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Tag: Roger Collier

After Months of Thought Senate Republicans Propose Obamacare Lite

No-one can say any longer that Senate Republicans are entirely deaf to calls to describe how they would replace the much maligned Affordable Care Act.

This week, three senior GOP senators (Orrin Hatch, Tom Coburn, and Richard Burr) announced their proposed Patient Choice, Affordability, Responsibility, and Empowerment (or Patient CARE) Act. Given that each of this group is a heavyweight mainstream Republican and that Senator Coburn is one of the few physicians in the Congress, the draft Act deserves a serious look.

Although the first part of the draft would repeal the ACA, other parts would continue a number of the ACA’s reforms while introducing some changes in attempts to control costs and reduce the numbers of uninsured, creating a kind of Obamacare Lite.

The draft proposes to continue the ACA’s ban on lifetime insurance caps, its coverage of dependents up to the age of 26, and the ACA’s savings in Medicare costs. It also continues, although in a weaker form, the ACA’s subsidies for low-income individuals and the ban on medical underwriting, and allows states to continue to operate insurance exchanges (although without any federal funding).

On the other hand, the three parts of the ACA that have taken the most heat from Republicans – the individual mandate, the Medicare IPAB, and the expansion of Medicaid eligibility – would all be eliminated.

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The Republican Dilemma

What a difference a few weeks make. Just as Republicans were desperately trying to extricate themselves from the fiasco of tying budget passage and debt ceiling legislation to repeal of the Affordable Care Act, the White House came to their rescue with its disastrous healthcare.gov start-up.

It’s now looking like the most egregious healthcare.gov glitches will be fixed by year-end, but with enough problems remaining in 2014 to continue to provide fodder for conservative (and other) critics. Unfortunately for the administration, just as the technical bugs are ironed out the spotlight will move to other aspects of Obamacare.

Premiums are going to take a jump next year, reflecting the lower than projected enrollment by the young and healthy (thanks in part to the healthcare.gov fiasco and the confusion created by Presidential and Congressional attempts to allow non-compliant plans to be extended). There’s a good chance of wholesale cancellations, too, as some insurers take a long look at the unhealthy business they’ve acquired and decide to abandon the exchange market. And it’s almost a given that every other increase in premiums or cut in coverage or cancellation of insurance will be blamed on the upheaval of the Affordable Care Act.

It’s enough to make gleeful Republican leaders believe in the Tooth Fairy.

But will the Tooth Fairy continue to deliver, notably in the Congressional midterms in 2014 and the Presidential election in 2016? The public attention span is notoriously short, and while the current chaos may influence the 2014 midterms, by 2016 the healthcare.gov disaster is likely to be a fading memory. Barack Obama won’t be running for reelection, so harping on the present White House’s incompetence will have limited impact. And while the eventual imposition of IRS fines on those still without coverage will certainly generate a new round of outrage–even assuming the IRS gets the calculations right–Hilary Clinton, or whoever the Democratic candidate turns out to be, will reasonably be able to ask “So where was the Republicans’ better idea?”

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Reforming Health Reform

It may say something about expectations for the Affordable Care Act that the simplistic “just repeal Obamacare” cries of Congressional Republicans are starting to be supplemented by proposals for its replacement.

The most detailed so far is from the conservative American Enterprise Institute, which has published an unexpectedly non-doctrinaire study authored by Harvard professor Michael Chernew and seven other respected academics.

It’s far from perfect, but it’s worth reading.

Structural details of the AEI proposal, modestly titled “Best of Both Worlds,” aren’t always clear (page 1 lists four “principles,” page 5 lists five “priorities”, and page 16 lists three “major planks”), but it does attempt a bipartisan approach, combining ideas from left and right.

Some of these ideas have been contained in other proposals, such as those of Wyden and Bennett and Fuchs and Emanuel (which may damn the AEI proposal in right-wing eyes), and most recently in a THCB piece by Martin Gaynor. They include the elimination of the employer coverage tax preference, the provision of “premium support” subsidies for most individuals, and the establishment of a national insurance exchange. Together, they are designed to encourage individual choice and responsibility and to maximize competition between insurers, while removing some of the inequities of the present system (and of the ACA).

