Health Care Reform Articles - February 17, 2017

Health Affairs

February 15, 2017

National Health Expenditure Projections, 2016–25: Price Increases, Aging Push Sector To 20 Percent Of Economy

By Sean P. Keehan and colleagues at the CMS Office of the Actuary

Abstract

Under current law, national health expenditures are projected to grow at an average annual rate of 5.6 percent for 2016–25 and represent 19.9 percent of gross domestic product by 2025. For 2016, national health expenditure growth is anticipated to have slowed 1.1 percentage points to 4.8 percent, as a result of slower Medicaid and prescription drug spending growth. For the rest of the projection period, faster projected growth in medical prices is partly offset by slower projected growth in the use and intensity of medical goods and services, relative to that observed in 2014–16 associated with the Affordable Care Act coverage expansions. The insured share of the population is projected to increase from 90.9 percent in 2015 to 91.5 percent by 2025.

http://content.healthaffairs.org/content/early/2017/02/14/hlthaff.2016.1627.abstract

Now You Can Do Your Taxes Without Filling Out the Insurance Question

by Margot Sanger-Katz - NYT - February 15, 2017

If you want to keep your health insurance status a secret from the I.R.S., the Trump administration just made it a little easier.

The policy change, confirmed by the I.R.S. on Wednesday after elements were reported by the libertarian magazine Reason, does not do away with the Affordable Care Act’s requirement that all Americans who can afford it obtain health insurance or pay a fine. But it might make it a little harder for the I.R.S. to figure out who is breaking the rules.

The I.R.S. recently notified tax preparers that it will not reject tax returns that omit information about whether a filer had health insurance during the previous year. That’s actually a continuation of an informal Obama administration policy, but because of the way the decision was announced, it is likely to have broader effects on how many people report their insurance status to the government and how many people end up paying penalties for staying uninsured.

Mr. Trump signed an executive order on the day of his inauguration asking agencies to reduce burdens related to compliance with the health law. In its statement, the I.R.S. indicated that this policy was related to that instruction.

Tax returns include a line that asks people to indicate whether they had insurance for the entirety of the previous year. If they did, they can check a box. If not, they are asked to provide more detail: about how much coverage they had; whether they had been granted an exemption; or, if they owe penalties, how much.

Under the Obama administration, the I.R.S. would still process the tax return if a filer did not fill out this part of the return, but the policy was informal. Tax preparation software, used by individuals and professional tax preparers, essentially made it impossible to omit the section. The Obama administration had announced that it was ending its informal policy this year, and would begin rejecting returns that left off insurance information.

Under the new guidance from the Trump administration, that is changing, and the old policy is becoming more formal. Julie Miller, a spokeswoman for Intuit, which owns the personal tax preparation program TurboTax and provides software for tax preparers and accountants, said that the company would be changing its products on March 2 in response to the change. Currently, the software does not allow customers to complete a return without providing health insurance information. After the change, the health insurance portion of the return, known as Line 61, will remain part of the software, but customers will not get an alert if they leave it blank. As Reason reported, Drake Software, another company that provides programs for professional tax preparers, is making a similar change.

Even if it accepts returns with the section left blank, the I.R.S. can still review these returns, audit such filers or impose penalties. And on Wednesday the I.R.S. also clarified that it will continue to enforce the penalty. But the change may signal to some people that buying insurance is less important.

“While this announcement is consistent with the recent executive order, it is concerning to those who worry about stability in the A.C.A. marketplace,” said Nicole Elliott, a partner at the law firm Holland and Knight, who was a senior director of operations for the Affordable Care Act at the I.R.S. during the Obama administration.

The change was announced on the same day that the Department of Health and Human Services released proposed regulations meant to stabilize the Affordable Care Act’s marketplaces for individual insurance. Those new rules will mostly make it harder for sick people to sign up for insurance coverage only when they need it. Insurers have been asking for such changes; they argue that the pool of people buying Obamacare policies tends to be old and sick, making them expensive to insure. They have largely cheered the proposed rules.

But the tax change could cut the other way. The mandate to buy insurance was devised to bring healthy people into the insurance market, and a weaker mandate is likely to cause more such people to drop out.

https://www.nytimes.com/2017/02/15/upshot/trump-makes-it-easier-to-ignore-the-obamacare-mandate-on-your-taxes.html?hpw&rref=upshot&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well

Will Obamacare Really
Go Under the Knife?

Republicans spent almost seven years waging a battle to repeal the Affordable
Care Act. Finally, they are set up for victory — or a new kind of disappointment.

by Robert Draper - February 14, 2017

ix days after he was sworn in as America’s 45th president, Donald J. Trump traveled to Philadelphia to address Republican lawmakers at their annual retreat. Standing behind a lectern emblazoned with the presidential seal, Trump predicted, “This Congress is going to be the busiest Congress we’ve had in decades.” Being Trump, he could not resist ad-libbing a superlative: “Maybe ever. Maybe ever. Think of that.”

The legislators responded with a curious silence — perhaps awed by the thought, perhaps also a bit unnerved. After years mired in do-nothingness, the Republican-controlled Congress had both the means and, Trump believed, the mandate to roll back Barack Obama’s liberal legacy.

At the top of their hit list was Obama’s monumental health care legislation, the Patient Protection and Affordable Care Act. During the six and a half years since its passage, Republicans maintained a striking unanimity in their hatred of what they derisively called Obamacare. And over that same period, they became thoroughly united in the conviction that Trump expressed from the outset of his candidacy — namely, that he “would repeal and replace” the health care law “with something far better.”

But in the months since Trump’s victory, many of the lawmakers in attendance that day had become increasingly worried about how they would go about undoing the legislation. That same weekend in Philadelphia, Republican members of Congress were caught on tape fretting aloud about what the “something far better” to replace the law should be. Should they allow states to accept expanded Medicaid benefits, as Obamacare had done? Should they enter what Representative John Faso, a New York Republican, called the “political minefield” of defunding Planned Parenthood as part of the package? For that matter, should they really be rushing to repeal the A.C.A. before they had any idea of what would replace it? Looming over the gathering was a question that it was perhaps now too late to ask: Had Republicans become trapped by their pledge to do away with Obamacare?

A few days before the retreat, I met up with the man who, perhaps more than any other figure in the conservative movement, had maneuvered the party toward complete and unbending opposition to Obamacare: Michael Needham of the Heritage Foundation. Needham, 35, is the chief executive of Heritage Action for America, a feral cur of a lobbying organization established by the venerable conservative think tank in 2010 to (as its website puts it) “hold Congress accountable to conservative principles.” Though other organizations — among them the Club for Growth and Americans for Tax Reform — have vigorously opposed Obamacare from its inception, Heritage Action has spent the last six years almost monomaniacally focused on demanding that legislators abolish the hated law. It scores them on what it deems critical votes and loudly condemns any and all apostasies. It names names and, when necessary to its ends, is happy to defy the Republican leadership. In violating Reagan’s “11th Commandment” not to speak ill of others in his party, Needham has come to rival Ted Cruz as one of the least popular Republicans in Washington.

Needham would not seem an obvious choice for this distinction. Smooth-skinned and passively handsome in the manner of Mitt Romney, he grew up on Manhattan’s Upper East Side. His youthful acquaintance with struggle was limited to being a Mets fan. After graduating from Williams College in 2004, Needham went straight to work for Heritage, where he was made its director of Asian studies, despite having never visited Asia. In 2007 he briefly left the think tank to become a policy aide for the presidential campaign of Rudolph W. Giuliani, the most liberal of the dozen or so Republican candidates in that cycle. By the time Obamacare was signed into law in March 2010, Needham had again temporarily left Heritage, attending Stanford Business School and dating a Democrat whom he would later marry. There was little in the cards to prefigure his imminent future as the self-designated — and at times deeply reviled — lead driver in the Obamacare demolition derby.

Like virtually every Republican in Washington, Needham was not especially enamored of Trump during the primaries. “Donald Trump’s a clown,” he said on “Fox News Sunday” just a month after Trump announced his candidacy — adding, with evident distaste, “This is a guy who believes in socialized medicine.” Needham’s preferences ran more to Bobby Jindal, and of course to Cruz, whom Needham reflexively referred to by his first name. Still, Needham and his adopted cause had emerged as unambiguous winners of the 2016 election. On the first day of his presidency, Trump signed an executive order to “seek the prompt repeal” of Obamacare.

Thus had Trump and Needham — two men who had never met — become allies. “I think one of the big disagreements we’ve had with the party for a long time is that we think when you’re trying to win an argument, it can only happen when you start them,” the young C.E.O. said as he sat in his Capitol Hill office, looking somewhat fatigued from having spent the previous weekend toilet-training his child. “And this kind of maniacal focus on ‘governing’ ” — his voice taking on a mocking tone — “when all governing means is a bill-signing to get good press, instead of laying out a vision of where you want to take the country, was one of the big divides we had.”

