Posts Tagged ‘Medicare’

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The Morning After

Tuesday, March 12th, 2013

OK. Sequestration has happened. That means funding cuts for community health centers, public health and medical research. Medicare provider payments will be shaved by two percent while Medicaid and CHIP are exempt. VA health benefits are also exempt, but the Indian Health Service is not. Though, like Medicare provider payments, cuts are limited to two percent.

Sequestration is not only bad health policy, it is also bad economic policy since it will shrink the economy and could push us back into a recession. 

On the other hand, being against sequestration is not enough because bad as it is, it could be worse. Not only are many programs for low-income people protected, but cuts are balanced between military and domestic spending. We are actually better off if the alternative is a bad deal – e.g. cuts greatly exceed revenue, military spending is spared, social spending is hit hard, and health care cuts fall heavily on beneficiaries rather than on weeding out waste, inefficiency and low-value spending.

For the most part, we have yet to feel the effects of sequestration and won’t right away. Unlike a government shutdown, sequestration is more like a slow drip than a sudden convulsion. But the pain will be real. The questions for advocates is what do we have to do now? Can we roll back the cuts? Can we continue to protect Medicare and Medicaid benefits? To answer those questions, we need to understand how we got here and why.

The blame game

Of course, both sides blame the other. House and Senate Republican leaders have lambasted the President for not offering an alternative (even though he did, just not one they like), while for weeks leading up to the deadline, President Obama traveled the country and took to the airwaves trumpeting the ill effects of sequestration and calling on Congressional Republicans to replace the automatic cuts with a more balanced approach that includes new revenue.

Who is responsible for sequestration, and at this point does it matter? The answer is both Congressional Republicans and the President are responsible, and yes, it does matter.

Congressional Republicans are fundamentally responsible for sequestration.

The overwhelming preference of Republicans to resist taxes at all costs and demand cuts in Medicare, Medicaid, Social Security and other federal programs, (the opposite of the preferences of the American people by the way) is the core cause of sequestration. As long as “no new revenue” remains the Republican Party mantra, then sequestration will remain in force, for better and for worse. For worse because it means there is little chance of restoring cuts in the short run. For better because it also means there is little willingness to consider Medicare or Medicaid cuts within the Democratic caucus.

What about the Democrats?

Most of the blame lies with Congressional Republicans. However, President Obama also shares the blame—and not for the dopey reason that Bob Woodward says (Obama brought up the sequester idea first)—but because there are many things the administration did or didn’t do over the past several years that helped bring us to where we are today. The highlights include: embracing the politics of austerity even during a time of economic weakness; negotiating with Republicans over the debt ceiling; and, most recently, decoupling the debate about the expiring Bush tax cuts from sequestration decisions and the debt ceiling, thereby giving away most of his leverage.

As to why it matters, it’s important to remember the President remains committed to a “grand bargain” of spending reductions and tax increases. While most of the President’s policy proposals are progressive, some are decidedly not—including reductions in Medicare, Medicaid and Social Security benefits. Not only that, but some of his best policy proposals—reducing Medicare overpayments for prescription drugs—face tough sledding in Congress not only from Republicans, but also from Democrats.

The greatest danger for Medicare and Medicaid beneficiaries comes if Republicans ever soften in their opposition to new revenue. In that case, the President’s desire for a grand bargain coupled with the reluctance of many Democrats to confront the powerful interest groups who profit from waste and inefficiency in health care could lead to much deeper benefit cuts than the relatively modest, but still troubling changes currently backed by the White House.

Now what?

The next round in the game of serial fiscal chicken is passage of a new Continuing Resolution, which must be in place by end of March or we will face government shut down. While there will certainly be some skirmishes, government shutdown seems pretty unlikely. At the same time, it is also very unlikely sequestration cuts generate enough heat to create deal that includes revenue. That means the status quo continues at least until the next fiscal face off when the debt limit has to be raised again this summer.

