Posts Tagged ‘Medicaid’

What Would Repeal Look Like?

Wednesday, July 18th, 2012

The nonpartisan Congressional Budget Office (CBO) has issued a report that the House Republicans’ bill to repeal President Obama’s health care reform legislation would increase the deficit by roughly $230 billion through 2021.   According to the CBO statement, “The March health care legislation would have a net cost of about $780 billion over the 2012-2019 period. Repealing that legislation would eliminate such costs. But [the health care legislation] also included a number of provisions to reduce federal outlays (primarily for Medicare) and to increase federal revenues (mostly by increasing the Hospital Insurance payroll tax and imposing fees on certain manufacturers and insurers); in March, CBO and JCT estimated that those provisions unrelated to insurance coverage would, on balance, reduce direct spending by about $500 billion and increase revenues by about $410 billion over the 2012-2019 period. If that legislation was repealed, such reductions in spending and increases in revenues would not occur. Thus, H.R. 2 would, on net, increase federal deficits over that period.”

Undeterred, Sen. Orrin Hatch (R-Utah), ranking member on the Finance Committee, said if Republicans gain control of the chamber next year, their efforts to replace the healthcare overhaul will focus on cost control, instead of coverage expansions. Hatch was the author (along with Ted Kennedy) of SCHIP, the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since Medicaid began in the 1960s. Hatch is in position to lead the committee with primary jurisdiction over federal health policy if Republicans retake the Senate, which Republicans would do if they net only four Democratic-held seats.

As evidence of ObamaCare’s inability to reduce overall healthcare costs, Hatch cited the 9.5% increase in the cost of an average family health plan to $15,073 last year over its cost when the law was enacted.

The first cost-control efforts he would undertake would come in Medicare and Medicaid, he said. Those steps include increasing physician pay and removing “government-dictated prices” in Medicare that increases costs for the privately insured when providers pass along the cost of caring for Medicare and Medicaid patients.

Health Insurer OKs Reform No Matter What the Supreme Court Does

Monday, June 18th, 2012

Even if the Supreme Court declares the Patient Protection and Affordable Care Act (ACA) unconstitutional, UnitedHealth, the nation’s largest health insurer will still cover certain types of preventive care. The extensions will apply primarily to its customers who have individual policies or small-group health insurance through their employer, a minority of its 35 million total members.  The ACA, whose goal is to provide coverage for millions of uninsured people, started unfolding in 2010 after health insurers fought to block its passage.  Challenges to the law from states and other groups opposed to it wound their way to the Supreme Court.  Bob Laszewski, a consultant and former insurance executive, UnitedHealth’s move a “very smart business decision.”  The provisions are relatively inexpensive and are already factored into the coverage price.  If insurers cut these benefits, customers probably will expect a corresponding premium drop, he noted.  “It would probably be more trouble to roll these things back than go ahead with them,” Laszewski said.  “It just makes common sense to leave these things in there and not take these benefits away since they’re already priced in.”  Laszewski expects other insurers and large employers to take a similar approach.

The provisions UnitedHealth will maintain include providing coverage for dependents up to age 26 under their parents’ plan.  The company will still offer certain preventive healthcare services without requiring a co-payment.  These include yearly check-ups, screening for high-blood pressure and diabetes, and immunizations.  Additionally, UnitedHealth will continue to forgo lifetime dollar coverage limits on policies.  “The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising healthcare costs,” UnitedHealth Chief Executive Officer Stephen Hemsley said.  “These provisions make sense for the people we serve and it is important to ensure they know these provisions will continue.”

The ACA is the largest overhaul of the $2.6 trillion American healthcare system in nearly a half century.  It is designed to ultimately expand coverage to more than 30 million uninsured Americans, by setting up insurance exchanges and opening Medicaid for low-income Americans.

According to estimates, the ACA let approximately 6.6 million young adults remain on their parents’ health insurance plans last year, according to a report from The Commonwealth Fund. If the law is declared unconstitutional, Republican lawmakers may reinstate the extension of young adults dependent coverage.  Other provisions that UnitedHealth plans to maintain include providing easily understandable ways for members to appeal coverage claim decisions; and eliminating rescissions, which are considered to be retroactive policy cancellations, except in the case of fraud.  DeAnn Friedholm, director for health reform at the Consumers Union, called UnitedHealth’s actions “a positive step” and said she hopes other companies follow suit should the law be struck down.

Ronald Pollack, executive director of the consumer advocacy group Families USA and a supporter of the law, applauded UnitedHealth’s move.  “It would make a huge difference for a great number of people who would otherwise be left out in the cold in terms of getting coverage,” he said. “And hopefully, given UnitedHealthcare’s market share, this would have tremendous influence on other companies.”  Even if other large insurers follow suit, Pollack said, it would hardly make up for the loss of other provisions in the law that are set to take effect in 2014 — including subsidies to help low-income Americans buy insurance and bans against discriminating against adults with preexisting conditions.

