Entries Tagged as 'Medicare'

Here’s How To Get To A Debt Ceiling

June 27th, 2011 at 2:31 pm 7 Comments

The theatrics of the past two weeks aside, click the wink and the nod seem to be already communicated as the President, remedy the Speaker of the House, sale and the Senate Majority and Minority leaders begin the next phase of the drama.

Both sides have now solidified their bases in Congress.  “No new taxes” now balances “The end of Medicare as we know it.”  Neither will happen to any significant degree and the press releases for back home can be written well in advance.

The question arises, then, if the negotiations ignore 70 percent of the problem, what kind of deal could pass muster with a majority in both the House and Senate?

Here’s the dirty little secret—it isn’t that hard to meet the targets set out by either side.

Let’s start with the basics.

To get a debt ceiling increase that will take Congress and the Administration beyond the November, 2012, elections, requires approximately $2.4 trillion.  Speaker Boehner has declared that he wants that much in spending restraint, dollar for dollar.

Selected leaks from the now-defunct Biden meetings crowed about getting as much as $2 trillion.

Can either target be met without confronting the underlying structural changes in entitlements that would truly change the debt trajectory?


Here’s a “back of the napkin” plan to reach the Speaker’s goals and not harm entitlements.

A—accept approximately $1.1 trillion in defense savings over the 10-year period by simply counting the money that will be saved as we draw down troops from Iraq and Afghanistan.

B—freeze non-defense, domestic appropriated accounts for five years, saving $400-$500 billion.

C—make minor changes in small entitlements like agricultural subsidies, change the Cost-of-Living index used to calculate increases in various federal programs, and allow many of the openings in the federal work force the next decade to go unfilled, saving another $100-$200 billion.

D—accept a freeze on new defense spending, outside the troop drawdown savings, for enough time to get $300 billion.

E—close a couple of tax loopholes—like the ethanol subsidy, some of the “tax extenders” for special purposes, and remove the mortgage interest deduction entirely for second homes—and save another $600 billion over the decade.

F—finally, add to these savings the amount of federal interest payments that such savings would produce, another $300-$400 billion.

Lo and behold, you’ve done it.   These changes from the Congressional Budget Office current policy baseline for the next decade amount to even more than $2.4 trillion.  And, better yet, the savings from “cuts” in programs outweighs the new revenues from loophole closings by about three to one.  That is another stated goal of whatever package emerges.

Republicans get to claim that they held on “no new taxes.”

Democrats get to shout that they kept “hands off our Medicare and Social Security.”

And both sides can do all this without having to reduce Medicare payments to doctors, or to expand the reach of the Alternative Minimum Tax (AMT), or to reform almost anything of significance.  Better, if the 113th or 114th Congress confronts a serious international challenge, those folks can always increase defense spending as needed.  One Congress cannot bind another—a basic law of legislation.

No one will notice, except for budget geeks and some cranky media types, that the total indebtedness of the federal government will total $23 trillion ten years from now.  This means that the $2.4 trillion in savings barely achieves 10 percent of anticipated debt.  Worse, such a deal allows Medicare, Medicaid and most other entitlements to continue to climb without restraint.

Why does this outcome seem probable?  Because we have been down this road before.

In the Reagan years, Congress promised a package of deficit cuts that would be three-to-one spending changes compared to tax changes.  When all was said and done, and we looked back a couple of years later at our handiwork, much more was said than done.  The package never achieved three-to-one spending versus taxes and deficits barely budged from projections.

Yes, the package may contain serious process reform and enforcement mechanisms that promise to save more in the future.  But such an outcome will hardly satisfy those who want real fiscal reform and real stabilization of the federal debt.

Kicking a can down the road really is fun.  You watch kids do it all the time.

Gingrich Was Right About Ryan Plan

June 24th, 2011 at 11:41 am 11 Comments

Americans want the deficit reduced, prostate but they aren’t so keen on Paul Ryan’s medicare plan. A new Bloomberg Poll finds that Americans by a 57 percent to 34 percent margin say that they will be individually worse off if Paul Ryan’s Medicare Plan became the law.