But the long, and at times quixotic, struggle to repeal Obamacare in which Needham has been a lead combatant has more closely resembled a street fight than anything that could reasonably be termed an “argument.” And though it may appear otherwise in a dawning age of Republican near-monopoly on government, the argument is today far from over. According to a January Fox News poll, Obama’s signature program now enjoys a 50 percent approval rating. There is no guarantee that Republicans in the Senate will sign onto legislation that risks leaving millions of their constituents suddenly without health care coverage while alienating key donors — drug makers, insurance companies and doctor associations — who helped shape and support the law Trump now seeks to replace. “The joke around Washington,” the former Democratic congressman Jim McDermott told me, “is that the Republicans are going to repeal Obamacare — and they’ll replace it with the Affordable Care Act.”

The building that houses the Heritage Foundation, on Massachusetts Avenue near the Capitol, stands as an eight-story monument to plain-faced perversity. It was here, in 1989, that the intellectual framework was first developed for what would become the Affordable Care Act. And it is here where Needham has spent the last six years trying to exterminate what he sees as the Frankenstein’s Monster that Heritage inadvertently set loose upon the land.

The basic architecture of the bill that would eventually become the A.C.A. was conceived in 1989 by the Heritage Foundation policy analyst Stuart Butler as a conservative alternative to government-managed health care. It was first put into practice in 2006 by Gov. Mitt Romney of Massachusetts, who devised his state’s health care policy with the help of two other Heritage health care specialists, Bob Moffit and Ed Haislmaier. But for many decades, conservatives had resisted increasing the federal government’s role in health care. That remained true in 2009, when the newly elected President Barack Obama undertook to pass legislation that would extend health care coverage to tens of millions of Americans.

What Obama and the Democratic-controlled Congress ultimately settled on was a framework of health care exchanges — marketplaces where health insurance could be purchased, and had to be, if you weren’t already covered. This was the so-called “individual mandate” first advocated (albeit in the context of a private-sector health care system) by Butler and later embraced by Romney.

Obama opposed the concept as a candidate, in favor of an unspecified plan that he claimed would lower costs. What many Democrats on the Hill — “probably more than half of our caucus,” McDermott says — preferred was a single-payer system, in which health care costs are borne not by insurers but instead by a single fund, typically originating from taxpayers, as Medicare does. But half of the Democratic caucus wasn’t enough for a bill to pass the House, much less the Senate. When a congressional majority failed to materialize for a hybrid measure, known as the “public option,” in which consumers would be allowed to choose among government-run insurance plans as well as private ones, Democrats were left with the individual mandate.

The final 2,700-page legislative package would aim to “increase the quality, availability and affordability of private and public health insurance to over 44 million uninsured Americans,” as the administration put it. Applicants whose income was between 100 percent and 400 percent of the federal poverty line would be eligible for federally subsidized insurance. Those with incomes at or below 138 percent would now qualify for Medicaid in states that chose to participate in the program. Young people up to the age of 26 were permitted to stay on their parents’ health insurance. Americans with pre-existing medical conditions could not be denied coverage. And a variety of other regulations, taxes, penalties and incentives would be set up to maximize participation on the part of insurers, recipients, physicians and health care centers.

Though the details of the Affordable Care Act, as the final bill came to be called, left plenty of room for disagreement, its fundamental reliance on taxpayer-subsidized health care overseen by the federal government was a concept anathema to most Republicans. In a 28-page memo written by the Republican pollster Frank Luntz in spring 2009, Republicans were urged to use the phrase “government takeover” when referring to the Democrats’ health care package. Less heeded was another admonition in Luntz’s memo: “It’s not enough to just say what you’re against. You have to tell them what you’re for.”

In the end, Republicans lacked the numbers necessary to block the bill. On March 21, 2010, the House finally passed on a party-line vote a version of the bill that was sure to be agreed to by the Democratic-controlled Senate. “We didn’t give in to mistrust or to cynicism or to fear,” Obama, announcing the bill’s passage that night in the East Room of the White House, said. “Instead, we proved that we are still a people capable of doing big things and tackling our biggest challenges.”

The day after Obama signed the bill into law, a four-term Republican backbencher from Iowa named Steve King drafted his own bill in the House to repeal it in its entirety. Since there was no hope of Speaker Nancy Pelosi’s considering King’s bill, he had decided to try a rarely successful legislative tactic known as a discharge petition — which, if it gathered signatures from 218 of the 435 House members, would force Pelosi to bring King’s bill to the floor for an up-or-down vote.

A couple of days after King made his move, in mid-June 2010, the two newly minted leaders of Heritage Action — Needham, then 28, and the 32-year old chief operating officer, Tim Chapman — met in the Capitol with Barry Jackson, chief of staff to John Boehner, the House minority leader at the time. Though Jackson today says that he has no recollection of their visit, Needham and Chapman both say they remember it clearly. After explaining the general mission of their new organization, the young conservatives brought up the recently passed Affordable Care Act. Heritage Action, they informed Jackson, intended to push House members to sign King’s petition.

Jackson’s response surprised Chapman and Needham. “He was very clear,” Chapman recalls, “that if we pushed forward on it, we would probably not get all the Republicans on it, and it would be politically detrimental to a lot of Republicans to be on it. He said, ‘I’ve seen all the ads the unions have prepared to run on this stuff.’ I don’t know where he’d seen them. We let off on the gas. We said, ‘We’ll agree to disagree on this one.’ It was the ‘aha’ moment for us: We just don’t see the world the same way.”

As both Chapman and Needham today concede, Jackson might also have had his own “aha” moment, recognizing them as impudent young jerks. Still, their aggression had the full blessing of Ed Feulner, then Heritage’s president, who says fondly of Needham, “He reminded me of myself 40 years earlier.” As for Heritage Action, he said: “We knew we’d be breaking some china.”

Among Republican elected officials, the Heritage Foundation had long been regarded as a tweedy grandfather, revered but not feared. The think tank was proficient at spewing out white papers and keynote speeches. But because of its status as a 501(c)(3) nonprofit, it could not devote a substantial part of its activities to taking positions on congressional votes or campaigning against political foes. Heritage sat by helplessly in 2003 while President George W. Bush, dismaying conservative purists, promoted and then signed into law a new federal entitlement that used Medicare to extend prescription benefits to senior citizens. Two years later, Heritage could do nothing to rescue Bush’s Social Security privatization measure from defeat. Now, with Heritage Action as a 501(c)(4) “social welfare organization,” the foundation at last had its own squad in the fight. And in Needham, Feulner had a jut-jawed lieutenant whose job, as Feulner put it, would be “to run the flag up the flagpole and see who salutes.”

Steve King’s bill was Heritage Action’s first flag. It had not occurred to Needham and Chapman to see things Barry Jackson’s way — to consider that Republicans’ taking an unambiguous stand to completely repeal Obamacare could cost them House seats five months later. Jackson’s hesitancy to campaign on full repeal was in fact shared by many Republican leaders. One of them, Senator John Cornyn, the chairman of the National Republican Senatorial Committee, said of Obamacare in May: “There is noncontroversial stuff here, like the pre-existing conditions exclusion and those sorts of things. Now, we are not interested in repealing that. And that is frankly a distraction.”

To Needham, there was only one way to look at the matter. “What’s the point in having a conservative party if we’re not going to fight a massive federal intervention in health care?” he told me. “It’s one-sixth of our economy!”

Needham and Chapman knew there were risks in allying themselves with King, an inveterate bomb-thrower with a deep yearning for the spotlight. But King was also a tenacious conservative. On June 16, he introduced his discharge petition, and Heritage Action began sending out emails to the foundation’s 661,000 members, urging them to pressure representatives on both sides of the aisle to sign it — ominously adding in a news release that “those who fail to support this effort are responsible for Obamacare.” The petition soon picked up two highly influential signatories: Representative Tom Price of Georgia, an orthopedic surgeon who was chairman of the Republican Study Committee, the House’s internal conservative think tank; and Representative Mike Pence of Indiana, a staunch conservative and personal hero of Needham’s who refused to vote for Bush’s Medicare bill in 2003.

A month later, Heritage Action turned up the heat on the 34 Democrats — most of them so-called conservative Blue Dogs — who voted against Obamacare in March but had yet to sign King’s discharge petition. In a press statement, Needham declared, “I know their constituents, who will be attending town halls this August, are eager to hear why they do not support the repeal effort.” In September, a single Democrat, Gene Taylor of Mississippi, added his signature. The tally reached 173, well short of what it would take for King’s bill to make it to the House floor — much less to get it passed and then sent over to the Senate, where Republicans’ appetite for abolishing Obamacare altogether was less acute than it was in the House.

But though the discharge petition had stalled, King and Heritage Action could justifiably declare a victory of principle and, eventually, an I-told-you-so. Overall, those who pledged fealty to repealing Obamacare fared better that November than those who didn’t. As King told me recently: “The Barry Jacksons and the John Cornyns were clearly wrong. Look at what happened to the Blue Dogs in 2010. There were 53 of them when Obamacare passed. Now I don’t know if you can count three of them.” King was exaggerating, but not by much — there are 18 members of Congress’s Blue Dog Coalition today. “Pelosi made them walk the plank, and they fell like tenpins after that. Since then, I don’t think there’s been a freshman Republican who didn’t run on the full repeal of Obamacare.”

