Election Gives Health Reform the Kiss of Life
It's hard to argue this wasn't a decisive victory for the President and Democrats in the Senate. What remains to be seen is whether intractable Congressional Republicans will come to the table to get stuff done.
While it was a distant #2 issue in exit polls, this election was a de facto referendum on health reform. The ACA will not be repealed and is now assured to be Obama's lasting legacy. The "repeal and replace" campaign -- over three dozen repeal attempts in Obama's first term at taxpayer expense of more than $50 million -- is over. The GOP fought the ACA fiercely but I expect it will be hugely popular by 2016. Our hope is that Congressional Republicans will lay down their arms and help shape the ACA's implementation so they can share the credit when it's as successful as Medicare Part D has been. House Speaker John Boehner made some welcome gestures this week, asserting that "ObamaCare is the law of the land" and that the repeal agenda is over. We'll see.
Here are some thoughts on what happens in government health programs now that the election is over:
Sequestration and Fiscal Cliff: the 2% across-the-board sequester will not happen and the two parties will make a deal on the fiscal cliff that leaves everyone pissed — like compromise is supposed to. The political dynamics strongly favor the President, as his ideal scenario — raising taxes on the wealthy to accompany budget cuts -- occurs without any legislative action, and nothing happening in Congress is always a safe bet these days. Any deal reached will now involve both entitlement cuts and tax increases, we'd guess in the neighborhood of $2T or roughly half that recommended by the Simpson-Bowles Commission, and it will have bipartisan support.
"Doc Fix": The Sustainable Growth Rate (SGR) or the "doc cut" will be fixed, but it has to be paid for — and that's the obstacle both parties struggle with. MA rates are profoundly impacted by this issue, and Congress's inclination to deal with it through annual increments rather than the 10-year price tag in CBO estimates means that MA plans must wait until the next year's rates are announced. The discrepancy between how and when MA rates are set vs. FFS means that MA plans are never really made whole. It's a tremendous challenge for our industry — and an enormous windfall for MA in 2014 and beyond if Congress solves the problem.
Exchanges: Many Red State governors held out hope the election would settle whether they must prepare for health reform. The 11th hour means most have been caught flat-footed and the Federal Exchange will operate in over 30 states and will be the defining marketplace for health insurance starting in 2014. Far-right governors in Kansas and Virginia will eat the Federal fallback; Wisconsin Governor Scott Walker is now scrambling to get his own exchange together, and a handful of others may follow. It's one of the supreme ironies of Obama's reelection: the governors who screamed loudest of a "government takeover of health care" are about to get just that for their inaction, when the Federal Exchange comes to town in 2014.
Medicaid: most, if not all, of the 7-8 Red States who opposed expansion following the Supreme Court ruling will fold and take the expansion funds in the next 90 days — it's just too good a deal to pass up. Most of the 16 Million new Medicaid beneficiaries envisioned by the ACA — many childless uninsured adults -- will be assured of coverage in a second Obama term.
Dual Eligibles: The migration of dual eligibles to health plans will now move forward in more than two dozen of states in the next two years. The state fiscal crisis will overwhelm concerns about the speed of the migration, and it will result in over $200 Billion in new annualized premiums for plans in the next 3 years. The duals are now affirmed as the biggest opportunity for health insurers in a generation — bigger than the exchanges. They're also the most vulnerable, complex and expensive patients in the entire US health system and will challenge health plans like never before.
Medicare Advantage and Part D will continue on the course set by the ACA, and we expect the consolidations within the industry to accelerate with the election's uncertainty resolved. Look for a much tougher CMS in a second Obama term, with a continued increase in oversight, bolder regulations raising the bar, and a tougher compliance posture from CMS for Medicare Advantage and Part D plans.
- The Stars program's current trends will continue: Standards will change every year and underperforming plans will be hunted down and eliminated. CMS may get moving on SNP-specific rating standards, as SNP plans will be in trouble soon without them. Plans with 4+ Stars will continue to get bonuses and rebates under the ACA, but 2013 will usher in a new era of sub-3 Star plans being shut down by a much tougher CMS.
