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July 18, 2011

Washington Health Policy Week in Review Archive e519f8f8-d2c8-44c5-a012-c18932096fd0

Newsletter Article


Obama Administration Touts Flexibility in Proposed Exchange Regulation

By John Reichard, Jane Norman and Rebecca Adams, CQ HealthBeat

June 11, 2011 -- Health and Human Services (HHS) officials set the stage for the crucially important final phase of the health care law's implementation with the unveiling of two proposed exchange regulations that they say would provide states with considerable flexibility in developing their new insurance marketplaces.

The proposed regulations, anxiously awaited by states and insurers, represent another milestone toward full implementation of the law in 2014, when the exchanges will be up and running to serve individuals and small businesses. Not yet disclosed by HHS, however, are the details of the essential health benefits package that will be offered to consumers or how a federal fallback exchange would operate in states that don't set up their own new marketplaces.

In describing the rules throughout the day, HHS officials stressed that the proposal was designed to reduce administrative burdens on the states and duplication of efforts, and allow states to partner with the feds. "In this proposed rule, we aim to encourage state flexibility within the boundaries of the law," the exchange rule says.

"States can choose to develop an exchange in partnership with the federal government or develop these systems themselves,'' says an HHS statement. "This provides states more flexibility to focus their resources on designing the right exchanges for their local insurance markets."

HHS Secretary Kathleen Sebelius, other HHS officials and a group of small business leaders discussed the new rules at a morning news conference.

One 244-page proposal governs the establishment of exchanges and qualified health plans. The second 103-page rule is designed to minimize the impact on insurance companies of covering high-cost patients.

The overwhelming majority of states have yet to approve legislation setting up the framework for their exchanges.

Consumer advocates said the proposal will allow states to fashion exchanges with policyholders in mind.

"HHS today released a menu, not a recipe,'' said U.S. PIRG policy analyst Mike Russo. "State leaders should take the flexibility they've been given to design a strong, negotiating exchange on behalf of consumers."

The proposal is a mixed bag for insurers. Employers who elect to provide coverage to their workers through the exchange can pick the tier level of coverage they will offer. But employees will be able to choose which specific plan in that tier they want to enroll in. Insurers had wanted employers to have the option of deciding exactly which health plan their workers would have to enroll in.

Terry Gardiner, vice president at the Small Business Majority, a group friendly to the Obama administration, said at the news conference that states initially are focused on creating exchanges to serve individuals as distinct from small business. He said, however, that he expects all states will eventually have separate exchanges specifically for small businesses. He said that so far only one, New York, has discussed having a single exchange that would serve small business and individuals.

Some aspects of exchange operations are not addressed in the rules, including key aspects of how the federal government would run an exchange if a state opted not to create its own.

For example, Joel Ario, head of HHS' exchange office, said that no decision has been made yet on whether the federal government would play an active purchaser role, with the power to exclude an insurance plan from a particular federally run exchange if that company offered consumers a bad deal.

HHS officials emphasized that the federal government plans to help all 50 states manage these new marketplaces.

For example, Ario said a federal "data hub" will provide information to the states on whether any particular applicant is a U.S. citizen. The data hub also will give states information on tax credits that will be available to exchange customers.

An estimated 8.9 million people will enroll in exchanges in 2014; 23.4 million in 2018, according to Congressional Budget Office (CBO) estimates. CBO also estimated that most of them would be eligible for premium subsidies that are expected to average $4,600 per person in 2014.

Reaction to the exchange proposal was positive from from Democrats on the Hill.

"These rules are the next step in continuing to put individuals and small businesses, not insurance companies, in the driver's seat," said Finance Committee Chairman Max Baucus, D-Mont., one of the authors of the overhaul.

Sen. Tom Harkin, chairman of the Health, Education, Labor and Pensions Committee and another author of the law, said he was pleased the administration had "released a proposed rule that will guide states' work in getting exchanges up and running—many states are already deeply engaged in this process."

Republicans have supported the concept of insurance exchanges but not in the context of a health overhaul they oppose.