Bashing Obamacare instantly became a winning Republican message — an indictment of its polarizing namesake, of big-spending Democrats and of the boogeyman of creeping socialism all rolled into one. During the 2010 midterm election cycle, opponents of the A.C.A. spent $108 million on ads pillorying it. As a reward to the 87 Republican freshmen whose victories had enabled the party to retake the House, Eric Cantor devoted part of his first day as the House majority leader to introducing H.R. 2, the “Repealing the Job-Killing Health Care Law Act.” It would become the first of more than 50 bills that would pass the House over the ensuing four years designed to repeal, defund, restrict or delay implementation of Obamacare. None of them stood any chance of becoming a law — they were dead on arrival in the Democratic-controlled Senate. But to Heritage Action, they served a purpose: in the organization’s parlance, to “lock in” members, to “orient” the Republican Party to conservative principles so that it would “do the right thing.”

At times, however, what looked like the “right thing” was, from Needham’s vantage, in fact the wrong thing. In April 2011, for example, a bill dismantling part of Obamacare did clear the House and then the Senate, and was signed into law by President Obama without hesitation. It was a measure to eliminate the requirement that small companies submit 1099 forms for all transactions exceeding $600, which essentially served as a tax to help pay for the program and which Heritage Action had condemned as “burdensome” and “onerous,” guaranteed to generate paperwork and high accounting fees.

But Heritage Action, because of its ironclad resistance to “partial repeal,” actually opposed the measure to get rid of the 1099 provision. Yes, it would help small businesses — but then those same small businesses would no longer care to be part of Heritage Action’s crusade. As Needham later told me, “We felt that when anything less than full repeal becomes acceptable, you open the door for every lobbyist in town to say: ‘Hey, while we’re working on full repeal, let’s fix the 1099 issue. Or let’s fix the franchise-restaurant issue’ ” — the popular shorthand for an A.C.A. provision requiring companies with 50 or more employees to provide health care to anyone working over 30 hours a week. “You eventually over time whittle off various constituencies that we want to keep as part of the full-repeal platform.” Partial repeal would be well and good if it got rid of what Needham called a “vital organ” of the law: the individual mandate, say, or Medicaid expansion. But “those vital organs were never going to go down if repeal was defined by Washington’s lobbying class. It would be 1099s and these heavily lobbied issues, and then we’ll be stuck with Obamacare.”

In mid-2011, Heritage Action declared that it would “key vote,” or place greater emphasis on, bills it deemed especially relevant as litmus tests of members’ conservative bona fides. Needham also began issuing scorecards on how frequently members of Congress were voting down spending bills. The notion of a 20-something former Giuliani aide grading veteran lawmakers on their principles did not go over well. Representative Rob Wittman of Virginia was taken to task in a Heritage Action analysis for casting only four of a potential 11 votes to cut spending during a series of roll calls; he had to inform Chapman that he had missed those votes because his father had died. (Chapman did not change Wittman’s score but did explain the reason for Wittman’s absence on the Heritage Action website.)

Representative Geoff Davis of Kentucky, a onetime target of Heritage Action’s grading system, fumed to me about the organization’s absolutist browbeating, which came as Republican members were doing their best to thwart Obama’s agenda. “If I’m trying to stop someone’s bleeding on the side of the road, I don’t need to also give them a lecture about how they need to do aerobics and lift weights three times a week,” he said. Echoing the opinion of many Republicans in Washington, Davis asserted that Needham’s operation was less about legislative results than its own fund-raising: “Very quickly, it became a conservative for-profit operation,” he said.

More than once, Chapman recalls, Republican leaders on the Hill called Feulner to say, “You’ve got to rein these guys in.” But Heritage Action had other defenders besides Feulner. The new Republican Study Committee chairman, Jim Jordan of Ohio, felt that Needham’s organization was instrumental in pushing the party rightward. Mick Mulvaney of South Carolina, a rising star in the Tea Party class of 2010, characterized Heritage Action’s messaging as “invaluable.” Even the complaints were tacit acknowledgments of the organization’s growing clout. As a 501(c)(4), Heritage Action was not obliged to disclose its finances, but it was known to have received millions, including $500,000 from the Koch brothers. Rank-and-file-conservative House members pointed with pride to their high Heritage Action scores. Leadership aides saw no choice but to include Needham and Chapman in strategy meetings.

And Heritage Action’s relentless focus on its message — Obamacare is a disaster that must be repealed in full — was already taking its toll. Before the law had even gone fully into effect, polls consistently showed that most Americans disapproved of it. The A.C.A.’s unpopularity persisted despite a number of modifications meant to improve the program and thus quell discontent. As Kathleen Sebelius, the Health and Human Services secretary at the time, told me: “The notion from Day 1 was to make this work and listen carefully to the feedback, and to help dampen anxiety without gutting key provisions in the law. What made things difficult was that most of the law wasn’t going to be implemented right away. There was this huge gap in time between designing the bill and actually having the benefits fully in place, which gave a lot of opportunity for the opposition to say, ‘This will kill jobs, pestilence will come, vermin will fall from the sky’ — and very little opportunity for us to say anything other than, ‘Wait and see.’ ”

On this point, if nothing else, Sebelius and Needham could agree: The war on Obamacare would become far more difficult for opponents to wage once the actual benefits became available. New enrollees would begin receiving health care coverage on Jan. 1, 2014. It was a glum axiom among conservatives that once Americans were handed a new entitlement — Social Security, Medicare, Medicaid, food stamps, unemployment insurance — they were loath to part with it. Moreover, once a gigantic program fully insinuates itself into the federal governing apparatus, disentangling it is a formidable task. “One of my political heroes in town is Don Rumsfeld,” Feulner told me. “And one of Rumsfeld’s rules is that you want to act as quickly and aggressively as you can, because every day someone in the bureaucracy is narrowing the options you’ll have two days later. That’s clearly what’s happening with Obamacare. Every day the options for full repeal get fewer and fewer.”

On Sept. 24, 2013, House Republicans, goaded by Heritage Action and Ted Cruz, drafted legislation in which they agreed to raise the debt ceiling if Obama agreed to a number of conditions, including delaying implementation of his health care law by one year. Senate Democrats objected, but House Republicans wouldn’t budge. As a consequence, the United States Treasury warned it would soon default on its obligations, and on Oct. 1 the government began shutting down. A couple of days later, Tim Chapman met with several senior Republican staff members and members of conservative activist groups in a House conference room.

The shutdown was the crisis point Heritage Action had hoped for — that cherished moment when Republicans finally took a bold, principled stand. The public would express outrage that the president was willing to hold America’s full faith and credit hostage over the much-disliked Obamacare. Democrats would go wobbly. Republicans in both the House and the Senate would stand firm. In the end, Obama would cave. Or so Needham and Chapman hoped. “Kudos to leadership for doing the right thing,” Chapman told the group. “Now let’s prosecute this case!”

His enthusiasm was met with a wall of silence. The others in the room stared at him with a welling resentment. Finally, a tax-policy analyst at Americans for Tax Reform said to Chapman: “You’ve been saying the Republicans need to be brave. Well, we’re doing that. We’ve shut the government down. But what does Heritage Action intend to do to put pressure on the Democrats? So far, the only money you’ve spent over the past few months has been a half-million dollars attacking Republicans.”

Chapman went visibly red-faced. Only a couple of days into the shutdown, it was now occurring to the chief operating officer of Heritage Action that he and Needham had been abandoned by conservative leaders. Within days, the Republicans in the Senate buckled and, with the House Republican leaders in tow, signed a debt-ceiling deal with Obama that said almost nothing about health care. Congress was blamed by the public for causing the shutdown, and its approval ratings plummeted.

Throughout the shutdown, Needham insisted that the public would eventually reward Republicans for standing up to Obamacare. “Look,” he told me at the time, “there’s more Americans who are aware right now of the fact that we have one political party that owns Obamacare and was willing to go to the great lengths of shutting down the World War II Memorial in order to preserve it, and another party that tried to stop it. And Americans deserve that type of clarity.”

This opinion was apparently not shared by Speaker Boehner. In December 2013, he told reporters that groups like Heritage Action had “lost all credibility.” A month later, on the “Tonight” show, he called the government shutdown a “predictable disaster.”

But the continuing intransigence of the repeal advocates was beginning to wear down the White House. Initially, Sebelius says, “we were more focused on the Republican attorneys general across the country who challenged the constitutionality of the law. Until that was resolved by the Supreme Court in June 2012, that was our focus. The congressional action was viewed more as sour grapes and not altogether realistic. Clearly the president wasn’t going to sign anything that would strike down his brand-new law.” By the time of the shutdown, though, the repealers appeared to have succeeded in getting inside the Obama administration’s collective head. As Oct. 1, 2013 — the date HealthCare.gov was to be open for enrollments — approached, little time was available to subject the website to tests that could expose its shortcomings. But “the one thing that wasn’t feasible, knowing how vehemently the Republicans were determined to stop it at any cost, was moving the deadline,” she said. “That would have mobilized the opposition to the point that we might never have been able to launch it at all.”

