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The Math of Medicare for All

(Legislature, U.S. Congress) Permanent link

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This is an excerpt of a post originally published on Sarah Fontenot’s website. The opinions expressed are Ms. Fontenot’s. Texas Medicine Today is sharing them to further the conversation on the future of health care reform.

Support for Medicare for All has swept the nation – or at least Democratic primary voters.

In a September Kaiser poll of likely Democratic voters, 40% said they were in favor of replacing the Affordable Care Act (ACA) with Medicare for All. Of that segment 14% said they would only support a candidate who would bring Medicare for All to America (as opposed to other solutions, such as the Public Option).

With two of the current top Democratic candidates – Sens. Bernie Sanders (I-Vermont) and Elizabeth Warren (D-Massachusetts) – espousing Medicare for All, supporters and detractors alike are asking more in-depth questions about the proposal, particularly how much it will cost.

What do Senators Sanders and Warren mean by “Medicare for All”?

Medicare for All is a concept that has been around since the early 1900s, was an unrealized component of President Franklin Roosevelt’s New Deal, and was in the background of the Medicare law President Lyndon Johnson signed in 1965.

Senator Sanders picked up the banner in 1987 and has run on it ever since – most memorably in the 2016 presidential election.

In April, Senator Sanders updated his Medicare For All plan (the fifth time he has done so) in Senate Bill 1129. Among his 14 co-signers were four senators who were running for president at the time: Elizabeth Warren, Cory Booker, Kamala Harris, and Kirsten Gillibrand.

SB 1129 would create a single-payer health system in America, eradicating private health insurance and current government health care programs over four years.

The insurance described in the Sanders plan would be more comprehensive than any policy currently available on the market, more generous than Medicare as we know it now, and more generous than any government program in the world (including Canada, the United Kingdom, and Norway).

Almost every resident of the United States would be entitled to comprehensive health care through a new government program modeled on Medicare (not included: veterans, who would continue to receive health care through the U.S. Veterans Administration; and Native Americans, who would be served through Indian Health Service).

Under Senator Sanders’ plan, Medicare for All would include:

  • Care in any hospital;
  • Care outside of a hospital (free-standing facilities, labs, etc.);
  • All preventative health care and chronic disease management;
  • Comprehensive reproductive, maternity, and newborn care, including abortion;
  • Emergency health care services and treatments;
  • Primary and specialty health care;
  • Palliative and long-term care (including home-health);
  • Care for vision, hearing, and oral health problems;
  • Mental health and addiction services;
  • Prescription medication (the first $200 a year out of the patient’s pocket);
  • Medical equipment and supplies;
  • Diagnostic tests; and
  • Other services (this list is not all-inclusive) 

All this care would be available at no out-of-pocket cost to the patient, and there no longer would be insurance premiums, copays, or deductibles in America.

It is understandable why the concept of Medicare for All has proven so attractive to many Americans.

It is also apparent why the cost of the plan has remained one of the most consistent arguments against it. What level of investment by the federal government will be necessary to make Medicare for All possible?

What does Senator Sanders say about the cost of his plan?

He has historically been vague about the cost of Medicare for All. The last time he ran for president, the “false charms” of his plan were widely criticized (and that was before he added long-term care to the 2019 version of his proposal). 

Variables make projections of the cost of Medicare for All difficult: How many new patients will enter the system? How many health care services will be requested when insurance companies no longer act as gatekeepers? How low can payments to hospitals and physicians go before the health care community closes and creates access issues for patients? What will it cost to build an administrative agency large enough to manage the health care of the entire country? 

Even so, many economists have attached a specific price to Medicare for All. Senator Warren released her price tag recently. Senator Sanders remains more opaque, and inconsistent. 

For example, in an interview in July with the Washington Post, Senator Sanders quoted the price to the government at $30 trillion to $40 trillion over 10 years. 

However, during the September debate in Houston, Senator Sanders did not refute former Vice President Joe Biden’s assertion that Medicare for All would cost over $30 trillion. Instead he added, "Status quo, over 10 years, will be $50 trillion." 

In another interview in October, it appeared Senator Sanders was frustrated by the cost question: “We’re trying to pay for the damn thing” [through, in part, taxes on the top 1% in income in the country]. He later added, “You’re asking me to come up with an exact detailed plan of how every American – how much you’re going to pay more in taxes, how much I’m going to pay. I don’t think I have to do that right now.”

What does Senator Warren say Medicare for All will cost?

Senator Warren does not have a separate plan for Medicare for All, saying instead, "I'm with Bernie on Medicare for All," as she said in the Democratic candidate debate in June. But the two candidates differ on how to pay for the plan, and how much it will cost.

Senator Warren released her plan for funding Medicare for All in November. Her lack of an explanation on how she could deliver it without a tax increase on the middle class, as has been her promise, was a prominent moment in the last Democratic debate.

