Cruelty or Care? The Choice is Yours
By Pippa Abston, M.D.
Pippa Abston’s blog, May 22, 2013
Pippa Abston’s blog, May 22, 2013
Well. From the beginning, I have been telling you all that the so called “Patient Protection and Affordable Care Act” is neither protective nor affordable to patients. We can keep the same PPACA abbreviation and call it what it is: The Profiteering Protection and Affordable Cruelty Act. Although I read the whole darn thing, I lack a background in law or politics. As the specific corporate protections emerge from this convoluted mess, I have to say I didn’t foresee some of them. I knew it would be bad, just not all the details of said badness.
The latest in our story of woe? Insurers and some employers have discovered an irresistible loophole that allows skimpy policies covering only a few outpatient services. The key phrase is “minimal essential coverage,” previously defined in federal law under the IRS Act of 1986. I noticed some folks had conflated that term with “essential health benefits,” but EHB are mandated items on state Exchange policies starting in 2014. No plan will be allowed to put lifetime or annual dollar limits on coverage, but outside of the Exchanges, other details of minimal essential coverage are minimally described.
I think I was fooled by the ACA’s opening paragraphs allowing insurers to temporarily restrict annual limits on essential health benefits until 2014. I missed the absence of any requirement to offer those benefits at all, at any date, except on the Exchanges. Insurer can’t restrict annual dollar amounts of those benefits if they are offered. In a stunning twist on catastrophic coverage, it is possible for insurers to cover only the required preventive services and omit the catastrophes. You can get your colonoscopy “free” if you have a non-grandfathered plan, but any follow-up surgery is entirely on you.
The most minor effect is that employers who offer bare-bones policies and employees who get them are exempt from the ACA penalties. I see some reference to this loophole only applying to large employers, but I don’t know how that was determined. I don’t see it in the IRS code that I found, which includes as minimal essential coverage “B) any other plan or coverage offered in the small or large group market within a State” —it may be elsewhere. It seems to me it would apply to any size group policy offered outside of the Exchanges. If one of you can find me the relevant law making this only applicable to large employers, I’d be grateful.
The worst effect is that employees who have minimal essential coverage are not eligible for premium subsidies on the Exchanges, as far as I can tell. This also seems to be theIRS’s interpretation: “A month is not a coverage month for an individual, and thus no premium tax credit is allowable for the individual’s coverage, if the individual is eligible for minimum essential coverage other than coverage offered in the individual market for that month.” If you can show me in the law itself or in administrative policy how it can be read otherwise, please post a link. Maybe the IRS can do some creative adjusting. Generally their creativity seems to apply only to corporations.
The unwelcome role of the IRS in Obamacare
By Michael Gerson,
Let us stipulate that now might not be the best time — with IRS officials exposed for abusing power, caught in self-serving deceptions, invoking their constitutional right against self-incrimination — to dramatically expand the authority and size of their agency. But this is what Obamacare requires. Thousands of new IRS agents will implement 40-odd provisions of the Patient Protection and Affordable Care Act — the exact number is a matter of dispute since the law itself is so confusing. The largest tax law and social policy change in a generation will be imposed on a skeptical public by a government agency whose credibility is in ruins.But the IRS is not merely implementing Obamacare. It engaged in a regulatory power grab to ensure that it could implement Obamacare.
As written, the Affordable Care Act provides tax credits and subsidies for the purchase of health insurance through exchanges that are run by “a governmental agency or nonprofit entity that is established by a state.” Since the federal government is constitutionally forbidden from ordering states to create exchanges, the law provides incentives to ensure their cooperation. This was part of the reform’s political appeal: Federal subsidies would be mediated through state institutions, undermining the criticism that U.S. health care was being nationalized.
But 33 states have so far refused to create health exchanges, with reactions ranging from “no” to “hell no.” The law allows the Department of Health and Human Services to set up federal health exchanges in the holdout states. But the statute makes no mention of the IRS providing credits and subsidies through federal exchanges. Without subsidies, employers and some individuals in those states would be exempt from mandates. Obamacare would be unworkable in over half the country.
