Wonkbook: Is the slowdown in health-care costs over?

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RCP Obama vs. Romney: Obama +3.7%; 7-day change: Obama +0.2%.

RCP Obama approval: 50.0%; 7-day change: +0.9%.

Intrade percent chance of Obama win: 72.1%; 7-day change: +7.3%.

Top story: The mess in medicine

The slowdown in health costs is over. Here we go again. "U.S. spending on health insurance grew at an accelerated rate in 2011, breaking a two-year trend of smaller cost increases. The culprit, a new study suggests, is not Americans seeking more treatment but rather rapid growth in the price of medical care. Spending for private health insurance surged by 4.6 percent in 2011, according to a report from the Health Care Cost Institute. That growth rate is faster than the rest of the economy and higher than the previous year, which had 3.8 percent growth. Average spending on a private insurance patient rose to $4,547 in 2011, compared with $4,349 in 2010." Sarah Kliff in The Washignton Post.

And premiums on Medicare drug plans are rocketing upwards. "Seven of the top 10 Medicare prescription drug plans (PDPs) saw a double-digit increase in premiums for 2013, according to an analysis by Avalere Health. The increases mean that several of the top 10 PDPs will lose eligibility for low-income subsidy beneficiaries in some U.S. regions, the study found...The top 10 PDP with the highest premium increase was the Humana Walmart Preferred RX Plan, which saw a 23 percent rise to an average premium of $18.50. More than 1.5 million seniors are in enrolled in that plan, the report stated. The second-highest increase among the top 10 plans hit First Health Part D Value Plus, rising 17 percent to $29.75." Elise Viebeck in The Hill.

@dmarron: To boost adoption, the killer app in electronic medical records was inevitably to help docs charge more

Doubt the future of Medicare? Survey says: You're not the only one. "Most people who are not on Medicare doubt the program will supply good and affordable healthcare by the time they turn 65, according to a new survey...Specifically, 80 percent expressed partial to no confidence that they will be able to afford healthcare while on Medicare without struggling financially. A similar 77 percent were unsure that Medicare will afford them a good choice of medical providers, and 75 percent doubted that the program will guarantee them the medical treatments they need." Elise Viebeck in The Hill.

But voters trust Obama over Romney on Medicare. "A new poll shows swing-state voters trust President Obama better than GOP rival Mitt Romney to handle Medicare. A new Gallup poll finds voters in 12 battleground states saying Obama will better address the challenges facing Medicare, by 50 percent to 44. Among all voters surveyed nationally, Obama holds a 51-43 edge over Romney on the issue." Meghashyam Mali in The Hill.

The U.S. government issued a stern warning to hospitals on Medicare fraud. "Saying there are 'troubling indications' of abuse in the way hospitals use electronic records to bill for Medicare and Medicaid reimbursement, the Obama administration warned on Monday that it would not tolerate what it called attempts to 'game the system' and vowed to vigorously prosecute doctors and hospitals implicated in fraud...Regulators, including the Office of Inspector General for Health and Human Services, are concerned about the increase in billing for the most expensive evaluation services by hospitals, in the emergency room, and by doctors in their offices. Private insurers have also expressed concern about the higher level of billing. The Centers for Medicare and Medicaid Services is conducting audits to prevent improper billing. The agency is also starting more extensive medical reviews of billing practices that will identify those hospitals or doctors that are billing for much more expensive services than their peers, according to the letter. While not unprecedented, the letter is especially blunt." Reed Abelson and Julie Creswell in The New York Times.

@sam_baker: Reminder: Do not commit Medicare fraud.

Read: The Sebelius-Holder letter.

Also read: The response of the American Hospital Assoc. (PDF download-only).

@AlecMacGillis: So instead of using electronic medical records to save $$, hospitals are using them drive up their bills. Infuriating.

Romney was against relying on emergency room care before he was for it. "During an interview that aired Sunday night on CBS’s “60 Minutes”, Republican presidential candidate Mitt Romney talked about emergency rooms as a solution for the uninsured. 'If someone has a heart attack, they don’t sit in their apartment and die,” he said. “We pick them up in an ambulance and take them to the hospital and give them care. And different states have different ways of providing for that care.' That’s different from 2006, when Romney used to talk about emergency rooms as the problem. Massachusetts had just passed its universal coverage law that was meant, among other things, to move care out of emergency rooms, where costs are higher, and into primary care offices." Sarah Kliff in The Washington Post.

