November 27, 2014

Posts on health care

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Friday, November 7, 2014 - 12:55 PM

Last Wednesday, President Obama requested approximately $6.2 billion to combat the Ebola epidemic. As Congress examines and debates this proposal, it is an important opportunity to reexamine our government’s budgetary policies.

Whether it’s Ebola, ISIS, or the child migrant crisis, our nation faced a number of unforeseen challenges this year that required action (and emergency spending) by the federal government. These challenges serve as reminders of a key underlying purpose of fiscal responsibility: To enable the country to deal with the unexpected.

We can’t predict the future. But having lower debt and deficits can give us the fiscal flexibility to act quickly when crises arise. Alternatively, irresponsible budget policies leave the government with higher borrowing costs and fewer resources to deal with changing circumstances.

Furthermore, responsible budgeting isn’t just about keeping spending in line with revenue. It’s about making sure our tax and spending policies reflect our priorities as a nation.

If federal investment in hospital and emergency preparedness is important to us, for example, we must be...

Tuesday, September 23, 2014 - 8:18 AM

In 2011, Medicare spent $170 billion, or 28 percent of its total expenditures, on services for beneficiaries in their last six months of life. But a new report says many of these patients are not receiving the care they want and are undergoing costly and unnecessary tests, procedures, and hospital visits.

Revamping the end-of-life care system in the U.S. could better satisfy the wishes of patients and families and make health care more affordable.

The report, “Dying in America,” was put together by a 21-member commission of doctors, nurses, religious leaders and aging experts. The panel was appointed by the Institute of Medicine, an independent research arm of the National Academy of Sciences that provides information to the public and policymakers.

The commission’s co-chairs are David Walker, former Comptroller General of the United States and former CEO of the Comeback America Initiative, and Dr. Philip A. Pizzo, a former dean of the Stanford University School of Medicine.

The report points...

Tuesday, June 17, 2014 - 8:19 AM

The Congressional Budget Office (CBO) cost estimate for the Senate’s expansion of veterans’ health care has been getting a lot of attention from budget groups and members of Congress. As illustrated by the Committee for a Responsible Federal Budget, when fully implemented, the part of the legislation that provides broad access to care providers outside the VA system might cost up to $50 billion a year -- more than doubling what is currently spent for veterans’ health. This new “mandatory appropriation” would increase the deficit by more than the prescription drug benefit under Medicare Part D.

While there has been a lot of misplaced consternation among members of Congress about CBO’s scoring accuracy, there has also been some constructive discussion about the need to find offsets for the new spending. However, there has not been nearly enough discussion about whether the entire congressional strategy and this rushed “fix” are misguided.

The first problem is that Congress, in trying to rapidly...

Tuesday, April 8, 2014 - 8:39 PM

Yesterday, the Centers for Medicare and Medicaid Services (CMS) released the 2015 government payment levels for the Medicare Advantage private insurance plans that are offered to seniors as an alternative to traditional Fee-for-Service (FFS) Medicare. In a bit of a surprise, CMS projects that total payments will increase by about 0.4 percent despite earlier CMS guidance suggesting payments would be cut by 1.9 percent.

The change follows months of lobbying by the private insurance industry -- fearful of lost profits -- along with members of Congress from both parties who are fearful of being attacked for cutting benefits to seniors.

Medicare Advantage plans have seen annual cuts to their payments from the government through a process set in motion by the Affordable Care Act (ACA), and cuts are scheduled to continue (despite the slight increase for next year). The payment reductions were intended to fix a fundamental financing disparity between FFS Medicare and the Medicare Advantage program; insurers are paid more per beneficiary than it would cost the government if the beneficiaries remained in FFS. 

The negative reaction from politicians and interest groups to these continual cuts...

Wednesday, March 26, 2014 - 9:34 AM

The growth in health care spending has slowed in recent years but could speed up again as the economy strengthens and the population ages. Even with slower growth rates, however, federal and state governments need to pursue reforms and innovations to keep public health programs sustainable.

Massachusetts and Maryland are at the forefront of such efforts. Officials in other states and the nation’s capital should watch how the experiments in these two states turn out and consider what lessons they may hold.

Maryland regulators recently received approval from the Center for Medicare and Medicaid Services (CMS) to limit the growth in hospital spending for each of the next five years to 3.58 percent. That is the state’s average annual rate of per capita economic growth since 2002.

Maryland already has successful experience restraining growth in health care spending relative to other states because of a unique commission that...