Writing for CBS News, Stephanie Condon says that UnitedHealth’s decision “Could also alter the political fallout from the high court’s decision.  Should the Supreme Court reject President Barack Obama’s law, he could point to UnitedHealthcare’s announcement to validate his policy agenda.”

The Associated Press’ Ricardo Alonso-Zaldivar points out that dismantling the ACA could be messy.  “It sounds like a silver lining.  Even if the Supreme Court overturns President Barack Obama’s healthcare law, employers can keep offering popular coverage for the young adult children of their workers.  But here’s the catch: The parents’ taxes would go up.  That’s only one of the messy potential ripple effects when the Supreme Court delivers its verdict on the Affordable Care Act this month.  The law affects most major components of the U.S. healthcare system in its effort to extend coverage to millions of uninsured people.  Because the legislation is so complicated, an orderly unwinding would prove difficult if it were overturned entirely or in part.  Better Medicare prescription benefits, currently saving hundreds of dollars for older people with high drug costs, would be suspended.  Partially overturning the law could leave hospitals, insurers and other service providers on the hook for tax increases and spending cuts without the law’s promise of paying more to offset losses.”

Federal Government Bets $2 Billion on Oregon Medicaid Program

Thursday, June 14th, 2012

Oregon Governor John Kitzhaber, a former emergency room physician, has convinced the Center for Medicare and Medicaid Services (CMS) that he can significantly improve Medicaid treatment and do it cheaper by altering the way the sickest people in his state get healthcare.  If Kitzhaber’s experiment works, it could have repercussions for the entire nation.  According to Kaiser Health News, Oregon’s major cities — Portland, Salem and Eugene — will have their own umbrella groups for treating the Medicaid population, in effect, a “coordinated care organization.” (CCOs)  Under these umbrellas will be a majority of the heavy hitters in the health sector including hospitals, doctors, mental health providers and dentists.

Kitzhaber wants to switch Oregon’s 600,000 Medicaid patients into CCOs, which will accept a flat fee for delivering each patient’s care while remaining within that budget, with bonuses for quality metrics.  If patient care costs more than the flat fee, healthcare providers must eat the difference.

Kitzhaber’s idea is that healthcare businesses will stop competing for patients and instead link to each other electronically so that it’s easier for providers to share information.  Patients can see whichever provider they need to get maximal care.  The sickest people will have a $20-an-hour outreach worker to assist them in navigating the system and avoiding pricey hospitalizations.  Each outreach worker will manage a caseload of approximately 30 patients – with the goal of saving Medicaid hundreds of thousands of dollars.

I think this is really a defining moment for health care in the State of Oregon and, I think that if we’re successful, probably for healthcare beyond our borders,” Kitzhaber said.  The plan is supported by both Republicans and Democrats, with the state’s leaders putting their political reputations on the line for this deal.  The legislature passed its entire budget in the belief that the federal government was going to fund the program.  Unions and businesses in Oregon also support the program.  Malia Wasson, the president of US Bank in Oregon, celebrated the news.  “Governor, I know that you’re not prone to being overly demonstrative,” she said.  “But would you indulge me with a high five?”

Naturally, there are skeptics.  State Representative Jim Weidner voted against the Medicaid bill.  “It doesn’t really drive down the cost of healthcare.  It’s just shifting costs into different spots,” Weidner said.  He believes that the program ultimately will cost the state money.  Kitzhaber disagrees, noting that the coordinated care organization will be paid with a lump sum to manage Medicaid patients.

Under Oregon’s present system, hospitals and doctors don’t have a financial incentive to make people better.  To the contrary, if a patient keeps coming back, the provider keeps getting paid.  Under the new system, the faster a patient recovers, the coordinated care organization can keep more money.  Kitzhaber believes that over the next five years, Oregon will be able to save Medicaid every cent of the $2 billion the state’s been promised.

“We estimated that if every state Medicaid program in the country were to adopt this model, the net savings would be about $1.5 trillion dollars over 10 years,” Kitzhaber said.  Congress is looking at $1.2 trillion in cuts over the next 10 years after the super committee failed to come up with budget cuts.  Despite the fact that Oregon is pleased with itself, the federal government has said that if the state doesn’t show cuts to Medicaid spending by two percent next year, the new money could dry up.

