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Health Reform Timelines Called Into Question Again - Governing Magazine
Health Reform Timelines Called Into Question Again
POSTED BY DYLAN SCOTT | JANUARY 23, 2013 GOVERNING MAGAZINE
Can the states and the federal government get the health insurance marketplaces that are supposed to sell health coverage to as many as 20 million Americans starting in October 2013 ready in time? That’s been an open question since the law passed in 2010. But in an interview with Bloomberg News yesterday, Louisiana Insurance Commissioner Jim Donelon suggested that it was time for the Obama administration to start considering an extension.
“It’s his calling-card, signature issue and to rush it into implementation before it’s ready would not be in his overall interest,” Donelon, a Republican and outgoing president of the National Association of Insurance Commissioners (NAIC), told Bloomberg. He also insinuated this was a widely held view, saying that state officials across the country “don’t want it to create chaos.”
According to a few people in the know, the U.S. Department of Health and Human Services (HHS) is taking those concerns seriously.
The department has already tacitly admitted that the timelines might need bending. Originally, states were supposed to have gotten full approval of their plans for a state-based exchange by Jan. 1, 2013, if they wanted one. But the Obama administration decided last year that states could ask for merely conditional approval instead, with the understanding that they would tweak their plans as necessary to get full approval at a later date. The feds also gave states until Feb. 15 to decide if they wanted to pursue a partnership exchange or default to a federal-run marketplace.
But even with those allowances, many state officials do share Donelon’s view: We might need even more time. An extension would have political complications, though. For one, if the Obama administration extended deadlines passed their statutory date, it would presumably validate earlier criticism that the law was unrealistic with its timeline.
One state official, who asked not to be named to discuss the issue candidly, said their state was already floating alternatives—such as selling coverage on the exchange that is retroactive to Jan. 1, 2014—that could allow for an extended deadline. The person, who has been in regular contact with HHS, also said they knew that the department was also weighing those kinds of options, even if officials wouldn’t say so publicly. HHS declined to comment for this story.
“At some point, the grown-ups are going to have to step in and say: ‘We have to figure out a way to do this, or a lot of people are going to get it hurt,’” the official said. “It's better not to have things fall apart when you're trying to meet an unrealistic deadline, when an extra three or four months could make a huge difference 40 years from now.”
The Affordable Care Act (ACA) has consistently faced criticism that its timetables were too aggressive. Under the law, the marketplaces (formerly known as ‘exchanges’) have to open on Oct. 1, 2013, to start selling insurance coverage that begins on Jan. 1, 2014. Given the amount of work that the states or HHS—which must establish an exchange in any state that chooses not to do so itself—must do to get them running, doubts have always lingered. They have to set a website, which is similar to Expedia or Orbitz, to process insurance applications, handle customer service and digitally communicate with various state and federal agencies to make sure everything checks out.
It’s a tall task, and the deadlines are rapidly approaching. But is there going to be an organized push for an extension? That remains to be seen. At a press briefing to introduce outgoing U.S. Sen. Ben Nelson (D-Neb.) as NAIC’s new CEO, the organization’s leaders started to walk back some of Donelon’s comments. Nelson, who was present at the Bloomberg interview, said that Donelon mentioned an extension as “one option” that would be available if necessary.
“At this point, the law is the law,” said incoming NAIC president and North Dakota Insurance Commissioner Adam Hamm. “We can’t control what’s going to happen here in Washington , D.C.
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Health IT Not Yet Fulfilling Expectations of Savings, Paper Says
Health IT Not Yet Fulfilling Expectations of Savings, Paper Says
By Jane Norman, CQ HealthBeat Associate Editor
The promise that health information technology will save billions of health care dollars annually isn’t yet coming true, according to a report published Monday in the journal Health Affairs.
The analysis by RAND Corporation researchers says that a 2005 study, also by RAND , projected that the rapid adoption of health IT could save the nation $81 billion annually. But the study also said recent data instead show a “mixed” result, with annual health expenditures continuing to grow, though less rapidly than in the past.
