Today is Medicare’s 45th anniversary, and the Republican National Committee is celebrating the occasion by trying to attack “Obamacare” and by pretending the GOP has been a defender of Medicare. The RNC posted an online research briefing called “Happy 45th Birthday Medicare!” alleging President Obama used the Affordable Care Act to take money out of Medicare: “THANKS TO OBAMACARE,” they write, “DEMOCRATS HAVE SLASHED MEDICARE FUNDING.”

Even though the GOP likes to position itself as a guardian of Medicare, the party virulently opposed its creation at the time, as the Wonk Room’s Igor Volsky outlined in a post last year:

Ronald Reagan: “[I]f you don’t [stop Medicare] and I don’t do it, one of these days you and I are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.” [1961]

George H.W. Bush: Described Medicare in 1964 as “socialized medicine.” [1964]

Barry Goldwater: “Having given our pensioners their medical care in kind, why not food baskets, why not public housing accommodations, why not vacation resorts, why not a ration of cigarettes for those who smoke and of beer for those who drink.” [1964]

Bob Dole: In 1996, while running for the Presidency, Dole openly bragged that he was one of 12 House members who voted against creating Medicare in 1965. “I was there, fighting the fight, voting against Medicare . . . because we knew it wouldn’t work in 1965.” [1965]

Beyond historical hostility to Medicare’s existence, conservative politicians are still actively trying to de-fund and eliminate the program. In 1995, House Speaker Newt Gingrich (R-GA) tried to justify his idea to cut 14% from Medicare over seven years as a way to make the program “wither on the vine.” And, as recently as last summer, Rep. Roy Blunt (R-MO), chairman of the GOP Health Solutions Group, said “you could certainly argue that government should have never have gotten in the health care business.”

In 2008, Sen. John McCain (R-AZ) promised to cut $1.3 trillion from Medicare and Medicaid if he became president. Rep. Paul Ryan (R-WI), called “one of the party’s most influential voices on the economy” by Ezra Klein yesterday, has released a budget plan that would privatize Medicare by 2021.

Instead of hiding the party’s history on the issue, the RNC’s birthday message could have mentioned positive aspects of Medicare. For example, according to Health Affairs, “the health of the elderly population has improved, as measured by both longevity and functional status” since Medicare passed in 1965. In addition, a Commonwealth Fund survey found “elderly Medicare beneficiaries reported greater overall satisfaction with their health coverage, better access to care, and fewer problems paying medical bills than people covered by employer-sponsored plans.”

- William Tomasko

This morning, following GOP allegations that states would be able to use federal dollars to cover none-Hyde abortions in the temporary high risk insurance pool programs, HHS issued regulations prohibiting states from covering the procedure. “The (high-risk pool) program,” the regulation states, “is Federally-created, funded, and administered (whether directly or through contract); it is a temporary Federal insurance program in which the risk is borne by the Federal government up to a fixed appropriation. As such, the services covered by the PCIP program shall not include abortion services except in the case of rape or incest, or where the life of the woman would be endangered.”

The controversy that sparked the new rules originated in a press release from the National Right to Life Committee, which claimed that the Obama Administration “has quietly approved a plan submitted by an appointee of Governor Edward Rendell (D) under which the new program will cover any abortion that is legal in Pennsylvania.” The charge bounced around conservative circles, despite the administration’s swift promise to issue new guidance preventing states from covering abortion services. House Republicans wrote a letter HHS Secretary Kathleen Sebelius asking her “to supply them with the applications from all the states administering their own high-risk pools” and yesterday, 13 Republican Senators penned their own missive urging Sebelius to do what the administration had already promised.

Meanwhile, progressive pro-choice advocates felt betrayed. Since there is no over-arching law that prevents states from using federal dollars to fund abortion services, the administration was not required to alter the state’s proposals. It had already promised to segregate abortion funds within the exchanges and to prohibit community health centers from using federal funds to provide abortion services, but it had said nothing of shielding funds elsewhere — including high risk pools. Writing at RH Reality Check, CAP’s Jessica Arons accused the administration of applying the Stupak amendment to the high risk pools and going beyond the bargain it struck:

It is understandable that the Administration might now feel the need to honor the “spirit” of the compromise that resulted in the Executive Order. But the whole point of the compromise was to preserve the status quo, which included both restricted and unrestricted spheres of abortion funding. Moreover, the terms of the agreement were carefully negotiated. Abortion opponents who participated in the bargaining did not raise concerns about high risk pools or other specific potential sources of federal funding, and they should be able to live with the deal they made.

Indeed, rather than developing a compromise that would have either allowed states to decide whether to cover abortions with federal funding or required them to segregate funding and use private or state money to pay for the abortion services, the administration prohibited abortion coverage almost instantly. White House Office of Health Reform Director Nancy-Ann DeParle insists that “no new ground has been broken” and that “the program’s restriction on abortion coverage is not a precedent for other programs or policies” — and hopefully that’s true. But it’s hard to understand why the administration felt so compelled to make this decision so quickly and reactively. If it was hoping to score points with conservative pro-life voters, then it overestimated the GOP’s willingness to recognize its concessions and may be surprised when Republicans continue to send fundraising letters about the abortion issue.

A July Health Tracking Poll from the Kaiser Family Foundation finds that opposition to health care reform continues to decrease, but is still being driven by popular misconceptions about the law. Seniors — most of whom already have access to insurance — also view the law more negatively than “their younger counterparts,” the survey concluded:

The July Health Tracking Poll indicates overall public support for the health reform law is steady from June, while unfavorable views of the law have trended downward. Half the public (50%) now expresses a favorable view of the law, while 35 percent say they have an unfavorable opinion (down from 41% in June) 

[...]