The IRS resolved this conundrum by denying its existence. In a May 2012 regulatory ruling, it asserted its own right to provide credits outside the state exchanges as the reasonable interpretation of an ambiguous law. But the language of the law is not ambiguous. And health scholars Jonathan Adler and Michael Cannon, in an exhaustive recent analysis, find no justification for the IRS’s ruling in the legislative history of Obamacare. “The statute,” they argue, “and the lack of any support for the IRS rule in the legislative record put defenders of the IRS rule in the awkward position of arguing that it was so obviously Congress’ intent to offer tax credits in federal exchanges that despite a year of debate over the PPACA, it never occurred to anyone to express that intent out loud. A better explanation is that the PPACA’s authors miscalculated when they assumed states would establish exchanges.”
http://www.washingtonpost.com/opinions/michael-gerson-the-irs-has-an-unwelcome-role-in-obamacare/2013/05/23/b4e10550-c3df-11e2-8c3b-0b5e9247e8ca_print.html
States’ Policies on Health Care Exclude Poorest
By ROBERT PEAR
WASHINGTON — The refusal by about half the states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance under President Obama’s health care law even as many others with higher incomes receive federal subsidies to buy insurance.
Starting next month, the administration and its allies will conduct a nationwide campaign encouraging Americans to take advantage of new high-quality affordable insurance options. But those options will be unavailable to some of the neediest people in states like Texas, Florida, Kansas, Alabama, Louisiana, Mississippi and Georgia, which are refusing to expand Medicaid.
More than half of all people without health insurance live in states that are not planning to expand Medicaid.
People in those states who have incomes from the poverty level up to four times that amount ($11,490 to $45,960 a year for an individual) can get federal tax credits to subsidize the purchase of private health insurance. But many people below the poverty line will be unable to get tax credits, Medicaid or other help with health insurance.
Sandy Praeger, the insurance commissioner of Kansas, said she would help consumers understand their options. She said, however, that many of “the poorest of the poor” would fall into a gap in which no assistance is available.
The Kansas Medicaid program provides no coverage for able-bodied childless adults. And adults with dependent children are generally ineligible if their income exceeds 32 percent of the poverty level, Ms. Praeger said.
In most cases, she said, adults with incomes from 32 percent to 100 percent of the poverty level ($6,250 to $19,530 for a family of three) “will have no assistance.” They will see advertisements promoting new insurance options, but in most cases will not learn that they are ineligible until they apply.
Administration officials said they worried that frustrated consumers might blame President Obama rather than Republicans like Gov. Rick Perry of Texas and Gov. Bobby Jindal of Louisiana, who have resisted the expansion of Medicaid.
Everything you know about employers and Obamacare is wrong
By Ezra Klein,
Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system, is being written by Ezra Klein today. Sarah, unfortunately, is doing some firsthand reporting on America’s dental system. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, and read previous columns here.
For all the speculating in Washington about how the Affordable Care Act will work — much of it, I admit, from me — there’s been too little attention given to the best evidence we have on the subject: How the extremely similar reforms in Massachusetts have worked.
Take employers. There’s real concern that companies will see the Affordable Care Act as an opportunity to drop health insurance for their employees and let taxpayers pick up the tab. For those with more than 50 full-time workers, that’ll mean paying a $2,000 to $3,000 penalty for each one, but that’s a whole lot cheaper than paying for health insurance.
The Massachusetts reforms, if anything, were even friendlier to this sort of dumping. The penalty for employers was a paltry $295 per worker. Compared to the average cost of an employer-provided health plan in the Northeast — $17,099, according to the Kaiser Family Foundation’s 2012 Employer Health Benefits Survey — that’s a pittance. It seemed almost irrational for employers to keep offering coverage.
“The benefits we were giving guys who left employer-sponsored insurance were way more generous than what the federal plan gives them,” says MIT’s Jonathan Gruber, a health economist who helped design the Massachusetts reforms. “And we didn’t have much of an employer penalty. I predicted employers would drop coverage.”
But they didn’t. To Gruber — and everyone else’s — surprise, employers expanded coverage. “In the seven years since Massachusetts enacted its law,” says a new report from PricewaterhouseCoopers, “the number of people covered by insurance through the workplace increased by about 1 percentage point, running counter to the rest of the nation, which saw employer-based insurance decline by 5.7 percentage points.”
The report argues that people simply misunderstand why employers offer health-care benefits. They’re not doing it as a favor to employees. And they’re not doing it because anyone is making them. After all, prior to the Massachusetts reforms, employers could stop covering their employees without penalty. That’s true now in every other state in the nation, too. And yet 61 percent of firms offer health-care coverage. If anything, the Massachusetts and national reforms are making it pricier, not cheaper, for them to drop insurance.
Why is DHHS always asking for more money?
