Obama’s Proposals For Medicare — Do They Go Far Enough? Will They Become Law?

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Not long ago, I wrote about the Center for American Progress’ (CAP’s) “Senior Protection Plan” —a report that aims to rein in Medicare “by $385 billion over ten years without harming beneficiaries.” In that post, I suggested that CAP’s proposals might well give us a preview of the “modest adjustments” that President Obama had said he would be willing to make to Medicare.  At the time, I highlighted three of CAP’s recommendations:

— increase premiums for the wealthiest 10% of Medicare beneficiaries (raising $25 billion);

— insist that drug-makers extend Medicaid rebates to low-income Medicare beneficiaries (saving $137.4 billion);

— prohibit “pay for delay” agreements that let “brand-name drug manufacturers pay generic drug manufacturers to keep generics off the market” (saving $5 billion).

Last week, in his State of the Union address, President Obama embraced the first two:  “Already, the Affordable Care Act is helping to slow the growth of health care costs,” he noted. “The reforms I’m proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors.”  (In time, I suspect that the administration also will call for a ban on those decidedly seamy “pay for delay” deals.)

“On Medicare,” he added, “I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission.” The commission called for reducing Medicare spending by roughly $350 billion over 10 years–  a sum that is not far from CAP’s $385 billion target.

Are These “Adjustments” Too Modest ?

These may seem like small numbers. But keep in mind that this is on top of the $950 billion that the Affordable Care Act (ACA) saves by squeezing waste out of health care spending, while simultaneously raising new revenues. Of that $950 billion, some $350 billion comes in the form of Medicare savings achieved by:

—  Pruning over-payments to private sector Medicare Advantage insurers– $132 billion  

—  Containing Medicare inflation by shaving annual “updates” in  payments to hospitals and other large facilities by 1% a year for ten years, beginning in 2014– $196 billion

— Cutting disproportionate share hospital payments to hospitals that care for a disproportionate share of poor and uninsured patients over 10 years beginning in 2014 – $22 billion.

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IRS ruling a ‘disaster for Obamacare?’ Not quite. Ruling may be ‘unfortunate,’ but it won’t leave ‘millions’ uninsured

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Under the Affordable Care Act, Americans who are not offered “affordable” insurance at work can purchase coverage in the ACA’s health insurance exchanges, where many will be eligible for generous subsidies.

The law defines “affordable” as insurance that costs less than 9.6 percent of income. But the ACA doesn’t specify whether it is referring to individual coverage or family coverage, which is always far more expensive. The wording is ambiguous, an “oversight,” say many legislators.

Now the Internal Revenue Service (IRS) has ruled that the government will look at the cost of coverage for an individual – not a family – when deciding if a plan is “affordable.”

A disaster for Obamacare?

Earlier this week, Forbes ran a story about the rule under a headline that blared, “IRS Ruling to Create Millions of Uninsured Americans as It Undermines the Very Intent of Obamacare.”

Forbes’ take plays right into the conservative claim that Obamacare is a disaster. “We are now entering the crucial phase of the law’s enactment,” crows blogger Dwight L. Schwab, “and many critics are saying, ‘I told you so.’”

Whoa! Let’s look at Forbes’ argument, and the numbers.

Fear-mongering vs. facts

Forbes observes that, according to the Kaiser Family Foundation’s 2012 survey of employee benefits, on average, workers contribute $951 annually for an individual plan. But those buying family coverage fork over $4,316, “a number well in excess of the 9.5% of earnings for someone making just $35,000 a year.” Yet, under the IRS decision, “only the portion of the contribution attributable to the individual employee” can be “considered for the purpose of determining what is affordable – not the entire contribution.”

Forbes’ contributor Rick Ungar offers an example: If an employee who earns $35,000 and “is the sole breadwinner in the family” pays less than $3,325 annually for his own insurance … “nobody in the family qualifies for participation on the healthcare exchanges and nobody can qualify for the intended government subsidies.” If the employee signs up for a family plan with his employer it would cost “over 12 percent of their annual income … a crushing amount.”

“The result,” Ungar says, “will be millions of spouses and children left to go uninsured.”

Millions uninsured???

Let’s begin with that last sentence. Just how many children would be shut out? Bruce Lesley, president of First Focus, a children’s advocacy group, estimates that 500,000 children could remain uninsured.

