PNHP

Single payer better than flawed ACA

pnhpf3a

Single payer better than flawed ACA

By Melissa Stiles, M.D.
The Capital Times (Madison, Wis.), Letters, June 28, 2015

The Affordable Care Act withstood yet another attack as the U.S. Supreme Court rejected the King v. Burwell challenge. The issue was whether the ACA’s language allows the federal government to provide subsidies to people who bought health insurance in states that did not set up their own “marketplaces.” As only 13 states set up state-managed marketplaces, this decision has significant consequences for millions of Americans. The Urban Institute estimated that 9.3 million people in 34 states would have lost their subsidies within the year and an estimated 8.2 million would have joined the ranks of the uninsured if the decision was upheld.

Although the ACA has many positives (i.e., decreased the number of uninsured, one cannot be denied insurance for a pre-existing condition), it is fundamentally flawed due to its complexity and design. The ACA will never achieve universal coverage. Even if all of the states had taken the Medicaid expansion, there would still be 24 million uninsured. The ACA perpetuates the central role of for-profit interests (insurance companies, Big Pharma, device manufacturers) in the U.S. health care system. We believe this is an unacceptable and an unsustainable health care model.

We believe the way to more forward is to institute a single-payer system that would achieve truly universal, more affordable and comprehensive health care. The annual savings ($400 billion) alone would help finance the system. We believe that health care is a human right.

Everybody in, nobody out!

Dr. Melissa Stiles resides in Madison. She submitted this letter on behalf of the Linda and Gene Farley Chapter of Wisconsin Physicians for a National Health Program.

http://host.madison.com/news/opinion/mailbag/dr-melissa-stiles-single-payer-better-than-flawed-aca/article_0d0cf9b2-ee57-5a58-80b8-b07e218de4b7.html#ixzz3eSf1v8qk

Health insurers’ warped approach to competition

How Insurers Competed in the Affordable Care Act’s First Year

By Katherine Swartz, Mark Hall, Timothy S. Jost
The Commonwealth Fund, June 24, 2015

Abstract

Prior to the Affordable Care Act (ACA), most states’ individual health insurance markets were dominated by one or two insurance carriers that had little incentive to compete by providing efficient services. Instead, they competed mainly by screening and selecting people based on their risk of incurring high medical costs. One of the ACA’s goals is to encourage carriers to participate in the health insurance marketplaces and to shift the focus from competing based on risk selection to processes that increase consumer value, like improving efficiency of services and quality of care. Focusing on six states — Arkansas, California, Connecticut, Maryland, Montana, and Texas — this brief looks at how carriers are competing in the new marketplaces, namely through cost-sharing and composition of provider networks.

From the Conclusions

The ACA reforms will surely stimulate continuing adaptations by carriers, providers, and policymakers, and we expect the competitive strategies in the marketplaces to evolve as consumers and carriers gain more experience with marketplace competition.

http://www.commonwealthfund.org/publications/issue-briefs/2015/jun/insurers-aca-first-year

****

Comment:

By Don McCanne, M.D.

What should the consumer expect from marketplace competition? Business experts tell us that competition is the key to higher quality at lower cost. So what has competition between private health insurance plans brought us?

Based on international comparisons, our health care quality is mediocre and our health care costs are by far the highest of all nations. The insurers have been ineffective in improving either of those. Okay, but what about the health plans themselves? Are we receiving high quality insurance products at low prices?

Before the Affordable Care Act (ACA), insurers competed primarily on the prices of their insurance premiums, and they still do. Before ACA, the most effective method of keeping their premiums from increasing more than they did was to exclude people from coverage who actually needed health care. The most important purpose of insurance is to make health care access affordable by diluting risk through insurance risk pools. Yet the insurers instead excluded risk by attempting to insure only those who could pass underwriting standards in the individual market, or by pricing group plans out of the market if they experienced high health care utilization.

A quality risk pooling program would be designed to ensure that everyone receives essential health care, yet by excluding those who have the greatest needs for care, the insurers abandoned any effort to ensure quality in their insurance products.

As far as costs are concerned, health care costs continued to escalate out of control, demonstrating that the insurers could not deliver on the promise of lower costs either.

What has happened since ACA was implemented?

Although the act prohibits medical underwriting, the insurers are still using devious methods to discourage individuals with greater heath care needs from enrolling. As an example, drugs used for certain chronic conditions are placed in upper tiers of drug coverage which require greater coinsurance payments, pricing these products out of reach for the patients, which deters them from joining the plan in the first place. Plans also are still selectively marketed to healthier populations. Professionals and institutions noted for providing care to high needs patents are frequently left out of the insurers’ networks, chasing away patients who use these providers. Again, these efforts to exclude those with needs confirm that the insurers are still marketing low quality insurance products that fall short of the health care needs of the community.

This new report from The Commonwealth Fund shows that the insurers are using two innovations to improve their competitive positions in the marketplace: cost sharing and narrow provider networks.

Cost sharing through deductibles, co-payments, coinsurance, and exclusion of coverage erects financial barriers to care, reducing the use of beneficial services and thus allowing the insurers’ premiums to be priced more competitively. An insurance product that is designed to keep people away from care that they need is a low quality product.

Narrow provider networks reduce health care utilization by preventing coverage of health care professionals and institutions that may be the most appropriate for the patients’ conditions, requiring them to turn to lesser care or no care at all. Also, care may be made less accessible simply by increasing the distances needed to travel to network providers while excluding nearby providers from the networks. Again, insurance products designed to impair access to appropriate health care providers are low quality products.

Thus, with ACA, insurers are impairing quality through the use of the barriers of cost sharing and narrow networks. And regarding costs, it appears that they are again on an upward trajectory. Health care prices have not been controlled. The only slowing has been due to a modest reduction in the use of beneficial health care services caused by these barriers that the insurers have erected. The insurers have failed again on their promise of higher quality at lower cost.

What about the future? The Commonwealth Fund report states, “we expect the competitive strategies in the marketplaces to evolve as consumers and carriers gain more experience with marketplace competition.” We know what this means. The insurers will not be looking for ways to pay for more beneficial health care services. They will be introducing more innovations that prevent patients from getting the care that they need. That’s the way that the marketplace for health insurance products works.

Medicare doesn’t work that way. Instead, efforts are made to include everyone who is qualified and to include all health care professionals and institutions. At the same time, payments are based on legitimate costs and fair margins – a system that is less costly because of administrative efficiencies.

If we really want higher quality at a lower cost, we need to improve Medicare and expand it to cover everyone. The private insurance industry certainly is never going deliver on quality and cost since they will do better for themselves with their warped approach to competition.

America’s health care system is still broken: Why single-payer is the only thing that will ever fix it

The final triumph of Obamacare was great news for Americans depending on it — but it still isn’t enough

By A.W. Gaffney, M.D.
Salon, June 26, 2015

On Thursday, the Supreme Court splintered yet another spear heaved by conservatives trying to destroy, by whatever means necessary, the Affordable Care Act. Those living in the 34 states that rely on the federal “exchange,” who purchase health insurance using subsidies provided by healthcare reform, are understandably relieved.

“Without the subsidy, I am not sure what I was going to do,” said one man, a hairdresser who was diagnosed last year with kidney cancer, to Kaiser Health News. “I was thinking of moving out of my apartment and go live in my car to afford coverage.” Another man, suffering from a form of blood cancer, told the New York Times: “I am nervous about the Supreme Court decision, very nervous,” he said. “If I don’t take that pill, the cancer will come back.” The pill, the Times reported, would otherwise have cost him more than $10,000 a month.