- CMS will keep trying to find a better way to risk adjust. We expect an attempt to recalibrate the HCC coefficients based on encounter data, which will change the dynamic: Plans will have to find missing codes to avoid being cut, rather than getting paid more. How CMS adjusts for the FFS error rate will be crucial.
- SNP and 1876 reauthorizations will both get paid for, but we need a vehicle to get the 1876 extension quickly, since it expires the end of December 2012. SNPs expire at the end of 2013, and so have more time for reauthorization.
Medicare: We expect Medicare will serve as a piggy bank for deficit-reduction proposals, given its size and fiscal situation.
- The Ryan/Wyden Medicare reform proposal will be debated as a gesture of "cross the aisle" goodwill from the President, but won't come close to enactment. But "premium support" will go mainstream in the debate and become more palatable over time — it reeks of inevitability and Democrats must come to the table to save the program we all hold so dear. The discussion begun by Ryan and Wyden must have its day.
- We expect the cuts that have been considered in prior budget proposals will be back on the table, including: fraud detection, reforming Medicare cost sharing rules, restricting first dollar coverage in Medigap, extending Medicaid drug rebates to duals and LIS, and more means testing. Provider cuts will also be on the table, especially for hospitals.
- An increase in the eligibility age to 67 is a possibility. But unlike with Social Security, deferring the eligibility age merely cuts off the lowest-cost tail of the distribution. The cost reduction would be disproportionately small compared to the number of people politicians would upset.
ACOs: with the ACA intact, the truly astounding surge in ACOs participating in Medicare, Medicaid and the commercial market will continue. Over 100 ACOs are already operating in Medicare. Over 500 applications were received by CMS for the September filing deadline for the Medicare Shared Savings Program, and over 300 ACOs are active in the commercial market and Medicaid reforms. With the election ACOs are here to stay as the bedrock contracting vehicle for the evolution and enrichment of forward-looking providers.
While it ended up a "status quo election" it gave the Affordable Care Act an indelible kiss of life and ushers in one of the biggest changes in our domestic policy in a generation. Now it's time to get down to the real work of implementing it.
Romney-Ryan Plans for Medicare Are Kid Stuff Compared to What They'd Do to Medicaid
GOP nominees Mitt Romney and Paul Ryan have big plans for Medicare reform, as we've written about here often. But health plans and other stakeholders need to start paying attention to their plans for Medicaid, which are game-changing, would affect millions more Americans, and would take effect much sooner: a recent Bloomberg report found that Romney/Ryan's changes to Medicaid would lead to an estimated $1.26 trillion drop in federal funding from 2014 through 2022. Other analyses estimated that 14-27 million Medicaid beneficiaries could lose coverage if the campaign's promise to block-grant the program became reality.
If Romney becomes President in January, the potential consequences for our industry are both massive and uncertain. While he speaks daily to his intention to repeal the 2010 health-care law, he has spent less time talking about what policies he would replace it with. His campaign website, www.mittromney.com, lists 15 health-care proposals — some specific, others vague — which, taken together, would dramatically affect the business landscape, no matter what your politics may be.
Medicaid is the largest source of health coverage in America -- covering 53 million people at a cost of about $457 billion a year, and needless to say covers the most vulnerable patients in the nation. Of those covered, around 24 million are in health plans, a number expected to double this decade. Its addition of as many as 16 million new Americans in the Affordable Care Act and moves by dozens of states to enroll dual eligibles in health plans also present the biggest opportunity for health plans since the launch of the Medicare drug benefit. The duals alone represent a bigger opportunity for health plans than the 16 million uninsured expected to enter health insurance exchanges in 2014. In the wake of the Supreme Court decision we think almost all states will eventually take the ACA's Medicaid expansion money as a deal too good to pass up.
