This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

Health Care Reform Memo: September 17, 2012

Deloitte Center for Health Solutions publication


DOWNLOAD  

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: history of Medicaid: a discussion of rising costs and government responsibility

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

I do not know if George knew that several of his high school classmates were in Chattanooga Saturday to cheer him on as Alva pushed his wheelchair in the Alzheimer’s Association walk. We were there to support him knowing he’d likely not know.

In the past year, he’s had several minor strokes and a new pacemaker that helps keep his heart beating. He barely walks and can’t speak. Unpredictably, a smile pops out of his rounded face and his eyes roam as if pondering how life might have been.

Life handed George a lemon in terms of his health. For 15 years, he’s been unable to work, and in recent months completely unable to care for himself. His sister moved from Knoxville to care for him, and he has Medicaid. That’s about it: Alva, some friends, and Medicaid.

When Lyndon Johnson passed his Great Society program in 1965, starting the Medicare and Medicaid programs, no one could imagine the future of both programs. They’re vital parts of the social safety net that seniors, the disabled, and poor count on. And they’re huge in terms of enrollment—49 million in Medicare, 62 million in Medicaid—and costs: combined, state and federal spending on the two is $986.5 billion—more than defense spending ($712 billion) and any other category of government spending.

The public seems to understand Medicare better than Medicaid: perhaps it’s because it’s for seniors and everyone anticipates they’ll use it some at point as we age, or because employers and employees pay a tax to fund the program.

By contrast, Medicaid seems to get less attention, and it is usually in the context of its costs to states. Perhaps it’s also because no one anticipates they’ll need it unless poor, without coverage, or disabled like George. It’s harder to put a face on Medicaid or even imagine George among its enrollees. But the facts are compelling:

  • Fact: the biggest insurance plan in the U.S. is Medicaid.
  • Fact: some states require Medicaid enrollees pay premiums based on their income: ranging from $9/month at 101 percent of the federal poverty level (FPL, $18,530 for a family of three) to $43/month at 301 percent of the FPL.
  • Fact: Medicaid program costs are shared between states and the federal government. The federal share is determined using a formula known as the federal medical assistance percentage (FMAP): 1 - 0.45 x (state per capita income/U.S. per capita income). The average state FMAP is 57 percent and cannot exceed 82 percent.
  • Fact: currently, each state sets its own eligibility and coverage limits but is required to cover certain populations (i.e., pregnant women) and services (i.e., hospital care) to participate in the program with the flexibility to cover other population groups and services. As a result of the U.S. Supreme Court’s decision June 28, states may elect to expand coverage in their Medicaid program per the Affordable Care Act’s (ACA) requirement that eligibility be standardized at 133 percent of the federal poverty level or forego expanding their programs.
  • Fact: Medicaid enrollees view the health system more favorably than those with commercial coverage and almost as favorably as Medicare enrollees.

Findings from the 2012 Deloitte Survey of U.S. Health Care Consumers:

  Employer Based Medicare Medicaid
Using a typical report card scale with grades of A, B, C, D, and F, how would you grade the U.S. health care system on the following dimensions? % who rated the system “A” or “B” on the following dimensions:
Meeting the health care needs of individuals who do not have insurance 17% 22% 25%
Overall performance 33% 48% 43%
How satisfied are you with the performance of the U.S. health care system?
% who answered they are satisfied (8, 9, 10 on a 10-point scale) 19% 35% 27%
What impact has the recent economic slowdown had on your household's health care spending?
No impact at all - we spend as much as we need to get the health care services and products that we want 35% 45%  25%
Significant impact - we have cut back on spending on health care services and products because of cost 18% 13%  24%
To what extent do you feel your household is financially prepared to handle future health care costs?
% who answered prepared (8, 9, or 10 on 10-point scale) 20% 27%  8%
% who answered not prepared (1, 2, or 3 on 10-point scale) 22%  23% 50%

Source: 2012 Deloitte Survey of US Health Consumers

The cost of the program to states and taxpayers is a legitimate issue: Medicaid costs are soaring and innovative solutions vital. But the national discussion we should also have is about the role a developed society and its government plays in programs that serve the needs of the old, sick, and poor. My colleague Wade Horn often reminds me that ours is a society where we have “health or human services” programs instead of tightly integrated “health and human services” and he’s right in my view.

