Posts Tagged ‘Medicare’

The Consolidation Wave in Healthcare

Tuesday, February 4th, 2014

Remember the Telecommunications Act of 1996? This was one of the signature pieces of legislation by the Clinton administration. The 1996 Act was intended to transition our communications laws and regulations from the era of natural monopoly to an era of market competition by eliminating barriers to entry at the local level. At the signing ceremony, former President Clinton put it this way:

“This revolution has been held back by outdated laws, designed for a time when there was one phone company, three TV networks, no such thing as a personal computer. Today, with the stroke of a pen, our laws will catch up with our future. We will help to create an open marketplace where competition and innovation can move as quick as light.”

It did have positive outcomes for consumers — increasing competition in local and long distance phone service, for example – but others said it led to a much more consolidated landscape. Before passage of the Act, a company could not own more than 40 radio stations in the entire country. With the Act’s sweeping relaxation of ownership limits, a company like Clear Channel by 2002 was able to own 1225 radio stations in 300 cities.

Could something similar be happening in healthcare? Cleveland Clinic CEO Toby Cosgrove, MD, thinks that in time to come, consolidation will lead to a dozen or more integrated regional health systems dominating the marketplace.

The reason? Under this Act, providers are being reimbursed not for individual episodes (“fee-for-service”) but for outcomes (the long-term health of the patient population). This is real: last year for the first time, Medicare penalized more than 2,000 hospitals with excessive readmissions — one of the major red flags for poor performance. Part of the institutional change to improve outcomes is the concept of the Accountable Care Organization.  ACOs are essentially consortiums promoted as a bigger, better model that manages health at the population level across a broader swathe of the healthcare specialties. So, an ACO might include a hospital, various specialty groups, surgery center, imaging, Emergency Department, even nursing homes, with all payments made to the head of the ACO (usually the hospital or large physician multi-specialty group) which then disburses to the rest of the group. So providers can’t operate in a silo anymore or they won’t get paid. It’s now about the alignment of physicians and hospitals, working as a team.

As a result, the ACO has caused the biggest wave of consolidation that I’ve ever seen in the sector. What’s more, in 2015, Medicare reimbursements will be reduced for physicians who haven’t made inroads with electronic medical records, which can be expensive for small independent practices to install – resulting in more consolidation so providers can be compliant. Consider that a quarter of specialty physicians and 40% of primary care physicians are already employed by hospitals, up from 5% and 20%, respectively, in 2000. Some larger specialty practices are combatting this trend by merging with other practices to avoid being purchased by healthcare systems or hospitals. Nick Reed, Vice President of Professional Banking Services at Wells Fargo Bank, paints the picture: “Some independent practices are moving out of condominium office buildings and grouping together to buy office buildings. The costs of maintaining small independent space are becoming burdensome, particularly as the technological pressures on integration and connectivity are imposed.” Mr. Reed sees information technology financing as an ever increasing part of medical office loan commitments. “We see a lot of IT expenditures in the $30,000 to $50,000 range, while multi-specialty groups have larger expenditures to fund.”

ObamaCare: Shambolic or Shining?

Thursday, May 2nd, 2013

The word of the week, courtesy of NY Times columnist, David Brooks, is "shambolic" which he uses to describe ObamaCare as it becomes implemented. As the overhaul of the US health system becomes a reality, the critics on both sides of the political aisle are joining Brooks to carp on what seems like a bureaucratic nightmare.

Even Max Baucaus, Democrat from Montana, has called the rollout of the healthcare exchanges a potential “train wreck” (the Obama team expects to spend $4 billion this year on setting up the 50 state-based exchanges and $1.5 billion next year running several of them).

Then there’s the application to apply for insurance from an exchange which started out as a 21 page booklet.  Following criticism, the Health and Human Services Department announced that they’ve cut the application from 21 pages down to three pages.

The issue seems to be that ObamaCare is creeping along without many of its details worked out or workable. While any sweeping institutional reform will have its shambolic elements, it’s useful to realize that Medicare did not arrive in 1965 as a fait accompli; It’s actually been a 48-year work in progress.  Today, beneficiaries get coverage through Original Medicare and the newer model, Medicare Advantage (also known as Parts A and B); then we had Disability and end-stage renal benefits in 1972; then the Medicare and Medicaid Program Protection Act of 1987 to fight all the fraud; then the prescription drug benefits for the Medicare population, which went into effect in 2006 (maybe the Bush Administration’s singular achievement if you listen to former administration official like Karen Hughes).

Lastly, people say that the administration is force feeding us a rewriting of healthcare law that the country doesn’t want. According to the Kaiser Health Tracking Poll for March 2013, only 37 percent of Americans like Obamacare. Looking at Medicare, we see the same parallels. In July of 1962 when President Kennedy first proposed it, a Gallup poll found 28% in favor, 24% viewing it unfavorably, and 33% with no opinion. A month later, 54% said it was a serious problem that “government medical insurance for the aged would be a big step toward socialized medicine.” After Lyndon Johnson was elected, a Harris poll found only a minority, 46%, supported a Federal plan to extend health care to the aged. Today, of course, Medicare is overwhelmingly popular.