But if Romney and Ryan win, all bets are off. It'd take them years to unwind the ACA, even if the GOP retakes the Senate -- but they could take a meat-axe to Medicaid much easier and quicker. Republicans would need a super-majority in the Senate to repeal the ACA, which they likely won't have, even if they reclaim control of the upper body. But Medicaid can be gutted through budget reconciliation, which only requires simple majorities. And their cuts to the program would take effect almost immediately in 2013, as opposed to Ryan's Medicare plan, which wouldn't be effective for almost a decade.
Medicaid is an easy target for budget hawks. Providers and states alike hate it. While Romney and Ryan would have to face the music with colossus AARP to enact their Medicare vision, there is no National Association for Poor Folks, just a gaggle of underfunded nonprofits fighting for Medicaid, and its beneficiaries often don't vote. But it remains the most important source of health insurance in America, and the biggest opportunity going in health insurance. Remember that while you're "voting your wallet" in November.
Time to Reauthorize Special Needs Plans
Special Needs Plans (SNPs) are a special type of health plan for America's most vulnerable and complex seniors that are set to expire at the end of 2013. Over 500 SNPs serve more than 1.5 million Medicare beneficiaries across the United States. Done well, the SNP significantly improves outcomes and brings down costs thanks to personal care planning, care-transition assistance, disease management, and medication therapy management. Not all SNPs are good at what they're designed to accomplish, but there are many providing patient-centered, coordinated care to vulnerable populations showing signs of success -- the program should be allowed to continue.
There are three types of SNPs since their launch in 2006: Institutional SNPs serve individuals who reside in institutional settings or are eligible for skilled nursing. Chronic SNPs serve individuals living with multiple chronic conditions, such as diabetes, congestive heart failure, and end-stage renal disease. Dual-eligible SNPs serve those eligible for both Medicare and Medicaid (MediCal in California).
An April 2012 study found that SCAN Health Plan's dual-eligible members had a hospital readmission rate that was 25%lower than dual eligibles with identical risk profiles in Medicare fee-for-service. The study also found that SCAN performed 14% better than fee-for-service on keeping people out of the hospital for preventable conditions and episodes of care.
A five-year extension for SNPs would stabilize specialty care for the 1.5 million beneficiaries in SNPs while continuing the progress they are making in reducing emergency department visits, hospitalizations, re-hospitalizations and nursing home stays. An extension would also allow states, if they choose, to construct their duals and long-term care demonstrations on a SNP framework, and allow time to evaluate findings from SNPs so that CMS can work with Congress to enact a permanent program going forward.
We Love Us Some Kitzhaber...Medicaid Reform Genius
It's happy days for us when Sarah Kliff at WaPo, one of our favorite bloggers, posts a great "get" with Oregon Governor John Kitzhaber, MD -- one of our favorite Medicaid reformers. It was such a terrific interview I wanted to reprint it here, with thanks to both for an illuminating discussion of the way forward on reforming entitlements:
Interview: Gov. John Kitzhaber on Oregon's $1.9 billion Medicaid experiment
"Oregon is in the middle of a multibillion-dollar Medicaid experiment. It has promised the Obama administration it can slow the program's growth to a rate comparable to the rest of the economy over the next two years. That means reducing Medicaid cost growth, on a per capita basis, by 2 percent.
If Oregon can't pull it off, the state stands to lose $1.9 billion in federal funds meant to jump start that process. As Oregon Gov. John Kitzhaber (D) put it, his state has "to change how you do business in order to survive."
The new business plan, he says, is to pay doctors for the quality of health care they provide, rather than the quantity. The idea is to eliminate expensive care that doesn't improve health care — a readmission, for example, for an issue that should have been solved on a first hospital visit. The structure is similar to the Accountable Care Organizations that the Affordable Care Act created in Medicare.
Oregon's revamped Medicaid program launched at the start of this month. We spoke at length about the risks involved in the new project, how it's going and whether it can be expected to improve the health of Oregon's Medicaid recipients. What follows is a transcript, lightly edited for grammar and content.
Sarah Kliff: What's changing on the ground right now in Oregon about how Medicaid patients receive their care?