I am fortunate to afford private insurance and enjoy a standard of health that lets me live independently. Thirty-one of my 252 classmates in Tyner High School class of 1967 have died; others like George face huge obstacles and are dependent on the government to help.

George did not choose his path to dependence. He is a lucky man to be loved by his friends, cared for by his family, and a citizen in a country where a program to help is available. He’s not a statistic. He is not bad debt or charity. He is a person whose dignity matters, even when left to live a life no one would wish to live.

I spoke at the University of Minnesota Thursday. Outside the Hubert H. Humphrey School of Public Affairs are famous quotes from the feisty former Minnesota Senator and Vice President. In his last speech in 1977, he said: "...The moral test of government is how it treats those who are in the dawn of life, the children; those who are in the twilight of life, the aged; and those in the shadows of life, the sick, the needy and the handicapped."

Let’s have that discussion. It does not diminish the gravity of economic recovery; it does however call us as a nation to the core of who we are.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

P.S. Two suggestions: this Thursday, tune in for Deloitte’s Dbriefs webinar focused on “Medicaid Innovation” featuring experts discussing six areas where policymakers and industry stakeholders should focus to increase the effectiveness and efficiency of the program. Guests are Jessica Blume, U.S. Public Sector Leader, Wade Horn, Director, Deloitte Consulting LLP, and Greg Scott, Principal, Deloitte Consulting LLP. To tune in, September 20, 1 p.m. EST, Medicaid: What’s its Future?

And read Wade Horn’s Guest Commentary (below) outlining the possible ways the ACA might change as a result of the election in 50 days.

Implementation update

White House releases sequestration report, specifies cuts

Friday afternoon, the White House released its sequestration report outlining budget cuts that go into effect January 1, 2013 if Congress doesn’t reach consensus on a budget resolution. The Sequestration Transparency Act of 2012 (STA) required the President to submit a report to Congress detailing the cuts that would reduce the deficit by $1.2 trillion. The report explains which budget accounts are exempt and which are non-exempt and provides an explanation of calculations in the report. Under the stipulations required by the STA, sequestration results in reductions of 9.4 percent in non-exempt defense discretionary funding and 8.2 percent in non-exempt, nondefense discretionary funding.

The sequester would impose cuts of 2 percent to Medicare along with the 7.6 percent cuts to other non-exempt, nondefense mandatory programs and 10 percent to non-exempt defense mandatory programs. The 2 percent cut from the more than $550 billion that the Centers for Medicare & Medicaid Services (CMS) projects to spend on providers and insurers in 2013 will amount to $11.1 billion. In addition, approximately $5.8 billion will come from the Hospital Insurance Trust Fund—the fund controlling Part A of the Medicare program which is financed through an equal share of employer and employee payroll tax contributions.

For proposed sequester cuts included in the sequester report: see attached summary.

Reaction: the American Hospital Association, American Medical Association, and American Nurses Association released a report estimating the cuts will result in 496,000 health care jobs lost in 2013 increasing to 766,000 by 2021. Direct employment of nurses, caregivers, housekeepers, independent contractors, and residents is estimated to be 211,756 less in 2014, and 330,127 less by 2021.

HHS: rate review and MLR provisions in the ACA save $2.1 billion for consumers

Tuesday, the U.S. Department of Health and Human Services (HHS) released a report analyzing the impact of the premium rate review program and medical loss ratio (MLR) policy provision in the ACA. Highlights include:

  • 13 million Americans saved $1.1 billion on health insurance premiums as a result of rate reviews averaging 2.8 percent
  • MLR yielded an additional estimated $1.1 billion in savings to 13 million consumers in the past year
  • 64 percent of premium increase filings ≥10 percent were found to be unreasonable, were modified, or withdrawn

Background: per Section 2718 of the ACA health insurers are required to provide rebates to consumers if the amount of the premium spent on clinical services and quality is less than 85 percent for plans in the large group market and 80 percent for plans in the individual and small group markets. It also required the establishment of an annual premium rate review process to review “unreasonable” health insurance premium rate increases, and awarded grants to help states carry out their rate review process. Forty-four states have programs to review the proposed premium increases; in a state that does not have such a program, HHS conducts the review.

Related: in the Deloitte 2012 Survey of Health Care Consumers, 52 percent of US adults believe insurance company administrative costs are a major driver of health care costs.

