Category: Health Alerts

Health Plans’ Mastery of Obamacare Poses Challenge To Repeal

electronic-medical-record(A similar version of this Health Alert appeared at Forbes.)

Can Obamacare still be repealed? Well, that depends. If the politicians will legislate according to the people’s preferences, Obamacare is a jump-ball.

According to the Kaiser Family Foundation’s latest tracking poll, 43 percent have a generally favorable opinion of Obamacare, while 42 percent have a generally unfavorable opinion. Further, 22 percent claim Obamacare has hurt them or their family directly, while only 19 percent claim it has helped. That leaves more than half who do not think Obamacare has directly affected them.

Perhaps the 25 million who have become insured or dependent on Medicaid after Obamacare rolled out will confirm its success. Actually, there has been no improvement in access to care due to Obamacare. The Commonwealth Fund reports that 35 percent of adults delayed medical care because of cost last year – versus 37 percent in 2005. Further, the proportion of adults ages 19 through 64 who had a medical problem but did not visit a doctor or clinic was 22 percent in 2003 and 23 percent last year. Thirteen percent did not receive needed specialist care last year – the same percentage as in 2003.

Basically, when it comes to access to care, Obamacare has returned us to the status quo from before the Great Recession – at great cost to taxpayers. And that is only the picture in broad strokes. Very few people account for most medical spending, and those very sick people are doing poorly in Obamacare plans. A politician who offers a compelling plan to restore prosperity, as well as repealing and replacing Obamacare, should not face overwhelming odds convincing Obamacare beneficiaries.

The real obstacle to advancing an alternative to Obamacare will be interests in the health sector, which has mastered Obamacare remarkably. The latest evidence is the first quarter earnings reported by UnitedHealth Group and Hospital Corporation of America, both of which Forbes colleague Bruce Japsen describes as having had the “best Obamacare quarter yet.”

Bipartisan Medicare Reform: Debt and Deficits, All the Way Down

The extremely flawed so-called Medicare “doc fix” has passed.  Its direct consequences include increasing federal government control of the practice of medicine and increasing deficits by at least $141 billion through 2025. However, it also has implications far beyond Medicare’s physician fee schedule, to post-Obamacare reform and general governance.

Let’s tackle the fee schedule first. This “doc fix” was promoted as solving the problem that Congress has to increase Medicare’s physician fees at least once a year beyond the rate of growth originally legislated in 1997. If this did not happen, physicians’ fees would drop by about 20 percent, and they would reduce Medicare beneficiaries’ access. This “doc fix” abolishes the 1997 formula in favor of fixed, nominal rates of growth.

As a consequence, the fee schedule is not “fixed” in the sense that it is “solved”. It is “fixed” in the sense that Congress has dictated the total amount that will be paid to physicians in future years. It will go up 0.5 percent per year from 2016 through 2019. Then, the amount freezes, and doctors enter a war of all against all, competing against each other for shares of an amount that will inexorably shrink in inflation-adjusted terms. It gets even more bureaucratized after 2025, but there is no point thinking about that because the whole thing is almost certain to unravel before then.

Hospitals “Turbocharge” Medicare Claims

Today’s Consumer Price Index release shows a big jump in prices for hospital services. The Wall Street Journal has an exemplary piece of investigative journalism discussing one way hospitals gouge Medicare:

A Wall Street Journal analysis of Medicare claims data and financial filings from medical facilities shows that many hospitals increased prices faster than costs rose, affecting outlier payments. The Journal identified $2.6 billion in overpayments Medicare made to general hospitals between 2010 and 2013 because of overestimates of hospitals’ costs—about one-sixth of outlier payments in the analysis.

At Christ Hospital, more than 40% of outlier payments between July 2012, when the hospital was acquired by an investor group during bankruptcy proceedings, and the end of 2013 were due solely to an increase in prices, the Journal analysis shows.

The Medicare agency took steps in 2003 to deter hospitals from raising prices to increase outlier payments, sometimes referred to as “turbocharging.”

(Christopher Weaver, Anna Wilde Mathews, & Tom McGinty, “Medicare Pays as Hospital Prices Rise,” Wall Street Journal, April 15, 2015)

Well, that’s 12 years ago, and it obviously hasn’t worked. The only way to get hospitals to quite manipulating chargemaster prices is to get the government out of fixing hospital charges.

Chief Actuary Blows Away Make-Believe Medicare “Doc Fix”

A similar version of this Health Alert appeared at Forbes.