EMANUEL, TANDEN, AND BERWICK: The Democrats' market-friendly alternative on health care. "Pilot programs under the Affordable Care Act, such as Medicare's Acute Care Episode Demonstration in the Baptist health system in San Antonio, have produced 15% to 30% savings in hip and knee replacements...We also recently proposed letting market competition determine prices for many health-care goods and services. Rather than have the government set prices for things like laboratory tests, manufacturers and suppliers should compete to offer the lowest prices. Where it has been used, competitive bidding has reduced Medicare spending by 42%. Does this sound like government-controlled health care -- or a market-friendly policy?" Ezekiel Emanuel, Neera Tanden, and Donald Berwick in The Wall Street Journal.

KESSLER: Premium support would do a better job insulating Medicare from politics. "The administration of government programs can be influenced to greater or lesser degrees by politics, and Medicare suffers enormously from its constant micromanagement by Congress and the executive branch. The current debate over Medicare reform is often framed as a choice between centralized administration and market mechanisms, but there is a more clarifying way to evaluate the various reform proposals: by examining how much they would allow politics into the program, and how they would manage the competing desires of lawmakers, administrators, interest groups, health-care providers, and beneficiaries." Daniel Kessler in National Affairs.

Top op-eds

KLEIN: Romney's nightmare scenario. "If things don't start looking better for Mitt Romney soon, they're going to get a lot worse for him, and very quickly. To understand the Romney campaign's nightmare scenario, you need to understand the Romney campaign's much-vaunted finances. It's become conventional wisdom that the Romney campaign has more money than the Obama campaign. But that's not quite right... Romney only controls the money raised by his campaign...[W]hile these groups [the RNC and Republican super PACs] want Romney to be president, they are not solely devoted to the task of electing Romney as president. If they are devoted to anything, it's to blocking Obama. Which leads to Romney's nightmare scenario: If things don't turn around for Romney soon, those super PACs may give up on the task of electing Romney as president and turn to the task of encircling Obama's second term with a Republican House and a Republican Senate." Ezra Klein in The Washington Post.

NOCERA: What the rentiers don't do for America. "Forbes magazine published its annual list of the 400 wealthiest Americans. There werenÕt a lot of surprises on the Forbes 400...All the usual suspects were there...What was illuminating was not so much who was on the list but what they collectively told us about the state of the richest of the rich. Thirty years ago, when Forbes published its first Forbes 400, a net worth of $75 million would get you on the list. Today it takes $1.1 billion...What was illuminating was not so much who was on the list but what they collectively told us about the state of the richest of the rich. Thirty years ago, when Forbes published its first Forbes 400, a net worth of $75 million would get you on the list. Today it takes $1.1 billion...Although Romney himself isnÕt close to being rich enough to join the Forbes 400, his reliance on capital gains is a trait he shares with most of the ultrawealthy. It is the thread that ties together the Forbes 400...All of which would be justifiable if the country got some benefit in return." Joe Nocera in The New York Times.

BROOKS: The disappearance of communitarian conservatism. "When I joined the staff of National Review as a lowly associate in 1984, the magazine, and the conservative movement itself, was a fusion of two different mentalities. On the one side, there were the economic conservatives...But there was another sort of conservative, who would be less familiar now. This was the traditional conservative, intellectual heir to Edmund Burke, Russell Kirk, Clinton Rossiter and Catholic social teaching... Instead, the traditionalist wanted to preserve a society that functioned as a harmonious ecosystem, in which the different layers were nestled upon each other...Conservatism has lost the balance between economic and traditional conservatism. The Republican Party has abandoned half of its intellectual ammunition. It appeals to people as potential business owners, but not as parents, neighbors and citizens." David Brooks in The New York Times.

@dandrezner: I have mental image of @nytdavidbrooks weeping sadly into his port, sitting by a fireplace, after filing this column

PONNURU: Q&A on the Fed's QE. "WhatÕs the rationale for QE3? One argument for it starts with the two goals that Congress has set for the Fed: to keep unemployment low and prices stable...Core inflation, headline inflation and market expectations of inflation are all below 2 percent. Right now unemployment is high. Looser Fed policy would bring us closer to both targets...Will looser money hurt savers?...The reason Friedman said interest rates are a bad gauge of monetary policy is that tight money can depress the economy and thus lower returns on investment. The weak economy, not excessive money creation, has been keeping interest rates low. If the FedÕs action increases economic growth, then it will help savers. Long-term interest rates rose after its announcement." Ramesh Ponnuru in Bloomberg.