[Seniors] remain roughly split about the law with 46 percent of seniors holding an unfavorable view of the law and 38 percent holding a favorable one. While 35 percent of seniors think they will be worse off under reform, a greater share (57%) say they will be better off (20%) or it will make no difference (37%).

A large number of seniors “mistakenly believe the law includes provisions that cut some previously universal Medicare benefits” and 36% think that the law creates ‘death panels.’ Also, only 14 percent of seniors know that the law will increase the Medicare Part A trust fund by 12 years “and nearly half (45%) of seniors think the health reform law will weaken the financial condition of the fund.
”

These results are interesting in that they demonstrate the effectiveness of the GOP’s pre-reform messaging and the ineffectiveness of their current repeal and replace campaign: once a benefit has been extended, the public don’t want it taken away. Only 27 percent of the public overall say the law should be repealed “as soon as possible,” a number that’s remained consistent since June.

On the seniors front, the results are also promising. While many still cling to the vestiges of the old death panel attacks, a good number remain uncertain about what’s in the law and may still be swayed by the positive news around implementation. This is evident in this poll and in an earlier survey released on Monday. That questionnaire, sponsored by the National Council on Aging (NCOA), “found that only 17 percent of respondents could answer even half of the 12 questions about key provisions in the law.”

Reuters is reporting that shares of Aetna and Wellpoint “slid on Wednesday and weighed on industry peers despite the fact that both posted strong quarterly earnings and raised their 2010 forecasts.” “A main reason for the industry’s uncertainty about the impact of the U.S. healthcare overhaul is that rules determining how much the health insurers must spend on medical costs have yet to be determined. Those details are expected to be ironed out in the next couple of months.”

Wellpoint, the nation’s largest insurer by membership, “reported a 4% increase in profit for the second quarter that helped generate earnings of $1.6 billion since the beginning of the year – a 26% increase over the same period in 2009″ and Aetna said its “second-quarter profits rose 42 percent, with a net income of $491 million, compared with $346.6 million for the same quarter last year.”

Both companies also reported lower medical-loss-ratios, as enrollment numbers declined. Kaiser Health News has this breakdown:

For the quarter, Aetna’s combined medical-loss ratio for its commercial, Medicare and Medicaid businesses was 81.8 percent, compared with 86.8 percent in the same quarter last year. The ratio for its commercial business declined to 80.1 percent for the second quarter from 85.9 percent for the same quarter in 2009…[Wellpoint] said it spent 82.9 percent of customers’ premiums on medical care during the second quarter, down from 83.9 percent during the same quarter a year ago. For all of 2010, WellPoint now expects its so-called medical loss ratio to be 83.9 percent, down from its April forecast of 84.3 percent.

In other words, insurers earned more partly because they spent less on medical care and some Democrats in Congress are already arguing that these profits should preclude insurers from raising premiums next year. “Wellpoint and Aetna are on track for great years with multi-billion dollar profits. Now it’s time for them to return those windfalls to their enrollees in the form of reduced premiums. With business booming, there is no excuse for any premium hikes or benefit cuts next year by Wellpoint or Aetna in their private sector or Medicare Advantage plans,” Rep. Pete Stark (D-CA), Chairman of the Ways and Means Health Subcommittee said in a statement.

The MLR indicator is closely watched by Wall Street investors as a sign of insurer profitability and companies have spent years strictly defining “medical care” to ensure that the so-called “loss” to profit is not too great. But now that the health care law will require insurers to spend at least 80 percent of premiums on medical care, and 85 percent for large group plans, insurers are lobbying to expand the definition to include services they had previously classified as “administrative.”

It’s unclear why insurers’ medical loss ratios are decreasing just as the government is preparing to issue new, presumably more stringent regulations. Are beneficiaries spending less on health care during an economic downturn or are insurers dropping sicker patients, stashing cash away in reserves, and investing in other business activities? The lower the MLR rate today, the more insurers would have to spend on medical expenses to meet the new requirements (if they’re at 80% today, they’ll have to jump 5 percentage points to get to 85%, which is far more difficult than starting at 84% and moving just 1 point to the new requirement). But this lower starting point gives insurers the opportunity to whine about “unreasonable” government regulations and could even convince the Secretary to use her discretion to lower the target rates. If she doesn’t of course, it could all backfire.

On Monday, Rep. Charles Boustany (R-LA) introduced a bill “that could block implementation” the health law’s long term care benefits program,” known as the CLASS Act. Boustany’s bill would require the government to shut down the long-term care insurance program “if government actuaries said the program was unsound.” It’s a radical solution to a very real concern that could probably be addressed with some smaller tweaks to the current law.

First, some background. CLASS is a voluntary, government long-term care insurance program that will provide medical and non-medical services like dressing, bathing, and using the bathroom to adults who become severely functionally impaired. Working adults who enroll in the program will be able to receive the benefit — approximately $50 a day — after paying into the program for five years.

Long-term care proponents contend that the current system of financing long-term care is unsustainable. Americans spend more than $200 billion a year on long term care services in nursing homes, at home, or in assisted living facilities. “Medicaid is now the largest single provider of long-term care costs — it spent more than $100 billion last year, over one-third of its budget” and “paid more than 40 percent of the nation’s total long-term care bill.” Families and senior citizens (and Medicare to a lesser extent) pick up the rest of the tab, often spending down to “$2,000 in financial assets” to qualify for Medicaid coverage. By mid-century, the Congressional Budget Office predicts that the nation will have to spend 16% of anticipated federal revenues on Medicaid to fund care for the baby-boom generation.

