Reagan, Deregulation and America’s Exceptional Rise in Health Care Costs
by Austin Frakt - NYT - June 4, 2018
Why did American health care costs start skyrocketing compared with those of other advanced nations starting in the early 1980s?
At the same time this was happening, American longevity gains were failing to keep up with peer countries. In addressing these twin mysteries in a recent article, experts suggested two main reasons: The United States didn’t impose the same types of government cost controls on health care that other nations did, and we invested less in social programs that also promote health.
Many readers have since commented that it had to do with the Reagan-era zeitgeist, or increasing obesity. In the intervening weeks, I have spoken with many more health care experts — about their ideas as well as those of readers — and several, while believing the article essentially covered the answers, offered intriguing new observations.
The 1980s divergence in health costs, some readers and experts observed, coincided with a broad push toward deregulation.
Gary Gaumer, an associate professor at Simmons College School of Business, pointed to changes in how hospitals and doctors were paid. Before the early 1980s, payments by Medicare and other insurers were tied to costs. If it cost a hospital, say, $5,000 for a patient’s surgery, that’s what the hospital was paid, plus a bit more for reasonable profit.
But then payers (private insurers and government health care programs like Medicare) began to shift financial risk to providers like hospitals and doctors. It started with a law that began affecting most hospitals in 1983, changing how Medicare paid hospitals to a fixed price per visit, regardless of the actual costs. This approach later spread to other Medicare services and other payers, including private insurers. If providers could get costs down, they made money. If they couldn’t, they lost money.
“Hospitals and other providers began to behave more like businesses,” Mr. Gaumer said. “And the culture of health care delivery began to change.”
To lessen risk, hospitals sought revenue at every turn, starting new programs and offering new services — such as providing new outpatient services that previouslyinvolved longer hospital stays. Health care organizations became more concerned with growing in scale to absorb the higher level of risk, which helped push health care spending ever higher.
Though shifting more responsibility to the investor-owned private sector seemed to backfire as a cost-control measure, it was consistent with broader deregulation in the 1980s.
“We need to see the medical sector as part of the broader gestalt of American society at the time,” said John McDonough, professor of Public Health Practice at the Harvard Chan School of Public Health. President Carter was “obsessed with broad public and private health care cost control, and Reagan abandoned that, with the exception of Medicare,” he said.
The 1980s deregulatory agenda was evident in states as well. Many abandoned health care price and capital investment controls. Managed care — in the form of health maintenance organizations — was the free-market replacement to government regulations. Investor-owned, shareholder-driven, for-profit companies became common in health care for the first time. They focused on revenue and profit maximization, not cost control.
“‘Greed is good’ was more than a catchy movie line — it was the Me Decade’s dominant theory,” Professor McDonough said. “No other advanced democracy embraced deregulated health care markets in the way that the U.S. did. It swept through health care as it did every other part of the U.S. economy.”
Further explanations for why the nation fell behind in health care outcomes, starting in the 1980s, are harder to come by. Mr. McDonough pointed to the Federal Trade Commission’s 1978 decision to allow direct-to-consumer advertising of prescription drugs. And the first signs of the obesity epidemic began to appear in this decade, but not enough to explain that decade’s remarkable cost explosion.
Stuart Butler, a senior fellow in economic studies at the Brookings Institution, added that underfunding of social services relative to medical care probably played a significant role in both health care spending and outcomes. “I’d like to see more experimentation with investments in nonmedical sectors we know also affect health,” he said, “but we’ll need to track these carefully to find what actually pays off.” These include housing and education, for example.
Gail Wilensky, senior fellow at Project HOPE, an international health foundation, and former director of the Medicare and Medicaid programs under President George H.W. Bush, agreed that the United States spends too much on health care and too little on other social services. Firearms and illicit drugs also contribute to early deaths. However, she pointed to one hopeful example. “The U.S. was unusually successful in smoking cessation, relative to other countries,” she said. “If we could replicate that success in other areas, like obesity reduction, we might close the gap in health care outcomes.”
She said there are other hopeful lessons from history. American health spending pulled away from that of other countries over the decades in large part because of an expansion of programs like Medicare and Medicaid, without the kind of brakes on prices and technology adoption that other countries put in place.
But health spending growth relative to G.D.P. held steady in the 1990s. “That’s partly due to a strong economy,” she said. “But we also put some brakes on Medicare in that decade. In addition, managed care slowed growth in the private sector.”
If we did it then, we could do it again, she added.
Editor's Note -
The next article is a column I wrote about the marketplace mentality in health care and health care costs in 2013.
-SPC
Health care spending: A 21st century gold rush
by Philip Caper, M.D. - Bangor Daily News - February 14, 2013
Winston Churchill once remarked, “Americans will always do the right thing, once they’ve exhausted all alternatives.” His observation, at least the second half of it, is proving itself as we continue to struggle with our health care system, especially its out-of-control costs that are crippling the budgets of businesses and government alike.
There is a lot of money in our health care system, and no enforceable budget. That leads to carelessness when it comes to spending that money.
What are some of the reasons health care costs continue to rise? Here are a few examples.
For at least the past 40 years, I’ve heard colleagues say, “We’d better get our fees and charges up now, because next year they’re really going to crack down on us.” It has never happened, yet. The problem is intensifying as outpatient “providers” have morphed from being real people into being corporations.
