How The Budget Deal Affects The Affordable Care Act
So how does this mammoth budget-cutting deal, with its congressional “supercommittee” affect health reform?
Good question, because lots of people in Washington are asking it too.
More specific answers will become clearer in the next few weeks, but here’s a first version of the road map to both the policy and the politics.
First, understand there are two different processes – and each, separately, aims at cutting more than $1 trillion over the next decade.
The one that you’ve probably heard most about is the “supercommittee” of 12 members of Congress. They are supposed to identify savings by Thanksgiving. Entitlements – Medicare, Medicaid, Social Security and aspects of the Affordable Care Act – are part of their turf. So are taxes and revenue – at least in theory. It’s not so clear that the Republicans see it that way given the public statements of Congressional leaders.
If they agree on some kind of grand deal by Thanksgiving, Congress has to take it or leave it by the end of December, eliminating the usual congressional dilly-dallying. (It looks like dilly-dallying to the casual observer or much of the public, but remember that all that arcane, tedious process IS policy in Congress. If you slow something down, make it go through hoops, amend it, hold it up, etc., it doesn’t become law. That may be good or, depending on your point of view, bad politics.)
If Congress takes any recommendations that the supercommittee agrees on, that’s the law. If the committee fails, or Congress rejects it, then the “trigger” gets pulled. The official name is “sequestration.” That’s a fancy name for automatic cuts – 2 percent across-the-board cuts in Medicare, for instance, affecting all health care providers, doctors, hospitals, etc. It won’t affect beneficiaries – at least not directly.
Medicaid is not subject to the trigger. Neither, according to the preliminary interpretations I’ve received from analysts and congressional staff, are the big, key subsidies in the health care reform law – the Medicaid expansion and the subsidies that will help low-income and middle-income people afford health care in the new state exchanges.
Other parts of the health reform law are, however, subject to automatic cuts. Among them: Cost-sharing subsidies for low-income people. This isn’t the help paying the premium; this is the help with the co-pays when people do get care. But the payments are made to health plans, not directly to beneficiaries so it won’t have the direct impact of discouraging care. It may affect how health plans make decisions about what markets to participate in. Gary Claxton and Larry Levitt at Kaiser Family Foundation explain here.
Also, the supercommittee could have a partial deal – meaning there’s still a trigger, but a smaller one. Maybe they won’t reach agreement on $1.2 trillion to $1.5 trillion in savings, which would avoid the trigger. But maybe they could agree on, say, $500 billion. That means a trigger wouldn’t have to go as deep because some of the savings would already be identified.
To recap – before we go on to the second stage of this process: The “super-committee” can do whatever it wants to health care, Medicare, Medicaid, Social Security, etc. – if it can agree, if it can get the rest of Congress to agree and if the president doesn’t veto it.
Will the Democratic Senate and the Obama White House agree to cuts that eviscerate health reform? Not likely. In fact, the Democrats “won” on very few aspects of the budget/debt deal. Walling off Medicaid and key parts of the health coverage expansion were two of the “wins.” That’s a bright line worth paying attention to as this moves forward.
Does that mean other health-reform related spending will be untouched? Given how many moving parts there are to any spending deal, and the fact that defense and tax policy are also part of the mix, chances are it will be affected. But expect to see that bright line remain visible – maybe not quite as bright, but visible. (The CLASS Act, the voluntary long-term care program created under health reform, is a different story; it’s quite vulnerable.)
The second part is the annual appropriations process. The budget deal provides for cuts – real cuts in spending, not just slowing the rate of growth. Health programs (aspects of the health reform legislation touching on exchange creation, prevention, community clinics, etc., and just about everything else at the Department of Health and Human Services – the FDA, NIH, CDC, etc. – will be subject to these cuts. But this isn’t an across the board process, it’s a line-by-line, or at least category/agency-by-category/agency, process. And there is some horse trading.
