Reports surfaced last week that in his effort to reach a “grand bargain” with Congressional Republicans to raise the debt ceiling, President Obama refused to take cuts to Medicare off the table and said he would consider a proposal to raise the program’s eligibility age from 65 to 67, a plan floated by Sens. Joe Lieberman (I-CT) and Tom Coburn (R-OK). At the White House press briefing this afternoon, Press Secretary Jay Carney confirmed that raising Medicare’s eligibility age was under consideration:

REPORTER: In the spirit of rebutting this idea that it has all been smoke and mirrors, is the President willing to raise the retirement age for Medicare and Social Security? [...]

CARNEY: A lot of the reporting about what has been under consideration has been accurate. And I would simply say for those of you, all of you, who are familiar with these issues what hard choices are to judge for yourselves whether the kinds of things that we have been able to consider do not constitute significant, significant, demonstrations of a willingness to compromise and I think the answer is they absolutely do.

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For Americans to judge the level of compromise constituted by raising the Medicare eligibility age, they need to know exactly what that proposal would mean for the program. Jacob Hacker, Professor of Political Science at Yale University, called the scheme “the single worst idea for Medicare reform — which is saying a lot in light of the disastrous Paul Ryan plan for turning Medicare into an inadequate voucher for private insurance.” “It saves Medicare money only by shifting the cost burden onto older Americans caught between the old eligibility age and the new, as well as onto the employers and states that help fund their benefits (and, after 2014, back onto the federal government through subsidized coverage for the uninsured under the 2010 health care reforms).”

According to the Kaiser Family Foundation, raising the eligibility age to 67 would cause an estimated net increase of $5.6 billion in out-of-pocket health insurance costs for beneficiaries who would have been otherwise covered by Medicare. Seniors in Medicare Part B would also face a 3 percent premium increase, the study found, since younger and healthier enrollees would be routed out of Medicare and into private insurance. Beneficiaries in health care reform’s exchanges would see a similar spike in premiums with the addition of the older population. Employer retiree health costs would also increase by $4.5 billion. “Costs are shifted to older people who have been paying into the Medicare program their entire lives,” the Urban Institute’s Judy Feder said.

Worse still, some seniors between the ages of 65 and 67 could “end up uninsured,” the Center on Budget And Policy Priorities’ Edwin Park predicted. Individuals “with incomes too high for premium subsidies in the exchange and those who qualify for only modest subsidies” could be priced out of affordable coverage, he warned.

Federal cost savings, meanwhile, would be slim. The Congressional Budget Office studied the proposal when it was part of the House GOP’s budget plan and found it “would have little effect on the trajectory of Medicare’s long-term spending…because younger beneficiaries are healthier and thus less costly than the program’s average beneficiary.”

“Private coverage costs more than Medicare for the same benefits and is much less reliable,” Hacker said. “So this is an accounting maneuver that does nothing to address the real challenges of runaway health care costs and insecure coverage.”

In the midst of debt ceiling negotiations, the administration has hinted that it would consider raising the eligibility age under Medicare from 65 to 67. The proposal, originally floated by Sens. Joe Lieberman (I-CT) and Tom Coburn (R-OK), would increase out-of-pocket costs by $5.6 billion for seniors who would have been covered otherwise. In response to such ideas, Ohio Sen. Sherrod Brown (D-OH) offered a simple adage: Practice what you preach.

Today, Brown introduced an amendment that would make the Social Security retirement age the age at which members of Congress could collect their own retirement benefits. Under current law, lawmakers can collect the federal pension benefits at 50, depending on how long they’ve served. Brown told the Washington Post’s Greg Sargent that “people who cavalierly say we can raise the retirement age” don’t know people “who are doing physical work.” As for the Medicare age proposal, Brown called it flat out “wrong“:

Brown is hoping that the very fact that it’s a long shot will force some members of Congress — and the President — to rethink the notion that it’s acceptable to raise the retirement age on hard working Americans.[...]

Asked to respond to Obama’s reported willingness to raise the Medicare eligibility age, Brown cautioned that we don’t know details but said he would oppose it if the reports were true.

“He’s wrong,” Brown said of the President’s reported flirtation wih the idea. “Elected officials don’t know enough people who work outside in winter and work in construction and in retail and diners. Members of Congress work into their 70s — it’s not hard for us.”

This type of proposal is Brown’s modus operandi, having refused to take health care benefits until a health care reform law was passed. In a statement to ThinkProgress, Brown said, “Raising the Social Security retirement age might sound fair to politicians who come to work every day in a suit and tie, but it’s a nonstarter for working Ohioans who stand on their feet all day long in a restaurant or on a factory floor. It’s time for Washington politicians to make the same sacrifices that they’re proposing for millions of Americans.”

