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Posts Tagged ‘Medicaid’

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

March 25th, 2014

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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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The Left’s Four Fiscal Fantasies

June 28th, 2013

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This piece was originally published in the Washington Post.

There is a rising chorus on the left, most recently articulated in an op-ed Monday by Neera Tanden and Michael Linden [“Deficits are not destiny”] of the Center for American Progress, that our fiscal conversation should be declared over and plans for meaningful entitlement reforms mothballed. These voices argue that we can have substantial new spending on public investments, a secure safety net, no middle-class tax increase — all without addressing entitlement spending.

Lo, if it were so. But the left’s reasoning is predicated on four fiscal fantasies that Democrats must see through if they hope to expand the economy, help the middle class and keep the safety net solvent.

Fantasy No. 1 is that taxing the rich solves our problems. Let’s say the top income tax rate were raised a whopping 10 points, to 49.6 percent — a level higher than anything under serious consideration. Tack on the “Buffett rule,” with its 30 percent minimum tax on millionaires to squash loopholes. And let’s take a whack at wealthy inheritances, cutting the estate tax exemption by about one-third and setting the rate on large estates at 45 percent.

If we leave entitlements be, our annual budget deficit in 2030 would still be $1.3 trillion in today’s dollars, not much different from the $1.6 trillion deficit we’d have if income tax rates for the wealthy are kept the same. Sure, raising some additional taxes on the wealthy is necessary, but it is not nearly sufficient.

Fantasy No. 2 is that “we can have it all” — a bigger safety net and more investments that spur growth and opportunity. Events of the past 50 years say the opposite.

In the mid-1960s, the federal government spent $3 on public investments for every $1 on the major entitlement programs. By the early 1970s, the ratio was one to one. Last year, it flipped. The federal government spent $3 on Social Security, Medicare and Medicaid for every $1 on federal investments, according to our analysis of data from the Office of Management and Budget. By 2022, the ratio will be one to five. In other words, entitlement programs are drowning out public investments just as international competition and technology demand that we need these investments the most.

That is a 50-year trend, but what is most mind-boggling is that some on the left still cling to a belief — bordering on faith — that if a spending program is worthy, voters will support it without trade-offs. Yet the evidence is clear that as Democrats have sought to increase spending beyond a certain point, voters have taken them to the woodshed. Recall 2010: The health-care bill (which our organization vigorously endorsed) exceeded the limits of what voters were willing to spend after the 2009 stimulus, auto rescue and bank bailout. That November, Democrats lost the House, Republicans controlled 29governorships and the tea party became dominant.

Fantasy No. 3 is that a delay on entitlement fixes is benign for the middle class. As evidence, some liberals point to this year’s Medicare trustee report, in which the program’s fiscal outlook — mercifully — improved. In truth, it improved from horrid to awful. We can’t make even that boast about Social Security, where the outlook is plain wretched. Over the past 10 years, the Social Security insolvency date had leapt forward from 2042 to 2033. The hope was that an improving economy would push the date farther out. It did not, and every indicator of Social Security health worsened between the 2012 and 2013 trustee reports.

If there is one message from the trustee reports, it is that every year we wait, the inevitable fixes to Social Security and Medicare get harder. Here is one example: Several years ago, proponents of an all-tax solution to Social Security solvency called for eliminating the cap on payroll taxes to solve the entire problem. Now they say it solves most of the problem. That’s because we waited too long. Eliminating the FICA cap — a step that we do not support — solves 79 percent of the problem. Now, supporters of a tax-only solution also call for adding a point to the payroll tax rate for all workers. That one point means a tax increase of $650 a year for a typical working family. Over the course of their working lives, it will come out to more than $20,000. Waiting is anything but benign.

Fantasy No. 4 is that the politics to fix entitlements will get better. In fact, the politics will get worse every election cycle. In 2012, one out of six voters was a senior citizen. By 2024, one in four will be, based on the Census Bureau’s Statistical Abstract. How will we possibly fix safety-net programs for the elderly then? The answer: on the backs of the working-age middle class.

The country and Democrats face real fiscal choices. Avoiding them in favor of fantasies is not the answer.

Entitlement reform key to U.S. future

February 27th, 2013

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This piece was originally published in Politico.

As the sequester blame game hits fever pitch this week, Republicans’ stance on taxes is simply indefensible, falling hundreds of billions short of even their own prior positions. But as Democrats, we also share a large portion of responsibility for the coming cuts to domestic discretionary spending, as the party has decided in both action and rhetoric that meaningful fixes to the major entitlement programs of Medicare, Medicaid and Social Security are off-limits.

Think about it. Over the past three years, from debt ceiling deals to the supercommittee and the fiscal cliff, social insurance programs have escaped virtually unscathed while every other category of spending took some hit and revenue grew. And because of the sheer enormousness of the Big 3 entitlements, Democrats face a serious new crisis that is closer to home and will linger long past the sequester: There is now barely a farthing left in the budget for any new investments.

Over the past century, Democrats can boast two major economic legacies. The first is the safety net programs of the New Deal and the Great Society — successful programs that lifted the elderly and vulnerable out of poverty. The second is the New Frontier investment programs defined and expanded under President John F. Kennedy. These investments in science, space, defense, education, as well as highways, rails, ports and medical breakthroughs helped power the U.S. economy during the latter half of the 20th century.

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Hmm? Entitlements aren’t crowding out investments??

August 3rd, 2012

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Dylan Matthews posted on our paper this afternoon, and we appreciate the opportunity to continue the dialogue. So let’s get started.

Should Social Security be left out of this discussion, as Mr. Matthews suggests? Is it really only the health care entitlements we need to contain?

He is correct, and we showed in our paper, that over the past 50 years, all of Social Security’s growth relative to GDP has occurred in the first 20 years and has stayed roughly static since. But five percent of the economy is a lot. It’s roughly equal to Medicare, Medicaid and CHIP combined. And it’s not going to stay static – that is a certainly. In less than two decades, Social Security is poised to jump from 5.0% to 6.0% of GDP, according to CBO. One point may not seem like a big deal, but it represents a 20% rise in the cost of Social Security relative to the size of the economy. That’s not peanuts, especially since (as Mr. Matthews rightly points out and we also show in our paper) our health care entitlements will sprint ahead much faster. Read the rest of this entry »

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

June 28th, 2012

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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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The Deficit Primary

April 13th, 2011

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This piece was originally published in Politico.

With today’s address on deficit reduction, President Barack Obama is making a shrewd opening move for his 2012 campaign — laying claim to the political center, challenging Beltway orthodoxies and setting the stage for a possible historic agreement on the budget.

Obama reportedly is set to propose serious entitlement reforms — only three months after 200 progressive groups lobbied the White House to keep Social Security, Medicare and Medicaid off the agenda. Instead, he’s expected to reach out tonight with both hands and grab onto the “third rail” of American politics.

But rather than getting burned, Obama may emerge well positioned for his reelection.

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