It’s safe to say that the Republicans will try to cut discretionary portions of the new health law. That’s not a new political dynamic, it doesn’t arise out of the debt ceiling or the Wall Street woes. It’s what we’ve seen since last fall’s elections and the repeal/defund fights of the past few months. And House Budget Chairman Paul Ryan has publicly tried to insert health care into any potential deal. So expect to see more Republican push to cut, and continued Democratic push back. Will health spending emerge unscathed? It’s too soon to know but, given the amount of savings Congress needs to find –both in this budget deal and in the perennial quest to fund the “doc fix” payments – some cuts are clearly possible. Some of it may affect aspects of exchange establishment, regulation, prevention, public health, etc. But it’s hard to see the Democrats allowing cuts so deep that they basically constitute a side door to repeal.
One further twist – some Republicans are calling for a delay in health reform implementation to save money.”Delay” may sound better to an ambivalent public worried about spending than “repeal.” What’s delayed (if anything), how it’s delayed, how long it’s delayed, and what stopgaps are created in the meantime could have an impact on how many people get covered in 2014.
Assorted committees and government agencies are still examining the new budget law and how it will affect … everything. So the perspective I’ve outlined here – and I’m writing amid all the market turbulence – may change as the economic and political climates change. But the lines in the sand around the trigger – health reform, Medicaid and Social Security – tell us something about where the White House will come down.
By: Joanne Kenen, Association of Health Care Journalists, August 10, 2011
Flashback 2007: Tim Pawlenty Proposed Establishing A Health Insurance Exchange
Politico’s Kendra Marr and Kate Nocera reviewthe health care records of the GOP presidential candidates and find that Mitt Romney isn’t the only contender who previously supported parts of the Affordable Care Act. Tim Pawlenty, Jon Huntsman, and Newt Gingrich all flirted with various provisions that ultimately ended up in the health law.
ThinkProgress Health reported on Pawlenty’s past support for “universal coverage” here, and his positive assessment of Massachusetts’ individual mandate, but Cal Ludeman, his commissioner of the Minnesota Department of Human Services, recalls that Pawlenty also advocated for establishing an exchange:
Minnesota’s exchange proposal would have required all employers with more than 10 employees to create a “section 125 plan” so workers could buy cheaper insurance with pre-tax dollars. During a 2007 news conference, Pawlenty said launching such a system would only cost employers about $300.
“Remember how new that idea was, even back then,” said Ludeman. “Everybody was talking about how this was a new Orbitz or Travelocity, where you just go shop. It was never talked about in our conversations as a hard mandated only channel where you could go. But that’s where Massachusetts ended up.”
Pawlenty advanced the non-profit Minnesota Insurance Exchange in 2007, arguing that it could “connect employers and workers with more affordable health coverage options.” “If just two of your employees go out and buy insurance through the exchange, the benefits to the employer on a pre-tax basis — because of their payments to Social Security and otherwise into the 125 plan — more than cover the cost of setting up the plan,” Pawlenty explained.
The exchange originated as a Republican idea and was developed in part by the Heritage Foundation’s Stuart Butler. The measure was eventually adopted by Mitt Romney and later became part of the Democrats’ health reform plan. Under the Affordable Care Act, states that don’t establish their own exchanges by 2014, cede control of the new health market places to the federal government. In 2010, while still governor of Minnesota, Pawlenty rejected the ACA’s “insurance exchanges,” dubbing them a federal takeover.
By: Igor Volsky, Think Progress, June 13, 2011
Paul Ryan Supported Payment Advisory Boards Before He Was Against Them
During his series of 19 town halls in Wisconsin several weeks ago, Rep. Paul Ryan (R-WI) repeatedly criticized President Obama’s Independent Payment Advisory Board (IPAB) for “rationing” care to seniors, cutting Medicare, and denying care to current retirees. The IPAB is a 15-member commissionthat would make recommendations for lowering Medicare spending to Congress if costs increase beyond a certain point. The reductions would go into effect unless Congress acts to stop them.
“[Obama’s] new health care law…puts a board in charge of cutting costs in Medicare,” Ryan told retirees at one town hall in Kenosha, Wisconsin in late April, arguing that the IPAB would “automatically put price controls in Medicare” and “diminish the quality of care for seniors.”
