The Weekly Checkup
Tomorrow the Supreme Court is scheduled to rule on the constitutionality of various parts of the Affordable Care Act (ACA). The road to the biggest decision in decades was paved by in part by the American Action Forum’s three amicus briefs examining the detrimental effects of the ACA on the healthcare system.
On March 26, the American Action Forum and Blue Dog Research Forum released a poll of 66 former Supreme Court clerks and members of the Supreme Court Bar, to survey expert opinion on the expected outcome of the Affordable Care Act’s court challenge. The results showed that the majority of experts expected the court to side with the Obama Administration on the highest-profile part of the law, its individual insurance mandate – only 35 percent of those surveyed expected the mandate to fall. However, in a new Forum poll of 56 of the same population, that prediction has changed sharply.
Dual-eligibles (those who qualify for both Medicare and Medicaid coverage) are a costly and vulnerable population group that accounts for a disproportionate share of spending under each program. According to a report from Health Affairs, an estimated 9 million Americans fall under the dually eligible criteria, including 5.6 million low-income seniors and 3.6 million people with disabilities under age sixty-five. Medicare covers hospital, physician, and prescription drugs, as well as a variety of acute and post-acute care services. Many elderly dual-eligible beneficiaries qualify for the Medicaid program after spending down their assets paying for long-term care, which is not covered by Medicare. These beneficiaries need Medicaid to cover their long-term care provided in the home, in a community setting, or in a nursing home.
President Obama’s signature piece of legislation, the Affordable Care Act (ACA), will throttle American employment in the coming years. One of the most strangling components of the law is the medical device tax – which amounts to a tax on jobs and innovation, devastating the progression of both.
Over half of the health insurance plans offered in the individual market will be in danger of extinction in 2014 according to a recent study published in Health Affairs. The research shows that 51% of beneficiary plans in the individual market offered benefits below the 60% minimum actuarial value the Affordable Care Act mandates for qualifying health insurance plans in 2014 (Figure 1). These plans with actuarial values below 60% were called “tin” plans by the authors and had an average deductible of $3,881.
A report released earlier this week by the Health Care Cost Institute (HCCI) pointed to increasing prices for services as the primary cause of increasing health care expenditures in the under-65, employer-sponsored insurance (ESI) market. The HCCI study illustrates key trends in the private insurance market that had previously been held as confidential information by major insurers. The independent institute was formed in September of 2011 with the intent to synthesize data from around three billion health insurance claims for more than 33 million individuals under 65 years of age that were covered by employer-sponsored private health insurance. The de-identified data was voluntarily released by Aetna, Humana, Kaiser Permanente, and UnitedHealthcare, four of the largest private health insurers in the country, for the purpose of cost and utilization research.
The Urban Institute recently released a paper on the decline of health care access in the United States for both insured and uninsured adults. The study measured access with three criteria: the likelihood of having unmet medical needs due to cost, receiving a routine checkup, and receiving a dental visit; looking at all nonelderly adults and the subgroup of uninsured adults. While the paper’s authors conclude that the Affordable Care Act (ACA) will help states increase access, a closer look at the findings reveals that the health reform law is unlikely to be a cure-all. The ACA does not fix the deeper problem individuals face: the rising cost of medical care and a stagnant economy.
It’s not much of a surprise that a new study by the RAND Corporation showed that increasing the proportion of consumer-directed health plans (CDHP) can lower health care costs by a huge amount. Consumers are smart and willing to go to great lengths to save money. Take Black Friday as an example: every year, millions brave cold weather, irate shoppers and even trampling in attempt to plunder the best deals from department stores. If consumers have the determination to risk life and limb for a cheap new TV on Black Friday, they clearly have the determination to choose the best health insurance plan to maximize benefits and minimize costs.
The New York Times drew attention this week to the importance of e-prescribing technology and the impact it has on Adverse Drug Events (ADE’s) that result from prescription errors. The article cited a 2010 study published in the Journal of General Internal Medicine that examined prescription error rates between providers using e-prescribing (including physicians, nurse practitioners and physician assistants), in which clinicians choose from a list of prescriptions and dosage instructions on a computer and send the information electronically to the pharmacy, and those still handwriting their orders.
