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Wonkbook: Health reform turns 2

at 07:00 AM ET, 03/23/2012

Health-care reform turns two today, and it's not going to be a particularly happy birthday. On Monday, the Supreme Court will begin to hear oral arguments on the constitutionality of the individual mandate. The law remains unpopular among the public and loathed by Republican politicians, who have pledged that repeal will be their first order of business if given power in 2012. Implementation is proceeding jerkily, in part because many states are waiting till the legal and political uncertainty clears to commit to the law.


President Obama delivers remarks and signs the health-care reform bill in the East Room of the White House on March 23, 2010. (Marvin Joseph - WASHINGTON POST)
And yet, out in the health-care system, the law's second birthday will be a happy one. As Sarah Kliff reports, the hundreds of pages devoted to moving American health care away from fee-for-service and towards pay-for-quality are having a dramatic effect on the way medical providers across the country actually do business.

The Affordable Care Act included 45 reforms aimed at changing how health care is delivered. Fifteen of those reforms focus on payment practices. At the moment, most are voluntary, but they are quickly becoming mandatory. Starting in October, for instance, hospitals with high rates of "preventable readmission" -- that is to say, high rates of patients returning with complications from earlier procedures -- will lose one percent of their Medicare revenue. In the current system, conversely, a patient turning up with a complication from a previous procedure actually provides the hospital with more revenue.

In answer to some of these reforms and in preparation for others, health-care systems across the country are either undertaking or accelerating long-overdue changes to the way they do business. Kliff follows Baptist Health System, a five-hospital network in San Antonio, Texas, which saw four surgeons quit as they moved to implement the new, quality-based payments metrics, but which has now seen performance on those measures rise to 98 percent.

Kliff's article -- which you should read, now -- is an unusually concrete look at a dimension of the health-care reform law that is often passed over in the public debate but is perhaps the single most ambitious effort ever launched in this country to lower costs and improve quality in the system. And unlike most of the bill, which hasn't been implemented yet and may or may not survive the election, it's happening now, all around us.

Top stories

1) Two years later, health care reform has faced some challenges in implementation. "When the health-care overhaul became law after a bitter debate, many Democrats predicted Americans would grow to like it as they started enjoying some of the early benefits. The day after the president signed the bill into law, which happened exactly two years ago, an average of major polls collated by the website Real Clear Politics showed 50.4% of Americans opposed. This week, that had changed only by a tenth of a percentage point, ticking up to 50.5%. The health law remains a tough sell for reasons that go beyond the drumbeat from Republicans for its repeal and questions about its constitutionality that will be debated next week at the Supreme Court. Several of the law's early pieces, designed to win public support, haven't worked as well in the real world as on paper and have irked even some of the Americans they were designed to help." Janet Adamy and Louise Radnofsky in The Wall Street Journal.

But it is already transforming the health-care system. "The Affordable Care Act is mostly known for its mandate to expand health insurance to 30 million more Americans within a decade. That’s the side of the legislation Democrats touted last week, when the law hit its two-year anniversary. It’s also the point that has roused the most ire from opponents. Insurance expansion is at the heart of legal challenges the Supreme Court will take up on Monday, which argue that forcing people to buy insurance coverage is unconstitutional. But much of the law’s 905 pages are dedicated to an effort that’s arguably more ambitious: an overhaul of America’s business model for medicine. It includes 45 changes to how doctors deliver health care — and how patients pay for it. These reforms, if successful, will move the country’s health system away from one that pays for volume and toward one that pays for value. " Sarah Kliff in thw Washington Post.

SLIDESHOW: How the Affordable Care Act is changing the health-care system -- in charts.

@morningmoneyben: So next week is pretty much Lalapalooza for health care reporters, no?

2) House GOP leaders are increasingly confident that the Ryan budget will pass. "Conservative House Republicans on Thursday said they support the 2013 budget resolution, leaving GOP leaders increasingly confident they will be able to pass the measure on the floor next week. A day after the budget was approved in committee by a single vote (with two Republicans voting no), prominent members of the conservative Republican Study Committee said they back the resolution crafted by House Budget Committee Chairman Paul Ryan (R-Wis.). 'The Ryan budget will pass,' said House Majority Whip Kevin McCarthy (R-Calif.)...If McCarthy’s prediction comes true, passage of the resolution will be the first clear sign of unity in the House GOP conference in months. Intra-party battles on high-profile bills have marked Rep. John Boehner’s (R-Ohio) tenure as Speaker." Erik Wasson and Russell Berman in The Hill.

