The Department of Health and Human Services (HHS) announced a new round of grants this afternoon to help states expedite and simplify the process of developing IT systems for the new exchanges (the Travelocity-like market places that will help Americans find comprehensive insurance coverage). By the time the exchanges become operational in 2014, states should be able to use information technology to determine eligibly, enrollment, premium tax credits, cost-sharing assistance administration, and integrate the system with Medicaid and CHIP. Officials believe that sophisticated, yet “consumer friendly” IT systems are “critical to the success of the exchanges” and hope that the final product will look similar to the new HealthCare.gov website, where beneficiaries can compare different plans, identify if they’re eligible for government aid, and enroll in insurance.

But as Politico’s Jennifer Haberkorn points out this morning, “states view the project as an enormous undertaking, requiring them to design a system, develop the information technology and put it into action in just three years amid tight budgets. In response, the Department of Health and Human Services is planning to ask five states to develop systems that can hopefully serve as prototypes for other states to replicate.” “The states have told us that they don’t all want to all have re-invent the wheel on each aspect of the exchange; they want to be able to re-use and leverage the work of their fellow states so that the resources are used more efficiently and effectively,” Joel Ario the Director of the Office of Insurance Exchanges at HHS said on a conference call attended by the Wonk Room.

The so-called “Early Innovators Grants” will be offered to five states or coalition of states “that demonstrate leadership in developing cutting-edge and cost-effective consumer-based technologies and models for insurance eligibility and enrollment for Exchanges” that “can be adopted and tailored by other States.”

“The benefits to the states are three-fold,” Ario said. “First, there are lower costs through the uses of shared models, second there is an improved implementation schedule, increased quality and reduced risk through the re-use, the peer-collaboration and the leveraging of lessons learned across the state boundaries. And finally, there is improved capacity for program evaluation because of the more uniform implementation theory,” he explained.

Last month, the federal government awarded exchange planning grants to 48 states and the District of Columbia and has announced that it will award “Establishment Grants” in February of 2011. “We’re looking for a lot of collaboration, we’re looking for states to lead….to really kind of provide the direction and progress that needs to be made early rather than later,” Henry Chao — the Chief Technology Officer at the Office of Consumer Information and Insurance Oversight — explained on the call, noting that states struggled to implement the IT requirements in Medicare Part D because they were given “very very short timeframes” “in terms of systems development.” “I think the lessons learned have really told us that we need to collaborate much more so upfront, not just with the states, but across the federal government, with other agencies.”

I’m enjoying Jonathan Cohn’s, Greg Sargent’s, and Ezra Klein’s counterfactuals about Democrats’ mid-term election prospects had they they never taken up health care reform. All agree that Democrats would find themselves in the same spot, or be even worse off than they are today:

- COHN: A Newsweek economics columnist called Obama’s failure to address health care costs, at a time when the political forces for action were finally aligned, an unforgivable act of political cowardice. It’s hard to know whether voters share that assessment, but the perception that Obama whiffed at tackling the nation’s major issues certainly isn’t helping his approval ratings. The phrase “Carterbama” comes up a lot in conversation.

- SARGENT: There are a host of reasons to believe Dems might have been in a pretty bad position even if they hadn’t attempted reform at all. And if that had happened, and Dems had sustained big losses all the same, it could have postponed action on reform for a decade or more. Those who think Dems shouldn’t have tried reform this time around need to be asked when Dems would have gotten their next bite at the health care apple — particularly with such big majorities.

- KLEIN: In conversations over the past few weeks, some of the party’s leading strategists told me that it all comes down to accomplishments, or — here’s that ubiquitous word again — “deliverables.” The president, who ran such a brilliant campaign, they argue, has utterly failed to live up to the promise of his election. They cited perceived missed opportunities like the president’s decision to expand S-CHIP rather than pursuing health-care reform and suggested that he hadn’t done enough to re-regulate the financial sector in the aftermath of one of the worst financial crises in the nation’s history.

I agree with the above, but also wonder where Democrats would be today (regardless of the economy) if the President had approached reform in a more hands-on manner, publicly advocated for progressive priorities like the public option and drug reimportation, and crafted a more coherent and specific vision of what he wanted the final reform bill to look like. On one hand, it’s certainly possible that this more confrontational style would have put off the self-important lawmakers who took pride in personally crafting the law and pushed away the special interests whose acquiescence the administration bought with special agreements and tradeoffs. Reform might have died a slow death and Obama would likely be no better off than he is today — again, maybe even worse.

But had these Clintonian tactics led to a different result — if reform passed, it would have either included the kind of progressive ideas that Democrats could rally around or it would have mirrored something similar or even more conservative than the Affordable Care Act. In either outcome, if Obama steered the ship, the actual reform process could have been cut in half and even in the latter instance, Obama could have been seen as someone who stood and fought for what he campaigned for. And, it’s possible that his progressive base would have been more likely to stand with him than many are today. Conservatives, moreover, would have had less time to smear the law and concoct lies; without those falsehoods, and with a shorter legislative process, the American public would have been more receptive to the policy.”

Of course, all of this is mere speculation, but one can’t help but question if Democrats would see more public support for the law and their party today had the President publicly acted like it really mattered to him 16 months ago.

AHIP President and CEO Karen Ignagni appeared on Fox Business on Wednesday to lay out the insurance industry’s opposition to the Affordable Care Act. Ignagni wouldn’t say if insurers support repealing the law outright, but highlighted several provisions that she claims would increase costs for small businesses and individuals. She maintained that the law needs to be fixed:

IGNAGNI: I think the most important thing, Neil, is that what is being telegraphed all over the country is that people are worried about costs. [...] Small businesses in 2014 are going to face an unprecedented sales tax on their health insurance premiums….. Right now, going, starting January 1, there are new regulations going into effect that cap administrative costs. It’s going to be happening overnight, a shock to the system. And it is going to lead to a number of disruptions all over the country. [...]

CAVUTO: So you think that’s more likely if Republicans grab power or what?

