Tag: The ACA

Fools’ Gold Rush: Obamacare And The Medicaid “Opportunity”

Aug 27, 2012• 13

By J.D. Kleinke

You know we’ve gone through the looking glass when the hottest health care money on Wall Street is chasing Medicaid.

No, I didn’t mean Medicare, the $560 billion per year federal program for insuring the elderly that has launched a thousand IPOs. The current darling of health care investors is Medicaid, the hybrid federal-state program for insuring the poor that now dominates, and often overwhelms, state government budgets.

Last month, Wellpoint agreed to pay $4.5 billion for Amerigroup, a Medicaid managed care company, representing a nearly 50% premium over Amerigroup’s market price. Not to be outdone, Aetna this past week purchased Coventry for $5.7 billion, which also services Medicaid populations. These deals and several others like them rumored to be in the pipeline have driven up the share prices of Amerigroup’s competitors – other Medicaid managed care companies like Centene and Molinas – in anticipation of the latest round of monkey-see, monkey-acquire deals by health insurers.

Why Medicare Matters

Aug 22, 2012• 3

By Henry J. Aaron

Now that Mitt Romney has picked Paul Ryan to be his running mate, a major national debate on Representative Ryan’s so-called ‘premium support’ plan has become certain. Ryan’s plan would replace the current Medicare program for workers under the age of 55. When eligible, they would receive a flat dollar amount—or voucher—that would cover part of the cost of a health insurance plan. The value of the voucher would be adjusted annually according to a pre-specified index. If health care costs increased faster than that index, enrollees would have to pay the added cost themselves or accept narrowed insurance coverage.

Because that plan would not apply to anyone age 55 or older, supporters claim that older Americans don’t ‘have a dog in that fight.’ For reasons I explain below, that isn’t true, even if one looks only at Representative Ryan’s Medicare proposal. Other elements of the Romney/Ryan health care program have even larger implications for older Americans, but let’s start with the Ryan Medicare plan.

Costs for Seniors Could Rise

The claim that the Ryan plan leaves American’s over age 55 unaffected is untrue because it is likely to raise the amount they have to pay out-of-pocket for insurance. The reason is technical, but easy to understand. The premium for those who stay in traditional Medicare under the Ryan plan would be calculated as under current law, but the average cost of serving those who remain in traditional Medicare would go up as private insurance companies market selectively to those with relatively low anticipated costs.

All Hell Hath Broken Loose

Aug 21, 2012• 46

By Robert Laszewski

I’ve never seen a week in health care policy like last week. The media reports have to be in the thousands, all trying to make sense of the furious debate between Obama and Romney over Medicare.

As someone who has studied this issue for more than 20 years, it has also been more than exasperating for me to watch each side trade claims and for the press to try to make sense of it.

This blog post is quite long because the subject matter is complicated. If you want to cut to the chase, see my conclusion and summary at the end of this post.

Allow me to list a few of the questions people are asking and give you my take on it.

Will current seniors suffer under the Romney-Ryan Medicare plan?

No. Let me start by saying something that will likely surprise you. If I could be king for a day, I would prohibit anyone over the age of 60 from voting in this election. This election is really about the future and the big decisions on the table are about the long-term government spending and entitlement issues that should be made by younger voters who will have to pay for them and will benefit or suffer from them.

Those in their 60s and older are almost surely going to cruise to the end with the benefits they now have.

Whether its Obama’s Medicare plan, based heavily on the Medicare cost control board imbedded in his health reform bill (which doesn’t begin to impact hospital costs until 2020), or the Romney/Ryan Medicare premium support plan (that has no effect on anyone now over the age of 55), today’s seniors’ benefits are insulated from this issue.

The Age Rating Game: Will Older Americans Pay More Under Health Reform?

Aug 20, 2012• 107

By Maggie Mahar

The Affordable Care Act leaves it to the states to decide whether they want to let insurers charge older Americans more for coverage. If a state takes no action, a 64-year-old buying his own insurance in the individual market will pay up to three times more than an 18-year-old. In the small-group market – if a small business employs an unusually large number of older workers – the same 3:1 ratio applies.

