Reg's Blog

Senior and Post-Acute Healthcare News and Topics

CMS Releases Proposed New SNF Rule

Concurrent with the White House Conference on Aging, CMS released its “proposed” rules of reform for the SNF Conditions of Participation.  The proposed rule is set for publication tomorrow in the Federal Register but readers with interest can access the document/PDF on this site on the “Reports and Other Documents” page.  The Federal Conditions of Participation for SNFs have not undergone substantial revision or update since 1991 (OBRA implementation and PPS).  A portion of the impetus for the update is the continued roll-out of the various pieces of the ACA (Obamacare).  Within the ACA are several directions to the Secretary of Health and Human Services to make modernization recommendations and regulatory updates for all provider segments within the Medicare/Medicaid domain.

In researching the content for this post and reviewing the released document (402 pages), it seemed the best use of space and the most expeditious for readers/followers that I summarize the “impactful” elements rather than regurgitate the content of the document.  In so doing, I need to preference my summary with a bit of a preamble.

The document is a release of “proposed” rules not concretized rules.  There is a lengthy comment period and the final rule will morph from this release.  While I won’t profess to have a crystal ball, I have certain insight and 30 plus years of experience so I think my summary will provide a solid look into what the salient changes are and what is likely to happen.  The latter is for another post and a planned webinar (watch for details).  The key to remember for anyone reading this post and any other information that is current and forthcoming regarding the proposed rule is that this is the “macro” level; the finite level is the implementation and the survey and enforcement data otherwise known as Interpretive Guidelines.  What you see now, read now, etc. is and will be a far cry from how the same (when final) is interpreted at the facility level and enforced.  I can’t emphasize this point enough as anyone who has a similar history to me knows, the stuff in the Federal Register as the actual law can be widely and sometimes, astoundingly interpreted and enforced at the ground level (again, fodder for another post).

To begin: What is proposed to change is an actual bifurcation of clarifications and new elements.  Oddly enough, there isn’t a tremendous amount of overhaul moreover, language changes and “modernizations”. In certain instances, the words are just references to current industry vernacular such as “care transitions” rather than transfer and discharge.  Resident Rights are also a section where nothing substantive changes other than references and language.  Ironically (and I could run a fun contest here), a number of proposed changes are nothing more than an incorporation of what I have seen evolve as survey tasks and enforcement tasks (current) that aren’t really tied (bright line) to current law.  (Feel free to comment to this post if you see some of these ironic elements in the proposed rule).  So, without further dribble, here is what my summary of the key proposed changes.

  • Transitions of Care: There are two elements of change – one in 483.15 (Transfer, Discharge) and the other in 483.30 (Physician Services). First, any transition from the SNF to any provider will require additional documentation to accompany the resident such as present illness, reason for transfer, medical history, etc. This isn’t major.  The major element is for any non-scheduled hospital transfer, the rule would require an in-person evaluation of the resident prior to the transfer by a physician, physician assistant, or advance practice nurse (qualified nurse specialist or NP).  This means the 2:00 AM transfer to the hospital for an urgent/emergent condition could not occur without one of the aforementioned individuals being “on-site” and certifying the need for the discharge.  I believe this element will either evaporate from the final rule or be substantially changed and better defined.  It is not only impractical but frankly, in rural areas, etc., completely improbable and virtually impossible (heavy emphasis on “virtual’ as that is the only way it could occur, via tele-medicine).
  • Care Planning: A new section is added titled “Comprehensive Person-Centered Care Planning” that will require an initial care plan in 48 hours, an expanded definition of Interdisciplinary Team to include a CNA, a food service/nutrition staff member and a social worker. The rule also proposes to implement the requirements of the IMPACT Act (Improving Medicare Post-Acute Care Transformation Act) as pertaining to discharge planning (med reconciliation to include pre-admission meds and current meds plus OTCs, discharge summary recommendations for follow-up care, resources and information for the resident regarding his/her discharge plan, etc.  I believe this element will remain in the final rule, substantially unchanged.
  • Nursing Services: The proposed rule would incorporate a competency requirement for determining sufficient number of staff based on a facility assessment which incorporates number of residents, acuity, diagnoses and careplans.  This one I see changing quite a bit as it is so vague and potentially fraught with huge implementation and oversight problems.  It also as written, is a bit confusing and disconcerting in terms of a survey element.
  • Behavioral Health: This is proposed as a new section.  It, similar to Nursing Services prior, would require a facility assessment to determine direct care staff needs regarding staff competency and skill sets to meet resident psychological and mental health needs.  Again, I see this changing dramatically as it is horribly vague and fraught with implementation challenges.
  • Pharmacy Services: The proposed rule includes a required 6 month pharmacist review of resident medication regimes and upon admission when the resident is new and post-hospitalization (return). and monthly when the resident is on an antibiotic, psychotropic drug or any other drug that a QAA (Quality Assurance) committee requests the pharmacist review.  Irregularities are to be noted and reported to the attending physician, the medical director and the director of nursing.  Attending physicians are then to document that the irregularity was reviewed and any action taken/not taken plus the reasoning for the action.  I see this fundamentally staying with some clarifications.
  • Dental Services: The “big” shift is the proposed requirement that facilities are prohibited from charging a Medicare resident for loss or damage of dentures, if the facility is responsible for the dentures.  I’m not sure where this will fall out but if it remains fundamentally intact, facilities will be paying for lots of dentures, regardless of how the loss or damage occurred.
  • Food Service: Following thematically with other elements in the proposal, the requirement is for a facility to assess the resident population by care needs, diagnoses, acuity and census and employ sufficient staff with sufficient competency to provide food and nutritional services.  A Director of Food Service in the proposal must meet certain education and training requirements such as Certified Dietary Manager, Certified Food Service Manager, have at least an Associate’s degree in food service management or similar from an accredited institution.  The proposal also requires facility menus to be reflect the cultural, religious and ethnic needs and preferences of residents, be periodically updated and not limit the resident’s right to make food choices.  In addition, facilities will have to allow residents to consume and store foods brought by visitors and families.  I see major changes forthcoming in this requirement, especially around the staff adequacy determination, menus and food brought into the facility by visitors and families.  The latter is a huge infection control risk.
  • QAPI: This requirement is added anew – not surprising.
  • Facility Assessment: This also is a new element requiring the facility to conduct and document a facility-wide assessment to insure the resources necessary to care for residents are available daily and in emergencies.  This assessment must be updated regularly.  The assessment must address the resident population by number, overall care delivered and the staff competency to provide the care and meet resident preferences plus incorporate a facility-based and community-based risk assessment.  I see this element changing dramatically as it is vague and potentially problematic to enforce and implement.
  • Binding Arbitration Agreements: The rule will require facilities that use such agreements to meet certain requirements. Chief among the provisions is that a resident and/or his/her legal representative cannot be required to sign the agreement upon admission.  Additionally, the agreement must indicate the resident’s right to communicate with federal, state and local officials (regulatory) including Ombudsmen. I do not see much change in this element.
  • Infection Control: In addition to having an Infection Control Program the facility would be required to have an Infection Control Officer and this individual’s primary responsibility must be infection control. I see the Infection Control Officer element subject to change.
  • Compliance and Ethics Program: This is a new element requiring the operating organization (not just the facility if part of a larger organization) to have at each facility a compliance and ethics program with written standards, policies and procedures such that the same are capable of reducing criminal, civil ad administrative violations.  I see this element staying but changing to be a bit more definitive and relevant.
  • Staff Training Requirements: This is also a new element requiring facilities to develop, implement and maintain for all staff, a training program that encompasses (minimally) the following (I don’t see much change in this requirement);
    • Communication
    • Resident Rights and Facility Responsibilities
    • Abuse, Neglect and Exploitation
    • QAPI
    • Compliance and Ethics
    • Ongoing education for CNAs in dementia education and abuse prevention (12 annual hours minimum)
    • Behavior Health Training