The poll reveals trends that pose particular problems for GOP presidential candidates. On one hand, hospital voters consistently say they want the deficit addressed. However the poll also show that 58 percent of independent voters said they would be worse off under the Ryan Plan.

This is a very serious problem: the Ryan budget plan specifically lays out a way to draw down the nation’s debt. But if the elderly and large numbers of independents both oppose the plan strongly, clinic supporting the Ryan plan could singlehandedly drive a candidate out of contention.

What is perhaps most ironic about the results of this poll is that it shows that Newt Gingrich was right about the Ryan plan.

If you remember, Gingrich took heat for his Meet the Press statement, “What you want to have is a system where people voluntarily migrate to better outcomes, better solutions, better options, not one where you suddenly impose it. I am against Obamacare imposing radical change, and I would be against a conservative imposing radical change.”

Gingrich was compelled to apologize. But it turns out Gingrich hit the nail right on the head: Americans do think Ryan’s plan is radical.

Follow Jeb on twitter: @JGolinkin

GOP Must Call Democrats’ Bluff On Medicare Cuts

June 23rd, 2011 at 11:13 pm 26 Comments

Eric Cantor’s withdrawal from the debt talks with Joe Biden may be dominating the headlines for now but, there in the long run, it may not matter much.

More negotiations, probably between President Barack Obama and Speaker of the House John Boehner, will take place and, unless both parties have a death wish, default on the debt isn’t going to happen. (Both parties may resign themselves to a variety of face-saving short-term extensions until the 2012 elections.)

The bigger news — which is pretty meaningful — is that Democrats have apparently floated real short-term cuts in Medicare before talking ended.

If the offer is something more than a political bluff (and that’s what I suspect it is), it’s hugely important.

The cuts the Democrats may have suggested — cuts to provider reimbursements –  are the right ones. Medicare, as the largest medical payer in the country by a large margin, undergirds a medical system that pays workers, regardless of education, job title, or background, more than their counterparts in any other sector the Bureau of Labor Statistics tracks.

Controlling overall costs is going to require controlling labor costs and that, in turn, is going to require medical providers to be more productive or work for less. And cutting reimbursements to providers, if done correctly, won’t necessarily result in much that patients will notice: as much as doctors may complain about it, few are going to stop taking Medicare patients.

Furthermore, provider cuts could take place right away: For all its merits, the Ryan Plan isn’t nearly as much a small government manifesto as many of its acolytes think.

Nearly all of its meaningful Medicare cuts take place well in the future and, if history is any guide, would probably be repealed before taking effect even if they somehow pass into law. (Medicare cuts almost always have.)

Cuts to Medicare provider reimbursements now will take force now ad cut the deficit now. These types of painful but necessary short-term cuts, furthermore, are exactly the ones Republicans will have to go for if they actually want to reduce the deficit without raising taxes.

Although it may seem like good politics to let Democrats propose these types of cuts first–and then as part of a deal that also includes tax increases — it does draw GOP political courage into question.

Even though there are plenty of good reasons to think that the offer is insincere, it may give the Democrats an upper hand in trying to show that Republicans are unreasonable. If Republicans are serious, they need to call Democrats’ bluff and propose even deeper cuts in Medicare and probably Social Security too.

Bitter medicine? Yup. But necessary.

Hospitals: The New Teachers’ Unions?

David Frum May 31st, 2011 at 8:26 am 18 Comments

Are hospitals the new public-school teachers’ unions?

From the New York Times today:

More generally, [hospitals] are apprehensive about Medicare’s plans to reward and penalize hospitals based on untested measures of efficiency that include spending per beneficiary.

A major goal of the new health care law, often overlooked, is to improve “the quality and efficiency of health care” by linking payments to the performance of health care providers. The new Medicare initiative, known as value-based purchasing, will redistribute money among more than 3,100 hospitals.

Medicare will begin computing performance scores in July, for monetary rewards and penalties that start in October 2012.

The desire to reward hospitals for high-quality care is not new or controversial. … However, adding in “efficiency” is entirely new and controversial, as no consensus exists on how to define or measure the efficiency of health care providers.