METTLER AND SIDES: 96 percent of Americans have leaned on government once. "We have unique data from a 2008 national survey by the Cornell Survey Research Institute that asked Americans whether they had ever taken advantage of any of 21 social policies provided by the federal government, from student loans to Medicare...What the data reveal is striking: nearly all Americans -- 96 percent -- have relied on the federal government to assist them. Young adults, who are not yet eligible for many policies, account for most of the remaining 4 percent. On average, people reported that they had used five social policies at some point in their lives" Suzanne Mettler and John Sides in The New York Times.

Inequality interlude: The most unequal profession? Pharmacy, according to a new study.

Got tips, additions, or comments? E-mail me.

Still to come: the young are saving more of their incomes; the policies behind emergency medicine; how the sequester affects local governments; the weakening of energy-efficiency measures; and half of the poor are politically independent.

Economy

The IMF calls for 'lights, camera, action.' But really, just the 'action' part. "The United States and Europe need to speed key political decisions to help keep the weakening global economy from sinking under high debt and unemployment, International Monetary Fund Managing Director Christine Lagarde said on Monday. The ongoing crisis in Europe, U.S. fiscal problems and a developing slowdown in Asia are threatening even deeper problems, Lagarde said, and have triggered new worries about waning momentum for action still needed to address some of the issues behind the 2008 financial crisis." Howard Schneider in The Washington Post.

@AnnieLowrey: IMF's Lagarde: Good work, central banks! But everything is still awful and we might cut our growth forecasts again.

Why the fiscal cliff might not be hurting businesses. "Lately, there have been a series of news stories about how the U.S. economy is getting dragged down by fears of the looming 'fiscal cliff' -- that batch of tax hikes and spending cuts scheduled to take effect in 2013 if Congress doesnÕt act soon. Much of the evidence, however, has been anecdotal...And perhaps CongressÕs dilly-dallying on the fiscal cliff really is creating a spate of economy-crushing uncertainty. So far, however, itÕs hard to see in the data." Brad Plumer in The Washington Post.

The young are also the thrifty. "Growing numbers of young Americans are boosting savings, cutting spending and planning for retirement...But young adults are now saving more and starting earlier than people their age used to, according to several broad measures. Of employees under age 25, 44% participated in their companies' 401(k) retirement plans in 2011, up from just 27% in 2003, according to data on millions of employees whose companies' retirement plans are managed by Vanguard Group Inc. Of those ages 25 to 34, 63% participated in 2011, up from 58% in 2003...The automatic-enrollment system typically starts employees with a 3% contribution, she said, but the average contribution rate for people 21 to 33 is 6%, suggesting an intentional effort to boost savings. Fidelity said its data indicated that 86.4% of employees ages 21 to 33 contributed to 401(k) plans in 2011, the highest of any age group." E.S. Browning in The Wall Street Journal.

The economic rationale for preferential treatment of capital income. "Mitt Romney's Cayman Island hideouts and unusually stuffed IRAs get most of the attention, but the main explanation for his low tax rate isn't at all nefarious: 80 percent of his income comes from investments, and the top tax rate on capital gain and investment income is 15 percent. That's compared to a top tax bracket of 35 percent on ordinary income. Why does investment income get this big bonus?...The basic idea here is that you investing is a form of savings. And economists don't really want to tax savings, in part because the effects of taxing savings can be a little weird...[Even small capital gains taxes generate] a massive incentive to spend money now rather than save it and spend it later on...Some economists argue that this means there shouldn't be any tax on capital, because as the number of years you save approaches infinity, the tax rate on savings starts to become truly exorbitant...So the disagreement among economists isn't about whether people like Romney are paying too little. It's about whether or not they're paying too much." Dylan Matthews in The Washington Post.

The Wild West economics of the Internet top-level domains. "A historic land rush is underway for vast new swaths of the Internet: Amazon has bid for control of all the Web addresses that end with '.book.' Google wants '.buy.' Allstate wants '.carinsurance.'...The number of what are called 'top-level domains; is set to expand from the current 22, including '.com' and '.org,' to potentially more than 1,400 next year...Overseeing the issuing of Web addresses is a Los Angeles-based nonprofit group Ñ the Internet Corporation for Assigned Names and Numbers, or ICANN Ñ whose sharply growing revenue is tied to the continued expansion of domains. Its revenue grew from $5.7 million in 2002 to $68 million last year, according to federal tax documents." Craig Timberg and James Ball in The Washington Post.