A U.S. Government Accountability Office (GAO) report offers a similar estimate … that “460,000 children may be left uninsured if states stop funding the Children’s Health Insurance Program (CHIP) beyond 2015.” (Funding ends in 2015 because legislators assumed the ACA would protect kids.) “Federal funding could be extended,” the GAO notes. (My guess is that, if necessary, Congress would expand CHIP funding.)

But what about the mothers? If 500,000 children might be affected, that means that, at most, 500,000 mothers would be left uninsured. But in most of these cases, parents may well have have two children, sometimes more. Let’s assume that, on average, they have two children. That means 250,000 mothers (half of 500,000) might find themselves uninsured because of the IRS rule.  Add those 250,000 mothers to a maximum of 500,000 children, and 750,000 people wind up “going naked” as insurers put it.

Married couples who don’t have children also should be counted. If only one spouse works, and they cannot afford the family plan his employer offers, another adult could be left out. But, these days, few married women under 65 who don’t have children stay at home. We’re still far from “millions.”

Forbes’ example

Forbes’ example of a single-breadwinner family is the exception, not the rule. Among families earning $25,000 to $60,000, 67 percent of mothers and 85 percent of fathers work.In these cases, couldn’t each parent purchase insurance through their employer?

Note: The post originally appeared on Healthinsurance.org  To find the answer to that question, and why the Forbes Op-ed represents “fear-mongering, pure and simple”, please click here.  If you like, come back here to comment.

Join the debate on “Reining in Medicare Costs without Hurting Seniors”

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The January 26 post below (“How to Rein in Medicare costs without Hurting Seniors“) has drawn some 43 comments (including mine, as I responded to readers). I thought of turning a couple of my replies into posts, but then decided it might be more interesting for you to read them in the context of what other readers said.

I would love to see more readers participate in this thread. Comments are still open.

It’s a lively thread that takes on a number of third-rail issues: Does Medicare spend too much on pricey cancer drugs, end-of-life care and brand name hospitals?

 Should we try to spend less on end-of life care? Many say “Yes,” but Zeke Emanuel (a medical ethicist and oncologist who was part of the Obama team during the president’s first term), says “No.” I link to a column where he notes that “It is conventional wisdom that end-of-life care is an increasingly huge proportion of health care spending. . . Wrong. Here are the real numbers: end-of-life care (not just for the elderly, but for all Americans) accounts for just 10% to 12% of  total health care spending. This figure has not changed significantly in decades.”

He goes on to suggest that while we probably can’t make end-of-life “cheaper,” we can make it “better . . .  Here are four things the health care system should do to try to improve care for the dying, even if they won’t save money.”

A number of readers comment on what is driving Medicare spending. Is it “patient expectations,”  “doctors’ fear of litigation,”  “regulations that dictate nurse-staffing ratios,” “practice patterns that doctors learned long ago,” or is the biggest problem “promotional efforts by manufacturers?”

Other questions come up: Does anyone really have any idea how much Medicare will cost in 2022?  By then will Medicare have begun negotiating with drug-makers and device-makers for discounts on drugs (the way the VA does now, saving 40%)?  How far will Medicare go in using medical evidence to decide what to cover?

One doctor/reader points out that in his field Medicare has begun to refuse to pay for procedures when research shows that they are not effective. He and another reader agree that in this way Medicare can provide “political cover” for private sector insurers who will follow Medicare’s lead.

We also discuss the deficit, and whether we should be trying to address the deficit now — or wait until the recession ends and unemployment falls. Also, is the deficit already dissolving as CAP suggests? 

And is the deficit our biggest problem? On this question, you will find links to Paul Krugman, Peter Orszag (who analyzes the slow-down in health care spending over the past three years as a “structural change, not just the result of the recession) and Ezra Klein,

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Health Wonk Review –Waste, Warnings and the Future

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Last week I hosted Health Wonk Review for HIO.  This round-up of some of the health care posts published over the past two weeks includes:

—  A piece by Managed Care Matter’s Joe Paduda that takes a hard look at “Flu season and Tamiflu,” and asks “Which one’s more hyped?”

