A government report finds that the cost of expanding Medicaid to millions more low-income people is increasing faster than expected, raising questions about a vital part of President Barack Obama’s health care law.
The law provided for the federal government to pay the entire cost of the Medicaid expansion from 2014 through the end of this year.
Obama has proposed an extra incentive for states that have not yet expanded Medicaid: three years of full federal financing no matter when they start. But the new cost estimates could complicate things.
In a recent report to Congress, the Centers for Medicare and Medicaid Services said the cost of expansion was $6,366 per person for 2015, about 49 percent higher than previously estimated.
Hillary Clinton admits she’s running to extend the Obama legacy, and so far she’s had a free ride in defending it. She hasn’t even had to explain the increasingly obvious failures of ObamaCare to deliver the affordable insurance that Democrats promised.
The Affordable Care Act is now rolling into its fourth year, and even liberals are starting to concede that the insurance exchanges are in distress and Congress may have to reopen the law. Premiums are high and soaring; insurers have booked multimillion-dollar losses and are terminating plans; and the customer pool is smaller, older and less healthy than the official projections.
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The Affordable Care Act has overwhelmed large swaths of the economy, and the Administration is poised to upend yet another, by overriding Congress’ directives on how Medicare pays for the medicines that physicians prescribe under that program. Patients, healthcare providers and drug manufacturers all stand to suffer from the Administration’s disregard of a statutory mandate that controls over $20 billion in payments a year.
In the Medicare statute, Congress laid out a formula for Part-B drugs (those you get at a doctor’s office): Providers receive 106% of the average sales price—that is, the going rate plus a little to cover overhead costs. Enter the Centers for Medicare and Medicaid Innovation (CMMI), a bureaucracy within a bureaucracy, created to test “innovative payment and service delivery models.” CMMI recently proposed to “test” an approach to paying for Medicare Part-B drugs that will change reimbursements for three-quarters of the country.
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“Irony is wasted on the stupid.” This quote, attributed to Oscar Wilde, seems fitting in light of the Obama administration’s new campaign to block two blockbuster mergers between the health insurers Aetna and Humana and Anthem and Cigna. (It is also fighting hospital consolidation in many states.) The administration is rightly worried that this will lead to higher health care costs through reduced competition, yet it ignores the fact that its signature law, the Affordable Care Act, was specifically designed to foment such consolidation.
The central planners behind the Affordable Care Act – also known as Obamacare – were convinced that consolidation in health care would lead to decreased health care spending by eliminating duplication, standardizing treatment protocols and incentivizing better utilization. As three of Obamacare’s primary authors wrote in The Annals of Internal Medicine in 2010, the law was designed to “unleash forces that favor integration across the continuum of care.” No part of health care was supposed to be spared – doctors, hospitals, insurers, pharmaceutical companies and others were given regulatory and financial incentives to merge.
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The health insurance exchanges that are the beating heart of Obamacare are on the edge of collapse, with premiums rising sharply for ever narrower provider networks, non-profit health co-ops shuttering their doors, and even the biggest insurance companies heading for the exits amid mounting losses. Even the liberal Capitol Hill newspaper is warning of a possible “Obamacare meltdown” this fall.
Three states – Alaska, Alabama, and Wyoming – are already down to just a single insurance company, as are large parts of several other states, totaling at least 664 counties.
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At the start of 2015, Marilyn Tavenner held one of the most important jobs in health care: Implementing Obamacare, as the head of CMS. Six months later, she’d swapped it for a completely different major role: Lobbying to change Obamacare, as the head of America’s Health Insurance Plans.
It’s an unusual career shift, and it’s given Tavenner — a long-time government official turned top lobbyist — a rare perspective on the changes unfolding in the industry.
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Over the past year, a new wrinkle has emerged. Federally subsidized co-ops included in the ACA after the defeat of the government-payer “public option” began failing rapidly when Congress limited their potential subsidy to taxes collected through the ACA. Most of them have now closed after having lost access to nearly unlimited amounts of red ink in the HHS budget. Joining them are a growing number of private insurers, unhappy about the losses they continue to absorb in Obamacare exchanges.
In short, the individual markets keep marching closer and closer to collapse. Whether or not the imposition of a single-payer system on all Americans in a crisis was the secret plan all along for ACA advocates, the existential crisis for this market is nearly upon us. This is the time to spring socialized medicine in the US, right?
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Clinton tried hard to get health reform passed when she was first lady in the 1990s. Now that President Obama has done that, she would continue to implement his law if she wins in November. But she has shown a deep interest in more healthcare reform, proposing a number of policies aimed at making coverage more affordable.
Last fall, she released a plan to reduce prescription drug costs that included capping out-of-pocket drug expenses for consumers and requiring pharmaceutical companies to pay larger rebates to Medicare for low-income patients.
In a healthcare proposal on her campaign website, she also calls for requiring insurers to cover more doctors visits even before a patient pays the deductible and providing families with a tax credit to help pay for out-of-pocket health expenses.
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In an effort to prevent more insurers from abandoning the Obamacare exchange in Tennessee, the state’s insurance regulator is allowing health insurers refile 2017 rate requests by Aug. 12 after Cigna and Humana said their previously requested premium hikes were too low.
Cigna and Humana filed to increase last year’s premiums an average of 23 and 29 percent, respectively, on June 10. But in the interim, both insurance companies have told state regulators that the requests would not cover the expected claims, said Kevin Walters, spokesman for the Tennessee Department of Commerce and Insurance.
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“Last week, I outlined eight possible futures for Obamacare. By curious coincidence, few of them looked like the paradise of lower premiums and better care that the law’s supporters had promised. In the best case scenarios, they looked more like what critics had warned about — “Medicaid for all,” or fiscal disaster, or a slow-motion implosion of much of the market for private insurance as premiums soared and healthy middle-class people dropped out.
What I did not explore was why we seem to have come to this pass — which is to say, why insurers seem suddenly so leery of the exchanges and why premiums are going up so much for Obamacare policies. No one really seems to know exactly why insurers are having so much trouble in the exchanges. . . .”
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