Health Care Blog

Health Reform, Medicare Advantage, and Care for America’s Seniors

It’s a favorite talking point among opponents of reform that the new health reform law will threaten Medicare or weaken guaranteed benefits for seniors enrolled in Medicare Advantage plans – when the truth is that law strengthens Medicare and overall health care for our seniors.
 
When it comes to Medicare Advantage, the new law simply puts these privately-administered plans on equal footing with traditional Medicare by cutting wasteful subsidies that pad insurance company profits. And a news story out yesterday makes it clear, in the words of the insurance company executives and health care experts, that Medicare Advantage plans and the seniors who use them won’t be hurt by the health reform law:

From Bloomberg News:

Stephen J. Hemsley, chief executive officer of UnitedHealth Group Inc., told analysts on an earnings call this week that reduced payments won’t keep the company’s products from competing with Medicare insurance offered directly from the government. Kathleen Sebelius, the Health and Human Services secretary, told a House Appropriations subcommittee that she expects “a robust array of choices for Medicare recipients.”

More:

Insurers offering the plans could pressure health providers to lower their prices, McGlynn said. Also, Senate Democrats and the White House “did some smart things” to mitigate the effect of the Advantage cuts in the final version of the health law, said Robert A. Berenson, a former Medicare official now at the Urban Institute, a research foundation in Washington.

The law lets Advantage plans operating in areas where Medicare’s costs are lower than private insurers’ costs be paid more than the government program, said Berenson, who served in the Clinton administration. Plans where Medicare’s costs are higher than private insurers’ costs would get less.

Beginning in 2014, Advantage plans can earn 5 percent bonus payments if they implement programs to improve the health of their customers or the efficiency of care, he said. Insurers could qualify if they created programs to manage chronic diseases, for example, or new payment systems for doctors.

More broadly, the health reform law signed by the President strengthens Medicare by taking aggressive new steps to fight waste, fraud, and abuse within the system and reforming the payment system to reduce unnecessary hospital admissions and reduce health care acquired infections.  Together, these proposals will extend the financial health of Medicare by 12 years.  On top of that, not a penny of Medicare taxes or trust funds will be used for health reform.
 
In fact, the law is packed with improvements for all seniors. To name a few, the bill:

• Closes the “donut hole” in Medicare prescription drug coverage;
• Provides for free preventive care under Medicare, whereas seniors today often pay 20 percent of these costs;
• Invests in innovations in new ways to treat and control chronic disease;
• Creates news standards to improve the quality of care in nursing homes.

To learn more about the benefits that the Affordable Care Act offers America’s seniors, see our fact sheet.

Dan Pfeiffer is White House Communications Director

TIME’s Take on the Actuary’s Report

You may have seen an Associated Press story published this morning about the new report from the Office of the Actuary at the Centers for Medicare and Medicaid services. The AP took a decidedly breathless tack in describing the report – and of course their story is now popping up in some familiar outlets that always opposed reform.
 
In reality, the Actuary’s report is little changed from a previous report issued months ago by the same office, and it underscores many of the major strengths of the new health reform legislation, as we noted here.
 
If you haven’t already seen it, here’s a piece from TIME Magazine on the same report. It offers a lot more context on the report itself, and should help put to rest some of the concerns kicked up by the AP’s coverage. 

"Another Critical Health Reform Report," Kate Pickert Friday, April 23, 2010
 
Health reform proponents got another round of bad headlines today, as the chief actuary for the Centers for Medicare and Medicaid Services released a report saying that the new law will increase costs. According to an AP story by Ricardo Alonso-Zaldivar, the report is "a worrisome assessment for Democrats," showing that while cost savings could come sometime after 2020, there is little hope of reducing spending in the next ten years. This sounds pretty bad, right?
 
Well, it is - if you consider it in a vacuum. The truth is the actuary who wrote the report, Richard S. Foster, authored a nearly identical report released January 8, 2010. Some of his figures changed in the interim - he wrote about the Senate bill in January and this week's report includes changes made by the reconciliation package that altered the Senate bill - but overall, Foster's assessment is the same.
 
The health reform law will increase overall spending in the near future because more people will have insurance and therefore access to medical care. Those who are now going without care because of cost will, post-implementation of reform, seek care, insurance or Medicaid card in hand. Reductions in Medicare reimbursements to providers may cause some to limit the Medicare patients they accept; future cuts to Medicare reimbursements called for in the bill may never happen due to political pressure; the long-term care insurance program created by the law may be unsustainable. This is all important, truthful information and provides a worthy counter-balance to those celebrating the health reform law's less contentious implications. But it's worth stressing what this report is not - surprising new information that was kept under wraps during the health reform debate. For instance, I wrote a story back in December about the potential pitfalls of the long-term care program.
 
Ezra Klein, who supports health reform, says he thinks "the report makes health-care reform look pretty good." I don't know if I'd go that far, but Klein does point out a few more things to consider when evaluating Foster's report - and news coverage of it:
 

The Congressional Budget Office's estimates look at the deficit. CMS is looking at total national health expenditures. This often confuses people into thinking that there's conflict between the two sets of numbers when there isn't: CBO says that federal spending is going to go up to pay for the coverage expansion, but that savings and revenue will go up by even more, leading to a net reduction in the federal deficit.
 
CMS is looking only at the spending side. And here's what it finds: In 2019, implementation of the Affordable Care Act will reduce the ranks of the uninsured by 34 million people and increase nation health expenditures by 1 percent.
 
One percent.
 
And that 1 percent is actually 1 percent and falling: When the legislation is fully implemented in 2016, the spending increase will be 2 percent. But cost controls kick in over those years and bring it down to 1 percent. Assuming the trend holds, the second decade will see national health expenditures fall below what spending would've been if the bill hadn't passed. So that's the bottom line of the report: We're covering 34 million people and come 2019, spending is expected to be one percentage point -- and falling -- above what it would've been if we'd done nothing. 

The bottom line is that no one knows for sure if health reform will "bend the curve" of increasing medical spending. The law will experiment with cost controls that economists and health policy experts think could curb spending, but there's little certainty and a lot of politics likely to interfere while reform is being implemented and tweaked. Here's what Karen and I wrote recently about cost controls called for in the law.

Dan Pfeiffer is White House Communications Director