House Votes To Repeal Part Of Healthcare Law

(Reuters) - The House of Representatives voted on Wednesday to repeal a provision of President Barack Obama's healthcare overhaul setting up a home-care program for the elderly and disabled that regulators said was unworkable.

The Republican-led House voted 267-159 for the bill that would terminate the Community Living Assistance Services(CLASS) Act that was supposed to create a voluntary insurance program to help the elderly and disabled pay for home care.

Republicans called it a step toward achieving their goal of dismantling the healthcare overhaul Obama signed into law nearly two years ago.

The legislation is not expected to pass the Democratic-controlled Senate even though Republicans are expected to push for a vote on it.

"There is no doubt that the president's healthcare plan is killing jobs," said Republican Representative Jeb Hensarling. "House Republicans have repealed it in its totality. It has been blocked by the president, by Democrats and so if we can't do it in its totality we'll do it piecemeal. We need to start out by repealing the CLASS Act."

Democrats opposed to scrapping the program acknowledged that it had a flawed design, but they argued it should be fixed rather than repealed so millions of elderly and disabled people could receive help at home rather than be placed in usually more expensive institutional care.

"You stand there with no alternative whatsoever," Democratic Representative Bill Pascrell shouted at Republicans on the House floor. "Millions of people out there are suffering. Where is your heart ... you have no heart."

The Health and Human Services Department last October pulled the plug on the program after officials determined they could not come up with a model that would keep it voluntary and solvent without adding to long-term U.S. budget burdens.

The law calls for workers to begin voluntarily enrolling in the program later this year. Participants would have paid monthly fees for at least five years before qualifying for benefits.

The Congressional Budget Office saw the program raising money in the short run, but adding to long-term budget imbalances in a few decades as the program began paying out more in benefits than it collected in premiums.

(Reporting By Donna Smith; Editing by Eric Walsh)

Why the Pilot Programs Failed

By John Goodman, Health Policy Blog

Just about everybody in the health policy blogosphere has noted with disappointment the failure of Medicare’s demonstration projects to reduce the costs of care. Recall that these are critical to President Obama’s challenge “To find out what works and then go do it.”
If nothing works, the fallback weapon in Obama Care is to reduce fees paid to doctors and hospitals. Yet the Medicare actuaries tell us that squeezing the providers in this way will put one in seven hospitals out of business in the next eight years, as Medicare fees fall below Medicaid’s. Under this scenario, senior citizens may be forced to line up behind welfare mothers, seeking care at community health centers and in the emergency rooms of safety net hospitals.

I believe this is the only blog that has confidently predicted that health care costs will never be controlled by running pilot programs and trying to “copy what works.” (Note, however: the Congressional Budget Office has shared our viewpoint from the beginning.) I’ll explain why I predicted failure all along below. First let’s review the latest results.

Over the past two decades, Medicare’s administrators have conducted two types of demonstration projects.
Disease management and care coordination demonstrations consisted of 34 programs that used nurses as care managers to educate patients about their chronic illnesses, encouraged them to follow self-care regimens, monitored their health, and tracked whether they received recommended tests and treatments. The primary goal was to save money by reducing hospitalization. With respect to these efforts, the Congressional Budget Office (CBO) finds:
On average, the 34 programs had little or no effect on hospital admissions.
In nearly every program, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program.

Value-based payment demonstrations consisted of four programs under which Medicare made bundled payments to hospitals and physicians to cover all services connected with heart bypass surgeries. With respect to these, the CBO finds that “only one of the four … yielded significant savings for the Medicare program” and in that one Medicare spending only “declined by about 10 percent.”

As Robert Laszweski put it at The Health Care Blog the other day, “thirty years into managed care, the stark reality is that we aren’t yet smart enough to get things under control.” That’s an understatement.

So why is none of this working? Because it all involves people on the demand side of the market trying to take the place of entrepreneurs who would ordinarily be on the supply side in any other market.
Successful innovations are produced by entrepreneurs, challenging conventional thinking – not by bureaucrats trying to implement conventional thinking. There are lots of examples of successful entrepreneurship in health care. There are very few examples of successful bureaucracy. Can you think of any other market where the buyers of a product are trying to tell the sellers how to efficiently produce it?

On the supply side, we have the islands of excellence (Mayo, Intermountain Healthcare, Cleveland Clinic, etc.). On the demand side, we have a whole slew of experiments with pay-for-performance and other pilot programs designed to see whether demand-side reforms can provoke supply-side behavioral improvements. And never the twain shall meet.
We cannot find a single institution providing high-quality, low-cost care that was created by any demand-side buyer of care. Not the Centers for Medicare and Medicaid Services (CMS), which runs Medicare and Medicaid. Not Medicare. Not BlueCross. Not any employer. Not any payer, anytime, anywhere.