Gov. John Kitzhaber: The Coordinated Care Organizations have only been up since Sept. 1, but essentially the model is a patient-centered medical home. Each person will have a single point of contact with the delivery system, some sort of a care manager. We'll increase our use of home health workers to essentially try to manage chronic conditions at home. Then there will be financial incentives. If hospitals can, for example, reduce admission rates by five per thousand, those cost savings get shared within the system. They don't go off to a third party.
SK: The Obama administration has given you an additional $1.9 billion to put toward improving your system for this project. How is that money being spent?
JK: We had a big hole in our budget. Providers did take an 11 percent cut, notwithstanding this money. This basically prevents any further cuts to the system. It gives us five years to get the delivery model up and running and realize the savings. It's like changing a car tire while you're driving down the road. You have to maintain the current delivery system while changing it. It gives us the resources to do that.
SK: What's at stake for Oregon here? If you don't hit the cost metrics that you've promised, what happens?
JK: The $1.9 billion is contingent on this gradually ramping down of costs. Chunks of those resources go away if we don't achieve those cost metrics. There will be resources pulled out of the system which will make it more difficult. The real incentive is if we don't transform the system, we go back to the 40 percent cut. There's no more money. This is one where you really have to change how you do business in order to survive. I think the system appreciates that. The grand bargain was they give us the flexibility, they give us $1.9 billion, we reduce the Medicaid cost trend by 2 percent points per member by the end of the second year and improve health outcomes. That's the grand bargain.
SK: How will the administration measure what counts as higher quality care? How do you safeguard against providers skimping on care?
JK: There are metrics we're developing with [the Center for Medicare Services] about patient outcomes and population health metrics. So this is clearly unlike an old HMO, which could save costs by skimping on care.
There will be some things we won't do, but they will be things that don't have an impact on health outcomes. If you can manage someone with congestive heart failure in their home, which is not that hard to do, you save $50,000 every time you avoid them going into the hospital.
There will be clear, specific outcome measures and they're around access, they're around relationship to outcomes. Right now, payment is all about quantity. The more you do, the more you get paid. We're shifting to outcomes-based and performance based-funding.
SK: You're looking at a two-year timeline that you'll be measured on both spending reductions and quality improvements. What kind of health care outcomes can you change in that relatively short time span?
JK: I think what you're going to see is some significant improvements in access. You may see some reductions in low-birth weight infants. If you provide good prenatal care, you can actually see that return pretty quick. Hopefully we'll see an increase in the number of kids who are immunized.
The real big cost savings we're probably not going to see until the end of the second year. Those will be the results of reducing hospitalizations and better managing chronic conditions at home. One of the metrics might be how many times someone with a chronic condition has come had to go to the hospital.
SK: I want to talk a bit about how your proposal compares to the idea of a block grant that some of your Republican counterparts have proposed. Both essentially make a trade off, saying the state could spend less if it's given more flexibility. What do you see as the key differences?
JK: Let's say you have 100 people and a block grant that allows you to spend $100 per person. Let's say the auto industry goes belly-up and now instead of 100 people, you've got 200 people. Now you're only spending $50 per person.
There's no relationship between the block grant and the cost of the care you're trying to provide. It's a meat ax approach that just saves money. It's not designed to improve health outcomes.
What we're doing is we're establishing a per person, per year amount that will grow at a fixed rate. If you add 10 people, they still get that amount. The cost savings are in the rate of inflation. The only way you can achieve that is change your delivery model.
One of the conversations we had at the White House, was they said, ‘let's say we give Oregon this $1.9 billion and increased flexibility. What's to keep us from giving this to other states?' I said, "well, if another state came to you — lets say New Jersey."
Let's say Gov. [Chris] Christie came you and said, "We will promise you that if you give us X amount of money, we will reduce our medicaid inflation rate to 3.5 percent. We'll increase access, we'll improve outcomes." I'd say, give them the money because if every state did what Oregon is doing, the total saving is $1.5 trillion over five years.
SK: Have you heard from other states who want to try the approach you're taking?
JK: Right after we got the money, we had about 10 states call us up and say how'd you get that money. We haven't had anyone else follow up and say, we want to do it too. I think part of it is due to the election cycle. After the election, when states are faced again with dealing with stuff, I think a lot of states will look at what we're doing. It's actually up now.
