---

New Mexico media on Health Reform, its impact in NM and critics"

Albuquerque Journal
Sunday, January 10, 2010

Bill Reduces Uninsured, Still Faces Many Critics

By Winthrop Quigley
Of the Journal
The health care bill Congress seems most likely to pass would significantly reduce the number of uninsured New Mexicans, increase the state's Medicaid funding, encourage more medical providers to work in its rural areas and improve Indian health care.
The bill would also maintain the private insurance system, reduce funding to New Mexico's hospitals, reduce payments to the health plans that offer Medicare managed care products and maintain the relatively lower Medicare pay scale New Mexico receives compared with other states.
The bill offends people on both ends of the political spectrum.
Opponents on the left say it is a boon for insurance companies, doesn't force pharmaceutical companies to negotiate better prices with the government and contains no government-run public option to compete with private insurance. Critics on the right warn that the bill is too expensive and that Congress can't be counted upon to cut health care spending. They charge that the bill amounts to a government takeover of health care.
Economics pundit Robert J. Samuelson observed that the bill slows the growth in health care costs; it doesn't reverse the trend. Samuelson said that, by 2019, health care spending will consume 22.1 percent of gross domestic product without the bill and 21.3 percent with the bill.
The House and Senate have passed different health care bills. Sen. Jeff Bingaman, D-N.M., told the Journal that, to keep the votes of 60 senators necessary to overcome Republican obstacles to the bill's passage, compromise legislation between the chambers will have to closely resemble the Senate bill.
Bingaman acknowledged that the bill is far from ideal. He expressed distaste for provisions designed to win votes from Nebraska and Florida senators and dismay that there was "clearly tremendous pressure on Republicans not to participate" in a bipartisan solution to health care reform.
However, Bingaman said, the passage of a bill "that the Congressional Budget Office will say is deficit neutral or reduces the deficit, and one that controls costs over the long haul is unprecedented in my 27 years in Congress. If we don't enact health care reform, it's a cinch health care costs will go up and up and up."
Bingaman said that family health insurance premiums in New Mexico that cost an average of $11,000 a year today are expected to reach $28,000 in 2016 absent congressional action. He said that because health care providers have to recover the money they lose caring for uninsured New Mexicans from people with insurance, family premiums cost the state's insured patients $2,300 more than they would if the uninsured had coverage.
A Wall Street Journal analysis found that the premiums among large groups might decline slightly, premiums among small groups would be little changed, and premiums for individuals would probably increase.
The Senate bill would help up to 238,000 uninsured New Mexicans afford private health insurance and extend Medicaid coverage to as many as 124,000 more, Bingaman said.
State Medicaid director Carolyn Ingram said the Senate bill will allow New Mexico to cover all low-income adults entirely with federal money in 2014, 2015 and 2016. The state will have to pick up 5 percent of the cost thereafter.
New revenue source
Today, most Medicaid recipients are low-income children, disabled people, the elderly and pregnant women. The federal government pays about 70 percent of the cost of their care.
Ingram said the Medicaid provisions mean a new source of revenue for medical providers, especially in rural New Mexico. That flow of new money to low-income areas should improve local economies, because it will give providers revenue to hire new people, improve services and expand operations, she said.
More Medicaid funding, mandates that people get coverage and subsidies to help people afford health insurance should put downward pressure on health care costs and provide "a bonanza" to insurance companies, said Garrey Carruthers, New Mexico State University business school dean and former Republican governor of New Mexico. Carruthers was also an owner of an insurance company that was sold to Ardent Health Services.
"It's not clear to me why insurance companies would oppose this when it's going to impose on them 30 million new customers," Carruthers said.
"There is more to like from an insurance standpoint," said Presbyterian Healthcare Services CEO Jim Hinton. Larger insurance pools should allow health care expenses to be spread across more paying customers and reduce risks for medical providers and insurance companies, he said.
The expansion of private insurance is precisely the problem with the entire Senate bill, according to Physicians for a National Health Program.
In a letter to the Senate, the group said the bill "would reinforce private insurers' stranglehold on care." Currently insured and formerly uninsured people would be "forced to pay private insurers' inflated premiums, often for coverage so skimpy that serious illness would bankrupt them."
Premium subsidies that the physicians group said would total $476 billion in public funds "would all go to insurance firms, buttressing their financial and political power, and rendering future reform all the more difficult."