Friday, January 24, 2014 - 3:47 PM

As more people obtain health insurance through the Affordable Care Act’s exchanges and its expansion of Medicaid -- the federal-state program for low-income individuals -- policymakers should focus on ensuring that the health care system can meet the increased demand for services.

As people gain insurance, they tend to increase their utilization of health care. (See, for example, this report from the Medicare and Medicaid actuaries.)

Thus federal and state policymakers need to work together to make the health care system more efficient so that expenditures on health care don’t crowd out other important government programs. Possible solutions to this challenge can be found in Oregon, which has experimented with payment and delivery reforms in Medicaid in ways that could serve as a model for the rest of the country.

Reforming the delivery of care for Medicaid patients is not an easy task. An analysis of a landmark...

Tuesday, January 14, 2014 - 10:14 AM

A new report by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) found that health care spending over the past four years grew at the slowest rate recorded in more than half a century. The spending grew by 3.7 percent in 2012; since 2009 the annual rate has been between 3.6 percent and 3.8 percent.

That's down from the 5.5 percent average increase over the past decade, and well below the average annual increase of 11 percent observed in the 1980s and 13.1 percent average annual increase observed in the 1970s.

The recent slower growth contributed to the first reduction in health care costs as a share of the economy in 15 years, down to 17.2 percent of GDP in 2012 from 17.3 percent in 2011.  

It is good news that we are bucking the historical trend on health care cost growth. But the causes for this are not completely understood and thus we have uncertainty as to the sustainability of the trend.

Several factors are at work, including: the last recession and subsequent slow recovery, programs and policies initiated by Obamacare, structural changes in the health care...

Tuesday, November 26, 2013 - 9:57 AM

A recent report by the President’s Council of Economic Advisors (CEA) reviewing the recent slowdown in health care costs examined its potential causes, its sustainability and the economic impact going forward.

While the report is intended to put the administration's efforts on health care reform in the best light, that shouldn’t diminish the importance of the slowdown and the lessons we can learn from it. When looking at future fiscal policy decisions, some crucial takeaways are:

  • Changes in government policy can, at the very least, contribute to lowering health care cost growth.
  • Unlike five or six years ago, health care experts are now fairly confident they have identified some strategies to build upon and there is an emerging political consensus for encouraging their implementation.
  • The slowdown presents a unique opportunity to expand reform efforts, and is not a moment for complacency or resting on laurels.

The CEA report highlights the cost slowdown by examining how per-capita spending from 2010 to 2012 saw the lowest growth rate for a three-year...

Monday, October 28, 2013 - 8:38 AM

Who says that Democrats and Republicans can't reach a grand bargain?

Harry Reid and Paul Ryan seem to have it figured out. If Democrats and Republicans don’t demand compromises from each other, everyone can get along. It’s the perfect political grand bargain: Do nothing.

Unfortunately, that could easily become a self-fulfilling prophecy.

The prospects for a real grand bargain – one that actually makes some headway on solving our fiscal imbalance – are not looking good right now. It is particularly disappointing, however, that already two key members of Congress are simply accepting the gridlocked status quo rather using their leading positions to figure out a better result.

In an interview with the Associated Press (AP), Ryan summed up his view this way: “If we focus on some big, grand bargain then we’re going to focus on our differences and both sides are going to require that the other side compromises some core principle and then we’ll get nothing done.”

That’s a bit like saying elected officials can’t do a grand bargain because it would require a grand...

Friday, August 30, 2013 - 11:55 AM

This year will mark the end of a four-year string of trillion-dollar-plus federal deficits that have troubled the American public and caused turmoil on Capitol Hill.

Fiscal Year 2013 is drawing to a close with a projected deficit of a little over $640 billion, down from $1.1 trillion last year. That’s good news, but it should hardly be considered an “all clear” signal on the nation’s fiscal and economic challenges.

Here are eight reasons why:

1. While the deficit is going down, the federal debt is still going up.

The government is still borrowing a substantial amount of money this year, and that is all being added to the accumulated debt, which is approaching  $17 trillion. That’s why elected officials -- despite their usual lamentations and finger-pointing -- have no choice but to raise the debt limit at some point in the next few months. The real question is what they will do to prevent the debt from growing in the future to unsustainable levels.

2. This year’s lower deficit can be largely attributed to short-term economic factors rather than systemic reforms in the federal budget

During difficult economic times with high unemployment, federal deficits rise as...