Monday, January 31, 2011

Has the Florida Judge Stopped the New Health Care Law in Its Tracks?

Reading page 75 of today's Florida opinion it sounds like that is his intent:
(5) Injunction

The last issue to be resolved is the plaintiffs’ request for injunctive relief enjoining implementation of the Act, which can be disposed of very quickly.

Injunctive relief is an “extraordinary” [Weinberger v. Romero-Barcelo, 456U.S. 305, 312, 102 S. Ct. 1798, 72 L. Ed. 2d 91 (1982)], and “drastic” remedy [Aaron v. S.E.C., 446 U.S. 680, 703, 100 S. Ct. 1945, 64 L. Ed. 2d 611 (1980)(Burger, J., concurring)]. It is even more so when the party to be enjoined is the federal government, for there is a long-standing presumption “that officials of the Executive Branch will adhere to the law as declared by the court. As a result, the declaratory judgment is the functional equivalent of an injunction.” See Comm. On Judiciary of U.S. House of Representatives v. Miers, 542 F.3d 909, 911 (D.C. Cir.2008); accord Sanchez-Espinoza v. Reagan, 770 F.2d 202, 208 n.8 (D.C. Cir.1985) (“declaratory judgment is, in a context such as this where federal officers are defendants, the practical equivalent of specific relief such as an injunction . . .since it must be presumed that federal officers will adhere to the law as declared by the court”) (Scalia, J.) (emphasis added).

There is no reason to conclude that this presumption should not apply here. Thus, the award of declaratory relief is adequate and separate injunctive relief is not necessary.
Presumably, this applies only in the 26 states that brought the suit. And, of course we should expect the Appeals Court with jurisdiction over this judge to rule on his finding--including the possibility of an emergency order keeping the law in effect during the appeals. But what happens to the early benefits of the law in the meantime?

More uncertainty over the implementation of the new health law.

You can download the complete opinion here.

Now We Have Real Uncertaintly--The Entire Health Law Ruled Unconstitutional!

We all knew the question of the constitutionality over the new health care law was going to be taken up by the Supreme Court.

We knew that because the law inexplicably lacked a severability clause a judge could throw the whole thing out if the individual mandate were to be found unconstitutional and critical to the legislation.

And, we expected this Florida judge would likely rule against the law in some way.

Up to today, we knew that one federal judge had ruled that only the individual mandate was unconstitutional while two other federal judges had upheld the law.

But, I will suggest that the market's uncertainty about implementing the Affordability Act just went up exponentially with a second federal judge ruling against it. And, there is nothing like the whole thing being thrown out in a suit 26 states have brought.

It will likely be 18 months before we get a final Supreme Court ruling--not to mention a number of Appeals Court Rulings in the meantime. Will they uphold the entire law, throw it all out, or just the individual mandate? Four federal judges have put at least those choices on the table.

If you are a provider, do you now spend millions of dollars developing an Accountable Care Organization? Do you build that new building or make a big technology purchase? If you run an insurance company do you make a big strategic bet on exchanges or now marginal markets?

We really don't know any more this afternoon then we knew this morning.

But the uncertainty index just took a huge jump!

It Will Be Democratic Senators Leading The Charge To Fix Or Improve The New Health Law

I wrote this Kaiser Op-Ed before today's federal court ruling, that held the entire health care law unconstitutional because of the individual mandate. Now that two federal judges have held the individual mandate unconstitutional, this one overturning the entire law because of it, I have to wonder just how long the Democrats are going to wait before they try to amend the Affordability Act in order to jettison the individual mandate that threatens the whole thing.

When the House of Representatives roll was called Jan. 19, only three Democrats joined with House Republicans in voting to repeal the new health law. This development was notable in that it meant most of Democrats who voted against the overhaul the first time around, and were reelected to Congress in November, voted not to repeal it this time -- evidence that they may be sensing that support for the health overhaul hardening. A quick examination of public opinions offers evidence as to why this idea might be taking hold.

First off, recent polls have shown public perception of the overhaul may be improving. Although the country is still evenly divided in its overall feelings toward the new law, a recent Washington Post-ABC News poll found that less than one in five want the whole thing repealed. Similarly, a Kaiser Family Foundation poll released the day of the President's State of the Union address found that, though about half of Americans remain opposed to the measure, most aren't as supportive of repealing, replacing or defunding it as congressional Republicans are. (KHN is a program of the Kaiser Family Foundation.)

Another recent poll, this one by Fox News, found only 27 percent of those asked wanted the whole law repealed while 34 percent wanted parts of it repealed and 20 percent wanted it expanded. And within Fox's collection of numbers, one specific finding jumped out. Only one in seven of those polled by Fox News want the health law to remain as it is. In other words, for now at least, the country seems to be settling on "fix or improve" attitude toward what we have.

Backed by findings like these, Democrats in Congress seem just as convinced defending the bill is a winning issue as Republicans are certain they have the high ground in trying to scrap it.

But what do voters want in the run-up to the 2012 elections? Cooperation.

A recent USAToday poll found that 80 percent of those asked said the President Barack Obama and the Republicans should work to pass legislation they can agree on -- even 70 percent of Democrats agreed with that. Eighty-three percent said that it is extremely important for House Republicans to pass legislation that both parties agree on -- including 77 percent of Republicans.

More than another bitter and protracted health care debate in 2011, what Americans want the Congress to focus on is policies that will lead to more jobs. While I expect a number of House committees to hold lots of health care hearings in the next few months, I also expect Republicans to begin to move on to other issues rather than spend the whole year on health care.

Back home, most House Democrats are not on the defensive over the new health care law. But that is not always the case with Senate Democrats. With a disproportionate number of their seats in play in 2012 -- and with Sen. Kent Conrad, D-N.D., already deciding not to run again -- it will be the Senate Democrats up for reelection who most want to look like they are being the constructive ones. The individual mandate may be one of the areas on which they focus their attention.

My sense is that what many Americans, particularly swing voters, want to hear most about health care is that Democrats and Republicans found a way to work together to make the new law better -- not repeal it, but not leave it as it is either.

Ironically, I expect it will be these vulnerable Democratic senators, not Republicans who still think they have a winning issue bashing the new law, who will be the most eager to fix or improve the measure.


Friday, January 21, 2011

"Quit the RUC"

Brian Klepper and David Kibbe have a notable column at Kaiser Health News arguing that the American Medical Association's Relative Value Scale Update Committee (RUC) is specialist dominated and steers health care resources away from primary care:

Not surprisingly, the Committee’s payment recommendations have consistently favored specialists at the expense of primary care physicians. More striking, however, is CMS’ rubber stamping of about 90 percent of their suggestions, even though, in their last three service reviews, the RUC urged payment increases six times more often than decreases.

This arrangement has played out well for specialists, but the health system consequences have been catastrophic. One significant result has been a primary care shortage. Specialists now earn, on average, $135,000 a year and $3.5 million over the course of their careers more than their primary care colleagues. The income disparity has driven all but the most idealistic medical students away from primary care.

You can read the entire column here.

Monday, January 17, 2011

The House Health Care Repeal Vote, the National Debt, and the Imperative for Democrats and Republicans to Compromise

This week's House health care repeal vote is little more than a political stunt--everyone knows the effort will die in the Senate.

But, when the day is done the only way for the Republicans to do anything with the new health law will be to work out a compromise—repeal before the 2012 elections is impossible and it isn’t very likely after the 2012 elections. Even if the Republicans sweep the White House and both houses of Congress in 2012, it is highly unlikely they will have the 60 Senate votes needed for a full repeal.

So, in the end, a compromise will be needed.

During the past week, more than one Democrat has indicated an interest in at least looking at compromise amendments to the health care bill—particularly on the individual mandate. But so far, Republicans are showing no signs of being interested in fixing what they say is a bill so bad it should only be repealed.

The House vote will take place against a backdrop of increasing debt and enormous fiscal challenge. In recent days, the national debt passed the $14 trillion mark—that is $45,300 for every person in the country!

Half of our national debt was added in just the last six years. The debt was “only” $7.6 trillion in January 2005 and $10.6 trillion the day President Obama was inaugurated just two years ago.

Last year the deficit was $1.7 trillion and the estimate is for the deficit to be $1.3 trillion this fiscal year—40% of this year’s budget is unpaid for.

The estimate is that the federal government will hit the statutory debt ceiling by the end of March or early May. Lots of newly elected conservatives want to use the required vote to increase it as their first salvo against deficit spending. The problem is that we are going to need to raise the ceiling or face default on our debt.

This debate will be a thorny one for both sides: “The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance the government's reckless fiscal policies.” That was a statement on the Senate floor by Senator Obama on a prior debt-ceiling vote (to $9 trillion) in 2006.

It is not possible to have a conversation about getting America’s fiscal house in order without talking about health care—the single largest driver of federal spending. How both sides get around to talking about health care cost containment having punted on that issue for the last two years will be interesting to watch.

And, neither side can deal with the national debt until they are willing to get serious about working together on the health care entitlements.