This is what matters most about yesterday’s Supreme Court decision on Obamacare: Many Americans – some 8.2 million, according to an estimate from the Urban Institute – no longer need to worry about being unceremoniously dumped into the ranks of the uninsured. It has been estimated that a ruling in favor of the plaintiffs could have cost between 8,000 and 9,800 lives a year. How the case plays out with respect to ongoing Democratic and Republican political gamesmanship seems, in comparison, a piddling matter.

Now, in other news yesterday, health care stocks were spiking on Wall Street: Insurers (UnitedHealth and Aetna) and corporate hospital networks (Hospital Corporation of America) were seeing strong gains. The link between these events is, of course, obvious: The Affordable Care Act’s premium subsidies are funneled through private health insurance companies, who take a cut. Corporate hospital chains, meanwhile, prefer a well-paying customer.

Together, this might be a bit puzzling for those who’ve adopted that age-old mantra, “What’s good for the health insurance industry is bad for America.” Yet this corporate compromise was fundamental to the passage of Obamacare, as Stephen Brill documents in his book ”America’s Bitter Pill.” As a result, Obamacare is, by and large, good for the health care business. A few years back, as described in a New York Times story headlined, “The President Wants You to Get Rich on Obamacare,” Thomas Scully – who comfortably alternates between working as a government administrator and a government lobbyist – tried to alleviate the concerns of a room of investors about Obamacare at the “21” Club in New York.

“It’s not a government takeover of medicine,” he was quoted by the Times as saying, “It’s the privatization of health care.” As the Times put it, “Billions could flow from Washington to Wall Street, indeed.”

Next question: Why should we care, if the insured are being covered in the process? Well, we should care because our corporate health care compromise comes at a serious cost.

First, it’s a waste of good money. Private insurers have notoriously high overhead: They spend perhaps 12 percent of your premium on administration and profits. Traditional Medicare, in contrast, spends about 2 percent on overhead. A recent analysis found that the insurance expansion under the ACA has been particularly costly from this perspective, with about $1,375 spent on overhead for each newly insured person.

Second, the mandate model of health care reform was never intended to result in universal coverage. “If you took George H. W. Bush’s health plan,” Scully told the investors at the “21” Club with some fairness (again as quoted in the Times), “and removed the label, you’d think it was Obamacare.” The problem with a mandate model – which used to be the conservative approach to health care reform – is that some people will invariably fall between the cracks: Indeed, some 27 million will remain uninsured in the long term under the ACA. Some of these people are undocumented immigrants, while others are working- or middle-class people, for whom the purchase of health insurance is simply too costly.

Third, the problem of underinsurance — which is, roughly speaking, having insurance, but not being able to afford to use it because of copayments or deductibles — is going nowhere quickly. The percentage of non-elderly Americans with private insurance who have a “high-deductible health plan” rose from 22.5 percent in 2009 to 36.9 percent in 2014. Underinsurance doubled between 2003 and 2014, such that by one measure, 31 million Americans are now “underinsured.”

Fourth, the delivery of health care by for-profit corporate enterprises has become an entrenched component of the political economy of American health care. For a particularly unseemly example, consider the explosion of the corporate hospice industry. There was a time not long ago when the hospice was a charitable, religious or not-for-profit enterprise. In the neoliberal era, however, it was all but inevitable that venture capital would try to get in on the market for dying: by 2013, 66 percent of Medicare-certified hospices were for-profit businesses. Quality issues with such for-profit providers are a perennial concern: An investigation by the Washington Post last year, for instance, found that “on several key measures, for-profit hospices as a group fall short of those run by nonprofit organizations,” like the amount spent on nursing each patient.

Which brings us to the final question: What’s the alternative? Is real universal health care – e.g. a single-payer national health program – at this point feasible?

Based on national polling, the answer is yes, absolutely, of course. A majority or near majority generally voice support for a single-payer system, including in one recent survey.

Now, I know, “will of the populace,” yada yada. But on the other hand, there does seem to be a groundswell of outrage at rising inequality in our society that may not be so easily swept away. Electoral politics, to some extent, seem to be reflecting that. Bernie Sanders, for instance – now in second place behind Hilary Clinton in the Democratic presidential primary – has made economic justice the center point of his campaign. He’s also a strong single-payer supporter: “What the United States should do,” he put it in a statement about King v. Burwell yesterday, “is join every other major nation and recognize that health care is a right of citizenship. A Medicare-for-all, single-payer system would provide better care at less cost for more Americans.” Well said, Bernie.

For those who want to open a bottle – or even a case – of champagne to celebrate yesterday’s ruling, I’d say: enjoy. But tomorrow, once the hangover has cleared, the work to transform our corporatized, fragmented, and inequitable health care system remains before us.

A.W. Gaffney is a research fellow in pulmonary and critical care medicine at Harvard Medical School and Massachusetts General Hospital. He received his medical degree from the New York University School of Medicine and completed residency training at Columbia University Medical Center, where he served as chief resident. He is a frequent writer on health policy, blogging at theprogressivephysician.org.

http://www.salon.com/2015/06/26/americas_health_care_system_is_still_broken_why_single_payer_is_the_only_thing_that_will_ever_fix_it/

Next step: Establishing health care as a right through single payer

SUPREME COURT OF THE UNITED STATES

KING ET AL. v. BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.

No. 14–114. Argued March 4, 2015—Decided June 25, 2015

Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.

The judgment of the United States Court of Appeals for the Fourth Circuit is Affirmed.

http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf

****

The Elusive Right to Health Care under U.S. Law

By Jennifer Prah Ruger, Ph.D., M.S.L., Theodore W. Ruger, J.D., and George J. Annas, J.D., M.P.H.
The New England Journal of Medicine, June 25, 2015

Is there a right to health care in the United States? No U.S. Supreme Court decision has ever interpreted the Constitution as guaranteeing a right to health care for all Americans. The Constitution does not contain the words “health,” “health care,” “medical care,” or “medicine.” But if we look deeper, a more nuanced picture emerges. The Court has found rights to privacy, to bodily integrity, and to refuse medical care within the vague right to “due process” contained in the Constitution. The Court has also constructed a right to decide to terminate a pregnancy, although it has also ruled that the government has no obligation to subsidize the exercise of this right. When this line of cases is considered together, it would appear that the U.S. Constitution provides scant affirmative obligation to provide health care.

Despite the absence of a universal right to health care in the Constitution, Congress and the Supreme Court have incrementally crafted an incomplete web of health care rights during the past 50 years. In prisons and emergency rooms across the country, physicians and medical institutions have for decades been required to provide medical care. In a 1976 landmark decision in Estelle v. Gamble, for example, the Supreme Court found a right to adequate medical care for prisoners grounded in the Eighth Amendment of the Constitution.