And here is her number: $26.6 trillion. (I know the headlines said “$20.5 trillion, but that was ignoring the $6.1 trillion she expects the states to chip in to support the program.)

As reported by the New York Times:

Ms. Warren would pay for the new federal spending, $20.5 trillion over 10 years, through a mix of sources, including:

  • Requiring employers to pay the government a similar amount to what they are currently spending on their employees’ health care, totaling $8.8 trillion over a decade.
  • Changing how investment gains are taxed for the top 1% of households, raising $2 trillion, and ramping up her signature wealth tax proposal to be steeper on billionaires, raising another $1 trillion.
  • Creating a tax on financial transactions like stock trades, bringing in $800 billion.
  • Beyond the $20.5 trillion total, she is also counting on states and local governments to contribute an additional $6.1 trillion to help pay for the system. 

Senator Warren explained more details on her plan in November, but for our purposes, here is the crucial line: “We don’t need to raise taxes on the middle class by one penny to finance Medicare for All.”

Senator Warren’s announcement immediately prompted criticism from Republicans as well as fellow Democrats. Saturday Night Live parodied her talking about her plan on the Cold Open the following night.

In the meantime, Senator Sanders retorted that his plan is “far more progressive” than Senator Warren’s. Recognizing his proposal includes raising taxes on the middle class, Senator Sanders predicts those taxes would balance with lower health care costs, while Senator Warren’s plan “might have a ‘very negative impact’ on job creation because of funds it could take from employers.”

(Vox.com has more details on the differences between the Sanders and Warren plans.)

What do economists say?

The Congressional Budget Office (CBO) provides Congress with financial estimates on proposed legislation, including Senator Sanders’ SB 1129. In May, the office released a detailed report on the primary features of establishing Medicare for All in America, explaining that the magnitude “is difficult to predict because the existing evidence is based on previous changes that were much smaller in scale.”

The CBO refrained from providing a specific, detailed cost estimate (as it would usually do), noting “that such a system would be so different from the country’s current situation that any hard estimates would be difficult, even with all the specifics laid out.”

However, economists outside of the government have been willing to derive specific numbers for the cost of Senator Sanders’ plan.

For my money (pun intended), the best guide to the Medicare for All cost estimates from economists (as opposed to politicians) is an interactive article in the New York Times.

I like this resource because it has dynamic, interactive visuals for each estimate, and compares figures from very conservative sources (such as the Mercatus Center) to very liberal ones (such as the Urban Institute).

I encourage you to access the resource yourself, but here are the bottom-line projections for the total costs of Medicare for All from that publication:

  • Gerald Friedman, a professor of economics at the University of Massachusetts, Amherst, whose estimates were frequently cited by the Sanders campaign in 2016: $2.76 trillion
  • Charles Blahous, a senior research strategist at the Mercatus Center at George Mason University, and a former trustee of Medicare and Social Security: $3.46 trillion
  • Analysts at the RAND Corporation, a global policy research group that has estimated the effects of several single-payer health care proposals: $3.24 trillion (plus $506 billion*)
  • Kenneth E. Thorpe, the chairman of the health policy department at Emory University, who helped Vermont estimate the costs of a single-payer proposal there in 2006: $3.20 trillion (plus $706 billion*)
  • Analysts at the Urban Institute, a Washington policy research group that frequently estimates the effects of health policy changes. $3.87 trillion (plus $514 billion*)

(*Some estimates of the Medicare for All price tag are not inclusive of all health care costs.)

What will voters say?

This is, of course, the most important question of all.

We will get the voters’ answer in November.

Sarah Fontenot is both a nurse and an attorney. Today, as a professional speaker, she travels the country, helping people understand how health care is changing and what it means for them as consumers.

Where Do We Go From Here With Our Health Care System?

(Legislature, Public Health, U.S. Congress) Permanent link

APM_Options
  This post was originally published on Rob Tenery, MD’s blog

When the Affordable Care Act (Obamacare) was first introduced, the public was told that they could keep the doctor of their choice and their premiums would not escalate. Quickly, it became obvious that was not possible. Many doctors failed to become participants and the costs for coverage in 2017 ranged anywhere from 20 to 60 percent higher since the ACA’s inception. Additionally, not every uninsured individual chose to participate. Thus, almost 20 million remained without coverage.

“If you have a law that makes it explicit healthy people pay in and sick people get the money, it wouldn’t have passed,” said the often-called architect of the ACA, MIT Professor Jonathan Gruber. “Lack of transparency is a huge political advantage, and basically call it the stupidity of the American voter or whatever, but basically that was really critical to getting the thing to pass.”

                                                                ~~~

There are several social and economic realities that doomed the ACA from the start:

1.) The patient was taken out of the decision-making process, with no incentive or effective disincentive for financial responsibility.