Posted May 24, 2013, at 3:47 p.m.
When the Legislature’s Appropriations Committee met last Sunday for a rare weekend session, the focus was a May 28 deadline for lawmakers to approve $35.3 million in additional funding so the Department of Health and Human Services could make its final Medicaid payments of the fiscal year.
It was far from the first time the budget-writing appropriations panel has been caught addressing a DHHS budget shortfall. Since lawmakers passed the last two-year state budget in 2011, they’ve had to pass three midyear budgets designed to shore up cost overruns in the state’s Medicaid program, MaineCare, which provides health insurance to more than 300,000 low-income residents.
Health and Human Services Commissioner Mary Mayhew on Sunday argued that lawmakers haven’t provided enough Medicaid funding to cover the insurance program’s costs. Democrats on the panel, meanwhile, criticized Mayhew for not previously alerting them that they faced a May 28 deadline for allocating additional funds. They’ve also doubted the accuracy of DHHS figures.
Disputes over DHHS funding are not new. Supplemental requests for funding for Maine’s Medicaid program have been commonplace for decades, a result of the unpredictable nature of budgeting for a program that pays for people’s health care and a political reality that sometimes leads to lawmakers balancing budgets by building in savings that don’t bear fruit.
An inexact line item
MaineCare is the single largest program managed by the state Department of Health and Human Services, accounting for nearly 70 percent of the $1 billion the agency receives each year from the state General Fund.
In 2009, Medicaid covered 27 percent of Maine’s population — the fourth highest total nationwide — and Medicaid spending accounted for nearly 22 percent of health care spending in Maine, compared with a national average of 16.5 percent. Maine spent $8,077 per Medicaid recipient, the 16th highest total nationwide, according to the Centers for Medicare and Medicaid Services.
In addition to being large, Medicaid is also among the most unpredictable items in any state budget. Maine is not alone in facing frequent Medicaid budget shortfalls, said Matt Salo, executive director of the National Association of Medicaid Directors in Washington, D.C.
“Trying to plan out what you will spend in a program the size and complexity of Medicaid is extraordinarily difficult,” he said. “There are so many moving pieces, and there’s so much wiggle room.”
The first challenge in crafting a Medicaid budget is projecting enrollment. Officials can never be certain how many low-income people will qualify for the public health insurance program and what portion of eligible people will actually sign up.
“You can make a guess,” said Salo. “You don’t know.”
The same goes for how much health care Medicaid recipients will use once they’ve enrolled and how much health care costs will change each year. It’s never certain, for example, how many times patients will visit the doctor and how many costly MRIs will be ordered.
Those uncertainties can be complicated by outside factors, such as an economic downturn that boosts enrollment as more people slip into the income ranges that qualify them for Medicaid. Public health epidemics, such as spikes in certain types of illicit drug use, also contribute to Medicaid’s uncertainties, said Salo.
“You start seeing impacts not only in terms of drug treatment and incarceration, but babies being born drug-addicted,” he said. “You certainly can’t predict those things.”
Maine GOP disappoints on Medicaid
Posted May 24, 2013, at 1:45 p.m.
Republicans in the Maine Legislature have given excuse after excuse for opposing a bill to both expand Medicaid to about 60,000 people and pay the state’s $186 million share of debt to 39 hospitals. After Gov. Paul LePage on Thursday vetoed the bill, LD 1546, and with not enough Republican support to override the veto, hospital CEOs should be indignant. But they should not be as outraged as Maine residents, particularly those whose quality of life — and even life expectancy — could improve with access to health care.
Maine must pay back the hospitals, and it must expand Medicaid. To stall or block either imperative is to deny the obvious at the expense of the poor and the sick. The state has delayed making a decision about expansion since June 28, 2012 — when the U.S. Supreme Court ruled the Affordable Care Act constitutional and the Medicaid expansion optional. LePage has wasted the state’s time by making preposterous requests of the federal government to pay for 10 years of expansion and to grant the state a “ global waiver” to change how it delivers Medicaid services.
Legislative Republicans have continued to block Medicaid expansion, while saying they are not opposed to the concept “in principle.” Even though the Affordable Care Act mandates the federal government to pay states the full cost of expansion for three years and then ratchet down to no less than 90 percent thereafter, they have opposed this major policy change based in part on doubts federal officials will hold their promise. If they seriously are worried the federal government won’t stick to the law, they could have amended current legislation to return eligibility levels to 2013 standards in the event federal funding did decrease. Or they could remember Maine can drop out of the expansion program later, per the Centers for Medicare & Medicaid Services’ rules.