The “disappointing” performance of health IT can be linked to shortcomings in design and implementation, says RAND . Systems now on the market are not designed to talk to each other and until recently, providers haven’t had much of an incentive to buy systems that can communicate with other systems, said the report. Often, information stored on one provider network can’t be accessed by another provider.
Also, adoption by providers lags behind that of practitioners in other countries. The most recent data say 40 percent of U.S.
There’s a lack of enthusiasm among doctors and others, too, said the report. “Considering the theoretical benefits of health IT, it’s amazing how few fans it has among health care professionals,” the authors said, speculating that a major reason is the difficulty in using many systems. It’s also challenging for doctors to get information comparing various systems.
Going forward, the country needs a “simple but powerful vision” of how health IT should work, said RAND . Data stored in one system should be retrievable by others, with patient consent. Patients should be able to download their personal health data. And systems should make providers’ work easier, not harder, said the report.
Health Care Spending Growth Rate Remains Low for Third Consecutive Year
Health Care Spending Growth Rate Remains Low for Third Consecutive Year
By Rebecca Adams, CQ HealthBeat Associate Editor
National health care spending increased 3.9 percent in 2011 over the previous year, the same as in 2010 and up slightly from 3.8 percent in 2009 — levels that are the lowest in the 52 years that federal actuaries have tracked such growth rates.
Federal actuaries attributed the moderation in spending increases mostly to the effects of the recent recession.
Spending on medical services as a share of the gross domestic product remained at 17.9 percent, as in the previous two years, according to an annual study published Monday in the journal, Health Affairs.
Overall, health care spending totaled $2.7 trillion in 2011, or $8,680 per person, compared to $8,404 per person in 2010 and $8,149 per person the year before.
Centers for Medicare and Medicaid Services Chief Actuary Rick Foster, who is retiring at the end of the month, told reporters Monday that the historically low spending growth may not last, but also that it may not climb as dramatically as after previous recessions.
During the economic downturn, many people lost their insurance and jobs, which diminished their ability to pay for medical services. “The recession’s impact on insurance enrollment was one of the most influential contributors to the slower growth in national health expenditures,” said the report.
Other factors also played a part in 2011. More people were enrolled in consumer-directed health plans, such as health savings accounts, which provided an incentive for people to spend less because of cost-sharing that was often higher than under traditional insurance. The number of workers enrolled in consumer-directed plans has swelled from 8 percent of employees in 2008 to 17 percent in 2011. Such plans are now the second-most-prevalent type of private health insurance, after preferred provider organizations and ahead of health maintenance organizations.
Medicaid spending also fell as federal matching rates declined in June 2011 with the expiration of a temporary increase included in the 2009 stimulus law.
The study says the health care overhaul had little net effect on growth.
But, as Foster noted, the next few years could be different as coverage broadens. In 2014, roughly 30 million people may gain health care benefits as part of the Medicaid and health insurance exchange expansions included in the health care law. The additions in coverage could drive up the use of medical services since uninsured people use fewer services than people with insurance.
“All those reasons would suggest faster growth” in the future, said Foster.
But growth may not quickly return to historic levels, Foster indicated. As recently as 2007, the annual growth rate in overall health care spending was 7.6 percent. One factor is that medical providers may be reluctant to charge prices that rise as significantly as in the past, given a rising national concern over health care spending increases, especially as the government assumes responsibility for covering a growing share of Americans. The share of health care spending paid by the federal government grew from 23 percent of costs in 2007 to 28 percent in 2011. That was partly due to the temporary increase in Medicaid, but the federal government will assume greater responsibility for spending as the health care law is implemented in 2014.
“Providers are getting it,” said Foster.
So far, national income and job growth has not taken off as robustly as policymakers would like.
