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“Obamacare’s Secret Success”: Health Reform Is Starting To Look Like A Bigger Success Than Even Its Most Ardent Advocates Expected

The law establishing Obamacare was officially titled the Patient Protection and Affordable Care Act. And the “affordable” bit wasn’t just about subsidizing premiums. It was also supposed to be about “bending the curve” — slowing the seemingly inexorable rise in health costs.

Much of the Beltway establishment scoffed at the promise of cost savings. The prevalent attitude in Washington is that reform isn’t real unless the little people suffer; serious savings are supposed to come from things like raising the Medicare age (which the Congressional Budget Office recently concluded would, in fact, hardly save any money) and throwing millions of Americans off Medicaid. True, a 2011 letter signed by hundreds of health and labor economists pointed out that “the Affordable Care Act contains essentially every cost-containment provision policy analysts have considered effective in reducing the rate of medical spending.” But such expert views were largely ignored.

So, how’s it going? The health exchanges are off to a famously rocky start, but many, though by no means all, of the cost-control measures have already kicked in. Has the curve been bent?

The answer, amazingly, is yes. In fact, the slowdown in health costs has been dramatic.

O.K., the obligatory caveats. First of all, we don’t know how long the good news will last. Health costs in the United States slowed dramatically in the 1990s (although not this dramatically), probably thanks to the rise of health maintenance organizations, but cost growth picked up again after 2000. Second, we don’t know for sure how much of the good news is because of the Affordable Care Act.

Still, the facts are striking. Since 2010, when the act was passed, real health spending per capita — that is, total spending adjusted for overall inflation and population growth — has risen less than a third as rapidly as its long-term average. Real spending per Medicare recipient hasn’t risen at all; real spending per Medicaid beneficiary has actually fallen slightly.

What could account for this good news? One obvious answer is the still-depressed economy, which might be causing people to forgo expensive medical care. But this explanation turns out to be problematic in multiple ways. For one thing, the economy had stabilized by 2010, even if the recovery was fairly weak, yet health costs continued to slow. For another, it’s hard to see why a weak economy would have more effect in reducing the prices of health services than it has on overall inflation. Finally, Medicare spending shouldn’t be affected by the weak economy, yet it has slowed even more dramatically than private spending.

A better story focuses on what appears to be a decline in some kinds of medical innovation — in particular, an absence of expensive new blockbuster drugs, even as existing drugs go off-patent and can be replaced with cheaper generic brands. This is a real phenomenon; it is, in fact, the main reason the Medicare drug program has ended up costing less than originally projected. But since drugs are only about 10 percent of health spending, it can only explain so much.

So what aspects of Obamacare might be causing health costs to slow? One clear answer is the act’s reduction in Medicare “overpayments” — mainly a reduction in the subsidies to private insurers offering Medicare Advantage Plans, but also cuts in some provider payments. A less certain but likely source of savings involves changes in the way Medicare pays for services. The program now penalizes hospitals if many of their patients end up being readmitted soon after being released — an indicator of poor care — and readmission rates have, in fact, fallen substantially. Medicare is also encouraging a shift from fee-for-service, in which doctors and hospitals get paid by the procedure, to “accountable care,” in which health organizations get rewarded for overall success in improving care while controlling costs.

Furthermore, there’s evidence that Medicare savings “spill over” to the rest of the health care system — that when Medicare manages to slow cost growth, private insurance gets cheaper, too.

And the biggest savings may be yet to come. The Independent Payment Advisory Board, a panel with the power to impose cost-saving measures (subject to Congressional overrides) if Medicare spending grows above target, hasn’t yet been established, in part because of the near-certainty that any appointments to the board would be filibustered by Republicans yelling about “death panels.” Now that the filibuster has been reformed, the board can come into being.

The news on health costs is, in short, remarkably good. You won’t hear much about this good news until and unless the Obamacare website gets fixed. But under the surface, health reform is starting to look like a bigger success than even its most ardent advocates expected.


By: Paul Krugman, Op-Ed Columnist, The New York Times, November 28, 2013

November 29, 2013 Posted by | Affordable Care Act, Health Care Costs | , , , , , , , | Leave a comment

“Willfully Disobeying The Law”: Republican Leaders Refuse To Make Appointments To Key Obamacare Panel

The top two Republicans in Congress informed President Obama on Thursday that they will refuse to fulfill their duty under the Affordable Care Act to recommend members of a new board with the power to contain Medicare spending.