Rep. Michael C. Burgess, R-Texas, a senior member of the Energy and Commerce Subcommittee on Health, said in a statement that the country didn't need or want the health law, or additional regulations. "The concept of an insurance exchange is not necessarily a bad idea," Burgess said. "However, states being compelled to establish exchanges and forced to comply with regulations that fit with the federal government's vision will not necessarily work for the states."

Exchange approval timing

Under the health care law (PL 111-148, PL 111-152), states must have their insurance exchanges ready for HHS approval by Jan. 1, 2013, so the new marketplaces can be operational by 2014.

However, the regulation gives states some leeway in that timetable by saying that HHS may issue a "conditional approval" because there will be systems development and contracting activities that occur in 2013 past the deadline.

"There are no absolute deadlines here," Ario said at the news conference.

The rule provides three options. States can be ready by the January 2013 deadline; they can get a conditional approval for their exchanges; or they can initially let the federal government run the exchange.

"The conditional approval would presume that the state's exchange would be operational by January 1, 2014 even if it cannot demonstrate complete readiness on January 1, 2013," says the regulation. "HHS would continue to work with and monitor the progress of states with conditional approval until a determination of full approval is made, or until the conditional approval is revoked."

Even if the state elects to let the federal government run its exchange, it can change its mind later and subsequently set up its own exchange as long as it gives HHS 12-month notice.

HHS officials say they are also considering and asking for comment on a proposed review process for the exchange plans that is similar to what's used for Medicaid and the Children's Health Insurance Plan, in that there would be 90 days available for review of the plan for approval, denial or to request comment. If more information is requested, states would have 90 days to approve or disapprove the plan.

Also in the proposed rule HHS says that states would have to notify HHS before "significant" changes are being made in an exchange plan and the plan would have to get written approval before it could proceed with those changes. The agency is considering using the state plan amendment process now in place for Medicaid and CHIP.

Significant changes would include altering a key function of exchange operations, changing a time frame for crucial functions or making changes to the exchange governance structure, state laws or regulations, information technology systems, the Qualified Health Plan certification process or the process for enrollment in a QHP.

The separate proposed reg that deals with lessening the impact on insurers of covering high-risk patients includes three components that would encourage insurers to cover these sicker patients just as they would healthy patients.

Those elements are: a risk-adjustment formula that would pay insurers higher rates for sicker patients; a three-year reinsurance program that would set up a nonprofit that would pass through temporary payments for insurers that cover patients with high medical claims, and a risk corridor program that would operate through 2016. That would give insurers whose claims are at least 3 percent higher than projected more federal funding, while giving insurers whose costs are at least 3 percent less than projected fewer federal dollars.

Governing the exchanges

New details are provided in the regulation on the entities that will run the state exchanges. At a minimum, they must be incorporated under the law of one or more states and have demonstrated experience on a state or regional basis in the individual and group markets and in benefits coverage.

Governance of the insurance exchange can include representatives of the insurance industry, however a majority of the members of the exchange board must be consumer representatives. While the rule allows for either a state agency or a not-for-profit organization to manage the exchange, it prohibits insurance companies from operating the marketplaces.

"We note that there may be ways in which an exchange and the federal government can work in partnership to carry out certain activities," says the rule. Sharing of information and ideas is expected in a federal-state partnership, and the rule asks for comments on how that could best work.

Even while contracting with outside entities, the exchange remains responsible for meeting all federal requirements related to the contract, the regulation notes. "We invite comment on the extent to which we should place conflict of interest requirements on contracted entities," it adds.

If the exchange is an independent state agency or not-for-profit entity established by the state, it must have a clearly defined governing board meeting certain minimum requirements and must submit detailed information on its accountability structure. That structure would be administered under formal, publicly adopted charters or bylaws, ensuring public transparency. Exchange boards are to have regular public meetings with advance notice provided to the public.

The majority of members of the boards should be individuals who support the interests of consumers and small businesses and so a majority of voting members cannot represent health insurers, brokers or anyone licensed to sell insurance, the regulation says. Comment is invited on the extent to which people with conflicts of interest should be further specified and on the types of members who might have conflicts of interest.