3) Today is the deadline for World Bank nominees. "The deadline for nominations to become president of the World Bank is 6 p.m. Friday. Thus far, the only named candidate is Jeffrey Sachs, the development economist and director of the Earth Institute at Columbia University...The United States plans to name a qualified candidate who would immediately become the front-runner -- Europe is expected to back the American nominee, giving the White House pick a hefty portion of the World Bank board’s voting shares. Possible candidates include Lawrence H. Summers, the former Treasury secretary and Obama economic adviser; Laura D’Andrea Tyson, the former White House economist (and an occasional contributor to this blog); Susan E. Rice, the ambassador to the United Nations; and Indra K. Nooyi, the head of PepsiCo. (Speculation continues to swirl around Hillary Rodham Clinton, the secretary of state, and Timothy F. Geithner, the Treasury secretary. But they have been firmly ruled out.)" Annie Lowrey in The New York Times.

SPOILER ALERT: The World Bank’s top job will go to (another) American.

FELIX SALMON makes the case for Nigeria's Ngozi Okonjo-Iweala: http://reut.rs/GIPUuW

4) The Senate passed the JOBS Act after adding some investor protections. "The Senate on Thursday approved a package of bills that relaxes federal regulations to help boost small businesses and startup companies as the economy continues to recover. Senators passed the JOBS Act on a 73-26 vote Thursday, two weeks after the House voted 390-23 to approve it. The measure is backed by President Barack Obama in a rare, election-year agreement in a polarized Washington. But Democrats and several Republicans successfully changed the bill in a way they said would provide more stringent safeguards for investors. That means it now heads back to the House, instead of to the president’s desk for his signature...The change comes with an amendment, sponsored by Sen. Jeff Merkley (D-Ore.), Sen. Michael Bennet (D-Colo.) and Sen. Scott Brown (R-Mass.), which would place additional restrictions on so-called crowdfunding, in which small amounts of money are collected from large groups of people." Seung Min Kim in Politico.

@delrayser: Hard to believe, but the Senate actually appears to be doing stuff. Nobody make any sudden movements; don't want spook them.

5) America is inching towards energy independence. "Across the country, the oil and gas industry is vastly increasing production, reversing two decades of decline. Using new technology and spurred by rising oil prices since the mid-2000s, the industry is extracting millions of barrels more a week, from the deepest waters of the Gulf of Mexico to the prairies of North Dakota. At the same time, Americans are pumping significantly less gasoline. While that is partly a result of the recession and higher gasoline prices, people are also driving fewer miles and replacing older cars with more fuel-efficient vehicles at a greater clip, federal data show. Taken together, the increasing production and declining consumption have unexpectedly brought the United States markedly closer to a goal that has tantalized presidents since Richard Nixon: independence from foreign energy sources, a milestone that could reconfigure American foreign policy, the economy and more." Clifford Krauss and Eric Lipton in The New York Times.

@drgrist: "a story of industry-friendly policies started by Bush & largely continued by Obama - many over the objections of environmental advocates"

Top op-eds

1) LITHWICK: The Supreme Court's health care arguments are all about politics. "That the law is constitutional is best illustrated by the fact that--until recently--the Obama administration expended almost no energy defending it...Will the Court’s five conservatives strike it down regardless? That’s what we’re really talking about next week and that has almost nothing to do with law and everything to do with optics, politics, and public opinion...The current fuss being made over the health care cases has offered the court a perfect cover story. They will hear six hours of argument next week. They will pretend it is a fair fight with equally compelling arguments on each side. They will even reach out and debate the merits of the Medicaid expansion, although not a single court saw fit to question it. And then the justices will vote 6-3 or 7-2 to uphold the mandate, with the chief justice joining the majority so he can write a careful opinion that cabins the authority of the Congress to do anything more than regulate the health-insurance market." Dahlia Lithwick in Slate.