And so the White House rolled out a deeply flawed website. By this time, the Republican critique of Obamacare was already becoming a self-fulfilling prophecy. The A.C.A. had been passed with only about one-tenth of the funding that it would need to be fully operational, with the expectation that the rest would be portioned out by Congress annually, through the appropriations process that funds discretionary government programs. From 2011 through 2014, as the House Republicans played round after round of fiscal brinkmanship, Obama reluctantly signed last-minute budget deals that continually shortchanged Obamacare.

“They did a very effective job making sure there would never be enough to fund implementation,” Sebelius told me. “And they came after the budget over and over. Anything that looked like it could be used, they made sure was gone.” That was especially the case, Sebelius said, when it came to educating the public about the program’s benefits — funding that would have made a difference in the 19 states where governors and legislatures had refused to expand Medicaid and had no interest in promoting Obamacare. “Any effort to put in dollars for outreach on the federal level,” she said, “were immediately stripped out.”

It’s impossible to know for sure how much of a role the hobbling of Obamacare played in the outcome of the 2014 midterm elections, in which the Republicans captured the Senate and expanded their majority in the House. But Republicans uniformly campaigned against the program, while Democrats found themselves at pains to demonstrate its virtues. As a bonus for Needham and Chapman, Eric Cantor, the House majority leader had been drubbed in the primary by a Tea Party-backed Republican. In September 2015, Boehner would step down as well.

A month after Boehner resigned, the House considered yet another bill targeting Obamacare. But this one was different from its predecessors. Sponsored by Representative Tom Price, who in just over a year would be Trump’s pick as secretary of Health and Human Services, H.R. 3762 was a “reconciliation bill,” a budgetary measure to defund the health care program that would, in accordance with Senate rules, require only 51 votes to pass in the upper chamber. That threshold was attainable, now that the Republicans had 54 Senate seats. The bigger hurdle was a more arcane one: To qualify for this lower passage threshold as a reconciliation bill, every item in the legislation had to be deemed a budgetary fix, rather than an extraneous provision, by the Senate parliamentarian. Accordingly, it did not include repealing the individual mandate and Medicaid expansion. Better to let the Senate legislative aides confer on those matters with the parliamentarian, one staff member who helped write the bill told me.

That approach was not good enough for Needham and Chapman. Heritage Action announced its strong disapproval of the reconciliation bill, instructed members to vote it down and warned that the measure would be key-voted. Insisting that it was “universally acknowledged” that the repeal of the exchange subsidies and Medicaid expansion would qualify as reconcilable items, Heritage Action stated that it would be satisfied with nothing less.

The new speaker of the House, Paul Ryan, ignored Heritage Action. On Oct. 23, the reconciliation bill went to the House floor, where all but seven Republicans voted for it. Apoplectic, Needham termed the act a “charade” that “undermines the party’s longstanding position of full repeal.” He added, “We expect the Senate to do better.”

The Senate Republicans did. Their version of the bill included repeal of the individual mandate and Medicaid expansion. The parliamentarian ruled that both provisions were extraneous and did not therefore qualify in their present form for a simple-majority vote.

A watered-down version of the bill, which kept the individual mandate and Medicaid expansion but stripped away the ability to enforce either, then passed the Senate and was reapproved by the House. It was sent over to President Obama. On Jan. 8, 2016, he vetoed it. Obama’s final defense of his namesake program would come almost exactly 10 months later, when he received President-elect Trump in the Oval Office and urged him not to eviscerate Obamacare.

Obama’s words, Trump said the following day to The Wall Street Journal, had made him reconsider abolishing the law in full. But 10 weeks later, as one of the very first acts of his presidency, Trump signed an executive order whose mission statement was the “prompt repeal” of Obamacare in its entirety.

The Affordable Care Act’s approval rating has rarely exceeded 50 percent. And over time, as it has strained under the multitude of compromises that were necessary for its passage, it has proved itself worthy of several of the criticisms aimed at it. Though for 80 percent of health care recipients (including those receiving health care from Medicare, Medicaid or their employers) annual rate increases are at historic lows, for the rest the story has been different. The premiums have been rising because of a variety of structural reasons, and because federal assistance to recipients to offset the costs has been in many cases inadequate. Or, as the health-policy analyst Robert Laszewski puts it, “They created a Cadillac with Chevrolet subsidies.” But it is also because unit costs have continued to soar — like the price of prescription drugs, thanks to the sweetheart deal that the pharmaceutical industry cut with the Democrats in exchange for being an early supporter of the law. Some rural states like Alaska have seen very little competition among insurers — something that a public option might have addressed, had the insurance lobby not spent a fortune to defeat that provision. Of the 23 nonprofit insurance co-ops set up by the Affordable Care Act to compete in such areas, only a handful remain — probably at least in part because the co-ops received from Congress only $2.4 billion of the $6 billion originally appropriated to establish them.

To make Obamacare economically feasible for insurers, the program needed to attract a large pool of young and healthy recipients to offset the costs of providing care for the older and less healthy. That ratio has yet to prove satisfactory for many insurance companies — one of which, Aetna, announced last year that it would be abandoning the program in several states. (Aetna publicly blamed Obamacare, saying that it was losing money participating in the exchanges, but a federal judge ruled that Aetna’s real motive was to escape scrutiny for its possibly illegal merger with Humana, and court documents have shown that the company was making money in some states where it was claiming not to.)

Then again, it was always the industry’s expectation that the law would prove flawed in places, and that those shortcomings would be addressed legislatively. As Karen Ignagni, the lead lobbyist for the health-insurance industry during the formation and passage of Obamacare and now president and C.E.O. of Empire Health, tactfully puts it: “On the Affordable Care Act, there was a strong difference of opinion between Democrats and Republicans going back to the initial days of discussion. And so there was never a coming-together.”

In spite of all this, Obamacare has done far more good than its critics predicted it would. As of 2014, insurers cannot deny coverage to anyone based on their current health status — a meaningful protection for the 133 million Americans with chronic illnesses. Over 15 million poor or near-poor citizens are now receiving Medicaid benefits in the 31 states (as well as the District of Columbia) that have opted for this expansion. Another 3 million Americans under the age of 26 have been allowed to stay on their parents’ health care plans, thanks to the provision in the A.C.A. that Heritage Action warmly refers to as the “slacker mandate.” Meanwhile, during each month that Obamacare has been in existence, the private sector has grown. The bill has not proved to be the “job killer” apocalyptically described by its Republican opponents.

Now that the law is in place, trying to tinker with it in a measured fashion, deciding which parts to discard and which to keep, would be more complicated than simply determining what the public likes and what it doesn’t. As Jim McDermott says: “You can’t just reach in and pull out one thing. It’d be like a doctor doing surgery and saying, ‘Well, since you’re not using your spleen today, let’s take it out.’ It’s all wired together in a very complex way.”

That wiring represents, among other things, the compromises worked out with the various players in the health care ecosystem — doctors’ and nurses’ associations, hospital groups, insurers, drug companies — that enabled the passage of Obamacare in the first place. As Ignagni points out: “It was very unique that all of the different industries were willing to sit at the table and engage in problem-solving together. I don’t really recall any time when that has happened in our economy on any issue.” Collectively, those groups spent close to $273 million on lobbying during the height of the Obamacare debate. They will surely spend a similar sum haranguing Congress to pass a replacement that favors them.

Many conservative remedies have been floated over the years and have been consolidated into Speaker Paul Ryan’s 37-page “A Better Way” summation: expanded health savings accounts, assorted tax credits and refunds, medical-liability reform, portability of insurance from one job to the next and the ability to purchase insurance across state lines. But the problem for Republicans is that Obamacare’s sweeping coverage has changed the paradigm. Of the 31 states that have opted for expanded Medicaid coverage, 16 have Republican governors. None of these governors have expressed a desire to throw their states’ residents off the rolls. At the same time, the fitful and at times rhetorically muddled transition from the known (Obamacare) to the unknown (“something terrific”) has risked throwing the health care industry into turmoil. The aftershocks are likely to be not only economic but also political.

“If you take Obamacare as it looks right now,” says the policy analyst Robert Laszewski, a longtime critic of the legislation, about half of enrollees “don’t get a subsidy because their incomes are too high. They make $90,000 or $100,000 a year but are in the individual market. These tend to be Trump supporters. So if he further destabilizes this thing and there are 20-to-50-percent rate increases, he’ll be screwing his own people.”

Last month, Representative Steve King once again offered his full-repeal legislation, maintaining that in doing away with Obamacare, the country would immediately be “far better off,” even if nothing were done to replace it. To King and Heritage Action, failing to seize this moment of opportunity would constitute a grave betrayal. “It’s pretty clear that the conservative base is expecting Congress to do this,” Chapman told me. “If Congress goes back to the voters in 2018 and people are still enrolling in Obamacare, I think that’s going to be disastrous.” Speaking of the base, Chapman predicted, “They’re basically going to splinter off and create a third party.”

But it took more than the conservative base to elect Donald Trump, and it will take more than them to re-elect many Republican senators and representatives in 2018 and 2020. The rest of the public has begun a decided turn against King’s and Heritage Action’s position. The same Fox News poll last month that found Obamacare’s overall favorability to be 50 percent also found that only 23 percent of respondents favored fully repealing it — a new low since the law was signed nearly seven years ago.

