Archive for July 25th, 2009

WASHINGTON (CNN) — The White House has criticized the Congressional Budget Office’s findings that the Obama administration’s proposal to control Medicare costs would yield a moderate savings of 2 billion over the next decade.White House Budget Director Peter Orszag said the CBO’s analysis — which it relayed to House Majority Leader Steny Hoyer on Saturday — could feed a perception of the office’s bias toward “exaggerating costs and underestimating savings.”"The point of the proposal … was never to generate savings over the next decade,” Orszag said in a letter posted on Saturday.”Instead the goal is to provide a mechanism for improving quality of care for beneficiaries and reducing costs over the long term.”CBO Director Doug Elmendorf’s letter to Hoyer on Saturday was in response to the Senate Majority Leader’s request for analysis on “possible approaches for giving the President broad authority to make changes in the Medicare program,” Elmendorf wrote.The Obama administration is touting a proposal to give a medical advisory council the power to help decide the scope of coverage that would be eligible for reimbursement under Medicare.Administration officials say the proposed “Independent Medicare Advisory Council” would both improve health care quality and control costs. Some health care industry groups object to the proposal, saying such a council would not be qualified to make those judgments.The CBO’s review of the proposal found that “the probability is high that no savings would be realized … but there is also a chance that substantial savings might be realized,” Elmendorf wrote.0:00
/5:47The great healthcare challenge”Looking beyond the 10-year-budget window, CBO expects that this proposal would generate larger but still modest savings on the same probabilistic basis.”Orszag, a former director of the CBO, pointed out that “it is very rare for CBO to conclude that a specific legislative proposal would generate significant long-term savings so it is noteworthy that, with some modifications, CBO reached such a conclusion with regard to the IMAC (Independent Medicare Advisory Council) concept.”But he also criticized Elmendorf’s findings.”As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception,” Orszag said. “In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.”The new council, if approved, would replace the current Medicare Payment Advisory Commission, which is made up of doctors and health care experts. Once a year, it gives recommendations about coverage and reimbursement rates for Medicare but has no authority to enforce its ideas. Its report in March recommended that payments for primary care physicians be increased and home health services rates be decreased.The proposed council would be comprised of doctors and health care experts making their recommendations based on extensive data and analysis of best health care practices, according to administration officials.It would be an independent executive branch agency — which would give its recommendations more weight. The president would have to approve or disapprove the its recommendations as a package. If it is approved, the package would be enacted if Congress did not vote against it within 30 days.Proponents believe this would improve care and help eliminate some of the wasteful spending by doctors who are now paid separately for each visit and procedure they authorize. Instead, this council could recommend, for example, a comprehensive approach to treat a patient with chronic heart condition or high cholesterol.The administration says that by encouraging doctors to follow this type of plan, the government will save money by cutting out unnecessary treatments and procedures. The council’s recommendations would then go to the commission overseeing Medicare to determine the specific procedures and the actual reimbursement amount.”It is not an exercise in just cutting reimbursement rates. In fact, in some cases, we may need higher reimbursement rates for certain aspects,” President Obama explained at a town hall meeting in Shaker Heights, Ohio, on Thursday.The members of the proposed Independent Medicare Advisory Council would study different procedures done nationwide to determine what are the best treatments being given in order to determine their recommendations.Administration officials, though, say this council will not make decisions about what coverage a patient gets.Still, opponents view this proposal as “big brother” dictating medical treatment.The conservative Heritage Foundation describes the initiative as being “the equivalent of a federal health board determining how health care was rationed for all seniors.”–CNN’s Kevin Bohn, Jessica Yellin, and Ed Henry contributed to this report.

Source:CNN

WASHINGTON (Reuters) — A White House proposal to set up an independent council to set Medicare fees and other changes to the government health program for the elderly could save up to 2 billion from 2016 through 2019, the Congressional Budget Office said Saturday.The nonpartisan CBO said, however, that the plan, if added to a sweeping healthcare reform bill, could also easily produce no additional savings because it lacks specific goals and proposes no “fall-back” mechanism to ensure cost-reduction objectives are met.”The estimated savings of 2 billion over the latter half of the 2010-2019 period represent a probabilistic assessment of a range of possible outcomes,” CBO director Douglas Elmendorf wrote in a letter to House of Representatives Majority Leader Steny Hoyer and other congressional leaders.Elmendorf said it was unlikely an independent rate-setting council appointed by President Barack Obama would recommend actions that would add “substantial additional savings” to those already anticipated under the main healthcare reform bill.He said the council might be weighted toward medical providers who might not be inclined to recommend deeper cuts in provider payments. Further savings also may be limited without more substantial changes to the structure of payments and incentives to medical providers — something that would require politically difficult legislation.0:00
/5:47The great healthcare challengeThe plan also needs a fall-back mechanism to ensure that some minimum spending cuts are achieved. That mechanism could include an across-the-board reduction in payments if goals for cost reduction are not met, he said.More substantial savings could be achieved if that and other enhancements were approved, including the setting of specific, feasible goals and giving the president’s council clear authority to recommend broad coverage changes to coverage, benefit design and payment systems.Those savings could reach “several percent” of annual Medicare spending in the years beyond 2019 — a level that would reduce Medicare outlays by tens of billions of dollars annually.”Substantial additional savings from an Independent Medicare Advisory Council-type proposal would probably require significant changes in coverage, benefit design, and payment and delivery systems aimed at reducing the quantity and intensity of services provided,” Elmendorf wrote.The federal Medicare program insures some 44 million elderly and disabled Americans at an annual cost of about 450 billion, almost one-fifth of total U.S. healthcare spending.

