Health Care

Obamacare's Unlikely Coverage Goal

October 29, 2013

In the midst of the troubled launch of Obamacare's health insurance exchanges, it is looking less and less likely that the law will lead to the net increase of insured Americans that the administration has promised, as I explain in a column at National Review Online.

At the time of enactment, CBO estimated that the net effect of the various Obamacare provisions would be 10 million new enrollees in Medicaid in 2014, 8 million enrollees in plans offered on the exchanges, 4 million new enrollees in plans sponsored by employers, and a reduction of 2 million people in the non-exchange individual insurance market. The net effect was an estimated reduction in the ranks of the uninsured of 19 million in 2014.

The Obama administration relied heavily on this CBO cost estimate to argue that the law would dramatically expand insurance coverage even as it also reduced projected federal budget deficits, in the short and long term. The CBO estimate was also instrumental in rounding up the final votes in favor of passage of the legislation in Congress. A strong case can be made that the numbers in the CBO cost estimate were what was promised to the American people, and therefore represent the benchmark against which Obamacare should be assessed.

The likelihood that such a sizeable reduction in the uninsured can be achieved in 2014 is slim. To date, far more people have learned that they are losing their plans next year than have signed up for new coverage in the exchanges. Moreover, even though Medicaid enrollments are running above those in the exchange plans, they are still not nearly on pace to reach the levels promised at enactment.

You can read the rest of the column here.

posted by James C. Capretta | 5:58 pm
Tags: exchanges, CBO
File As: Health Care

Obamacare's Mugged by Reality Moment

October 25, 2013

With the serious setbacks facing the implementation of the Affordable Care Act, it is starting to look like it would be best for opponents of the law to wait for the disaster to unfold to reap the political benefits of its collapse in 2014.

But, as I argue in a column at The Weekly Standard, pushing for delaying the individual mandate should remain a key part of the GOP's opposition to the law in the months ahead.

There are many conservatives who fully expect the law to collapse under its own immense weight, and who anticipate that they will reap the political benefits of that collapse in 2014 no matter what they do now. So why engage in another politically risky showdown with the president?

Certainly the GOP shouldn’t repeat the mistaken tactics of the last month. But there’s every reason to continue making a delay of the individual mandate the GOP’s top priority in the negotiations with the Obama administration and Senate Democrats over the coming months.

For one thing, there will never be a better time to press the case for a mandate delay. The rollout of Obamacare is a complete mess. The voters can see for themselves that enrollment in Obamacare is a completely unreasonable proposition at this stage, even with the administration’s recent announcement that it will treat any enrollment commitments made before April 1 as satisfying the coverage requirement (previously, the cut-off to avoid the uninsured tax was thought to be mid-February, because the law allows for three months without coverage in a calendar year and it can take several weeks to go from an enrollment submission to initiation of insurance coverage). It should be obvious that the system for determining subsidy amounts for households has not been tested nearly enough to ensure it is reliable and will not waste billions in taxpayer dollars. It will be impossible for the administration to continue its defense of the individual mandate if these conditions remain substantially unchanged through the end of 2013.

You can read the rest of the column here.

posted by James C. Capretta | 2:13 pm
Tags: Obamacare implementation, individual mandate
File As: Health Care

Jumpstarting Entitlement Reform

Replace Obamacare's Flawed Medicare ACOs with a Better Model
October 15, 2013

If the White House and Congress want to make a serious effort at entitlement reform, they should begin by bringing more consumer choice to Medicare, which could be done by replacing Obamacare's Medicare accountable care organizations (ACOs) with a model that provides more consumer choice, as I explain in a new column at e21.

There are far better ways to encourage the spread of high-quality integrated care networks in Medicare.  The fastest, surest way would be to create a level competitive playing field with Medicare’s dominant FFS insurance system. This is the premise of the “premium support” model of Medicare reform. Under premium support, private insurance options—the MA plans of today, plus whatever new models may emerge—would compete directly with the government-administered FFS option on a regional basis, and the beneficiaries would select their coverage from the competing plans. Importantly, the government’s contribution to coverage would not increase with higher priced insurance.  That means the beneficiaries would have to pay more for expensive plans.  The result would be strong incentives for enrollment in options that offer high value at reasonable cost -- exactly what well-run integrated systems of care could offer.

You can read the rest of the column here, and for more on Medicare ACOs,  you can watch this AEI video where I explain what they are and why they won't work as defenders of the Affordable Care Act expect them to.

posted by James C. Capretta | 2:14 pm
Tags: accountable care organizations, Medicare reform
File As: Health Care

Beware the Pivot to a ĎGrand Bargainí

October 9, 2013 • In the ongoing debate over the government shutdown and the upcoming negotiations over the debt ceiling, Republicans should continue to focus on extracting concessions on Obamacare, rather than “pivoting” to a more general debate over the budget. As I argue in a column at National Review Online, the implementation of Obamacare is going to continue to face serious problems that will make opposition to Obamacare the right choice both politically and as a matter of policy.