A majority of members of the governing board are to have experience in health benefits administration, health care finance, health plan purchasing, health care delivery system administration, public health, or health policy issues related to the small group and individual markets and the uninsured.

HHS says it considered additional ways to regulate the governing structure of exchanges but "we propose to afford states discretion to select and appoint members of their exchange boards" as long as they meet those minimum federal standards, the agency says.

Each exchange also has to have a set of guiding principles including its ethical and conflict of interest standards. Those must be publicly posted, along with disclosure of board members' financial interests.

Timothy Jost, a Washington and Lee University law professor who serves as a consumer representative for the National Association of Insurance Commissioners, expressed concern about the exchange board governance provisions. Jost said he is worried that insurers will have too much influence over exchanges and that they should be excluded from exchange board.

Exchange models

In the proposal, HHS says it received many comments about whether exchanges should be able to accept any willing plan or incorporate the components of an active purchasing model, such as price negotiation.

"Of these comments, many recommended that at a minimum, HHS should not require the exchanges to accept all eligible plans," says the agency. "In contrast, advocates of the any-willing plan approach noted that state insurance departments already review and approve rates and regulate insurer solvency, and that negotiation would result in de facto premium price controls for the entire market, reduce consumer choice and competition, and result in duplicative regulatory structures."

In response, HHS says, it is providing states with "discretion" on the issue. That means an exchange may use an "any qualified plan" strategy, certifying all plans as qualified health plans as long as they meet minimum federal certification standards in the regulation.

Alternately, an exchange could require competitive bidding or selective contracting and pick the plans ranked highest in terms of certain exchange criteria. "With competitive bidding, an exchange may be able to achieve additional value and quality objectives by limiting participation and through plan competition," HHS suggests.

An exchange could also choose to negotiate with insurers on a case-by-case basis, asking for amendments in proposed plans.

"To enhance competition and preserve consumer choice, all health plans that meet these new standards should be allowed to offer coverage in the exchanges,'' America's Health Insurance Plans said in its statement on the exchange regulations.

The proposal also covers at length how and when enrollment into the exchanges will work. The initial open enrollment period begins Oct. 1, 2013, and extends through Feb. 28, 2014. For applications received or before Dec. 22, 2013, the exchange must ensure a coverage effective date of Jan. 1, 2014. After that, the date of enrollment depends on when the application is received but coverage will begin on the first day of a month.

Then, for benefit years beginning on or after Jan. 1, 2015, the annual open enrollment period begins Oct. 15 and extends through Dec. 7. There also must be special enrollment periods when qualified people—including those with life changes such as marriages or job shifts—can enroll or switch plans.

Also spelled out are the roles of navigators, the public or private entities that help individuals and small businesses sign up for insurance and conduct outreach and education about the exchanges. Insurance brokers and agents have been worried about how their traditional roles will fit in with those of the navigators.

The rule says that navigators must have knowledge of the market, but can't be health insurance issuers or receive any consideration, directly or indirectly, from insurers.

States may also allow insurance agents and brokers to enroll individuals and small businesses in plans and assist individuals in applying for premium tax credits and cost-sharing reductions. Exchanges can also provide information about agents and brokers on their Web sites "for the convenience of consumers," the proposal says.

The new proposed regulation likely will undergo a lively debate as soon as July 16, when the National Governors Association will have a session on it featuring HHS official Steven Larsen, director of the Office of Oversight at the Office of Consumer Information and Insurance Oversight.

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Obama 'Willing to Look' at Medicare Eligibility Age, Means Testing

By John Reichard, CQ HealthBeat Editor

July 15, 2011 -- President Obama confirmed in his news conference that he is willing to consider raising Medicare's eligibility age and adopting provisions that would charge wealthier Americans more for the program.

"We've said that we are willing to look at all of those approaches" Obama said after he was specifically asked about charging the wealthy more and increasing the eligibility age. Lawmakers have proposed gradually raising the Medicare eligibility age from 65 to 67.

"You know, you can envision a situation where for somebody in my position, me having to pay a little bit more on premiums or copays or things like that would be appropriate,'' Obama said. "And again, that could make a difference."

