Hey Star Czars: Look Here
Medicaid Came This Close to Deep Cuts in the Debt Battle
Keeping Medicaid from automatic cuts was a priority of the Obama administration in the final, ugly days of the debt ceiling fight. It was the one major concession the President and the Democrats won in the whole nasty sausage-making exercise.
Politico did a great job telling how the deal was done, and the tense moment when Obama staffers threw down the gauntlet:
[T]he atmosphere was tense as the hours slipped toward the deadline. By Saturday night, discussions over the trigger had bogged down, and a call between [Senate Minority Leader Mitch] McConnell's staff and senior White House aides turned heated when GOP negotiators demanded that Medicaid be added to the mix of programs that could face cuts.
Gene Sperling, chairman of Obama's National Economic Council, was in mid-sentence, trying to calmly explain why the White House wouldn't allow that, when Office of Management and Budget Director Jack Lew interrupted.
"No!" the typically mild-mannered Lew yelled. "The answer is simply no! No, no!"
In earlier plans passed by House Republicans, Medicaid had been subject to automatic cuts. At least the Dems won one for the little guy.
Debt "Deal": Not As Bad for Medicare as Expected, Medicaid Spared
So we have a deal on the debt ceiling. The President is now authorized to raise the debt ceiling by at least $2.1 Trillion. The roughly $2.5 Trillion in cuts over 10 years represents 5% of expected Federal spending over that time period. $917 Billion in cuts are made up-front. A joint bipartisan committee will then decide on an additional $1.5 Trillion in cuts by November 2011 for a December vote.
If the evenly divided committee failed to agree to the required amount of cuts, Congress would either have to approve a balanced budget amendment to the Constitution (which doesn't stand a chance of being ratified), or accept an across-the-board cut in spending, with 50% coming from defense programs beginning in 2013 (military pay and veterans' benefits are exempt). Medicare would also sustain cuts, but only up to a point. Medicaid and Social Security were exempted.
Putting "sacred cows" on the chopping block, like national security for Republicans and Medicare for Democrats, was to provide a strong incentive for the joint committee to avoid gridlock and deliver a plan that could pass Congress. I could see these "incentives" working on Democrats, who just folded AGAIN to the demands of the far-right House GOP. The Tea Partiers just showed they're willing to flirt with global economic ruin -- what's a few billion to the Pentagon or the Department of Homeland Security to them? Expect another budgetary "High Noon" right around the holidays.
Physicians and other providers could see an additional 2 percent pay cut on top of double-digit Medicare reductions already slated for 2012 under the "deal". The now-29% pay cut for physicians is scheduled to go into effect this year unless there's a fix to Medicare's Sustainable Growth Rate formula, as well as an 11 percent regulatory hit to home health agencies.
The White House said last night the Medicare cuts would hit providers but would not directly affect beneficiaries, but of course they do -- mainly in providers' willingness to continue to accept Medicare patients. There wasn't specific mention of Medicare Advantage or Part D plans -- but if the "doc fix" doesn't happen, that 29% cut in traditional Medicare could translate into a 7% hit to Medicare Advantage rates in 2013.
What to expect in the coming months? Two of the proposals in the Bowles-Simpson bipartisan deficit reduction committee's December 2010 report will get more attention: increasing the Medicare eligibility age from 65 to 67, and moving dually-eligible beneficiaries into health plans, which would curry huge state support. As a general proposition, the Administration will likely bend over backwards to provide states with greater flexibility in how Medicaid dollars are spent through the state waiver process.
It's hard to call this anything but a political rout for Obama and the Democrats. A few weeks ago they had the Republicans over a barrel on the Ryan Medicare reform plan. Now they've handed the Tea Party several opportunities where they can create a global financial crisis unless the President caves, and he's now shown for a third time that he will.
My favorite wonk, WaPo's Ezra Klein, called this a "terrible, horrible, no good, very bad deal" and I couldn't agree more. He went on to say that "Today, the markets are breathing a sigh of relief because Washington managed to agree before it sparked an unnecessary financial crisis. But we could be celebrating an agreement that actually did what was necessary to speed the recovery now and reduce the deficits that matter. Congress may be patting itself on the back because it didn't needlessly wreck the global financial system, but that's not evidence of success. It's evidence of how terribly they have failed us. And the fact that so many are celebrating this deal only goes to show how used to their failures we have become."
Poll: Cut the Deficit, but Not Medicare
Half of all Americans say the deficit should be reduced by cutting spending on government programs and services, but there is strong opposition to cutting entitlements, according to a poll released Thursday by the Kaiser Family Foundation.
Kaiser's July Health Tracking Poll found that 62 percent of people don't want Social Security cut, 59 percent don't want Medicare cut and 48 feel the same way about Medicaid.
