Map of life expectancy at birth from Global Education Project.

Monday, March 29, 2010

Since most people don't know . . .

what is in the Romneycare legislation the president signed last week, our hospital CEO has provided us with a pretty good summary. It's still a bit long for this blog, so I'm going to give you a summary of the summary with a comment or two from YT. Almost all of the outrage about this is either fake (in the case of Republican politicians such as the author of the legislation, Mitt Romney) or else comes from people who believe all kinds of stuff that isn't true. Maybe this will help you talk to them (though I doubt it). (Credit to my employer's staff for much of this, but they didn't say it was proprietary.) My comments in italics.

Expanding health insurance coverage

o 95% of legal residents will now have health insurance coverage. Emphasis mine. This is not really a true fact, it's a prediction. We'll see.

o Expanded coverage will be delivered through health exchanges in each state offering health insurance plans, similar to the Massachusetts Connector, which serves as a health insurance marketplace. Providers’ rates would be negotiated by the health plans and the providers. This exchange scenario should provide more consumer choice and competition among insurance companies.

o To be clear, this bill does not contain a government run public health insurance option as a means of providing more people with access to health insurance.

Expanding access by providing government subsidies

o The health reform bill provides federal subsidies for health insurance to individuals and families with incomes up to 400% of the federal poverty level (FPL) ($43,320/individual and $88,200/family of four). Massachusetts only provides subsidies to individuals and families with incomes up to 300% of FPL, so increasing subsidies from 300% of poverty to 400% of poverty could cover about 75,000 more people in Massachusetts. These Massachusetts residents are already required to have insurance or pay a penalty; so "cover" more people means give more people subsidies, not give more people insurance.

o Tax credits will be provided to small employers that provide health insurance, and have fewer than 25 employees with average annual incomes of less than $40,000. The tax credits are available for up to 35 percent of their contribution toward the employee’s health insurance premium.

Paying for expanded coverage

o The bill is slated to cost $940 billion over ten years.

o Much of reform package is paid for in cuts to Medicare reimbursements to providers, new taxes and industry fees. Congress and the administration held true to their provision that all players must “put some skin in the game” as we see in the rate cuts and fees or taxes levied on all of the major stakeholders. That includes providers, employers and consumers, pharmaceutical companies and medical device manufacturers. And most importantly, Government has a responsibility to pay its fair share. Note: these are not, repeat not cuts in Medicare benefits; they are reductions in reimbursements to providers. While providers complain that they can barely get by on Medicare as it is, these reductions are targeted so as to encourage efficiencies, not drive providers to the poorhouse. Our CEO is worried about this but not despairing, writing "Further cuts to Medicare fees will require that we become increasingly efficient and prudent about how we use our limited resources." This is not the best way to start to contain costs but it's the only way forward with the wingnuts screaming about death panels.

Individual Mandate beginning in 2014

o The bill imposes penalties on individuals and families if they do not purchase health insurance.

o An income tax penalty will be applied to hose without coverage ranging from $695 (single) per year up to a maximum of $2,085 (per family) or 2.5% of household income, whichever is higher, by 2016. Unfortunately, this is considerably less than the cost of insurance and some people will undoubtedly choose to pay the penalty. Then they'll be hit by a bus or get cancer and, since medical underwriting will be banned, they will still be able to buy insurance and make the rest of us pay for their irresponsibility.

Employer Mandate

o The reform package requires employers to provide a minimum level of benefits to employees and imposes a penalty on employers if they do not.

o Firms with more than 50 employees will pay an uncovered worker fee of $750 per uncovered person per year by 2016. Again, much less than the cost of insurance, obviously, but a small revenue stream to help pay for the subsidies.

o The reform law does not contain a fee assessment for new hires in a waiting period for their insurance, but limits waiting periods to 90 days beginning in 2014.

Other taxes and fees levied to pay for expanding access

o A 3.8% Medicare tax on investment income of high-income households. An increased Medicare tax on high-income households by 0.9 percent. High income is defined as more than$200,000 for singles, more than $250,000 for married couples filing jointly. Good! The Medicare tax as it stands now is regressive. This will help keep Medicare solvent, although it's only a start. They should do the same thing with Social Security, BTW.

o An excise tax on premium plans, so-called “Cadillac health plans”, will raise $32 billion. Cadillac plans are those with low deductibles, low co-pays and rich benefits. I don't particularly like this -- everybody should have comprehensive insurance with low cost-sharing, it's in society's best interest. On the other hand, if ways can be found to keep prices down while still providing good benefits, thereby avoiding the tax, okay.

o An excise tax on tanning. Sounds kind of stupid but it's a public health issue. Tanning is dangerous, causes melanoma, and should be discouraged.

o Taxes on the pharmaceutical industry totaling $28 billion over 10 years. The industry benefits enormously from publicly sponsored biomedical research. They owe us this money.

o An excise tax on the medical device manufacturing sector to raise $20 billion over 10 years. Ditto.

o An excise tax on insurance companies to raise over $57 billion over 10 years. This is kind of stupid -- it's a perpetual motion scam.