Also, wherever we do find excellence we almost always discover that it cannot be copied. Megan McArdle argues that pilot programs — even when they work — are not scalable in every field.
In health care, scholars associated with the Brookings Institution identified 10 of the best hospital regions in the country and then tried to identify common characteristics that could be replicated. There were almost none. Some regions had doctors on staff. Others paid fee-for-service. Some had electronic medical records. Others did not. A separate study of physicians’ practices found much the same thing. There were simply not enough objective characteristics that the practices had in common to allow an independent party to set up a successful practice by copycat alone.

Bottom line: bureaucracies can’t do what only markets can do.

Picturing a world with transparent health care costs

Posted January 30, 2012 by Mark Gaunya

Mr. Gaunya goes to Washington . . . and comes home renewed with confidence and appreciation.

Each year, the National Association of Health Underwriters holds a legislative “fly-in” called Capitol Conference. Well over 1,000 brokers, consultants and employee benefit professionals make the annual pilgrimage to DC to share best practices, educate their legislators and build long-lasting relationships by supporting our profession and the clients and consumers we serve.

As the President of the Massachusetts Association of Health Underwriters, I look forward to this trip every year because it gives me the opportunity to work with my colleagues and make a difference to over 100,000 brokers, consultants and employee benefit professionals and the millions of people they protect through insurance and financial services.

After a couple of challenging and often frustrating years culminating with the passage of the Patient Protection and Affordable Care Act, we returned to the Hill with two specific messages:

1. The Medical Loss Ratio (MLR) provision needs to be amended to exclude broker compensation

2. Support transparency by requiring the disclosure of cost & quality information to help consumers make informed choices

What happened?

We gained considerable ground by the time we left DC – securing commitment for 20+ more Congressmen to support H.R. 1206 in the House of Representatives and receiving word that the Senate would be introducing a companion bill.

On the third and final day of our meeting, it was announced that a bill modeled after H.R. 1206 will be sponsored by Sens. Mary Landrieu (D-LA), Johnny Isakson (D-GA) and Bill Nelson (D-NE). The new legislation will not be identical to H.R. 1206, but instead will include minor targeted improvements based on the market’s response to the MLR requirements over the past year. The lead co-sponsors of H.R. 1206, Reps. Mike Rogers (R-MI) and John Barrow (D-GA), have indicated their support for the updated Senate measure.

This is tangible proof that our legislators understand and value our role as trusted advisors to employers and consumers for health insurance and comprehensive employee benefits. It provides relief to thousands of small businesses who employ benefit professionals that make a difference in lives of their clients every day . . . and it demonstrates the power of working together toward a common set of ideals.

If you refer back to my first blog, it will not surprise you that I’m writing about transparency. Without it, we will NEVER solve the problem of rising healthcare costs. What did we do about it at this Capitol Conference? We sharpened our focus and delivered a message that is being well received from both sides of the aisle.

Our clients want to make informed health care choices and we need to equip them with easy to understand information. How? Let’s start with making the language health care providers and insurers use to talk to each other visible to the American public . . . procedural or billing codes (CPT and ICD-9). Rather than “reform” the way providers are paid (like the last blog I wrote), let’s make contracted costs transparent to the consumer so BEFORE they seek the care they need in non-emergency situations, they use that information to look for the best value weighing both cost and quality. And rather than waiting for quality to be defined and used as a reason not to expose cost, let’s support transparency first and let the market and competitive pressure sort out how quality is measured.

Can you imagine a world where the “new norm” required insurers and providers to disclose what they charge upfront so consumers could make informed decisions, avoid unnecessary care and helps us understand that care can be expensive but not necessarily better in value? I can see it .. . I hope you can too. Next time you see your State NAHU Chapter volunteers, thank them for making a difference, they are working hard for you.

Did you attend the conference? Share your reflections on it in the comments.

Gaunya, GBA, is principal at Methuen, Mass.-based Borislow Insurance. He can be reached at 978-689-8200 or mark@borislow.com

S&P Warns Cuts Loom For G20 Nations On Health Costs

(Reuters) - Ratings agency Standard & Poor's warned it may downgrade "a number of highly rated" Group of 20 countries from 2015 if their governments fail to enact reforms to curb rising healthcare spending and other costs related to aging populations.

