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June 22, 2015

Washington Health Policy Week in Review Archive 74492ae5-a5ce-471e-9d4a-0e6c6227e298

Newsletter Article


Repealing Health Law Under Dynamic Scoring Increases Deficit, CBO Says

By Melissa Attias and Paul M. Krawzak, CQ Roll Call

June 19, 2015 – Last week, the Congressional Budget Office (CBO) estimated that repealing the health care law would increase the federal deficit by $137 billion from fiscal 2016 to 2025 using a dynamic score, compared to $353 billion under traditional scoring practices.

The $216 billion difference is a result of the economic growth that is expected to follow a repeal of the 2010 overhaul largely because the number of hours that people work would increase. The nation’s economic output is projected to grow by about 0.7 percent on average between fiscal 2021 and 2025.

The projection is the first dynamic cost estimate produced by the CBO and the Joint Committee on Taxation (JCT) since new congressional rules requiring scoring took effect last month. The fiscal 2016 budget resolution (S Con Res 11) requires CBO and the JCT to incorporate dynamic analysis into the official cost estimates of major legislation.

If a dynamic score had shown that repealing the law would save money, Republicans would have had new ammunition in their push for full repeal, which they’re expected to attempt through the budget reconciliation process.

But the finding that repeal would increase the deficit even under dynamic scoring raises the question of the feasibility of using reconciliation to repeal the health care law, since the GOP-written reconciliation instructions require legislation that would reduce the deficit by at least $2 billion to $3 billion over the next decade.

In their report, CBO and the JCT said the $137 billion cost was their best estimate under the new method, even as they cautioned that projections could shift substantially in either direction.

“The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period—or could increase deficits by a substantially larger margin than the agencies have estimated,” the scorekeepers wrote.

Scrapping the law would increase the number of nonelderly people without health insurance by about 19 million in fiscal 2016 compared with the number of people who would be uninsured if the health law stays intact. The number of people without insurance would grow to 22 million more than under current law in fiscal 2017, and gradually rise to about 24 million more uninsured Americans from fiscal 2020 through 2025.

The estimate is the first estimate of the health law produced by newly installed CBO director Keith M. Hall, who served in the George W. Bush administration.

The estimate comes as the Supreme Court is poised to determine whether the law’s subsidies to help low- and middle-income Americans afford coverage should be available in the 34 states that use the federal insurance exchange.

The scorekeepers noted that their estimates assume that subsidies are available in every state. If the justices rule in King v. Burwell that subsidies are not legal in states that didn’t build their own exchange, that calculus could change. “The magnitude of such changes would depend on the specifics of the court’s ruling,” they said.

Repealing the law would increase GDP by .7 percent between fiscal 2021 and 2025 in part because under the law, people would no longer feel compelled to work in order to gain health coverage or afford coverage.

The health law provides subsidized coverage for lower-income and middle-class people.

"Those subsidies, along with expanded eligibility for Medicaid, generally make it easier for some people to work less or to stop working without losing health insurance coverage," the report said.

Because more people would need to work if the law was repealed, the higher employment would result in more taxable income, and more taxes paid to the government, which would reduce the deficit.

The CBO said a repeal "would probably" increase deficits in subsequent decades as well.

Enzi, who requested the report, stressed that a repeal would expand the economy. "While CBO’s report notes that the deficit impact of repealing the law is highly uncertain, and could even reduce the deficit, it does show that repealing this law will boost nationwide employment and grow the economy," he said in a statement.

But in a separate statement, House Minority Leader Nancy Pelosi, D-Calif., said the report is "very clear."

"Any way you slice it, repealing the Affordable Care Act (ACA) will add hundreds of billions of dollars to the deficit."

The report found that repealing the health care law "would cause federal budget deficits to increase by growing amounts after 2025, whether or not the budgetary effects of macroeconomic feedback are included." That would occur because the savings from repealing the law's insurance coverage provisions would grow more slowly than the costs of repealing the ACA's other provisions—in particular the cuts to Medicare payments that help pay for coverage.

The agency added that the "estimated effects on deficits of repealing the ACA are so large in the decade after fiscal 2025 as to make it unlikely that a repeal would reduce deficits during that period, even after considering the great uncertainties involved."

Sources of health coverage are also projected to shift under repeal. If the health law were repealed, in most years in the budget window the number of people who receive their insurance through an employer would rise by about 8 million while the number with coverage through Medicaid or who buy it individually would drop by a net 30 million to 32 million.

In July 2012, CBO and JCT estimated that similar repeal legislation would boost the deficit by $109 billion over 10 years under traditional scoring practices. They attributed the significantly higher deficit estimate mostly to a shift in the budget window that brings in later years when repeal would sharply increase budget deficits.

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CBO Estimate Complicates Republican Plans for Reconciliation

By Paul M. Krawzak, CQ Roll Call

June 19, 2015 -- The Congressional Budget Office’s (CBO) finding that repealing the 2010 health care law would add more than $100 billion to the deficit even when dynamic scoring is used shows the challenge that Republicans face in moving a repeal through reconciliation.