One of the truest and most powerful conservative ideas of the 1980s and 1990s was to stop measuring our commitment to “education” by measuring “inputs” (spending per student, class-size)  and instead to measure “outputs” (student learning). Schools and teachers resisted, but were rightly over-ruled. Now the country is heading to a re-enactment of this debate with health. Here’s hoping that Republicans can overcome both political opportunism and also the temptation of donations from the hospital industry and again adhere to the right side of the issue.

NY-26′s Biggest Loser: Medicare Reform

May 25th, 2011 at 11:53 pm 41 Comments

As a life-long Democrat, case I should be celebrating the victory of Kathy Hochul in Tuesday’s special election for the U.S. House of Representatives. And the excitement I feel should be boundless, considering my background as a Democratic operative, including stints as executive director of two of my party’s three major campaign committees (the DNC and the DCCC).

But truth be told, my sense of partisan satisfaction is tempered considerably by what I fear will be the major outcome from yesterday’s results: Hanging any notion of Medicare reform around the necks of Republican candidates will be virtually the entire Democratic playbook in the 2012 Congressional and Senatorial campaigns. The voters’ verdict in the New York 26th race almost ensures that serious discussions about essential entitlement reform are likely to be kicked down the road once again.

Republicans demagogued health care reform relentlessly and shamelessly in the run up to the 2010 midterm elections, and it worked for them. Democrats will do the same on entitlements between now and November of next year, and odds are it will work for them—they will pick up seats as a result.

The list of losers in yesterday’s special election starts with the Republican nominee, Jane Corwin, but House Republicans who embraced Budget Chairman Paul Ryan’s ideas about radical changes to Medicare certainly share that dubious distinction. However, other losers may also include those Democrats, such as Senators Mark Warner (VA), Dick Durbin (IL), and Kent Conrad (ND), who have been trying to nudge their colleagues toward budgetary discipline and fiscal reforms of some sort. They know, as does anyone who is paying the slightest bit of attention, that our current policies and practices—be they spending or revenues—are unsustainable.

Conservative Republicans and Tea Party adherents seem determined to repeal or alter in fundamental ways major sections of the social contract that evolved in the U.S. during the 20th century; the great majority of Democrats—most certainly including its left-leaning base—are committed to resisting such initiatives  as vigorously and as long as they might have to.

However, there are some Democrats—and I put myself in this category—who realize that specific elements of that compact are going to have to be renegotiated and recalibrated. What made sense in the mid-1930s (a retirement age of 65, for example), may no longer work. The current “fees for service” system upon which Medicare is based also will require reform. Paul Ryan’s vouchers may not be the answer, but neither is inaction.

My worry is that important and ultimately inescapable facts and their ramifications may already have been lost among the empty champagne bottles and sparkling confetti of last night’s Democratic victory party. If so, we’re all going to be worse off as a consequence.

Conservatives Scramble To Explain NY-26 Loss

May 25th, 2011 at 12:50 pm 53 Comments

Yesterday the GOP lost an important race in NY-26 when Democrat Kathy Hochul defeated Republican Jane Corwin.  Conservatives are already offering excuses minimizing the importance of this loss. Here are a few of the new ones hitting the blogosphere and talk radio:

Excuse #1: Blue collar voters are easily scared by Democrats. This argument was made by Henry Olsen from the National Review who argues that blue collar voters respond differently to GOP tactics and that “they are also susceptible to the age-old Democratic argument that the secret Republican agenda is to eviscerate middle-class entitlements to fund tax cuts for the wealthy. The truth is, if conservatives and Republicans are to move forward with entitlement reform (as they should), they need to address the real concerns of these pivotal voters.”

Excuse # 2: New York Republicans are way worse than the rest of the party. Erick Erickson was quick to subscribe to this belief. “The truth of the matter is that the Republican Party of New York sucks and has sucked for a while. It is especially terrible at special elections where the out of touch party leaders pick state legislators who everyone hates and runs them”. So, naturally, this loss means nothing.

Erickson later revised his stance and blamed the press, bringing us to excuse #3: media bias. “The press’s ready willingness to believe Democrat spin is yet again driven home this morning by the Republican loss in New York last night,” Erickson said. “Immediately, the press was adopting Democrat spin that this was all about Medicare.”

