Tag: "medicare advantage"

Questions On Medicare For Dr. Tom Price, Our Next Health Secretary

220px-Tom_Price(A version of this Health Alert was published by Forbes.)

It looks like Tom Price, MD, Donald Trump’s nominee for U.S Secretary of Health & Human Services will get his first Senate confirmation hearing on January 18. According to Morning Consult, Democratic Senators are planning to focus on Price’s support for turning Medicare into a system of “premium support.”

Fair enough: It will be a relief from all the arguments and counter-arguments about whether “repealing and replacing” Obamacare means “repeal and delay,” “repeal and de-regulate,” or “delay and delay” (as advocated by some who fear Republican politicians will repeal Obamacare immediately and never get around to a replacement bill.)

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Health Care Savings in Obama’s Budget

(A version of this Health Alert was published by The Hill.)index1

In a remarkable move breaching a four-decade precedent and characterized by many as a snub, the Republican chairmen of the House and Senate Budget Committees declined to invite the director of the Office of Management and Budget to present President Obama’s 2017 budget to their committees.

Utterly ignoring the president’s proposed budget is short-sighted, especially since congressional Republicans are disunited on fiscal issues. In January the Congressional Budget Office (CBO) updated its estimate of the cumulative federal deficit for the next 10 years to $8.5 trillion, versus just $7 billion last August.

The reason for the increase is that Republicans, who control both chambers, have won some tax cuts but no spending cuts. Obama’s latest budget offers the opportunity to remedy this, if only to a small degree and only by being very selective.

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Jeb Bush’s Positive Plan to Reform Medicare

Bush2(A version of this Health Alert was published by RealClearPolicy.)

Jeb Bush’s Medicare reform contains two proposals — premium support and Health Savings Accounts — that will have a significant, positive effect on seniors’ access to care and Medicare’s finances. In particular, the proposals will address four flaws in Medicare Advantage, an alternative to traditional Medicare in which seniors choose a plan from a private insurer.

Although Obamacare tried to cut seniors’ access to private plans, the use of these plans continues to grow. Before Obama took office, one-quarter of beneficiaries chose Medicare Advantage plans. Today, about one-third do. But despite their popularity, private Medicare plans do not live up to their potential for cost-effectiveness.

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Government-Health Complex Continues to Congeal

TevennerThe government-health insurance complex continues to congeal as AHIP, the health insurers’ main trade association, picked former Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner to lead it.

Although not confirmed as CMS Administrator until May 2013, she acted in that capacity since December 2011, after the administration fumbled the appointment of Dr. Donald Berwick to the position. In other words, she is the grande dame of Obamacare.

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Medicare Advantage Plans Become Entrenched

Cheerful Senior Man Having His Blood Pressure TakenThe Centers for Medicare & Medicaid Services (CMS) has announced that payments to Medicare Advantage plans will increase by 1.25 percent next year. Less than a month ago, the plan was to cut payments by 0.95 percent.

Medicare Advantage plans are comprehensive plans that seniors can chose instead of the traditional Medicare Fee-For-Service (FFS) model.Because they are offered by private insurers, Obamacare was supposed to crush Medicare Advantage.

However, this is the third year the Administration has flinched from cuts that would deny people access to these plans. More seniors are in Medicare Advantage today than when Obamacare was passed.

We think Medicare Advantage plans are a good thing, and a foundation for further Medicare reform. So, this development is good news. Further, there appears to be bipartisan agreement that Medicare Advantage is a good thing:

Democrats were wary of a program launched by Bush that they saw as a giveaway to insurance companies.

But as time has passed, support has grown in both parties for the program.

“The worst fears were not materialized,” said Rep. Gerry Connolly (D-Va.), who signed the letter this year against the cuts. “It’s growing in popularity among our constituents and it provides an option.” (Peter Sullivan, The Hill)

Headlines I Wish I Hadn’t Seen

How Well Does Risk Adjustment Work?

Medicare uses an elaborate risk adjustment model incorporating individual demographic characteristics and medical conditions into 70 different hierarchical condition categories in order to decide how much to pay Medicare Advantage plans for each individual enrollee. The goal is to predict each enrollee’s medical expenses as accurately as possible and to pay a premium that reflects that expectation. These models will also be used in the new ObamaCare exchanges in order to “tax” plans with healthier enrollees and subsidize those with “sicker” enrollees. Private insurers have historically set their premiums using experience rating rather than risk adjustment.

So how well does risk adjustment work? According to the June 2012 MedPAC Report, the current model is a “much better predictor of a beneficiary’s costliness” than the previous model. The previous model explained “only about 1 percent” of an individual’s costliness. The current model predicts “about 11 percent.”

ObamaCare Cuts Unraveling Already

This is from Julie Appleby of Kaiser Health News:

In a surprising move, the Obama administration will extend special bonus payments meant to reward top-performing Medicare Advantage insurers to those that score only average ratings…. The change means 62 percent of all Medicare Advantage insurers — representing 84 percent of enrollees — will qualify for the quality bonuses, compared with only 14 percent of plans under the health law provisions….The total cost over the three years is $1.3 billion.

“It’s only been eight days since the election,” [Barclays Capital analyst] Joshua Raskin, wrote in his report, “but the rollback of Medicare Advantage cuts got its first step forward.”

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Seniors to Pay More Out-of-Pocket for Health Care

A new letter by Medicare Chief Actuary, Richard Foster, to Senate Republicans quantifies the expected losses for seniors. Those enrolled in Medicare Advantage plans will see their out-of-pocket costs rise by $346 per year in 2011, peaking at $923 in 2017.

Gag Order Does Not Apply to the Censors

During the debate over ObamaCare last fall, the Administration threatened health insurance companies who were informing seniors of potential losses of Medicare Advantage (MA) benefits.  As far as I could tell, the mailings were completely truthful and consistent with the CBO and CMS estimates.  Medicare’s Chief Actuary, for example, predicts that eventually as many as 7.4 million beneficiaries will lose their MA plan altogether and another 7.4 million will experience a loss of benefits.

This week the very same agency that gagged the insurers is sending out a propaganda pamphlet to more than 40 million Medicare beneficiaries – extolling the benefits of the new law, but ignoring all the costs (including the fact that more than half the cost of health reform is to be paid for by reduced Medicare spending).  The pamphlet even claims that MA enrollees will be better off!

Republicans are outraged [gated].  CMS says it only wants to help seniors avoid confusion.  But won’t the biggest confusion come when their MA plans are cancelled?