Congress Needs A Different Approach on Health Care

By John Rother, President & CEO and Larry McNeely, Policy Director

Although we lack a full Congressional Budget Office(CBO) analysis, the House budget reconciliation package appears to fall short with respect to NCHC’s central priority, improving health care affordability. We are also  concerned the bill would shift costs now born by the federal government onto consumers and state taxpayers. It is time for this Congress to begin considering a different approach.

In a series of blog posts on NCHC’s website in the summer of 2016, we expressed our hope that certain concepts in the House Republican Conference’s health care blueprint, A Better Way, could serve as the basis for serious discussion and common ground. We singled out that document’s support for value-based insurance design, pre-existing condition protections, and state innovation funds as constructive. Yet we also took strong exception to policies that merely moved costs borne by the federal government onto consumers or taxpayers at the state level.

With the release and accelerated markup of the American Health Care Act (AHCA), we have now seen the 115th Congress’ first effort to translate A Better Way into legislation. Regrettably, preliminary analyses from outside research organizations, ranging from Standard & Poors to the Kaiser Family Foundation, indicate that the AHCA would have significant negative effects on affordability and coverage.

We continue to consult with our member organizations regarding the legislation. Once a Congressional Budget Office (CBO) analysis is released, we expect to react to its central provisions, including its Medicaid and tax credit sections.

But even without a publicly available CBO score, serious problems are apparent. These flaws undercut its authors’ own stated goals of minimizing disruption to Americans’ current coverage during a transition period and empowering states to lower costs and improve care. Indeed, aspects of the bill could do serious and immediate harm- even before the broader Medicaid per capita allotment and tax credit provisions take effect.

Our early analysis has identified specific provisions that would:

Threaten the stability of non-group insurance markets:   The Ways and Means Budget Reconciliation Legislative Recommendations immediately zero out the penalty for failing to meet current law’s individual responsibility requirement. Yet the proposed State Patient and Stability Fund, established to stabilize the market, is scheduled to go into effect in 2018. That deadline may prove challenging to meet operationally. And any mismatch between the individual responsibility requirement repeal and the availability of state stabilization funds could destabilize non-group insurance markets. This effect will only be exacerbated by continuing uncertainty around the availability of cost-sharing reduction (CSR) payments for 2018 and 2019.

Decimate chronic disease prevention efforts: Section 101 of the Energy and Commerce Budget  Reconciliation Legislative Recommendations immediately eliminates the Public Health and Prevention Fund without making any provision to replace those dollars through Congressionally-directed spending. A funding cut of this magnitude not only eliminates 12% of the Centers for Disease Control and Prevention budget; it threatens $625 million a year in support for innovative state and local initiatives to fight preventable chronic diseases like cancer, heart disease and stroke.

Undermine Medicare Financing:  As called for in the W&M Recommendations, the immediate repeal of the 0.9% Medicare Hospital Insurance payroll tax is estimated to accelerate the insolvency of the Medicare Part A Trust Fund forward to 2025-absent offsetting revenues. This manufactured crisis could be used by a future Congress as a pretext to impose blunt provider, health plan or beneficiary cuts in Medicare.

Defund state Medicaid expansion coverage for the working poor:  Section 112 of the E&C Recommendations would maintain enhanced federal support (E-FMAP) for Medicaid beneficiaries enrolled as of Jan 31, 2019. However, if a beneficiary has any break in Medicaid coverage of a month or more, the enhanced E-FMAP would be terminated. This encourages states to drop from coverage any childless adult who secures a job paying more than the Federal Poverty Level (just $1005 per month for a single individual in 2017). In itself, this is a work disincentive. Additionally, Section 116 incentivizes state officials to audit their circumstances and earnings to ensure that they are eligible. The interaction of these provisions would immediately begin reducing Medicaid expansion and significantly limit states’ flexibility to support employment and cover the working poor through Medicaid.

It is time for Congress to consider an entirely different tack. Congressional leaders should set aside sweeping overhauls of the health sector and return to a more step-by-step approach.