So the question becomes, how do we fix this system? How do we create a system that can both relieve the burden on families and relieve this burden on government? Republicans argue that the program will be overrun by sick people who desperately need long-term-care benefits, increase costs, and push out healthier enrollees. “Health economists call this an ‘adverse-selection death spiral,’ and it would likely end in program bankruptcy,” the Heritage Foundation’s Brian Riedl noted in yesterday’s Washington Times, predicting that the government would have to consistently bail out the program with taxpayer dollars “to keep premiums low and pay out all benefits.”

But rather than repealing the program, as Boustany suggests, Congress should address some of its shortfalls. I spoke with Howard Gleckman, a resident fellow at the Urban Institute and author of “Caring For Our Parents.” He admitted that the current CLASS Program has its pitfalls and suggested several solutions to keeping it sustainable over the long term:

- Make the program mandatory: If you have a mandatory program, you accomplish two things. The first is you of course eliminate the adverse selection problem, because everyone is in the program, and the other thing is, you are able to push down rates to level where they are pretty easily affordable for most of the population.

- Include CLASS in employer cafeteria plans: The tax deduction is not so important, but including long-term insurance insurance with other benefits raises its profile.

- Provide HHS with more money to market CLASS: The law only allows 3 percent of premiums for all admin costs. That is not enough and, in the run-up to initial sales, there are no premiums.

- Redesign premiums: In CLASS, they are fixed at the age at which you first enroll. Unless all premiums are raised (because the program is deemed insolvent) you always pay the same premium. Instead, they could adjust premiums for inflation. This would allow premiums to start very low (especially for young workers) and rise with their incomes.

As Gleckman noted just yesterday, “Fiscal conservatives such as Capretta and Riedl ought to be looking for ways to improve CLASS, rather than demanding its repeal. The millions of Americans who will need personal assistance, their families, and taxpayers would all be better off for it.” Those principles should outweigh whatever pressure Republicans are receiving from the long-term-care insurance lobby — which sees CLASS as a competitor to their private insurance product. (When in reality it may compliment the existing market place in which private insurers will be able to market supplemental “Medigap”-like coverage to CLASS beneficiaries.)

The New York Times’ Kevin Sack has an interesting report about how states that are publicly opposing health care reform are still working to implement the measure:

In Austin, legislative hearings and agency planning sessions proceed despite Gov. Rick Perry’s vow to fight “on every front available” against a law that he characterizes as “socialism on American soil.” Bureaucrats apply for federal grants and collaborate with the Obama administration at the same time that Attorney General Greg Abbott strategizes to eviscerate the law in court.

“Sometimes it seems a little schizophrenic,” acknowledged State Representative John M. Zerwas, a Republican who favors the law’s repeal but also leads a House committee that seeks to maximize its benefits to Texas. “There are plenty of laws out there that I might not agree with. But if the law of the land says we have to do it, the last thing I want is for Texas to not be prepared or not put things in place to comply.” [...]

State agency leaders said politics had not interfered to date with that task, or with new requirements to create a health insurance exchange and oversee strict regulations on health insurers.

“I don’t have any sense that I’m being held back in any way,” said Billy Millwee, the state Medicaid director.

That view was echoed by Thomas M. Suehs, the commissioner of health and human services, who said the governor “expects me to implement the federal law in the most cost-effective, efficient manner.”

Reformers have long worried that the law’s state-based implementation structure would allow red states to sabotage reform, but Sack’s piece suggests that the anti-reform states can apparently walk and chew gum at the same time.

On some level, political leaders have to appreciate the additional federal dollars the law will bring to the state (even if most of it will only last a couple of years) and protect the state’s flexibility in implementing the measure. After all, any state resistance will invite federal interference. For instance, by opting out of the interim high-risk insurance pool, Texas has already forced the federal government to implement the measure and will trigger further federal action if it fails to establish the exchanges in 2014. As one Democratic State Representative put it, “[y]ou can’t run around saying the federal government wants to take over Texas, but then when we have an opportunity to do it ourselves leave it to the federal government.” This is true enough, but one can’t shake the notion that a “schizophrenic” government — one that opposes the law publicly but is also moving forward with implementation — is not the best system for adopting such complex reforms or policing and regulating the system.

Late last year, when the Preventive Task Force advised primary care physicians against recommending mammograms to women under 40 years of age, I defended the ruling. While physicians should take every patient’s unique medical history into consideration, if the science shows that for the average woman the test only raises raises stress levels without improving health outcomes, then the guidelines should reflect this. No health care system can accommodate an environment in which doctors order CAT scans for simple headaches or complicated surgeries for problems that can be solved with a regimen of medication, particularly when those treatments often lead to more harm than good.

Yesterday, Emma Sandoe pointed to data which showed that Minnesotans have a higher than average rate of using MRIs for lower back pain, “despite professional guidelines advising doctors” to try other treatments first. Today, NPR’s Scott Hensley reported on a study which found that “most men with low-risk prostate cancer get aggressive treatment, even though the therapies carry big risks”:

Most of these men turned out to have low-risk, slow-growing cancers, yet the great majority of them got aggressive treatment anyway. The findings appear in the Archives of Internal Medicine.

The researchers say that many American men with prostate cancer aren’t likely to benefit from this aggressive treatment. Instead, their cancers could be monitored and many would never pose a threat.

An accompanying editorial calls the nation’s experience with the PSA test a “cautionary tale.” More bluntly, the authors of the commentary write, “Unfortunately, some 2 decades into the PSA era, the promise of early detection has been tarnished.”