The estimate provided by CMS for implementation cost at the facility level is $46,491 in the first year, $40,685 in the following year totaling $729 million industry-wide in the first year.  I guarantee that these numbers are light by 50% or more and in stable to declining reimbursement periods (now and going forward), this will be the driving point the industry will use in lobbying Congress, among the other points noted herein.

 

July 15, 2015 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , | Leave a comment

Post-Acute Compliance 2015: OIG Targets

As is customary in late fall, the Office of the Inspector General (OIG) of the Department of Health and Human Services released its Fiscal Year work plan.  As a reminder or preface, the work plan is the summary of investigations and focal areas the OIG plans to undertake in the upcoming fiscal year and beyond to ensure program efficiency and integrity and to identify and prevent fraud, waste and abuse (the latter is the most relevant activity).  Each provider segment reimbursed by Medicare is covered, some more so than others depending on the prevailing nature of program expenditures.  As of late (most recent years), the post-acute sector is targeted principally due to the outlay/expenditure growth (Medicare) for hospice, home health and skilled nursing care.

Below is the categorical highlights (not exhaustive) found within the 2015 Work Plan (the full plan can be found here ( https://oig.hhs.gov/reports-and-publications/archives/workplan/2015/FY15-Work-Plan.pdf ;

Skilled Nursing Facilities

  • Medicare Part A Billing: Scrutiny on claim accuracy and appropriateness of billed charges, particularly focused on therapy utilization and RUGupcoding.  Recent False Claims Act cases withExtendicare illustrate how the OIG views Medicare payments for inappropriate utilization and for care that is clearly inadequate.  This is a major risk area for providers and no SNF should discount the exposure, particularly if any of the following elements within the organization’s operations are present.
    • Therapy services provided by an outside contractor.  The OIG has identified previously that there exists a correlation between certain therapy agency contractors and patters of upcoding.
    • Disproportionately higher (as a percentage of census/payer mix), Medicare utilization.  The common threshold level is 30% or lower of total census.  Higher Medicare days as a percent of overall payer mix is a red flag for the OIG or an outlier.
    • Low overall Part B therapy utilization.
    • Skewed RUG distribution where the majority of days are falling the highest paying therapy RUGs (particularly ultra-high with moderate to minimal ADL scores – minimum/moderate assist levels)
    • Longer length of stays at higher RUG levels – minimal or infrequent Change of Therapy without corresponding Change of Conditions or vice-versa.
  • Medicare Part B Billing: The converse to the point previous is enhanced focus by the OIG on over-utilization or inappropriate utilization of Part B therapy services when Part A is exhausted or unavailable.  The OIG has noticed a trend for providers wary of Part A scrutiny to shift utilization to Part B. Again, the focus is on inappropriate billing patterns and utilization trends above or beyond, the historical norm.
  • State Agency Survey Reviews: The OIG plans to review how frequently and how well, state survey agencies reviewed and verified, facility plans of correction for completeness and compliance.  The gist: enhanced/additional federal look behind visits and desk reviews.
  • Hospitalizations: The OIG intends to review the hospitalization trends of SNF patients, identifying patterns of utilization for manageable or preventable care issues. A 2011 review found that 25% of Medicare SNF patients were hospitalized in a given year and the OIG is of the opinion that a percentage (likely sizable) is preventable and potentially, indicative of quality problems at the SNF level.

Hospice

  • Hospice in Assisted Living: The OIG will monitor the continued growth trend of hospice care provided in Assisted Living facilities.  Part of this initiative is couched in the requirement within the ACA for the Secretary (of HHS) to reform the hospice payment system.  The OIG indicates that it will gather data on hospice utilization, diagnoses, lengths of stay, etc. for residents in Assisted Living facilities.  Medpac has noted that for many providers, particularly the larger national chain organizations, that hospice care in this setting is typified by longer stays and thus, monitoring is warranted.
  • General Inpatient Care: OIG will continue to monitor the utilization of General Inpatient Care within the hospice benefit for appropriateness and potential abuse.  As General Inpatient Care pays a higher per diem and many hospices maintain their own inpatient units, the concern on the part of OIG is misuse or abuse for payment or, to mitigate (agency) staffing shortages where the better alternative for the patient is Continuous Care.

Home Health

  • Reimbursements/Payments: The OIG will continue to monitor payments made to agencies principally for accuracy.  Prior investigations by the OIG identified that at least on in four claims were incorrect and potentially, fraudulent.  This initiative is a continuation of ongoing concerns by the OIG of excessive fraud and or waste in the Home Health sector principally due to improper application of the Medicare benefit and lack of substantiated medical necessity and/or supported clinical documentation of appropriateness of care (e.g., therapies particularly).

