January 24, 2017

Posts on health care

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Monday, January 16, 2017 - 3:58 PM

While the budget resolution that congressional Republicans approved last week was designed to speed repeal of the Affordable Care Act (ACA), budget analysts and some lawmakers in both parties have expressed understandable concerns about such hasty action before a replacement health care plan is ready.

Over the weekend President-elect Trump raised further questions when he told The Washington Post he was almost finished with a plan designed to guarantee “insurance for everybody” but provided few details on how such an ambitious goal could be met.

As The Concord Coalition said in an issue brief last week: “As a matter of sound fiscal policy, it makes no sense to reverse the many spending and tax policies of Obamacare without knowing what comes next. Concord added that having a replacement plan ready is “the only way to avoid great fiscal uncertainty, showdowns and risk with regard to Obamacare repeal.”

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Tuesday, December 20, 2016 - 9:33 AM

Republican efforts to repeal Obamacare while imposing a delay on replacement plans could prove to be fiscally problematic.

From strictly a budgetary perspective, the “repeal and replace” plan being floated by Republicans can be viewed as simply an immediate $680 billion tax cut bill combined with an uncertain promise to achieve savings down the road.

Furthermore, those savings can only come from reducing the number of people with insurance or dramatically lowering the generosity of that insurance -- both politically unpopular options -- because you can’t keep just the good parts of Obamacare (for instance the ban on exclusion for pre-existing conditions) without the “bad” parts (subsidies for insurance and some type of mandate to keep healthy people in the insurance market).

This combination -- the immediate easy choice of a tax cut and the vague promise to make harder choices in the future -- is the definition of avoiding hard choices. Making it even more toxic is that the delay period itself might unravel the individual insurance market, making any replacement scheme even more costly or unworkable.

There are clearly ways to make Obamacare work better and there are ways to make it align with a more...

Tuesday, December 6, 2016 - 9:20 AM

How the incoming Trump administration handles health care policy is perhaps the most consequential question hanging over the nation’s budgetary outlook.

That’s why policy analysts are scrambling to read the tea leaves on health care amid conflicting signals. Republicans seem to have one foot on the gas pedal and one foot on the brakes.

For example, recent developments have led to intense speculation on whether the new administration will rapidly work to reform Medicare. On the campaign trail, candidate Trump was adamant that he would not touch the program other than by cutting waste, fraud and abuse. However, his selection of a strong Medicare reform advocate, House Budget Committee Chairman Tom Price (R-Ga.), to become secretary of Health and Human Services raises the prospect that something more might be contemplated.

House Speaker Paul Ryan, another strong advocate of Medicare reform, has indicated that he is still planning to push the issue soon, even as senior Senate Republicans have voiced caution. 

So it is understandable if some confusion has arisen as to the direction and pace of Medicare reform.

But the tension between speed and deliberation is best exemplified by the congressional Republicans’ developing strategy for delivering on their campaign promise to “repeal and...

Monday, December 5, 2016 - 1:44 PM

National health expenditures grew by 5.8 percent in 2015, pushing health care spending to 17.8 percent of the economy, up from 17.4 percent in 2014. This marks the second year in a row spending has grown more quickly than the economy, following a stable period from 2009 to 2013. 

The numbers come from a new report by actuaries at the Centers for Medicare and Medicaid Services (CMS). Increased spending had been widely expected, given expanded insurance coverage through the Affordable Care Act (ACA). The insured population rose from 86 percent of the country in 2013 to 90.9 percent in 2015. 

The actuaries said that in addition to spending on the newly insured, faster growth was driven by increased use and intensity of health care services and rapidly increasing spending on prescription drugs -- which grew by 9 percent after even more dramatic growth of 12.4 percent in 2014.

Slow growth in Medicare spending stands out as a bright spot in the report. While overall Medicare spending grew by 4.5 percent, on a per-enrollee basis spending only grew by 1.7 percent because the number of beneficiaries increased by 1.5 million. 

Even with moderate cost growth, more clearly needs to be done to slow health...

Tuesday, November 15, 2016 - 10:01 AM

The Affordable Care Act (ACA) dramatically altered the individual insurance market by forcing insurers to insure anyone regardless of health status or pre-existing conditions. It also eliminated caps on coverage. 

These changes have been popular. When elected officials say they support banning insurance companies from discriminating against individuals with pre-existing conditions, they are supporting this part of the ACA. One of what many people consider the “good parts” of the legislation.

Here is the rub -- you can’t just keep these “good parts” and repeal “the rest” of the ACA.

This is why: Health insurance is expensive. It is more expensive when medical costs are high and less expensive when medical costs are low. Thus, insurance costs can go up or down based on how small and sick the insured population is. (For the moment let’s leave aside that costs are also dependent on how much we pay doctors and hospitals for their work.) 