2.) There was a failure to develop an affordable basic benefits package of health care services that would be available to all, through expansion of the state-run Medicaid programs, medical savings accounts, vouchers, and allowing the private health insurance carriers to compete for patients across state lines.

3.) Similar to automobile liability insurance, the ACA is mandated personal coverage with punitive penalties that weren’t persuasive enough to force compliance under an individual mandate regulation.

                                                                     ~~~

To make the ACA work, the more healthy individuals would have to sign up or face a fine if they didn’t. The fine would be levied under the Individual Mandate (IM) stipulation dictated under the ACA. The problem with the IM was that the penalty was relatively minimal and only recoverable by a withholding part of any tax rebate for which they might be eligible.

When Justice Roberts joined the other liberal justices on the Supreme Court in ruling the ACA constitutional, he ruled on the basis that the ACA was not a mandate, but a tax, which the Congress could lawfully create. The other part of his ruling was that Congress could not lawfully issue mandates.

The Republicans were not able to pass their version to repeal and replace the ACA. When President Trump issued an Executive Order to do away with the very unpopular IM, a George W. Bush appointee Federal District Judge Reed O'Connor in Ft. Worth ruled that without the IM, the ACA was no longer constitutional, since that was the only tax in the original ACA.

This ruling, once again, brings up options: Reinstate the IM, but make it more punitive, so as to force more of the uncovered into obtaining coverage. Another, create a mandatory catastrophic coverage plan that would be a variant of the IM. A third, 'Medicare for All', as proposed by Bernie Sanders and reportedly to be introduced as a bill in the US House of Representatives. Unfortunately, this option will lead to a single payer system and would cost added trillions of dollars in additional costs.

To say that Medicare works well, denies the fact that in many patients are no longer able to go to the doctor of their choice. In fact, even finding a doctor is difficult. Additionally, many doctors no longer participate in the Medicare program.

This program is only one step away from a single payer health care system, which was once referred to as socialized medicine. Under this system, the government, controlled by federal dictates and paid for by taxes or raising the federal debt, provides all medical and hospital services, and determines all reimbursement levels.

Under a single payer, all people are guaranteed health care services, but that care is dependent on the availability of the services and the providers who would render that care. One just has to look at the Canadian system where examinations, tests and procedures are often put off for weeks to months, while patients’ morbidities drag on.

The complexities of reimbursement may be reduced under a single payer system. But added billing and coding time requirements, often take doctors away from direct patient care. Although escalation of overall costs of care is easier to control, the reimbursement levels usually decrease to the doctors and institutions, resulting in potential compromise of the time that is devoted to that care.

The questions for any new plan or revision of what is left are two: What to do with pre-existing conditions as pointed out in the recent New York Times article and how to bring money back into health care to offset the losses from including pre-existing conditions. The latter is most easily resolved by going back to the healthy individuals who are not eligible for a government program and have decided to go ‘bare’. Reintroducing the Individual Mandate again, but make it much more punitive than before if they don’t choose that option. Or create a catastrophic coverage plan that is mandated to protect the patients that have unexpected, catastrophic medical or surgical events, the public from bearing those added costs through taxes or accepting these losses by the health care providers and hospital systems. 

Community rating alone makes others’ premiums too high. Continuing high-risk pools, as we have, is another option. The current Democratic answer seems to be 'Medicare for All', which is much more expensive in the long run. Then there is the ’single payer’ option. This should be the LAST choice, because then the government makes all the choices, which is close to what we already have now.

Is moving into a single payer the answer? Just because the coverage questions are addressed, the skyrocketing costs and access for these added patients are not. Simply put, this country’s delivery system is second to none. Why would we want to give that up?

Robert Tenery Jr., MD, is an ophthalmologist in Dallas. He is a TMA past president and Distinguished Service Award winner.

Beyond the Slogan “Medicare for All”

(Legislature, Public Health, U.S. Congress) Permanent link

US capitol
 This is an excerpt of a post originally published on Sarah Fontenot’s website. The opinions expressed are Ms. Fontenot’s. Texas Medicine Today is sharing them to further the conversation on the future of health care reform.

Medicare For All has become a rallying cry for many (if not most) Democrats, but it was independent Sen. Bernie Sanders of Vermont who started the movement in the 2016 presidential election.

Senator Sanders introduced his Medicare for All Bill in September 2017 with 13 Senate co-sponsors, including five who have announced their candidacy for president in 2020.

The public is embracing the concept as well. Polling is mixed, but as high as 70 percent of Americans now support Medicare for All, including 85 percent of Democrats and 52 percent of Republicans, according to a recent Reuters survey.

However, as popular as the concept is, the details are lost in the simple slogan of “Medicare for All.”

To further confuse the issue, the specifics of any Medicare for All plan may differ between advocates, with “Single-Payer,” “Public Option,” and “Universal Health Care” all added into the mix to further confuse what any politician or pundit believes.