LTAcHs and Inpatient Rehab Facilities

  • Adverse Events: The OIG is targeting both settings for an analysis of adverse events/temporary harm circumstances to patients in the setting (falls, infections, etc.).  Inpatient Rehab Facilities provide 11% of post-acute inpatient therapy services and growth over the past decade or so has been consistent and steady.  Questions however have arisen regarding the actual value of such care compared to the care received in an SNF. The SNF is reimbursed substantially lower than the IRF even though many SNFs staff sufficiently to provide the same level of therapy services (up to 3 hours per day).  Similar concerns have risen within the LTAcH setting as to cost vs. outcome and quality, particularly as compared other setting comparable, lower cost settings such as SNF.  There continues in Washington, a generalized view that post-acute payment reform is overdue, particularly given the rapid expansion of the sector.  Within the payment reform movement is the growing view that setting differentiation and thus payment differentiation at the inpatient level is no longer warranted and consolidation is required to rid the excess capacity and reward economically efficient providers that demonstrate higher quality outcomes (SNFs in particular as well as rural swing bed hospitals and to a lesser extent, home health providers and outpatient providers).

December 10, 2014 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

CMS Announces Final Rule for Hospice Payments for 2015

Yesterday, CMS confirmed the details of an earlier published proposed rule (May) set for publication on August 22, 2014 (final rule) regarding FY 2015 hospice payments.  Anyone wishing a copy of the Federal Register text, please contact me as provided on this site (either via comment or contact info. in Author page).  As is always the case with these final rules, CMS addresses multiple components of the programmatic rules, not just payment.  In other words, the “benefit” (coverage, eligibility, payments, etc.) are often adjusted or modified to codify other legislation (the ACA for example) or recommendations for congressional hearings and Medpac.  Such again is the case for Hospices.

A summary of the key provisions in the final rule are as follows.

  • Payment: Hospices will receive on average, an increase of 1.4% in reimbursement.  This is a function of a 2.1% increase in the market basket (inflation) minus a .7% in overall payments resulting from the 6th year of the 7 year phase-out of the BNAF (Budget Neutrality Adjustment Factor).  The 1.4% is applied to daily home care rate and the resulting rates for GIP and Continuous Home Care are $708 and $930 per day respectively.
  • Quality Reporting: Introduced in 2014, hospices are required to report certain quality measure data to CMS.  Failure to report the data equals a 2% reduction in payments.  For 2015, no new quality measures are forthcoming although CMS is requiring that all hospices participate in the CAHPS (Hospice Survey)/Hospice Quality Reporting Program for one month in the first quarter of 2015 and then monthly for April through December for payment implication in 2017 and then collect survey data Payment implications in 2018 require data collection for every calendar month in 2016.
  • Attending Physicians: Hospices will be required to identify the patient’s attending physician on the Election Form – at the time the patient elects the Hospice Benefit.
  • Notice of Eligibility/Notice of Termination: CMS defines prompt filing as 3 days after election or 3 days post revocation/termination.
  • CAP Determinations: CMS is requiring all hospices to finalize their aggregate cap calculations within 5 months after the CAP year-end (March 31) and re-pay any overages accordingly.  They are not issuing any requirement for such calculations on the inpatient cap.
  • Guidance on Hospice Eligibility: CMS issues further guidance on how a hospice should determine eligibility for hospice; essentially the determination of terminality.  The benefit requires the patient to be terminally ill and death to most probably occur within  6 months or less.  The guidance is that the Hospice Medical Director should consider the terminal diagnosis, the health conditions of the patient related or unrelated to the terminal condition and all other current clinical data relevant to the diagnoses. The point in this provision is CMS stating that physician’s must use clinical relevancy as the means for determining appropriate/inappropriate by “terminal” likelihood.

Finally, the ACA requires the Secretary of DHHS to make recommendations regarding benefit reform and begin the same thereto, no earlier than October 31, 2013.  Nothing in the rule gives any indication of wholesale movement toward payment reform.  The glimpses remain the same in the discussion sections of trends in utilization patterns; primarily declining Continuous Care stays and increasing live discharges.  As before, the outlook appears to be for a payment system that is bell-shaped – higher in the first days of the stay, moderating at stability, and again higher at the end or near death.  CMS shows nothing about how this might work other than to continue to make vague references to a system similar.

August 5, 2014 Posted by | Hospice | , , , , , , | Leave a comment

Hospice and the Medicare Care Choices Model: A Progressive Approach?

About a month ago (mid-March), CMS introduced a pilot program called the Medicare Care Choices Model.  Basically, this pilot program will allow Medicare beneficiaries to access, via certain participating hospice organizations, dual benefits; hospice and curative treatments, concurrently.  Under the current Medicare Hospice Benefit, a patient with a terminal illness or condition, certified likely to die in 6 months or less by a physician, can enroll into the Hospice Benefit but in doing so, forgoes the traditional coverage for curative treatments under traditional Part A.  Essentially, by electing the Medicare Hospice Benefit, the patient has decided not to pursue an aggressive path of cure or curative interventions or treatment (chemotherapy, radiation therapy, artificial hydration/nutrition, etc.) opting instead for palliative care, symptom management, and a progressive path toward natural death.

In the Medicare Care Choices Model, Hospices that apply and are selected to participate in the program will provide services available under the Medicare hospice benefit for routine home care and inpatient respite levels of care that are not separately billable under Medicare Parts A, B, and D.  The services must be available 24 hours per day and across all calendar days per year.  CMS will pay a $400 per beneficiary per month fee to the participating hospices for these services.  Providers and suppliers furnishing curative services to beneficiaries participating in Medicare Care Choices Model will  continue to bill Medicare for the reasonable and necessary services they furnish.  Per CMS, the ideal hospice applicants for program participation can demonstrate a history of providing care/case coordination to patients, across a continuum of providers and suppliers.

Returning to the title of this post: Is this progressive on the part of CMS?  The truth  is best answered – “not really”.  There are a number of current issues with regard to the Medicare Hospice benefit, care utilization, end-of-life care in general, and yes, the ACA at play.  Under the ACA/Obamacare, the Secretary of HHS has a mandate to implement changes to the Medicare Hospice benefit no earlier than October 1, 2013. Abt and Associates (consultants) has been gathering and analyzing data on lengths of stay, place of care, length of stays in hospice by diagnosis, costs of care, etc.  The Medicare Care Choices Model is in certain respects, a trial balloon element in the process of overhaul for the Medicare Hospice benefit.

Another operative element or issue and one that hospices are all too familiar with of late is the utilization pattern changes that are occurring across the spectrum of end-of-life care.  Hospice referral patterns haven’t changed much but the nature of the referral has.  Additionally, census trends for most hospices are flat and when viewed with/against lengths of stay, the trends are actually “down”.  In short, an evolving dichotomy for hospice referrals is occurring.  The referrals are modestly increasing in many urban/suburban regions but at the expense of the length of stay.  The patient is finally referred at the end of his/her life, after all curative options are exhausted.  Per CMS, 44 percent of Medicare patients use the hospice benefit at end-of-life but in a continuing pattern, at the end of life resulting in shorter and shorter stay increments.