No doubt the speaker and his allies are looking for an end-game strategy on the CR and debt-limit fights that has a chance of producing a modest victory for the GOP. That’s understandable. But, at this point, they are better off sticking with the fight they already started over Obamacare than with pursuing broader budget talks that could easily backfire.

Ironically, the odds have improved in recent days for extracting concessions on Obamacare from the White House and Senate Democrats. This has nothing at all to do with the shutdown and its political effects and everything to do with the slow-motion fiasco that is the Obamacare rollout. The continued dysfunction at the website is confirmation that the law was not ready to be implemented. And the problems are not limited to the inability of curious citizens to see the insurance options. It is also apparent that the systems are not properly transmitting the required data to the insurance companies to successfully enroll people in coverage. If these problems persist, there could be thousands of people come January 1 who think they have signed up for insurance but have not yet successfully done so.

You can read the rest of the column here. And for those interested in hearing more about the problems with the implementation of the Affordable Care Act, my former colleague from the Office of Management and Budget, Keith Fontenot and I discussed the law's implementation on C-SPAN's Washington Journal on Saturday, October 5th.

posted by James C. Capretta | 11:10 am
Tags: Obamacare, shutdown
File As: Health Care

CBOís Long-Term Budget Projections

The Outlook Is Even Worse Than It Looks

October 3, 2013 • Last month, the Congressional Budget Office released its annual update to its long-term budget projections, and as I explain in a post on the Health Affairs blog, the unsustainable debt and deficits forecasted by the CBO are due to the familiar causes of growing entitlement spending, especially in health care.

The cause of the soaring deficits and debt is familiar:  rapid increases in entitlement spending (on top of the five decade run-up that has already occurred), driven by the aging of the population, rapidly rising health care costs, and spending associated with expanded health entitlements under the Patient Protection and Affordable Care Act (PPACA).  CBO expects that 54 percent of the federal spending increase on the major entitlements over the next twenty-five years will be attributable to the aging of the U.S. population.

Twenty-eight percent of the increase will be due to “excess cost growth” in health care – meaning cost escalation per capita in excess of GDP growth per capita.  The rest of the spending increase is due to the expansion of Medicaid and the new premium credits enacted in the PPACA.  When looking at just the health care entitlements, 40 percent of the federal spending increase is due to excess cost growth, 35 percent from population aging, and 26 percent from the PPACA program expansions.

You can read the rest of the post here.

posted by James C. Capretta | 12:41 pm
Tags: entitlements, debt, deficit
File As: Health Care

Win the Argument

How the GOP Can Get the Upper Hand

October 2, 2013 • In a column at The Weekly Standard, I argue that Republicans should use the budget debates over the government shutdown as a chance to argue for a delay of the Affordable Care Act's individual mandate.

The political and substantive case for a delay in the individual mandate is compelling.  On a political level, what politician wants to defend giving a one-year break to corporate America but not to the little guy?  That’s exactly the position Democrats are now in, and the GOP can swing public opinion their way by making this the central theme of their public case.  In the coming days and weeks, there will be no shortage of opportunities for GOP members and Senators to go on TV, and they should use every chance they get to pound the message home with voters that the Democrats are the ones protecting businesses but not workers.

Substantively, the case is just as strong.  The administration has delayed enforcement of the employer mandate for a year, which means some workers will not get an offer of coverage at their place of work.  Because the individual mandate is still in place, they will have to go into the exchanges to get insurance or pay the uninsured tax.  In two states, New Hampshire and West Virginia, there’s only one plan being offered in the exchanges.  In other states, there are very few choices.  Is it really fair to force American to buy insurance from one insurance carrier, or limit their choices to even two or three plans?  The administration says it will start enforcing the employer mandate in 2015, which means many workers who were forced into the exchanges in 2014 will be forced out of them in 2015 when they get offered employer plans.  Does disrupting insurance like this make any sense?  The GOP should make these points to show that a delay of the employer mandate necessitates a commensurate delay of the individual requirement.

You can read the rest of the article here.

posted by James C. Capretta | 10:53 am
Tags: Obamacare, individual mandate, delay
File As: Health Care

Some Progress on Premium Support

September 20, 2013

Medicare premium support, the entitlement reform plan that has been part of budgets passed by the House Republicans in 2011, 2012, and 2013, was harshly criticized during the last election, with the president repeatedly, and falsely, claiming that the plan would “end Medicare as we know it.” But, as I explain in a column at National Review Online, a new report from the Congressional Budget Office shows that premium support would not undermine Medicare benefits, even though it would be effective at cutting costs.

The CBO’s new analysis concludes that, depending on the specifics of the reform, it would indeed be possible to build a program that moderates federal costs and eases premiums for beneficiaries. For instance, under a premium-support model that used the average of premium bids by region (weighted by the size of the insurer’s beneficiary enrollment) to determine the government’s contribution, federal spending would drop by 4 percent relative to current law and beneficiary premiums would fall by 6 percent.