“Voters have become casualties as candidates toss around these catchphrases – sometimes vaguely and inaccurately,” Kaiser Health News wrote in November.

Health care was the top issue in the midterm elections, and is expected to be a dominant issue in 2020 as well. The potential of an overhaul of our health care delivery system is far too complicated (and weighty) to capture in a jingle.

I will take four options all affiliated with Medicare for All and provide a bit of detail on each.

Option No. 1: Senator Sanders’ plan

The most common interpretation of Medicare for All is the option espoused by Senator Sanders. Although he did not invent the idea of a single-payer health care system, he made the concept a trend.*

Senator Sanders’ plan dispenses with private insurance and creates a government-run health coverage plan (like Medicare) for everyone. There would be no copays or deductibles, and everyone would have access to inpatient and outpatient care for needs as diverse as substance-abuse treatment and long-term care. Prescription drugs, diagnostic tests, and vision care will be obtainable to all.

Unlike a socialist health care system (for example the United Kingdom), in this plan doctors, hospitals and other health care providers will remain independent – the government will pay for care but not provide it.

Paying for this version of Medicare For All is controversial and has incited debate. It will at least be paid for partially by multiple new taxes in the bill, such as a tax on households earning more than $28,800 (escalating for those with annual earnings over $250,000), as well as taxes on capital gains and dividends, and a new “Responsible Estate Tax” on Americans inheriting more than $3.5 million. The tax on employers under Senator Sanders’ bill is 6.2 percent of their employees’ incomes.

As helpful as those revenues may be, the biggest argument against Senator Sanders’ plan is the predicted cost. Senator Sanders estimates a $1.38 trillion per year expenditure; other calculations range from $2.4 trillion to $2.8 trillion – and a report last July by the Mercatus Center at George Mason University placed the cost at a staggering $3.26 trillion annually.

Cost is a significant barrier, but there are other reasons not everyone is endorsing Senator Sanders’ plan. A federal government takeover of health care raises questions about federalism, and there are a lot of people that like the insurance they currently have – such as people with generous employment benefits. The eradication of the health insurance industry would hit small-town insurance brokers on “Main Street, Everywhere” and devastate insurance centers like Hartford, Conn. Finally, this plan would destroy much of the structure created by the Affordable Care Act (ACA), when support for the law is at an all-time high.

*Although I am focusing on the Bernie Sanders’ Bill, in March an even more ambitious plan for Medicare For All – HR 676 – was introduced by 124 progressive Democratic representatives in the House. The bill makes health insurance illegal as well as any for-profit health institution.

Option No. 2: The Public Option

Other lawmakers who endorse Medicare for All want the return of the Public Option. (Some of these people are arguing for both plans simultaneously.)

I wrote about the Public Option in detail in Fontenotes No. 25. This version of “Medicare for All” would not extend government-backed health care coverage to everyone but would make a Medicare-like product available for purchase on the ACA (also called “Exchanges”). Presumably, this would help to control costs within the pool of available policies and could help bring insurance costs down across the industry.

This idea – individuals choosing to buy in to Medicare – was born (and died) in California in 2001. Presidential candidate John Edwards revived the idea in 2008; candidates Barack Obama and Hilary Clinton adopted similar proposals in their campaigns that year.

As President Obama and Congress moved forward writing the ACA, the Public Option remained part of the design, but increasingly it became controversial as private insurance companies argued they could not compete in the market with a government-backed alternative. Democrats ultimately killed the public option, with Sen. Joe Lieberman (D-Conn.) delivering the final blow. (Why? Hint: Where is the Insurance Capital of America?).

Hillary Clinton raised the public option from the ashes as part of her 2016 Presidential Platform.

Now, as we face the presidential election cycle of 2020 the public option has resurfaced again, but under the rubric Medicare for All.

The persistence of this idea was predicted in 2010; that tenacity may point to its value.

The Public Option does not require destroying the private insurance industry, people can keep the insurance they like, and the structure of our providers (profit and not-for-profit) remain the same – there is no immediate government takeover of health care.

The only downfall may be the threat the Public Option poses to the private insurance industry, but that would seem to prove the point. Could the Public Option ultimately lead to a single-payer government-run health care system? Yes, but over time and only if the insurance industry fails to adapt.

Option No. 3: Expanding Medicare eligibility

There are some in Washington with a much smaller expansion of Medicare in mind – simply lowering the age of eligibility to 50 (or 55). Private insurance companies charge more to cover those who fall in the 50 to 64 age range (known as the “age tax”).

Arguments for allowing people as young as 50 into Medicare include the prevention of health conditions that could cost the government more in the long run if untreated until 65, and the business opportunity for private insurance companies offering Medicare Advantage plans to this segment of the population.

The reason to not expand Medicare is, of course, the cost to American taxpayers.