IGNAGNI: I think that the American people are telegraphing to both sides of the aisle that this is a priority for them. They’re worried about costs. They should be worried about costs. We need to get on with that job of addressing that.

Watch it:

Ignagni’s efforts to demur are telling. Even though the health insurance industry is in the process of massively shifting its campaign donations to Republicans and independent groups dedicated to defunding or repealing the law, I’ve suspected that insurers are more interested in favorable regulations that don’t cut into industry profits than outright repeal. Ignagni’s appearance only confirms this hypothesis.

While she may genuinely have some concerns about the penalties associated with the free rider provision that goes into effect in 2014 (employers with more than 50 workers wouldn’t be required to provide health insurance, but they would face fines if their work force received a government subsidy to buy health insurance), she’s probably more worried that if employers respond to the penalties by dropping coverage (and moving their workers into the exchanges), they’ll abandon their existing insurance products.

Other companies and plans operating inside the exchanges will pick up that business, but they will probably have to operate under better regulated market conditions. And, since companies would have to compete for business in the exchange (which in some states may include a public option) those products could bring in smaller profits. Ignagni is determined to shield the companies she represents form this kind of erosion and she’s happy to inflame concerns about rising health care costs to do so.

Besides Gov. Tim Pawlenty (R-MN), Alaska’s Sean Parnell is the only governor who is using his opposition to the Affordable Care Act to prevent his state from applying for federal grants to fund employer retirement health plans, help regulators police unreasonable insurance health premiums and plan for the exchanges. Asked to defend his resistance to accepting federal funds for reform’s most popular programs during last night’s final gubernatorial debate, Parnell — who has joined the Florida-led lawsuit challenging the constitutionality of reform — claimed that he would refuse all federal funding until the lawsuit was settled:

MODERATOR: Governor Parnell, mentioning the health care lawsuit, Democrats have accused you of footdragging in implementing some of the more popular provisions for state employees. Senator Hollis French says you’re delaying as long as legally possible provisions like getting kids staying on their parents’ health care plans until age 26 and there are Democrats who are upset you are not offering the health care benefits to state employees. States aren’t required to do that, but some are, it’s an option. Do they have some validity in saying you’re holding back? [...]

PARNELL: When I’m accused of foot dragging what I’m doing is taking each deadline in the federal legislation on a case by case basis. For example, when the federal government says here is some money to set up a health insurance exchange, but you don’t have to do it until 2014, but you ought start doing it now and here is the money if you want to try a little bit. I said no because let’s finish this lawsuit and see if the individual mandate gets overturned. That will directly bare on the health insurance exchanges and we got three years more, four years more until we’ve got to buy into a system that right now, I don’t buy.

Listen:

Interestingly, Parnell is the odd man out of the 21 other states that are part of Florida’s health care lawsuit and is offering an odd argument for why he’s refusing federal dollars for programs that have noting to do with the individual requirement. Every other state has accepted some of the early benefits of reform. In fact, even Pawlenty — who has gone out of his way to condemn the law — applied for funds to implement abstinence-only education programs and several other grants. Alaska, meanwhile, is suffering from a fairly severe health care crisis and would stand to benefit from the aforementioned grants to employers and regulators. Nineteen percent of Alaskans and 12 percent of children are without insurance coverage and the state’s health care costs tend to grow faster than the national average.

During a more lighthearted moment in the debate, Parnell was asked how old the earth was. He refused to answer, replying simply, “only God knows.” “I really don’t know. I mean, for either one of us to do it, would be quite speculative.” You can watch that exchange here.

National Journal’s Josh Kraushaar makes the case that “health care is fueling the Democrats’ dismal situation” going into the midterm elections by pointing out that “Democrats who opposed the bill are in surprisingly decent shape,” while those who went along with the White House are in very tight re-election races. When voters in competitive races “were asked an open-ended question about what gives them the biggest pause about voting for their sitting member of Congress, a solid plurality said it was health care – ahead of the economy and jobs,” Krausharr adds.

But if the unpopular legislation contributes to the predicted Democratic loses in the House — a point that is under some contention — it won’t be because the legislation itself is so rotten. Much of the blame should also fall on the Democrats’ failed effort to sell the law and the GOP’s success in tarnishing it.

Yesterday, Greg Sargent pointed out that “opponents of the legislation, including independent groups, have spent $108 million since March to advertise against it” — “six times more than supporters have spent, including $5.1 million by the Department of Health and Human Services to promote the new law.” That $108 million went to finance the false claims that individuals who don’t purchase coverage will go to jail, or sex offenders will have access to government subsidized Viagara and seniors will lose all their Medicare benefits.

As Sargent notes, after the elections, some Democrats will surely argue that the administration overreached in its health care policy, a contention that’s undermined by these ad campaigns and polls which still show that the individual components of the bill are very popular. For instance, last night’s New York Times poll found that 41% of Americans thought Republicans should repeal the law, but that number dropped to 25% when the respondent was told that “repealing the law meant that insurance companies were no longer required to cover people with existing medical conditions.” Forty-six percent of respondents also said that “the Democratic party is more likely to improve the health care system,” while just 28 percent thought Republicans were.

I’ve debunked Sen. Judd Gregg’s (R-NH) entire Halloween-themed health care editorial here‘ before, but since he’s now expanding on his claims about the causes of rising health insurance premiums, it’s important to give his comments some more play — if only to highlight how far off the ledge he’s fallen.

Last night, Gregg told Fox News’ Greta Van Susteren, “You’re seeing a massive increase in premium costs, some driven by the cost of health care generally, but a lot driven by the cost of the regulations in this new program.” The deliberate use of “some” and “a lot” suggests that the health care law is driving up premiums faster than health care inflation — an argument that’s so unbelievably false that even the health insurance lobbyists are unwilling to make it:

Robert Zirkelbach of the insurance industry trade group America’s Health Insurance Plans concedes that, despite what some have claimed, the law isn’t the major driver of premium increases for next year. “In fact, the evidence is very clear that the rise in medical costs is a key factor in driving up health insurance premiums,” he says.

