Nancy Pelosi’s Obamacare Bailout Also Funds Abortion Coverage

In the words of her former House colleague Rahm Emanuel, Nancy Pelosi never wants to let a crisis go to waste. The House speaker not only wants to use the coronavirus pandemic to entrench Obamacare, she wants to make taxpayers fund abortion in the process.

A recent summary of the legislation Pelosi plans to introduce as an alternative to Senate Republicans’ “stimulus” bill laid out the strategy. House Democrats want to force insurers to reopen enrollment in the Obamacare Exchanges, and cover their losses via a taxpayer-funded bailout.

Leftist Wish List

The available summary of the bill—the summary!—totals 62 pages, and nearly 25,000 words. It contains a veritable menagerie of liberal big-government programs and boondoggles. For instance, it creates a “cash for clunkers” program for the government to buy old airplanes. (I’m not making this up—check out page 53 of the summary.)

Page 13 of the summary also notes that the bill would spend $400,000 so Congress’ Office of the Attending Physician can buy “N95 masks, surgical masks, gloves, swabs, test[s]…and personal protective equipment.” Somehow, the fact that Pelosi ensured Congress appropriated funds to protect itself failed to surprise this jaded observer.

New Open Enrollment Period

Division G of the 1,404-page legislation includes a variety of health-care provisions, only some of which directly relate to the coronavirus pandemic. For instance, Section 70301 (which begins on page 337) would create a “one-time special enrollment period for the [Obamacare Exchanges], allowing Americans who are uninsured to” purchase coverage.

This proposal raises an obvious problem: Moral hazard. If individuals know they can forego coverage during the usual open enrollment period and obtain coverage later, healthy individuals will do just that: only buy insurance when they need it.

Some may argue that those who lose their jobs due to coronavirus—either a temporary furlough, or a permanent layoff, during the resulting downturn—need a way to buy coverage after losing their insurance. But individuals who lose employer coverage already have a way to purchase a new plan: They automatically qualify for a special enrollment period, during which they can replace their former employer plan with exchange coverage.

Bailout Funds

News reports suggest that insurers support reopening the exchanges for a special enrollment period. However, the insurance industry also wants federal dollars to offset their potential losses from such a move.

Insurers obviously did not account for the costs of coronavirus treatments last spring and summer, when they set their 2020 premiums; no one knew of the disease at that point. The unexpected costs associated with treating the disease will likely eat into insurers’ margins for 2020.

But allowing people to buy “insurance” in the middle of a pandemic will raise insurers’ costs even further. Consider that life insurers are already imposing waiting periods for at least some applicants during the pandemic. One actuary believes life insurers will shut down applications entirely, due to the overwhelming risks they face.

By contrast, health carriers will allow anyone to apply for “insurance” during the pandemic, “if the government cover[s] anticipated losses.” Hence Section 70308 of Pelosi’s “stimulus” bill (beginning on page 404) provides for a two-year program of risk corridors.

Pelosi’s bill would recreate an Obamacare program in place from 2014 through 2016 that would have exposed taxpayers to billions of dollars in losses, but for language inserted at the insistence of Republican members of Congress. Just a few months ago, insurers took a case over risk corridors to the Supreme Court, asking for the justices to give them the bailout funds that Congress declined to pay.

Taxpayer Funding of Abortion Coverage

But as I noted nearly three years ago, when Republicans wanted to pass a “stability” bill bailing out Obamacare insurers, providing new federal dollars to insurers by definition represents taxpayer funding of abortion coverage. Only codifying the Hyde amendment’s pro-life protections for the risk corridor program would ensure that the bailout dollars will not flow to plans that cover abortion.

Separate provisions included in Section 104 of Division T of the bill (beginning on page 1089) would also substantially increase the generosity of Obamacare subsidies. The provisions would reduce the percentage of income that individuals would have to pay towards their premiums, with the federal government picking up a greater share of the tab. The same section would also eliminate the current income cap that prevents households with incomes of over 400% of the federal poverty level ($104,800 for a family of four in 2020) from receiving subsidies.

Joe Biden also included these changes to the Obamacare subsidy regime in his own health plan, released last summer, illustrating Pelosi’s attempt to exploit the coronavirus pandemic to enact Democrats’ pre-existing agenda. As with the risk corridors funding, if the legislation does not include strong pro-life protections, it means that billions of federal taxpayer dollars will flow to plans that cover abortion.

Of course, Pelosi did not include these Hyde Amendment protections in the summary of her bill, and likely would not allow a measure containing the protections to come to the House floor. Instead, the legislation represents a giveaway to both health insurers and the abortion industry.

Ironically, Senate Democrats objected to Republicans’ “stimulus” bill because they claimed it included a “slush fund” designed to bail out corporations. Perhaps they should have a conversation with Pelosi, because the Obamacare “slush fund” included in her bill would do the exact same thing.

This post was originally published at The Federalist.

This post was updated subsequent to publication with additional details regarding the introduced bill.

