New Atlantis Contributing Editor James C. Capretta is an expert on health care and entitlement policy, with years of experience in both the executive and legislative branches of government. E-mail: email@example.com.
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James C. Caprettaís Latest New Atlantis Articles
“Health Care with a Conscience” (Fall 2008)
“Health Care 2008: A Political Primer” (Spring 2008)
“The Clipboard of the Future” (Winter 2008)
- accountable care organizations (2)
- CBO (40)
- cost curve (5)
- exchanges (6)
- Ezekiel Emanuel (1)
- Fred Upton (2)
- healthcare.gov (1)
- individual mandate (10)
- individual market (2)
- insurance cancellations (1)
- Medicare (51)
- Medicare reform (5)
- Obamacare (86)
- Obamacare implementation (2)
- Obamacare rollout (1)
Friday, June 14, 2013
This week, the U.S. News “Debate Club” blog posed the question of whether the federal government’s short term deficit has been reduced enough, following the less dismal than usual projections in last month’s Congressional Budget Office report. I weighed in on the debate, arguing that the United States still faces serious fiscal challenges, especially the challenge of controlling the long-term growth of entitlement spending.
But the core fiscal challenge for the country, which remains unaddressed, is the unrelenting growth of entitlement spending -- a problem that will become acute in the next twenty years. Between 1973 and 2012, entitlement spending rose from 7.4 percent of GDP to 13.1 percent of GDP. By 2035, spending on Social Security, Medicare, Medicaid and the health care law's new entitlements is expected to add another 5.4 percent of GDP to the spending side of the federal ledger. Absent serious reform, the budgetary pressures created by this entitlement spending surge will either force massive cuts in the rest of the budget or very large tax increases, or perhaps trigger a debt crisis.
You can read (and vote for!) the rest of my post here.
Thursday, June 6, 2013
The prospects for a “grand bargain” on the budget finally seem dead, and as I explain at National Review Online, the fault lies with tactical blunders made by President Obama.
There was a period when the prospects for a “grand bargain” were on the rise — right after President Obama’s reelection in November 2012. The president was riding high and had campaigned on a “balanced approach” to deficit reduction, by which he meant any deal to reform entitlements and cut spending must also increase taxes, especially on the rich. In the weeks after his reelection, the president might have been able to press a demoralized congressional GOP into agreeing to a large, multiyear budget framework along these lines.
That certainly would have been in his interests. Based on where things now stand, his presidency will be defined in part by the $7 trillion in debt he will run up during his time in office. A “grand bargain” on the budget at the beginning of his second term could have fundamentally altered the legacy of his budgetary performance in office, turning what is sure to be viewed as a rather large failure into perhaps a modest achievement. Moreover, a multiyear budget deal would have taken fiscal issues, including the sequester the administration despises, off the table for the remaining years of the president’s time in office, freeing up his administration to press for agenda items he clearly is more passionate about.
But for some unfathomable reason, the president decided to pursue a different strategic approach. Instead of moving quickly to do what was necessary to create the conditions for a budget deal, he chose instead to pursue a two-part strategy on taxes and spending. That was a huge mistake.
You can read the rest of the column here.
Tuesday, June 4, 2013
Last Friday, the Medicare trustees released their annual report on the state of Medicare’s finances. And, yesterday, the American Enterprise Institute held its annual event on the report, moderated by AEI’s Joe Antos. The session always features a presentation on the report’s main findings by a representative from the office of the actuary that prepares the report. For many years, that task fell to long-serving chief actuary Richard Foster, but Mr. Foster retired earlier this year after a distinguished career. So, yesterday, Paul Spitalnic, the acting chief actuary for Medicare, performed the duty for the first time, and did so admirably.
The rest of the session featured comments on the state of health care costs and Medicare by Mark Pauly of the University of Pennsylvania, Chapin White of the Center for Studying Health System Change, and myself, followed by a question and answer session with the audience.
