The passage of Obamacare is perhaps the most important recent example. By CBO’s 2010 estimates, Obamacare authorized $940 billion in new spending to expand insurance coverage over its first ten years. Congress partly offset these costs with provisions for new revenue like the medical-device tax and the so-called “Cadillac tax” on expensive employer-sponsored plans. To make up the remaining difference, it relied on Medicare changes similar to proposals that had been considered previously in the Senate Finance Committee’s earlier draft of the legislation: changes to physician payments, cuts to Medicare Advantage, and new Hospital Insurance revenues. All told, the actuaries credited Obamacare with $575 billion in net Medicare savings — even as those savings were used to paper over the law’s new spending. These ten-year estimates have changed over time, as the law’s schedule did not provide for full implementation until several years into the initial ten-year budget window.
Five years into Medicare spending cuts that were supposed to devastate private Medicare options for older Americans, enrollment in private insurance plans through Medicare has shot up by more than 50 percent, confounding experts and partisans alike and providing possible lessons for the Affordable Care Act’s insurance exchanges.
But it is possible to predict that the slow death of Obamacare has become more likely. Most obviously, any premium increases within the exchanges can lead potential and current enrollees to direct their healthcare dollars elsewhere, perhaps by doing without any insurance at all or by signing up for Medicaid. Ironically, it will be hard to win these defectors back with advertisement or improvements in plan coverage, because these options are tightly constrained by Obamacare, which by design limits competition only to the choice of various care levels. Ordinary markets allow for innovation on all dimensions of service, and thus have a resilience that is all too lacking in Obamacare.
This session was especially helpful to congressional staff members new to the issue, but is also a useful review for anyone dealing with the Affordable Care Act (ACA). The briefing took place just as the second marketplace enrollment period ended and the Supreme Court heard oral arguments in a case challenging the law’s subsidies.
What are the key provisions of the ACA? How did the ACA extend coverage to the uninsured? How does the ACA impact private and public insurance coverage, marketplaces and employer-sponsored coverage? What is the role for states? What are the requirements on employers and individuals? How was Medicaid changed by the ACA and then the Supreme Court? How is the Children’s Health Insurance Program (CHIP) affected?
The Department of Health and Human Services (HHS) recently announced it will expand Value Based Payment (VBP) programs that currently account for 20 percent of Medicare payments to 30 percent by 2016 and 50 percent by 2018. While VBP is supposed to improve quality and lower costs by paying for the value and/or quality of services, rather than the volume of services, multiple studies, including some by HHS, show that VBP programs have not worked. In practice they place tremendous burdens on physicians and distort the physician-patient relationship. This flawed experiment will impact all Americans since Medicare is a benchmark for all U.S. health insurance.
Scott Becker, JD, CPA, publisher of Becker’s Hospital Review and chairman of the healthcare department at McGuireWoods, recognizes the serious outcomes the overhaul may have. “I think if this happens it will have a draconian effect on all small and mid-size hospitals, health systems and providers.” he says. “The largest providers, who can absorb the changes and take on population health, will fare fine. The small and mid-size providers will face further harm from such substantial changes in payment methods. They are already struggling to survive. Actions like this heavily favor the larger systems and are grist for more consolidation.”
Concerning HHS’ plan, Mr. Becker also says, “This may in part be a political salve aimed at getting more providers interested in a single-payer system — i.e. Medicare for all. Most mid-size and small providers would anticipate serious negative consequences from the approach set forth by CMS and might view a single-payer system as a good alternative to this. It reminds me of the old adage about hitting someone over the head. If you hit them for long enough, they say thank you for stopping here. This plan is another shot across the bow at smaller and mid-size providers of all types. They may just be thankful to stop being hit.”
“Measurement fatigue is a real problem in hospitals,” said Scott Wallace, a visiting professor at Dartmouth’s Geisel School of Medicine. “But, to me, the only metric that matters is, did you get better?”
As of last year, 33 federal programs asked providers to submit data on 1,675 quality measures, according to a government count. State, local and private health plans use hundreds more.
This year, many of the federal pay-for-performance programs carry financial penalties. Hospitals and doctors stand to lose millions in Medicare payments for missing filing deadlines or improvement benchmarks in programs that track hospital-acquired infections, readmissions and electronic-record use.
In all, about 80% of traditional Medicare spending is already tied to such pay-for-performance programs. HHS Secretary Sylvia Burwell said Monday the agency wants that to increase to 90% by 2018. She also set a goal of having 50% of Medicare spending in alternative payment models, in which providers are accountable for quality and the cost of care for groups of patients.