Ten Things Everyone Should Read About Obamacare

Grace-Marie Turner reports on a new study that details the state-level impact of PPACA’s Medicare cuts.

In a working paper published by the University of Minnesota’s Medical Industry Leadership Institute, Robert A. Book and Michael Ramlet show that the cuts are unevenly distributed by state and county. Florida is near the top, facing $44 billion in Medicare-payment reductions over ten years to partially pay for the new Obamacare health-coverage subsidies.

California tops the list with nearly $61 billion, followed by Florida ($44 billion), Texas ($43 billion), New York ($40 billion), and Pennsylvania ($28 billion). Ohio ($21 billion) also is in the big eight, which all have more than $20 billion in anticipated cuts to Medicare provider and plan payments. Eighteen other states face at least $10 billion in cuts, including North Carolina, Virginia, Indiana, and Missouri.

The cuts will mean reductions in payments to hospitals, home health providers, nursing homes, and hospices ($415 billion), as well as cuts to the popular Medicare Advantage plans ($156 billion), which serve about 11 million seniors, plus other Medicare payment reductions.

And it is important to note that the $716 billion in Medicare cuts are actually spent twice in Obamacare, once to pretend to extend the solvency of Medicare by stretching payment dollars further and again to create the new health-insurance subsidies for those under age 65. And, as the president said, the same dollars cannot be spent twice.

Working to avoid the mistakes South Carolina made during the Sanford administration:

In 2009, former GOP Gov. Mark Sanford unsuccessfully sought to reject $700 million in federal stimulus funding, making essentially the same argument Haley’s administration is embracing now: that the cash will hurt the state in the long run.

The administration argues the state will not have the money to support the expansion, which would provide health insurance to an estimated 350,000 to more than 600,000 needy South Carolinians.

In addition, administration officials say the expansion won’t help accomplish the goal of providing the most health care for the least cost. The Legislature ultimately will decide whether to move forward with the expansion or not, just as it did with the stimulus money.

The state took the stimulus cash after the Republican-controlled Legislature sought to overrule Sanford, who rejected lawmakers’ mandate but was eventually sued and lost.

“In terms of the legality of it, we’ve seen how that plays out,” said Tim Pearson, Haley’s chief of staff. “The question is are the political realities different and where are the legislative leaders? I think that the framework is extremely similar. The question is whether or not it plays out the same way.”

The federal pot is much bigger this time around. South Carolina stands to receive more than $13 billion with an estimated $1.1 billion match by the state for the first six years of the expansion. The federal government would fully fund the expansion, part of the Affordable Care Act, for the first three years from 2014 to 2016. States would contribute a maximum of 10 percent of the cost by 2020. Few states receive more assistance from the federal government on Medicaid payments as South Carolina, and nearly 20 percent of the state’s residents lack health insurance.

The success that Haley’s office, particularly her Medicaid Director Tony Keck, has in wooing GOP lawmakers and medical industry interests could go far in determining how the fight over the expansion plays out next year. The vast majority of Statehouse Democrats are widely expected to end up supporting the expansion.

The administration is sure to face fierce opposition. Several Democrats, advocates for the poor and groups such as the United Way Association of South Carolina say the state should follow through with the expansion. And frustration from expansion supporters is likely to build from a simmer to a boil in the more than three months before the Legislature can begin debate on the issue.

Gov. Peter Shumlin pushes ahead alone.

The rest of the United States has no interest in single payer, of course, not now nor in the near future. Not only did the 2010 health law reject single payer or a public option, its rules and structures prevent a state like Vermont from going single payer, at least at the outset.

But Shumlin’s ready to go – and he doesn’t want the health care law to stand in his way.

“This Vermont boy wants to implement that single-payer health care system tomorrow, and I don’t know why you guys want to stop me from doing that,” Shumlin said at a recent POLITICO health policy panel. “It’s the right thing to do. The rest of the world has figured it out. Let’s grow up and join them.”

The Vermont Legislature and his administration are working on setting up a state health insurance exchange under the health care law. It isn’t single-payer, although it’s often described that way. It’s an exchange. But Vermont is designing its exchange in a way that could be a platform for a state-based single-payer system.

Shumlin argues that his vision is as pragmatic as it is progressive. The efficiencies of a one-payer system will slow health care spending, freeing up dollars for jobs and economic growth, he says.

But a lot of things have to fall into place. To get to single-payer, even by 2017, Shumlin acknowledged that he would need an unprecedented slew of exemptions, tweaks or workarounds from numerous federal health programs and laws – including waivers from Medicare, Medicaid and the Affordable Care Act itself. He has to figure out what to do about big businesses that operate in Vermont and other states whose health plans are regulated not by the state, but by a federal law known as ERISA.

And the Legislature has to agree on a way of paying for it – one that won’t stir so much opposition in the business community that the whole thing falls apart.

What it’s like to be on the wrong side:

Insurance officials like Chaney, however, want a better contingency plan in case the Republicans lose, as the 10-day window between the election and the exchange deadline will not give them enough time to prepare an exchange.

“They can’t just leave this to the will of the wind,” Chaney said in an interview.

“This isn’t about politics. It’s about following the law,” he added. “And I think I’m better equipped to operate an exchange in my state than the federal government.”

A bill to create a state-based exchange failed to pass the Republican-led Mississippi legislature in 2011, but Chaney, a former lawmaker and businessman, was able to create an exchange anyway under the auspices of an older state law.

