The Debt Ceiling Impasse Explained in One Chart
Negotiations on the Debt Ceiling ground to a halt after weekend negotiations. President Obama laid out a $4 trillion package his own party is getting upset about, especially his latest proposal to raise Medicare eligibility to 67. Congressional Republicans are calling for a debt reduction plan half that size, but have a drawn a line in the sand: no tax increases, period.
Want to understand why we're playing chicken with a national default? It's complicated, but the guys at YouGov encapsulate it one chart. Brilliant. 
Want to read more? We invite you to Check out Nathan's thoughts on the debt ceiling debate in his blog post from earlier today.
High-Wire Act on Entitlements as Debt Negotiations Stretch into the Weekend
President Obama and Congressional Democratic leaders are walking a high-wire going into weekend negotiations on the debt ceiling with their Republican counterparts. Discussions center around Medicare, Medicaid and Social Security, and the concern is that the President could cut a deal that his Democratic colleagues may not support. The Wall Street Journal has a nice overview out today on the front page.
Exchange Regs Released!
Is that steamy summer novel not quite holding your interest? Luckily, CMS has stepped in with its latest publication, "Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans." While this work may not make the New York Times best seller list, this initial attempt at defining the exchanges at a Federal level will be one of the most important pieces of regulation released this year. From the summary:
"This proposed rule would implement the new Affordable Insurance Exchanges
("Exchanges"), consistent with title I of the Patient Protection and Affordable Care Act of 2010
(P.L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (P.L.
111-152), referred to collectively as the Affordable Care Act. The Exchanges will provide
competitive marketplaces for individuals and small employers to directly compare available
private health insurance options on the basis of price, quality, and other factors. The Exchanges,
which will become operational by January 1, 2014, will help enhance competition in the health
insurance market, improve choice of affordable health insurance, and give small businesses the
same purchasing clout as large businesses."
Stay tuned for analysis by the GHG policy team in the coming days. Until then, happy reading.
As always, we welcome your comments, feedback and questions.
‘Dual-Eligibles' Require New Ideas, Not Cuts
Norm Ornstein from the American Enterprise Institute had a tremendous op-ed in Roll Call this week that deserves reprint here. I couldn't agree more, and find new ideas for dual eligibles -- managed long-term care through home and community-based services instead of institutions, aggressive coordinated care, and culturally-competent services -- among the most exciting work we do with our clients.
Observers need look no further than Care Improvement Plus, the chronic-care Special Needs Plan based in Baltimore that focuses on rural dual eligibles I'm thrilled to serve as a Director for. CIP offers physician, nurse and pharmacist call center support to its members, an aggressive house call program deploying a "mobile primary care network", and other critical innovations that redesign local healthcare delivery to meet the unique needs of duals.
Norm's exactly right -- these ideas need support and expansion from Congress and the Administration, not a budget meat-axe.
‘Dual-Eligibles' Require New Ideas, Not Cuts By Norman Ornstein
Roll Call Contributing Writer
July 6, 2011, Midnight
PrintEmailReprintsText size Related from CQ TodayHouse GOP Reaffirms Opposition to Tax Increases in Debt DealSenate Agrees to Turn to Democrat's Non-Binding Deficit Reduction PlanSenators Reach Deal to End Ethanol SubsidySenators Differ Widely On 'Meaningful Contributions'Obama Meeting Could Be PivotalConrad's Budget Getting Good Reviews From Democrats Despite CutsCantor Opens Door to Curbing Tax Breaks
The public attention to negotiations between Congress and the White House over budget cuts has focused primarily on cuts in discretionary domestic programs, Medicare and Social Security. Almost lost in the shuffle has been Medicaid — in part because both parties and both branches have agreed that large cuts in Medicaid are needed and assumed that cuts that hit the poor are less politically dangerous than cuts that hit the middle class or elderly.
That assumption is dead wrong. The single largest component of Medicaid is long-term care for the elderly, followed by care for the seriously disabled. And the biggest chunk of all is care for what are called the "dual-eligibles," those who qualify for both Medicare and Medicaid.
