Health Care Entitlements
Congressional Republicans are insisting that big cuts to Medicare and Medicaid be on the table in the negotiations over the so-called fiscal cliff and deficit reduction. That stance is largely a political move against two programs, which have been critical to the public welfare for the past half-century.
Postelection polls show that large majorities of voters for both President Obama and Mitt Romney opposed making large Medicare cuts as a way to reduce the budget deficit. And, the fact is, the Obama administration has already pledged to extract more than $1 trillion in savings over the next decade from these programs. There is not much more that can be cut without hurting the most vulnerable Americans.
The Affordable Care Act contains provisions that will reduce projected Medicare spending by $716 billion over 10 years, primarily by reducing the annual increases in Medicare reimbursements for hospitals, nursing homes and other health care providers and by reducing unjustified subsidies paid to private Medicare Advantage plans. During the campaign, the Romney-Ryan ticket criticized the president for making such a big cut and even fatuously promised to restore all of it.
On top of those savings, President Obama, in his budget for fiscal year 2013, proposed cutting another $340 billion from Medicare spending over 10 years through tactics like requiring drugmakers to pay rebates to Medicare in some circumstances; reducing payments to some health care providers for treating patients just released from the hospital; reducing coverage of bad debts that hospitals and skilled nursing homes have failed to collect from patients; and charging higher premiums to high-income beneficiaries.
Those cuts seem acceptable as part of a larger budget deal to avert the fiscal cliff. There may be room to squeeze additional savings from health care providers as long as their fiscal health is not jeopardized. But, beyond that, there are very limited options for further reducing Medicare or Medicaid spending.
Upper-income beneficiaries already pay higher Medicare premiums, and there may be some room to charge them more. But middle-income beneficiaries need to be protected from higher costs. And the half of all Medicare beneficiaries who have incomes below $20,000 already pay sizable portions of their income for health care and certainly cannot afford to pay more.
Some ideas should be off the table entirely. The election made it clear that there is strong opposition to turning Medicare into a voucher system. And, as for raising the Medicare eligibility age, respected analysts have concluded that this change would actually increase total health care costs and shift the burden to employers and individuals, without saving the government much money.
Finally, it’s important to keep in mind that short-term cuts in Medicare are not urgently needed. Medicare spending per enrollee is projected to increase more slowly than per capita gross domestic product or private insurance spending per enrollee over the next decade, and it is only in the following years that strong cost controls may have to come into play as the population ages and medical costs continue to rise.
Maine’s health reform law back to the drawing board
BY GINA HAMILTON, Times Record, Brunswick, Maine November 28, 2012
When Public Law 2011 Chapter 90 was being debated last year in the Legislature, supporters insisted the reason Maine’s health care costs are among the nation’s highest was that the market was over-regulated.
End some of the red tape, they argued, and the free market will provide competition and bring down costs. Supporters went so far as to say that all uninsured people in Maine would be able to afford coverage.
Although much of the plan remains to be implemented, four of its provisions have already gone into effect, and have already caused higher net premiums for most policyholders.
The law permits insurance companies to increase the difference between what they charge older or rural customers and what they charge younger or urban customers in the individual and small group markets. As a result, Maine’s largest insurance provider — Anthem Blue Cross — raised premiums for the majority of its individual policyholders, especially older ones. Small-business premium rates increased, especially in northern and eastern Maine — rate increases of 70 percent, in some cases.
Relatively few policyholders saw a decrease in premiums, averaging 7 percent to 8 percent.
The law permits an insurance company to “close” its individual or small-group book of business at will and issue new plans. Because the plans are “new,” they do not qualify for regulatory protection. Anthem again led the way: It closed its existing programs and offered a new plan called HealthChoice Plus that drastically reduced benefits, cut maternity coverage altogether, increased deductibles and increased cost-sharing compared to the older, defunct plans.
The law imposes a new tax that requires every privately insured person to pay up to $6 per month to establish coverage for high-risk people by a new private, nonprofit corporation whose meetings — where they decide how public tax money will be spent — will not be open to the public. Maine policyholders together will pay a tax of $22 million — and possibly up to $33.5 million — for this high-risk pool, without knowing what or whom constitutes “high risk.”
State budget problems worsen; Republican leaders call for quick solutions
Posted Nov. 29, 2012, at 8:02 p.m.
AUGUSTA, Maine — For the second straight day, news of a growing state budget shortfall has left leaders scrambling to solve the problem, raising the possibility of seating an Appropriations Committee before the January opening of the legislative session.
On Thursday, Gov. Paul LePage’s administration said it now anticipates a shortfall of more than $100 million in the state’s Medicaid budget for this fiscal year.
News of the Medicaid shortfall came a day after the state’s revenue forecasting committee reduced tax collection estimates by $37 million for the fiscal year that ends June 30, 2013.