For several years running, the Medicare Trustees have warned of Medicare’s impending insolvency. This year proved to be no different. The Trustees report released on Monday tells us that by 2024, Medicare will be bankrupt—leaving seniors to fend for their own health care costs. Why is Medicare so broke? Taking a look at Medicare’s income and expenditures tells the story: expenditures have been higher than income in every year of the program besides 1966 and 1974 (Figure 1).
The shortages of chemotherapy drugs have caused cancer care to resurface in the news. According to a recent study, patients may also soon face a shortage of cancer providers. Following an article about physicians having financial troubles that singled out oncologists as particularly struggling, is a study that many oncology practices are closing or being sold. The results, released by the Community Oncology Alliance, found that within the last five years, 241 cancer clinics have closed, 392 have been purchased or financially aligned with a hospital, 132 have merged or been acquired by a corporation, and 442 of the remaining clinics are struggling financially.
Tucked into the 2,700 page Affordable Care Act is a 2.3% tax on medical devices sold in the United States. Created to raise $20 billion over the next 10 years to help pay for the pricy provisions of the health reform law, the tax is having injurious effects across the medical device industry.
On Monday the American Action Forum and the Blue Dog Research Forum released a poll of Supreme Court experts, including former Supreme Court clerks and lawyers who have argued before the Court, to ascertain the likelihood of potential outcomes for the Patient Protection and Affordable Care Act (PPACA) case. Of particular interest in the survey were the outcomes predicted by specialists in regard to PPACA’s most controversial element, the individual mandate, which forces all Americans to have health insurance meeting certain minimum coverage requirements or pay a financial penalty for choosing to forgo insurance. Concerns exist on both the mandate’s constitutionality and whether the mandate, which data shows to be hugely intertwined with the other PPACA reforms, is severable from the law.
House Budget Committee Chairman Paul Ryan has a plan to save Medicare and Medicaid from going bust. In his 2013 House Budget Plan released yesterday, he outlines the steps needed to ratchet down the federal government’s egregious spending habit. By simplifying the tax code and reforming health care safety net programs, he sets America on a sustainable path forward; an audacious goal compared to the President’s weak-kneed attempt at a federal budget.
The Congressional Budget Office (CBO) released their updated cost estimates for the Affordable Care Act(ACA) yesterday, just in time for the health reform law’s second anniversary. New legislation, a poorer economic outlook, as well as technical changes combine to lower the estimated net cost of the ACA by $48 billion compared to the March 2011 estimate. At first glance, the reduced cost of the ACA seems like good news; however, the reduced costs are largely a result of increased penalty payments from the uninsured and employers along with other tax revenues.
In response to numerous reports of poor public opinion regarding the Affordable Care Act (ACA), the Obama Administration is attempting to publicize any and all good news about the health reform law. This week it was a report from the Assistant Secretary for Planning and Evaluation (ASPE) on the 105 million people benefitting from the lift of lifetime limits in health plans. A lifetime limit is a max dollar amount that a health insurance plan will pay out in benefits for any single beneficiary.
Drowning. That’s how providers must be feeling when the Centers for Medicare and Medicaid Services (CMS) released the long awaited standards for the Stage 2 of the meaningful use of electronic health records (EHRs) last Thursday. Although the 455 pages of proposed guidelines seem like a step in the right direction, the massive document outlining requirements does little more than place burdens on health professionals in their transition to a working EHR system. Known as Stage 2 meaningful use, the proposal does little to refine what was laid out in Stage 1 and does little to help healthcare providers who are lagging in IT use compared to other industries.
Last week the Gallup –Healthways Well Being Index released the second part of a new poll investigating recent trends in health insurance coverage in the United States. This publication focused specifically on health insurance coverage from employers, and may cause some heartache for the Obama Administration who continually claims that the number of people with affordable insurance will increase due to the Affordable Care Act (ACA). Unfortunately, the Gallup poll indicates that the average annual premium for employer-sponsored health insurance rose 9 percent between 2010 and 2011 and the number of Americans with employer-sponsored coverage fell.
Last week, the Weekly Checkup took a look back on Obama’s Fiscal Year 2012 Budget. This Checkup focuses on healthcare spending in the President’s proposed FY 2013 Budget and what has changed from his budget proposal last year.