Back to the question in the title of the post, this initiative is less about promoting or integrating hospice earlier, though the outcome of earlier intervention could occur.  What CMS is tinkering with or intending to impact, is the continued growth of very expensive medical care in the last months of life.  The two greatest drivers for Medicare spending in the U.S. are the cost of caring for “lifestyle” diseases (chronic diseases such as Type II diabetes) and care provided within the last six months of a person’s life.  The latter is the target for this program.  The premise is as such.  If, by integrating hospice into the equation sooner, having removed the curative or interventional obstacle, patients will transition earlier to palliative care, foregoing certain last rounds of inpatient, interventionist care and thereby, save the government money.  The patient and the curative care team (the physician, hospitals, etc.) will be less loathe to refer to hospice and address the prospect of treatment futility (even though that prospect is real) since, under this program, the patient may continue to pursue as much interventional and curative approaches as desired.

My quick analysis is that this program, while a novel approach, doesn’t really achieve any of the objectives intended (savings, better care, easier transitions, earlier transitions, more appropriate care, etc.). My reasons and conclusions are as follows;

  • The issue of when a patient chooses to opt for end-of-life care versus curative care is more an American cultural/social issue than a public policy issue.  As Americans, we are inculcated that death is bad, life is premiere.  Our health insurance, especially now with ACA reforms, has virtually no limits on the treatment we can access (no lifetime minimums and no pre-existing condition limitations).  Our media (television, print, other) is full of advertisements of procedures, drugs, providers that offer hope and cure.  Watch a Cancer Treatment Center of America spot – a prime example.  Physician specialists aren’t trained to forego what may clearly be futile care but instead, to press forward and to convey options and hope.  In fact, the number of physician specialty groups that I have spoken with over the years validates this point emphatically: “Hospice is futility. We provide hope”. This element is the leading cause of late stage referrals when in validation, futility is truly evident as the patient is nearly dead or the final rounds of whatever treatment have shown no result.
  • There is no financial incentive to change or alter the care provided.  In the Choices model, the patient may access curative care and receive hospice services.  The hospice receives $400 more per month (for care coordination) and all other provides bill Medicare for their interventions, services, etc.  If CMS is relying on the care coordination skills of the hospice to facilitate better choices by the patient, his/’her family and/or the other providers, they are truly foolish.  These groups have no financial incentive to partner on best choices and unless, CMS provides regulatory boundaries or payment incentives aligned to certain behavior, the savings will be minimal.
  • There isn’t a real incentive for patients to enroll in this pilot project, other than they can get routine home care, respite, etc. benefits from the hospice.  In reality, patients who are going to pursue curative options aren’t thinking hospice options.  Likewise, the providers offering the curative interventions aren’t talking hospice options at this point.  Our current healthcare system doesn’t function on this integrate plane.  Thus, there truly is no motivation across the actors (hospice, curative providers, patients, families) to change current behavior.  In fact, I see a risk for new avenues of improper utilization, qualification and abuse.  Enrollment in hospice under this program is going to be challenging to qualify and quantify as in theory, where is the point of terminality (without intervention, death is likely in 6 months).

It will be interesting to watch how this program rolls-out and how CMS addresses or attempt to address the nuanced and overt regulatory issues that today, are separate and distinct by benefit programs.  Likewise, it will be interesting to see how patient utilize, if they do to any extent, this hybrid model. The economist in me tells me that the concept and programmatic approach makes financial sense but operatively, this isn’t a slam-dunk in terms of ever working in the real world.  There are simply too many behavioral impediments today for this to be a truly successful model.

 

 

 

April 16, 2014 Posted by | Hospice, Policy and Politics - Wisconsin | , , , , , , , , , | Leave a comment

Doc Patch in the Works

Yesterday, the Speaker of the House (John Boehner) announced that a compromise is forthcoming to alleviate, for one year, the pending 24% payment reduction to the Physician Fee Schedule arising out of the current SGR formula. Ten days or so ago I wrote a post regarding a House bill that repealed the SGR but contained a “poison-pill” provision assuring its death in the Senate ( http://wp.me/ptUlY-gm ). As is the common methodology in Congress today, this initiative is a “patch”; another extension of the current status quo, delaying any SGR implications for one year.  Alas, while the SGR demands fixing, permanently, no traction is available among the parties to resolve the issue.

What the compromise does and doesn’t do is as much the center of debate as any efforts to replace the SGR with a more permanent formula.  In summary, the compromise;

  • Staves off the 24% cut but doesn’t restore any cuts related to sequestration.
  • It delays the implementation for hospitals of the 2 midnight rule for another six months.  The 2 midnight rule essentially reduces Medicare payments to hospitals for short in-patient stays.  It requires admitting physicians to have justification for the inpatient stay and if the same is lacking, the stay could be deemed (by RAC auditors) outpatient observation and thus, paid under Part B  at a lower rate.  The Bill would delay RAC auditors ability to review such stays until March of 2015 and give CMS authority in the interim and beyond, the ability to probe and educate but not re-classify stays.
  • It extends the implementation of ICD-10 for one more year.
  •  It extends certain programs that provide additional funding for rural hospitals.

While no one wins under these compromises, the Patch is likely to pass both houses quickly, viewed as a better alternative than the SGR cuts.  For post-acute providers, this is good enough news as the therapy fee schedule was subject to the same 24% reduction.

Interesting to note is that while the Bill extends the implementation of the 2 midnight rule, it doesn’t address the backlog of Administrative Appeals that continues to mount due to the Medicare RAC initiative.  This backlog is enormous and growing and it is the sole source initially, for providers to appeal RAC decisions.  I know of multiple providers today in the appeal queue waiting for a review of what appears to be, many erroneous determinations and shabby reviews of claims.   More on this in another post – later.

March 27, 2014 Posted by | Policy and Politics - Federal | , , , , , , , , , , | Leave a comment

House Passes Doc-Fix Bill Destined for Nowhere

Earlier today, the House passed a bill that repeals the SGR formula used to derive physician reimbursement under Medicare.  For more specifics on the SGR, see a previous post I wrote at http://wp.me/ptUlY-ae .  The legislation is title SGR Repeal and Medicare Payment Modernization Act.

Unfortunately, the fate of the legislation is predestined as the bill includes an amendment from the Ways and Means Chairman (Rep. Dave Camp) that delays implementation of the tax/fee penalties concurrent with the Individual Mandate. It does not repeal or delay the mandate, simply the punitive measures for those that don’t comply.  Recall, the Affordable Care Acts requires all individuals above a certain income limit (tax filing limit) or without expressed hardship, to obtain health insurance by April of this year or face a penalty.  The penalty embedded within the act is a flat dollar floor with amounts increasing based on gross income.  With certainty, the inclusion of the amendment in the legislation spells a death sentence in the Senate where Senate Democrats hold a majority and Leader Reid, controls the flow of legislation for vote.  The bill will never see a vote in the Senate due to the Camp amendment.

The sticking point on repeal of the SGR is cost.  The Congressional Budget Office estimates that a repeal of the SGR, shifting to an indexed option with market baskets and productivity adjustments, will cost $138 billion over 10 years.  The dollars would need to come from an already shaky Medicare program that today, doesn’t really have another source of revenue save tax increases or contra-revenue infusions via reduced provider payments elsewhere in the industry.  The funding dilemma that occurs with the Camp amendment is that such an amendment actually saves the government $169 billion.  The savings is achieved by a projection of fewer people, sans the mandate penalty, having health insurance including under Medicaid and SCHIP (or CHIP).  With fewer people accessing the government-funded entitlement programs, the outflow is less, savings in amounts greater than the SGR repeal costs.

Once again, a fascinating insight into current federal health policy and the economics at play…

March 14, 2014 Posted by | Policy and Politics - Federal | , , , , , , , , | Leave a comment

The ACA/Obamacare: Predictability and Practicality

With all the news and among the conjecture, punditry and analysis that fits any twenty-four hour news cycle, I wondered with a few colleagues the other day, how predictable the events current with Obamacare were.  Americans being who we are, our collective political memories and policy memories are short.  I too, often find even the recent past a bit muddled in memory though in my case, I attribute the “muddling” to age and a ton of issues always at-play. Nonetheless, my files are always organized and my memory good enough to recall a series of prior articles and posts that I wrote as Obamacare emerged.  For current and past readers, I’ve referenced each below.

http://wp.me/ptUlY-l

http://wp.me/ptUlY-p

http://wp.me/ptUlY-1u

http://wp.me/ptUlY-1K

http://wp.me/ptUlY-1P

http://wp.me/ptUlY-1W

http://wp.me/ptUlY-28

http://wp.me/ptUlY-2a

http://wp.me/ptUlY-2w

http://wp.me/ptUlY-2A

http://wp.me/ptUlY-2M

http://wp.me/ptUlY-2R

http://wp.me/ptUlY-2T

http://wp.me/ptUlY-2Z

http://wp.me/ptUlY-3c

http://wp.me/ptUlY-4w

When I go back through this list and my notes, etc., my first reaction is kind of an “I told you so”, smug feeling.  The same is quickly buffered by a feeling of how so many folks couldn’t see this coming or refused to view the forest for the trees.  The practical reality is that health care in this country is complicated.  It can’t be re-configured wholesale.  Additionally, experiments that rely heavily on failed math and distributive justice theories (or redistributive theories) are predestined for failure in a society where, like it or not, capitalism continues to reside.

I have colleagues that are small business men/women and self-employed (many consultants are).  They are successful, for the most part, and premiere capitalists.  They are the folks who rely purely on their own skills, intellect, etc. to forge a living for themselves and for the folks they employ. Virtually to a sole, each has had their small business insurance or personal insurance eviscerated by Obamacare.  Unfortunately, none qualify for Medicaid or public subsidy.  Their sole flaw?  They work for themselves or own a small business (or both in most cases).

Certain elitists will claim that their success has come as a result of some oppressive force that hurts a sector of folk less well-off.  The notion that it is about time these folks “paid their fair share”.  Strange logic indeed.  Truth told, these folks have always paid more into the system via taxation and their employment of others.  Likewise, they didn’t get to this stage, nor did I, without committing a single flawed act – worked longer, harder, and sacrificing more disproportionately than many.  Even in the U.S., one isn’t successful ultimately, without putting in a disproportionate share of effort and taking risks that many will simply, not.

The course of failure for Obamacare lies predictably, in its lack of practicality.  It sought to level an artificial playing field created by government via a Robin Hood like approach.  In as much as I love Robin Hood, the perversity in Obamacare is that no legislation can redefine the “haves from the have-nots” (recall, Robin Hood stole from an oppressive government, not from the people – a moral on taxation without representation). The problems of those who don’t “have” is fixable but not at the expense of those who already have and not through a Washington knows best recipe. The result is clear: Obamacare grew out of failed ideology that the “haves” were bad or disproportionately (more) rewarded than those who didn’t have.  Now we know.  Many of those supposed “haves” are nothing more than people who by definition, are middle class or the working class.  The jab isn’t just to my self-employed and small business colleagues but to mid-sized employer plans (non-union) when come 1/1/14, they get a gut kick and thus, so do the employees. Wait until next year when the stomping ramps-up exponentially.

This mess isn’t about failed websites or cancelled individual insurance plans.  It is about a systemic over-reach, destined to fail by design.  Yes, folks point out that Medicaid expansion is by comparison, running smooth.  Enrollment is one thing, access and payment for providers another.  How good of a system is it (Medicaid) when those who now have benefits, can’t find a doctor willing to care for them?  Or, as so much of the U.S. remains rural, can’t find access to a clinic, hospital, or other providers other than one that is hundreds of miles away?  Not my definition of practical or for that matter, smooth.

As I wrote back in 2009, the ACA/Obamacare wasn’t ever about health care reform.  Health care reform was and remains the practical target.  All fixes now going forward are political dynamite and as such, this is the tragedy of Obamacare.  Pragmatically, the flaws in the systems, Medicare and Medicaid, etc., remain and until addressed, finding another way to re-dress this pig with new earrings or a different ensemble will only change the pig’s outward appearance.  Economically, socially and away from the political milieu, answers of a practical nature remain.  We as a nation, need to demand these solutions be at a minimum, discussed and vetted.

November 26, 2013 Posted by | Policy and Politics - Federal | , , , , , , | Leave a comment

Obamacare/ACA: Implications for Consumers

Having jumped around just a bit in the last few weeks “topically”, this post may seem a bit disjointed.  It is meant as a continuation of a series I’ve compiled on the various implications providers, consumers, etc. can/will experience under the Affordable Care Act (a/k/a Obamacare).  Given the news cycle of late and the recent roll-out of the insurance exchanges under the ACA, many readers may think this post somewhat non-relevant.  Begging to differ, the implications for consumers under the ACA are expansive and the surface today is all that is visible.