Widespread PSA testing and early identification of prostate cancer have led to an epidemic. Aggressive treatment of the many low-risk cancers found is the bigger problem because men who probably won’t get many benefits can suffer life-changing side effects.

This is the kind of unnecessary and harmful overtreatment that the health care law (and Don Berwick) should discourage, despite the politics or optics of the debate. Congress may have overruled the Task Force’s mammogram decision in December and then promptly politicized Berwick’s views on care quality just last month, but any serious discussion about controlling health care costs is meaningless if it doesn’t develop techniques to discourage unnecessary and harmful treatments. Hopefully, Berwick will engage in this debate once he finally testifies before Congress.

Center For Public Integrity is reporting that five of the nation’s largest health insurance companies are considering forming a nonprofit organization to better influence the implementation of health care reform and bolster the industry’s image. “The insurers’ goal will be to help elect members who can be allies in the all important regulatory writing process now underway to implement key parts of the health care legislation that was signed into law earlier this year“:

The two sources tell the Center for Public Integrity they expect millions of dollars will be pumped into issue advertising in a number of races where candidates sympathetic to health industry concerns have a shot at winning.

“The objective is to make the House more accommodating to concerns that have been raised,” says one industry source. “They’re looking at toss-up candidates,” adding that the companies want to “focus resources to influence campaigns.” [...]

The sources stress that insurers are particularly concerned at this stage about a provision in the new law that mandates they spend 80 cents of every premium dollar received on the welfare of patients. The high financial stakes mean insurers have been pushing hard with state regulators to allow for broader definitions of what constitutes patient welfare expenditures. This issue is “probably the most important one right now,” explains a source.

The campaign may be an alternative to the industry’s long-time lobbying group America’s Health Insurance Plans (AHIP), which has represented the industry throughout the health care reform debate. Industry sources are telling Politico’s Pulse that “they feel the group wasn’t strong enough during the reform battle and they’re not convinced it has the muscle to deliver during implementation.” “The insurance industry sources argue that the industry got little out of the year-long Hill battle: the individual mandate is relatively weak and the industry is still getting hammered by reform supporters.”

AHIP has already promised to work alongside federal and state regulators to implement the new reform law “effectively” and to the extent that the industry’s goals intersect with the objectives of reform, a partnership with insurers could lead to some real progress. The government can rely on the industry and its expertise to adapt the payment reform models in Medicare to the private sector, develop administrative simplifications, or encrouage Americans to enroll in insurance coverage. As Jon Kingsdale, former director of the Commonwealth Connector Authority, has pointed out, the implementation process would probably benefit from this kind of industry input.

But if insurers are only looking to inflate their medical loss ratios by reclassifying certain administrative services as “medical” or undermining the rate review processes, then they’re working against the public interest and it will be up to us to publicly involve ourselves in the implementation process and counter the industry offensive.

Last week, while we were all at Netroots Nation, 128 House Democrats introduced a new public option bill that could reduce the deficit by $68 billion from 2014 to 2020 and offer premiums that “would be 5 to 7 percent lower than other private plans available within the exchange.” Emma Sandoe, who was gracious enough to do a post on this (including a very snazzy table), had this to say about the effort:

Realistically, this chances of this public option bill passing this Congress, who is exhausted from the last public option fight and in full midterm mode, are slim. This hasn’t deflated Woolsey who said, “This will be there for the next Congress.” Whether or not this proposal goes anywhere legislatively, it reminds more progressive voters and members of the party that the public option has not been forgotten. States have already begun showing support for public run insurance systems, this support from the federal government can work to galvanize the effort.

Democrats in progressive districts want to use the bill to turn out the base in November, and that’s a good thing. The public option is one of the most popular and controversial elements of health care reform and if structured correctly from a policy perspective, it could actually go a long way towards lowering health care costs and injecting some competition into insurance markets. We should welcome this move, but we should also urge Democrats to go further and spend equal energy on ensuring that the existing parts of the law, particularly the exchanges within which the public option will operate, are well implemented. After all, various parts of the health industry are busy influencing the implementation process and Democrats in Congress should too.

HCAN issued a report just last week about how the insurance industry is already spending millions of dollars to water down the medical loss ratio regulations and other sectors are undoubtedly working to craft their own regulatory exemptions. There are several progressive-based implementation efforts underway, but with the exception of a few dedicated health care wonks — Sen. Jay Rockefeller (D-WV) among them — few Democrats have spent time publicly countering the well-orchestrated industry lobby or pressuring the HHS Secretary and the other relevant agencies to issue regulations in the consumers’ interest.

But this fight is just as essential as the public option and Democrats should be holding Congressional hearings, working closely with their state insurance departments and legislatures, and doing all they can to ensure that the bill is properly implemented. If they don’t, we know that the industry will determine the effectiveness of reform, and in many respects, the future of the party.

Senate Majority Leader Harry Reid (D-NV) is telling The Hill that health care reform will improve the Democrats’ chances in November, pointing to polls which show that the more people are asked about repealing health care reform the less they like it:

“All the polls around the country, including Nevada, indicate that when people are presented with ‘Do you want to do away with giving 25,000 small businesses in Nevada a 3 percent discount on the healthcare?’ they all say no,” Reid explained in an interview with David Brody of the Christian Broadcasting Network. ” ‘Do you want to have Medicare extended for 19 years like we did it?’ They say yes. You don’t want to repeal that. ‘Do you want to open the doughnut hole again?’ They say no, so the more people know about healthcare, the better they like it.”

