may not
live near VA facilities or know that VA care is available,
according to the report.
a hearing last month before the House Committee on Veterans' Affairs,
VA officials said they expect a net
increase of 66,000 veterans seeking health care through VA facilities
when the mandate to have health insurance kicks in next year.
Some veterans will come into the VA system but others will leave
to seek coverage on the exchanges or through Medicaid, they said.
Those who are eligible for more than one
health program may pick and choose, using one program for cheaper
prescription drugs, for example, and another for specialist care.
May 6, 2013:
Spending to Promote Obamacare Exchanges Varies
Dramatically in Red States versus Blue
state legislature adjourned this weekend WITHOUT adopting Governor
Scott's plan to expand its Medicaid program) is on course to
spend $6 million to reach out to nearly 4 million uninsured people
and help them sign up for coverage in the federal health law's
online marketplace this fall. Maryland
will spend more than four times as much, or about $24.8 million, to
help about 730,000 uninsured. The District
of Columbia expects to spend about $9 million assisting 42,000
wide variation in spending to hire and train people to provide
consumer assistance in the first year of the new marketplaces could
have a major impact on how many people actually get coverage under
Yet states with some of the nation's
highest uninsured rates, such as Florida and Texas, are getting far
less federal money per uninsured resident than states with low rates,
such as Maryland, Vermont and Rhode Island.
That's because states relying on the federal
government to run their marketplaces are getting far less money than
states setting them up themselves because of how the health law was
written. In addition, some states such as Maryland that
are running their own operations are supplementing the federal
dollars with states funds. That's widening the gap.
spending difference could have a huge impact,"
said Jon Kingsdale, a consultant who helped
launch the successful Massachusetts health
insurance exchange in 2006 ("Romneycare").
Consumer assistance is considered key to
enrolling the uninsured for several reasons. Polls show
most people are unfamiliar with the law's benefits, including new
government subsidies that take effect next year. For example, those
subsidies will apply to a family of four with an income as high as
online marketplaces, which open for enrollment October 1, were
envisioned to be as easy to use as travel websites like Expedia, but
experts say that many people will need help
figuring out which plan is best for them and what information they
might need to sign up for coverage. Some have never applied for health
insurance coverage before and may need assistance even to navigate the
The marketplaces, also known as exchanges,
are the key way the law expands health coverage to about 27 million
people by 2016. That's where people will shop for and
enroll in private coverage and determine if they are eligible for
premium discounts, or for Medicaid, the state-federal health insurance
program for the poor. While many customers will be uninsured, others
with coverage will use them to take advantage of government subsidies.
a shame that we see states with lower rates of
uninsured putting more money into education and
outreach than states with higher rates of
said Deborah Bachrach, a former New York State
sure, consumer assistance is only one way that potential enrollees may
learn of new insurance options and how to sign up for them. Additional
federal dollars will go to advertising on radio, television and
billboards. And insurers, hospitals and nonprofit groups may
supplement public education efforts in many states.
biggest reason for the uneven spending on consumer assistance is that
when Congress passed the health law in 2010, it assumed most states
would run the online marketplaces, and it authorized broad funding for
that. As it turned out, only 16 states and
the District of Columbia agreed to do so.
did not set aside money for the federal government to operate the
marketplaces, either alone or in partnership with the states, as it is
doing in at least 34 states.
To remedy that, the Obama administration recently moved $54
million from the law's prevention fund to provide money to hire and
train people to assist consumers in those states, based on their
number of uninsured. That money will be awarded directly to
organizations that agree to hire and train people to assist consumers.
Those eligible include church groups, local health agencies, community
health centers, chambers of commerce.
Goodhue, executive director of
Florida CHAIN, a consumer advocacy group
estimates about 1.7 million people in Florida could benefit from
subsidized coverage in the marketplace run by the federal government,
but few know it will exist. "We
are equally concerned about a lack of consumer assistance or any type
of consumer advocacy at the state level to help resolve issues related
to enrollment and eligibility," she said.
with the nation's highest uninsured rate of about 24 percent, will get
as much as $8 million to enroll about 5 million uninsured in a
federally run marketplace. That's less than $2 per uninsured resident
-- compared to about $31 per person in Maryland. Virginia, with
845,000 uninsured, is getting $1.4 million for consumer assistance to
help people sign up for its federally run marketplace.
states with high rates of uninsured are running their own
marketplaces, and as a result, have more money for consumer
assistance. New York, for instance, expects to spend up to $32 million
on consumer assistance. Washington state has budgeted $6
million; Nevada, $2.3 million through 2014; California has budgeted
$49 million through 2014.
states running their own marketplaces also have relatively big budgets
to hire and train people to assist consumers. Rhode Island, which has
116,000 uninsured residents, plans to spend nearly $2 million over 18
months. A handful of states, including Maryland and Vermont, are also
spending state taxpayer money to supplement their federal grants.
Maryland has put up $8.6 million on top of $16 million it got from the
federal government. Vermont, which has about 55,000 uninsured, has put
up $400,000, for a total of $2 million.
the amount of money channeled toward consumer assistance is important,
other factors also will have an impact. For example, states can
streamline enrollment in Medicaid and make other efforts to make the
process as consumer friendly as possible.
number of states are also counting on help from private organizations.
The California Endowment, a large health foundation has offered about
$29 million to help California's already well-financed outreach effort
-- mostly to help find and enroll people in Medicaid.
Health advocacy groups in Maryland,
meanwhile, are giddy at the $24 million that state is putting toward
getting people signed up for insurance. The money will pay for 300
consumer assistance jobs created by six groups, including county
health agencies and nonprofits. Asked about how Baltimore will have
more money for consumer assistance than the entire state of Florida,
HCAM CEO Kathleen Westcoat laughed.
is putting its money where its mouth is,"
Jeanne's Weakly Lawyer Jokes for the Week of May
Feminine Practice of Law
... for more go to
May 2, 2013:
Finish Line Fast Approaching on Medicaid
Ever since the U.S. Supreme Court ruled last
summer that expanding Medicaid to more
low-income people was optional for the states,
the focus has turned to what Republican
governors and GOP-controlled legislatures would
do. Would they
forego tens of millions of dollars in federal
aid that would extend health insurance to many
more people and, proponents argue, would provide
a major boost to state economies? Or
would these governors, many of whom vowed not to
expand, stand their ground and insist the
federal government will not be able to afford
As of May 1, 16 states plus the District of
Columbia have approved the expansion or are
headed in that direction, 27 have rejected it or
are about to and seven states could still go
Some Republican governors, including Arizona's
Jan Brewer and Florida's Rick Scott, have broken
ranks, which in some cases has pitted them
against GOP majorities in their legislatures.
The other major development has been the
(see below) by Arkansas Democratic Gov. Mike
Beebe, who received tentative permission from
the Obama Administration to use federal Medicaid
dollars to buy health insurance on the private
market. And Republican legislators in some
states, such as Texas and Louisiana, are
interested in exploring similar plans, even as
their GOP governors remain fiercely opposed.
With uncertainty about those plans and
legislative battles still unfolding in a number
of states, it's not yet known how many states
will expand their Medicaid programs come
January. 1, when the Patient Protection and
Affordable Care Act (Obamacare) is set to take
effect. Below is an up-to-date look at where
each state and the District of Columbia stand at
Stay tuned. Much can happen before January.
May 2, 2013:
The Arkansas Medicaid Model: What You Need To
Know About The "Private Option"
Obama administration wanted Republican states to accept the health
law's Medicaid expansion pretty much as is. Republicans wanted
Medicaid money in no-strings
block grants. Arkansas has broached
what could be a deal-making compromise, giving Washington the
increased coverage for the poor it wants and Republicans something
that looks less like government and more like business.
Florida, Nebraska and other Republican-heavy states have taken a look.
Some think the Arkansas model, passed by a
Republican legislature and signed by Democratic Gov. Mike Beebe last
week, could erode resistance in some 30 red states and eventually
prompt similar programs elsewhere. And because the federal
government has put no deadlines on Medicaid expansion, other states
will be able to watch what happens in Arkansas and see if they want to
adopt a similar idea.
the plan brings what many see as advantages for patients, it also
raises difficult questions of cost and implementation, not the least
of which is the high overhead generally required by for-profit private
insurers seeking to satisfy their investors and the stock markets.
Government-run Medicare and Medicaid programs operate with much
smaller margins and lower operating costs.
Republicans insist that the "efficiencies" of the for-profit business
model and market competition will reduce costs even more than
"inefficient" government managers. Government bureaucracies are worse
than private sector bureaucracies they argue. Democrats,
who have long argued for a single-payer government plan point to the
success of the government run Medicare program which operates at less
than half the overhead expense of the for-profit alternatives under
Medicare Advantage, without the 14% "kicker" these MA plans receive
and without the "pressure" to increase profits that have led to so
many consumer complaints in the private sector about claim denials and
Does the Arkansas Plan Work?
upholding the Patient Protection and Affordable Care Act last June,
the Supreme Court did reject one critical
element of Obama’s plan: mandatory requirements that states expand
their Medicaid programs to at least 133% of the poverty level.
That Supreme Court decision making Medicaid expansion
optional, combined with red-state reluctance,
reduced the chances of reaching Obamacare's original coverage targets
and undermining its universality. Arkansas
would let newly eligible Medicaid beneficiaries shop for insurance
policies along with other consumers in the online marketplaces,
also known as exchanges, created by Obamacare. Arkansas House Speaker
Davy Carter, a Republican, called the idea "a
conservative alternative to the policy forced upon us by the federal
is the Arkansas Proposal Different From Traditional Medicaid?
Medicaid is a combined federal and state program for low-income and
disabled people that for many years paid health care providers for
each procedure as well as each doctor and hospital visit. Recently
most Medicaid treatment has shifted to managed-care plans run by
private insurance companies with incentives to keep costs down.
Arkansas takes the privatization idea a step
further by letting many Medicaid consumers shop for the same
commercial insurance available to those who aren't eligible for the
menu of options is going to look the same" for eligible
Medicaid consumers as for anybody else buying through the online
marketplaces, said Matt Salo, executive director of the National
Association of Medicaid Directors. "Access
to physicians is going to look the same."
[Jeanne's Historical Memory Aside: My first job working in the health
care industry, while going to law school, was as a claims examiner for
a Blue Cross-Blue Shield plan. The year was 1965 when on July 2,
President Lyndon B. Johnson signed the new Medicare (and Medicaid)
law. While Medicare drew the most public attention and controversy,
there was this Medicaid program coming along almost as an
afterthought. I remember how the argument in support of it went:
"Poor people would be able to show up at a
doctor's office with their heads held high, presenting their Medicaid
cards and getting the same coverage (and presumably respect) as every
other insured patient." Well history has shown us
different as the costs of Medicaid ... and the states willingness to
fund and support it ... has ebbed and flowed with the economy, the
politics and the medical profession's acceptance. Now Arkansas
Republicans seem to be making the same argument that LBJ made in 1965,
Medicaid patients will be on a par with everyone else. Time will
are the Advantages?
Commercial insurers' doctor networks are generally wider than Medicaid
networks. Enrollment for Medicaid patients could improve access to
care and prevent minor illnesses from spiraling into expensive
hospitalizations. It could also reduce care
disruptions for those whose incomes fluctuate, shifting
them between Medicaid and the subsidized exchanges. At the same time,
adding thousands of Medicaid members to the
exchanges could reduce the risk that a few chronically ill patients
would sharply drive up exchange premiums. With proper
software, exchanges could determine people's eligibility for Medicaid
and pay federal and state Medicaid dollars directly to their insurance
are the Disadvantages?
might be a big one. Medicaid typically pays
hospitals and doctors much less than average. A beneficiary costing
the government $6,000 a year for Medicaid would cost $9,000 on a
private plan on the exchange, the Congressional Budget
Office has estimated. On the other hand, Arkansas officials have
suggested that competition among insurers
and providers for Medicaid patients could keep the cost from being
prohibitive or even save money eventually. There would also
be challenges to harmonizing Medicaid plan designs with those of
policies sold on the exchanges. Private
coverage on the exchanges is expected to come with large deductibles
and co-payments for consumers, but Medicaid strictly limits such cost
sharing. For a Medicaid patient,
"if you're going to go to the pharmacy counter and pick up your
prescription, are you going to have to come up with this 15 or 20
percent copay out of your pocket?" said MaryBeth
Musumeci, a senior analyst at the Kaiser Family Foundation's
Commission on Medicaid and the Uninsured.
Finally, the law would keep most of Arkansas' existing Medicaid
beneficiaries -- mainly children -- in the state's regular Medicaid
program. To avoid potential cost shocks to the exchanges, the very
sickest of patients in the Medicaid expansion would also be placed in
May 1, 2013:
Aetna, We Aren't Sure We're Glad to Meet Ya.
Slowing the Obamacare Exchange System, While
Reaping Huge Profits
new sign that implementing the health law could take longer than
expected, insurer Aetna said Tuesday it
lowered the number of medical policies it expects to sell
through online marketplaces that open for
business in October.
is going to be a slow uptake,"
Aetna CEO Mark Bertolini told investment analysts on a call to discuss
[Jeanne: Aetna reported profits of almost $500
million for the quarter, on a pace to earn nearly $2 billion for the
year ... profits, not just revenues, money going for huge executive
money that should be spent on actual health care.]
process required to sign up, to get the
subsidies, is going to take some time. And I think this is a two-year
ramp to get the individual exchanges up to a level where customers are
going to feel appropriate signing up. And so our estimates of what we
believe ... enrollment [will be] are dropping for the first year."
didn't give a number, and insurers rarely disclose projections for
specific business lines. But Aetna offered nothing to challenge
perceptions that it will approach Obamacare's subsidized
marketplaces, also known as exchanges, with great deliberation.
naming specific states, the company cut from 15 to 14 the number of
states in which it might sell exchange plans to individuals.
Aetna might even withdraw at the last minute
if exchanges aren't ready or look unprofitable, Bertolini
said. Under the PPACA's requirement that
everybody buy health insurance or pay penalties, consumers without
coverage from employers or government programs such as Medicare are
supposed to start shopping for exchange plans on October 1.
not going to go in for a land grab,"
"Obviously at the end of all this we have an
opportunity to pull out in September. And we
continue to hold that as an option should the
exchanges not develop favorably or they ask for
caution of No. 3 health insurer Aetna echoes that of No. 1
UnitedHealthcare, which has said it will be "very selective" in
selling exchange plans.
itself is helping hold down exchange enrollment by offering to renew
policies of existing customers before the end of this year, thus
delaying potential price increases associated with the health law.
Rating rules expected to raise premiums for
younger, healthier customers kick in January 1, but only for plans
starting a new policy year. Approving a one-year renewal
before the calendar turns over could delay the price hike for most of
2014 and prove to be more attractive for some clients than buying an
are going to offer that opportunity as part of
our renewal strategy with accounts,"
other insurers, Aetna is attempting to
compete on exchanges with narrower networks of hospitals and doctors
who agree to lower prices in return for more new customers.
The insurer has signed deals with two-thirds of the care providers it
hopes to include, Bertolini said, adding that
Aetna's exchange networks are a fourth to half
the size of its regular provider organizations. The
narrower the network, the closer Aetna's costs will be to lower rates
paid by Medicare rather than higher commercial reimbursement, he said.
Challenges to opening the health marketplaces include building complex
computer systems; persuading insurers to participate; running
federally managed exchanges in hostile Republican states; relying
on limited budgets to educate largely ignorant consumers; and
enrolling young, healthy members to finance the expenses of those with
pre-existing illness who will be first in line to join.
Health and Human Services Secretary Kathleen Sebelius says the
exchanges will be ready.
May 1, 2013:
LAW DAY, 2013
May 1, is Law Day in
the United States, and although it started out
as a Eisenhower era "cold war stunt" to counter
the "May Day" celebrations in many Communist and
western European nations, it has taken on a
force of its own, albeit
if little recognized by the American public.
Law Day was originally the idea of Charles S.
Rhyne, Eisenhower's legal counsel for a time,
who was serving in 1957-1958 as the president of
the American Bar Association. To dissuade
citizens from being inspired by the populist
tones of May Day, Eisenhower proclaimed May 1 to
be Law Day, U.S.A. in 1958. Its observance was
later codified into law by Public Law 87-20 on
April 7, 1961.
On February 5, 1958, President Eisenhower
recognized the first Law Day when he proclaimed
that henceforth May 1 of each year would be Law
Day. He stated "In a
very real sense, the world no longer has a
choice between force and law. If civilization is
to survive it must choose the rule of law."
Law Day is not a government holiday. In fact,
few outside the legal community in the United
States are even aware of the existence of Law
Day. To celebrate Law Day, many local bar
associations hold a luncheon, featuring speakers
who discuss topics such as justice or the
liberties provided for by the United States
Constitution. This year the theme of Law
Day, set by the American Bar Association, is
Dream: Equality for All" ... Ten
states have recognized the rights of their gay,
lesbian and transgendered citizens, 40 others
have not ... it remains but a dream in most of
April 30, 2013:
Doctors Warned About Using "Social Media"
A new social media policy urges doctors to
"pause before posting"
and to not "friend" patients online.
The position paper, issued by the American College of Physicians (ACP)
and the Federation of State Medical Boards, was released at ACP
Internal Medicine 2013 in San Francisco, California, and was
simultaneously published online April 11 in the Annals of Internal
It addresses the
benefits and drawbacks of a number of online interactions, and
A recent survey of state medical boards showed that 92% reported at
least 1 online violation of professionalism that led to a major
action, such as license revocation (JAMA. 2012;307:1141-1142). Those
researchers were surprised to find that problems ranged across every
age group and demographic.
"We decided to work with the ACP to get this
information out to all physicians,"
Humayun Chaudhry, DO, president and
CEO of the Federation of State Medical Boards and one of the authors
of the position paper, said at a news conference. The resulting
position paper "is valuable to every
physician across the country," Dr. Chaudhry added.
are legitimate ways that physicians can engage in social media with
"It's really the beginning of a conversation. The online media world
is constantly changing. There are legitimate ways that physicians can
engage in social media with patients," added Dr. Chaudhry.
Email and electronic communication should be
restricted to individuals with whom the physician has an established
"This has happened to me and to many of my
colleagues: A patient sends an email out of the blue. It may be
someone we have an established relationship, but not a healing
relationship, with. They may ask very poignant questions about
themselves or a loved one. We need to be very careful about the type
of information that we provide. It places us at a professional and
ethical risk," said David Fleming, MD, chair of ACP
Professionalism, and Human Rights Committee.
One challenge is ensuring confidentiality.
Posts on Facebook, Twitter, and other social media sites can be widely
read, and even emails can be forwarded.
"We have to assume that any time we send
electronic communication, it's not just the patient that's going to
see it.... So we have to be careful about the kind of information we
provide, particularly private and confidential information that the
patient may not want shared," said Dr. Fleming.
Many institutions have set up portals for confidential interactions
with patients. The position paper urges
physicians to use such options rather than standard social media or
personal Web sites. "A post can be
taken out of context and go viral...and will last in perpetuity. I
don't think every physician is aware of that," Dr.
Social media enables communication with "a
larger audience than you might be able to in a practice,"
which can be helpful when disseminating information on issues such as
public health reform or vaccines. However,
"you have to realize that any comment you make...can have a life of
its own and might spread in a fashion you hadn't intended.
"Our advice is to pause before posting,"
said Dr. Chaudhry. Posts can be objective, such as referenced
health information, or subjective, such as opinions on matters of
Professional and Personal Personas
Finally, the position paper provides specific recommendations for
users of social media.
First, physicians should keep their
professional and personal personas separate; they should
not "friend" or contact patients through personal social media.
Establishing a professional profile so that it "appears" first during
a search can provide some measure of control that the information
patients read is accurate. Email and other
electronic communications should only be used by physicians within an
established patient–physician relationship and with patient consent.
When a physician is approached through electronic means for
clinical advice in the absence of a patient-physician relationship,
the individual should be encouraged to schedule an office visit or go
to the nearest emergency department.
should never be used for medical interactions, even with an
established patient, except with extreme caution and consent from the
patient. It should be remembered
that trainees can inadvertently harm their future careers by not
posting responsibly or actively policing their online content.
Educational programs that stress a proactive approach to maintaining
an online reputation are good forums to introduce potential
April 29, 2013:
Hospital "Cost-of-Living" for F/Y 2014
Negligible; Quality Bonuses and Penalties
Hospitals would get a fairly skimpy
net rate increase of
0.8 percent in fiscal 2014, under a
rule that the Centers for Medicare and Medicaid
posted late last week. In addition,
that large of an
increase would go only to hospitals that
successfully participate in a quality
reporting program developed by CM2,
according to documents released by the agency.
Those hospitals that are not successful would
get slapped with a penalty equal to a
2-percentage-point reduction in that proposed
payment increase. In addition, the
proposal reveals how CM2 plans to
administer a new patient safety program that's
part of Obamacare and will be launched in fiscal
These quality-focused provisions and others
continue the Obama
administration's stress on trying to more
closely link hospital payments to how well
institutions perform, rather than simply the
number of patients they treat.
"The new policies in this proposed rule support
hospitals' important work and the people with
Medicare who depend on them by promoting safety
and care improvement," said
Marilyn Tavenner, acting CM2
administrator, in a statement.
Compared with fiscal 2013, total inpatient
hospital payments for both operating and capital
payments in fiscal 2014 are projected to
increase by $27 billion. The proposal would
apply to about 3,400 acute-care hospitals as
well as 440 long-term-care hospitals and would
be effective for discharges on or after October
1. Long-term-care hospitals would receive a
payment increase of 1.1 percent under the
proposal, or about $62 million in all.
The proposed 1,424-page
rule will be published in the Federal Register
on May 10.