Oregon is the only state to attempt to rethink Medicaid backed by federal tax dollars, said Dr. Roger Stark, a physician and healthcare policy analyst with the Washington Policy Center.  “The Oregon program is based on an HMO model which ties into quality controls to hold costs down.  But Oregon is broke, and they didn’t have the seed money to start the program because like all the states, they’re broke.  Oregon really stood on its head, and the CMS gave in.  Oregon’s program lines up with President Barack Obama’s law, and they probably sold it to the administration as a sort of pilot program,” Stark said.

According to Stark, the CCO approach resembles the HMO model, which was reviled by doctors and patients.  “The physicians hated it because they couldn’t control treatment decisions and had to focus on cutting costs, and the patients hated it because they couldn’t get complete treatment — they had no trouble seeing a primary care physician, but it was extremely difficult seeing a specialist,” Stark said, noting that rationing is inevitable under this approach.  “Oregon told CMS they could save money, which is pie in the sky.  Instead, there will be some form of rationing because they’re dealing with a fixed amount of money.  The rationing will be subtle and insidious.  Say you’re 60 years old and need a hip or knee replacement; they will tell that patient, ‘Oh, you don’t need that operation.’  Or they will tell him, ‘Take these pills, not those,’” Stark said.

Handicapping the ACA’s Fate

Wednesday, June 13th, 2012

As the nation anticipates the Supreme Court decision on the future of the Patient Protection and Affordable Care Act (ACA),  pointed questioning by justices has supporters and opponents facing the possibility that the law could be declared unconstitutional.  That would eliminate — along with the contentious mandate that people purchase health insurance — popular provisions such as letting young adults stay on their parents’ plans until age 26, making prescription drugs more affordable for seniors, and requiring insurers to cover those with pre-existing medical conditions.

Even if the court keeps most of the law intact and strikes down the individual mandate, many healthcare advocates, insurers, and legislators believe that these consumer protections will be meaningless.  “There are a series of provisions of the law which have already been enacted which have proven to be fairly popular,’’ said Andrew Dreyfus, president and CEO of Blue Cross Blue Shield of Massachusetts.  “The question nationally is will there be bipartisan consensus to maintain those provisions even if the Supreme Court overturns some aspects of the law or the whole law?’’

Congress has been disinclined to talk about contingency plans, or the possibility of compromise.  There is agreement  that nothing will be done before November’s presidential election.  “Repeal and replace is a good slogan, but what kind of replacement are we talking about?’’ asked Gail Wilensky, a healthcare economist who administered Medicare and Medicaid under George H.W. Bush.  “Is it a replacement that will substantially extend coverage for people who have been uninsured?  At the moment it’s a little hard to see that happening.’’

“It’s a standard rule of politics that people value losses more than hypothetical gains,’’ said John McDonough, director of Harvard University’s Center for Public Health Leadership and who helped the Senate write the ACA.  “If the court were to strike down significant parts of the law that are already in place, there could quite possibly be a potent public reaction against what is being taken away from people.’’

In an interview with Kaiser Health News, Jon Kingsdale, Executive Director of the Commonwealth Health Insurance Connector Authority, who is working to implement the ACA said “We’re working with about a dozen states, and they fall, I’d say, into three camps: One, working very, very hard with a real strong vision of what they want to set up, to implement by October 1, 2013 – which is less than 18 months away.  Others that are planning – they’re preparing.  They’re waiting to see, in fact, if it’s implemented after the Supreme Court decision, which is expected to be announced in June – and/or the election in November.  And then there are states, frankly, we are not working with that are pretty much waiting to see this go away.”

Kingsdale believes that the entire law will not be thrown out by the Supreme Court.  “I think their striking down the entire law is much less probable than striking down the mandate,” he said.  “I’ve begun to talk to people in insurance companies and states and vendor organizations about what happens if the entire law is struck down, and I am struck by the lack of anticipation of what that would mean.  People are aware that there are huge problems. There are many things that have been implemented already, in terms of insurance coverage and Medicare payment policies and accountable care organizations, the authorization of which would be undercut.”

David Axelrod, chief campaign strategist to President Barack Obama, is denying reports that the White House may revisit healthcare in his second term.  “Our hope and our expectation is that the Supreme Court will affirm the healthcare law,” Axelrod said.  “Now is not the time to speculate on that.  We believe that the law is constitutional.  The Affordable Care Act is also really important to the health and well-being of the American people,” Axelrod said. “It is already helping people all over this country, and has improved the position of people relative to their insurance companies, and the kind of policies they are getting and the return they are getting for the premiums they are paying.”