A three part agenda for advocates

As the deficit wars drag on through the summer, people who want to protect Medicare and Medicaid benefits have to keep up the pressure on Congress and the White House for a three-part agenda:

  • First, new revenue must be part of any additional debt reduction strategy.
  • Second, budget savings must not be tilted in favor of military spending and against domestic needs.
  • Third, any savings that are obtained from federal health programs should come from reducing overpayments to drug companies, insurers and providers and improving public health, not from cutting benefits. (You can read about Community Catalyst’s recommendations for achieving health care related budget savings without hurting Medicare and Medicaid beneficiaries here.)

Recent initiatives, such as the letter sent by more than 100 members of Congress opposing any cuts in benefits are a good start and advocates should recognize these efforts by thanking their members of Congress. But it’s only a beginning. We’ve bungee-jumped off the fiscal cliff and it is a long climb back to the top.

– Michael Miller, Director of Strategic Policy

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Takeaways from “The Dual Agenda: Better Care at a Lower Cost?”

Monday, June 18th, 2012

On June 1st, with the generous support of The Atlantic Philanthropies, The John A. Hartford Foundation and the Robert Wood Johnson Foundation, Community Catalyst brought together advocates, providers, policymakers, funders, and technical experts to discuss the proposed demonstration projects to integrate care for people who are dually eligible for Medicare and Medicaid (“dual eligibles”). These demonstration projects are a joint federal and state experiment to test whether it is possible to reorganize the way services are delivered and financed for dual eligibles, and to simultaneously improve the quality and stabilize the cost of their care. Twenty-six states have submitted proposals, and advocates from 13 of those states were at the conference.

Dual eligibles are among the most vulnerable people in the country. Care for them is complex, often necessitating long-term services and supports. Conference participants heard about the opportunity of these demonstrations from innovative mission-driven programs like from PACE (Program for All Inclusive Care For the Elderly) which is operational in 29 states, and plans like the Commonwealth Care Alliance in Massachusetts, and Independence Care in New York, which have been successful in caring for people who are dually eligible.

Conference participants also discussed the risks involved in reorganizing the health of this vulnerable population. Implementation will be challenging and there are “sharks in the water.” The dual eligibles have gotten the attention of some governors, who are concerned about holes in their budget, and of insurers, who have previously shown no interest in serving this population. Many of the proposed state plans are not well developed. Conference attendee Chris Langston, Program Officer for The Hartford Foundation, blogged about a number of these risks after reviewing three of the state plans: “We are on the verge of putting millions of people into new but untested financing and delivery models in a period of unprecedented budget strain and financial disruption,” he writes.

Participants also wrestled with difficult technical issues such as establishing meaningful quality measures and creating appropriate payment mechanisms to promote better care. They also had the opportunity to hear from Melanie Bella, Director of the Medicare-Medicaid Coordination Office, and others from CMS and HHS who were at the conference to hear the concerns and answer questions.

The dual demonstration project could be one of the most significant provisions of the Affordable Care Act. It could provide the opportunity to improve the lives of duals and to stabilize costs. But everyone at the conference acknowledged the need for continued connection, support and resources for advocates, who will play an important role in ensuring new care models are responsive to the specific needs of the people being served.

– Rob Restuccia, Executive Director

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The Insider: Leave the money in small, unmarked bills…

Monday, May 21st, 2012

Last week Speaker of the House John Boehner delivered a ransom note to the American people. The note said: “Give me tax breaks for the rich and benefit cuts for the elderly, people with disabilities and low and moderate income families or I’ll wreck the global economy. You have until December to pay up.” OK that isn’t exactly what Boehner’s statement said, but that is what his insistence that the House will not authorize the U.S. to pay its debts after December means in effect.

Remember the last time House Republicans held the full faith and credit of the US government hostage? We got a rating downgrade on U.S. government debt as well as the “Super Committee” process that resulted, after that committee deadlocked, in an across the board cut scheduled to go into effect in January 2013. Mr. Boehner and House Republicans have proposed a noxious stew of proposals—retain tax cuts for the rich (set to expire in January 2013), cancel scheduled cuts in military spending and replace them with deeper cuts in health care, social welfare, environmental protection and education. Then they require still further cuts in domestic spending equal to the amount the debt ceiling is raised—that would result in draconian cuts to Medicare and Medicaid, a move that would be a disaster for ordinary Americans and would probably trigger another recession.