Reid is right to argue that Americans/small businesses don’t want the government to take away the tangible immediate benefits — checks to seniors in the doughnut hole, children on their parents’ coverage, tax credits — but I’m not so sure that they’re as confident in what’s coming in 2014. Republicans have caught on to this reality, taken credit for reform’s most popular and immediate provisions, and have moved on to shape the public’s perception towards the new reporting requirements and the exchanges, releasing reports that aim to discredit the new benefits before they’re even rolled out.

I suspect that businesses will be affected by reform in different ways. Behind the scenes, they’re already working with the relevant federal agencies to ensure that any new requirements don’t add unnecessary burdens. Nevertheless, the political debate isn’t about how best to implement reform for small businesses — it’s about whether we should have reform at all. As my colleague Lelsey Russell notes, that is an easier argument to win.

Today, she’s released a new report demonstrating what would happen to small businesses and their employees if reform was completely repealed:

- Small businesses will pay 55 percent more in health care costs for their workers over the next 10 years.

- 128,000 jobs that could have been saved will be lost over the next decade as health care costs continue to escalate.

- Small business employees will lose up to $309 billion in wages over the next 10 years as a consequence of health insurance’s increasing cost.

Projected benefits may not be as convincing as the tangible and immediate provisions, but so long as Republicans are painting the future in dark colors, it’s helpful to remind voters of the alternative. Read the full report HERE.

All insurers are required to set aside a certain portion of premiums for future claims that have not yet occurred and/or not yet reported over the expected term of the policy. Back in April I wondered if insurers were shifting some of their earnings into reserves in order to inflate their medical loss ratios — which measures the percentage of premiums that are actually spent on medical care — and keep their reported profits artificially low (remember, they keep insisting that insurer profit makes up just 4% of national health care spending).

Well last week, Consumers Union released a report suggesting that at least some nonprofit insurers are “setting aside unnecessarily large surpluses even as some of them continue to raise premiums”:

The report released Thursday by the Consumers Union, the nonprofit publisher of Consumer Reports, found that seven of 10 Blue Cross Blue Shield affiliates examined had amassed surpluses that are more than three times the level regulators deemed necessary for them to remain solvent.

At the close of 2009, for instance, Blue Cross Blue Shield of Arizona had a surplus of $717 million, more than seven times the regulatory minimum. That same year, the company raised premiums for its individual market customers between 8.8 and 18.4 percent.

Similarly, Regence Blue Cross Blue Shield of Oregon had about 3.6 times the regulatory minimum surplus, yet it raised rates on some individual policies an average of 25.3 percent in April 2009 and 16 percent in April of this year, the study found.

As Ken Terry observes, “What all of this says is that insurers, whether for-profit or not-for-profit, will try to maximize their margins in any way they can. And when they’re sitting on a pile of cash, they’re going to invest it. It would be nice if they would rebate some of their surpluses to policyholders, as some auto insurance companies do. But, short of a federal mandate, that’s unlikely to happen.”

Insurers are required to report their reserves to state insurance commissioners, “who review them to gauge the financial soundness of each insurer.” It’s up to these commissioners to ensure that the issuer isn’t overstating reserves and understating its earnings. This report probably suggests that at least some commissioners are asleep at that wheel.

Our guest blogger is Emma Sandoe, a Health Care Researcher at the Center for American Progress.

Just when you thought the last nail had been driven in the public option coffin months ago, like a phoenix rising from the ashes, the public option has once again returned to Congress. As Noam Levey reported last night, “[c]reating a major government health insurance program was roundly rejected last year, but 128 House Democrats are pushing to reconsider the idea, contending that it would hold down federal spending.” The legislation, HR 5808, is sponsored by Rep. Lynn Woolsey (D-CA) and the 128 cosigners are largely progressive caucus members and include all three chairmen of the committees of jurisdiction, Ways and Means, Energy and Commerce, and Education and Labor.

The Congressional Budget Office (CBO) scored the legislation and noted some promising findings. The public plan, in this form, has always been a deficit reducer and this is no exception. CBO found the proposal would reduce the deficit by $68 billion from 2014 to 2020. Despite likely lower reimbursements than private plans, CBO found providers would likely participate in large numbers because of the number of enrollees. CBO estimates the average public plan premium would be 5 to 7 percent lower than other private plans available within the exchange, making it more affordable to individuals. They also estimate approximately 13 million or one in every three individuals eligible for exchange coverage would chose the public option.

The legislation looks very similar to the original House public option that passed the Ways and Means and Education Labor committees. It is important to remember the public option that passed the full House of Representatives in November of last year looked very different from this initial version. Both the original House bill and the new legislation would create an option for a public plan within the health insurance exchanges beginning in 2014. Providers would be paid Medicare rates plus 5 percent in the initial years. The providers will not be required to accept Medicare to enroll in the program.

Realistically, this chances of this public option bill passing this Congress, who is exhausted from the last public option fight and in full midterm mode, are slim. This hasn’t deflated Woolsey who said, “This will be there for the next Congress.” Whether or not this proposal goes anywhere legislatively, it reminds more progressive voters and members of the party that the public option has not been forgotten. States have already begun showing support for public run insurance systems, this support from the federal government can work to galvanize the effort.

In comparison to the original House version of the public option, as CBO notes, some of the savings are not as large. This is primarily due to the fact, “that total federal subsidies for exchange participants will be substantially smaller under PPACA than they would have been under the legislation that was considered in the House.” In other words, because we aren’t spending as much as we were with the original House bill, we can’t save as much.

In comparison to a very early Senate public plan option, this public plan would cover more individuals and premiums would be cheaper for individuals. Providers would likely see lower rates which would make them not favor this plan. A public plan with payments linked to Medicare was never an option for this Senate.