But state House Minority Whip Keith Gardner, R-Roswell, an athletic trainer and a partner in an out-patient physical therapy clinic, scoffs at the idea that expanding government's role in health care financing will help contain costs.
"The government's opinion of efficiency seems to be more regulation," Gardner said. "Regulation is very expensive; it tends to be cumbersome and inefficient in the long run."
Gardner also objects to provisions that would impose taxes on people who buy more expensive insurance policies before the government extends coverage to more people, calling it a "money grab."
Carruthers said collecting new taxes early in the process and spending it later is probably why the Congressional Budget Office found the Senate bill reduces the federal budget deficit over 10 years. Claims of a deficit reduction "are a bit disingenuous," he said.
Cuts in spending
Bingaman said the CBO estimates cost savings exceed new taxes over the longer term and expects the federal deficit to be $1.2 billion lower over the next 20 years if the Senate bill becomes law, assuming Congress has the political well to leave spending cuts required by the bill alone, something some critics doubt will occur.
Some of those savings will come from slowing the pace at which Medicare spending grows, Bingaman said. Insurance companies in New Mexico that manage Medicare coverage through Advantage plans are paid about 30 percent more than traditional Medicare for the same service, he said. The Senate bill would reduce that spread to 16 to 18 percent.
The bill creates a new advisory body to recommend ways to reduce Medicare spending through improved efficiency. The bill funds pilot projects designed to improve care and lower costs. Changes to the complex formulas used to set Medicare payment rates would slow the growth in Medicare spending, Bingaman said.
American hospitals alone would see payments cut $155 billion over 10 years, mostly because of Medicare changes, said New Mexico Hospitals Association president Jeff Dye.
"The premise continues to be that hospitals will be able to absorb reduced payments if there is more coverage, because then there will be less uncompensated care," Dye said. However, the Senate bill is expected to assure that 94 percent of citizens and legal residents have coverage while the nation's hospitals were counting on 97 percent coverage. "That leaves several million people uncovered, so it doesn't have the same potential to reduce uncompensated care," Dye said.
The bill also leaves in place two major Medicare flaws, Hinton said. First, Medicare would continue to pay states with fewer providers and lower costs of care like New Mexico less than bigger, higher cost states like Florida. Second, fee-for-service Medicare would continue. Hinton said fee for service pays providers for the amount of service they provide and not for the quality or efficiency of care. Even if payment is lowered for services, the incentive to provide more service, even unnecessary service, remains, Hinton said.
The Senate bill has features that could address two significant New Mexico problems: rural and Indian health care. Rural clinic systems would receive more federal funding. Medical providers willing to work in under-served areas would get more help financing their education.
The bill would modernize the Indian health system to fund the tribal clinics and other locations where Indians receive care, said state Indian Affairs Secretary Alvin H. Warren. The laws governing Indian health care haven't been updated for 17 years, he said. The bill includes funding for construction and improvement of infrastructure that serves Indians. It would permanently authorize existing Indian health programs rather than require Congress to vote periodically to continue the programs. New behavioral health care programs would be launched.
Shortage of providers
Regardless of which bill passes Congress, New Mexico doesn't have nearly enough medical providers to care for hundreds of thousands of newly insured people, said Frank Hesse, a physician and chairman of the state Health Policy Commission. "It's going to be a disaster, and nobody's talking about it," Hesse said.
Dan Derksen, a family practice physician at the University of New Mexico Health Sciences Center, worked as a Robert Wood Johnson Foundation fellow on health policy issues in Bingaman's office. He said the Senate bill tries to increase the medical provider supply by establishing a national commission to improve work force planning, increases funding for medical provider training and allows the federal government to fund medical training in community settings like rural clinics.
"There is no question we don't have enough providers," Bingaman said. "There is no question, if we provide more coverage for everybody, there will be more demand for care." However, he said, the uninsured already receive about 60 percent of the care insured people receive, and many of them receive it in the least efficient way. At a minimum, he said, expanding coverage to hundreds of thousands of New Mexicans gives providers payment for care they'd deliver anyway.
What is the Senate health bill?
THE PURPOSE The Senate bill (which is expected to be the basis of federal health legislation that ultimately passes Congress) is designed to expand existing public programs to cover millions of currently uninsured people, requires almost everyone to obtain coverage, forces insurance companies to cover more people and attempts to slow the speed at which health care costs grow.
It does not contain a government-run insurance option.
WHO IT COVERS