The Los Angeles Times reported on a case where a teacher’s group health plan was billed $87,500 by an “out of network” provider for a knee procedure that normally costs $3,000. Her health plan was willing to pay it. Outraged, the teacher ratted on the orthopedic surgicenter to California’s attorney general. After the press got involved, the charge was “reduced” to only $15,000. Not a bad pricing strategy, from the surgicenter’s point of view.
The New York Times reported an incident where a student who needed emergency gallbladder surgery ended up with a couple of “out-of-network” surgeons through no fault of his own. He was billed $60,000. His insurance company was willing to pay only $2,000. He was left to deal with the rest of the bill on his own.
There are many more examples. Privately insured patients are not the only ones affected. Governors around the country are continuing to struggle with how to pay for their Medicaid programs. In Oregon, Democratic Gov. John Kitzhaber is trying to find ways to impose a fixed budget on Oregon’s Medicaid program without adversely affecting Medicaid beneficiaries. But, he acknowledges, disciplining Medicaid alone will not do the job. He hopes his approach will be adopted by most other health insurance programs.
In Maine, Republican Gov. Paul LePage is struggling not only with how to keep up with burgeoning current Medicaid costs, but also how to pay the state’s almost $500 million past-due Medicaid debt to hospitals. He has proposed lowering liquor prices to boost sales, and mortgaging Maine’s future liquor revenues to secure bonds to pay the debt. His Republican colleagues in the Legislature have described this idea as “creative.”
One of the central features of Obamacare is the creation of “health insurance exchanges,” or online marketplaces. But the law has recognized that many people will need help making the right choices. So it has created an army of “navigators” to help them. A recent Washington Post story points out that a huge number of such experts will be necessary (California alone plans to certify 21,000 of them). Their cost will be reflected in higher health insurance premiums and has sparked opposition from insurance brokers who view them as competition. That will be an expensive fight, without increasing the amount going to actual health care by a single dollar.
Then there is the purchase of politicians by powerful corporate interests. When the Medicare prescription drug
There is a lot of money in our health care system, and no enforceable budget. That leads to carelessness when it comes to spending that money.
What are some of the reasons health care costs continue to rise? Here are a few examples.
For at least the past 40 years, I’ve heard colleagues say, “We’d better get our fees and charges up now, because next year they’re really going to crack down on us.” It has never happened, yet. The problem is intensifying as outpatient “providers” have morphed from being real people into being corporations.
The Los Angeles Times reported on a case where a teacher’s group health plan was billed $87,500 by an “out of network” provider for a knee procedure that normally costs $3,000. Her health plan was willing to pay it. Outraged, the teacher ratted on the orthopedic surgicenter to California’s attorney general. After the press got involved, the charge was “reduced” to only $15,000. Not a bad pricing strategy, from the surgicenter’s point of view.
The New York Times reported an incident where a student who needed emergency gallbladder surgery ended up with a couple of “out-of-network” surgeons through no fault of his own. He was billed $60,000. His insurance company was willing to pay only $2,000. He was left to deal with the rest of the bill on his own.
There are many more examples. Privately insured patients are not the only ones affected. Governors around the country are continuing to struggle with how to pay for their Medicaid programs. In Oregon, Democratic Gov. John Kitzhaber is trying to find ways to impose a fixed budget on Oregon’s Medicaid program without adversely affecting Medicaid beneficiaries. But, he acknowledges, disciplining Medicaid alone will not do the job. He hopes his approach will be adopted by most other health insurance programs.
In Maine, Republican Gov. Paul LePage is struggling not only with how to keep up with burgeoning current Medicaid costs, but also how to pay the state’s almost $500 million past-due Medicaid debt to hospitals. He has proposed lowering liquor prices to boost sales, and mortgaging Maine’s future liquor revenues to secure bonds to pay the debt. His Republican colleagues in the Legislature have described this idea as “creative.”
One of the central features of Obamacare is the creation of “health insurance exchanges,” or online marketplaces. But the law has recognized that many people will need help making the right choices. So it has created an army of “navigators” to help them. A recent Washington Post story points out that a huge number of such experts will be necessary (California alone plans to certify 21,000 of them). Their cost will be reflected in higher health insurance premiums and has sparked opposition from insurance brokers who view them as competition. That will be an expensive fight, without increasing the amount going to actual health care by a single dollar.
Then there is the purchase of politicians by powerful corporate interests. When the Medicare prescription drug
benefit was enacted in 2003, it was prohibited from negotiating lower drug prices, even though the veterans health system and many Medicaid programs are permitted to do so. The lead congressman pushing that provision retired from Congress soon after it was passed to take a lucrative job with the pharmaceutical industry. This has become standard practice in Washington.
And don’t forget the for-profit levels of compensation paid to the executives of nonprofit hospitals.
Meanwhile in Massachusetts, where Obamacare was born, health care costs are expected to rise six to 12 percent next year. Last year, their legislature passed a law capping increases in total private and public spending statewide, limiting them to the rate of growth of the Massachusetts economy. But the job of figuring out how to actually get it done was turfed to an “expert panel” of “stakeholders.” My bet is that such cost control will be difficult or impossible to achieve unless we simplify and centralize the way we finance health care.
Why does this financial abuse of taxpayers and patients continue? Because we let it. Americans often react to structural problems by simply throwing more money at them. We seem to be unable to say “no more.”
Maybe it’s time to revisit the part of Churchill’s comment about Americans always doing the right thing — by emulating the policies of most other wealthy countries. They have health care systems that are more popular than ours, provide better access to care, get better results, and are far less expensive.