The long-term-care component has grown dramatically as Medicaid has become the de facto program for long-term care in the country. Of course, the recipients of it are poor as defined by the government — but most are middle-class elderly who have either diverted assets over time to their children and grandchildren to trigger Medicaid eligibility or depleted their savings on nursing home care. Also growing as a share of Medicaid spending is care for the seriously disabled, including a large share of those Americans with mental incapacities, ranging from Down syndrome to schizophrenia to Alzheimer's disease, along with those with serious physical conditions such as quadriplegia.
Medicaid care includes providing assistance during the day so family members can work and provide for their families, including the disabled ones, while giving some quality of life to all concerned.
The 9.7 million dual-eligibles are the most important set of beneficiaries because they take up a huge share of both the Medicaid and Medicare budgets and because they represent the greatest challenge and the greatest opportunity when it comes to ballooning health care costs.
As Janet Adamy noted in the Wall Street Journal, the dual-eligibles make up 15 percent of the enrollees in Medicaid but account for 39 percent of Medicaid spending — and 27 percent of Medicare outlays.
These are the most chronically ill people in the society, and they account for a huge share of health care costs.
As Adamy pointed out, a large share of the cost problem arises from the lack of coordination between programs, leading to mismanagement of care and waste, with far more hospital days and higher nursing home and rehabilitation costs than should be the case given the problems.
The higher costs don't mean better patient care; instead, patients are often shuffled around from place to place or put in limbo when the two programs argue over which one is responsible for treatment or kept in institutional facilities when it would be better for them — and less costly — to get care at home.
Some of the problems flow from the reality that Medicaid reimbursement rates are too low, leading providers to look for ways to shift the costs to Medicare, often in ways that are bad for treatment and disruptive for patients and their families.
Just as we never made a conscious policy decision to make Medicaid our long-term care mainstay, we never thought about the issues of dual eligibility. It is not at all clear that the negotiations over the budget are bringing any new thinking to the table — ways to reduce costs while improving the efficiency of care.
It is certainly not clear that the preferred response of Rep. Paul Ryan (R-Wis.) and his Republican allies, giving states less money for and more flexibility over Medicaid, will do anything to help dual-eligibles or create more effective programs for them or for others with serious mental and physical disabilities.
What is clear is that, as in so many cases, we are moving to cut spending without thinking through how to cut that spending or in what ways a short-term savings will result in longer-term burdens.
If Medicaid cuts out the opportunities for those caring for seriously disabled family members to work, that will mean hardship for the family — and a less productive workforce. Taking away day programs for the seriously disabled will take away from many their opportunity to work or contribute to society.
The same is true for the rest of the Medicaid population; a failure to provide prenatal care to pregnant women or to enable them to get their kids' ear infections treated will mean more infant mortality, less healthy children and, ultimately, a less productive workforce.
There is no panacea here. One of the advantages that could accrue from the Patient Protection and Affordable Care Act's commission overseeing Medicare is that it could find better ways of dealing with dual-eligibles — but the panel is under siege from conservatives.
Perversely, one way to improve care and reduce long-term costs — providing more realistic Medicaid rates for providers — is unlikely because the focus is on cutting now, not saving later.
There is little evidence from the states, especially those that have high Medicaid burdens such as Texas, that there is any spur to innovation that will lead to better treatments with lower outlays; governors such as Rick Perry will just cut the already-meager benefits.
We might end up with a bipartisan approach to budget and deficit cutting. What a shame that we can't have a similar approach to finding a better and less expensive way to deal with the sickest among us.
Norman Ornstein is a resident scholar at the American Enterprise Institute.
CMS Administrator Berwick's "Race Against Time"
WaPo had a great piece yesterday on the clock ticking down on CMS Administrator Berwick's time remaining before his recess appointment runs out. It's clear that Congressional Republicans are not going to allow Berwick to be confirmed, and that partisan politics are driving this eminently qualified leader from office at the end of this year.
It's a sad statement on where the politics of health reform stand heading into a Presidential election and full implementation of the ACA in 2014. Our hope is that the heir apparent, Marilyn Tavenner (see Jean Lemasurier's post from last month), will benefit from her lower profile and operational experience to drive the Administration's Medicare and Medicaid reform agenda next year.
