CBO analysis of the Rivlin/Ryan Medicare voucher and Medicaid block grant proposals

Posted by on Monday, Nov 22, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Preliminary Analysis of the Rivlin-Ryan Health Care Proposal

(Analysis transmitted by letter from Douglas Elmendorf, Director of the CBO, to Rep. Paul Ryan)
Congressional Budget Office
November 17, 2010

For purposes of this analysis, CBO assumed that all individuals projected to enroll in Medicare would use the proposed voucher. Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law, for two reasons. First, most of the savings for Medicare under the proposal stem from reducing the amounts that the federal government would pay for enrollees on a per capita basis, relative to the projections under current law. Second, future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.

Similarly, reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.

For both Medicare and Medicaid, the budgetary effects would become larger over time because federal payments would tend to grow more slowly under the proposal than projected costs per enrollee under current law. Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees’ spending for health care and the uncertainty surrounding that spending would increase.

http://www.cbo.gov/ftpdocs/119xx/doc11966/11-17-Rivlin-Ryan_Preliminary_Analysis.pdf

Congressman Paul Ryan and former Clinton budget director Alice Rivlin are both members of the Bowles/Simpson deficit commission. They have asked the Congressional Budget Office to analyze their proposal to reduce future federal health care expenditures by converting Medicare to a voucher program for purchasing private health plans, and by converting Medicaid into a block-grant program for the states.

If you read the analysis found at the link above, you would see that the deficits related to future spending in the Medicare and Medicaid programs would be reduced by this proposal. If your only goal is to cut the federal deficit, then the analysis would predict success, but at what cost?

Compared to the current Medicare program, the vouchers would purchase less coverage, or the premiums paid by the beneficiaries would be higher, or both. Merely shifting to private plans alone would result in higher premiums if the benefits were to remain the same as in the traditional Medicare program. Many Medicare beneficiaries are already burdened with excess medical debt, and the voucher proposal would increase the burden by both lowering the federal contribution and increasing the administrative waste characteristic of private plans.

Converting Medicaid into a block grant program uses the same principle as converting defined benefit programs into defined contribution programs. The federal government ends its exposure to the risk of ever-increasing costs by fixing its contribution to the states through a defined block grant. The state then bears the risk for increases in health care costs.

Of course, states are already heavily burdened by the costs of their Medicaid programs. Adding more to that burden further strains state budgets. The states are then put into a position of trying to balance reductions in health services with the greater deficit holes punched into the state budgets. Passing the problem from the federal taxpayer to the state taxpayer accomplishes nothing.

As the CBO analysis states, “Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees’ spending for health care and the uncertainty surrounding that spending would increase.”

What is our goal here? Appeasing anti-government budget hawks? Or removing financial barriers so that people can get the health care that they need?

The budget hawks say that we need to make hard choices. So what about the choice of a single payer monopsony – an improved Medicare for all? That would solve the budget deficit problem while enabling everyone to have the care that they need – not really very hard choices. Maybe it would be a hard choice for the hawks to accept a government program that would actually work, but let’s hold them to their demand. If they think an improved Medicare for all is a hard choice, then so be it.

Will the Wyden/Brown state waiver enable single payer?

Posted by on Friday, Nov 19, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Senators push bipartisan state healthcare waiver

Reuters
November 18, 2010

A Democrat and a Republican teamed up in the Senate on Thursday to offer legislation that would give states the flexibility to implement their own healthcare approaches when the federal overhaul goes into full effect in 2014.

The proposal by Democrat Ron Wyden and Republican Scott Brown moves up the date when states can apply for waivers from the federal law in order to implement their own approaches.

The law, which passed in March, currently allows states to apply for waivers in 2017.

Under the Wyden and Brown proposal, states could apply for an exemption from some requirements of the reform law — including the mandate that everyone purchase insurance and the employer penalty for not providing coverage — if they offer an alternative that is considered at least as effective and affordable.

http://www.reuters.com/article/idUSTRE6AH4NT20101118

And…

S. 3958 (the entire bill)

To allow an earlier start for State health care coverage innovation waivers under the Patient Protection and Affordable Care Act.
IN THE SENATE OF THE UNITED STATES
NOVEMBER 17, 2010

Mr. WYDEN (for himself and Mr. BROWN of Massachusetts) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL
To allow an earlier start for State health care coverage innovation waivers under the Patient Protection and Affordable Care Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the “Empowering States to Innovate Act”.

SEC. 2. EARLIER START FOR STATE HEALTH CARE COVERAGE INNOVATION WAIVERS.
Section 1332(a) of the Patient Protection and Affordable Care Act is amended—

(1) by striking ‘‘January 1, 2017’’ in paragraph (1) and inserting ‘‘January 1, 2014’’, and
(2) by inserting ‘‘beginning not later than 180 days after the date of the enactment of the Empowering States to Innovate Act’’ after ‘‘application’’ in paragraph (4)(B)(ii).

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s3958is.txt.pdf

And…

Patient Protection and Affordable Care Act (excerpts):

PART IV–State Flexibility to Establish Alternative Programs

Sec. 1332. Waiver for State innovation.