The AEI proposal assumes that eliminating the employer coverage tax preference will result in most individuals obtaining coverage through a national exchange, with national regulation of insurance plans. Current Medicaid eligibles will be included, with the replacement of acute care Medicaid funding by subsidies for conventional coverage. All individuals will be able to choose between fully-subsidized “basic plans” and more generous partially-subsidized options, typically with substantial deductibles tied to income and health status. Insurers will be encouraged to offer multi-year coverage and, unlike in the ACA, medical underwriting will be allowed. The only government financing will be for premium subsidies, to be funded by the additional income and payroll tax revenues resulting from elimination of the employer tax preference and by redirecting federal and state Medicaid payments.

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Paul Ryan Is Right (And Wrong)

Having cost the Republican Party a Congressional seat earlier this year with his plan to turn Medicare into a voucher program, House Budget Committee Chair Paul Ryan is back with an even more sweeping health care proposal.

Ryan’s latest offering, unveiled in a speech a week ago at Stanford University’s conservative Hoover Institution, is nothing less than a blueprint for replacing the Affordable Care Act with a consumer-driven model that would eliminate the current tax-exempt treatment of employer-paid health insurance.

Is Ryan right? Or wrong?

Ryan believes that exempting health care benefits from employee income tax leads to insurance choices that are unnecessarily costly (since they are effectively subsidized), insufficiently tailored to employee needs (since few choices are offered), inadequately valued (since the employee isn’t paying), and unreasonably tie employees to their jobs (since they may not be able to move without switching insurance). He also believes the present system is unfair: higher-paid employees get a greater tax advantage, while employees of smaller businesses have fewer (or no) options at higher prices than their peers in larger corporations.

He’s right! Common sense says that people are likely to choose the most generous coverage available if it is free or offered at a very low price, while employers—especially those who must negotiate union contracts—see tax-subsidized health insurance as a “better buy” than salary payments.

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Mandate On Its Way To the Supreme Court?

It may have looked like a non-event, but it was a significant one.

Monday September 26 was the last day on which the Obama administration could ask the Eleventh Circuit Court of Appeals to reconsider its three-judge panel’s ruling that the Affordable Care Act’s individual mandate was unconstitutional. The fact that the Justice Department took no action almost certainly means that its intent is to ask the Supreme Court to decide the issue.

The administration’s thinking was most likely dependent on three factors. First, given that the full Eleventh Circuit is considered even more conservative than the three-judge panel that struck down the mandate, the only advantage of a second hearing would have been to delay consideration by the Supreme Court. Against this was presumably factored the political risk of a further well-publicized rejection of the mandate providing additional ammunition for opponents of reform.

Second, the administration may still be able to delay a Supreme Court decision either by filing its request for a hearing at the last possible moment in November, or even by asking for a filing extension—something that the Court might be willing to consider, given the potential impact of a decision in the middle of a presidential election.

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And What Happens if the Individual Mandate is Struck Down?

An alarming article in Politico.com looks at what could happen if the Supreme Court determines that the Affordable Care Act’s individual mandate provision is unconstitutional—something that the current conservative leaning of the Court seems to indicate is somewhat more likely than not.

Assuming that such a possible decision by the Court follows that of the Eleventh Circuit Court of Appeals in ruling that the mandate is unconstitutional but the remainder of the ACA may stand, the Politico.com article anticipates some potentially disastrous consequences.

The provisions of the ACA—some of them already in force—include guaranteed issue, elimination of annual and lifetime limits, and a ban on basing premiums on health status, essentially decoupling coverage and premiums from insurance risk. Without the requirement for almost everyone to have coverage, there will be nothing to ensure that the risk pool contains a large percentage of individuals in good health as well as those with medical problems, and nothing to stop anyone from waiting until they’re sick or injured to demand coverage.

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Attacks on IPAB Gather Strength—And Waste Energy?

The Washington Post reports that the Affordable Care Act’s Independent Payment Advisory Board, intended to constrain Medicare spending increases, is under increasing pressure from Republicans, health care lobbyists—and a significant number of Democrats.