2) KRAUTHAMMER: Judgement time is here for Obamacare. "Obamacare dominated the 2010 midterms, driving its Democratic authors to a historic electoral shellacking. But since then, the issue has slipped quietly underground. Now it’s back, summoned to the national stage by the confluence of three disparate events: the release of new Congressional Budget Office cost estimates, the approach of Supreme Court hearings on the law’s constitutionality and the issuance of a compulsory contraception mandate...Rarely has one law so exemplified the worst of the Leviathan state -- grotesque cost, questionable constitutionality and arbitrary bureaucratic coerciveness. Little wonder the president barely mentioned it in his latest State of the Union address. He wants to be reelected. He’d rather talk about other things. But there’s no escaping it now. Oral arguments begin Monday at 10 a.m." Charles Krauthammer in The Washington Post.

3) MARCUS: Paul Ryan's budget is irresponsible. "Lower the rates, broaden the base. Everyone agrees that such tax reform is a good idea, and the first half of that equation is simple enough. Pick a number, any number. Paul Ryan’s numbers, as it happens, are 10 and 25. The House Budget Committee chairman’s new framework proposes collapsing the current six tax brackets (top rate, 35 percent) into two, with rates of 10 percent and 25 percent. Ryan would also lower the corporate tax from 35 percent to 25 percent -- all, he says, without losing any revenue...Sounds great, right? But the second half of the tax reform equation is the tricky part, which helps explain why the appealing precision of Ryan’s tax brackets is not matched by any detail about what loopholes he would close...Ryan’s tax plan fails the basic test of responsibility. If Ryan and his colleagues have a workable proposal to cut tax rates that dramatically without losing badly needed revenue, let’s see it." Ruth Marcus in The Washington Post.

4) KRUGMAN: No, Obama isn't trying to make gas prices higher. "Let’s get the facts on gas prices straight. First, the lie: No, President Obama did not say, as many Republicans now claim, that he wanted higher gasoline prices. He did once say that a cap-and-trade system for carbon emissions would cause electricity prices to 'skyrocket' -- an unfortunate word choice. But saying that such a system would raise energy prices was just a factual statement, not a declaration of intent to punish American consumers. The claim that Mr. Obama wanted higher prices is a lie, pure and simple. And it’s a lie wrapped in an absurdity, because the president of the United States doesn’t control gasoline prices, or even have much influence over those prices. Oil prices are set in a world market, and America, which accounts for only about a tenth of world production, can’t move those prices much. Indeed, the recent rise in gas prices has taken place despite rising U.S. oil production and falling imports." Paul Krugman in The New York Times.

5) EL-ERIAN: The economy still needs structural reforms. "The United States has gone through an arduous period of intervention and rehabilitation since the global financial crisis in 2008 sent it to the economic equivalent of the emergency room. It moved from the intensive-care unit to the recovery room and, just recently, was discharged from the hospital. The question now is whether the US economy is ready not just to walk, but also to run and sprint...The problem is that the sense of relief now can - and probably will - be taken too far. Indeed, today’s good news should not obscure some consequential structural limitations that will require prolonged therapy and caution. After all, the US economy has yet to regain its full strength, is too structurally impaired to sustain any rapid forward movement, and has not yet started to overcome the many distortive side effects of the extreme medicine that it received." Mohamed El-Erian in Project Syndicate.

@pourmecoffee: On this day in 1933, FDR signed bill legalizing possession of beer and wine. He also did some other good stuff, but this was his main thing.

Folk interlude: The Civil Wars play "Poison & Wine" at Rolling Stone.

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Still to come: Car sales are up; the House voted to get rid of the IPAB; regulators want workers to know their rights; the first offical green jobs report; and a corgi's-eye view of hiking the Runyon Canyon.

Economy

GOOD NEWS WATCH: Jobless claims dropped again. "The number of people filing new applications for jobless benefits dropped to the lowest level in four years, easing fears that recent gains in the job market might prove unsustainable, though a broader gauge of claims continued to suggest that improvement is slowing. New claims for unemployment insurance fell by 5,000 to a seasonally-adjusted 348,000 last week, the government said Thursday, the lowest level since March 2008. But a less volatile measure, the four-week moving average of claims, remained around the 355,000 level it's been for the past four weeks. The latest reports suggest companies are slowing layoffs and looking to expand and hire, but not as fervently as earlier this year. Employers added 227,000 new jobs in February, but the unemployment rate remains high, at 8.3%...Economists have worried a mild winter in the U.S. has propped up recent job growth...the four-week moving average of claims is down about 5,000 from the corresponding week in February, suggesting a sturdier job market." Neil Shah in The Wall Street Journal.

