Congressman Ryan’s Radical Attack On Our Health Care System

April 7, 2011

Republicans in Congress made a big deal of the fact that the health care reform legislation was more than 1,000 pages long. A large portion of those pages spelled out initiatives aimed at controlling health care costs.

Congressman Paul Ryan, Chairman of the House Budget Committee, has a simpler way of cutting federal health care spending. Just stop paying for the health care people need.

His just-released Fiscal Year 2012 budget resolution, The Pathway to Prosperity, would make two radical changes in our health care system.

It would convert Medicare from a health insurance program for seniors and severely disabled people to subsidies that would partially cover the costs of health insurance they purchase on the private market.

Ryan claims that his plan will unleash competition by letting patients choose the plan that delivers high-quality services for the lowest cost.

But, of course, that’s how a vast number of people get their health insurance now — not only the members of Congress Ryan mentions, but others who get their health insurance through their employers or purchase it on their own. Yet health care costs are spiraling.

So how will the Ryan plan save money? Pathway to Prosperity makes the conventional references to waste and abuse, but is otherwise judiciously vague.

But Ryan’s earlier Roadmap for America’s Future certainly wasn’t. Nor was the similar plan he developed in partnership with Alice Rivlin, former head of the Congressional Budget Office and the Office of Management and Budget.

Ryan would reduce federal Medicare spending by adjusting the value of the subsidies according to an inflation index that doesn’t reflect rising health care costs. This produces an even bigger crunch than Ryan-Rivlin.

So, as the Center on Budget and Policy Priorities explains, seniors and other beneficiaries would have to shoulder more and more of their health insurance costs or switch to plans that provide significantly less protection.

Ryan would also convert Medicaid from a genuine federal-state partnership into a block grant — a different type of cost shift, but with similar results.

The federal government now covers a certain percentage of states’ Medicaid costs — somewhere between half and three-quarters, depending on a state’s average per person income.

Under Ryan’s plan, states would get a fixed amount of money — the same in good times and bad, somewhat more over time, but considerably less than would be needed to accommodate rising health care costs and the aging of the population.

States would get enormous “flexibility” (favorite Republican word). They’d no longer have to enroll everyone whose income was low enough to fall below a standard threshold — or indeed, any threshold at all. Nor would they have to provide a specified minimum package of essential services.

Ryan claims that the block grant would eliminate incentives that have led states to expand coverage to people who aren’t “truly in need” — as if people who now qualify for Medicaid aren’t.

States would also, he says, gain freedom from unspecified restrictions that keep them from making their programs “smart” and “efficient.”

We’ve already seen what happens when states face budget pressures due to a combination of lower revenues and rising safety net costs. They look for savings in Medicaid, which accounts for a large percentage of those costs.

And they exercise what’s actually considerable flexibility to eliminate benefits federal rules don’t require — home care that keeps frail elderly people out of nursing homes, hearing aids and eyeglasses, preventive dental care, even life-saving organ transplants.

They make further cuts in reimbursement rates, effectively denying Medicaid participants health care because doctors won’t treat them.

They seek permission to drop people from the program — something they wouldn’t have to do under Ryan’s plan because it would repeal most of the health care reform act, which bars states from rolling back Medicaid coverage.

And recall, this is all happening under the current funding formula.

Ryan says that his plan for Medicaid would save $1 trillion over 10 years. Only one way that could happen. Less federal funding than under the current system — probably progressively less relative to need as time goes on.

States could in theory pick up the difference. But it’s more likely that most would ramp up the kinds of cost-cutting measures we’re seeing now — and go in for others we’re not seeing, thanks only to federal rules.

The Ryan plan may be a pathway to prosperity for the wealthiest, who would enjoy a further 10% cut in their income tax rate. But it’s a pathway to unnecessary pain, suffering and economic insecurity for the rest of us.

UPDATE: The Ryan plan is more generous to the very wealthy than I realized. The Wall Street Journal reports that it would not only cut the top income tax bracket, but eliminate the recently-enacted surtax on high earners’ investment income.

Is Health Care Reform Dead?

January 23, 2010

It’s hard to keep up hope. Harder still to muster the fighting spirit that’s needed to keep health care reform alive. But it’s not dead yet. And it won’t be if enough members of Congress hear from enough of us.

That’s what I heard yesterday from seasoned advocates at Families USA and other partners in the Coalition on Human Needs. They’ve been working on health care reform since before it was a twinkle in Obama’s eye. And I figure if they’ve still got the hope and heart to advocate, then we should too.