 — A investigative post on Health Care Renewal that reviews “The Tragic Case of Aaron Swartz,”  the young computer activist who faced criminal charges for downloading thousands of scientific scholarly articles from the site JSTOR. After being pursued by a “tough as nails, relentless federal prosecutor,” Swartz committed suicide. Yet blogger Roy Poses notes, this same U.S. Attorney has been “soft as a marshmallow when dealing with top executives of health care corporations.”

— A post by The Hospitalist Leader’s Brad Flansbaum questioning the ACA’s assumption that a high rate of hospital readmissions signals waste. Just how many were preventable?

 —  In  a provocative post on Health Business Blog, David E. Williams asks why Cincinnati hospitals are furious because some employers have signed up for an insurance plan that would pay all hospitals just 40% more than Medicare pays for the same service.  The Hospitals claim  that isn’t enough. Moreover, each hospital would like to set its own prices—quietly. (This allows brand-name hospitals to charge far more than some of their competitors, for exactly the same services. )

 — On Wright on Health, Brad Wright describes a new rule, proposed by the Department of Health and Human Services that could prove “disastrous” for patients on Medicaid: “HHS is now attempting to woo states into participating in the Medicaid expansion by allowing them to increase cost-sharing in Medicaid” for all but the poorest of the poor. (More bloggers and reporters might want to write about this. The proposed rule will be open for comment until Feb. 13.)

 

How to Rein in Medicare Spending Without Hurting Seniors

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In his Inaugural speech, President Obama renewed his commitment to safety nets:  “Medicare and Medicaid and Social Security–these things do not sap our initiative, they strengthen us.

Yet last week, he signaled that he is “open to making modest adjustments to programs like Medicare.” Should seniors brace for bad news?

No. There are many ways to cut Medicare spending without drawing blood. It’s a matter of using a scalpel, not an axe, to trim the fat.

Not long ago, the Center for American Progress (CAP) unveiled a Senior Protection Plan that would do just that, revealing how we could reduce Medicare spending by $385 billion without harming beneficiaries.”

The administration pays attention to CAP. Recently Bloomberg News described CAP as “the intellectual wellspring for Democratic policy proposals, including many that are shaping the agenda of the Obama administration.” This suggests that the report’s proposals may offer a preview of “adjustments to Medicare spending” that the president would consider.

How would CAP save $358 billion without rationing benefits or shifting costs to middle-class seniors? The report focuses on squeezing waste out of the system. Waste doesn’t help beneficiaries.

During recent fiscal cliff negotiations, Democrats and Republicans agreed to adopt four of CAP’s proposals, and I suspect that, over time, we will see more of its recommendations become part of the reality of health care reform.

Recently, I interviewed CAP president NeeraTanden and Topher Spiro, CAP’s managing director for health policy. I was impressed by how their practical approach differs from conservative strategies for slicing “entitlements.”
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The Newest Health Wonk Review—on Health Affairs

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Chris Fleming hosts the latest edition of Health Wonk Review, a compendium of recent posts on health care blogs.

On Managed Care Matters, Joe Paduda offers 5 predictions for health care in 2013.  He’s convinced that all but a handful of states will expand Medicaid. (“The pressure from hospitals and providers will be overwhelming.”) He also predicts that “The feds and CMS will get even more aggressive on Medicare and Medicaid fraud.”  (For what it’s worth, I think he’s right on both counts.)

                                       Food for Thought

Some posts are likely to stir controversy, either because they’re rebutting the conventional wisdom, or because they’re questioning some deeply held beliefs.  I think these posts are important because they define issues that we should all think about.

Over at Colorado Health Insurance Insider, Louise Norris examines the question of whether smokers should pay more for their health insurance.  Under the ACA, smokers can be charged up to 50 percent more than nonsmokers.  . . .

“Norris prefers the carrot over the stick,” Fleming observes, “endorsing the requirement that all plans cover tobacco cessation programs as part of the ACA’s preventive services mandate, although she cites evidence showing that implementation of this requirement has been inconsistent. “ (It’s worth noting that tobacco cessation programs work. “Sticks,” behavioral psychologists tell us, just aren’t nearly as effective.) 

The Hospitalist Leader’s  Brad  Flansbaum suggests that our emphasis on getting everyone vaccinated during a severe influenza (and claims about Tamiflu) may well amount to “oversell.”  Eye-opening.