CM2 sets rates in advance for
hospitals based on patients' diagnoses and the
severity of their illnesses. Overall, the
increase would be 0.8 percent. That is computed
by starting with a 2.5 percent increase to
account for increases in the costs of goods and
services used by hospitals.
But that's then
decreased after CM2 takes into
account various adjustments, including
reductions required under the health care law
and for earlier overpayments due to
documentation and coding changes.
Those overpayments of $11 billion are to be
recovered during the next three years as well.
leaves a big imprint on the proposal. For
example, more money is being tied to how well
hospitals perform on quality measures. This is
part of what's called the
Value Based Purchasing program.
The proposal increases
to $1.1 billion the pool of money from which
payments are taken to pay facilities that
perform well on quality scores. The proposal
creates that pool by reducing Medicare inpatient
hospital payments to all facilities initially by
1.25 percent. Facilities that perform well get
all that back and more and would end up with a
net increase of 0.8 percentage points.
Another big change relates to provisions of the
overhaul that lower payments if patients in a
hospital acquire an infection or the facility
performs poorly on other patient safety
measures. Infections and unsafe forms of care
fall under the rubric of "hospital-acquired
conditions." The proposal outlines a framework
for starting these payment changes in fiscal
2015. "Under this
program, hospitals that rank in the
lowest-performing quartile of hospital acquired
conditions would be paid 99 percent of what they
would otherwise would be paid" in
fiscal 2015, the proposed rule says.
Two sets of measurements would be applied. One
consists of six patient safety measures.
These include the
incidence of pressure ulcers, or bed sores; the
"volume of foreign objects left in the body;
"the rate of "accidental puncture and
laceration"; and post-operative pulmonary
embolism, among others. The second
set of measures relates to infections.
They include catheter
associated urinary tract infections and blood
stream infections associated with the "central
line" used to stream medications into the
patient through insertion in the neck or chest.
The proposal also increases penalties in fiscal
2014 for certain preventable hospital
maximum reduction under this program was 1
percent of payments in fiscal 2013. In fiscal
2014, the proposal increases that to 2 percent.
The readmission penalties currently relate to
heart attack, heart failure, and pneumonia. CM2
is proposing to add two new readmission measures
in fiscal 2014 that would be used to dock
payments in fiscal 2015. They are readmissions
for chronic obstructive pulmonary disease and
for hip/knee arthroplasty.
April 29, 2013:
on Medscape's Annual Physician Income Survey
Physician Compensation by
Where you practice affects your income. This
year, as in Medscape's previous two Compensation
Reports, physicians in the North Central region
earn the most ($259,000). The region comprises
Iowa, Missouri, Kansas, Nebraska, South Dakota,
and North Dakota. Also similar to prior years,
physicians in the Northeast Region earn the
least ($228,000).There's less managed care in
the North Central region, fewer doctors, and a
lower cost of doing business. The opposite is
true in the Northeast.
This leads naturally
to a couple of questions: Does this mean that
"managed care" actually does hold costs down?
Does having more
physicians per capita (as in many other 1st
world countries) lead to more competition and
lower prices? Or is this simply the
result of lower operating costs and thus higher
profit margins? In my opinion, all three
questions need more analysis, especially the
number of physicians per capita as that would
lead to a serious
discussion as to why the USA has relatively
speaking so few physicians per 10,000 and
whether the medical profession is engaged in
antitrust deliberately holding down the number
of physicians to keep competition down and
Compensation by Practice Setting
Physicians in group practices -- both
single-specialty ($265,000) and multispecialty
($260,000) -- were among the top earners, which
was similar to last year's survey results.
Hospitals moved up as high payers; this year,
physicians working in hospitals earned a mean of
$260,000, compared with $225,000 in last year's
One change worth noting: In last year's report,
physicians in solo practice earned more
($220,000) than did employed physicians
($194,000). Not so in this year's report: The
income of solo practitioners ($216,000) has
declined and is lower than that of employed
physicians, who experienced an increase in
All of this leads to some more questions:
What does this sharp
increase in employed physician salaries foretell
for the many new Accountable Care Organizations
being established as part of Obamacare?
As hospitals compete for physicians,
particularly in larger metropolitan areas, will
these sharp salary increases continue? And
finally, what might be the ultimate impact of
the trend by 3rd party payers, including
Medicare, to bundle payments to all the
providers treating a patient for a condition,
hospital, lab, physician, et al?
Participation in Various
There's a dramatic change in the number of
physicians who are becoming involved in
Accountable Care Organizations (ACOs). The focus
on ACOs as a care-delivery and cost-containment
method is making an impact.
But whether that impact on costs is positive or
negative remains to be seen.
In Medscape's 2012 report, only 8% of physicians were either in an ACO
or planned to be in an ACO within a year. However, in 2013, 24% of
respondents were either in an ACO or plan to be in one in the coming
The percentage of physicians in a concierge or cash-only practice
increased very slightly from the previous year, from 4% to 6%.
better question Medscape needs to survey next year is how many
physicians moved to concierge care and/or and cash only and
whether they have continued such practice
exclusively, or whether they have resumed taking some insurances
and/or have gone back to a more traditional practice to maintain
discussion of doctor incomes and concierge medicine confronting
average American family incomes go to a conversation I created between
myself and Prof. Uwe Reinhardt of Princeton University.
Do Physicians Feel Fairly Compensated?
And for all of this, earning over 5 times the average American income,
a slight majority of the greedy ba$$rds think they are underpaid.
Jeanne's Weakly Lawyer Jokes for
the Week of April 29, 2013
I've posted my
"weakly" lawyer jokes for the week of April 29,
2013 on my humor page ... a story about the
origins of LEGALESE and whether this is a
separate and distinct language from English ...
along with a few cartoons ...
April 26, 2013:
Medscape's Annual Physician Income Survey
Physician Compensation in 2012
By and large, physicians are still doing well
and income is on the rise overall. About one
third (8) of the specialties surveyed each
earned a mean of over $300,000 annually. This
year's 3 top-earning specialties -- orthopedics,
cardiology, and radiology -- were the same as in
Medscape's 2012 Compensation Report, although
last year radiology and orthopedics tied for the
On the other side of the scale, HIV/ID dropped
to bottom position this year, which was last
year occupied by pediatrics.
For employed physicians, compensation includes
salary, bonus, and profit-sharing contributions.
For partners, compensation includes earnings
after tax-deductible business expenses but
before income tax. Compensation excludes
non-patient-related activities (eg, expert
witness fees, speaking engagements, and product
Who's Up, Who's Down Since 2011?
Most specialties reported income increases
ranging from modest to significant. Orthopedic
surgeons showed the highest increase, while
endocrinologists and oncologists noted a slight
"As the economy has
gotten somewhat stronger, many people who have
been putting off elective procedures are now
getting them," says Tommy
Bohannon, a vice president at Merritt Hawkins, a
physician recruiting company in Irving, Texas.
"As the population
ages, more knees and hips are giving out and
need to be fixed." As far as the
9% increase for internists and 5% increase for
"there's an intense doctor shortage, and health
care reform is giving them a bit of a boost for
Medicare patients," says
Do Men or Women Earn More?
There's still a large gap between male and
female physicians, although that gap is narrower
in primary care. Overall, male physicians earn
30% more than women; in primary care that gap is
One contributing factor involves choice of
specialties. There are fewer women in some of
the higher-paying specialties. For example, in
orthopedics, only 9% of the survey respondents
were women, whereas in pediatrics, 53% of survey
respondents were women.
"As more doctors
start working regular set hours for large health
systems, there's little variance in income based
on sex," Judy Aburmishan, partner
in FGMK, LLC, a Chicago firm that represents
physicians and other providers
The United States Compared to Other 1st World
Doing a direct comparison of remuneration across
different countries is tricky because the same
salary may allow for different standards of
living in different places.
But here are two possible ways to think about
these comparisons, taken from a 2007
Congressional Research Service report entitled "U.S.
Health Care Spending: Comparison with Other OECD
One way to compare cross-country data is to
adjust the salaries for purchasing-power
that is, adjusting the numbers so that $1,000 of
salary buys the same amount of goods and
services in every country, providing a general
sense of a physician's standard of living in
each nation. Another way is to look at how a
doctor's salary compares to the average national
in that doctor's country -- that is gross
domestic product per capita.
April 24, 2013:
The Public Option is Dead. Long Live CO-OPs!
you ever wanted to know about CO-OPs can be found in this report from
Politico. What? You didn't even know there was such a thing as
a CO-OP? And, BTW, what does the acronym CO-OP stand for? Well,
remember way, way back to 2009 when the legislation that
became Obamacare was first being introduced,
the left argued strongly for a public option ... that is a program run
entirely by the government -- in effect Medicare for all!
any such provision was not strong enough to overcome threats of GOP
filibusters, especially since there were 8-10 Democratic
senatecritters who weren't ready to jump on that bandwagon. In the
real politik negotiations that then took place (politics being defined
as the "art of the possible")
option option was dropped, but in its place as a poor distant cousin
was something called Consumer Operated and Oriented Plans
... and in the report below, Politico explains it all to you,
interrupted only now and then by my own comments, a little sarcasm and
a couple of cartoons.
The public option is dead. Long live CO-OPs!
chant from mostly grass-roots health reformers in 24 states, backed by
billions of dollars in government loans, who are gearing up to offer
alternatives to commercial insurance plans on the exchanges next fall.
who are starting up these Consumer Operated and Oriented Plans speak
earnestly about a CO-OP "movement" that's ready to break out onto the
a historic opportunity it is to inject into the
marketplace a member-governed, nonprofit health
carrier that is building from the ground up,
writing from a blank slate,"
said John Morrison, a former Montana insurance
commissioner and president of the National
Alliance of State Health CO-OPs.
CO-OPs will have to compete with large established insurers that are
also hungry for the new exchange business under the health law.
Those insurers have provider networks in place, established
reputations and large marketing budgets. Most CO-OPs have had less
than a year and limited resources to mount their challenge.
remains to be seen whether CO-OPs can
effectively market their policies and services
to become self-sustaining,"
a recent brief from the Robert Wood Johnson
is a flabbergastingly enormous task,"
said Jan VanRiper, executive director of
"The oldest [CO-OP] has
been around for one year."
liberals' dream of a government public plan to compete with private
insurance under the federal health law was sacrificed during
negotiations, but what was widely considered a watered-down backup
option to fund these consumer-run plans has survived -- albeit
bloodied and diminished.
clear CO-OPs will be up and running in nearly half of the states this
fall, they would have had a much broader presence save for a provision
in the fiscal cliff deal that forbade the feds from contracting with
any CO-OPs that hadn't already signed loan agreements with the
burgeoning "movement" reeled at the cliff deal, which came just one
day after the Centers for Medicare & Medicaid
Services' Dec. 31
application deadline. More than 40 additional applications were
pending, some from organizations in major states like Florida, Texas
was a deal that was done quickly and quietly in
the dark for reasons other than saving money,"
Morrison said at the time. The cut, in his view,
"about the health
insurance giants attempting to eliminate
competition at the expense of millions of
Americans who will pay higher premiums because
of a lack of competition."
initially by $6 billion in the [Patient Protection and] Affordable
Care Act, the CO-OP
effort already had been cut to $3.4 billion even before the fiscal
cliff deal swept most of the remaining money off the table.
But CM2 had already contracted with
the 24 CO-OPs for about $2 billion in loans, which are unaffected, and
was left with 10 percent of remaining funds to administer the program.
cliff deal doesn't necessarily mean the program will be forever
confined to 24 states, CM2 has said. Some of the approved
CO-OPs want to expand to other states -- and CM2 can give
them loans to do so. So far, 13 CO-OPs have licenses to sell insurance
in 13 states, and most of the rest expect final approval in the next
few weeks. They have designed health plans, most have contracted with
provider networks and claims processors and are developing public
blocks CO-OPs from using loan funds for marketing but not educational
The government faces challenges in explaining the exchanges and
encouraging enrollment; the CO-OPs will also have to explain what
these new consumer-owned insurance offerings are and how they differ
from the other exchange options.
Baker, CEO of the Arches Health
Plan, a CO-OP in Utah, plans to market to the "young
young adults who are often uninsured. Health plans want to get them
into the market. Baker plans to offer a low-deductible, catastrophic
policy and a "Healthy
option that will offer first-dollar accident benefits and no copays
for some office visits.
hope the appeal of a nonprofit insurer that will use any extra
revenues to lower premiums or improve benefits
will appeal to consumers used to thinking about insurance companies as
here to reach out to the uninsured,"
"We are coming back to centering it on the
will succeed in capturing a significant piece of the new market from
traditional insurers is an open question.
CEO of the Connecticut CO-OP HealthyCT, said his state hasn't licensed
a new insurance company in about 30 years. Lalime has contracted with
a network of 7,000 physicians in the state and plans to compete
aggressively for individuals and small businesses on and off the
exchanges, but he doesn't expect to have the big-ticket business with
self-insured employers right away.
a small organization -- a startup -- to walk out
the door and say I'm going head to head with
Aetna, probably isn't the smartest strategic
he said. But small businesses that have been
underserved in the past may be easier to reach.
[The Real Politik According to Jeanne: The for-profit
health insurance industry led the charge to delete any public option
from the final version of Obamacare,
after all at
stake for them were the billions in profits they hoped to garner from
having 30-40 million more Americans insured in their plans.
would they be able to pay their senior executives the multi-million
dollar bonuses to which they had become so addicted?
salaries and perks, corporate jets and near billion dollar stock
options might have to give way if they had to compete with a
government plan that held overhead costs down to the same 4-6% that
has been the average for Medicare, instead of the 18-24% overhead
costs standard in the for-profit sector.
Even these new watered-down CO-OPs might also be a problem if they
actually succeed, keeping administrative overhead including stock
pay-outs and executive pay in check through meaningful competition.
The private for-profit health insurance industry has no incentive to
cut costs as long as they have been able to raise premiums at near
double-digit rates year after year after year and is lobbying its
friends in Congress to keep the gravy train rolling.]
Hickey, CEO of New Mexico Health Connections, says that
97 percent of
employers in his state are small businesses that would qualify for tax
in the health law if they provide coverage to employees. Most do not
now, he said,
in a state
that has among the highest uninsured rates in the country -- 23
to the challenge of competing with large, established insurers, CO-OPs
are also still contending with skeptical lawmakers on the Hill. Some
Republicans have criticized CO-OPs as Solyndra-like giveaways to Obama
administration allies, in particular the Freelancers
Union, headed by Sara Horowitz, which is sponsoring CO-OPs in three
House Oversight and Government Reform Committee, chaired by
Housecritter Darrell Issa (T/R-Calif.), has asked 12 CO-OPs for a
detailed accounting of how they have spent their federal loans so far.
He cites an Obama administration estimate that taxpayers could lose up
to 43 percent of money given out in loans. He has also asked CM2
for documents relating to how it approved CO-OPs, saying the agency
has been opaque in administering the program. Asked for comment on the
investigation, a spokesperson said only that the committee had
received some documents and was considering how to proceed.
the NASHCO president, says
policymakers misunderstand the funding.
of the funding comes in 15-year, low-interest loans meant to ensure
that the upstart insurance plans can meet the financial solvency
requirements of state regulators and to guarantee they can pay any
claims newly covered patients may incur.
"Many policymakers and policy analysts think this money is being
spent, but it isn't being spent,"
"In order to be an insurance company, you have
to keep the gas in the tank."
Congressional scrutiny and competition aside, many of the CO-OP
"people who have hit their head against the wall with the system for
20 or 30 years,"
Miltenberger, a board member of the Montana CO-OP who runs a benefits
management consulting firm.
jumping at the opportunity to do something new, something the big
insurers with legacy computer systems and contracts aren't nimble
enough to do,
"You're going to see a lot of innovation."
April 22, 2013:
Health Insurance Exchanges In Switzerland and The Netherlands Offer
Five Key Lessons For The Operations Of US Exchanges
Since the 1990s some European countries have had regulated health
insurance exchanges or have incorporated elements of exchange markets
into their health systems. Health reforms
in Switzerland and the Netherlands in 1996 and 2006, respectively,
created managed competition in the countries' health insurance
markets, which are somewhat analogous to the US state and federally
operated health insurance exchanges scheduled to begin operations in
2013 under Obamacare. Looking at the Swiss and Dutch
experience with their exchanges offers specific lessons for the US in
running the Obamacare market places.
which provide premium
adjustments intended to compensate health plans for enrolling people
expected to have high medical costs -- need to be
sophisticated and continually updated. One of the issues that led to
the downfall of the "Hillarycare" initiative by the Clinton
Administration in 1993-94, was effort to limit
particularly by very sophisticated for-profit insurers who sought to
enroll only healthy people in their plans leaving expensive care to
non-profits and the government, maximizing their profits in the
process. The Clintons spent about 800 pages in their 1100
page law addressing just this issue with overly complex formulas for
adjustment. Obamacare's exchanges must be less complex and more
Enrolling Most Eligibles
it is important to determine why people
eligible for coverage don't enroll and to craft responses that will
overcome enrollment barriers. Trust me on this, I am a
lawyer after all, red state governors and state legislatures are not
anxious to do anything to help Obamacare get off to a good start. If
roadblocks can be thrown in front of those eligible to sign-up through
one of the federally-operated exchanges, they will lie down in the
roadway to block passage if they can.
Simplify the Process
particularly the process for applying for subsidies must be as simple
as possible for low income, under-educated people and families to
understand and accept. No more governmentese ... use small, easily
understood words, save paper (and trees).
Balancing the Bargaining Power
insurers will need bargaining power similar to that of providers, and
vice-versa to create a level playing field for negotiating about
prices and quality of services, and interim
cost containment measures may be necessary.
Transparency and Information
insurers and consumers alike will need
meaningful information about providers' costs and quality of care so
they can become prudent purchasers of health services,
since managed competition among health plans by itself will not
substantially drive down health costs.
Expectancy at birth (m/f):
Doctors per 10,000 people
Health spending as a percentage of GDP
Expenditure on health per capita
Weakly Lawyer Jokes for the Week of April 22, 2013
Tales of the Court ... a Few Judge
A lawyer went to Heaven after he dies, and was warmly welcomed by St.
Peter. "We get so few of you around here, and each honest advocate is
a pleasure." The lawyer, who had maintained a reputation for
effectiveness as a plaintiff's lawyer before the Federal bar, was
pleased, but still somewhat concerned.
Study of Massachusetts Connector Exchange Raises Issues of Obamacare's
Cost to Lower Income Families
six months, open enrollment for the Patient
Protection and Affordable Care Act's health insurance marketplaces
will begin around the country. Massachusetts' experience
has proven to be instructive. In 2006, the state created an insurance
exchange, called the Commonwealth Health
Insurance Connector Authority. The
Connector, which began offering
unsubsidized commercial insurance products in 2007, now provides an
array of options for consumers, including
subsidized coverage to people with incomes below 300 percent of the
study, released April 17 by Health Affairs, surveyed 393
families in unsubsidized Connector plans. It found that 38 percent of
surveyed families reported financial burden associated with their
health care and 45 percent reported higher-than-expected out-of-pocket
costs. This study is one of the first to
evaluate the prevalence of and risk factors for financial burden and
unexpected costs among families in unsubsidized health insurance
obtain their data, the authors conducted a cross-sectional survey of
families enrolled through the Massachusetts Connector in
unsubsidized Commonwealth Choice
plans from Harvard Pilgrim Health Care, a large nonprofit insurer that
has one of the largest market shares among commercial carriers in the
Connector. Between April and October 2010 the authors conducted a
survey by mail then followed up by phone, studying families both with
and without children.
Although exchanges may expand access to coverage,
"those with lower incomes, increased
health care needs, and more children will be at particular risk after
they obtain coverage through exchanges in 2014," the
authors conclude. "Given the complexity of
health insurance choices and consumers' limited understanding of
health insurance benefits, policy makers need to reach out and
simplify information to promote optimal plan choices for the people."
study is available to Health Affairs subscribers at
The abstract of the study
"Health insurance exchanges created under the Affordable Care Act will
offer coverage to people who lack employer-sponsored insurance or have
incomes too high to qualify for Medicaid. However, plans offered
through an exchange may include high levels of cost sharing. We
surveyed families participating in unsubsidized plans offered in the
Massachusetts Commonwealth Health Insurance Connector Authority, an
exchange created prior to the 2010 national health reform law, and
found high levels of financial burden and higher-than-expected costs
among some enrollees. The financial burden and unexpected costs were
even more pronounced for families with greater numbers of children and
for families with incomes below 400 percent of the federal poverty
level. We conclude that those with lower
incomes, increased health care needs, and more children will be at
particular risk after they obtain coverage through exchanges in 2014.
Policy makers should develop strategies to further mitigate the
financial burden for enrollees who are most susceptible to
encountering higher-than-expected out-of-pocket costs, such as
providing cost calculators or price transparency tools."
April 18, 2013:
Society of Actuaries "Rate Shock" Study --
Biased, Self-Serving and Error-Filled ???
Few aspects of
the Patient Protection and Affordable Care Act are more critical to
its success than affordability, but in recent weeks experts have
predicted costs for some health plans could soar next year. Now health
law supporters are pushing back, noting close ties between the
actuaries making the forecasts and an insurance industry that has been
complaining about taxes and other factors it says will lead to rate
shock for consumers. (I
have posted numerous FAQ about this report, see:
actuaries in this country -- what percentage are employed by insurance
Senatecritter Al Franken, a Minnesota Democrat, asked an actuary last
week at a hearing of the Committee on Health, Education, Labor and
Pensions. The committee was discussing a study published last month by
the Society of Actuaries (SOA)
predicting that, thanks to sicker patients joining the coverage pool,
medical claims per member will rise 32 percent in the individual
plans expected to dominate the Obamacare exchanges next year. In some
states costs will rise as much as 80 percent, the report said.