Republican lawmakers walked into the trap Democrats set to link Medicaid expansion and the hospital payback plan and then used the combination bill as an excuse to vote against it. They complained they were “coerced,” arguing that the two measures should be decided separately. Mainers, however, recognize that the substance of the policies here is more important than the process. While there’s no doubt the combination bill is a political tactic meant to improve the odds of Medicaid expansion occurring, no one should be under the impression Republicans were going to wholeheartedly back a bill that solely addressed Medicaid expansion.
Democrats agreed, rightly, to support the Republicans’ proposal to use the revenue from the state’s future liquor business to pay off the hospital debt. What ground has the GOP ceded? On Thursday, House Republican leader Ken Fredette, R-Newport, submitted a bill to establish a study group on Medicaid expansion, describing it as a “compromise.” While the goals of the proposed group appear benign — such as to study the costs associated with expansion and ways to limit the growth of Medicaid in Maine — in reality, it’s another delay. The Maine Department of Health and Human Services could and should have worked with the federal government months ago to complete an actuarial analysis.
At the same time they have called for a study, Republicans have argued Medicaid expansion would add costs to an already expensive program. It’s true Maine will likely pay more in the long-term. The fiscal note attached to LD 1546 estimates the state would pay $8.9 million in 2016-17 for expanding h
Wildly varying hospital prices keep health care expensive
Posted May 23, 2013, at 3:28 p.m.
If further proof were needed that price competition doesn’t exist in the expensive U.S. health care market, it arrived this month. The Centers for Medicare and Medicaid Services published 2011 charges for medical treatments set by more than 3,000 American hospitals.
In suburban Denver, a patient treated for a respiratory infection with complications could be billed $28,000, $46,000 or $97,000, depending on the hospital. In the Los Angeles area, knee and hip replacements cost seven times more at one hospital than another.
The wide — and wild — variation exposes a critical weakness in the national effort to control costs. Hospital charges, which account for about a third of spending on health care in the U.S., are uncontrolled by either government or competition. Even as states and the federal government work to hold down health-insurance rates, hospital prices will continue to exert powerful pressure on them to rise — along with the overall cost of care.
Private insurers negotiate for discounts, but with many hospitals they bargain at a disadvantage. Why? Because health-insurance buyers, including companies that purchase group coverage for employees, demand a choice of hospitals. They especially want their insurance to cover treatment at hospitals that have strong reputations or provide a special service such as organ transplantation or neonatal intensive care. Such hospitals are able to command the highest prices, while stand-alone community hospitals accept rates similar to the standardized payments made by Medicare.
In the past decade and a half, the “must have” hospitals have compounded their clout, merging into regional and national health care chains that typically negotiate for all their institutions in a single package.
So prices keep rising. Although the Affordable Care Act gives states greater ability to control increases in insurance premiums, it doesn’t restrict what hospitals can charge insurers.
Instead, the law aims to lower prices indirectly by encouraging the creation of “accountable care organizations” — groups of hospitals, doctors and other providers that coordinate patient treatment to make it more efficient. If these organizations achieve lower costs, they get to keep some of the savings — a welcome incentive. If they are successful, though, accountable care organizations will also increase cooperation among health-care providers, which may further consolidate their market power.
Publicizing prices, as CMS and others have done, is a step in the right direction, raising awareness of how arbitrary hospital charges can be. Ideally, it also signals to hospitals that aggressive price-setting strategies may invite regulators’ attention.
States might consider, for instance, rules to prevent hospitals from charging different rates to different insurers, or to set caps on what hospitals can charge patients with little or no insurance.
Maryland sets the prices that hospitals can charge all payers, including private insurers, uninsured patients, Medicare and Medicaid. The state takes into account the hospitals’ costs, the quality of treatment and the level of uncompensated care they provide. Since 1976, when the state program started, Maryland’s rate of cost increase per hospital admission has been the second-lowest in the U.S.
Another way for a state to achieve uniform hospital charges without actually setting them would be to let public and private insurers collectively negotiate them with hospitals, as health care policy experts writing in the New England Journal of Medicine last fall recommended. Once set, such charges could then be allowed to rise at the same rate as average wages in the state.
Not all states would want a system as regulated as Maryland’s. But all states — and the federal government, too — would be remiss not to address out-of-control hospital charges
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