CMS to states: October 2012 essential health benefits expectation

CMS responded to a recently published article referencing the October 1, 2012 essential health benefits (EHB) deadline stating that “HHS has not established a deadline by which states have to submit their essential health benefits benchmark to HHS. Consistent with the bulletin on intended guidance issued in December 2011 and to ensure plans have ample time to design benefit offerings, we have encouraged states to submit their selected essential health benefits benchmark by October 1, [2012]. HHS will work with any state coming in after October 1. This approach maximizes state flexibility as they continue to build their health insurance marketplaces.” (Source: Politico)

Background: per ACA Section 1302, any qualified health plan in the group, individual market, or participating in an exchange must provide the EHB package of comprehensive set of services as defined by HHS and to be defined by a benchmark plan selected by each state. If a state does not define a plan, the default benchmark plan will be the plan with the largest enrollment in the state’s small group market.

AHRQ: improving medication adherence can lower health care cost

Friday, the Agency for Healthcare Research and Quality (AHRQ) released a report outlining tactics to reduce medication non-adherence by consumers that costs $100 to $289 billion annually. Key findings:

  • Twenty to 30 percent of medication prescriptions are never filled
  • Half of medications for chronic diseases are not taken properly

According to AHRQ, evidence suggests that investments in improved self-management of chronic diseases could result in a significant savings (estimated cost-to-savings ratio of 1:10). (Source: AHRQ, “Medication Adherence Interventions: Comparative Effectiveness, Closing the Quality Gap: Revisiting the State of the Science,” September 2012)

Study: ACO savings in dual eligible population

Dartmouth researchers studied accountable care organization (ACO) financial results in Medicare and Medicaid programs: the accountable care model attributed to a 5 percent reduction in costs for dual eligibles, or $532 annually vs. $114 annually for the general patient population. (Source: Carrie Colla, et al, Journal of the American Medical Association, “Spending Differences Associated With the Medicare Physician Group Practice Demonstration,” September 12, 2012)

Hospital readmission formula being reconsidered to account for patient risk factors

A recent Medicare Payment Advisory Council (MedPAC) analysis revealed a direct correlation between a hospital's share of beneficiaries receiving supplemental security income (SSI, payer mix) and “avoidable” readmissions for heart failure. CMS data showed that 25 percent of hospitals with over 19 percent of beneficiaries on SSI would not be penalized.

Legislative update

MedPAC suggests standardization of premium support programs in Medicare

Last Thursday, MedPAC held a public meeting to discuss standardizing options for designing a Medicare model that would “competitively determine plan contributions” necessary for seniors. Specifically, design issues discussed were whether the federal contribution should…

  • Be determined based on plan bids vs. predetermined
  • Be determined nationally or locally
  • Include fee-for-service (FFS) Medicare as a bid or not

House Energy and Commerce Subcommittee on Health legislative approvals

The U.S. House Energy and Commerce Committee approved six health care related bills in a mark-up last week:

  • H.R. 1206: Access to Professional Health Insurance Advisors Act of 2011, introduced by Representative Mike Rogers (R-MI), would exclude commissions paid to insurance brokers in the MLR calculation.
  • H.R. 6118: Taking Essential Steps for Testing Act of 2012, introduced by Representative Michael Grimm (R-NY), would amend Section 353 of the Public Health Service Act to provide CMS with the regulatory authority to enforce prohibitions against improper referrals of proficiency testing under the Clinical Laboratory Improvement Amendments.
  • H.R. 1063: Strengthening Medicare and Repaying Taxpayers Act of 2011, introduced by Representative Tim Murphy (R-PA), would expedite the return of funds to the Medicare Trust Fund from the Medicare Secondary Payer Program and reduce legal barriers for employers.
  • H.R. 6163: National Pediatric Research Network Act of 2012, introduced by Representative Cathy McMorris Rodgers (R-WA), would “amend the Public Health Service Act to provide for a National Pediatric Research Network, including with respect to pediatric rare diseases or conditions.”
  • H.R. 4124: Veteran Emergency Medical Technician Support Act of 2012, introduced by Representative Adam Kinzinger (R-IL), would “amend the Public Health Service Act to provide grants to states to streamline state requirements and procedures for veterans with military emergency medical training to become civilian emergency medical technicians.”
  • H.R. 733: Pancreatic Cancer Research and Education Act of 2012, introduced by Representative Anna Eshoo (D-CA), would amend the Public Health Service Act to include a pancreatic cancer initiative.