Maybe it’s time to put everybody into a single, nonprofit system we can all support, within a budget acceptable to the majority of people. That arrangement would eliminate the political fights among people in different health insurance programs, each questioning change by asking, “How does it benefit me?”
Such a system would be best if done at a national level. But it could work initially at the level of individual states, such as Maine. That’s how the Canadians did it — one province at a time. If Maine could be one of the first states to do that, the people of Maine could truly say “Dirigo, I lead.”
http://bangordailynews.com/2013/02/14/health/health-care-spending-a-21st-century-gold-rush/
And don’t forget the for-profit levels of compensation paid to the executives of nonprofit hospitals.
Meanwhile in Massachusetts, where Obamacare was born, health care costs are expected to rise six to 12 percent next year. Last year, their legislature passed a law capping increases in total private and public spending statewide, limiting them to the rate of growth of the Massachusetts economy. But the job of figuring out how to actually get it done was turfed to an “expert panel” of “stakeholders.” My bet is that such cost control will be difficult or impossible to achieve unless we simplify and centralize the way we finance health care.
Why does this financial abuse of taxpayers and patients continue? Because we let it. Americans often react to structural problems by simply throwing more money at them. We seem to be unable to say “no more.”
Maybe it’s time to revisit the part of Churchill’s comment about Americans always doing the right thing — by emulating the policies of most other wealthy countries. They have health care systems that are more popular than ours, provide better access to care, get better results, and are far less expensive.
Maybe it’s time to put everybody into a single, nonprofit system we can all support, within a budget acceptable to the majority of people. That arrangement would eliminate the political fights among people in different health insurance programs, each questioning change by asking, “How does it benefit me?”
Such a system would be best if done at a national level. But it could work initially at the level of individual states, such as Maine. That’s how the Canadians did it — one province at a time. If Maine could be one of the first states to do that, the people of Maine could truly say “Dirigo, I lead.”
http://bangordailynews.com/2013/02/14/health/health-care-spending-a-21st-century-gold-rush/
The Next Great American Public Health Campaign? Readers Make Their Picks
Public health campaigns have proved a rare double success in American health care over the decades: They have drastically increased life spans, and often paid for themselves.
Given that, it’s surprising that spending on public health today is so low, Aaron Carroll and Austin Frakt recently wrote in The Upshot. They are planning a follow-up article, consulting experts on which public health interventions would get the most bang for the buck in this era.
But first we asked readers which health campaign they would like to see started. Here are some of their responses.
Mothers and Babies
Start as Early as Possible
We must improve the way we nurture small children if we actually want to improve public health. Kaiser’s Adverse Childhood Experiences (ACEs) study by Dr. Vincent Felitti showed us some 20 years ago that adversities in childhood seed both physical and mental illnesses. Kids who experience traumas have more cancer, heart disease, diabetes, depression, suicide and addiction as adults. And there is a dose response effect: The more adversity, the worse the health outcomes.
Programs that address the mother baby dyad, like the Nurse Family Partnership, pay for themselves very rapidly by inculcating attachment and parenting skills, supporting breast-feeding, etc. — Megan, Santa Barbara
A Program That Touches the Heart
The program that most touches my heart and mind is the Nurse Family Partnership.It seeks to educate and assist low-income pregnant women to assure the delivery of a healthy child, and maintain the health of both mother and child thereafter. It makes a big difference to get a child off on the right foot, and this program has many subsequent benefits to all of society. — Mzmecz, Miami
Don’t Forget Diabetes
‘A Very Costly Disease Indeed’
I would love for the U.S. to concentrate on two areas of public health: maternal child health and expanding our diabetes prevention efforts. Both have high returns on investment as published by the C.D.C. and other entities. Medicaid has been essential in helping women obtain early prenatal care and preventing premature births. This along with basic family planning goes a long way to save tax dollars. Both are under attack politically.
Regarding diabetes prevention, nationally only around 6 percent of adults know if they are prediabetic. In Hawaii, this rate is 14 percent, making us the highest-ranking state in testing, yet this is insufficient. Effective help such as the Y.M.C.A.’s diabetes prevention program goes a long way in helping support people to change behaviors that delay and prevent diabetes, a very costly disease indeed. — Christina Simmons, Hawaii
Nutrition
Burger, Fries and Soda?
I would like to see serious focus on sugar and unhealthy foods. Driving on the highway, I saw a McDonald’s billboard with a burger, a white bread bun, fries and soda. “Eat affordably.” This was frustrating. I work in primary care and see daily the results of our cultural priorities on weight leading to diabetes and hypertension. We then complain about the cost of health care and hold clinicians accountable for poor outcomes. — Leslie Goldman, Vermont
Stop the Sugar Machine
One thing that can be focused on that everyone can understand is reduction of sugar in the diet. However, the sugar industry has a phenomenal lobby and propaganda machine. — Wayne Griswald, Moab, Utah
Guns and Suicide
The Silence Around Suicide
Why is suicide and suicide prevention seldom if ever discussed when it comes to public health funding? Around 60 percent of all gun deaths nationwide are due to suicide. In Oregon, around 82 percent of all gun deaths are due to suicide. — Sarah Hobbs, Portland, Ore.
‘Senseless Deaths and Injuries’
Nearly 40,000 people are killed by guns in this country yearly, and many more are wounded. It’s been estimated that we spend $229 billion per year on this epidemic that devastates individuals, families and communities. There is much that can and should be done to prevent these senseless deaths and injuries, and I hope that the authors will use this platform to shine a bright light on the role that public health/preventive strategies can play in curbing this crisis in their next installment. — Sonya Lewis, Ann Arbor, Mich.