For our part, the National Coalition on Health Care has come together around several nonpartisan policy objectives, which could inform the development of a constructive agenda:

  • Stabilize the non-group health insurance markets, by maintaining cost-sharing reductions and tax credits, avoiding disruption of current Medicaid funding and providing ongoing risk stabilization support
  • Bring down the cost of care in Medicare and the private sector by improving chronic illness care, further accelerating the transition away from fee-for-service, and embracing value-based insurance design
  • Expand primary care, prevention and other interventions that improve outcomes and reduce downstream medical costs
  • Extend the state-based Children’s Health Insurance Program(CHIP) and bolster funding for the nation’s network of community health centers
  • Tackle the high cost of prescription drugs through market-based solutions: transparency, value, and competition

There is much that is broken in American health care. To have hope of fixing these problems, this Congress and Administration will have to act. Unfortunately, we fear that the legislative language advanced this week could make Americans’ health care affordability problems worse, not better.

Member Spotlight: Pacific Business Group on Health

For NCHC’s first Member Spotlight, we are thrilled to feature Pacific Business Group on Health (PBGH). PBGH represents the interests of dozens of private and public purchasers working towards the same goal—an improved and innovative healthcare system that benefits the American public.

Founded as an organization for purchasers, its members include some of the largest national and regional companies in the U.S. By drawing on its members’ own experience testing healthcare innovations, PBGH is able to identify what’s working and help other purchasers bring those models to scale.

One noteworthy effort has been PBGH’s Intensive Outpatient Care Program (IOCP), designed to better coordinate care for medically complex and chronically ill patients and, in turn, cut costs and unnecessarily duplicated services. Funded by a three-year Center for Medicare and Medicaid Innovation (CMMI) grant, IOCP is now operating across five states (CA, WA, AZ, NV, and ID) in partnership with 23 physician groups.

Preliminary data from earlier tests of this model with a commercially insured population show a reduction in costs of up to 20%.

IOCP is just one of the many innovative healthcare initiatives led by PBGH.

We applaud PBGH’s unwavering efforts to work towards affordability and efficiency and are pleased to work with them in this ever-changing healthcare environment. You can read more about where NCHC stands on CMMI and other similar innovative payment models here.

Top of The Administration’s Agenda: Stem the Rising Cost of Healthcare

Reprinted with permission from Generations 40:4, Winter 2016-2017. Copyright © 2017. American Society on Aging, San Francisco, California. For electronic publication, please provide full citation, publication credit and hyperlink to ASA,

by John Rother

The rising cost of healthcare is one of the greatest economic, fiscal, and moral challenges facing the United States, not just for the next four years, but also for coming generations. Successful efforts to simultaneously improve quality and outcomes while “bending the curve” of healthcare spending must be a top national priority.

Where We Stand Today

Despite substantial progress reforming the health insurance market and reshaping healthcare delivery in the past six years, current trends are not promising for America’s older adults, or the population as a whole.

Undoubtedly, the United States has benefitted from an unexpected slowdown in health spending growth and the fact that more than 90 percent of the population is currently insured. But that fortuitous slowdown has largely ended, with spending climbing again at a rate well above inflation and wage growth, albeit not as high as historical norms. The reality is that the cost of Medicare and Medicaid will consume increasing shares of our economy and our federal budget in the years and decades ahead. Any resurgence of healthcare spending growth will only accelerate the impact of an aging population on health spending. And as Medicare costs grow, so will the premiums paid by beneficiaries, a development which will negatively affect their ability to afford care—with the greatest immediate impact on the 5 percent of beneficiaries, who generate 50 percent of healthcare spending.

In the non-Medicare population, the situation is no better. Recent analyses of the employer market and the non-group market show rising premiums and rapidly climbing deductibles.

On this trajectory, future generations of Americans will find it increasingly difficult to afford the care they need. Faced with these affordability barriers, Americans will experience higher rates of illness, disability, and early mortality than they otherwise might. Unless we act, this combination of poor health and the increasing cost of care will gradually erode our standard of living—until the security provided today by programs like Medicare, and the American dream of generational progress, both vanish under the growing burden of healthcare costs.

To continue reading, click here. To see the full digital issue of Generations, Journal of the American Society on Aging, click here.

Considering the Implications of Repeal and Transition


by Larry McNeely

With the Senate’s decision to take up the Fiscal Year 2017 budget resolution, Congressional leaders are now pursuing repeal of key provisions of the Affordable Care Act without an immediate replacement. It is time that we took a hard look at this strategy’s implications for health care.