10 Percent of America’s Veterans Have No Healthcare Coverage

Tuesday, June 12th, 2012

Ten percent of the nation’s 12.5 million non-elderly veterans do not have health insurance coverage or use Veterans Administration (VA) health care according to the 2010 American Community Survey (ACS).  The Urban Institute report, which was released by the Robert Wood Johnson Foundation, is the first to provide estimates of a lack of insurance among veterans and their families both nationally and at the state level, and to assess the potential for the Patient Protection and Affordable Care Act (ACA) to reduce these rates.  Veterans are less likely be uninsured than the overall population.  Uninsured veterans and their families report significantly less access to healthcare than their counterparts with insurance coverage.  Forty-one percent of veterans who lack healthcare coverage have untreated medical needs, while nearly 34 percent have put off getting care because of the expense.

The ACA’s coverage provisions have the potential to increase coverage among the U.S. population, including uninsured veterans.  An estimated 50 percent of veterans who currently do not have insurance would qualify for expanded Medicaid coverage; another 40 percent have the potential to receive subsidized coverage through health insurance exchanges if they lack access to affordable employer coverage.  Not surprisingly states that have made minimal progress in setting up health insurance exchanges have the most uninsured veterans — nearly 40 percent.  Success in bringing coverage to uninsured veterans will depend primarily on aggressive ACA implementation and enrollment efforts.

The Veterans Administration (VA) –  with more than 1,400 hospitals nationally and nearly 15,000 physicians – covers the majority of veterans, although not all: Eligibility is determined by income, injuries sustained in combat and length of service.  Because of the eligibility requirements, 1.3 million veterans and 0.9 million family members have no healthcare coverage.

Uninsured veterans typically are younger than those with coverage and less likely to have been injured in combat.  Uninsured veterans tend to have higher unemployment rates, less income and usually are not married — all of which reduce the odds of having private coverage.  “Their lower likelihood of being full-time workers and being married likely contribute to their lack of coverage, as these attributes are characterized by lower access to employer-sponsored health insurance,” according to the Urban Institute study.

Writing for the Non-Profit Quarterly, Rick Cohen notes that “Among the states with the worst rates of uninsured veterans, Louisiana, Oregon, and Idaho all top 14 percent, and Montana comes in at a woeful 17.3 percent.  This past weekend, the streets of Washington, D.C. were occupied by participants in the Rolling Thunder demonstration, the annual Memorial Day gathering of veterans (and non-veterans) on motorcycles focused on calling the nation’s attention to the POW/MIA issue.  The Robert Wood Johnson Foundation report would suggest that, in the U.S., there is an abundance of veterans and their families who are being treated as if MIA when it comes to health insurance.”

According to Dr. Jonathan D. Walker, assistant clinical professor at the Indiana University School of Medicine in Fort Wayne,  “A Harvard study estimated that more than 2,200 veterans died in 2008 due to lack of insurance.  You may have thought that veterans can automatically be treated at a veterans’ hospital, but this is not the case.  Uninsured veterans face a “means test” based on their income.  The test determines their priority level for care and how much they have to pay.  And if the system doesn’t have enough money, it can stop enrolling veterans if they fail the means test – as happened from 2003 to 2009.  But even if the VA were able to fully cover every veteran, it would still leave a lot of veterans without care because they do not live near a VA hospital.  And even if they live near a hospital, they still may need to drive far away to get services that aren’t available locally.  There are laws that make it illegal for an insurance company to force patients to drive an excessive distance to stay in their network, yet we think nothing of making veterans drive long distances simply to get the care to which they are entitled.”

Senate Passes Bill to Fund the FDA

Wednesday, June 6th, 2012

In a rare show of bipartisanship, the Senate voted 96 – 1 to fund the Food and Drug Administration (FDA), a regulatory powerhouse with far-reaching influence over the foods Americans eat and the medicines they take.  The bill’s goal is to speed approval of new drugs and devices and ensure food safety.  It reauthorizes fees from companies like Johnson & Johnson, Medtronic, Inc. and Roche Holding AG that facilitate FDA evaluation of new medical products prior to approval.

These user fees could provide approximately 50 percent of the FDA’s proposed $4.5 billion budget for 2013.  The FDA regulates products that make up nearly 25 percent of the American economy.  Similar legislation has passed a House committee with support from both sides of the aisle and may move to the full House for a vote quickly.  Senate leaders sped the bill through the chamber, emphasizing its importance in protecting consumer safety and promoting innovation in medicine.

“This bill is a shining example of what we can achieve when we all work together,” said Senator Tom Harkin (D-IA), who chairs the Senate committee that oversees the FDA.  Industry user fees, first enacted in 1992, give the FDA millions of dollars annually to review new products for the American market but must be renewed every five years.  The current version will expire in September.  Additionally, for the first time the FDA will also collect fees from makers of generic drugs and of copycat versions of complex biotech drugs, known as biosimilars.  “We’ve worked on this bill for 18 months,” Harkin said as he and ranking member Mike Enzi (R-WY) refereed the mostly cordial debate.  The two led opposition to all of the amendments that came up for a vote, and all were defeated.