THE COURTS, THE CONGRESS, AND HEALTH CARE RIGHTS

It is notable that all three of these litigation efforts against the ACA — the 2012 ruling on the individual mandate, the 2014 ruling in Hobby Lobby, and the forthcoming ruling on subsidies for exchange participants — arise from the devolved structures of American health governance; none of the three issues would be valid constitutional or statutory objections to a taxpayer-financed single-payer system. As the Court ruled in Hobby Lobby, religious objections to general taxation used to finance national imperatives are not protected as strongly as the specific claim of Hobby Lobby against the regulatory mandate of the ACA. Perhaps paradoxically, under the Court framework, a completely single-payer system is more constitutionally sound than the ACA statutory design, which aims to preserve a private institutional role in the health care system.

http://www.nejm.org/doi/full/10.1056/NEJMhle1412262?query=TOC

****

Comment:

By Don McCanne, MD

According to the Supreme Court, Congress’s plan was “to improve health insurance markets, not to destroy them,” and thus they upheld the subsidies for the plans offered through the state insurance exchanges. But Congress has failed to establish a process through which absolutely everyone is assured of health care when needed. That is, Congress has established health care as a right only in selected circumstances, but not for everyone. In contrast, as the authors of the NEJM article state, “…under the Court framework, a completely single-payer system is more constitutionally sound than the ACA statutory design…” Enacting a single payer system would finally establish health care as a right throughout the United States.

Physicians for a National Health Program release on the King v. Burwell decision by the Supreme Court: https://www.pnhp.org/news/2015/june/%E2%80%98subsidies-upheld-but-health-needs-still-unmet%E2%80%99-doctors-group

‘Subsidies upheld, but health needs still unmet’: doctors group

Although the Supreme Court has upheld the premium subsidies under the Affordable Care Act, the law remains incapable of remedying the U.S. health crisis, physician group says

FOR IMMEDIATE RELEASE
June 25, 2015

Contact:
Mark Almberg, PNHP communications director, 312-782-6006

Physicians for a National Health Program, an organization of 19,000 doctors who support single-payer national health insurance, released the following statement today:

Today’s decision by the Supreme Court in King v. Burwell to uphold the Affordable Care Act’s premium subsidies in about three dozen states will spare more than 6 million Americans the health and financial harms associated with the sudden loss of health insurance coverage.

For that reason alone the decision must be welcomed: Having health insurance is better than not having coverage, as several research studies have shown.

That said, the suffering that many Americans are experiencing today under our current health care arrangements is intolerable, with approximately 35 million people remaining uninsured, a comparable number underinsured, and rapidly growing barriers to medical care in the form of rising premiums, copayments, coinsurance and deductibles, and narrowing networks.

The unfortunate reality is that the ACA, despite its modest benefits, is not a remedy to our health care crisis: (1) it will not achieve universal coverage, as it will still leave at least 27 million uninsured in 2025, (2) it will not make health care affordable to Americans with insurance, because of high copays, deductibles and gaps in coverage that leave patients vulnerable to financial ruin in the event of serious illness, and (3) it will not control costs.

Why is this so? Because the ACA perpetuates a dominant role for the private insurance industry. Each year, that industry siphons off hundreds of billions of health care dollars for overhead, profit and the paperwork it demands from doctors and hospitals; denies care in order to increase insurers’ bottom line; and obstructs any serious effort to control costs.

In contrast, a single-payer system – an improved Medicare for All – would achieve truly universal care, affordability, and effective cost control. It would put the interests of our patients – and our nation’s health – first.

Single payer is simple: everyone in the U.S. would be covered for all medically necessary care in a single program financed by equitable taxes.

By replacing multiple private insurers with a single, nonprofit agency like Medicare that pays all medical bills, we would save approximately $400 billion annually by slashing the administrative bloat in our current private-insurance-based system. That money would be redirected to clinical care. Copays, coinsurance and deductibles would be eliminated.

Further, such a single, streamlined system would be able to rein in costs for medications and other supplies through the system’s strong bargaining clout – again, to our patients’ benefit.

A single-payer system would also be legally robust.

Because of the ACA’s administrative complexity and flaws – largely reflecting its accommodation to the private health insurance industry and other corporate, profit-oriented interests in U.S. health care – it is particularly vulnerable to the kind of legal challenge we saw today.

Our patients, our people and our national economy cannot wait any longer for an effective remedy to our health care woes. The stakes are too high. We need to move beyond the administratively wasteful, complex and inadequate ACA to a more fundamental, rational single-payer national health program.

Contrary to the claims of those who say we are “unrealistic,” a single-payer system is within practical reach. The most rapid way to achieve universal coverage would be to improve upon the existing Medicare program – which is celebrating its 50th anniversary this year, showing it has stood the test of time – and expand it to cover people of all ages. There is legislation before Congress, notably H.R. 676, the “Expanded and Improved Medicare for All Act,” which would do precisely that.

What is truly unrealistic is believing that we can provide universal and affordable health care in a system dominated by private insurers and Big Pharma.

The American people desperately need a universal health system that delivers comprehensive, equitable, compassionate and high-quality care, with free choice of provider and no financial barriers to access. Polls have repeatedly shown an improved Medicare for all, which meets these criteria, is the remedy preferred by two-thirds of the population. A solid majority of the medical profession now favors such an approach, as well.

We pledge to step up our work for the only equitable, financially responsible and humane cure for our health care ills: single-payer national health insurance, an expanded and improved Medicare for all.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization of more than 19,000 doctors who support single-payer national health insurance.

Losing Obamacare OK if it leads to single-payer system

By Alan Shay
Palm Beach Post, June 24, 2015

I am growing in favor of abolishing the Affordable Care Act. In a recent letter, “Obamacare doesn’t set insurance costs,” the writer discussed the structure and costs associated with medical insurance policies. He is correct when he states that the insurance companies are responsible for the development and pricing of the current offerings of policies through the marketplace.

The ACA sets the guidelines and mandates associated with certain policy provisions, associated costs and profits.

One should remember that the ACA was introduced as a compromise proposal to appease and to recruit assistance from the opposition, while keeping the insurance companies in the loop to underwrite the risk.

The proposal that was most popular initially was a single-payer plan, similar to the comprehensive and very excellent Medicare program that seniors enjoy. In retrospect, however, the single-payer option would probably have been the better choice, since the ACA’s current options have evolved to offerings of high-cost/low-benefit plans — similar to the offerings that existed pre-Obamacare.

The potential “good” that could come from a court ruling against the ACA would be the possible development of a single-payer system, similar to Medicare, for all Americans — including our elected representatives in the U.S. House and Senate.

This “socialistic” plan (read: Medicare) currently provides a very adequate and acceptable level of benefits to the masses. I feel certain that our politicians would now view and welcome this structure, especially if their current plans were to disappear and the lawmakers were given the same options as their constituents.

Alan Shay is a retired financial planner and a licensed insurance agent. He resides in West Palm Beach.

http://www.palmbeachpost.com/news/news/opinion/point-of-view-losing-obamacare-ok-if-it-leads-to-s/nmjfP/

How Undocumented Immigrants Help Strengthen Our Health Care System

By Esther Yu-Hsi Lee
Think Progress, June 24, 2015

Undocumented immigrants provided a surplus of $35.1 billion to the Medicare Trust Fund between 2000 and 2011, according to a new Journal of General Internal Medicine study recently published. The findings challenge concerns that undocumented immigrants are financially burdening the health care system.

According to the study, undocumented immigrants contributed $2.2 and $3.8 billion more than they withdrew annually between 2000 and 2011 to a Medicare program known as the Hospital Insurance Trust fund. The total contribution of their surplus was $35.1 billion.