The key change in the CBO’s assessment: They forecast that intense price competition would cause the private insurance plans to submit bids that are 4 percent below the bids they would submit under today’s Medicare Advantage program. That’s a big difference, given that Medicare’s total per capita costs are expected to approach $12,500 in 2020. This assumed reduction in costs from private insurers would mean an even wider cost gap than the one that already exists between today’s Medicare Advantage plans and the traditional fee-for-service (FFS) program. CBO’s assessment leaves no doubt that private plans, properly run, can deliver Medicare benefits at far lower cost than the existing fee-for-service plans in most regions of the country.

You can read the rest of the column here.

posted by James C. Capretta | 11:37 am
Tags: premium support, CBO
File As: Health Care

More Good News as the Medicare Drug Benefit Approaches Ten Years

September 19, 2013

Contrary to the expectations of its early critics, the Medicare prescription drug benefit has been very successful at using market forces and consumer preferences to keep the cost of drug coverage down over the past decade. In a column at e21 I argue that, instead of bringing more government regulation to the drug benefit program, as the Obama administration is planning, the market-based model of the program should be used as a model for how to reform the rest of Medicare.

new paper from Doug Holtz-Eakin and Robert Book of the American Action Forum documents the compelling record of the drug benefit. For starters, the primary objective of those who authored and pushed for the enactment of the program has been met, which is ensuring access to prescription drugs for America’s seniors. About 90 percent of the Medicare population is now enrolled in a drug plan of some sort. Most beneficiaries get their coverage through one of the private plans competing directly for enrollment within Medicare, but a sizeable portion of Medicare enrollees also get good coverage outside of Medicare through retiree benefit plans. The law facilitated the continuation of these plans.

And the beneficiaries like what they are getting. Surveys of beneficiaries since the program was implemented have consistently shown high consumer satisfaction with the drug benefit plans offered through the program. The most recent survey indicates that 92 percent of Medicare beneficiaries enrolled in a drug plan are satisfied with their coverage, with 58 percent indicating they are “very satisfied” with their current plan.

You can read the rest of the column here.

posted by James C. Capretta | 12:18 pm
Tags: Medicare
File As: Health Care

The Play Should be Delay

September 16, 2013

While there is widespread recognition among conservatives that the Affordable Care Act should be their chief target in the fiscal debates between now and the end of the year, there is some disagreement about whether Republicans in the House should seek to delay or defund the health care law. In a piece in The Weekly Standard, Jeffrey Anderson and I argue that, for both political and substantive reasons, delaying rather than defunding Obamacare is a wiser strategy.

A push for a full-year delay of other major provisions is thus seen not as an unusual and politicized concept but rather as a reasonable response to the reality on the ground. A recent Kaiser poll asked whether Obamacare’s opponents “should continue trying to change or stop it, so it has less impact on taxpayers, employers, and health care providers,” or “should accept that it is now the law of the land and stop trying to block the law’s implementation.” By a 20-point margin—53 to 33 percent—respondents said that Obamacare’s opponents should keep trying to impede its implementation. In other words, Americans don’t think Republicans should just sit by and watch Obamacare go into effect.

The notion of defunding Obamacare gets a very different public reaction. While essentially every poll taken over the past three-and-a-half years has shown that Americans want to see Obamacare repealed, they don’t want to see it defunded. Rather, polls show that Americans oppose defunding Obamacare by large margins—ranging from about 20 to 30 percentage points. Over the past two-and-a-half years, Kaiser has taken eight polls on defunding. On average, those 8 polls have shown 29-point opposition to defunding—61 to 32 percent.  A CBS News poll that showed 18-point opposition to Obamacare (51 to 33 percent) showed 20-point opposition to defunding it (55 to 35 percent).

You can read the rest of the article at the Weekly Standard’s website here.

posted by James C. Capretta | 2:37 pm
Tags: Obamacare
File As: Health Care

Reforming Medicare Integrated Care

August 26, 2013

One of the core provisions for “bending the cost curve down” contained in the Patient Protection and Affordable Care Act (PPACA) are the Medicare accountable care organizations (ACO), which are intended to serve as integrated health plans that will be able to deliver health care more efficiently than the current Medicare fee for service model. But, as I argue in a new AEI research paper, these ACOs do not allow for genuine consumer choice, and because they continue to rely on the fee for service payment model, they are unlikely to deliver on the health care savings that they are supposed to provide.

Private-sector efforts to build high-performing health systems around the country are making real progress in some cases and should be given the room they need to succeed. But this is not the same as saying the ACO program under the PPACA is a success or that it will be successful down the road, which is very unlikely to be the case.

Fortunately, the shortcomings of the ACO model in the PPACA need not be the end of the story. It remains important to encourage the development of more integrated and cost-effective care within Medicare. And that goal can be achieved by replacing the flawed ACO model of the PPACA with a more workable approach based on incentivizing the formation of high-quality plans and on allowing the beneficiaries to share in the cost savings such plans would produce.

The rest of the paper can be read online here.

posted by James C. Capretta | 9:53 am
Tags: Medicare, accountable care organizations, managed care
File As: Health Care

Previous  Next