Senator John McCain (R-AZ) proposed an amendment that would let Americans import drugs from approved Canadian pharmacies.  “In a normal world, this would require a voice vote,” McCain said.  “But what we’re about to see is the incredible influence of special interests here, particularly (the Pharmaceutical Manufacturers Association).”  Senator Robert Menendez (D-NJ) argued that it’s not about the special interests.  “It’s about the health and security of the American people, which is why time after time the Senate has rejected it,” Menendez said.

Senator Bernie Sanders (I-VT), who cast the sole “no” vote, got a vote on his amendment to take away exclusive marketing rights from drug makers if a company is found to be at fault for fraud involving a particular drug. The measure failed overwhelmingly, 9-88.  “Almost every drug company in this country is perpetrating fraud,” Sanders said.  “They’re ripping off Medicare; they’re ripping off Medicaid; and they’re ripping off the American consumer.”

The bill’s speedy passage surprised onlookers accustomed to the usual congressional gridlock.  “I haven’t seen anything move this fast in a long time,” said Lisa Swirsky, a senior policy analyst at Consumers Union.  “Congress is actually working.  It’s kind of like you learned about it in high school.”  Nevertheless, consumer advocates have mixed feelings about the Senate bill that now goes to the House.  “If you look back at what we saw in the House in December, you know this could have been a lot worse,” Swirsky said. She noted that she was “deeply disappointed” that some provisions consumer groups were pursuing to toughen FDA’s review of medical devices did not make it into the bill.  “I would say it’s bittersweet but mostly bitter.”

For more than seven decades, the FDA has primarily inspected U.S. factories.  In recent years, pharmaceutical companies have moved their operations overseas to take advantage of cheaper labor and materials.  Between 2001 and 2008 the number of American drugs made overseas doubled, according FDA figures.  Today approximately 80 percent of the ingredients used in U.S. medicines are made in other countries.

The Senate bill will end a requirement that the FDA inspect all American factories every two years, and give the agency increased discretion to focus on foreign facilities.  At present, the FDA inspects the typical foreign manufacturing facility once every nine years.  Under the bill,  FDA inspectors will target the most problematic manufacturing sites, no matter where they are located.  “This puts domestic and international facilities on an even playing field for the first time,” said Allen Coukell of the Pew Charitable Trusts, which has advocated for increased drug safety.  “It says to FDA, ‘you should inspect the highest risk facilities first, no matter where they are in the world.’”

“These are all the steps American families already think we have in place to protect them,” said Senator Michael Bennet, (D-CO), one of the bill’s authors.  “I cannot tell you how many town halls I have had where people have been shocked to learn that the products they have in their medicine cabinets have never been inspected.”

New Study Reveals Where Healthcare Costs Are Rising

Thursday, May 31st, 2012

Higher prices charged by hospitals, outpatient centers and other providers drove up healthcare spending at twice the rate of inflation during the financial crisis – even as patients sought less medical care, according to the first-ever Health Care Cost and Utilization Report. According to Kaiser Health News, prices rose five times faster than the inflation rate for emergency room visits, outpatient surgery and facility-based mental health care from 2009 to 2010, according to the Health Care Cost Institute (HCCI), a nonpartisan research group funded by insurers.  Prices fell only in nursing home care, which declined by 3.2 percent in the cost per admission.  Rather surprisingly, the fastest growing spending was in children’s medical care.

“The story really does seem to be prices,” said Martin Gaynor, chair of the institute’s governing board and a healthcare economist at Carnegie Mellon University.  One of the most comprehensive analyses at real claim payments made by insurers, the study’s findings raise questions about the nation’s $2.6 trillion annual healthcare bill: Why are medical services costs rising significantly faster than inflation?  Is the fast increase in spending on children a glitch, or a long-standing drift with major implications for future costs?  “If you don’t know what the cause is, you don’t know what the right policy lever is (for a solution),” Gaynor said.

The study’s results are based on nearly three billion claims paid by Aetna, Humana and UnitedHealthcare for 33 million people with employer-based insurance.  The data represent approximately 20 percent of the people with insurance nationally, but do not include spending for people who are on Medicare, Medicaid or those who purchase private policies.

According to the report, people with job-based insurance “are paying more and getting less,” said Chapin White, a senior researcher at the Center for Studying Health System Change, a nonpartisan think tank.  Hospitals and other medical providers “just seem to be able to raise prices faster than general inflation.”

“This is an important study that clearly demonstrates that rising prices for medical services are driving health care cost growth,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans, the industry lobby. “Reducing medical costs is essential to making health care coverage more affordable for individuals, families, and employers.”