Medicare consists of two trust funds. The Hospital Insurance Trust Fund (HITF), mostly paid through payroll taxes (and interest on past surpluses), pays for inpatient care. The Supplemental Medical Insurance Trust Fund (SMITF), mostly funded through enrollee premiums and Congressional appropriations from general revenues, pays for outpatient care.

“If unauthorized immigrants had not contributed to nor drawn HITF funds from 2000 to 2011, the HITF would become insolvent in 2029 — 1 year earlier than is currently predicted by Medicare’s Trustees based on their intermediate cost assumptions,” the study concluded.

The study found that in 2011 alone, undocumented immigrants paid in $3.5 billion more than they needed in care. “Unauthorized immigrants generated an average surplus of $316 per capita to the Trust Fund, while other Americans generated a deficit of $106 per capita,” the study’s press release indicated.

The report was a collaborative effort from researchers at Harvard Medical School, the Institute for Community Health, and the City University of New York School of Public Health at Hunter College. Researchers took data from 201,398 respondents in 2012 using the Current Population Survey.

If undocumented immigrants were allowed to get legal status and get on a path to citizenship like the one laid out in the Senate’s 2013 comprehensive immigration reform bill, the study estimated that the group at large could “contribute a cumulative surplus of $45.7 billion, as compared to $44.1 billion in the absence of this policy, from 2012 to 2019.”

Undocumented immigrants contribute the most to the HITF since they pay taxes with the jobs they have, sometimes on a borrowed or invalid Social Security number. That group also consists of undocumented immigrants shielded from deportation relief under President Obama’s 2012 executive action known as the Deferred Action for Childhood Arrivals (DACA) program, who have valid Social Security numbers and also contribute into Social Security taxes. Meanwhile, they typically don’t benefit from the program. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 imposed restrictions that barred undocumented immigrants from from accessing Medicare benefits. While they can collect on Medicare if they ever legalize, about one-third of undocumented immigrants leave the U.S.

Beyond Medicare, undocumented immigrants incur an estimated $5.5 billion in non-Medicare publicly funded health care expenses annually, but they also contribute to state and local taxes that help to offset those expenses. An Institute on Taxation and Economic Policy study found that undocumented immigrants paid an estimated $10.6 billion in 2010.

The lack of access to primary and preventative care can result in higher use of emergency room services and poor quality of care for immigrants who otherwise can’t find or afford care. As a result, undocumented immigrants are at disproportionate risk for chronic health issues like diabetes, tuberculosis, obesity, and drug and alcohol abuse. Poverty and social exclusion are also factors that perpetuate unhealthy living habits that can exacerbate those health issues.

Some state lawmakers are now trying to give undocumented immigrants the opportunity to sign up for health insurance. Earlier this month, the California Senate approved a bill to allow undocumented immigrants to buy health insurance on a state exchange under the federal Affordable Care Act. The bill still needs support from the General Assembly, a gubernatorial signature, and a federal waiver. A 2014 poll of California voters surveyed by the California Endowment found that 54 percent of voters want health coverage for undocumented immigrants.

Unauthorized immigrants reinforce Medicare trust funds

Unauthorized Immigrants Prolong the Life of Medicare’s Trust Fund

By Leah Zallman MD, MPH, Fernando A. Wilson PhD, James P. Stimpson PhD, Adriana Bearse MS, Lisa Arsenault PhD, Blessing Dube MPH, David Himmelstein MD, Steffie Woolhandler MD, MPH
Journal of General Internal Medicine, June 18, 2015

Abstract

Background and Objective

Unauthorized immigrants seldom have access to public health insurance programs such as Medicare Part A, which pays hospitals and other health facilities and is funded through the Medicare Trust Fund.

Design and Main Measures

We tabulated annual and total Trust Fund contributions and withdrawals by unauthorized immigrants (i.e., outlays on their behalf) from 2000 to 2011 using the Current Population Survey and Medical Expenditure Panel Surveys. We estimated when the Trust Fund would be depleted if unauthorized immigrants had neither contributed to it nor withdrawn from it. We estimated Trust Fund surpluses by unauthorized immigrants if 10 % were to become authorized annually over the subsequent 7 years.

Key Results

From 2000 to 2011, unauthorized immigrants contributed $2.2 to $3.8 billion more than they withdrew annually (a total surplus of $35.1 billion). Had unauthorized immigrants neither contributed to nor withdrawn from the Trust Fund during those 11 years, it would become insolvent in 2029—1 year earlier than currently predicted. If 10 % of unauthorized immigrants became authorized annually for the subsequent 7 years, Trust Fund surpluses contributed by unauthorized immigrants would total $45.7 billion.

Conclusions

Unauthorized immigrants have prolonged the life of the Medicare Trust Fund. Policies that curtail the influx of unauthorized immigrants may accelerate the Trust Fund’s depletion.

http://link.springer.com/article/10.1007/s11606-015-3418-z?wt_mc=email.event.1.SEM.ArticleAuthorOnlineFirst

****

Unauthorized immigrants prolong the life of Medicare Trust Fund: JGIM study

PNHP, June 23, 2015

Unauthorized immigrants pay billions more into Medicare’s Hospital Insurance Trust Fund each year than they withdraw in health benefits, according to research from Harvard Medical School, the Institute for Community Health and the City University of New York School of Public Health at Hunter College.

In 2011 alone, unauthorized immigrants paid in $3.5 billion more than they utilized in care.  Unauthorized immigrants generated an average surplus of $316 per capita to the Trust Fund, while other Americans generated a deficit of $106 per capita. The authors conclude that reducing unauthorized immigration would worsen Medicare’s financial health.

Payroll taxes are the major revenue source for the Trust Fund, which mostly pays hospital bills. Unauthorized immigrants often pay these taxes, usually under a borrowed or invalid Social Security number. Unauthorized immigrants are mostly working age, have high rates of labor force participation, and hence contribute substantial payroll taxes. Medicare outlays for unauthorized immigrants are low because they are ineligible for Medicare benefits.

Senior author Dr. Steffie Woolhandler, professor of public health at City University of New York and lecturer in medicine at Harvard, said: “The numbers contradict the myth that unauthorized immigrants are a drain on the health system. Reducing immigration would worsen Medicare’s financial woes.”

https://www.pnhp.org/news/2015/june/unauthorized-immigrants-prolong-the-life-of-medicare-trust-fund-jgim-study

****

Comment:

By Don McCanne, MD

Discussions of expanding health care coverage to everyone frequently result in expressions of concern about immigration policy. That unauthorized immigrants place a burden on our public resources has become a meme that is not substantiated in fact. This study adds to the evidence that unauthorized immigrants contribute more toward our public resources than they consume in benefits. Their contributions have reinforced our Medicare trust funds.

Under a single payer system, everyone is included. Studies such as this should allay fears that the nation cannot afford the costs of including unauthorized immigrants. Acknowledging that they are here and are important contributors to our economy should ease concerns about the need to move them from non-compliant use of Social Security numbers to a transparent system of accurate identification. Under single payer, they would openly contribute their equitable share to our pooled health care funds.

Everyone should have health care whenever needed. Let’s fix our system.

Medicare at 50: Strengths to Build On

By John Geyman, M.D.
The Huffington Post, June 22, 2015

Traditional, or Original, Medicare turns 50 on July 30, having had many challenges and achievements from the days of its passage to today. It is time to celebrate its many successes, note some of its current challenges and threats to its future, and briefly discuss how it gives us a strong foundation upon which to build still-needed health care reform.

When it was enacted in 1965, about one-half of seniors in the U.S. lacked health insurance, and many could not afford necessary health care. When it was passed with strong bipartisan support (313-116 in the House, and 70-24 in the Senate), 20 million Americans age 65 and older gained health insurance.1

From the start, Medicare was a political football raising strong arguments for and against any kind of universal health insurance, quite similar to those we hear today, including from the American Medical Association, hospitals, and the health insurance industry. But a “corporate compromise” was struck in 1965 whereby private insurers were relieved of their worse health risks, hospitals could expect assured payments for their costs of serving a previously disadvantaged population, and physicians gained a permissive “usual, customary, and reasonable” reimbursement policy.2 Claims processing and bill auditing were contracted out by the government to private fiscal intermediaries, especially Blue Cross and Blue Shield plans.3

From the beginning, Medicare has provided a broad set of benefits, defined by law, protecting all seniors, many of whom could not afford health insurance in the private market. Part A provides hospital insurance, while Part B provides supplementary medical insurance for 80 percent of physician services (initially with a $50 deductible and 20 percent coinsurance), X-ray and laboratory tests, and some home health and outpatient and mental health services. Some additional benefits were added in later years to this basic program, including coverage for the disabled and patients with end-stage renal disease in 1972 and partial coverage for prescription drugs in 2003 (Part D). Medicare’s benefits have always been considered an earned right, not an entitlement, since all beneficiaries pay into the program through mandatory contributions from individuals and/or employers.4

Today, Medicare is a very large program, covering more than 55 million Americans, including all seniors and 9 million people with permanent disabilities under age 65. It accounted for 14 percent of the federal budget in 2014 and about 20 percent of total personal health expenditures in 2013.5 Since the 1990s, we have seen an increasing trend toward privatized Medicare plans (Part C), starting with Medicare + Choice HMOs in the 1990s and their sequel, Medicare Advantage (MA) since 2003. These plans have been promoted by conservative policymakers and think tanks with a goal to replace Medicare as an “entitlement program” with private market plans, health savings accounts and vouchers. Almost one-third of seniors are now enrolled in MA plans.

The Many Strengths of Traditional Medicare over 50 Years

Traditional Medicare has performed much better over the years than any of these private plans, which operate with the goal of profits more than service. Table 1 summarizes the major differences between traditional Medicare and privatized plans.6

Source: Adapted from Geyman, JP. Shredding the Social Contract: The Privatization of Medicare. Monroe, ME. Common Courage Press, 2006, p. 206.

These comparisons are supported by many studies over the years. As just four examples:

A literature review by the Kaiser Family Foundation of 40 studies since 2000 found that beneficiaries rated access and quality of care better in traditional Medicare than in Medicare Advantage, especially by those who were sick.7

An analysis by the Urban Institute over three decades found that private Medicare plans cost the government more than fee-for-service traditional Medicare, which contained costs better than private plans over those years.8

Traditional Medicare operates with an administrative overhead of 2 percent, compared to overhead of Medicare Advantage about seven times higher.9

The Centers for Medicare and Medicaid Services (CMS) took 35 enforcement actions against Medicare Advantage plans and Medicare Part D plans in 2014, particularly for inappropriate denials of care and requiring unnecessary preauthorization of services and medications that resulted in more cost shifting to beneficiaries.10

Some Major Challenges Facing Medicare Today

As in 1965, Medicare remains a lightning rod for intense political debates over its future. Despite its proven track record for efficiency, reliability, and responsible service over these last 50 years and widespread public support, Republicans are united in their attempts to dismember it, convert it to a voucher program, and shift patients to the private marketplace, all under the guise of reining in federal spending and austerity. Some Democrats are amenable to raising the eligibility age for Medicare and increasing cost sharing. These ideas are a complete disconnect with the needs of our aging society in a time of increasing inequality of incomes. More than 25 million seniors and people with disabilities live on annual incomes of $23,500 or less, many of whom cannot afford premiums and cost-sharing in either traditional or privatized Medicare. And as our population ages, pensions that in the past assured defined benefits are shifting to defined benefit pensions, without such assurances.11 There are still many gaps in coverage, even within traditional Medicare, including for long-term care and dental care.

Future funding for Medicare is seriously threatened and murky at best. The Obama administration has told us that the Affordable Care Act (ACA) will be financed in part by $716 billion in Medicare cuts over 10 years, with the unbelievable claim that these cuts will not result in reduction of services. The recently passed H. R. 2, the “doc fix” bill, has provisions in it that will require new deductibles in first-dollar supplemental Medigap plans (held by 40 percent of Medicare beneficiaries) and expand means-testing for Medicare Part D, both of which will increase costs for seniors and further undermine traditional Medicare.

Just as the future of Medicare is unclear, so is that of our entire health care system. The U. S. Supreme Court is expected to rule in coming days on the legality of subsidies under the ACA. A negative ruling will be a serious blow to the ACA and call into question where we should go next. Republicans in Congress will push for repeal or defunding parts of the ACA. As the debate heats up, the leading alternatives will likely be: (1) continuation of the ACA as it unravels, (2) some GOP “plan” based on patients having “more skin in the game” that further threatens access and affordability of care; (3) revival of the “public option” idea, hardly an effective fix as merely adding one more payer to our dysfunctional multi-payer financing system; and (4) long-overdue consideration of single-payer national health insurance that would cover all Americans in a large risk pool with more benefits, less cost, more reliability and equity in a sustainable way, as described in my recent book, How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans.11

Traditional Medicare has proven its superiority over any private, market-based alternatives for the last 50 years. It is time to build on this social insurance model as the health care debate continues.

References:

  1. Rosenblatt, B. House passes massive expansion of health care coverage. Washington, DC. National Academy of Social Insurance, April 10, 2015.
  2. Geyman, JP. Shredding the Social Contract: The Privatization of Medicare. Monroe, ME. Common Courage Press, 2006, pp. 49-51.
  3. Oberlander, J. The Political Life of Medicare. Chicago. The University of Chicago Press, 2003, p. 33.
  4. Study Panel on Medicare’s Larger Social Role, Final Report. Washington, DC. National Academy of Social Insurance, 1999, pp. 31-35.
  5. Cubanski, J. A primer on Medicare: Key facts about the Medicare program and the people it covers. Kaiser Family Foundation, March 20, 2015.
  6. Ibid # 2, p. 206.
  7. Gold, J, Casillas, G. What do we know about health care access and quality in the Medicare Advantage versus the traditional Medicare program? Kaiser Family Foundation, November 6, 2014.
  8. Boccuti, C, Moon, M. Comparing Medicare and private insurers: growth rates in spending over three decades. Health Affairs (Millwood) 22 (2): 230, 2003.
  9. Himmelstein, D, Woolhandler, S. The post-launch problem: the Affordable Care Act’s persistently high administrative costs. Health Affairs Blog, May 27, 2015.
  10. Herman, B. Medicare is doing more to police Advantage and Part D lapses, but does it matter? Modern Healthcare, December 4, 2014.
  11. Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015.

http://www.huffingtonpost.com/john-geyman/medicare-at-50-strengths_b_7637296.html

Robert Reich supports Medicare for all, but…

Making the Economy Work for the Many and Not the Few

#11: Medicare Isn’t the Problem; It’s the Solution

By Robert Reich
HuffPost Politics, June 22, 2015

Again and again the upcoming election you’ll hear conservatives claim that Medicare — the health insurance program for America’s seniors — is running out of money and must be pared back.

