The Washington Extension

December 16, 2011

Medicare News

Senator Ron Wyden (D-OR) and House Budget Chairman Paul Ryan (R-WI) introduced a plan to reform Medicare beginning in 2022, including premium support, a Medicare Exchange, and a cap on annual Medicare spending. The members tout their plan as increasing choice for seniors, spurring innovation, and lowering health care costs through competition among private plans and traditional Medicare. The plan also expands health care options for small businesses by allowing employees to use employer contributions to purchase their own health care. The reforms draw from ideas that Mr. Ryan and Mr. Wyden have previously backed. Though key details are omitted from the plan, critics of premium support have questioned its ability to lower costs, provide adequate premium support amounts, and protect low-income beneficiaries. Political reactions are divided largely along party lines, with Democrats asserting that the plan will undermine Medicare and Republicans cautiously supporting it as worthy of consideration.

ACA Update

The early retiree health insurance fund—established by the ACA to help employers maintain coverage for non-Medicare eligible retirees until 2014 when exchanges are running—will accept its last claim on December 31, 2011. The $5 billion fund has already exhausted $4.5 billion. According to Democrats, the rapid exhaustion is due to the program’s popularity with employers, though Republicans assert the premature shut-down proves the inaccuracy of cost estimates when the ACA was passed.

Minnesota has posted multiple exchange prototypes for employers and individuals to test drive, including websites from Ceridian, Curam Software, MAXIMUM/Connecture,, and Deloitte. The functionality of the websites range from Deloitte, with actual plan search capability, to MAXIMUM’s, which appears to have only demonstration videos posted. Minnesota is asking for public feedback on the modules to influence its vendor selection process and development of an online interface.

On the Hill

Congress must act before the end of the year to avert a nearly 30% Medicare pay cut to physicians, and may pair short-term relief from the cuts with extension of the payroll tax holiday and unemployment benefits, also set to expire at year-end. The extension could be as short as two months, but will still require Congress to come up with $40 billion to pay for the bill. A House-passed bill earlier in the week offset the extensions in part by reducing the Medicare subsidy that certain higher-income beneficiaries receive, thereby increasing premiums and reducing government spending.

Both Senate committees with jurisdiction over health care—Finance and Health, Education, Labor and Pensions—held hearings on widespread prescription drug shortages reported across the country. Witnesses at the hearings cited quality control issues, manufacturing delays, supply disruptions and price changes as problematic in ensuring a constant supply of drugs.

HHS is expected to release information about essential health benefits that plans offered through health insurance exchanges will be required to cover. Look for the release here or here. The Institute of Medicine, at the HHS Secretary’s request, released a report earlier in the year recommending criteria and methods for determining and updating essential benefit requirements.

Reports/Other News

Seniors age 50+ and near retirement are more concerned about their ability to afford health care expenses (24%) than current retirees (17%), according to an Allstate-National Journal Heartland Monitor poll. Three-quarters of near-retirees believe they will have to work after retirement and over half say they will retire later than their parents.

The Government Accountability Office released a report on “job lock” due to employer-sponsored health insurance, finding that workers with health insurance from their employer are less likely to change jobs, leave the labor market, become self-employed, or retire when eligible, compared to workers with alternative sources of coverage. Experts surveyed generally agreed that broader access to health insurance in the ACA may help mitigate job lock, but opinions differed about the extent.

The Washington Extension will return in 2012. Happy Holidays!

Visit Extend Health — the nation’s largest private Medicare exchange.

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