On March 25, the U.S. House of Representatives voted for a fiscally irresponsible so–called Medicare “doc fix” that will add $141 billion to the deficit over the next ten years, according to the Congressional Budget Office (CBO). The U.S. Senate will likely vote on the bill later today, and the same lobbyists who dragged Obamacare into the end zone in 2010 are hoping for another win. This one will be even better, because it will be bipartisan.

Nobody denies the way Medicare pays doctors today is flawed. Every year, Congress has to increase the scheduled amount of money because if it did not, fees would drop by about one fifth. Many doctors would stop seeing Medicare beneficiaries.

There are two major differences between this so-called “fix” and previous ones. The first one is real: Previous increases have been offset by cuts to other government spending, and this one is not. The second one is fiction: That this doc fix is a permanent solution to the fee problem.

That fiction was debunked last week in a report published by Medicare’s Chief Actuary.

Rushed Medicare “Doc Fix” Suffers From Exposure to Sunlight

Remember that one of the complaints about Obamacare was that nobody (including those who had voted for it) had enough time to read and understand the bill?

It looks like the same could be said about the so-called Medicare doc fix that passed the House of Representatives with no debate on March 26, only one week after the world learned that Speaker John Boehner and Minority Leader Nancy Pelosi had been secretly negotiating a bill for two months. We did not see the text until March 24. Then, before you knew it, within two days it was rushed through the House.

Lobbyists were hoping a sleepless Senate (which had been voting on the budget resolution until about 3 a.m.) would simply wave the legislation through. Fortunately, some Senators demanded time to read the bill.

Time had not treated the bill kindly in the following two weeks. Senators Ben Sasse, David Vitter, Jeff Sessions, Ted Cruz, and Mike Lee emphasize the bill is not paid for by offsets to other government spending – an issue utterly ignored in the House by fiscal hawks like Representative Paul Ryan, who covered the legislation with praise. The Congressional Budget Office estimates it will add $141 billion to the deficit, and that includes gimmicks that hide some of the cost!

Paying for the Medicare Doc Fix is Easy

A similar version of this Health Alert appeared at Forbes.

Late last month, an overwhelming bipartisan majority in the House of Representatives approved the Medicare Reauthorization and CHIP Extension Act (MACRA), a fiscally irresponsible approach to increasing the amount the federal government spends on Medicare’s physicians’ services. Medicare’s Physician Fee Schedule is tied to an inflation formula that is inadequate to pay physicians enough to keep seeing Medicare patients. While Congress has had to increase this amount every year, those increases have always been funded by offsets from other federal spending.

This is the first time politicians of both parties have ignored this rule, increasing Medicare’s physicians’ payments perpetually and not paying for it. Worse, gimmicks obscure the true cost of the bill. Further, the bill would centralize federal control of the practice of medicine along the lines of Obamacare. The bill faces a lot of pressure to pass the Senate next week, especially because Medicare will have to start paying doctors according to a significantly lower fee schedule on April 15. So, the Senate needs to fix the bill very quickly before approving it.

There are three responsible approaches: A shorter “doc fix” that increases physicians’ Medicare payments by no more than two years, which can be easily offset just like 17 previous doc fixes have been; including MACRA on the “pay as you go” (PAYGO) scorecard, making its spending subject to sequestration; or finding $141 billion of offsets required to make the entire bill budget neutral.

Fixing the Medicare Doc Fix Fiasco

On March 26, an overwhelming bipartisan House majority voted for H.R. 2, the Medicare Access and CHIP Reauthorization Act (MACRA), by 392-37. This bill is the so-called Medicare “doc fix,” a prize that has been chased for many years but never caught by politicians eager to break out of the fiscal discipline a previous Congress had imposed on them.

In 1997, similarly large bipartisan majorities passed the Balanced Budget Act, which introduced the way Medicare pays doctors today. Payments are supposed to be based on the Sustainable Growth Rate (SGR). The SGR was designed to contribute to a balanced budget by linking Medicare’s payments to physicians with a measurement of the nation’s ability to pay for the entitlement: Real Gross Domestic Product (GDP) per capita.

Unfortunately, the rate of growth indicated by the SGR was not adequate to pay physicians enough to see Medicare beneficiaries. So, within a few years, Congress had to find more money. Importantly, Congress always paid for these increased payments by cutting spending in other areas.