Baloney. Medicare isn’t the problem. In fact, Medicare is more efficient than private health insurance.The real problem is that the costs of health care are expected to rise steeply.

Medicare could be the solution — the logical next step after the Affordable Care Act toward a single-payer system.

Please see the accompanying video — #11 in our series on ideas to make the economy work for the many rather than for the few. And please share.

Some background: Medicare faces financial problems in future years because of two underlying trends that will affect all health care in coming years, regardless of what happens to Medicare:

The first is that healthcare costs are rising overall — not as fast as they were rising before the Affordable Care Act went into effect, but still rising too quickly.

The second is that the giant post­war baby boom is heading toward retirement and older age. Which means more elderly people will need more health care, adding to the rising costs.

So how should we deal with these two costly trends? By making Medicare available to all Americans, not just the elderly.

Remember, Medicare is more efficient than private health insurers ­­ whose administrative costs and advertising and marketing expenses are eating up billions of dollars each year.

If more Americans were allowed to join Medicare, it could become more efficient by using its growing bargaining power to get lower drug prices, lower hospital bills, and healthier people.

Allowing all Americans to join Medicare is the best way to control future healthcare costs while also meeting the needs of the baby boomer and other Americans.

Everyone should be able to sign up for Medicare on the healthcare exchanges set up under the Affordable Care Act. This would begin to move America away from its reliance on expensive private health insurance, and toward Medicare for all – a single­ payer system.

Medicare isn’t a problem. It’s part of the solution.

http://www.huffingtonpost.com/robert-reich/medicare-solution-for-making-economy-work_b_7635620.html

Video: https://www.facebook.com/moveon/videos/vb.7292655492/10152825520900493/

****

Public Plan Option in a Market of Private Plans

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.
Physicians for a National Health Program, March 26, 2009

The “public plan option” won’t work to fix the health care system for two reasons.

1. It forgoes at least 84 percent of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs at current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single payer — not enough to make reform affordable.

2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan — which started as the single payer for seniors and has now become a funding mechanism for HMOs — and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan.

https://www.pnhp.org/news/2009/march/himmelstein_and_wool.php

****

Comment:

By Don McCanne, MD

In his enthusiastic endorsement of single payer Medicare for all, Robert Reich also renews the call for the “public option” of allowing people to purchase Medicare through the exchanges established by the Affordable Care Act. During the health care reform process, the public option had wide support, but was first weakened considerably and then eventually rejected by Congress in a power play by Sen. Joseph Lieberman.

In spite of the modest benefits of the Affordable Care Act, nothing has changed that would alter the concerns about the public option expressed by David Himmelstein and Steffie Woolhandler and others of us at PNHP.

At the time the public option was being considered, I wrote the following: “The option to purchase a public plan within a market of private health insurance plans would merely provide one more player in our inefficient, dysfunctional, fragmented, multi-payer system of financing health care, that is if the public option even survives the political process. It would leave in place the deficiencies that have resulted in very high costs with the poorest health care value of all nations (i.e., overpriced mediocrity in health care).”

Even if Medicare were offered for purchase in the exchanges, the premiums would not be competitive with the low-actuarial-value silver and bronze plans with their very high deductibles, especially since the Medicare risk pool includes higher cost elderly and disabled individuals. If Medicare were revised to make it competitive, benefits would have to be reduced when what we need instead is an improved Medicare with expanded benefits.

One possibility would be to provide subsidies for those electing the Medicare option, but either the beneficiaries’ share would still be too great, certainly making the plan non-competitive, or the public subsidies would have to be greater than those for the private low-actuarial-value insurance plans – an approach that would be vigorously opposed by the all-powerful private insurers.

Besides, it is unlikely that Congress would support higher subsidies for a public option Medicare when their agenda has been the opposite – providing higher subsidies for the private Medicare Advantage plans, sending us in the direction of a privatized Medicare.

Although Robert Reich proposes a public option version of Medicare as a way to begin moving us toward a single payer Medicare for all, it is difficult to perceive how the transition would take place. Offering an option to purchase Medicare is a very small step that leaves everything else in place. As Medicare Advantage demonstrates, one-third of beneficiaries have moved in the opposite direction – from traditional Medicare to private insurance options. That would continue as long as Congress continues to advance policies that cater to the insurers more than they do to the public.

Reich seems to be recommending a two step path to reform – one step offering the Medicare option and a second step of converting to single payer Medicare for all. Quentin Young has compared that to taking two steps to cross a chasm. That first step can lead to a serious misadventure, but it should not be a surprise.

Affordable Care Act? Not really

By The Editorial Board
Lake Placid (N.Y.) News, June 18, 2015

Health insurance is going to cost a lot more for many Americans.

President Barack Obama is not the first person to claim he could provide more people with health insurance while keeping costs for care under control, but it took Obama’s “hope and change” mantra to get a national health care plan on the books.

Change certainly is occurring. Millions of Americans have been affected adversely by Obamacare. Some have found the president was not being honest when he pledged that if they liked their health insurance, they could keep it. Some are losing excellent insurance provided through employers. Many learned that even with massive government subsidies, the only insurance they could afford leaves them with massive out-of-pocket obligations. And many are being fined hundreds of dollars a year for failing to obtain government-approved coverage.

The latest news, though, is that now many insurance companies say they must increase rates for health care policies. Increases in double digits will be common, just like in the days before the Affordable Care Act, commonly called Obamacare. Some large insurers propose rate hikes of 20-25 percent or more. Both government policies and those paid for by individuals will be affected.

Insurers have cited unexpectedly high expenses for Obamacare policies as a primary reason for the increases. That’s probably true. We suspect there’s another reason as well: These companies’ beneficiaries are getting richer by exploiting the public.

It’s true that the Affordable Care Act has done some good. Scrapping it would hurt many people who could not afford insurance without it, such as younger people who can now remain under their parents’ plans until they are 26 years old. Also, insurance companies are no longer allowed to reject people just because they have pre-existing conditions.

But in view of the news from insurers, how many Americans are being priced out of the market because of Obamacare?

We agree with conservative politicians like our congresswoman, Elise Stefanik, that Obamacare is a mess, but Republicans like her have proposed no real alternative. Many of them tend to heed the beck and call of big-business health industries over the needs of Americans.

We, however, have a clear and obvious solution. We’ve been talking about it for years. This nation should have single-payer health insurance – Medicare for all – but so far there’s been little political will to consider it.

Why do we in this country lay health insurance on the backs of employers? That makes no sense. It squelches hiring and makes things much less fair and more complicated than they have to be. Imagine how hiring would increase if every employer in the nation no longer had to worry about the cost of health insurance for every employee. Imagine how property taxes would decrease if health insurance (and, for counties, Medicaid) costs were no longer on the books of our school districts and municipalities.

We don’t believe it would cost much more than we’re paying now, because it would reduce the terrible inefficiency of the United States’ current system. According to the World Health Organization Global Health Expenditure database, in 2013 (the latest year stats are available, and with Obamacare in place) the U.S. spent $9,146 per person on health care, which is more than every other nation except Norway and Sweden, which have luxurious national health coverage. Canada spent $5,718.

There could be victims of such a move – the health insurance companies – but we’re willing to risk that. They’d land on their feet.

