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.
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.
Collaboration and Partnership with CMS
Having spent my government career at CMS, it was interesting for me to listen to current CMS officials Steve Larsen (CCIIO) and Cindy Mann (Medicaid) describe the many opportunities for states and other stakeholders to participate in the development of federal policy for Health Exchanges that were authorized by the Affordable Care Act.
The discussion took place at today's meeting on Insurance Exchange Development sponsored by the Bipartisan Policy Center and the Kaiser Family Foundation.
Steve Larsen described the partnership hybrid model where CMS and States could jointly administer State Exchanges with the federal government performing functions that states would effectively outsource to CMS. Cindy Mann described upcoming state collaboratives where states and CMS would sit together and jointly develop guidance for state exchanges.
The clear message is that the federal government does not have all of the solutions and that there is no "one size fits all" . The new CMS Innovation Center also conveys a strong message of public-private partnerships and consistently seeks ideas and solutions from stakeholders to improve the health care system. This is clearly a different era from my early days at CMS when the tradition was to seek input only through a formal regulatory comment process. CMS is now a "Learning Organization" -- just in time to lead the expected huge changes in health care.
What are the amendments anyway?
As I watched the increasing drama of the debt ceiling unfold over the weekend, several commentators discussed the possibility of Obama being able to raise the limit regardless of congress due to the 14th amendment. Interesting article on this yesterday in the NY times.
We hear commentators and politicians quoting the constitution and amendments constantly as they battle for some political point and I realized I'd never taken the time to read or understand any of it — not a quick task as I discovered this weekend, but a geekily interesting one. Take a look at the Wikipedia article for a quick rundown on the list. I propose a 28th amendment where politicians have to read and understand them before they are allowed to run for office.
Economic Calamity Update: Scoring Deficit Reduction
Senator Harry Reid's plan reduces the deficit more that Rep. John Boehner's plan, says the CBO.
Joe Scarborough's Vision of the Day After Will Haunt My Dreams
The President and the Speaker have made their case to the American people...and still couldn't seem farther apart. They're both now dug in and appealing to different constituencies. Obama was all Kool and the Gang, quoting Reagan and Jefferson to the beat of "Too Hot" and trying out the 2012 "I'm the only grownup here" stump speech for independents and moderates. Boehner went all Metallica, hands up for some Tea Party love. Eight days left and no path to a resolution. We're screwed.
Like I've said the debt ceiling debate makes for strange bedfellows. Former Florida GOP Rep. Joe Scarborough, host of "Morning Joe" on MSNBC (one of my faves when travelling) laid out a vision in Politico of what happens on August 3 that will haunt my dreams. Had to share.
| The morning after By: Joe Scarborough July 25, 2011 01:49 PM EDT |
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| WASHINGTON, D.C.— Aug. 3, 2011It was a financial storm that even an economics professor could see coming. The debt crisis that had gripped Washington for a month came to a sudden, horrifying climax that left America's economy looking like a nuclear wasteland. Credit markets suffered life-threatening seizures as the stock market dropped a staggering 25 percent. U.S. Treasuries plummeted as Moody's and Standard & Poor's downgraded the United States' credit rating — instantly adding trillions of dollars in interest costs to the national debt. Only gold was on the rise, and its price exploded past $2,000 an ounce.European markets reacted with understandable alarm while shock waves raced across Asia despite the early morning hour. China remained still, issuing little more than bland assurances, while its leaders quietly relished the fact that the United States of America had undermined its economic standing in a way that the Middle Kingdom could never have done on its own.The threat of exploding interest rates on home mortgages, cars, student loans and credit cards caused growing concerns. But it was the gutting of 401(k)'s and pension programs that would soon stir panic. Camera shots of citizens lined up outside banks, credit unions and Social Security offices caused commodity prices to collapse less than 30 minutes after those images began flickering on CNBC — and more than a few news commentators drew parallels between the chaos of this day and the early morning hours after the Sept. 11 attacks.