Option No. 4: Leave it to the states

And as another wrinkle, some Democrats want Medicare for All to be a choice each state makes – state-run single-payer plans.

How do any of these options compare with what voters envision?

It is possible that none of the options I described match the expectation of Americans marching under the Medicare for All banner.

Based on promises from politicians, talking heads, and 30-second sound-bites, the vision of many Americans appears to be a health care system even more glorious than any under consideration in Washington. The prospect of obtaining all the care they need, from any provider, without permission from an insurance company, and at no cost is a clarion call for voters.

Democratic politicians, particularly those with their eyes on the presidency, continue to stoke those dreams without addressing the realities: the costs, payoffs, and pitfalls of their plans. One progressive leader described the “pleasant ambiguity” of Medicare for All, which creates “a broad umbrella where any candidate can embrace some version of it.”

American voters deserve better. We need to demand facts, numbers, and clarity as we head into this heated political season. The first question we should ask is “What do you mean by Medicare for All?”

A Dozen Ways the Shutdown is Affecting Health Care

(Legislature, Public Health, U.S. Congress) Permanent link

Fontenotes_Shutdown

This is an exceprt of a post originally published on Sarah Fontenot’s website.  

As other industries are struggling through the partial government shutdown, it would be easy to feel positive about health care. Funding for both Health and Human Services (HHS) and the Department of Veteran Affairs (VA) are secure due to appropriation bills that predate the current crisis. VA benefits, Medicare, Medicaid and the Affordable Care Act (also known as Obamacare) are — at least at face value — protected. 

The Centers for Disease Control and Prevention (CDC) is up and running, the National Institutes of Health (NIH) continues to oversee biomedical research, and Food and Drug Administration (FDA) responsibility for drug approval is not affected.

But that is not the whole story.

The shutdown is impacting — even risking — the health of countless Americans. Protections and processes all of us rely on are on hold. Innovations and developments in science, policy, and the law are being delayed or subverted.

Starting with the most important examples — people who are directly affected — here are 12 ways this shutdown is doing damage in the realm of health care.

1. Some Federal Workers are Losing Their Health Benefits  

The 800,000 employees at shut down federal agencies who fall under the Federal Employees Health Benefits (FEHB) program are not at risk of losing their health care insurance. But they could start to receive bills for their dental, vision, and long-term care coverage if the crisis continues. 

The federal employees most in jeopardy are those working under contracts not eligible for the FEHB program. Not only are contract workers potentially not going to get paid when the shutdown ends, they lost their health care benefits at midnight on Dec. 22. A poignant story highlighted by NBC News and the New York Post covers a young woman from the Interior Department now rationing her insulin because she cannot afford the cost.

2. Many Native Americans are Going Without Health Services  

The Indian Health Service — run by HHS but funded through the Department of the Interior — is directly affected by the shutdown. Native American tribes have already missed millions of dollars in essential services; only health care that meets the "immediate needs of the patients, medical staff, and medical facilities" are included in the department’s shutdown plan. Some clinics serving Native Americans have closed already; others are expected to cease services by the end of this week. 

3. Some People Eligible for ACA Subsidies May Have Their Applications Delayed  

Many (if not most) people who purchase insurance on the Affordable Care Act (ACA) Exchanges (or “Marketplaces”) receive a subsidy from the government to help them afford health care coverage. Applications for subsidies may require an Internal Revenue Service (IRS) review in some circumstances, such as when applicants lose their job, a baby has been born, or the person involved filed for an extension on paying income taxes or signed up for insurance outside of the open enrollment window.

With 90 percent of IRS workers out of the office, these applications are now delayed — and the patients involved could lose their insurance entirely if they can’t pay the full premium while they are waiting. (As a bonus, the IRS Call Center is closed so these people can’t get information on what they should do.). Democratic senators andrepresentatives sent a letter Monday to HHS and Treasury asking for protection from unexpected premium costs due to the shutdown.

4. People Who Receive SNAP Benefits (Food Stamps) Have Another Month of Coverage  

The United States Department of Agriculture, Food and Nutrition Service (FNS) released funds to each state to provide February Supplemental Nutrition Assistance Program (SNAP) benefits two days before the shutdown. This means people who receive SNAP (food stamps) must ration their benefits to last two months; it is unclear if there will be any further assistance if the shutdown continues into March.

People who were in the process of applying for food stamps when the shutdown began may have to go without until the reopening of the government. Although the SNAP program is administered through the states, “FNS does not guarantee eligible applicants will receive food stamp benefits while the partial federal shutdown is in effect,” St. Louis Public Radio wrote.

5. Food Safety Issues May Affect Public Health  

Food safety is a basic component of public health, and it is now threatened by the interruption of routine food safety inspections. However, the day after FDA Commissioner Scott Gottlieb confirmed the cessation of food control efforts, the FDA announced that “high-risk” inspections, including infant formula, shellfish, and prepared salads and sandwiches, will resume with the return of 150 furloughed (but still unpaid) people next week.