At the outset, I should stipulate that this course of action is not one NCHC can support. Despite real flaws in the ACA and pressing affordability challenges, the United States has managed to end pre-existing condition denials and benefit caps, cover more Americans and slow the growth in Medicare spending. In our view, this Congress ought to be working together, on a bipartisan basis, to fix what’s broken in our health system without first putting these broadly supported achievements at risk…now or in the future.

That said, this post is not a polemic against repeal. Instead, I want to invite ACA supporters and opponents alike to examine a very specific aspect of forthcoming repeal legislation….the replacement fund, established by Section 3002 of the budget resolution.

This “fund” may seem like an arcane detail in the budget process, but exactly how Congress handles this issue will substantially impact the lives of ordinary Americans.

You see, ending the ACA’s major coverage provisions such as the affordability tax credits, the Medicaid expansion or the individual and employer mandates, will produce savings to the federal treasury. Although much of these savings are expected to offset the rollback or delay of taxes which helped pay for the ACA, the budget resolution provides that all but $2 billion of the net savings from any repeal bill would be set aside in this fund to cover the cost of eventual replacement legislation.

Let’s say the eventual repeal bill sunsets key coverage provisions after two years and allocates the savings to this replacement fund.  How much would go into this fund?

HR 3762, the vetoed repeal bill from 2015 which today’s Congressional leaders are using as a template, produced $317.5 billion in net savings, or $516 billion when accounting for macroeconomic effects, according to the non-partisan Congressional Budget Office. (We will not know the exact impact of this year’s legislation until CBO scores an actual bill specifying the provisions to be repealed and the date of their repeal, but using the HR 3762 numbers should give us a rough approximation of what this year’s repeal effort might generate.)

The problem is that $300-500 billion is only a fraction of the $1.4 trillion in direct ACA coverage spending which is expected to be repealed. Even if our lawmakers were given the judgment and wisdom of Solomon, it would not be possible to cover the same number of people at one third of the cost.

No efficiencies, newly wrung from the health system, can be sufficient to make up a budgetary difference of that magnitude. Lawmakers will be forced to turn to some combination of the following blunt force cuts:

  1. Reducing the size of the tax credit available for private coverage or limiting the number of people eligible for that tax credit under any replacement
  2. Cutting Medicare benefits or payments to providers and plans
  3. Capping the exclusion of employer sponsored health plans from income and payroll taxes
  4. Reducing the overall level of federal support for state Medicaid programs

Theoretically, lawmakers could look outside health care to fund ACA replacement legislation. Unfortunately, domestic discretionary spending, now at historic lows, could not provide much. Large scale defense or social security savings, even if advisable, would be politically unlikely, and tax reform advocates would fight to devote any revenue to the lowering of rates, not new health care spending.

If Congress moves forward with repeal and transition, it seems likely that individual market customers and plans, Medicare beneficiaries and their providers, Medicaid programs in all 50 states and DC, and employers offering health coverage would be pitted directly against one another. What one gains, someone else will lose. For everyone with a stake in health care, it would amount to a war of all against all.

Whatever your view of the ACA, why would any of us want to live through the scenario described above? Instead, let’s begin the hard work of identifying ways to confront the increasing unaffordability of coverage and care in this country.

Presidential Candidates’ Health Proposals

As Election Day 2016 approaches, it is time to take a look at the candidate’s health care proposals.  Although this issue has not played an especially prominent role recently in either Hillary Clinton’s or Donald Trump’s campaigns–although it was briefly discussed the October 9 debate–it is certainly an issue of importance to many Americans, and will continue to be so well after the election is over.

The Commonwealth Fund recently released a report comparing the two candidate’s health care proposals and not surprisingly, there are stark differences between their two approaches.  In short, Clinton wants to keep the Affordable Care Act (ACA) but make needed changes; her proposals would increase the number of people with health insurance by 400,000 to 9.6 million.  Trump would repeal and replace the ACA with a proposal entitled “Healthcare Reform to Make America Great Again;” it would decrease the number of people with health insurance by 15.6 million to 25.1 million.  Both Clinton’s and Trump’s proposals have an impact on the deficit of course; the Commonwealth Fund has estimated that the impact of Clinton’s proposals could range from a $0.7 billion reduction in the deficit to a $90 billion increase.  They estimate that the Trump proposals would increase the deficit by $0.5 billion to $41 billion.

Read more here.