We’ve come to this pretty pass for a couple of reasons. The most important, I think, is that we’ve lost sight of the forest for the trees. Understandably so, given the surfeit of blow-by-blow media reports, propaganda and detailed analyses of flaws and compromises.

I own a share of responsibility for this. So here’s my list of big good things the pending legislation would do:

  • Expand health insurance coverage to about 31 million more people–an even greater number if certain provisions in the House bill prevail.
  • Make health insurance–and health care–affordable for millions more who have insurance but are over-burdened by the premiums and out-of-pocket costs.
  • Enable more small businesses to offer health care benefits.
  • Ensure that we’ll have health care coverage even if we lose our jobs or our employers drop it.
  • Prevent insurance companies from denying coverage or charging exorbitant rates because of pre-existing health conditions, gender or age.
  • Keep Medicare affordable and narrow the gap in prescription coverage (the infamous doughnut hole).
  • Curb the soaring costs of health care, which jeopardize the coverage we have and our economy as a whole.

Some members of Congress–and perhaps the White House too–view the upset in Massachusetts and some recent polls as signals to step back. We hear talk of paring the package back to a few, relatively uncontroversial elements. Republican leaders say Congress should start all over again, with a bipartisan approach, a.k.a. their proposal.

History tells us there won’t be another chance to pass comprehensive health care reform for many years. Recall that the last serious effort died 15 years ago. But if the imperfect bill we’ve got now does pass, there will always be chances to improve it.

New York Times columnist Paul Krugman puts it well. “Whereas flawed social insurance programs have tended to get better over time, the story of health reform suggests that rejecting an imperfect deal in the hope of eventually getting something better is a recipe for getting nothing at all.”

I think our elected leaders know this. But they think that most of us don’t want comprehensive health care reform. We’ve got a small window of opportunity to convince them otherwise.

Families USA has an open letter to members of Congress urging them to move forward on meaningful health care reform now. So pass the news along if you belong to an organization that would endorse it or a listserv that would spread the word.

The rest of us can use the letter for personal messages to our elected representatives in Congress. Contact information and e-mail forms are on the House and the Senate websites.

I think it’s also worth writing the key decision-makers–President Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Just a line or two will do what’s needed.

UPDATE: Families USA has set up a toll-free hotline for us to call our Congressional representatives. It’s 800-828-0498. This number will take you to the Capitol Hill switchboard. So ask the person who answers to put you through to the appropriate office. Those of you who’ve got Senators will need to make three calls to cover all bases.

The link above will take you to a page that includes suggested talking points. But I think the link itself contains the germ of a great message: “Can’t back down.” Our representatives don’t have to be told all the reasons we need comprehensive health care reform. They need to know that we want them to pass it now.

Senate Health Care Bill Puts Cost Burdens On Low-Income People

December 5, 2009

Bear with me for a moment. There’s been such an over-plus of proposals, polls, pontificating and  propaganda that I’ve half-forgotten why we decided to plunge into health care reform to begin with. And it seems I’m not the only one.

As I recall, the idea was to make good health insurance affordable for everyone because most people can’t get the health care they need without it. Bringing down health care costs was a means to this end, though it’s taken on a life of its own.

I’ve gone back to the basics because I think they’re a lens for looking at what the bill the House passed and the bill the Senate’s debating will do to ensure that low-income people can get sufficient, affordable health care.

I’ve already put in my two cents on the employer responsibility provisions. So what about affordable health insurance for those who won’t be able to get it through their jobs?

On this score, the House bill does more for poor and near-poor people. It would extend Medicaid, which offers good coverage at very low cost, to individuals and families up to 150% of the federal poverty line. The Senate bill would cut off Medicaid eligibility at 133% of the FPL.

Above these thresholds come a range of actuarial values, i.e., levels of subsidized coverage provided by insurance purchased through the exchange. These decrease as income brackets go higher. Put them together with the Medicaid cut-offs and you’ve got significant cost differences.

The Center on Budget and Policy Priorities has updated its comparative table. As it shows, the Senate bill would keep costs lower for individuals and families at higher income levels by shifting the costs to those who have less.

  • Individuals and families who would be covered by Medicaid under only the House bill would pay nearly two-thirds more under the Senate bill–$613 more for families and $362 more for individuals.
  • Those at 150% of the FPL would pay somewhat over a third more under the Senate bill–$462 more for families and $252 more for individuals.
  • The situation reverses at 300% of the FPL, with families paying $100 less and individuals $65 less under the Senate bill.
  • By 400% of the FPL, the point spread has increased to $1,611 less for families and $953 less for individuals.