How Single Payer Would Make Outbreaks Like Coronavirus Worse

The past several weeks have seen two trends with important implications for health policy: Vermont Sen. Bernie Sanders’s burst of momentum following strong political showings in both Iowa and New Hampshire has drawn greater attention to his proposal for single-payer health care, as China struggles to control a coronavirus outbreak that first emerged at the end of last year.

The two events are linked by more than just time. The coronavirus outbreak provides a compelling argument against Sanders’s so-called “Medicare for All” program, which would upend the health-care system’s ability to respond to infectious disease outbreaks.

In an Outbreak, Could You Obtain Care?

For starters, supporters of Sanders’s plan have admitted that under single payer, not all patients seeking care will obtain it. In 2018, People’s Policy Project President Matt Bruenig claimed that while demand for care might rise under single payer, “aggregate health service utilization is ultimately dependent on the capacity to provide services, meaning utilization could hit a hard limit.”

By eliminating virtually all patient payments for their own care, single payer would increase demand for care—demand Bruenig concedes the system likely could not meet, even under normal circumstances. Consider that an outbreak centered more than 6,000 miles from the Pacific coast has already led to a run on respiratory face masks in the United States. During a widespread outbreak on our shores, an influx of both sick and worried-but-well patients could swamp hospitals already facing higher demand for “free” care.

Bureaucrats’ Questionable Spending Priorities

While Sanders’s legislation attempts to provide emergency surge capacity for the health-care system, experience suggests federal officials may not spend this money wisely. Section 601 of the House and Senate single-payer bills include provisions for a “reserve fund” designed to “respond to the costs of treating an epidemic, pandemic, natural disaster, or other such health emergency.” However, neither of the bills include a specific amount for that fund, leaving all decisions for the national health care budget in the hands of the Department of Health and Human Services.

And federal officials demonstrated a questionable sense of policy priorities in the years leading up to the 2014 Ebola outbreak. Of the nearly $3 billion from Obamacare’s Prevention and Public Health Fund given to the Centers for Disease Control in the years 2010-2014, only about 6 percent went towards building epidemiology and laboratory capacity. Instead, CDC spent $517.3 million funding grants focused on objectives like “improving neighborhood grocery stores” and “promoting better sidewalks and street lighting.”

Socialized Medicine Brought to Its Knees By…the Flu?

Including a system of global budgets as part of a transition to single payer would leave hospitals with little financial flexibility to cope with a sudden surge of patients. Sanders’s Senate version of single-payer legislation does not include such a payment mechanism, but the House single-payer bill does. Sen. Elizabeth Warren and other liberal think-tanks believe the concept, which provides hospitals lump-sum payments to cover the facilities’ entire operating budget, can help reduce health-care costs.

But in its May 2019 report on single payer, the Congressional Budget Office noted that consistently slow growth of global budget payments in Britain’s National Health Service has “created severe financial strains on the health care system.” And how: Rising hospital bed occupancy rates have created longer wait times in emergency rooms, with patients stuck on gurneys for hours. In one example of its annual “winter crisis,” two years ago the NHS postponed 55,000 surgeries due to capacity constraints, with one ER physician apologizing for “Third World conditions of the department due to overcrowding.”

A British health system barely able to cope with a predictable occurrence like a winter flu outbreak seems guaranteed to crumble in the face of a major pandemic. Voters lured by the siren song of socialism should bear that in mind as they ponder news of the coronavirus and Sanders’ “Medicare for All.”

This post was originally published at The Federalist.

“Bidenomics” at Work

The Government Accountability Office released a report yesterday detailing the first two years of spending from Obamacare’s Prevention and Public Health fund.  The report itself is 134 pages long – but its essence can be found on pages 101 through 103.  There, GAO highlights more than $5 million in spending on seven separate grant programs covering media and public relations.  According to GAO, these grants for “advertising and marketing strategies” were intended “to provide enhanced media buying/placement support to the National Prevention Media Initiative to increase exposure of audiences to campaign messages in communities that received Communities Putting Prevention to Work awards.  The goal of this activity is to achieve maximum additional exposure of existing/in-development creative campaign materials.”

In other words, the Obama Administration is wasting millions of dollars on PR contracts – to show how Obamacare is wasting billions of dollars on a prevention “slush fund,” all at a time the federal government is running trillion dollar deficits.  If this isn’t an example of Joe Biden’s axiom of “spending money to keep from going bankrupt,” I don’t know what is.

Obama’s Medicare Fantasies

Ahead of this evening’s first presidential debate, it’s worth examining what may happen on entitlement reform in a post-election environment.  Politico had a piece last Friday examining what the President isn’t saying about Medicare:

[During debt ceiling negotiations in mid-2011,] Obama and his top aides made clear that they were willing to swallow serious changes to Medicare in exchange for deficit reduction….Obama, in an interview with [Bob] Woodward, acknowledged he was open to nudging reluctant liberals on Medicare and Social Security if Republicans were willing to deal on taxes.  “’I am willing to move on entitlement reform — even if my own party is resisting, and I will bring them along — as long as we have significant revenues so that people feel like there’s a fairly shared burden when it comes to deficit reduction.’”

The Obama camp’s statements mislead on multiple fronts.  First, President Obama is currently claiming on the campaign trail that his proposals “will save Medicare money by getting rid of wasteful spending in the health care system.  Reforms that will not touch your Medicare benefits.”  What President Obama is claiming – before the election – is that he fully intends to break his own campaign promise “not [to] touch your Medicare benefits” after the election – so long as Republicans agree to break their own campaign pledge and raise taxes on the American people.  To say that is a cynical move – the antithesis of hope and change – is putting it mildly.

The second problem is that the President’s claim itself doesn’t withstand serious scrutiny, given his past track record.  Take, for instance, his pledge to Congress in September 2009 that his health plan would “cost around $900 billion over ten years.”  Here’s how that turned out:

  1. The final health care legislation as enacted spent $938 billion on insurance subsidies – more than the President’s $900 billion figure;
  2. The legislation also included a total of $144.2 billion in additional mandatory spending on programs other than insurance subsidies (e.g., closing the Medicare “doughnut hole,” prevention “slush fund,” etc.) – taking the measure’s mandatory spending to well above $1 trillion;
  3. The legislation included more than $100 billion in authorizations for domestic discretionary spending – figures revealed only after the legislation was signed into law; and
  4. Even the $1.2 trillion in combined mandatory and discretionary spending was an under-estimate of the law’s true 10-year fiscal impact, as the insurance expansions were delayed until 2014 in an attempt to make the bill seem less expensive than it really was.  The Congressional Budget Office concluded in July that the $938 billion in insurance subsidy spending has nearly doubled, to $1.68 trillion, now that more years of subsidy spending are present in the 10-year budget window.

So when all is said and done, and the gimmicks exposed, the plan President Obama claimed in 2009 would cost “only” $900 billion will in reality spend much more than that – a liberal, and recklessly irresponsible, record that would make many question Obama’s ability, and desire, to take on America’s unsustainable entitlements.

Even if the above fears are unfounded, and President Obama will finally put aside his liberal tendencies, the man who claims that “even if my own party is resisting” entitlement reform, “I will bring them along” appears to be vastly over-estimating his ability to influence the “professional left.”  According to Bob Woodward, Speaker Nancy Pelosi hit the mute button on President Obama during negotiations on the “stimulus” in 2009.  That might be a nice way to avoid listening to someone who has described himself as “long-winded” – but it doesn’t speak well to the President’s ability to influence his own party.

To sum up: President Obama wants Republicans to break their campaign promises after the election – which his advisers already claim he fully plans on doing himself – so that they can negotiate with someone whose health care bill cost twice what he promised, and whose own party’s leaders have tuned him out.  Somewhere, P.T. Barnum must be smiling.

Obamacare’s Prevention Priorities: Mammograms, No; Jungle Gyms, Yes

Last week, the New York Times reported on a study conducted by the Mayo Clinic, which found that the number of women in their 40s obtaining mammograms declined “in the year after an expert panel’s recommendation that women delay regular breast cancer screenings until age 50.”  The “expert panel” in question is the US Preventive Services Task Force – referenced 21 different times in Obamacare, and granted the power by the law to set federal coverage standards for preventive coverage by insurers.

The Mayo study leads to the unsurprising conclusion that if a government board decides a treatment is not “approved,” people will receive less of that treatment.  Empowering a government board will decrease access to preventive care screenings, as insurance companies will likely follow the directives of a federally-backed panel.  So rather than keeping choices between patients and doctors, Washington has effectively short-circuited that process, because the rulings of a government board will lead insurance companies to stop covering preventive treatments.

Unfortunately, it’s not just access to mammograms that may be affected – prostate cancer screening may well be next.  Earlier this year, the US Preventive Services Task Force released its final recommendations regarding prostate cancer screening.  Even before the Task Force’s draft recommendations were issued last October, insurers were already re-evaluating whether or not to cover screening tests in light of the Task Force’s decision.

Yet even as the recommendations from the Preventive Services Task Force have reduced the use of preventive care screenings, the Administration has been promoting “preventive services” elsewhere.  Over the past several months, HHS has been handing out grants from Obamacare’s prevention new “slush fund” to finance things like jungle gyms, bike paths, and crosswalks.  So when it comes to prevention funding from this Administration, the mantra appears to be “Mammograms, no; jungle gyms, yes!”

46 Reasons to Repeal an Unconstitutional Law NOW

46 50 Reasons to Repeal ALL of Obamacare NOW

Today the Supreme Court struck down portions of Obamacare as unconstitutional – states cannot be “dragooned” into expanding their Medicaid programs according to the law’s dictates. However, a list of 50 particularly onerous or egregious provisions in Obamacare (with sections from the statute duly noted) reveals just how much of this bad law remains. By the most generous interpretation, the Court struck down only four of the 50 egregious policies, illustrating why Congress should immediately repeal the entire measure once and for all. Among many other bad policies, the law:

  1. Imposes $800 billion in tax increases, including no fewer than 12 separate provisions breaking candidate Obama’s “firm pledge” during his campaign that he would not raise “any of your taxes” (Sections 9001-9016)
  2. Forces Americans to purchase a product for the first time ever (Section 1501)
  3. Creates a board of 15 unelected and unaccountable bureaucrats to make binding rulings on how to reduce Medicare spending (Section 3403)
  4. Pays over $800 billion in subsidies straight to health insurance companies (Sections 1401, 1402, and 1412)
  5. Requires all individuals to buy government-approved health insurance plans, imposing new mandates that will raise individual insurance premiums by an average of $2,100 per family (Section 1302)
  6. Forces seniors to lose their current health care, by enacting Medicare Advantage cuts that by 2017 will cut enrollment in half, and cut plan choices by two-thirds (Section 3201)
  7. Imposes a 40 percent tax on health benefits, a direct contradiction of Barack Obama’s campaign promises (Section 9001)
  8. Relies upon government bureaucrats to “issue guidance on best practices of plain language writing” (Section 1311(e)(3)(B))
  9. Provides special benefits to residents of Libby, Montana – home of Max Baucus, the powerful Chairman of the Senate Finance Committee, who helped write the law even though he says he hasn’t read it (Section 10323)
  10. Imposes what a Democrat Governor called the “mother of all unfunded mandates” – new, Washington-dictated requirements of at least $118 billion – at a time when states already face budget deficits totaling a collective $175 billion (Section 2001)
  11. Imposes reductions in Medicare spending that, according to the program’s non-partisan actuary, would cause 40 percent of all Medicare providers to become unprofitable, and could lead to their exit from the program (Section 3401)
  12. Raises premiums on more than 17 million seniors participating in Medicare Part D, so that Big Pharma can benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats (Section 3301)
  13. Creates an institute to undertake research that, according to one draft Committee report prepared by Democrats, could mean that “more expensive [treatments] will no longer be prescribed” (Section 6301)
  14. Creates a multi-billion dollar “slush fund” doled out solely by federal bureaucrats, which has already been used to fund things like bike paths (Section 4002)
  15. Subjects states to myriad new lawsuits, by forcing them to assume legal liability for delivering services to Medicaid patients for the first time in that program’s history (Section 2304)
  16. Permits taxpayer dollars to flow to health plans that fund abortion, in a sharp deviation from prior practice under Democrat and Republican Administrations (Section 1303)
  17. Empowers bureaucrats on a board that has ruled against mammograms and against prostate cancer screenings to make binding determinations about what types of preventive services should be covered (Sections 2713 and 4104)
  18. Precludes poor individuals from having a choice of health care plans by automatically dumping them in the Medicaid program (Section 1413(a))
  19. Creates a new entitlement program that one Democrat called “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of” – a scheme so unsustainable even the Administration was forced to admit it would not work (Section 8002)
  20. Provides $5 billion in taxpayer dollars to a fund that has largely served to bail out unions and other organizations who made unsustainable health care promises to retirees that they cannot afford (Section 1102)
  21. Creates a tax credit so convoluted it requires seven different worksheets to determine eligibility (Section 1421)
  22. Imposes multiple penalties on those who marry, by reducing subsidies (and increasing taxes) for married couples when compared to two individuals cohabiting together (Sections 1401-02)
  23. Extends the Medicare “payroll tax” to unearned income for the first time ever, including new taxes on the sale of some homes (Section 1402)
  24. Impedes state flexibility by requiring Medicaid programs to offer a specific package of benefits, including benefits like family planning services (Sections 2001(a)(2), 2001(c), 1302(b), and 2303(c))
  25. Requires individuals to go to the doctor and get a prescription in order to spend their own Flexible Spending Account money on over-the-counter medicines (Section 9003)
  26. Expands the definition of “low-income” to make 63 percent of non-elderly Americans eligible for “low-income” subsidized insurance (Section 1401)
  27. Imposes a new tax on the makers of goods like pacemakers and hearing aids (Section 9009)
  28. Creates an insurance reimbursement scheme that could result in the federal government obtaining Americans’ medical records (Section 1343)
  29. Permits states to make individuals presumptively eligible for Medicaid for unlimited 60-day periods, thus allowing any individual to receive taxpayer-funded assistance ad infinitum (Section 2303(b))
  30. Allows individuals to purchase insurance on government exchanges – and to receive taxpayer-funded insurance subsidies – WITHOUT verifying their identity as American citizens (Section 1411)
  31. Gives $300 million in higher Medicaid reimbursements to one state as part of the infamous “Louisiana Purchase” – described by ABC News as “what…it take[s] to get a wavering senator to vote for health care reform” (Section 2006)
  32. Raises taxes on firms who cannot afford to buy coverage for their workers (Section 1513)
  33. Forces younger Americans to pay double-digit premium increases so that older workers can pay slightly less (Section 1201)
  34. Prohibits states from modifying their Medicaid programs to include things like modest anti-fraud protections (Section 2001)
  35. Includes a special provision increasing federal payments just for Tennessee (Section 1203(b))
  36. Allows individuals to purchase health insurance across state lines – but only if politicians and bureaucrats agree to allow citizens this privilege (Section 1333)
  37. Allows the HHS Secretary and federal bureaucrats to grant waivers exempting people from Obamacare’s onerous mandates, over half of which have gone to members of union plans (Section 1001)
  38. Creates a pseudo-government-run plan overseen by the federal government (Section 1334)
  39. Removes a demonstration project designed to force government-run Medicare to compete on a level playing field with private plans (Section 1102(f))
  40. Gives the Secretary of HHS an UNLIMITED amount of federal funds to spend funding state insurance Exchanges (Section 1311(a))
  41. Creates a grant program that could be used by liberal groups like ACORN or AARP to conduct “public education activities” surrounding Obamacare (Section 1311(i))
  42. Applies new federal mandates to pre-Obamacare insurance policies, thus proving that you CAN’T keep the insurance plan you had – and liked – before the law passed (Sections 2301 and 10103)
  43. Prohibits individuals harmed by federal bureaucrats from challenging those decisions, either in court or through regulatory processes (Sections 3001, 3003, 3007, 3008, 3021, 3022, 3025, 3133, 3403, 5501, 6001, and 6401)
  44. Earmarks $100 million for “construction of a health care facility,” a “sweetheart deal” inserted by a Democrat Senator trying to win re-election (Section 10502)
  45. Puts yet another Medicaid unfunded mandate on states, by raising payments to primary care physicians, but only for two years, forcing states to come up with another method of funding this unsustainable promise when federal funding expires (Section 1202)
  46. Imposes price controls that have had the effect of costing jobs in the short time since they were first implemented (Section 1001)
  47. Prohibits individuals from spending federal insurance subsidies outside government-approved Exchanges (Section 1401(a))
  48. Provides a special increase in federal hospital payments just for Hawaii (Section 10201(e)(1))
  49. Imposes new reporting requirements that will cost businesses millions of dollars, and affect thousands of restaurants and other establishments across the country (Section 4205)
  50. Codifies 159 new boards, bureaucracies, and programs

The Supreme Court may have struck some of these onerous provisions, but the only way to ensure that ALL these provisions are eliminated – and never return – is to repeal ALL of this unconstitutional law immediately.

News Flash: Obamacare a “Massive Undertaking”

The Government Accountability Office released a new report regarding IRS implementation of Obamacare yesterday, and it includes some interesting nuggets.  First, the report’s opening paragraph calls the law a “massive undertaking” for the agency, which must implement 47 separate statutory provisions – yet another reminder of the law’s sweeping scope, and the intrusive reach of the IRS permeating the measure.

Second, the report notes that “implementation costs are expected to reach $881 million through fiscal year 2013, with $521 million of that amount being provided” through the $1 billion mandatory implementation “slush fund” included in the law.  The report also notes that IRS has yet to meet an earlier GAO recommendation regarding a more detailed and up-to-date cost estimate of the agency’s projected spending on implementation.

Third, an organizational chart included in the report (and reproduced below) attempts to demonstrate how the IRS will implement Obamacare.  Note that the word “doctor” and the word “patient” appear nowhere on the chart.

If you still don’t believe that this “massive undertaking” amounts to a massive government intrusion into the health care sector – what you might even call a takeover – the GAO report provides yet more evidence of that fact.

Kathleen Sebelius, Obamacare’s Resident Spendthrift

Do you remember the old TV show “Supermarket Sweep” – the one where people went running wildly through a grocery store, picking up expensive products (and occasionally crashing in the process), in an attempt to spend the greatest amount of money in the shortest amount of time?  Well, that’s not a bad analogy for how HHS is trying to blow through vast sums of Obamacare money before the law gets struck down and/or repealed, as two pieces in this morning’s Wall Street Journal outline.  The first piece, an editorial appropriately entitled “Fannie Med,” discusses among other things Obamacare’s co-op loans.  Even the Administration estimates at least $1 billion in taxpayer funds spent on co-op loans will not be repaid – not least because of the way HHS chose to structure the loans, which place federal taxpayers at the BACK of the line to be repaid, in an attempt to circumvent state requirements regarding insurers’ reserves.

In a separate op-ed on the Journal’s pages, Steven Greer, a former grants administrator for Obamacare’s Center for Medicare and Medicaid Innovation (CMMI), gives his firsthand experience about how that program’s $10 billion “slush fund” is being spent with little oversight or forethought:

Having written numerous other federal grant applications as a medical researcher, I was surprised by the very short time allotted to review 12 applications, each of which ran more than 100 pages.  We had only two weeks to assemble a team and grade the applications on such criteria as the promise of the project design and its workforce goals.  Applications to the government’s National Institutes of Health or the Patient-Centered Outcomes Research Institute, by contrast, undergo months of thoughtful review by scientists who are well-regarded in their fields.  I began to wonder how much CMMI was interested in high-quality input from the grant reviewers.