It’s a dramatic power-play driven by the explosive partisan politics of Obamacare and with potentially important implications for federal health care policy.

In a letter to President Obama, House Speaker John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY) noted their original opposition to Obamacare, reiterated their intent to repeal it entirely, and declared that they would not make any appointments to the Independent Payment Advisory Board.

The IPAB is a 15-member panel whose members must be confirmed by the Senate. The President selects three members himself and is required by law to seek three recommendations each from the top Democrat and Republican in each chamber. With Thursday’s letter, Boehner and McConnell refused to make any recommendations.

The IPAB will be stood up in 2014 by Obamacare and tasked with making cuts to Medicare provider payments (it may not touch benefits) if costs exceed economic growth plus an additional percentage point in any given year. Congress can override it by passing equally large cuts with a simple majority or waiving the cuts entirely with a three-fifths majority.

“Because the law will give IPAB’s 15 unelected, unaccountable individuals the ability to deny seniors access to innovative care, we respectfully decline to recommend appointments,” Boehner and McConnell wrote in the letter.

But there is a catch: if IPAB fails to do its work for any reason, the Health and Human Services secretary must order the cuts herself. So in a way, Boehner and McConnell are surrendering some of their power in order to appear as though they’re thwarting Obamacare — when in reality they’re merely turning over more control to the executive branch.

“Under the ACA, if the IPAB fails to make a recommendation as required under the IPAB provision, the Secretary may make a recommendation in its place,” said Tim Jost, a professor of health law at Washington and Lee University. “So if no IPAB is created, it is not fatal.”

IPAB is, however, capable of functioning without all of its members confirmed. But the letter reflects a continuation of broader GOP obstruction of Obamacare implementation. Senate Republicans have suggested that they may filibuster any IPAB nominee, period.

This approach makes it easier for a future Republican president to neuter IPAB by executive fiat. In the short term, it puts the Obama administration more directly in the political line of fire for any cuts that it does approve.

The other political incentive for Republicans to oppose IPAB is that spending Medicare dollars more wisely makes it easier to sustain the single-payer structure of the program, and makes it harder to argue that it needs to be privatized, as the Paul Ryan budget does.

There is some irony as well in Boehner and McConnell refusing to play ball on IPAB — a key cost containment mechanism in Obamacare — while their party is complaining about potential cost increases under the law, and government spending more generally. Limiting Medicare spending and cutting the deficit, part of the rationale for IPAB, are routinely touted as central GOP goals.

“We believe Congress should repeal IPAB, just as we believe we ought to repeal the entire health care law,” Boehner and McConnell wrote. “In its place, we should work in a bipartisan manner to develop the long-term structural changes that are needed to strengthen and protect Medicare for today’s seniors, their children, and their grandchildren. We hope establishing this board never becomes a reality, which is why full repeal of the Affordable Care Act remains our goal.”


By: Sahil Kapur, Talking Points Memo, May 9, 2013

May 13, 2013 Posted by | Affordable Care Act, Politics | , , , , , , , | 1 Comment

A “Special Kind Of Human Being”: Rick Santorum’s Despicable And Hurtful Health Care Lie

You have to want to be President awfully badly to purposely scare the hell out of parents whose children face illness and disability in their lives. You also have to be a perfectly despicable human being.

Appearing yesterday with his wife, Karen, on the Glenn Beck program, Rick Santorum joined his wife in ‘revealing’ that it was the passage of Obamacare that motivated them to enter into the presidential race.

According to Karen Santorum, “Because we have as you know a little angel, little Bella, special needs little girl, and when Obamacare passed, that was it, that put the fire in my belly.”

Had that been the end of it, I’d have no problem whatsoever with Mrs. Santorum’s comment. If Karen Santorum feels that there is a better way to protect the health and wellbeing of her child, it is not only her right but her responsibility to do everything she can on behalf of her little girl and every child out there in similar circumstances. I would fully respect her for the same even if I disagree with her assessment of what the law means to her daughter and others who suffer illness.

But it did not end there—not by a long shot. Instead, Rick Santorum chimed in his agreement by arguing that the health care law would ration care based on the ‘usefulness’ of an individual.

It’s all about utilization, right? It’s all about how do we best allocate resources where they are most effectively used? […] Government allocating resources best on how to get the best bang for your dollars and it’s all about utility. It’s all about the usefulness of the person to society, instead of the dignity of every human life and the opportunity for people who love and care for people to give them the best possibility to have the best possible life.