The witness was unable to answer Franken's question, but the
senatecritter made his point. Insurance is why actuaries exist.
The industry and the profession are hard to separate. Using
predictive math, actuaries try to make sure insurers of all kinds
don't run out of money to pay claims. Many
actuaries also work for consultants whose clients include insurance
companies. Undisclosed in the SOA report was the fact that
about half the people who oversaw it work for the health insurance
industry that is warning
about rate shock. The chairman of society committee supervising
the project was Kenny Kan, chief actuary at Maryland-based CareFirst
Others on the committee work for firms with insurer clients.
The report included committee members' names but not their
"portray themselves as this nonpartisan
think tank when in fact everything about the study is by people who
have a vested interest in the outcome of the study,"
said Birny Birnbaum, executive director of the Center for Economic
Justice, a Texas group that advocates on behalf of financial and
perform the research, the society hired Optum, sister company of
UnitedHealthcare, the country's biggest private health insurer, and
an insurer that has a long history of
"troubles" when it comes to how it has maximized its profits,
paid its executives enormous bonuses,
and abused the public trust in
covering or not-covering health insurance
claims and reimbursing providers. Society
spokeswoman Kim McKeown said the project was overseen by credentialed
actuaries "from a cross-section of
industry organizations" and was
"exposed for review and comment to the broad health care
supporters of the health act worry about premium increases next year,
when many of its provisions take effect. But the debate fits into a
larger discussion about actuaries' public role.
Actuaries are self-regulated, which some say
makes them unaccountable. Their
associations set conduct standards and investigate malpractice in
confidential proceedings. During the previous two decades
the Actuarial Board for Counseling and Discipline, which works with
the Society of Actuaries, has recommended
public disciplinary measures for fewer than two people a year,
according to its
annual report. Other professions, including those for health
professionals, lawyers, and even beauticians and morticians are
subject to much more publicly scrutinized reviews and, on a percentage
basis, report far more disciplinary actions than do actuaries.
One either has to assume that actuaries are
intrinsically more honest than other professionals, or that their
profession looks the other way in an effort to protect itself and its
members from criticism or question.
actuaries play many public roles. By calculating the adequacy of
employer pension contributions they affect the retirement of millions.
And they'll act as virtual referees for important aspects of
implementing the health act. "I have a
great deal of respect for actuaries," said Timothy Jost,
a law professor at Washington and Lee University and health law
expert. "But I do think they often end up
in ... situations where the interests of the public and of their
employers might be in conflict."
the Obama administration has developed a
calculator plans must use for determining whether insurance plans
meet the health act's standards for benefits and value, recently
finalized regulations give insurer-employed actuaries the
power to override it by substituting one benefit for another.
Insurance company actuaries calculate rates when plans file with
states, which act as the industry's primary regulators.
Charged with making sure the prices are
justified, state insurance departments often have far less actuarial
expertise at their disposal than the insurers. For example,
the Vermont Department of Financial regulation
"does not have actuaries on staff," a spokeswoman
said. "We outsource our review of rate
filings." The situation in 2011 was the same in a dozen
other states, according to information compiled by the National
Association of Insurance Commissioners.
supporters complained that that the actuary society's study predicting
a 32 percent increase in claims didn't
account for key factors, including the potential for competition to
lower prices, the subsidies people will receive to buy the coverage
and the fact that next year’s plans will be more generous than this
actuaries' predictions are not significantly better than, say, those
of the Weather Channel. Recent premium increases of 50 percent and
higher for nursing home insurance reflect a previous under-calculation
of costs by actuaries. Actuarial models
didn't work especially well at calculating subprime mortgage risk a
few years ago, either.
A settlement in New York last month revealed cases in which
actuaries overestimated liabilities and a mortgage insurer paid out as
little as 20 percent of collected premiums in claims.
and Birnbaum want representatives of consumers and state insurance
departments to be included on the actuaries' discipline board. In
proceedings at the insurance commissioners' group,
consumer advocates also want the board to
state that actuaries' first duty is to the public whenever they
furnish calculations to state or federal regulators and to tighten
conflict-of-interest standards for firms producing work relied on by
both insurers and regulators.
"There is always room for improvement in everything,"
said Karen Terry, an actuary for State Farm and the vice
president of professionalism at the American Academy of Actuaries, an
umbrella group that works with the discipline board and groups such as
the SOA that represent professional subspecialties such as health or
pension actuaries. "We're open to that
April 15, 2013:
Red States and TeaParty Republicans Block
Obamacare Implementation and Funding
Frustrated by red state governors and legislatures refusing to
implement major parts of the new health care reform legislation and
with Tea Party House Republicans and filibuster-loving Tea Party
Senators continuing to block the funding for the program, federal
officials have been forced to scramble to cobble together necessary
monies to continue preparing for next January’s roll-out of major
provisions in the law. Last week the Obama administration revealed long-withheld
details about how they are funding the creation of the insurance
"exchanges" so critical to the success of the health care law and its
coverage expansion provisions. Health and Human Services
(HHS) Department officials said they expect to spend some $1.5 billion
in fiscal 2013 on the federal exchange.
They are piecing together funding from sources such as a Public
Health and Prevention Fund created under the law (PL 111-148, PL
"non-recurring expenditures" account and
These newly revealed details about where HHS is finding the money
could spark attempts by Republicans to shut off those financing
sources in fiscal 2014, which starts
October 1, just as the operations of the exchange are scheduled to
start. Tea Party Republicans including Senatecritters Orrin G. Hatch of
Utah have repeatedly asked for such details. Hatch criticized Marilyn
Tavenner, the acting administrator of the Centers for Medicare and
Medicaid Services, for not providing the information at her
confirmation hearing last week.
HHS hopes that Congress will give it the $1.5
billion for fiscal 2014 and that it won't have to keep cobbling
together money from other sources. Both are extremely iffy
propositions given the continued obstinacy and procrastination of the
Tea Party Republicans who vowed to use every tool at their disposal to
stop Obamacare in its tracks.
HHS officials said at a recent budget briefing that they need a total
of $2 billion next year to operate the federal marketplace -- to be
-- including the $1.5 billion from Congress. HHS will receive an
estimated $450 million in fees on insurers that already have been
promulgated under the law.
"We need to get that $1.5
[billion] in budget authority from the Congress," said Ellen Murray, assistant HHS secretary for financial
resources, at a press briefing on the administration's fiscal 2014 HHS
budget proposal. Asked about the chances of getting such
implementation funding from lawmakers, HHS Secretary Kathleen Sebelius
"This is an ongoing
conversation with Congress. ... As this act is fully implemented and
Americans begin to take advantage of the benefits, I'm hopeful that
Congress will see that this is the law of the land, the Supreme Court
has ruled, we intend to implement the law, and millions and millions
of Americans are looking forward to full implementation," she said.
Murray said the $1.5 billion this fiscal year has come from these
sources: what remains from $1 billion that was allotted under the law
for its implementation;
use of the CM2 administrative budget; the
"non-recurring expenses fund, which is authority we have to use
past-year dollars for IT investments"; and
"the secretary's authority to transfer limited
sums of money." Specifically, Murray said, $235 million is coming from the
original $1 billion in implementation money, $450 million from the
non-recurring expense fund and $116 million from the secretary's
authority to transfer funds.
finalizing the final dollars," she said. Asked to elaborate on the nature of the non-recurring
expenses fund, Murray said it is
"a fund which was set up by the appropriators in
2008. Social Security, many other agencies have such a fund, which
enables an agency to use dollars from prior years that are no longer
available for obligation, for one-time IT and real estate
Asked whether HHS would have access to that fund in fiscal 2014,
"We are using the fund for the first time
because authority began in 2008, and as many of you may know, funds
are available often for five years, so most of the money that we know
is definitely available [will] come, we don't have projections yet for
what might be available next year."
Murray also said that an undisclosed amount is coming this fiscal
year from the Public Health and Prevention Fund. Senatecritter Tom
Harkin, D-Iowa, who secured that funding in the health care law,
recently was adamant in saying that money for the fund would not be
used for exchanges in fiscal 2014. However, Murray served for many
years as an aide to Harkin in his capacity as chairman of the Senate
Labor-HHS-Education Appropriations Subcommittee. The federal exchange
is the mechanism established by the law to expand coverage of the
uninsured in states that refuse to create their own such marketplaces
-- and there are many.
Twenty-six states have declined to play any role in creating their own
exchanges, which means their uninsured residents must rely on the
federal exchange. An additional seven
states will rely at least partially on the federally operated
marketplace under agreements with HHS to open
upshot is that in much of the country, make-or-break functions of the
health law will have to be performed by the federal exchange --
assuming it will have the money to do them.
These include determining eligibility for coverage, establishing
individual income levels for purposes of setting subsidy amounts,
steering the uninsured to Medicaid coverage and enrolling people in
April 15, 2013:
Five Things the Obama-Proposed Budget Would Do to
Higher Cost Sharing for New Medicare Beneficiaries: In
2017, 2019 and again in 2021, new Medicare beneficiaries would have to
pay an additional $25 for their Part B deductible, for a three-year
total of $75 to be added on to the cost of the Part B premium, which
in 2013 is $147. The administration says the change would
"strengthen program financing and
encourage beneficiaries to seek high-value health care services."
Seniors advocates say it's an additional cost to people already
struggling on fixed incomes. In 2012,
nearly half of Medicare beneficiaries had annual incomes of below
starting in 2017, Obama's plan would require new Medicare
beneficiaries to pay $100 for five or more home health care visits
that are not preceded by a stay in the hospital or another medical
facility, such as a nursing home or a rehabilitation hospital.
Home health care is one of the few areas in
Medicare that does not have cost sharing, and its rapid
growth in recent years has led panels like the Medicare
Payment Advisory Commission (MedPAC) to recommend beneficiary cost
Beginning in 2017, new beneficiaries who purchase supplemental
insurance, known as Medigap, with particularly low cost-sharing
requirements -- such as "first-dollar"
coverage -- will face a surcharge equivalent to approximately 15
percent of the average Medigap premium. The
thought is that more generous
Medigap plans encourage overuse of services, but seniors
rely on these generous plans to shield them from unanticipated costs.
Baker, president of the Medicare Rights Center, said that Medicare
proposals that "increase deductibles and
co-pays, and tax Medigap plans that ensure financial security, must be
Wealthier Beneficiaries Pay More: Current
law (enacted by Republicans as part of the Medicare Modernization Act
of 2003) already requires individual beneficiaries whose incomes are
$85,000 and above ($170,000 and above for couples) to pay a larger
share of Medicare Part B
(outpatient services like doctor visits and laboratory services) and
Part D (prescription drugs) premiums. While
most beneficiaries pay 25 percent of their Part B premiums,
higher-income beneficiaries pay between 35 to 80 percent, depending on
plan would increase the lowest income-related premium to 40 percent
and cap it at 90 percent. His plan would also maintain the current
income thresholds until a quarter of Part B and Part D beneficiaries
are paying the higher income-related premiums.
In a 2012 analysis, the Kaiser Family Foundation found that if the
proposal to have a quarter of all beneficiaries pay the higher
premiums were implemented last year, beneficiaries with incomes at or
above $47,000 for individuals and $94,000 for couples would be paying
higher income-related Medicare premiums.
Obama administration says the proposal would help improve Medicare's
financial stability by reducing how much
the government spends on Medicare for beneficiaries who can afford to
pay more. But the Center for Medicare Advocacy fears asking
higher income people to pay a greater share of premiums
"might lead to more people choosing not to
participate in Medicare. Fewer participants in [Medicare] B and D
would result in increased costs for the remaining participants."
Doughnut Hole Closing Faster, Higher Drug Rebates for Low-Income
Obama's budget plan would close by 2015 -- instead of 2020 as
mandated by the health law -- the "doughnut hole,"
that gap in Medicare prescription drug coverage where seniors pay the
full cost of prescriptions until they hit a catastrophic cap.
This acceleration would be financed by
increasing the current 50 percent discount that the drug makers give
to beneficiaries in the "doughnut hole" to 75 percent starting in 2015.
Beneficiaries would be responsible for the remaining 25 percent of
drug costs. Drug makers oppose raising the discount amount.
president's proposal also alters drug costs for the nine million
low-income Medicare beneficiaries who qualify for both Medicare and
Medicaid. These people, known as "dual eligibles," used
to get their drug coverage from Medicaid, the shared federal-state
health insurance program for the poor and disabled. And drug makers
returned back to Medicaid in the form of rebates part of the cost of
drugs for those beneficiaries, just they do now for current Medicaid
of the creation of the unfunded Medicare Part D prescription drug
program (established under a Republican-controlled Congress in 2003),
the drug coverage for "duals" shifted to Medicare.
But the rebates that Medicare Part D plans
negotiate are not as generous as those that drug makers previously
paid to Medicaid, the administration says.
Part D plans also pay higher prices for drugs
than Medicaid does. The administration's proposal
would require drug makers to pay the
difference between rebate levels they now provide to Part D plans and
the Medicaid rebate levels.
statement the Pharmaceutical Research and Manufacturers of America,
said the rebate proposal would increase beneficiary premiums and
Provider Cuts: Hospitals
are none too happy about Obama's plans to cut their Medicare payments
for bad debt and graduate medical education
over the next decade. Medicare now pays
hospitals 65 percent of debts resulting from beneficiaries'
non-payment of deductibles and co-insurance after providers have made
reasonable efforts to collect the money. Starting in 2014, the
president's plan would decrease that amount to 25 percent over three
years, which the administration says would be closer to
private payers that typically pay nothing on bad debt. The reductions
would be in addition to those hospitals and other providers face as
part of the 2010 health law.
Beginning in 2014, the Obama plan also would cut by 10 percent
"add-on" payments to
teaching hospitals for graduate medical education. In its budget
document, the Department of Health and Human Services cites a MedPAC
finding that these additional payments
"significantly exceed the actual added patient care costs these
Hospital groups, however, maintain that the cuts to bad debt
reimbursement and medical education payments would weaken hospitals'
ability to provide care and to train physicians, nurses and other
Concerning payments to physicians, Obama's budget assumes that
Congress will once again pass a "doc fix"
to avert a scheduled 25 percent payment cut in 2014. Administration
officials say they want to work with Congress to find a long-range
solution to avert the annual
crisis over Medicare physician payments.
What Obama Left Out: The
president did not propose an increase in the Medicare eligibility age
from 65 to 67,
a savings mechanism favored by the GOP but assailed by some key
Obama propose combining the premiums beneficiaries pay for hospital
care (Part A) and outpatient services (Part B). Taking that step,
which has the support of
Republican leaders like House Majority Leader Eric Cantor,
T/R-Va., would reduce Medicare expenditures and lower beneficiaries'
costs for hospital care. But seniors who
mostly use Part B and don't go to the hospital often would pay more.
analysts wonder if these and other Medicare overhaul ideas could
resurface as part of a larger discussion that includes overhauling the
tax code and entitlements. "This is the
first time in this presidency that I have seen a chance at a
bipartisan budget agreement, so I am cautiously optimistic about
that," House Budget Committee Chairman Paul Ryan,
National Public Radio.
Ways and Means Committee Chairman Dave Camp, T/R-Mich., has said his
panel will hold a series of hearings to evaluate ideas including those
advanced by Obama and by his fiscal
overhaul commission. "Given the
bipartisan support for various reforms to these programs, there is no
reason we cannot roll up our sleeves and get this done,"
Camp said in a statement.
GOP and Obama have widely different views. House
Republicans' fiscal 2014 budget plan, for instance, would eventually
turn Medicare into a "premium support" plan that would give
beneficiaries a set amount for their coverage, which
Democrats oppose. Meanwhile, Obama has said
he'll agree to entitlement changes only if Republicans agreed to
higher revenues, which they steadfastly oppose.
Jeanne's Weakly Lawyer Jokes for the Week of of April 15, 2013
... a few Tax Lawyer Jokes
men's room, a tax lawyer, a corporate bond lawyer and a legal aid
lawyer were standing side by side using the urinal. ...
for the rest ...
April 13, 2013:
Would End SGR ... But
Hospitals Would Pay the Piper
President Barack Obama today released a proposed
$3.8 trillion budget for fiscal 2014 that would
shrink the federal deficit by $1.8 trillion over
the course of 10 years,
but not on the backs of physicians. Instead,
they are on the receiving end of some federal
For starters, Obama's deficit reduction, similar to that in the budget
plan approved on March 23 by the Democratic-controlled
Senate, (see below) would replace the
automatic, across-the-board cuts called sequestration that include a
2% decrease in Medicare reimbursement for physicians. In
addition, as in previous budget plans, Obama
would perform a "doc fix" on the sustainable growth rate (SGR) formula
for setting Medicare pay rates. That formula, hated by
organized medicine, will trigger a 24.4% cut in physician pay on
January 1, 2014, unless Congress steps in to prevent a collapse of the
federal program. Under the Obama plan,
physician pay rates would be frozen at their current level.
The administration supports several years of fee-for-service
"payment stability" that
would give the Centers for Medicare & Medicaid
more time to develop various pay-for-performance models from which
physicians eventually could choose. The goal is to
"provide predictable payments that
incentivize [sic] quality and efficiency in a fiscally responsible
way," the budget plan states.
Hospitals Foot the Doc Bonus Pay: As expected, Medicare spending gets
trimmed substantially -- $370 billion worth over the course of 10
years -- but the cuts come mostly at the
expense of hospitals, drug companies, nursing homes, and wealthy
seniors, who will be asked to pay higher premiums. Obama
refrained from raising the eligibility age for Medicare, an idea toyed
with in Washington, DC.
In addition to these and other spending cuts, the Obama budget would
trim the deficit by raising an additional
$580 billion in revenue over the course of 10 years, mostly by
eliminating tax loopholes and benefits for America's super-affluent.
Increased Funding for Mental Health, HIV/AIDS Prevention and
The Obama budget proposal --
which, like any other, requires Congressional action for any money to
be spent -- allocates $80.1 billion in discretionary funds
to the Department of Health and Human Services (DHHS), or almost $4
billion more than what was enacted in fiscal 2013. Here is where some
of that money would go:
- The Centers for Disease Control and Prevention
(CDC) would receive more than $30 million for a nationwide
system as well as research on the causes and prevention of gun
- DHHS would use $130 million for a new initiative to
teach teachers and other adults to recognize signs of mental illness
in young people, train 5,000 more mental health professionals to
serve students and young adults, and otherwise improve mental health
services for this group.
- Funding for the US Food and Drug Administration
would increase by $821 million to improve food and medical-product
(FDA funding has been down for years, especially for
food safety, since 2001, contributing to the increased number of
food recalls, "packing house" disasters and food poisonings in
recent years ... Congress hates to bite the food lobby that feeds it
- The CDC and the Health Resources and Services
Administration would receive an extra $30 million for HIV/AIDS
prevention and treatment activities.
Winners and losers in the president's plan made their feelings
"We are pleased that President Obama's
2014 budget recognizes the need to eliminate the broken Medicare
physician payment formula known as the SGR and move toward new ways of
delivering and paying for care that reward quality and reduce costs,"
said Jeremy Lazarus, MD, president of the American Medical Association
(AMA), in a press release. "The
president's proposals align with many of the principles developed by
the AMA and 110 other physician organizations on transitioning
Medicare to include an array of accountable payment models."
Rich Umbdenstock, president and chief executive officer of the
American Hospital Association, was not pleased.
"Today's proposal contains troubling
reductions to assistance to hospitals that help defray some of the
costs of caring for low-income seniors known as bad debt,"
Umbdenstock said in a press release. "In
addition, the budget would jeopardize the ability of hospitals to
train the next generation of physicians by cutting funding for
graduate medical education, and hinder care for people in rural
communities by reducing funding for critical access hospitals. ... The
solution to what ails our nation’s fiscal health is not further cuts
to providers that care for millions of America's seniors, but creative
solutions to modernize the Medicare program."
April 12, 2013:
Obamacare, Delay After Delay
April 11, 2013:
Americans May Really Just Be That Stupid!
In 2008, Rick Shenkman, the Editor-in-Chief of
the History News Network, published a
book entitled Just
How Stupid Are We? Facing the Truth about the
American Voter. In it he demonstrated,
among other things, that most Americans were:
(1) ignorant about major
international events, (2) knew little about how
their own government runs and who runs it, (3)
were nonetheless willing to accept government
positions and policies even though a moderate
amount of critical thought suggested they were
bad for the country, and (4) were readily swayed
by stereotyping, simplistic solutions,
irrational fears and public relations babble.
Shenkman spent 256 pages documenting these
claims, using a great number of polls and
surveys from very reputable sources. In the end
it is hard to argue with his data.
The majority of any population will pay little
or no attention to news stories or government
actions that do not appear to impact their lives
or the lives of close associates.
If something non-local
happens that is brought to their attention by
the media, they will passively accept government
explanations and simplistic solutions.
The primary issue is
"does it impact my life?"
If it does, people will pay attention. If it
appears not to, they won't pay attention. For
instance, in Shenkman's book unfavorable
comparisons are sometimes made between Americans
and Europeans. Americans often are said to be
much more ignorant about world geography than
be, but it is, ironically, due to an accident of geography. Americans
occupy a large subcontinent isolated by two oceans. Europeans are
crowded into small contiguous countries that, until recently,
repeatedly invaded each other as well as possessed overseas colonies.
Under these circumstances, a knowledge of geography, as well as paying
attention to what is happening on the other side of the border, has
more immediate relevance to the lives of those in Toulouse or
Amsterdam than is the case for someone in Pittsburgh or Topeka. If
conditions were reversed, Europeans would know less geography and
Ideology and Bureaucracy
That American ignorance is explainable does
not make it any less distressing. At the very least it
often leads to embarrassment for the minority who are not ignorant.