Of course, CMMI has its supporters; former Medicare Administrator Donald Berwick called it the “crown jewel” of Obamacare.  And little wonder – for as Greer exposes, Berwick’s former employer seems to be a big winner from Obamacare’s $10 billion giveaway:

Dr. Donald Berwick was Administrator of the Centers for Medicare and Medicaid Services from July 2010 to December 2011.  CMMI, which was established during his tenure, started another program called the Partnership for Patients….In December 2011, the Partnership for Patients awarded a contract to the Health Research and Education Trust, which in turn awarded a subcontract to the Boston-based Institute for Healthcare Improvement—which Dr. Berwick ran for 19 years before he moved to Medicare.  A source involved with Partnership for Patients told me about the relationship.

I emailed Dr. Berwick in May to confirm the subcontracts between the institute and the trust.  “I don’t think there are contracts between them, but they’re good friends,” he replied.  He was careful to note that he is no longer the institute’s CEO, though he now works out of the institute’s Boston offices as an adviser.  The Health Research and Education Trust and the Institute for Healthcare Improvement have not responded to requests for information about the subcontract.

(On a related note, has anyone ever questioned why Dr. Berwick never bothered to release tax information from the Institute for Healthcare Improvement that Sen. Grassley requested from him two years ago?  Why does an CMS Administrator who argued for transparency in government – and has claimed in interviews he wants “decision-making to be done in the daylight” – refuse to be transparent about HIS financial dealings?)

Greer’s op-ed also delightfully points out that several of the CMMI grants spend about as much money as they supposedly will save: “George Washington University earned $1,939,127 because it expected to reduce health costs by a mere $1.7 million.  Similarly, the Center for Health Care Services in San Antonio received $4,557,969 to save $5 million.”

Spending money to keep from going bankrupt?  Well, at least on that count, you can’t say they didn’t warn us…

What You Missed Over the Easter Recess

Just in case you were out of town for some or all of the prior two-week recess, here’s a quick rundown of the major events in health care that took place over the break…

Shocker: Obamacare Will Increase the Deficit:  Medicare public trustee Chuck Blahous released a report last week explaining how, after taking into account Medicare double-counting and other unrealistic assumptions, Obamacare will likely increase the deficit by hundreds of billions of dollars.  The White House’s response to the report noted favorable scores from the Congressional Budget Office – even though CBO itself admitted that the major savings assumptions in the law were unrealistic and unlikely to be sustained over the long term.  It’s also worth noting that Democrats’ claims Obamacare will reduce the deficit come from the same party that said the CLASS Act would be solvent for 75 years – which turned out to be a slight over-estimate, as the program was killed as unsustainable before it ever even got off the ground.

Another Obamacare Flop:  The Administration attempted to trumpet its latest round of accountable care organization (ACO) participants as a remarkable achievement.  However, as National Journal pointed out, the number of participating hospital and doctor groups (59 total) is less than one-fourth of the 270 ACOs the Administration predicted would participate last October – indicating that many providers remain reluctant to embrace the Administration’s top-down, government-centric approach to “controlling” health costs.

Thanks to Obamacare, You Can’t Spell Insurance without I-R-S:  The Hill reported that the Internal Revenue Service is in the process of receiving approximately half a billion dollars from a government “slush fund” to implement provisions of Obamacare.  This development comes after liberals derided Republican claims that Obamacare could result in the hiring of thousands of new IRS employees.  Moreover, the “slush fund” transfers come outside of the usual appropriations process, thus leading to a lack of accountability regarding this new funding, as Ways and Means Committee Chairman Camp pointed out in a letter to the IRS.

Liberal Advocate Admits Medicaid Stigmatizes the Poor…  One analyst at a liberal advocacy group told the Salt Lake City Tribune last week that “Medicaid and SCHIP already have a negative connotation in the community.”  A study by the Manhattan Institute bolstered this claim, as it quantified how Medicaid patients suffer from longer wait times and poorer health outcomes.  According to a recent report by the Medicare actuary, Obamacare will ensnare 25.9 million more Americans in a program that even liberals admit stigmatizes the poor.

…As Conservatives Show a Way to Reform the Program:  Even as liberals admitted that the current Medicaid program carries negative connotations, an editorial in the Wall Street Journal illustrated how the program can be enhanced through state flexibility, thereby improving care for patients and saving money as well.  The editorial highlighted a December study by non-partisan analysts at the Lewin Group on Rhode Island’s global compact waiver.  According to Lewin, the flexibility afforded Rhode Island’s Medicaid program “had a positive impact on controlling Medicaid expenditures,” and when it comes to disabled beneficiaries “reduced expenditures for this population while at the same time generally resulting in improved access to physician services.”  The contrast between flexibility yielding success in Rhode Island and Washington’s top-down mandates is stark – at a time when states face budget deficits totaling a collective $175 billion, Obamacare is imposing new unfunded mandates of at least $118 billion, thus undermining rather than supporting efforts like Rhode Island’s success story.