“This fact raises questions about whether the near future will hold the type of rebound in health care spending typically seen a few years after a downturn,” said the report.
Impact on Providers and Payers
Beyond the overall numbers, the effect on medical professionals who provide care and on the different programs that pay for it varied.
Spending growth slowed for hospital services while spending on prescription drugs and physician care increased. For the nearly $851 billion spent on hospital care, spending grew by 4.3 percent from 2010 to 2011, while it had grown by 4.9 percent from 2009 to 2010 and by 6.7 percent in the previous yearly comparison.
The number of inpatient days and the number of outpatient visits both rose at slower rates from 2010 to 2011 than in the previous time period. Part of that could be attributed to the reduction in Medicaid growth as states faced tight budgets. Growth in Medicaid spending for hospital care rose by 2.4 percent from 2010 to 2011, compared to 7.6 percent growth the year before.
The $541 billion spent on physician and clinical services was 4.3 percent more than in 2010, a faster increase than the 3.1 percent increase from 2009 to 2010. The increase was driven mostly by a greater use of services, since prices for physician services grew only by 1.4 percent from 2010 to 2011. Clinical services — including family planning clinics, outpatient surgical centers, labs, and outpatient mental health clinics— also shot up by 7.2 percent from 2010 to 2011, which helped push up the growth in the overall category of physician and clinical care.
But higher spending growth on physician and clinical services still has not rebounded to previous levels. From 2002-2008, the average annual growth increase for that type of care was 6.1 percent.
Drug Costs Moderating
Consumers spent $263 billion on prescription drugs in 2011, about 2.9 percent more than in 2010. Over the past few years, patients have faced less dramatic increases in drug spending as more people have turned to generics rather than brand-name medicines and people filled fewer prescriptions. The health care law also reduced Medicare beneficiaries’ out-of-pocket spending for drugs by narrowing the so-called doughnut hole that requires seniors to bear more of the costs of drugs, so beneficiaries were able to fill more prescriptions.
Overall spending growth rates in Medicaid were not as high as from 2009 to 2010, but that was not the case for Medicare, private health insurance or out-of-pocket spending. Medicare rose by 6.2 percent from 2010 to 2011, in part because of a one-time boost in skilled nursing facility rates, higher Medicare Advantage spending increases, and more spending for physician care, the study said.
As the economy improved, private health insurance premiums and benefits rose. About one million more people were enrolled in private health care plans in 2011, in part because of a provision in the health care law allowing young people up to age 26 to stay on their parents’ plans. But those people were younger and healthier than the rest of the population, so spending on benefits per person grew by 3.2 percent from 2010 to 2011, compared to 4.6 percent in the previous annual study period.
Spending on private insurance premiums grew by 3.8 percent on average. The study found that new so-called “medical loss ratio” provisions requiring insurers to spend a certain share of premiums on benefits may have attributed to the relatively slow growth.
Overall government public health spending grew by 0.5 percent, with federal funding declining for the first time since 1960 as an influx of funding to combat influenza ran out.
Health and Human Services Secretary Kathleen Sebelius in a blog post on Monday lauded the slower-than-usual growth. She noted that growth in total private health insurance premiums remained low in 2011 at 3.8 percent and attributed that to provisions in the health care law, including reviews of proposed rate increases and a requirement that insurers spend at least 80 percent of premiums on health benefits or provide rebates to their customers.
Sebelius also said that states should apply for federal funds to beef up their reviews of proposed rate increases.
Zirkelbach said, “Health care cost growth being steady is a positive sign but much more does need to be done to make sure this trend continues, particularly as the economy rebounds and as the health care law is implemented next year.”
The CMS actuaries will build on the historical analysis that they released on Monday in the summer, when they issue a projection of future costs. Foster will not be in the actuary’s office when that study comes out, but he made an unscientific projection of his own Monday.
“I think costs will accelerate from where we are,” he said. “But I don’t think they’ll go back to dramatic levels as we have often seen in the past.”
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