Only one presidential candidate is pushing this: Bernie Sanders of Vermont. We’re not close to ready to endorse anyone yet, but on this issue, we hope he gets some traction.

The Democratic Party alternative, the Affordable Care Act, is proving to be unaffordable.

http://www.lakeplacidnews.com/page/content.detail/id/523575/Affordable-Care-Act–Not-really.html

CBO: Repeal of ACA would raise economic output (per dynamic scoring)

Budgetary and Economic Effects of Repealing the Affordable Care Act

CBO, June 2015

In this report, the Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) analyze the main budgetary and economic consequences that would arise from repealing that law.

What Would Be the Major Effects of Repealing the ACA?

CBO and JCT estimate that repealing the ACA would have several major effects, relative to the projections under current law:

  • Including the budgetary effects of macroeconomic feedback, repealing the ACA would increase federal budget deficits by $137 billion over the 2016–2025 period. That estimate takes into account the proposal’s impact on federal revenues and direct (or mandatory) spending, incorporating the net effects of two components:
    • Excluding the effects of macroeconomic feedback — as has been done for previous estimates related to the ACA (and most other CBO cost estimates) — CBO and JCT estimate that federal deficits would increase by $353 billion over the 2016–2025 period if the ACA was repealed.
    • Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period. Alone, those effects would reduce federal deficits by $216 billion over the 2016–2025 period, CBO and JCT estimate, mostly because of increased federal revenues.
  • For many reasons, the budgetary and economic effects of repealing the ACA could differ substantially in either direction from the central estimates presented in this report. The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period — or could increase deficits by a substantially larger margin than the agencies have estimated. However, CBO and JCT’s best estimate is that repealing the ACA would increase federal budget deficits by $137 billion over that 10-year period.
  • Repealing the ACA would cause federal budget deficits to increase by growing amounts after 2025, whether or not the budgetary effects of macroeconomic feedback are included. That would occur because the net savings attributable to a repeal of the law’s insurance coverage provisions would grow more slowly than would the estimated costs of repealing the ACA’s other provisions — in particular, those provisions that reduce updates to Medicare’s payments. The estimated effects on deficits of repealing the ACA are so large in the decade after 2025 as to make it unlikely that a repeal would reduce deficits during that period, even after considering the great uncertainties involved.
  • Repealing the ACA also would affect the number of people with health insurance and their sources of coverage. CBO and JCT estimate that the number of nonelderly people who are uninsured would increase by about 19 million in 2016; by 22 million or 23 million in 2017, 2018, and 2019; and by about 24 million in all subsequent years through 2025, compared with the number who are projected to be uninsured under the ACA. In most of those years, the number of people with employment-based coverage would increase by about 8 million, and the number with coverage purchased individually or obtained through Medicaid would decrease by between 30 million and 32 million.
    • About 14 million fewer people would be enrolled in Medicaid.
    • About 18 million fewer people would have nongroup coverage. That reduction is the net effect of a projected decline of about 22 million in nongroup coverage purchased through exchanges (which would no longer serve as a conduit for federal subsidies and might not exist at all) and a projected increase of about 4 million enrollees in nongroup coverage purchased directly from insurers.
    • About 8 million more people, on net, would have employment-based coverage—roughly mirroring the agencies’ estimate of the extent to which the ACA will reduce employment-based coverage in future years.
    • About 24 million more nonelderly U.S. residents would be uninsured.

The Macroeconomic Feedback Effects of a Repeal and Their Impact on the Federal Budget

CBO and JCT also have analyzed the effects that repealing the ACA would have on the U.S. economy and estimated the budgetary impact — or feedback effects — of those macroeconomic changes. CBO and JCT estimate that the net effect on the economy’s output would be negligible in 2016 but would grow after that. According to the agencies’ estimates, from 2021 through 2025, a repeal would increase GDP by about 0.7 percent, on average — mostly by repealing provisions that, under current law, are expected to reduce the supply of labor.

Labor Supply

CBO and JCT estimate that repealing the ACA would increase the supply of labor and thus increase aggregate compensation (wages, salaries, and fringe benefits) by an amount between 0.8 percent and 0.9 percent over the 2021–2025 period. Those effects would be the result of repealing various provisions of the ACA that are estimated to reduce the amount of labor that people choose to supply. In particular, the subsidies and tax credits for health insurance that the ACA provides to some people are phased out as their income rises — creating an implicit tax on additional earnings — and those subsidies, along with expanded eligibility for Medicaid, generally make it easier for some people to work less or to stop working without losing health insurance coverage. For other people, the act directly imposes higher taxes on labor income, thus discouraging work. Repealing the ACA would reverse those effects. In percentage terms, the increase in total hours worked is estimated to be larger than the increase in aggregate compensation because the largest increases in labor supply would occur among the lower-wage workers whose incentives would be most strongly affected. Specifically, repealing the ACA would increase the aggregate number of hours worked by about 1.5 percent over the 2021–2025 period, CBO and JCT estimate.

How Would a Repeal Affect the Budget and the Economy Beyond 2025?

CBO and JCT expect that the trend projected for the latter part of the coming decade would probably continue after 2025, whether or not the effects of macroeconomic feedback are incorporated into the analysis. To generate rough estimates for the decade beyond 2025, CBO and JCT extrapolated the budgetary effects that a repeal of the ACA would have in the years before 2025. According to that analysis, and excluding the budgetary effects of macroeconomic feedback, a repeal would increase annual deficits over the 2026–2035 period by amounts that lie within a broad range around one percent of GDP. Although the macroeconomic feedback stemming from a repeal would continue to reduce deficits after 2025, the effects would shrink over time because the increase in government borrowing resulting from the larger budget deficits would reduce private investment and thus would partially offset the other positive effects that a repeal would have on economic growth. Consequently, taking that feedback into account would not substantially alter the increases estimated for federal deficits that would occur over that period. A repeal of the ACA would probably increase deficits in subsequent decades as well, whether or not the effects of macroeconomic feedback are included.

http://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50252-Effects_of_ACA_Repeal.pdf

****

Mixed Effects Are Seen on an Affordable Care Act Repeal

By Robert Pear
The New York Times, June 19, 2015

The nonpartisan Congressional Budget Office said Friday that repealing the Affordable Care Act would significantly increase federal budget deficits and the number of people who are uninsured.

But, it said, repealing the law would also raise economic output because it would create incentives for some people to work more.

The estimates came in the first major study issued by the new director of the budget office, Keith Hall. It was also the first report to use new methods of fiscal analysis, according to instructions from the Republican majority in both houses of Congress.

Repealing the law would increase federal budget deficits by $137 billion in the decade from 2016 to 2025, Mr. Hall said in the report. In addition, he said, the number of uninsured people, estimated at 35 million under current law, would increase by 24 million if the law was repealed.

Senator Michael B. Enzi, Republican of Wyoming and the chairman of the Senate Budget Committee, said the report showed that “repealing the president’s health care law will increase economic growth.” But Representative Nancy Pelosi of California, the House minority leader, said it showed that “repeal will explode the deficit.”

The report analyzes the economic effects of the health care law and the ways in which those effects may, in turn, influence federal spending and revenues — a technique known as dynamic scoring. Democrats fear that Republicans will use that approach to help justify tax cuts. But at least in the report on Friday, Mr. Hall was cautious in using the new technique and carefully documented the economic assumptions that led to his conclusions.