But as the Incidental Economist’s Don Taylor reports this morning, Ryan has previously introduced legislation that included a very similar board to control health care spending. In 2009, Ryan introduced the Patients’ Choice Act (PCA) which “proposed changing the tax treatment of private health insurance and providing everyone with a refundable tax credit with which to purchase insurance in exchanges” but also sought to establish “two governmental bodies to broadly apply cost effectiveness research in order to develop guidelines to govern the practice of, and payment for, medical care.” Taylor writes that “the bodies proposed in the PCA had more teeth, including provisions to allow for penalties for physicians who did not follow the guidelines, than does the Independent Payment Advisory Board (IPAB) that was passed as part of the Affordable Care Act.” Both the Health Services Commission and Forum for Quality and Effectiveness in Health Care was tasked with developing guidelines and standards for improving health quality and transparency and were afforded what the bill called “enforcement authority”:
(b) ENFORCEMENT AUTHORITY.—The Commissioners, in consultation with the Secretary of Health and Human Services, have the authority to make recommendations to the Secretary to enforce compliance of health care providers with the guidelines, standards, performance measures, and review criteria adopted under subsection(a). Such recommendations may include the following, with respect to a health care provider who is not in compliance with such guidelines, standards, measures, and criteria: (1) Exclusion from participation in Federal health care programs (as defined in section 1128B(f) of the Social Security Act (42 U.S.C.1320a–7b(f))).(2) Imposition of a civil money penalty on such provider
Like the IPAB, Ryan’s board is insulated from Congress and would have allowed true health care cost experts — the Forum for Quality and Effectiveness in Health Care even included 15 individuals, just like the IPAB although they do not appear to require Senate confirmation — to improve the cost effectiveness of the health care system. As Taylor observed back in 2009 when the board was first introduced, “any such effort will undoubtedly be called rationing by those wanting to kill it, and quality improvement and cost-effectiveness by those arguing for it. Whatever we call it, we must begin to look at inflation in the health care system generally and in Medicare in particular.” Little did we know that Ryan would be on both sides of that debate.
By: Igor Volsky, Think Progress, May 13, 2011
Cutting Through The Medicare Charade
In his Wall Street Journal op-ed today, House Budget Committee Chairman Paul Ryan (R-Wis.) said the Republican budget plan is focused on “saving Medicare.”
Of course, in this context, this is intended to strip the word “save” of all meaning. Even the Wall Street Journal yesterday noted that the GOP proposal “would essentially end Medicare,” which happens to be true.
Medicare is very easy to understand — it’s a popular system of socialized, single-payer health care for seniors. Beneficiaries love it, and the system works pretty well. The House Republican scheme for Medicare is a little more complicated, but still pretty straightforward — the GOP intends to privatize it. The resulting system would, ironically, look quite a bit like the Affordable Care Act, with seniors entering exchanges, where they would take a subsidy to purchase private insurance.
So, what’s the problem? Republicans intend to rig the game, scrapping the existing system and ending the guarantee of set benefits, while at the same giving beneficiaries a voucher that wouldn’t keep up with costs.
This isn’t “saving Medicare”; it’s ending Medicare and screwing over seniors.
Josh Marshall had a good piece on this yesterday, calling the plan “Medicare Phase-out legislation.”
The Ryan plan is to get rid of Medicare and in place of it give seniors a voucher to buy health care insurance from private insurers. Now, what if you can’t buy as much as insurance or as much care as you need? Well, start saving now or just too bad.
Now, by any reasonable standard, that’s getting rid of Medicare. Abolishing Medicare. Phasing it out. Whatever you want to call it. Medicare is this single payer program that guarantees seniors health care, as noted above. Ryan’s plan pushes seniors into the private markets and give them a voucher. That’s called getting rid of the program. There’s simply no ifs or caveats about. That’s not cuts or slowing of the growth. That’s abolishing the whole program. Saying anything else is a lie.
Yep.