But, Zirkelbach says, in some cases, premiums could rise significantly because of new benefits the law requires.

“Many people already have the new benefits that are required in the law as part of their current benefit packages,” he says. “So they’re not going to see [nearly as much of] an impact as people who have chosen less comprehensive policies in exchange for a lower monthly premium.”

On the other hand, Zirkelbach says, “for those people who have less comprehensive benefit packages today, they’re going to see a much larger impact in their premium as a result of health care reform.”

In other words — in a rare glimmer of truth that Zirkelbach’s boss AHIP President and CEO seemed unwilling to concede last month — premiums are increasing for the exact opposite reason than Gregg is suggesting. The new consumer protections in the health care law are at most responsible for one to two percent of the increases; the rest is due to health care inflation and the poor economy. And this is something Gregg has actually admitted before. During an appearance on Fox Business last week, Gregg said, ”Premiums went up by an average of eight to nine percent, it’s estimated that one to two percent of that is directly a result of the health care bill.”

So there you have it. The GOP final health care talking points are so extreme, they have to be reigned in by the very health insurance lobbyists who helped them spin these arguments in the first place.

On Friday, Joel Ario, the Director of the Office of Insurance Exchanges at HHS reiterated his claim that regulators on the state level are far more open to implementing the exchanges in the Affordable Care Act than the current political rhetoric suggests. Speaking at a panel for the Alliance on Health Reform, Ario said “that there was a lot of interest on the state level in these exchanges and that it was very focused and very specific to the fact that state markets are broken.” “It’s hard to see who’s from a red state or a blue state, you just see people who are working in their marketplaces trying to put things together.” Watch it:

Washington and Lee University law professor Tim Jost, also a member of the panel, reiterated that the idea behind an exchange “comes out of free market advocacy groups and has been endorsed by them in the past. The particular way it is shaped, we’ll see blue states taking one approach and red states taking one approach, maybe,” he stressed, referring to the two existing exchange models in Massachusetts and Utah. Blue states may follow California’s lead and adopt the Massachusetts model, which allows the authority that governs the Exchange to bargain with insurance companies on behalf of consumers and requires issuers to meet certain minimum standards. Red states, conversely, may consider the Utah model where consumers can “compare a wide variety of health plans sold by any insurers that want to participate.”

Ario also added that he first heard of exchanges from a Republican legislator in Oregon, “who had a concept paper from Ed Haislmaie at the Heritage Foundation. I followed the idea for several years there, as it made its way through the Heritage foundation. They took credit for getting Governor Romney to support the idea in Massachusetts and to date, the three states that have exchanges have all been led by Republican governors.” (Click here to read Haislmaie’s article praising the exchanges and the individual mandate.)

Heritage may now be downplaying its support for the concept, but the exchanges are still fairly popular in conservative states. Last month, for instance, 48 states — 21 of which are suing the federal government over the constitutionality of the Affordable Care Act — accepted federal grants “to invest in research and planning to get the Exchanges up and running” by 2014.

The LA Times’ Noam Levey reminds us that the policies Republicans would replace the Affordable Care Act with are the same old tired proposals that have been offered (and rejected) in the past:

But some conservatives acknowledge that the healthcare program offered by party leaders is largely unchanged from the proposals the GOP pushed when it held majorities from 2000 to 2006. During that period, insurance premiums skyrocketed, businesses reduced benefits and the number of Americans without health insurance rose. [...]

While there is some disagreement, Republicans have largely coalesced around an approach that builds on basic pillars of GOP healthcare policy: loosen state regulation of insurance markets to allow insurers to sell policies across state lines; put new limits on medical malpractice lawsuits; and expand so-called high-risk pools to provide insurance to sick Americans who are denied coverage.

“We will approach it in smaller bites. That is the wiser course,” said Minnesota Rep. John Kline, who is in line to chair the Education and Labor Committee in a Republican-controlled House.

Sen. Orrin Hatch (R-UT) — who has offered several proposals to repeal parts of the Affordable Care Act — predicts some kind of conservative health renaissance, telling Levey, “We could come up with a healthcare system that the American people would not only be proud of, but would actually love,” he said. “We’ve never had a real conservative majority.” But this seems unlikely, particularly if Republicans continue to recycle the health care policies of President Bush and Sen. John McCain (R-AZ). In fact, most existing GOP proposals are almost identical to what McCain offered during the 2008 campaign and are filled with the same kinds of consequences that arise from deregulating the insurance industry and unraveling the employer-based system without simultaneously adding consumer protections to the individual market.

Interestingly, if Republicans were really looking for the kind of reforms that the “American people would not only be proud of, but would actually love,” they would have to reclaim their old support for the exchanges, consumer reforms in the individual health market and subsidies to help lower income Americans afford coverage. But that would require preserving the existing health law.

Yesterday, FOX CT, a local Fox affiliate in Connecticut, pulled an ad bankrolled by undisclosed donors to the American Action Network because “the commercial’s claims are unsubstantiated” and made “false or misleading statements” about the Affordable Care Act. Now, Politico’s Pulse is reporting that in Colorado, “AAN voluntarily took down an ad on the local NBC affiliate, 9News, that claims Rep. Ed Perlmutter (D-CO) supported a health reform bill that would pay for Viagra for rapists” after “a 9News reporter had posted a fact check challenging the ad’s claims late Monday.”

WOMAN 1: You have to check the article I sent you. Apparently convicted rapists can get Viagra paid for by the new health care bill.

WOMAN 2: Are you serious?

WOMAN 1: Yep! I mean Viagra for rapists? With my tax dollars? And Congressman Perlmutter voted for it.

Watch it:

But as the K9News fact check notes, “this is false. Perlmutter never voted for it.” “The new health law treats sex offenders who are not incarcerated the same way the old law did. They can buy any health plan they choose. Some might cover drugs like Viagra, some might not. The new law doesn’t say anything about these types of drugs.”