****

Dynamic Scoring in Congress Is Defensible but Slippery

By N. Gregory Mankiw
The New York Times, February 28, 2015

… congressional leaders appointed Mr. Hall, a veteran of the Bush administration, to be the new head of the budget office.

Until now, conventional budget analysis has used a process called static scoring, which assumes that the path of gross domestic product remains the same when the government changes taxes or spending. This procedure has the virtues of simplicity and transparency.

We don’t yet know how Mr. Hall’s leadership will differ from Mr. Elmendorf’s but we do know that he will face a big challenge. House Republicans have recently changed the rules: The Congressional Budget Office and Joint Committee on Taxation are now required to use “dynamic scoring” when evaluating major changes in tax and spending policy. This is the can of worms that awaits Mr. Hall as he takes on his new job.

****

Obamacare and Labor Supply

By Paul Krugman
The New York Times, June 20, 2015

I was critical of CBO yesterday — probably excessively — for giving what seemed like undue cover for deficit scolds in its long-run budget projection. So credit where credit is due: the new report on the consequences of repealing the ACA is definitely not what the Congressional majority wants to hear. Despite including “dynamic scoring”, the report finds, unambiguously, that Obamacare reduces the deficit and repealing it would enlarge the deficit.

Is there anything in the report that provides fodder for the opponents? I see that the Times report says that there are “mixed effects”, because CBO says that GDP would be higher if the ACA were repealed. And maybe the usual suspects will try to spin it that way.

But the truth is that this report is much, much closer to what supporters of reform have said than it is to the scare stories of the critics — no death spirals, no job-killing, major gains in coverage at relatively low cost.

And there’s another important point: while the ACA may lead to somewhat lower GDP because it reduces labor supply, this does not imply a one-for-one loss in welfare. Suppose that a family’s second earner, now assured of being able to get health insurance, chooses as a result to work shorter hours and spend more time taking care of the children. GDP goes down — but there is a compensating non-monetary gain.

In fact, in a perfectly competitive economy the gain would fully offset the fall in GDP: if workers are paid their marginal product, the fall in GDP from the ACA is equal to the lost wages, but workers choosing to work less clearly prefer to have the extra time to the extra wages. Or to put it a bit differently, other things equal it’s a good thing if workers, freed from the fear that they won’t be able to get health insurance, respond by voluntarily working less.

OK, the story is made more complicated by taxes, which place a wedge between wages paid and income received; so there probably is a net cost to a fall in labor supply. But this effect is fully captured by the loss in revenue, which CBO doesn’t think would be large.

So overall this isn’t at all a “mixed” report — it’s a very big win for Obamacare supporters.

http://krugman.blogs.nytimes.com/2015/06/20/obamacare-and-labor-supply/

****

Comment:

By Don McCanne, MD

This report from the Congressional Budget Office (CBO) is important because it describes the consequences of repealing the Affordable Care Act (ACA) – a goal of many conservatives in Congress. But there also is an important sub-story here – the advent of the use of “dynamic scoring” by the CBO and its potential implications.

One of the more severe deficiencies of ACA is that when it is fully implemented about 29 million people will still be uninsured. This CBO analysis indicates that repeal of ACA will increase the numbers of uninsured by another 24 million – bringing the total to over 50 million. If no other lesson is drawn from this report, it is that  we should not move backwards with efforts to reject what progress has been made, but that instead we should move forward with real reform that would cover everyone (in case you need any hints, that would be single payer).

From the perspective of the federal budget, this report also shows that repeal of ACA would cause significant increases in the deficit which presumably would require either increased revenues (taxes) which the conservatives reject, or decreases in spending which would be intolerable when considering that our discretionary federal budget is already spartan. If we moved forward with more effective reform – single payer – the provisions of that reform would include equitable financing, and thus the budgetary damage done by the displacement of ACA would become a moot point.

But what about dynamic scoring, and what is it? It seems to have more to do with politics and less with economic science. When the CBO analyzes the potential impact of proposed legislation on the federal budget, they look at not only the direct impact of the legislative requirements, but they also look at the macroeconomic impact – the changes in the economy at large that can result from the legislation. They can do this with static scoring – assuming that the gross domestic product remains the same when government changes taxes or spending – or they can use dynamic scoring – evaluating how fiscal policy influences the course of the economy.

The Republicans who now control Congress have changed the rules for the non-partisan CBO and now require dynamic scoring, and this is the first CBO report in which this tool has been applied. Does it represent economic science or political posturing?

They determined that repeal of ACA would increase the supply of labor, and this increase would result in a 0.7 percent increase in the gross domestic product (GDP) – an example of dynamic scoring. Why should the supply of labor be increased? They say that loss of insurance would drive greater employment rates amongst the unemployed and underemployed. With a continued sluggish economy, limited employment opportunities, and the permanent exiting of millions from the job market, do they really believe that health insurance status is a significant driver when everyone already wants income and job security? Do they really believe that people are not working because having insurance makes “it easier for some people to work less or to stop working,” as the CBO report states? Do they really believe that employers are not hiring now because there is a robust job market, whereas they would start hiring if the job market contracted? Does anyone of any integrity really propose that we do the experiment of repealing ACA and then follow the change in the GDP to see if it increases, while ignoring declines in insurance coverage and increases in the federal deficit?

Another concept implicit in this report is that the reduction in government expenditures for health care brought about by repealing ACA would somehow improve the economy. Yet health care is one of the most important sectors of our economy, and its strength likely prevented the Great Recession from becoming a full-on depression. Sidestepping the issue of precisely how GDP is or should be defined, wouldn’t the stimulus to the health care industry provided by ACA (confirmed by Wall Street reports) have a much greater impact on the economy than would this reduction in labor supply caused by more people being insured?

Considering the numbers who would become uninsured and considering the increase in the national debt that would occur with ACA repeal, it sounds like repeal would be a cruel and fiscally irresponsible act. Yet the conservatives are celebrating the fact that the CBO has allegedly implied in this report that repeal of ACA would be good for the economy. As Senate Budget Committee Chairman Mike Enzi said, “repealing the president’s health care law will increase economic growth” (Robert Pear, New York Times, June 19), and Senate majority leader Mitch McConnell said, in a tweet, “The CBO says an Obamacare repeal actually boosts the American economy” (Kate Gibson, CBS Moneywatch, June 19).

The CBO has always been the source of highly credible, non-partisan reports on important matters before Congress. Dynamic scoring could be used to increase the accuracy of CBO analyses, but it would have to be very carefully applied to avoid analyses driven by political ideology. Through the appointment of a conservative economist with an order to institute dynamic scoring, the Republicans may be impairing the credibility of the CBO. Imagine how they might use dynamic scoring to try to discredit single payer.

(In fairness to CBO Director Keith Hall, economist Paul Krugman does remind us, “the ACA may lead to somewhat lower GDP because it reduces labor supply.” Also respected New York Times reporter Robert Pear concludes, “Mr. Hall was cautious in using the new technique and carefully documented the economic assumptions that led to his conclusions.” So a generous application of this economic principle allows CBO to include in its summary the statement, “Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period.” But this isolated statement does allow, as Krugman indicates, fodder for the usual suspects to try to put a positive spin on repeal – exemplified by the statements of McConnell and Enzi. Nevertheless, I still contend that the loss of health insurance would not cause a major incremental increase in the labor supply for a population that already craves employment security. “Hey, I got insurance; forget about food and rent.”)

[Corrected text posted June 23, 2015.]