Perhaps, the experience of Medicare counsels us to be aware that history has a way of confounding growing pains and poll numbers.

Is It Time to Reform the Fee-for-Service Model?

Tuesday, September 25th, 2012

Despite the healthcare industry’s attempts to alter the way in which physician reimbursements are determined,  fee-for-service is still the accepted basis for payment.  Typically, physicians are reimbursed according to the number of patients they see and how many procedures and tests they order.  Policymakers have concluded that the “do more, earn more” business model is deeply flawed and one reason why Americans pay so much for healthcare.  In 2012, Americans will pay more than $8,000 per individual on healthcare.  That’s more than double the $3,400 average spent for each person in other industrialized nations.  What’s more, all that spending has not made Americans healthier.

The time may have come to find a new reimbursement model that places less of a financial burden on patients while still rewarding physicians.  An August article in the Journal of the American Medical Association notes that the fee-for-service payment is the foundation of even some emerging accountable-care organizations, including Medicare’s popular shared-savings program, say Drs. Allan Goroll of Harvard University Medical School and Stephen Schoenbaum of the Josiah Macy, Jr., Foundation.  The shared-savings program “Promotes accountability for a patient population and coordinates items and services under (Medicare) Part A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.”

Goroll and Schoenbaum isolate a number of reasons for why fee-for-service endures:  many physicians are risk-averse and so resist change; additionally, skepticism is a “major barrier” to reforming the payment model.  “Transitioning to a new payment system will require new modes of practice, and many physicians feel ill equipped to assume financial or performance risks individually or even collectively,” Goroll and Schoenbaum write.  “The concern is that continued reliance on fee-for-service payment for primary care as well as for specialists, with its emphasis on volume of services, threatens meaningful practice transformation and the very goals of delivery system reform.” The bottom line is that the healthcare industry must develop “robust, scientifically validated risk-adjustment models,” according to Goroll and Schoenbaum.  Payment reform could blend capitation and fee-for-service with a plan to revise the payments over time.

Change must be forced on the medical community, whether or not they are ready for it.  One provision of the Patient Protection and Affordable Care Act (ACA) requires alterations to payment and delivery systems to control costs and enhance the quality of care.  Rather than basing payment solely on the number of patients a physician sees and tests ordered, these methods promote preventive care and maintain open lines of communication between a patient’s multiple physicians.

The potential alternative reimbursement models presently being considered include:

•       Bundled payments or fixed amounts paid to healthcare providers for related services a patient needs within a given timeframe.

•       Patient-centered medical homes.  This model would restructure primary-care practices so that their focus is on preventive medicine, patient education and healthcare coordination.

•       Accountable care organizations, in which physicians and other providers share responsibility for providing cost-effective, quality care for patient groups.

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.”

Is End-of-Life Care Worthwhile?

Monday, August 27th, 2012

Even in the age of advanced healthcare directives and living wills, Americans still must cope with a dilemma when it comes to end-of-life healthcare for themselves or their loved ones.  Consider the fact that Medicare pays as much as $55 billion annually for physician and hospital bills during the last two months of patients’ lives.  That’s more than the budget for the Department of Homeland Security, or the Department of Education.  Estimates are that 20 to 30 percent of these medical expenses usually have no meaningful impact.  The federal government pays for a majority of the bills with no questions asked.  Medicare spends nearly 30 percent of its budget on beneficiaries in their final year of life.

Given this information, the question is whether extending someone’s life is worth the money it can potentially cost.  The solution potentially could have been a snap for Congress when it passed the Patient Protection and Affordable Care Act (ACA).  Unfortunately, the previously bipartisan issue quickly became a political hot potato.

According to Dr. Ira Byock, it costs as much as $10,000 a day to maintain someone in the intensive-care unit, even if the patient remains there for weeks or even months.  “This is the way so many Americans die. Something like 18 to 20 percent of Americans spend their last days in an ICU,” Byock said.  This discussion raises the philosophical issue of the value of human life.   According to Byock, “While many people question spending a lot of money to prolong the life of an elderly, frail patient, it was perfectly logical for a frail person to value life extension as much as a perfectly healthy person.  With advances in medical care, it can be argued that the value of hope has been increasing along with the statistical odds of staying alive until a cure is found.”

Over-treatment, according to Byock, is an unfortunate side effect of medical advances.   “We have enormous scientific prowess and remarkable diagnostic and treatment,” so that when you are admitted to the hospital, the system “moves you quickly towards the next diagnosis and then the next diagnosis after that for the next component problem in a whole picture that few people will see.  It’s a dysfunctional system that feels like a conveyor belt.  We have a disease-treatment system rather than a healthcare system caring for human beings.”  Byock notes that the same system can lead doctors and patients to regard any reduction in treatment, or even accepting that patients are going to eventually die, as failure.  There are amazing ways to combat disease and extend life.  “That’s all well and good.  The problem is, we have yet to make even one person immortal,” Byock concluded.