I don’t believe that Rick Santorum knows the first thing about dignity in a human life. He couldn’t. If he did he could not possibly have made such a statement knowing how this would cause fear for so many when it is a complete lie.

Never mind that the ACA has made it possible for children like Bella Santorum to always access health insurance, without lifetime caps and without the possibility for exclusion because of being born with a tragic illness or disability. Never mind that, because of the ACA, children born into a lifetime of medical challenges will never again face a time when they are denied the health insurance necessary to pay for their expensive healthcare needs.

And never mind that we are left to scratch our heads in wonderment that leading organizations such as the American Association of People with Disabilities, National Organization For Rare Disorders, The Arc of the United States, and numerous additional widely recognized and respected groups whose sole purpose is to represent the needs of those Santorum tells us will be deemed disposable, have not only registered their support for the ACA, but have gone to the trouble and expense to actually file an amicus brief with the Supreme Court to defend the law.

Apparently, Santorum either believes that these organizations are led by the dumbest people alive; that they have entered into some sort of deal with the devil to sell out the very people they exist to defend for reasons that escape the rational mind; or he simply could not care less that his statements will be heard by people who are the parents of special children and that they will be terrified.

Let’s take a look at the what law actually does and who it affects.

The government board that Santorum pretends to fear is the Independent Payment Advisory Board (IPAB) which is authorized to make changes to Medicare—and only Medicare. Accordingly, while some children with challenges like little Bella Santorum could find themselves qualified for coverage in Medicare, young Bella would not be affected by any decisions of the IPAB as the Santorum family has their own insurance coverage. Further, the legislative record makes clear that the IPAB is not to offer any recommendation to ration health care, raise revenues or increase Medicare beneficiary premiums, increase Medicare beneficiary cost sharing (deductibles, coinsurance, or co-payments), or otherwise restrict benefits or modify eligibility criteria.

And if, by some evil act, the IPAB does attempt to ration healthcare, Congress has the specific authority under the law to shoot it right down.

If Rick Santorum doesn’t understand the law, he should. And if he is too lazy or finds it too inconvenient to correctly cite the law when lying is so much better for political purposes, then he could,at least, show sufficient humanity to avoid targeting his political potshots in a way designed to frighten those with challenged children.

You see, should the ACA continue to be the law of the land and Rick Santorum is not president, Santorum gets to return to his cushy lobbying gig. But all of these parents with special needs children—the people Santorum has so needlessly frightened—will be left to worry forever because Rick Santorum thought this all made for a nifty campaign pitch.

I guess when your ambition is as big as Senator Santorum’s, you can’t be worried about the damage to you do to those who are the most vulnerable.

I understand very well that many people object to the Affordable Care Act for a variety of reasons. And while I am convinced that if people better understood the law the result would be greater support for the law, this is wholly beside the point.

If your own judgment is that Obamacare is not the best way to address our healthcare problems, fine. That’s what America is all about. If you have a better idea as to how to deal with the issue then, by all means, vote for those who share your approach and work hard to make any change you believe is necessary, even if that includes repealing the Act.

However, when Rick Santorum tells us that the law would deny the right to life and the care needed to sustain that life to children like his own daughter, because such a child would be deemed to not be of  ‘sufficient use to society’, he accuses the President, every member of Congress who supported the law, and every other supporter, such as myself, of being unfit to walk to this earth.

Anyone is welcomed to disagree with my judgment as to whether the Affordable Care Act is a good or a bad law. If my opinion is wrong, it won’t be the first time or the last that this will prove to be the case. But if you are going to accuse me of being willing to allow a child—or anyone else— to die because I would somehow deem her to be inconsequential to society, you’d really better be prepared to not only say that to my face but take the punishment that I promise you will follow.

What’s all the more amazing is that Santorum’s statement doesn’t even make sense.

In point of fact, the elements of the law that allegedly so concern Santorum do not even begin to ‘kick in’ until 2014.  Thus, President Obama would only preside over its implementation for a very few years. And yet, Rick Santorum suggests that he is of the belief  that Congresses and presidents in the years to come—some of whom will no doubt be Republican—would stand idly by while people are allowed to die because they are no longer deemed useful to society.

It is precisely because Santorum’s statement makes no sense, and precisely because he so badly cites the reality of the law, that we know that it is nothing but pure politics. And playing politics with the hearts of people whose lives are already tough enough takes a very special kind of human being—the kind that would never be welcomed at my dinner table.

