What You Missed Over the August Recess
In case you were out for some or all of the August recess, I’ve compiled a “Dirty Dozen” list of seven important stories you may have missed since the Senate adjourned in August – followed by five stories that I didn’t have a chance to send around over the break:
What You Missed Over Recess
Health Care Law Raising Costs; White House Response “Misleading”: Last week the Medicare actuaries released their updated projections for future health care costs through 2019 that reflect the changes made in the health care law. The Health Affairs article (subscription required) found that health costs would RISE about 0.2 percentage points per year more than they would if the law had not passed, leading health care spending to consume nearly one-fifth of GDP by 2019. When asked about the report at his news conference Friday, the President responded that “we knew that” costs would go up as a result of more individuals obtaining insurance – claims that an Associated Press fact check piece noted “were rarely heard” during the health care debate, when Democrats asserted their bill would reduce costs. A separate AP fact check piece released this morning called the Administration’s claims that spending per insured person would decline under the law “fuzzy math;” one math professor called the metric “a little misleading,” and Medicare actuary Rick Foster called the White House’s statistics “not meaningful.”
Impact on Premiums: The Kaiser Family Foundation’s annual survey of employer-provided insurance found that premiums rose by 5 percent for individuals and 3 percent for families last year. However, because firms are requiring their employees to contribute a greater percentage of premium costs, net premiums paid by employees rose by nearly 13% for families and 15% for individuals. Last week a Wall Street Journal report found that some carriers are raising their premiums by 5-7% to reflect the new mandates and costs imposed by the health care law. The Journal’s findings comport with a similar study of employers conducted by Mercer and released last week, which similarly found that the law’s many mandates will raise premiums by more than the 1-2 percent Administration officials have been claiming. However, the Journal article prompted Secretary Sebelius to send a letter to insurers attacking their “misinformation and unjustified rate increases.” In this context, it’s worth pointing out that during his presidential campaign, then-Senator Obama promised his health care plan would reduce premiums for family coverage by $2,500 – a claim the Administration has not made about the law in recent months.
Effects on Work: In its annual August update to the budget, CBO included a section (pages 66-67 of the PDF) outlining the health care law’s effects on the labor supply. Most notable was the conclusion that “the legislation, on net, will reduce the amount of labor used in the economy by…roughly half a percent, primarily by reducing the amount of labor that workers choose to supply.” At a time when economic growth remains weak, some may question the impact of policies in the health legislation that will discourage work – and according to CBO, will lead to about 750,000 individuals to stop working.
Liberal Groups Recalibrate their Health Care Pitch: A Powerpoint presentation prepared for Families USA and other affiliated liberal groups, and obtained by Politico, found that “straightforward ‘policy’ defenses fail to be moving voters’ opinions about the law,” and that voters were skeptical that the law will either reduce the deficit or help the economy. As a separate article noted, the slide show “stresses repeatedly [that] many are unaware that the reform has passed, an astonishing shortcoming in the White House’s all-out communications effort….The presentation also concedes that the fiscal and economic arguments that were the White House’s first and most aggressive pitch have essentially failed.”
Health Care Measure Remains Unpopular: The Kaiser tracking poll released in late August showed a significant uptick in opposition to the health care law, with approval falling by seven points and disapproval rising by ten points. Fewer than three in ten Americans (29%) believe the law will benefit them personally – a near-record low on that measure – and seven in ten (70%) Americans disapprove of the individual mandate, 52% strongly. For all these reasons, a Politico article last week noted that the only ads being run by Democrats regarding the health care law come from those House Members who opposed the measure – defying earlier predictions by Democrats that “those who voted against health care will find it a liability” by this November’s elections.
The “Stigma” of Enrolling Poor Americans in Medicaid: In a press release, Sen. Ben Nelson questioned budget estimates released by Nebraska’s Governor that assumed poor Nebraskans would drop their private coverage to enroll in Medicaid, because, in Sen. Nelson’s view, “private insurance generally is better than Medicaid, which also comes with a stigma for some.” According to the Medicare actuary, more than half of the individuals obtaining coverage as a result of the law – 18 million out of 34 million newly insured – will be enrolled in Medicaid. It’s also worth noting that individuals newly eligible for Medicaid under the law will be automatically enrolled in that government-run program, and will NOT be given subsidies to choose their own plan on the insurance Exchanges.
Reading the Bill a “Waste of Time”: At a town hall meeting in Libby, Montana, Finance Committee Chairman Baucus told his constituents “I don’t think you want me to waste my time to read every single word in that health care bill….It takes a real…real…expert to know what the heck it is. We hire experts.”
What I Missed Over Recess
Budget Chairman Dubious About Deficit Savings: At a debate in South Carolina last week, House Budget Committee Chairman Spratt acknowledged that the health care law’s supposed savings “may still be in doubt. ‘That may or may not happen, but those are the projections from CBO,’ he said.”
A “Complicated and Bewildering” System for Consumers to Navigate? In a New York Times blog posting, noted liberal economist Uwe Reinhardt said insurance brokers shouldn’t worry about losing their jobs as a result of the health care law, because “it’s a pretty safe bet that the state-based exchanges…will be so complicated and bewildering that the services of brokers will still be needed.” Remember however that CBO predicted administrative savings in the Exchanges would actually mitigate some of the law’s increases in premiums elsewhere – so if Reinhardt’s prediction is accurate, and the exchanges are administratively complex, consumers in the individual market could end up paying even more than the $2,100 increase in premiums CBO projected last November.
Primary Care Doesn’t Equal Better Care: The Dartmouth Atlas released a report last week that examined whether seniors in areas where more Medicare beneficiaries have at least one primary care visit per year received better care (e.g. mammogram every two years, eye exam for diabetics, etc.) The researchers ended up finding…nothing: There was virtually no correlation between increased primary care visits and better patient care. It’s an interesting finding, and one that casts doubt on whether programs like medical homes and accountable care organizations will automatically lead to improved patient care and outcomes.
Medicaid and the Emergency Room: A Health Affairs article (subscription required) examined the stresses on America’s emergency personnel: Emergency departments comprise only 4% of the American physician workforce, yet handle 11% of all ambulatory visits. One primary reason for this disparity can be found among Medicaid patients – more than half of all Medicaid patients’ acute care visits took place in the emergency room, with only about 5% taking place with specialist physicians. The lack of access to physician care (particularly medical specialists), and the reliance on the emergency room as a primary source of health care access, due to Medicaid’s low reimbursement rates was further emphasized by a paper released by the American Action Forum last week. Former CBO Director Doug Holtz-Eakin found that, because the health care law dumps another 18 million individuals into Medicaid without reforming that troubled program, more new Medicaid patients will flock to emergency rooms – resulting in an estimated 68 million emergency room visits (nearly 13 million annually), and increased costs to hospitals of $35.8 billion.
Patient Choice Improves Health Care Outcomes—Even in Britain: A National Bureau of Economic Research paper released last month (subscription required for off-Hill users) examined the impact of changes made several years ago to Britain’s National Health Service (NHS) that allowed patients to choose their own hospital. The results: “We find that the introduction of competition led to an increase in quality without a commensurate increase in expenditure” – because better hospitals attracted more patients, and “the increased competitive pressure led to improvements in quality.” The study calculated the changes creating patient choice and competition in the NHS saved an estimated 3,354 life-years and £227 million (about $350 million at current exchange rates). The study may come as a surprise to CMS Administrator Donald Berwick, who previously warned NHS officials: “Please don’t put your faith in market forces.”