February 17, 2012
12:40 pm
There’s a very illuminating story in the newest edition of National Journal (no, I can’t link to the article because it’s subscription-only material, but I urge you to check out the Meghan McCarthy article “A Fair Share” on page 38) regarding the actual out-of-pocket healthcare costs for Medicare beneficiaries.
The President’s proposed budget, released this past Monday, calls for over $32 billion in new beneficiary costs over the next decade assessed in the form of higher co-pays, deductibles and premiums for higher-income seniors. (More on the President’s proposed Medicare provisions here.) As President Obama said last fall, he is asking “the wealthiest Americans…to pay their fair share.”
What Ms. McCarthy points out in her article is that seniors, without even accounting for any Obama-proposed increases, are already paying plenty for Medicare coverage. As she writes:
- Americans under 65 spend, according to the Kaiser Family Foundation, about three percent of their income on healthcare. Medicare beneficiaries spend 16 percent, and that figure is expected to reach 26 percent by 2020.
- Under the Affordable Care Act, private sector employees who pay more than 9.5 percent of their income for health insurance will qualify for coverage in a state exchange and possibly be eligible for premium subsidies. According to Kaiser, seniors were spending an average eight percent of their incomes on Medicare premiums in 2006 and had no access to competitive insurance exchanges or subsidies.
- The White House wants 25 percent of beneficiaries, or 19 million people, to pay higher Medicare premiums or “more of their fair share.” Kaiser, according to Ms. McCarthy, has estimated that this 25 percent threshold will affect people not typically considered wealthy.
The National Journal article gets right to the heart of the dilemma. Under Medicare’s current structure, there are limited options to achieve financial solvency. Ms. McCarthy wrote, “And without an alternative to Medicare’s fee-for-service system, the government is limited to cutting provider payments – which the president’s budget also does, or asking seniors to cough up extra cash.”
And that raises the question, should there be other options? More to the point, shouldn’t Medicare beneficiaries, who are paying plenty for their healthcare, have the same option under-65 consumers will soon enjoy to shop in a competitive exchange for the health plan that offers the best value for their particular health needs and status?
February 10, 2012
3:19 pm
A great deal of news was made last month when journalist Ryan Lizza gained access to and posted a 56-page memo that was written by White House economic advisor Lawrence Summers early in the Obama presidency, outlining the possible steps the Administration could take in addressing the economic crisis.
Another White House memo unearthed by Lizza, one that received a significantly lesser degree of attention but that is fascinating nonetheless, has also entered the public domain, this one on the decision making process related to medical liability reform.
The July 2009 White House memo, written to the President by advisors Nancy-Ann DeParle and Susan Sher, can be found here. And the New Yorker blog post regarding the memo is here.
I’ll leave this memorandum for readers to absorb with a minimum of commentary on my part. There are some interesting points, though, worth noting:
· The memo underscores the challenge in getting liability reform legislation through the U.S. Senate. As DeParle and Sher note, “Majority Leader Reid has made it clear that he opposes any medical malpractice reform, creating a difficult environment for Democrats to step forward.” (Although, on a brighter note, the memo states that Senator John Kerry (D-MA) had privately expressed interest in working toward reform and Senator Tom Carper (D-DE) wished to work with the White House on a liability reform proposal.)
· A footnote in the memo undermines the efficacy of caps on non-economic damages as a liability reform option, saying there is no evidence that caps have reduced the frequency of medical liability claims. (Actually, there have been studies in Texas showing a decline in the number of malpractice suits since the state adopted tort reform.)
· Even though the President didn’t choose it as his preferred option, his advisors did place before him the possibility of providing some form of liability “safe harbor” to physicians who practice evidence-based healthcare guidelines. The Healthcare Leadership Council is among the organizations exploring this approach as a liability reform option, incorporating investment in health information technology – and the increased ability to access evidence-based practice guidelines — as a factor in providing greater protection to healthcare providers against litigation.
February 07, 2012
3:37 pm
Even before its implementation, for which the Internal Revenue Service issued regulations last Friday, the medical device tax is already taking a heavy toll.
Late last year, a major device manufacturer, Stryker (a Healthcare Leadership Council member) announced that it was reducing its workforce by five percent to prepare for the financial hit that comes with the new 2.3 percent excise tax. Similarly, another device maker, Covidien, said it would lay off 200 workers in the United States and move some of its production to Costa Rica and Mexico – again, to compensate for this new tax created as part of the Affordable Care Act.
So, the tally thus far is hundreds of jobs lost to a tax that hasn’t even taken effect yet. The question is, how much more damage needs to be done before Congress takes corrective action.
