From the category archives: Budget
The news back in February that private insurers in Medicare would receive a 2.2% rate cut in 2014 sent their lobbyists into overdrive, flooding the halls of Congress and the media with ads bemoaning the reduction in their billions of dollars of federal overpayments. Historically, private insurers providing Medicare Advantage coverage have collected 13% more from the federal government to provide private MA coverage than it costs to cover seniors in traditional Medicare. Over the years this massive government subsidy to private for-profit insurers has cost Medicare millions of dollars, so the Obama administration correctly trimmed back those wasteful overpayments as part of the Affordable Care Act, helping to add 8 years of solvency to the program.
Incredibly the news this week is that the Obama administration has now caved to the insurance industry’s lobbying blitz and Congressional pressure and will not only reverse the 2014 Medicare Advantage cuts but will also give for-profit insurers a 3% raise. No surprisingly, this is a move that CMS actuaries (the non-politicians actually paid to do this job) opposed:
“The actuaries in charge of the calculation made clear that they did not endorse the change. The official notice, signed by Jonathan Blum, director of Medicare at CMS, and Paul Spitalnic, the chief actuary in charge of the formula, said that the change had come at the behest of HHS Secretary Kathleen Sebelius.” National Journal
“It’s about the best possible result for Medicare Advantage plans,” said Ipsita Smolinski, managing director at Capitol Street, a health care consulting firm.” Politico
Sure, it’s good news for the nation’s $884 billion dollar a year health insurance industry but what about Medicare? Not so much. While Medicare Advantage over-payments will still face future reductions thanks to health care reform, this is the classic case of political “If You Give a Mouse a Cookie.” Will those common sense reductions survive another AHIP lobbying onslaught? It’s also important to note that many of the same members of Congress who have decried Medicare spending and support more means testing, benefits cuts and more for seniors -- all in the name of deficit reduction -- lobbied the hardest to ensure the health insurance industry keeps their government subsidies. These are subsidies that all seniors, whether they are in a Medicare Advantage plan or not, pay for with higher premiums while also burdening the Medicare program overall.
For comparison, let’s juxtaposition Congress’ rapid response this week to the insurance lobby’s pressure to keep their goodies with the inaction we’ve seen over months leading to across the board budget cuts in the ongoing sequester. Budget cuts that are impacting average Americans, not huge for-profit industries.
The Washington Post reports today that the sequester has lead to thousands of Medicare cancer patients being turned away from cancer clinics who can’t afford the 2% sequester cut for drugs needed to treat their Medicare patients.
Cancer clinics across the country have begun turning away thousands of Medicare patients, blaming the sequester budget cuts. Oncologists say the reduced funding, which took effect for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially.
Patients at these clinics would need to seek treatment elsewhere, such as at hospitals that might not have the capacity to accommodate them. “If we treated the patients receiving the most expensive drugs, we’d be out of business in six months to a year,” said Jeff Vacirca, chief executive of North Shore Hematology Oncology Associates in New York. “The drugs we’re going to lose money on we’re not going to administer right now. After an emergency meeting Tuesday, Vacirca’s clinics decided that they would no longer see one-third of their 16,000 Medicare patients. “A lot of us are in disbelief that this is happening,” he said. “It’s a choice between seeing these patients and staying in business.”
Cancer providers have also been lobbying Congress asking for a sequester waiver for cancer drugs so that they can continue providing their life-saving care. Washington certainly rallied quickly to reinstate massively wasteful government subsidies to one of our nation’s largest industries...yet so far, no response to those who literally control the life and death of thousands of cancer patients in Medicare.
Today’s release of the GOP/Ryan budget
reminds us of the famous line, “the definition of insanity is doing the same thing over and over again and expecting different results.” Today marks the third time House Republicans have released the Ryan budget, which in Rep. Paul Ryan’s Orwellian terms he’s also named a “Path to Prosperity.” Thankfully the result again this year will likely be the same. Dead on arrival. We say thankfully because, once again, this budget pretends deficit reduction alone is economic recovery, while ignoring the financial realities millions of America’s middle-class families still face in this slow economy. This plan also targets seniors in Medicaid with cuts, a “coupon care” plan for Medicare which would ultimately end traditional Medicare, and a fast-track plan to cut Social Security benefits:
“Once again, House Republicans have re-introduced the same flawed budget approach middle-class Americans have rejected in poll after poll and most importantly at the ballot box. Rather than deal with the true challenges facing this nation including, slow economic growth, high unemployment, and unprecedented income inequality, the GOP/Ryan budget targets middle-class seniors and their families with massive cuts to pay for tax cuts benefiting huge corporations and the wealthiest among us. Americans want a balanced approach to the national budget. This cuts-only plan isn’t it.
