Posts Tagged ‘Independent Payment Advisory Board’

GOP VP Candidate Paul Ryan Advocates “Medicare Premium Support”

Wednesday, September 5th, 2012

Now that Representative Paul Ryan (R-WI) has been selected by former Governor Mitt Romney (R-MA) as his vice presidential running mate, the debate is focusing on the Wisconsin representative’s plan to reform Medicare.  Known as Medicare Premium Support, it “refers to a system under which Medicare enrollees would pick from a menu of competing plans with a fixed government payment to help defray premium costs.  Enrollees would be on the hook for any charges above the government contribution.  But they could save money by selecting a plan with a premium below the federal subsidy.”

Ryan says that under his plan, the government’s contribution toward premiums will equal the cost of the second least expensive plan in any market — or traditional Medicare — whichever costs less.  Ryan believes that his plan is politically feasible because it doesn’t begin until 2022 with the result that it retains traditional Medicare for Americans who were 55 and older in 2011 — meaning that baby boomers are exempt from the changes.  Democrats who oppose the plan contend that Ryan’s Medicare overhaul would subject seniors to the vagaries of the private market, leaving them with little protection against rising premiums and negligible benefits.

So what is the difference between the Democratic and Republican cuts to Medicare?  The ACA stresses government control and central planning. The law creates a panel of 15 unelected government officials, called the Independent Payment Advisory Board (IPAB) to direct changes that will shrink spending by cutting physician and hospital reimbursement.  The Wyden-Ryan plan preserves the ACA’s targets for future Medicare spending, but uses competitive bidding.  Seniors would have the same benefits that they do now, and would have the option of choosing from several government-approved private insurance plans.

The Republican budget targets Medicare growth of GDP plus 0.5 percent, just as the 2013 Obama budget does. The difference lies in the fact that the GOP budget repeals the ACA, while maintaining that law’s Medicare cuts.  The Democratic budget leaves the ACA in place.

Writing in the Washington Post, Ezra Klein puts the difference in a nutshell:  “The difference between the two campaigns is not in how much they cut Medicare, but in how they cut Medicare.”

In an exclusive interview with Modern Healthcare magazine, Ryan says that “This is an idea whose time has come.  And it’s a bipartisan idea.  What Representative Ron Wyden (D-OR) and I tried to do was to plant the seeds of a bipartisan consensus.  We knew we weren’t going to pass it because of the politics.  We did this together to get the consensus-building started.”  Ryan believes that the plan’s chances for approval will greatly improve in 2013 — especially if the Romney/Ryan team wins the November 6 presidential election.  “I’m actually pretty optimistic,” he said, noting that the United States should reform healthcare on its own terms and “fix this on our terms” instead of borrowing European ideas.  “We believe there are far superior ways to get back to a patient-centered healthcare system, the nucleus of which is the patient and doctor — and not the government,” Ryan said.  “We believe consumer-driven, market-based reforms do more to alter the cost curve of healthcare inflation.”

If Ryan’s plan is enacted into law, people 55 and younger would see a change from one in which everyone gets the same set of government-paid benefits to one in which the government gives all senior citizens a fixed amount of money.  They could use this to purchase private insurance or pay a portion of the cost of enrolling in traditional Medicare.  Ryan has not said how much the premium support payment would be.  But he would limit the annual growth rate to no more than one-half percent more than the economy’s overall growth rate, even though healthcare costs are rising at a significantly faster pace.  Ryan’s plan would also raise the Medicare eligibility age to 67 from 65 by 2034.

Not so fast,” Democrats warn as partisans from both parties accuse the other side of throwing senior citizens under the bus.  “Make no mistake about it — these Republicans don’t believe in Medicare,” Obama campaign senior adviser David Axelrod said.  “They want to turn it into a voucher program.  And slowly, all the burden is going to shift to seniors themselves.  And that is not an answer to entitlement reform.”

Republicans counter that $716 billion in cuts to Medicare are already a part of the Patient Protection and Affordable Care Act (ACA).  An online video created by the Republican National Committee features Ryan saying that Democrats “have refused to make difficult decision because they are more worried about their next election than they are about the next generation.”  According to Ryan, “We won’t duck the tough issues; we will lead.”

Uwe Reinhardt, a healthcare economist at Princeton University disagrees, saying that rather than motivating insurers to control their costs, the Ryan plan will not benefit seniors.  “You’re essentially shoving these guys out on a boat, saying, ‘We’ll give you a push, but if the waves are rough, you’re on your own,” he said.  “It would really worry me if I were a middle-class American.”

Medicare Times Are a Changing

Monday, January 16th, 2012

Baby boomers may not like it — and whoever wins the White House this year — but the Medicare that our parents knew and love is destined to change. And it’ll be like it or lump it.