Cuts to Medicare and Medicaid

§ Reductions in Medicare and Medicaid Disproportionate Share Payments (payments made to states for treating a disproportionate number of Medicaid and Medicare patients). Ideally, this would become an anachronism anyway, but right now it isn't; Medicaid rates in particular are too low and some hospitals have a hard time making ends meet.

§ Medicare Advantage Rates Frozen in 2011 until 2012. Government payments to Medicare Advantage plan (for seniors) cut $132 billion over 10 yearsGood. M.A. is an insurance industry scam on the public.

§ Tighter restrictions on payment for readmissions to hospitals. This is a bit arcane but basically, it's a way of encouraging higher quality, better coordinated care. It's a good idea.

Insurance reforms

o Healthcare reform creates significant changes to the way insurance companies do business. The overall impact to payers is that they will see many more new customers; new market opportunities through state health exchanges and new regulations and oversight. You'll notice their stock prices jumped.

o There will be temporary mechanisms to provide coverage to individuals with pre-existing conditions and for non-Medicare eligible retirees over age 55. This will happen within 90 days of enactment of the bill. Still won't be affordable though -- few will benefit, I think.

o Insurers will be prohibited from setting annual and lifetime limits, dropping coverage (except in cases of clear fraud), and excluding coverage to children based on a pre-existing condition. This will take effect within six months of enactment of the bill. First steps toward eliminating medical underwriting. Bravo!

o Parents will be able to include dependent children up to age 26 on their health insurance plans. A stopgap, half-assed measure intended to give people a lollipop right away, for political reasons. A good idea on that basis.

o Health insurers would be prohibited from excluding coverage based on pre-existing conditions for adults, beginning in 2014. She also doesn't mention that rate discrimination can be on the basis of age only. This will largely end medical underwriting although the bad news is people in their 50s and early 60s may have real affordability problems even with the subsidies.

Other provisions

o Primary Care Physicians: Requires states to increase Medicaid payment rates to primary care providers in 2013 and 2014 only to Medicare levels, and provides 100 percent federal funding for the incremental costs to states.

o 340B Program: Extends eligibility for the 340B drug discount outpatient program to children’s, cancer and critical access hospitals, as well as certain sole community hospitals and rural referral centers. It does not expand the program for existing 340B hospitals (of which we are one) to cover inpatient drugs. This is a significant disappointment, as it would have resulted in large savings and administrative simplification, but was clearly an area where pharma lobbying won out.

o Graduate Medical Education: Contains no reductions in IME (indirect medical education) payments. This is a critical piece as it shows government’s understanding of the importance of protecting the pipeline of new physicians – for which there will be increased demand across the country. This will not happen fast enough. We'll need new efforts to create more Nurse Practitioners and Physician's Assistants to meet the need for primary care.

She forgot to mention the death panels, and the government takeover of 1/6th of the economy. I guess those are in the secret codicil.
o Resident Slots: Redistributes 65 percent of unused residency training positions for qualified hospitals who would be able to request up to 75 new slots.

o Malpractice Reform: Creates grant programs for states to enter into pilot programs to begin examining malpractice reforms. This measure is not as strong as many of us in the industry had hoped it would be, however we will continue our fight on the state level for greater malpractice reform measures.

o Medicare Part D gap: Starts closing Medicare Part D gap; expansion begins with $250 rebates for enrollees entering donut hole in 2010. Closing Medicare Part D ‘donut hole’ would increase pharma volume from seniors, so pharmaceutical companies will receive significant benefit from the healthcare reform changes.

o Flexible Spending Account : Increases contribution limits for flexible spending accounts to $2,500 per year and then grows by the annual Cost of Living Adjustment.

o Demonstrations and Pilots: Creates and encourages many pilot and demonstration projects on funding mechanisms and care delivery, such as ACOs and bundled payments.

o Physician Self-Referral: Bans physician self-referral to physician owned hospitals.

1 comment:

kathy a. said...

well, this is a LOT of stuff to consider. overall, like you, i think it is a bunch of steps more or less in the right direction.