Part of this is just good communication. This is hard. It's a big paradigm shift. You need to sit down together so you don't feel like you're all by yourself. You need to figure out what's working and what isn't. What can the state do to facilitate this.
SK: What are the biggest obstacles to making this work?
The biggest challenge is the old business model. People are used to having this unfettered flow of cash that increases every year coming into the health care
What we've signed up for is basically a cap on spending. Even if you figure out a way to raise more money, you can't spend it in the Medicaid program. We're getting there slowly with that. The other big piece is making sure that the private sector knows its in their interest to align their purchasing power with the 900,000 people we have or else some of this is going to be a cost-shift onto them.
SK: How did you get hospitals on board with this? Why should they get behind the idea of essentially capping the amount they can earn from Medicaid?
JK: At the end of the day, they know this isn't working…The lack of resources is what's really driving and motivating people to change. They know the alternative is worse than this.
The interesting thing is, I have to remind them of this all the time, and say let's not do this, then what's your world like? It doesn't look good at all. You have to continually remind them that the alternative is just a whole lot worse for them.
Newbies Slow Dual Eligible Expansion in Key States
After last week's AHIP conference on Medicare and Medicaid and MANY coffees and cocktails later, a picture emerged that the only thing slowing the movement of dual eligibles into health plans isn't nervous advocacy groups or overstretched regulators -- it's newbies to the game of caring for the nation's most vulnerable patients.
Dual-eligible expansion has slowed in key states due to the influx of a number of inexperienced plans in states like Florida and New York — Florida in particular, where provider-sponsored plans and other late-comers are popping up like mushrooms in response to the state's long-term care integration RFP. Ohio has selected its plans in a tortured process, but many are newcomers to duals and many influential providers are in disarray, slowing momentum. By contrast, California is moving apace — in counties with experienced plans like Orange and Los Angeles, while delaying implementation in counties covered by plans with little or no track record.
Some interesting challenges lay ahead for Melanie Bella's Office of Federal/State Integration at CMS, which has handled the surge admirably but now needs to balance quality priorities against Medicaid agencies that want fewer strings attached despite the flood of newbies. At this stage CMS's pipeline and market intel suggests the following states to watch:
|
Year |
Early Adopter States |
|
2013 |
MA, CA, FL, IL, OH, MN, WI |
|
2014 |
AZ, HI, NY, TN, TX, WA, ID, MI, OR, RI, SC, VA |
To address the "newbie" phenomenon, I suspect in many of these states some very strange bedfellows will emerge, like Blue Cross/Blue Shield plans partnering with large provider systems or traditional Medicaid-focused plans. Stay tuned — it ain't easy getting a $200 billion market off the ground among companies with precious little track record in serving those who need their services the most. The launch of Part D will seem like a milk run once this transition is complete.
Join us Thursday for First in New Webinar series: Risk adjustment in the exchanges
On Thursday July 26th at 1pm ET we'll kick off our new webinar series, "Lessons from Medicare Advantage and Part D", a monthly webinar series around what we've learned in Medicare that can be applied to the exchanges and other aspects of health reform. We'll begin with a deep dive on risk adjustment in the exchanges.
