Barack Obama Has the Last Word on the Medicare “Doc Fix”

 

I thought that I had given the last word on the flawed Medicare “doc fix” last Monday. Nope: That honor goes to President Obama. During the three week period the secretly negotiated “doc fix” legislation was being rushed through Congress (“rushed” because the Senate was in recess for most of it), I wrote an article suggesting Republicans who voted for it might be casting their first vote for Obamacare. Well, don’t take my word for it. Now that he’s signed the bill, President Obama has hosted a fabulous garden party for the politicians who voted for it. Yahoo has the whole story, including a photo of Speaker Boehner planting a bipartisan kiss on the cheek of Minority Leader Pelosi. One of my charges was that the law increased federal control of the practice of medicine.

Here’s what the President had to say about that:

“I shouldn’t say this with John Boehner here, but that’s one way that this legislation builds on the Affordable Care Act,” Obama said, adding, “But let’s put that aside for a second.”

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Can Obamacare still be repealed?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.”

Administration Plays “Medicaid Hardball” With Holdout States

 

Obamacare was supposed to dramatically increase Medicaid dependency in exchange for reducing some direct federal funding of hospitals. Now, some governors of states that rejected Obamacare’s Medicaid expansion are reacting negatively to the federal government’s cutting back hospital funding.

Governor Rick Scott of Florida is suing the federal government for proposing to cut Low-Income Pool (LIP) funding to hospitals, which he describes as retaliation for the state rejecting Medicaid expansion. Now, it looks like the Administration is issuing the same threat to Texas.

It is not clear why the Administration cares whether federal money sent to a state for health care is sent to Medicaid or directly to hospitals.

NCPA’s long-standing proposal for a universal, refundable tax credit addresses the issue as follows: If people do not claim the tax credit for health insurance, it gets sent to a safety-net facility where they reside. We haven’t gone deep into the details of how that gets executed. Although, my latest proposal is that all federal funding for welfare be bundled into unified Opportunity Grants

Obamacare’s Hospital Monopolies

 

Obamacare induces significant consolidation among providers, which the Federal Trade Commissioner has long recognized can be anti-competitive. State antitrust overseers are also pushing back against this effect:

During the 2008 financial crisis, “too big to fail” became a familiar phrase in the U.S. financial system. Now the U.S. health-care system is heading down the same path with a record number of hospital mergers and acquisitions—95 last year—some creating regional monopolies that, as in all monopolies, will likely result in higher prices from decreased competition.

Some see the dangers. In a rare move, Massachusetts Superior Court Judge Janet Sanders recently blocked Partners HealthCare—Harvard’s affiliated 10-hospital conglomerate and Massachusetts’ largest private employer—from acquiring three competitor hospitals.

(Marty Makary, “The Obamacare Effect: Hospital Monopolies,” Wall Street Journal, April 19, 2015)

Obamacare’s Medicaid Expansion Does Less Than It Claims

 

I am still playing whack-a-mole with journalists and others who keep confusing Medicaid with health insurance. The latest is the coverage of the Urban Institute’s latest Health Reform Monitoring Survey. The Hill reported it as” “Uninsured rate falls by half in states that expanded Medicaid”.

Imagine if a state expanded cash welfare payments versus its neighbors. The media would report that the number of people reporting no cash income had dropped faster in that state, despite creating no jobs.

Obamacare and Employment (Again)

 

Vox’s Mattew Yglesias, an undaunted Obamacare supporter, has listed “7 charts that show what Obamacare critics are getting wrong”. The first is, you guessed it, that chart from the Gallup survey of health insurance that this blog has been analyzing and criticizing pretty relentlessly.

I’m not going to go through all seven, but focus on his claim that Obamacare is not causing part-time work at the expense of full-time work. Here it is:

Vox

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.

IS FDA Reporting Drug Shortages Adequately?

 

For a number of years, there have been critical shortages of certain generic drugs for injection. These are often important cancer drugs. In 2012, I wrote a report that concluded over regulation by the Food and Drug Administration (FDA) was the primary cause of the shortages.

The President and Congress acted, but their actions did not result in improvement for over a year.

Today, the FDA claims to have improved the situation. However, an article in Health Affairs points out that the number of drug shortages reported by the FDA and the number reported by the University of Utah Drug Information Service (UUDIS), the leading private source of this data is diverging dramatically:

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.

Health Prices Outpace Other Consumer Prices

 

Today’s release of the Consumer Price Index (CPI) indicates that prices of health services are outpacing other consumer goods and services by a multiple. From February to March, the seasonally adjusted CPI increased 0.2 percent. Medical care services overall increased at twice that rate, 0.4 percent, while physicians’ and hospital services both increased by 0.6 percent.

Year on year, the situation is even worse. The CPI showed slight deflation of minus 0.1 percent, while prices of medical care services have increased 1.9 percent, physicians’ services 1.7 percent and hospital services a startling 3.4 percent.

With respect to health goods, price increases might be tapering. Although prices of medical care commodities increased 4.2 percent, year on year, they only increased 0.1 percent last month. Nonprescription drugs, medical equipment, and medical supplies actually had small decreases in prices last month.