The State of Play on Medicare ACOs
GHG and our longtime client North Texas Specialty Physicians were featured in a terrific piece by Harris Myer in this month's Health Affairs. We're continuing to work closely with the CMS Innovation Center to bring some real-world sensibility to capitated Pioneer ACOs.
The biggest hurdle so far: bureaucratic inertia around claims payment by ACOs. CMS doesn't want to disrupt claims processing by carriers and fiscal intermediaries, and doesn't have time to promulgate regulations on claims being paid by capitated ACOs. We're continuing to engage on the subject and hope to have a breakthrough soon with applications for the Pioneer Demonstration due on August 19.
If CMS can keep up with real-world practices for sophisticated providers already participating as ACOs, I think they'll have robust participation in the Demo, including 6-8 GHG clients; if they don't I fear providers will opt for more concrete opportunities in Medicaid and the commercial sector, and Medicare will be left in the dust as ACOs move forward elsewhere. It would be a tremendous missed opportunity: there is operational precedent for how capitated ACOs can work in the Health Care Prepayment Plan (HCPP) and Medicare Cost Contract programs. CMS just needs to get out of its own way and ACOs could thrive in Medicare.
ACOs Won't Work? What Really Matters When Discussing the Next Steps in Health Reform
It is interesting that most conversations about healthcare reform either start out or turn very quickly to a discussion of the financial ramifications/barriers/challenges—place whatever moniker you will on it but the conversational road leads most often to the topic of how to best finance healthcare or how much to cut the cost of healthcare.
Lost in all the discussion is the fundamental truth that we pay more, achieve less results, and increasingly experience limited access, ( for many different reasons that I will explore another time) than most of the industrialized nations we compete with on the economic world stage.
We are quick to point out our advances in medical technology, pharmaceutical options and treatment breakthroughs but happily ignore that many people forgo regular checkups or skip medications because they can't afford the cost. We disparage government funded healthcare in other nations as socialistic but ignore that the citizens of those nations have a quality of life as measured in longevity and overall health that is better than our own in many areas.
And consistent with our historical approach to healthcare, we immediately attack the concept of providing the right healthcare at the right time in the right setting for the right cost as unrealistic, as impossible to implement, as something that would negatively impact the current revenue stream generated to the healthcare stakeholders that rely on the current system for collective and individual gain. In a recent blog post, Bob Laszewski noted that ACOs will "only work if the provider gets paid less for the same patient population ... Only in the policy wonk netherland does that compute."
Accountable Care Organizations, appropriately implemented, have the potential to positively impact certain aspects of how healthcare is currently delivered. Fundamentally an ACO enterprise is all about providing coordinated, cost effective care in the most appropriate setting: call it Accountable Care, name it an integrated service delivery approach, refer to it as patient-centered medical care, or whatever moniker one wishes to ascribe. What is important is the recognition that the approach to the delivery of healthcare, the pricing of that care and the expected outcomes of that care requires fundamental change. It requires us to rethink our values and expectations and reengineer the current clinical, financial and education systems.
Is that a complex undertaking many years in the making? Absolutely! Is it a responsibility that we as a nation can afford to ignore? Only at our peril. Think of it this way: Every day approximately 3,500 people age into the Medicare system. Following behind are several generations of individuals whose use/utilization of the healthcare system has already been charted by virtue of life style and abandon with respect to individual responsibility for wellness.
Who is going to shoulder the burden of providing proper healthcare to these individuals? And who is going to pay the price?And what type of healthcare can we expect five, ten, fifteen, twenty, or twenty five years from now?
There is no ready answer and no magic solution. However, I am reminded of an old commercial regarding the advisability of ongoing maintenance vs. crisis maintenance. The message? — you can pay me a certain amount now or you can pay me a whole lot more later. Seems to apply to healthcare ... don't you think?
