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As the ACA Stands Up, Can Programs for the Uninsured Stand Down?

March 25th, 2014


It is clear that HealthCare.Gov is working better. Enrollment figures are climbing. Over 5 million Americans have selected a plan through the federal and state marketplaces, and another 6.3 million are getting coverage through Medicaid. While problems remain, the level of interest in getting coverage has grown—to as many as 2 million visits to the federal website in one day.

But amid these public proof points will be another less obvious measure of success—a decline in the need for a patchwork of programs designed to help the poor who continue to lack coverage despite the Affordable Care Act (ACA).

One of those programs, called the 340B Drug Pricing Program, however, shows no signs of slowing down. The 340B program supports clinics and hospitals that serve a high proportion of low-income and elderly patients. 340B requires drug manufacturers to provide discounts to hospitals and clinics that generally serve low-income patients or other groups like HIV-AIDS patients. The program allows hospitals and clinics to dispense the drugs purchased through 340B to their patients who may have their own private insurance coverage and pocket the difference between their deeply discounted purchase price and the amount that a health plan reimburses for the drug. For example, hospitals like Denver Health, which is the public safety-net provider for the city, have used 340B to expand services for at-risk patients. The discounts range from 20% to 50% off the cost of drugs. Those discounts are often bigger than the discounts required of drug manufacturers for Medicaid patients. Federal auditors have found that Denver Health is compliant with program requirements. But they also have found many other facilities to be out of compliance under current federal policy. Moreover, current law and regulations may be inadequate to ensure 340B is truly helping vulnerable Americans.

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GOP Health Care Reforms would Affect Jobs, Too

February 10th, 2014


Lost in the back-and-forth over the most recent CBO report on the Affordable Care Act (ACA) is a simple fact that any expansion of health care coverage for Americans will inevitably have an impact on America’s working habits. It is no less true of GOP proposals than Obamacare.

To make coverage more affordable, any proposal must provide some sort of subsidy. For example, the recent Republican proposal from Sens. Tom Coburn (R-OK), Richard Burr (R-NC), and Orrin Hatch (R-UT) includes a tax credit for lower income workers. The act of giving someone financial assistance for health care will naturally reduce the need to work somewhat.

Rep. Paul Ryan (R-WI) thinks this creates a poverty trap. While Ryan neglects the fact that millions of Americans are bankrupted every year due to medical bills, he instead focuses on the ACA’s subsidies to buy coverage through the federal and state marketplaces. These subsidies decline as workers earn more money, which means that workers have to work a little harder to keep another dollar in take-home pay. So yes, some people will choose to work less to keep their subsidy. But does that make the ACA a poverty trap? Of course not. We have dozens of social insurance programs ranging from food stamps to the Earned Income Tax Credit, and yet we remain the world’s greatest economy.

The alternative to phasing out benefits by income is to provide the same benefit to rich and poor alike, as many European nations do. But that requires higher tax rates or cuts in government services, which, in turn, leads to greater burdens on everyone.

Here is how CBO describes this problem in their most recent report:

CBO’s estimate that the ACA will reduce employment reflects some of the inherent trade-offs involved in designing such legislation. Subsidies that help lower- income people purchase an expensive product like health insurance must be relatively large to encourage a significant proportion of eligible people to enroll. If those subsidies are phased out with rising income in order to limit their total costs, the phaseout effectively raises people’s marginal tax rates (the tax rates applying to their last dollar of income), thus discouraging work. In addition, if the subsidies are financed at least in part by higher taxes, those taxes will further discourage work or create other economic distortions, depending on how the taxes are designed. Alternatively, if subsidies are not phased out or eliminated with rising income, then the increase in taxes required to finance the subsidies would be much larger. 

This is nothing new. CBO had previously estimated that the ACA would have some impact on jobs. What’s new is that the CBO has refined his estimate and made it more precise based on the latest research.

Some conservative commentators like Avik Roy have acknowledged that GOP plans will also affect working habits due to income-based subsidies. But conservatives persist in the belief that GOP alternatives are morally superior even though their actual solutions are just different choices about the amount of the subsidies and the degree of security offered to American workers.

Economics is called the dismal science because it shows the downside to any choice. But there’s nothing dismal about having security and stability in your health care. As Jason Furman, Chairman of the Council of Economic Advisors at the White House explains, the ACA provides many economic benefits. Today, under Obamacare, millions of Americans no longer have to worry about getting coverage for a pre-existing condition.  They don’t have to stay in a job that they don’t like because of their health insurance. And they don’t have to worry about losing their health care coverage if they lose their job. The GOP needs to make it clear whether they disagree with the goals of Obamacare or the means.