Risk adjustment is the defining health care finance issue of the decade, and MA and Part D represent the largest experiments in risk adjustment on the planet. MA and Part D's risk adjustment system is the blueprint for ACOs, the exchanges, and a growing number of state Medicaid programs as well. We'll explore the risk adjustment provisions in the ACA and the final regulation, and apply what we've learned in the last 7 years to the future of health plan payment, with our partner Dr. Jack McCallum, CEO of GHG sister firm CenseoHealth. Bring your CFO, Chief Strategy Officer, CMO,Chief Marketing Officer, and your actuaries for a geektastic discussion on how to follow the money post-2013. In the coming months we'll examine other reform topics where the Medicare, Part D and Medicaid Dual Eligible experience shines a light: In early September: Distribution In and Around the Exchanges: Lessons from MA and Part D. We'll explore how individuals with subsidies and small groups will be sold the "metal" plans, especially in the Exchanges through Navigators and other impartial facilitators, to the deployment of brokers and sales management. Our focus will be on the Federally-Facilitated Exchange, which could operate in as many as 40 states, with updates on specific states as applicable. In late September: we'll explore the Nuts and Bolts of the Federal Exchange: Lessons from MA and Part D. We'll focus on how the Federal Exchange will function from a 10,000-foot level perspective, where the plan interfaces are and the broad strokes of anticipated reporting requirements. In late October: Product Strategy in the Exchanges: Lessons from MA and Part D. How subsidies will work based on income determinations; a landscape view of where states are on accepting ACA Medicaid expansion dollars in the wake of the SCOTUS ruling. For Red States: what the new "near-Medicaid coverage gap" means in those states that refuse the ACA funds. We'll examine how to segment the market for Platinum, Gold, Silver, and Bronze plans, and the allowability of supplemental insurance products (like dental) in the exchanges. What existing commercial and government programs provider networks mean to product pricing and strategy. The imperative for a database of local individual claims to wargame product designs on. More to come. The scars on our collective backsides in Medicare the last 16 years provide some great "teachable moments" for the new world post-ACA. We look forward to the discussion.
Rising Chorus Urges CMS to Slow Down on Dual Eligibles
CMS and at least 20 states are moving hell-bent-for-leather toward enrolling as many as 3 million of the 9 million Dual Eligibles into health plans in the next two years, creating one of the biggest opportunities for payers in history. Now a rising chorus including the Medicare Payment Advisory Commission, the American Medical Association, some policy analysts and now at least one key Senator are urging CMS to hit the brakes. I tend to think the movement of duals into plans is like the movement of water: it can be slowed but not stopped.
Most agree that something has to change for the 9 million Americans who receive both Medicare and Medicaid. Duals typically have multiple chronic conditions, much higher prevalence of mental and behavioral health problems, polypharmacy issues, and much higher rates of institutionalization. They represent about 15% of Medicaid enrollees but account for almost 70% of program costs. Duals are the most vulnerable patients in the entire US health system, and they need the best of what health plans have to offer: better coordination, access to broader networks of providers, and better deployment of home and community-based services. 15 states are working with CMS on a pilot program to transition these folks to health plans in the next couple years, and at least another half-dozen states are moving forward on the same timetable but without CMS assistance.
But resistance to the effort is escalating:
- MedPAC recently raised a number of concerns over the size, scope and rapid pace of the program. "If all the state proposals are approved, then roughly 3 million dual eligible beneficiaries will be enrolled," MedPAC Chairman Glenn Hackbarth stated in an 11-page letter to CMS. "This would mean that approximately 40 percent of all full-benefit duals will be enrolled in the demonstration."
- Provider and advocacy groups warn that the size of the pilot programs under consideration represent the equivalent of a waiver or Medicaid program change. Last month, the AMA called for a delay of the program to give providers and patients more time to understand how it would run. Among the AMA concerns were disruption of established doctor-patient relationships, auto-enrollment of duals, and that pilots don't slash physician fees.
- Sen. Jay Rockefeller (D-W.Va.), who helped shape the effort in the Affordable Care Act (ACA), has called for its immediate suspension. In a letter released late last week, Rockefeller torched the pilot, asserting its design is more about savings for states and less about improving care. Rockefeller created the CMS Federal Coordinated Health Care Office in the ACA -- so this episode is a bit like Daddy taking his son to the woodshed.
I tend to think these concerns will result in CMS raising the bar on states and other stakeholders -- there will be plenty of strings attached to these pilots, especially for the plans -- but they won't stop the movement of duals into health plans. The state fiscal crisis is so severe that Governors and Legislatures need these initiatives to move forward just to balance their budgets -- duals are the #1 or #2 item in every state budget now. And the Feds are eager to help states with the right approach, especially in light of the drama on Medicaid expansion arising from the recent Supreme Court decision. So it may get noisy around the duals' transition to health plans, but it won't get slower.