The big federal government health care programs -- Medicare (about 43 million insured) and Medicaid (62 million) -- tend to have enough people enrolled that there is a predictable mix of the healthy and the sick. For those programs, spending is more dependent on the number of people being provided with health insurance.

You can reduce that spending by...

Monday, May 2, 2016 - 2:44 PM

Health care cost-control efforts in the United States can often be described simply as “changing incentives.” The focus on incentives can be traced to two main circumstances:

1) The majority of politicians have opposed efforts to reduce costs simply through government price-setting, a mechanism widely used around the world to control costs.

2) The incentives in the U.S. health care system have been severely misaligned for decades, with all the actors -- from consumers to employers to insurance companies to physicians and hospitals -- having incentives to increase spending.

The most notable cost-related health care system changes of the past decade have attacked some of this misalignment and those efforts have contributed to historically slow growth rates for health care costs over the last five years.

The one area primarily untouched by those changes, prescription drug costs, is also the one area where inflation is growing rapidly, with 12.2 percent growth in 2014. Yet there appears to be an effort in the House and Senate...

Friday, November 6, 2015 - 10:44 AM

Rep. Scott Rigell (R-Va.) recently offered the America First Act, a bill to replace 75 percent of the sequester cuts scheduled under current law with a mix of reforms in mandatory spending and revenue increases from limiting tax expenditures.

In the aftermath of the bipartisan budget agreement, ideas like those in the Rigell plan could serve as models for long-term, bipartisan fiscal reform efforts in Congress.

The Rigell plan proposes a new framework that would achieve substantial deficit reduction while replacing the sequestration-level spending caps that are in place under current law. The plan comes at a time when a number of fiscal experts and lawmakers have concluded that the sequester caps are unrealistically tight.  

According to Congressional Budget Office (CBO) estimates, the Rigell bill would save $2.5 trillion over the 10-year budget window. It would do so by implementing a three-to-one mix of spending cuts to revenue increases, making major reforms to Social Security and Medicare to improve their long-term finances.

On the...

Monday, October 12, 2015 - 11:30 AM

There has recently been a renewed focus on a key provision in the Affordable Care Act (ACA) -- the so-called “Cadillac tax.” The tax, which will take effect in 2018, attempts to limit the tax-free treatment of employer-provided health insurance benefits by taxing them above a certain amount.

The “Cadillac” terminology arises because only the most expensive, generous insurance plans are initially projected to be hit by the tax. As insurance costs rise along with health care costs, more plans will gradually become partly subject to the tax, and thus the amount of fully tax-free health insurance in the country will fall.

This is good, because the exclusion of health insurance from taxation is widely considered economically inefficient and regressive tax policy. It is very expensive for the government, only provides benefits to some workers, distributes those benefits primarily to those who earn the highest incomes, and encourages higher health care spending. Economists believe that as the tax-based preference for health insurance over employee wages dissipates, employee wages will rise.

The Cadillac tax was always a suboptimal and clunky method through which to limit the health care tax exclusion because it does so indirectly (Concord’s...

Monday, July 27, 2015 - 10:44 AM

The message from the Social Security and Medicare trustees last week could not have been more blunt: the two programs’ long-term costs “are not sustainable with currently scheduled financing and will require legislative action to avoid disruptive consequences for beneficiaries and taxpayers.”

This conclusion should take no one by surprise. The pressures on both programs from population aging and rising health care costs have been warned about many times by many nonpartisan sources.

What is surprising is that so few lawmakers seem to take these warnings seriously.

After all, Social Security and Medicare are not insignificant programs. In 2014, 59 million Americans received Social Security benefits, and Medicare covered 54 million. At a cost of nearly $1.5 trillion, the two programs alone accounted for 42 percent of federal program spending last year.

Given their size and importance for so many American families, the fact that Social Security and Medicare are on an unsustainable track should place them high on the legislative agenda for both...

Tuesday, July 14, 2015 - 9:58 AM

Last week the Department of Health and Human Services (HHS) proposed a new method of paying for health care services, using its authority under the Affordable Care Act (ACA) to scale up payment reforms that have been shown to save money while maintaining the quality of care.

In 75 metropolitan areas, Medicare will use “bundled payments” for hip and knee replacements  -- meaning that every aspect of an intervention, from the surgeon’s work to the artificial joint to post-surgery rehab, will be covered in a single payment. Ultimately, providers will both share in any cost savings or risk penalties if there are cost overruns or quality falls short.

For the first time these payment changes will be mandatory. This is an important step in furthering the Obama administration’s goal to make most Medicare payments through alternative models (not fee-for-service) by 2018.

Starting with hips and knees for such mandatory changes makes sense because there is a wide cost variation for these procedures, but no evidence linking cost to quality. Furthemore, this...