Health Care Spending to Grow Even More Slowly

The Hill highlights a new report from PricewaterhouseCoopers showing that “medical inflation will likely fall to 6.5 percent next year — a 50 year low.”

“The rate of growth in healthcare costs slowed predictably during the recession… PwC’s Health Research Institute expects that trend to continue not only as the economy continues to improve, but after the healthcare law brings millions of uninsured people into the healthcare system, driving up demand.”

“It cited new penalties on hospitals whose patients must be readmitted soon after being discharged, as well as still-developing efforts to improve care coordination and efficiency. Slow growth is also being driven by changes in employer-based healthcare plans, which are increasingly shifting more costs to employees.”

Battle Over Medicaid Expansion Rages in Maine

Maine Gov. Paul LePage (R) vetoed legislation that would expand his state’s Medicaid program under President Obama’s health care reform law, “turning the focus back to majority Democrats to try and rally enough Republican votes to override it,” according to the Bangor Daily News.

“It passed in the House, 97-51, and in the Senate, 23-12. While both tallies included some Republican votes, they fell short of the two-thirds threshold needed to override LePage’s veto… In his letter, LePage warned lawmakers against accepting promises that the federal government will pay nearly all costs of expanding Medicaid over the next decade.”

Feds Absent on Oil Spill Health Issues

“Since 2010, at least three ruptured pipelines have spilled oil into U.S. neighborhoods, forcing officials to decide quickly whether local residents would be harmed if they breathed the foul air,” but InsideClimate News reports that “because there are no clear federal guidelines saying if or when the public should be evacuated during an oil spill, health officials had to use a patchwork of scientific and regulatory data designed for other situations.”

“Other federal guidelines limit the amount of benzene that manufacturing plants can emit, or set standards for transporting benzene on the nation’s highways… Without specific rules to help them, health authorities confronted with oil spills usually turn to these disparate guidelines and scientific studies to decide whether an evacuation is needed.”

“After oil spills, public health decisions usually fall to county or state officials. In Mayflower, those decisions were made by the Arkansas Department of Health (ADH), which set a benzene threshold of 50 ppb… InsideClimate News tried to compare that 50 ppb guideline with guidelines established by other agencies, but found that it was virtually impossible to make a direct comparison.”

Setting Up Obamacare Exchanges Comes Down to the Wire

“With the deadline for states to implement Affordable Care Act-mandated health insurance exchanges less than four months away… States are having to reevaluate their existing health insurance infrastructures to meet the act’s requirements,” the Washington Post reports.

“Several states — including California, Oregon and New York — have already set up exchanges, secured vendors, built system infrastructure and created Web sites to educate consumers. These states are now shifting their focus to developing marketing and outreach strategies for the new systems.”

“States that have opted to use federally provided health insurance marketplaces are still awaiting the exchanges, and concerns persist over whether these exchanges will integrate with state health and human service computer systems.”

Why Obamacare Should Cover Newly Documented Immigrants

Jed Graham explains the perverse incentives created by proposals to exclude undocumented immigrants who receive legal status under immigration reform from receiving health insurance subsidies through President Obama’s health care reform law.

“Both approaches would give employers a big incentive to hire legalized immigrants in order to dodge ObamaCare’s fines for failing to provide affordable, comprehensive health coverage to workers. That’s because such fines may be levied based on the number of full-time employees who actually get subsidized coverage via ObamaCare’s exchanges.”

“For each subsidized worker, many employers will owe a $3,000 nondeductible fine, which equates to $5,000 in wages for a profit-making firm that pays a combined 40% federal and state tax rate.”

Court Ruling Leaves Open Questions on Gene Patenting

In the wake of the Supreme Court’s ruling on patenting of genetic sequences, Francie Diep looks at what to expect in the world of genetic testing and patenting.

“Would-be competitors have some catching up to do… Myriad should have tons of data it’s collected from two decades of providing the testing almost exclusively… Opening up testing to more companies was one of the major reasons Myriad Genetics’ opponents had sued the company in the first place.”

“The human body doesn’t naturally make cDNA like the synthetic BRCA1 and BRCA2 that Myriad makes—but viruses are able to make cDNA. The Supreme Court ruling addressed this by saying that it’s a rare phenomenon. But how rare is rare enough? This issue may make its way to courts in the future… In addition, cDNA may not hold up to patent challenges in the future because the methods for making cDNA are well known and commonly used.”

Republicans Divided on Constituents’ Obamacare Inquiries

“People regularly call their representatives for help with Medicare, Social Security and other government programs,” but The Hill reports that some Republican lawmakers will not help their constituents with questions regarding President Obama’s health care reform law.