The President was legally required to submit a Fiscal Year 2013 Budget last Monday, February 6th. However, its arrival will be a week late…so for the time being, we are going to use this opportunity to look back at the role Medicare, Medicaid and the Affordable Care Act (ACA) played in last year’s unsuccessful Presidential Budget, and what Obama should include in this year’s proposal.
Yesterday, the Congressional Budget Office (CBO) published their 10 year budget outlook. This report estimates how expenditures and revenues change over the next 10 years. In this report, the CBO projected two different scenarios. One scenario is the baseline scenario, which is ultimately unrealistic with the current policy environment, but is the best possible representation of the current law. Although the baseline scenario is unlikely, it allows CBO to break up the projected costs in a more accurate way. The CBO described the Alternative Fiscal Scenario by saying, “Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does.” (Sep. 2011 report) Despite not allowing the CBO to provide detailed breakdowns of their projections, the Alternative Fiscal Scenario still provides the most realistic overall picture. In the case of the alternative fiscal scenario, by 2022, debt held by the public would reach 94 percent of GDP (Figure 1).
During his State of the Union address Tuesday night, the President’s speech was notably light on one topic: health care. This is exceptionally shocking given that in 2010, the President signed a 2,700 page health care reform bill that would supposedly lower the federal deficit and health insurance premiums for Americans. But it seems the President didn’t think it was important to discuss his highly contentious health care reform bill—giving it just two lines or 44 words—when addressing important national topics such as the federal deficit, the struggling middle class, or job creation, all of which the Administration touted would improve thanks to the Patient Protection and Affordable Care Act (PPACA).
Despite numerous claims of corporate mergers and acquisitions, the height of the pharmaceutical industry seems to be coming to an end. In attempt to compete with other medical and pharmaceutical entities while at the same time complying with industry regulations, pharmaceutical companies have been forced to resort to spending a considerable amount on advertising. However, with shrinking profit margins, the expiration of several blockbuster drugs and numerous other competitors like generic drug companies and biotechnology companies, it brings into question, is it still beneficial for Big Pharma to be big?
CMS released the National Health Expenditure Data from 2010 this week and results show that growth in health spending was much lower than pre-recession levels. In 2010, health spending grew only 3.9 percent. The National Health Expenditure Accounts has been collecting and analyzing health spending data for over 50 years, and the lowest growth on record occurred in 2009 and 2010. Is this cause for celebration?
The Hatch-Waxman Act of 1984 paved the way for generic pharmaceuticals to reach market more easily by allowing generic drug manufacturers to submit an Abbreviated New Drug Application (ANDA) and show that their drug is “bioequivalent” to the brand name version. This allowed generic companies to bypass costly clinical trials that are required of innovator drugs. Hatch-Waxman also included an incentive for generic manufacturers to challenge the patents held by brand name drugs, providing a 180-day period of exclusivity for the first company to win a challenge, and permitted generic drug companies to conduct bioequivalence studies before brand name patents expired.
In an attempt to track PPACA implementation costs and paperwork burdens, the Forum has produced a database of formal rulemakings published in the Federal Register since passage in March 2010. In a separate document, the Forum has produced a “Calendar” of pending PPACA rulemakings with estimated costs and links to the Unified Agenda. This document summarizes our PPACA database of published rulemakings; some of the regulations are still in the proposed rule stage. All of the figures cited are from the Federal Register entries or separate Regulatory Impact Analysis documents.
One of the most controversial questions regarding health reform is whether or not employers will drop health insurance in 2014 when the Affordable Care Act (ACA) is fully implemented and employees are able to purchase health plans in the exchanges. Currently, roughly 60 percent of the non-elderly population is covered by employer sponsored insurance. Studies done by the American Action Forum, Employment Policies Institute, and McKinsey & Company all point to the financial incentive for employers to drop coverage altogether. However, even more harmful to the ACA’s goal of affordable, universal, coverage is the scenario in which employers offer health insurance, but structure plan offerings in a way that encourages only their high-risk employees to buy plans on the individual market.
It is clear to lawmakers and physicians alike that the Sustainable Growth Rate (SGR), used to determine how much physicians are reimbursed, is broken. The SGR, enacted as a part of the Balanced Budget Act of 1997, and was put in place as a mechanism to stem the growth of Medicare spending for physician services. At the time, the volume and complexity of physician services charged to Medicare was growing at a relatively slow rate compared to previous years. Therefore, the formula used to calculate the SGR when it was enacted was based on an uncharacteristically low trend.