American politics is a contact sport to be sure. But when the front-runner for his party’s nomination is willing to level charges such as this just to score some cheap political points while giving every parent with a challenged child a false reason to lie awake at night with worry, it is Rick Santorum’s usefulness to our society —not the value of the sick and disabled—that remains very much in question.

By: Rick Ungar, Contributing Writer, Forbes, February 25, 2012

February 27, 2012 Posted by | Affordable Care Act | , , , , , , , , | Leave a comment

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

June 1, 2011 Posted by | Affordable Care Act, CMS, Congress, Conservatives, Consumers, GOP, Government, Health Care, Health Care Costs, Health Reform, Ideologues, Ideology, Medicaid, Medicare, Politics, President Obama, Rep Paul Ryan, Republicans, Wisconsin | , , , , , , , , , , , | Leave a comment

The Importance of Independence: Affordable Care Act’s Independent Payment Advisory Board Key to Quality Care at Lower Cost

A year ago this week, President Barack Obama signed into law our nation’s first comprehensive health reform law, the Affordable Care Act, which not only extends health insurance protection to tens of millions of Americans but also actually reduces the deficit—in large part because of measures the law takes to responsibly slow the growth in Medicare and overall health spending. Lowering the projected growth of health care costs is a key promise of the law because these ever-escalating costs drain businesses, government coffers, and individuals’ savings. Yet many who criticize the law as a budget buster are aiming to repeal some of its key cost-containment features.

The Independent Payment Advisory Board is a case in point. The Affordable Care Act establishes this board to serve as a guarantor that the law’s cost-containment goals will actually be achieved. If the government’s main health care program for the elderly and disabled Medicare exceeds its per capita cost-growth targets under the new law, then the Independent Payment Advisory Board is empowered to recommend ways to reduce program expenditures by changing the way Medicare pays health care providers.

The secretary of health and human services must implement these recommendations unless Congress passes an alternative proposal or discontinues the cost-containment review process by the Independent Payment Advisory Board. Some legislators propose to eliminate the board. This would be a mistake.

Understanding the purpose of the board—as part of the Affordable Care Act’s cost-containment strategy overall—makes it clear that keeping and strengthening the independent board makes sense. The new health law’s cost-containment strategy includes both reducing excessive payments to providers under Medicare’s current payment mechanisms and moving Medicare—and, by example, the private sector—away from a payment system that rewards volume of services, without regard to health benefits, to payment arrangements that reward effective care, efficiently provided.

The Independent Payment Advisory Board will reinforce this twin focus on quality care at lower cost.

The Affordable Care Act holds hospitals and other institutional health care providers to productivity gains—something every other sector of our economy has achieved over the past several decades. Between 1995 and 2008 average annual productivity growth across the vast majority of U.S. businesses was 2.4 percentage points—just more than 1 percentage point higher than the previous two decades. In contrast, the health care, education, and social services sectors combined have produced average annual productivity growth rates of negative 0.2 percentage points.

The Affordable Care Act’s push for providers to produce productivity gains on par with other sectors promotes the efficiencies needed to reduce health care costs. But to assure that growth rates actually slow, the Affordable Care Act sets a target for Medicare spending growth and requires the Independent Payment Advisory Board to develop and recommend payment changes to achieve it. Both the Congressional Budget Office and the executive branch’s Centers for Medicare and Medicaid Services predict that explicit payment changes will produce most but not all of the savings needed to realize the independent board’s spending-growth targets through 2019 under the new law.

Avoiding excessive increases in the rates Medicare pays historically slows spending growth across the entire health care industry and can do so in the future. But tightening fee-for-service does nothing to improve quality or efficiency in care delivery—a critical goal of health reform. That’s why the Affordable Care Act includes multiple strategies to promote payment and delivery reform.

First, the new law stops rewarding bad behavior. The law authorizes the secretary of health and human services, without seeking congressional action, to review and alter “misvalued” fees, such as paying more for services than they’re worth, and to reduce payments for clearly undesirable behavior, such as hospital-acquired infections or conditions, inappropriate hospital readmissions, and, even more egregious, outright fraud. These new steps will deliver market-based signals to Medicare health care providers—and by example to the entire industry—that the wrong kinds of services that drive up current costs will no longer be rewarded.

Alongside what might be considered these “sticks” to change behavior come a set of essential “carrots,” or rewards to deliver more effective and efficient care. At the most basic level, these rewards are extra payments to providers for doing “good” things—say, meeting a set of efficiency standards while maintaining quality care. But more importantly, these rewards reside in alternative payment mechanisms to replace today’s fee-for-service payment system.