In a recent post, I listed a number of places both sides could compromise on improving the Affordability Act:

1. Eliminating the individual mandate and replacing it with freedom of choice with responsibility – The existing mandate gives many families the choice of paying a fine they can't afford or paying even higher and more unaffordable insurance premiums. Because the penalty doesn't apply when family premiums reach 8 percent of income, which will be the case for many, it isn't even a very effective individual mandate.

Instead, a compromise could make guarantee issue health insurance entirely voluntary. If it is purchased when the consumer is first eligible -- such as when the exchanges are first available or at the time of a new job -- the consumer would not be subjected to underwriting or preexisting condition rules. The compromise, though, should let consumers purchase and use their health insurance at any other time. But if they didn't purchase coverage when they were first eligible, any preexisting condition would be subject to a two-year waiting period.

2. Eliminating the benefit mandates in the new law and creating a free market of health insurance choices, but with a standardized baseline for ease of comparison – Eliminate all of the benefit mandates in the new law requiring individual market and exchange consumers to purchase only plans that are yet to be outlined in what will be hundreds of pages of regulations. Instead, a compromise could have only two new benefit requirements. One could be a standard plan, which would take the law's existing "silver plan" and use it as a baseline. Every insurer would have to offer this coverage on the exchange or in the individual market. But insurers could also offer consumers any other plan design, so long as they told consumers the relative actuarial value the other plans had to the standard plan. The second would be a health savings account. Every insurer would have to offer an HSA-style program and state its value relative to the standard plan. Consumers who would be eligible for premium subsidies would have any premium savings deposited in a health savings account.

3. Eliminating the "Cadillac" tax on high cost health insurance plans and introducing elements of a conservative defined contribution approach to the existing liberal defined benefit legislation – With exchange premium subsidies already based upon the value of the new law's silver plan (and they should continue to be), the compromise could limit the employer deduction for health insurance, as well as the individual income tax exemption for employer-provided health insurance, to the cost of the standard plan (currently the silver plan) in any year. Phase this limit in over a period of seven-years -- to 2018, when the "Cadillac" tax was to take effect. As a result, tax policy would continue to support comprehensive coverage but also provide real incentives for consumers to buy wisely.

4. Using the budget gains from limiting the existing health insurance tax preference to pay for such things as improving the now inadequate insurance subsidies for the middle-class, permanently fixing the Medicare physician payment issue, or for reducing the deficit. In 2008, the CBO calculated a 10-year savings of $450 billion by limiting health plan tax preferences to the 75th percentile of premiums then paid by employers.

5. Letting states have the flexibility to experiment with alternatives by enacting the proposal by Sen. Ron Wyden, D-Ore., and Sen. Scott Brown, R-Mass., that would move up to 2014 the year in which states can submit proposals to the Secretary of the Department of Health and Human Services to implement their version of health care reform. The law already allows states to petition the federal government to use the overhaul's money to enact their own plans so long as they cover as many people as the new law would have -- but not until 2017.

Monday, January 10, 2011

Strong Evidence A Bipartisan Agreement on Health Care Was Possible in 2009

Readers of this blog have often heard me say that a bipartisan agreement on a health care bill was possible in 2009--driven from the Senate Finance Committee. I have continually made the point that the two sides were much closer than is commonly believed--or partisans are willing to concede.

Every time I post this, the overwhelming reaction is that I am wrong--with one side inevitably blaming the other for a lack of good faith in the discussions.

Bara Vaida had an interview in Friday's Kaiser Health News with Mark Hayes, who was the lead Republican health staffer on Senate Finance at the time and had a "clear view" of the negotiations.

Here are the key excerpts:
Q: [Vaida] Key Democrats, including Senate Majority Leader Harry Reid, D-Nev., recently said their biggest regret was allowing the Senate Finance Committee leaders, your former boss Sen. Grassley and committee chair Max Baucus, D-Mont., to spend so much time trying to forge a bipartisan compromise on health care. What do you think about that criticism?

A: [Hayes] We really devised much of the health care framework even before the Gang of Six Senate (Finance Committee) leaders started meeting. In the summer of 2008, Sens. Grassley and Baucus held a summit and we were chugging along with planning our roundtables and it is my understanding that the leadership was frustrated with us that we were moving too quickly and they wanted us to slow down. We got agreement on 80 percent of the framework even before the Gang of Six started meeting to take on the remaining 20 percent. People were naturally impatient but the complexity of the job, connecting the dots and making the model work is a huge challenge so those who pushed for it to be done quickly were watching the clock and likely didn't have a full appreciation for the issues we were attempting to resolve. The idea that the health care law could be done quickly and be done right is like saying you can go to the moon on the first try.