6. Industry Developments Are Affected by Government Regulators’ Lack of Funding  

The Antitrust Division of the Justice Department asked the U.S. District Court in Washington, D.C., last week to suspend review of the $70 billion CVS-Aetna merger due to lack of resources. The judge told them to keep working.

This “mega-merger” is a highly publicized case — and the judge’s opinion presumably reflects that. Undoubtedly there are lesser-known business dealings and corporate plans that cannot come to fruition while the necessary federal agencies are unavailable to serve their role.

7. The Safety of Drinking Water is Threatened  

After what is happening in Flint, Mich., water safety is top-of-mind for all health care providers, but with more than 13,000 workers furloughed, the Environmental Protection Agency does not have enough staffing to inspect drinking water adequately.

8. State 1332 Waivers for Innovations in Marketplaces are on Hold  

IRS evaluation of the financial impact of proposed innovations is a central component in a state’s process to obtain a 1332 waiver, but because the IRS is currently crippled (see above) that agency can’t work with HHS to evaluate state initiatives to revamp their ACA marketplaces, a chief focus of conservative efforts to alter the ACA.

9. The Appeal of the Texas Decision Striking Down the ACA is on Pause  

The federal court system has survived the shutdown by conserving resources as best as possible (although a closure could happen as early as next week), but the shutdown has still impacted the most prominent court case in health care today: the Texas lawsuit decided in December declaring the entire ACA invalid. On Jan. 11, the 5th Circuit Court of Appeals in New Orleans issued a stay in the appeal of that decision until the government reopens.

10. The FDA is Open — but New Drug Treatments may be Delayed  

The FDA, as a branch of HHS, is up and running, but even so, some pending new drug treatments (including those for multiple sclerosis, depression, and diabetes) may be delayed if the shutdown continues, as the agency cannot process the application fees paid by drug manufacturers during the shutdown. Funds available at FDA are expected to be exhausted before March. 

11. It is Increasingly Difficult to Hire Researchers at the FDA  

In 2016, the passage of the 21st Century Cures Law (Pub. L. 114-255) was “designed to help accelerate medical product development and bring innovations and advances to patients who need them faster and more efficiently.” Part of that directive was to accelerate hiring scientists (and increase their pay) at the FDA. However, as recently reported by Bloomberg, the shutdown is making it difficult to entice the best minds away from the private market — to reinforce the argument that the government is “a good place to work.”

 

12. Activities of Homeland Security Related to Health are at Peril  

The division of the Department of Homeland Security that monitors threats related to infectious diseases, pandemics, and biological and chemical attacks (the Office of Health Affairs) is scaled back throughout the shutdown. Of the 204 people who typically address these threats as well as others in the Countering Weapons of Mass Destruction Office, only 65 remain active.

Other Homeland Security employees who will continue to work without pay include border health inspectors and members of the border patrol.

This shutdown is a world of pain for all of us. But for many, it is an actual threat to life (such as living without insulin).

2019 will be a year of political battles over the future of the American health care system on both a federal and state level. The Trump Administration will (presumably) continue to erode protections provided in the ACA, and the December case ruling the entire ACA unconstitutional will continue to wind its way toward a newly constituted conservative U.S. Supreme Court. The ying and yang of “Medicare for All” and “Free Market Health Care” will be the debate of the year. All of that, and much more, will be the subject of future Fontenotes.

But until our government fully reopens — those debates all seem irrelevant — if not irreverent.

 

Congress Puts CHIP Back on Course

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CHIP blog photo

The news was almost lost amid the furor over the government shutdown and immigration politics. But it did happen. Funding for CHIP was extended for six more years on Monday.

Federal funding for CHIP, which provides health coverage for almost 400,000 Texas children, expired Sept. 30. Since then, members of Congress have given lots of verbal love to CHIP but claimed to be unable to find the money to finance the program for another six years. Over the ensuing 114 days, families worried, states made and began to exercise contingency plans, and Congress propped up the program for a few more months. 

All of those problems melted away yesterday when — in the span of about 12 hours — the Senate and then the House passed, and then President Trump signed the bill that reopened the federal government and puts CHIP on firm footing for the next six years.

“In this day and age, the only thing we have to be certain about is uncertainty itself,” said TMA President Carlos J. Cardenas, MD. “Six years of dependable CHIP funding is good news for the state budget, for Texas children, for their families, and for the physicians who care for them.”

CHIP covers physician and dentist visits, hospitalizations, prescription drugs, and more for kids up to age 18 whose families make too much to qualify for Medicaid but too little to afford commercial insurance. 

It’s a good deal for the families. They pay annual enrollment fees of $50 or less, and copays for office visits and medications of $3 to $35.