Take for example the facts that polls
show over half of American adults don't know which country dropped
the atomic bomb on Hiroshima, or that 30 percent don't know what the
explain this as the result of faulty education; however, there are
other, just as embarrassing, moments involving the well educated.
Take, for instance, the employees of Fox News. Lou Dobbs (who
graduated from Harvard University) is host of the Fox Business Network
talk show Lou Dobbs Tonight. Speaking on March 23 about gun
control, he and Fox political analyst Angela McGlowan (a graduate of
the University of Mississippi) had the following
"What scares the hell out of me is that we have a president ... that
wants to take our guns, but yet he wants to attack Iran and Syria. So
if they come and attack us here, we don't have the right to bear arms
under this Obama administration."
"We're told by Homeland Security that there are already agents of Al
Qaeda here working in this country. Why in the world would you not
want to make certain that all American citizens were armed and
education, (harder to understand from Harvard-educated Dobbs, who I
believe knows better but who also recognizes which side his bread is
buttered and is simply pandering to his right-wing audience for the
cash it earns him; as for Ole Miss-educated McGlowan, well, she is
just that stupid) ignorance plus ideology
leading to stupidity doesn't come in any starker form than this.
Suffice it to say that nothing the President has proposed in the way
of gun control takes away the vast majority of weapons owned by
Americans, that the President's actions point to the fact that he does
not want to attack Syria or Iran, and that neither country has the
capacity to "come and attack us here."
Did the fact
that Dobbs and McGlowan were speaking nonsense make any difference to
the majority of those listening to them? Probably not. Their regular
listeners may well be too ignorant to know that this surreal episode
has no basis in reality. Their ignorance will cause them not to
fact-check Dobbs's and McGlowan's remarks.
They might very well rationalize away countervailing facts if they
happen to come across them. And, by doing so, keep everything
comfortably simple, which counts for more than the messy, often
one can multiply this scenario many times. There are millions of
Americans, most of whom are quite literate, who believe the United
Nations is an evil organization bent on destroying U.S. sovereignty. Indeed,
in 2005, George W. Bush actually appointed one of them, John Bolton (a
graduate of Yale University ... nuf' said), as U.S. ambassador to the
United Nations. Likewise, so paranoid are gun enthusiasts (whose level
of education varies widely) that any really effective government
supervision of the U.S. gun trade would be seen as a giant step toward
dictatorship. Therefore, the National Rifle Association, working its
influence on Congress, has for years successfully restricted
the Bureau of Alcohol, Tobacco, Firearms and Explosives from using
computers to create a central database of gun transactions.
but certainly not least, there is the unending
war against teaching evolution in U.S. schools. This Christian
fundamentalist effort often enjoys temporary success in large sections
of the country and is ultimately held at bay only by court decisions
reflecting (to date) a solid sense of reality on this subject. By the
way, evolution is a scientific theory that has as much evidence to
back it up as does gravity.
The truth is
that people who are consistently active as critical thinkers are not
going to be popular, either with the government or their neighbors.
They are called boat-rockers. You know,
people like Socrates, who is probably the best-known critical thinker
in Western history. And, at least the well educated among us know what
happened to him.
April 10, 2013:
Obama's Budget Proposal Offends
BOTH the Right AND the Left
President Barack Obama weighed into Washington's
budget wars today with a third entry that
offers Republicans a
modest concession on entitlement programs but
demands that the wealthy pay more in taxes.
His fiscal 2014 budget request is closer in most
respects to the modest budget savings passed by
Senate Democrats last month than to the
deep cuts passed by the
Republican-controlled House of
Representatives aimed at achieving a surplus by
how the three budget plans compare in key areas:
Projected deficits are slightly higher than the Senate plan in the
early years of the next decade and never dip below $475 billion. But
they are lower than the Senate plan in later years and average 2.5
percent of gross
domestic product over 10 years.
Cumulative deficit is $5.27 trillion.
Note: the 2.5% of GDP average compares favorably to the period
1982-1994 (the Reagan, G.W. Bush budget years) when the "debt to GDP
ratio" exceeded 4% for most of the years. In a growing economy debt
ratios like this are actually preferred to keep the economy
stimulated. The current cumulative overall 107% U.S. debt-to-GDP ratio
would decline substantially under this proposal.]
Deficits fall to around $400 billion by 2016 and stay in the $400-$600
billion range, averaging 2.4 percent of GDP over 10 years.
Cumulative deficit is $5.20 trillion.
Deficits fall below $100 billion by 2016 and reach a small surplus in
2023. As a share of GDP, they average 0.6 percent over 10 years.
Cumulative deficit is $1.23 trillion.
[Jeanne's Comment: Of course, in a depressed economy, running a budget
surplus is not necessarily a good thing, remember Vice President Dick
Cheney's infamous remark when looking at the "off-budget" expenses of
the Bush Afghan and Iraq wars,
"deficits don't matter"
... not mattering to the tune of about $3.5 TRILLION in debt by 2023,
wars for which Republicans still seemingly don't want to pay and for
which they do defiantly not want to take the blame.]
DEBT HELD BY PUBLIC IN 2023
$19.03 trillion; debt-to-GDP ratio declines gradually to 73 percent from about 107 percent
$18.2 trillion; debt-to-GDP ratio declines
gradually to 70.4 percent.
$14.2 trillion; debt-to-GDP ratio falls
sharply to 54.8 percent.
[Jeanne's Note: Even at 107%, the U.S. is NOT in danger of becoming
another Greece and never has been, despite the deficit hawks
continuing cries to the contrary. Cutting the ratio as severely as the
GOP proposals, especially without adding to revenues, could trigger a
greater recession than we have already experienced and from which
Obama's economic policies have for the most part rescued us.]
CLAIMED DEFICIT REDUCTION
Claims to reduce deficits by $1.8 trillion over 10 years but this
includes replacing automatic spending cuts known as the sequester.
Obama resurrects previous offer of $930
billion in spending cuts coupled with $580 billion in new tax revenue.
Also proposes $166 billion in new spending on surface transportation
improvements financed by $167 billion in savings from drawdown of
foreign war spending.
moving to a "more accurate" measure of inflation for cost of living
adjustments to most programs and tax brackets, for a 10-year savings
of $230 billion.
[Jeanne's Aside: OK
Barack, this means the "chained CPI" right ??? That’s a pretty big
gift to the Tea Party ... costing future Social Security recipients
thousands in annual benefits. Is it worth that price in order to get a
concession from the GOP? ... Oh wait, I see, they will never concede
on tax cuts for the rich and this is just a ploy to get them committed
on the record. That's tough love, a strategy that could backfire if
the GOP's Tea Party-wing actually used reason and came to the table
accepting that revenues must be increased as well as spending cut.
Will they be so reasoned? Not likely, but still a gamble.]
Claims $1.85 trillion in 10-year savings, but this includes $960
billion to replace automatic spending cuts.
Seeks $975 billion in spending cuts and $975
billion in new revenue from eliminating tax credits for the wealthy
and large corporations. Proposes $100 billion in new
spending on infrastructure, job training.
Claims to slash deficits by $4.6 trillion over 10 years, on top of
savings from the automatic sequester spending cuts which are left in
place. No new revenues are sought,
all reductions come from spending cuts, largely cuts to social safety
[Jeanne: And the economy heads straight into the toilet with the rich
getting even richer, jobs continuing to flow overseas, and the USA
looking more and more like a backward 3rd world country.]
Seeks $400 billion in health care savings over 10 years, largely by
standardizing reimbursement rates across the Medicare and Medicaid
health care programs and other program changes to improve efficiencies
and cut waste. Proposes to increase
Medicare premiums after 2017 for wealthier seniors for doctor's visits
and drug benefits, generating $50 billion in 10-year savings.
[Jeanne's Remarks: This is a full 180 for the Democrats on
means-testing Medicare and, maybe, Social Security. Back in 2003 when
a Republican-controlled Congress and a Republican president rammed
through the so-called "Medicare Modernization Act" which "privatized"
parts of Medicare and established an unpaid for prescription drug
benefit, not a single Democrat voted in favor. Why? Because that bill
for the first time added a modest "means test" to the program,
charging wealthier seniors more per month for Medicare Part B,
depending on their incomes above $80,000/year. Democrats opposed:
Medicare (and Social Security) were part of the nation's "social
contract" they argued ... everyone, every American should get Social
Security and Medicare on an equalized basis ... Bill Gates would get
Medicare and Social Security, the bag lady who sleeps over the grating
outside Union Station in Washington DC would get them. Charging
wealthier Americans more would change the programs from entitlements
(we are "entitled to them as Americans") to subsidized welfare
benefits, with wealthier Americans paying more for the same or lesser
benefits. In time, the Democratic argument went, public support for
the programs would wane ... and like any welfare program be subject to
sometimes whimsical cuts and denials. Now, it appears, the Democrats
are willing to embrace at least some of these GOP-initiated changes.
Makes no major structural changes to Medicare, Medicaid and other
health care programs. Seeks $265 billion in
savings from Medicare through unspecified new efficiencies to be
determined in future legislation; $10 billion in savings
from Medicaid through reductions in some reimbursement rates to match
those in Medicare and other efficiencies.
Seeks repeal of President Barack Obama's
health care reforms, clawing back $1.84 trillion in future
spending. Cuts $756 billion from Medicaid
and other health care programs for the poor by turning them into block
grants for states. Seeks $129 billion in efficiency savings
from Medicare, but starting in 2024 turns
program into a voucher-like subsidy to help seniors buy health
coverage from private insurers or the traditional Medicare system.
The Republican plan also would apply
greater means-testing across the program.
[Jeanne's Note: The 2003 Medicare Part B
means-testing would be extended to Medicare Parts A and D as well. The
Tea Party Republicans know full well that this is the first step in
finally what their grandparents and great-grandparents failed to do,
effectively end both Medicare and Social Security. Banana Republic
here we are!]
Revives past proposals for raising $580
billion over 10 years from the wealthy, including the "Buffet tax"
that phases in a new minimum 30-percent tax rate on income above $1
million and caps on itemized deductions for income starting at
$250,000. It also proposes a new $77 billion cigarette-tax
increase to fund an early childhood education program and would limit
tax-deferred individual retirement accounts to $3 million, exposing
more income to taxation.
[Jeanne Responds: Seriously Obama ??? Republicans would raise taxes
this much. Mitt Romney's $20 million "IRA contribution" would be
disallowed? I wouldn't hold my breath, not with the likes of the Koch
brothers and Sheldon Adelson spending billions to protect their
personal tax shelters and accumulated untaxed wealth.]
$975 billion in new revenue from closing tax loopholes. It does not
specify which of these tax breaks should end but states that any such
effort, including broader tax reform,
should target breaks that benefit the wealthy and the largest
corporations, preserving those aiding
the middle class.
Seeks no new tax revenue, but leaves in place the $620 billion "fiscal
cliff" tax hike on the wealthy. Proposes to eliminate wasteful tax
deductions, credits and loopholes in order to lower personal and
corporate income tax rates dramatically, with
just two tax brackets for individuals - 10 and
[Jeanne's Comment: Oh sure, a massive more than 40% cut in the tax
rate on those making more than $250,000 a year ... from 38.6% to
25%, while suggesting what effectively would be a tax increase on most
incomes below $80,000 a year. They know that most Americans do not
have the good math skills to figure this out.]
Obama budget seeks to add discretionary spending above caps set in
budget legislation in 2011 - with an increase of $99 billion to $1.155
trillion for 2014. It would then gradually reduce the caps in later
Senate plan seeks to stick largely to the pre-sequester spending caps
in early years, including $1.058 trillion in 2014 and $1.073 trillion
in 2015, but in later years discretionary spending excluding disasters
would fall slightly below the 2011 caps.
Keeps the post-sequester caps on discretionary spending in place,
resulting in sharp reductions for programs
ranging from education to the military to national parks - to $966
billion for 2014 and $995 billion for 2015.
[Jeanne: Oh crap, there goes a college education for most Americans
... but with cuts to elementary and secondary education spending, most
wouldn't be able to get in anyway. And the poor, well they can get by
on one meal a day, after all there won't be any jobs left for them
after tax incentives to corporations send more jobs overseas. And
seniors, with vouchers covering a smaller and smaller proportion of
their medical expenses will die sooner thus adding to the savings for
both Medicare and Social Security. See, win-win. The military? The
proposed cuts in the GOP budget are for show only, as soon as defense
contractor lobbyists get through with them, Congress will be spending
Remember Jeanne's Lawyer Jokes are Still Here, over on her Humor
Additions to Her Canonical List of Lawyer Jokes
Week of April 8, 2013
April 7, 2013:
Maxine on Fishing
April 5, 2013:
New Guidance: Federal Regulators Allow
"Collaborative Arrangements" for Enforcement
October 2012, only 11 states and the District of Columbia had moved
forward to implement at least one of the Patient Protection and
Affordable Care Act's (Obamacare's) 2014 private insurance market
reforms. The other 39 states had not yet
taken action, potentially limiting their ability to fully enforce the
reforms. Without new legislation, regulators in at least 22
states reported that they would be limited in
their ability to use all of the tools they need to protect consumers
March 15, 2013, federal regulators at the Center for Consumer
Information and Insurance Oversight released guidance on how the
Patient Protection and Affordable Care Act's new market
reforms will be enforced. In this blog post, I am trying to
describe this enforcement framework of the Obamacare, how the new
guidance fits into that framework, and what the new guidance means for
enforcement of the law's most significant reforms, particularly in
light of the continued obstinacy and outright opposition most "red
states" have regarding any cooperation with the Obama Administration
in implementing and enforcing the new health care reform law..
are the primary regulators of health insurance in the individual and
small-group markets and can require insurance companies in their state
to meet federal standards.
If, however, a state fails to substantially
enforce all or parts of Obamacare or notifies the federal government
that the state does not have the authority to enforce it or is not
enforcing the law, federal regulators at the Centers for Medicare and
Services (CM2) will step in to enforce.
In doing so, federal regulators have the authority to
assess significant fines of $100 a day for
each individual that is affected by an insurer's noncompliance.
does the new guidance say?
guidance states that "the vast majority of
states are enforcing the Patient Protection and Affordable Care Act
health insurance market reforms." The guidance also
recognizes that CM2 has the responsibility for enforcing
the reforms in states that lack the authority or ability to do so. In
those states, insurers will be required to submit policy forms to CM2.
According to the guidance, CM2
will notify issuers of any concerns, conduct targeted market-conduct
examinations, and respond to consumer inquiries and complaints.
CM2 will "work cooperatively
with the state" to address any concerns about
compliance and transition enforcement responsibilities back to the
state when it is willing and able to assume enforcement authority.
that are willing and able to perform regulatory functions but lack
enforcement authority can enter into a collaborative arrangement with
which would allow the state to enforce Obamacare using the same
regulatory tools used to ensure compliance with state law. In
addition, consumers would continue to contact the state with inquiries
and complaints about their coverage. In the face of a potential
violation of federal law, states would refer the issue to CM2
for possible enforcement action if unable to obtain voluntary
compliance from insurers. But will they? Will
red states actually "collaborate" even this much?
March 1, 2013, four states --
Oklahoma, Missouri, Texas, and Wyoming -- had notified CM2
that they do not have the authority to or are not otherwise enforcing
Obamacare. An additional two states, Alabama and Arizona (for group
PPO plans), made the same notification as of March 29, 2013.
does it all mean?
regulators have recognized the need to ensure that there is adequate
enforcement of the insurance market reforms that come into effect in
2014. The guidance offers a "middle
ground" through the newly announced collaborative
arrangements. These arrangements allow CM2 to leverage the
expertise of the states in monitoring their marketplaces and avoid
dual regulation of insurers at the state and federal levels. This
approach also may minimize consumers' confusion and duplication of
efforts by the states and CM2.
Again, befuddled red state governors and state legislators would
rather throw mud on Obamacare than take even a baby step in
implementing it. Protecting all the lobby money they are receiving
from the for-profit insurance industry trumps the idea of offering
protection to their own citizens.
unclear, though, how the new arrangements align with existing federal
regulations that require CM2 to make a formal determination
that a state has not substantially enforced federal law before
stepping in to do so. Further clarification will be needed to address
Whether CM2 can bring an enforcement action against an
insurer without first making a formal determination that the state is
not substantially enforcing; and
Whether federal law allows insurers to be subject to penalties at both
the federal and state levels for the same violation.
questions remain about the coordination that might be required between
state and federal regulators, states should consider whether new
legislation or regulations -- either to amend existing state law or
give their insurance department more authority -- are more appropriate
to address enforcement gaps, continue meaningful regulatory oversight,
and promote consumer protections at the state level. While the
guidance shows that CM2 is willing to work with and support
states in their enforcement efforts, states continue to have the
opportunity to enforce the new reforms and ensure that consumers
receive the full protections of the law ...
and there is barely a snowball's chance in hell that very many of the
red states will doing anything along these lines.
April 4, 2013:
The Public's Misperceptions of Benefits Make
Trimming Them Harder
President Obama is quoted as saying: "For
each dollar that Americans pay for Medicare, they ultimately draw
about $3 in benefits." What's more, he added,
most people do not understand this truth.
In making this statement, the president was referring to the
widespread and incorrect view, especially
among older Americans, that Medicare recipients get only what they
have paid for through taxes, premiums and medical co-payments.
Now that misperception is making it all the harder for politicians to
consider trimming those benefits or raising out-of-pocket expenses as
they seek to restrain Medicare spending that is rising unsustainably
while baby boomers age and medical prices increase.
One of the problems for President Obama, and for progressives who want
to support his programs and agenda, is that this basic fact is getting
in the way of any actual efforts to reform Medicare.
Admitting the problem as in any 10-Step
program, is the first and sometimes most important step.
And while the problem has existed from almost the very first day of
Medicare, when then President Lyndon Johnson, wanting the program to
succeed, basically "sold the farm,"
offering hospitals and doctors top pay ("usual
and customary" fees to the docs,
"costs-plus" to hospitals, with almost no
limitations) for servicing the new plus age 65 Medicare
beneficiaries. Johnson's largesse went especially to Medicare Part B,
the outpatient and physician component. If the actual costs of that
part of Medicare were passed directly on to the beneficiary --
(Medicare Part B "premiums" are deducted from beneficiary Social
Security) -- the deductions would have made the program too expensive
for most seniors, albeit it was still a "good deal" when compared to
private insurance coverages. Johnson and
the Great Society Congress of the time, set the Part B premium at
roughly one-quarter the real costs, with general revenues and taxes
covering the shortfall. Every president and every Congress
since then has pretty much maintained this same ratio. The problem is
most Americans do not understand this
"giveaway" and more or less deliberately are relishing
in their ignorance.
2012, for a sixth straight year, Medicare trustees issued a warning
required by law whenever more than 45 percent of the health program's
costs must be covered by general revenues from all taxpayers. To date,
Mr. Obama has mostly proposed cuts to
payments for health care providers, like hospitals. He has supported
reducing benefits or raising costs for higher-income beneficiaries,
but has made any broader benefit changes contingent on Republicans'
agreeing to additional tax revenues from wealthy individuals and
Administration officials said that Mr.
Obama, in speaking of a 3-to-1 ratio of Medicare benefits to taxes,
was referring just to Medicare's Part B coverage for doctor and
outpatient services. Older Americans pay about 25 percent
of Part B costs through premiums, deductibles and coinsurance
(high-income beneficiaries pay 35 percent to 80 percent). The rest
comes from general revenues -- income taxes and other levies.
The ratio is similar for Medicare's newer
prescription drug benefit: While beneficiaries' premiums cover about a
quarter of costs, the rest comes from general revenues and borrowed
are heavily subsidized by the federal
government, and the trend is getting worse,"
said Robert D. Reischauer, a former director of
the Congressional Budget Office and now one of
two public trustees for Medicare and Social
payroll taxes finance only the program's Part A
coverage for hospital costs.
Mr. Obama apparently was speaking only about
Part B, analysts say
that it is roughly true for all of Medicare that
beneficiaries on average pay about $1 for every
$3 in benefits.
Analysts frequently cite Gene Steuerle, an economist at the Urban
Institute, a non-partisan policy research organization, who calculates
average payroll taxes and benefits for Medicare as well as Social
Security over the lifetimes of various types of individuals. Those
figures vary by income, health, longevity, marital status, children
and other factors. For example, his October
update showed that a single male who
earned the average wage ($44,600 in 2012 dollars) and turned 65 in
2010 had paid about $61,000 in Medicare taxes and could expect
$180,000 in benefits.
Security is a different story these days.
That same single male, Mr. Steuerle calculated, paid about $300,000 in
payroll taxes, excluding the portion for disability benefits, and
could expect a bit less, $277,000, in retirement benefits.
(Married couples do better than single people because many of them
receive spousal and survivor benefits.) Social Security and Medicare
benefits are greater on average for women because they generally live
longer than men.
idea among Americans that they get back what they paid for, with some
rate of return, dates to President Franklin D. Roosevelt's legislative
marketing of Social Security nearly 80 years ago.
But when Medicare was created in 1965, new
payroll taxes were assessed to cover only Part A hospital insurance.
was sort of a foundation argument that F.D.R.
popularized when the Social Security Act was
passed -- that this was a fiscally responsible
program because people were going to pay in and,
as a result of their payments, be entitled to
said Mr. Reischauer, the public trustee.
Yet Social Security has always been a
pay-as-you-go system, with workers' taxes going
not to some actual trust fund for them but
directly toward benefits for retirees. Initial
beneficiaries paid little or nothing into the
system, but "all of
the first generations got windfalls,"
Mr. Steuerle said.
For decades until the 1980s, workers paid a Social Security tax rate
much lower than the current 12.4 percent (split between employers and
employees) and on a smaller share of their wages, even as Congress
Only now are new Social Security claimants
roughly breaking even and likely to get back about what they paid in.