GOOD NEWS WATCH: New car sales have jumped. "A combination of cheap financing, popular new models and rising consumer confidence is stoking pent-up demand and drawing customers back to the nation’s auto showrooms. New-vehicle sales have surged at the start of 2012, outpacing forecasts and putting the nation’s automobile industry on track for its best year since 2007...The sharp increase in auto sales coupled with rising gas prices is causing a few spot shortages, particularly among fuel-efficient models. Dealers worry that the shortages could grow worse if the current sales pace continues through the year...After unexpectedly strong sales in January and February, several auto-research firms raised their 2012 sales forecast. LMC Automotive now predicts that 14 million cars will be sold this year, the same prediction as TrueCar.com. Meanwhile, IHS Automotive and Kelley Blue Book have revised their forecasts upwards from 13.3 million to 13.6 million." Michael Fletcher in The Washington Post.

The SEC is investigating rapid trading firms. "Federal securities regulators are examining whether some sophisticated, rapid-fire trading firms have used their close links to computerized stock exchanges to gain an unfair advantage over other investors, people familiar with the matter say. The wide-ranging probe, being handled by the enforcement staff of the Securities and Exchange Commission, is focusing on the computer-driven trading platforms of exchanges, including BATS Global Markets Inc., the people said. The SEC probe illustrates a bigger push by regulators to examine less-transparent parts of the securities markets, such as the fast-growing area of so-called high-frequency trading. High-speed trading firms use powerful computer systems for rapid-fire trades, in which they often hold stocks for only fractions of seconds. They benefit by being able to move quicker than less technologically proficient investors." Scott Patterson and Jean Eaglesham in The Wall Street Journal.

The Fed will review the bank capital rules for foreign banks. "The Federal Reserve will respond to moves by foreign banks such as Deutsche Bank to restructure to avoid higher capital requirements, the Fed’s top regulatory official has said. Germany’s biggest bank disclosed in its annual report this week that it had restructured its US subsidiary to separate its bank and its broker-dealer. The move allows the bank to avoid having to commit billions of dollars in additional capital to back up its US operations. Daniel Tarullo, the Fed governor in charge of regulation, told the Senate banking committee on Thursday that Deutsche’s move would inform a review of foreign bank supervision in the US...The Fed is already reviewing its supervision of foreign banks in line with a separate provision of Dodd-Frank. If the central bank decides to impose higher capital levels on overseas banks in response to the moves from Deutsche and Barclays, it will be a significant policy reversal." Shahien Nasirpour and Tom Braithwaite in The Financial Times.

Photography interlude: Color photos from the Great Depression and World War II.

Health Care

The DOJ will argue that you can't separate the mandate and the regulations. "No broccoli? Then no dessert. That’s the scenario the Obama administration is presenting to the Supreme Court on health reform’s individual mandate. If you want to get rid of the hated mandate, the administration is telling the justices, you also have to get rid of the most popular part: coverage for people with pre-existing conditions. The Justice Department argues that without the mandate, there is no way to keep the law’s requirements that insurance companies accept all applicants regardless of their medical history and cannot charge more to sicker and older patients. That’s because without the mandate, there won’t be enough healthy people paying health insurance premiums to cover the costs of the sick people. And insurers could raise everyone’s premiums sky-high to pay for those costs." Jennifer Haberkorn in Politico.

Health care reform's future will depend on wheat, pot, and guns. "The survival of President Barack Obama’s signature health care law may come down to wheat, pot, guns -- and a nagging question about broccoli. Strange as it may seem, those diverse topics are apt to surface repeatedly during next week’s arguments at the Supreme Court over the health law’s constitutionality. Wheat farming, pot growing, guns near schools and a violence-against-women law all produced high court precedents key to the federal government’s power to regulate interstate commerce -- and to whether Congress can require most Americans to get health insurance or pay a fine...Broccoli doesn’t involve a precedent, but it’s raised its green head in legal arguments over the law: If the individual mandate is constitutional, just how far could Congress go to address rising health care costs? Could it, for instance, force citizens to eat broccoli?" Josh Gerstein in Politico.