House Ways and Means Oversight Subcommittee hearing: administrative burden of ACA

Tuesday, the House Ways and Means Oversight Subcommittee held a panel hearing during which Representative Boustany (R-LA) testified that taxpayers would spend nearly 80 million hours per year dealing with the ACA-related Internal Revenue Service (IRS) regulations—40 million of which will be spent on the small-business tax credit designed to help employers provide insurance to their employees. The committee also heard testimony from Fred Goldberg, a former IRS commissioner who stated the ACA presents significant administrative and compliance challenges for employers.

House passes six month stop-gap measure for FY2013

Last week, by a 329-91 vote, the U.S. House of Representatives passed a continuing resolution for the first six months of fiscal year (FY) 2013. The stop-gap measure will allow the federal government to continue operating from October 1, 2012 through March 27, 2013 at existing funding levels and is expected to pass in the Senate this week. Both the U.S. House of Representatives and the U.S. Senate agreed beforehand to raise appropriations accounts by 0.6 percent to meet the $1.047 trillion spending target set for FY2013 in last year’s Budget Control Act.

Note: this bipartisan agreement shelters legislators from criticism of budget votes they’ll make during the election cycle.

State update

State round-up

  • The federal government approved New Hampshire’s plan to implement Medicaid managed care across the state contracting with three private plans responsible for coordinating all health care services for enrollees through a network of providers.
  • Last week, a 1st Circuit Court of Appeals judge denied Maine’s request to force CMS to issue an immediate decision on the state’s proposed Medicaid cuts. CMS has asked Maine to withhold its legal action while it reviews the state’s request to reduce its Medicaid program.

    Note: the Court ruled that the federal government cannot require state participation in Medicaid expansion. CMS maintains that the Court ruling did not change maintenance of effort (MOE) requirement, whereby states must maintain eligibility at 2010 levels until Medicaid expansion in 2014, but indicated some of Maine’s cuts may be permissible under the MOE provision anyway.
  • Virginia, Montana, and Alaska, the states with the highest density of veteran residents, will each receive roughly $300,000 in federal grants to advance their telehealth capabilities for veterans living in rural areas. The grants, administered by the Health Resources and Services Administration, are part of a pilot program aimed at encouraging collaborative telehealth networks and virtual linkages among rural health providers and the U.S. Veterans Administration (VA).
  • A state study concluded Idaho could save $380 million over six years by expanding Medicaid coverage under the guidelines of the ACA. The costs of caring for the state’s indigent population are currently covered by the state and county supported “Catastrophic Health Care Fund.” Savings for Idaho taxpayers could be realized by shifting the burden of these costs onto federally subsidized Medicaid. A committee sponsored by Governor C.L. “Butch” Otter (R) will make recommendations to lawmakers on the subject in upcoming weeks.
  • Study: in 2011, San Francisco, California restaurants and businesses collected nearly $14 million in surcharges from customers in order to comply with the city’s universal health care ordinance. The law requires employers to set aside funds for workers’ health care costs and applies to more than 4,000 businesses with as few as 20 part-time employees. However, 40 percent of these fees were not spent as intended—reimbursing employee health care expenses.
  • Colorado officials have indicated that moving Medicaid patients to medical homes and reforms in their case management program are yielding positive results. Data for the first six months showed a 14 percent decrease for inpatient hospital stays among children, and a 5 percent drop in emergency-room visits among adults. Among adults with disabilities, inpatient-hospital stays have decreased 9 percent compared with those not enrolled in the program.
  • Tuesday, Arkansas Governor Mike Beebe (D) announced his support for expanding the state’s Medicaid eligibility to 133 percent of FPL. The Governor stated that the expansion would help uninsured working adults. The Arkansas Department of Human Services has estimated that expanding Medicaid eligibility would add 250,000 beneficiaries to the program.
  • Michigan Governor Rick Snyder (R) proposed legislation that would remove tax exemptions from nonprofit health insurer Blue Cross Blue Shield of Michigan (BCBS). If passed, the law would require BCBS to pay approximately $100 million in state and local taxes. In return, the organization would see the same streamlined rate review and approval process as other health insurance companies in the state. According to Governor Snyder, Blue Cross entities have already undergone similar transitions in 18 states. As part of the legislation, BCBS would also pay $1.5 billion over 18 years into a separate nonprofit intended to address issues like obesity and infant mortality within Michigan.
  • Montana residents will vote this November on a measure banning the state and federal government from ordering citizens to purchase health insurance. The proposal, similar to ones made in other states, is seen as a largely symbolic censure of the ACA’s individual mandate requirement. Montana’s senior senator, Finance Committee Chairman Max Baucus (D), was co-lead author of the law.