In a case of listen to what I say, don’t watch what I do, a particularly interesting feature of the House Republican proposal is that notwithstanding their incessant attacks on the Affordable Care Act for reducing Medicare spending, they actually propose to retain all of the cuts in Medicare assumed in the ACA and in the sequester. Then they cut even deeper.

What to read while you are waiting for SCOTUS

As the clock ticks down toward a Supreme Court ruling on the constitutionality of the ACA, the tension is mounting. How to pass the time? Read this piece in the New York Review of Books by New York University law professor Ronald Dworkin. It may not convince you that the Supreme Court will uphold the ACA but it clearly lays out why they should.

 – Michael Miller, Director of  Strategic Policy

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Consumers: The Key to Successful Innovation

Thursday, May 17th, 2012

Last week, Center for Medicare and Medicaid Innovation (CMMI) announced the first group of organizations for Health Care Innovation awards. As readers may already know, CMMI was established by the Affordable Care Act (ACA) to test innovative payment and delivery models that have the potential to reduce costs while preserving or enhancing the quality of care. The awards recently announced are part of CMMI’s Health Care Innovation Challenge, which is granting up to $1 billion to applicants who can implement the most compelling new ideas to deliver better health care and to improve care and lower costs to people enrolled in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), particularly for those with the highest health care needs. Awards range from approximately $1 million to $30 million for a three-year period and focus on key CMS priorities areas:

  • • Workforce Development and Deployment
  • • Speed to Implementation
  • • Model Sustainability

This is exciting stuff. There isn’t one magic bullet to solve the problems of low-quality, uncoordinated care and escalating health care costs. The CMMI grants will provide much-needed investments in promising approaches across the country to see if they can be brought to scale and expanded.

This a particularly wonderful opportunity for grantees like Cooper University Hospital, in Camden, New Jersey, which was already testing an innovative model of care and now can expand the model even further. Using its new CMMI grant, Cooper will continue to work with Camden Churches Organized for People (CCOP), a faith-based community organization affiliated with the PICO National Network, and Camden Coalition of Healthcare Providers (CCHP), which is led by Dr. Jeffrey Brenner. For the last few years, CCOP and CCHP have been working together to help low-income Camden residents improve their access to health care and reduce avoidable emergency room visits. Now, both will be working with Cooper to reach out to even more Camden residents and “super-utilizers“ to improve their health. CCOP’s role will be to work with Cooper to identify and train 14 health care workers to serve as part of multidisciplinary care teams.

Cooper’s decision to work in partnership with consumer advocates is a clear acknowledgement that their participation is one of the keys to success. The Innovation Challenge presents a unique opportunity for advocates and community-based organizations to work with hospitals, providers and payers to develop a truly patient-centered delivery system.

The next announcement of CMMI grantees is slated for early June 2012. We hope CMMI – and their grantees – will take their cues from Camden and prioritize grants that build in consumer involvement from the start.

Readers can find detailed project descriptions of all grantees on the CMS Innovation Center website.

– Leena Sharma, State Advocacy Manager, Integrated Care Advocacy Project

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The Insider: Second Anniversary Check-in on the ACA

Tuesday, March 20th, 2012

With today’s blog we welcome back “The Insider,” Community Catalyst Policy Director Michael Miller, who will continue to provide an “inside out” perspective on major policy and political developments in the health policy arena. Though today’s blog is very Affordable Care Act-centric, future Insiders will delve into other non-ACA hot button health care issues.

More March Madness
The folks who want to restrict women’s access to contraception simply don’t know when to quit. The best available polling shows that a majority of the public supports the ACA requirement that contraception be made available without cost-sharing with an exception for churches or other houses of worship. Although certain segments of the population (Republicans and white evangelical Protestants) are less supportive, independent voters are very supportive of the rule. So politically, the contraception jihad is clearly a loser. Interestingly, the Catholic Bishops notwithstanding, Catholics overall are more supportive of contraception coverage than the general population, and non-whites who identify as either Protestant or Catholic are even more supportive (so there is little chance the issue will drive Hispanic voters away from Democrats). But since the furor shows no signs of abating, here are two points too often overlooked in the debate.