@sam_baker: Sure wish @MCHammer had filed an amicus brief on #hcr, so I could be like, "As explained in the Hammercus brief," which would never get old

What happens if it's overturned? Well, it depends. "Since the 2010 health-care bill became law two years ago Friday, it has launched fundamental changes to Medicaid, Medicare and the private health-insurance system relied on by millions of Americans. Its most transformative -- and controversial -- provisions are not set to take effect until 2014, but a complex web of new rules has already extended coverage and expanded benefits across the country. So what happens to the existing provisions if the Supreme Court, which will hear challenges to the law next week, ultimately decides to go with its most sweeping option: overturning the law in its entirety? The answer depends on where you live, who you work for and how you get your insurance." N.C. Aizenman in The Washington Post.

The House voted to abolish the IPAB. "In a rebuff to President Obama, the Republican-controlled House passed a bill on Thursday to abolish a Medicare cost control board created by the new health care law. The bill, approved by a vote of 223 to 181, provoked a full-throated debate on the merits of the law, the Affordable Care Act, on the second anniversary of its signing by Mr. Obama...The stated purpose of the new panel, the Independent Payment Advisory Board, is to 'reduce the per capita rate of growth in Medicare spending.' Spending cuts recommended by the 15-member board would take effect automatically unless Congress voted to block or change them...The House vote generally followed party lines. Seven Democrats voted for the bill, and 10 Republicans voted against it...The Congressional Budget Office estimated that repealing the board could increase Medicare spending by a total of $3 billion from 2018 through 2022." Robert Pear in The New York Times.

Domestic Policy

Regulators are gearing up for a PR blitz on workers' rights. "Federal regulators are preparing a drive to tell workers at nonunionized businesses they have many of the same rights as union members, a move that could prompt more workers to complain to employers about grievances ranging from pay and work hours to job safety and management misconduct. The National Labor Relations Board will focus on workers' rights to engage in 'protected concerted activity,' which allow two or more employees to take action for their mutual aid or protection, NLRB Chairman Mark Pearce said in an interview. That means employees may discuss working conditions with their employer or among themselves--including in online conversations--and bosses can't retaliate. An individual also may act on behalf of colleagues, according to the 1935 National Labor Relations Act, enforced by the NLRB at most private-sector companies." Melanie Trottman in The Wall Street Journal.

Corgis are excellent interlude: Runyon Canyon as seen from the eyes (back) of a corgi.

Energy

Green jobs make up 2.4 of all employment. "'Green' jobs accounted for 2.4 percent of the nation’s total employment in 2010, the Labor Department reported Thursday in its first-ever survey of green goods and services jobs. According to the report, which gave a snapshot of the role that environmental consciousness plays in the U.S. economy, the United States had 3.1 million green jobs in 2010, the vast majority of them in the private sector. The public sector listed 860,000 green jobs, the report said. In the past, employment in this field has been hard to measure because there’s been no consensus on what constitutes a green job. For its assessment, the Labor Department counted certain jobs in manufacturing, construction, utility and other sectors in which the primary function was to contribute to a green product or service. That includes the manufacture of hybrid vehicles, the production of solar power and construction projects such as weatherization." Sarah Halzack in The Washington Post.

One third of federal clean energy loans are on an internal 'watch list.' "The Department of Energy has placed nearly one-third of its clean-energy loan portfolio on an internal 'watch list' for possible violations of terms or other concerns, according to a copy of the list obtained by The Wall Street Journal, highlighting how such concerns have spread beyond the now-bankrupt Solyndra LLC...Overall, the clean-energy loan program has doled out roughly $8.3 billion, according to a Jan. 31 report by Herb Allison, a former Treasury Department official and Wall Street executive who was commissioned by the White House to review the program after Solyndra's bankruptcy filing. Loans get placed on the watch list because they have been 'identified as higher risk,' Mr. Allison said in his report...Energy Department officials said loans also could be placed on the watch list for benign reasons--for example, if staff knew an important deadline was approaching--and that being placed on the list wasn't necessarily a precursor to financial problems." Ryan Tracy in The Wall Street Journal.

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

 
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