Exercise
Walk the Walk
I would like to see a public health campaign advocating walking at least one mile a day. You have to start somewhere, and exercise prevents or controls a variety of chronic conditions. — Voter in the 49th, California
Follow Europe’s Footsteps
I’d like to see a public information campaign to encourage people to take a walk after dinner rather than sitting back and being glued to a screen. When I lived in Europe, this was the norm. — Nancercize, New York
Loneliness
Someone to Lean On
In my local corner of the health care industry, the health care systems believe that social isolation, a k a “loneliness,” is the next frontier for public health and traditional health care. — Wts, Colorado
Needle Exchanges
Can’t Hide From This ‘in Your Gated Community’
The idea of offering free needles to addicts is still regarded as somehow “not right.” Yet we have an opioid crisis, and this will be followed by an H.I.V. and hepatitis crisis. This is not something you can hide from in your gated community; your kids are dating kids who have used needles (sadly I know a lot about this subject) — L. Finn-Smith, Little Rock
The Need for New Antibiotics
A Golden Age Ending?
The Age of Antibiotics is coming to an end, after less than a century, as American capitalists invest less and less in developing new antibiotics to treat resistant bacteria. — Jay David, NM
Use Taxes Wisely
Take Aim at Tobacco and Alcohol
Tax tobacco and alcohol to completely cover their contributions to health care costs. — Turbot, Philadelphia
Obesity, Too
The biggest causes of death and disease now are chronic disease — heart disease, cancer, etc. And these have two main causes, both of which are preventable: tobacco and obesity. As someone who works in public health, resources need to be directed toward changing those behaviors and getting people screened. If people really want to save lives and money, they should beg their legislators to institute tobacco and sugar taxes. — Laura, New Orleans
Community hospitals struggle to compete with better-paid rivals
by Priyanka Dayal McCluskey = The Boston Globe - May 30. 2018
On a rainy day soon after Kim Hollon took over at Brockton Hospital eight years ago, he and his staff counted 35 plastic buckets collecting water leaking through the roof. The buckets were a stark reminder of how urgently hospital officials needed to spend on such basics as building maintenance.
The hospital has since replaced sections of the roof and recently opened a new cancer center, but it still faces $3 million in basic maintenance costs.
Hollon says there is a reason he doesn’t have enough money to make timely investments in the building or in new medical equipment: The rates insurers pay Brockton Hospital for services are far below the average for Massachusetts hospitals.
The disparity in insurance payments threatens the viability of many smaller hospitals, especially those serving lower-income communities, Hollon and leaders of other community hospitals say. To address the problem, they want lawmakers to approve a “minimum wage” for hospitals, bringing those on the low end of the pay scale within 90 percent of the average reimbursement for medical services.
We have found ourselves perpetually underpaid,” said Hollon, chief executive of Signature Healthcare, the parent company of Brockton Hospital. “[If] other competitors can continue to add new equipments, new buildings, they will continue to grow, you’ll continue to stay right where you are.”
Narrowing the gap would cost $180 million a year, with the money divided among more than two dozen hospitals in communities across Massachusetts.
It’s an unusual and controversial request while the state is focused on controlling growth in health care spending.
Legislation that simply sets a base wage for community hospitals could force consumers and employers to pay higher insurance premiums, driving up total health spending. Or the legislation could try to contain spending by redistributing hospital payments, giving expensive hospitals smaller pay raises and community hospitals a big boost. Both options are facing resistance, either from insurers or large hospitals.
Independent community hospitals have long struggled to compete with their larger rivals, which offer a broader array of services and more prestigious brand names. A few community hospitals, including ones in North Adams and Quincy, have closed in recent years.
When community hospitals negotiate payment rates with insurers, they lack the clout of their larger competitors to demand high rates. Payments for the same medical service can vary by hundreds or thousands of dollars from one hospital to another.
The raise that community hospitals are seeking would account for less than 1 percent of commercial health spending in Massachusetts. Community hospital leaders argue that is reasonable and affordable. They say insurers could find the money by becoming more efficient and by paying smaller increases to large hospitals that already are paid well.
“We’re talking about a rounding error,” said Spiros Hatiras, chief executive of Holyoke Medical Center.
Hatiras says a hospital “minimum wage” is critical for the survival of institutions like his.
“We are being cornered into a business model that is absolutely a death trap,” he said. “My prediction is there’s no way we can survive five years.”
The state Senate included a floor for payments to community hospitals in a health care bill approved in November. The bill also had a provision that would penalize certain large hospitals if spending rises too fast. House leaders are still working on their health care bill, which is expected to be released in the coming weeks.
More than half of the House of Representatives, including Democrats and Republicans, have signed a letter to House leaders supporting a base payment rate for community hospitals. State Representative Frank A. Moran, who penned the letter, said payment disparities particularly hurt hospitals in low-income communities.
“Low-income communities are being singled out by the health insurers,” said Moran, a Lawrence Democrat.
Officials in Governor Charlie Baker’s administration said they’re generally open to legislation that ensures health care is affordable, but they oppose proposals that would raise payments for community hospitals without setting a limit for hospitals at the top or some other cost-control measure.
Health insurers say that setting a minimum payment rate for hospitals without setting a maximum rate would result in higher costs for patients and employers.
“They need to come up with a proposal that figures out a way to divide up the pie and not just ask for more pie,” said Lora M. Pellegrini, president of the Massachusetts Association of Health Plans. “That’s what’s employers and consumers expect.”