It’s a good deal for the state treasury. Children are generally healthy and not very expensive to insure. Since passage of the Affordable Care Act (ACA) in 2010, the federal government has picked up an “enhanced share” of the costs. For Texas this year, that’s 93 percent. So Texas taxpayers pony up about $70 million for a program that costs almost $1 billion. The April 2017 enrollment stats show CHIP covers 393,000 children in Texas; about 36,000 Texas women also receive prenatal care and post-delivery checkups with CHIP funds.

Under the law passed Monday, the enhanced rate stays in place through fiscal year 2019, it drops to 82.5 percent in fiscal 2020 and reverts to its pre-ACA match of 71 percent by fiscal 2021.

It’s not a bad deal for physicians. Even though CHIP pays the same low rate as Texas Medicaid, it generates far fewer complaints about paperwork and bureaucratic interference.

It's a good deal for the federal treasury as well — in the perverse world of Washington economics. According to the Congressional Budget Office, the net cost of the six-year extension is only $800 million, and a 10-year extension actually would have decreased the federal budget deficit by $6 billion. 

And, of course, it’s a great deal for the CHIP kids themselves. It helps them stay healthy, in school and on the job, and out of the emergency department.


Fontenotes: Three Things to Watch in 2018

(U.S. Congress) Permanent link

By Sarah Fontenot

As 2018 peeks over the horizon, it promises to be another year of health care headlines and talking heads, with political free-for-alls, wins, and losses.

Sarah FontenotThere will be many things to keep track of, including (presumably) some issues we don’t even know about yet.

But I promise you there will be at least three things to be watching in the year to come, and I would like to give you a quick preview of each.

Interested?

Please read on!

1. Will there be an Obamacare Repeal & Replace 2.0?

Politicians do not return to the scene of their most significant defeats, and the Senate is not known for picking up controversies that die on their chamber floor.

That explains why, after the Senate bill to defeat Obamacare failed in July, Senate Majority Leader Mitch McConnell (R-KY) announced “that the Senate will give up on its bill to replace” the Affordable Care Act (ACA) and focus on repeal only “in the next two years.”

After the second defeat in August, McConnell described the future of the effort as “murky” and said that Republicans in the Senate would talk with Democrats to find measures on which the two parties might be able to agree.

A surprising third blitz for repeal and replace under a bill co-sponsored by Sens. Lindsey Graham (R-SC) and Bill Cassidy, MD (R-LA) died without a vote on Sept. 26, and the party moved on to the Tax Bill.

With three strikes out*, many watchers thought 2017 would bring the end to the “Repeal & Replace” fervor. (*More depending on how you count the bills.)

Accordingly, on Dec. 22 McConnell told the Associated Press he was skeptical at best about revisiting Obamacare in the Senate. On the 29th (pointing to the loss by Roy Moore in Alabama that brought the GOP Senate majority to one seat) he reiterated that in 2018 the Senate would “probably move on to other issues.”

But has anyone told Sen. Lindsey Graham?

On Dec. 21, Graham tweeted: "To those who believe — including Senate Republican leadership — that in 2018 there will not be another effort to Repeal and Replace Obamacare — well you are sadly mistaken."

A week later, Graham announced his commitment with Senator Cassidy to renew the push in 2018 for their bill that failed in the fall.

Is the Senate poised to begin “Repeal and Replace 2.0?”

Be watching.

2. Will the Insurance Markets be Stabilized?

In a Fontenotes last April I explained the controversy surrounding subsidies to insurance companies under the ACA in some detail. I returned to the issue in October to highlight the bipartisan effort led by Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) to save the subsidies after an executive order from President Donald Trump stopped them.

Those same subsidies will be a “hot topic” for Congress moving into 2018. There is significant disagreement among Republicans about continuing to reimburse insurance companies under the ACA formula, particularly in the House of Representatives. As I described in my previous Fontenotes, the result of that debate could significantly raise the cost of insurance on the ACA exchanges, and arguably for the rest of us as well.

But no one will be watching what happens next more closely than Sen. Susan Collins (R-.ME).

You will remember that Senator Collins was a crucial vote for the GOP in 2017; she voted (or announced her intent to vote*) against all three “Repeal and Replace” efforts in the Senate.

(*Her announced intention to vote against Graham-Cassidy was “the final death blow” to the bill that died with a whimper- not an actual vote.)

And then came the Tax Bill in December.

Explaining her vote (again crucial) to pass the tax bill, Senator Collins “told reporters she had an ‘ironclad’ commitment from McConnell and Vice President Mike Pence to pass legislation by the end of the year to stabilize Obamacare premiums.”

But that didn’t happen.

With a now one-vote majority in the Senate, can the GOP leadership afford not to keep that promise to Senator Collins in 2018? And if broken, how will it affect her vote on her other choice health care issues, such as protecting Medicare?

