Unintended Consequences
Yes, another post on default. But a short one.
The irony of the discussion regarding payment prioritization in the event of a default on 8/2 is that if we indeed honor our obligations to pay interest on the debt (as is universally acknowledged we would do) first as part of a prioritization scheme.... the effect will be to pay the Chinese and other foreign soverign debt-holders before we pay salaries for the troops (or Medicare, or air traffic controllers). Can't imagine that was the plan.
What is the "advantage" in Medicare Advantage?
All the clamor over cuts in MA reimbursement and audits of MA payments has caused us to lose track of what this program can do that traditional Medicare cannot.
Risk adjustment has made direct, careful clinical assessment of MA members a financial imperative. The Stars program has made measuring quality of care for those members a necessity. MA plans have the unique advantage of being able to: 1) merge claims and clinical data in a single, actionable database and 2) use that data to positively impact the care their members receive.
The recent push to prospectively evaluate MA members' chronic care conditions and the care they receive for those conditions does both—and traditional Medicare cannot do either.
This is a marvelous example of a situation where CMS is using financial incentives to effectively drive care for America's seniors. Maybe there really is a strong case for moving more Medicare beneficiaries into this well-designed model.
Debt Negotiations Collapse. What Does it Mean for Medicare?
Another week, another impasse in debt ceiling negotiations with 9 days to go before default. My favorite wonk, WaPo's Ezra Klein, does a CSI-style autopsy of how we got here and a primer on the issue. We just proved to the world that Washington has become California: ungovernable. Credit agencies aren't grading our ability to raise the debt ceiling, they're grading our ability -- or as now demonstrated, our utter inability -- to deal with our deficit and pressing economic matters in a functional manner.
It's clear that markets are going to have to force the House GOP to swallow a compromise that will satisfy Wall Street. We'll get the first test of that tonight when Asian markets open. And then Monday morning we can pray that Wall Street flirts with mobile network meltdown as GOP donors warn their beneficiaries on the Hill of unmitigated disaster before Standard & Poors and Moody's drop the bomb.
Let's say it takes a few weeks for the credit agencies to weigh in and US bondholders show some admirable restraint. In August the real pain starts as the government literally runs out of money and the President has to start making decisions about which bills to pay. This has never been done before in US history. The Bipartisan Policy Center produced a terrifying report on how it might actually work. Treasury will only be able to pay 55-60% of the federal government's bills in August. So where does Medicare fit in?
It's certainly possible that FFS provider payments or the next month's Medicare Advantage or Part D capitation payments could get held up in one or more months to come. The President may have to decide in the fall that "this month I'm paying interest on the debt, Social Security, military personnel pay, unemployment insurance and Medicaid payments -- those Medicare HMOs and PBMs and all those doctors and hospitals -- not to mention all those Federal employees, the Centers for Disease Control, and air traffic controllers -- will have to wait."
According to the BPC, the federal government needs to roll over $500 billion of debt in August. If we default, no one will want to buy that debt unless we're paying a lot more for it. BPC points out a 10 percent premium would cost us $50 billion.That's only the direct cost -- the indirect costs are far worse. Because most debt instruments are pegged to the Treasury rate, you'll see interest rates spike across the system. Every type of borrowing -- from mortgages and college tuition plans to corporate lines of credit and acquisition financing -- all of it will be hit. It won't just be the federal government that pays. It'll be the economy -- and that goes way beyond Medicare missing a couple months' of accounts payable and then catching up.
If it isn't yet clear: this is really, really bad news.
Options on the Table for Debt Reduction at the 11th Hour
This morning WaPo offered great coverage on the state of play on the debt negotiations and included this terrific visual on the options on the table. Yesterday my colleague Nathan Goldstein wrote about recent polling showing the public's preferences, and it appears class warfare is alive and well in the US. Nathan's right: Democrats are winning this battle -- the public perceives the GOP as more to blame for the debt crisis -- but losing the war.
Rep. Conyers -- My Old Boss -- Faces the Redistricting Music
The man with whom my Washington career began 21 years ago, US Rep. John Conyers from my hometown of Detroit, is in real danger of losing his seat to redistricting, Politico reports this morning. It would be an unfortunate end to a storied and at times controversial career.
Conyers is a prince of a man personally and a liberal fighter borne of the labor and civil rights movements. He may be out of step with the times, and in need of better connection to his recession-nuked district. But there's no question he's been a strong voice of the progressive wing of the party, and a tremendous advocate of issues facing the African-American community. I'm honored to have gotten my Washington indoctrination at John's knee, and I wish him all the best next November.
Amen to that (the US Chamber of Commerce??)!
I'm not usually one to agree with right-wing leaning pro-business groups, but this debt ceiling fight makes strange bedfellows. Republican business allies are growing more restless as the crisis persists, Politico reports.
"Jeopardizing our country's credit rating and fiscal security by refusing to compromise isn't the answer," R. Bruce Josten, U.S. Chamber of Commerce executive vice president for government affairs, said in a posting Thursday.
Amen to that!