Among the new payment systems the new health law encourages is “bundling” separate fees into a single payment for services associated with a specific condition, such as a hip fracture, which today would include separate fees for diagnosis, surgery, and postoperative care. Another provision of the law promotes the financial and health benefits of primary care and chronic care management through newly created “medical homes,” which coordinate health care for their patients. And yet another new approach to health care promoted by the new law are so-called “accountable care organizations,” which are collaboratives of inpatient and outpatient providers who are rewarded for delivering quality care to a defined set of patients at lower-than-projected costs.

The new law sets a clear timetable for implementing some of these measures and creates the Center for Medicare and Medicaid Payment Innovation to initiate, evaluate, and broadly extend the application of these methods as part of “rapid cycle change.”

The law also recognizes that these efficiencies and the savings they can deliver will not be realized if changes in payment systems are limited to the public sector, and therefore encourages public-private partnerships. Medicare is a large payer, accounting for 20 percent of our nation’s medical bill in 2009. Private payers have historically followed Medicare payment practices. But that outcome is neither automatic nor immediate.

What’s more, inconsistent payment mechanisms across payers discourage providers from changing behavior, impede efficiency improvements, and create opportunities for offsetting one payer’s spending reductions with increases for others. Indeed, a recent study by the Medicare Payment Advisory Commission, an independent congressional agency, finds that hospitals squeezed by both Medicare and private payers changed their operations to become more efficient, yet hospitals with generous private payments ignored Medicare constraints, took losses on Medicare patients, and continued business as usual. Better quality care at lower costs requires that the public and private sectors work in tandem.

The health reform law encourages common action in different ways. The law gives preference to innovations where providers engage with private payers alongside Medicare in adopting new payment incentives Other provisions in the law further support payment reform in the private sector by extending access to Medicare provider performance data to guide private payers’ payment-reform efforts, and requiring private health plans to regularly report on those efforts. These data will inform the Independent Payment Review Board when it uses its authority to make nonbinding recommendations for private-payer reforms alongside binding recommendations for public programs.

This is a key provision of the new law. From 1970 to 2000 the private sector was less effective than Medicare in promoting efficiency, with an average annual growth rate per enrollee of 11.1 percent compared to Medicare’s rate of 9.6 percent. An effort that addresses public-sector but not private-sector health care spending risks limited access for beneficiaries as well as missed opportunities to encourage health care providers to operate more effectively and efficiently. Therefore, the broader the new board’s authority is to influence not only public but also private spending, the more effective it will be.

A focus on policy tools alone, however, obscures the most important element of the Independent Payment Review Board’s potential impact. Payment improvements in the past were stymied by legislators responding to providers’ resistance to change. Provider payment is rarely a partisan issue but it is a political issue. The new law takes the politics out of the equation by giving the independent board the authority to make Medicare payment recommendations that become law unless explicitly overridden by legislative action. This gives a major boost to policy over politics in containing health care costs.

And it’s precisely this boost that special interest groups want to prevent. Opponents of the new board complain it undermines congressional authority and removes from their control an important budgetary lever at a time when the federal budget deficit is rising at an unsustainable rate. But the real concern of many of these critics, who often are the fiercest advocates of fiscal restraint, is that the board’s authority diminishes their influence and their ability to fashion a Medicare budget that benefits the pharmaceutical industry and other special interest groups that are in a position to lose the most from the board’s future recommendations.

Other critics of the Independent Payment Advisory Board fear the Affordable Care Act did not go far enough in granting it authority, leaving too many loopholes for special interest groups to avoid payment adjustments. In making adjustments the board is prohibited from addressing payments to hospitals, skilled nursing facilities, and other health care providers who are scheduled to receive “productivity adjustments” under the Affordable Care Act. Rather than repeal the board, the more sensible option would be to close these loopholes and extend accountability for unacceptable health care cost increases.

In fact, members of Congress and policymakers in the federal government should be thinking of ways to strengthen the Independent Payment Advisory Board given the fiscal reality facing the federal government today. The new board is one of the Affordable Care Act’s most important cost-containment tools. We can’t afford to lose it.

By: Judy Feder, Senior Fellow, Center For American Progress, March 21, 2011

March 22, 2011 Posted by | Affordable Care Act, Congress, Deficits, Federal Budget, Health Care Costs, Health Reform, Medicare, Politics, President Obama | , , , , , , , , | Leave a comment


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