Setting aside what we know of the exchange access problems and the individual enrollment glitches, the crux of the ACA implications for consumers is cost and ultimately access.  The ACA fundamentally resurfaces the consumer insurance landscape and changes the rules in terms of how individuals access insurance, how prices for insurance coverage are determined, and what coverage levels individuals can experience.  Promoted as simple, one-size premise approach to accessing coverage, the ACA for consumers doesn’t come anywhere close to its promised result.  In fact, consumers can expect a dizzying array of complex choices, cost levels and limited provider and carrier choices (depending on location) than ever before.

The biggest initial jolt for most consumers under the ACA is what will occur within employer sponsored health plans.  Employer plans represent the largest source of insurance for consumers, though the participation rate continues to decrease.  At present, 59% of individuals receive their health insurance coverage via employer sponsored plans. Given the provisions within the ACA that impact employer plans directly, the projected number of employers that will opt to drop health insurance as a benefit is actually minimal (less than 5%).  Where the ACA impact becomes onerous is cost pushed back to the individual.  Employer plans are subject to an ACA tax in 2014.  Additionally, with or without the employer mandate, fully insured plans via group insurance providers are expected to experience premium increases ranging from 10%  to 65%.  Why the big difference?  Regional differences account for some of the increase and the majority, plan design changes mandated by the ACA.  For example, plans formerly offered as high-deductible plans with Medical Savings Accounts can no longer qualify as compliant under the ACA.  The mandated plan changes such as full wellness coverage, affordability requirements, and eligibility expansion (must cover individuals working 30 hours or more) are the fundamental drivers to the added premium cost.

For most consumers covered today via an employer sponsored plan, their first reaction to premium levels in 2014 is akin to sticker shock.  Two things are certain to occur.  First, premiums paid by consumers via their employer plan will rise and in virtually all cases, by minimally 10%.  Second, their plans will change, some for the positive and some for the negative.  The positive will occur in a trade-off fashion: Richer benefits but at a higher premium.  The negative will occur as employers reduce plan benefits to the ACA minimum as a means of offsetting premium increases and where possible, increase employee cost share.  Across my client base, the vast majority of which fall in the large employer category under the ACA and presently offer health insurance to their employees, the projected premium increase in 2014 is 15% on average.  Eighty plus percent of this group plans on passing along, in the form of cost to the insured, 80 to 90% of the increase.

Certain for consumers, regardless of where they access insurance or how, save those who fit an expanded Medicaid eligibility definition and/or qualify for near full-subsidy in an exchange purchase, is that their health insurance will cost more and thus, their net expendable income will decrease.  It is this latter element that represents the biggest impact for consumers and the biggest impact for the economy current.  Wage inflation is negligible across virtually all industries.  Only certain regions and certain industries are clamoring for labor (oil and gas for example in North Dakota) and thus, scarcity produces rising wages to a modest extent.  Presuming a 10% increase in premium cost for an employee covered under an employer plan and an inflationary wage adjustment in 2014 of 2%, the net (simple) decrease to income is 8%.  Taking this just a step closer to reality, assume a 14% increase in premium and no wage adjustment or an adjustment of say, 1.5%.  The net (simple) decrease to income is 12.5% to 14%.  What occurs for a consumer when a change in incomes is so profound is behavioral change.  Consider the following as plausible;

  • Forestalled large-scale purchases such as homes, major appliances and automobiles.
  • Reduced savings and increased consumer debt.
  • A continued lag on employment (job) recovery.
  • A continued lag on GDP recovery and growth as consumer consumption accounts for approximately 65% of GDP.

For consumers not participating in employer sponsored plans, a similar sticker-shock will occur for all but those that achieve coverage via Medicaid expansion and/or full subsidy through an exchange.  What we are already seeing for this group is an evaporation of their current private options and/or premium increases routinely above 25%.  For those whose access to coverage is through an exchange, enrollment today is problematic.  More problematic is the cost, especially sans complete subsidy.  While premiums on their face seem somewhat reasonable, out-of-pocket costs plus premiums for the “bronze” or low-level options equate to 60% of total.  For example, a bronze premium for a 40-year-old in Illinois averages $180 per month or $2,160 per year.  A bronze plan leaves an out-of-pocket exposure of 40% of health costs save wellness benefits (an annual physical, certain wellness tests).  In North Dakota, the cost jumps to $215 per month.  This is for an individual only.

Breaking this down to include subsidies, here’s what a nationalized approach looks like using the Silver plan option (middle of the road, 70% of costs covered, average deductible of $2,500 and out-of-pocket maximums of $6,000) under the ACA.

  • At 200% of the Federal Poverty Limit, the cost of a Silver plan for an individual ($22,980 annual income) is $1,452 per year and for a family plan, the premium is $2,964 – rates include all subsidies.  This equals a total possible cost annually for an individual of $7,452 dollars (premium of $1,452 plus out-of-pocket maximum of $6,000).
  • At 300% of the Federal Poverty Limit, the premium for a Silver plan ranges from $2,772 to $3,276 (range is due to regional pricing differences among carrier options plus income levels and subsidies between 200% and 300%) and for a family, the premium is $6.078 – all subsidies included.  The 300% income threshold for an individual is $34,470. At this premium level, the cost exposure is approximately $9,000 per year (premium plus max out-of-pocket).
  • At 400% of the Federal Poverty Limit, the premium for a Silver plan ranges from $2,772 to $4,368 (regional differences and income plus subsidy levels between 300 and 400% of the FPL).  The premium for a family is $8,952 – rates include all subsidies.  The individual income limit is $45,960.

Per the Kaiser Family Foundation and separately, from a study completed by Deloitte, each of the above options is more expensive for an individual (total cost plus deductible including subsidized premiums) than a typical employer sponsored plan offering.  For example, one of my client companies with 300 employees, 225 participants presently offers a single premium, 80/20 plan for $85 per month. They are a very typical company (health care provider) in their industry (just to dispel any reader’s notion that the company is unique in demographics).  In comparison, a better plan costs a single employee $1,020 annually versus a subsidized plan for the lowest income group (200% of the FPL) at $1,452 per year.

The Consumer Conclusion?  My summary is more, unanticipated cost and fewer options than most expected.  The real implication for the consumer is the economic impact.  The U.S. labor trend is weak and wage inflation minimal.  In such an environment, insurance increases that can’t be offset by wage inflation, reduce consumer income.  Reductions in a consumer’s ability to consume via an increase in health insurance cost will create one of two reactions (three in some cases).  First, if the consumer stays insured or participating in an employer plan, a reduction in net income available will reduce consumption in all areas.  Second, the consumer opts to drop coverage or inclusion, instead paying the minimal penalty.  The third option for those presently privately insured, is that they either drop coverage or alter coverage to lower levels as a means of offsetting higher premium costs.  What is most disconcerting to me is that the exposure in terms of coverage gaps via out-of-pocket costs under all ACA scenarios is growing and this impact is undoubtedly, negative for economic growth and consumer economic health.