Reconciliation would allow a repeal of the Affordable Care Act to pass the Senate with a simple majority rather than the usual 60 votes, negating the need for Democratic support. But the Republican written reconciliation instructions require any measure that is moved through the expedited procedure to reduce the deficit. 

The CBO and Joint Committee on Taxation said in their analysis that even when including the economy-expanding effects of a repeal as measured through dynamic scoring, a full repeal of the law would add $137 billion to the deficit over the next 10 years. That means Republicans would have to write repeal legislation which, unlike the generic repeal bill assumed by the CBO, would reduce the deficit between 2016 and 2025. 

But the task is even more complicated than that. The report said that in the decade after 2025, repeal would result in an increase in the deficit of about 1 percent of GDP. That, too, poses a challenge to reconciliation, since the Byrd Rule in the Senate provides for a point of order against any reconciliation bill that would increase the deficit in future years following the 10-year budget window. 

That means Republicans have to come up with a repeal bill that not only reduces rather than increases the deficit over the next 10 years, but one that does not produce additional red ink in subsequent years.

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House Moves to Scrap Obamacare Medical Device Tax

By Melissa Attias, CQ Roll Call

June 18, 2015 -- Legislation that would scrap the health care law’s 2.3 percent excise tax on medical devices is on its way to the Senate after the House endorsed it in a recent bipartisan vote. Another bill to get rid of the law’s still-unappointed Medicare cost-cutting board is poised to follow next week.

The House passed the device tax repeal (HR 160) 280-140, with 46 Democrats joining a united Republican caucus in support of the measure.

Lawmakers are also planning to debate legislation soon that would repeal the so-called Independent Payment Advisory Board (HR 1190) and offset the cost with cuts to the health law’s prevention fund. A vote will take place the week of June 22.

Both components of the 2010 health law have long been targeted by GOP lawmakers, who moved repeal bills through the House in past Congresses, and are opposed by a number of Democrats. But the Obama administration threatened to veto the measures earlier this week, charging that the device tax bill “would increase the deficit to finance a permanent and costly tax break for industry without improving the health system or helping middle-class Americans.”

The tax, which took effect in 2013, applies to a wide range of medical devices with exemptions for items that are usually purchased by an individual at retail, such as eyeglasses and hearing aids. It was included in the law to offset some of the costs of the health coverage expansion. The medical device industry has made repeal a top priority.

Getting rid of the provision is estimated to cost about $24.4 billion from fiscal 2015 to 2025, according to the Joint Committee on Taxation staff. But the House-passed version incorporated an amendment from Ways and Means Chairman Paul D. Ryan, R-Wis., that would exempt the measure from the pay-as-you-go budget rules, allowing it to pass without an offset.

That move drew the ire of the nonprofit Committee for a Responsible Federal Budget and may have diluted some Democratic support for repeal, though other Democrats defend the tax by maintaining that the industry benefits from the law.

“Now they’re coming forth and saying, ‘just take us out of it,’” Sander M. Levin of Michigan, the top Democrat on the Ways and Means Committee, said in remarks for the House floor. “That’s unfair, unwise, irresponsible, and sets a pattern that will do what Republicans really want to do, which is to pick apart this reform which has been 75 years in the making.”

Opponents of the tax say it takes away jobs, hurts innovation and reduces access to life-saving technologies. In a letter to House leaders, the presidents of the American Association of Neurological Surgeons and Congress of Neurological Surgeons said they “enthusiastically support” passage of the repeal bill.

“Because our specialty is so highly dependent on advances in medical technology, repealing the medical device tax is among neurosurgery’s top legislative priorities,” they wrote.

The vote comes as the Supreme Court is poised to determine the fate of another piece of the 2010 health care law–its subsidies to help low- and middle-income Americans afford coverage. The justices are expected to rule by the end of the month on whether those subsidies can continue in the 34 states that use the federal insurance exchange.

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House Call Program Shows $25 Million in Initial Savings, CMS Says

By Kerry Young, CQ Roll Call

June 18, 2015 -- Medical professionals making in-home visits to the frail elderly produced more than $25 million in savings in the first year of a federal test program that also showed a trend of reduced hospital readmissions, according to the Centers for Medicare and Medicaid Services (CMS).

"These results support what most Americans already want--that chronically ill patients can be better taken care of in their own homes," Andy Slavitt, the acting CMS administrator, said recently in discussing the agency's Independence at Home demonstration project.

Slavitt described the approach as "a great common sense way" to improve the quality of care provided to Medicare beneficiaries. The three-year effort enrolls practices that can make in-home visits and work to coordinate care of people in the health program. Nine of the 17 organizations that participated met their spending targets in the first year, allowing them to receive bonus payments ranging from $275,427 for Doctors Making House Calls of North Carolina to $2.9 million for the Visiting Physicians Association of Michigan, according to CMS.

Other participants in this effort include Boston Medical Center and Cleveland Clinic Home Care Services, which didn't meet the bonus targets in the first year.

The Independence at Home project is part of broader efforts within CMS to study whether greater coordination of care will produce the expected savings and improvements in health. While there's strong bipartisan support in Congress for moving Medicare away from its strong reliance on fee-for-service payments, Democrats and Republicans disagree on how best to do it.