First, employers were already prohibited from discriminating against women by refusing to cover contraception. In addition to numerous state laws, back in 2000, the Equal Employment Opportunity Commission ruled that refusal to cover contraception was a violation of the Civil Rights Act as amended by the Pregnancy Discrimination Act. The main thing the ACA actually does is remove the associated cost-sharing.

The second point is that health benefits don’t belong to employers, they belong to workers. Workers earn the benefits and give up wages in order to secure them. Therefore, the preferences of employers, religious or otherwise, are essentially irrelevant (or should be).

Pretzel Logic
The ACA takes numerous steps to reduce the growth in health care spending. An effort to repeal one of those provisions, the Independent Payment Advisory Board (IPAB) created to develop ways to reduce Medicare spending, is likely to hit the House floor this week. Opponents of IPAB contend that the board’s recommendations will result in health care rationing or put government bureaucrats between patient and doctor. The truth is that IPAB is statutorily prohibited from reducing Medicare benefits.

As the House prepares to bring an IPAB repeal bill to the floor later this week, a number of Democratic supporters of the ACA appear poised to join in the IPAB repeal effort. Those Democrats who voted for the ACA and against the House Republican budget that proposed turning Medicare into a voucher program and are now contemplating a vote against IPAB are becoming nearly Romneyan in their ideological contortions. If you are against cutting benefits and increasing cost-sharing for Medicare beneficiaries, as proposed by the Republicans, and you are for reducing federal health spending, as would be achieved by the ACA, then voting against IPAB makes no sense. The alternative is likely to be the very kinds of Medicare cuts these Democrats have previously opposed.

To be sure, IPAB is not perfect. In particular it could be made better by making sure the board can consider payment and delivery reforms that will yield savings over multiple years. But there is plenty of time to fine-tune the IPAB rules since the board is not expected to file recommendations before 2018. The IPAB repeal vote is nothing more than yet another effort to distort what the ACA really does and undermine both the ACA and Medicare. Those who want to ensure Medicare cost containment is done correctly need to detach efforts to improve IPAB from efforts to weaken the ACA and Medicare program.

And speaking of undermining the Medicare program…
Last year, the House Republican budget proposed to eliminate guaranteed Medicare benefits for future retirees and to turn the Medicaid program into a block grant to states that would shift billions in costs onto states and beneficiaries. Despite widespread popular opposition, House budget chairman Paul Ryan appears poised to double down on last year’s politically damaging proposals. Ryan insists that his budget is about reducing the federal debt, but in addition to punishing cuts affecting older people, people with disabilities and children and families, the plan is expected to include tax cuts for the wealthiest Americans. If nothing else, it offers Americans a picture of the difference between the two parties with respect to crucial health care programs.

I’m still waiting
CMS just released two important sets of regulations—on Exchanges and Medicaid eligibility—that are currently being analyzed by Community Catalyst staff. And, of course, everyone is waiting for more information on federal Exchanges. But as we approach the second anniversary of the ACA, it is past time for the appearance of some other crucial regulations. Although they lack the marquee appeal of Exchange regulations, two topics that are particularly important to lower-income households have yet to be addressed: the Basic Health Plan option (BHP) and IRS rules governing financial assistance, charges, and debt collection for non-profit hospitals.

For those states moving forward with Exchange implementation, BHP regulations are needed so policymakers and consumer advocates can make an informed decision about whether to implement a BHP. The main reason for doing so is that a BHP could provide better benefits at a lower cost for lower-income people. Unless BHP guidance is released soon, there is substantial risk that those states most likely to consider a BHP will be too far down the road in their Exchange planning to give the option due consideration.

With respect to hospital financial assistance, the ACA contains provisions, nominally effective on passage, that would make it easier for uninsured and underinsured people to understand what financial assistance is available from their local hospitals and also to protect people from unreasonable collection actions. But almost two years later, no implementing regulations have been released, which means no improvements in access to care for uninsured and underinsured families. At least the IRS says financial assistance regulations are a priority to release this year (in contrast to CMS, which has been completely silent with respect to timing on the BHP). However, rumors of pushback on financial assistance regulations by hospitals persist, and there is as of yet no clear timeline for the regulations to be promulgated.