This has become increasingly painful for politicians, who now revile the SGR as “broken” and “unworkable.” They act as though the fiscal discipline brought about by the SGR was imposed on them by alien invaders instead of Congress itself.

So, last month, the House of Representatives decided to throw any pretense of fiscal discipline out the window, passing an unfunded “doc fix” that will add half a trillion dollars of debt to the nation’s balance sheet. Further, it increases federal control of the practice of medicine, thereby reinforcing the changes to Medicare introduced five years ago in Obamacare (which explains why President Obama has pledged to sign the bill).

Have House Republicans Cast Their First Vote for Obamacare?

A similar version of this Health Alert appeared at Forbes.

Former Speaker of the U.S. Representatives Newt Gingrich said something last week that many feared, but few have been willing to admit: Republicans in Congress have no intention of repealing and replacing Obamacare with patient-centered health reform.

Faced with an interviewer who seemed to believe opposition to Obamacare is actually opposition to Barack Obama, and who suggested that after this president leaves office, opposition will soften, Mr. Gingrich accused his former colleagues of misrepresenting their commitment.

Now that we are in the twilight of the Obama presidency, and Republicans have majorities in both chambers of Congress, they should be able to put such charges to rest. Unfortunately, last week’s overwhelming bipartisan support in the House of Representatives for a deal to lock in Obamacare’s way of paying doctors sends a terrible signal.

Budget Gimmicks Hide the $213 Billion Cost of Medicare Doc Fix

The headline of the Congressional Budget Office’s (CBO) damning assessment of the fiscal damage done by H.R. 2 — the so-called Medicare doc fix negotiated secretly by House Speaker John Boehner and Minority Leader Nancy Pelosi — is that the deal will add $141 billion to the deficit over the next ten years.

Even this appalling outcome is sugarcoated. After unpacking the gimmicks underlying the estimate, the actual result is much worse.

First, the worst gimmick: The bill increases spending on the Children’s Health Insurance Program (CHIP) by almost $40 billion. Yet, the CBO only includes less than $6 billion in its estimate of the bill’s costs. How did over $34 billion of CHIP spending simply vanish into thin air? Easily! Much of it was already in the baseline.

Welcome to the weird world of federal budgeting, where the so-called baseline is the source of much mischief. Recall the entire reason Congress had to patch Medicare payments to doctors at least once a year for over a decade is because the budget baseline was determined by an unrealistic formula called the Sustainable Growth Rate (SGR).

Because that formula would have led to pay cuts that would have made it uneconomical for physicians to see Medicare patients, Congress had to increase physicians’ fees beyond the baseline. Most importantly, until now, those pay increases have been paid for by spending offsets.

Physicians never had their Medicare pay cut to the level dictated by the baseline. There was simply no crisis that had to be averted by last week’s budget busting Medicare doc fix.

Kick the Medicare Doc Fix Down The Road

Confident Doctors

A similar version of this Health Alert appeared at Forbes.

Congressional leaders from both parties have agreed on a long-term, so-called “doc fix” that claims to solve the problem of how the federal government pays doctors who treat Medicare patients.

Currently, Congress has a certain amount of money every year to pay doctors. This amount of money increases according to a formula called the Sustainable Growth Rate (SGR), which was established in 1997. The SGR is comprised of four factors that (by the standards of federal health policy) are fairly easy to understand. Most importantly, the SGR depends on the change in real Gross Domestic Product (GDP) per capita.

The Medicare Part B program, which pays for physicians, is an explicit “pay as you go” system. Seniors pay one quarter of the costs through premiums, and taxpayers (and their children and grandchildren) pay the rest through the U.S. Treasury. Therefore, it is appropriate taxpayers’ ability to pay (as measured by real GDP per capita) be an input into the amount.

The problem is the amount is not enough. If growth in Medicare’s payments to doctors were limited by the SGR, the payments would drop by about one-fifth, and they would stop seeing Medicare patients. So, at least once a year, Congress increases the payments for a few months. The latest patch (H.R. 4302) was passed in March 2014 and runs through March 31, 2015. It costs $15.8 billion.

This has happened 17 times since 1997. Congress has never allowed Medicare’s physician fees to drop. So, why not pass a long-term fix? This would finally free politicians from having to grub around every year finding money to pay doctors, and they could turn their attention to loftier matters.

Actually, there are plenty of reasons to be skeptical of any “doc fix”, and certainly this one.