But young workers today can expect fewer benefits for their taxes.
bottom line is that the older you are, the more
likely that your Social Security benefits
exceeded your contributions,"
said Charles Blahous, the other public
trustee and a former adviser to President George
W. Bush. "The
younger you are, the more certain it is that
your tax burden will exceed what you ever get
fiscal debate rages, even the word
"entitlement" -- long part of the budget lexicon -- has
come to be seen as a pejorative among Americans who fear that benefits
Security and Medicare are both earned and paid
for through our salary taxes,"
a reader of The New York Times
wrote recently. "A
better term for these two programs is 'earned
benefits.' It more accurately describes them
without giving them a sense of negativity and
Keith, a budget historian formerly at the Congressional Research
Service, said the term entitlement first appeared in the 1950s to
describe Social Security and veterans and education benefits, and was
in common use by the 1970s, after Medicare and Medicaid were created.
It describes programs that automatically provide benefits to those who
are "entitled" because they
meet certain criteria -- like age and payment of payroll taxes -- and
cannot be changed except by a new law. In contrast, most other federal
programs are called "discretionary,"
because Congress can add or subtract
annually in its appropriations process. As the
past two years have shown, that makes discretionary programs far more
vulnerable than entitlement programs when Washington is focused on
deficit reduction -- though it is the fast-growing entitlement
programs and insufficient tax revenues that are driving the
projections of mounting debt.
April 3, 2013:
The Rationale for the Tea Party's "47%" Meme
April 3, 2013:
Obama Caves Again to For-Profit Health Insurers
Payments to Medicare Advantage plans will increase by 3.3% in 2014,
Medicare officials said late Monday. Officials at the Centers for
Medicare and Medicaid
Services (CM2) based the
payment increase on the assumption that Congress will override
scheduled cuts in physician reimbursements for an 11th consecutive
year, the agency said.
policies announced today further the agency's
goal of improving payment accuracy in all our
programs, while at the same time ensuring
program stability and preserving beneficiary
Jonathan Blum, PhD, CM2' acting
principal deputy administrator, said in a press
release. Blum is "acting" because
TeaParty/Republicans in Congress continue to
block most Obama appointees with filibusters in
In making this announcement, the Obama administration is caving in
once again to the powerful for-profit health insurance industry.
Medicare Advantage plans were first created in 2003, under a
Republican-controlled Congress and signed by a Republican president
WITHOUT A SINGLE DEMOCRATIC vote. This 2003 "Medicare Modernization
Act" established an unfunded additional drug benefit, Part D, to
Medicare and for the first time began to "means-test" Medicare Part B
by increasing the monthly premiums paid by beneficiaries earning more
than $80,000/year, (both policies then adamantly opposed by
Democrats). In order to get around a possible Democratic
filibuster of this law, Republicans used a little known Congressional
tool called "reconciliation," which allowed a vote on the bill in the
Senate without a 60-vote superplurality. When Democrats used the same
procedure to pass Obamacare in 2010, you'd of thought the world had
come to an end with right-wing complaints about this "abuse" of
Virtually overlooked with all the brouhaha over the creation of the
unfunded drug benefit which would allow drug companies to charge
almost anything they wanted for drugs with the government being unable
to negotiate for volume or group pricing (drug prices for most
commonly prescribed drugs under Medicare have tripled since 2003), was
a provision establishing
Part C" ... or Medicare Advantage, which for the first time allowed
Medicare beneficiaries to choose private insurance coverage plans over
the traditional fee-for-service government-run Medicare plan. The
argument went that "competition" among these plans would bring prices
down. Well duh, they haven't and Medicare payments under these Part C
Advantage plans have averaged 14% MORE than under traditional
The Patient Protection and Affordable Care Act (PPACA, "Obamacare")
had planned for $716 billion in overall Medicare cuts, with $308
billion coming from gradually phasing out this 14% "bonus premium"
being paid to for-profit Medicare Advantage plan insurers by 2020. CM2
had proposed in February a 2.2% cut based on this Obamacare phase-out
But the for-profit health insurance industry has gone ballistic in
America's Health Insurance Plans (AHIP), a trade group in Washington
for the health insurance industry, led a multimillion lobbying and
public relations campaign denouncing the cuts
and has pushed hard against them in recent weeks. Now Obama has
capitulated and naturally enough, AHIP said it was pleased with the
new payment increase.
being responsive to the more than 160 members of
Congress from both parties who raised concerns
about the impact of the proposed payment rate on
seniors, CM2 has taken an important
step to help stabilize Medicare Advantage at a
time when the program is facing significant
President Karen Ignagni said in a statement.
Obama's capitulation ... instead of going public and denouncing the
outrageous profits being reaped by the private health insurance
industry (not to mention the tens of millions being pulled out to pay
for bonuses for insurance company executives); instead of explaining
to America exactly how drug prices have been ratcheted up by the
pharmaceutical industry with the government being unable to negotiate
reductions; instead of explaining how these Medicare Advantage plans
(offering wealthier and healthier seniors health club memberships, spa
services and other bonuses with the 14% "kicker" they are getting)
under Medicare; Obama has caved in ... once again.
April 2, 2013:
Red State Roadblock: Small Firms' Plan Choices
Under Obamacare Delayed
states have been doing everything they can to thwart the
implementation of the Patient Protection and Affordable Care Act --
refusing to cover more of their citizens under Medicaid, even though
long term, the federal government would cover 90% or more of the
costs; failing to regulate the for-profit health insurance industry
despite the Obamacare's support for stronger enforcement, allowing
these companies to continue to reap obscene profits while paying their
executives enormous bonuses all while raising premiums at near double
digit rates year after year for over 20 years; dragging their feet on
operating the health care exchanges or marketplaces that would assure
the open competition among health plans so vital to holding future
health care costs down, this despite the lip-service they pay to free
market capitalism. Now they have won a small victory, the monopoly
large for-profit insurers have over the small business insurance
market will be allowed to continue for at least another year.
to meet tight deadlines in the new health care law,
the Obama administration is delaying parts of
a program intended to provide affordable health insurance to small
businesses and their employees -- a major selling point for
the health care legislation. Obamacare calls for a new insurance
marketplace specifically for small businesses, starting next year.
But in most states, employers will not be able
to get what Congress intended: the option to provide workers with a
choice of health plans. They will instead be limited to a single
choice option, already available to many big businesses, was supposed
to become available to small employers in January.
But Obama administration
officials now say they will delay it until 2015 in the 33 states where
the federal government will be running insurance markets known as
exchanges. And they will delay the requirement for other states as
well. Jeanne: Chalk up a
victory for red states opposed to the new law, that is if you call a
self-inflicted wound a victory. Residents in these states will have
fewer choices and less opportunity, but then throwing even a small
"roadblock" in front of Obamacare is all that really counts, right?
The welfare of our citizens be damned.
promise of affordable health insurance for small businesses was
portrayed as a major advantage of the new health care law, mentioned
often by White House officials and Democratic leaders in Congress as
they fought opponents of the legislation. Supporters of the law said
they were disappointed by the turn of events. The delay will
"prolong and exacerbate health care costs that
are crippling 29 million small businesses," said
Senatecritter Mary L. Landrieu, Democrat of Louisiana and the
chairwoman of the Senate Committee on Small Business and
Entrepreneurship. In the weeks leading up to the passage of the health
care legislation in 2010, Ms. Landrieu provided crucial support for
the measure, after securing changes to help small businesses. The
administration cited "operational
challenges" as a reason for the delay. As a result, it
said, most small employers buying insurance
through an exchange will offer a single health plan to their workers
insurance availability and cost are huge concerns for small
businesses. They have less bargaining power than large companies and
generally pay higher prices for insurance, if they can afford it at
all. In 2010, Obamacare stipulated that each state would have a Small
Business Health Options Program, or SHOP exchange, to help employers
compare health plans and enroll their employees.
One of the most important tasks of the
exchange is to simplify the collection and payment of monthly
premiums. An employer can pay a lump sum to the exchange, which will
then distribute the money to each insurance company covering its
Obama administration told employers in 2011 that the small business
exchange would "enable you to offer your
employees a choice of qualified health plans from several insurers,
much as large employers can." In addition, it said, the
exchange would "consolidate billing so you
can offer workers a choice without the hassle of contracting with
are scheduled to start enrolling people on October 1, for coverage
that begins in January. However, the administration said that the
government and insurers needed "additional
time to prepare for an employee choice model" of the
type envisioned in the law signed three years ago by President Obama.
Jeanne: Here I fault the Obama Administration. Obama has
known from the git-go that red state governors and legislatures would
balk at every opportunity in implementing health care reform. From the
git-go, DHHS under Secretary Kathleen Sebelius should have been
working on its own plans to operate exchanges
in these recalcitrant states. Weeks
became months, months years and here we are three full years AFTER the
law was passed and still waiting on many of the implementing
regulations and operating processes. Whips and chains may be needed.
If Obamacare fails, most of the blame will fall upon
TeaParty/Republicans who have thrown roadblock after roadblock in the
way, but Obama himself will have a share for his failures to deliver
what he could have done with better planning and administration.
Michael Roach, who owns a women's clothing store in Portland, Oregon,
said the delay was "a real mistake. ... It
will limit the attractiveness of exchanges to small business ... We
would like to see different insurance carriers available to each of
our 12 employees, who range in age from 21 to 62. You would have more
competition, more downward pressure on rates, and employees would be
more likely to get exactly what they wanted," he said.
John C. Arensmeyer, the chief executive of Small Business Majority, an
advocacy group, said that the delay of "employee
choice" was "a major
letdown for small business owners and their employees. ... The vast
majority of small employers want their employees to be able to choose
among multiple insurance carriers," Mr. Arensmeyer
said. Small Business Majority supported Mr. Obama's
health care law.
support was invaluable to Democrats who pushed the bill through
Congress. Representative Nancy Pelosi of California, who was speaker
at the time, cited the group's research as evidence that
"small businesses will benefit from health
However, in recent weeks, insurance companies urged the administration
to delay the employee choice option.
"Experience with Massachusetts has demonstrated that employee choice
models are extremely cumbersome to establish and operate,"
the health insurer Aetna said in a letter to the administration in
December. Insurers said that the administration was partly responsible
for the delay because it did not provide detailed guidance or final
rules for the small-business exchange until last month. Jeanne:
Of course Aetna and the other major for-profit health insurance
carriers want delay. Every day delayed means they continue to reap the
profits of their monopoly coverage, free from the competition of other
insurers who want to jump into the marketplace but are limited by
barriers in marketing infrastructure and advertising. The free market
competition they pay such public lip service to, is being thwarted at
every opportunity. Obamacare was counting on that market competition
to drive down prices (Yes Virginia, Obamacare is built on a
free-market model ... the only socialists here are the giant
for-profit conglomerates that have their cozy marketplaces all sewed
up and locked in.) Delaying competition for a year is another victory
for the troglodytes.
Businesses with up to 100 employees will be able to buy insurance in
the exchanges. In 2014 and 2015, states can limit participation to
businesses with 50 or fewer employees.
Companies with fewer than 25 workers may be able to obtain tax credits
for up to two years of coverage bought through an exchange.
States can open the exchanges to large
employers in 2017. A few states running their own
exchanges, including California and Connecticut, said they planned to
offer an employee choice option next year, though it was not required
by the federal government.
A stated goal of the 2010 law was to increase “consumer choice” and
stimulate competition among insurers. The law makes it easier for
consumers to compare health plans by defining four standard levels of
coverage, ranging from the least to the most generous. The law says an
employer can pick a level of coverage and then allow employees to
choose among all the health plans available at that level.
So much for Obamacare's socialism. Here's where the "real" socialists
Remember Jeanne's Lawyer Jokes are Still
Here, over on her Humor Page ...
Jeanne's Latest Additions to Her
Canonical List of Lawyer Jokes
Week of April 1, 2013
March 29, 2013:
How Will Obamacare Hit Premiums? Let's Break
Down The Numbers.
be one of the most hard, most important questions to answer in health
policy right now: What will happen to
premiums in 2014, when millions of Americans flood into the insurance
markets? It's a question hugely important to the Patient
Protection and Affordable Care Act's (Obamacare) success.
If Americans balk at the price of insurance, they may opt-out of the
program, reducing the size of the insurance expansion.
Some argue that premiums will spike. Others think they won't. The
Obama administration, for its part, thinks there will be a bit of a
mix; some will see their costs rise and others will not.
are going to see some lower costs, some men are going to see some
Health and Human Services Secretary Kathleen Sebelius
told reporters Tuesday.
"It's sort of a one to one shift ... some
of the older customers may see a slight decline, and some of the
younger ones are going to see a slight increase."
don't, unfortunately, have a health policy crystal ball to gaze into
on this issue. We do, however, have the
next-best thing: An actuarial analysis of health premiums in the
California individual market! Exciting, right?
Milliman on Thursday issued a really
in depth report
on how Obamacare will likely change the cost
of health insurance in California. It's a great way to
break down how the cost of coverage will change next year --
and also why it's difficult to make any broad
statements about the future of health insurance costs.
Milliman starts by walking through all the factors that will make
insurance more expensive in 2014. One has
nothing to do with the health-care law at all: The firm expects
premiums to rise 9 percent next year, due to rising health-care
prices. This increase would be in line with the premium
hikes seen in recent years, prices of which have risen near or above
double digits almost every year since the late 1980's.
assumed the average increase in premiums from
2013 to 2014, in the absence of the Affordable
Care Act changes, to be 9.0 percent,"
the report says, noting that individual
market premium hikes last year ranged between 7
and 11 percent.
The 9 percent increase would happen regardless of Obamacare,
so it's hard to count those as a result of the law. There is, however,
one part of the health law that will be
expensive: The requirement that insurance companies cover a whole
bunch of health benefits. This is known as the
"essential health benefits" and it can include
some health services that plans previously skimped on. Californians
(and the rest of the country, for that matter) will have to pay more
to get more coverage, essentially. Milliman
estimates this will increase premiums by 22.2 percent for most
have health care costs and quality of coverage going up, which are
components that would raise premium rates for everyone. But there's
one other change, the influx of new customers, that could either raise
or lower your premiums, depending on whether you already have
coverage. For those who already have
insurance, the Patient Protection and Affordable Care Act is expected
to increase premiums by 14 percent, mostly to cover the costs of the
expanded benefits -- you're getting more, therefore you are paying
more. That makes sense when you think about some of the
people likely to enter the market: Those who previously found coverage
too expensive to buy a health plan, perhaps due to a health condition.
If you're one of those uninsured Californians, by the way, PPACA will
actually lower the cost of insurance (compared to life without
Obamacare) by 14 percent.
are the elements that will increase the cost of health insurance, but
it's important to remember that there's
another big part of the law meant to reduce premiums. These are the
tax subsidies, available to Americans earning less than 400
percent of the poverty line (about $45,000 for an individual).
These, Milliman expects, will make insurance
83 percent less expensive for someone earning less than 250 percent of
the poverty line.
what all those elements look like in chart-form, for those who already
have insurance coverage in California:
separate chart showing how the cost of coverage will change for the
figures are the pretty basic ones. They don't take into account what
will be different for older or younger Americans, or how different
states will face different issues. They
are, however, a good guidepost for thinking about why premiums will
(or won't) go up in 2014. At least, until we track down a
health policy crystal ball.
March 26, 2013:
FAQs About the "Infamous" Society of Actuaries
Report on the Health Premiums Under Obamacare
The Kaiser Health News has published a Q&A on
Monday's report from the Society of Actuaries
that suggested that medical outlays under
Obamacare will go up 32% by 2017. Obamacare
critics have been all over the airways and in
the print media using this report to attack
PPACA and renewing their calls for its repeal.
The Society of Actuaries report says a lot of
things ... but nowhere does it say the things
anti-Obamacare fanatics are attributing to it.
I am reproducing the Kaiser FAQs below, along
with my bracketed and italicized comments at
several places. I love my quote:
and kumquats aside ..."
too early to know how much individual health
insurance policies will cost once the online
marketplaces created under the [Patient
Affordable Care Act launch Jan. 1. But that
hasn't stopped experts and interest groups from
making predictions. The latest
analysis comes from the Society of
Actuaries. It's attracting attention because of
the group's [presumed] expertise and
nonpartisanship. What actuaries do for a living
-- predicting future expense based on multiple
squishy factors -- is at the core of figuring
out what will happen under Obamacare
Thanks to subsidies and the requirement that
everybody get insurance or pay penalties, the
society forecasts that the number of people
covered by individual polices will double to
25.6 million by 2017.
Getting the headlines was the forecast that
insurer costs -- medical claims per policyholder
-- will soar, on
average, 32 percent for the individual market in
2017, with wide variations among
not the same thing as saying prices consumers
pay for policies will rise 32 percent.
But if claims are higher, insurers generally
[Jeanne: Also left out is the fact that while
overall medical plan outlays may or may not
increase by an average of 32%, total premium
income being paid into these for-profit insurers
from 30 or so million newly insured Americans
will also rise. Whether this premium income
will offset the higher outlays or fall short is
not reported in the Society of Actuaries report.
The Society itself admits that it was asked by
the for-profit health insurance industry to look
ONLY at the increase in medical payments (not
premium income) in preparing its report.
Comparing apples, oranges and kumquats aside,
the report is clearly a propaganda
piece commissioned by the for-profit insurance
industry in its battle to be allowed to increase
premiums for people with pre-existing conditions
by 5 times or more.]
Opponents of the health overhaul seized
on the figure to suggest the law could
really be called the Unaffordable Care Act.
administration says the study leaves out factors
that will restrain what plan members actually
pay, including more competition among insurance
Kaiser Health News talked to experts to learn
what it means for the consumers the health law
was meant to help.
Q: What's predicted to drive up costs?
A: Many of those seeking coverage in online
marketplaces -- known as exchanges -- are
expected to be older and sicker. They'll have
more incentive to buy policies, and they'll tend
to increase claims paid by insurers. On the
other hand, "young
and healthy people are less likely to be
interested in insurance, because they’re less
likely to find value," said
Kristi Bohn, a consultant for the Society of
Actuaries who worked on the report. The penalty
for not having insurance is likely to be far
less than the cost of coverage.
The fewer young or
healthy people who sign up, the higher the costs
per plan member. The authors also
made assumptions about how many employers will
cancel their plans.
Companies with sicker workforces are predicted
to be more likely to end employer-based coverage
and steer people toward exchanges.
Q: I get insurance at work, were they
talking about my insurance claim costs?
A: No. This report was just about people who buy
on the individual insurance market, currently under
10 percent of the country, though that's
expected to go up as the law kicks in. The vast
majority of Americans get insurance through work
or through government programs (Medicare,
Medicaid, the military).
Q: Does the study predict health
insurance premiums will go up 32 percent by
A. No. First, it's only forecasting the
individual insurance market. That's where
millions of Americans newly covered under [PP]ACA
are expected to find policies. The report says
nothing about costs for employer-based health
important, the 32 percent forecast is for
medical expenses paid by insurers, not what
insurers will charge in premiums, and not what
consumers will pay.
Q: But if medical claims go up,
shouldn't insurance prices also go up? How much
difference could there be?
A: In the individual market designed under the
health law, quite a bit, say supporters.
[PP]ACA limits insurer profits and also gives
government regulators oversight of rate
increases, both of which could hold premiums
down. Even if sticker prices rise, an
important feature of the health law is subsidies
for people to buy insurance, through tax credits
for those with lower incomes. So what many
newly-insured people actually end up paying
themselves won't be the same as what the
insurance company bills.
Thanks partly to subsidies, "many people buying
individual coverage today will see decreases in
costs," said Larry Levitt, senior vice president
at the Kaiser Family Foundation. (Kaiser Health
News is an editorially independent program of
Insurers who end up signing lots of sicker
members will also be partly reimbursed for
several years by a reinsurance pool designed to
lower their risk. That will lower their
expenses, and it wasn't accounted for by the SOA
[Jeanne: Of course they weren't accounted
for. The whole purpose of a propaganda hit piece
like this is to distort facts, plant
misrepresentations, and "buy" public opinion.
Risk adjustments, like increased premium income,
were deliberately left out ... especially in the
accompanying press releases and media reports
such as on Fox News and in the Wall Street
Q: Does it matter where I live?
A: Yes. The report found huge
variability, based on geography. While the
estimated increase would be 62 percent for
California by 2017, in New York state, the
report estimates claim costs to drop by almost
Q: Will health plans offer the same
coverage in 2017 that they do now?
A: That's another reason the 32-percent headline
could be misleading.
Thanks to [PP]ACA minimum coverage requirements,
benefits will be more generous starting next
year. So what insurers pay in claims can
expected to be higher, too.
number of people who are underinsured has grown
dramatically over the last decade,"
said Sara Collins, a vice president at
the Commonwealth Fund.
"One reason claims might be a lot lower now
is the benefit package is so crummy."
The health law was intended to shift
spending into the commercial insurance system
that is now outside it: high out-of-pocket costs
for those in low-benefit plans; uncompensated
emergency-room care; patients paying in cash,
and so forth. Moving those costs under the
insurance umbrella increases insurance-based
[Jeanne: The problem of the
in America has been
one of the least reported and least
understood problems befuddling the nation's
health care system and costing providers (and
the fully insured) billions in additional costs.
"health/medical savings accounts"
and employers such as Wal-Mart have championed
health plans as a way to save costs in
health care. They actually do seem to work great
for some, especially for higher income healthier
people who have enjoyed the tax breaks MSAs/HSAs
give them ... but for lower income American, for
whom the tax break is virtually non-existent,
and to which a sudden illness or accident might
mean having to come up with the $5,000
deductible before any insurance kicks in,
the safety net supposedly provided by such
coverage is non-existent. $5,000
dollars might as well be $5 million, the bills
cannot be paid, the provider is stuck with a
uncollectible debt, and those with coverage pay
higher premiums to help alleviate the losses.