Read more: http://www.politico.com/news/stories/0711/59623_Page3.html#ixzz1SqKJdpS9
House GOP Warned on Fiscal Irresponsibility
From Politico: "House Republicans were cautioned Thursday in a closed door meeting with credit rating agency officials that a "death spiral" in the bond market was one of the possible outcomes in the event of default.
One official warned of a worst-case scenario in which a default on the nation's credit could result in a rapid drop in bond values, sparking chaos in the markets — a dramatic warning as Washington worked on a possible deal on deficit reduction and an increase in the debt limit."
Former Bush Treasury Secretary Hank Paulson, calling mounting debt "the single greatest threat to our nation's future," said Friday that the ceiling must be raised. "And the sense of urgency is clear — failing to raise the debt ceiling would do irreparable harm to our credit standing, would undermine our ability to lead on global economic issues and would damage our economy," Paulson said in a statement after a breakfast meeting with Treasury Secretary Timothy Geithner.
Read more: http://www.politico.com/news/stories/0711/59655.html#ixzz1SqaPWTwF
Read more: http://www.politico.com/news/stories/0711/59612.html#ixzz1SqLw5CgR
"For Medicare and Medicaid, Drama"
We're definitely in uncharted waters should the US be allowed to default on its debts August 2. Politico explores what might happen to Medicare and Medicaid should the unthinkable happen.
Consider this: Medicare Advantage monthly capitation payments don't get made in September. Despite it being over 100 in DC today, that cold chill down my spine offers no comfort.
Cut, Cap and Balance Crashes and Burns in the Senate
The Senate just rejected the idiotic House GOP bill to "Cut, Cap and Balance" the Federal budget. "It's one of the stupidest constitutional amendments I have ever seen," said Senate Budget Committee Chairman Kent Conrad (D-N.D.), a member of the "Gang of Six" that unveiled a bipartisan deficit-reduction framework this week. "It looks like it was drafted by two interns on the back of a napkin."
I couldn't agree more. Now that the wingnuts in the House have covered their collective asses next November, maybe we can get down to the serious business of saving the US as the premier global market to invest in.
Carmegeddon and the Drive Towards More Access
As many of you have heard, "Carmegeddon" took place over the weekend. A ten mile stretch of Los Angeles' 405 Freeway was closed for a full 48 hours. Why? To make it bigger of course! After all, pushing the same amount of traffic through greater lane capacity should reduce congestion in the country's busiest road…. right? Nope.
Notes policy analyst Steve Lafleur*: "LA drivers spend over half a billion hours per year stuck in excess traffic delays, which costs the economy roughly $12 billion dollars. Adding more freeway lanes seems like an obvious solution, except for the fact that it doesn't work. Studies have shown that every percentage increase in roads leads to an equal percentage increase in driving. In other words, more roads mean more driving."
Freeways aren't the only places where traditional notions of capacity are turned upside down. Dartmouth Atlas researchers famously showed that too much of a good thing might not actually be a good thing when it comes to physician visits, procedures and days spent in the hospital. The term was "distributional inequity," i.e., the numbers of specialists and hospitals in largely urban areas drives the quality and efficiency of patient care--- but not in the direction one might expect.
A traditional view of markets would hold that having more physicians would make stuff less expensive (supply and demand) and high quality (via increased competition). But Dartmouth researchers and proponents argue that hospitals need to fill their beds and physicians need to fill their appointment books. Supply increases demand.
In a 2007 report on utilization and equity, Dartmouth authors identified that Miami, Los Angeles, and Manhattan have overbuilt their acute care sectors, whereas Minneapolis, Salt Lake City, and Portland, OR have been frugal, using fewer hospital beds, less physician labor, and fewer expensive technologies such as ICU beds and medical imaging. The group saw excessive utilization increase in those "overbuilt" markets, with care intensity increasing everywhere, and growth in specialist visits and ICU stays escalating rapidly in high-cost regions. What constitutes "excessive" is a subject of heated debate but the latest FFS Medicare per member per month expenditures in those markets stand out: Miami: $1,236.51; Portland, OR: $615.41.
So while too little access causes problems (the Kaiser Family Foundation estimates that 60 million Americans lack adequate access to primary care, eventually driving up unreimbursed, emergency and acute care costs), it appears too much does as well. Of course access to what matters greatly. Since the ACA passed, much has been made of the fact that so many of the reforms depend on a robust, empowered system of primary care--- and it is PCPs we're in shortest supply of.
One can't help but think it's the definition of "access" itself that needs a close examination. I was reminded of this quote from Don Berwick: "The greatest potential for reducing costs while maintaining and improving the lot of patients is to replace visits with better, more flexible and fine-tuned forms of care. But almost all current payment mechanisms, whether enforced by the market or mapped into organizations by internal compensation systems, use impoverished definitions of productivity that actively discourage the search for and incorporation of non-visit care."
Maybe the best thing about non-visit care is the fact that you don't need to get in the car to have it.
*It should be noted that Mr. LaFleur is a Canadian, which may explain his un-American views on the automobile.