After Trump remarked to The Washington Post on Jan. 15 that he planned to provide “insurance for everybody,” I thought I had better gauge Michael Needham’s reaction. Taken at face value, Trump did not sound much like a man hellbent on tilting health care policy rightward. “I’m concerned when I hear that kind of talk,” King had told me. “I don’t know how deeply he’s gone into the details.”

But Needham chuckled breezily when I brought up Trump’s statement. “I think right now there’s a lot of people who want to jump on words,” he said. “Everybody wants to ensure every American has access to high-quality health care. That is pretty clearly what Trump was saying. What’s the overused phrase? Trump supporters take him seriously, not literally.”

Nor did it seem to bother him that Republicans on the Hill were in a frenzy to develop a consensus for replacement legislation. Up to now, Needham reminded me, the goal had been to inculcate in the party a ceaseless lust for Obamacare repeal. “For the last eight years,” he said, “it hasn’t made sense to litigate the nuance of, Do you use a tax credit or a tax deduction, or what are your views of block-granting?” The Republicans might not end up with a single gargantuan replacement bill, and maybe that was as it should be. “We’re probably in an age where smaller, humbler pieces of legislation are easier to get consensus around.”

This struck me as sensible and, at the same time, somewhat naïve. If, as in Heritage Action’s dream scenario, Obamacare were to be immediately vaporized, it would leave a yawning vacuum — and the first thing to fill it would be anxiety. Every gruesome case of once-insured families now left to die would be duly chronicled by the media. Legislators would panic — but, if recent history is any judge, their reaction would be tame compared with that of the man who now thoroughly owned the post-Obamacare landscape. Was it really so hard, I asked Needham, to imagine Trump faltering under the specter of bad press and equally bad approval ratings and hastily offering up a Trumpcare that bore a suspicious resemblance to Obamacare?

Needham paused for a moment before saying, in a vaguely amazed voice: “I’m a little surprised by the question. Right now, I don’t see much evidence of that playing out.” Trump’s vice president was Mike Pence, “my first hero when I came to Washington.” Tom Price, the nominee for Health and Human Services secretary, and Mick Mulvaney, whom Trump tapped to run the Office of Management and Budget, were longtime supporters of Heritage Action. The former senator Jim DeMint, Ed Feulner’s replacement as president of the Heritage Foundation, was helping to shape the selection of Trump’s prospective Supreme Court nominees. Trump’s team was loaded with Heritage staff members. All this counted for as much as whatever the new president himself thought. “Richard Viguerie, one of the icons of the conservative movement, said to me that what was great about Reagan was that when he walked into the room, you saw your friends and allies walking with him,” Needham told me.

It was a pleasing image, conveying undying fellowship. Yet even Reagan, fierce inveigher against socialized medicine that he was, did not make a dent in Medicare, the program he so loathed, during his two terms in office. Quite the contrary, in fact: He briefly expanded its benefits to include catastrophic care for the elderly before Congress struck down the measure less than a year after Reagan left office.

Now came the president whom Needham once accused of embracing socialized medicine. Maybe he would somehow turn out to be a more reliable friend to the conservative movement than Reagan had been. Or maybe Washington would prove, hardly for the first time, that even the best of friends will let you down.

https://www.nytimes.com/2017/02/14/magazine/will-obamacare-really-go-under-the-knife.html?hpw&rref=magazine&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well

House GOP leaders will elaborate on their Obamacare plans

by Kelsey Snell, David Weigel and Mike Debones - Washington Post - February 15, 2017

House Republican leaders plan to unveil on Thursday elements of their plan to repeal and largely replace portions of the Affordable Care Act.

House Majority Leader Kevin McCarthy (R-Calif.) told reporters Wednesday that committee leaders will brief GOP lawmakers on some specific proposals at a closed-door meeting scheduled for Thursday morning. The meeting comes as leaders are working to rally sharply divided GOP members around a single plan to remake the health-care law.

Asked whether leaders planned to announce specific elements of the repeal-and-replace plan that will be included in upcoming legislation McCarthy said, “Yes.”

McCarthy did not say which elements of the plan would be detailed at the meeting. But House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said he plans to discuss both repealing the law and ways to give states greater control over health-care decisions.

“I’ll be visiting about the areas in my jurisdiction,” Brady said. “Health savings accounts, individual credits so people can buy the plan that’s right for them that’s portable.”

A senior GOP aide said Wednesday that lawmakers would be presented with a menu of replacement items such as tax credits for purchasing insurance, health savings accounts, “high-risk pools” for the chronically sick, and major Medicaid reforms, as well as potential ways those elements could be passed into law.

But not all of those possible pieces have widespread support among Republicans, who will need to produce 218 votes among their 239 members. Among the most controversial are the tax credits, which under the framework backed by House Speaker Paul D. Ryan (R-Wis.), could be refunded to taxpayers much like the existing Obamacare tax subsidies — even to low-income Americans who would owe no tax.

Many conservatives have grown tired of waiting for House leaders to follow through on their campaign promises to repeal the ACA. Members of the influential House Freedom Caucus announced their own repeal legislation Wednesday to roll back most of the law and move millions of Americans into health savings accounts (HSAs).

“We were tired of waiting,” said Rep. Jim Jordan (R-Ohio) at a news conference on the legislation, “and that’s why we said: ‘Let’s go. Let’s go now.’ ”

Their plan, introduced by Rep. Mark Sanford (R-S.C.) and Sen. Rand Paul (R-Ky.), would end Medicaid expansion, decouple health insurance from employers, offer a tax credit of up to $5,000 to fund HSAs, and eliminate most regulations on what health plans must cover. Insurers would be able to sell policies across state lines; regulations that mandate birth-control coverage would be nixed.

“What if 30 percent of the public had health savings accounts?” Paul asked. “What do you do when you use your own money? You call up doctors and ask the price. . . . If you create a real marketplace, you drive prices down.”

The hard-line conservatives’ rationale for backing the bill is partly that it exists, while at this point the frequently re-branded plan from GOP leadership does not.

“There seems to be a coalescing around principles; I don’t think it’s gotten deep in the weeds about what it will actually include yet,” Sanford in an interview about the larger GOP effort.

House leaders hope to prove Thursday that they, too, can provide details.

House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) defended the pace of the repeal effort. He said that it took time to make sure members had a chance to weigh in on a plan and the Thursday meeting should clear up some of their concerns.

“I think they’ll come away well-informed with what the options are and have a chance to give us their feedback before we move to the next step, which would be a hearing, markup, whatever between now and the end of March,” Walden said. “We’ll have some options available for people to look at.”

Those options may not be enough to appease a growing number of Republicans who insist the repeal bill should go at least as far as a measure approved by Congress in 2015. That effort ended with a veto from President Barack Obama, but GOP leaders touted it as proof of what could be possible with a Republican president.

“The 2015 resolution is the floor,” said Rep. Scott Perry (R-Pa.) at a roundtable for reporters Tuesday. “We all approved of that in 2015. There should be no reason we can’t approve of that again.”

https://www.washingtonpost.com/powerpost/2017/02/15/dde12aac-f3d3-11e6-b9c9-e83fce42fb61_story.html?hpid=hp_hp-more-top-stories_obamacare730pm%3Ahomepage%2Fstory&utm_term=.19a32ce63512

House G.O.P. Leaders Outline Plan to Replace Obama Health Care Act

by Robert Pear and Thomas Kaplan - NYT - February 16, 2017

WASHINGTON — House Republican leaders on Thursday presented their rank-and-file members with the outlines of their plan to replace the Affordable Care Act, leaning heavily on tax credits to finance individual insurance purchases and sharply reducing federal payments to the 31 states that have expanded Medicaid eligibility.

Speaker Paul D. Ryan and two House committee chairmen stood with the new secretary of health and human services, former Representative Tom Price of Georgia, preparing Republican lawmakers for a weeklong Presidents’ Day recess that promises to be dominated by angry or anxious questions about the fate of the health law.

But the talking points they provided did not say how the legislation would be paid for, essentially laying out the benefits without the more controversial costs.

It also included no estimates of the number of people who would gain or lose insurance under the plan, nor did it include comparisons with the Affordable Care Act, which has extended coverage to some 20 million people.

With the House proposal’s rollback of Medicaid payments to the states, it appears probably that the number covered would be smaller.

House Republican leaders asserted in a document describing their plan that they would not “pull the rug out from anyone who received care under states’ Medicaid expansions.”

But Kenneth E. Raske, the president of the Greater New York Hospital Association, expressed alarm, saying the proposals would “put a huge amount of pressure on state budgets and put many Americans at risk of losing health care coverage.”

Sketchy as the outline was, it envisions major changes.

It would fundamentally remake Medicaid, a Great Society program that provides health care to more than 70 million Americans, not just the poor, but also middle-class people who have run out of money and need nursing home care. Under the plan, Medicaid, an open-ended entitlement program designed to cover all health care needs, would be put on a budget.

The Affordable Care Act’s subsidies, which expand as incomes decline, giving the poorer people more help, would be replaced by fixed tax credits to help people purchase insurance policies. The tax credits would increase with a person’s age, but would not vary with a person’s income.

And new incentives for consumers to establish savings accounts to pay medical expenses still assume that workers would have money at the end of a pay period to sock away.