This common sense approach even earned the endorsement of the conservative advocacy group National Taxpayers Union. Noting that Congress’ retirement system is “the most generous offered at any level of government,” NTU said that Brown’s change, “while seemingly small, would actually make a great deal of progress toward the more equitable outcomes taxpayers seek.”

Rep. Paul Ryan (R-WI) got to the heart of the GOP’s criticism of the Affordable Care Act’s Independent Payment Advisory Board (IPAB) — a 15-member commission that would make recommendations to Congress about lowering Medicare reimbursements if costs increase beyond a certain point — during this morning’s House Budget Committee hearing when he said that reducing payments to providers would undercut seniors’ access to doctors and hospitals and thereby ration their care. His argument is that Medicare already underpays providers, forcing them to either shift costs to individuals with private insurance or close off their Medicare business altogether, and any additional cuts will only exacerbate this problem.

The point is somewhat disingenuous, since Ryan’s budget maintains many of the provider reductions in the Affordable Care Act (while repealing the IPAB), and it ignores the fact the ACA will begin to change not just how much providers are paid for their services, but how they’re paid for delivering them. The law invests in delivery reforms that move away from the inefficient fee-for-service system and pay providers for episodes of care and greater care coordination. That’s something the Ryan budget does not do, as HHS Secretary Kathleen Sebelius, who was testifying before the committee, highlighted in her back and forth with the Chairman:

RYAN: Obviously if we underpay them it will save more money. The question is, if we underpay them, will they keep delivering the benefit? … Don’t you agree that if we underpay them they will just stop seeing beneficiaries?

SEBELIUS: Mr. Chairman, I think the assumption is that nothing changes in care…that we keep paying at the same not only rates, but keep saying for the same kinds of services. So if you assume that care delivery doesn’t change at all, that we keep paying for good care, the same that we pay for bad care, if we don’t have any changes in underlining care, if we dont’ coordinate care, if we don’t have more home based patient based care….That trend line is probably accurate.

I would suggest that what the Affordable Care Act does and what we have begun to do pretty successfully with the innovation center and the very enthusiastic support of a lot of health care providers across the country is look at where the best practices are…groups that have actually delivered very high quality care well below the trend line and capture that and then reach out to others to try to accelerate that change and use the enormous levers of the Medicare payment system to do just that to drive best practices.

Watch it:

Ryan’s other sleight of hand is his fundamental assumption: Medicare’s lower reimbursement rates are responsible for providers losing money. That may not always be true, however. Research into hospital costs suggests that the real culprit of lower hospital margins from Medicare is some combination of private payer laxity in setting competitive rates and provider clout in negotiating higher prices for their services. A study published in Health Affairs found that the higher reimbursements hospitals earn on payments from private payers are actually a “key reason that Medicare margins have declined.” “The apparent chain of causation is as follows. Strong market power leads hospitals to reap higher revenues from private payers. This in turn leads these hospitals to have weaker cost controls. The weaker cost controls lead to higher costs per unit of service. As a result, hospitals have a narrower margin on their Medicare business.”

In other words, hospitals are losing money precisely because the current reimbursement system — the very system that Ryan’s budget perpetuates — does not incentivize delivering efficient care — it encourages providing more care! That’s something the ACA seeks to change and IPAB can help accelerate.

Health insurers are weighing in on the Department of Health and Human Services’ new exchange regulations and pressuring the government to provide states with maximum flexibility in allowing private insurers to participate in the new marketplaces:

The association representing the nation’s health insurers said health insurance exchanges should be true marketplaces where competition can thrive, while at least one market analyst said exchanges still represent a “promising opportunity” for the sector. [...]

America’s Health Insurance Plans, in a statement, applauded this approach but cautioned that the exchanges should supplement current avenues for purchasing health coverage, not supplant them. AHIP also said it is still reviewing the proposed rule.

“All health plans offering coverage in the new exchanges will be required to meet new quality and performance standards,” AHIP President and CEO Karen Ignagni said in a statement. “To enhance competition and preserve consumer choice, all health plans that meet these new standards should be allowed to offer coverage through the exchanges.”

Allowing every insurer into the new marketplaces may do wonders for the industry’s bottom line, but it can’t be the best solution for enrollees. As former Massachusetts exchange head Jon Kingsdale often observes, letting every payer in “would be like telling your grocery store they have to offer every single kind of bread baked by every single bakery,” and “the Exchanges would be nothing more than an automated Yellow Pages.” Exchanges wouldn’t be able to aggressively select plans and set rules that translate the costliness of their networks into a price that the consumer understands.