Before this treasure trove of data was available, researchers have relied on far smaller surveys of employers or on government claims statistics from Medicare, which primarily covers Americans over age 65.

Healthcare researchers have wondered why, after more than 10 years of startling growth, healthcare spending is now rising more slowly.  The researchers’ numbers lend support to one of the most popular theories: People are using less healthcare.  According to the report, between 2009 and 2010, people with employer-sponsored insurance had 3.3 percent fewer admissions to hospitals and other medical facilities, 3.1 percent fewer “outpatient” visits, and virtually no change in the number of procedures performed at physicians’ offices.  There was a slight increase in procedures performed at medical facilities, which rose by two percent, and use of prescription drugs, which went up by just under one percent.

“People had speculated that there was a decline in utilization, but by analyzing over three billion claims we now know not only the trend but the magnitude of the trend,” said David Newman, the institute’s executive director.  “It’s one thing to believe something, it’s a completely different thing to actually know it.”

If these tendencies continue, Gaynor said, “we may need to think about where we’re directing our policies” to control costs.  That’s because healthcare reform initiatives like accountable care organizations — networks of hospitals and doctors that will work together to coordinate patients’ care and cut out unnecessary services — may not help if they’re still charging more for those services.  Gaynor suggested that it might be worthwhile to keep a closer eye on consolidation in the health care sector — since larger hospitals and health systems might have the leverage to demand higher prices from insurers. He also said it might be more effective to regulate prices or increase the portion of health costs insured people pay so that they demand better deals.

Although the insurers whose data was analyzed provided “seed funding” for the study, they did not limit the questions that researchers can ask and have no control over what they produce, Gaynor said.  The group plans to update the database with more-recent claims and make the information available for further study.  “There’s been an awful lot of consolidation in certain sectors of the healthcare industry, and we know that tends to lead to higher prices, but we can’t draw any conclusions yet,” Gaynor said.

Non-Profit Hospitals Will Take Financial Hit If the Individual Mandate is Struck Down

Monday, May 14th, 2012

If the Supreme Court overturns the individual mandate that requires Americans to buy healthcare insurance that is contained in the Patient Protection and Affordable Care Act (ACA), non-profit hospitals will struggle with higher costs, according to Moody’s Investors Service.  The individual mandate has become the focus for legal attacks on the healthcare law.  It “would result in a significant reduction in uncompensated care delivered by hospitals” and reduce “utilization of expensive emergency room services,” the rating agency said.

“If the Supreme Court overturns the individual mandate, the private health insurance market would likely weaken under the unbalanced weight of strict provisions to cover all those who seek insurance without the counterbalancing benefit of a new, largely healthy, population segment that would be provided under the mandate,” Moody’s said.  “This scenario could become untenable for many insurers and hospitals, as costs would rise but revenues would not.”

There are additional challenges to non-profit hospitals in the ACA, specifically cuts in reimbursement rates for Medicare and reduction of funds paid to hospitals that serve a disproportionate share of Medicaid recipients, Moody’s said.  “Removing the mandate would make the negative features of reform loom much larger.”  Moody’s said the federal government could turn to a voucher system in which individuals would receive public help for them to buy health insurance, but the results for non-profits hospitals “would be more complex and hard to foresee.”

This is bad news because by a nearly five-to-one margin, hospitals expect the ACA to shrink their revenues. The result suggests that hospital executives are having second thoughts about the deal they made with the Obama administration in exchange for supporting the healthcare overhaul will help them weather the law’s financial repercussions.

According to a recent poll, 55 percent of hospitals and health systems anticipate falling revenues as a result of the law, while 12 percent expect an increase.  Twenty-eight percent were unsure of the law’s effect on revenue, indicating continued concern in the industry over the changes wrought by healthcare reform.  Hospital executives agreed to give up $155 billion in government payments over 10 years in a deal to cap costs borne by the industry as a result of the ACA.  The agreement followed a similar agreement with pharmaceutical companies and enabled the reform.  Two crucial hospital groups — the American Hospital Association and the Federation of American Hospitals — backed the law.  “Hospitals have acknowledged that significant healthcare savings can be achieved by improving efficiencies, realigning incentives to emphasize quality care instead of quantity of procedures,” Vice President Joe Biden said at the time.  “Today’s announcement, I believe, represents the essential role hospitals play in making reform a reality.”

“Hospital and health systems’ financial health has a direct impact on the benefits offered to their employees,” said Maureen Cotter, a senior principal at HighRoads, which took the poll.   “Even though 70 percent of those surveyed stated that they are committed to providing coverage in the long term, and no organizations have plans to discontinue coverage now or in the future, the coverage provided may take a new shape,” Cotter said.