The United States of inequality. "The Census has calculated the Gini coefficients -- the standard measure of income inequality -- for each state, and the results aren't necessarily what you'd expect...The dark purple areas are highly unequal and the light blue ones highly equal. New York is the most unequal state, followed by Connecticut, Louisiana and New Mexico (a motley crew if ever there was one), and Wyoming, Alaska, Utah, Hawaii and Vermont are the most equal...How has this changed since the recession hit?...Again, inequality patterns make for some odd partners. Inequality fell the most in Wyoming, Montana and South Dakota, with North Dakota and Minnesota also faring well, but Delaware, Mississippi and three states in New England all saw declines as well. The most intense rises in inequality came in Nevada and New Mexico, two Sun Belt states very hard hit by the housing crash, but states from Michigan to Georgia to Maine also saw big increases." Dylan Matthews in The Washington Post.

Independents interlude: Half the poor are of no political party.

Health Care

Emergency care and where it fits into health policy. "A Kaiser Family Foundation found that state and federal government spent $34.9 billion on uncompensated care in 2004...Some costs likely get shifted to private consumers, too. A 2008 paper in the journal Health Affairs estimates that as much as 1.7 percent of private health insurance premiums are used to offset the cost of uncompensated care...The fact that emergency room care tends to be more expensive than that delivered in other settings exacerbates this problem...Government data shows that the average emergency department visit cost $922 in 2008. The average office visit, meanwhile, came in at $199. Here's another way to put it: Emergency room visits accounted for 4.4 percent of doctor visits but 14.4 percent of doctor visit costs." Sarah Kliff in The Washington Post.

Domestic Policy

The sequester will have effects on local governments. "Add the nation's mayors to the growing chorus of voices warning of fiscal doom if sequestration takes effect. While much of the opposition has focused on the defense sequester, the U.S. Conference of Mayors wants to remind everyone of the domestic spending cuts as well, many of which will hit state and local budgets...'The impending sequestration process mandated by the Budget Control Act of 2011 (BCA) is perhaps the biggest threat to our metro economies...We are particularly concerned with deep reductions in non-defense discretionary spending, one-third of which is directed to state and local programs.'" Suzy Khimm in The Washington Post.

Changes to electoral system in Cali. create new local politics. "The new primary system, coupled with California's adoption of nonpartisan redistricting, is causing upheaval in the nation's largest and most influential Congressional delegation...After voters approved electoral changes in 2010, an independent commission redrew the electoral map, making some districts more evenly divided among Democrats and Republicans. In other, more homogeneous districts, the new top-two primary system has also made races more competitive by allowing the two most popular candidates from the same party to compete in the fall." Normitsu Onishi in The New York Times.

Rock classics interlude: '(Don't Fear) The Reaper,' Blue …yster Cult, 1976.

Energy

Congress waters down energy-efficiency legislation. "Backers of a Senate energy efficiency bill passed early Saturday said that removing authorizations and new standards were necessary to gain traction in the Republican-controlled House...The newer edition largely emphasizes increased collaboration between the federal government and industrial sector to enhance energy efficiency. It also expands energy efficiency efforts at federal facilities. The amended bill does not contain any authorizations or new efficiency standards called for in the original version...The lighter bill dropped language that would have boosted energy efficiency requirements in national building codes for new homes and commercial buildings. It also scrapped a plan to expand Energy Department loan guarantees to efficiency retrofits and a loan program that would have employed states to encourage efficiency upgrades in the manufacturing sector." Zack Colman in The Hill.

Standardization plan for oil commodity prices blocked. "Global financial watchdogs have backtracked on proposals for greater regulation of the physical oil market due to opposition from oil majors and bodies including the International Energy Agency and the Opec cartel. The International Organisation of Securities Commissions, an umbrella group of financial regulators, pushed in favour of strong regulation this year on how commodities benchmarks, including Brent crude, are compiled...The regulators at first proposed that market participants sent all prices to the price-reporting agencies to gather a complete view of the market. Moreover, they proposed that only completed transactions be used to compile the benchmarks." Javier Blas in The Financial Times.

Wonkbook is produced with help from Michelle Williams.

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Dylan Matthews · September 24, 2012