Dana Goldman, director of the Schaeffer Center for Health Policy and Economics at the University of Southern California and founding editor of the Forum for Health Economics and Policy, has a difference approach.  According to Goldman, “We think of healthcare as an expense, but we really should be thinking of healthcare as an investment.  We want to invest where we have the greatest return. I would put prevention in that bucket.  But the way we do it now, no one has an incentive to invest in things with a long-term return.”

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.

GOP Proposes Putting Seniors on Congressional Healthcare Plan

Tuesday, July 3rd, 2012

In a highly controversial move, Republicans critical of Medicare have proposed opening up the Federal Employee Health Benefits Plan (FEHBP) to Medicare patients.  “We are going to offer a plan that would give all senior citizens in the country the same congressional healthcare plan that we have,” said Senator Rand Paul (R-KY).  “We are not willing to wait until after the next election to fix the entitlements.”

The National Active and Retired Federal Employees Association (NARFE) warned that the plan could shake the federal program, while asking seniors to pay more for healthcare.  “This is a kill-two-birds-with-one-stone kind of proposal that would both bring down Medicare as we know it and threaten the stability of the FEHBP,” Joseph A. Beaudoin, NARFE president, said.  Beaudoin said seniors should examine the proposal closely, because it throws open the doors of a stable healthcare program to millions of seniors currently enrolled in Medicare.  “Given the current environment of budget attacks on federal employees, retirees and Medicare, the federal workforce and all Americans should be wary of plans like the one proposed today,” he said.

Called the Congressional Health Care for Seniors Act (CHCSA), the plan’s supporters claim that it would save taxpayers $1 trillion in the first 10 years as well as provide enhanced healthcare benefits, choice, quality and outcomes by moving seniors into the FEHBP.

How would it work?  Federal employees can now choose from approximately 250 plans participating in FEHBP, including 20 nationwide plans.  The large selection provides access to better doctors, better quality healthcare, and the ability to pick plans that best suit the person’s individual needs.  The rationale also is that because Congress uses the plan, it must be the best in the country.  Additionally, the legislation would set up a “high risk pool” for the costliest patients within the FEHBP.  The federal government will directly reimburse healthcare plans for enrolling the most expensive five percent of patients, which keeps premiums low while allowing high-risk patients to get the same quality healthcare as every other enrollee – federal employees and seniors alike.  If the legislation is passed, seniors could enroll in FEHBP starting in 2014.

There is some bipartisan support for this proposal.  In 2004, Senator John Kerry (D-MA) proposed allowing uninsured people, not seniors, to enroll in FEHBP.  “Entitlements are broken,” said Paul.  “It’s not Republicans’ fault; it’s not Democrats fault.  I tell people, ‘It’s your grandparents’ fault for having too many kids and then your fault for not having enough kids.’  It’s a demographic problem.”

Paul said the plan “means-tests the benefits and gradually allows the age of eligibility to go up.”  Currently, Medicare eligibility age is 65; Paul’s plan would gradually increase it to 70 by 2034.  “There is means-testing in this — and the reason you have to do that is: we’re spending more on Medicare than is coming in.”  According to Senator Lindsey Graham, (R-SC), “What I would tell the person near retirement is don’t fear change, embrace it, because you’ll have more doctors available to treat you and your family.  “Think about not just what happens to you…think about where we’ll be as a nation if something doesn’t change pretty quickly with these big programs.”

Virtually everyone in Washington agrees that the federal government must control its deficits and rising debt by finding a way to reduce entitlement spending.  President Bill Clinton’s former budget director, Leon Panetta, now defense secretary, who reproached the Senate Budget Committee: “You can’t meet the challenge that you’re facing in this country” by only cutting discretionary spending, which is less than a third of all spending.  “If you’re not dealing with the two-thirds that is entitlement spending, if you’re not dealing with revenues, and you keep going back to the same place, frankly you’re not going to make it, and you’re going to hurt this country’s security.”

Paul acknowledges that adding seniors to the federal program would drive costs up for its current 8.5 million enrollees by approximately 24 percent.  “Federal employees are the one group of people who may have a legitimate argument with the Congressional Health Care Plan for Seniors,” according to Paul’s synopsis.  “Asking them to share their healthcare with the elderly will cause their premiums to increase.”  Not surprisingly, as soon as the legislation was announced, the National Active and Retired Federal Employees Association expressed concerns that the bill would destabilize the federal workers’ program.

Beaudoin notes that “As for the senators’ notion that America’s seniors should be in the same healthcare system as America’s elected officials, they seem to have forgotten that starting in 2014, members of Congress will no longer be covered by the FEHBP but will be in state-based healthcare exchanges.”

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.”

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.”

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.”