Monday, June 3, 2013
The Medicare Trustees released their annual report on the state of the Medicare trust fund last Friday, and, not surprisingly, Obamacare supporters are already pointing to the report’s findings as evidence that the law is working. Such claims are nonsense, as I argue in a short post on National Review Online.
For starters, Medicare’s unfunded liability remains staggering — a full $43 trillion over the infinite horizon. That’s nearly $7 trillion more than the 2010 report.
Moreover, as was the case in every report from 2010 onward, Medicare’s actuaries have again told us that the real state of Medicare’s financial outlook is far worse than the official projections indicate. That’s because the cuts to Medicare contained in Obamacare are so irrational and blunt that they will almost certainly be reversed. Most especially, the actuaries expect the so-called “productivity improvement factor” will be reversed because of the damage it will do to access to care for seniors. That would be the provision in Obamacare that reduces the inflation update for most non-physician providers of services, especially hospitals. The cuts begin this year and continue every year, in perpetuity. If they are allowed to stand, they will push reimbursement rates for hospitals to levels that are so low they’ll fall below what Medicaid pays by the end of this decade. Medicaid’s rates, meanwhile, are so far below what private insurance pays that the network of hospitals willing to take large numbers of Medicaid patients is quite constrained. The actuaries expect that, by 2030, the cuts would push revenue for 25 percent of the nation’s hospitals below their total costs, leading many of them to withdraw from the Medicare program entirely.
You can read the rest of the post here.
Tuesday, May 21, 2013
Securing universal health insurance enrollment has been a major goal of American liberals for decades, and Obamacare aims to use the individual mandate to ensure that all Americans obtain health insurance. But as I explain in a column at National Review Online, even with the individual mandate Obamacare will fail to provide “universal coverage” for Americans, and will end up becoming just another expensive entitlement program.
In its latest assessment of the law, released in conjunction with new budget projections, the CBO indicates that the number of uninsured residents in the United States will never fall below 31 million — three million more uninsured people than was estimated for the non-mandate plan President Obama rejected — and that the insured will never be as much as 90 percent of the population.
And even that estimate is highly optimistic. It assumes that 70 percent of the population eligible for the Medicaid expansion will eventually enroll in the program. As of today, however, only 24 states have governors and legislatures that would likely agree to move ahead with expansion, and that number could easily fall as more state policymakers come to the realization that Medicaid is far too often failing its current enrollees. It makes little sense in that context to dramatically expand a program that credible independent observers believe needs significant reform.
You can read the rest of the column here.
Friday, May 3, 2013
In a column published today at National Review Online I point out some steps that Congressional Republicans can take to not only push back against the worst aspects of Obamacare, but also to win the public argument over the future of American health care.
For the moment, the future of Obamacare isn’t a question of legislative tactics. It’s a question of political strategy — how to build a wave of public support behind a credible program to repeal Obamacare and replace it with something far better, and how to get that sentiment to prevail at the polls in 2014 and 2016. The excesses and deficiencies of Obamacare will go a long way toward convincing the public that there must be a better way. But the congressional GOP can and should also take steps to build its case and gain the upper hand in the argument. The bill to close down the prevention fund and apply some of the savings to a high-risk pool is one small step in that direction.
You can read the rest of the piece here.
Tuesday, April 23, 2013
Yesterday, I was pleased to participate in a panel discussion sponsored by the Brookings Institution, entitled “Reforming Medicare: Fiscal Challenges and Policy Solutions.” The event was moderated by Bill Galston of Brookings and included — in addition to my remarks — presentations from Bob Reischauer of the Urban Institute, Chris Jennings of the Bipartisan Policy Center, Joe Antos of AEI, and Dr. Rhonda Randall of United Health Group.
The event was covered live by C-SPAN and can be viewed in its entirety here.
