The Insider: The Shape of Things to Come
House Republicans who have jurisdiction over health care programs have been busy lately. In order to make the programs under their control (Medicare, Medicaid and the Affordable Care Act) conform to the House budget resolution, the Ways and Means and the Energy and Commerce Committees have passed a long list of spending cuts, including eliminating the Prevention Fund, the “Maintenance of Effort” requirement that prevents states from cutting Medicaid eligibility, and funding for health insurance co-ops. They’ve also cut Medicaid payments to U.S. territories, Exchange implementation funding, and CHIP enrollment bonus payments that reward states for doing a good job of improving their enrollment processes and signing up more eligible children. Lastly, to top it off, they’ve increased repayment penalties for people who receive health insurance tax credits and subsequently experience an increase in income.
The truth is very little of this has any chance of becoming law in the near future. Most of what House Republicans have proposed is unacceptable to President Obama and Senate Democrats. One notable exception is that both the president and the House have proposed scaling back states’ use of provider taxes to fund Medicaid, making it a likely place negotiators will go as they try to find health care spending cuts in what promises to be a challenging lame duck session this November.
That session will mark the renewal in earnest of debate over federal policies on taxes and spending, and health care policy will be right at the center of that debate. A confluence of factors—including the immanent imposition of across the board spending cuts as part of the Budget Control Act (triggered by the failure of the “Super Committee” to reach a deal), expiring tax cuts, a need to increase the debt ceiling and the perennial problem with Medicare physician payment—will force a lame duck Congress to reach some agreement on spending cuts and/or revenue increases.
Of course, Congress is unlikely to resolve all of these thorny issues between Thanksgiving and Christmas, but even delaying the big decisions until 2013 comes with a price tag and will force Congress to come up with offsets. This is where provider taxes come back in. It’s one of the few areas identified by both parties as an acceptable place to go for health care savings, which effectively places a big target on the provision.
The larger danger is that in the context of negotiations during the lame duck, Congress will agree to an overall level of spending cuts that will not be possible to achieve without eviscerating federal health programs. To avoid this outcome, here is a modest suggestion of principles that should guide the White House and Congressional leaders as they consider how to move forward in the lame duck and beyond:
- Revenue must be part of the solution. An approach to debt reduction that relies solely or even mainly on cuts will do more harm than good.
- When it comes to health care, focus on system improvements and avoid benefit cuts to Medicare or cost shifting onto state Medicaid programs or other parts of the health care system.
Response to news of consumer rebates suggests insurers are mathematically challenged Thanks to the ACA, insurance policy holders (both individuals and employers) will receive an estimated $1.3 billion in premium rebates this summer. Not included in that total are the additional savings that many policy holders have enjoyed as insurers have worked to keep premiums down to avoid having to pay the rebates in the first place.
A disgruntled AHIP (the insurance industry trade group) issued a press statement cherry picking features of the ACA to argue that the benefit of the rebates would be offset by other features leading to higher costs. As AHIP tells it, the extra benefits that people will get courtesy of the ACA should only be viewed as an additional cost to consumers without an offsetting benefit (excuse me, but isn’t that why they call them “benefits”?). Conspicuously absent from AHIP’s accounting: any acknowledgment that the better coverage resulting from the ACA would reduce consumers’ out-of-pocket costs and, most significantly, that thanks to the ACA, substantial tax credits will be available to bring down premiums for millions of Americans. With this degree of fuzzy math it is no wonder that the industry gets the numbers wrong so often in their rate filings.
Meaning of Medicare Trustees Report, like beauty, is in the eyes of the beholder And speaking of fuzzy math, when the Medicare Trustees released their annual report last week it provoked the usual claims that the sky is falling from those seeking to destroy Medicare in order to save it. Let’s get some perspective here. The Trustees have been forecasting the date when the Hospital Insurance Trust Fund would be exhausted for many years. Sometimes the estimated lifespan of the fund has been even less than the current projection of twelve years. Those dates have come and gone. Yet the fund has not run out of money and the program has not crashed and burned. It’s not going to crash and burn this time either. The truth is federal spending on Medicare can be reduced and the Medicare program can be preserved for beneficiaries today and tomorrow without slashing benefits or turning the program into a voucher system. We can do this by making sure that we are not overpaying for services, protecting the integrity of the program from fraud and payment errors (recent good news on this front), and reducing the amount we spend on expensive care that could be prevented or delivered more cost effectively. To paraphrase Mark Twain, reports of Medicare’s imminent demise are greatly exaggerated.
— Michael Miller, Director of Strategic Policy