The Medicare Affordability and Enrollment Act of 2016

On September 21, Senator Wyden, the ranking member of the Senate Finance Committee, Congressman Frank Pallone, the ranking member of the House Energy and Commerce Committee and Congressman Sander Levin, the ranking member of House Ways and Means Committee, along with several of their Democratic colleagues, introduced “The Medicare Affordability and Enrollment Act of 2016” (S. 3371 and H.R. 6109), which would update the Medicare program to improve both beneficiary affordability and the enrollment process.

Read more here

Examining Selected Proposals in ‘A Better Way to Fix Health Care’: Part 3

In two previous blog posts, we have discussed some of the ideas and approaches to health care reform in the House Republicans “A Better Way” plan where NCHC shares common ground (and also expressing our opposition of outright repeal of the Affordable Care Act). In this blog post, however, we want to talk about a couple ideas with regard to Medicaid where we do not agree; where we, in fact, have very serious reservations.

Read more here.

Three Steps Congress Can Take To Accelerate Medicare’s Delivery Transformation

in Health Affairs blog

By John Rother and Larry McNeely

The pace of change in the United States’ health care system is accelerating. Building on work by private and public payers, Centers for Medicare and Medicaid Services (CMS) officials are pursuing a transformation of how our health care system pays for care, spurred on by the passage of last year’s bipartisan sustainable growth rate (SGR) reform legislation and Health and Human Services (HHS) Secretary Sylvia Mathews Burwell’s own payment reform goals. The destination is a wholesale transition away from the incentives for volume over value inherent in fee-for-service medicine.

But even as recent press coverage and HHS announcements suggest that reform is picking up speed, providers and plans are facing significant speed bumps. It’s time that Congress give providers and plans the tools needed to deliver on the promise of better care at lower cost.

To be sure, HHS’ efforts are promising. On July 7, regulators offered up a draft Medicare physician payment rule which bolstered reimbursement for care coordination and planning and covered diabetes prevention programs. The Center for Medicare and Medicaid Innovation (CMMI) has announced sweeping tests of bundling and medical home models. Secretary Mathews Burwell has already deployed the Affordable Care Act’s expansion authority to implement elements of the Pioneer Accountable Care Organization (ACO) Demonstration and the Diabetes Prevention Program. And this November 1, after sorting through 3,874 public comments, CMS will issue its final rule implementing payment incentives for physicians and clinicians to participate in alternative payment models.

Yet the truth is that the underlying Medicare law was built for a purely fee-for-service system. And as alternative payment models evolve and grow, they are encountering significant statutory barriers to their success — barriers that only Congress can bring down.

Read the full Health Affairs Blog here.


Examining Selected Proposals in ‘A Better Way to Fix Health Care’: Coverage Policy and Health Care Innovation (Part 2)

In our blog post on July 14, we talked about some of the provisions in the House Republican Health Care Task Force’s health reform proposal — entitled “A Better Way” — that NCHC believes would modernize and improve the Medicare program for beneficiaries and taxpayers alike. In later posts, we will turn a critical eye toward their plans for the children, seniors, and low-income adults who depend on Medicaid and CHIP.  But today, we identify some elements of the Task Force’s coverage and innovation proposals that represent good starting points for future dialogue.

As an organization, NCHC has long been committed to finding common ground solutions to our health care challenges. And  “A Better Way” does provide some room for future conversation. The Task Force report opens with the following quote: “Americans deserve an accessible and affordable health care system that promotes quality care and peace of mind. It should empower patients and support innovation.”  We could not agree more with these goals.  After all, the National Coalition on Health Care was established to support efforts for better and more affordable coverage for all Americans, and we too believe our health care system should focus on patient-centered, high quality health care.

Read the full blog post here:


Examining Selected Proposals in ‘A Better Way to Fix Health Care’

On June 22, the House Health Care Reform Task Force, led by House Speaker Paul Ryan, released their blueprint describing how the House Republican caucus’ hopes to reform our country’s health care system, entitled “A Better Way to Fix Health Care.” There is much in their approach that we at NCHC do not support.  To name just a few examples, there is nothing particularly appealing about proposals to roll back federal support for Medicaid and CHIP, raise Medicare’s eligibility age or shutdown the Centers for Medicare and Medicaid Innovation’s crucial work on alternative payment models.  We’ll have more to say on these issues in later blog posts.

But there are ideas in the package that, properly developed, could improve our health care system. So we begin today by taking a close look at a few constructive proposals included in the report’s Medicare section.

Read the full blog post here: