The Congressional Budget Office released an issue brief Tuesday that suggested lifting Medicare’s eligibility age from 65 to 67 would save the federal government 5 percent on projected outlays over the next decade, and only “a small share of those people would end up without health insurance.” The idea has been touted by numerous deficit reduction proposals, including those from Republican Paul Ryan and Democrat Alice Rivlin, the former CBO director.
It’s a bad idea, says Aaron Carroll, a professor at the Indiana University School of Medicine and director of its Center for Health Policy and Professionalism Research. “No one should be under the illusion that the federal government will save money by raising the Medicare eligibility age,” he said in an interview after attacking the report on The Incidental Economist website, which is widely read by health policy researchers and analysts.
First, it’s a cost-shifting plan, not a cost-cutting plan, he pointed out. “Someone has to pay for the health care of those older workers.”
What’s in a name? Everything, it would appear, when it comes to describing Rep. Paul Ryan’s plan to privatize Medicare, which the Republican-controlled House of Representatives backed in its budget resolution late last month. The plan would subsidize seniors’ purchase of private insurance plans instead of enrolling in traditional government-financed Medicare, although that would be preserved as an option. The government would finance a portion of the purchase.
Architects of the plan call it “premium support.” Opponents call it a voucher, which they say will over time lag behind medical inflation and force seniors to pay an ever-growing share of their health care bills.
Ten Republicans joined every Democrat in voting against the resolution, which passed 228-191. The Republican apostates abandoned their majority colleagues largely because they were afraid of being tarred with the voucher label during this fall’s re-election campaign.
And it was that label that Republicans on the House Ways and Means health subcommittee repeatedly attacked during Friday’s hearing on the Republican plan, which has not yet been introduced as legislation. Its details have not yet been scrutinized by health care experts or, more significantly, the Congressional Budget Office. “Premium support is not a voucher,” Ryan, R-Wis., said at the hearing.
Call it the Scott Walkering of America.
Even though tax revenues are finally rising faster than expenses, governors across the nation are recommending more austerity in the budgets they’re presenting to state legislatures this year, the latest survey from the National Governors Association shows.
For the fiscal year beginning July 1, governors are recommending a 2.2 percent increase to $683 billion in general revenue fund spending. That’s down from the 3.3 percent increase in state spending in 2012. Revenue, meanwhile, is projected to rise four percent during the coming fiscal year.
“The public sector has even more uncertainty at this time than the private sector,” said Dan Crippen, executive director of the NGA and former head of the Congressional Budget Office. Citing the looming Supreme Court decision on health care reform, the uncertain levels of federal aid from the “fiscal cliff” negotiations, and talk of tax reform that could cut tax expenditures that benefit state and local governments, “it’s pretty hard for states to plan,” he said.
The U.S. tax system and health care are deeply intertwined. The Republican tax bills hurtling through Congress would make significant changes in this relationship.
The proposed changes, primarily a large cut in the corporate tax rate from 35 to 20 percent, would benefit health care (and most other) companies.
But none of the changes would, in the long run, benefit consumers, the public good, or public health. The major components of the proposed legislation are dangerously ill-conceived and ill-timed in the context of the overall economy and in particular health care policy and spending, which is projected to comprise 20 percent of the nation’s economy in 2025, up from 18.3 percent today.
That’s a difference and increase that reflects several trillion dollars of “additional” health care spending over the next decade. Amid this projected rise, the Trump administration and congressional Republicans propose to reduce the rate of growth of overall federal government spending and shift a sizable portion of health spending to other government entities and programs. These include the Pentagon, national security, homeland security, infrastructure projects, and—most notable in the context of the tax bills—a tax cut for corporations and upper income Americans.
It doesn’t and won’t add up—unless two (unlikely) things happen: (1) the economy grows at twice to three times the rate most economists predict and (2) the rate of growth in health spending is dramatically constrained.
Absent both, the Republican tax bills will cause the annual federal budget deficit and the nation’s long-term debt to balloon even more than already forecast.
The toxic polarization of Washington politics might lead even the most stubborn optimist to abandon any hope for bipartisanship on healthcare. Despite endemic pessimism, the flagging efforts to forge a Republican consensus on “repeal and replace” might set the stage for overdue efforts at compromise. Congress will be tempted to move on to more promising areas such as tax reform and infrastructure funding. That temptation should be resisted. The threat to the nation posed by the current state of American healthcare calls for Congress to resurrect the long lost spirit of bold bipartisanship.
Before considering opportunities for compromise, the obstacles confronting the GOP reform efforts are worth considering. Republicans face the same stubborn reality that confronted the framers of the Affordable Care Act (ACA): Expensive services cannot be covered by cheap insurance. The cost of U.S. healthcare has simply priced low income and even middle income individuals out of health insurance. Without subsides, they get left behind. The Congressional Budget Office’s estimated that the Ryan plan would result in 24 million losing coverage underscored the political divide: Confronted with unmanageable healthcare costs, most Republicans would opt to reduce public expense whereas Democrats plus a handful of Republican moderates prefer more extensive coverage. The effort of the GOP leadership to split the difference by preserving some residual subsidies and the structures supporting them—“Obamacare light”—remains unacceptable to many on the right. No clear middle ground has yet emerged.
Fake news has replaced responsible journalism. It’s hard to know what to believe. It wasn’t long ago that supermarket tabloids like National Enquirer were considered fake news. Now it seems the Enquirer and TMZ may be more reliable sources of accurate news than the New York Times or Washington Post.
Government agencies aren’t immune from the fake news trend either. The Congressional Budget Office describes itself as, “Strictly nonpartisan; conducts objective, impartial analysis; and hires its employees solely on the basis of professional competence without regard to political affiliation.”
I’ll bet most newspapers and television news networks say the same about their own objectivity.
The CBO analyzed the American Health Care Act of 2017, a lame effort by Republicans to repeal and replace Obamacare. Passed by the House, it’s now on to “the greatest deliberative body in the world.”
THCB readers are well aware this coming week Senate Republicans plan to begin debate on passing their amended version of the House-passed American Health Care Act (AHCA), titled the Better Care Reconciliation Act. As of today, June 23rd, immediate reactions by Republican senators to the June 22nd released discussion draft have been limited largely because members immediately left town after the draft’s release. The Congressional Budget Office’s (CBO’s) score, that will again be influential, is expected this Monday or Tuesday. Senate debate on the legislation will likely begin next Wednesday with a vote expected late Friday or early Saturday morning, or just prior to their week-long July 4th recess. Here is an assessment of the legislation’s prospects:
The U.S. Senate has an opportunity next week to hammer the final nail in the coffin of the failed “sustainable growth rate” (SGR) formula for Medicare physician payment. At the same time, it can move the U.S. closer to a system that pays doctors for the quality of care they deliver, not the quantity.
Bear in mind that Medicare pays about a third of the tab each year for all physician services in the U.S.
For those who have not been following this issue (and I don’t blame you, it’s convoluted, even tortuous), here’s a quick recap:
The House in a rare bipartisan vote (392-37) voted on Thursday, March 26 to repeal the SGR formula, which has been in place since 1998. The formula, part of the Balanced Budget Act of 1997, was intended to constrain Medicare spending by pegging annual physician fee updates to a target based on the growth in overall physician spending and the gross domestic product.
The formula never worked. I’ll spare you the details on that. Suffice is to say that the disparities between the growth in physician costs and GDP over the period 2002-2013 were such that reducing physician fees each year by the amount the formula dictated were—well, let’s just say they were very politically distasteful. Continue reading…
There are dozens of ways to take stock of the Affordable Care Act as it turns 5 years old today. According to HHS statistics:
- 16.4 million more people with health insurance, lowering the uninsured rate by 35 percent.
- $9 billion saved because of the law’s requirement that insurance companies spend at least 80 cents of every dollar on actual care instead of overhead, marketing, and profits
- $15 billion less spent on prescription drugs by some 10 million Medicare beneficiaries because of expanded drug coverage under Medicare Part D
- Significantly more labor market flexibility as consumers gained access to good coverage outside the workplace
Impressive. But the real surprise after five years is that the ACA may actually be helping to substantially lower the trajectory of healthcare spending. That was far from a certain outcome. Dubbed the Patient Protection and Affordable Care Act for public relations purposes, there were, in fact, no iron clad, accountable provisions that would in the long run assure that health insurance or care overall would become “affordable.”
ACA supporters appear to have lucked out—so far. Or maybe, just maybe, it wasn’t luck at all but a well-placed faith that the balance of regulation and marketplace competition that the law wove together was the right way to go.
To be sure, other forces such as the recession were in play—accounting for as much as half of the reduction in spending growth since 2010. But as the ACA is once again under threat in the Supreme Court and as relentless Republican opposition continues, it’s worth paying close attention to new forecasts from the likes of the Congressional Budget Office (CBO) and the actuaries at the Centers for Medicare and Medicare Services (CMS).
The ACA is driving changes in 17 percent of the U.S. economy that, if reversed or interrupted, would have profound impact on federal, state, business, and family budgets. A quick look at some important numbers follows:
I’m hearing a lot of the lazy “but what are the political implication” perpetual horse race questions from the media about recent developments surrounding the Affordable Care Act. That’s fun Inside-the-Beltway stuff, but in the mean time there are real people who are likely to be helped and hurt with matters as essential as their health. So, what I am not hearing enough of yet, however, are tough, substantive questions that get to the heart of whether the Affordable Care Act is going to be stillborn.
Here are some questions that I think intelligent journalists and blogger ought to be asking in light of recent developments with the Affordable Care Act. Getting answers in many cases may take persistent questioning and closer scrutiny of existing documents. In others, FOIA requests may be needed.
1. Actual v. Anticipated Age Distributions in the Exchanges
What is the age distribution by state and in the aggregate of persons who it is claimed have enrolled in Exchange-based plans under the Affordable Care Act? Once we have this data, we can compare it to (a) census data on the age distributions in the various states and (b) any prior estimates on what the age distribution of Exchange enrollees would be such as those described in this government document.
If there is a significant difference between the age distribution encountered thus far and the anticipated age distribution, that increases the probability of the ACA succumbing to an adverse selection death spiral.