 At the Innovative Health Media Blog  David Wilson writes: “The Medicare Annual Wellness Visit  (AWV) is the perfect vehicle to address the increasing need for early detection of cognitive impairment.  The AWV” gives physicians the opportunity “to provide such a screening and receive reimbursement for it .

“Once a patient shows the need for additional testing physicians can use self-administered computerized tests to perform the additional screening without referring the patients to another doctor or office,” he adds. ” This also creates additional reimbursement for physicians.” 

MM–I can’t help but ask: “Since we have no cure or effective treatments for Alzheimer’s (or most forms of senile dementia) do you really want to know that, in three or four years, you may  be diagnosed with full-blown Alzheimer’s?”

Certainly, seniors who want this testing should have access to it. Perhaps, one day, accumulated data will help researchers understand the disease. But Medicare patients should know that they can say “No” There is no requirement that this be part of your Annual Wellness visit.

On the Health Business Blog, another David Wilson has published a post that is likely to be even more controversial. He argues that “The Nursing Shortage is a Myth.”

We have plenty of nurses,  Wilson suggests. In fact, in the future, he writes, “robots will be replacing nurses “just as robots have replaced “paralegals” and “actuaries.” (“Insurance companies used to hire tons of them, but their work can be done much more efficiently with computers.”)

Over at Wright on Health, Brad Wright takes a look at the recent Institute of Medicine report comparing health in the U.S. to health in other wealthy nations. He notes that data on preventable deaths among young people points to the importance of public health interventions, including reducing access to guns.

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Under the ACA, will YOUR Insurance Premiums Rise or Fall?

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Today, many Americans are asking: will my premiums go up in 2014?

There is no simple answer.

According to Families USA ,the Affordable Care Act (ACA) will have a positive effect on the typical family’s budget. Using an economic model that can factor in all provisions of the Act (ACA), Family’s USA estimates that by 2019, when the law is fully implemented, “the average household will be $1,571 better off.”

Even high-income families will save: thanks to rules that limit co-pays, and reward providers for becoming more efficient, “those earning $100,000 to $250,000” will spend $779 less on medical care.” But these are “averages.” They don’t tell you whether your health care costs will rise or fall.

The answer will depend on: your income, your age, your gender, who you work for, what state you live in, whether a past illness or injury has been labeled a “pre-existing condition,”  and what type of insurance you have now: 

If you work for a large company:

—  The ACA will have a “negligible” effect on your premiums says the Congressional Budget Office(CB0). This doesn’t mean that your costs won’t climb at all in 2014. As  long as medical product-makers and providers continue to raise prices, premiums will edge up each year.

But in 2012 average premiums for employer-based insurance rose by just 3% for single coverage and 4% for families, a “modest increase” when compared to 8% to 12% jumps in past years. And on average, employee co-pays and deductibles remained flat.

Granted, a 3% to 4% increase still outpaces growth in workers’ wages (1.7% percent) and general inflation (2.3%) percent).But as reform reins in spending annual increases for large groups could fall to 2%–or less. 

If you work for a small company with more than 50 employees:

Your boss will be more likely to offer affordable benefits, in part because, if he doesn’t, he will have to pay a penalty

Moreover, he will find insurance less expensive. Today, small businesses pay 18% more than large companies because the administrative costs of hand-selling plans to small groups are sky-high. But starting in 2014  businesses with fewer than 100 employees will begin buying insurance in “Exchanges” where they will become part of a large group, and eligible for lower rates.

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The Mind Body Connection: Could Psychosomatic Disorders Account for 30% of Chronic Symptoms?

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Below, a guest-post by Dr. Clifton K. Meador, the author of well-known satirical writings on the excesses in our medical system, including “The Art and Science of Non Disease,” (the New England Journal of Medicine, 1965) and  “The Last Well Person,” an essay he published as an “Occasional Note” in NEJM  in 1994. HealthBeat readers may remember past guest-posts by Meador including “The Art of “Diagnosis” drawn from his book True Medical Detective Stories, and “The Unheard Heart: A Metaphor,” 

In this guest-post Meador writes about the importance of listening to patients—something that often doesn’t happen in a 15 minute office visit. I’m hopeful that under reform, more and more doctors will be able practice medicine full-time, leaving billing, hiring and firing of support personnel ,and all of the  other time-consuming details of running a business to others. Telemedicine also should open up some time: rather than coming in for a 15 minute appointment, patients who don’t have questions could ask for refills of routine prescriptions on the phone or via e-mail.