The Ryan plan would create vouchers in Medicare leaving seniors and the disabled – some of our most vulnerable Americans – hostage to the whims of private insurance companies. Over time, this will end traditional Medicare and make it harder for seniors to choose their own doctor. Vouchers are designed not to keep up with the increasing cost of health insurance… that is why they save money. If the GOP/Ryan budget becomes law, seniors would immediately lose billions in prescription drug savings, free wellness visits and preventative services provided in the ACA, and the Part D donut hole returns.
Destroying traditional Medicare and leaving millions of Americans without adequate health coverage is not a path to prosperity for anyone except for-profit insurers. The American people understand that.” Max Richtman, NCPSSM President/CEO
Senate Democrats have also prepared their budget plan which will be released tomorrow. According to Huffington Post, the Democratic Budget plan:
“... calls for $975 billion in additional revenues through closing loopholes and ending tax expenditures. The budget, unlike Ryan's, doesn't close the door on going beyond the fiscal cliff deal either; it calls for the continuation of current tax rates for middle and lower class Americans but does not specify whether current rates should be protected for high-end earners.
“While House Republicans are doubling down on the extreme budget that the American people already rejected, Senate Democrats are going to be working on a responsible budget that puts jobs and the economy first and reflects the values and priorities of middle class families across the country,” read a statement from Murray.
A top Senate Democratic aide said that the specifics -- including where rates should be set, which loopholes should be closed, and which expenditures should be ended -- would be left to the Senate Finance Committee. The Murray budget does give the Finance Committee some help, though, offering parliamentary instructions (known as reconciliation) to help ensure the tax reform bill it produces will be granted an up-or-down vote.
While the $975 billion figure is ambitious, the Senate aide pointed to a report by the Center for American Progress that showed $1 trillion in savings could be gained through "reducing or reforming tax breaks."
On the spending side, Murray's budget looks for $493 billion in domestic cuts, $275 billion of which will come from health care savings. The aide said that those health care savings, which will also be determined by the Finance Committee, would be felt solely on the provider side and not among beneficiaries. Additionally, the budget calls for $240 billion in defense spending cuts and $242 billion in reduced interest payments.
Those savings in total will replace the sequestration-related cuts that went into effect on March 1. Over a ten-year window, they will reduce the deficit by $1.95 trillion. But since Murray's budget also sets aside $100 billion for economic stimulus measures -- $50 billion on repairing highest transportation priorities, $10 billion on projects of major regional importance and the rest on other items like worker training -- the total savings will be measured at $1.85 trillion.”
These budgets clearly lay out starkly different priority choices. Especially for middle-class families and retirees who understand first hand the value of programs like Social Security, Medicare and Medicaid, and who want those programs preserved for future generations.
It's easy in this era of Washington deficit mania to focus solely on the numbers on a budget spreadsheet while losing sight of the fact that the austerity agenda pushed by those least likely to be impacted by their policies will have serious implications for America's middle class families. This is especially true for those already struggling in this economic slowdown, especially communities of color. We've talked about this a lot during February's Black History month coverage and NCPSSM will continue to address these issues throughout the ongoing budget and deficit debate. In case you missed it, here's a wrap up of some of our February coverage:
We were proud today to release a new report, co-authored with the Human Rights Campaign detailing how current law leaves America's same sex couples and their families living outside the safety net.
Social Security is the keystone of most Americans’ retirement planning and provides valuable income protection to families in case of a worker’s disability or death. Yet, same-sex couples and many of their children are denied access to Social Security benefits, even though they have contributed to the program throughout their working lives. The National Committee to Preserve Social Security and Medicare Foundation and the Human Rights Campaign Foundation have issued a new report “Living Outside the Safety Net.” This report examines the impact this inequality has on millions of lesbian and gay families and offers legislative solutions.
“Social Security has a long tradition of evolving to more effectively protect America’s workers and their families as our nation changes. In fact, that is key to the program’s unparalleled success across generations. America’s same-sex couples and their families have earned Social Security’s protections the same as any other working American and they deserve the same retirement and economic security the program provides.” … Carroll Estes, NCPSSM Foundation Chair
"Social Security is a safety net for many, and the sole source of income for some. However, same-sex couples go completely unrecognized by Social Security and are routinely denied this benefit. As a result, many surviving same-sex spouses find themselves in a financial free-fall following the death or disability of a spouse." said HRC Legislative Counsel for Administrative Advocacy Robin Maril. "This report provides an overview of the extent of the economic loss many families are experiencing today because the Social Security system fails to recognize them as a family. Congress must right this wrong by passing legislation that makes these vital benefits available to all Americans."