The House Republican plan would also make it easier for consumers to buy health insurancefrom companies licensed in other states, an idea long promoted by Republicans in Congress and championed by President Trump in his campaign last year.

After the recess, Mr. Ryan said: “We intend to introduce legislation to repeal and replace Obamacare. It has become increasingly clear that this law is collapsing. People’s premiums are getting higher and higher. Their deductibles are soaring, and their choices are dwindling.”

Mr. Price told House Republicans that Mr. Trump “is all in on this.”

Mr. Ryan’s presentation on Thursday was meant to generate a sense of momentum for the Republicans’ campaign to eviscerate President Barack Obama’s health care law — a campaign that has been plagued by apprehensions, doubts and divisions among Republicans in the last few weeks.

It was not clear whether the plan as outlined would get Republicans much closer to resolution. Senator Lamar Alexander of Tennessee, chairman of the Senate health committee, said that he and other Senate committee chairmen were working with their House counterparts, with the goal of developing a “consensus document.” The House, he said, will probably act first but “will have the input of senators and the president.”

House conservatives are saying that any plan must begin with a full repeal of the Affordable Care Act and a replacement that looks nothing like it. Representative Mark Meadows, Republican of North Carolina and the chairman of the hard-line Freedom Caucus, said Republicans needed to talk about replacement measures “in specific terms, not in aspirational terms.”

“We believe that it’s time that we make some very difficult decisions and move forward,” Mr. Meadows said.

Any plan that can satisfy House conservatives would face great uncertainty in the more moderate Senate.

The plan unveiled on Thursday by House Republican leaders would make huge changes in Medicaid. It would eventually undo the Affordable Care Act’s expansion of Medicaid and give each state a fixed amount of money for each beneficiary. As an alternative, they said, a state could receive a lump sum of federal money for all of its Medicaid program, or a block grant.

In either case, the federal government would gradually reduce the extra payments it makes to states that have expanded Medicaid under the 2010 health care law. States could continue providing Medicaid to the newly eligible beneficiaries, but the federal share of the costs would decline to the regular federal share of Medicaid costs for other beneficiaries.

The federal government now pays more than 90 percent of the costs for newly eligible beneficiaries in states that expanded Medicaid. Under the House Republican plan, the federal share would decline to 50 percent in states like New York, New Jersey, Connecticut and California, resulting in a significant loss of federal revenue.

In a number of states that have expanded Medicaid, Republican governors and Republican members of Congress have made clear that they do not like the idea of a block grant or a per-beneficiary allotment.

The Congressional Budget Office says that 12 million people have insurance because they became eligible for Medicaid under the Affordable Care Act, and it estimates that federal spending for this group will be $70 billion this year.

The House Republican plan would immediately eliminate tax penalties for people who do not have insurance and employers that do not offer it.

It would also eliminate taxes and fees that help pay for the expansion of coverage under the 2010 health care law. These include fees collected from health insurance companies and manufacturers of brand-name prescription drugs and an excise tax on makers of medical devices.

House Republicans have repeatedly said that they would continue providing some protection for people with pre-existing medical conditions. But the document describing their proposal does not say how they would do that.

Mr. Ryan said the tax credits envisioned by House Republicans were different from those provided in the Affordable Care Act.

Under that law, the tax credits are available only for insurance products that meet detailed federal standards and are purchased through an insurance exchange like HealthCare.gov.

By contrast, Mr. Ryan said, with the Republican version of tax credits, people can “buy the health insurance plan of their choosing,” which could cost less and have less generous coverage than the plans now available.

“You get the freedom to do what you want and buy what you need,” Mr. Ryan said.

During a transition period, House Republicans would continue “Obamacare subsidies,” but they would provide a little more assistance to young people and a little less to older Americans.

The House Republican plan would provide an unspecified amount of money for “innovation grants,” which states could use to help defray consumers’ out-of-pocket costs or to establish “high-risk pools” for people with serious chronic conditions.

https://www.nytimes.com/2017/02/16/us/politics/affordable-care-act-congress.html

Republican Health Proposal Would Redirect Money From Poor to Rich

by Margot Sanger-Katz - NYT - February 16, 2017

Republicans in Congress have been saying for months that they are working on a plan to repeal and replace Obamacare in the Trump era. Now we have the outline of that plan, and it looks as if it would redirect federal support away from poorer Americans and toward people who are wealthier.

A white paper drafted by House leadership and the staff of the House and Senate committees that oversee health policy details a structure that could replace large sections of the Affordable Care Act. Crucially, the proposal largely containsprovisions that could be passed through a special budget process that requires only 50 Senate votes, and fulfills President Trump’s promise that the repeal and replacement of the law would take place “simultaneously.”

The plan would make major changes in how health care is financed for Americans who don’t get coverage from work. It would greatly expand the number of Americans who could benefit from federal help in buying health insurance, but it would change who benefits most from that support.

Obamacare, as the A.C.A. is known, extended health coverage to 20 million Americans through two main mechanisms. It expanded Medicaid coverage to Americans below or just above the poverty line in states that participated, and it offered income-based tax credits for middle-income people to buy their own insurance. Obamacare was a redistributive law, transferring money from rich to poor.

The Republican plan would alter both of those programs, changing the winners and losers. It would substantially cut funding for states in providing free insurance to low-income adults through Medicaid. And it would change how tax credits are distributed by giving all Americans not covered through work a flat credit by age, regardless of income.

That means that the biggest financial benefits would go to older Americans, like, say, Secretary of State Rex Tillerson. If he didn’t have a job in the Trump cabinet and access to government coverage, a 64-year-old multimillionaire like him would get the same amount of financial assistance as someone his age, living in poverty, and he would get substantially more money than a poor, young person.

The idea of matching tax credits to age makes some sense. Older people tend to have higher medical bills, and insurers, even under Affordable Care Act rules, charge them substantially higher prices. The new plan would also simplify the current system, which requires verifying every applicant’s income and then giving just the right amount of financial assistance. It would also eliminate incentives for low-income people to avoid earning more (higher earners can face a reduction in benefits).

But the current system is set up to ensure that low and middle-income Americans can afford the cost of their premiums. The Republican plan would not do that, and would result in many more low-income people losing out on coverage if they couldn’t find the money to pay the gap between their fixed tax credit and the cost of a health plan.

Older people without employer-based insurance typically earn more than young people, who tend to be starting out in their careers. It’s hard to know precisely how many people would lose coverage under this proposal because it’s missing some numbers. But similar tax credit plans from House Speaker Paul Ryan and Tom Price, the new secretary of health and human services, would result in millions losing coverage, according to independent estimates. (Mr. Ryan said Thursday in a news conference that the Congressional Budget Office was evaluating the new proposal, which means that we may see firm coverage estimates in the coming weeks.)

The plan includes additional features that redistribute resources from the poor to the rich. It would allow Americans to sock more money away for health spending in special tax-free health savings accounts. The benefits of such accounts fall largely to higher income-people who pay more in taxes, and a recent analysis of current health savings accounts found that they are held disproportionately by families with high earnings. (The white paper is silent on two Obamacare taxes that target wealthier Americans, but other Republican plans have proposed eliminating them. It does eliminate a number of taxes on the health care industry.)

What the plan doesn’t do, currently, is change any of the Obamacare regulations on health insurance that Republicans say drive up the cost. Those rules, including requirements that every plan cover a standard package of benefits, and those requiring companies to charge the same prices to healthy and sick Americans, would stay on the books, because they can’t be easily changed through the budget process.

Changing those rules could make insurance cheaper but would rankle many consumer advocates — and would require separate legislation, with 60 Senate votes. Under this proposal, the health plans would look largely the same, but the way the government helps people pay for them would change.

There’s still a lot subject to change, of course. Congressional leadership has said the bill, once completed, will proceed through committee hearings and amendments. And the politics of passing such legislation, even with Republican control of both houses of Congress, will be a challenge. But this proposal, with the imprint of every major committee working on health care, seems likely to set the terms of the discussion.

I wrote a few weeks ago about how all health policy decisions involve trade-offs, and it will be hard for President Trump to honor his promise of coverage that is “far less expensive and far better” than Obamacare. This plan is a good illustration of those challenges. It’s a simpler, potentially cheaper plan than Obamacare. But it’s far less generous to the poor, and unlikely to provide the health insurance for “everybody”that President Trump envisions.

https://www.nytimes.com/2017/02/16/upshot/republican-health-proposal-would-redirect-money-from-poor-to-rich.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0

Scheme Tied to UnitedHealth Overbilled Medicare for Years, Suit Says

by Mary Williams Walsh - NYT - February 16, 2017

UnitedHealth Group, one of the nation’s largest health insurers, is accused in a scheme that allowed its subsidiaries and other insurers to improperly overcharge Medicare by “hundreds of millions — and likely billions — of dollars,” according to a lawsuit made public on Thursday at the Justice Department’s request.

The accusations center on Medicare Advantage, a program through which people 65 or older agree to join private health maintenance organizations, or H.M.O.s, whose costs the government reimburses.

The program was created in 2003 after UnitedHealth and other insurers said that managed care could help contain the overall cost of Medicare, which has strained the federal budget by rising faster than the rate of inflation.