Medicaid Mattered Most in the SCOTUS Decision
In all of the drama around the recent Supreme Court ruling on the Accountable Care Act (ACA) and the individual mandate, it was the Medicaid eligibility expansion ruling that mattered most. Hands-down, Medicaid was WAY more important: $1 TRILLION and 17 million Americans' access to health insurance is now at stake, potentially millions more when Medicaid maintenance of effort rules on states expire in 2014, and it's all red meat for Red State governors who will devour it at their own peril.
Red State governors will make a spectacle of throwing a middle finger at President Obama -- but it's the most vulnerable Americans and the most hardcore uninsured they're giving the shaft. Not to mention hospitals and other powerful provider organizations who would prefer Medicaid to bad debt. I'll say it here: the RedGovs' are bluffing for political gain and most of these jerks will fold before the election, ultimately taking the ACA expansion money in the face of an onslaught of local lobbying.
Why Medicaid mattered: SCOTUS essentially made it optional for a state to participate in ACA's $1 TRILLION Medicaid eligibility expansion to 133% of the poverty limit. The federal government is funding 100% of the expansion for the first three years, and will eventually scale back to match $9 to every $1 spent by states. According to the Center on Budget and Policy Priorities, the Feds would pay $931 billion of the cost of the Medicaid expansion through 2022 — while the states would be asked to chip in $73 billion, or about 7%. It's a great deal for cash-strapped Red States. If a state declines to participate in the coverage expansion, it will create a huge gap in coverage among the poor and near-poor, and will subject safety-net providers to more bad debt where there was supposed to be coverage.
The Republican governors of 5 states — Florida, Texas, Louisiana, Mississippi, and South Carolina — have declared they want nothing to do with the expansion. "The bottom line here is that Medicaid is a failed program," Texas Governor Rick Perry -- who claims 1.3 million long-term uninsured in his state -- said Monday on Fox News. "To expand this program is not unlike adding a thousand people to the Titanic."
Are we talking about the same Medicaid program? You know, the one that is the largest source of health insurance in Texas and the nation? Leaders of 6 other states are considering the same kamikaze mission. As of today, the scorecard looks like this:
Hell, No (5) -- FL, TX, LA, MS, SC
Probably Not (5) -- IA,MO, NE, NV, NJ, WI
Leaning Yes (3) -- AR, OR, RI
All-In (10) -- CA,CT, DE, DC, HI, IL, MD, MA, MN, VT, WA
Undecided (26) -- AL, AK, AZ, CO, GA, ID, IN, KS, KY, ME, MI, MT, NH, NM, NY, NC, ND, OH, OK, PA, SD, TN,
UT, VA, WV, WY
Publicly-traded health plans and hospitals and Wall Street itself are betting the RedGov's are chest-thumping too. WellPoint announced Monday it will spend almost $5 billion to purchase Amerigroup to buy a bigger stake in Medicaid expansion. "When you step back from all this, there are billions of dollars of federal money that are going to flow into the states. We think the states are going to need to take it," Amerigroup CEO James Carlson said following the announcement. Stocks for Amerigroup, Molina and Centene all jumped following the SCOTUS ruling, posting gains of 20+% this week.
Stocks for the largest chains of private, for-profit hospitals also shot up following SCOTUS, and the RedGovs' threats to withdraw from Medicaid have done little to drive them down. Hospitals expected to be another beneficiary of the Medicaid expansion -- in 2010, they paid out $39.3 billion — 5.8 percent of their total expenses — in uncompensated care.
I get the RedGovs' posturing but still hate them for it: rejecting the Medicaid expansion fits with their crusade to cut government, and a slam on Obama is catnip for their base. But the ringleader of the RedGovs, Florida Governor Rick Scott, is the former CEO of HCA, one of the biggest publicly-traded hospital chains in the nation. Texas' massive hospital districts and Louisiana's charity hospital system make for noisy, well-funded lobbying campaigns with intense turnout on the ground. The RedGovs will face the fury of a local lobbying campaign never before seen at the state level. Hospitals will say they're doomed to bad debt if RedGovs reject the coverage expansion. They'll remind the RedGovs that hospitals are among the biggest employers in most communities and will say that once-rock-solid jobs in their communities are now in peril. They will point out that without Medicaid expansion, many small safety-net and traditional providers of care to the underserved will cease to exist.