A summary table comparing the three public option proposals is below.

	Initial House Proposal HR 3200, Summer 2009 (later became a negotiated rate system)	Early Senate Proposal for HR 3590, November 2009 (public option later dropped)	Woolsey HR 5808, July 2010
Deficit Reduction	Not separately scored – unofficial estimates had a savings of $110 billion	$3 billion 2014-2019	$68 billion 2014-2020
Premiums	10 percent cheaper than private plans in the exchange	More expensive than private plans in the exchange	5-7 percent cheaper than private plansin the exchange
Estimated number of individuals enrolling	9-10 million	3-4 million	13 million
Payment	Medicare rates with +5% bonus in first three years for physicians enrolled in Medicare	Negotiated rates with providers	Medicare +5% bonus for first three years
Sexy Fact	The public plan can negotiate drug prices from the start. Provider participation is voluntary.	Healthier enrollees, states could opt out of the plan, start up costs must be repaid.	State based exchanges with a federal Medicare linked payment system.

Austin Frakt points to this post by Jim Hufford who argues that conservatives misunderstood Robert Pear’s big health care article on Sunday. Pear may have added fuel to the repeal movement by noting that while the President had insisted that the new individual mandate was not a tax in September, his Justice Department was now defending the law in court and describing it as just that. But Hufford says that this is actually a bad thing for repeal advocates:

[Even if] the commerce clause argument gives the mandate’s challengers a leg to stand on, the taxing and spending clause does not. Congress’s power of taxation is limited only by the requirement that any tax laid be conducive to the general welfare; and Congress decides whether a tax is conducive the general welfare. [...]

The article makes it sound like the administration has the upper hand on the taxing clause (a.k.a., the “general welfare clause”) argument, but the challengers are still in the fight and coming out swinging with their commerce clause argument. But it’s not really like that. Because you can’t answer a general welfare clause argument with a commerce clause argument. And if the government wins on either issue, the fight is over.

Ok, fair enough, but I also don’t think that conservatives have a very convincing argument with the “gocha” on taxes point. What Obama told George Stephanopoulos in September is still true today. The individual mandate — originally a Republican idea — is designed to get everyone to take responsibility for their own health and eliminate the cost shifts that occur when individuals receive uncompensated care. “What it’s saying is, is that we’re not going to have other people carrying your burdens for you any more than the fact that right now everybody in America, just about, has to get auto insurance,” Obama said at the time. “Nobody considers that a tax increase. People say to themselves, that is a fair way to make sure that, if you hit my car, that I’m not covering all the costs.”

The mandate is not a “tax” in the sense that its primary purpose is to raise revenue even though it meets the legal definition, which is somewhat different than the popular understanding of that term. As Ian Millhiser tells me, conservatives obviously think “that they have caught Obama in some grand contradiction because he uses one meaning of the word ‘tax’ in one context and his lawyers use another meaning of that term in a legal brief, but the word ‘tax’ has an unusually broad meaning in the constitutional context — it can include nearly any provision that adds money to the federal treasury.”

Yesterday, Rep. Mike Pence (R-IN) doubled down on his party’s commitment to repealing health care reform and promised to replace it with a GOP alternative, paid for by the savings from malpractice reform:

PENCE: Let me tell you, I believe the House Republicans are committed to repealing ObamaCare lock, stock and barrel, and replacing it with health care reform that will focus on lowering the cost of health insurance without growing the size of government. The Republican alternative, I know we get talked about a lot as a party of ‘no’; we actually had substantive alternatives on all these bills. On health care, our alternative allowed Americans to purchase across state lines, it brought about medical malpractice reform, used those savings to cover people with pre-existing conditions.

Watch it:

I know that Republicans have promised to fund their replacement health care plan — which places everyone with a chronic condition in a state-based high risk pool, allows younger and healthier Americans to purchase the least regulated and cheapest insurance product, and encourages small businesses to form purchasing associations — with malpractice savings before, but hearing it post reform reminds me why that’s such a bad idea.

The Congressional Budget Office (CBO) estimates that between 2010 and 2019, tort reform will save about $54 billion and so that’s all the GOP plan can cost (the actual amendment came in at $61 billion, so they had some other savings). That’s the cap — about 6% of the cost of the current health law. And the CBO estimates that the Republican plan — also known as the Boehner proposal — would cover just 3 million people and actually increase the number of uninsured to 52 million by 2019. Deficits would decrease by $68 billion over the 2010–2019 period and the bill could slightly reduce premiums for Americans who purchase coverage independently.

So that’s really the choice: you can keep the current law, which covers some 30 million Americans or you can switch to this, which will increase the number of uninsured. That’s the choice Pence is presenting.

In his latest Kaiser Health News column, Jonathan Cohn points to two health care trends in today’s papers (“Firms Cancel Health Coverage“) and (“Insurers Push Plans Limiting Patient Choice of Doctors“) and explains why reform is not to blame:

Insofar as the articles report broader trends–and they may not–they actually chronicle the same basic process at work. Health care is getting more expensive; the economy is still sputtering. Employers who provide and help pay for employee coverage can react to this in one of two ways. They can stop offering insurance altogether, which is what the Globe reports some small Massachusetts firms are doing. Or they can simply offer less generous policies, which is what the Times suggest will happen in those three cities. [...]

But what about the people who watch as employers whittle down coverage, restricting which doctors and hospitals they can see? Again, this happened before and was bound to happen again–only now, thanks to health reform, the law will limit how plans can do it. They can’t impose cost-sharing for basic preventive care. They can’t impose annual or lifetime dollar caps on benefits. And while they can limit beneficiaries to certain doctors and hospitals, they have to offer beneficiaries the right to appeal treatment denials–and the right to get treatment out-of-network if it’s not available in-network.