(a) Application.
(3) Pass through of funding.–With respect to a State waiver under paragraph (1), under which, due to the structure of the State plan, individuals and small employers in the State would not qualify for the premium tax credits, cost-sharing reductions, or small business credits under sections 36B of the Internal Revenue Code of 1986 or under part I of subtitle E for which they would otherwise be eligible, the Secretary shall provide for an alternative means by which the aggregate amount of such credits or reductions that would have been paid on behalf of participants in the Exchanges established under this title had the State not received such waiver, shall be paid to the State for purposes of implementing the State plan under the waiver.

(b) Granting of Waivers.
(1) In general.–The Secretary may grant a request for a waiver under subsection (a)(1) only if the Secretary determines that the State plan–
(A) will provide coverage that is at least as comprehensive as the coverage defined in section 1302(b) and offered through Exchanges established under this title as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by this Act and the provisions of this Act that would be waived;
(B) will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title would provide;
(C) will provide coverage to at least a comparable number of its residents as the provisions of this title would provide; and
(D) will not increase the Federal deficit.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_public_laws&docid=f:publ148.111

And…

Sen. Bernie Sanders: ‘Vermont stands a chance to be the first state in the nation to pass single-payer’

By Ezra Klein
The Washington Post
November 18, 2010

Ezra Klein:  So what happens if Scott Brown and Ron Wyden get their way and the waiver moves up to 2014? Will Vermont use it?

Bernie Sanders:  We believe Vermont stands a chance to be the first state in the nation to pass single-payer. The governor-elect campaigned on it, and we have support in the House and Senate. We’re not asking for one nickel more than we’d otherwise get. The other thing we think we have an opportunity to do is reach out to our conservative friends and say, hey, Vermont wants to go forward with a single-payer system, and Mississippi and Alabama don’t, but maybe they have other ideas. Now, we’re conscious of the need to make sure that the health-care reform bill’s standards aren’t diminished. So everyone needs to provide the same quality of health care as the bill provides and at the same, or lower, price. But if they can do that, then they should be able to go for it.

Ezra Klein:  And then the various models can compete with one another and, presumably, spread to other states if successful?

Bernie Sanders:  Absolutely. And that’s what we wanted from it. In my state, it’ll be single-payer. In California, I think there’s a chance it could be single-payer. In other states, it will be something else. This makes the states laboratories for the system, and then other states can copy them. Now, you need a minimum level for coverage and quality. You can’t go lower than health-care reform.

http://voices.washingtonpost.com/ezra-klein/2010/11/sen_bernie_sanders_vermont_sta.html

The initial reaction to S. 3958, The Empowering States to Innovate Act, sponsored by Sen. Ron Wyden (D-OR) and Sen. Scott Brown (R-MA), is that the bill will enable states to bypass the requirements of the Patient Protection and Affordable Care Act (PPACA) and set up their own state-based programs, even single payer should the states prefer. But what does the bill actually say?

PPACA already authorizes a program for state waivers, but not until 2017. The Wyden/Brown bill does only one thing. It moves the state waiver program forward to 2014, the same year that the individual mandate and insurance exchanges go into effect. It does not change the waiver in any other way.

For those states that wish to establish their own programs, advancing the eligibility date removes the very burdensome task of complying with the insurance exchanges, mandates and other requirements for an interval of only three years, and then facing the additional costs and burdens of transitioning to their own programs. If you agree with the policy that states should be able to set up their own programs, then this is a very wise move.

Massachusetts already has a program similar to PPACA. Sen. Brown would much rather modify what they have by complying with the waiver than to have to comply with all details of PPACA for the first three years. For Sen. Wyden, his preferred model of reform was rejected by Congress, but he would still like to experiment with his model, as much as possible, within the state of Oregon, while protecting what innovative programs they already have.

So just how much leeway does the PPACA state waiver allow? It does allow innovations as long as coverage is at least as comprehensive, cost sharing is at least as affordable, at least as many residents would be covered, and as long as the federal deficit would not be increased. It also passes through to the state the funds that would have been used for premium tax credits, cost-sharing reductions, and small business credits. Is that enough funding to establish a single payer system?

What about the funds for Medicare? Medicaid? CHIP? Taft-Hartley plans? What about ERISA requirements? What about the multitude of other funding requirements such as the VA system, academic institutions, safety-net institutions, community health centers, the Indian Health Service, the U.S. Public Health Service, and the many others?

There is no authorization in the Wyden/Brown bill, PPACA, nor any other existing law or regulation to fold many or all of these programs into one single payer system. Think of trying to run a partial single payer system (an oxymoron) while still having to deal with the massive Medicare and Medicaid programs. The point is, don’t let up on your advocacy, thinking that Wyden/Brown is our entry to single payer. We would still have a highly fragmented financing system.

Our best option remains enacting a national single payer bill such as HR 676, which will be re-introduced in the next session of Congress. In lieu of that, we should continue with our efforts to enact single payer systems on the state level. Just don’t be fooled into thinking that a bill such as Wyden/Brown is the ticket. The enabling federal legislation that would be required for state programs would be as complicated, if not more so, than a bill establishing a national single payer program – an improved Medicare for everyone.

Vermont is a test. Without enabling comprehensive federal legislation, I’m already apprehensive.

International comparisons: It’s the insurance, stupid!

Posted by on Thursday, Nov 18, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Consumers and Insurance: Experiences In Eleven Countries

By Chris Fleming
Health Affairs Blog
November 18, 2010

As the United States begins implementing health reform, how does the U.S. experience compare with that of other high-income countries? To answer that question, The Commonwealth Fund conducted its thirteenth annual health policy survey, this year focusing on access, cost, and care experiences. The survey findings were published today in a Health Affairs Web First article by Commonwealth Fund Senior Vice President Cathy Schoen and coauthors.

