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.

Senate Finance Committee Health Care Bill Better and Worse

October 21, 2009

The Senate Finance Committee worked hard, if not collaboratively, on the health care bill introduced by its chairman, Senator Baucus. A whopping 564 amendments considered. What it’s come up with has something for everyone to dislike. And I’m no exception.

Set aside the hot button issues like the lack of a public option and prospective cutbacks in Medicare. The committee failed to resolve two major problems in the Baucus bill that would adversely affect low-income people. In fact, it made at least one of them worse.

One big problem is affordability. The Finance Committee bill made some improvements here. However, both premiums and out-of-pocket expenses for low and moderate income households would still be much higher than under either the main bill pending in the House of Representatives or the bill passed by the Senate Health, Education, Labor, and Pensions Committee.

The Center on Budget and Policy Priorities has again crunched the numbers. As its new brief shows, for people below 200% of the federal poverty line, premiums would be two to four times greater.

If the bill were effective now, deductibles and co-pays for families at 250% of the FPL could be as high as $5,800 a year. For a family of three, this would be on top of an initial $4,349 premium–9.5% of its total income. And, for reasons explained in my earlier posting, premiums would eat up an increasing percentage of income over time.

The Finance Committee apparently recognized that health care would still be hard for many people to afford. But rather than adopt a different cost-sharing scheme, it waived the penalty for not having insurance for households whose premium costs for the lowest-cost plan in the insurance exchange would exceed 8% of their income.

CBPP says the waiver would apply to people with incomes between about 220% and 400% of the FPL. Given the costs of the insurance, many might decide to remain uninsured. Others might opt for the expanded “young invincible plan,” which isn’t just for young people any more. Under this plan, coverage would kick in only after people have met a high deductible–$5,800 for individuals and $11,600 for families.

One way or the other, a lot of low to moderate income people would still not have insurance that enables them to get the health care they need. Those most likely to opt out would be the healthiest–those who feel they’re invincible. But of course they’re not. Major illnesses and injuries can happen to anyone. And if the healthiest opt out, the risk pool would include mostly people with higher health costs. Up go the premiums. Up go the number of people who can opt out.

Another big problem in the Baucus bill was the “free rider” provision, i.e., the requirement that employers who don’t offer health insurance with benefits up to a minimum standard pay a fixed amount only for employees who are eligible for subsidies and work at least 30 hours. The fee would also apply if the insurance they offered was unaffordable for these employees.

Needless to say, this provision give employers a strong incentive to hire only people who don’t qualify for subsidies. It could also prompt them to convert current full-time, low-wage employees to part-time. Hardest hit would be near-poor single parents with dependent children because fees for them will be highest.

The Finance Committee bill strengthens this perverse incentive in two ways. First, it denies employers the right to deduct the costs of the fees as a business expense, even though health insurance is deductible. Second, it changes the formula for calculating the fees in such as way as to make them more costly.

The Finance Committee was trying to reduce the impacts of health care reform on the federal budget. Impacts on low-income people seem to have been of less concern. It could have done a better job if it had adopted a standard pay-or-play option for employers and tapped revenue sources outside the health care system, as the Coalition on Human Needs has recommended.

Senate Majority Leader Harry Reid has the thankless task of reconciling the Finance Committee bill with the Senate HELP Committee bill–and with an eye toward getting the 60 votes needed to get his version passed. It’s bound to have something that everyone–not just the all-but-solid Republican opposition–dislikes.

But will so many Senators, organized interest groups and we grassroots Americans dislike so much of it so much that it fails?

Baucus Health Care Reform Bill Needs Reform

September 22, 2009

I told myself I was going to leave health care reform to more expert bloggers. But I’ve changed my mind because the bill Senator Baucus has introduced would compromise away vital interests of poor and near-poor individuals and families. Several provisions are at issue here.

One is the scheme for subsidizing the health insurance premiums they’d pay. It’s pretty complicated, but essentially involves a sliding scale for offsetting the costs of premiums for individuals and families up to 400% of the federal poverty line.

The Center on Budget and Policy Priorities has crunched the numbers. Its analysis shows that the required premium contributions would be more than many low-income people could afford–and much greater than the contributions that would be required under either the bill pending in the House of Representatives or the bill produced by the Senate Health, Education, Labor, and Pensions Committee.