With more than 1.5 million baby boomers enrolling in Medicare every year, the program’s future is one of the most crucial economic issues for anyone who currently is 50 or older. Healthcare costs are the most erratic part of retirement expenses, and Medicare remains a great deal for retirees, who often get benefits worth significantly more than the payroll taxes they paid while working.  “People would like to have what they used to have.  What they don’t seem to understand is that it’s already changed,” said Gail Wilensky, a former Medicare administrator. “Medicare as we have known it is not part of our future.”

Consider these numbers.  Medicare’s giant trust fund for inpatient care is expected to run out of money in 2024.  When that happens, the program will collect only enough payroll taxes to pay 90 percent of benefits.  Additionally, researchers estimate that as much as one-fifth and even two-thirds of the more than $500 billion that Medicare now spends every year is spent on treatments and procedures of little or no benefit to patients.

Representative Paul Ryan (R-WI), chairman of the House Finance Committee, is leading the charge on changing Medicare.  Ryan’s current proposals will not impact people now 55 or older would not have to make any changes.  But how would it work?  Would it save taxpayers’ dollars?  Would it shift costs to retirees, who are least able to afford it?   Will Congress ultimately end traditional Medicare?  These questions are still waiting for answers.  “I’m not sure anybody has come up with a formula on this that makes people comfortable,” said health economist Marilyn Moon, who formerly served as a trustee overseeing Medicare finances.

The White House’s preference is to keep the existing structure of Medicare while “twisting the dials” to control spending, said Medicare trustee, economist Robert Reischauer of the Urban Institute think tank.

Ryan’s original approach would have put 100 percent of future retirees into private insurance.  His most recent plan, written with Senator Ron Wyden (D-OR), would keep traditional Medicare as an option, competing with private plans.

Writing for AARP, Ricardo Alonzo Zaldiver says that, “This could mean more Medicare recipients joining private insurance plans (currently, only about 25 percent of Medicare recipients are in private ‘Medicare Advantage” plans, while the other three-quarters participate in the traditional, government-run Medicare program).  A new voucher-for-private-Medicare plan would be available to anyone currently under 55.

“It could also mean keeping the existing Medicare structure but making certain tweaks to control spending.  Under President Obama’s healthcare overhaul, the Independent Payment Advisory Board could force Medicare cuts to service providers if costs rise above certain levels and Congress fails to act.  Obama has said he’ll veto any plan to cut Medicare benefits without raising taxes on the wealthy.  During failed budget negotiations last summer, he indicated a willingness to gradually raise the Medicare eligibility age to 67, revamp co-payments and deductibles in ways that would raise costs for retirees, and cut payments to drug makers.  ‘For the 76 million baby boomers signing up over the next couple of decades, it will pay to be watching.’”  President Obama has promised that he will veto any plan to cut Medicare benefits without raising taxes on the wealthy.

The Chicago Sun-Times offers this sage advice: “Fix Medicare, ignore scare talk.”  According to writer Steve Huntley, “I’ve contributed to Medicare every year of its existence. Yet, it’s a myth that seniors have paid the costs of their Medicare services, as demonstrated by the research of economists Eugene Steuerle and Stephanie Rennane of the Urban Institute think tank.  Their study showed that a two-income couple earning $89,000 a year would pay $114,000 in Medicare taxes during their careers but could expect to receive $355,000 in medical care in retirement. They could get prescriptions, doctor visits and hospital services valued at three times their contribution to Medicare.

“Medicare combined with Medicaid and Social Security add up to an entitlement time bomb —  they’ll consume all tax revenues by 2052, according to a Heritage Foundation analysis —  for the people who’ll be stuck with the bill: working Americans.  In 1950, there were 16 taxpaying workers for each retiree; by the time the baby boomers all retire, there will be two workers for each retiree. Entitlement reform has to happen.”

Trading Medicare for the National Debt

Wednesday, June 8th, 2011

Slashing the soaring national debt will require some hard choices, but our representatives in Washington, D.C., need to do the right thing.  Writing in the New Yorker, James Surowiecki says that “Multitrillion-dollar piles of debt have a way of making people nervous, so it’s not really surprising that Washington is now in the throes of budget-cutting hysteria.  Republicans risked a government shutdown over a few billion dollars in spending cuts, and are now threatening to refuse to raise the government’s debt ceiling.  The ratings agency Standard & Poor’s lowered its outlook on U.S. debt because of concerns about the long-term budget.