The other option — reducing payment increases to expensive teaching hospitals to give a boost to community hospitals — has also run into opposition.
“We’re sympathetic,” said Peter Markell, chief financial officer at Partners HealthCare. “We don’t mind other hospitals wanting more money. We’re not wild about them wanting to take it from us.”
Partners is the parent company of two of the state’s most expensive hospitals, Massachusetts General and Brigham and Women’s.
A trade group, the Massachusetts Health & Hospital Association, also opposes the capping of payments to some hospitals in order to boost others. But association president Steve Walsh said, “‘It’s critically important that we stabilize our community providers.”
The wide variation in reimbursements to hospitals in Massachusetts has been documented in several reports. State officials assembled a special commission to examine the issue, which last year recommended tighter regulation of hospital pricing. The commission also supported a raise for struggling community hospitals.
“There are a bunch of community hospitals that offer quality on par with other hospitals in the state. The things they do, they do as well as the teaching hospitals in Boston,” said Richard G. Frank, a health economist at Harvard Medical School who served on the state commission.
“The idea was that if you want to have a robust system . . . where people get care at low-cost places, you need to ensure the survival of those guys.”
Few states have tackled hospital price disparities through sweeping regulation. Last year in his state budget proposal, Baker proposed freezing payments to Massachusetts’ priciest hospitals while allowing the least expensive hospitals to get a pay raise. That proposal fizzled when legislators declined to adopt it.
Community hospitals say they urgently need a change in the law. Otherwise, they argue, they won’t be able to invest in facilities and attract patients so they can stay sustainable in the long run.
“If we leave it to just the market — it hasn’t worked. It is going to take a little bit more teeth. It’s going to take legislation,” said Dr. Assaad Sayah, chief medical officer of Cambridge Health Alliance, which runs hospitals in Cambridge, Somerville, and Everett. “We need to get paid a basic minimum so we can appropriately invest in the resources to provide care in the community.”
LePage administration must follow voter-approved law, put Medicaid expansion in motion, court rules
by Dennis Hoyey - Portland Press Herald - June 4, 2018
A Superior Court judge ruled Monday that the Maine Department of Health and Human Services and the LePage administration must follow the voter-approved Medicaid expansion law and submit a state plan amendment next week that sets the health coverage in motion for thousands of low-income Mainers.
The court set a June 11 deadline for the state to file the amendment with the federal government.
In November, 59 percent of voters approved Medicaid expansion, making Maine the first state to expand the program through a citizen-initiated referendum.
However, Republican Gov. Paul LePage has steadfastly opposed expansion, and has called on the Legislature to fund it before he implements it.
On April 30, Maine Equal Justice Partners, Consumers for Affordable Health Care, Maine Primary Care Association, Penobscot Community Health Care and five individuals sued DHHS and the LePage administration . Oral arguments were held May 24, and on Monday, Kennebec County Superior Court Justice Michaela Murphy sided with the petitioners and ordered the state to comply with the voters’ will.
“The governor cannot ignore the law,” Robyn Merrill, executive director of Maine Equal Justice Partners, said in a prepared statement. “Maine voters did not make a request at the ballot, they passed a law, and laws are not optional. Today’s ruling is good for more than 70,000 Mainers who the law says can sign up for health care on July 2.”
However, Murphy’s decision could be appealed.
LePage spokeswoman Julie D. Rabinowitz, in an email response to a request for comment, said the administration is reviewing the court’s decision. The state’s Boston-based attorney, Patrick Strawbridge, did not respond to phone messages left Monday night.
“We won. I think it’s a great decision for all low-income Mainers,” David Kallin, an attorney with Portland-based Drummond Woodsum, said in an interview. “This is the first step on the road to get health care for Mainers who really need it.”
Kallin, James Kilbreth, also of Drummond Woodsum, and Charlie Dingman of Preti Flaherty represented the petitioners on a pro bono basis.
The expansion will open up the program to Mainers who earn 138 percent of the federal poverty level – $16,753 for an individual or $34,638 for a family of four.
Justice Murphy’s ruling requires DHHS Commissioner Ricker Hamilton to file a state plan amendment with the U.S. Department of Health and Human Services by Monday. In her ruling, Murphy disagreed with the state’s position that the executive branch has no obligation to file a plan amendment until legislative appropriations to fund the expansion have been made.
“The court is not persuaded that the executive branch is excused from clear statutory obligations by the Legislature’s failure to follow through with legislative obligations, as defined by the executive branch,” Murphy wrote in her 13-page ruling. “The court concludes that the commissioner’s complete failure to act cannot be considered substantial compliance with (the referendum vote).”
The plan amendment, which Kallin described as a routine, two-page, check-the-box form, establishes a process for ensuring eligibility for people under 65 years of age who qualify for medical assistance.
Congress created Medicaid – known as MaineCare in Maine – in 1965 as a program to provide federal funds to states that pay for medical treatment for the poor. To receive federal funds, states must prepare a plan that defines the category of individuals eligible for benefits and the specific kinds of medical services covered by the plan.
Once the state plan amendment has been filed and approved, Maine will begin receiving federal matching funds that Kallin said will pay for about 90 percent of the costs associated with Medicaid expansion. The law passed by voters in November required the state to file the plan amendment paperwork by April 3.
Although LePage did not react to the court decision Monday, he and his allies have acknowledged that Medicaid expansion is law. The governor also has maintained that his hands are tied until the Legislature appropriates sufficient funds to pay for the expansion.