Meanwhile, an AAN spokesperson tells Politico that “This is all Democrat hyperventilation” and claims that they were planning on taking down the Colorado ad anyway.

USA Today has an interesting story on how despite endorsements from the AARP, the Democrats’ vote for the Affordable Care Act can jeopardize their electoral chances with seniors:

Until this spring, lifelong Democrat Carolyn Land never had a second thought about voting for Rep. Allen Boyd, a Democrat who has represented her area since 1997.

But the day after Boyd cast his vote on March 21 for the new health care overhaul law, Land, 65, got out of her La-Z-Boy, switched her registration to Republican and began stumping for Boyd’s Republican challenger, Steve Southerland. The law “cut $500 billion from Medicare,” she complained. “Right now, I can see a doctor when I need to, but I’m afraid I won’t if that happens. I foresee a long wait.”

As emotions run high over the law, anger and fear about its impact on Medicare — whether founded or not — could be a deciding factor in some particularly close congressional races, especially in areas where there are large numbers of seniors, say political analysts such as Robert Blendon, professor of health policy and political analysis at the Harvard School of Public Health. “It could make a difference in any one of these races,” he said.

The article goes on to explain that Republicans are taking advantage of seniors’ anxiety about the act by “pummeling Democrats with the claim that the new law would gut the program by cutting $500 billion.” Democrats are certainly fighting back by pointing out that the cuts would protect guaranteed Medicare benefits and are designed to slow the growth of the program and shore it up for future generations, but as we know, it’s always easier to distort something than to defend it.

The one silver lining that Democrats have in seniors’ resistance to changing their government-sponsored health insurance is that it suggests that as Americans experience the benefits of the new health law, they will grow more supportive of it. By the next election cycle, younger Americans will be as opposed to tweaking the benefits of the Affordable Care Act as today’s seniors are to changing Medicare.

Greg Sargent points out that FOX CT, a local Fox affiliate in Connecticut, has pulled an ad bankrolled by undisclosed donors to the American Action Network. “The group has sunk at least $445,000 into attacking Rep. Chris Murphy (D-CT), who is running for reelection in a tough district against Republican Sam Caligiuri,” and this latest ad accuses him of supporting a health care law that jails individuals who don’t purchase coverage and provides “free health care for illegal immigrants”:

A government health care mess, thanks to Nancy Pelosi and Chris Murphy. Five-hundred billion in Medicare cuts, free health care for illegal immigrants, thousands of new IRS agents, jail time for anyone without coverage, and now a 47% increase in Connecticut health care premiums.

Watch it:

“Following a review of the spot titled ‘Mess’ and the documentation provided by the American Action Network, WTIC-TV, the FOX affiliate in Hartford, Connecticut, believes the commercial’s claims are unsubstantiated and has removed it from air,” FOX CT spokeswoman Andrea Savastra told the CapitolWatch blog. “It is the station’s responsibility to review commercials (candidates ‘uses’ being the exception) to protect the public from false or misleading statements,” she added.

Indeed, the Affordable Care Act specifically states that the Secretary “shall not file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by [the minimum coverage requirement], or levy on any such property with respect to such failure.’’ On March 25, IRS Commissioner Douglas Shulman testified before a hearing of the House Ways and Means Committee that “the IRS won’t be auditing individuals to certify that they have obtained health insurance.” Rather, insurance companies “will issue forms certifying that individuals have coverage that meets the federal mandate.” “So there’s not going to be any discussions about health coverage with an IRS employee,” Shulman said.

Section 1411 of the Affordable Care Act states that individuals have to be legal immigrants or citizens in order to receive subsidies under the law.

A new Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey found that most respondents support “moving toward salaried physician practice, with appropriate rewards for quality and prudent use of resources” and reimbursement methods that “use cost and quality information to foster price competition among providers and suppliers.” Interestingly, a majority of experts also said they would “favor either all-payer payment rate setting or a single system of payment negotiation on behalf of all payers”:

Currently, public and private health insurers engage in a complex and continuous process of negotiations with multiple health care providers to establish reimbursement rates for services. This increases administrative expenses among payers and providers and leads to wide variation in prices. Fifty-six percent of leaders support replacing the current system with either all-payer payment rate setting or a single system of payment rate negotiation on behalf of all payers. Twenty-three percent of respondents support letting each provider set its own prices; insurers would pay the lowest price and patients would pay the difference in cost for seeing higher-priced providers. Nine percent of leaders support keeping the current system.

The Affordable Care Act will finance new demonstration projects that reimburse providers in ways that focus on quality rather than quantity but won’t directly lead to an all-payer system in which health care providers would charge all payers (private and public) the same price for the same service (while allowing for age and risk adjustment to ensure that hospitals would be adequately reimbursed for the costliest patients).

The strategy was popular in the 1970s and 1980s, when at least 30 states used all-payer rate setting to contain health care spending. Lawmakers established rate boards that considered “the differences in labor markets and how much a hospital pays in wages; the amount of charity care the hospital does; and whether it treats a large number of severely ill patients” and set rates accordingly.

By setting prices at the actual cost of delivering services, lawmakers hoped to reduce wasteful spending and spur efficiency — while freeing hospitals from the uncertainly of annual rate negotiations with insurers. And it worked. At least, a little. One study found that from 1982 through 1986, “all-payer ratesetting reduced hospital expenditures by 16.3 percent in Massachusetts, 15.4 percent in Maryland, 6.3 percent in New York, and 1.9 percent in New Jersey, compared with the national average.” Other studies disagreed and during the conservative revolution of the 1980s, most states abandoned the practice in the hopes that managed competition could deliver lower rates. Today, Maryland is the only state that continues to maintain an all-payer rate setting system, but the strategy is also used in France, the Netherlands, Japan, Australia and Germany.

As Maggie Mahar notes that “a review of the Maryland plan published in a recent issue of Health Affairs reports that, since 1976, state regulation of hospital rates has saved $40 billion. Had a similar system been in place over the same period of time for all states, savings would have totaled $1.8 trillion or more.” The Maryland system is “widely regarded as having created a market in which payments are predictable, transparent, and fair, and in which profits have not suffered as a result,” Mahar argues. “Providers are protected from having to negotiate rates with payers; payers, meanwhile, are shielded from the high markups attached to hospitals services in other states; and patient access to hospital care is protected.”