Industry update

U.S. Census Bureau report on insurance in 2011: commercial coverage stable, household income down

Last week, the U.S. Census Bureau released a report detailing income, poverty and health insurance in the U.S. in 2011. Highlights:

  • Median household income was $50,054, a 1.5 percent decrease from 2010
  • The poverty rate remains consistent with 2010: 15 percent with 46.2 million living in poverty
  • The number with health insurance increased to 260.2 million in 2011 from 256.6 million in 2010, as did the percentage of people with health insurance (84.3 percent in 2011, 83.7 percent in 2010)—first time in ten years that the rate of private health insurance coverage has not decreased.
  • The percentage of people covered by government health insurance increased from 31.2 percent to 32.2 percent: the percentage covered by Medicaid increased from 15.8 percent in 2010 to 16.5 percent in 2011.
  • The rate of the uninsured declined in 2011 for people age 19 to 25, age 35 to 44, and those age 65 and older.
  • Uninsured rates decreased as household income increased from 25.4 percent for those in households with annual income less than $25,000 to 7.8 percent in households with income of $75,000 or more.

Note: health care workers’ 2011 median income was $59,570 vs. all U.S. workers at $50,054. Last year, health care worker incomes decreased 1.3 percent vs. 1.5 percent for the overall workforce. (Source: U.S. Census Bureau, “Income, Poverty and Health Insurance Coverage in the United States: 2011,” September 2012)

Health insurance premiums increase 4 percent in 2012

Tuesday, a new report concluded that annual premiums for employer-sponsored family health coverage increased 4 percent from 2011 to 2012 to $15,745, with an employee contribution of $4,316. Fifteen percent of workers at firms with at least 35 percent of employees earning $24,000 or less annually have a deductible of $1,000 or more, compared with 29 percent of employees at firms with many high-wage workers. Slightly more firms are offering health benefits in 2012, 61 percent of all firms compared to 60 percent in 2011—2 percent more small firms offered benefits, 1 percent fewer large firms offered benefits. (Source: Kaiser Family Foundation, “Employer Health Benefits 2012 Annual Survey,” September, 2012)

Related: in the Deloitte 2012 Survey of Health Care Consumers nearly one-third of the consumers—31 percent report that, compared to the previous year, their household’s health care spending increased as a proportion of their household’s total spending, while 43 percent say their spending stayed about the same, and 23 percent say it decreased.

IOM: major drivers of waste

Per a recent Institute of Medicine study, the U.S. system wastes $750 billion annually. Eighteen experts analyzed data from 2009 identifying savings in six areas:

Category Sources Estimate of excess waste
Unnecessary services Overuse—beyond evidence-established levels
Discretionary use beyond benchmarks
Unnecessary choice of higher-cost services
$210 billion
Inefficiently delivered services Mistakes—errors, preventable complications
Care fragmentation Unnecessary use of higher-cost providers
Operational inefficiencies at care delivery sites
$130 billion
Excess administrative costs Insurance paperwork costs beyond benchmarks
Insurers’ administrative inefficiencies
Inefficiencies due to care documentation requirements
$190 billion
Prices that are too high Service prices beyond competitive benchmarks
Product prices beyond competitive benchmarks
$105 billion
Missed prevention opportunities Primary, Secondary, and Tertiary prevention $55 billion
Fraud All sources—payers, clinicians, patients $75 billion

Source: IOM, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, August 2012

Trade groups: sequestration will hurt FDA effectiveness, increase industry fees

“At a sequestration rate of about 8 percent, we estimate that the sequestration would be about $200 million from BA appropriations and another $68 million revenue loss for FDA from PDUFA, MDUFA and other smaller existing user fees, a $40 million loss for the tobacco programs, and a nearly $26 million loss of FY2013 revenues expected under the new generic and biosimilars user fees. Our understanding is that user fees would still be collected from industry; however, the sequestered amounts would stay in the relevant Treasury account rather than be available to FDA.”— Alliance for a Stronger FDA

Note: the Alliance for a Stronger FDA is a coalition of almost 200 organizations supporting increased funding for the FDA. ASPET is a member of the coalition.