Obama added that he wants to protect current Medicare beneficiaries as much as possible and that "we should look at the out years" to make revisions.

Over time, "modest modifications can save you trillions of dollars," he said.

The president also suggested that there is room to wring Medicare savings out of the program's payments for pharmaceuticals.

Raising the eligibility age to 67 over time would match an approach taken by the Social Security program. When a reporter circled back to ask Obama specifically about the eligibility age he declined to elaborate, saying "I'm not going to get into specifics."

Although a grand bargain seems unlikely, Obama continued to make the case for a sweeping agreement that lawmakers say would save about $4 trillion over 10 years. "I am still pushing for us to achieve a big deal," he said.

In opinion polls, most Republicans favor a "balanced" approach that involves revenue increases, he said. Republicans from previous administrations also favor that way forward, he added. Now it's time for Republicans in Congress to listen to the American people, Obama said.

"What we're not willing to do is to restructure [Medicare] in the ways that we've seen coming out of the House over the last several months, where we would voucherize the program and you'd potentially have senior citizens paying $6,000 more," Obama said.

House Republicans are saying that they will vote on a package with $2.4 trillion in cuts that includes a balanced budget amendment.

But, Obama, said "if you're trying to get to $2.4 trillion without any revenue, then you are effectively gutting a whole bunch of domestic spending."

"That is going to be too burdensome and is not going to be something that I would support," he said. "You know, just to be very specific, we've identified over a trillion dollars in discretionary cuts, both in defense and domestic spending." That essentially means a freeze in spending.

"And when I say "freeze," that means you're not getting inflation, so that these are programmatic cuts that over the course of 10 years, you'd be looking at potentially a 10 percent cut in domestic spending. Now, if you then double that number, you're then at that point really taking a big bite out of programs that are really important to ordinary folks."

"You're talking then about students accumulating thousands of dollars more in student loan debt every year. You're talking about, you know, federal workers and veterans and others potentially having to pay more in terms of their health care."

Many observers think lawmakers are moving toward a debt ceiling agreement that will give the president unilateral power to raise the debt ceiling, and that such a deal will include spending cuts. It's unclear, however, whether such a package might include Medicare and Medicaid cuts or how large they would be.

After Obama's news conference, an administrative official clarified what Obama meant when he answered the question on means testing.

"Currently, Medicare premiums for doctors and for prescription drugs are already means tested, meaning that couples making over $170,000 or singles over $85,000 (about 5% of Medicare beneficiaries) already pay somewhat higher Medicare premiums,'' the official said in an email. "What the President referenced today was his openness, as part of a potential big deal, to asking Medicare recipients over those high-income thresholds to pay modestly higher premiums. At no point did the Administration express openness to raising premiums on Medicare beneficiaries below those income levels."

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Wary, but Intrigued, Health Insurers Eye a Plunge into the Exchanges

By Jane Norman, CQ HealthBeat Associate Editor

July 13, 2011 -- The health benefit exchanges set to begin operation in 2014 represent a lucrative new $60 billion market in which insurance companies will battle for millions of new customers, says a new report on a survey of health insurance executives and consumers.

Much of the attention on the health benefit exchanges has revolved around their structure and how fast states are moving to set them up, given the deadlines. But the PricewaterhouseCoopers analysis instead looks at a market that's being born and the opportunities it presents both for business and for people new to health insurance who will be covered through the exchanges.

"In the race for members, insurers must first understand these new customers," says the report. "And they need to start now." The analysis projects that 97 percent of people who will enroll in the exchanges don't currently have health insurance, mostly because they can't afford it. Many don't yet understand what an exchange is.

A proposed regulation on health insurance exchanges issued by the Department of Health and Human Services was a sign that the launch of the exchanges is not that far away.

States under the health care overhaul law (PL 111-148, PL 111-152) must have their exchanges ready for HHS approval by Jan. 1, 2013. But the proposed regulation also provides for the agency to issue a "conditional approval" if a state needs to work on information technology and contracting activities beyond Jan. 1.

More than half of the 153 executives surveyed by PricewaterhouseCoopers said their firms will want to sell policies in the individual or small group exchanges, or both. A third are considering it but are undecided. Many insurers may be worried about the design and setup of the exchanges, but at the same time feel like they can't afford to opt out, the survey authors say.

An estimated 12 million Americans will be choosing health insurance policies—mostly online—through the exchanges in 2014, "in a new, tightly regulated marketplace where choice will be king," the report says.

By 2019, that number will grow to 28 million, according to Congressional Budget Office estimates. An estimated $60 billion in premium revenue in the exchange market in 2014 will grow to $200 billion five years later as more people find out about the subsidies.

"Insurers will compete head-to-head for individuals who will be required to buy their product but be able to comparison shop like never before," the report says. "This is a far cry from today's world, where nearly all workers—except federal employees—have few choices of health plans."

It will also require a change in sales approaches for the individual market, toward a more retail-oriented approach and personalized marketing. Insurers will have to earn the loyalty and respect of consumers who will have the power to choose among many companies and products, the authors say.

Of those executives who say their companies are interested in selling in the exchanges, 37 percent said they are not in the individual market now, and 20 percent are not in the small group market.

Concerns Remain

The biggest worry among insurance executives is about adverse selection, or that they will enroll disproportionate shares of the sickest and most high-cost individuals. They are also concerned about technology, and about any plans by states to restrict the types of plans that can be included in exchanges. Just 10 percent of the executives surveyed favored the so-called "active purchaser" model in which a state spells out standards for plans, the report said.

Many of the new enrollees will not have much experience in buying insurance. A PricewaterhouseCoopers survey of 1,000 adults, separate from the executive survey, found that 82 percent of the people in income groups eligible for exchange subsidies did not know they might qualify.

The survey of executives also seemed to confirm fears among brokers and agents that their jobs are in jeopardy because of the law. Insurance executives said they expect 20 percent fewer health policies will be sold by insurance brokers when the exchanges go into effect.

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Health Exchange Risk Programs Would Protect Insurers Against Losses, Consumers Against Adverse Selection

By Rebecca Adams, CQ HealthBeat Associate Editor

June 11, 2011 -- Health and Human Services Department (HHS) officials coupled the recent health exchange regulation with another proposed rule designed to minimize the impact of covering sick, expensive patients on insurance companies.

The federal government proposed to give insurers higher payments for patients whose claims cost more than average so insurers don't have an incentive to avoid covering high-cost patients.

The 103-page regulation includes three components that would encourage insurers to cover high-risk policy holders just as they would those who are healthy. Those elements are:

  • A permanent risk adjustment formula that would pay insurers higher rates for sicker patients, such as those with chronic conditions. The adjustment would apply to those in the individual and small group markets inside and outside of the exchanges.
  • A three-year reinsurance program that would establish a nonprofit to handle temporary payments for insurers that cover patients with high medical claims in the individual market.
  • A three-year risk corridor program that would give insurers inside the exchanges more certainty by limiting losses and gains. Insurers whose claims are at least 3 percent higher than projected would get more federal funding, while those whose costs are at least 3 percent less than projected would get fewer federal dollars.

The public has 75 days to comment on the proposal.

The risk adjustment program is the only one of the three components that is permanent. Payments will essentially transfer money from plans that cover mostly low-cost individuals to those whose enrollees have higher costs. The federal government or the states would calculate the payment formulas. Paying plans with high-cost patients is envisioned as a permanent feature, just as it already is in Medicare, the federal program for the elderly and disabled.

Joel Ario, who directs HHS's exchange office, said that the risk adjustment will "be there to protect what the promise of this law is—that every consumer regardless of their health status can come to the marketplace and get a policy."

Under the health care overhaul law (PL 111-48, PL 111-152) the reinsurance and risk corridor programs were made temporary because lawmakers felt that over time, more people would enter the new exchange program, insurers would have a better understanding of the risks of covering enrollees, and the market would mature.

The law requires that each state establish a reinsurance program to "help stabilize premiums for coverage in the individual market during the first three years of exchange operation," which are 2014-16, according to the rule. The money will come from all insurance plans and third-party administrators of self-insured group plans, who will contribute funds to a nonprofit that will dole out additional money to insurers who have higher claims.

