Another Way Obamacare Fails to Deliver

The Centers for Medicare and Medicaid Services announced today that Medicare Part B premiums would rise by $3.50 per month in 2012.  The Administration is trying to bill this announcement as evidence that Obamacare is working – but the reality is just the opposite.  First, candidate Obama promised to CUT premiums by an average of $2,500 per familyso ANY premium increase by definition means the law has failed to achieve its promised savings.

Part B premiums will rise by less than projected, however, which the Administration is claiming is due to Obamacare’s “investment” in prevention (read: jungle gyms).  That however is NOT what the non-partisan Medicare actuary concluded was responsible for the overall slowdown in the growth of health costs; here’s the first paragraph of the actuary’s most recent summary of national health expenditure projections:

In 2010, NHE is projected to have reached $2.6 trillion and grown 3.9 percent, down from 4.0 percent in 2009.  Estimated spending growth in 2010 was slow due to continuing declines in employment and private health insurance coverage associated with the recent recession.

In other words, spending growth was slower – and the Medicare premium hike lower – than projected NOT because Obamacare worked, but because the Obama “stimulus” didn’t.  That’s not exactly a success story the Administration should be trumpeting today.

It’s Medicare’s Open Season — So Where’s Andy Griffith?

Amidst the stories this week surrounding the CLASS Act debacle and the release of the final ACO reg, open season started for Medicare beneficiaries last Saturday.  Due to a provision in Obamacare, open season now starts a month earlier, and will end several weeks earlier as well.  And as a Kaiser Health News piece from last week cited one survey indicating that 65 percent of seniors were unaware of the changed dates for Medicare’s open season as of earlier this year.

This brings up the question I raised above:  Given the accelerated open season calendar, of which many seniors are unaware, where’s Andy Griffith to inform seniors of these important changes?  As you probably recall, last year CMS engaged Andy Griffith to take on the role of “pitching President Barack Obama’s health care law to seniors.”  Press reports note that the Administration spent $3 million in taxpayer funds to run an ad campaign in which Mr. Griffith was, in the White House’s own words, “delivering the good news” about Obamacare to seniors.  And according to CMS’ response to a Freedom of Information Act request, the ads were “only airing in September and October 2010” – i.e., the weeks and months right before November 2’s mid-term election.

My point is NOT to argue that at a time of trillion-dollar deficits, CMS should spend millions running television ads using “weasel words” and misleading rhetoric in an attempt to persuade seniors about Obamacare.  My question is, why is the Obama Administration running the Andy Griffith ad campaign in even-numbered years, but not odd-numbered ones?  Is timing such advertisements right around elections warranted or appropriate?  And does anyone want to venture a guess that an ad campaign featuring Mr. Griffith will return next fall in states like Florida, Colorado, and Ohio…?

ACOs, CLASS, and the Expansion of Bureaucratic Power

As previously noted, the final rules on accountable care organizations were released this morning.  One point I neglected to mention in my earlier e-mail about regulations:  The final rule took 11 pages of bill text (Section 3022 of the 2,000-plus page Obamacare) and converted them into nearly 700 pages of bureaucrat-written regulations, requirements, and mandates.

Compare that to the controversy surrounding the CLASS Act, and the statements of advocates of the program who this week called for it to continue, despite Secretary Sebelius’ statements that she did not see a path forward to implementation.  The advocates either 1) want to give HHS MORE authority to fix the program unilaterally, and/or 2) say she should plow ahead anyway, despite the legal concerns the Secretary raised.

So, in the same week that found a CMS bureaucracy turning 11 pages of bill text into nearly 700 pages of regulations, we have liberal groups advocating to give HHS even more power than they were granted by Obamacare.  That in and of itself speaks volumes to the problems with the sprawling federal bureaucracy, and in particular with top-down, government-driven approach to health “reform” epitomized by Obamacare.

Obamacare, Medicaid, and Beneficiary Lawsuits

Former CMS Administrator Bruce Vladeck has an op-ed, entitled “Killing Medicaid the California Way,” in the New York Times this morning, in which he and a co-author discuss the recent Supreme Court arguments over whether or not Medicaid beneficiaries have a right to sue over reimbursement rates and their effects on physician access.  Two points in particular, related to this case’s impact on Obamacare implementation, are worth highlighting.  First, Vladeck argues that beneficiaries should be allowed to sue because CMS does not have the resources to investigate and protect beneficiary access:

The department doesn’t have the resources to oversee compliance with the equal access provision.  As Justice Anthony M. Kennedy pointed out at the oral argument last week, only 500 employees supervise nearly $400 billion in Medicaid expenditures.  Indeed, the department’s budget for the administration of Medicaid declined by 44 percent between the 2008 and 2010 fiscal years, even as Medicaid costs have kept rising.