The National Committee and HRC support legislation introduced by Congresswoman Linda Sanchez (D-CA) to expand Social Security spousal benefits to same-sex couples. The Social Security Equality Act of 2012 (H.R. 4609) would require the Social Security Administration to provide same-sex couples with the same spousal, survivor and death benefits their heterosexual counterparts receive.
"Same-sex couples pay into Social Security, and they should receive the full benefits they have earned. It is time for us to end discrimination in Social Security so that same-sex couples are not treated as second class citizens. I’m proud to say that I will be re-introducing the 'Social Security Equality Act' this Congress to make sure every American receives a benefit based upon their contribution to the program, not their sexual orientation." Rep. Linda Sanchez (D-CA)
On average, a full retirement age same-sex household with one wage-earner forfeits $675 monthly or $8,100 annually in lost spousal retirement benefits. Blair Dottin-Haley, from Alexandria, Virginia, works for a local non-profit and has been married for nearly two years. His husband is HIV positive; however, even though they both have contributed to Social Security throughout their working lives they are not eligible for spousal benefits.
Blair Dottin-Haley who married his husband two years ago in DC also be joined the panel. "As a married man, it's important that I protect my family and work to secure the rights and benefits that we've earned by joining our lives together."
This report recommends that Congress:
- Amend the Social Security Act to include same-sex domestic partners as eligible to receive equal benefits following the death, retirement, or disability of their loved one.
- Include language within the Social Security Act’s definition of “child” to reflect the permanent relationship between a legally-unrecognized same-sex parent and his or her child to end the exclusion of many children under current law.
- Repeal the Defense of Marriage Act (DOMA) which currently prevents surviving same-sex spouses from receiving Social Security benefits they are otherwise entitled to.
You can read the full report on the NCPSSM Foundation website here.
Time Magazine’s cover story this week is an incredible read and one we highly recommend. Steven Brill’s “Bitter Pill: Why Medical Bills are Killing Us” provides a remarkably in depth look at our American health care system including Medicare. Using many personal case studies, Brill breaks down and describes the economic devastation being reaped by our for profit medical industrial complex.
As we’ve said here repeatedly, America doesn’t face a Medicare crisis -- we face a national health care crisis. Rather than targeting Medicare for cuts we should be using it as the model to improve out health care system nationwide. As Brill reports:
“Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.”
Consider Time’s example of Susan S. She was 64, one year away from qualifying for Medicare, when she went to the hospital with chest pains. Her bill for 3 hours of tests and a false alarm was $21,000. If she had Medicare she would have paid less than $500. Compare her costs:
Time’s survey of this same hospital found that in 2010 its total charges were 11 times its actual costs. And that’s not unusual in our current private profit and even non-profit health care system.
Not only does Medicare manage these outrages costs better than the private market, Medicare’s administrative costs are two-thirds of 1% or less than $3.80 per claim. Private Insurers administrative costs run much higher. Brill reports Aetna’s for example, run 29% or $30 for each claim.
However, Medicare isn’t immune from the skyrocketing costs that are burdening our economy. Brill points out that Congress has tied Medicare’s hands in many instances forcing the more efficient Medicare program to perform like the less efficient private market:
Our laws do more than prevent the government from restraining prices for drugs the way other countries do. Federal law also restricts the biggest single buyer — Medicare — from even trying to negotiate drug prices. As a perpetual gift to the pharmaceutical companies (and an acceptance of their argument that completely unrestrained prices and profit are necessary to fund the risk taking of research and development), Congress has continually prohibited the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services from negotiating prices with drugmakers. Instead, Medicare simply has to determine that average sales price and add 6% to it.
Similarly, when Congress passed Part D of Medicare in 2003, giving seniors coverage for prescription drugs, Congress prohibited Medicare from negotiating.
Nor can Medicare get involved in deciding that a drug may be a waste of money. In medical circles, this is known as the comparative-effectiveness debate, which nearly derailed the entire Obamacare effort in 2009.
The health care industrial complex spends more than three times what the military industrial complex spends for Washington lobbying. Is it any wonder why so many in Congress have chosen to ignore the true system wide health care problem in favor of targeting Medicare for benefit cuts, arbitrary caps, cost-shifting, means-testing and privatization.
They know what the core problem is — lopsided pricing and outsize profits in a market that doesn’t work.
In spite of this, Congress appears ready to protect that broken health care market that is wrecking our economy in favor of targeting the program that works for cuts -- all in the name of deficit reduction. Cutting benefits to seniors in Medicare not only ignores the real challenges we face as a nation but it also threatens the health security of millions of Americans.
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