And that’s perhaps one of the ironies of reform: critics and the general public will blame the law for causing the very same long-existing problems that it seeks to ameliorate. (Remember when conservatives faulted the new grandfather regulations for forcing Americans out of their existing insurance plans, when in reality the regulations discourageed employers and insurers from stiffing beneficiaries with very higher costs?)

Over the short term, any anxiety about the changing insurance market or the shift from employer-based coverage will be blamed on the Democrats and reform. Stories like this one about businesses anxieties and loss of employer-sponsored coverage are and will continue to dominate the media. Only successful implementation of reform and time will change this narrative.

In yesterday’s Republican Radio Address, Sen. Pat Roberts (R-KS) reiterated the GOP’s attacks against Obama’s appointment of Dr. Don Berwick to head CMS, accusing the nominee of planning to redistribute the wealth:

ROBERTS: Now, as we all return to work after our Independence Day celebrations, we learn President Obama – again – has gone behind closed doors to appoint a health care czar without public debate.

President Obama gave a recess appointment – avoiding a public hearing and a vote in the Senate – to Dr. Donald Berwick, making him the Administrator for the Centers for Medicare and Medicaid Services. [...] He said, ‘any health-care funding plan…must—must—redistribute wealth from the richer among us to the poorer and less fortunate.’ Well, the obvious fear is Dr. Berwick will in fact use this position to redistribute the wealth in our country, cementing Obamacare as a giant, but stealthy, income transfer machine.

Watch it:

Roberts can talk about redistributing the wealth in all kinds of malicious tones, but I don’t think you can do health reform without it. Currently, poor Americans — particularly those without access to employer based coverage and those suffering from chronic conditions — are priced out of the system. They can’t find insurance to cover their chronic condition and so they go uninsured or seek uncompensated care in the emergency room once their condition becomes unbearable. The costs of their treatments are shifted throughout the system and contribute to higher premiums.

To eliminate these cost shifts and control health care spending, you have to bring everyone into the health care system. The health care law does this by establishing exchanges and providing subsidies for lower income Americans, while eliminating the tax exemption for so-called Cadillac health care plans. Republicans have proposed a more radical version of the same basic concept: giving everyone a one-size-fits-all tax credit to purchase health insurance on the individual market, while eliminating the tax exemption for all employer-based coverage. Now, I would argue that “the poorer and less fortunate among us” would do much better under the current health care law than the GOP’s scheme, but both plans would give poorer people money to buy health coverage and take away money from richer people (to varying degrees).

Covering people costs money, even under the Republican plan, and the fact that most of our nation’s dollars are concentrated among the very very wealthy (income inequality is the worst it has been since 1928, and according to the latest data, “the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007“) means that both Republicans and Democrats have to take those dollars from the top. What else can you do when the “top 1 percent of families now receive nearly 25 percent of the country’s income, after earning less than 10 percent in the 1970s?”

Roberts only has the GOP redistributive policies (from poor to rich) to blame.

In his reply to Robert Samuelson’s crystal ball predictions about how national health care reform will mirror the failures of the Massachusetts experiment, Jonathan Cohn argues that Massachusetts residents have better access to care, despite growing health care costs. But what’s most dispiriting and confusing about Samuelson’s op-ed is his overarching conclusion: the forces that lead to higher health care costs are simply beyond human control. Therefore, far from informing the national cost control effort, Massachusetts’ unsuccessful bid to rein in spending demonstrates that any national cost control effort will also fail:

The lesson from Massachusetts is that genuine cost control is avoided because it’s so politically difficult. It means curbing the incomes of doctors, hospitals and other providers. They object. To encourage “accountable care organizations” would limit consumer choice of doctors and hospitals. That’s unpopular. Spending restrictions, whether imposed by regulation or “global payments,” raise the specter of essential care denied. Also unpopular.

In other words, health care spending may be swallowing up the budget, but so long as doctors and hospitals oppose moving towards an outcome-based reimbursement system, policy makers will twiddle their thumbs or pass legislation to shield the medical community from the tough cuts.

Samuelson is wrong on several fronts. First, as Cohn points out, unlike the Massachusetts bill, the national law includes important cost containment provisions like “an independent board to calibrate and ratchet down Medicare spending. It imposes a tax on high-end benefits, to push down private insurance rates. And then it introduces a host of smaller delivery reforms–everything from penalizing hospitals with high infection rates to encouraging the formation of more efficient group medical practices–that should make it possible to lower spending without lowering quality.” “The Congressional Budget Office, which takes a skeptical view of these changes, still estimates that health reform will reduce the rate of growth in health care spending–which, as Samuelson knows, is the key to controlling costs long-term.”

Second, many hospitals and doctors may lobby against these changes, but in an era of ever growing health costs and deficits it’s not certain that they’ll succeed. For instance, the AMA has been trying to pass a permanent fix to the SGR for years, but has found itself rebuffed by lawmakers who have yet to find a way to pay for the overhaul. This same economic reality has contributed to the diminished clout of the AMA and has encouraged other providers to adopt the kind of outcome based reimbursement systems that Samuelson believes are so politically unfeasible.

Geisinger Health System, a physician driven system that has led the nation in delivery and payment reform, estimates that its advanced medical home model for the care of chronically ill Medicare patient has “bent the cost curve and lowered projected spending by up to 7 percent” and it has successfully adopted many of the new law’s delivery reforms without sacrificing profit. “We don’t know if the Geisinger experience is scalable or generalizable through U.S. health care, but we do think that the way our country pays for and delivers health care nationally will need to move to something that looks a little bit more like Geisinger in a relatively short period of time,” Geisinger’s CEO told Health Affairs. Indeed, other systems across the country are now adopting similar measures.