“Polls have shown that the public is largely ignorant about the law and how it operates… It also means that congressional offices — Republican and Democratic— are likely to face a slew of calls from people learning about their benefits for the first time.”

“A few GOP lawmakers said they are not preparing for a lot of calls, or haven’t thought about what to do. GOP leaders have not issued detailed instructions to their members on how to handle ObamaCare inquiries… There are some Republicans who plan to answer constituents’ questions, however.”

Does Health Care Uncertainty Boost Economic Growth?

Karl Smith has a counterintuitive argument that the political uncertainty surrounding President Obama’s health care reform law is actually raising economic growth compared to what it would be without such uncertainty.

“Some economists and politicians have pushed the idea that Obamacare is leading to increased uncertainty in the business world and that this uncertainty is preventing business leaders from investing… there is one sector in which this story makes sense and at least a casual look at the data supports it – that is health care itself… look at health care equipment. Nice steady growth until a swoon from 1992 until 1995. Then rapid growth until around 2007. Note that the spending slowdown here predates the Great Recession.”

“A story here is that the swoon in 1992 and the stagnation after 2006 were both caused by political uncertainty… The government began talking about the need to reign in health care costs. Providers got nervous and reduced investment. This in turn slowed the growth of health care costs. Slower health care inflation caused the overall inflation rate to fall and the Fed responded by reducing interest rates and increasing investment in structures and transportation equipment.”

Medicaid Fight Heats Up in Mississippi

Sandhya Somashekhar highlights a brewing fight over Medicaid in Mississippi that is putting the state’s entire program at risk because of disagreement over the Medicaid expansion in President Obama’s health care reform law.

“State law requires that the legislature reauthorize Medicaid annually, and because it has a tax component, it needs the support of three-fifths of both chambers. This usually happens without fanfare. But Democrats in the House rejected the reauthorization bill. Their objection? Republicans will not permit a debate on expanding Medicaid under the health law.”

“The governor has said that he hopes to hold a special session later this month to reauthorize Medicaid, and that he believes he has the power to run the program himself if the legislature does not.”

Arizona Approves Medicaid Expansion

Arizona’s state legislature has approved the Medicaid expansion in President Obama’s health care reform law after a lengthy standoff with Gov. Jan Brewer (R), reports Reuters.

“Brewer, a staunch conservative in this desert southwestern state, has said Arizona had no choice but to agree to provide care to 300,000 poor and disabled residents through the federal-state program. She said the decision would also protect rural and other hospitals from being jeopardized by the rising costs of paying for uninsured patients, inject $2 billion into the state’s economy and create thousands of jobs.”

Bloomberg: “The move will let the state restore Medicaid to childless adults living in poverty, who were covered until 2011, when lawmakers froze enrollment. It also will ease a rising burden on residents whose insurance rates help pay for the care hospitals give to the uninsured.”

Medical Students Face Uncertain Future

“Another 32 million Americans are projected to enter the health care market under ‘Obamacare,’ just as the first wave of baby boomers hits 65, the age at which the demand for health care surges. At the same time, many baby boomer doctors will begin to retire. The result is predicted to create a gaping national physician shortage,” according to the Washington Times.

“The most pressing question is whether there will be enough residency slots to accommodate the growing influx of medical students. A medical school graduate is required to complete a hospital residency before practicing medicine, but training positions funded by Medicare have been capped since 1997.”

“Those who do find residency slots could be practicing medicine in a very different environment from previous generations. Caps on Medicare reimbursements, combined with increases in paperwork, are expected to accelerate the trend of doctors working on salary for large hospitals rather than as independent practitioners.”

Health Care Industry is Becoming Too Concentrated

The New York Times looks at how consolidation in the health care industry is a major factor in the growth of health care spending.

“The Obama administration is betting heavily on waste control to address the problem… What is missing from the stampede of policy innovation is something to tackle one of the best-known causes of high costs in the book: excessive market concentration… If there is one thing that economists know, it is that market concentration drives prices up — and quality and innovation down.”

“The Affordable Care Act could help reduce prices… But some provisions of the health care overhaul are potentially troubling… accountable care organizations may prove anticompetitive. Merger activity has jumped in anticipation of the law’s coming fully into effect.”

Obamacare Brings Hospital Savings, Better Care

Bloomberg examines how “hospitals are improving care and saving millions of dollars with one of the least touted but potentially most effective provisions” of President Obama’s health care reform law: Accountable Care Organizations.

“Under the program, hospitals and physician practices take responsibility for tracking and maintaining the health of elderly and disabled patients. If costs rise beyond an agreed upon level, hospitals may become responsible for reimbursing the government. If they cut the cost of care while maintaining quality, hospitals share in the savings.”