House GOP appropriators, for example, recently tried to derail the CMS' Innovation Center, which runs the Independence at Home program and other projects meant to test different approaches to care. The Labor-Health and Human Services-Education subcommittee approved this draft measure in a voice vote, with Democrats objecting to the measure. The bill would rescind $6.8 billion from the Innovation Center, which is roughly the balance remaining from the $10 billion provided for it by the 2010 health law.

Such cuts are unlikely to become law as long as President Obama remains in office. But they signal that Republicans may block any attempt to renew funding for the Innovation Center when the initial $10 billion tranche is exhausted. For Rosa DeLauro of Connecticut, the ranking Democrat on the House Labor-HHS panel, the announcement from CMS about the early results of the Independence at Home program provides yet another reason to defend the Innovation Center.

"I have long made the case that the Innovation Center can improve quality and reduce costs, and today we are seeing evidence of that," she told CQ HealthBeat in a statement. "To take away its funding is short-sighted and foolish. I will continue to fight for this important project to be fully funded."

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CMS Boosts Assistance for Marketplace Health Insurers

By Rebecca Adams, CQ Roll Call

June 19, 2015 -- Health insurers who offer plans in health law marketplaces will get more federal assistance for sick, expensive-to-treat patients, the Centers for Medicare and Medicaid Services (CMS) announced last week.

The extra assistance for the 2014 benefit year is available because CMS collected more money from insurers than the federal government expects to send back to the plans.

The 2010 health law provided three types of programs to help protect insurers from unexpected losses and entice them to offer coverage in new marketplace plans. One of those programs, the reinsurance program, gives money to insurers for sick patients with expensive medical bills. The money for the reinsurance program is funded by a tax on health insurance premiums of $63 per person.

CMS is expected to take in about $9.7 billion by Nov. 15, 2015. The next open enrollment period for 2016 is expected to start on Nov. 1, 2015. CMS officials projected that there will be money left over that could be used to cover more of the costs of insurers.

The federal government will use the extra money to pay insurers all of the costs, instead of 80 percent of those costs, within certain guidelines. Currently, the federal government pays 80 percent of expenses in high-cost cases that total $45,000 or more, up to a cap of $250,000.

The reinsurance program, along with another program known as the risk corridors program, drew some criticisms from some congressional Republicans who questioned the additional funds, even though the reinsurance program is essentially funded by insurers. The reinsurance money expires after 2016.

Health insurers applauded last week's announcement.

"This flexibility will ensure health plans can address the needs of enrollees managing multiple chronic conditions while making individual market premiums more affordable for consumers," said America's Health Insurance Plans spokeswoman Clare Krusing.

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Electronic Records Limit Docs' Contact with Patients, Panel Is Told

By Melanie Zanona, CQ Roll Call

June 16, 2015 -- Although electronic health records (EHRs) can improve the quality of care, some health experts warn that overly burdensome documentation requirements are forcing doctors to spend more time on computers at the expense of interacting with their patients.

"Complaints of increased time burdens on the practitioner, loss of provider interactions with patients and frustration with new requirements and changed workflows dominated discussion among providers, even as the capability of EHR's to reduce errors and improve communication had grown," said Boyd Vindell Washington, president of Unified Medical Group and chief medical information officer of Franciscan Missionaries of Our Lady Health System, told the Senate Health, Education, Labor, and Pensions Committee last week.

The Senate panel is holding a series of hearings to explore ways to improve a $30 billion federal program meant to encourage the adoption of electronic health records. The 2009 stimulus package (PL 111-5) created the Meaningful Use Program to incentivize doctors and hospitals to use electronic medical records. But physicians have struggled to meet the first two phases of requirements. The final rule for the next stage is expected this fall.

One of the major concerns identified in last week's hearing is that existing documentation requirements for quality and billing information are overly burdensome and time-consuming for doctors, which can make the recording requirements more like a "glorified progress note," said Meryl Moss, chief operating officer of Coastal Medical in Providence, R.I.

"They're working well into the evening," said Moss. "What we found is that the record itself drove all the work to them."

Panelists said the current documentation requirements are modeled after the old paper system, such as a requirement that physicians check boxes to demonstrate providers reviewed data or performed tests. They said the rules can be redundant and unnecessary.

Such requirements "place unnecessary burdens on providers and do not substantially improve the care," Washington said. "As the industry switches from volume to value, the importance of documentation as a check and balance should lessen and providers should be rewarded more for expected outcomes."

Some of the recommendations to address the problem include streamlining the documentation requirements, adjusting the standards to be more consistent with the electronic world and allowing certain information to be entered by someone other than the doctor, such as a nurse or an aide.

Bill Cassidy, a physician who chaired the hearing, also said doctors spend too much time focusing on medical records as opposed to interacting with their patients. The Louisiana Republican pointed to how doctors determine whether a patient has received an appendectomy, saying younger doctors are more likely to just rely on what a medical record says while older doctors are more likely to look for a physical scar on the individual.

"As a physician, time is better spent looking into a patient's eyes . . . as opposed to clicking through a computer screen to document something unimportant to her and required by someone far removed from the exam room," Cassidy said.

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