The worsening financial outlook spurred two Republican legislators who will assume leadership roles in the next Legislature to now say they would support allowing LePage to curtail state spending as soon as the law allows him to do so.
“I support the governor’s temporary curtailment proposal as a means to deal with the immediate revenue shortfall,” Rep. Kenneth Fredette, R-Newport, the incoming House minority leader, said Thursday in a statement. “Quite frankly, state government cannot spend money that it doesn’t have, and we are mandated by the state constitution to have a balanced budget.”
In the same release, Sen. Roger Katz, R-Augusta, joined Fredette in advocating for immediate spending cuts to address a $37 million reduction in projected state tax collections for this fiscal year.
“Although in a perfect world, these curtailments should be made following legislative discussion, the time crunch here warrants the governor’s approach,” Katz said.
After the state’s revenue forecasting committee announced downward projections Wednesday, Fredette and Katz said they favored addressing them as part of a supplemental budget proposal rather than through curtailment, a temporary measure that would allow government agencies to start trimming immediately.
However, after hearing more information Thursday about what appeared to be downward trends in state tax collections — and the growing Medicaid problem — that could stretch into the next two-year budget cycle, Fredette called for curtailments to minimize the size of a supplemental budget he anticipates will go before the new Legislature.
Fredette and Katz both served on the 125th Legislature’s Appropriations Committee.
“I expect a fairly sizable supplemental budget [to balance the state’s books for the fiscal year that ends June 30, 2013],” Fredette said. “The idea of curtailment, of reducing expenses quickly under executive order, makes sense now in terms of the budget for the rest of this fiscal year.”
Fredette urged LePage to provide legislators with information about the current fiscal year’s structural gap as quickly as possible so they can begin work on a supplemental budget. He also called for putting the next Legislature’s Appropriations Committee to work on a supplemental budget as soon as possible, perhaps even before the traditional January opening of the new legislative session.
Here is a column I wrote in January, 2012 the last time saving money by cutting Medicaid in Maine was being debated.
Do we need to gut MaineCare?
Posted Jan. 19, 2012, at 1:30 p.m.
For more than a month, the Legislature has been focused on the governor’s proposal to cut $221 million from the Department of Health and Human Services budget by revoking Medicaid eligibility for about 65,000 low-income and disabled Mainers. His proposal has generated controversy, including marathon hearings, state house rallies, articles in many of Maine’s papers as well as a petition that garnered more than 8,000 signatures in less than two weeks, all opposing the cuts.
I hope our legislators are enjoying this exercise in democracy because, even if they are able to satisfactorily resolve the immediate crisis, they can look forward to a repeat performance in a year or two unless they have the courage, wisdom and bipartisanship to attack the fundamental flaws in the ways we finance and deliver health care services. Maine’s very real problems with MaineCare are only symptoms of defects in our overall health care system. The most visible signs are out-of-control costs and diminishing access to quality health care.
For the past few decades, insurance companies have been systematically pushing the least healthy off their rolls. As a result, many people have been forced to turn to public programs such as Medicaid, swelling its roles, or to their own inadequate resources. Predictably, the amount of uncompensated care facing hospitals and other providers is growing. The Maine Hospital Association recently sounded the alarm, warning that layoffs and further reductions in service would result from the proposed MaineCare cutbacks.
Attempts in the past to slow this trend by tinkering with the existing employment-based system have not succeeded. Our health care system does not need a tune-up. It needs an overhaul. And it must begin with the way we finance health care.
As the MaineCare hearings are demonstrating, our current fragmented system of financing health care breeds conflict. We have separate financing systems for different groups. Each constituency is focused on protecting its own program, often without regard to the effect on others. Each may believe they are being asked unfairly to shoulder somebody else’s burden. The result is stalemate.
That is one reason to move from our fragmented financing system to a single publicly managed pool in which everyone would participate. All would play by the same rules and eligibility issues would be moot. Questions of fairness among groups of people would largely disappear and our health care version of class warfare would be eliminated. Such a program’s universal base of beneficiaries would protect the plan’s popularity, funding and political viability. Care that exceeds the program’s benefits could be purchased privately.
In addition to simplifying administrative costs, this program could ratchet down out-of-control prices and windfall incomes and profits by individuals and corporations. Centralizing health care data would make it much easier to detect fraud, waste and abuse.
More than enough money to cover everybody would be freed up. It is credibly estimated that such a program could result in saving the people of Maine more than $1 billion dollars in the first year alone, and all but eliminate the pain and suffering created by fighting arbitrary insurance company denials. These changes would accelerate reforms in the way we pay purveyors of medical goods and services. That would permanently reduce the rate of future inflation of health care costs.
On Thursday, DHHS Commissioner Mary Mayhew, seen last year with Gov. LePage, announced that her department is facing a $100 million shortfall.