New Polls Confirm Obamacare’s Unpopularity:  A new poll of physicians under 40 showed their disapproval of the health care law – more than twice as many young doctors thought the law would have negative effects (49%) compared to positive outcomes (23%), and Obamacare (along with its myriad regulations) was the number one reason 57% of young physicians were pessimistic about the future of American health care.  A separate Fox News poll found that two-thirds of Americans believe the Supreme Court should strike down all of Obamacare (42%) or its unpopular individual mandate (24%).  The Fox poll also found that a majority (56%) of Americans believe President Obama was trying to intimidate the Supreme Court through his “unprecedented” attack on the Court (which fact-checkers debunked as being wildly inaccurate).

Read the Bill and It Won’t Pass:  A majority (55%) of Americans also told last week’s Fox poll they did not believe Obamacare would have passed if every Member of Congress actually read the bill before voting on it.  Recall that multiple Democrats publicly stated that reading the bill was a waste of time, because “we have to make judgments very fast,” and because “we hire experts” to read the bill instead.

Freedom under Renovations; Omen for SCOTUS’ Consideration of Obamacare?  According to the Architect of the Capitol’s office, workers began renovations on the statue of Freedom Triumphant in War and Peace above the Capitol on April 2.  The restoration and cleaning work is scheduled to be completed by mid-May.  Some may find the timing of this work ironic, as the renovations began the week after Supreme Court arguments on Obamacare, and will be completed by the expected June ruling.  Here’s hoping that Freedom is restored – both literally and metaphorically – later this spring.

White House Budget Summary

Overall, the budget:

  • Proposes $362 billion in savings, yet calls for $429 billion in unpaid-for spending due to the Medicare physician reimbursement “doc fix” – thus resulting in a net increase in the deficit. (The $429 billion presumes a ten year freeze of Medicare physician payments; however, the budget does NOT propose ways to pay for this new spending.)
  • Proposes few structural reforms to Medicare; those that are included – weak as they are – are not scheduled to take effect until 2017, well after President Obama leaves office.  If the proposals are so sound, why the delay?
  • Requests just over $1 billion for program management at the Centers for Medicare and Medicaid Services, of which the vast majority – $864 million – would be used to implement the health care law.
  • Requests more than half a billion dollars for comparative effectiveness research, which many may be concerned could result in government bureaucrats imposing cost-based limits on treatments.
  • Includes mandatory proposals in the budget that largely track the September deficit proposal to Congress, with a few exceptions.  The budget does NOT include proposals to reduce Medicare frontier state payments, even though this policy was included in the September proposal.  The budget also does not include recovery provisions regarding Medicare Advantage payments to insurers; however, the Administration has indicated they intend to implement this provision administratively.
  • Does not include a proposal relating to Medicaid eligibility levels included in the September submission, as that proposal was enacted into law in November (P.L. 112-56).

 

Discretionary Spending

When compared to Fiscal Year 2012 appropriated amounts, the budget calls for the following changes in discretionary spending by major HHS divisions (tabulated by budget authority):

  • $12 million (0.5%) increase for the Food and Drug Administration – along with a separate proposed $643 million increase in FDA user fees;
  • $138 million (2.2%) decrease for the Health Services and Resources Administration;
  • $116 million (2.7%) increase for the Indian Health Service;
  • $664 million (11.5%) decrease for the Centers for Disease Control;
  • No net change in funding for the National Institutes of Health;
  • $1 billion (26.2%) increase for the discretionary portion of the Centers for Medicare and Medicaid Services program management account; and
  • $29 million (5.0%) increase for the discretionary Health Care Fraud and Abuse Control fund.

With regard to the above numbers for CDC and HRSA, note that these are discretionary numbers only.  The Administration’s budget also would allocate additional $1.25 billion in mandatory spending from the new Prevention and Public Health “slush fund” created in the health care law, likely eliminating any real budgetary savings (despite the appearance of same above).

Other Health Care Points of Note

Tax Credit:  The Treasury Green Book proposes expanding the small business health insurance tax credit included in the health care law.   Specifically, the budget would expand the number of employers eligible for the credit to include all employers with up to 50 full-time workers; firms with under 20 workers would be eligible for the full credit.  (Currently those levels are 25 and 10 full-time employees, respectively.)  The budget also changes the coordination of the two phase-outs based on a firm’s average wage and number of employees, with the changes designed to make more companies eligible for a larger credit.  According to OMB, these changes would cost $14 billion over ten years.  Many may view this proposal as a tacit admission that the credit included in the law was a failure, because its limited reach and complicated nature – firms must fill out seven worksheets to determine their eligibility – have deterred American job creators from receiving this subsidy.