President Barack Obama went before TV cameras to try to calm Americans. Despite his shaky on-air performance, the president's message was convincing and explained why the overwhelming majority of Americans surveyed in an overnight Gallup Poll blamed Republicans for the financial catastrophe that had quickly brought the world's largest economy to its knees. Obama began his short speech by quoting another president. "Congress consistently brings the government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations." The president paused for effect while Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke stood beside him and watched. "Ronald Reagan said that 24 years ago. It is time that Republicans running the House today follow the 40th president's wise advice and do the right thing." With that, Obama, Geithner and Bernanke left the Rose Garden and walked back into the White House. For the next hour, markets continued to drop. By late afternoon, the New York Stock Exchange and NASDAQ took the extraordinary step of closing their markets. But the damage was already done. In a day's time, America's credit rating had collapsed, the dollar had fallen into disrepute and the life savings of millions of Americans had been wiped out. Inside the office of the speaker of the House, Jamie Dimon and Jeff Immelt joined Geithner and Bernanke to explain in the bluntest terms possible the stakes that lay before John Boehner's Republican caucus. Bernanke summarized their positions. "Mr. Speaker, this Congress can either pass a long-term deal tonight to bring sanity back to the markets or can expect to face unimaginable economic consequences in the morning." The Fed chairman stood up to leave but left Boehner with a final jab. "There is no Plan B. Not after Congress's performance today." Boehner glanced over Bernanke's shoulder to see breaking news on a bank riot in St. Louis. Another screen showed a late-night protest at a Richmond Social Security office. The image of a burning LAPD squad car seemed to be running on an endless loop on Headline News while a commentator was shouting about the "riots caused by the Republicans." The speaker knew his caucus was cornered. By the time he entered HC-5 in the bowels of the Capitol complex, most members sensed they were on the wrong side of an epic political rout. By late July, House Majority Leader Eric Cantor had realized that his future in national politics would depend on how quickly he could bring this crisis — which many on Wall Street were blaming squarely on him — to a close. Boehner entered the grim caucus room and went straight to the podium, telling members that the events of the day had made irrelevant any ideological argument. He was finished in a few minutes and then turned the mic over to Cantor, who told conservatives that the only option left to them was to live to fight another day. Only Michele Bachmann and a handful of freshman members delivered impassioned pleas to keep waging their war on Obama. But those short speeches were written more as fodder for future press releases than to persuade fellow Republicans. The meeting was quickly adjourned with the understanding that Boehner would immediately call a vote to stop the hemorrhaging of world markets by extending the debt ceiling. In so doing, Boehner and his conservative caucus would be giving the president what he had been asking for all along. The $4 trillion deal that the speaker had once hoped for was now nothing more than an opportunity lost. His party could have had a historic deal to reduce the national debt. His caucus could have made a real difference. Instead, their intransigence crippled America's economy and clinched the reelection of Barack Obama. A guest columnist for POLITICO, Joe Scarborough hosts "Morning Joe" on MSNBC and represented Florida's 1st Congressional District in the House of Representatives from 1995 to 2001. |
The Republicans Have Won. Will They Get Out of Their Own Way?
The GOP came to the debt ceiling fight with goals of avoiding a deal where they have to vote for tax increases and preventing President Obama from getting a political victory. Given what US House Speaker Boehner and Senate Majority Leader Reid are working on today -- new debt-reduction proposals without tax increases -- the Republicans have won. The question is, will they now stop fighting and declare victory? If they keep pushing the Tea Party agenda, they will snatch defeat from the jaws of victory.
Last week pollster Mark Blumenthal examined the findings of last week's various polls of the public on the debt ceiling fight. First: "Americans prefer a deal featuring a mix of tax hikes and spending cuts to a deal featuring just spending cuts." Second: "most of the surveys find strong sentiment in favor of compromise, especially among Democrats and independents." Finally: "the surveys all show Americans expressing significantly more confidence and trust in President Obama's handling of the issue than of either the Republican or Democratic leadership in Congress." Polling today showed economic pessimism in the US at its highest point in 15 years. When asked whether the policies of President Barack Obama and the Democrats or President George W. Bush and the Republicans were more responsible for the economy's current condition, 29 percent pointed to Obama while 57 percent pointed to the GOP.
The GOP has the upper hand now because the debt ceiling needs to be raised and can't be raised without their votes. But the public doesn't support their position or their leadership. Democrats are desperate to avoid a debt crisis that could stall the sputtering economy. But if the GOP overplays their hand, they will lose, as the public is insisting Congress avoid a preventable economic calamity, and they're ready to blame the GOP if one happens.
But there's plenty of evidence that the Tea Party tail is wagging the Republican dog, and that the GOP intends to stay in its foxhole rather than declare victory and go home. Yesterday the House and Senate Tea Party Caucuses introduced a bill that would direct Obama to prioritize federal payments to the nation's creditors, Social Security recipients and soldiers serving in Afghanistan and Iraq. No mention of Medicare in there, by the way.
So how long could this national nightmare go on for? In his remarks Friday, the President insisted that any debt limit extension be 'through the next election, into 2013.' He has threatened to veto a shorter term increase. Over the last 20 years the nation acted 44 times to increase the debt limit. Ten of those 44 times the extension lasted more than a year.
I've always believed markets are the best predictor of events. Over at InTrade, the online futures market, the betting money is that there is only a 28% chance the government will raise the debt ceiling before the August 2 deadline, rising to a 75% chance by the end of August; and a 64% chance that the US's AAA rating will be downgraded by the end of the year.
My call: I don't see a path to a deal in time. I bet we default on August 2 but enact a short-term increase to the debt ceiling sometime in August. It'll be tied to some novel process to make the requisite cuts on a fast track through Congress later this year. The credit ratings agencies will see this continuing drama and begin downgrading US creditworthiness. A month or more goes by where tough decisions on which Federal bills to pay must be made -- and in one of those months, Medicare payments aren't made. Seniors go wolfpack wild and light up the phones on the Hill. Congress sees the mushroom cloud on Wall Street and gets its act together sometime in the fall, agreeing on just enough cuts to satisfy Wall Street.
But the damage will be done, and Obama will sail into 2012 on a campaign of being the last reasonable guy standing in Washington. And he'll win -- all because the GOP didn't know when to stop fighting this week.