“Medicare’s accountable-care program requires hospitals and doctors to show they are improving or maintaining the quality of their care before they are paid any bonuses… More powerful technology will also help. And unlike in the ’90s, today’s programs are backed by a new law.”

Fight Begins Over Chemical Safety Rules

An effort to update the rules governing chemical safety after nearly 40 years has run into the usual Washington gridlock, according to The Hill, noting that “environmental and health advocates say the legislation does not go far enough, while other groups and members of the industry hail it as a breakthrough.”

“The bill would require that chemicals are classified as either a high or low priority. High priority chemicals would have to be evaluated by the Environmental Protection Agency (EPA), which could take action if a substance is found to be unsafe.”

“The lawyers claim that the legislation requires the EPA to justify new safety tests and makes it difficult to prove that they are dangerous, while offering protections for chemical companies… Former EPA officials in charge of toxic chemicals have endorsed the measure in recent weeks, as have the Environmental Defense Fund and the Humane Society.”

Obama Drops “Plan B” Court Fight

The Obama administration has dropped its appeal in the case that eliminated age restrictions for purchases of the “Plan B” emergency contraceptive, opening up sales of the morning after pill to women and girls of any age without a prescription, the Washington Post reports.

“President Obama has not changed his position and still opposes over-the-counter access to emergency contraceptives for young girls… But the Justice Department decided to drop the case after multiple setbacks in federal courts in recent months.”

Emily Bazelon: “Science for once wins over politics.”

Chart of the Day

– Matthew Yglesias pulls out these charts from a report by the Center for American Progress “showing that the medium-term debt and deficit projects look very different in the spring of 2013 than they did back in 2010 when the ‘pivot’ to deficits began.”

“But the point is that the actual deficit and debt situation is totally different from the situation that obtained at the time the Simpson-Bowles Crew was first unleashed upon the universe, and yet the political dialogue on the subject doesn’t seem to have changed at all… because the elites steering the discourse don’t care, even slightly, about deficits or debt.”

“And guess what we haven’t done during this era of changing projections? We haven’t cut Social Security benefits. We haven’t raised the age at which people become eligible for Medicare. We’ve done things to reduce budget deficits, in other words, but we haven’t really acted to make it tougher for people to retire.”

Feds Get Better at Stopping Medicare Fraud

USA Today looks at a major jump in the policing of Medicare fraud, after the government “revoked the ability of 14,663 providers and suppliers to bill Medicare over the past two years — almost two and a half times the number that had been revoked in the previous two years.”

“A key part of the anti-fraud effort…includes a new, easier-to-read summary statement that allows recipients to see exactly who has billed Medicare with their identification numbers… During the past four years, the government has recovered $14.9 billion in Medicare fraud money, due in large part to the 2010 health care law.”

“The law allowed the government to analyze data to spot indications of fraud and stop paying providers… all providers had to go through a reapplication process to participate in Medicare. Those who didn’t meet a requirement, had felony convictions, had incorrect addresses or who weren’t properly licensed are no longer allowed to bill Medicare.”

Obamacare Reduced Individual Insurance Market Premiums

A new analysis by the Kaiser Family Foundation shows that the medical loss provision of the President Obama’s health care reform act, which requires insurers to spend 80 percent of premium dollars on health care and quality improvement expenditures in the individual and small group markets or pay a rebate to customers, has already produced lower premiums.

“If insurers’ preliminary estimates hold true, this year’s rebates (at a total of $571 million across all markets) are expected to be about half the amount of last year’s $1.1 billion in insurer rebates. Smaller rebates, however, are not an indication that consumers are now saving less money as a result of the MLR provision, but rather that insurers are coming closer to meeting the ACA’s MLR requirements and that this provision is having its intended effect of consumers getting more value for the money they spend on premiums.”

Court Allows Broader “Plan B” Access

The Second Circuit Court has ordered the federal government to allow women of all ages to purchase the two-pill version of the emergency contraceptive “Plan B” without a prescription, but will continue to study whether to broaden access to the one-pill version on an expedited basis, reports Lyle Denniston.

“Senior U.S. District Judge Edward R. Korman of Brooklyn, New York, had ordered the Obama administration to lift all restrictions — age and at the retail counter… The Second Circuit motions panel…turned down the government’s plea to block all of Judge Korman’s order.  Instead, it refused to block access to the two-pill variety, while blocking access — except as allowed by the current FDA policy — to One-Step.”

Sarah Kliff: “This is not a ruling on the merits of the case, but rather a decision on whether to drop age restrictions before issuing that ruling. We don’t quite know what the practical impact of this is yet, either.”