October 18, 2013 Posted by | Policy and Politics - Federal | , , , , , , , | Leave a comment

Debt Ceilings, Government Shutdowns and Health Policy

Most of my readers know by now that I am an economist by training and formal education.  My clients know this as well.  The net result is that I’ve been queried, almost to death as of late, as to what this current round of Washington folly is really all about.  Is it about the ACA?  Is it about the budget?  Spending? Is there really a debt ceiling, etc.?  Suffice to say, this post is intended as a concise answer (and no, economists are not known to be concise or clear on anything so I’m going out on a limb here).

While most Americans express concern over the amount of debt at the Federal level, the truth is that the amount is really not the issue.  The ratio of debt to GDP is the bigger issue plus the cost of servicing the debt as percentage of the revenue received by the government.  Today, the debt load is approximately $16 trillion (beginning of 2013).  Of this total, around $10 trillion arrived since 2002.  The $10 trillion is the result of the wars in Iraq and Afghanistan, entitlement growth, stimulus spending, tax cuts, and the recession.  Income flows into the government coffers reduce substantially during recessionary periods and periods of stagnant GDP growth.  As revenue evaporates faster than spending, and during recessions spending on behalf of the government normally increases (income support programs, entitlement growth, etc.), the deficit gap widens.  Deficits require funding (the bills must be paid) and thus, the source for the government is borrowing.  As of late (last few years), the government has borrowed more than $1 trillion annually to cover its cash outflow shortfalls.

While the question of long-term sustainability begs and the debate wages on about fiscal balance, the truth is that while this process (escalating borrowing) is on its face unsustainable, it is likely more temporary in nature than permanent.  At the very least, the policy drivers and economic factors will shift, altering the present course of borrowing.  For example, across the last two fiscal years, borrowing has reduced as budget deficits recede naturally.  Spending priorities in Washington have shifted and taxes increased.  The 2013 deficit will not exceed the trillion-dollar mark, coming in at $700 billion or so. As wars conclude and the economy recovers, even if slightly more than present, the deficit shrinks and the need to borrow is lessened.

What is central to the issues referenced in the title is the budgetary math and how the dollars are received and spent.  Within a budget of $3.8 trillion, two-thirds is allocated toward “fixed” or “mandated” spending.  That leaves $1.2 trillion in the variable or discretionary bucket.  Interesting to note, the budget proportion as a percent of GDP hasn’t changed all that much – up only 2% compared to the most recent forty-year average.  What has changed is the allocation percentages with more dollars spent today on entitlement programs.  For example, Medicare spending is nearly three times greater as a percent of GDP compared the forty-year average. Health spending is more than double and Social Security is one and a third times more.  Because the percentage of GDP spent is roughly the same, the offsets are found in defense spending, science and technology, general government and interest (yes, even with a rising debt level, lower rates have kept the interest cost lower than the historical average).

The government via taxes, will take in approximately $3 trillion.  The gap thus is $800 billion, give or take a billion or so.  This gap is the driver of borrowing limits and debt ceilings.  In effect, the debt ceiling is a self-imposed number and one that is totally arbitrary.  Congress established the debt ceiling back in 1917 with the passage of the Liberty Bond Act.  In the 70s, via passage of the Budget Control and Impoundment Act, the debt ceiling became less relevant.  Effectively, the debt ceiling issue was tied to the budget and a parliamentarian procedure known as the Gephardt Rule (after Congressman Dick Gephardt) allow the ceiling to automatically adjust incident to budget passage.  The problem to a certain extent of late is that the government hasn’t operated with a budget for at least three years and spending bills (appropriations) have stalled in the Senate.  Essentially, a debt ceiling discussion thus becomes separate from other fiscal operation activities.

So where are we now and what does this mean?  In cold hard reality, the issue of the debt ceiling is less about default on credit but about the ripple effect economically that will occur.  The U.S. really can’t default on its debt and does operate with enough cash flow to keep interest payments current.  The President does have unique authority via executive privilege and orders to adjust the U.S. borrowing limit.  The Treasury also has other temporary powers.  Using these powers is a last resort as doing so will certainly cause economic havoc world-wide via the real signal that the U.S. government is in chaos.  Remember, the stability of much of our economy is based on the stability of our systems of banking, credit and government – the full faith and credit stuff – nothing more.  If this system isn’t credible and stable, the erosion is tsunamic.

History and an updated view of the economic reality we live in, paints the true picture.  Today, our debt driver and our economic structural flaws within the government budget (such as it is) are entitlements as presently configured.  There simply is not enough room on the discretionary side or the variable side to right size the budget, offsetting the entitlement growth.  The demographic shift that is occurring in the U.S. and all first world countries (aging) is the catalyst. By 2033, 20% of our population will be 65 and older, eligible as presently configured, for Social Security and Medicare.  Moreover, the expenditure to income ratio per each under Medicare produces a significant outflow deficit.  For example, a 65-year-old couple in 2020, assuming average wages earned during their work years will contribute $110 thousand (with employer share) into Medicare.  Across their remaining life, Medicare will spend in present dollars, almost 4 times more ($430,000).  By 2022, Medicare spending is projected (under current law) to consumer 4.5% of GDP (3% today) and rise of 6.7% by 2035.  This net change equates to a spend rate of more than $1 trillion in current dollars on Medicare alone.

To the point: Health policy is the shutdown, budget and debt ceiling debate.  The good news is that it is fixable but the bad news is that it must be fixed by government.  There is no other course of action that can and will adjust the debt trajectory.  Now, hope is also muddled within the mix.  The healthcare industry has gotten smarter and evidence suggests that recent reductions in healthcare spending increases are as much due to more efficiencies in healthcare delivery (generic drugs, better insurance bargaining, smarter consumption habits of patients) as due to a weak economy.  A public-private initiative could create a paradigm shift, favorably changing the entitlement spending outlook.  Congress and the President will need to get creative and utilize a different legislative approach to resolve the present dilemma.