But if Medicaid administrative costs are woefully under-funded, then why did Democrats decide to expand the program to an additional 25 million Americans under Obamacare?  If the program can’t engage in proper oversight for the beneficiaries it has now, then why do liberals think it should enroll MORE Americans?  And where was Mr. Vladeck in making this argument a year ago – that CMS was ill-equipped and under-funded to handle the largest expansion in Medicaid’s history…?

The second key question related to Obamacare:  If Mr. Vladeck supports allowing lawsuits for Medicaid patients, why didn’t he point out that Obamacare denies Medicare patients – many of whom are also on Medicaid – the ability to sue to stop treatments being denied them by an unelected board?  Specifically, Section 3403 of Obamacare explicitly DENIES Medicare patients the right to sue over restricted or denied access to care, prohibiting lawsuits against the rulings of the law’s new board of 15 unelected, unaccountable bureaucrats.  What’s more, Medicaid providers and beneficiaries currently have a form of redress – they can (and have) utilized federal administrative processes through Washington to demand changes in state Medicaid programs.  Conversely, Obamacare prohibits BOTH judicial AND administrative review of the board of bureaucrats’ Medicare rulings – making the power of these unelected officials nearly absolute.

Surprisingly enough, in arguing for Medicaid beneficiaries’ right to sue states over poor access, Mr. Vladeck didn’t mention how Obamacare takes away the right of Medicare beneficiaries to sue the federal government over the very same access issues.  Perhaps he’s saving this point for a separate op-ed, “Killing Medicare the Obamacare Way.”  We eagerly anticipate him demonstrating ideological consistency by making such an argument.

Report: Obamacare Board to Recommend Ending Prostate Cancer Screenings

CNN is reporting this afternoon:  “The U.S. Preventive Services Task Force, the group that told women in their 40s that they don’t need mammograms, will soon recommend that men not get screened for prostate cancer, according to a source privy to the task force deliberations.”

You may recall that the Preventive Services Task Force is mentioned no fewer than nine times in Obamacare.  This board sets the standards for coverage of preventive health services that private insurers are required to cover (Section 1001) and helps determine the standards for what preventive treatments Medicare will cover (Sections 4103-4105).  So the decision by this government board to recommend men NOT get screened for prostate cancer could well lead to fewer insurers covering this treatment, and fewer individuals being screened for cancer as a result.

This development may meet with the approval of CMS Administrator Donald Berwick – he of “rationing with our eyes open” fame.  Dr. Berwick, who previously served as the Vice Chair of the Preventive Services Task Force during the 1990s, has publicly – and repeatedly – advocated for less money being spent on preventive care, arguing for instance against procedures like routine ultrasound tests for pregnant women. (A sample of his published writings on this topic is listed below.)  Apparently the government board agreed with his view.

As the story notes, the Preventive Services Task Force recommended reducing mammogram screenings two years ago – a move that sparked public outrage during the debate on Obamacare, and prompted Senate Democrats specifically to override the Task Force’s mammogram recommendations in the bill that became law.  But it’s worth asking:  What will happen NOW, as the government board empowered by Obamacare to make decisions about covered benefits decides that men should not undergo prostate cancer screening?


Preventive Screening Measures

Reduce demand…We have not developed sound ways to help our patients seek their own self-interest, and we have allowed the public to proceed on the dangerous, toxic, and expensive assumption that more is better.  The evidence is often otherwise.  I have had the pleasure for the past five years of serving as vice chair of the U.S. Preventive Services Task Force [from 1990-96]…with the sole charge of reviewing…almost two hundred clinical preventive practices.”[1]

“The U.S. Preventive Services Task Force, of which I was vice chair, reviewed preventive and screening technologies and found many that were growing rapidly in use without any scientific proof of their merit—and often with some proof of their harm.  These include techniques such as continuous monitoring for preterm labor, prostatic ultrasound tests, and exercise stress testing in normal adults to screen for coronary disease.”[2]

“One over-demanded service is prevention: annual physicals, screening tests, and other measures that supposedly help catch diseases early.”[3]

“Is any screening procedure appropriate for a health fair even though that same procedure lacks merit in a physician’s office?…At the moment, we lack sufficient information to make such a judgment.”[4]

“The medical director of an HMO knows that routine colonoscopy as part of well-adult physical examinations can occasionally save the life of a colon cancer victim.  She also knows that, to serve her enrolled population, she would have to hire eight specialists to perform the needed colonoscopies.  If she did that, the resulting premium increase would be so great that the HMO would without doubt lose many employee accounts and its economic future would be at risk.  Are routine colonoscopies a social good?  What about routine pap smears?  Routine smoking cessation counseling?  Routine well-baby visits?”[5]