Medicare’s Prescription Drug Benefit: A Foundation for Health Care Cost Savings

October 3rd, 2012


With or without a fiscal cliff, health care costs are going to continue to skyrocket and eventually drown out the nation’s ability to protect our borders, fix our roads, inspect food, and educate our children. It will take a concerted effort by both parties to bring health care spending down from its current track, which is projected to consume half of all federal revenues by 2031.

A critical component to lowering health care costs is Medicare’s Part D prescription drug benefit. Enacted under Republican leadership, the drug benefit broke the mold for Medicare policy-making. Instead of setting prices for drugs—as Medicare does for physician and hospital services—Part D uses competition to keep prices in check. Seniors shop for coverage from a menu of plans and learn about prices and coverage from Medicare’s website, pamphlets, and 800 call-in centers. They are very satisfied with the program according to surveys conducted by the Healthcare Leadership Council. Read the rest of this entry »

Tough love: Why Democrats must cut entitlements

August 9th, 2012

by and

This piece was originally featured on Politico.

It’s brother against brother.

Democrats launched two great economic initiatives in the 1960s that would change the country. President Lyndon B. Johnson’s Great Society declared a war on poverty and ushered in two of the nation’s most crucial entitlement programs – Medicare and Medicaid. A few years earlier, President John F. Kennedy embarked on the New Frontier, an investment agenda to make the United States the world leader in space, communications, science, education and infrastructure.

Fifty years later, these two children of Democratic presidents have taken radically different paths. The younger child, the Great Society, has grown to be fat and happy. Counting Social Security, the three major entitlements grew from 15 percent of federal spending in the ‘60s to nearly 50 percent today. The older child, investments, is starved. NASA, the New Frontier’s crown jewel, is a shell. Total spending over all federal investments, from highways to space stations to defense, has declined from one-third of our budget to one-seventh today. Is it any wonder our schools are average, our roads clogged and our scientists mostly imported? Read the rest of this entry »

Next Steps: Health Care Cost Savings and Coverage for the Poor

June 28th, 2012


The Supreme Court ruling on health care re-affirms the President’s goal of stable and secure coverage for the middle class and the nation. It is time for the Republicans to drop their fight against the law and join forces with Democrats against a common enemy: rising health care costs.  Both parties should take full advantage of the key role that states play in health care, an important topic the Supreme Court also ruled on today.

Today’s ruling affects the expansion of health care coverage to the poor under Medicaid. As a quick refresher: the Affordable Care Act required states to expand coverage to all the poor under Medicaid. Today, one-third of the poor have no coverage under Medicaid, through a job, or any other source.

The Supreme Court affirmed the federal funding for that coverage, but said states should be free to choose whether to accept it for expanding Medicaid. From the start of the expansion in 2014 through 2016, federal funding covers 100 percent of the costs of expanding Medicaid, but after that, the states will start splitting the cost with the feds. The state’s costs are capped at 10% of the total, far less than their typical share, which averages 32% across the states.

What does this mean?

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Are We There Yet?

June 12th, 2012


With less than three weeks left before the Supreme Court leaves for the beach — also known as the end of their term — speculation around the fate of the Affordable Care Act has reached a fever pitch within Washington, DC. When will the Court decide?  Will the law be upheld or struck down? Or will the Court leave it bruised and battered? How will it shape the election?  How is it trending on Twitter?

Lost within this uncertainty is a bigger issue—most Americans still have no idea what the bill does. While the public supports numerous individual provisions of health care reform, roughly half do not believe those provisions have been enacted.  Thus, millions of U.S. families won’t know what the Court’s decision actually means for them.

Yesterday’s announcement by three health insurers was a helpful recognition of some of the important provisions in the legislation. UnitedHealth Group, Aetna, and Humana all announced that they would retain some of the benefits found in the Affordable Care Act, whether or not the Supreme Court upholds the law. These provisions—which include allowing dependents to remain on parents’ policies up to age 26 as well as guaranteeing free preventative care, among others—are integral components to ensuring stable and secure health benefits.

We cannot control the Court’s decision—but we can go to back to basics and explain to people what is in this bill. Whether you are a progressive health insurer, a journalist, or a parent, let’s use the Court’s decision to educate Americans about the actual health care benefits at stake.