Medicare Policy And Politics: The Obama Debt Reduction Plan

Austin Frakt

First posted 9/19/11 on The Health Affairs Blog

Copyright ©2011 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc. 

Today, President Obama offered his plan to reduce the national debt by $3 trillion over 10 years, relative to current law. Most media attention will focus on his “Buffett rule,” the principle that millionaires should not pay average tax rates below those of the middle class, and on his ultimatum to “veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share.” However, the plan also includes some proposed changes to health programs.

In broad terms, two important changes for Medicare policy and politics are included in the plan. They are (1) targeted cuts in provider payments (saving $224 billion over 10 years) and (2) 15 percent increases in income-related Parts B and D premiums and the fixing of thresholds so that, in time, one-quarter of beneficiaries are subject to a premium surcharge (generating about $20 billion in revenue over 10 years). The former is consistent with the spirit of the Affordable Care Act (ACA), which also cuts provider payments. The latter is consistent with the Buffett rule, which aims to make wealthy Americans pay a greater share of the cost of social programs.

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What We Know About Cost Sharing

Austin Frakt

First published 5/24/11 on The Incidental Economist

I wrote about a cost sharing research review paper by Katherine Swartz earlier today. Another one is out, by Katherine Baicker and Dana Goldman. Like Swartz’s paper, Baicker’s and Goldman’s is ungated and quite readable. Here’s the abstract:

In this paper, we explore the role patient incentives play in slowing healthcare spending growth. Evidence suggests that while patients do indeed respond to financial incentives, cost-sharing does not uniformly improve value; rather, cost-sharing provisions must be deliberately structured and targeted to reduce care of low marginal value. Other mechanisms may be helpful in targeting particular populations or types of utilization. The spillover effects between privately insured and publicly insured populations as well as market imperfections suggest a potential role for public policy in promoting insurance design that slows spending growth while increasing the health that each dollar buys.

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Demography is Destiny

Austin Frakt

First published 5/10/11 on The Incidental Economist

There is an often-repeated claim that retiring baby boomers have a lot to do with future increases in federal spending, which is itself dominated by Medicare spending. There is something to it, but not as much as one would think. This graph, produced by Peter Orszag, shows it:

Medicare Spending

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Paradox Glossed

Jim Hufford

First published 4/27/11 on Organon

I’ve always been a little unsure about the policy ramifications of regional variations in medical care. The Dartmouth Atlas project’s findings—famously noted in Atul Gawande’s New Yorkerpiece comparing health outcomes and utilization in McAllen and El Paso, Texas—suggest an inverse relationship between the amount of care provided and the quality of health outcomes resulting from that care.

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After the Deluge: Health Reform Without An Individual Mandate

Austin Frakt and Kevin Outterson

First published 2/24/11 on Kaiser Health News

Two federal judges now tell us that the federal health law’s individual mandate is unconstitutional. Three others disagree, and soon we will start to hear from appellate courts. But what if we put the legal arguments aside for the moment and focus on the real question: what happens to health reform if the individual mandate is ultimately struck down?

Some claim that, without the mandate, the overhaul will collapse. Opponents certainly hope that is true, and Judge Roger Vinson of the Northern District Court of Florida decided to void the entire law on that basis – explaining that the measure’s other provisions cannot be separated from the requirement to buy insurance. Even the White House and its lawyers have on occasion agreed, perhaps only as a rhetorical device. But they are mistaken. Health reform can survive without it.

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Insurance Reform Is Not Cost Control


First published 2/09/11 on Kaiser Health News

Now that House Republicans, along with a few Democrats, have passed a bill to repeal last year’s health reform law, they are planning to offer some alternatives for replacing it. Not unexpectedly, health care spending — high and growing premiums and government expenditures — are dominant concerns among policymakers. But how can we tell if their plans are likely to tackle this problem?

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The CBO Is Telling Us Something. Is Anybody Listening?


Originally published 1/11/11 on Kaiser Health News

The Congressional Budget Office’s budgetary scoring of the health reform law has returned as a subject of debate. At issue is whether health reform will really reduce the deficit by $143 billion through 2019 as the CBO predicted last year. It’s a legitimate question, but focusing on it misses the most important message conveyed by CBO estimates

Republicans in the House, who are intent to repeal the new health law, contend that eliminating it wouldn’t really increase the deficit. It’s an argument that makes sense if one is willing to reject the CBO’s deficit-reducing score of the law, and many are. There are good reasons to be skeptical that the law will in fact reduce the deficit.

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