Similarly, the House bill would provide cost-sharing assistance to families up to 350% of the FPL, while the Senate bill would cut it off at 200% of the FPL. At the same time, actuarial values are lower under the Senate bill at all levels except for 400% of the FPL.

This means that low-income households would have to pay larger deductibles and co-pays than under the House bill. And again, the differences would be greatest for those in the lowest income brackets.

CPBB estimates that a family of three at 175% of the FPL would be responsible for $3,867 in deductibles and co-pays if the Senate plan were in effect now. That would be more than 10% of its annual income. And it would already have paid $2,307–6.3% of its income–for the premium.

Yes, the family would have insurance. But would it be able to afford the health care services it needs. I rather doubt it. And there goes one of the bill’s two main objectives–“to provide affordable, quality health care for all Americans.”

And if the family can’t afford the out-of-pockets, its members are likely, as now, to wind up in emergency rooms–a very costly alternative to preventive and maintenance care. Or it may decide simply to pay the relatively modest penalty for not having health insurance. One way or the other, there goes the bill’s other main objective–“to reduce the growth of health care spending.”

Will the bill that comes out of the Senate come closer to these objectives? More likely getting those precious 60 votes will mean even more compromises at the expense of those who need health care reform most.

Senate Health Care Bill Lets Employers Duck Responsibility

December 2, 2009

The Senate health care bill has gotten kudos for fiscal responsibility. The Congressional Budget Office says it would not only pay for itself, but reduce the deficit by $130 billion in the first decade–an estimated $26 billion more than the bill the House passed last month.

We’re told the bill would also “bend the curve” of rising health care costs. A new brief by the Center on Budget and Policy Priorities explains how.

But low-income people fare won’t fare so well. High on my gripes list are the employer responsibility provisions. They’re not so bad as the Senate Finance Committee’s “free rider” provision, but they’ll still put low-income workers at a disadvantage.

The “free rider” was part of the Finance Committee’s solution to situations where employers don’t offer health insurance with benefits up to a minimum standard or do offer such insurance but not at a cost low-income workers can afford.

It required them to pay a free only for employees who are eligible for subsidized coverage in the health insurance exchange and work at least 30 hours a week. This obviously gave them a huge incentive to hire only people who didn’t qualify for subsidized coverage in the health insurance exchange and/or to reduce their hours to bring them under the definition of full-time, i.e., at least 30 hours a week.

The bill the Senate may (or may not) vote on levies a fee on most employers (all except those with fewer than 50 employees) that don’t offer health insurance if they’ve got even one full-time employee who gets a premium credit in the exchange. The fee starts at $750 for each full-time employee, whether low-income or not.

Since most covered employers are likely to have at least one low-income employee, the incentive to avoid hiring more is minimized. But the incentive to convert low-wage jobs to less than full-time is still there.

There’s also a fee for employers that offer health insurance but at a cost low-income workers can’t afford, i.e., more than 10% of their income. It’s $3,000 per employee, but only for those who can go to the exchange because the employer’s plan is, for them, unaffordable. So there’s still an incentive to prefer employees at higher income levels and those covered by another family member–and another incentive to convert full-time to part-time jobs.

The House bill offers no such incentives. Employers that don’t offer health insurance that meets a minimum standard would pay fees ranging from 2% to 8% of payroll, depending on payroll size. There’s an exemption here for quite small employers–those with payrolls below $500,000. But beyond this threshold, employers must provide or otherwise contribute to adequate health insurance for all their employees. Period.

The affordability standard for employer-provided insurance is higher than under the Senate bill–12% of income instead of 10%. However, the fee is up to 8% of the employer’s average wage times the number of employees eligible to buy on the exchange. According to CBPP, this fee would generally be less than what the employer would pay to insure higher-income workers. So there’s no incentive to prefer them.

The Senate bill also does considerably less than the House bill to help low-income people afford health insurance and the out-of-pockets they’ll have to pay if they buy it. But that’s a subject for another posting.

I’d like to think that Senate Majority Leader Harry Reid did the best he could to strengthen the employer responsibility provisions without losing any of the votes he needs to get a health reform bill passed.

He still seems not to have those votes lined up. If he gets them, we can only hope that the House employer mandate or something close to it prevails in the complex negotiations that will be needed to produce a House-Senate compromise.


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