At Wal-Mart for example, the company touts its
health plan with varying $2k to $5k deductibles,
costing its minimum wage employees upwards of
$120 to purchase ($300 for a family) as a
"solution." When you are making less than
$10/hour a sudden $2,000-5,000 bill will be
devastating. As a practical matter for these
people -- thinking they are "covered" -- almost
any hospital visit would be impossible to pay.]
Q: The idea of the insurance exchanges is to create
competition, isn't that supposed to lower costs?
A: Yes. The idea behind state health exchanges is that
insurers will compete for business by pressing providers for discounts
and passing part of the savings to members. The actuary study didn't
account for that kind of competition.
"Every insurer I've talked to says they're building lower-cost
networks that they plan to use for their exchange plans,"
Q: Does this mean costs in the health exchanges
aren't a concern?
A: No. Many consumers will pay more in premiums to get more
in benefits. The high cost of medicine could mean that, even for those
getting big subsidies, affordability will be an issue. Many consumers
"will be moving into a really fully
insured product for the first time, so there may be a higher cost
associated with getting into that market," Health and
Human Services Secretary Kathleen Sebelius said
March 23, 2013: NYT Editorial:
Report Card on Health Care Reform
The New York Times editorial board decided to
celebrate the 3rd anniversary of
Obamacare by giving the new law a "report card."
I have reproduced the NYT editorial below.
Republican leaders in Congress
regularly denounce the 2010 [Patient Protection
and] Affordable Care Act and vow to block money
to carry it out or even to repeal it. Those
political attacks ignore the considerable
benefits delivered to millions of people since
the law's enactment three years ago Saturday.
The main elements of the law do not kick in
until Jan. 1, 2014, when many millions of
uninsured people will gain coverage. Yet it has
already thrown a lifeline to people at high risk
of losing insurance or being uninsured,
including young adults and people with chronic
health problems, and it has made a start toward
reforming the costly, dysfunctional American
health care system.
EXPANDING COVERAGE Starting
in 2010, all insurers and employers that offer
dependent coverage were required to offer
coverage to dependent children up to age 26. An
estimated 6.6 million people ages 19 through 25
have been able to stay on or join their parents'
plans as result, with more than 3 million
previously uninsured young adults getting health
insurance. The law requires private health
insurers to provide free preventive care,
without co-pays or deductibles. Some 71 million
Americans have received at least one free
preventive service, like a mammogram or a flu
shot, and an additional 34 million older
Americans got free preventive services in 2012
Private insurers are now required to cover
children with pre-existing conditions, which
means that an estimated 17 million such children
have been protected against being uninsured. And
more than 107,000 adults have enrolled in a
federally run insurance plan for people with
pre-existing conditions. The law also bars
insurers from canceling policies on sick people;
previously, 10,000 people a year had their
The law appropriated $11 billion over five years
to build and operate community health centers, a
major factor in increasing the annual number of
patients served to 21 million, a rise of 3
million from previous levels. Some $5 billion
has been put into a reinsurance program that has
encouraged employers to retain coverage for
retirees and their families; 19 million people
benefited with reduced premiums or cost-sharing.
SAVING CONSUMERS MONEY Private
insurers are required by the law to spend at
least 80 to 85 percent of their premium revenues
on medical claims or quality improvements, or
they must pay a rebate to consumers. In 2012,
insurers had to pay $1.1 billion in rebates, an
average of $151 per family. Although Republicans
contend the law will drive up insurance
premiums, thus far it seems to have reduced
them. Any insurer that wants to increase its
premiums by 10 percent or more for people who
buy their own policies must justify the increase
to state or federal officials. As a result, the
proportion of rate filings that sought increases
of 10 percent or more fell from 75 percent in
2010 to 34 percent in 2012, and it is expected
to be even lower this year. The average premium
increase in 2012 was 30 percent lower than in
The law also provides for prescription drug
discounts to Medicare beneficiaries. More than
6.3 million older or disabled people have
already saved more than $6.1 billion on
prescription drugs since 2010 and will save even
more as a gap in coverage, known as the doughnut
hole, is filled in by 2020. And the law ended
lifetime dollar limits on services covered by
private plans, a matter of great importance to
people with very high medical costs. Annual
limits on what plans will pay are being phased
REINING IN HEALTH CARE COSTS Sharp
declines in the annual growth rate in overall health care spending and
in Medicare's cost per beneficiary have eased the pressure on federal
budgets and on private insurance premiums. The main factor was
presumably the recession, which made people reluctant to spend on
health care, but it is possible that the focus on reform has led many
providers to act more frugally. The law has reduced unjustified
overpayments to private Medicare Advantage plans, which enroll more
than a fifth of all beneficiaries, and despite fears to the contrary,
Medicare Advantage premiums have fallen by 10 percent and enrollment
has risen by 28 percent since the law was passed.
BETTER QUALITY OF CARE One
of the most promising aspects of the health reform act is its focus on
improving quality. The percentage of Medicare patients requiring
readmission to the hospital within 30 days of discharge dropped from
an average of 19 percent over the past five years to 17.8 percent in
the last half of 2012, an improvement due in large part to penalties
imposed by Medicare for poor performance and financial incentives paid
by Medicare to providers to encourage better coordination of care
after a patient leaves the hospital. A number of pilot programs in
Medicare and Medicaid have been started to reward quality, to
encourage doctors and hospitals to coordinate care, and to lower
costs. If enough of these experiments pan out, they could transform
not only Medicare but the entire health care system.
March 19, 2013:
The USA's Long History of Unsustainable Growth
in Health Care Spending
The United States has by far the most expensive
health care system of any country in the world.
Health spending constitutes more than 18 percent
of the U.S. economy, compared with less than 10
percent in the average industrialized country.
And not only is health spending high,
it is projected
to rise faster than gross domestic product over
the next 10 years.
This growing commitment of resources inevitably
means less money is available for other
For families, it means more expensive
insurance premiums, higher taxes, and lower
wages. For federal and state governments, it
means less funding for other public priorities
like education and infrastructure.
Looking to the future, projected federal
budget deficits are
primarily driven by rising health spending.
Other countries' experiences can help us assess
the opportunity cost of funneling such a large
proportion of our resources to health care. Switzerland offers
an instructive parallel,
as its health system resembles our own in
Swiss patients are usually able to choose any
doctor, and have rapid
access to specialist care. The Swiss
buy private health plans through regional
by competing insurers.
The federal government provides sliding-scale
subsidies for those with low incomes, much like
Patient Protection and
Affordable Care Act's state insurance
that will be operating by 2014.
Switzerland also resembles the U.S. in that,
over the past 30 years, we have had the two most
expensive health care systems in the world.
However, we have by now left even Switzerland
In 1980, per capita spending in both countries
was roughly equal; in 2010, U.S. spending
surpassed Swiss spending by nearly $3,000 per
The difference in spending between the two
countries allows us to put a price tag on how
much our health care spending has exceeded that
of every other country in the world.
If we had spent only as much per person as
Switzerland did over the past 30 years, we would
have saved about $15.5 trillion.*
What could that $15.5 trillion buy if we had it
It would be enough to transform our $11.6
trillion federal debt into a $3.9 trillion
At current tuition levels,
it would send over 175 million students to a
We could use it to
cover an area the size of South Carolina with
solar panels, generating more carbon-free
electricity than the U.S. even uses.
come to think about it is probably a very good
use for the state of South Carolina, apologies
to Stephen Colbert.)
could buy everyone in the world four iPads.
(Which as I think about it, is probably NOT a
very good idea since they are mostly made in
Why do we spend so much on health care? Contrary
to what one might expect, the U.S. has one of
the youngest populations among industrialized
countries, and we
go to the doctor and hospital relatively
infrequently. Instead, research
suggests that the difference in health spending
between the U.S. and other countries largely
comes down to higher
We spend more because our physician
hospital stays, pharmaceuticals,
and procedures are
The high cost of American health care would
perhaps be justified if we received the
highest-quality care and achieved the best
health outcomes. Unfortunately,
evidence suggests that the U.S. health system
does not deliver notably superior care,
and in fact lags
other countries in
important areas such as access, care
coordination, and patient safety.
people in the U.S. have
health outcomes than
in most developed countries.
Couple these failures with the fact that the
U.S. is the only wealthy country that does not
yet ensure universal insurance coverage, and the
inefficiency of the U.S. health system comes
Patient Protection and
Affordable Care Act, in addition to expanding
and strengthening insurance coverage, contains a
number of provisions to slow the growth of
health care spending. These include new ways to
pay for care that incentivize quality instead of
quantity; the creation of transparent health
insurance marketplaces to increase competition;
incentivizing primary care and prevention; and
the creation of an independent panel of experts
to propose Medicare savings if spending
increases faster than GDP plus 1 percent. In
addition, the Commonwealth Fund Commission on a
High Performance Health System has released a
report proposing further payment and delivery
system reforms and consumer incentives, which
together could improve health system performance
while generating $2
trillion in savings by 2023.
The success of these
and future reforms will be essential in ensuring
we do not spend another 30 years moving further
along our path of unsustainable health care
* This figure is in 2012 dollars adjusted for
Consumer Price Index inflation. When not
adjusted for inflation, the figure is $11.8
March 18, 2013: Too Many Americans Still Believe the Lies About
And whose fault is this? Well, I do fault
who failed to take the initiative and the high
ground immediately after the passage of the Act
in March 2010. By his keeping a low profile and
not getting out to explain what was really in
the law, the right wing media echo chamber was
able to flood the airwaves with lies,
distortions, gross misrepresentations and
out-and-out slanderous statements about the new
law. Repeated over and over again by the likes
of Sean Hannity, Rush Limbaugh and Glenn Beck,
the lies took on an aura of right-wing
"truthiness," to quote Stephen
Colbert. The fact that the lies are still
believed and repeated endlessly even today by
the likes of Congresscritters Michelle Bachmann
and Steve King, half-term governor and
conservative media princess Sarah Palin, and by
tens of thousands of Tea-Party activists fueled
by Koch brothers billions is proof of the
failures of the American education system.
Jeanne's Weakly Lawyer Jokes for the
Week of March 18, 2013
How we are told our laws are made ...
There Oughta-Be a Law
that we have laws for everything but the stuff that can really get on
our nerves. For instance, "there oughta be a law" to protect citizens
from the airline passenger who maintains his seat in a fully reclined
position while an in-flight meal is being served. So I propose that we
start passing some much- needed legislation to crack down on the
For the rest, go to ...
How our laws are really made ...
Accountable Care Organization: Early Adapters
Report on Successes and Failures
The Commonwealth Fund has issued one of the
first reports on the successes and failures in
implementing Accountable Care Organizations
under Obamacare. ACOs are being relied upon to
bring major savings to the delivery of health
care in the U.S. According the agency formerly
known as the Health Care Financing
Administration, now called the Centers for
Medicare and Medicaid
accountable care organization (ACO) is a health care organization
characterized by a payment and care delivery
model that seeks to tie
provider reimbursements to quality
metrics and reductions in the total cost of care
for an assigned population of patients.
A group of coordinated health care providers
forms an ACO, which
care to a group of patients. The ACO is
accountable to the patients and the third party
payer (Medicare is only the originator, but all
payers may participate) for the quality,
appropriateness and efficiency of the health
care provided. CM2 describes an ACO
as "an organization
of health care providers that agrees to be
accountable for the quality, cost, and overall
care of Medicare beneficiaries who are enrolled
in the traditional fee-for-service program who
are assigned to it."
Department of Health and Human Services (DHHS)
has finalized the initial set of guidelines for
establishment of ACOs under the
Medicare Shared Savings
Program (Section 3022 of PPACA).
These guidelines stipulate the necessary steps
that voluntary groups of physicians, hospitals
and other health care providers must complete in
order to partake in an ACO.
PPACA, the MSSP
"promotes accountability for a patient
population and coordinates items and services
under parts A and B, and encourages investment
in infrastructure and redesigned care processes
for high quality and efficient service
existence of the Medicare Shared Savings Program
ensures that ACOs are a permanent option under
Medicare. However, the specifics of ACO
contracts are left to the discretion of the
Secretary of the Department of Health and Human
Services, which allows the ACO design to evolve
or devolve over time. Thus these reports from
the early adopters (those on the bleeding edge)
are very important to the future development of
the concept and its potential successes or
on interviews with clinical and administrative
leaders, this report
describes the experiences of seven accountable
care organizations (ACOs). Despite
gaps in readiness and infrastructure, most of
the ACOs are moving ahead with risk-based
contracts, under which the ACO shares in savings
achieved; a few are beginning to accept
"downside risk" as well. Recruiting physicians
and changing health care delivery are critical
to the success of ACOs -- and represent the most
ACO leaders are relying on physicians to design
clinical standards, quality measures, and
financial incentives, while also promoting
team-based care and offering care management and
quality improvement tools to help providers
identify and manage high-risk patients.
The most advanced ACOs are seeing
reductions or slower growth in health care costs
and have anecdotal
evidence of care improvements. Some
of the ACOs studied have begun or are planning
to share savings with providers if quality
benchmarks are met.
In the continuing drive toward a
higher-performing health system, and to
reposition themselves in a changing health care
marketplace, hospitals and physicians are
forming accountable care organizations (ACOs).
In so doing, they are forging contractual
relationships with payers that reward
achievement of shared goals for health care
quality and efficiency.
The Affordable Care Act established ACOs --
initially a private-sector innovation --- as a
delivery system option for Medicare. As of
January 2013, more than 250 ACOs have contracted
with the Centers for Medicare and Medicaid
Services (CMS) to cover more than 4 million
Medicare beneficiaries. A small but growing
number of state Medicaid programs are also
implementing or exploring ACO-type arrangements,
to coordinate care and restrain cost growth as
they prepare to expand eligibility under the
health reform law. Though the total number of
ACO arrangements in the private and public
sectors is difficult to estimate, recent
findings from surveys and evaluations
suggest that the U.S.
health care system is at the beginning of the
ACO adoption curve.
specific arrangements vary, the basic ACO model
involves a provider-led entity that contracts
with payers, with financial incentives to
encourage providers to deliver care in ways that
reduce overall costs while meeting quality
standards. ACOs rely on
assignment of enrollees to primary care medical
homes, communication among providers, strong
management of high-risk patients across the
continuum of care, and extensive monitoring of
Although ACOs are in their infancy,
early results suggest
modest savings and significant promise.
Health care researchers and planners are
therefore stressing the importance of learning
from early adopters -- particularly how they are
transforming the delivery of care, designing
incentives and sharing rewards with providers,
and tackling a multitude of challenges.
This report describes the experiences of
seven hospital-physician organizations that have
created ACO-type entities and begun risk-sharing
arrangements with public and private payers, or
will soon start them. Covered populations
include formerly fee-for-service Medicare
patients, a health system's own employees,
enrollees in commercial health plans, Medicaid
beneficiaries, or a combination.
Based on interviews with leaders of
hospitals and physician groups, we explore the
changes in health care delivery and payments
that ACOs have pursued, the challenges they
face, and their expectations for next steps. We
describe the strategies for clinical integration
and practice management that ACO administrators
view as most promising, and present some early
results. We also identify lessons for other
organizations considering embarking on an ACO.
Finally, we suggest insights for policymakers
seeking to learn how public policies and
incentives can spur hospitals and physician
groups to participate in accountable care
March 13, 2013:
Congress Isn't the Only Thing That's
Dysfunctional, Americans and Their Health Care
System are Too.
March 13, 2013:
Patients Don't Want to Care or Control Health
Care Costs -- They Want to "Stick it to Their
In recent years,
consumers have increasingly been encouraged by
employers and insurers to help control rising
health care costs by avoiding unnecessary tests,
buying generic drugs and reducing visits to the
emergency room, among other things.
The hope is that
patient better educated and more engaged in
health decisions will choose options that will
promote better health and decrease costs.
"patient engagement" efforts assume that
patients welcome the opportunity -- or at least
are willing -- to get more involved in their own
care. But as a study published last month in the
majority of patients didn’t want to factor costs
into their medical decisions, nor did they want
their doctors to do so.
The study investigated the attitudes of focus
group participants in Washington, D.C., and
Santa Monica, Calif., toward weighing their own
out-of-pocket costs as well as the costs borne
by their insurer in medical decisions. The
participants, researchers said,
did not generally
understand how insurance works and felt little
personal responsibility for helping to solve the
problem of rising health care costs.
They were unlikely to
accept a less expensive treatment option, even
if it was nearly as effective as a more
In an interview with study co-author Susan Dorr
Goold, a professor of internal medicine and
health management and policy at the Center for
Bioethics and Social Sciences in Medicine at the
University of Michigan, Kaiser Health News found
some more disheartening impressions from the
public about controlling health care utilization
and costs. This is an edited transcript of that
What if anything about the findings surprised you?
as a team were surprised at how firmly and frequently
people talked about not wanting cost
considerations to factor into decision-making at all. It
surprised us as we were analyzing the data that there weren't some
people speaking out and saying, "Wait,
we're all going to pay more if we don't consider the costs."
We heard it, but not very often and not very much.
If patients think we shouldn't consider costs
at all, doctors are put in a difficult position.
But isn't it true that doctors don't generally like discussing the
cost of care with patients?
other research has shown is that doctors feel
some responsibility to help contain health care costs.
However, they feel even more responsibility to patients.
In the study, you asked patients to consider how cost might influence
their thinking if, for example, someone had a headache for three
months and discussed getting an MRI versus a CT scan with his doctor.
In this scenario, the doctor explained that a CT scan would identify
nearly all the problems that were serious enough to need treatment for
a fraction of the cost of an MRI. In general, people were unwilling to
consider the cheaper test. How do you interpret that?
A. As a
research team, we talked about what might have happened if we had
chosen a different example. When you talk about headache, you're
talking about your brain. What if we'd talked about toenail fungus
instead? Is getting rid of it worth a treatment that's nearly a
thousand times more expensive? There's a whole spectrum of medical
problems, from life threatening to living with ugly toes.
Although we know from other research
patients certainly consider their out of pocket costs, they're not
very good at deciding what's worth spending extra money on.
Doctors have to be part of the discussion about the value of different
Q. One of the
beliefs people expressed was that you get what you pay for, that more
expensive care is by definition better. That seems like a very
"American" attitude, doesn't it?
idea that you get what you pay for is a very
American, market-oriented point of view. I often talk to
patients about generic versus brand-name medications, for example, and
how for the most part there's no difference in value. If you're trying
to get your blood pressure down or treat a rash, using a generic
medication is fine. But you'd be surprised at
how many people resist something just because it's cheaper, even if it
is just as good.
Participants seemed to feel that since they're paying health insurance
premiums they should be entitled to unlimited care whenever they need
it. How do health insurance claims differ from auto insurance or
homeowners' insurance claims?
Health insurance is different because we're not talking only about a
rare, catastrophic event. We're talking about all kinds of events. The
fact that you've been paying into the insurance plan gives you a just
claim to resources needed to care for your needs.
But paying into insurance doesn't mean
that you can ask them to pay for anything and everything you ask for.
It should be a real health need, a legitimate service and at a
car repairs, insurers would say that you have to get a couple of
estimates, and they want to make sure the price is reasonable, and
they're not going to give you a sun roof if you didn't have one
before. You get a replacement for what you lost. But with health care
it's not necessarily a rare and expensive event. It could be an
ongoing event for a particular person. If you have diabetes and heart
disease, you may have doctor visits every couple of months. So it's a
little bit different than car insurance.
People expressed concern that they don't want physicians to factor in
patient resources when they make treatment decisions. Care should be
the same, they said, whether someone is penniless or just flew in on a
private jet. To what extent do patient resources influence care?
matter if you flew in on your private jet or came in penniless off the
street, for the most part I'm going to recommend the same treatment.
That doesn't mean you'll be able to afford it. Lots of places have
looked at what care we should pay for, and
frankly the insurance companies are making those decisions now.
They're deciding what's covered and what's not, what's medically
necessary and what's not. That's a judgment.
No matter what kind of system you have,
somebody has to decide what's going to be paid for.
In the study, you found that some participants seemed motivated to
choose expensive care "out of spite," because they were antagonistic
toward their insurance company. What's going on there?
There was an almost vengeful attitude toward insurance companies, the
idea that "I've been paying in and now I'm
going to get what I'm owed," or
"I'm going to get them back for all the money I've paid in all
these years." The motivation that
"I'm sick and I don't want to think about the money,"
that's understandable. But "I want to hurt the insurance
company?" Why? Those health care payments come from
money all of us have paid to insurers. It's an interesting finding
that requires more looking into.
March 12, 2013:
Marilyn Tavenner, Acting Head of CM2
(and Nominee for Administrator) Gives "State of
the Agency" Report
working for nearly three years behind the scenes
overseeing the implementation of the massive
health law, Marilyn Tavenner is increasingly
stepping out in public to talk about her
"I think we are going to have all the
steps in place to get it done,"
Tavenner told a gathering of for-profit hospital
executives last week regarding the historic 2014
expansion of health coverage under the Obamacare
This week, the acting Centers for Medicare and
administrator plans to address health
information technology executives at a
conference sponsored by the Health Information
and Management Systems Society. And not too long
from now, Tavenner hopes to be sitting behind a
microphone at a planned -- but not yet scheduled
-- hearing by the Senate Finance Committee on
her nomination to become permanent head of CM2.
Tavenner told reporters that she was very
encouraged by a meeting she had last week with
the committee's chairman Senatecritter Max
Baucus, D-Mont., concerning her nomination.
Tavenner's remarks at the meeting, sponsored by
the Federation of American Hospitals could hint
at her testimony before the Finance committee.
She cited various "metrics" detailing
accomplishments under the "Obamacare" health law
(PL 111-148, PL 111-152). But the main event in
terms of metrics will come this fall when CM2
sees how many people will be covered under
expanded state Medicaid programs and how many
come to insurance exchanges to obtain health
"part of what we will call
our insure America campaign,"
that area, there is much uncertainty about how
many of the uninsured will sign up.