Today, in most states, there are no caps on how much insurers can charge a 60-something forced to purchase his own insurance. In the individual market, only New York State bans age rating altogether, and just three other states limit how much premiums can vary, based on age, to less than 3:1. When insurers sell policies to small businesses, Vermont also prohibits age rating, but only five other states cap increases.

To check whether your state shields older boomers in either of these markets, take a look at these charts. (A checkmark in the right-hand column means that age rating is now unregulated in that state.)

Help from the younger generation?

The Way Out of the Wilderness

Aug 17, 2012• 37

By David Dranove

In 1932, the Committee on the Cost of Medical Care identified rising medical costs as a threat to the financial security of millions of Americans. In a series of studies that created the field of health services research, the Committee recommended several strategies for cost containment that reads like a blueprint for today’s cost containment efforts: prevention, price controls, capitation, elimination of unnecessary care, and integration. If it sounds like a précis of my previous two blogs – cut prices and cut quantities – it should. We have known for a long time that those are the only ways to cut spending. And yet here we are, 80 years later, facing a spending crisis that threatens to take down the entire economy.

In my lifetime, we have been subjected to a steady drumbeat of rising medical costs. There have been respites – for a couple of years after Medicare introduced DRGs and for about five years in the 1990s during the heyday of HMOs. While DRGs and HMOs shifted costs down, they did not seem to reverse underlying growth trends, although HMOs did not thrive for long enough to be certain.

Not for lack of trying have medical costs continued to increase. We promote prevention, regulate prices, capitate providers, and review utilization to eliminate wasteful spending. We have seen horizontal integration that led to market power and higher costs, and vertical integration that more often than not created unmanageable bureaucracies. Most of today’s proposals for cost containment can be encapsulated by two words: “Try harder.” The Affordable Care Act gives us free preventive care, stricter price controls, ACOs, and the Comparative Effectiveness Institute. We need radical change but all we get is creeping incrementalism. I will take creeping incrementalism over the do-nothing approach of the previous decade, if only because we could use another respite. But the ACA is no permanent fix.

How Do We Bend the Cost Curve? Reduce the Waste.

Aug 17, 2012• 1

By Wendy Everett, ScD

Health care had its own version of the LeBron James “Decision” last month with the Supreme Court upholding the critically important elements of the Affordable Care Act. Now that the uncertainty is behind us―at least until the November elections―health care leaders can continue preparing their organizations for the changes ahead.

Fixing the system requires reforms at the macro level. But it also takes a symphony of smaller actions happening in concert. As experience bears out, it is difficult to agree upon a collective action with so many competing interests in health care and the partisanship that has gripped politics. But there is a song that we can all agree upon, loud and in unison. Reduce the waste.

Nearly a third of our health care costs come from wasteful spending and inefficiencies that could be avoided. Left unchecked, this is a nail in the coffin of our system; but, if tackled, is a huge cost containing opportunity. By identifying waste in the delivery system and systematically reducing it, we could lower costs without resorting to budget cuts and fees that compromise the quality of care.

A Big Fat Stupid Law??

Aug 16, 2012• 4

By Marion Nestle

Remember menu labeling?

The Affordable Care Act instituted national menu labeling—the posting of calories on the menu boards of fast food chains.

The FDA still has not issued final rules, leaving vast amounts of time for lobbying and pushback.

Now John Carter (Rep-TX) has introduced HR 6174, the anything but “Common Sense Nutrition Disclosure Act of 2012.”

This bill was introduced under lobbying pressure from the pizza and supermarket industries.

Its purpose is to exempt supermarkets and convenience stores from having to post calorie information on prepared foods. This would allow pizza chains to list calories per serving, thereby defeating the entire purpose of the menu labeling law.

The pizza industry learned that it could get Congress to do what it wanted. Even a dab of tomato paste on pizza now counts as a vegetable serving in school meals.

If you thing calorie labeling on pizza might be a good idea, now is the time to write your congressional representatives. Here’s how.

Marion Nestle is the author of What To Eat and is the Paulette Goddard Professor of Nutrition, Food Studies, and Public Health at New York University. Nestle blogs regularly at Food Politics.