Overall, the survey identified significant differences between countries and found that US adults — even when insured — were the most likely to incur high medical expenses, spend more time on paperwork, and have more claims denied.

The countries surveyed were Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States.

Key findings include the following:

*  Twenty percent of US adults surveyed said they had had serious problems paying medical bills in the previous year. Responses to the same question from the other ten countries were in the single digits. US respondents were also significantly more likely than adults in other countries to have gone without care because of cost.

*  Thirty-five percent of US adults had out-of-pocket medical spending of $1,000 during the previous year, a far higher percentage than in any other country.

*  A lower proportion of adults in the United States (70 percent) than in all other countries except Sweden (67 percent) and Norway (70 percent) were confident that they would receive the most effective treatment when needed.

*  When asked about access to prompt medical care, 57 percent of US adults said they had seen a doctor or nurse the same or next day the last time they were sick and needed care. Switzerland had the most rapid access (93 percent). Adults in three other countries (Canada, Norway, and Sweden) reported longer waits than US adults.

*  Nearly one third of US adults (31 percent) reported either denial of payments by insurers or time-consuming interactions with insurers, a higher rate than in all other countries. Twenty-five percent of US respondents reported that their insurance company denied payment or did not pay as much as expected; 17 percent said they spent a lot of time on paperwork or disputes for medical bills or insurance — the highest rates in the survey.

*  The United States had the widest and most pervasive differences in access and affordability by income of the eleven countries. The United Kingdom had the least.

http://healthaffairs.org/blog/2010/11/18/consumers-and-insurance-experiences-in-eleven-countries/

And…

How Health Insurance Design Affects Access To Care And Costs, By Income, In Eleven Countries

By Cathy Schoen, Robin Osborn, David Squires, Michelle M. Doty, Roz Pierson and Sandra Applebaum
Health Affairs
November 18, 2010

US Insurance Reforms: Challenges Ahead

Concerns expressed by US respondents were concentrated in the working-age population that is the target of insurance reforms. In this age group, wide disparities by income for those insured throughout the year underscore the importance of the Affordable Care Act’s emphasis on benefits with income-related provisions. The law will expand eligibility for Medicaid to those earning 133 percent of the federal poverty level. It will also provide subsidies for premiums for people up to 400 percent of poverty and for cost sharing for people up to 250 percent of poverty.

However, by international standards, the United States will remain an outlier for cost sharing. The annual limits for the least expensive benefit option will range from $2,000 per person ($4,000 per family) for those with incomes just above 133 percent of poverty, to $6,000 per person above subsidy thresholds. Families can opt for lower cost exposure, but only if they can pay higher premiums.

As US reforms unfold, it will be important to monitor access and affordability. The Affordable Care Act will provide billions of dollars in subsidies for premiums and cost sharing to address affordability for individuals and families with low or modest incomes. Even so, it is still possible that some of the insured will remain at substantial financial risk for care they cannot afford when sick and bills they cannot pay.

Even after the enactment of health reform, the United States will also remain unique among countries in that it covers low-income people in a separate program. This poses the dual challenge of promoting equity across programs and ensuring continuity of insurance. In the other ten countries in our survey, providers were typically paid the same amount regardless of patients’ incomes, which is not currently the case in the United States. Nor is it likely to be the case after full implementation of health reform. Avoiding coverage gaps as patients’ circumstances change will require creative efforts to enable single portals of entry for people to enroll in publicly sponsored and private insurance, and smooth transitions as families gain or lose eligibility for insurance. To the extent that provider networks also differ for those low-income insurance programs, continuity of care as well as insurance will remain at risk after reforms take effect.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2010.0862v1

Compared to other high-income nations, the health care financing system in the United States does not perform well. We pay more; we have greater problems paying medical bills; we have excessive out-of-pocket spending; we have greater hassles with insurers; and we have the greatest disparities in access and affordability based on income levels.

We clearly needed reform, but will the Patient Protection and Affordable Care Act (PPACA) correct these deficiencies? It looks grim. The law has perpetuated the flawed system that we already have, one based on the U.S. version of dysfunctional private insurance plans plus a welfare program – Medicaid.

PPACA does include some important insurance regulations such as guaranteed issue and removal of annual and life-time spending caps, but it doesn’t do much to end the administrative hassles that are designed to protect the insurers from loss (i.e., protect them from having to pay medical bills). In fact, by making plans with low actuarial values the new standard, patients will face even greater out-of-pocket expenses and administrative hassles when they access health care. The government subsidies are not adequate to reduce the problems that patients already have with paying their medical bills.

Although other countries have special provisions for low-income individuals, Medicaid is unique in that beneficiaries are enrolled in an entirely different program that generally pays much lower rates than do private insurers. Thus the Medicaid networks of willing providers can be quite different from the networks for the private insurers, which in themselves also can vary greatly from plan to plan. Care can be very disruptive as individuals move in and out of the Medicaid program because of fluctuations in their eligibility, or move between various private plans based on such factors as employment, place of residence, or premium affordability. Such disruptions can aggravate the access problems noted in this study.

