The Washington Extension

September 9, 2011

Medicare News

The NAIC subgroup tasked by the ACA with evaluating first-dollar coverage in Medigap is raising concerns that the Congressional Budget Office (CBO)—Congress’ official scorekeeper—is overestimating savings from changes to Medigap benefits. The state officials are skeptical that eliminating first-dollar Medigap coverage for all Medicare services will save the $53 billion that the CBO projects. NAIC is considering how to make its argument, considering that Medigap savings may be on the table for the “supercommittee” as it looks for $1.5 trillion in savings by mid-November.

ACA Updates

Kansas will delay implementation of its health insurance exchange until after the US Supreme Court hears the case and rules on the constitutionality of the Affordable Care Act. The state has awarded a $135 million contract to Accenture to develop its exchange. The state expects the exchange to cost $85 million to establish and $10/year to operate over the first five years.

The Center on Budget and Policy Priorities compiled data on the status of health insurance exchange planning in states, including whether each state has passed legislation and the amount and type of grant funding received (or returned). State statuses are current as of late August.

The 4th Circuit Court of Appeals denied Virginia’s lawsuit over the Affordable Care Act’s individual mandate, saying that the state does not have a legal right to sue. This vacates a lower court ruling and does not come as a surprise to observers of the court’s hearing proceedings, which found the judges skeptical of the lawsuit. The Court also asserted that the individual mandate is a form of federal tax, not law, and therefore a lawsuit cannot be initiated until taxpayers have paid the tax, which is not effective until 2014.

On the Hill

As Congress returns to Washington, DC, the debt “supercommittee” gets to work with its initial public meeting. The 12-member Congressional panel has just six weeks left to recommend $1.5 trillion in projected deficit reduction (PDF) over 10 years. If this bipartisan committee fails, $1.2 trillion in across-the-board spending cuts will automatically be triggered, equally implicating defense and non-defense spending.

Ways & Means Committee Democratic staffers prepared a laundry list of policy changes to Medicare that could help the “supercommittee” achieve its savings target. For each policy option, the memo describes the policy change and estimated savings, as well as a discussion of proponents’ and critics’ arguments. The options include longstanding recommendations from MedPAC—Congress’ Medicare advisory panel—as well as revisiting options from the House of Representatives’ 2009 health reform bill and others.

The automatic spending cuts included in the compromise on the debt limit increase in early August were designed to motivate lawmakers to create thoughtful policies to reduce the debt and deficit—therefore avoiding blunt across-the-board cuts. Now, industry analysts and other Medicare stakeholders are analyzing the cuts that would be implemented automatically if the “supercommittee” fails to meet its targets, finding that they may be more palatable than the implications of likely alternatives. One reason for this is that the trigger shields Medicaid from any spending reductions.

Reports/Other News

The Kaiser Family Foundation reports that 16% of employees expect their out-of-pocket health care costs to rise, as open enrollment season approaches, with a greater percentage of employees at large firms expecting changes than at small firms. Almost 70% of employees blame insurance companies raising rates for their increased out-of-pocket costs, and just over 40% blame the Affordable Care Act. While 2/3 of employees would be willing to participate in a wellness program to lower costs, only one-third would be willing to pay more for brand-name Rx drugs, pay a higher deductible, or accept a more restricted provider network. Finally, 61% of workers say health benefits are either a very, or the most, important consideration when looking for a new job.

August’s Kaiser Health tracking poll found that only about half of the uninsured know about the provisions in the Affordable Care Act, such as premium tax credits and cost sharing reductions, which are designed to help them afford insurance. A similar percentage thinks that health reform “won’t make much difference”. Among Americans as a whole, 39% have a favorable view of the ACA, 44% are unfavorable, and 17% don’t know enough to say. This division is similar to public opinion in recent months.

New studies in the journal Health Affairs find that 29 million adults with health insurance lacked adequate coverage in 2010, exposing them to high out-of-pocket costs if they fall sick. This is an increase from the 16 million adults who were underinsured in 2003. Additionally, monthly health care expenses for a family of four nearly doubled between 1999 and 2009, virtually eliminating any income gains over the past decade.

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