A new report from the Center for Disease Control shows that one in three people lives in a household struggling with medical debt makes it painfully clear that this is a problem that shouldn’t wait until 2014 to be addressed. The Obama administration obviously knows this is a problem since the CDC report is actually the second HHS report since passage of the ACA that underscores the problem of medical debt. They also have the power to do something about it by releasing the financial assistance regulations sooner rather than later. That would make a nice second anniversary present for uninsured and underinsured American families struggling to make their way back from the recession.

 – Michael Miller, Policy Director

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For Seniors the Affordable Care Act is the Gift that Keeps on Giving

Monday, March 19th, 2012

This week marks the two year anniversary of the Affordable Care Act. And, while we will devote plenty of space this week to highlighting the many successes of the ACA, we could think of no better place to begin than with the law’s benefits for seniors. Under the ACA, older adults have already seen concrete new benefits such as:

  • • Decreased drug prices: In 2010, the ACA provided a $250 rebate check to seniors who hit the “donut hole” coverage gap, and last year, began offering a 50 percent discount on covered brand-name drugs in the donut hole. New data released over the weekend shows that more than 5.1 million seniors and people with disabilities on Medicare saved more than $3.2 billion on prescription drugs because of these provisions. This means real money back in the pockets of the people who need it most. And the savings will only continue. Under the law, this year, Medicare beneficiaries will receive a 50 percent discount from manufacturers on covered brand-name drugs and a 14 percent savings on generic drugs in the donut hole. These discounts will increase over time until the donut hole is completely closed in 2020.
  • • Increased access to preventive services: In 2011, seniors started receiving a slew of new benefits aimed at keeping them healthy without breaking the bank. The law ended cost-sharing for wellness visits, flu vaccines and certain preventive services recommended by the US Preventive Services Task Force. The free annual wellness visit also includes a new health risk assessment intended to spot chronic diseases and urgent health needs.

These are all tangible benefits that seniors are already enjoying. However, there many lesser-known ACA provisions that hold the promise of improving the health and well-being of the frailest seniors while also reducing the cost of that care. The law created two new offices at CMS – the Center for Medicare and Medicaid Innovation (CMMI) and the Medicare-Medicaid Coordination Office (MMCO) – charged with finding ways to improve care and lower costs within the public programs. These offices have been hard at work developing new programs aimed at finding cost-effective methods of better coordinating care, keeping people from being unnecessarily hospitalized or placed in a nursing home, and promoting overall good health. Two of the latest programs are especially worth mention:

  • • Duals Demonstration Projects: More than nine million Americans have both Medicare and Medicaid coverage. These so-called “dual eligibles” include more than five million low-income seniors who tend to have a higher incidence of chronic conditions, poor care coordination and – as a result – higher rates of preventable (and expensive) hospital admissions and readmissions. Together, CMMI and MMCO have provided planning grants and new financing opportunities to help states design new programs aimed at improving care and lowering costs by better integrating Medicare and Medicaid services. Consumer advocates in many of these states are actively involved in helping to shape these programs so that they fulfill their promise.
  • • Nursing home readmission initiative: Just last week, the MMCO announced a new program aimed at keeping long-term nursing home residents from bouncing back and forth to the hospital. These admissions are disruptive and disorienting, especially for frail elders who are vulnerable to the risks of hospital-acquired complications and other transition-related complications such as medication errors. They’re also expensive. This new program will wisely test whether providing enhanced on-site services and supports can support the goal of reducing avoidable hospital admissions.

These are but two of the many smart programs the ACA has created to improve the lives of older adults and their family members. We look forward to the continued rollout of these kinds of innovations and urge advocates to get involved at the local, state and federal levels in shaping them so they best suit the needs of those they intend to benefit. Happy anniversary, ACA!

– Renée Markus Hodin, Director, Integrated Care Advocacy Project

 

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CMS Releases Guidance on Payment Model to Improve Care for Dual Eligibles

Wednesday, February 22nd, 2012

The issue of improving care for people who are eligible for both Medicaid and Medicare (“dual eligible”) continued to pick up steam with the recent release of a new federal guidance related to payment models. While advocates will not be formally commenting on this new guidance, it is imperative that they keep a close eye on what the guidance says and how this will impact which health plans will be chosen to oversee the care of the dual eligible population.