Estimates of the state’s expansion costs have varied widely, but the nonpartisan Office of Fiscal and Program Review has projected they would be about $45 million in the first year. The LePage administration says it will cost as much as $60 million in the first year and as much as $100 million annually in future years.
Lawyers for the petitioners have argued that there are already enough funds in the state’s Medicaid account to get through the current budget biennium, which ends in June 2019. They also have argued that there is more than $140 million in unallocated funds that the state could draw from at any time.
Murphy’s ruling evoked reactions both on a state and national level.
“Today is a victory for the 70,000 Mainers who stand to gain coverage from Medicaid expansion and for everyone who believes that health care should be a right for all, not just a privilege for a wealthy few,” Democratic National Committee Chairman Tom Perez said in a prepared statement. “Thanks to today’s ruling, Gov. Paul LePage will finally be forced to respect the will of Maine’s voters, who voted overwhelmingly to expand Medicaid last November.”
In a prepared statement, Maine Democratic Party Chairman Phil Bartlett said, “This decision is both a victory for the more than 70,000 Mainers who stand to benefit from Medicaid expansion, and a sharp rebuke of Gov. LePage and his senseless obstruction of the law. The people of Maine have spoken, the court has spoken, and now Gov. LePage and Republicans must listen.”
U.S. Rep. Chellie Pingree, D-1st District, also hailed the court’s ruling, saying, “The order is clear: The LePage administration cannot veto Maine’s voter-approved Medicaid expansion law.”
Is Health Care Really a Winner for Democrats?
by Peter Superman - NYT - June 5, 2018
After years of struggling with the politics of Obamacare, Democrats now view health care as a winning issue. A candidate in Orange County, California, has a chance of winning a primary on Tuesday while running on explicit support for Medicare for All. Single-payer-friendly Democratic candidates are not just running in deep-blue states; they are campaigning in places like New Jersey, Pennsylvania and Illinois as well as Nebraska and Texas. Across the country, Democrats are making health care a top messaging and policy priority, with some red state Democrats running on Obamacare for the first time.
This is partly an attempt to blame Republicans for the failings of Obamacare. A Congressional Budget Office report from May projected a 15 percent premium increase for a typical plan under Obamacare, in part because last year’s tax law eliminated the individual mandate as of 2019. That effort is intertwined with a related push to advance single payer as a cure for what ails the Affordable Care Act.
Polls show rising support for single payer, and a number of high-profile 2020 hopefuls have endorsed the idea. When Bernie Sanders released his single-payer Medicare for All plan, his campaign pollster declared that within the party, support for single payer was “fast-emerging as a litmus test.” Democrats believe they have the advantage on health care policy and are poised to press that advantage in the coming elections.
There is some truth to this story. Democrats have a clearer sense of broadly shared health goals than their Republican opponents.
Yet that optimism also obscures practical and political challenges Democrats are likely to face, some of which oddly resemble the obstacles that Republicans failed to overcome with their repeal push last year. If Democrats turn the next two elections into a push for single payer, or something closer to it, they may be setting themselves up for failure.
Polling emphasizes the instability of public opinion when it comes to single payer: Although support for single payer has risen in recent years, a Kaiser Family Foundation survey last year found that positive opinions on the issue were easily flipped when respondents heard that single payer would increase government control over health care or require many Americans to pay more in taxes.
Furthermore, as a recent BuzzFeed News report found, many voters in swing states have a fuzzier understanding of what Medicare for All actually means. They see it as a generalized reference to increased government support for health care. But any push to enact an actual Medicare for All plan is bound to struggle when voters don’t have a firm sense of what it is.
Attempts to set up single-payer systems at the state level have run into precisely this problem. Even in blue states like California, Colorado and Vermont, voters and lawmakers have consistently rejected or abandoned single payer on the grounds that it would cost too much or be too disruptive.
Liberal policy experts, at least, are not unaware of these difficulties, and policy proposals like the recent Medicare Extra plan from the Center for American Progress represent attempts to capitalize on the surge of interest in single payer while addressing some of the potential practical challenges of dramatically expanding government provision of care. Yet even those seemingly supportive proposals can also be understood as attempts to pre-empt the stronger forms of single payer that have failed so disastrously at the state level.
States face budget constraints and other limitations that the federal government does not, but the federal cost would still be extraordinarily high. And the politics of single payer at the national level would hardly be easier. Red-state voters would wield more influence, and the election of Donald Trump appears to have made some voters who might otherwise be supportive of single-payer-style systems newly waryof handing over more power to the federal government.
Democrats hoping to move in the direction of single payer have plenty of hurdles to jump, and it’s not evident how, or whether, many of them can be cleared. But base enthusiasm and the appearance of broader public support combined with a Trump-era desire for boldness means the party is moving ahead anyway. And in that sense, the Democrats appear to be following in the footsteps of their political opponents.
The Medicare for All push is not precisely analogous to the Republican effort to take down Obamacare, but it’s not too hard to see the parallels. The Republican effort was also driven by a popular slogan (“Repeal and replace”) whose appeal rested in part on the vagueness of its meaning. That vagueness allowed the base to understand it one way without scaring off moderates, while making it difficult for opponents to poke holes in a plan that didn’t exist. Republican wonks offered a variety of plans with varying degrees of specificity, but the party never rallied around any one of those plans or made an effort to sell the details to the public, which balked at losing a part of the system that was already in place.
As a result, when Republicans finally had a chance to act, they had neither the policy particulars nor the political support lined up. They failed, and now they are paying a price politically.