But that’s only part of it. At the end of the first year, the caps on contributions would shift from a fixed percent of income to a fixed percent of the cost of the insurance premium. So low-income people would wind up paying an ever-greater share of their income for insurance because premiums will almost certainly rise faster than incomes.

And that’s still only part of it. The Baucus bill would mean high out-of-pocket costs for low-income people. Essentially, this has to do with the actuarial values the bill assigns to the various levels of insurance that would be available. The higher the actuarial value, the lower the deductibles and co-pays. People in the lowest income bracket would be entitled to the plan with the highest actuarial value, people in the next-lowest bracket to the plan with the next-highest actuarial value, etc.

So far, so good. But the Baucus bill sets actuarial values lower than either the House or the Senate HELP Committee bill. This translates into higher out-of-pockets. According to CBPP, if the plan were in effect now, a family of three at 250% of the federal poverty line would have to pay 12.6% of its income for deductibles and co-pays before assistance kicked in. And that’s in addition to the 10.5% of its income it would have to pay for the insurance premium. Affordable health care this ain’t.

Last, but far from least, the Baucus bill egregiously limits the “pay or play” scheme that’s a standard element in many health care reform proposals, including the House bill and the HELP Committee bill. Washington Post blogger Ezra Klein calls this “the worst policy in the bill, and perhaps in the world.” Here’s why.

Under the Baucus bill, employers that don’t provide health insurance would have to cover the costs of the subsidies that most of their eligible workers would receive when they purchased health insurance. Employers that do provide health insurance would also have to cover the costs of subsidies for those of their workers who had to pay more than 13% of their income for the premiums in the employer-sponsored plan. But employers would get a “free rider,” i.e., incur no cost at all, for the rest of their workers.

So there’s an incentive here to hire workers whose family income puts them above the subsidy level and workers covered under a family’s insurance plan. And there’s a big disincentive to hire low-income workers entitled to subsidized family plans since these, of course, cost more than individual plans.

Why hire a single mother who’s struggling to support her children when it’s cheaper to hire a well-off teenager–or one of those illegal immigrants who’ve become a favorite talking point for the Republican opposition?

As New York Times columnist Paul Krugman says, we’ve known for a long time that any health care bill that Congress produces will fall short of reformers’ hopes. The question is how bad does a bill have to be to make it too bad to vote for.

The Baucus bill is right on the threshold. It would be a dreadful shame to wind up with a plan that left low-income individuals and families with unaffordable health care costs–plus new challenges to employment. But would it be better to scrap the whole thing if that would leave us with the grossly inequitable, unsustainable system we’ve got?

Perhaps there’s still hope for a bill that won’t force this choice.

Children’s Health Insurance Update

January 22, 2009

As expected, the U.S. House of Representatives passed its version of the State Children’s Health Insurance Program (SCHIP) reauthorization. The vote was 289-139, with 40 Republican voting in favor and two Democrats against.

The Senate Finance Committee completed work on the Senate version last Thursday. It added the House-passed provision that would allow states to immediately provide coverage to immigrant children and pregnant women who are in this country legally. It also added an option for states to provide dental care coverage for children who don’t have it through private insurance.

Now the full Senate will begin consideration of the SCHIP bill, possibly as early as today. Though Democrats are in a majority, passage is not a slam-dunk. The Republican leadership is strongly opposed to the current version of the bill. This means we are likely to see proposed amendments to narrow it.

Based on what Republican leaders have said, I’m guessing these could include:

  • Elimination of the legal immigrant children and pregnant women option
  • Reduction of income eligibiity from 300% to 200% of the federal poverty level
  • More onerous citizenship verification requirements
  • A provision designed to prevent “crowd out,” i.e., parents switching from private health insurance to SCHIP

The Democrats have the votes to defeat such amendments. But under Senate rules, they will need at least five Republicans to join them in voting to end debate. Without those votes, there can be no vote on the SCHIP bill itself.

Maybe those five votes are already there. If they aren’t, then the SCHIP bill could be weakened to get them.

So those of you who want to see SCHIP significantly expanded should consider contacting your Senators, especially if either or both are Republicans. The toll-free hotline is still open. It’s 1-800-828-0498.