“Our study suggests that, even if customers had to pay out of pocket for their ultrasound tests, the excess of willingness to pay over price—i.e., consumer’s surplus—could provide some of the momentum behind rapidly rising health costs.”[6]


[1] “Run to Space,” speech to 7th annual National Forum on Quality Improvement in Health Care, December 1995, in Escape Fire: Designs for the Future of Health Care by Donald Berwick (Jossey-Bass, 2004), p. 81

[2] “Sauerkraut, Sobriety, and the Spread of Change,” speech to 8th annual National Forum on Quality Improvement in Health Care, December 1996, in Escape Fire: Designs for the Future of Health Care by Donald Berwick (Jossey-Bass, 2004), p. 102

[3] “We Can Cut Costs and Improve Care at the Same Time” by Donald Berwick, Medical Economics August 12, 1996, p. 186

[4] “Screening in Health Fairs: A Critical Review of Benefits, Risks, and Costs” by Donald Berwick Journal of the American Medical Association September 20, 1985, p. 1498

[5] “Health Services Research and Quality of Care: Assignments for the 1990s” by Donald Berwick, Medical Care August 1989, pp. 769-770

[6] “What Do Patients Value? Willingness to Pay for Ultrasound in Normal Pregnancy” by Donald Berwick and Milton Weinstein, Medical Care July 1985, pp. 889-90

Democrat Plans Rationing with Open Eyes

From Montana this week comes word that its Governor, Brian Schweitzer, wants to establish a government-run health care plan in his state.  The governor said he “has completely different plans for the Medicare and Medicaid money the federal government gives the state,” and that he wants to “create a state-run system that borrows from the program used in Saskatchewan.”  He then went on to explain how his government-run system might keep taxpayer spending on health care low:

[Schweitzer] said the Canadian province [i.e., Saskatchewan] controls cost by negotiating drug prices and limiting non-emergency procedures such as MRIs.

A simple web search about waiting times in Saskatchewan yields information about the types of “non-emergency procedures” subject to rationing in the province; for instance, the list of “Wait List FAQs” from the Saskatchewan Cancer Agency includes this helpful guidance for cancer patients:

What are you doing to ensure that I get an appointment in a timely way?

Currently we have a shortage of medical oncologists that is impacting our wait times.  We are also actively recruiting to fill our vacant positions throughout our facilities and are working to bring in locums to help address wait times….

Can I get care sooner if I go somewhere else?

You will find that wait times exist in the healthcare system throughout Canada and in other countries as well….

And when it comes to the MRI example Governor Schweitzer referenced, rationing occurs there as well – unless you’re politically connected.  Saskatchewan Rough Riders – i.e., players in the Canadian Football League – have been able to jump the long queues for MRIs in the province by paying for their own treatment; other people can wait for as long as three months.

Details on how Governor Schweitzer intends to turn Montana into a Canadian-style health care system are not yet known.  However, given that Schweitzer’s application will be reviewed by the Centers for Medicare and Medicaid Services – whose head, Donald Berwick, has spoken of rationing with our eyes open – it’s quite possible the application will be approved.  In that scenario, those who can afford to get to the head of the queue – millionaires and billionaires who can fund the entire cost of their treatment, and pro athletes like Michael Vick – will receive in a prompt fashion the MRIs and cancer care they need to maintain or regain their health.  Everyone else, perhaps not.

The President’s Shrinking Entitlement Savings

The President’s deficit proposal released this morning claims to achieve $320 billion in deficit savings.  As we’ve previously noted, given the size of our entitlement programs, that’s a comparatively insignificant amount – barely enough to finance a long-term “doc fix,” let alone make Medicare and Medicaid solvent for the long term.  But what’s interesting is how the size of the health care savings put forward by the President has actually SHRUNK over time.  The White House’s April “deficit framework” (i.e., a speech) claimed to achieve $340 billion in savings – $20 billion MORE than this morning’s proposal.

So what exactly prompted the President to LOWER his sights for entitlement savings over the last five months?  Was it the unprecedented downgrade of America’s debt rating?  The stock market swoon that quickly followed?  The chaos in Europe as that continent struggles to achieve fiscal discipline and avert a sovereign default crisis?  Or was it the event that happens on the Tuesday after the first Monday in November every fourth year?  You be the judge…

All that said, a detailed summary of the President’s (new) proposal follows below.  Keep in mind that Administration/OMB estimates may vary significantly from CBO scores, so remember that your budgetary mileage may vary.  (All scores are over a ten-year period unless otherwise indicated.)