Another important observation in this study is the protection that is afforded by Medicare. Quoting from Schoen et al, “US adults under age sixty-five were significantly more likely to report insurance paperwork, disputes, or insurance surprises than were those sixty-five and older and covered by Medicare (35 percent compared to 16 percent). The high rates of insurance concerns among younger adults may stem from unstable coverage as well as complex benefit designs.”

What we needed was a program that includes everyone, funds care equitably, eliminates financial barriers to care, provides automatic life-long enrollment, provides choice of any health care professionals and facilities, and has public funding that would ensure adequate capacity in the system. A single payer, improved Medicare for all would have those goals.

Instead, we’ll be pouring even more money into the system we have, and still compare unfavorably to these other high-income nations, that is unless we are willing to do something about it. We need to tell our policy makers, “It’s the insurance, stupid!”

Jan Schakowsky and Rivlin/Domenici on the deficit

Posted by on Wednesday, Nov 17, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Schakowsky Alternative to Simpson-Bowles Deficit Reduction Plan

Congresswoman Jan Schakowsky
November 16, 2010

Today Rep. Jan Schakowsky (D-IL), a member of the bipartisan National Commission on Fiscal Responsibility and Reform, offered a comprehensive proposal to reduce the federal deficit without making middle class Americans foot the bill.  Schakowsky’s plan is an alternative to the Simpson-Bowles plan and would reduce the deficit by $427.75 billion in 2015, surpassing President Obama’s $250 billion target. Critically, the Schakowsky plan accomplishes deficit reduction without making cuts to essential federal expenditures that benefit the middle class.

http://schakowsky.house.gov/index.php?option=com_content&view=article&id=2777:schakowsky-alternative-to-simpson-bowles-deficit-reduction-plan&catid=21:2010-press-releases&Itemid=58

And…

Reviving the Economy, Cutting Spending and Debt, and Creating a Simple, Pro-Growth Tax System

By The Debt Reduction Task Force, Senator Pete Domenici and Dr. Alice Rivlin, Co-Chairs
Bipartisan Policy Center
November 2010

Strengthen Medicare for the Long Term: Transition to a Premium Support Option

Like today, Medicare enrollees will be in the traditional fee-for-service program unless they choose a private plan. However, if federal spending per enrollee for the benefits specified in legislation rises faster than GDP growth plus one percent, beneficiaries will have to pay an additional premium to cover the difference. They can avoid that additional premium, however, and potentially get higher quality health care, if they choose a private health plan offered on a new Medicare Exchange. The expectation is that increased competition among plans fostered by the Medicare Exchange, and increased beneficiary interest in these plans, will keep costs from rising rapidly and result in higher quality, more cost-effective health care.

This proposal will limit growth in federal support for Medicare per beneficiary to one percentage point per year higher than a five-year moving average of GDP growth. If Medicare spending per enrollee for the benefits specified in legislation rises at a faster rate, enrollees will have the option of paying an additional premium to cover the difference and remaining in the traditional Medicare program, or selecting a private insurance plan from the Medicare Exchange.

While the proposed premium support option resembles the current structure of Medicare Advantage, there are differences. Competition among plans will be enhanced by creating a federal Medicare Exchange, which will facilitate beneficiary choice and enrollment and increase the competitiveness of the market, leading to lower premiums.

This proposal will provide incentives for Medicare Exchange plans to develop products that will save beneficiaries money. Today, if a Medicare Advantage plan has very low costs, it cannot pay a rebate to enrollees; instead, it must increase benefits. Under this proposal, Medicare Exchange plans can offer beneficiaries relief from rising Medicare premiums. The Task Force plan might also increase political support – by Medicare beneficiaries, their children, and those approaching Medicare eligibility – for federal policies that promote cost containment in health care.

Asking beneficiaries to pay more for their Medicare coverage (or shift to a lower-cost plan) mirrors what has happened in private insurance over the past decade, with increases in patient cost-sharing to keep premium growth from exceeding income growth by too large a margin. Employers have generally opted to increase patient cost-sharing rather than increase the percentage of the premium that employees contribute. The former keeps employees enrolled in the plan and encourages more judicious use of health services.

http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf

The co-chairmen of President Obama’s deficit commission advanced a proposal that disappointed those of us who believe that the government has an important role in promoting a healthy and secure future for all of us. Erskine Bowles and Alan Simpson recommend reducing the deficit by cutting back on important social programs such as Medicare and Social Security, while failing to recommend tapping obvious potential revenue sources in our upside-down economy. Two members of their committee, Jan Schakowsky and Alice Rivlin, have now released alternative proposals.

Alice Rivlin is also co-chair, along with Pete Dominici, of The Debt Reduction Task Force from the Bipartisan Policy Center (BPC), an organization founded by Howard Baker, Tom Daschle, Bob Dole, and George Mitchell. Frankly, their report is also disappointing for basically the same reasons. It is very heavy on program reductions (though some are appropriate) and very light on seeking new revenues.

Discussed here is only one feature of the BPC recommendation: converting Medicare to a premium support program. This had been mentioned only cryptically in the Bowles/Simpson report, but more details are provided in the Rivlin/Domenici report (excepts above).

Premium support was a proposal advanced a dozen years ago by John Breaux, Bill Thomas, Bill Frist, and Bobby Jindal that barely failed to receive a super-majority vote in their Bipartisan Medicare Commission, and is now being trotted out again. It is a proposal to convert Medicare from a defined benefit to a defined contribution.