Q: [Vaida] What were the pieces that had been agreed to and what was the remaining 20 percent?

A: [Hayes] We agreed on the structure of the exchanges, state regulation, insurance reform, delivery system reform, the creation of the innovation center and financing mechanism. The last pieces that needed to be resolved and became problematic were the amount of funding, the offsets and the way the individual mandate would be implemented.
This was a huge missed opportunity. Partisanship--particularly from the Congressional leadership and the White House--overwhelmed what could have been a bipartisan agreement.

Even then, I doubt any of the players foresaw the degree of political and market uncertainty, as well the national division over the new law, that ramming this thing through has caused.

Why does anyone ever think partisanship is superior to bipartisanship? Yet, a year later the Congress is more polarized than ever with many of the more bipartisan members from 2009, like Bob Bennett of Utah, in forced retirement.

Thursday, January 6, 2011

Karl Rove’s Criticism of AARP Was a Cheap Shot and Uninformed

Readers of this blog know that I am willing to call AARP out when I think they deserve it. Witness my recent post criticizing their reaction to the chairs of the Deficit Commission and their preliminary report when AARP acted more like a narrow minded advocate than an enlightened organization that understands the inevitability of fundamental reform to the entitlements.

And, I have never been comfortable with their advocacy for both the Republican Part D program as well as the Democratic health care bill when a big share of their revenue comes from health insurance commissions.

But Rove’s recent column in the Wall Street Journal claiming the Obama administration was giving AARP a pass from the new health law’s regulations because the organization is a political ally is just an uninformed cheap shot.

Rove cites recent Obama administration regulations that exempt Medigap plans, a big seller for AARP, from rate review and other mandates such as the minimum loss ratio rules. Medigap plans were exempted because the entire Medigap industry argued they should be—and for good reason. Medigap premiums are only a fraction of the premium of traditional health insurance or Medicare Advantage plans—the same loss ratio rules simply wouldn’t work there. The benefit structure of Medigap plans is already highly regulated and it wouldn’t make sense to try to stretch the new law’s insurance rules to that market segment.

AARP didn’t get anything the rest of the Medigap industry did not get and for good reason.

Rove also points out that AARP is exempt from the cap on insurance industry pay that can be deducted for tax purposes and argues this is another pay-off to an Obama political ally. But AARP is not an insurance company and therefore was never going to come under this provision. AARP is an insurance agency and no insurance agency is subject to this limit.

Rove also argues that AARP gets a break from the Obama regulations because it doesn’t have to pay the new insurance company premium tax—again it is not an insurance company. None of the nation’s insurance agencies will pay the tax.

AARP’s insurance company partner, the real insurance company in the AARP senior product offering, will have to comply with all of the insurance company requirements such as tax caps on its executive pay.

There simply aren’t any special AARP exceptions.

I find it more than ironic that the same Karl Rove that drove the Medicare Part D benefit during his time in the Bush White House, that added $8 trillion to the long-term Medicare unfunded liability—because none of the new program's cost was paid for—and had AARP issue a pivotal last minute endorsement of that Republican initiative, would now criticize the senior group.

In 2003, I thought it inappropriate that AARP, part of it a giant senior insurance agency that had a great deal to gain by selling the new drug benefit, provided an endorsement most observers felt at the time put the Republican legislation over the top.

There are lots of things to be critical about in this new health care law and how it was passed.

I am troubled by AARP’s recent unwillingness to use its influence to educate its members on the necessity of entitlement reform and the sacrifices everyone will have to ultimately make. AARP should be a leader on this front—not just another self-serving special interest.

But I will also suggest that Karl Rove, or any of us, could provide a better service by getting the facts straight and minimizing the self-serving hypocrisy.

Tuesday, January 4, 2011

Improving The Health Law In 2011: Realistic Ways To Reach Bipartisan Compromise

This post originally appeared at Kaiser Health News.

The new health care law can be changed in ways that would make it acceptable to a bipartisan majority in the new Congress -- and, therefore, to the American people. But to find this elusive middle ground requires consideration of the competing philosophies at the heart of the nation's political divisions regarding this sweeping measure.

For starters, liberals want a health insurance system in which everyone is covered in a more equitable health insurance pool, but conservatives argue the individual mandate used to accomplish this goal is an unconstitutional encroachment on individual freedom.

Liberals also want a standardized competitive marketplace for health insurance ensuring consumers get comprehensive benefits, but conservatives argue that this would destroy choice and the free market, and create hundreds of pages of rules about what people can and can't buy.