The nonpartisan Congressional Budget Office estimates that 31 million of the 40 million citizens and legal residents without health insurance in the United States would receive coverage.
People who already have health coverage could keep it, although supporters and opponents of the legislation disagree over whether the overhaul will hold down premiums or force them higher.
The bill does not cover people living illegally in the United States.
FINANCIAL IMPACT ON THE BUDGET
The CBO estimates the federal budget deficit will total $7.137 trillion over the 10 years ending with the 2019 federal fiscal year if the Senate bill is not enacted. It predicts that the deficit would reach $7.104 trillion — about $133 billion less — if the bill is enacted as currently written. That includes increases in taxes and other revenue and cuts in spending, although critics question whether Congress will have the political will to cut spending in the future.
How the CBO says the bill will affect the deficit:
Spending money to expand coverage to more people would increase the deficit $614 billion between 2010 and 2019. That deficit increase is offset by $264 billion because new taxes, fees and other revenues would be collected. Reduced spending on other federal programs — including plans to slow the annual growth in Medicare spending from the 8 percent rate it has been for the past 20 years to a 6 percent rate over the next 20 years — would cut the deficit another $483 billion.
New taxes and revenue include:

• A tax on high-cost private insurance plans that would generate $149 billion over 10 years.
• Taxes and fees on medical device manufacturers and insurance companies would bring in another $101 billion.
• Medicare payroll tax would increase in 2013 by 0.9% for individuals earning more than $200,000 and couples earning more than $250,000/couple, generating $53.8 billion in new revenue.
CHANGES IN INSURANCE
Insurance companies would be required to cover just about everyone, but just about everyone would be required to buy private insurance or be enrolled in a public coverage program.
Insurance companies' new rules:
• Companies could not deny coverage or charge higher premiums to people with pre-existing medical conditions.
• Coverage could not be rescinded if an insured person becomes ill. Companies could not impose lifetime spending limits on covered people.
• Annual increases in co-payments and deductibles would be capped.
Rules for individuals, businesses:
• Most citizens and legal residents would be required either to have health coverage or pay a tax. The tax phases in over time, but by 2016 people without coverage would pay a maximum of 2 percent of taxable household income.
• Exempt from the individual mandate would be people with a financial hardship, people with religious objections to carrying health insurance, American Indians (whose coverage is governed by treaties and other federal laws), those without coverage for less than three months, prisoners, people who cannot purchase insurance that costs 8 percent of an individual's income or less, and people whose income is below 100 percent of the federal poverty level.
• Businesses with more than 50 employees that don't offer coverage will pay a $750 tax per full-time employee if at least one full-time employee receives a new federal tax credit used to help the employee buy private insurance. Construction companies employing five or more people would have to provide coverage.
Who gets help paying for insurance?
• Citizens, legal residents and qualified businesses would receive subsidies designed to help them purchase coverage.
• Families with incomes of up to 400 percent of the federal poverty level ($88,000 for a family of four) could get some tax relief to help them buy coverage through insurance exchanges the Senate bill establishes.
• Help is available to lower-income families that can buy insurance provided off the exchanges.
• Businesses that employ no more than 25 people and pay an average annual wage of less than $50,000 would get tax credits to help pay the cost of their contribution to employee health insurance.
INSURANCE EXCHANGES
The bill would establish state-level insurance supermarkets, known as exchanges, designed to encourage insurance company competition and make insurance easier to purchase. The exchange would be run by a nonprofit organization or a government agency. The exchanges would allow people and businesses to purchase insurance through Web-based portals and allow easy comparison of prices and benefits.
EXPANDED MEDICAID
Medicaid would be made available to anyone younger than 65 years whose income is up to 133 percent of the federal poverty level, or $29,327 a year for a family of four. In New Mexico today, nearly all Medicaid recipients are low-income children, pregnant women, people with disabilities and the elderly.
MEDICARE
The growth in spending on Medicare Advantage plans would be slowed. According to Sen. Jeff Bingaman, D-N.M., Medicare Advantage plans are paid on average about 130 percent of what the same services would cost if provided under traditional Medicare. The plans would receive between 116 percent and 118 percent of traditional Medicare under the bill, according to Bingaman.
The rate of payment to Medicare providers would be slowed.