Premium support places a limit on the amount that the government contributes toward the Medicare beneficiaries’ premiums, exposing individuals to the increasing costs of health care. It then uses the leverage of higher individual premiums to encourage “voluntary” purchase of less expensive private plans in the marketplace.

Since private plans have much higher administrative costs, they can achieve lower premiums only by reducing benefits or increasing out-of-pocket costs for the beneficiaries, making coverage worse than under the traditional Medicare program. Instead of overpaying private plans as with the current Medicare Advantage program, the premium support underpays the private plans but allows them to obtain the balance from the Medicare beneficiaries. It is a plan to privatize Medicare that can have only disastrous consequences for Medicare beneficiaries.

In sharp contrast is the proposal of Jan Schakowsky. She would balance revenues and expenditures with the goal of reducing the deficit, as opposed to the unstated goals of Bowles/Simpson and Rivlin/Domenici to reduce government. Her recommended reductions in spending are carefully targeted to programs that many in America believe should be reduced anyway. Her proposed increased revenues not only would help wipe out the deficit, but they also would provide corrections to the current massive income transfer from middle-income workers to the very wealthy – one of the greatest social injustices in modern history.

Other than improving the way we would purchase pharmaceuticals, she has little to say about Medicare. Her position is that of protecting what we do have. We can go her one better on that. We can improve Medicare and then provide it for everyone. That frankly won’t reduce the deficit much, but it would provide us with much greater value for our health care taxes.

What more could we ask for out of our government than sustainable budgets that provide us with real value?

ACTION ALERT: The heavy hitters are out in force, and they intend to dismantle as much of government as they can, in the name of “fiscally responsible hard choices.” It is imperative that President Obama and members of the Senate receive our clear and unrelenting message that we must both protect and improve our public programs dedicated to social justice. The House alone cannot take those away from us if we have the President and the Senate on our side.

Drew Altman on hard choices for Medicare

Posted by on Monday, Nov 15, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Health Care Takes a Hit in New Commission Plan

By Drew Altman
The Fiscal Times
November 12, 2010

Three national commissions are hammering out recommendations for reducing the debt and reining in entitlement spending, putting two giant health programs that serve the elderly, disabled and low-income Americans, Medicaid and Medicare, as well as Social Security, in the crosshairs of a new policy debate.

The discussion of these issues is framed almost always in terms of “hard choices” to reduce spending, increase taxes, or both. In general, Democrats will resist cuts in these programs and Republicans will resist any new taxes.

But these choices are also hard on legitimate policy grounds, especially when it comes to Medicare.  And the most important reason they are hard is that so many seniors and disabled people on Medicare have low incomes and already pay a significant share of those incomes for their health care today.  It will be difficult if not impossible to ask the majority of beneficiaries ––to pay more or make do with less.  That has been the missing element in the entitlement/deficit reduction debate: Warren Buffet is not the typical Medicare beneficiary.  Instead the prototype is an older woman with multiple chronic illnesses living on an income of less than $25,000 who spends more than 15 percent of her income on health care.  It is the people on these programs and the realities of their lives that have been left out of the discussion.

http://www.thefiscaltimes.com/Issues/Health-Care/2010/11/12/Health-Care-Takes-a-Hit-in-New-Commission-Plan.aspx

Medicare is already an inadequate program for our seniors and for individuals with long term disabilities. The commissioners are making an egregious mistake in framing the problem as a budget deficit that needs “hard choices” to reduce federal spending by shifting more costs to Medicare beneficiaries.

Medicare does need to be improved, not by cutting benefits, but rather by expanding benefits and by eliminating financial barriers to care. Then Medicare would be a much more suitable program, not only for current beneficiaries, but for everyone else as well.

It is true that the federal budget spending would increase, but the federal budget deficit would be reduced by financing Medicare through equitable taxes, and wasn’t this supposed to be all about reducing the federal budget deficit in the first place? Further, our entire national health expenditures, public and private, finally would be brought under control. As both patients and taxpayers, we couldn’t ask for a better deal.

By Ida Hellander, M.D.

There’s actually some good news for single-payer health reform in the midst of the generally negative midterm election news.

The good news:

* Peter Shumlin won in Vermont, so the state has a pro-single-payer governor on top of a large grassroots movement. Sen. Patrick Leahy was re-elected to office and is pro-single-payer; the same holds for Rep. Peter Welch, a co-sponsor of Rep. Conyers’ single-payer bill in Congress, H.R. 676. Sen. Bernie Sanders, of course, is a very outspoken supporter of single-payer Medicare for all.

* Jerry Brown won in California so that state also has a pro-single payer governor and a large movement (twice passing a single-payer bill through the state’s Legislature).

* Neil Abercrombie, who was a co-sponsor of H.R. 676 while he was in Congress, was elected governor of Hawaii. Many of Hawaii’s lawmakers have shown support for single payer.

* With 14 of 14 districts reporting, the ballot question for single payer in Massachusetts swept all of them, including some of the most conservative districts in the state and several that went for Republican Sen. Scott Brown in last year’s special election. The text of the ballot question reads as follows:

“Shall the representative from this district be instructed to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?”

* Only one of 87 co-sponsors of H.R. 676 was defeated in the general election by a Republican, Rep. Phil Hare of Illinois. (We lost seven other co-sponsors to death, resignation, defeat in the primary or retirement. Just one of those, Rep. Eric Massa’s old seat, went to a Republican.)