Developed nations in Europe, as well as Japan and the United States, are likely to suffer the largest deterioration in their public finances in the next four decades as more elderly strain social safety nets, S&P said in a report.

"Steadily rising healthcare spending will pull heavily on public purse strings in the coming decades," S&P analyst Marko Mrsnik wrote in the report.

"If governments do not change their social protection systems, they will likely become unsustainable."

If no reforms are adopted, healthcare-related credit downgrades would likely start within three years, eventually leading to an increase in the number of junk-rated countries as of 2020, the study showed.

Byun Yanggyu, director of macroeconomics at the Korea Economic Research Institute warned developed nation will eventually become the victims of their social safety nets.

"The more developed countries get, the more complicated their welfare structures become. In order to cover all necessary means in terms of welfare, spending elsewhere will have to shift there," Byun told Reuters.

"I believe our country is headed more so in that direction...and it will dull our production in the end," he said. "There is a bigger chance that developed countries will be subject to a downgrade from this point of view."

Healthcare will likely be the fastest-growing expenditure for developed countries, which already have high social protections and rapidly worsening demographic profiles.

For example, Japan's population is expected to decline by 30 percent by 2060, with two out of every five people turning 65 or older, according to official data.

Japan's welfare spending, which includes pensions and health, is expected to reach nearly 108 trillion yen ($1.4 trillion) in the current fiscal year, around 22 percent of GDP.

By 2025/26, spending is forecast to hit 141 trillion yen.

"Over time it must be a real problem for Japan," said Adrian Foster, head of financial markets research at Rabobank International in Hong Kong. "There's a call for authorities to push through fiscal reform. When you look at the government they seem to lack any real ability to respond to it."

FALLING FERTILITY RATES

Falling fertility rates and a rapidly aging population are problems facing most of Japan's richer neighbors too. South Korea, Singapore and Taiwan have flirted with policies aimed at boosting marriage and childbirth, but with limited success.

South Korea is the most dramatic example of the trend. In the past 40 years, as its economy has boomed, it has gone from having one of the highest birth rates among developed countries to one of the lowest. By 2050, almost 40 percent of the population is likely to be over the age of 65.

A report released by Seoul's Ministry of Strategy and Finance last July warned the national debt would jump to 138 percent of gross domestic product (GDP) in 2050 as pension and health insurance costs soar, from around 34 percent last year.

Emerging market countries, especially in Southeast Asia, have a little more room to maneuver due to more favorable demographic dynamics and economic growth, S&P said.

But even in that region the picture is changing -- in Thailand, for example, the proportion of the population aged over 60 is projected to rise to nearly a quarter by 2030 from around 13 percent now.

Asia, however, may suffer less from this demographic shift than Western nations because, by and large, the social welfare net in the region is not as extensive, Rabobank's Foster said.

"The fact that most of Asia doesn't have the entitlement society that the West has generated means the demographic timebomb is not going to be as significant," he added.

NEW TECHNOLOGIES

Demographics will not be the only factor driving up health-care costs. More expensive new technologies and broader treatment coverage may account for as much as two-thirds of the projected increase in healthcare spending, according to a study by the International Monetary Fund cited by S&P.

Pension system reforms alone would not be enough for G20 countries, S&P said in the report.

If legislation were enacted to contain future increases in age-related spending without also tackling healthcare spending, the results would be only slightly less severe than under a no-policy-change scenario.

"The probable increase in projected healthcare costs alone is so substantial that the impact of these reform efforts would not be enough to meaningfully reverse the resulting credit deterioration," S&P said.

Australia, which has more favorable demographics than most developed nations because it can easily attract skilled migrants, illustrates the problem.

A 2010 government survey projected population ageing would push total state spending from 22.4 percent of GDP in 2015/16 to 27.1 percent by 2049/50 -- with health accounting for two-thirds of that increase. As a result, spending would exceed revenue by 2.75 percent of GDP in 40 years.

S&P said it was not too late for G20 countries to tackle the problem, but reforms to contain age-related spending needed be coupled with efforts to balance budgets by 2016, which would be enough to offset rising healthcare costs by 2050.

"The results of this scenario point to overall stabilization of our hypothetical sovereign ratings," S&P said, noting, however, that the number of ratings in the lower investment-grade categories would still increase.

($1 = 76.3900 Japanese yen)

(Additional reporting by Jonathan Hopfner and Christine Kim in Seoul, Wayne Cole in Sydney and Orathai Sriring in Bangkok; Editing by Miral Fahmy and Alex Richardson)

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