Health reform repeal – noise without substance

A report released today by the Economic Policy Institute reinforces Michigan’s need for full implementation of  federal health care reform known as the Affordable Care Act. Michigan ranks No. 1 in the number of people, nearly 1 million, who have lost employer coverage over the period 2000-01 and 2008-09.

This is bad news, both for Michigan’s health status and economy. The majority of people who lose their employer coverage are unable to afford private coverage due to cost. This has contributed to the dramatic increase in the number of uninsured.

The report should help counter the  “noise” about the repeal of the Affordable Care Act that has certainly escalated over the past couple of weeks. It is important, however, to filter the “noise” for substance, or lack thereof. To date, there has been no comprehensive alternative proposed by those unhappy with the law, and the Congressional Budget Office estimates that repeal would increase the deficit by $455 billion over the period 2010 – 2019.

While the law is not perfect (and what new law is?), it has already provided critical health care benefits to thousands of Michigan residents, including children who can no longer be denied coverage due to a pre-existing or chronic condition; young adults without employer coverage who have the opportunity to remain on their parents’ employer insurance plans without being students or tax-defined dependents; adults who have gained coverage through the special program subsidized by the federal government but administered by Physician’s Health Plan for those with a pre-existing condition who had been unable to secure coverage and had been uninsured for six months (applications for this program are currently being accepted); and Medicare Part D beneficiaries who received a $250 payment to help those who had reached the “donut hole” and no longer had assistance with their drug costs.

In addition, health insurance plans can no longer cancel coverage for someone simply because they become ill and need benefits or impose lifetime limits on the amounts they will pay in benefits. There are also newly imposed restrictions on the amounts of annual benefit limits insurers can impose.

It would be devastating for those who recently gained these valuable benefits to lose them, and again become uninsured or underinsured.

Additional consumer-friendly benefits are scheduled to take effect in each of the next four years. In 2011, more than 20 new provisions will be implemented, including such policies as:

• Health plans must spend 80 percent to 85 percent (depending on their market size) of collected premiums on medical care. Failure will result in insurers having to offer rebates. Key definitions of medical care were recently adopted by the National Association of Insurance Commissioners, and submitted to the Department of Health and Human Services for approval.
• The elimination of cost sharing for Medicare beneficiaries for specific recommended preventive services.
• Required 50 percent discounts on brand name drugs for beneficiaries who have reached the Medicare Part D “donut hole” and would otherwise have no assistance with their drug costs.
• The creation of the Center for Medicare and Medicaid Innovation to test new payment and delivery approaches to reduce cost and improve quality and outcomes.

Full implementation of the Affordable Care Act will provide the opportunity for those people who lose or have lost their employer coverage to secure affordable coverage, with sliding income scale subsidies and limits on out-of-pocket costs, through the Exchanges to be implemented on Jan. 1, 2014.
Let’s not be distracted by the “noise” about repeal.

Rather, let’s focus our energies on helping policymakers, particularly the new ones, understand the law and its benefits, and determining the best way to implement the Affordable Care Act to provide affordable, quality health care for all in Michigan – our families, our friends, and our neighbors.

Dear Gov. Snyder

Dear Governor Snyder and new and returning lawmakers:

Congratulations on your election! The phrase, “be careful what you wish for,” comes to mind, though.

If you didn’t know it when you started your race, surely you’ve learned now that as leaders of the state, you will face many challenges in the coming months. You’ve heard that state revenues have plummeted. You’ve heard that unemployment remains high. You’ve heard that needs are great. You’ve heard that the state budget has at least a $1.6 billion hole. So I won’t repeat it again.

But with challenges come opportunities. The opportunity to modernize Michigan’s tax system. The opportunity to ensure that health care reform is implemented properly and thoughtfully. The opportunity to help struggling Michigan families while working to grow the economy.

At the League, we stand ready to work with you.  In fact, we’ve already done a lot of work to help you. On our website you’ll find reports and fact sheets and more. Take a look. Give us a call with your questions.

And we hope you’ll join us on December 3 for our Policy Forum, Looking Back, Moving Forward. It will feature retiring Senate Fiscal Agency Director Gary Olson, Representative Joan Bauer and former Representative Don Gilmer.  We think their perspectives will be insightful as we all look to January.