Any insurance company in a state's individual market that was not grandfathered under the law—including plans outside of the exchange—could be eligible for the higher reimbursements. The law calls for states to collectively assess and disperse a total of $10 billion in 2014, $6 billion in 2015 and $4 billion in 2016 for reinsurance, in addition to collecting other funds from insurers, such as $2 billion in 2014-15 and $1 billion in 2016 for the general treasury.

The risk corridor program, which will be administered by the federal government instead of the states, would apply to insurers in the exchange's individual and small group markets during the first three years that the exchange is operating.

"Those are important mechanisms, I think, in the first few years because you do have in most states today exclusionary policies, frankly, that discriminate against people who have health conditions," said Ario on a media conference call. "Many of those people are outside the market. The rules as of 2014 will allow everyone to come into marketplace without regard to their health status. That puts a certain amount of pressure on the marketplace."

The three mechanisms will help smooth the transition and provide more stability in the marketplace for insurers who end up with more sick people than other insurers as well as for insurers who might not be able to predict their risk in the first couple of years, Ario said.

The protections are "primarily designed to limit the downside" for insurers, Ario said. Although risk corridors also could cap the profits of some insurers, he said "primarily the focus is on protecting those insurers who may end up with a risk pool that was not as favor as another insurer's.

States could choose to change the details of reinsurance or risk adjustment from those set out by the federal standards. Any state that decides to make changes would need to publish a notice at least one year before the benefit year begins. The regulation proposes that states that want to modify the parameters publish a notice by March in the calendar year before the effective date.

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Study: Why Cutting Medicare Is So Hard

By John Reichard, CQ HealthBeat Editor

July 14, 2011 -- For years, analysts have issued dire warnings that America's economic future will be threatened if lawmakers fail to control Medicare spending—with relatively little effect. So what exactly explains the gridlock over Medicare?

A new study that analyzes the role played by public and voter opinion finds four basic reasons: Medicare is, in general, popular with the public; most Americans don't want it changed; most Americans think the budget can be balanced without cutting Medicare; and, oh yes, there's the little matter of that special election in upstate New York.

Published in this week's New England Journal of Medicine, the study analyzed 21 polls exploring attitudes toward Medicare. Robert J. Blendon of the Harvard School of Public Health and John M. Benson of the John F. Kennedy School of Government conducted the analysis.

First, they say Medicare has been very popular ever since it was enacted 46 years ago. Shortly before its passage, 61 percent of Americans expressed support for establishing the health care program for seniors and the disabled; a CBS survey this June found that 68 percent of Americans believe Medicare's benefits are worth the cost of the to taxpayers.

The program also is rated highly by those who use it. Fifty-one percent of seniors, most of them covered by Medicare, rated their health coverage as excellent, according to an August 2009 Kaiser Family Foundation poll. By comparison, only 32 percent of Americans below the age of 65 rated their private coverage as excellent.

Second, as indicated by the program's popularity, most Americans don't want it changed much. Only 13 percent say it needs a major overhaul, according to an April 2011 Gallup-USA Today poll.

The House-passed budget plan that calls for restructuring Medicare has attracted the public's attention, Blendon and Benson said. The plan recommends that people entering the program in 2022 get a fixed sum toward premium payments for private health plans rather than a package of guaranteed benefits. Averaging seven polls conducted between May and June, the authors found that 51 percent of those interviewed opposed the plan, authored by Rep. Paul D. Ryan, R-Wis., and 36 percent supported it.

Third, while most Americans believe the budget deficit is a very serious problem, according to a March CBS poll, 54 percent also believe it is possible to balance the federal budget without cutting Medicare. The public wants Congress to find ways to reduce the deficit other than cutting Medicare.

Accordingly, 66 percent of Americans in an April Washington Post survey favored raising taxes on people with annual incomes above $250,000. Seventy-two percent backed cutting foreign aid. Sixty-five percent wanted to reduce military commitments abroad. And 62 percent wanted to limit tax deductions for big corporations.