Regulatory focus on weight loss products

The Federal Trade Commission settled a lawsuit against Medifast over false advertising claims that the company’s meal replacement products made unsupported claims about weight loss results. At issue, claims of how much weight a user could expect to lose in the first two weeks, with the company agreeing to use “up to” to describe the upper range of weight loss.

Quotable

“Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our Nation to achieve deficit reduction. The President has already presented two proposals for balanced and comprehensive deficit reduction. It is time for Congress to act. Members of Congress should work together to produce a balanced plan that achieves at least the level of deficit reduction agreed to in the BCA that the President can sign to avoid sequestration. The Administration stands ready to work with Congress to get the job done.” 

Office of Management and Budget, “Report Pursuant to the Sequestration Transparency Act of 2012,” September 2012

“If banking were like health care, automated teller machine transactions would take not seconds but perhaps days or longer as a result of unavailable or misplaced records. If home building were like health care, carpenters, electricians and plumbers each would work with different blueprints, with very little coordination. If the care in every state were of the quality delivered by the highest-performing state, an estimated 75,000 fewer deaths would have occurred across the country in 2005.”

IOM, “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America,” August 2012

“Mrs. Braly may be gone, but insurance CEOs will be more in demand than ever on Capitol Hill as flogging victims when costs under ObamaCare keep rising and rising.”

Holman Jenkins, Wall Street Journal, “The Day Health Insurance Died,” September 12, 2012

“For decades, the ideal academic physician has been the triple threat: an incisive diagnostician and empathetic clinician, a productive researcher, and a scintillating teacher...The new model recognizes that with increasing clinical and scientific complexity, no physician can be a competent triple threat; that few clinicians will also be investigators; that no single clinician can know everything even in his or her own specialty; and that effective care requires collaborative, multidisciplinary teams.”

— Ezekiel Emanuel & Victor Fuchs, Journal of the American Medical Association, “Shortening Medical Training by 30 percent,” March 21, 2012