Medicare Proposals (Total savings of $248 Billion)

Bad Debts:  Reduces bad debt payments to providers – for unpaid cost-sharing owed by beneficiaries – from 70 percent down to 25 percent over three years, beginning in 2013.  The Fiscal Commission had made similar recommendations in its final report.  Saves $20.2 billion.

Medical Education Payments:  Reduces the Indirect Medical Education adjustment paid to teaching hospitals by 10 percent beginning in 2013, saving $9.1 billion.  Previous studies by the Medicare Payment Advisory Committee (MedPAC) have indicated that IME payments to teaching hospitals may be greater than the actual costs the hospitals incur.

Rural Payments:  Ends add-on payments for providers in frontier states, saving $2.1 billion.  Reduces critical access hospital payments from 101% of costs to 100% of costs, saving $1 billion, and prohibits hospitals fewer than 10 miles away from the nearest hospital from receiving a critical access hospital designation, saving $3 billion.

Post-Acute Care:  Reduces various acute-care payment updates (details not specified) during the years 2014 through 2021, saving $32.5 billion.  Equalizes payment rates between skilled nursing facilities and inpatient rehabilitation facilities, saving $4.5 billion.  Increases the minimum percentage of inpatient rehabilitation facility patients that require intensive rehabilitation from 60 percent to 75 percent, saving $2.6 billion.  Reduces skilled nursing facility payments by up to 3%, beginning in 2015, for preventable readmissions, saving $2 billion.

Pharmaceutical Price Controls:  Expands Medicaid price controls to dual eligible and low-income subsidy beneficiaries participating in Part D, saving $135 billion according to OMB.  However, according to the Congressional Budget Office’s March 2011 Budget Options (Option 25), this proposal would generate smaller savings ($112 billion).  Some have expressed concerns that further expanding government-imposed price controls to prescription drugs could harm innovation and the release of new therapies that could help cure diseases.

MA Repayment Provisions:  Recovers payments to insurers participating in the Medicare Advantage (MA) program.  MA plans are currently paid on a prospective basis, with those payments adjusted according to the severity of beneficiaries’ ill health.  Some sample audits have discovered instances where plans could not retrospectively produce the necessary documentation to warrant the prospective coding adjustment that some beneficiaries received.  The deficit plan would apply this adjustment, currently contemplated for some beneficiaries based on the sample audit, to ALL beneficiaries.  OMB now scores this proposal as saving $2.3 billion; when included in the President’s budget back in February, these changes were scored as saving $6.2 billion.

Anti-Fraud Provisions:  Assumes $600 million in savings from various anti-fraud provisions, including limiting the discharge of debt in bankruptcy proceedings associated with fraudulent activities.

EHR Penalties:  Re-directs Medicare reimbursement penalties against physicians who do not engage in electronic prescribing beginning in 2020 back into the Medicare program.  The “stimulus” legislation that enacted the health IT provisions had originally required that penalties to providers be placed into the Medicare Improvement Fund; the budget would instead re-direct those revenues into the general fund, to finance the “doc fix” and related provisions.  OMB now scores this proposal as saving $500 million; when included in the President’s budget back in February, these changes were scored as saving $3.2 billion.

Imaging:  Reduces imaging payments by assuming a higher level of utilization for certain types of equipment, saving $400 million.  Also imposes prior authorization requirements for advanced imaging, saving $900 million.

Additional Means Testing:  Increases means tested premiums under Parts B and D by 15%, beginning in 2017.  Freezes the income thresholds at which means testing applies until 25 percent of beneficiaries are subject to such premiums.  Saves $20 billion over ten years, and presumably more thereafter, as additional seniors would hit the means testing threshold, subject them to higher premiums.

Medicare Deductible Increase:  Increases Medicare Part B deductible by $25 in 2017, 2019, and 2021 – but for new beneficiaries only; “current beneficiaries or near retirees [not defined] would not be subject to the revised deductible.”  Saves $1 billion.

Home Health Co-Payment:  Introduces a home health co-payment of $100 per episode for new beneficiaries only, in cases where an episode lasts five or more visits and is NOT proceeded by a hospital stay.  MedPAC has previously recommended introducing home health co-payments as a way to ensure appropriate utilization.  Saves $400 million.

Medigap Surcharge:  Imposes a Part B premium surcharge equal to about 15 percent of the average Medigap premium – or about 30 percent of the Part B premium – for seniors with Medigap supplemental insurance that provides first dollar coverage.  Applies beginning in 2017 to new beneficiaries only.  A study commissioned by MedPAC previously concluded that first dollar Medigap coverage induces beneficiaries to consume more medical services, thus increasing costs for the Medicare program and federal taxpayers.  Saves $2.5 billion.