Eventually Health IT will be good enough that doctors will no longer spend hours tracking down lost Faxes. Finally, more physicians will be dividing their work with nurse-practitioners. In some cases, the nurse-practitioner might be especially effective when dealing with chronically ill elderly patients; in other cases he or she might excel in treating adolescents.

Ideally, restructuring how care is delivered will lead to longer appointments with some patients, giving the doctor the opportunity to truly listen—particularly when the cause of physical symptoms remains a mystery.

If a doctor had more time, what would he discover? Here, Meador offers what some may consider a radical thesis: 55 years of experience as a  primary care physician, combined with studying the medical literature, has convinced him that “between 30 and 40 percent of first contact  primary care visits are stress- related or are psychological in nature.”

I’m particularly intrigued by his description of “psychosomatic disorders” as described by Dr. John E. Sorno in The Divided Mind.

I haven’t yet read the book, but look forward to doing so. The reviews are impressive. As Meador makes clear, to say that an ailment is “psychosomatic” does not mean that “it’s all in your mind.”

Finally, Meador mentions that at this time, the medical profession denies the existence of psychosomatic illnesses. I’m baffled.  Both life experience and years of reading have convinced me that mind and body cannot be separated. I’d be interested in hearing from other physicians on this point. — MM

                                  The High Cost of Not Listening to Patients

by Clifton K. Meador, M.D.

www.cliftonkmeador.com   

www.doctorswholisten.net

             Author: True Medical Detective Stories and Symptoms of Unknown Origin  

Before we can understand the high cost of not listening, we need to examine in detail the diagnostic process. I am limiting my discussion to patients with chronic or recurring symptoms lasting several months. I am not discussing acute illnesses. They fall into completely different category.

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Diversity in the Physician Workforce is Essential; What Will Happen If the Supreme Court Overturns Affirmative Action?

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In October, the Supreme Court heard Fisher v. University of Texas at Austin. You may have read about the case: the plaintiff, Abigail Fisher, applied for undergraduate admission to the University of Texas at Austin but was turned down. If she had graduated in the top 10% of her high school class, she would automatically have been admitted—but she did not.

When admitting students, the University of Texas first accepts all in-state students who place in the top 10%. This policy is race-neutral and fills about 80% of all spaces. The remaining seats are filled according to an evaluation process which considers six factors. Race is one of them.

Fisher is white and she claims that the explicit use of race as a factor in admission to the university violates the Equal Protection Clause of the 14th Amendment of the Constitution.

Within the next few months, the Supreme Court will announce its decision

            What the Case Means for Medical Schools—and Patients

Last week, the New England Journal of Medicine published an editorial warning that the decision will “chart the future of affirmative action in American higher education . . . including admission of students to our nation’s medical schools.”

The editorial’s authors underline the need for a physician workforce that is ethnically and racially diverse:

“To provide good care, physicians must understand the communities and cultures in which they work. An important way to ensure that physicians understand the lives of their patients and to reduce health disparities is to promote diversity.”

I agree, and would add a second argument: if Fisher wins, the Court’s decision will leave millions of Americans without the medical care they desperately need because they live in a place where few physicians want to practice.

In this two-part post, I will be asking four questions:

1) How do we attract more physicians to underserved communities?  Could we entice them with higher salaries?  (Probably not.  A doctor who doesn’t want to raise his kids in rural Alabama won’t set up shop there even if you double his income.)

2) Should we encourage medical schools to practice class-based rather than race-based affirmative action?  This is, at best, a partial solution. A large percentage of low-income Americans are white. If they were admitted to medical school, those who grew up in rural areas might well decide to practice in similar communities where physicians are needed.. But this would not solve a larger problem—the shortage of  Latino, African-American and Native-American primary care doctors available to work both in inner cities and in the many rural areas where minorities are rapidly becoming the majority.

Multiple studies show that outcomes, communication, and compliance improve when a patient is able to see a physician from his own racial or ethnic group. This is not to say that committed white physicians cannot overcome cultural barriers and build strong patient relationships in these communities. But  many fewer choose to work, and raise their families, in remote rural areas that are primarily Latino, Native American, Mexican-American, or African American.

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Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

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Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today.  Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

“About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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