As readers may recall, the Affordable Care Act created two new offices within CMS to promote long-term systemic improvements for dual eligibles. The Center for Medicare and Medicaid Innovation (Innovation Center) was established to rapidly test, evaluate and replicate innovative models of care. The Medicare- Medicaid Coordination Office (“MMCO”) was created to promote policies and assist states in better integrating care specifically for dual eligibles. As a result, 15 states have planning grants to develop models of care for dual eligibles. In July 2011 MMCO announced a demonstration program to test two new payment models – the “capitated” and “managed fee-for-service” approach – designed to help states improve quality and share in the lower costs that result from better coordination of dual eligibles’ care.

The guidance released last month by the MMCO is directed at health plans or other qualified entities interested in pursuing the capitated financial model. Under this model, CMS, the state, and health plans or qualified entities would enter into a three-way contract, where the participating plans would receive a prospective blended payment to provide comprehensive seamless, coverage to dual eligibles.

Why Focus on the Dually Eligible?
The dual eligible populations (approximately 9 million) are a lot more vulnerable and typically have poorer health status and a greater need for more high-cost services such as inpatient and outpatient hospital, emergency room, and skilled nursing care. Navigating the Medicare and Medicaid programs, which have different sets of rules and requirements, is an added burden for beneficiaries and results in care that is often fragmented and uncoordinated.

Given the uncertainty of today’s political environment, state advocates need to be actively engaged in the decision-making process of any duals-related initiative. Advocates need to keep a close eye on decisions made about: enrollment, provider networks, appeals processes, marketing including how beneficiaries receive information, quality measures, financing, and consumer protections. Without an active voice, we are leaving the decisions to insurers and big providers who do not necessarily have consumers’ best interest in mind. It is important that all states be involved – not just the 15 states who received planning grants or those states that have sent in a letter of intent.

What does this new guidance mean for our work?
The new guidance on pursuing the capitated approach addresses important issues such as payment principles, standards in programmatic areas, key dates, and network adequacy. For each issue, there is a role consumer advocates can play to ensure that the proposed demonstrations keep consumer interests at the forefront. In a previous blog, we shared with you disability-oriented advocacy principles, to help shape the design of the demonstrations. Advocates should use them as guide as well as this fact sheet that highlights the role consumer advocates should play.

The efforts to improve care for the dual eligible population are commendable. However as CMS and states move forward on their aggressive timetable, advocates must ensure that only proposals that maintain or improve beneficiaries’ access to high-quality, comprehensive services make it to the finish line.

 – Leena Sharma, Field  Coordinator
Integrated Care Advocacy Project 

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Deal on Medicare Physician Pay Leaves Clues to Future Debates

Tuesday, February 21st, 2012

Last Friday, Congress reached an agreement on how to prevent a payroll tax increase on 160 million working Americans, preserve unemployment benefits for laid-off workers and also extend a number of expiring health care provisions, most visibly, deferring a scheduled 27 percent cut in Medicare physician pay (the so called Sustainable Growth Rate Formula, or SGR). The agreement also preserves programs that help low-wage workers and low-income Medicare beneficiaries with their health care costs.

Key takeaways:

Who killed a long-term SGR fix? (Hint: It wasn’t Colonel Mustard)

Although they reached a short-term (ten month) agreement, Congress passed up a chance to put an end to the annual exercise by using unspent war funds. Their decision not to do so makes you wonder in whose interest is the recurrent debate over physician pay? No one wants their fingerprints on the knife, but the evidence does point in a particular direction. Congress’s failure to address the payment formula means physicians are less happy with the Medicare program. It also means physicians are less well disposed toward the Affordable Care Act (ACA) because they thought that they had a commitment that SGR would be addressed in the context of broader health reform. Finally, failure to fix SGR also leaves in place a device for forcing additional spending cuts either in health care or elsewhere in the federal budget. Now, let’s see…who wants to undermine support for Medicare and the ACA and force additional cuts in federal health spending? (If you really can’t figure it out, check out this post).