Comparative Effectiveness Research:  The budget proposes a total of $599 million in funding for comparative effectiveness research.  Only $78 million of this money comes from existing funds included in the health care law – meaning the Administration has proposed discretionary spending of more than $500 million on comparative effectiveness research.  Some have previously expressed concerns that this research could be used to restrict access to treatments perceived as too costly by federal bureaucrats.  It is also worth noting that this new $520 million in research funding would NOT be subject to the anti-rationing provisions included in the health care law.  Section 218 of this year’s omnibus appropriations measure included a prohibition on HHS using funds to engage in cost-effectiveness research, a provision which this budget request would presumably seek to overturn.

Obamacare Implementation Funding and Personnel:  As previously noted, the budget includes more than $1 billion in discretionary spending increases for the Centers for Medicare and Medicaid Services, which the HHS Budget in Brief claims would be used to “continue implementing [Obamacare], including Exchanges.”  This funding would finance 256 new bureaucrats within CMS, many of whom would likely be used to implement the law.  Overall, the HHS budget proposes an increase of 1,393 full-time equivalent positions within the bureaucracy.

Specific details of the $1 billion in implementation funding include:

  • $290 million for “consumer support in the private marketplace;”
  • $549 million for “general IT systems and other support,” including funding for the federally-funded Exchange, for which the health law itself did not appropriate funding;
  • $18 million for updates to healthcare.gov;
  • $15 million to oversee the medical loss ratio regulations; and
  • $30 million for consumer assistance grants.

Exchange Funding:  The budget envisions HHS spending $1.1 billion on Exchange grants in 2013, a $180 million increase over the current fiscal year.  The health care law provides the Secretary with an unlimited amount of budget authority to fund state Exchange grants through 2015.  However, other reports have noted that the Secretary does NOT have authority to use these funds to construct a federal Exchange, in the event some states choose not to implement their own state-based Exchanges.

Abstinence Education Funding:  The budget proposes eliminating the abstinence education funding program, and converting those funds into a new pregnancy prevention program.

Medicare Proposals (Total savings of $292.2 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 $35.9 billion.

Medical Education Payments:  Reduces the Indirect Medical Education adjustment paid to teaching hospitals by 10 percent beginning in 2014, saving $9.7 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:  Reduces critical access hospital payments from 101% of costs to 100% of costs, saving $1.4 billion, and prohibits hospitals fewer than 10 miles away from the nearest hospital from receiving a critical access hospital designation, saving $590 million.  The budget does NOT include a proposal to end add-on payments for providers in frontier states, which was included in the President’s September deficit proposal.

Post-Acute Care:  Reduces various acute-care payment updates (details not specified) during the years 2013 through 2022, saving $56.7 billion – a significant increase compared to the $32.5 billion in savings under the President’s September deficit proposal.  Equalizes payment rates between skilled nursing facilities and inpatient rehabilitation facilities, saving $2 billion.  Increases the minimum percentage of inpatient rehabilitation facility patients that require intensive rehabilitation from 60 percent to 75 percent, saving $2.3 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 $155.6 billion according to OMB.  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.

Anti-Fraud Provisions:  Assumes $450 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 $590 million; when included in last year’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; no savings are assumed, a change from the September deficit proposal, which said prior authorization would save $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 $27.6 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 $2 billion.

Home Health Co-Payment:  Beginning in 2017, 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 $350 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 budget, this proposal would NOT achieve additional deficit savings.

Medicaid and Other Health Proposals (Total savings of $70.4 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 scores this proposal as saving $21.8 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 $17.9 billion in savings from this proposal – much less than the $100 billion figure bandied about in previous reports last 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 budget once again ignores the governors’ multiple requests for flexibility from the mandates included in the health care law – unfunded mandates on states totaling at least $118 billion.

Transitional Medical Assistance/QI Program:  Provides for temporary extensions of the Transitional Medical Assistance program, which provides Medicaid benefits for low-income families transitioning from welfare to work, along with the Qualifying Individual program, which provides assistance to low-income seniors in paying Medicare premiums.  The extensions cost $815 million and $1.7 billion, respectively.

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 $3 billion; when included in the President’s budget last year, these changes were scored as saving $6.4 billion.

Rebase Medicaid Disproportionate Share Hospital Payments:  In 2021 and 2022, 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 $8.3 billion.

Medicaid Anti-Fraud Savings:  Assumes $3.2 billion in savings from a variety of Medicaid anti-fraud provisions, largely through tracking and enforcement of various provisions related to pharmaceuticals.  Included in this amount are proposals that would remove exceptions to the requirement that Medicaid must reject payments when another party is liable for a medical claim.

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 scores this proposal as saving $11 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 scores this proposal as saving $3.8 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 scores this proposal as saving $1.7 billion.

Prevention “Slush Fund:”  Reduces spending by $4 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.