There was majority support for "closing tax loopholes for large businesses," "closing tax loopholes for wealthy Americans" and "increasing taxes for wealthy Americans." Only 23 percent of poll respondents supported increasing taxes for all Americans.
What Happens to Medicare and Medicaid If We Default, continued
The Bipartisan Policy Center tried this week to break down the daily cash flow in the days following the Aug. 2 deadline to give an idea of what could get paid.
On Aug. 3, a day when there will be a $20 billion shortfall, $2.2 billion in Medicare and Medicaid bills will vie with $23 billion in Social Security payments, $1.4 billion in payments owed to defense vendors, and $500 million in federal salaries and benefits. Health spending's place in Accounts Payable at Treasury would change daily depending on what bills come due and the amount of revenue available.
States get their federal matching money for Medicaid in quarterly payments on the first of the month, so Sept. 1 would be the first big date for the program.
Amidst all this uncertainty, the only thing that's clear is that the country would be in uncharted territory if there's no deal before Aug. 2.
Blowing up the "Health Insurance" Service Model
In the 15 months since ACA passed, MA plans have scrambled to improve their Star Rating. Nothing motivates like the promise of a 5% premium bump in an era otherwise marked by dramatic payment decline. Also motivating: CMS appears to be making initial steps towards delivering on intimations that low-rated plans will have their contracts terminated.
Early efforts in the Stars focused on HEDIS scores and for good reason. Much of domains I and II are process and outcome-based HEDIS measures. But with C and D ratings taken together, less than 20% of the ratings are actually driven by these clinical targets. So where's the beef?
It's the service model. HEDIS aside, fully half the measures can be traced directly back to the service model--- and we're not talking call center hold times. The reliance on subjective survey measures for much of the Star scoring and the role of the service center in driving member compliance with clinical activities point to the increasing value of the relationship members have with the plan--- for better or worse.
This week, noted power point gurus Accenture released the results of a consumer survey regarding health insurance. The report shows that nearly half of insurance customers would be willing to pay more for health insurance that caters to their needs. Two specific items stood out to me:
- 85 percent of those surveyed rated interaction with knowledgeable employees as highly important, yet fewer than 50 percent were satisfied with current experience;
- More than 80 percent said dealing with one contact to resolve issues was important, but 60 percent said they currently were transferred to multiple contacts to resolve issues.
This sounds like the best very best rationale for the "Concierge" customer service model we've put in place at a few plans over the years. In the Concierge model, every member is paneled to a specific Rep, who also is tasked with making frequent, targeted and data-driven outreach to their panel. In other words, don't wait until the customers are unhappy until you talk to them. And while Concierge programs have proven to be no more expensive than traditional inbound models, this survey implies that your members would even pay more for it.
Blame it on the Heat
Things are getting goofy in DC. Anne Lowrey of Slate explains the latest idea to plunge the clogged toilet that is Congress:
"One option is coin seigniorage—aka, the "really-huge-coin workaround." The United States has a statutory limit on the amount of paper money in circulation, but no such limit on coins. The Treasury secretary has the authority to mint certain coins of any denomination, with no need for the value of the metal to equal the value of the coin. (It gets a bit technical.) But the idea is that Secretary Timothy Geithner could order the Mint to make a, say, $5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt."
Your weekend mental health break
Over here at the GHG HQ we're a big fan of Jessica Hagy. We hope you enjoy her insightful venn diagrams and especially hope you incorporate them into your next corporate powerpoint presentation.
Medicare Part D Works
According to a recently released study Medicare Part D is successful in assisting seniors in affording maintenance and other drugs that keep them out of hospitals and emergency rooms. This results in an estimated $12 billion in savings per year or about $1200 per senior that was inadequately covered before the program came into effect in 2006. The $12 billion is not enough to cover the $55 billion cost of Part D, but it is an indicator that seniors are enjoying a better quality of life.
As the discussions around how to reduce the cost of entitlement programs continue it will be important for politicians to keep in mind how all parts of the Medicare program affect each other.
Sebelius Weighs in on the Debt Debate
Politico Pro got the "get" with HHS Secretary Kathleen Sebelius yesterday, who said the debt ceiling negotiation is casting a shadow over HHS's day-to-day operations. "I would think it would make people a little leery about contracting with us, not knowing if we're going to pay our bills. That's a pretty precarious place to be," she said.
Interrupting the department's operations could have serious consequences because of the critical nature of the services the department provides, she suggested. "The services that are delivered by people in our department are really essential ... often life and death services at the ground level, so many states rely on the funding that comes out of our office, we're just going to continue to operate and, as I say, hope that the stalemate and the log jam breaks quickly," she said.