Instead of slowing Medicare costs, UnitedHealth may have improperly added excess costs in the billions of dollars over more than a decade, according to the lawsuit, which was unsealed in Federal District Court in Los Angeles.

A spokesman for UnitedHealth disputed that assertion, saying it was based on faulty interpretations of Medicare rules.

“We reject these more than five-year-old claims and will contest them vigorously,” said the spokesman, Matthew A. Burns. He said the company served millions of Medicare Advantage members and was “proud of the access to quality health care we provided, and confident we complied with the program rules.”

Insurers and the federal government have been at odds for years over how private plans bill Medicare. A number of UnitedHealth companies sued the Health and Human Services Department last year, challenging proposed rules for how companies should handle overpayments by Medicare.

At the same time, whistle-blowers have filed lawsuits against insurers, claiming they overcharged the programs, and government audits have uncovered a widespread problem with private plans overcharging Medicare over a number of years.

The Justice Department’s court notice that it was joining the case involving UnitedHeath was filed by Chad Readler, a lawyer who joined the agency’s civil division as part of the Trump administration. It is intervening in the whistle-blower’s claims about erroneous coding and inflated billing but is not taking part in other claims. The government has 90 days to file its own complaint.

The newly public accusations were first made in 2011, when a former UnitedHealth executive, Benjamin Poehling, filed a complaint under the False Claims Act, a federal law that allows private citizens to take legal action when they believe a government program has been defrauded.

Such cases are typically filed under seal to give federal or state investigators time to follow up and decide whether to join the litigation. In successful False Claims Act cases, where the government ultimately recovers money, the original whistle-blower receives a portion.

Mr. Poehling’s complaint, which was among the documents unsealed on Thursday, named 15 companies as defendants. Of those, the Justice Department told the court it wanted to intervene in the cases involving two, UnitedHealth and WellMed Medical Management, which UnitedHealth acquired in 2011.

The Justice Department asked the court to grant access to all documents produced while Mr. Poehling’s case against the other defendants proceeds, and it reserved the right to join those cases later.

Mr. Poehling was finance director for UnitedHealthcare Medicare and Retirement, a subsidiary that works with the Medicare Advantage program. His complaint describes “a corporate culture that demands and rewards financial success from its employees,” including initiatives to increase a billing practice known as “risk adjustment.”

The federal government has allowed people to receive Medicare benefits through private H.M.O.s for decades as an alternative to conventional fee-for-service Medicare.

Medicare initially paid the H.M.O.s a fixed rate per member, no matter what chronic conditions members had. That made the H.M.O.s avoid signing up unhealthy people, because they required more care, reducing the companies’ profits.

The approach changed in 2003, when the Centers for Medicare and Medicaid Services added a “risk adjustment factor” to its reimbursement schedules for managed care. That made H.M.O.s more willing to sign up unhealthy people, but it also gave them a new incentive: to make people appear sicker than they were. UnitedHealth had a unit that helped its subsidiaries and other insurance companies perform risk adjustment calculations.

Mr. Poehling said that he and other employees were given “risk adjustment” targets and their performance was evaluated based on how well they achieved them. In a 2008 performance review, for example, he was judged on whether he had increased risk scores by 3 percent.

“There were no similar performance goals for the overall accuracy of risk adjustment submissions,” he wrote in his complaint. “Nor was there any accountability assigned for reducing the number of false claims” submitted to the Medicare program for reimbursement.

Attached to his complaint was an email message from his division’s chief financial officer, Jeffrey J. Knutson, urging staff members “to really go after the potential risk scoring that you have consistently indicated is out there.”

“Let’s turn on the gas!” Mr. Knutson wrote. “What can we do to make sure we are being reimbursed fairly for the members and risk we take on more than what we are currently doing.

“When we meet next on our steering committee, I’d like to see what it would take to add another $1OOM to our 2008 revenue from where we are. What would be doable? What resources would you need? What technology would you need?”

Medicare Advantage’s rules require that for patient care to qualify for risk adjustment factors, a patient’s condition must be verified in person on a regular basis by a qualified professional.

But Mr. Poehling said that coding specialists would instead mine patient records, looking for hints of a possible long-term condition. When they found one, they would request the higher payment without going through the required in-person evaluation.

The realization that medical records could be mined for extra money appears to have given rise to a cottage industry of consulting firms offering to screen patient histories and look for indications of long-term health problems that could be used to increase Medicare reimbursements.

Federal audits of the Medicare Advantage program have suggested that H.M.O.s have driven Medicare costs higher, but a federal effort to issue tighter rules in 2014 was unsuccessful. The proposed rules were withdrawn, and UnitedHealth subsequently sued.

https://www.nytimes.com/2017/02/16/business/dealbook/unitedhealthcare-improperly-took-money-from-medicare-suit-says.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news

Long-Term Opioid Use Could Depend on the Doctor Who First Prescribed It

by Jan Hoffman - NYT - February 15, 2017

Some emergency room doctors are far more likely than others even within their own department to prescribe opioids to treat pain in older people, and their patients are at greater risk of using the powerful drugs chronically than those who saw doctors who prescribe them less frequently, according to a large new study.

The research was published Wednesday in The New England Journal of Medicine.

As the opioid epidemic continues to devastate communities around the country, the study was the latest attempt to identify a starting point on the path to excessive use.

“This is the analysis we have been looking for to show the risk of a single exposure of a patient in an emergency room to an opioid,” said Dr. Lewis S. Nelson, the chairman of emergency medicine at Rutgers New Jersey Medical School and University Hospital, who was not involved in the study.

The study tracked about 375,000 Medicare patients with a similar range of complaints in several thousand hospital emergency rooms from 2008 to 2011, as well as the frequency of opioid prescriptions written by the doctors who treated them. It found that the prescribing patterns of whichever physician they encountered were an important factor in their future opioid use.

Over all, researchers estimated that out of every 48 patients who were sent home with a prescription, one would end up using opioids long-term, which researchers defined as at least 180 days of medication over a year. Chronic opioid use, particularly in older people, can contribute to spiraling problems: constipation, confusion, falls and addiction.

But the risk of becoming that patient increased or decreased depending on the treating physician. Researchers found that doctors they identified as “high-intensity” prescribers sent one in four patients home with opioids. “Low-intensity” prescribers gave opioids to one in 14 patients. The patients who saw a high-intensity prescriber were 30 percent more likely to become long-term users, researchers said.

The study’s lead author, Dr. Michael L. Barnett, an assistant professor of health policy and management at Harvard T.H. Chan School of Public Health, said the point of the findings was “not that high-intensity prescribers are necessarily irresponsible in prescribing opioids to certain patients.” But, he said, “Their patients have worse outcomes that we weren’t aware of before.”

Experts in emergency medicine, geriatrics and medical toxicology praised the study.

“It puts the burden on us in the E.R. to be even more thoughtful about how to do things,” said Dr. Nelson, who served on the expert panel for the Centers for Disease Control and Prevention that helped develop opioid guidelines in 2016.

Although researchers looked at the strength and duration of the initial prescription, they did not find that the high-intensity prescribers necessarily prescribed doses that were higher or longer lasting.

Dr. Barnett, a primary care physician at Brigham and Women’s Hospital, said that the critical first step was the decision itself about whether to prescribe opioids, “regardless of how much or how little.”

The disparity in prescribing patterns, he said, demonstrates that “there is no consensus among E.R. doctors who are treating similar patients about when to prescribe opioids and what dose to give, and the lack of guidance for how to treat acute pain.”

“Doctors may have an intuitive sense, but when you rely on intuition, you get inconsistency,” he said. “You get overtreatment and also undertreatment.”

The study did not seek to lay blame for the well-documented rise in opioid use by Medicare patients at the feet of emergency room doctors. Indeed, after patients receive an opioid prescription from the emergency room, they usually have subsequent prescriptions written by doctors outside the hospital, especially primary care physicians. The study’s authors alluded to “clinical inertia” — the belief among follow-up physicians that if the emergency room doctor’s prescription did the trick, they might as well refill it.

Emergency department physicians note that older adults present unique, limiting challenges that further complicate pain management decisions. For any number of events — a twisted ankle, aching gut, or throbbing neck — younger adult patients can often be successfully treated with anti-inflammatory drugs, such as naproxen or ibuprofen, and an ice pack.

But Dr. Michael A. Steinman, a professor of medicine at the University of California, San Francisco School of Medicine, who has studied the increase of opioid use among older adults, said that these commonly used medications can exacerbate kidney and blood pressure problems for them, and raise the risk of stomach ulcers, particularly if used long term.

“So for many types of pain we’re left with creams, salves, patches and Tylenol,” said Dr. Steinman, a geriatrician. “And after that, you’re up to opioids. We have few medication options.”

Certainly many cases warrant opioids, he said, such as a broken bone. “But a sprained ankle? A painful rash? We shouldn’t just routinely recommend an opioid because someone is in pain.”

But he also noted that there is a “structural disincentive” to offer alternatives to medication, such as acupuncture, massage therapy, physical therapy, because of poor insurance reimbursement.