Here’s a Question to Ask Romney or Ryan

Aug 15, 2012

By Aaron Carroll, MD

Last week, I noted the significant differences between Paul Ryan’s proposals, from his 2012 budget to Ryan-Wyden to his 2013 budget. I also noted that while it would be tempting to campaign against the 2012 budget, which massively shifted costs onto seniors, his later proposals did that to a far lesser extent.

Or did they?

Governor Romney has endorsed Paul Ryan’s latest plan, which is specific in that it will reduce future Medicare spending by unleashing the power of the free market through competitive bidding. But what if that doesn’t happen? Well, just like the ACA, his law backstops the growth of Medicare spending at GDP + 0.5%.

The ACA is explicit about what will happens if growth goes above that amount. The IPAB will make recommendations on how to cut it. Congress will have to override those recommendations to stop them, and have their own ideas that save just as much. It’s likely those recommendations would involve reducing provider payments. But it’s the hope of those who support the ACA that other provider-based changes, like ACO’s and the excise tax, will keep the IPAB from having to act.

Reviving the Pipeline: A Call to Action For All

Aug 11, 2012• 27

By Andrew Morris-Singer, MD

Annie Lowrey’s July 28 article “Doctor shortage likely to worsen with health law” in the New York Times noted the growing shortage of primary care doctors particularly in economically disadvantaged communities, both in rural and inner-city America. This problem will likely get worse before it gets better as more Americans gain coverage and seek a regular source of care. As the article suggests, training more doctors and incentivizing them to pursue careers in primary care will be a key part of the solution. And it will require a multipronged campaign, using both some of the traditional strategies for workforce renewal and a few unique tactics not typically deployed in efforts to fix health care.

The primary care workforce pipeline had dried up before the Affordable Care Act was passed. Currently, one out of every five Americans lacks access to primary care. As a result, up to 75% of the care delivered in emergency departments these days is primary care . This overcrowds and overburdens EDs, raises costs, and limits EDs’ ability to do what they were designed to do: provide acute, emergency care that makes the difference between life and death. So the primary care shortage threatens our access not only to primary care but also to emergency care.

How did we get here? Many are quick to point to primary care doctors’ low salaries compared to those of their sub-specialist colleagues. Indeed, choosing a career in primary care rather than a sub-specialty means walking away from 3.5 million dollars of additional lifetime earnings.That’s tough to do when you’re looking at $150-200,000 of debt, which is the average debt of an American medical student at graduation.But the crisis in our primary care pipeline goes far beyond the money.

Costs Continue to Rise. What Can Employers Do? The Answer May Be Direct Primary Care.

Aug 10, 2012• 27

By Darrell Moon

The U.S. Supreme Court ruled on Jun 28^th by a 5-4 vote to let the individual mandate portion of the Affordable Care Act (Obamacare) stand. Immediately following, a CEO of one of the nation’s largest insurance companies was asked if people can expect their premiums to go up as this law is implemented. The answer was yes. So what can employers do to protect themselves from the inevitable?

One strategy for driving market incentives back into the healthcare system and driving down costs is called consumer-driven health insurance, and it is growing in popularity. Historically, the consumer or patient has had very little monetary skin in the game when it comes to the cost of healthcare. We go to the doctor and pay our copay, and never have to worry about what it really costs for health care.

Many employers are now trying to incentivize their employees to be as prudent a purchaser of health care as they are of any other product or service. And they’re doing this by offering high-deductible health insurance policies combined with health savings accounts, or HSAs.

For the 50 percent of patients who collectively spend only 3.5 percent of all healthcare dollars, it’s a fantastic alternative. Instead of paying the high premiums for a lower-deductible plan to the insurance company for care you don’t use — that’s money that goes out the window unnecessarily — you can store the money away, accumulating it every year until a health event occurs when you really need it.

To be sure, a big drawback to these high-deductible insurance plans is the negative impact they can have on the five percent of patients who spend 50 percent of all healthcare dollars. Many worry that high-deductible plans will increase the total cost of healthcare because those with chronic healthcare problems won’t get the help they need until their condition gets so bad that they are forced to seek help — when obviously the cost will be much greater. They have a very valid point.