Fact file

  • Administrative costs: Medicaid’s administrative costs were $17.9 billion in FY2010—4.5  percent of the program’s total spending. (Source: Kaiser Family Foundation)
  • Medicare, Medicaid abuse and fraud: in 2010, the two programs together made more than $65 billion in improper federal payments. An April 2012 study by a RAND Corporation analyst and former CMS administrator estimated that fraud and abuse cost Medicare and Medicaid as much as $98 billion in 2011. (Source: Walecia Konrad, New York Times, “As Medicare Fraud Evolves, Vigilance Is Required,” September 11, 2012)
  • Preventive health: a meta-analysis of 20 studies on the use of omega-3 fatty acids—$1.1 billion in U.S. sales in 2011 up 5.4 percent from 2010—found the supplements offer no significant impact on reduced heart attacks or strokes. (Source: Elizabeth Weise, Detroit Free Press, “Fish oil supplements don't prevent heart attacks, study says,” September 12, 2012)
  • Suicide prevention: 36,000 suicides could be prevented annually if victims discussed their issue as a part of routine health care; each year, 374,000 people are treated for self-inflicted injuries in emergency departments. (Source: CDC, Suicide Prevention Resources Center)
  • Tobacco tax reduces use: The federal tobacco tax increased from $.39/pack to $1.01 on April 1, 2009, producing $30 billion in revenue for the government. Prices increased 22 percent resulting in 3 million fewer smokers. (Source: Dennis Cauchon, USA Today, “Tax hike cuts tobacco consumption,” September 14, 2012)
  • Health care employment: the health care industry added 16,700 jobs in August—a 0.1 percent increase, down from a 0.2 percent monthly average in the past year. The industry accounted for 17 percent of the country's job growth last month, with hospitals generating 5,700 jobs and physician offices adding 700. (Source: U.S. Bureau of Labor Statistics, “Employment Situation Summary,” September 7, 2012)
  • Post-convention opinion on handling of health care: 52 percent of likely voters believe President Obama vs. 46 percent favoring GOP nominee Mitt Romney. The interviews were with 1,022 adult Americans conducted by telephone by ORC International on September 7-9, 2012 (margin of sampling error for results based on the total sample is plus or minus 3 percentage points). The sample also includes 875 interviews among registered voters (plus or minus 3.5 percentage points). (Source: CNN/ORC International, “POLL: CNN Poll: Obama takes back the lead,” September 2012)
  • Hospital pharmacies: 35 percent of U.S. hospitals in the country have at least one pharmacy aimed at patients being discharged to make sure they get their medications and stay on track. (Source: Karen Cheung-Larivee, FierceHealthcare, “Hospitals add in-house pharmacies to cut readmissions,” September 10, 2012)
  • End of life care costs: the average Medicare beneficiary spends $38,688 out-of-pocket during the last five months of life. Twenty-five percent spent all remaining assets, including any housing or real estate they might own. Excluding housing assets, the level of seniors spending was 43 percent of total net worth spent at end of life. (Source: Amy Kelley, et al, Journal of General Internal Medicine, “Out-of-Pocket Spending in the Last Five Years of Life,” September 4, 2012)
  • Misdiagnosis: autopsies of 919 dementia patients found that 17 percent of those diagnosed with Alzheimer disease (AD) were misdiagnosed and had other conditions: 39 percent of patients not diagnosed with AD were found to have evidence of the disease. (Sources: Journal of the Neuropathology and Experimental Neurology, “Accuracy of the Clinical Diagnosis of Alzheimer Disease at National Institute on Aging Alzheimer Disease Centers, 2005-2010,” April 2012)
  • Hospital operating room scheduling: According to research at the University of Texas Southwestern Medical Center, the time of day a patient undergoes surgery for conditions associated with the kidney or prostate does not affect patient outcomes. Previous researchers have suggested that patients who undergo surgery in the morning have better outcomes. (Source: Aditya Bagrodia, Journal of Eurology, “Surgeon Fatigue: Impact of Case Order on Perioperative Parameters and Patient Outcomes,” August 2012)
  • Healthiness of organic food: A study Stanford researchers has raised questions as to whether organic foods offer more benefits than conventionally farmed foods. After reviewing 17 human studies and 223 evaluations of nutrient and contaminant levels in different food groups, there was little evidence to suggest organic foods provide greater nutritional value. (Source: Crystal Smith-Spangler, et al, Annals of Internal Medicine, “Are Organic Foods Safer or Healthier Than Conventional Alternatives?: A Systematic Review,” September 2012)
  • Treatment costs vs. prevalence: The National Center on Addiction and Substance Abuse at Columbia University released a five year study, concluding that addiction treatment in the U.S. is disconnected from mainstream medical practice and evidence-based medicine, and is not widely adopted. In 2010, $28 billion was spent to treat 40 million people living with addiction in the U.S. vs. $44 billion for diabetes which affects 26 million; $87 billion for cancer, which affects 19 million; and $107 billion for heart disease which affects 27 million. (Source: National Center on Addiction and Substance Abuse at Columbia University, “Addiction Medicine: Closing the Gap between Science and Practice” August 2012)
  • Hospital satisfaction: Doctors and nurses account for 34 percent of the overall experience ratings for inpatients, and their influence is even higher (43 percent) among patients in emergency settings. Among outpatients, doctors and other health care professionals represent 50 percent of their overall experience. (Source: J.D. Power and Associates, “Patient Satisfaction Influenced More by Hospital Staff than by the Hospital Facilities,” September 2012)

Guest Commentary: Wade Horn, Director, Deloitte Consulting LLP, Public Sector Practice

“The Impact of the Election on the Affordable Care Act,” Wade Horn, Ph.D.

With the November elections just around the corner, many stakeholders have been asking: What, if any, implications do the November elections have for the ACA? On the surface, the U.S. Supreme Court decision in June would seem to have settled the question of the future of the ACA by holding that the ACA is, in fact, constitutional. But that decision does not preclude the U.S. Congress from repealing all or parts of the ACA. There are several ways this could happen.