As specified by the ACA, the IPAB will consist of fifteen health care “experts” to be appointed by the president and confirmed by the Senate, with authority to make cuts to Medicare if spending exceeds specified targets, starting in 2015. Congress could overrule the panel, but only by mustering a super-majority in the Senate or by creating an alternate plan to save the same amount.

The ACA imposes narrow limits on the IPAB. By law it cannot ration care, cut benefits, change eligibility rules, or raise revenue by increasing beneficiary premiums or cost-sharing, nor can it—until 2020—reduce payments to hospitals. This means that the brunt of any IPAB-proposed savings will fall on physicians and drug and medical device companies.

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Interpreting the Draft Insurance Exchange Regs

The Obama administration’s progress—with just a few stumbles—towards health care reform implementation took another major step this past week. In a carefully chosen small business setting—a Washington DC hardware store—HHS Secretary Kathleen Sibelius released draft regulations for the health benefit exchanges called for by the Affordable Care Act.

The exchanges, required to be established for every state, are predicted to serve some 24 million consumers by 2019 (provided that the ACA is neither significantly changed nor found unconstitutional), with the majority receiving federal subsidies to help pay for coverage.  So far, a dozen states have enacted bills to create exchanges, while in nine states such legislation has failed.

Responding to strident opposition to the ACA requirements from conservatives and from many business owners, Secretary Sibelius emphasized the flexibility of the draft regulations, which would allow considerable variation among states, give participating businesses considerable latitude in coverage selection, and interpret states’ readiness for exchange operation more loosely than implied by the ACA itself.  In describing the intent of the exchanges, she stated that they will “offer Americans competition, choice, and clout.”

Well, maybe, depending on one’s interpretation of the draft regs.

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Another Legal Round – With a Major Misstep?

The appellate court hearing in Atlanta a week ago on the Affordable Care Act’s constitutionality, one of a series along the inevitable road to the Supreme Court, showed that the opposing legal arguments are beginning to be firmly established—with each seeming to confuse the purchase of health insurance with the purchase of health care.

The Atlanta panel of three judges, with both Republican and Democratic appointees, heard arguments for and against the earlier ruling by Judge Roger Vinson in Pensacola that the individual mandate was unconstitutional and so central to the ACA that the entire act should be invalidated, and specifically that while the Commerce Clause of the Constitution gave the government authority to regulate interstate commerce, it did not allow Congress to penalize people for the “inactivity” of declining to buy a commercial product.

Former Bush administration Solicitor General Paul Clement, arguing in support of the Vinson decision, agreed that while it could be permissible for Congress to require insurance or other payment by those being treated in an emergency room, because they would already be in the “stream of commerce,” it was a very different matter to require them to pay prospectively for future care.

 

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Much More Reform Needed for Medicare?

This week’s startlingly gloomy annual report from the Trustees of the Medicare Trust Funds lent new urgency to the need for further Medicare expenditure reforms. Whether Washington DC politicians will respond with more than sound bites is less likely.

The Trustees’ report shows a dramatic deterioration—even based on the most optimistic assumptions— in the financial position of the Part A Trust Fund, along with expectations of continued faster-than-GDP growth for Parts B and D.

Compared with the prior year’s Trustees’ report, which forecast that the Part A Fund would run out of money in 2029, the latest report estimates that the fund will dry up in 2024—five years sooner. The reasons for the sudden acceleration of financial disaster include a significant drop in revenues from taxes on workers’ earnings due to the ongoing recession, and new forecasts of longer life spans for beneficiaries.

The report also includes new forecasts for Medicare Part B and Part D, which operate on a pay-as-you-go basis using mixes of beneficiary premiums and general federal monies. While Parts B and D will not exhaust their respective trust funds, they will have increasing impacts on the deficit as their federal subsidies are forced to increase. Medicare B costs are projected to grow at a 4.7 percent annual rate (based on current law), and Medicare D at a 9.7 percent rate through 2020, compared with forecasts of 5.2 percent annual GDP growth.Continue reading…