Excuse #4: Chris Lee’s Craigslist scandal made the GOP loss inevitable. John McCormack from the Weekly Standard writes that the fact that this loss was “precipitated by Republican congressman Chris Lee’s Craigslist sex scandal and ensuing resignation” means that the Democrat win is not “all that impressive or significant”.

Excuse #5: Tea Party candidate Jack Davis split the Republican vote, making a win impossible. W. James Antle III says at the American Spectator, “Unless the “Tea Party” independent is a total non-factor, reading too much into this race would be like exaggerating the impact of the Djou race in Hawaii last year”.

Excuse #6: You can’t read too much into one district. Philip Klein from The Washington Examiner cautioned that “at the end of the day this is just one data point in a single Congressional district out of 435. So it would be silly for Republicans to panic suddenly flee from the Ryan plan.” Don’t give up hope – there are still 434 more chances for the win.

On his show today Rush Limbaugh introduced excuse #7: voters are easily confused. “What happened here is the Republican tea party candidates got confused … and bought the notion that this was a genuine tea party candidate running in NY, ” he said. “The voters actually thought they were voting for something other than what ended up happening.”

Why Voters Aren’t Buying the Ryan Plan

David Frum May 25th, 2011 at 9:15 am 34 Comments

A footnote to the above posting regarding the Ryan budget plan.

The Ryan plan does maximum damage to Republicans because of its insistence on treating entitlement reform and tax reform as two tightly associated problems, rather than two separate issues to be handled at two separate times.

Ryan’s plan cuts the top rate of personal and corporate income tax from 36% to 25% with promises of offsetting revenue raisers to be determined later.

Because Ryan’s tax cuts were specific and his promises of revenue-raising reform ultra-vague, he had no defense to the attack that his tax reform involves massive downward redistribution of the tax burden. And after all, it’s hard to imagine what tax enhancements would counteract the distributional effect of a cut in the top rate of income tax from 36% to 25%. Ending the mortgage interest deduction for mortgages of between $417,000 and $1,000,000 (a good idea!) would not do it. Ending the deductibility of state and local taxes (another good idea) would not do it. A carbon tax (good idea again) for sure would not do it. Ditto a VAT. All of those measures would be good ways to raise additional revenues while leaving the current rates in place. But as offsets to a huge upper-income tax cut, they look like a shift of the tax burden from the upper class to the more affluent parts of the middle class at the same time as the rest of the Ryan budget removes Medicare coverage from the more affluent parts of the middle class – and leaves the remainder of Medicare very probably increasingly inadequate even for poorer Americans.

The one thing that might have enhanced the attractiveness of the Ryan Medicare plan is some kind of assurance of adequacy of the future Medicare vouchers for Americans under age 55.

Remember, under the Ryan plan, not only are Medicare vouchers means-tested, but they are also scheduled to grow in value at a deliberately slow pace. Today’s 40-somethings have good reason to fear that the vouchers will prove inadequate when it comes their time to retire.

Those fears could be allayed to a certain degree if Republicans would support any of the various initiatives to weaken the pricing power of healthcare providers. Some of these initiatives are included in the Affordable Care Act, others are still kicking around the think tanks. But no. Republicans condemn almost all of them as just so many variations on the death panel theme. The result: CBO projects that by 2030 the Ryan vouchers would cover only about 30% of the cost of an insurance policy equivalent to Medicare as it now exists.

And we’re going to ask Americans to vote for that? That’s the thinking that brought us Goldwater in 1964. “You’ll eat your canned peas, goddamnit, and tell us you like them!”

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Paul Ryan: 2012′s Goldwater?

David Frum May 25th, 2011 at 8:41 am 47 Comments

I used to worry that Sarah Palin would be the Barry Goldwater of 2012. My bad. Paul Ryan is the Barry Goldwater of 2012.

The Goldwater effect continues on this morning after the NY-26 debacle. Henry Olsen of AEI, as smart a political numbers guy as can be found on the political right, crunches the numbers to compare the performance of the 2011 special election candidates with the district-wide performance of all other GOP and Democratic candidates in 2010. He finds:

  • Republican congressional candidate Jane Corwin is running 18 points behind the worst-performing Republican of 2010
  • Democrat Kathy Hochul is running even with Barack Obama’s performance in the district in 2008 – the best Democratic showing in NY-26 in three decades.
  • The Republicans suffered their worst losses in the least-educated portions of the District, where former GOP voters seem to have deserted the party for an independent candidate, Jack Davis.