Regulators in Massachusetts are also eying all-payer rate setting as a way to control health costs. A recent RAND study of 12 options for reducing health care spending in the state ranked traditional hospital all-payer rate setting as the second most likely tool for changing the trajectory of health care growth, but concluded that “there were no ‘silver bullets’ that, alone, would reduce the rate of growth in health spending to that of GDP.” The report found that, “at a maximum, hospital rate setting could reduce health spending in Massachusetts by nearly 4 percent between 2010 and 2020.” RAND warns however, that providers could try to undermine rate setting by unbundling certain services, increasing admissions or length of stay.

Given the process of implementing the Affordable Care Act, however, lawmakers are years away from considering or applying this apparently popular method of cost control on a federal level, but if they do, at least some insurers may be on board. During the health care reform debate, it was rumored that the insurers would have accepted the public option if the law adopted a rate scheme under which all payers would reimburse providers at the same price for the same service.

Approximately 4.5 million college students nationwide receive health insurance coverage through so-called student health plans (SHP) — insurance that is available to college students — and if progressive advocates get their way, these plans will have to abide by the federal consumer protections in the Affordable Care Act, which prohibit insurers from denying coverage to individuals with pre-existing conditions, rescinding coverage, or placing annual or lifetime caps on benefits. Following an investigation by New York Attorney General Andrew Cuomo, which found that some college plans offer porous coverage that skirs state laws and regulations, youth organizations like Rock the Vote and Young Invincibles sent a letter to White House and the Department of Health and Human Services (HHS) asking regulators to ensure that SHPs abide by the regulatory baseline created in the Affordable Care Act.

The crux of the matter is whether HHS (which has regulatory authority over the plans) classifies SHPs as individual health plans — thereby requiring that they abide by the consumer protections in the law — or limited duration plans, potentially exempting them from the new federal standards. In their letter, the groups argue that the latter approach would “leave these plans virtually unregulated,” “exempt from even the most basic protections”:

Some groups have suggested defining student plans as “short-term limited duration insurance.” However, student plans do not fit into the definition of “short-term limited duration insurance.” Moreover, because this type of insurance is generally considered neither individual nor group insurance, there is a strong argument that such a definition would leave these plans virtually unregulated by the PPACA – a scenario clearly not within the intent of Congress.

Defined as “short-term limited duration insurance,” student health plans would arguably be exempt from even the most basic protections in the PPACA, including the:

- Ban on rescissions;

- Ban on discrimination based on pre-existing conditions;

- Limits on annual and lifetime benefit caps;

- Preventive care requirements;

- Minimum benefits package;

- Medical loss ratio requirements, among others. [...]

Indeed, student plans have not historically been classified as “short-term limited duration insurance,” under HIPAA, the PHSA, or any other federal statutory scheme – nor should they be. Student plans are often offered for a full 12 months. Moreover, they are almost always offered to any student who chooses to stay enrolled in a college or university. Additionally, any partial classification, leaving some shorter-term student plans regulated in this category, would merely encourage all student plan issuers to redefine their coverage as semester-based coverage, giving them a loophole through which to deprive students of important consumer protections. As such, any attempt to call student plans “short term limited-duration” plans would be both inaccurate and potentially detrimental to the well-being of several million students enrolled in them.

The American Council on Education — which represents presidents and chancellors of accredited educational institutions — and several other higher education associations disagree. They’re asking the government to “designate, in regulation, that student health coverage is considered minimum essential coverage under the individual mandate,” but argue that these plans have been traditionally seen as short-term limited duration insurance” and should be classified this way “[t]o avoid unintended consequences.”

“We believe that there is going to be coverage under ACA even under limited duration plans,” Steven Bloom, ACE’s Assistant Director of the Division of Government and Public Affairs told me in a phone interview. “The question is, tell us what they have to comply with under ACA.” The education associations do agree that the SHPs should be “made available to eligible students and their eligible dependents as defined by the policy without regard to health status or pre-existing conditions” and that they should meet the “actuarial standards of the Bronze Plan,” but do not go as far as Young Invincibles in demanding that they be required to meet almost of the requirements of individual health insurance plans.

Along with concerns that the law’s guaranteed issue and guaranteed renewability rules would undermine the plans’ student-only enrollment structure, Banson says that his group is also worried that issues like “pricing and rating” could undermine the policies. The law requires states to “establish 1 or more rating areas within that State,” but SHPs are priced differently, “based on campus population,” Banson told me.

Banson stressed that the higher education associations who signed on to the letter are not advocating against the new consumer protections. Rather they are asking for “guidance for what the rules of the road are” so “schools can understand what their student plans are required to comply with in the Affordable Care Act and what insurance reforms apply to student health plans.” Bloom says that even if these plans are “classified as limited duration plans it still means that students will have to purchase something that satisfied” the minimum benefits requirement under the law and would have to meet federal standards of coverage.

HHS is likely to issue the regulations in the coming weeks.

Outgoing Republican Senator Judd Gregg (R-NH) has penned a Halloween-themed editorial advancing some new myths about the Affordable Care Act, all the while implicitly conceding that Republicans will not be able to repeal the law. “Caught in a cobweb of false promises, the American people were fed a story about how health care reform would insure everyone, allow people to keep their own insurance policies and reduce health care spending while improving quality,” Gregg writes. “Sadly, these were fantasies masquerading as fact. The scary tale that follows needs no skeletons or vampires; statistics alone can frighten you.”

Some of Gregg’s ‘scary tale’ has already been debunked by Saturday’s very prescient New York Times editorial and, as it turns out, Gregg’s own TV appearances:

MYTH — HIGHER PREMIUMS: “President Barack Obama and congressional Democrats promised us that the new law would lower premiums. It has not. Premiums in 2011 will rise more than 12 percent for employer-sponsored coverage, according to a recent Hewitt Associates study.”