Source:CNN

NEW YORK: Trying to marshal support for health-care reform, President Obama’s Council of Economic Advisers on Saturday released a report outlining the dire effects the current system has on small companies and their workers. But in mapping out the arguments favoring reform, the report glosses past many details still being debated in Congress that will dramatically affect how costly new health-care laws will be for small businesses.An estimated one-third of uninsured Americans — 13 million people — work for businesses with fewer than 100 employees. Those small companies that do insure their workers pay up to 18% more per worker, on average, than larger firms do for a comparable policy — when they’re able to obtain coverage at all. Among companies with fewer than 10 workers, less than half offer employee health insurance, according to the Council’s report.”Health care is the number-one concern of small businesses,” Small Business Administration head Karen Mills said Friday in a conference call with reporters. “Small businesses don’t have the access they need to affordable health care right now.”President Obama planned to take up that theme during his weekly radio address on Saturday. Through a partnership with social networking site LinkedIn and on WhiteHouse.gov, Obama will solicit feedback this week from the small business community on the health care challenges their companies face. Council of Economic Advisers Chair Christina Romer is scheduling a Facebook chat on Wednesday to field questions.”Small businesses are severely disadvantaged by the current U.S. health care system relative to their larger counterparts,” her group concluded in its report.But as Congress crafts its reform proposals, small business owners face the possibility of sharp short-term pain in pursuit of savings that won’t materialize for years. That’s a problem CEA’s report doesn’t address.The death spiralThe most recent Congressional proposal, from the House of Representatives, would require any company with an annual payroll of 400,000 or more to offer health insurance to workers or pay a penalty totaling 8% of payroll costs. Companies with a payroll under 250,000 would be exempt; those in between would pay reduced penalties. Those penalty payments would help fund a national health insurance exchange through which individuals and small companies could purchase coverage.Pooling small companies together to increase their collective negotiating power is an approach that sounds attractive, but historically, it hasn’t worked. If individuals and small companies can find private insurance elsewhere at better rates, that’s what they buy. That leaves behind in the exchange only high-risk, high-cost customers — exactly the kind of clients insurance companies don’t want.That problem, called “adverse selection,” leads to high premiums for exchange participants and often kicks off a death spiral. One of the largest small business purchasing pools, California’s PacAdvantage, shut down in 2006 after too many of its insurers pulled out.Congress hasn’t settled on a solution to that problem. Any approach relying on a health insurance exchange would also require the government to act as an insurer and participate as a competitor in the exchange — the so-called “public option.” If private insurers don’t step up and offer attractive choices, exchange customers will be able to choose the government plan instead.”That certainly is what the president has proposed,” Romer said Friday. “Making sure that the exchange is stable, that there is ample choice, is something that Congress and the president are both very interested in.”Eroding profitsCEA’s report concludes that the reforms outlined by both chambers of Congress in their competing proposals will benefit small businesses by lowering their health care costs and increasing coverage options for their workers. If the current system continues unchecked, “small business profits will shrink over time because of rising health-care costs that firms cannot fully pass on to workers,” the report says, citing a recent analysis by the Small Business Majority, a pro-reform advocacy group.That analysis found that rising health-care expenses will cost small companies an estimated 700 million in lost profits this year. By 2018, the annual cost of lost profits will reach 12 billion, according to the Small Business Majority’s forecastsBut in the short term, reform will be even more expensive, according to the same analysis. A reform plan similar to the one proposed by the House would reduce small business profits by a whopping 6.5 billion this year. It’s not until 2013 that the reformed system’s savings would increase, rather than reduce, small business profits.”The first years of health care reform will require small businesses to invest profits in expanding health coverage for their employees,” the Small Business Majority wrote in its analysis.That’s a tough request during a recession, when many small business owners have no profits at all.