What should make this race all the more alarming for Republicans is that NY-26 turned into a referendum on the Ryan plan for Medicare. As Henry Olsen says:

blue-collar voters react differently to issues than the GOP base does. They are more supportive of safety-net programs at the same time as they are strongly opposed to large government programs in general. These voters crave stability and are uncertain of their ability to compete in a globalized economy that values higher education more each year. They are also susceptible to the age-old Democratic argument that the secret Republican agenda is to eviscerate middle-class entitlements to fund tax cuts for the wealthy.

The Ryan budget is uniquely vulnerable to that attack because it fuses very tough Medicare reforms with big tax cuts in the same document.

The political dangers in the Ryan budget could have been predicted in advance. In fact, they were predicted in advance – and widely. Yet the GOP proceeded anyway, all but four members of the House putting themselves on record in favor. Any acknowledgment of these dangers was instantly proclaimed taboo, as Newt Gingrich has painfully learned. Bill Kristol and Charles Krauthammer have enthusiastically promoted Paul Ryan as a presidential candidate. And this morning, as the reckoning arrives, the denial continues. Here’s Jonah Goldberg in a column arguing that “perhaps the only guy who can explain the GOP budget should run.”

In reality, Ryan is very unlikely to accept this draft. He declined the opportunity to run for US Senate in Wisconsin, likely because he sensed he could not win a state-wide election in which his budget would be the main issue.

Now we’re likely headed to the worst of all possible worlds. The GOP will run on a platform crafted to be maximally obnoxious to downscale voters. Some may hope that Tim Pawlenty’s biography may cushion the pain. Perhaps that’s right, at least as compared to Mitt Romney, who in the 2008 primaries did worst among Republicans earning less than $100,000 a year. And yes, Pawlenty is keeping his distance from the Ryan plan. But biography only takes you so far. The big issues of 2012 will be jobs and incomes in a nation still unrecovered from the catastrophe of 2008-2009. What does the GOP have to say to hard-pressed voters? Thus far the answer is: we offer Medicare cuts, Medicaid cuts, and tighter money aimed at raising the external value of the dollar.

No candidate, not even if he or she is born in a log cabin, would be able to sell that message to America’s working class.

Medicare Fix Must Include Means-Testing

May 25th, 2011 at 12:56 am 32 Comments

The Democrats may have picked up a seat in New York by running against Paul Ryan’s Medicare reform proposals. Anyone who is honestly contemplating Medicare’s future though must admit that controlling the program’s costs must include some level of means-testing.

Up to now, Democratic leadership has been adamant about denying the necessity for means-testing, clearly for reasons of partisanship and ideology. Can anyone deny the absurdity of the millionaires and billionaires the president is so fond of targeting receiving the same health insurance subsidies as the retired domestic worker? Now however, some Democratic leaders have come to see the foolishness of their pose: Minority Whip Steny Hoyer has even acknowledged the need for a new approach at his last weekly briefing.

This new reality raises the question about how one would go about operationalizing means-testing of Medicare. This is not easy. Medicare now pays 80% of an established physician fee schedule which is based on valuing the work and overhead costs associated with thousands of physician-delivered services. Physicians submit codes and Medicare sends them a check. How could this system be converted into a means-tested process?  Each individual could have a different co-pay level, but who would monitor that variable? Would physicians have to go to some central database to identify each patient’s co-pay?  Suppose a patient’s economic status changed. How would a new level of individual co-pay be known to the physician? Clearly this solution would be unworkable.

Another approach would be a tax refund based on medical expenses for the preceding year. But that approach would depend on the IRS tracking a patient’s net worth each year and also tracking the legitimacy of any medical claims. It would destroy any notion of the privacy of medical data and create a huge new level of data assessment for the IRS. In essence, the IRS would become a health insurance claims company.