Indeed, studies conducted by the Massachusetts Connector — the state’s exchange — revealed that consumers felt that too much choice was “confusing” and “overwhelming.” “Participants expressed a desire a for manageable numbers of plans (e.g. three to four) offered by four to six carriers. In addition, consumers expressed difficulty making plan comparisons under the existing model.” “Instead, consumers preferred for information to be presented in a simple and standardized format that clearly distinguished between different benefit design options.”

Not all states have the luxury of denying entrance to inefficient providers, however. States “that sit in highly concentrated insurance markets are limited in how selective they can be,” and states in which the exchange represents a small part of the commercial market will also have little leverage, as will states with a sicker risk pool. Still, as a recent National Academy of Social Insurance and Georgetown University concluded, the states can still take steps to ensure that the exchanges provide meaningful — rather than overwhelming — choices.

The House Budget and Commerce Committees will both hold hearings today to examine the Independent Payment Advisory Board (IPAB) created under the Affordable Care Act, which could provide GOP lawmakers with the forums they need to continue to push their vocal opposition to the provision. Rep. Paul Ryan, who chairs the Budget Committee, has come down loudly against IPAB, calling the proposal a “rationining” board that will “diminish the quality of care for seniors.”

And yet Ryan introduced a bill that would create two similar boards just over two years ago in May 2009. The Patients’ Care Act, which he and three other GOP lawmakers sponsored, focused on the use of tax credits to secure health insurance from state insurance exchanges, but also provided for the establishment of two independent advisory boards charged to design research-based guidelines for reducing health care costs. Don Taylor of The Incidental Economist even described Ryan’s independent-advisory boards as having “more teeth, including provisions to allow for penalties for physicians who did not follow the guidelines, than does the Independent Payment Advisory Board.”

As ThinkProgress detailed in May, the parallels between the two proposals, IPAB and Ryan’s Health Services Commission and Forum for Quality and Effectiveness in Health Care, are impossible to overlook:

According to a Kaiser report, “IPAB is an independent board housed in the executive branch and composed of 15 full-time members appointed by the President and confirmed by the Senate. IPAB is directed to recommend savings for Medicare if the per capita growth in Medicare spending exceeds defined target growth rates.”

Compare this to Taylor’s description of the Patients’ Care Act:

“Health Services Commission [is] to be run by five commissioners appointed by the president and confirmed by the Senate. The purpose of the commission is to ‘enhance the quality, appropriateness, and effectiveness of health care services through the publication and enforcement of quality and price information.’

A systematic look at the Medicare program (treatment coverage decisions, payment approaches, quality improvement strategies) that was insulated from Congress in a manner similar to the military base-closing commission would be a good first step toward addressing cost inflation in Medicare in a comprehensive and reasoned manner. Lessons learned from Medicare could then be applied more broadly to the health system.”

It appears the GOP is determined to repeal the Affordable Care Act and its provisions, even when that means attacking policy proposals they once championed.

–Sarah Bufkin

A new report from researchers at the Robert Wood Johnson Foundation and the Urban Institute predicts that states will save between $92 billion and $129 billion from 2014 to 2019 “because of provisions in the Affordable Care Act (ACA) that are designed to reduce the uninsured population and provide federal funding for functions that, in the past, have been financed by states and localities.” The federal government will spend “$704 billion to $743 billion more under ACA, while states will spend $92 billion to $129 billion less with ACA than without it.” A partial breakdown:

– Medicaid costs: State spending is actually expected to rise by $80 billion on new enrollees, but the federal government will largely offset these costs with an anticipated $66 billion in new federal spending on existing Medicaid enrollees. States will also save $69 billion from the elimination of Medicaid eligibility for individuals above 138 percent of the federal poverty line.

– Savings from uncompensated care: Since more individuals will have more access to insurance, state spending on uncompensated care could fall by 12.5–25 percent, saving the federal government up to $87 billion, while states would collectively save $52 billion.

– Savings in mental health: Reform will extend Medicaid to many low-income people with mental illness who previously were uninsured, thus saving states between $11 billion and $22 billion dollars from 2014-2019.

Look:

This study is in line with past analysis from the Kaiser Family Foundation, which similarly found that the federal government will contribute 95 percent of all the additional Medicaid spending, helping states reduce uncompensated care, cover more people, and even boost struggling economies. Under the law, states don’t have to spend additional Medicaid dollars on the expanded population until 2016 and will received a federal match of 90 percent for the newly eligible Medicaid enrollees by 2020.