I’d just add that some folks may have forgotten why Medicare was created in the first place. The nature of the human body is that ailments are more common as we get older, and profit-seeking insurance companies weren’t keen on covering those who cost so much more to cover. On average, folks who’ve lived more than six decades often have pre-existing conditions, and we know all too well what insurers think of those with pre-existing conditions.
Seniors relied on this system for many years, but it didn’t work. We created Medicare because relying on private insurers didn’t work.
And now Republicans want to roll back the clock.
By: Steve Benen, Washington Monthly, Political Animal, April 5, 2011
Teaparty, More Dumb Than Clever
Although I’m not part of the Tea Party movement and I don’t share its values, I usually understand what its followers are trying to do. But their latest gambit on health care has me genuinely baffled.
The idea is to oppose the Affordable Care Act not in the Congress or the courts, where they’ve been fighting so far, but in the state legislatures. As you may recall, the Act calls upon states to create the new “exchanges,” through which individuals and small businesses will be able to buy regulated insurance policies at affordable prices. The simplest way to do that is for state legislatures to pass laws creating exchanges that conform to the Act’s standards. Several states have started that process already–and a few, like California, are well along in their efforts.
But Tea Party activists have been lobbying state lawmakers to vote against such measures and, in a few states, it looks like they’re succeeding. Politico’s Sarah Kliff has the story:
In South Carolina, tea party activists have been picking off Republican co-sponsors of a health exchange bill, getting even the committee chairman who would oversee the bill to turn against it.
A Montana legislator who ran on a tea party platform has successfully blocked multiple health exchange bills, persuading his colleagues to instead move forward with legislation that would specifically bar the state from setting up a marketplace.
And in Georgia, tea party protests forced Gov. Nathan Deal to shelve exchange legislation that the Legislature had worked on for months.
It’s a great idea for blocking the law, except for one small problem: The Affordable Care Act anticipates that some states might not create adequate exchanges. And the law is quite clear about what happens in those cases. The federal government takes over, creating and then, as necessary, managing the exchanges itself. In other words, if state lawmakers in Columbia, Helena, and Atlanta don’t build the exchanges, bureaucrats in Washington are going to do it for them.
I realize that blocking the exchange votes may have certain symbolic value–and, at least in the early going, it could complicate implementation simply by generating more chaos. (Georgia lawmakers, as the article suggests, had already put in a lot of time on theirs.) I also gather that some Tea Party activists believe that blocking state exchanges will strengthen the constitutional case against the law. Still, if even part of the law withstands both congressional repeal and court challenges, as seems likely, the long-term effect of this Tea Party effort seems pretty clear: It will mean even more, not less, federal control.
The irony here is that, throughout the health care debate, liberals like me wanted federal exchanges, in part because we feared states with reluctant or hostile elected officials would do a lousy job. That’s the way exchanges were set up in the House health care reform bill and, in January of 2010, many of us hoped the House version would prevail when the two chambers negotiated the final language in conference committee. But the conference negotiation never took place, because Scott Brown’s election eliminated the Democrats’ filibuster-proof majority. The House ended up passing the more conservative Senate bill, which had state exchanges, and that became the law.
Of course, not all Republicans agree with the Tea Party’s approach. In a previous article, for Politico Pro, Kliff interviewed several state officials who said they were setting up exchanges, notwithstanding their opposition to the law, precisely because it is the surest way to keep out the feds.
Len Nichols, the health care policy expert at George Mason University, thinks that approach makes a lot more sense, given their priorities:
Ironically, the only way to make PPACA a “federal takeover” is for states to do nothing. There is much state flexibility in the law, and much more could be sensibly negotiated and amended before 2014, but the strategy of repeal, do nothing and “get the government out of health care” will have exactly the opposite effect in those states that follow this path.
Maybe the Tea Party activists know something that neither Nichols nor I do. My bet, though, is that this effort is the policy equivalent of a temper tantrum, one that opponents of federalizing health care may come to regret.
By: Jonathan Cohn, The New Republic, March 31, 2011
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