Finally, the approach could be to simply raise the premium that affluent seniors must pay monthly for Medicare Part B  (the physician component of Medicare). Currently, the premium is about $120 per month. While it may be necessary to pursue this solution, it would require a very large premium (really a tax increase) of, say, $500 to $1000 per month. This approach will not do anything to constrain health care costs in Medicare and will be enormously controversial. Many would rather shop for a high deductible insurance plan than pay such expensive premiums.

The only simple approach to this problem is actually the Paul Ryan proposal for utilizing the insurance industry to handle Medicare claims through its current infrastructure. This way, individuals would purchase their insurance using vouchers whose value would be based on a yearly assessment of an individual’s net worth or income.  Ryan has emphasized the means-testing of his approach but this point has been overshadowed by demagoguery about the overall proposal.

The administrative advantage of utilizing a voucher system to allow an efficient approach to means-testing is still a relatively minor benefit of managing Medicare through health insurance companies.  These companies now have the infrastructure to implement many of the reforms that Obamacare hopes to only study in the years beyond 2014. Take, for example, the Accountable Quality Contract (AQC) implemented by Blue Cross/ Blue Shield in the home of Romneycare. The AQC is a modified global payment model, designed to encourage cost-effective and patient-centered care by paying participating physicians and hospitals for the quality, not the quantity of the care they deliver. This model delivered impressive improvements in care as reported by BlueCross BlueShield of Massachusetts:

For preventative care measures like cancer screenings and well-child visits, the rate of improvement in AQC groups’ performance was three times that of non-AQC groups, and more than double the AQC group’s own improvement before joining the AQC.

For chronic disease care measures such as management of diabetes and cardiovascular disease, among the most costly and prevalent chronic care conditions, the AQC groups’ rate of improvement on screening and monitoring measures far exceeded those of physicians not in an AQC contract. In year one of the contract, AQC organizations made gains on these measures at a rate more than four times what they had been accomplishing before the contract.

On clinical outcome measures, many AQC group’s performance measures are approaching or have reached the highest levels of quality believed to be attainable for a patient population. Outcome measures indicate results of patient care, such as control of blood pressure, blood sugar, or cholesterol, which signify that a patient’s chronic condition like diabetes or cardiovascular disease is well-managed.

This kind of quality improvement can only be achieved when information systems have the ability to track medication use, patients seeking care at multiple institutions, and other important demographic and outcome data. The nation’s health insurance companies are the only regional enterprises that possess this capability for a large population.

So, an honest look at a plan that means-tests Medicare and allows implementation of new payment models must acknowledge the central role that the health insurance industry must play in healthcare reform. If Medicare costs continue to spiral upwards, Ryan’s plan or some iteration of it should be enacted.

More Businesses Opting Out of Obamacare

May 18th, 2011 at 11:06 am 33 Comments

Last week, pills the Obama administration approved over 200 new waivers for the Democrats’ health reform bill, more proof that businesses realize the plan is fundamentally flawed.

To say that Obamacare is fundamentally flawed is like saying Donald Trump would probably not be welcome at the Harvard Faculty Club (then again if he gave them an endowed chair, they might make him a lifetime member).

That companies and unions need to  request waivers of the requirements for a $750,000 level of coverage and comprehensive services including vision, dental, and other services when they currently provide much lower levels of health insurance for their employees illuminates the central problem with the law. To paraphrase Jimmy McMillan: the cost is too damn high.

Most small companies can’t afford to provide comprehensive fee for service, unmanaged health insurance to their employees. If business can’t provide it now, the unaffordability of comprehensive insurance will be transferred to the taxpayers. Subsidies will be provided to the new insurance exchanges and we’ll have to borrow trillions of dollars more in the coming years to pay for it.

If Obamacare succeeds in its essential goal of providing comprehensive health insurance to another 30 million people, companies will be foolish not to put their employees into the newly created plans. Certainly all the companies and organizations that have requested waivers will be doing exactly that. They can’t afford comprehensive insurance now and won’t be able to afford it in 2014.

The political debate over Medicare’s future is focused on the cost of care yet the Obama administration has been silent about controlling costs for the currently uninsured under-65 cohort. The whole focus of Obamacare is on finding money to insure that group and not on controlling the costs of the care they will receive.  These costs are another burden soon to be shouldered by a nation deep in debt.