Lower Caps on Medicare Spending:  Section 3403 of the health care law established an Independent Payment Advisory Board tasked with limiting Medicare spending to the growth of the economy plus one percentage point (GDP+1) in 2018 and succeeding years.  The White House proposal would reduce this target to GDP+0.5 percent.  This approach has two potential problems:

  • First, under the Congressional Budget Office’s most recent baseline, IPAB recommendations would not be triggered at all – so it’s unclear whether the new, lower target level would actually generate measurable budgetary savings.  (In August 2010, CBO concluded an IPAB with an overall cap of GDP+1 would yield $13.8 billion in savings through 2020 – not enough to make a measurable impact on a program spending $500 billion per year.)
  • Second, the Medicare actuary has previously written that the spending adjustments contemplated by IPAB and the health care law “are unlikely to be sustainable on a permanent annual basis” and “very challenging” – problems that would be exacerbated by utilizing a slower target rate for Medicare spending growth.

According to the Administration document, this proposal would NOT achieve additional deficit savings.

Medicaid and Other Health Proposals (Total savings of $72 Billion)

Medicaid Provider Taxes:  Reduces limits on Medicaid provider tax thresholds, beginning in 2015; the tax threshold would be reduced over a three year period, to 3.5 percent in 2017 and future years.  State provider taxes are a financing method whereby states impose taxes on medical providers, and use these provider tax revenues to obtain additional federal Medicaid matching funds, thereby increasing the federal share of Medicaid expenses paid while decreasing the state share of expenses.  The Tax Relief and Health Care Act of 2006, enacted by a Republican Congress, capped the level of Medicaid provider taxes, and the Bush Administration proposed additional rules to reform Medicaid funding rules – rules that were blocked by the Democrat-run 110th Congress.  However, there is bipartisan support for addressing ways in which states attempt to “game” the Medicaid system, through provider taxes and other related methods, to obtain unwarranted federal matching funds – the liberal Center for Budget and Policy Priorities previously wrote about a series of “Rube Goldberg-like accounting arrangements” that “do not improve the quality of health care provided” and “frequently operate in a manner that siphons extra federal money to state coffers without affecting the provision of health care.”  This issue was also addressed in the fiscal commission’s report, although the commission exceeded the budget proposals by suggesting that Congress enact legislation “restricting and eventually eliminating” provider taxes, saving $44 billion.  OMB now scores this proposal as saving $26.3 billion; when included in the President’s budget back in February, these changes were scored as saving $18.4 billion.

Blended Rate:  Proposes “replac[ing]…complicated federal matching formulas” in Medicaid “with a single matching rate specific to each state that automatically increases if a recession forces enrollment and state costs to rise.”  Details are unclear, but the Administration claims $14.9 billion in savings from this proposal – much less than the $100 billion figure bandied about in previous reports this summer.  It is also worth noting that the proposal could actually INCREASE the deficit, if a prolonged recession triggers the automatic increases in the federal Medicaid match referenced in the proposal.  On a related note, the deficit plan once again ignored the governors’ multiple requests for flexibility from the mandates included in the health care law – unfunded mandates on states totaling at least $118 billion.

Limit Durable Medical Equipment Reimbursement:  Caps Medicaid reimbursements for durable medical equipment (DME) at Medicare rates, beginning in 2013.  The health care law extended and expanded a previous Medicare competitive bidding demonstration project included in the Medicare Modernization Act, resulting in savings to the Medicare program.  This proposal, by capping Medicaid reimbursements for DME at Medicare levels, would attempt to extend those savings to the Medicaid program.  OMB now scores this proposal as saving $4.2 billion; when included in the President’s budget back in February, these changes were scored as saving $6.4 billion.

Third Party Liability:  Removes exceptions to the requirement that Medicaid must reject payments when another party is liable for a medical claim, saving $1.3 billion.

Rebase Medicaid Disproportionate Share Hospital Payments:  In 2021, reallocates Medicaid DSH payments to hospitals treating low-income patients, based on states’ actual 2020 allotments (as amended and reduced by the health care law).  Saves $4.1 billion.

Medicaid Anti-Fraud Savings:  Assumes $110 million in savings from a variety of Medicaid anti-fraud provisions, largely through tracking and enforcement of various provisions related to pharmaceuticals.

Amend MAGI Definition:  Amends the health care law to include Social Security benefits in the new definition of Modified Adjusted Gross Income used to determine eligibility for Medicaid benefits.  As previously reported, this “glitch” in the law would make millions of early retirees – who receive a large portion of their income from Social Security – eligible for free taxpayer-funded benefits, and would discourage work by providing greater subsidies to those relying on Social Security, as opposed to wage earnings, for their income.  Saves $14.6 billion.