"We are going to need your help,"
Tavenner told the hospital executives. CM2
is holding off until summer in starting its
enrollment outreach campaign, she said.
Research shows that
if CM2 gets too much of a head start
in talking to people about tax credits to buy
coverage in 2014,
and then people are told those credits won't be
available for six or seven months,
"they start to lose interest,"
Tavenner was asked by a questioner what
hospitals -- often what he called
"the first door"
for the uninsured into the health system --
could do to ease enrollment in health plans
under the health care law.
Many hospitals, she said,
have someone in their emergency departments who
acts as a Medicaid liaison. Those staffers will
have enrollment information and will be trained,
she said. Hospitals also will be able to help
individuals with online enrollment, she added.
And they'll be able to direct the uninsured to
toll-free telephone lines with counselors
available to provide guidance.
In states where the federal government will
operate the exchange, federal officials will
launch navigator programs to aid enrollment,
including by having navigators in some hospital
emergency departments. In states that operate
their own exchanges, such programs are required.
CM2 will begin to roll out the
navigator program between April and July,
she said. In addition, the CM2
regional offices will have liaison staff who
will send out teams to individual hospitals to
help them prepare to enroll the uninsured. She
added that "all types" of volunteers will be
trained to provide assistance, including those
from faith-based organizations.
Health Law Measures
Tavenner reviewed for the hospital executives
what CM2 counts as the
accomplishments so far
under the health law: about three million people
in their early to mid-twenties with coverage
under their parents' health plan; 34.1 million
Medicare beneficiaries who got some form of
preventive care in 2011; 54 million privately
insured Americans with improved preventive
benefits; 135,000 Americans with costly
pre-existing medical conditions who obtained
coverage through the PCIP program; and 6.1
million Medicare enrollees with $5.7 billion in
drug discounts under expanded drug coverage.
Another metric she cited relates to cost.
"What we've seen is zero percent growth in
health spending as a percentage of GDP between
2009 to 2011. This is the lowest sustained
growth in 50 years and low growth is continuing
into 2012 for Medicare and Medicaid,"
she said. Some
$2.1 billion has been returned to consumers in
rebates under medical loss ratio rules,
Tavenner said. The percentage of double digit
premium increases by insurers
"has gone from a high of 75 percent in 2010
to 14 percent so far in 2013,"
she said. Average family insurance premiums in
2012 rose four percent.
"I think you would all agree that that's a
lot lower than our history."
Questions on Health I.T.
Tavenner also addressed
the adoption of health information
technology, which has received a big boost under
the Obama administration.
Recent press coverage has focused on
inappropriate billing fueled by the technology
and an absence of federal audits to confirm that
providers are making
of health I.T. as they are required to in order
to qualify for higher Medicare and Medicaid
Tavenner said it's true that the wider use of
electronic health systems has had the ill effect
of an increase in inappropriate "upcoding" of
bills submitted by facilities for Medicare
payment. But the administration is
"very much committed"
to further I.T. adoption, she said.
"We've seen great success"
with health I.T. Some of the upcoding reflects
having better tools to document care and so is
appropriate, she indicated. But because of the
way the records are designed in some cases
"it may be a little too easy"
for billing staff to upcode inappropriately and
there may not be enough of a
management and clinical management functions associated
with the records,
she added. Changes perhaps are needed
make sure that physicians have a chance to
the work of billing staff, she said.
"Part of what we're going to do this year is
spend a lot of time around the education and
around the audit process,"
she said. CM2 is talking about having
a series of seminars with providers throughout
the year to foster appropriate billing, she
Vendors are also going to need to have
safeguards in their records to make sure that
it's not too easy to enter the wrong code,
"These are kind of the natural growing pains
that we expect,"
"What we'll do is spend
2013 pausing and reflecting on these areas to
try and increase the education, make sure we
have the vendors on board, make sure we do some
small targeted audits."
March 11, 2013:
Crazed TeaParty Senators Plan to Block Funding
for Obamacare, or Shut Down the Government
Sen. Marco Rubio, R/T-Fla., to the list of
lawmakers who wants to
cut funding for the 2010 health care law as part
of the debate over government funding for the
remainder of the fiscal year. In an
interview with radio show host Hugh Hewitt,
Rubio said he'll
support legislation to fund the government
through September 30
only if it contains language to defund the
is going to be an implementation disaster. It's
going to hurt our economy severely, and we
aren't spending enough time talking about that,"
This week, the Senate is expected to consider --
and amend -- House-passed
legislation that would fund the government
through the end of the fiscal year.
The bill did not
include $949 million in additional funding
that the Office of Management and Budget
requested for the Centers for Medicare and
Services, which is overseeing
much of the roll-out of the health law. The
House measure keeps "sequestration" -- the $85
billion in automatic budget cuts that began
March 1 -- in place. The bill would fund the
government beyond March 27 when the current
"continuing resolution" expires until the end of
the fiscal year on September 30.
the OMB request did not specify what the $949 million would fund,
"it was pretty well known"
that the money was to be used to implement
Obamacare's exchanges, said Matt Dennis, a spokesman
for Housecritter Nita Lowey, D-N.Y., ranking member of the House
Appropriations Committee. The exchanges are marketplaces being set up
in each state where individuals and small businesses will be able to
purchase insurance coverage. The exchanges
are scheduled to begin enrolling individuals in October for coverage
to begin January 1. Just after the House passed the measure
March 6, Lowey said that "without I.T.
infrastructure to process enrollments and payments, verify eligibility
and establish call centers, health insurance for millions of Americans
could be further delayed."
Cohen, who heads the CM2 Center for Consumer Information
and Insurance Oversight, nevertheless told reporters in a conference
call March 7 that the health law's exchanges would be up and running
by October 1 in all states. But if Republican
efforts to defund the health law are successful, all federal funding
would cease. Total nut job and McCarthyite Senatecritter
Ted Cruz, T-Texas, has said that he plans to offer an amendment on the
floor that would delay funding of the 2010
health law. Cruz has also introduced legislation to repeal
the law. The health law "should not be
implemented at [a] time when our economy is struggling so mightily, at
a time when its implementation could push us into a full recession," he
said in a statement.
Cruz, the other newly-elected nut job TeaParty Senatecritter, Mike
Lee, T-Utah, has said that he will object to
Senate consideration of the continuing resolution unless the floor
action includes a vote on defunding the health law.
"At this time of fiscal turmoil, Congress
shouldn’t borrow more money to pay for something we cannot afford,"
Lee said in a statement.
Republicans have passed several measures to defund the health law and
House Speaker John Boehner, T/R-Ohio, told reporters March 7 the House
would do so again. "We have voted several
times to defund Obamacare," Boehner said.
"I am sure we will again this year."
Despite President's Obama's overwhelming victory in the 2012 election,
despite the fact that Democrats gained two seats in the Senate, and
despite the fact that Democrats outpolled Republicans in House
elections by more than 5 million votes -- gerrymandering and
filibustering have allowed TeaParty Republicans to control the
Congressional agenda by repeated threats to block Obamacare, to refuse
to pay for national debts already incurred and to throw the works of
government into disarray. Government by the minority seems to be their
And of course, when the economy does come crashing down again because
of their obstinacy and perfidy, they can blame it all on Obama and
March 11, 2013:
TeaParty Housecritter Paul Ryan Reintroduces his
Bill to Effectively End Medicare and Repeal
March 8, 2013:
Addressing the Provider Shortage Under Obamacare
you may have realized by now that I am a strong advocate for
roles for nurse practitioners (and to a slightly lesser extent
for physician assistants.) Former U.S. Senatecritter Tom Daschle (D.S.D.)
has written a piece in Health Affairs addressing one of the major
concerns that could become a problem for the successful implementation
of Obamacare -- the shortage of qualified providers to meet the demand
35-45 million more insured Americans will place on the nation's health
infrastructure. I have edited the copy below.
of Medicine and the National Research Council reported that
Americans die earlier and live in poorer health than
people in other industrialized countries. This is the latest
evidence of the urgent need for health reform, as embodied in the
Patient Protection and Affordable Care Act (affectionately known as
PPACA's recent enactment has
triggered a series of new and concerted efforts to address some of
the many challenges relating to health care cost, access and quality
that the U.S. faces today. One of the most important challenges
involves the number and mix of health providers that will be needed
to meet the demand resulting from changing demographics, more
expansive availability of health insurance, and a new emphasis on
wellness and preventive care.
In this post, I discuss some of the factors that bear on this
challenge, and I suggest some policy steps that we could take to
help develop the workforce needed for the post-health reform world.
Two facts in particular inform the debate and are relevant to finding
the correct solutions. The first is that the country will require a
very diverse mix of health care providers in the future.
Primary care physicians, nurse practitioners,
physician assistants, nurses and pharmacists are going to be in
greater demand. The second fact
is that, while the need for a diverse workforce is clear, the right
balance is not.
Given the dramatic changes in the way health care services will be
offered and paid for, it may take years for the country to determine
the appropriate mix of providers. The ultimate resolution depends on
answers to several important questions. How many physicians plan to
retire in the coming decade? Given demographics, the retirement of
baby boomers, and the implementation of new health services under the
Patient Protection and Affordable Care Act, how many more
Americans will be seeking additional care? What kind of care? How much
more efficiency can be achieved with new health care models? How much
unnecessary care could be eliminated? How much more responsibility in
the new health paradigm can be given to providers who are not
of American Medical Colleges (AAMC) predicts that the need for
physicians within the country will increase substantially over
the coming decade. They argue that this is especially true of
pediatricians, internists, family physicians and general
practitioners. According to the AAMC, by
2020, the number of additional providers required will exceed 90,000,
half of them primary care providers, and by 2025 we will need an
additional 130,000, again half in primary care. That is roughly a 14
percent increase over the more than 950,000 physicians who practice
growing number of health experts argue that,
because physicians have increased their patient-load capacity through
team-based approaches and a larger support staff with increasing
efficiency, these numbers are inflated and unnecessary.
In addition, because the health care work
force is being transformed, nurse practitioners, physician assistants
and other primary care providers are at long last taking on larger
With no resolution in sight, enrollment in U.S. medical
schools is cautiously inching upwards. First-year
enrollment in U.S. medical schools rose last year by 1.5 percent to
over 19,500 students. Annual increases have
averaged approximately 2 percent since 2006, and the number of medical
students who now seek a specialty in family medicine continues to
slowly rise. Reports vary, but with over 2700 primary care residency
slots available, almost 2600 have been filled. There
is cautious but growing optimism that the goal to increase enrollments
30 percent by 2016 is within reach.
[Jeanne Interrupts: See: "Addressing
Physician Dyspepsia" for another perspective on why the U.S. may
not be educating as many physicians as it needs ... the Medical Guild
may just be protecting its turf.]
back to Senatecritter Daschle ...
As part of the enactment of the
Patient Protection and Affordable Care Act, the
administration is now implementing a new program designed to address
the primary care shortage. The Teaching
Health Center Graduate Medical Education program was
authorized under the Act and began to operate in 2011. It provides an
additional $230 million over five years to support primary care and
Regardless of the differences of opinion on the projected need for
additional health providers, there is no
debate that our current system denies tens of thousands of applicants
the opportunity to enter medical school. There were over
45,000 students who applied for medical school in 2012 and over 25,000
who failed to be admitted.
The problem isn't limited to medical schools.
An increasing number of medical school graduates are now being
denied entry into a residency program. That is largely due
to the current cap on the number of residencies that the federal
government finances through its Graduate Medical Education (GME)
program. There are approximately 115,000 physicians engaged in
residencies at a per-resident cost to the federal government of over
$100,000 a year, or a half-million dollars over each entire residency.
The GME program has long been funded in two separate mechanisms. The
government provides approximately $3 billion in direct GME payments,
largely for the salaries of residents and supervising physicians. It
also provides $6.5 billion in indirect medical education payments to
qualifying hospitals to subsidize other expenses associated with
running training programs, such as longer inpatient stays and more use
In recent years, there has been increasing scrutiny of
GME funding amid unprecedented budgetary pressure on both
Congressional and administration policy makers. MedPAC,
other reputable organizations have called for a substantial reduction
in indirect GME funding. Some have suggested both reducing the federal
commitment and consolidating the two programs.
The number of international
medical graduates who now compete for available slots exacerbates the
problem. In recent years, nearly 7,000 of these graduates have
competed with American medical school graduates for the limited number
of residencies available. Today, approximately
25 percent of all physicians who practice in the United States have
received their medical training in foreign countries.
While some of these graduates are U.S. citizens, there is increasing
concern that this country, along with many others, is taking the best
and brightest medical talent from countries that arguably need it even
The Way Forward
So what do we do?
I would propose five specific actions that, taken collectively, could
be consequential in addressing this complex problem. Unfortunately,
each proposal recognizes that there are no easy answers and that
achieving any solution poses a great challenge in itself. But unless
the country considers our options and gets on with addressing these
challenges, it will miss the opportunities that this transformational
and historic time offers for meaningful reform.
First, the entire health sector requires far more transparency. One
can't fix what one can't see, and many of the solutions to the
problems involving health costs and provider availability are
impossible to ascertain as a result. How many providers would we need
if we could eliminate unnecessary care as a result of our
volume-driven health care infrastructure?
Transparency would also assist in understanding the need for better
utilization of all primary care practitioners. However, both
government and private analytic organizations should make a concerted
effort to determine with far greater clarity what the anticipated and
appropriate need will be for each category of practitioners. Only by
starting here can we make an appropriate fundamental judgment about
the proper provider balance while setting realistic goals on how to
Reforming the GME program.
Second, given the need to find significant savings throughout the
health sector, a broad agreement on the need to do more with less
through greater efficiency and meaningful reform of the GME program is
Excessive payments for indirect medical education must be reduced.
Residents provide free labor to hospitals and enhance their
reputations. For Medicare to spend six billion dollars per year on the
program can no longer be justified.
Aggressive efforts should be made to streamline and reduce the cost of
residency training. Proposals to combine direct and indirect payments
should be carefully considered. Pay-for-performance programs should
be implemented that adjust GME payments based on the
training. GME programs should also be required in non-hospital
We must broaden the funding base for the GME program. Since both the
private and public sectors benefit enormously from the residency
programs offered to medical school graduates, both sectors ought to
have some responsibility for funding it. There is little likelihood
that, given current budgetary constraints including sequestration, the
federal government can fund an expansion of the program.
Diverting some of the resources to Teaching Health Centers would also
be a laudable beginning. That could allow for an opportunity for all
primary care practitioners to be included and be given equal access to
education and training required to meet anticipated workforce levels.
As a better understanding of the appropriate mix of additional
providers is acquired, the National Health Care Workforce Commission
that is called for in the Affordable Care Act should make specific
recommendations to the Secretary of Health and Human Services. The
Secretary should then be empowered, subject to Congressional review
and legislative veto, to raise or lower the ceiling based upon an
annual assessment of workforce availability and the long-term
projected demand for health care services.
In addition, policy makers should recognize that proficiency is not
necessarily guaranteed with prescribed lengths of time. The Commission
and the Secretary should consider providing qualified residents with
the option of "testing out" of certain levels of training to
accelerate their residency experience and reduce costs.
primary care. Third, beyond programs in
education, more incentives must be created to guarantee even higher
numbers of primary care providers in all health-related schools:
doctors, nurses, physician assistants, and pharmacists. Primary
provider payments in all health settings should reflect the greater
need and appreciation for the health services that they offer. "Scope
of practice" laws should allow all primary care practitioners to
practice to the fullest extent of their training. Finally, we should
ensure that primary care and wellness programs are offered in all
health benefits insurance plans.
Promoting team-based care.
Fourth, our health subsystems should accelerate the team-based
approach to health care delivery. Patient-centered and team-based
health care, in addition to accountable care organizations and similar
models, should be embraced and utilized in virtually every health care
setting. Only in doing so can we be assured of greater efficiency and
more successful utilization of all health care providers.
The team-based model involves not only shared responsibility but
should always require clearly defined and shared goals. It must be
outcomes-driven with an emphasis on value that is clearly defined as
an outcome per dollar expended.
Relying less on international medical graduates.
Fifth, let us de-emphasize the increasing reliance on international
medical graduates in addressing the health provider shortage in the
United States. Developing countries are increasingly sensitive to the
problems associated with the emigration of providers from the
developing world. While embracing open immigration laws, we should
not continue to exacerbate the critical shortages of primary care
providers in the developing world by taking the best and the brightest
health workers when other more suitable solutions exist.
In this important and transformational time, the U.S. has an
opportunity to reconstruct our health paradigm in the most meaningful
and consequential way. The country must seize the moment, recognizing
the many challenges that encumber our effort.
And when we do, Americans will live better and longer while acquiring
far greater health care value than we have today.
March 7, 2013:
May Do Something Right: Medicare-Medicaid Dual
Health News this week ran a feature describing a program not only in
my home state of Arizona but in my very backyard, Apache Junction,
Arizona (Gold Canyon is the
town just beyond "AJ" as it is affectionately known by locals). As
Kaiser described it, even in the reactionary state of Arizona,
experiments are underway that are becoming
"a model for how a generously-funded, tightly regulated government
program can aid vulnerable, low-income patients." Not
only does this article reflect some very significant possibilities for
the success of Obamacare, but it features comments, insights and
advice from a very distinguished authority, Leonard Kirschner, M.D., a
man who I greatly respect and admire, a sometimes mentor, and I am
proud to say, a friend.
JUNCTION, Ariz. -- In a low-slung building in the vast desert expanse
east of Phoenix, a small school of tropical fish peer out, improbably,
from a circular tank into the waiting lounge of the Apache Junction
Health Center. The hallways of the nursing home are still. Only half
of the rooms are filled, and the men and women who live here seem
surely in life's final season. "These are
folks that have chronic cognitive and physical disabilities that are
not going to improve," said George Jacobson,
administrator of the nursing home.
That this nursing home is sparsely filled with residents too disabled
in mind or body to return home is a stunning achievement for Arizona's
public health insurance agency. A decade ago, 60 percent of Arizonans
covered by Medicare and Medicaid, and deemed sick, frail or disabled
enough to live in a nursing home, resided in a skilled nursing
facility. Today, only 27 percent of them do,
and the rest -- nearly three out of four -- live in assisted living
facilities or at home with the help of nurses, attendants and case
managers provided by government-paid health plans.
As Congress debates an ambitious and far-reaching effort by the Obama
administration to streamline medical care and rein in spending for the
nation's sickest and most expensive patients,
Arizona -- with its finger-wagging Republican
governor and Tea Party enthusiasts -- is occupying
an unusual place in the national landscape:
as a model for how a generously-funded, tightly regulated government
program can aid vulnerable, low-income patients.
The 9 million people nationwide who are
eligible for both Medicare and Medicaid are by far the sickest and
most expensive patients in the country. Known in policy circles as
their care costs federal and state governments some $300 billion a
year. And yet, although they suffer from physical
disabilities, dementia or pressing frailty, they are often caught in
the bureaucratic eddies that have plagued the two public health
insurance programs since their debut in 1965. These patients receive
medical and hospital services from Medicare and nursing home and
at-home care from Medicaid.
Largely left out of previous trends that swept patients into managed
health care with a single insurance company overseeing their needs,
"dual eligibles" are often subjected to duplicated tests and
unnecessary medical care, and must divine for themselves which
services are paid by which program. That's not the case in Arizona
where state health officials have aggressively applied managed care
strictures for more than two decades. While
Arizona was the last state to join Medicaid in 1982,
an early adopter of paying
private health plans to
manage care for public beneficiaries. That
was in part
because Arizona's system of providing basic medical service to its
most impoverished residents was in disarray. Arizona had long required
county governments to provide basic health care to impoverished
residents -- the first territorial legislature addressed the issue
during the Civil War. But each county "had
different eligibility, different packages and no Medicaid money,"
said Dr. Len Kirschner, a former state Medicaid director.
Still, in order to overcome Republican hostility to the federal
insurance program for the poor -- and the federal dollars that would
flow for the first time into the state -- lawmakers "didn't want anything that sounded like
Medicaid," said Kirschner.
"So they came up with this name." The Arizona
Health Care Cost Containment System, in local parlance
AHCCCS or "access,"
is such a
pervasive brand in the state some beneficiaries and even lawmakers
don't realize it is Medicaid. And since its beginning, a long line of
the state's conservative lawmakers and governors have lent strong
Arizona's novel public-private
model in which health plans are paid a set monthly fee and are
expected to care for all of a patient's needs.
Safe At Home
Joseph Ford, 42, sits in his well-worn, floral upholstered chair in
the living room of the suburban Phoenix home he shares with his wife
and three young sons. His attendant has just arrived and makes her way
into the kitchen to chop vegetables for dinner. Later, she'll change
the sheets on Ford's hospital bed, which is pushed against the wall in
the entry way of the house where Ford sleeps every night. Ford's
disability is so severe -- he was injured in a car accident -- that he
cannot make it up the stairs. The state Medicaid agency has deemed him
at risk of institutionalization in a nursing home.
house is busy today. Dave Oxford, the case manager from his health
plan Mercy Care is here, too, peppering Ford with questions about the
nagging wound on his foot and whether he needs to change any of his
many medications. Oxford visits the homes of all of his clients in the
Phoenix area who are old or disabled enough to qualify for Medicare
and poor enough to qualify for Medicaid.
Oxford's visits every three months are part of a coordinated and
concerted effort to keep patients like Ford out of pricey nursing
homes and emergency rooms.
Mercy Care is a contractor of
the insurance giant Aetna, and like all health plans that compete for
Arizona's combined Medicare-Medicaid patients,
it receives a monthly fee per person that it must use to cover all
of a patient's needs.