Another point from the study, said Dr. Maryann E. Amirshahi, an emergency room physician at Medstar Washington Hospital Center who has a background in pharmacology and addiction medicine, was that if doctors were going to consider prescribing opioids, pausing a few moments in their harried shift was in order.

“We should be more mindful,” she said, recommending that doctors ask risk-assessment questions, prescribe shorter courses and err on the side of not having leftover, “just-in-case” pills.

Also important, she said: “Talking with patients about the role of opioids.”

Recently, Dr. Barnett, the lead author, realized himself that to do so amounted to a modest but meaningful shift in routine practice. He saw a patient who had first been treated in the emergency department for pain and bruising after falling on her back down winter-slick steps.

“She was in enormous pain and had such difficulty moving around that I felt I had no choice but to give her a short prescription of opioids to get through the weekend, just to be functional,” he recalled. “I told her about the risks of constipation and sleepiness. But I didn’t tell her about dependence and addiction.

“And that’s one lesson from this paper. Doctors don’t even know what they’re doing is a habit. We have to decide to interrupt ourselves, like picking up a backpack with your other arm: ‘Oh, I need to tell this patient about another risk with this medication.’ ”

https://www.nytimes.com/2017/02/15/health/long-term-opioid-use-doctors-prescriptions.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news

Big Pharma really, really doesn't want you to know the true value of its drugs

by David Lazarus - LA Times - February 17, 2017

The latest poster child for cruel and inhuman drug pricing is Kaleo Pharma, maker of an emergency injector for a med called naloxone, which is used as an antidote to save the lives of people who overdose on painkillers.

As America’s opioid crisis reaches epidemic levels, Kaleo has jacked up the list price for its Evzio auto-injector by 600%, soaring from $690 several years ago to $4,500, according to lawmakers.

 Nearly three dozen senators wrote to Kaleo’s chief executive, Spencer Williamson, last week to say they were “deeply concerned” about the price hike and to note that it “threatens to price out families and communities that depend on naloxone to save lives."

But that’s not what caught my attention.

Rather, I was struck by the company’s answers to me about lawmakers’ concerns.

In response to emailed questions, Williamson said that although the list price for Evzio is more than $4,000, that’s “not a true net price to anyone … due to numerous discounts and rebates that are negotiated in the supply chain that make up our healthcare system.”

In other words, even though the price tag for his company’s easy-to-use, lifesaving device is ridiculous and indefensible, there’s no need to worry because backroom deals by assorted players in the healthcare food chain make that price tag meaningless.

And that, in a nutshell, illustrates the lunacy of the U.S. healthcare system.

“Our system of healthcare financing is the most cynical such system in the world,” said Uwe Reinhardt, a healthcare economist at Princeton University. “It starts with the opaque hospital bill and ends with the opaque system of product pricing and the disgrace of surprise medical bills. Americans can rightly be ashamed of these arrangements.”

There’s a good reason why U.S. drug prices are so much higher than what people pay in other countries. Most other developed nations place limits on how much drug companies can charge to prevent them from taking advantage of the sick. A fair profit is fine. Price gouging is not.

In this country, drugmakers charge whatever they can get away with, which perhaps would be tolerable if we had an efficient, transparent marketplace in which patients benefit from robust competition and an ability to shop around for the best price. But we don’t.

Often, we have a single provider of a drug or medical technology that, thanks to its monopoly power, is in a position to profit handsomely from people’s misfortune. Their message to this captive market is based on an ugly economic principle: Pay up or suffer.

Or in some cases, pay up or die.

In his statement to me, Williamson said most people won’t pay anywhere close to $4,000 for Evzio. Even with a high-deductible insurance plan, he said, a patient won’t pay more than $360 and might end up paying nothing thanks to the company’s “enhanced patient access program.”

But that isn’t price transparency. That’s a magician’s trick known as misdirection. Williamson is saying, “Don’t look at the crazy list price in this hand, look instead at the sweet discounts in this hand.”

The upshot is that his company’s prices remain indecipherable.

“It's awfully hard to see much value in this opaque approach to real drug pricing,” said Nicholson Price, an assistant law professor at the University of Michigan who focuses on healthcare and regulation. “Especially if we want to have patients be more cost-conscious to keep costs down, opaque pricing does us no favors.”

What it does do, he added, is “create lots of opportunities for gaming and middlemen.”

Kaleo’s gamesmanship isn’t new. As my colleague Melody Peterson noted in a storyabout naloxone pricing last year: “Not long ago, a dose of the decades-old generic drug cost little more than a dollar. Now the lowest available price is nearly 20 times that.”

The reason Williamson can so confidently declare that the list price for Evzio isn’t worth fretting about is because he knows it’s completely arbitrary. Drug companies and hospitals routinely open their negotiations with insurers with a made-up price and then settle for a much lower amount, which is what the patient ultimately sees.

Unfortunately, that system, such as it is, no longer works. An increasing number of Americans face the full cost of healthcare as a result of high-deductible insurance plans.

Kaleo might pat itself on the back for its patient subsidies and protections, but the reality is that somebody has to pay the company’s bills, either the patient or the insurer. Sky-high list prices for insurers raise premiums for everyone.

What’s to be done? At the moment, the only effective tool is public shaming. Case in point: Mylan, which introduced a cheaper (but still overpriced) version of its EpiPen after facing public scorn over a 500% price increase for its epinephrine injector.

Otherwise, we can follow the example of our economic peers and impose price caps for prescription drugs (it’ll never happen) or pass legislation that introduces some sunlight to negotiations between pharmaceutical companies and insurers (ditto).

My sense is that the only politically feasible solution is to empower Medicare to negotiate drug prices with pharmaceutical companies — right now that’s forbidden by law; thanks, Republicans — and for details of that process to be available to anyone who wants to see them, as is the case for most public spending.

The drug industry wouldn’t like that, of course. It prefers operating in the shadows and keeping consumers in the dark.

Matt Schmitt, an assistant professor of strategy at UCLA’s Anderson School of Management, said it’s easy for Kaleo’s Williamson to shrug off a 600% markup as a fantasy number. But “the true price increase, while perhaps not 600%, may still be very substantial,” Schmitt said.

That’s what Kaleo and all other drug companies want to keep hidden — the deals cut behind closed doors. And they’ll do this by getting people to focus on the magic wand in their hand, rather than the cards up their sleeve.

This week, Kaleo reintroduced Auvi-Q, a competitor to the EpiPen. Auvi-Q had been recalled from the market in 2015 after reports of device malfunctions.

Kaleo’s list price for the injector is $4,500. Before the recall, it sold for $500.

But don’t worry, the company says. That list price is meaningless.

http://www.latimes.com/business/lazarus/la-fi-lazarus-drug-pricing-evzio-20170217-story.html

Maine Health Groups Concerned About New Health and Human Services Commissioner

by Patty Wight - Maine Public - February 12, 2017

In the early hours Friday morning, Republican U.S. Rep. Tom Price of Georgia was confirmed as the new secretary of the U.S. Department of Health and Human Services. The reaction among physicians and consumer groups in Maine is mixed, because Price, who is also an orthopedic surgeon, has supported making major changes to Medicaid, Medicare and the Affordable Care Act.

Before the vote to confirm Price, independent U.S. Sen. Angus King of Maine issued a strong warning on the Senate floor against the nominee.

“This guy is a wrecking ball. He’s not a Secretary. He’s going into this agency to destroy it,” he says.

Since Price’s confirmation, the language coming out of Maine about the new Health and Human Services Secretary is more cautious.

“Kind of a mixed bag,” says the Maine Medical Association’s Gordon Smith.

Smith says the MMA does not support Price’s previously stated positions that favor converting Medicaid to a block grant program and limiting Medicare payments to cover beneficiaries’ medical care. But Smith emphasizes that these are previous positions, and that Price could change his tune now that he oversees health for the country.

Smith says Price brings at least one positive to the position.

“He is a physician. He’s not a bureaucrat. He understands medicine and he understands the importance of patients being covered,” he says.

But Emily Brostek of Consumers for Affordable Health Care is far less optimistic.

“I have serious concerns about his confirmation as head of HHS, just in terms of his positions. He’s been a fierce critic of some of the pillars of our health system,” she says.

Along with the changes Price has wanted to make to Medicaid and Medicare, he has also vowed to repeal the Affordable Care Act. A replacement plan he crafted two years ago called the Empowering Patients First Act favors the use of health savings accounts, would establish high-risk pools and provide tax credits based on people’s age versus income.

Brostek says most changes to the Affordable Care Act can’t happen overnight. But Price will have some leeway because of the executive order President Donald Trump signed on his first day in office to reduce ACA regulations and taxes.

“So that’s a directive, now that we have a head of HHS, he’ll be taking up and deciding how to carry that out. So that’s a big question,” she says. “There is a fair amount that can be done by the administration without requiring legislation.”

Secretary Price did get a vote of confidence from Republican U.S. Sen. Susan Collins of Maine. Her spokeswoman released a statement saying she does disagree with Dr. Price on some issues, but believes having a medical doctor at the helm of the department will be helpful, and she looks forward to working with him to help increase access to affordable health insurance for all Americans.

http://mainepublic.org/post/maine-health-groups-concerned-about-new-health-and-human-services-commissioner