“And Barack Obama has been speaking of the need to eliminate two trillion dollars in federal spending in the next ten years.  Yet, strange as it may sound, the federal government does not have a spending problem per se.  What it has is a healthcare problem.  The cost of most budget items typically rises at a reasonable rate, if at all, but the cost of Medicare, Medicaid, and the tax subsidy for employer-provided insurance has been rising much faster than everything else: in the past forty years, Medicare costs increased 8.3 per cent annually.  If they’re not controlled, Medicare and Medicaid will eventually be by far our biggest expense.  Preventing that is the key to getting our fiscal house in order.”

Representative Paul Ryan (R-WI) has proposed replacing the popular Medicare program by giving seniors less money to cover their healthcare needs.  Ryan wants to replace Medicare with a voucher plan that they would use to purchase private insurance.  This plan saves money because the value of the vouchers would rise at a much slower pace than healthcare costs; the government’s payments to seniors’ healthcare spending would get smaller.  As a result, seniors would have to spend more of their incomes on private insurance and out-of-pocket expenses, or go without.  The Congressional Budget Office (CBO) estimates that Ryan’s plan would significantly increase how much Americans spend on healthcare, since private insurers don’t curb costs as effectively as Medicare.  The upside to the national debt is that taxpayers would foot less of the bill.

According to Surowiecki, “The healthcare bill that Congress passed last spring represents a different approach.  It trims more than four hundred billion dollars from Medicare spending, and contains a host of initiatives designed to make the healthcare system more efficient and effective. In line with that, it creates a body called the Independent Payment Advisory Board (IPAB), which determines how much Medicare will spend annually.  The American healthcare system is riddled with waste and unnecessary and ineffective procedures.  Relative to every other industrialized nation, we spend more and our health outcomes are no better (and often worse).  In American medicine, supply often creates its own demand, and paying doctors on a fee-for-service basis encourages more high-cost procedures.  The IPAB, in conjunction with other cost-cutting provisions in the bill, would look to fix the skewed incentives that lead to overtreatment, bargain for better prices, and insure that we’re spending our money more effectively.  The Affordable Care Act is far from a perfect law, but the CBO estimates that, if implemented as planned, it could cut the long-term deficit by more than a trillion dollars.”

A Wonkbook poll reported in the Washington Post found that 84 percent of Americans oppose the Ryan plan.

The prospect of replacing Medicare with a voucher plan to bring down the nation debt makes a lot of people uneasy.  Americans generally like and trust their doctors and hospitals.  Additionally they like the ability to choose their own doctors, and don’t want them to stop treating Medicare patients because the fees are too low.  Surowiecki concludes that “This is the fundamental dilemma: we’re unhappy about the rising cost of healthcare, but we’re also unhappy about what we would have to do to curb it.  The ideal system, for most voters, would guarantee all seniors reasonable healthcare, stop the debt from getting out of control, and keep paying healthcare providers as before.  The problem is that you can only do two of those things at once.  The debate between Ryan and Obama is a debate over which of the three we’re willing to give up.”

Is the GOP Alone In Wanting to Repeal Healthcare Reform?

Monday, December 6th, 2010

Even though Republicans will control the House of Representatives and have a larger presence in the Senate come January, they still are likely to hit some formidable roadblocks in their attempt to repeal the Affordable Care and Patient Protection Act. Those roadblocks are such lobbying giants as the American Medical Association (AMA), the American Hospital Association (AHA) and the Pharmaceutical Research and Manufacturers of America (PRMA).  The groups are on board with the new healthcare reform law because they will gain an estimated 30 million (or more) new paying customers in the next few years.  The reform law is expected to increase payments to physicians and hospitals who have felt squeezed in recent years.  Additionally, analysts believe the new law is a major force for job creation in the healthcare sector.

“These guys were onboard for a reason,” said David Dranove, a professor of health enterprise management at Northwestern University’s Kellogg School of Management.  “Very few employers will drop private health insurance, and you will expand private insurance to 15 million people.  If this legislation stands, we are not likely to see new reforms for a generation.”

Primary-care physicians, who are likely to benefit significantly from the healthcare reform law, will see their reimbursements from government insurance programs rise – although many believe the reform law is only the beginning.  According to Dr. Cecil Wilson, AMA president, “While the 111th Congress made important improvements to our nation’s healthcare system, more work needs to be done.”  Hospitals – which have been hard hit by patients unable to pay their medical bills because of unemployment – will be in better financial shape once more Americans get health insurance subsidies in 2014.

Pharmaceutical companies, which were among reform’s earliest supporters, oppose repeal, even though analysts say it will cost them $100 billion in government rebates.  The upside is that the industry will obtain new customers who were previously uninsured and unable to afford the latest brand-name medications.  Even the much-maligned insurance companies – who will have more than 15 million new customers – oppose repeal.