And liberals want every citizen to be entitled to a comprehensive health insurance plan -- a defined benefit. But conservatives want individuals to have incentives, including tax incentives, to purchase and use coverage responsibly -- defined contribution health insurance.

However, there are ways to modify the new health law so that it includes the key elements both sides see as central to moving toward covering everyone and doing it in a way we can better afford.

The key elements of such a compromise could include:

1. Eliminating the individual mandate and replacing it with freedom of choice with responsibility – The existing mandate gives many families the choice of paying a fine they can't afford or paying even higher and more unaffordable insurance premiums. Because the penalty doesn't apply when family premiums reach 8 percent of income, which will be the case for many, it isn't even a very effective individual mandate.

Instead, a compromise could make guarantee issue health insurance entirely voluntary. If it is purchased when the consumer is first eligible -- such as when the exchanges are first available or at the time of a new job -- the consumer would not be subjected to underwriting or preexisting condition rules. The compromise, though, should let consumers purchase and use their health insurance at any other time. But if they didn't purchase coverage when they were first eligible, any preexisting condition would be subject to a two-year waiting period.

2. Eliminating the benefit mandates in the new law and creating a free market of health insurance choices, but with a standardized baseline for ease of comparison – Eliminate all of the benefit mandates in the new law requiring individual market and exchange consumers to purchase only plans that are yet to be outlined in what will be hundreds of pages of regulations. Instead, a compromise could have only two new benefit requirements. One could be a standard plan, which would take the law's existing "silver plan" and use it as a baseline. Every insurer would have to offer this coverage on the exchange or in the individual market. But insurers could also offer consumers any other plan design, so long as they told consumers the relative actuarial value the other plans had to the standard plan. The second would be a health savings account. Every insurer would have to offer an HSA-style program and state its value relative to the standard plan. Consumers who would be eligible for premium subsidies would have any premium savings deposited in a health savings account.

3. Eliminating the "Cadillac" tax on high cost health insurance plans and introducing elements of a conservative defined contribution approach to the existing liberal defined benefit legislation – With exchange premium subsidies already based upon the value of the new law's silver plan (and they should continue to be), the compromise could limit the employer deduction for health insurance, as well as the individual income tax exemption for employer-provided health insurance, to the cost of the standard plan (currently the silver plan) in any year. Phase this limit in over a period of seven-years -- to 2018, when the "Cadillac" tax was to take effect. As a result, tax policy would continue to support comprehensive coverage but also provide real incentives for consumers to buy wisely.

4. Using the budget gains from limiting the existing health insurance tax preference to pay for such things as improving the now inadequate insurance subsidies for the middle-class, permanently fixing the Medicare physician payment issue, or for reducing the deficit. In 2008, the CBO calculated a 10-year savings of $450 billion by limiting health plan tax preferences to the 75th percentile of premiums then paid by employers.

5. Letting states have the flexibility to experiment with alternatives by enacting the proposal by Sen. Ron Wyden, D-Ore., and Sen. Scott Brown, R-Mass., that would move up to 2014 the year in which states can submit proposals to the Secretary of the Department of Health and Human Services to implement their version of health care reform. The law already allows states to petition the federal government to use the overhaul's money to enact their own plans so long as they cover as many people as the new law would have -- but not until 2017.

The Republican House of Representatives will almost certainly vote to repeal the new health care law early this year. But everyone knows that is for show -- the Democratic-controlled Senate will not go along, nor will President Barack Obama.

On the current partisan political track, we are destined to have a stand-off for two years with Democrats and Republicans blaming each other for gridlock while uncertainty over the new health law, and its 2014 deadlines, has consumers, employers, and health industry stakeholders unable to plan for the future -- only providing another burden of uncertainty in an economy trying to regain its footing.

If the Congress waits until after the 2012 elections before seriously considering changes to the law, it will be 2013 and less than a year before key elements of the legislation are due to take effect.

Or, we can recognize that both sides can get a lot of what they really want by agreeing to a few key and carefully placed changes to the existing law.

Liberals can improve even further the promise that consumers will have access to comprehensive health insurance while still bringing down the cost and underwriting barriers.

Conservatives can significantly move toward their goal of a free market for health care by expanding choices and crafting new incentives for people to make more efficient health care purchasing decisions.

And, these objectives can coexist, giving the American people the confidence we really have accomplished something.

Or, both sides can play a cynical game in the run up to 2012 and the people can be the losers.
Avoid having to check back. Subscribe to Health Care Policy and Marketplace Review and receive an email each time we post.

Blog Archive