An eroding commitment to public health?

We sometimes criticize corporate CEOs for being too focused on the next quarterly profit statement and their unwillingness to think long term. However, there is plenty of short-term thinking in Washington as Congress just proved with their decision to cut funding from the Prevention and Public Health Fund (PPHF) as a partial offset to the cost of blocking the scheduled cut in Medicare physician pay. As we argue here, a successful strategy to reduce health care spending must include a commitment to improving the underlying health of the American public.

To their credit, the drafters of the ACA recognized this simple truth and included new investments in public health as part of the legislation. Unfortunately, that moment of clarity appears to all too short lived. Almost immediately, public health resources were diverted for the worthy, but different, purpose of training more primary care providers. Pre-existing commitments to public health have since been scaled back with the assumption that the funding gap would be filled by the PPHF, resulting in less of a net gain in funding. Now Congress has diverted $5 billion from the fund to avoid the physician pay cut.

The problem is that while the case for public health investment is compelling, there are not enough powerful champions to defend the fund, especially since cutting it means taking away funds that are to be allocated in the future. As a result, in the short run, no one actually experiences a current funding reduction.

The shape of things to come?

As we said in our blog last week even though President Obama’s budget will not be enacted, it contains important signals for the direction of future action. Hardly 48 hours after its release, health programs the President indicated a willingness to cut showed up as offsets for yet another short-term SGR patch. This means we need to take very seriously other cuts President Obama has indicated he would support because these items are sure to reappear in future debates over cuts in health spending.

Those debates are likely to occur in the context of the 2012 elections, and will resume in Congress immediately thereafter since the delay in the physician pay cut is only for ten months. Many other issues—such as the scheduled expiration of the Bush tax cuts, the recently extended payroll tax reduction, the debt ceiling agreement and more—will also need to be addressed at that time, setting the stage for a high stakes debate over both taxes and spending, including (perhaps especially) Medicare and Medicaid.

We can guarantee that Congress will be looking for spending cuts yet again, and if we don’t want to see costs shifted onto Medicare and Medicaid beneficiaries or more raids on the Prevention Fund, advocates will have to start working with Congress and the Administration now to protect those programs.

– Michael Miller, Director of Strategic Policy

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Obama’s Budget: An Imperfect Reminder That We Can Cut Costs Without Undermining Care

Tuesday, February 14th, 2012

President Obama released his 2013 budget proposal yesterday. In the short run, it’s a mere formality. With a divided Congress in an election year, Obama’s budget is dead on arrival. But our national conversation about entitlement reform is far from over, and the health care cost-containment approach in Obama’s budget will inform that debate.

Obama’s budget reduces Medicare spending by $300 billion, and cuts another $55 billion from Medicaid. The good news is that Obama achieves many (but unfortunately not all) of these savings by weeding out wasteful spending rather than by pushing costs onto beneficiaries. For example, his budget:

  • • reduces overspending on prescription drugs by requiring drug manufacturers to pay the same rebates for low-income Medicare recipients as they do for Medicaid beneficiaries
  • • improves access to low-cost generic drugs by ending “pay for delay” agreements, a practice that allows brand-name drug manufacturers to pay generic drugmakers to keep their products off the market
  • • creates incentives for nursing homes to avoid needless and costly hospitalizations by providing better primary care to residents

The President proposes that the savings outlined in his budget replace the $1.2 trillion in across-the-board cuts scheduled to go into effect in January 2013 (“the sequester,” triggered by the failure of the Super Committee.) As far as the health care budget is concerned, the policies outlined above represent a marked improvement over the across-the-board cuts: they target the waste in our system rather than indiscriminately cutting good health care spending along with the bad. These policies not only save federal dollars, they actually strengthen Medicaid and Medicare.

The Bad News
Unfortunately, not all of the President’s cost-containment proposals are preferable to the across-the-board cuts. The sequester exempts Medicaid from cuts, but the President’s budget shifts billions in Medicaid costs onto states by: 1) reducing federal Medicaid matching rates, 2) limiting states’ ability to use provider taxes to finance Medicaid, and 3) increasing Medicare cost-sharing requirements (which would increase state Medicaid costs since Medicaid pays the Medicare cost-sharing requirements for the “dually-eligible”).