Rejecting Medicaid Expansion is a Rational Choice

While research indicates that under current policy it makes fiscal sense for states to expand Medicaid under President Obama’s health care reform law, Tyler Cowen explains why rejecting the expansion and the accompanying federal dollars is still a sound fiscal decision.

“States don’t want to be left holding the bag, and governors know it is hard to take back benefits once granted… The chance to jump on the Medicaid expansion bandwagon won’t go away tomorrow. Even if the cost-benefit ratio > 1, you still might want to play wait and see. There is even a chance that in the meantime you are somehow offered a better deal yet.”

“Now if someone wants to argue that, given these considerations, Medicaid expansion still makes financial sense for a state, fine, I would be keen to read such an analysis. But that is not what I am seeing… Governors are not stupid, or their chiefs of staff are not stupid, and many governors are far less ideological than they let on. They are politicians. And they are politicians who understand that the federal government is not to be trusted and yes if you wish you really can blame that on the Republicans, or indeed on any prospective switch of power. That is why we are not seeing more states do the Medicaid expansion. In the meantime, the debate needs to catch up to the reality.”

Why the Tax on “Cadillac” Insurance Plans is Great Policy

The forthcoming tax on so-called “Cadillac” insurance plans is, according to Charles Lane, one part of President Obama’s health care reform law ” that liberals, conservatives and everyone in between should be able to agree on.”

“Nearly half of Americans get health insurance through their employers; a tax exclusion for its value encourages businesses to provide coverage… The ideal solution would be to eliminate or sharply reduce this tax exclusion… What survived was a 40 percent tax on the value of an employer-provided health plan that exceeds $10,200 for individuals and $27,500 for families. When the tax goes into effect in 2018, it will hit 16 percent of employer-paid plans.”

“Anticipating the tax, some companies are adjusting coverage now. More are offering employees higher-deductible plans and other incentives to economize, a trend that may be contributing to the overall slowing of health-care inflation… That’s basically good news.”

Rejecting Medicaid Expansion Will Cost States More

The Hill highlights a new study by the Rand Corporation finding that “states that reject the Medicaid expansion will end up paying more for healthcare coverage than states that participate — and covering far fewer people.”

“Together, 14 states that have rejected the expansion will spend $1 billion more on uncompensated care than they would under the expansion, and they’ll lose out on $8.4 billion in federal payments… The 14 states included in the Rand analysis are also passing up a chance to cover 3.6 million uninsured people.”

Blame Democrats for Obamacare’s Funding Problems

Tim Kane: “Isn’t it strange that the Affordable Care Act was advertised as ‘shrinking the deficit’ back in 2010 because its fiscal outlays were so efficient, but now proponents are complaining that it’s not their fault the bill doesn’t have enough funds for implementation? How can you launch a project under the banner of cost efficiency and neglect an entire component of its cost structure?”

Is Entitlement Growth a Problem?

After last week’s report on Social Security and Medicare spending, Paul Krugman says that “the data suggest that we can, if we choose, maintain social insurance as we know it with only modest adjustments.”

“The latest projections show the combined cost of Social Security and Medicare rising by a bit more than 3 percent of G.D.P. between now and 2035, and that number could easily come down with more effort on the health care front. Now, 3 percent of G.D.P. is a big number, but it’s not an economy-crushing number. The United States could, for example, close that gap entirely through tax increases, with no reduction in benefits at all, and still have one of the lowest overall tax rates in the advanced world.”

But James Hamilton notes that the idea that Social Security and Medicare trust funds are “adequately funded” is off the mark.

“The Social Security trust fund ended 2012 with $2.6 trillion in assets… But the $2.6 T in current assets consist of nothing more than a big I.O.U. from the U.S. Treasury to the Social Security trust fund… Taxes will have to be raised, other programs cut, or the Treasury will have to borrow more from the public in order to deliver the funds that Social Security is assuming it’s going to be receiving from the Treasury between now and 2035.”

Choice Delayed for Obamacare Small Business Exchanges

Sarah Kliff reports on the latest development in the implementation of President Obama’s health care reform law: small business employees will not be able to choose their own health insurance plans for a year longer than expected.

“The final regulation is essentially the final word; it means that in 2014 many small businesses will need to choose one insurance plan for their employees, rather than leave the decision to workers… The ‘many’ in that sentence is important: The federal government’s rule applies only to the 33 states where HHS has a hand in running the exchanges. In the 17 state-run marketplaces and the District of Columbia, governments are free to move ahead with an employee choice model. Some, like Connecticut’s exchange, have already announced plans to do so.”