ACO's are not the panacea for solving what is wrong with healthcare. The ACO nomenclature may disappear soon or the concept may be modified beyond recognition. That is not really the point. The point is that we recognize that the current approach is unsustainable and that the moment calls for creativity, experimentation and faith. We have no option but to find a new approach to the delivery and financing of access to healthcare services. ACO's can be a tool in that effort to creating a workable solution. Every problem has a solution. We just need to look in the right place, apply common sense and set aside our own vested interests. We might surprise ourselves with the results.
Now if we could just……….
ACO Principles Worth Fighting For
Much has been and continues to be said about the shortcomings of the CMS regulations/requirements associated with the CMS Accountable CARE Organization initiatives. The WSJ recently posted an article claiming that "the draft rule is so awful that even the models for it say they won't participate."
It's true: many of the regulations proffered to date are cumbersome and disproportionately focused on the financial and compliance aspects of the program. Nonetheless, the philosophical underpinnings of the ACO program, the triple aim of better access, better quality and more cost effective care, are principles worth fighting for when it comes to the delivery of healthcare to our healthcare consumers, Medicare or otherwise.
The deficiencies of the ACO regulations notwithstanding, CMS/CMMI has challenged interested healthcare organizations to propose innovative alternatives to what has been proposed. We at Gorman Health Group embrace that challenge and will continue to participate with CMS and interested healthcare organizations in creating an ACO approach which passes the test of providing the right care, at the right time, in the right setting, and at the right price. We invite you to come join us.
Medical Mythbusters
If John King wanted to confound the GOP candidates for President at last Monday's debate, he might have asked them to comment on this important post by one of our favorite bloggers, Aaron Carroll, over at The Incidental Economist.
If one talks to physicians (and I do!) it's clear that that the spectre of malpractice lawsuits looms large in clinical decision making. Perception or reality? The closer one gets to the actual cost drivers of health care, the more one sees that tort reform is hardly the money pot of savings hoped for by many on the right. Carroll calls this "meme busting" and he has a few other memes in his crosshairs, including the belief that our extra-high spending is driven by an extra-unhealthy population. As it turns out, not so much….
What are some other memes you've confronted in your career that you would like to see examined?
One that occurs to me would be our over-reliance on specialists. Is it a utilization problem… or do we just pay too much?
(Would it surprise you to learn that in Washington we see things a little differently? The much maligned "trial lawyers" at which the GOP loves to take aim also constitute one of the Democrats' largest source of big-money donors. To dramatically limit damages through tort reform would have the effect of shutting this money source off at the tap.)
The New Political Calculus on Health Reform
Fresh off the "shellacking" Republicans dealt to Congressional Democrats in the midterm elections, the GOP made "repeal and replace" of the Accountable Care Act their #1 priority. They had 4 major approaches to accomplishing their goal. None are working out particularly well.
Repeal the ACA: for this to work it would require President Obama's signature, and that was never going to happen to his signature domestic achievement. It passed the House in January and promptly died in the Senate.
Lawsuits against the individual mandate: thus far 26 Republican Attorneys General have filed lawsuits challenging the Constitutionality of the individual mandate. They are winding their way through the courts and inevitably will end up in front of the Supremes in 2012. The conventional wisdom in DC is that there are ample precedents allowing the Feds to tax interstate commerce, even an "inactivity" like not buying health insurance, and that the Court will declare the mandate Constitutional, just in time for the Presidential election. No joy there for Republicans.
Defund the ACA. The deck was always stacked against Republicans here as well, as much of the implementation funding needed for exchanges and the like was pre-funded in the ACA. Very little was left to discretionary appropriations. The GOP walked to the brink of a government shutdown in March but blinked, haunted by the memories of 1994. As a result, they'll only inflict minor damage.
Ensure Obama is a one-termer: if the President loses in 2012, the ACA is stopped in its tracks. But that's not going so well either…the Republican field is muddled, the economy is sluggishly improving, millions of twentysomethings are still able to stay on Mom and Dad's health insurance because of the ACA, and overnight our mild-mannered Commander in Chief became Black Ninja.
Sure, it's still a long way to next November and much can happen. This is where futures markets are often the best predictors of an outcome. My money -- and many others betting real cash (see http://www.intrade.com/v4/home/) -- is on an Obama re-elect and the ACA implemented largely intact in 2014.
The health reform readiness show must go on.