It will take many of us working together to restore the greatness to the great state of Michigan. We look forward to working with you.

Michigan’s economic future

From First Tuesday, the League’s monthly newsletter.

Charles Ballard is a Ph.D economics professor at Michigan State University, for those of you who don’t know him, or only know of him. He’s highly respected and has written and spoken a lot about Michigan’s economic future.

I know Charley because he’s been a part of the revenue group that the League has been convening for several years. We’ve also been on several panels together lately and, I’m proud to say, are reinforcing each other’s messages.

Charley has just published a new book, Michigan’s Economic Future: A New Look, that is getting quite a bit of attention. I actually bought the book the day it was released. The book is deserving of attention. It is a comprehensive discussion of Michigan’s economy, its human and physical resources, Michigan’s place in the world economy, its tax system and some perspective about what Michigan might look like in 2030.

Make no mistake: Charley’s book isn’t just another dry summary of economic theory. Charley is a straight-talking economist who tells us in plain English what Michigan is facing and what we need to do to reverse the downward spiral that’s been our reality for a decade.

As I read Charley’s book I was pleased and proud that, in talking about what needs to happen with respect to Michigan’s tax system, he devoted a full page to a graduated income tax proposal developed by now-retired League staffer, Dale Fickle. Charley says that such a proposal would be a step in the right direction.

He doesn’t stop there. In his final chapter Charley writes about his hope for a brighter economic future for Michigan.  He says, “Many fine people are working passionately to turn things around. Some groups who are really fighting the good fight are A Better Michigan Future, The Center for Michigan, the Citizen’s Research Council of Michigan, Michigan Future, Inc., and the Michigan League for Human Services.”

It’s really gratifying to see the League’s work recognized by an economist of Charley’s stature. 

Charley’s kudos were echoed yesterday in Peter Luke’s column. Luke, who writes for Booth Newspapers and Mlive, is one of the state’s premier political columnists.

He wrote, “The candidates’ promises are secondary to the real work that’s been done by those who aren’t on the ballot. Business Leaders for Michigan, the Michigan League for Human Services, the Michigan Chamber of Commerce, local chambers, the Michigan Education Association, the Center for Michigan, Michigan Future and The (Grand Rapids) Press, all have given this election season some substance by laying out a wide range of policy options.”

In the weeks and months ahead the League will continue to provide leadership in the state’s public policy arena. In the meantime, make Charley Ballard’s book a “must read.”

(First Tuesday is a monthly League newsletter sent on the first Tuesday of each month. Sign up here.)

Updating an outdated poverty measure

The U.S. Commerce Department recently announced the Census Bureau is developing a new, unofficial poverty measure to go alongside the current poverty measure.

This is a change advocates have been waiting to see for years as the current measure is far out of date.

The new measure will not replace the official measure calculated each year by the U.S. Census Bureau or the official poverty guidelines published each year by the U.S. Department of Health and Human Services, but it will be published annually along with the official measure.

The current poverty measure does not take into account the things it takes for a family to live. It only considers pre-tax cash income and is adjusted each year for inflation using the Consumer Price Index.

The current measure was developed in the 1960s and is based on the U.S. Department of Agriculture’s economy food plan. This food plan was the lowest estimate of what a family needed to feed themselves, but was not necessarily sufficient for long-term nutrition. At the time, it was estimated that the average family would spend approximately one-third of their total net income on buying food using this plan.

The supplemental measure, due to come out in the fall of 2011, is based roughly on a measure the National Academy of Sciences developed in 1995. This measure takes a lot more into account, such as:

  • Assistance received from food assistance programs, housing vouchers, energy assistance and tax credits;
  • foster children (the official measure only includes relatives by birth, marriage, or adoption);
  • living expenses; and
  • geographic differences in the cost of living.

Since this new measure looks at a lot more things, it is thought it will cause the percentage of people in poverty to go up since the amount a family must earn to not be below the poverty level will go up.

The new measure will not, however, impact program eligibility. This means, a family with income higher than the current poverty level may be in poverty by the supplemental measure, but still not qualify for assistance programs since a family will have to be even poorer to get help.