FACT: That Hewitt study actually found that the new consumer protections in the health care law are at most responsible for 1% to 2% of the 12% increase that’s due to health care inflation and adverse selection, a point Gregg conceded during an appearance on Fox Business last week.”Premiums went up by an average of 8 to 9 percent, it’s estimated that 1 to 2% of that is directly a result of the health care bill,” Gregg told Neil Cavuto.

MYTH — LOSS OF EXISTING COVERAGE: “We were promised that, if we liked our coverage, we could keep it. But we were misled. The Obama administration recently revealed that employees of nearly 70 percent of U.S. businesses, who get coverage through their job, may lose their current health care plan because of the new regulations.”

FACT: Insurers and self insured employers make policy adjustments all the time and over the last few years they’ve been slowly shifting the risks and costs of coverage to the individual. Regulations in the Affordable Care Act will discourage employers and insurers from stiffing beneficiaries with very high costs and insufficient benefits and shield consumers from drastic benefit cuts or cost shifts. If Republicans are successful in repealing these requirements, insurers and employers will be able to avoid abiding by the popular consumer protections, no matter how dramatically they cut benefits, raise co-pays, or lower employer contributions.

MYTH — MCDONALD’S DROPPING COVERAGE: “These workers may lose access to their current benefits because the government will prohibit their employers from offering a plan that is affordable and provides substantive benefits for working families.”

FACT: As the New York Times explained on Saturday, “The administration has granted some 30 waivers for one year (Rush Limbaugh promptly accused the administration of allowing these employers to “break the law”) and has signaled willingness to smooth out other bumps on the road toward full reform.” Republicans, however, are intent on criticizing the administration for addressing this problem.

MYTH — SENIORS AT RISK: “Even seniors are at risk. The Obama administration announced that nearly one million seniors will lose their current Medicare Advantage plans next year.”

FACT: CMS actually projects that 99.7% of seniors will continue to have access to a Medicare Advantage plan and that only a small number of fee-for-service plans will leave the market. This is because of a 2008 bipartisan bill that required issuers to establish provider networks, not the Affordable Care Act. The bill was vetoed by President Bush, but passed again the Senate with a two-thirds majority. Gregg did not support the legislation.

MYTH — INCREASES HEALTH COSTS: “Even the Obama administration’s own actuaries found that health care spending will increase under the new law, consuming an even larger share of our nation’s fragile economy. ”

FACT: This is not what “the Obama administration’s own actuaries found.” They concluded that beginning in 2014, as 30 million+ individuals begin receiving health care coverage and visiting doctors, health care expenditures will naturally increase. Costs will continue to grow higher than current law until around 2015, at which point the Medicare savings, the excise tax on so-called Cadillac health plans, and the Medicare payment board will cause costs to “decelerate.” Moreover, the actuaries predict that as a result of these savings, Medicare spending will decline $86.4 billion from previous projections due to reforms. “Specifically, average annual Medicare spending growth is anticipated to be 1.4 percentage points slower for 2012–19 than we projected in February 2010. By 2019, it is projected to grow 7.7 percent—0.9 percentage point more slowly than we projected in February 2010,” the report concludes.

MYTH — INCREASES THE DEBT: “The current pace of government expansion and federal spending is unaffordable and unsustainable. The national debt will double in five years and triple in 10 under the Democrats’ spending plans.”

FACT: The CBO estimates that the law will produce “$143 billion in net budgetary savings over the 2010-2019 period” and reported that repealing the law would increase the debt by that amount.

Significantly, Gregg does not call for repealing the law, as he has in months past. He merely writes, “It is my hope that the next Congress consists of members who will pass reforms that responsibly address our health care needs while improving the economy.” The language is part of an ongoing GOP campaign to temper expectations for repeal.

Fox News Sunday host Chris Wallace pressed West Virginia Governor Joe Manchin (D-WV) — who is running to fill Robert Byrd’s seat in the Senate — on his past support for the health care law yesterday, asking the governor if he regretted saying that he would have voted for the law just six months ago.

Manchin told Wallace that that he didn’t know what was in the bill when he told the National Governors Association on March 17, “I’d be for it. I think you’ve got to move the ball”:

WALLACE: You’re saying now that if you had known what was really in the bill, although last March you said you would have voted for it, you are now saying you would have voted against it?

MANCHIN: Correct. Knowing the existence as far as how reaching it had been, as far as, I would have. And I think many people didn’t know about the bill. It ends up 2,000 pages or more. Bottom line, the concept was great as far as pre-existing conditions, how do we make sure more people have affordable insurance, how do we take care of children … keeping children on insurance longer because of the market conditions. There are a lot of good parts to it. Why won’t we fix what is wrong with it and make it better.

Watch it:

Manchin, who has held many different positions on the health care law, had previously told Fox News that he would vote to repeal the entire law if it couldn’t be fixed. While some of the governor’s gripes about the 1099 provision have bipartisan support, his new found opposition to the abortion language and “the mandates” is deliberately nonspecific and haphazard.

The Hill’s Julian Pecquet notes that Republicans have doubled down on their approach of criticizing both the potential coverage disruptions of the Affordable Care Act and the government’s efforts to minimize these changes. Republicans on the Energy and Commerce Committee have written a letter to HHS Secretary Kathleen Sebelius noting that they’re “deeply troubled that some 30 companies were forced to consider dropping coverage as a result of the law” and by HHS’ attempts to “exempt certain companies from new requirements so they can continue offering low-cost health plans.”

The letter includes various about the waiver process:

- According to USA Today, HHS has granted waivers so that “thirty companies and organizations…won’t be required to raise the minimum annual benefit included in low-cost health plans.” What companies or organizations were granted this waiver, and how many employees will this affect? Please provide a copy of both the waivers and a detailed description of the effects of the waivers.

- Have any companies or organizations asked for the waiver discussed in the USA Today article but not been granted one? If so, what companies or organizations were denied this waiver and why?