The Kaiser Family Foundation released a poll this week following the SCOTUS ruling, and it found 56% of Americans now say they would like to see the GOP stop their efforts to block the ACA's implementation and move on to other national problems. Solid majorities of voters of every political stripe say the decision won't impact whether or not they vote this November. That shows the RedGovs' politics on Medicaid expansion for what they are: opportunistic, fiscally irresponsible, cynical, and heartless. And they'll pay for it in November.
The Supremes Say the Mandate is Constitutional. But Voters Get the Final Word.
Washington's best-kept secret since JFK and Marilyn Monroe came out today: the Supreme Court upheld the individual mandate in the ACA in a 5-4 decision made by Chief Justice John Roberts. The President ducked a bullet in the ruling and comes out strong heading into the election on this issue; the decision will galvanize the right and embolden the left; and Chief Roberts finessed the issue by calling the mandate a tax, avoiding new precedent and getting the Supremes out of the nastiest domestic squabble since Bush v. Gore. But the Supremes didn't get the last word on the ACA: that rests with the voters in November. Making Obama a one-termer is now the GOP's only hope to stop health reform.
The Supremes' decision means reform moves forward without delay. That means most of the 26 Red States that brought the case to the Court, and a handful of others, are now WAY behind in implementation and will likely have the Federal Exchange jammed down their throats in January 2014 for their intransigence. That's the Supreme irony of the case: for all their bitching about a government takeover, that's exactly what those states will get for having done nothing while the case worked its way through the Courts.
The decision also means there is no impact whatsoever to Medicare. The cuts to Medicare Advantage (MA) remain and will continue to be phased in. The Star Ratings bonuses and rebates remain untouched. The new Part D coverage expansions -- the "jelly" in the donut hole -- are as sweet as ever. Accountable Care Organizations (ACOs) move forward. Minimum medical loss ratios (MLRs) take effect in Medicare Advantage in 2014. The coding intensity adjustment in MA remains. The Retiree Drug Subsidy (RDS) continues to phase down by 2016, compelling more employers to push their retirees into MA and Prescription Drug-only Plans. Insurer and provider taxes stay put. And 9 Million Dual Eligibles continue their march into health plans. It's as if the case never happened. And that means, as we've said many times here, it's still all about Star Ratings, Risk Adjustment, and chronic care management as keys to survival in Medicare this decade.
Now the only thing standing in the way of ACA implementation in January 2014 is if Obama is deposed in November and the GOP can get enough votes for "repeal and replace". Republican nominee Mitt Romney -- the original baby-daddy of the individual mandate in Massachusetts -- said he raised over $1M in campaign contributions in the first two hours after the decision came down. Obama will use the decision to try to reboot his health reform message. And the election becomes a referendum on the ACA.
Strap on your crash helmet and hold onto your butt -- the next 4 months will be the nastiest campaign cycle this country has ever seen. But for now, the ACA lives. And if you're in health care, you should be turning cartwheels today.
Times Are A-Changin'...Get Your Team to the GHG Forum June 12-13
In response to client requests, GHG is holding its first-ever Client Forum June 12-13 in Washington. With so much change in the air in government programs, the Forum is the perfect opportunity to get your team focused on the road ahead.
This isn't a disjointed lineup of vendors selling from the podium like at your usual industry conference: the presenters are all GHG's elite subject-matter experts, and the agenda is designed to be a silo-busting deep dive for government programs executive teams, with downtime built-in to allow you and your team to process and plan ahead. If you want answers, this is your gathering.
Change is a constant in the government programs world, and most of the folks who call us for help are those who are too busy these days to do anything but react. We have a motto at GHG: you can't react your way to excellence. Take two days to join us, bring your team leaders, and learn about how to get ahead of what's coming.