Critics of managed care say the incentives
for companies to keep the cash and withhold care are too great, the
potential profits too tempting.
They point to the
scandal-filled 1990s when some HMOs in the private insurance market
nationally kept costs down by denying treatment. But today, in
Arizona, advocates for the elderly and disabled and the patients
themselves say the case managers from their health plans are less like
Grim Reapers and more like guardian angels. "Dave is cool. He's in my
cell phone," said Ford. He appreciates that someone is looking out for
him "and not just looking at me as a number on a paper."
The program gets praise from patients who are healthier than Ford,
too. Antonia Lopez, 75, doesn't qualify for home visits or a
caseworker because she isn't at risk for institutionalization. Still,
she has a heart problem, high blood pressure and diabetes. She said
she is very satisfied with the care she receives from her primary care
doctor and the nurse and office staff who call to check on her
regularly. Lopez and other patients around the state said they have
just one number to call for help getting a doctor's appointment, a
prescription filled, a new walker or wheelchair or even, in Ford's
case, if they need help with life's most basic necessities like doing
laundry and preparing dinner. "This is like a one-stop shop," said
Matt Cowley, the head of Medicare for Mercy Care.
This generosity toward the poor can seem at
odds with Arizona's cultivated reputation for self-reliance,
until, that is, the actuaries get involved: an Arizonan in a nursing
home costs the state $5,400 a month for custodial care alone. If, like
Ford, a patient can live at home, the cost is only $1,400.
This cold arithmetic has led to noble gains,
advocates say, in keeping people out of nursing homes and a reasonable
profit for insurance companies, who say they typically make two to
four-percent profit in Arizona.
The state's fervent belief that private companies are best suited to
deliver public services doesn't mean Arizona is the Wild West. Health
plan executives, hospital and provider groups, and case managers in
Phoenix and Tucson said in interviews that
state regulators are strict, vigilant and quick to rebuke health plans
that don’t meet their standards.
"We have 75 staff whose job it is to
oversee the health plans and make sure they are meeting all of our
said Tom Betlach, director of Arizona's
Medicaid agency, AHCCCS.
"We sit down on a
quarterly basis. We bring the plans in. We look at their performance."
Those requirements include quarterly reports on access
to medical care, quality measures and proof that patients are getting
needed services, like attendant care.
"If there is some speculation that the
health plans can't be trusted,"
said James Stover, head
of the University of Arizona Health Plan in Tucson,
"I think in Arizona, we've demonstrated
the health plans have been ... models for improved health."
Betlach testified before a Senate committee last December about the
results of Arizona's system: those Arizonans eligible for both
Medicaid and Medicare who were enrolled under one managed care plan
had a 31 percent lower rate of hospitalization than those in
traditional fee-for-service. They used the emergency department less
frequently, and when they did end up in the hospital, they spent far
fewer days and were readmitted less often.
There's widespread consensus here that
Arizona's model works because the state is what's known as a "good
payer": physicians and health plans are paid much higher rates than
nearly every other state.
Even with a recent rate
most physicians and hospitals in
the Grand Canyon State accept Medicaid patients, a mark of access not
found in many states.
Stover cautions other states
looking to replicate the Arizona model that the system is fragile:
managed care companies here can provide rich services and wide access,
he said, so long as state budget makers keep rates healthy.
For now though, health plans continue to see a business opportunity in
fine-tuning Arizona's model even more, by stamping out more wasteful
and unnecessary medical care.
March 6, 2013:
Commonwealth Fund: Cutting Medicare Benefits Not
a Long-Term Solution
Speaking last week at a U.S. Senate
hearing on ways to
strengthen the Medicare program, Commonwealth Fund president David
Blumenthal, M.D., made the case for
"comprehensive payment and delivery system changes that produce
lower costs and better value not just in Medicare, but across the
entire U.S. health system."
At the hearing, held by the Senate's Special Committee on Aging,
Blumenthal said that while cutting Medicare payments to providers,
reducing program benefits, or restricting program eligibility may
produce short-term savings, such drastic steps
"would be both morally and politically
difficult, as they shift costs onto elderly Americans, renege on
historic promises, and raise the prospect of second-class care for a
group that is particularly vulnerable."
"Morally Difficult" ??? Who would want to introduce a moral standard
to the discussion of private marketers taking over the entire U.S.
health care system? It's not as if religions have anything to say on
the subject. Do they? Free markets should determine these things, not
morality! (We really do need a "sarcasm" font for the Internet.)
March 5, 2013:
Your Health Insurance Premiums at Work:
Drastic Changes in CEO Pay Structure
Humana Inc. (NYSE: HUM) spent about
$323,000 last year to fly new CEO Bruce
Louisville and Houston, where his
family resides. Humana's agreement with
Broussard allows him to use the company aircraft
to commute from his residence to corporate
headquarters, according to the proxy filing.
Humana said the expense was part of its
employment agreement with Broussard, according
to an annual proxy statement filed Monday with
regulators. The 50-year-old executive joined
Humana as president in late 2011 and became CEO
on January 1, 2013, replacing long-standing
chief executive Michael McCallister.
Companies routinely spend about $200,000 on
travel for top executives aboard company
aircraft, said Charles Elson, director of the
Weinberg Center for Corporate Governance at the
University of Delaware. But he said that figure
normally includes trips to meetings, events or
hard-to-reach company locations.
He called the total
spent on Broussard's commute a big number.
becoming a CEO means you move to the place where
the company's located," he said.
"They pay you enough to do that."
Elson said Broussard and Humana may have a good
reason for the expense. But it also could send
the wrong message to people coming to work for
the company. "If the
CEO's compensation scheme becomes too divorced
from the rest of the organization, you create
all kinds of incentive problems,"
Last year as president, Broussard received total
compensation valued at nearly $2.9 million. That
included a $900,000 salary,
bonus of $1.3 million, and $631,154
in other compensation. The commuting expense was
included in the "other" category. In contrast,
McCallister, who still serves as company
chairman, received total compensation valued at
Humana is the nation's fifth largest health
insurer but the biggest provider of Medicare
Advantage plans, which are privately run
versions of the government's Medicare program
for the elderly and disabled. The company's
earnings fell 14 percent last year to $1.22
billion, or $7.47 per share, compared with 2011.
Revenue climbed more than 6 percent to $39.13
billion. Humana shares also sank 22 percent last
year to close at $68.63, while the Standard and
Poor's 500 index climbed more than 13 percent.
Humana shares fell $1.03 in Monday trading to
close at $66.85. That's down about 2.5 percent
since the start of the year.
And for this, Broussard was paid a $1.3 million
"performance bonus?" It looks like he should
have been fired. All of
this portends a future when the private
for-profit health insurance runs the entire U.S.
health care system and continues to bring such
efficiencies to the nation as a whole.
Do you know where your health insurance premiums
For pictures of other jets owned by for profit
insurance companies ...
March 4, 2013:
Drastic Changes in Physician Pay Structure
needs $138 billion over the next decade to avoid
steep cuts in physician pay, says a panel
convened by a major medical group. Avoiding
those cuts has become an annual scramble in
Congress known as
the "doc fix." In a
report released Monday, the panel ... mainly
composed of doctors ... concludes that there are
harmful, ineffective, or unnecessary"
services already being paid for in
Medicare that outside
funding is unnecessary. Better pay
for doctors who care and manage those with
complicated medical problems could also come
from money already in the health care system,
according to the National Commission on
Physician Payment Reform. The commission was put
together by the Society
of General Internal Medicine, which is made
up of about 3,000 physicians on faculties at
medical schools and teaching hospitals.
The panel also said
Medicare could save money by targeting payments
that vary based on where they are performed.
As an example, the panel noted that Medicare
pays $450 for an echocardiogram in a hospital,
but only $180 when the procedure is performed in
a doctor's office.
"There's no reason for that whatsoever,"
Patel, a doctor and researcher at the Engelberg
Center for Health Reform at the Brookings
Institution who was on the panel. The panel also
took on the powerful Relative Value Scale Update
Committee, (RUC) which is managed by the American
Medical Association. The RUC influences how
physicians are reimbursed through its
recommendations to Medicare, which sets
reimbursement rates and often follows its
advice. The panel joined a chorus
of criticism that
technology-heavy procedures such as surgery and
imaging are overly encouraged by high payment
rates. The report said the RUC's
dominance by specialists and the secretive way
it operates are "seriously
Overall, the panel called for speedy
changes in Medicare's
fee-for-service payment system so that within
five years doctors are paid in a way that
rewards value, not volume.
"Over time, payers should largely eliminate
stand-alone fee-for-service payment to medical
practices because of its inherent inefficiencies
and problematic financial incentives,"
the panel wrote. Medicare is already
experimenting with several new methods of
accountable care organizations and
bundled payments, and
Obamacare orders Medicare to make quality
part of the calculation in reimbursing
2017. Jonathan Blum, director of the
Center for Medicare, told the Senate Finance
Committee last week that
this was the most challenging task in the law's
changes in health care financing.
March 4, 2013:
Actually, a Lot
of Physicians, More Than You Might Expect,
Support Obamacare ... Enthusiastically!
March 2, 2013:
Health Affairs: Everything You Ever Needed to
Know About Health CO-OPs Under Obamacare
Starting in October 2013, people without access to coverage through an
employer, Medicaid, or the Children's Health Insurance Program will be
able to purchase health plans through health insurance exchanges for
coverage taking effect in 2014. These new marketplaces are one of
Obamacare's key mechanisms for expanding affordable coverage.
Recognizing that in some states only a small
number of insurance companies offer coverage for individuals and small
businesses, the health care law also established a Consumer Operated
and Oriented Plan (CO-OP) program to increase competition among plans
and improve consumer choice.
The federal government
has now awarded nearly $2 billion in loans to help create 24 new CO-OPs
in 24 states. The CO-OP sponsors ... consumer-run groups, membership
associations, and other nonprofit organizations--are now moving
forward to offer health coverage in competition with established
commercial and nonprofit insurance companies.
Many analysts are enthusiastic about the potential for CO-OPs to bring
competition and choice to the market. Others question whether the
federal loan initiative has been a wise use of taxpayer dollars, since
many CO-OPs will be at a disadvantage competing against
well-established insurance companies and may fail. This policy brief
describes the CO-OP program and examines issues related to its
implementation and likelihood of success.
February 28, 2013:
Finding Solutions to the SGR "Problem" Remain
chaircritter of the House Ways and Means Committee made clear this
past week that finding a solution to the
vexing issue of setting Medicare physician payment rates is on his
to-do list this year, and he got some tepid support from a
Housecitter Dave Camp, R-Mich., said that the effort could be helped
by a recent reassessment of how much it would cost. Earlier this
month, the Congressional Budget Office lowered
its cost estimate for
fixing Medicare's physician payment formula over the next decade to
$138 billion due to lower Medicare spending on physician services
during the past three years. In January 2012, the CBO estimated
the cost of the fix at $316 billion, which it reduced to $245
billion last August.
scores in half is certainly helpful,"
committee chairman told reporters Tuesday, adding later,
"that's still a very large number."
It may be even harder to find funding amid the ongoing fight
over "sequestration," a
package of automatic spending cuts set to kick in tomorrow. President
Barack Obama and lawmakers are also battling over how to fund the
government after the current continuing resolution expires on March
did not say where he would find the money to pay for the SGR overhaul,
but he has promised it "will
not add a dime to the deficit." He said he is working on
the proposal with a fellow Michigan Republican -- House Energy and
Commerce Committee Chaircritter Fred Upton. It
might be part of a larger piece of legislation or it might move on its
hard to know right now,"
he said. "I wouldn't close off any
avenue on that." Camp said the SGR legislation is part
of a broader committee agenda to examine safety net programs. The
yearly "doc fix" dilemma
stems from a 1997 Balanced Budget Act that called for setting Medicare
provider (including hospitals, nursing homes, home health and durable
medical equipment providers, as well as physicians) payment rates
formula known as the
"sustainable growth rate" (SGR), based on economic growth. For the
first few years, Medicare expenditures did not exceed the target and
doctors received modest pay increases.
2002, doctors reacted with fury when they came in for a 4.8 percent
pay cut. Every year since, Congress has
staved off scheduled cuts. But each deferral just increased the
size -- and price tag -- of the fix needed the next time.
and Upton, along with their panels' respective health subcommittee
chairs, have unveiled an SGR repeal plan that
would freeze physician payment rates at their current levels for the
next 10 years, with future increases based on individual physicians'
quality of care and efficiency.
said Tuesday he has not discussed the draft with either the White
House or the Centers for Medicare and Medicaid
Housecritter Jim McDermott of Washington, the ranking Democrat on the
Ways and Means health subcommittee, said the GOP outline
plenty of room for agreement if people want to find it." But he warned that making
beneficiaries finance the fix wouldn't fly.
done smartly, this issue could reshape our entire health economy for
the better, but costs just can't be hoisted onto the backs of
he said. "There are better options, with
strong policy justifications, to pay for the needed SGR policy
Bipartisan groups of lawmakers have proposed fixing the SGR formula in
the past, but have been unable to agree on how to pay for it.
February 25, 2013:
Commonwealth Fund Commission on a High
Performance Health System ... Change the Way
Docs are Paid
growth in overall health spending, as well as
Medicare spending, has slowed over the past few
years, and that trend is beginning to affect
long-term projections. As a result, the
Congressional Budget Office (CBO) estimated last
week that it would cost $138 billion to replace
the formula used to determine Medicare physician
fees, which is just
about half their previous estimate from June
The new, lower estimate provides an opportunity
to replace the existing payment formula with an
approach that promotes high-quality and
efficient health care.
A Republican-controlled Congress enacted the
Medicare provider payment formula, known as the
sustainable growth rate (SGR), in 1997
to control spending growth. Under this formula,
a target is set for provider (physician,
hospital, nursing home, home health and DME)
spending in each year (based on annual increases
in the gross domestic product), and
across-the-board cuts in payment rates are
triggered if those targets are exceeded.
The formula has produced cuts in every year
since 2002. Concerns about potential disruptions
in Medicare beneficiaries' access to care if
physician fees were reduced,
has led Congress has
override those cuts annually since 2003 (for
physicians, but not for hospitals and other
institutional providers ... without
changing the formula or addressing the
underlying causes of spending growth.
As a result, the
scheduled cuts have accumulated and Medicare
physician fees are now scheduled to be reduced
by about 25 percent in January 2014.
The high CBO "score" ... the estimated
increase in federal spending resulting from
legislative action ... has deterred Congress
from repealing the SGR altogether.
CBO's reduction in the
estimated impact of repealing the SGR offers a
chance to pursue a new value-based approach to
Medicare payment for physicians and other
providers. A move away from the
traditional fee-for-service payment model could
produce savings that offset the net cost of
repealing the SGR, while better aligning
provider incentives with Medicare's goals of
high-quality, efficient care.
of policies recently
proposed by The
Commonwealth Fund Commission on a High
Performance Health System would
replace the SGR formula with a broad-based
policy that would:
-- Maintain Medicare physician fees at their
current level (including the current 10 percent
payment increase for primary care) through 2023;
-- Devote any new
payments to supporting innovative payment and
delivery system arrangements, such as
accountable care organizations and
patient-centered medical homes that offer
coordinated, around-the-clock care;
relative values for overpriced and underpriced services;
-- Revise payments
for other providers to better align payment and value;
-- Enhance payment
for primary care providers in patient-centered medical homes and for
high-cost care management teams;
-- Offer lower
out-of-pocket costs for people with Medicare who designate and use
primary care providers or, as appropriate, high-cost care management
-- Provide higher
compensation for providers who participate in innovative, high-value
health systems and perform well; and
-- Make a single
"bundled payment" for hospital episodes, including all physician
services provided in the inpatient setting and related readmissions
within 30 days, with postacute care also included in the bundled
payment for selected conditions and procedures.
These proposals could produce
estimated Medicare savings of $587 billion and federal savings of $788
billion over the next 10 years, more than offsetting the cost of
repealing the SGR. They are part of a broader three-pronged
systemwide strategy that would reform provider payment to support
delivery system innovation, engage consumers by providing and
encouraging high-value health care choices, and help health care
markets reduce administrative costs by simplifying their policies and
making them more consistent.
These policies would involve all stakeholders in
taking action to improve health and lower costs.
The Commission's recommendations would address the factors driving
health care costs rather than cutting payments, reducing benefits, or
restricting access to care for vulnerable populations. Although those
strategies might achieve short-term savings, they will not solve the
health system's long-term problems. Repealing the SGR and
implementing payment reforms like those outlined here would be an
important step in the right direction. The new CBO estimates should
increase Congress' willingness to finally take on these important
issues, and it should, indeed, strike while the iron is hot.
February 22, 2013:
States Capitulate on Obamacare ... But Raise New Fears
Almost overnight, Florida has gone from being an ardent opponent of
the federal health care law to a laboratory for an ambitious
experiment under the law. If state lawmakers back Gov. Rick Scott's
plan to expand Medicaid, it will be an experiment with a determinedly
free-market twist. Scott's turnabout on the Medicaid expansion came a
few hours after the federal government tentatively approved his
application to fully privatize the federal- state program for the
poor. That development has put health providers and consumers in a
quandary: Most are elated that more than 1 million Floridians are in
line to gain health coverage starting next year and that hundreds of
millions in federal dollars will flow into the state to cover their
medical services. But they're also concerned
that that coverage will be delivered through managed care plans with a
mixed record of providing quality care in Florida.
groups worry about whether the health plans will have enough
providers, especially in rural areas, and whether they'll approve
services in a timely way. Nursing home operators fear that for-profit
insurers may try to move residents into lower-cost settings even when
that may be unsafe. And doctors and hospitals say they're concerned
about getting paid on time and about having trouble getting services
approved for their patients. "Hospitals'
experience with managed care varies plan to plan in the ability to get
patients into the right level of care ... and plans paying claims
efficiently and in a timely manner," said Bruce Rueben,
president of the Florida Hospital Association.
Scott is not the first Republican governor to support the Medicaid
expansion, which the Supreme Court made optional for states when it
upheld the health care law last June. The
governors of Ohio, Arizona, Michigan, Nevada, North Dakota and New
Mexico preceded him. But Scott's decision is arguably more
significant due to his state's size (19 million people), its large
number of uninsured (4 million) -- and his outspoken opposition (he
refused to acknowledge the law until the Supreme Court upheld its
Florida's Past Experiments With Managed Care
If the Republican-controlled Legislature approves his plan when it
meets next month, Florida would also become one of the largest to
require virtually all recipients of Medicaid to
enroll in private managed care plans which can limit which health
providers patients can see. Other states that have put
nearly all their Medicaid recipients in managed care include Arizona,
Tennessee, Kentucky and Pennsylvania, according to Joe Moser, interim
executive director of Medicaid Health Plans of America, a trade group.
"It's a proven model and not a new
concept," he said. About two-thirds of states already
use managed care companies as a part of their Medicaid programs.
Florida has done so for nearly two decades, with more than a third of
its 3 million Medicaid recipients in the private health plans.
These HMO-style plans get paid a set amount
of money by the state to provide coverage, and the enrollees generally
get care only from doctors, hospitals and other providers who have
contracts with the plans.
And in five counties, including those in Fort Lauderdale and
Jacksonville, it has run a pilot program mandating most recipients be
in managed care. Originally there were a number of problems, including
patients having trouble getting access and patient confusion about the
plans. In addition a number of plans dropped out because of fears
about losing money.
A 2009 University of Florida study, however,
showed the pilot, which did not include those needing long-term-care,
helped save the state about $100 million a year without increasing
consumer complaints. But the study
could not determine whether the savings came from the plans providing
less care or being more efficient. Under the tentative deal
approved last week by the administration, virtually all Medicaid
recipients would have to enroll in such a plan, including more than
100,000 living in nursing homes and those receiving long-term-care
services at home and in community-based settings.
"People have a right to be concerned about
quality of managed care because it does not have a strong track record
in Florida," said Joan Alker, co-executive director of
the Georgetown University Center for Children and Families.
Another example that critics cite is Wellcare Health Plans, Florida's
largest Medicaid plan, which last year agreed to
pay more than $137.5 million to the federal government and
nine states, including Florida, to settle accusations that
it bilked government health programs and
systematically dumped patients with expensive health needs.
The Tampa-based company never lost its state Medicaid contracts. But
Republican lawmakers who control the legislature say they have
addressed past shortcomings with better oversight of managed care
companies, increased reimbursement for doctors and more stringent
penalties, including fining plans up to $500,000 if they drop out.
Scott, a former hospital executive who ran hospital giant HCA,
HCA later settled Medicare fraud claims brought against it by the
federal government, paying over $1 billion in restitution and
penalties. The HCA fraud was committed during Scott's tenure as CEO,
but he left the company without being charged before the final
settlement, taking with him more than $200 million in a "golden
parachute." Somehow the people of Florida, in the 2010 hysteria about
government spending and budget deficits, decided he should still be
their governor and he was giving the keys to the state treasury. His
current approval and popularity ratings in Florida show that the
state's electorate is beginning to figure out that they elected a
crook.] ... said paying managed care companies
fixed fees helps the state budget by making costs more predictable and
also can improve care because the state can hold companies
accountable. Florida's Medicaid program costs the state $21 billion a
The managed care industry says it can improve care and lower costs by
making sure patients get preventive services and have care overseen by
a primary care doctor. "We will bring the
benefits of coordinated care to all low-income Floridians and give
them access to a primary care medical home, comprehensive care
management, and disease management programs," Moser
said. But when all is said and done, Floridians (and the rest of
America watching) should remember that just four companies dominate
Florida's Medicaid managed care market -- Wellcare, Wellpoint, Centene
and UnitedHealthcare -- which have 75 percent of enrolled recipients.
All stand to gain thousands of new customers
and millions in additional revenue.