This overhaul is long overdue. While the current measure will remain the official poverty measure, it will be put in perspective by the supplemental measure. The current measure is severely outdated and fails to take into account the things that a family or individual needs to sustain a basic standard of living besides food–such as housing, utilities, clothes, and transportation.

So while the poverty rate will probably go up, this measure will give a clearer picture of what poverty really looks like in America.

-Jacqui Broughton

Health care reform — one step closer

In June 1994, the Michigan League for Human Services’ Board of Directors adopted a set of health care reform principles.

Last night’s historic House vote brought us one step closer to realizing the implementation of many of the policies and principles included in that document, which by health care reform standards, (see a brief history of health reform) is relatively new.

The Senate bill passed by the House is Senate Bill H.R. 3590 and the ensuing reconciliation bill is Reconciliation Act H.R. 4872.  Several components of the League’s health reform principles are included below with a brief explanation of how they are addressed in health reform legislation:

  • Coverage for nearly all Americans. By 2019, it is projected that 95 percent of non-elderly legal residents would have insurance. The legislation expands Medicaid to all adults and children under 133 percent of the federal poverty level (FPL) and provides subsidies to families with incomes up to 400 percent FPL to purchase insurance.  In addition, caps, based on a sliding income scale, will protect low-income persons from excessive out-of-pocket costs.
  • Mandated enrollment in health care coverage to spread the costs as broadly as possible.  The legislation requires most people to obtain coverage or pay a penalty, which is necessary to provide an incentive for people to secure coverage before they become ill. With nearly everyone enrolled in coverage, over time, premiums should become more affordable as they will no longer include the “extra cost” of providing care for those who are uninsured.
  • Focus on disease prevention and chronic disease management.  There are numerous prevention and wellness initiatives included in the legislation.  For example, all co-payments, co-insurance and deductibles for preventive services will be eliminated for Medicare beneficiaries.
  • Coverage of the full range of mental and physical health needs.  The new state-based exchanges would have to provide minimum standards for coverage and cost-sharing protections for enrollees, making sure coverage is comprehensive and affordable. Four levels of coverage will be required. Medicaid would continue to provide comprehensive coverage to all who qualify with enhanced federal subsidies for the newly eligible.
  • Implement effective cost containment. The legislation takes a number of steps, particularly within Medicare, to institute efficiencies to lower cost and improve quality of care, through changes in the delivery system, and through the establishment of an independent Payment Advisory Board charged with developing proposals to slow the growth of both Medicare and private insurance spending and improving quality of care.
  • Comprehensive quality management and health care outcomes.  The legislation creates a research institute to conduct comparative effectiveness research, create a value-based system for hospitals and physicians, and encourages the development of new patient-care models, to name a few.

Of key importance are the provisions in the legislation that will reform the health insurance marketplace by prohibiting lifetime limits on benefits and terminations of coverage when people become ill.  In addition, the reforms will prohibit insurers from denying coverage or charging higher premiums to persons with pre-existing conditions, or higher premiums based on gender.

The reform package gradually eliminates the Medicare Part D “doughnut hole,” the coverage gap in which beneficiaries continue to pay Part D premiums, but have no pharmacy coverage, and must fully pay for their medications.  An immediate 50 percent reduction in the cost of brand-name drugs will be available to those who reach the “doughnut hole.”

The reform package passed by the House last night will also provide subsidies to small businesses to enable them to provide coverage at a reasonable cost to their employees. They will also be able to purchase comprehensive, affordable coverage through the state-based exchanges.  Many small businesses have been unable to provide, or have been forced to drop insurance coverage due to the escalating cost of premiums.  The exchanges will provide opportunities for small business to purchase coverage with more affordable and predictable premiums.

The above information is only a small sample of the benefits included in the health care reform legislation passed by the House.  The reconciliation bill, which must now be taken up by the Senate, can be passed with a simple majority (51 votes).  Action by the Senate is expected this week.

The League and the Michigan Health Insurance Access Advisory Council are sponsoring a forum on April 23, Federal Health Care Reform: Challenges for the States.  For more information and to register, click here.

— Jan Hudson