There’s even more bad news in the fact that Howard Dean, a physician who formerly was chairman of the Democratic National Committee, a 2004 presidential candidate and governor of Vermont thinks that the high court will declare the mandate unconstitutional.  Dean believes that Justice Anthony Kennedy’s swing vote will side with the conservative justices when it comes to the individual mandate.  “I do believe that it’s likely the individual mandate will be declared unconstitutional.  Kennedy will probably side with the four right-wing justices. The question is going to be, is this individual mandate question, can that be considered separately from the rest of the bill?  And I think it will be.”

Dean also said the ACA can remain in place without the mandate.  “It’s definitely not necessary for the bill to succeed,” Dean said.  “It was mainly put in by academics who built the program for Governor Romney in Massachusetts, they had did it there, and for insurance companies who will benefit from extra customers.”

According to Dean, “The number of so-called free riders — people who will refuse to get insurance until they get sick — is going to be very, very small.”  Dean noted that the actual benefit of the individual mandate is “relatively small.  Everyone is a libertarian in America, whether Democratic, Republican or independent.  They don’t like to be told what to do by government.”

49 States Are Acting to Implement the ACA

Tuesday, May 8th, 2012

Although 26 states oppose sections of the Patient Protection and Affordable Care Act, a new report suggests that a majority are taking steps to implement it – no matter what the Supreme Court decides.  The Commonwealth Fund study looked at provisions of the law that went into effect in 2010, specifically the so-called “patient’s bill of rights.”  The law gave states a choice on those matters — they could regulate insurance companies or opt out and let the federal government step in.  According to the report, every state but Arizona has taken some steps to establish its own system. The “bill of rights” contains 10 provisions, including rules that insurers cannot retroactively drop coverage when a customer becomes ill, as well as one that allows parents of young adults to keep their children on their insurance policies.  Ten states have acted on all of the provisions.  Twelve have passed laws or written final regulations.  Yet others have reviewed insurance policy forms providing unofficial guidance to insurers.  “States are responding to the federal law in pragmatic ways that suit their political culture and regulatory needs,” according to the report.

Rhode Island, Maryland and Oregon led the pack in implementing the ACA.  In fact, those states were working to expand health coverage well before the law was passed.  If the ACA is overturned by the Supreme Court, these states — and others supportive of the law’s goals – will keep pursuing reforms.  “What I hear is, they still intend to proceed,” says John Holahan, director of the Health Policy Research Center at The Urban Institute.

One provision of the ACA is that states must set up public insurance exchanges where uninsured residents can shop for coverage.  So far, 16 states and the District of Columbia already have passed legislation enabling implementation of the law, or have governors who have issued executive orders to move forward.  New York was the most recent when Governor Andrew Cuomo bypassed Republican lawmakers who were holding up the state’s effort to create a state insurance exchange by issuing an executive order to proceed.  Another 20 states either have legislation pending or have received some federal grant money to move forward.  The remaining 15 states have made little or no progress.

Two-thirds of the states will have viable exchanges up and running by 2013, according to Sam Gibbs, president of the Exchange Technology Group at eHealth Inc., which runs an online insurance marketplace and is bidding to help build state-level exchanges.  According to the law, the federal government will operate exchanges in states that don’t start them on their own.  That could be difficult to achieve in states that are hostile to the ACA, because implementation requires close cooperation with state government and insurance regulators.

The exchanges will be the entry portal for individuals and families who are currently uninsured.  They will be eligible for a federal insurance subsidy in cases where family income is less than 400 percent of the federally defined poverty level.  The size of the subsidy is based on a sliding scale to hold costs as a share of income between two and 9.5 percent.  States also are required to offer dedicated exchanges for small businesses that would let employers provide a subsidy for employee coverage.  Lower-income families will be eligible for Medicaid under a dramatic federally-financed expansion.  Between the exchanges and Medicaid expansion, coverage will be extended to 23 million uninsured Americans by 2019, according to the Congressional Budget Office.

If the Supreme Court declares the individual mandate unconstitutional and doesn’t touch the rest of the ACA, insurance companies are certain to push Congress for a remedy sometime after the November elections.  This would ensure that enough healthy young people sign up for insurance to balance the ACA’s requirement that carriers accept all applicants and don’t charge high-cost premiums based on age or health risk.  A Government Accountability Office study identified nine alternatives to the individual mandate; for example, setting strict open-enrollment windows with harsh financial penalties for failing to enroll.  That tactic works for Medicare, which charges senior citizens a 10 percent annual lifetime Part B surcharge for each year of delayed enrollment.

Congressional action on a fix would depend on who controls the next Congress — but the recent track record isn’t encouraging. “Since the two parties don’t speak to one another, the odds of a federal fix aren’t very good,” Holahan said.