- As mentioned previously, according to the Wall Street Journal the issue is not merely whether the companies are granted waivers, but whether the insurers that offer these plans will be able to comply with new medical-loss ratios. Has HHS been contacted by any insurers to date about such a waiver to the ratio requirement? If so, please provide the names of the insurance companies that have done so. Has HHS granted any waivers of any kind to certain insurers, and if so what did those waivers entail?

- Exempting these employers from coverage requirements and penalties will likely affect the cost estimates of the health law. Has HHS calculated the effect of the waivers on the reported cost of the law? Please provide us with any information HHS holds on each exempted plan so that the impact of these exemptions may be examined.

The GOP will then use any answers to argue that the government is now arbitrarily picking winners and losers, thereby destroying America’s small businesses and job creators. As Rep. Mike Pence (R-IN) previewed the argument several weeks ago on local radio, “that’s why you don’t want a government takeover of health care, because all of the sudden you have bureaucrats with political power are going to be deciding…”

What’s really happening is that the administration is in a tough spot. If companies respond to the early regulations by dropping insurance coverage, low-wage employees will have to either go uninsured until 2014 (when the exchanges kick in) or try to enroll in Medicaid or the new high-risk insurance pools, for which they may be ineligible and may have some trouble affording. As Aaron Carroll of the Incidental Economist explains it, Democrats are facing the three-legged-stool problem. You can’t give people access to affordable coverage without regulating the insurers, getting everyone into the risk pool through the mandate and providing subsidies for those who need them, but the law implements the regulation leg four years before the subsidy and mandate legs are even attached. And so what you’re seeing now is a stool that just can’t find its balance.

Consequently, the government is exempting these companies for a year to give them an opportunity to gradually adjust their plans so they can meet the new requirements and will likely extend these exemptions through 2014 and issue even more waivers in the months to come. But as we’re seeing, this will make for its own batch of bad headlines, but it seems to be a better solution than letting thousands of low wage Americans go without coverage.

I agree with Jon Gruber’s argument that the expectation that a large number of employers will dump coverage into the Exchanges is overstated. As Gruber writes, in response to this piece by Gov. Philip Bredesen (D-TN), this argument overlooks some fairly important real-world experiences:

The gist of Bredesen’s argument is pretty simple: Some firms will find it more attractive to stop offering insurance and let employees get coverage through the new insurance exchanges, where generous subsidies will be available. But the Affordable Care Act, which I’ve long supported, imposes strong penalties on firms that do not offer insurance, as well as sizeable tax credits for smaller firms that encourage them to offer. And in most firms, the majority of employees will make too much money to be eligible for large subsidies anyway. It is for this reason that the Congressional Budget Office estimated that PPACA will reduce employer sponsored insurance in the U.S. by only about 2.5 percent by 2019. In other words, the effect on employer sponsored coverage will likely be small.

CBO projections aren’t perfect, of course. But this particular projection is consistent with the best evidence we have–evidence that, once again, Bredesen completely ignores. In 2006, the state of Massachusetts put in place a system much like the one the Affordable Care Act will create nationally–with subsidies for low income groups (subsidies that are even more generous than those in the Affordable Care Act) and an individual mandate, but without the small group tax credit or meaningful penalties on firms that don’t offer insurance. The result? Employer-sponsored insurance has risen in the state by more than 100,000 persons.

Bredesen’s claim that employees would move from employer coverage to subsidized insurance in the exchange also ignores that the government is already subsidizing employer plans through the tax code and will continue to do so (at lower levels due to the excise tax) under the Affordable Care Act.

Economists and many Democrats generally agree that the ACA’s employer responsibility requirement could be strengthened and many supported a true pay or play provision that would have ensured less employer coverage erosion. But they were opposed by the very same conservative Democrats and Republicans who are now echoing Bredesen’s claims. Rather than shoring up employer sponsored insurance (ESI), these lawmakers instead listened to the hysterical arguments of groups like the National Federation of Independent Businesses (NFIB) and the Chamber of Commerce and strongly opposed the very provisions that would have avoided what they’re now predicting.

However, the general question of why employers choose to offer coverage is a good one and the best explanation I’ve heard argues that employers feel more comfortable with the existing system within which they themselves can define their contribution towards health care. In other words, rather than leaving it up to the government to set the amount they’ll have to contribute, companies want to be more in control of their own costs. Austin Frakt believes CEOs are wrong for thinking this, but agrees that employer coverage is here to stay.

This week, after several Republicans suggested that the GOP would only repeal parts of the Affordable Care Act, Republican senators sought to reassure their conservative constituency of the purity of their intent by reiterating their opposition to the entire health care law. “Let me be very clear,” Sen. Jon Kyl (R-AZ) told conservative radio host Hugh Hewitt. “The position of the Republican Senators, all of us, is to repeal Obamacare if we can. If we can’t, having tried to do so, we will do everything we can to defund all or parts of it, to shave parts of it off … to try to reduce the scope of the rules and regulations.”

But Republicans also say that they support some parts of the health care law — like the consumer protections that would prohibit insurers from denying coverage to individuals with pre-existing conditions. Those elements would help consumers but they’d be better off if Obamacare were repealed and replaced with similar provisions. As Sen. Richard Burr (R-NC) explained during his debate in North Carolina last night, “Those provisions are acceptable to me and most Republicans and most Americans,” he said. “I think it’s important to realize we could have the elimination of pre-existing conditions tomorrow. We could have the elimination of lifetime caps tomorrow. We could begin to close the doughnut hole tomorrow. But you can’t fix the current health care bill that the president passed.”

So would Republicans really adopt strong consumer protections? It’s unlikely. The House Republicans’ ‘Pledge,’ for instance, guarantees coverage regardless of pre-existing condition only to those beneficiaries who had been previously insured. The uninsured can still be denied coverage. Similarly, a bill offered by Sens. Burr and Tom Coburn (R-OK) in May of 2009 encouraged states to “establish rational and reasonable consumer protections,” but did not eliminate the practice of denying coverage nationwide. Throw into this mix yesterday’s comments by Sen. John Cornyn (R-TX) and you quickly get the sense that any GOP pre-existing condition provision would be limited at best:

SIEGEL: But the basic change here, the government has expanded the entitlement to health insurance. Do you hope to see that expansion undone as a matter of federal law?

