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April 20, 2009 at 08:00 PM
Health issues will be a key congressional focus when Congress returns to work this week from a two-week recess.
Of immediate concern is dealing with a Centers for Medicare and Medicaid Services’ decision not to provide what the industry believes is adequate reimbursement to Medicare Advantage providers through its 2010 rate adjustment.
CMS officials did so despite entreaties from a bipartisan group of senators as they left for recess not to adjust rates based on a 21% cut in physician reimbursement scheduled to go into effect next year–because that rate will be changed before then, the senators said.
At the same time, long-term healthcare reform will take center stage over the next several months. It is a priority of the Obama administration, Congress and the healthcare industry itself.
As Congress returns, healthcare reform could turn on two key issues, industry officials and key members of Congress say.
The first critical decision will be whether to tax employees on the health benefits they receive through their employers.
A second will be to reduce rates for those who do not get adequate subsidy for their health insurance through their employer by establishing a competition between products provided by the health insurance industry and products provided through the existing Medicare/Medicaid systems.
The healthcare industry is voicing deep concern about the proposal.
In an analysis last December, after a proposal by then President-elect Barack Obama, John Sheils, an actuary at the Lewin Group, a healthcare consulting practice, compared it to proposals during the Democratic primary campaign by then-Sen. Hillary Clinton, D-N.Y., and former Sen. John Edwards, D-N.C.
Sheils said he envisioned that such a proposal would be administered through Medicare using Medicare provider reimbursement levels. Employers and individuals would be able to purchase coverage from the public plan by paying a full cost premium.
In his paper, Sheils suggested that premiums would be 30% or more less than premiums for comparable private coverage due to low payment levels and administrative costs.
“Consequently, there would be a mass shift of enrollment from private coverage to the public plan,” he said. “We estimate that, about 119 million people would shift from their current coverage to the public plan, which is a two-thirds reduction in the number of people with private coverage (currently 170 million people).”
Medicare premiums would be lower than private premiums because of the exceptional leverage that Medicare has with providers. Medicare’s “take it or leave it payment system” pays hospitals about 30% less than private insurers for the same service, he said, noting that physician payments are about 20% less than under private coverage. Also, because Medicare has no insurer profits or broker/agent commissions, administrative costs for this population are about one-third of administrative costs in private health plans, he added.
He projected that health insurer net income would decline under the proposal, even after accounting for reduced uncompensated care and increased utilization for the newly insured.