Shifting Medicaid costs onto states is not much better than shifting those costs directly onto vulnerable beneficiaries. Experience tells us that states are likely to compensate for their lost funds by scaling back on benefits like prescription drugs or dental care, raising premiums and co-pays, or cutting already-low provider reimbursement rates – all of which create barriers to needed care for the millions of seniors, children and people with disabilities who rely on Medicaid.

President Obama’s budget also cuts the Prevention and Public Health Fund by $4 billion over ten years. Since slowing our nation’s’ health care costs depends on our success at reducing the incidence of chronic illness, cutting prevention funding is a particularly short-sighted strategy.

We’ll Take More of “The Good”, Please
There is far more we can do to save money in our health care system without resorting to policies that would harm access to care for our nation’s most vulnerable citizens or undermine efforts to improve the health of Americans. For example, we should:

  • • Incentivize hospitals to reduce harmful care. The Affordable Care Act began adjusting Medicare payments to provide a stronger incentive to hospitals to prevent complications, such as hospital-borne infections and readmissions. As we outline in this paper, Medicare can do much more to reduce these harmful events. Doing so would not only save the federal government over $100 billion dollars, it would reduce deaths and suffering caused by avoidable infections, other preventable conditions, and needless hospitalizations.
  • • Tax sugar-sweetened beverages. This would bring in over $100 billion dollars in needed revenue over the next 10 years. And by lowering the consumption of sodas, a tax on sugary drinks would reduce the burden of obesity, diabetes, and heart disease on Americans’ lives and our health care costs.

As they debate entitlement reform, politicians will try to convince us that we have no choice – that slowing health care spending necessitates scaling back on our promise to care for our seniors, people with disabilities, and low-income families. By building off of the strengths in President Obama’s cost-containment approach, we can prove them wrong. We can – and we must — reduce our health care spending while strengthening Medicaid and Medicare.

-Katherine Howitt, Senior Policy Analyst
-Michael Miller, Policy Director

 

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The Unhealthy Consequences of Congressional Dysfunction

Thursday, December 22nd, 2011

After caving in to a rebellion from the tea-party wing of the House Republican caucus, Speaker Boehner has pulled the plug on a bipartisan agreement to do a two month extension on a number of expiring federal policies — including a patch on the Medicare physician Sustainable Growth Rate formula, an extension of unemployment benefits and continuation of a payroll tax reduction. The two-month extension was meant to give House and Senate negotiators more time to find agreement on a longer term deal.

At this point, with the Senate adjourned and the House rejecting the short-term extension, it is hard to see how the issue will get resolved. However, in a year that has featured several near shut-downs of government and routine 11th hour legislating, we can’t discount the possibility that some agreement will be reached. Still, it can’t be taken for granted that Congress will pull yet another rabbit out of its hat, and the cost of failure, in health care terms, will be high.

Although the most high profile health issue in the debate is preventing a 27 percent cut in the Medicare physician fee schedule, there are other important provisions at risk, including an extension of the “QI” program, which pays the Medicare Part B premium for low-income Medicare beneficiaries, and Transitional Medical Assistance, which allows families who would lose Medicaid eligibility as a result of an increase in earnings to temporarily retain that coverage. But the problem doesn’t stop there.

A failure to extend unemployment benefits and the payroll tax cut will have significant consequences for health care. First, at least some people losing unemployment insurance will end up on Medicaid, increasing the cost of that program as states struggle to recover from the recession and replace the lost federal Medicaid funds. Secondly, taking the purchasing power of unemployment benefits and the payroll tax cut out of the economy will be a drag on employment and will translate into further increases in the number of uninsured and people on Medicaid.

So what we are faced with is yet another example of Speaker Boehner and the House Republican caucus electing to play chicken, placing important health care programs and our fragile economic recovery at risk. This has become something of a pattern ever since they threatened to force a default on U.S. government debt earlier this year. Unfortunately, chicken is a risky game that often results in someone getting hurt.

– Michael Miller, Policy Director

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