CORNYN: I think the way it was done is problematic because it imposes a fine on individuals who don’t carry health insurance, but it says, on the other hand, that if you get sick, that an insurance company must issue you a policy regardless of your preexisting conditions and the like, which is driving up the cost of insurance. I think the model, to me, the ideal model is one that we’ve seen used in companies like Whole Foods Company in Austin, Texas, using health savings accounts.

Cornyn, of course, has it backwards. You can’t require insurance companies to “issue you a policy regardless of your preexisting conditions” unless you impose “a fine on individuals who don’t carry health insurance.” If you don’t find a way to encourage people who otherwise wouldn’t have bothered with health insurance to buy coverage, you can’t eliminate the pre-existing condition denials. That’s because without a mandate that brings healthy people into the program, the provision requires insurers to accept individuals who waited too long to purchase coverage. These sicker applicants would use up a lot of health care and drive up costs for everyone else in the pool, pushing out younger and healthier applicants (and their premium dollars). Only sick people who desperately need coverage would remain in the plan and as Kentucky, Main, New Hampshire, New Jersey and many other states have all found out, that’s a prescription for failure.

So the larger point here is that no matter what Republicans tell you about pre-existing conditions, without a mandate, they can’t possibly replace the existing consumer protections. All they can offer is some inferior provision that look a lot like the existing HIPAA law and won’t do much for the uninsured.

Peter Orszag laments in the New York Times today about the Democrats’ failure to include more robust malpractice reform in the Affordable Care Act, noting that “what’s needed is a much more aggressive national effort to protect doctors who follow evidence-based guidelines“:

The health care reform act that Congress passed earlier this year included a modest set of state pilot projects, including one in Oregon that is intended to experiment with this approach. But these pilots are small; the project in Oregon, for example, has only $300,000 in financing.

What’s needed is a much more aggressive national effort to protect doctors who follow evidence-based guidelines. That’s the only way that malpractice reform could broadly promote the adoption of best practices. [...]

The health care reform act that Congress passed earlier this year included a modest set of state pilot projects, including one in Oregon that is intended to experiment with this approach. But these pilots are small; the project in Oregon, for example, has only $300,000 in financing.

What’s needed is a much more aggressive national effort to protect doctors who follow evidence-based guidelines. That’s the only way that malpractice reform could broadly promote the adoption of best practices.

Indeed, when I spoke to former Sen. Tom Daschle (D-SD) several weeks ago, he too indicated that malpractice reform was probably a missed opportunity that would have been politically difficult to incorporate into this effort. “I’m actually not surprised, I’m disappointed that we’ve failed to go further on some of these issues. I think the President is a realist, he’s a pragmatist, he needed to ensure that we could bring a bill, maybe not with everything he/we wanted across the line,” Daschle told me. “I think he felt it would be hard to hold Democratic caucuses together moving a bill that went further. Ultimately, I’m confident that it’s going to happen….it was probably a bridge too far in this legislative effort.”

To be clear, malpractice costs make up only a small percentage of national health care expenditures and malpractice reform does not significantly decrease physicians’ anxiety of being sued. But it’s an issue worth tackling, since developing sensible solutions could improve quality and increase the number of physicians. The good news is, as I’ve been chronicling here, HHS is already funding some promising pilot projects that could provide a template for any future legislative efforts.

Jon Walker notices that the American Hospital Association — which had agreed to accept $155 billion in payment reductions over ten years if health reform covered at least 94% of Americans and didn’t include a public option — is now turning against the administration and “spending hundreds of thousands of dollars to help elect Republicans this November.”

On one hand, the news is not too surprising. The industry believes that helping elect Republicans will probably bring about looser regulations and less strenuous spending cuts from the Independent Payment Advisory Board (IPAB), which the GOP has promised to repeal. On the other hand, while all of the health care interest groups won important concessions from the new law, none were more successful than the hospital industry. During the 15 months beginning in January 2009 and ending in March, when Congress passed the Affordable Care Act, hospitals spent approximately $108 million on lobbying and got a lot for their effort.

Here are the cuts they accepted:

- Lowering the annual update rates paid to hospitals.

- Reducing Medicare payments for excessive and preventable readmissions.

- Lowering bonus payments for hospitals who treat the undeserved: Currently the government pays about $45 billion dollars a year in DSH payments to help hospitals afford uncompensated care. Since health care reform will insure 34 million Americans over a 10-year period, the number of ‘uncompensated’ care cases will decrease by as much as 80%, but DSH payments will only be cut by some 15%.

But, as the Tennessee Hospital Association’s (THA) concluded, the above cuts would still allow hospitals to net about $16 billion from reform. “The breakdown estimates that the industry will receive additional money of about $171 billion over those same 10 years as a result of reimbursements for newly insured patients…In other words, the hospitals would give up $155 billion in cost cuts, but take in $171 billion in new money — a net gain of $16 billion. What’s more, the Tennessee association notes that the deal delays most of the industry’s cost givebacks until the second half the agreement’s 10-year year period — well after the hospitals have enjoyed some of the benefits of the new money they’re expecting from expanded insurance coverage.”

“[T]he bond prices and stock prices will tell you that most hospitals are winners, at least in this bill,” Thomas Scully, who ran CMS from 2001 to 2004, explained at a recent roundtable for Health Affairs. “Assuming there are no subsequent bills, hospitals are probably the biggest winners. They got hardly touched and got a lot of new money,” Scully said.

Hospitals are also protected from cuts under IPAB through 2019 — but as their latest political manoeuvrings suggest, that still wasn’t good enough. After all, why tolerate any cuts — no matter how far into the future — when you there is a good chance that you can help elect a party that will make them all go away?