I am confident Senator Collins will be watching to see what happens with the Alexander/Murray compromise to subsidize the insurance markets.

And so should you.

3. Will CHIP be Saved?

The Children’s Health Insurance Program [CHIP] was created in 1997 as a joint federal-state program to provide health insurance to low-income children whose families are not eligible for Medicaid, but are too poor to be able to afford insurance.

It currently offers free or reduced-cost health care to nearly 9 million children, with some states taking the option under the law to cover pregnant women as well.

From its inception, CHIP has enjoyed “unusually strong bipartisan support,” yet this fall its funding fell victim to the other pressures on Congress, and “disagreements between the House and Senate over how to offset funds.” (Congress did not begin to start with the necessary legislation to renew its funding until October, although they have known for two years that funding was set to expire Sept. 30.)

A $3 billion stop-gap measure passed in December was supposed to keep the program alive until March 2018, but that is proving to be not true.

CHIP is an issue that affects all states, but some are running out of money more quickly. In November, Texas requested $90 million from the Centers for Medicare & Medicaid Services to keep its program running through February, and received $135 million in mid-December. Wisconsin (which by state law must continue coverage even if the federal government reneges) announced it would lose $115 million a year if Congress does not act. Pennsylvania only has enough funds to last until February, which will mean “176,000 children are going to be without health insurance.” (Notice all three examples are “Trump States.”)

The Trump Administration and many states are “fervently” searching for additional stopgap measures while waiting for Congress to address the funding issue.

However, with Congress having to return to the budget in January – as well as other “daunting” tasks such as budget caps, DACA, disaster relief, and now sexual harassment procedures – how will CHIP fare?

More to the point: How will CHIP be measured by those (such as Speaker Paul Ryan) who hope 2018 will be the year when entitlement reform is a priority?

Lots of people are worried about the future of CHIP, but only Congress can save it. Will they?

Be watching.

Want to know more?

Keeping track of how DC is changing health care is a full-time job. There are a number of resources I rely on, but none are more valuable to me than “The Health 202,” a Power Post from the Washington Post. It is written by Paige Winfield Cunningham and is exceptional. Here are some end of year examples I think you would enjoy:

I highly recommend you sign up to get Paige’s posts directly. (A “Sign Me Up” button appears at the end of each post I just listed.)

Sarah Fontenot is both a nurse and an attorney. Today, as a professional speaker, she travels the country, helping people understand how health care is changing and what it means for them as consumers. Visit her website.

CHIPping Away at a Long-Term Extension

(U.S. Congress) Permanent link

CHIP blog photoMore than 100 days have elapsed since the Children’s Health Insurance Program (CHIP) expired, and as yet there’s no deal to renew the program permanently, despite proclamations of its importance and feigned dismay at its lack of funding.

Lawmakers passed a continuing resolution, or stopgap spending bill, in late December before leaving Washington for the holidays. That continuing resolution expires Jan. 19, which coincidentally is when some states will get close to running out of funds, even though the short-term appropriation of $2.8 billion was intended to last through March.

The continuing resolution funds Texas’ CHIP program through March, with some contingency funding available after that should talks break down and progress screech to a halt. But 450,000 Texas children and pregnant women are counting on leadership in Congress to ensure contingencies do not need to be activated.

The recently passed Tax Cuts and Jobs Act, which in part eliminated the individual insurance coverage mandate, could drastically reduce the amount of funds needed for CHIP: A five-year extension will add about $800 million to the deficit, a significant reduction from the original $80 billion price tag. A 10-year extension would save roughly $6 billion, based on a new score from the Congressional Budget Office.

The complicated reasoning for the reduction follows several tracks:

  • States’ federal match rate would return to the level in place before the Affordable Care Act became law, from 93 percent to 69 percent, thus reducing expenditures.
  • Without individual mandates, premiums could go up, which would mean larger subsidy payments. Covering children and pregnant women in CHIP yields a larger reduction in spending related to marketplace coverage.
  • No CHIP funding, or even a reduction, could cause parents to cover their children through the marketplace, increasing federal spending.
  • Regulatory changes have made marketplace coverage for children more expensive, increasing federal spending.

All of this is to say that, essentially, the tax bill and regulatory changes have made marketplace coverage more expensive. Therefore, the federal government would spend less covering children and pregnant women through CHIP because of reduced expenditures on Medicaid and subsidies.

There is consensus among federal legislators to renew CHIP and optimism that full funding, instead of month-to-month piecemeal nickels and dimes, will happen in the very near term. 

The unknown is the vehicle:  

  • It could be a primary component of a continuing resolution due by Jan. 19, 
  • It could be a component of a full government budget if that budget is prepared by Jan. 19, or 
  • It could materialize as a stand-alone CHIP bill. 

TMA will continue to monitor the situation and let you know how you can help break any log jam.