Blendon and Benson also analyzed reaction to specific types of Medicare changes. Only 13 percent said premiums should be raised for everyone on Medicare, according a Kaiser poll in April, and 23 percent supported cutting Medicare benefits in the future, according to a Quinnipiac University survey also from April.

Other measures were somewhat more popular; 47 percent of Americans in the April Kaiser survey backed gradually raising the Medicare eligibility age from 65 to 67. And a Bloomberg News survey in June found that 41 percent of respondents said payroll taxes paid by employers and employees should be increased to preserve Medicare in its current state.

Fourth, a recent special election that was considered a referendum on the GOP Medicare plan did not go well for the GOP.

"Public opinion is particularly important if it affects the outcome of elections," Blendon and Benson said. In the special U.S. House election held May 24 in New York's 6th District, the winning candidate, Kathy Hochul, ran on opposition to Ryan's proposed Medicare overhaul. Moreover, Medicare was the leading issue for Hochul's supporters. Hochul, a Democrat, won that election in a historically Republican district, an area once represented by Jack F. Kemp.

The analysis also noted that Medicare is particularly important to older voters, who tend to go to the polls in relatively large numbers. Even though older voters would not be affected by the Ryan plan, in all of the polls for which responses were available by age, 59 percent of retirees and people nearing retirement age said they opposed the proposal.

These public attitudes have led "to an intense search by political leaders for innovations in medical delivery, information sciences, payment methods and prevention strategies that might save large sums in future Medicare expenditures without being seen as a threat to current or future Medicare beneficiaries and their families," the study authors wrote.

But they concluded that "if savings from these innovations do not occur in the years ahead, pressures arising from the continuing deficit and Medicare's troubled long-term picture will ultimately force the enactment of a series of policies what will no doubt be seen as painful by many."

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House Republicans Debate Future of IPAB with HHS Secretary

By Rebecca Adams, CQ HealthBeat Associate Editor

President Obama is "in discussion with a number of potential nominees" for the Independent Payment Advisory Board (IPAB), Health and Human Services Secretary Kathleen Sebelius told lawmakers at a hearing. But she suggested that there is no rush to name the board members because it doesn't need to begin work until 2013.

Two witnesses at the House Energy and Commerce Health Subcommittee session—American Enterprise Institute fellow Scott Gottlieb and Georgetown Public Policy Institute professor Judith Feder—said that they had discussed joining IPAB with the administration or congressional staff.
Gottlieb said he wasn't inclined to serve on IPAB. Feder said she had brought it up with the administration because she would be "proud to serve."

At what was a tense hearing, Texas Republican Rep. Michael C. Burgess noted that the $15 million budget for IPAB will become available Oct. 1. Sebelius noted that IPAB's first recommendations are not due until January 2014, and she assured GOP members that "there will be no drawdown of the Treasury of $15 million until there is a board."

The session featured many of the same tensions over both IPAB and each party's Medicare proposals that were evident in the House Budget Committee hearing. Sebelius criticized the House GOP budget resolution, saying it "shifts costs onto seniors" and "does contemplate an end to Medicare as we know it" because it marks an "end to guaranteed benefits."

"It'd be a voucher system in a private insurance market," Sebelius said.

The secretary was then lectured by Republicans, who said she should use the phrase "premium support" to describe their plan because the term "voucher" is inaccurate and pejorative.

Jan Schakowsky, D-Ill., later said that Medicare should not continue to use its name under the GOP budget proposal, saying it could be called "Sorta Care or Maybe Care or I Don't Care but it's not Medicare anymore," because it would guarantee a contribution toward beneficiaries' coverage, but not a long list of benefits.

The two parties also mostly disagreed over IPAB, although subcommittee ranking Democrat Frank Pallone Jr. of New Jersey said that he also would like to get rid of IPAB.

"One of the reasons I'm opposed to IPAB," Pallone said, is that "I thought in the Affordable Care Act that we did a very good job of keeping costs down . . . We don't need IPAB."

He also said he is concerned that IPAB would be similar to the Base Realignment and Closure Advisory Committee (BRAC) process, which he called "totally stacked against Congress."

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