Friday, April 19, 2013
This week, the American Action Forum (AAF) released a white paper I co-authored with AAF’s President Doug Holtz-Eakin. The paper provides new insurance coverage and cost estimates for the Obamacare replacement plan I developed in collaboration with many other health policy analysts over the past two years. (The replacement plan was described in two published articles: the first, co-authored by Robert Moffit of the Heritage Foundation, appeared in the spring 2012 edition of National Affairs; the second, published as a white paper by the American Enterprise Institute, provided some additional details about the reform plan.)
The AAF cost estimates are encouraging. They show that a replacement plan built on a decentralized, market-based reform program can broaden insurance coverage dramatically without the massive federal power grab and mandates of Obamacare. This is an important development. It demonstrates that, contrary to the talking points of the 2010 law’s apologists, there are viable, practical alternatives to Obamacare that have the potential for broad appeal with the American people.
The emergence of AAF’s modeling capacity — the Health Economic Policy Simulation System (HEPSS) — is also an important advance. It means that a new source of credible analytical information is now available to the policy community, and more information about the cost and coverage consequences of various reform plans can only help to improve the caliber of the public debate. Moreover, the estimates produced by HEPSS will almost certainly differ from those produced by the Congressional Budget Office, the Urban Institute, and others because the HEPSS model uses different sources of data in some respects (including more extensive data on the use of high deductible health plans by employers) and because every model requires the use of some assumptions, and there’s no reason to expect the HEPSS assumptions to exactly match those used by CBO and others.Obamacare is now being implemented, but that does not mean the debate over the future of American health care policy is over. Quite the contrary. Obamacare has far too many fundamental flaws for this debate to be over. At some point, the public will be receptive to hearing about alternatives to the current law, and opponents need to be ready with a fully developed answer. The paper released today is far from the final word, but it is another step in the right direction.
Wednesday, April 17, 2013
Yesterday, I was pleased to participate in a public event at the American Enterprise Institute, focusing on the content of three papers released by AEI this week (generously sponsored by the Robert Wood Johnson Foundation). The first paper, which I wrote, is entitled “The Role of Medicare Fee-for-Service in Inefficient Health Care Delivery.” I argue in it that Medicare fee-for-service is the most important reason that American health care is inefficient, fragmented, disorganized, and costly. It will not be possible to bring about real reform without significant changes in Medicare’s basic financial incentives.
The second paper, written by Robert Coulam of Simmons College and Roger Feldman and Bryan Dowd of the University of Minnesota, examines the benefits of moving toward a competitive bidding approach for the entirety of the Medicare benefit package. Private health plans would submit bids indicating the premium they would require to provide Medicare’s statutory benefits, and those bids would be used, along with the costs of providing Medicare FFS in a region, to determine a fixed government contribution. The authors estimate that this approach would reduce Medicare’s costs by $339 billion over a decade.
The third paper, written by Joe Antos, makes the case for reforming Medicare with a premium support model, including competitive bidding. The paper cites existing models, including the Medicare prescription drug benefit, and other evidence to make the case that harnessing the power of consumer choice and marketplace competition is the only reliable way to discipline costs without harming quality.
The AEI event, which was moderated by Bob Helms, can be viewed in its entirety here. Paul Ginsburg of the Center for Studying Health System Change provided helpful comments.
Monday, April 15, 2013
Over at Roll Call I have a column about what Congressional Republicans rightly seeking Medicaid reform can do to deal with the challenge of managing the long-term care component of the program.
Today, states try to manage long-term-care costs and quality through regulations and supply controls, but these efforts are never a match for the cost pressures that build when services are “free” to the users — and when rising use of services increases the incomes of those providing the services.
The solution is to enlist the support of those enrolled in the program in a cost discipline effort. The starting point is to calibrate financial assistance for long-term-care services and supports to the level of disability and financial needs of a Medicaid applicant. The most severely disabled applicants — as determined by an independent evaluator — with the lowest level of personal resources should get the maximum “allotment,” set at the level necessary to cover the range of support services needed to stay in the community. Other applicants with lesser disabilities or more personal financial resources would get a percentage of the maximum allotment commensurate with their circumstances.
You can read the rest of the piece here.