Flexibility on Benchmark Plans:  Proposes some new flexibility for states to require Medicaid “benchmark” plan coverage for non-elderly, non-disabled adults – but ONLY those with incomes above 133 percent of the federal poverty level (i.e., NOT the new Medicaid population obtaining coverage under the health care law).  No savings assumed.

“Pay-for-Delay:”  Prohibits brand-name pharmaceutical manufacturers from entering into arrangements that would delay the availability of new generic drugs.  Some Members have previously expressed concerns that these provisions would harm innovation, and actually impede the incentives to generic manufacturers to bring cost-saving generic drugs on the market.  OMB now scores this proposal as saving $2.7 billion; when included in the President’s budget back in February, these changes were scored as saving $8.8 billion.

Follow-on Biologics:  Reduces to seven years the period of exclusivity for follow-on biologics.  Current law provides for a twelve-year period of exclusivity, based upon an amendment to the health care law that was adopted on a bipartisan basis in both the House and Senate (one of the few substantive bipartisan amendments adopted).  Some Members have expressed concern that reducing the period of exclusivity would harm innovation and discourage companies from developing life-saving treatments.  OMB now scores this proposal as saving $3.5 billion; when included in the President’s budget back in February, these changes were scored as saving $2.3 billion.

FEHB Contracting:  Proposes streamlining pharmacy benefit contracting within the Federal Employee Health Benefits program, by centralizing pharmaceutical benefit contracting within the Office of Personnel Management (OPM).  Some individuals, noting that OPM is also empowered to create “multi-state plans” as part of the health care overhaul, may be concerned that these provisions could be part of a larger plan to make OPM the head of a de facto government-run health plan.  OMB now scores this proposal as saving $1.6 billion; when included in the President’s budget back in February, these changes were scored as saving $1.8 billion.

Prevention “Slush Fund:”  Reduces spending by $3.5 billion on the Prevention and Public Health Fund created in the health care law.  Some Members have previously expressed concern that this fund would be used to fund projects like jungle gyms and bike paths, questionable priorities for the use of federal taxpayer dollars in a time of trillion-dollar deficits.

State Waivers:  Accelerates from 2017 to 2014 the date under which states can submit request for waivers of SOME of the health care law’s requirements to HHS.  While supposedly designed to increase flexibility, even liberal commentators have agreed that under the law’s state waiver programcritics of Obama’s proposal have a point: It wouldn’t allow to enact the sorts of health care reforms they would prefer” and thatconservatives can’t do any better – at least not under these rules.”  The proposal states that “the Administration is committed to the budget neutrality of these waivers;” however, the plan allocates $4 billion in new spending “to account for the possibility that CBO will estimate costs for this proposal.”

Implementation “Slush Fund:”  Proposes $400 million in new spending for HHS to implement the proposals listed above.

Obamacare’s Latest Waiver Program: Seniors Can Keep Their Coverage — For Now…

This morning the Administration is attempting to tout projected increased enrollment in Medicare Advantage for 2012 as evidence that Obamacare won’t result in harm for Medicare beneficiaries.  But in reality, it’s more a reflection of the Administration making a political calculation to avoid the worst effects of Obamacare taking effect during the President’s re-election campaign.

The Associated Press previously reported on what amounts to a round of temporary Obamacare waivers granted by the Administration – this one to seniors in Medicare Advantage.  The “reprieve” granted by the Administration comes in the form of a multi-billion dollar demonstration project – FAR larger and broader than any prior demonstration program – to pay “bonuses” that mitigate the effects of Obamacare’s damaging Medicare Advantage cuts.  It’s these bonus payments – which were NOT included in Obamacare, and were created unilaterally by CMS as an attempt to stifle political opposition to the law – that are keeping plans from raising premiums and dropping coverage for seniors.

The AP story earlier this year noted that this waiver/bonus program “could head off service cuts that would have been a [political] headache for Obama and Democrats in next year’s elections.”  Even a former Democrat staffer who worked in the Clinton Administration admitted that the effort amounted to a political stunt: “It’s fair to say that [Medicare] could not tolerate dislocation, given the political climate.”

The Congressional Budget Office and the Medicare trustees STILL project that millions of seniors will lose their Medicare Advantage plans thanks to Obamacare.  But when do both CBO and the Medicare trustees think enrollment in Medicare Advantage will decline, meaning seniors will start losing their plans?  Beginning in 2013 – right after President Obama runs for re-election.  So for millions of Medicare beneficiaries, the mantra becomes “If you like your current plan, you can keep it – until after November 2012.”

Many may view the latest round of waivers for seniors as a mere continuation of the backroom deals that epitomized Democrats’ unpopular 2700-page health care law – and a further example of Democrats playing politics with Medicare ahead of President Obama’s re-election.