In some ways, then, it’s useful to see the two parties as negative images of each other, with inverse problems: If Republicans typically appear to be winging it on health care, with the average elected official’s understanding limited to empty talking points, Democrats sometimes come across as overly ambitious, like real-estate developers eagerly showing off concept art for structures they haven’t figured out how to build.
The deeper problem for both parties is that when it comes to health care, there is no real consensus, no shared vision of a way forward, no willingness to accept or even discuss the available trade-offs. Instead, the politics of American health care are dominated by contradictory impulses — that American health policy should provide more access and lower costs, be easier to understand and offer a wider array of choices, make better use of market forces and come with a greater level of government guarantee, preserve the status quo and enact radical change.
For good and for ill, Obamacare embodied those contradictions. And that’s why the Democratic push to move beyond it is likely to struggle just as much as the Republican effort to take it down.
Rate hikes sought by Maine’s ACA insurers come in lower than expected for 2019
by J. Craig Anderson - Portland Press Herald - June 6, 2018
The proposed increases for individual health plans average just over 9 percent, and they will be reduced further if a state-run reinsurance program is revived.
Maine’s two leading providers of Affordable Care Act-compliant individual health insurance are requesting average rate increases of just over 9 percent in 2019, and smaller increases if a state-run reinsurance program is revived.
Massachusetts-based Harvard Pilgrim Health Care asked for an average premium increase of 9.5 percent for its individual plans on Maine’s ACA marketplace in 2019, according to documents filed Monday with the state Bureau of Insurance. Lewiston-based Community Health Options requested an average premium increase of 9.2 percent for its individual plans, according to its filings. For an estimated 85 percent of individual ACA policyholders in Maine, those rate increases would be offset by higher federal premium subsidies.
Both of the requested rate increases are lower than the 16 percent hike that health care analysts predicted for 2019, and they are far lower than what Harvard Pilgrimand Community Health requested in previous years.
Reasons provided by the insurers for their proposed rate increases include the elimination of the individual mandate penalty and the resulting, anticipated decrease in younger, healthier Mainers purchasing individual ACA insurance in 2019. The individual mandate was repealed as part of the federal tax reform bill approved by congressional Republicans in December.
Insurers had assumed in 2017 that the mandate would be going away and had largely adjusted their rates accordingly. Ed Kane, Harvard Pilgrim’s vice president for Maine, said the current ACA market is relatively stable compared with previous years.
“Unlike last year, there have been no policy developments that necessitated unexpected increases beyond adjustments for medical costs,” he said.
Although lower than expected, some affordable health care advocates in Maine said a 9 percent rate increase is still too much.
“As we saw in the filings from both Community Health Options and Harvard Pilgrim, the vote last winter by Sen. (Susan) Collins and Washington Republicans to repeal the ACA individual mandate, coupled with short-term (health) plan proposals, means health insurance rates are going up for Mainers,” said Rebecca London, Maine director of the Protect Our Care Campaign, a pro-ACA policy group. “While she seems to be reticent to try to repeal the ACA again, the damage is done and now thousands of Maine citizens will be forced to pay nearly 10 percent more for their health insurance.”
REINSURANCE PROGRAM RELAUNCH
One factor that could help offset premium increases next year is a state-run reinsurance program that was put on hold when the ACA was implemented but is expected to be relaunched and take effect in 2019.
The state’s reinsurance plan – called the Maine Guaranteed Access Reinsurance Association – redistributes insurance money by charging a fee of $4 per person per month on individual and small- and large-group plans, and funneling the revenue only to individual plans. The reinsurance plan also would tap into federal money to help pay for what is estimated to be a $90 million program in 2019. That would help keep individual premiums lower than they would be otherwise.
For that reason, the Bureau of Insurance asked insurers submitting rate requests for ACA-compliant individual insurance in 2019 to submit two proposals – one for if the reinsurance plan is reinstated, and one for if it isn’t.
The requested increases of 9.5 percent and 9.2 percent assume that the reinsurance plan is not reinstated. If the program is revived, both insurance providers said it would result in smaller rate increases.
Harvard Pilgrim’s revised rate request calls for an average rate increase of 4.6 percent for individual insurance if the reinsurance plan is reinstated, and Community Health’s revised rate request calls for a 6.9 percent average increase.
ANTHEM MAY REJOIN ACA EXCHANGE
Only Community Health and Harvard Pilgrim continue to offer ACA-compliant, federally subsidized individual health insurance in Maine. Anthem also provides ACA-compliant individual coverage in Maine, but it is not sold on the ACA exchange and does not qualify for federal subsidies.
Anthem is requesting an average rate increase of 13.8 percent for individual plans without the reinsurance program, and a rate decrease of 8.7 percent if the reinsurance plan is reinstated.
Anthem also notified the Bureau of Insurance that it would resume offering on-exchange plans in 2019 if the reinsurance program comes back, which would give Mainers a third option for subsidized ACA individual insurance. The company offered subsidized, on-exchange ACA insurance in 2017, but opted to stop doing so in 2018.
Community Health Options, Anthem, Harvard Pilgrim, Aetna, United Health Care and others also offer a variety of ACA-compliant small-group insurance plans in Maine. The requested average 2019 rate increases for small-group plans in the state range from about 3 percent to 15 percent, depending on the provider and whether the reinsurance program is revived. In the case of small-group plans, a revival of the reinsurance program would result in slightly higher rates, because the program adds cost to small-group plans with no corresponding benefits.
