• It’s a Good Bill. Pass It, with Pride

    This post is co-authored by The Incidental Economist’s entire “staff” of bloggers, Austin Frakt, Steve Pizer, and Ian Crosby.

    What is almost certain to be the final set of tweaks to health reform legislation, The Health Care & Education Affordability Reconciliation Act of 2010, was released yesterday. The House Committee on Rules kindly provided a section-by-section summary, and Igor Volsky worked up a side-by-side comparison with prior bills. The three of us looked at the ultimate product and saw many things we like, most of which have received substantial attention by others (e.g. exchanges, subsidies, expansion of coverage to 32 million additional individuals, end to exclusions and recissions). There are a few other elements of reform worthy of note too.

    Two of us (Austin, Steve) work on and pay close attention to Medicare policy, which will be adjusted significantly by health reform. Beneficiaries will like the provisions that close the Part D doughnut hole (part way by 2011 and completely by 2020). At the same time, many beneficiaries are worried about proposed “cuts” to the program. The vast majority of these stem from the necessary, reasonable, and justified tightening up of Medicare Advantage (MA) payments to private insurance companies.

    As we’ve written about at length on this blog and in our scholarly work, MA payments have risen sharply in recent years and far exceed the costs of provision of standard Medicare benefit. Moreover, the value to beneficiaries of additional payments to Medicare HMOs is very low relative to their cost to taxpayers. Cuts to government payments to MA are long overdue. And those cuts won’t touch basic Medicare benefits available to all beneficiaries under the traditional fee for service arm of the program. (We are, however, disappointed to see that the MA cuts take the form of administrative pricing reductions rather than implementation of competitive bidding.)

    Health reform will also do great things for another large public insurance program: Medicaid. It will end the byzantine eligibility restrictions of the program, replacing them with far simpler means tests. In addition there will be more federal financial responsibility for the program and less for the states. This will help end glaring inequities across state lines and reduce burdens on state budgets that contribute toward cuts to Medicaid when people need it most, during economic downturns.

    While we don’t endorse all the specifics of the Cadillac tax, we recognize the importance of it as a cost reducing device. We are glad to see that it has been amended to include adjustments for age and gender variations across employer groups. Other good cost control efforts will be initiated with reform including the first tentative steps toward ending volume-based payments. This, more than anything else, is the key to taming health care costs.

    Finally, we’re all pleased (and particularly Ian) to see an end to insurance discrimination against coverage for developmental disabilities.

    There are many other provisions to like in the package of reforms, as well as a few we’d tweak if we had the power to do so. However, considering the political and budgetary challenges and realities, the bill is worthy of considerable praise. That it has come this close to passage and likely will pass this weekend is itself a remarkable achievement, and one that has eluded presidents and congresses for decades.

    Health reform, as currently proposed, should be supported and passed. And, should that occur, all Americans deserve to be proud that their nation will finally join the ranks of other industrialized nations in providing access to affordable health insurance for all its citizens. It’s about time.

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    • Mostly agreed. I am disappointed that we did not make insurance portable, separating it from employment, but you dont get everything you want. Your comments about Medicaid are interesting as the meme circulating on the right is that this bill will cause states to spend much more on Medicaid. I have mostly concentrated on Medicare and the private insurance side. Any truth to the increased spending by the states (unfunded spending)?

      Steve

      • @steve – From the Kaiser Heath Reform Gateway summary: “states will receive 100% federal funding for 2014 through 2016, 95% federal financing in 2017, 94% federal financing in 2018, 93% federal financing in 2019, and 90% federal financing for 2020 and subsequent years. States that have already expanded eligibility to adults with incomes up to 100% FPL will receive a phased-in increase in the federal medical assistance percentage (FMAP) for non-pregnant childless adults so that by 2020 they receive the same federal financing (90%) as other states. In addition, increase Medicaid payments in fee-for-service and managed care for primary care services provided by primary care doctors (family medicine, general internal medicine or pediatric medicine) to 100% of the Medicare payment rates for 2013 and 2014. States will receive 100% federal financing for the increased payment rates. (Effective January 1, 2014)”