A Preview of Tomorrow’s Census Report on the Uninsured

Tomorrow at 10 AM, the Census Bureau will be releasing its annual update on income, poverty, and health insurance coverage for 2010.  Several things to keep in mind ahead of the report’s release:

New Methodology:  Tomorrow’s Census figures on the uninsured will be released using a new method for imputing health coverage to individuals that do not respond to the health insurance survey question.  Liberal groups are claiming this revision will somewhat increase the number of Americans with health insurance, which would tend to reduce the number of reported uninsured.  Past year’s uninsured data will be revised in tomorrow’s report to reflect the new methodological format.  This is not the first time the Census methodology has been revised; many economists and statistical experts have questioned its accuracy of its uninsured estimates.  (See more at the bottom of this e-mail.)

Failed “Stimulus” Means Millions More Uninsured:  One of the prime reasons the number of uninsured is expected to increase again this year (methodological changes notwithstanding) is that the Obama Administration’s “stimulus” failed to bring down unemployment to promised levels.  Because most Americans obtain health coverage through employment, millions more Americans would be insured if the unemployment rate were at the 6.4% level the White House promised it would be today once the “stimulus” passed, rather than the 9.1% it actually stands at.

5,110,000:  Remember Democrats’ repeated claims that “every day, 14,000 Americans lose their coverage?”  The number was invoked frequently during the health care debate, and President Obama even cited the statistic in his September 2009 speech to Congress.  The statistic hasn’t been repeated often since the law passed, probably because its major coverage expansions don’t take effect until 2014.  But if the Democrat claims were true, and 14,000 Americans lost their health insurance every day, the Census report will show the number of uninsured Americans rose by 5.1 million in 2010.  However, the dubious assumptions behind the statistic make it likely that any potential increase in the number of uninsured won’t match the earlier predictions.  (The short version of the story: The Center for American Progress came up with the 14,000 estimate at a time when the economy was shedding more than 500,000 jobs monthly, which is not the case now.)

Uninsured Number vs. Rate:  While press accounts of the Census report tend to focus on the number of uninsured Americans, the uninsured rate has remained relatively constant for most of the past two decades (last year being an exception).  Economists tend to emphasize the unemployment rate – and not the total number of unemployed workers – as the most accurate picture of economic health, as the former reduces the impact of population growth.  For instance, while there are currently over 2 million more workers unemployed than there were during the 1982-83 recession, the unemployment rate is (slightly) below levels reached during that downturn, because the American workforce has grown by more than 40 million workers over the past three decades.  Some may therefore argue that the uninsured rate, as opposed to the number of uninsured overall, may present a more accurate picture of the health insurance system.

Uninsured Rate vs. Unemployment Rate:  The Bureau of Labor Statistics’ August employment report found a total unemployment rate – including discouraged workers who have left the workforce and part-time workers who cannot find full-time employment – of 16.2 percent.  It is likely that, for the third straight year, the percentage of individuals seeking full-time work who cannot find it will approach or exceed the percentage of individuals without health coverage – a pattern not previously seen for at least two decades.  This dynamic may cause many to question the logic of Obamacare’s more than $800 billion in tax increases at a time of record unemployment.

Cohorts of the Uninsured:  Former National Economic Council Director Keith Hennessey has analyzed the various groups within the uninsured population to ascertain who might need assistance to purchase health coverage.  The numbers are now dated (based on 2007 Census data), but it’s the best explanation out there of groups of the uninsured – those who are enrolled in Medicaid and/or SCHIP but aren’t reported on the Census survey as such, those who are eligible for Medicaid but haven’t enrolled, non-citizens, individuals who could likely afford to buy some form of health insurance, and the “young invincibles.”

More on Survey Methodology:  While the Census Bureau figure of uninsured Americans is among the most widely reported, it is far from the only measure used – or the most accurate.  Many indicators confirm that the Census survey represents a “point-in-time” snapshot of the uninsured population at any given moment, and does not reflect the number of individuals without insurance for long periods of time – those in most need of assistance.  For instance, while last year’s Census report found 50.7 million uninsured in 2009, a separate study by the Centers for Disease Control found that 32.8 million Americans were uninsured for one year or longer in 2009, and a survey of health spending conducted by the Department of Health and Human Services found 41.3 million non-elderly Americans lacked coverage for all of 2009.  In 2009, the Census survey saw a larger jump in the number of uninsured than the other two reports, which could be a result of methodological flaws, and/or the fact that many of the uninsured lacked health coverage for periods of less than a year. (For a further discussion of these issues, see also a 2006 Kaiser Family Foundation brief comparing the uninsured surveys, as well as a 2003 CBO analysis of the long-term uninsured.)