The super committee announced this week that it failed to find the required $1.2 trillion dollars in cuts over the next decade to reduce the deficit. The result of their failure is “sequestration,” the triggered spending ax that was supposedly so horrible that it would motivate the super committee to bridge their differences and come to an agreement in order to avoid it, will now go into effect January 1, 2013. While members of Congress may want to change course and avoid sequestration, President Obama announced that he would veto any “easy out” attempt to avoid the triggered cuts.
This past week, Stryker Corporation, one of the largest medical device companies in the world, announced that it would lay off 5 percent of its global workforce of over 20,000 employees by the end of 2012 in anticipation of the 2.3 percent medical device excise tax included in the PPACA. Stryker is a flourishing company: annual revenue has grown every year over the past decade including an 8.9 percent increase in sales between 2009 and 2010. This move by Stryker demonstrates that even highly successful companies will be significantly hurt by the medical device excise tax and although the tax does not go into effect until 2013, the reverberations are already being felt.
The National Federation of Independent Business (NFIB) published a report today detailing the effects of the Patient Protection and Affordable Care Act (PPACA) health insurance premium tax that will be imposed on health insurers beginning in 2014. Based on original research from the American Action Forum, the tax is estimated to cause health insurers to raise premium prices and increase the cumulative expenditures per family by nearly $5,000 through 2020. A follow-up study by NFIB projects that small businesses will take the brunt of the tax-induced damage, leading to a loss of 125,000 to 249,000 jobs in 2021 depending on the rate of health insurance premium inflation.
A recently released Government Accountability Office (GAO) report estimated that the $5 billion allotted to pay for health insurance for early retirees through January 1, 2014 will run out of money by September 2012.This program is the newest addition to the growing list of failures related to the President’s extensive 2010 health reform bill, the Patient Protection and Affordable Care Act (PPACA).
After struggling for the past 19 months to determine how to implement the controversial Community Living Assistance Services and Supports (CLASS) Act within the health reform law, the Department of Health and Human Services (HHS) announced last Friday that it would drop the entitlement program. The CLASS Act was a provision within the health reform law that established the first ever government-run long-term care entitlement program. Last Friday, Secretary of the HHS, Kathleen Sebelius yielded, “I do not see a viable path forward for CLASS implementation at this time.”
This week, Doug Holtz-Eakin and James Capretta wrote a short white paper looking at what savings could be achieved if costly provisions in the Patient Protection and Affordable Care Act (PPACA) were delayed for two, three, and four years. As it turns, out, the impact could be very significant.
On Monday, Kaiser Health News reported that America’s drug shortages are forcing doctors and pharmacists to ration available medications to patients who need them the most. Rationing prevents a number of patients from receiving timely and necessary medications such as cancer chemotherapy agents, anesthetics, antibiotics and electrolytes for nutrient solutions. Major delays in drug administration have even led to patients deaths. The Associated Press reported that at least 15 people have died as a result of drug shortages. This problem is only worsening; shortages have increased nearly every year since 2004. To read the full Weekly Checkup, click HERE.
In August, the 11th U.S. Circuit Court of Appeals ruled against the provision in President Obama’s health law requiring Americans to buy health insurance or face tax penalties. It was the first appellate decision to find the Patient Protection and Affordable Care Act’s (PPACA) individual mandate provision unconstitutional. It now seems that the case will be headed to the Supreme Court next summer. To read the full Weekly Checkup, click HERE.
Yesterday, consulting giant Mercer revealed preliminary results of a survey about the projected costs of health benefits provided by employers. The results of about 1,600 employers throughout the country (1,200 employers yet to finish the survey) indicate that health benefit costs will increase at a rate of 5.4 percent in the upcoming year. This is the lowest percentage-point increase since 1997. To read the full Weekly Checkup, click HERE.
The Census Bureau released its annual Income, Poverty and Health Insurance Coverage in the United States: 2010 report yesterday morning. The public release disclosed what many Americans already knew about the year 2010. First, the overall median household income in the United States declined and the poverty rate increased to an 18 year high. However, following a severe recession it is not too surprising that those living in poverty increased. Specifically, the northeast was the only region in the US not to see a decline in real median incomes between 2009 and 2010. To read the full Weekly Checkup, click HERE.