Is the sky falling because of too much debt?  Not really.  Governments and especially ours, don’t really need to be too concerned about the debt load in the short-run.  The concern is about changing or adjusting the factors that drive debt.  As long as the increase in new debt is less proportionately, than the increase in GDP, debt load as percentage of economic activity reduces.  For example, between 1945 and 1980, the government only encountered 8 years with surplus revenue.  Fully all other years involved deficit spending. In 1945, at the end of World War II, debt as percent of GDP weighed in at 120%. By 1981, the level subsided to 30%.  The reason?  GDP growth accelerated during these years and the deficits were relatively small.  The economic truth is that government policy needs to focus-in on all things fundamentally favorable to GDP growth while constraining with simple austerity, the deficit levels.  The debt problem thus resolves itself.  There is no need to “pay it back” and fundamentally, no reason to do so.  The best approach is to minimize its impact on the economy by fixing the root cause.  In this case, adjusting entitlement spending by relatively modest means (currently structural changes to reduce about $500 billion) is all that is needed.

October 10, 2013 Posted by | Policy and Politics - Federal, Uncategorized | , , , , , , | Leave a comment

The ACA, Funding Resolutions and the Shut Down

For readers approximating my age, a commercial slogan ties to the title of this post: “Is it real or is it Memorex”.  In this current round of Washington political maneuvering and on display dysfunction lies the question;  is the ACA issue real or is it a tool for political posturing?  Is this a real “red line” issue and an issue of such magnitude that a simple continuing resolution for government funding now resides in limbo? Maybe yes and maybe not.

Setting aside the news cycle rhetoric and the political ideologies at-play, merit exists to slow down ACA implementation and re-calibrate.  The problem is that neither party can find a way to address the process and thus, the economic and policy issues operative, without wading hip-deep into political muck.  Truthfully, the ACA issue is worthy of scrutiny and thus, legislative remedy but the timing and the mechanism is not during a budget procedural process.

Dissecting the debate further, removing the fringe and getting at the core, there is logic to explore and facts to review. Non-funding the ACA is a bogus proposition and one that is all but impossible to do.  It is not a stand-alone, singular expenditure like funding another aircraft carrier or a NASA mission.  It is already woven throughout the health care industry.  The issues that remain are whether certain elements need re-thought and arguably, many do.  This isn’t a political point but one shared by most economists (non-partisan), most health policy experts, and even the party leaders on both sides of the aisle.   No matter what the president’s rhetoric is at the moment, his administration delayed the employer mandate and for sound reasons.  The individual mandate deserves the same fate and for the same reasons.

The simplest of all reasons is neither at present, is in workable fashion and likely won’t be anytime soon.  The implementation and enforcement provisions for the requirements exist in only pieces.  Further, the complexity of the mandates (individual and employer) create so many unintended consequences that each deserves a time-out and re-think to address the possible consequences.  For example, the employer mandate created the real consequences of lost work hours and lost jobs – untenable outcomes in a job less recovery.  With this looming outcome and a loss of or reduction in, employer-sponsored health plans the participation goals of the ACA can’t be met and worse, the numbers break ugly quick on additional government resources required to pick-up the slack via Medicaid and subsidies through the exchanges.

A similar course is visible with the individual mandate.  The process is confusing and individuals simply don’t get it.  While the rates look at first glance palatable the reality is, rates plus out-of-pocket costs on the affordable plans don’t equal affordable coverage.  Similarly, rate subsidies are tied to tax credits not direct to income support for most (cash flow timing is markedly different with tax credits).  When viewed against employer coverage options existing, the choice for most is clear – the exchanges lose.  Additionally, Medicaid is full and overflowing.  In a number of states that have recently moved to a Managed Medicaid platform, the transition has created problems yet unresolved in terms of payment, claims adjudication, enrollment and provider access.  Adding to this mess is a certain nightmare, particularly in rural areas or inner-city areas where participating Medicaid providers (especially physicians) are limited and declining.  Worse, the numbers of participants that qualify for the exchanges and ultimately participating appears by estimate, to be far below projections.  If, as I believe and a number of health care economists similarly, the initial participants are folks with immediate health needs and chronic diseases, the costs via premium in year 2 will explode (too many sick people, not enough healthy people in ratio, paying premiums).  Recall, anyone qualifying to purchase insurance on an exchange can do so at any time and not be denied coverage.  There is no penalty to lapse in and lapse out effectively and initially, the “tax” penalty is meager – assuming some methodology of enforcement is available (one isn’t today).  Reality suggests that most who are healthy and presently under or uninsured, will not jump to lower their income via purchasing insurance until doing so is proximal to an immediate need.

If the above reasons aren’t compelling enough to re-think and re-craft the key ACA components, the state of the economy is.  Politics aside, the ACA is anathema to a rebuilding economy that is trying to shift to a different plane.  Large, overarching legislation that is ripe with new entitlements, new taxes, new mandates, and crosses traditional state boundaries with federal intercession creates temporary economic impacts – socially and politically in the immediate, financial beyond.  It is the social and political shifts that are creating a pull opposite to an economy seeking equilibrium.  The fundamental drag or tug is opposite or oppositional to labor, wages, income and consumer spending.  All of these elements succeeding or byproduct of industrial and business growth, capital investment, and production/service expansion.  Point in fact, the ACA addresses more issues in a past or former economy than it does in the shifting current economy.  Hence the flaws in the employer mandate so troubling to many employers.

What we know today of the economy is that its labor norms (employment) are fundamentally different and thus, income and consumption patterns have shifted.  For example, workforce participation rates are significantly down with retirement up and at least for a decade or more, likely to remain at this trend level.  The number of people working at fragmented jobs, temporary jobs and jobs below their former pay and grade has significantly increased and the increase again, is permanent not temporary.  Many of the jobs lost over the course of the last five to seven years are gone permanently.  Government employment is waning and will continue to do so.  This labor shift combined with a wage shift can’t be resolved by government policy.  The shift likewise, in employment and income status and thus, health insurance coverage isn’t adjusted by the ACA – only magnified.  Again, regardless of subsidies and Medicaid expansion, the number of permanently covered individuals won’t shift dramatically and in many regions and states, will shift negatively – more uninsured and underinsured.  Why?  The folks fundamentally “shifted” in the current economy are working, can’t qualify for Medicaid, and regardless of access to an exchange with some or limited subsidy, can’t or won’t afford the “total” cost of coverage (premium plus out-of-pockets costs).  The jobs they lost included benefits and the replacement jobs, without or at a higher cost.  This is the new economic norm and the ACA, unless adjusted, is an adverse factor in the labor market recovery.  Without a labor recovery, the overall recovery will languish.  This is an undeniable fact and one that no political fight or government policy can alter.

October 1, 2013 Posted by | Policy and Politics - Federal | , , , , , , | Leave a comment