The logic behind the medical device tax – which is a 2.3 percent tax on revenues, not profits – has always been severely flawed. Device manufacturers, tax proponents said, would not be hurt because the money lost to increased taxes would be recouped from the millions of additional Americans acquiring health insurance when health reform takes full effect in 2014 and a commensurate increase in health services utilization.
That argument, though, doesn’t hold up against even casual scrutiny. The vast majority of newly insured citizens will be the young, healthy ‘invincibles’ who have heretofore elected to bypass health coverage. From this population group, there won’t be a heavy demand for coronary stents or artificial hips. In fact, most medical devices are used in acute care settings, where health providers are already required to provide care for the uninsured.
There is hope on the horizon. Representative Erik Paulsen (R-MN) has gained over 225 cosponsors – a majority of the House of Representatives – for his legislation to repeal the device tax, and he has indicated that he has the word of the congressional leadership that his measure will be brought to a vote early this year.
The Paulsen bill should be enacted by the House, and the Senate should swiftly follow suit, before more jobs are lost to a tax that doesn’t even possess an acceptable rationale.
February 03, 2012
3:57 pm
Earlier this week, I posted in this space about the need for Congress to take the issue of entitlement reform seriously, and to avoid undermining serious discussion about proposals to improve Medicare with glib 30-second sound bites and attack ads during the upcoming campaign season.
But I only addressed half of the equation that is instrumental to constructive discussion on this issue. As a group of physicians serving in Congress pointed out this week, organizations representing the interests of different population groups also have critical roles to play in this dialogue.
In an open letter to AARP, 18 doctors serving in the House and Senate point out, accurately, that “the American people deserve a mature, informed and thoughtful conversation about how to save the Medicare program and shore up its financing.” They add that, absent reform, “AARP members aged 50-56 today – as well as future members – will see the end of Medicare as we know it.”
The doctors, in the letter, invite AARP to participate in publicly urging all members of Congress, regardless of political party, to “acknowledge the approaching insolvency of the Medicare trust fund and the program’s structural financing challenges.”
They’re right. Structural change to Medicare, which is necessary if we’re to achieve long-term sustainability while maintaining quality and innovation for patients, will face a steep uphill battle if influential interest groups marshal their resources in opposition. To the contrary, progress relies not just on officeholders, but also powerful advocacy groups, acknowledging that the status quo cannot be maintained and that change is necessary.
All of us who are engaged in healthcare policy advocacy bear this responsibility.
February 01, 2012
12:55 pm
In its annual budget and economic outlook, the Congressional Budget Office has clearly outlined one of the most serious fiscal challenges the country is facing. As the U.S. population ages, healthcare spending is expected to rise by eight percent annually between 2012 and 2022. This means that government spending for Medicare, Medicaid and other healthcare programs will more than double to $1.8 trillion over the next decade.
The significance of this CBO report cannot be overstated. Medicare’s financial challenges aren’t in some distant, far-off future. They’re happening right now. Ignoring these problems today brings us closer to a tomorrow in which Congress will have to either significantly raise taxes or enact harmful cuts to Medicare services in order to keep the program solvent and prevent this spending escalation from becoming a drag on the economy.
This warrants serious discussion by our elected officials. To their credit, Senator Ron Wyden (D-OR) and Congressman Paul Ryan (R-WI) have advanced this dialogue through their bipartisan efforts on Medicare reform. Whether their colleagues in Congress will follow suit is an open question.
Last week, the New York Times’ Robert Pear authored an article, “Medicare Seen as Battleground Issue in Congressional Races.” In this story, it’s pointed out that congressional candidates are being urged by Washington, DC advisors to make Medicare a focal point of their campaigns, but not in any meaningful way that lead toward solution-focused discussions. Rather, the issue is being raised in 30-second radio advertisements and ‘robocalls’ to voters claiming that lawmakers who supported the initial Ryan reform proposal “favor millionaires over Medicare.”
I’m not naïve and I don’t wear rose-colored glasses where partisan politics are concerned. I know that candidates have to take actions that move polling numbers. But elections have consequences, and needed Medicare reform has already been set back years by scalding campaign attacks against those who have advocated change. The success of those attacks has reduced the number of lawmakers willing to take on this critical, yet politically dangerous, issue.
The juxtaposition of the CBO report – and director Doug Elmendorf’s testimony before the House Budget Committee this morning – and the Pear story is a matter of concern. CBO has laid down the challenge. We can hope that Congress responds with more than attack ads and glib sound bites.
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