So Samuelson is undoubtedly right about the political challenges to controlling health care spending but he’s underestimating the extent to which economic necessity shapes reality for politicians and providers.

Yesterday, I speculated that support for repeal will diminish as benefits like the new preventive care guidelines are rolled out and people actually realize what’s in this bill and now the Huffington Posts’ Sam Stein reports that this already seems to be happening:

A Bloomberg News poll released on Wednesday shows that a full 61 percent of respondents don’t have interest in repealing the health care legislation that Congress passed earlier this year (47 percent want to see how it works, 14 percent say it should be left alone). Just 37 percent want the bill repealed (as is the wish of the Republican leadership).

The numbers underscore increasing public approval of the health care reform law. It also illustrates the potential dangers the Republican caucus assumes by make the repeal agenda a major plank of its campaign platform.

I think these results generally mirror what we’ve been seeing in other focus groups around the country. People may not understand what exactly is in the bill but they’re also confused by the GOP’s knee-jerk repeal it now campaign. As the early benefits are being rolled out, taking away dependent coverage and high risk pool insurance will become politically unpopular positions and Republicans need to be asked if they support repealing those benefits. Already, polls have shown that this will be a tough question to answer as an increasing number of Americans are coming out in favor of the health law (even Rasmussen agrees).

The GOP leadership has thrown its weight behind two discharge petitions offered by Reps. Steve King (R-IA) and Wally Herger (R-CA) as recently as last month. The petitions will need to attract 218 members to force the House to take up repeal legislation that would eliminate the entirety of the health law. As of Thursday, 133 members have signed on to King’s petition and Herger’s repeal and replace bill has 42 co-sponsors.

Yesterday, I explained why the new regulations about which preventive services insurers will be required to cover at no additional cost did not include family planing services without really delving into the specifics of the rules themselves. Luckily, Tim Jost has looked at the regulations and as he points out, this is the simplest rule yet:

– Insurers will begin following the new rules starting September 23, but we expect to see relatively few changes at first. Grandfathered plans — i.e. all existing insurance plans — aren’t required to follow the new rules, although laws in many states already require insurers provide the preventive treatments. “Over time, however, plans will lose grandfathered status and the benefits and costs will rise.”

– The lists of preventive services is available here and it includes most screenings, laboratory tests, and vaccinations.

– Plans may also use “reasonable medical management techniques to determine the frequency, method, treatment, or setting for an item or service” if consistent with the recommendation or guideline.

– The three federal departments estimate that premiums will increase on average about 1.5 percent, with some of the increase resulting from a transfer of costs to insurers from individuals who will face reduced cost-sharing, and some due to increased demand attributable to the absence of cost-sharing.

These kinds of benefits make the entire Republican premise of repeal so completely intangible. As I will never tire from pointing out, Sen. Jon Kyl (R-AZ) took credit for the provision on Monday and the pro-repeal crowd has been remarkably silent about the new regulations. They like to discuss the law in the broad terms of deficits, entitlements, and rationing and use rhetoric that has no connection to the very tangible benefits of affordable cancer screenings and vaccinations. They’ll cling to their terms even as the law is slowly implemented, but I suspect that as the benefits increase, support for repeal will tapper off to the point where its mere mention will be seen as inappropriate. Of course health reform has its costs and the law has its problems, but eventually, people won’t want to give up what the Republicans want to take away because they’ll actually have it.

Refusing to allow Republicans to delay implementation of reform any longer and trying to avoid a Republican hold, President Obama recess appointed Harvard Professor Don Berwick to head the Center for Medicare and Medicaid Services (CMS), a position vacant since 2006. Republicans, who had had characterized Berwick as a proponent of “health care rationing,” took to the Senate floor to condemn Obama for installing Berwick before he even had a chance to appear before the Senate Finance Committee. The GOP admitted that they had criticized the nominee but argued that they had not held up his nomination and would have treated his confirmation fairly:

- SEN. JON KYL: (R-AZ): But for anybody to suggest that Republicans are to blame for the fact that Dr. Berwick’s nomination didn’t come to a vote or wasn’t brought to the senate floor is sheer fantasy. We have not held up the nomination. We have not prested a vote. We haven’t — We have not prevented a vote. [7/12/2010]

- SEN. JOHN MCCAIN: (R-AZ): But where’s the evidence of delay in Berwick’s case? It can’t fairly accuse the other side of political gamesmanship when you short circuit the process and storm off the court before the first set. [7/13/2010]

- SEN. CHUCK GRASSLEY (R-IA): The nomination hasn’t been held up by Republicans in Congress and to say otherwise is misleading. [7/7/2010]

Ironically, the Republicans are now showcasing their desire for a fair and transparent nomination process by delaying two other nominations in retaliation for Berwick’s appointment. Minority Leader Mitch McConnell (R-KY) has “blocked a Democratic request Wednesday evening to advance two of President Obama’s nominees to the U.S. Court of Appeals for the Fourth Circuit,” the Hill reports. “Democrats didn’t schedule so much as a committee hearing for Donald Berwick,” McConnell said. “So given that the President has been so dismissive of the Senate’s right to provide advice and consent under the Constitution, I am not inclined at this point to consent to the agreement proposed by my friend from North Carolina,” he added.

The GOP is also demanding to hear from Berwick, and has written a letter to Senate Finance Committee Chairman Max Baucus (D-MT) asking him to call Berwick to testify.