Chaney said he worked “under the radar” to set up the exchange until July 12, when he attended a talk at the Mississippi Center for Public Policy, a think-tank and lobbying group. The speaker was Michael Cannon, health policy director of the libertarian Cato Institute, who described the damage posed by federal meddling into healthcare and urged the dozens of state lawmakers in attendance to refuse to set up Mississippi’s exchange.

Pressure piled on Chaney, and a day later he released a statement to say that he would not implement an exchange until after the elections. Though he continues planning efforts, he has not signed any permanent contracts.

“If you’d ever been to a picnic, and found out you were the main course, that’s what happened,” Chaney said about the experience later.

Democratic Gov. Jay Nixon rebuffed in defense of the administration’s conscience overrun:

The Missouri Legislature has voted to override Gov. Jay Nixon’s veto of a bill that would allow employers to opt out of covering contraceptives in health insurance policies for religious reasons.

But just hours after lawmakers voted Wednesday, the new law was hit with its first legal hurdle. The Greater Kansas City Coalition of Labor Union Women and a female firefighter filed a lawsuit claiming that the legislation discriminates by sex and religion and that it goes against federal law.

The contraception law was pushed in response to a new federal mandate that would require all employers – including religiously affiliated institutions, such as universities and hospitals – to offer birth control coverage in employee health plans.

Supporters of the exemption painted it as a fight for religious freedom.

“This bill is about protecting our religious liberties,” said Rep. Sandy Crawford, R-Buffalo. “It is about protecting businesses from the overreach of government.”

The new law says employers cannot be required to cover contraception, abortion or sterilization if those services go against their religious or moral convictions.

The latest report from Americans for Tax Reform:

Money is fungible.  It’s extraordinarily unlikely that a taxpayer will have a tax liability only due to not paying the penalty. Most times, taxpayers owe for all sorts of reasons – not reporting income, not being able to substantiate deductions, late payment or filing, etc. Just because a criminal penalty, levy, or lien is not being applied because of this liability doesn’t mean that the unpaid fine isn’t contributing to punishment for other unpaid tax liabilities. Nor does it mean that a partial repayment by the taxpayer will go first to other contributors to a tax debt. There’s just no way to effectively silo these things.

Interest and non-criminal penalties will still apply. The IRS will still charge taxpayers interest and regular, non-criminal penalties on unpaid mandate fines. Let’s say I earn $100,000 per year and have been wracking up $2500 non-compliance fines for four years. I don’t just owe the $10,000 in back taxes. I also owe interest (currently around 4% a year) plus a “failure to pay” penalty of 0.5% for every month you don’t pay (which never stops growing and compounding, by the way). Over time, that really adds up – the total interest rate could easily exceed 100% or more. A person consistently not paying the fine would wrack up multiple times their original liability. Can the IRS issue liens or criminally pursue for the interest alone? Probably.

What about the other 19 taxes in Obamacare? This fig leaf of protection only extends to the individual mandate penalty. What about failure to pay some of the other 19 new or higher taxes in Obamacare? Someone, for example, not wanting to pay the new 3.8 percent surtax on savings would face not only the interest and failure to pay penalty described above, but also the criminal penalties, liens, and levies the statute deals with. Ditto for the medical device manufacturing tax, the tanning tax, the new limitations on HSAs and FSAs, etc.

Don’t worry, taxpayers. The IRS won’t come down hard on you if you don’t comply with the individual mandate. Just ask them.

Policy and law not in sync:

California’s attorney general has launched a broad investigation into whether growing consolidation among hospitals and doctor groups is pushing up the price of medical care, reflecting increasing scrutiny by antitrust regulators of medical-provider deals.

The office of the attorney general, Kamala D. Harris, has sent subpoenas, known as civil investigative demands, to several big hospital operators in the state, including San Francisco-based Dignity Health and San Diego’s Scripps Health and Sharp HealthCare. Northern California’s 24-hospital Sutter Health system has also received one, as has Santa Barbara-based Cottage Health System, according to people with knowledge of the matter. Subpoenas have also gone to major California health insurers, those people said.

The probe, which has been under way for several months, is examining hospital systems’ reimbursement from the insurers, according to people with knowledge of the matter. The regulator appears to be focusing on whether the systems’ tie-ups with physicians, as well as ownership of hospitals, have given them the market power to boost prices in a way that violates antitrust law, these people said.

Nationally, health-care providers are rapidly merging into bigger health systems, moves that they say will improve efficiency. The number of hospital deals last year, 86, was the biggest since 2000, according to Irving Levin Associates, a research firm that tracks health-care transactions.

Also, nearly a quarter of all specialty physicians who see patients at hospitals are now employed by the hospitals, according to an estimate from the Advisory Board Co. That is more than four times the 5% in 2000. Among primary-care doctors who see patients in hospitals, the employed share has doubled to about 40% in the same time frame.

The American Hospital Association said consolidation doesn’t routinely drive up prices; the California Hospital Association referred questions to the national group. Hospitals are merging and employing more doctors in order to streamline and improve care, under pressure from health regulators urging a more integrated approach under the federal health overhaul law, said Melinda Hatton, AHA’s general counsel. “The antitrust agencies and national health-care policy don’t seem to be really in sync at this point,” she said.