It is also worth noting that the Census survey relies on individuals to self-report their insurance status, and some individuals may not remember periods of health insurance coverage.  Adding a “residual” question to the Census survey in 2000 – to confirm that those without employer, individual, or government coverage were in fact uninsured – reduced the number of uninsured Americans by 8 percent.  One survey conducted for the Department of Health and Human Services in 2005 adjusted for the number of individuals which the Centers for Medicare and Medicaid Services (CMS) reported were enrolled in Medicaid, but who did not report insurance coverage for the Census survey.  Such adjustments for the Medicaid undercount reduced the number of uninsured by about 9 million – or one-fifth of the total uninsured – and the number of uninsured children by half.  For these reasons, the Census Bureau report itself admits that “health insurance coverage is underreported [in the Census data] for a variety of reasons,” meaning that by Census’ own admission, the number of uninsured is lower than its report indicates.

A Modest Proposal for IPAB’s Defenders

Several months ago I began experiencing problems walking on my left foot.*  I was born with deformed bones in my left foot, and the pressure from walking on this abnormal foot structure for more than 30 years began to take its toll.  I visited several podiatric and orthopedic specialists to evaluate my options; non-invasive methods like orthotics and therapy helped, but it became apparent to me that they weren’t really solving the problem, as opposed to delaying the inevitable.  So I consulted with a surgeon, and he arrived at a plan of action – fusions, grafts, and a tendon lengthening – which should significantly alleviate my pain and improve my gait.  Feeling comfortable with the surgeon’s level of expertise and with his recommended treatment plan, I scheduled surgery for a few weeks from now.

However, the recent debate over the IPAB – Obamacare’s body of unelected bureaucrats who will control Medicare spending – has prompted me to reconsider my decision.  After all, who am I to decide how my own health care should be handled?

  • Paul Krugman has taught me that “Patients are Not Consumers” and that “making [health care] decisions intelligently requires a vast amount of specialized knowledge”;
  • The Center for American Progress, in making “The Case for Bureaucrats in Health Care,” has taught me that health care is different from buying shoes;
  • Ezra Klein has taught me that “consumer-directed health care is a silly idea” because “patients are not qualified to evaluate good care”; and
  • CMS Administrator Donald Berwick has taught me that “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care.  That is for leaders to do.”

These statements have left me in a serious conundrum, and forced me to reconsider my thinking.  After all, I’m not an expert on health care – I’m not even close:

  • I don’t have a PhD in economics, which, as Secretary Sebelius recently pointed out, qualifies individuals as “experts” in how to run a health care system;
  • Neither I nor my surgeon graduated from an Ivy League school; and
  • I don’t even know all the words to Fair Harvard.

I do however now recognize that I am not only clearly incapable of making my own health care choices, but also that my health – and our entire country – would be better off leaving those choices to “experts” who are my intellectual superiors.  After all, President Obama promised that the stimulus would prevent unemployment from rising above 8 percent – and who thinks joblessness is still a major problem more than two years later?  And just look at how Obamacare has already delivered the $2,500 reduction in premiums that candidate Obama repeatedly promised.

So all I need now is to find a suitable “expert” to tell me whether I should have the surgery or take the painkiller.  Therein lies my open request to IPAB’s defenders, to provide me with the enlightened knowledge of my own medical condition that I so clearly lack:

  • Peter Orszag – supporter of IPAB as a way “to improve Medicare’s cost-effectiveness” – can tell me whether my surgery will cost too much;
  • Zeke Emanuel can tell me where my procedure fits on his chart for the allocation of scarce medical resources; and
  • Dr. Berwick can tell me if I’m one of those cases where “Most people who have serious pain do not need advanced methods; they just need the morphine and counseling that have been available for centuries.”

I do hope that one of these individuals – or indeed other political commentators who have supported IPAB in recent weeks – can tell me how I should proceed when it comes to my foot.  After all, I now realize that my surgeon could be recommending an operation just for the reimbursement check – because most medical professionals base their decision-making processes on whether they will obtain a $50,000 payday (as opposed to Obamacare’s “experts,” whose decisions will be based on the fact that “the social budget is limited – we have a limited resource pool”).

There is a catch however:  While I will defer my own opinion to those of the “experts,” I do expect that any individual who passes judgment on my case will assume full financial and legal liability for same.  That may be a problem for some of IPAB’s defenders.  After all, Section 3403 of the statute exempts the IPAB and its members from ANY legal liability associated with its decisions.

And therein lies the point of this proposal, and this story:  If the IPAB’s defenders – and its so-called “experts” – aren’t willing to put their own money where their mouths are, then how good will this board of unaccountable bureaucrats be?


* And just in case you were wondering, the facts of this story are real, as is the sarcasm…