The bad news (a partial list):

* Sen. Russ Feingold, who ran on his support for the Obama health plan but is also a single-payer supporter, lost his Senate race in Wisconsin to a Republican.

* “Freedom of choice” and anti-mandate ballot initiatives passed in Arizona and Oklahoma (but was rejected in Colorado). An excellent article explains how these initiatives are anti-single payer measures.

* The Minnesota single-payer movement was set back by a Republican takeover of the state Legislature. The governor’s race, which includes a pro-single-payer candidate, is still too close to call and is undergoing a recount.

* Rick Scott of Columbia/HCA fame, which paid a $1 billion fine for Medicare fraud, won the governor’s race in Florida.

Kevin Drum explains the budget deficit

Posted by on Friday, Nov 12, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Is the Deficit Commission Serious?

By Kevin Drum
Mother Jones
November 10, 2010

So this report matters (the “chairman’s mark” of the deficit commission report), even though it’s really nothing more than the opinion of Alan Simpson and Erskine Bowles. So here’s what I think of it, all contained in one handy chart from the Congressional Budget Office:

(If the chart is not transmitted by this email, it can be accessed at the link below.)

Here’s what the chart means:

*  Discretionary spending (the light blue bottom chunk) isn’t a long-term deficit problem. It takes up about 10% of GDP forever. What’s more, pretending that it can be capped is just game playing: anything one Congress can do, another can undo. So if you want to recommend a few discretionary cuts, that’s fine. Beyond that, though, the discretionary budget should be left to Congress since it can be cut or expanded easily via the ordinary political process. That’s why it’s called “discretionary.”

*  Social Security (the dark blue middle chunk) isn’t a long-term deficit problem. It goes up very slightly between now and 2030 and then flattens out forever. If Republicans were willing to get serious and knock off their puerile anti-tax jihad, it could be fixed easily with a combination of tiny tax increases and tiny benefit cuts phased in over 20 years that the public would barely notice. It deserves about a week of deliberation.

*  Medicare, and healthcare in general, is a huge problem. It is, in fact, our only real long-term spending problem.

To put this more succinctly: any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn’t maintain approximately that ratio shouldn’t be considered serious. The Simpson-Bowles plan, conversely, goes into loving detail about cuts to the discretionary budget and Social Security but turns suddenly vague and cramped when it gets to Medicare. That’s not serious.

There are other reasons the Simpson-Bowles plan isn’t serious. Capping revenue at 21% of GDP, for example. The plain fact is that over the next few decades Social Security will need a little more money and healthcare will need a lot more. That will be true even if we implement the greatest healthcare cost containment plan in the world. Pretending that we can nonetheless cap revenues at 2000 levels isn’t serious.

And their tax proposal? As part of a deficit reduction plan they want to cut taxes on the rich and make the federal tax system more regressive? That’s not serious either.

Bottom line: this document isn’t really aimed at deficit reduction. It’s aimed at keeping government small. There’s nothing wrong with that if you’re a conservative think tank and that’s what you’re dedicated to selling. But it should be called by its right name. This document is a paean to cutting the federal government, not cutting the federal deficit.

http://motherjones.com/kevin-drum/2010/11/deficit-commission-serious

After reading Kevin Drum’s explanation of the federal deficit, it becomes even more obvious that all we have to do is improve Medicare, provide it for everyone, and then use its power as a monopsony serving the public good to bring the growth of health care costs to a manageable level. Compared to this, the other budget issues are a piece of cake.


by Andy Coates

Peter Shumlin was elected Governor of Vermont on his plans to close down Entergy’s aging, unsafe Vermont Yankee Nuclear Power Plant, to transition to green energy and to increase passenger rail, to reduce prison spending, his strong pro-choice stance, and, of course, single-payer healthcare for every Vermonter.

PNHP has already posted the VPR news story that excerpts an interview by Bob Kinzel. But you can also listen to the full interview with Governor-elect Shumlin.

Here is my own transcript. At about 10 minutes into the interview the Governor-elect talks about health spending briefly:

Big picture. I have a dual task. The first is to manage this 112, 115 million dollar hole. But the second is simultaneously, in managing this budget, we’ve got to start managing the infrastructure. We’ve got to put the pieces in place that I believe will do two things. The first is grow jobs and grow economic opportunities that I’m incredibly optimistic about for Vermont. And the second is, at the same time, we wil be solving our own budget problems.

Now, where is the money? We know that the first and the fastest area of growth in the state budget is health care. It’s killing us just like it’s killing Vermont’s families and small businesses. So we need to be putting the infrastructure changes in place, putting a team together that’s going to work with Dr. Hsaio and others to come with a plan, to pass a single payer health care plan that can contain costs and save Vermont from ourselves as we spend a million dollars more a day than we spent the day before.

And then a second area that I’ve talked so much about is corrections. It’s the second area of growth in the state budget. It is not sustainable…

At 33 minutes the Governor-elect returns to single payer:

Welcome back to Vermont Edition. I’m Bob Kinzel. Our guest today is Governor-elect Peter Shumlin. Our phone number is […] Governor-elect I see you’re going to the White House in early December as part of a contingent of new governors meeting with the President. So do I understand that you may use this as an opportunity to try to pitch the idea that Vermont needs some “waivers” from the federal government, particularly in the area of health care?