Writing for Think Progress, Igor Volsky says that “Indeed, it seems that the law has already created an unstoppable momentum towards change and it’s very unlikely that they will take away these new benefits or obtain efforts to modernize their operations (in an effort to reduce spending). Regardless of the Supreme Court’s anticipated ruling on the law in late June, the changes the ACA inspired are here to stay — in one form or another.”

26 Percent of Americans Had No Healthcare Coverage in 2011

Monday, May 7th, 2012

A Commonwealth Fund survey found that 26 percent of adults surveyed had no health insurance at some point in 2011.  The reasons typically were losing a job, changing jobs or becoming ineligible for Medicaid.  Fully 69 percent of respondents lacked coverage for one year or longer, while more than 50 percent had no insurance for two years or longer.  Low- and moderate-income individuals were most likely to experience a long gap in healthcare coverage.

The online survey is based on responses from a random sample of 2,134 adults aged 19 to 64.  Among respondents who had a gap in coverage, 41 percent lost their employer-sponsored insurance because of changing jobs, losing their job, working part-time, because they could no longer afford to pay their share of the premium, or because their employer stopped offering health insurance.  Another 18 percent who had qualified for Medicaid lost coverage because they made too much money or neglected to re-enroll in the program when they were supposed to.

After losing insurance, finding coverage was difficult if not impossible. Approximately one-third who lost their insurance and tried to find new coverage within the past three years were turned down, charged a higher price, or were denied because of a pre-existing condition.  Nearly 50 percent of those who lost their employer-sponsored coverage said they never bought a new insurance plan, typically because it was too expensive.

“For people who lose employer-sponsored coverage, the individual market is often the only alternative, but it is a confusing and largely unaffordable option,” Commonwealth Fund vice president Sara Collins, lead author of the survey, said.  “As a result, people are going a year, two years, or more without healthcare coverage, and as a result going without needed care.”

The holes in health insurance were a primary force in President Barack Obama’s push for the Patient Protection and Affordable Care Act (ACA). According to the survey, people without health insurance often skip necessary medical care and do not get crucial preventive services such as cancer screenings.  Over all, nearly 75 percent of women aged 40 to 64 with health insurance had a mammogram in the previous two years.  In contrast, only 28 percent of women in that age group who did not have insurance for a year or more received a mammogram.

The Commonwealth Fund’s report proves that the ACA is helping to bridge coverage gaps for young adults because of the new provision for dependent coverage that allows young adults up to age 26 to join or stay on their parents’ health insurance plan.  Nearly half (46 percent) of young adults said they had stayed on or joined a parent’s insurance policy in the last year, and about a quarter (23 percent) of parents with children under age 26 reported that they had an adult child stay on or enroll in their health plan.  Young adults in higher-income families were more likely to have been helped by the new option than those in lower-income households.  This is likely because adults in higher-income households are more likely to have health insurance with dependent coverage.  Almost two-thirds (63 percent) of working adults knew about the provision.

Writing on the Huffington Post, Jeffrey Young says that “Nearly 50 million Americans had no health insurance in 2010, according to the latest census data.  Healthcare costs, which have risen tenfold since 1980, are putting an increasing burden on families, employers, and government programs.  Costs also are driving up the ranks of the uninsured and leading fewer companies to offer health benefits to their workers.  From 2001 to 2011, the percentage of companies offering health benefits dropped from 68 percent to 60 percent, the Henry J. Kaiser Family Foundation reported.  More than two-thirds of those who lost health insurance in 2011 cited losing their job or getting a new job without health benefits as the main reason they were uninsured, according to the Commonwealth Fund survey.  Among these people, 45 percent said that they were discouraged from buying health insurance on their own because of the high cost.  Sixty-two percent of the uninsured responded that finding a new health plan was ‘very difficult or impossible,’ the Commonwealth Fund said.

At the same time, many Americans don’t know exactly what the ACA contains.  According to the survey, awareness of the health law’s provisions vary significantly depending on income.  Fifty-four percent of respondents who had incomes below 250 percent of the federal poverty level were unaware of the under-26 provision, compared to just 25 percent at or above that line.  For the high-risk pools, the totals were 63 percent and 39 percent, respectively.

“We need to do more,” said Kathleen Stoll, director of health policy for Families USA, a group that supports the health law.  She described how “it takes a while for programs like these to break through.”  People with pre-existing conditions are a specific challenge, because individual states run the high-risk pools with differing levels of publicity.

“The current system of health insurance in the United States has gaping holes, the effects of which have become increasingly pronounced during a weak economy,” Commonwealth Fund President Karen Davis concluded.  “The Affordable Care Act is beginning to close those gaps, so that people who are already struggling can maintain health care coverage that will provide for their families’ health and help ensure their financial security.”