Bribing the People with Their Own Money

Leaders of the House Energy and Commerce Committee have reached a deal on a long-awaited draft of legislation to speed up the approval of new drugs and treatments.

The bipartisan, multi-billion initiative, known as 21st Century Cures, includes major overhauls of the Food and Drug Administration (FDA) as well as the National Institutes of Health (NIH).

Funding for the NIH – which had been a deeply disputed issue within the committee – will rise by $10 billion over five years if the measure is enacted, according to a copy of the legislative language obtained by The Hill.

The annual budget would increase to $31.8 billion next fiscal year and reach $34.8 billion within two years. The legislation would also create a $2 billion-a-year NIH Innovation Fund through 2010.

The 200-page bill is about half the size of the previous version, which was more than 400 pages.

The committee’s text leaves out two of the more complicated areas: telemedicine and interoperability. The draft legislative language in both areas will be released “shortly,” the committee’s document reads.

Members reached a deal late Tuesday afternoon, a committee aide said Wednesday, adding that the draft will be released shortly.

Thousands of families with a disabled or deceased parent may have received a lower subsidy than they deserved to buy health coverage through the federal insurance marketplace as a result of a calculation error by the federal government.

In addition, some who should have been eligible for Medicaid may have been turned away, leaving them on the hook for higher-priced private insurance coverage. The Centers for Medicare & Medicaid Services has acknowledged the glitch but many details about how the agency will fix it remain unclear.

For months, health insurance assisters who help enroll people in coverage on the federal marketplace, which is relied upon by residents of about three dozen states, noticed that healthcare.gov seemed to be making a mistake in how it calculated some families’ income to determine whether they qualified for subsidized marketplace coverage, or whether family members might be eligible for Medicaid.

Healthcare.gov seemed to be tripping up in cases where children were receiving Social Security income, generally because a parent has died or is disabled. That’s because eligibility for marketplace subsidies or Medicaid is based on a household’s modified adjusted gross income, known as MAGI: generally, adjusted gross income plus tax-exempt Social Security benefits, interest and foreign income.

The government was including that Social Security income when it computed a family’s MAGI figure. However, a child’s income should only be included if the child (or other tax dependent) was required to file his or her own tax return. A child who only receives Social Security benefits wouldn’t be required to file.

By adding the child’s Social Security income to the family’s income, the marketplace was inflating the family’s income. The result: Some people were wrongly turned down for Medicaid coverage and others received less in premium tax credits and cost-sharing subsidies than they were eligible for.

House Republicans want Medicaid recipients to shop for treatment and invest their own money into their health care.

Proposed changes to the two-year, $71.5 billion budget would require certain individuals receiving Medicaid to invest 2 percent of their family income or $1 per month, whichever is greater, into a state-managed health savings account called a “buckeye account.”

Medicaid would contribute $1,000 per adult and $500 per child each year to the account. Funds in the account would carry over from year to year as long as people complete health services, such as an annual checkup.

If they don’t, only the individual’s contributions would be carried over, said Rep. Robert Sprague, R-Findlay, chairman of the Finance Subcommittee on Health and Human Services.

“The whole approach has personal responsibility built into it,” said Rep. Mark Romanchuk, R-Ontario, a member of the subcommittee.

Ohio House members [were] expected to vote on these and other budget changes Wednesday. Senate hearings on the budget began Tuesday.

Each account would be limited to $10,000 and funds would transfer to a bridge account if individuals’ incomes rise above Medicaid threshold. People would use money in the account to pay for treatments and doctors’ visits.

One of the problems with health care costs is people don’t have to pay for the cost themselves, and health savings accounts would remedy that, Sprague said.

To help everyone make decisions about health care, budget changes would create an Ohio hospital report card, establish a database of health claims to see what services cost and allow hospitals to advertise their rates, Sprague said.

The Department of Health and Human Services released a report this month highlighting the slowdown in Medicare spending growth in recent years. The administration says that Obamacare has led to slower growth in overall health spending, which in turn has made Medicare more sustainable. Another government document suggests that Medicare spending may be accelerating – but even if it isn’t, demographic trends will create pressure on the program in the coming years.

The HHS report compared Medicare growth rates from 2000 to 2008 with rates from 2009 to 2013, and found that $316 billion was saved over the latter period. The calculation includes Medicare savings for the year before Obamacare was enacted, which indicates that the law cannot be fully responsible for the slowdown. Some reports have suggested that much of the slower growth in health spending has stemmed from lingering economic weakness, though studies and experts differ on this point.

But in the week before this report was published, HHS undercut its message by acknowledging that Medicare spending has accelerated in recent months. The Centers for Medicare and Medicaid Services initially proposed a payment decrease for Medicare Advantage plans in 2016, but its final call letter proposed a payment increase, which it attributed to recent spikes in Medicare fee-for-service (FFS) spending:

“The 2.5 percentage point increase from the Advance Notice to the Final Notice comprises 1.9 percentage points of additional FFS spending through 2015, an underlying additional FFS trend rate of 0.6 percent for 2016, and 0.1 percent for the assumption that Congress will enact the pending [“doc fix”] legislation. … Initial information from Medicare actuaries suggests that contributing factors behind the change from the preliminary growth rate include higher than expected spending on impatient hospitalizations and some intermediary services such as therapy, rural health clinics and federally qualified health centers.”

In other words, Medicare Advantage plans did not cut payments for the upcoming year because Medicare’s actuaries have observed an uptick in spending for traditional Medicare. It’s possible, then, that the trend of slower spending growth highlighted in the HHS report may have ended.