Yes. I had the privilege of talking to the President of the United States earlier today. He called me from Air Force One. A lot of bizarre things have happened to me in the last five days, but that’s one of them. You pick up the phone and there’s the President at the other end of the line. It was a real honor.

But I mentioned two things to him. That I was looking for three waivers. And then I also said there’s a famous photograph of our current Governor, Jim Douglas, moving a couch down at the White House. I just told him that I was a little bit younger than Jim Douglas, nothing personal, but if he had any furniture to move, I’d come right down, just let me know when they needed things moved around down there.

But the answer is yes. We’re looking forward to working with the President and the Congressional delegation to get three waivers that I really want.

Looking at the health care one, supposedly it’s going to be at least until 2014 before any state can get a waiver. Who knows what’s going to happen to that health care law in the next two years, with Republican gains in Congress. Do you really think you can move it up from 2014 to 2012?

You know Bob this was tough to say during the campaign because it’s often hard to change the dialogue during the campaign: The “waivers” is the easy part.

The hard part is designing a single payer health care system that works and that delivers quality health care, gets insurers off our, our providers backs, has a reimbursement system that makes sense. You know we’re losing our primary care doctors. We’re going to lose our hospitals if we keep up this crazy system where they get paid 40 cents for one customer, 60 cents for another. They’re awash in a sea of paper and bureaucracy. They have insurers second-guessing them on everything that they do. The list goes on and on. So the challenge for us is not the waivers. I get that the waivers are a small challenge.

The bigger challenge is to say, to sit down with the plans that we’re going to be given. To bring together the health care community, the business community, families, consumers, providers, insurers, and design the system that does three things. Delivers quality health care to all Vermonters where health care is a right and not a privilege. Second, is affordable. The current system is going to drown us. It will bankrupt us. We can’t spend a million dollars more a day than we did the day before. Third, provide outcomes-based medicine, so that providers are reimbursed for keeping us healthy, not the number of tests they drive us through or put us through. And finally fourth, and perhaps most important, using technology to deliver health care the way all other businesses have utilized technology to deliver a product that allows them to be profitable.

If you designed the current system in Vermont from scratch and brought it in and said “we want a health care system and here it is,” people would think that you had lost your mind. It’s easy to criticize the existing system. It’s much harder to design a new one. That is a much bigger challenge than getting the waivers we need from Washington.

I believe if we design that system we can sell it. And I’m going to start working on that immediately, bringing people together to start the hard work to get it done. If we succeed, and if we also can design a system where health care is not a requirement of the employer, as well as the individual — it’s a huge job creator. It’s a huge national example of how to do health care right.

I think we have a real opportunity here. You know I was criticized during the campaign on this for making promises on this that I can’t keep. This is not a promise. It’s a commitment to a plan and we’re going to fight really hard to deliver on it.

Governor-elect Shumlin says the waivers are the easy part. Designing a single payer system is indeed hard work, particularly when we need to consider the transition from the multi-payer, money-driven, all-day disaster we have now.

But another part of the hard work is to see how our educational mission can help the people of Vermont. As the Governor-elect suggests, we find a welcome opportunity to set an “example of how to do health care right.”

Critique of the co-chairs’ health care proposals for the National Commission on Fiscal Responsibility and Reform

The projected increases in Medicare spending are of concern to all of us. Although we need to slow the rate of growth in spending, we should do so not only without impairing the program, but by actually enhancing the benefits.

The co-chairmen have advanced proposals that address federal budget deficits related to Medicare, but unfortunately they have done so to the detriment of the Medicare beneficiaries. I spoke to this briefly in my Quote of the Day yesterday.

They propose an increase in Medicare cost sharing to promote greater consumer sensitivity to health care costs. Medicare is already a relatively Spartan program, paying roughly only half of health care costs for our seniors and those with long-term disabilities. Medicare beneficiaries face significant financial barriers to care, sometimes preventing them from receiving essential health care services. Some with greater health care needs even face bankruptcy because of the high out-of-pocket costs. Shifting more costs from the federal government to patients might reduce the federal budget, but it plays havoc with personal budgets. Cost sharing is merely a polite term for what it really is — cost shifting onto the backs of patients.

Because of the potential financial burden, many Medicare beneficiaries purchase Medigap plans. They provide one of the lousiest values in health insurance, having very high premiums for very modest benefits. The co-chairmen propose that the benefits be reduced further by requiring deductibles, again to create greater consumer sensitivity to costs. If they were really interested in saving money, they would recommend folding the Medigap benefits into the traditional Medicare program, thereby saving the profound administrative waste that characterizes these private Medigap plans. Although that improves patients’ budgets without changing the federal budget, policies should be designed to benefit the patients rather than the anti-government ideologues.

In many areas of the country physicians are concerned about their relatively low Medicare payment rates, and the lack of a “doc fix” is a very real threat for patients. Our primary care infrastructure is already crumbling, and imposition of the scheduled fee reductions will cause many more physicians to exit the Medicare program. The recommendation to prevent the fee reductions for physicians by imposing fee reductions on physicians is truly disingenuous. Physicians understand simple math when it comes to their paychecks. Patients also understand what it means when physicians’ practices are closed to new Medicare patients.

The co-chairmen propose strengthening the pending Independent Payment Advisory Board (IPAB). The board is being given the task of reducing payments in the traditional fee-for-service Medicare program, and has been provided with considerable leverage to impose those changes. Reducing fees in the Medicare program without changing fees paid by private insurers will surely motivate physicians to drop Medicare patients in favor of those privately insured. Strengthening IPAB will only compound this differential. We do need an IPAB that has a mission, not to simply reduce payments, but rather to set payments based on value. But, to be effective, an IPAB would have to have influence over the entire health care delivery system. That would be possible only with a single payer system, but not with our current fragmented system of financing health care.

Another disingenuous recommendation is to reward physicians for meeting spending targets by reducing their rates further. Disgruntled physicians lack incentives for high quality performance. A “back-up-sequester” to increase premiums or reduce provider payments is punitive to both patients and physicians and could further impair patients’ access to care.

The proposed premium support system for Medicare is strictly another manifestation of the great risk shift – an assault on individuals and families (Hacker). It defeats the solidarity behind social insurance programs.

Although the deficit commission is fixated on the federal budget, what really matters in health care is that our total spending is brought under control – both private and public combined. If we are paying a reasonable amount for all health care combined, then it really doesn’t matter that most of it would appear in the federal budget. It’s still our money whether we pay it directly or pay it as taxpayers.

It would be much more efficient and equitable if our national health expenditures were funded through progressive tax policies. We could do that very easily if we simply improved Medicare and then provided it for everyone. At least we would have stabilized the health care component of our federal budget.

Deficit commission: Co-Chairs’ proposal

Posted by on Wednesday, Nov 10, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Co-Chairs’ Proposal (Draft Document)

National Commission on Fiscal Responsibility and Reform
November 10, 2010

Reducing Health Care Costs (page 31)

## Medium Term: Fully offset the cost of the “Doc Fix” by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth. Offsets include:
* Pay doctors and other providers less, improve efficiency, and reward quality by speeding up payment reforms and increasing drug rebates
* Pay lawyers less and reduce the cost of defensive medicine by adopting comprehensive tort reform
* Expand cost-sharing in Medicare to promote informed consumer health  choices and spending
* Expand successful cost containment demonstrations
* Strengthen IPAB
* Recommend additional health savings (illustrative examples to follow)
## Long Term: Contain growth in total federal health spending to GDP+1% after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize

Paying for the “Doc Fix” (page 32)

## Pay doctors, other health providers, and drug companies less and improve efficiency and quality
* Replace cuts required by SGR through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality.
* Require rebates for brand-name drugs as a condition of participating in Medicare Part D.
## Increase cost-sharing in Medicare
* Eliminate first-dollar coverage in Medigap plans.
* Replace existing cost-sharing rules with universal deductible, single coinsurance rate, and catastrophic cap for Medicare Part A and Part B.
## Pay lawyers less and reduce the cost of defensive medicine
* Enact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law.

Savings Beyond the Doc Fix (page 34)

## Expand Successful Cost-Containment Demonstration Projects by 2015
## Identify an additional $200 billion savings in federal health spending
## Strengthen the Independent Payment Advisory Board (IPAB)
* Include all providers (no carve-outs) and recommendations on benefit design and cost-sharing.
* Improve savings targets to 1.5% starting in 2015.
* Eliminate the trigger that could turn off IPAB in 2019.
* Allow cost-savings recommendations even when spending does not exceed the target growth rate.
* Allow proposals that apply reforms to health plans in the exchange.
* Require affirmative Congressional approval of recommendations or alternative savings, with a “back-up sequester” increasing premiums and reducing provider payments if IPAB recommendations (or equivalent savings) are not adopted.

Long-Term Health Care Savings (page 36)

## Set global target for total federal health expenditures after 2020 (Medicare, Medicaid, CHIP, exchange subsidies, employer health exclusion), and review costs every 2 years. Keep growth to GDP+1%.
## If costs have grown faster than targets (on average of previous 5 years), require President to submit and Congress to consider reforms to lower spending, such as:
* Increase premiums (or further increase cost-sharing)
* Overhaul the fee-for-service system
* Develop a premium support system for Medicare
* Add a robust public option and/or all-payer system in the exchange
* Further expand authority of IPAB

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf

Today, behind closed doors, the chairmen of President’s Obama’s deficit commission, Erskine Bowles and Alan Simpson, presented to the other members of the commission their draft proposal for reform. The selections above, from their report, apply to health care.

The reception by the committee members is expressed well by Lori Montgomery of The Washington Post:

“Commission members, who include a dozen sitting members of Congress, emerged from the morning session in a Capitol Hill hearing room praising the seriousness of the effort but voicing deep reservations about the details.”

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/10/AR2010111004029.html

Obviously, some of these proposals are very deleterious. It is not as if the commission didn’t receive suggestions for far better policies to address costs while actually improving our health care system, though they have chosen to ignore them. Following is a quote from the testimony of Margaret Flowers, M.D. of Physicians for a National Health Program:

“The alternative scenario of a national improved Medicare for All will save lives and save money. National improved Medicare for All will place our nation on the path of becoming one of the best health systems in the world – something of which we can all be proud. This commission has the ability to recommend creating a financially sustainable universal health system. I urge the members of this commission to recommend addressing the deficit through adopting this most popular approach: national improved Medicare for All. Don’t cut Medicare. Protect it, improve it and expand it to cover everyone.”

http://www.fiscalcommission.gov/meetings/public-forum/6/Margaret_Flowers_6_30_2010.pdf

Video version (in 6 of 7 at 27:30):
http://www.fiscalcommission.gov/meetings/public-forum/

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