Nearly 76,700 Mainers had individual ACA coverage in the first quarter of 2018, down 10 percent from the 85,300 who had it a year earlier, according to the bureau. Another 60,000 Mainers had ACA-compliant small-group coverage through their employers.
COSTS FORCE SOME OUT OF MARKET
Mainers who purchase individual insurance through the ACA marketplace have seen their premiums soar by as much as 110 percent since 2014. While those cost increases have been largely offset by increased federal subsidies for the majority of policyholders, an estimated 10,000 Maine policyholders who earn more than 400 percent of the federal poverty limit are not eligible for subsidies and must bear the entire brunt of the increases.
The surging costs already have priced some Mainers out of the market, and that trend is expected to continue in 2019.
ACA individual policies are categorized by bronze, silver, gold or platinum based on the quality of coverage. Mainers earning up to about $27,000 can qualify for zero-premium bronze plans through the ACA, while typical premiums for people who earn $40,000 to $45,000 are roughly $200 to $300 per month, depending on the policyholder’s age and place of residence. Insurers can charge up to three times more based on age, and can also charge more based on address. The average monthly out-of-pocket premium for ACA individual coverage in 2018 is $94 for Mainers who receive subsidies.
The Bureau of Insurance had set a deadline of 4 p.m. Monday for Maine’s ACA marketplace insurers to submit their rate increase requests for 2019, but it did not release the documents until Tuesday.
All rate requests must be approved by the bureau and the U.S. Centers for Medicare and Medicaid Services. The approval process is streamlined at the state level if the average rate increase being requested is less than 15 percent because the bureau is not required to conduct rate hearings.
Next move unclear on Medicaid expansion, despite court order
by Joe Lawlor - June 5, 2018 - June 5, 2018
Advocates say they'll file another lawsuit if the state doesn't begin accepting applications from 70,000 eligible Mainers on July 2.
A Maine judge ordered the LePage administration to implement Medicaid expansion on Monday, but what happens next – and when 70,000 newly eligible Mainers can begin signing up for the health insurance – is unclear.
The governor’s office didn’t respond to a request for comment Tuesday on how the administration plans to respond to the court order, which directs the state to submit an expansion letter to the federal government by Monday.
Republican Gov. Paul LePage has long been a staunch opponent of Medicaid expansion and has refused to implement it, despite voters approving it by a 59 to 41 percent margin in November.
Senate Assistant Majority Leader Amy Volk, R-Scarborough, said in a tweet on Tuesday that she supports implementing Medicaid expansion.
“I think this is a good thing,” said Volk, responding to the court ruling. “Conservative states across the country have models we can learn from. It’s time to implement what voters approved.”
Rob Poindexter, spokesman for House Minority Leader Ken Fredette, R-Newport, said LePage “obviously has to submit a plan. But what we don’t know is, will it be approved? And when will it be approved? That could take a year. Nowhere in the court’s decision did the judge say the Legislature must act.”
Other top Republicans in the State House did not respond to requests for comment Tuesday on whether they agree that the administration should do as the court directed. During legislative debates on Medicaid expansion bills, some Senate Republicans supported expansion, but House Republicans stood with LePage. Democrats have long pushed for expansion.
Jack Comart, litigation director for Maine Equal Justice Partners, which sued the LePage administration in April over its failure to act on expansion, said there’s no reason Mainers eligible for Medicaid shouldn’t be able to begin signing up on July 2, as is required by law. He said if the administration refuses to accept eligible enrollees in July, Maine Equal Justice will file another lawsuit against LePage for failing to comply with the law.
“There’s nothing stopping them from having the program in effect July 2,” Comart said. “They have people there to take applications.”
About 70,000 Mainers would be newly eligible for Medicaid under expansion, which would cover people who earn up to 138 percent of the federal poverty limit, $16,753 per year for an individual or $34,638 for a family of four.
Superior Court Justice Michaela Murphy on Monday sided with Maine Equal Justice Partners, ordering the LePage administration to file a state plan amendment with the U.S. Centers for Medicare and Medicaid Services, a necessary step to implement the expansion, by next Monday, June 11.
The plan amendment is a routine two-page form that the LePage administration was supposed to submit in April but never did, spurring the lawsuit. Medicaid is a blended federal-state program, with 90 percent or more of expansion funding coming from federal dollars. Thirty-four states and the District of Columbia have approved Medicaid expansion, but Maine was the first state to do so at the ballot box.
LePage’s attorneys argued that the Legislature must approve separate funding for the expansion, but Murphy rejected that argument on Monday.
The state’s nonpartisan Office of Fiscal and Program Review has projected the cost of Medicaid expansion would be about $45 million in the first full year of implementation.
Ann Woloson, executive director of Consumers for Affordable Health Care, said Medicaid would have many benefits for the health of Mainers, and would also help keep insurance premiums for everyone lower. A federal study in 2016 showed that insurance premiums were 7 percent lower in Medicaid expansion states compared to non-expansion states.
MaryBeth Musumeci, associate director at the program on Medicaid and the uninsured for the Kaiser Family Foundation, a Washington-based health nonprofit, said that expanding Medicaid, while it could take some time, is not a complicated task for state governments because states already operate Medicaid programs.
“This is not a heavy lift,” Musumeci said. “This is essentially adding a coverage group to existing Medicaid groups. There’s already an existing infrastructure and delivery system for the program.”
New Hampshire first approved Medicaid expansion in late March 2014, and it was implemented by mid-August of that year.
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