Sen. Lamar Alexander visited this newspaper last week armed with the Republican Party’s talking points against health care reform and other policies adopted by Democrats and the Obama administration. Given his party’s announced intentions to run against the new law in the coming November elections, his “repeal and replace” anthem on health care was predictable.
Still, the distortions should be noted. For example, Sen. Alexander continued to trumpet the Republican canard that Democratic cuts to Medicare Advantage programs would hurt seniors, including 243,000 Tennesseans.
In reality, what the legislation will do is take back the subsidies that Republicans wrongly gave private, for-profit health insurance companies to entice them to lure seniors out of Medicare proper. Trimming the costly giveaway of taxpayer and Medicare dollars to corporate interests would rightly cut corporate welfare that never should have been given to insurance companies in the first place.
True, those billions of dollars have been used partly – as Republicans conceived in the 2003 Medicare Modernization Act – to slightly embellish traditional Medicare benefits to lure seniors out of Medicare and into the “Advantage” plans.
Subsidies pork for insurers
Their enormous costs, however, were far higher than the value of the frills they offered seniors, and the money was taken straight out of the Medicare budget. That resulted in actual cuts in Medicare benefits to everyone left in the program – seniors and their care providers. That was in keeping with the Bush/GOP plan to let Medicare wither, and ultimately die, and turn over the Medicare business to for-profit insurers.
The subsidies have mainly enhanced insurers’ profits and their Republican collaborators’ campaign treasuries, but they were grossly unfair. Too much of the subsidies went to insurers’ bottom lines. Worse, the advantage programs eluded the bulk of Medicare enrollees, who were stuck with the burden of the offsetting Medicare cuts.
Moving the value of those subsidies back into Medicare will provide much greater benefits to all Medicare recipients. Foremost will be the phasing out of the dreaded “doughnut hole” in prescription drug coverage, and greater emphasis on wellness care and management of chronic disease.
Ending a free ride
Sen. Alexander’s GOP talking points similarly criticized the provision that would require Tennessee businesses with more than 50 employees (smaller companies are exempted) to pay a penalty if they do not provide an employee health insurance plan. Given the broad sentiment to keep the American model of employer-provided insurance, the new penalty fee is patently fair.
Employers that do not participate in that model essentially get a free ride by shifting a large part of their employee health care costs onto the public tab. Many workers who can’t afford coverage without an employer subsidy, for example, end up receiving charity care for all or part of the costs of an illness or hospitalization, or are forced into poverty. Their unreimbursed costs are then added to the bills, and insurance premiums, of others, or are paid by the diversion of more general taxpayer monies to public hospitals and clinics. The penalty would help reduce some of those wrongly shifted costs and bring more equity into the health care system.
Sen. Alexander also knocked the higher costs to states for their share of Medicaid, which covers the very poor, through the expansion of Medicaid coverage to residents with incomes up to 133 percent of the federal poverty level. That will, indeed, add to states’ Medicaid costs. In Tennessee, for example, it will expand the program by roughly 243,000 enrollees over five years, beginning in 2014.
Washington would pay all of the extra bill for the first three years of the expansion. After that, the state would pay 5 percent of the extra bill in 2017, and 1 percent more in both 2018 and 2019, and 10 percent more from then on. The new cost to Tennessee would be roughly $200 million more for TennCare (Tennessee’s Medicaid plan) annually from 2014 to 2010.
Stopping shifted costs
The benefit of broader Medicaid coverage, however, should reduce the larger indigent costs that are presently associated with that population, and that are now added, as with other costs of the uninsured, to the insurance premiums of insured patients.
As with employees whose companies do not provide insurance, that reflects the core paradigm and dilemma regarding the costs of the uninsured: the costs of caring for seriously ill indigent patients (and their lack of preventive care) not paid by Medicaid is already being shifted to the premiums of people who are insured, or to some other public expense.
Hospitals’ example
That is precisely why the state’s hospitals voluntarily banded together this year to tax themselves a 3.5 percent “assessment” to keep their share of federal Medicaid revenue flowing following the state’s decision to cut $400 million from its Medicaid budget. The state’s cut jeopardized $1.2 billion in total Medicaid funding because state funding is matched at roughly a 2-to-1 ration by the federal government.
Hospitals will use the new fee revenue of $230 million to replace state money and pull down a federal Medicaid matching share of $430 million for indigent care in hospitals that otherwise would have vanished with the state cut.
That’s a wise action by the Tennessee Hospital Association. It will end up with $660 million to cover indigent care that it otherwise would have lost. That would have devastated their budgets and the level of care they could provide for indigent care.
The silver lining of reform is that by rationally confronting such costs, expanding insurance coverage, emphasizing preventive care and instituting rules to limit insurance companies’ expenditures on administrative overhead, the nation can begin to identify, manage and break down costs that are now distributed unfairly and wastefully across the health care system.
Transparent costs are lower
This accords with the lessons of universal care learned long ago in every other industrialized country. By getting every worker to share in the costs of coverage, and by making the costs more transparent and improving preventive care, every other industrial country provides universal care – and gets better health care outcomes and health indices – for one-half to two-thirds of what America spends on health care (as a percentage of Gross Domestic Product).
Distorting these benefits with slanted partisan talking points only obscures the paramount value and fairness of reform; it serves no higher purpose. It is simply raw politics played for partisan advantage without consideration of the value of secure, affordable care for all Americans.