First, the U.S. Congress could repeal all or parts of the ACA through what is known as "regular order." Regular order refers to the normal process in which a bill becomes law. The law is passed by both Houses of Congress by a majority vote and is then sent to the President for his signature. It is unlikely, however, that the ACA could be repealed in whole or in part through regular order. That is because even if the Republicans gain a majority in the U.S. Senate as a result of the November elections, no one believes the Republicans will gain enough seats to attain a filibuster proof, 60-seat majority in the Senate. As such, even if in the minority, the Senate Democrats could filibuster any bill that would seek to repeal all or parts of the ACA—under regular order.

Of course, it is possible that the Senate Democrats could agree to changing or repealing parts of the ACA as part of some "grand bargain" in which the Republicans yield on some other issues of great importance to the Democrats in exchange for agreeing to a vote on changes to the ACA. But even under this scenario, it is unlikely that any major provisions of the ACA would be repealed or changed in any significant way. And if President Obama is re-elected in November, he would surely veto any such bill that he dislikes.

There is, however, a second way in which the ACA could be repealed in whole or in part. That second way is known as budget reconciliation. Arising from the Congressional Budget Act of 1974, the budget reconciliation process allows the Senate to force votes on bills intended to enforce provisions in a budget resolution. That is, it is intended to limit debate—and hence the use of the filibuster—on bills that affect the federal budget. Initially, the budget reconciliation process was used sparingly and for limited purposes. Over time, however, it has also been used to pass bills that have significant policy implications as well as budgetary ones. For example, welfare reform was passed through the budget reconciliation process back in 1996. So were parts of the ACA itself.

What the budget reconciliation process requires is that first the Congress adopt a concurrent budget resolution setting forth the Congressional budget with instructions to one or more committees to develop legislation affecting spending, revenues, or the debt limit. Then the Senate "reconciles" any such bills thus developed into a single "omnibus" bill. Debate on that bill is limited to only 20 hours, eliminating the use of the filibuster to prevent a vote on the bill.

So, if the Republicans attain a majority in the Senate, they could pass a concurrent budget resolution which includes directions to the relevant committees to develop legislation that affects the budget by repealing the ACA in whole or in part. Those bills could then be combined into a single "omnibus" bill, which the Senate Democrats would be unable to filibuster. Under such a scenario the Republicans would only need 51 votes in the Senate (50 votes if Mitt Romney is elected president since the vice president, in this case Paul Ryan, would break all "tie" votes in the Senate) to utilize this process in order to repeal all or parts of the ACA.

Ah, but there is a "rub." Only provisions of the ACA that affect the budget would qualify under the reconciliation process. Those provisions that are policy oriented, but do not affect the federal budget, are not subject to the reconciliation process. While there is certainly disagreement as to which provisions do, in fact, affect the federal budget, most agree that provisions such as the individual mandate and funding for health insurance exchanges would qualify. Some believe that an argument can be made that many of the insurance marketplace reforms might also qualify. Who gets to decide what is "in" and what is "out": the Senate parliamentarian, the official advisor to the Senate as to the Senate rules and procedures.

Of course, if President Obama is re-elected, he could veto a budget reconciliation bill, which is exactly what President Clinton did back in 1996, not once, but twice, before finally signing the "omnibus bill" that replaced Aid to Families with Dependent Children (AFDC) with the Temporary Assistance to Needy Families (TANF) program. And any presidential veto would require a two-thirds vote in both the House and the Senate to overturn—a very unlikely event.

So, what does the future have in store for the ACA? It seems the November elections will have a lot to say about it—and, of course, the Senate parliamentarian.

Wade F. Horn, Ph.D., is a director in Deloitte Consulting LLP’s Public Sector Practice, focusing on helping state governments provide effective and efficient health and human services that are client-focused and compliant with federal laws, regulations and reporting requirements. He served from 2001 to 2007 as the Assistant Secretary for Children and Families within HHS.

National health reform: What now?

National health reform: What now?

At Deloitte, we continue to explore and debate the key questions facing 
the industry, and we look forward to helping our clients find and implement 
the right answers for their organizations. To learn more, visit www.deloitte.com/us/healthreform/whatnow today.

Subscribe to the health care reform memo

Health care reform memo — The weekly health care reform memo is available for subscription. Please visit www.deloitte.com/us /healthmemos/subscribe.

  • Step 1, confirm your sector(s) of interest. 
  • Step 2, select the health care reform memo as one of your subscriptions.

 

Related links

Share this page

Email this Send to LinkedIn Send to Facebook Tweet this More sharing options

Stay connected