By N.C. Aizenman and Julie Appleby
Monday, October 18, 2010; 6:18 PM
The debate that preceded passage of the health-care overhaul has returned as a heated issue in the midterm elections. Politicians and advocacy groups seeking repeal of the law are making dramatic claims about its cost and effects. How valid are they? We evaluate some of the most common criticisms.
The law will cause 87 million Americans to lose their current coverage.
Republican House leaders assert this in the "Pledge to America governing plan they released last month, adding that it contradicts President Obama's assurance during the health-care debate that "if you like your health plan, you can keep it."
HOW TRUE IS IT?
How True? The evidence is limited.
Obama was certainly obscuring the picture. The law exempts plans in existence before its adoption from key requirements such as offering free preventive services and eliminating penalties for out-of-network emergency care.
But insurers can lose this "grandfathered status" by making such changes as reducing the coverage of particular conditions or raising deductibles, co-payments and coinsurance shares above amounts set by formula. The same goes for employers that switch insurance carriers or reduce the share of employee premiums they cover by more than five percentage points. As a result, the administration estimates that by 2013, plans covering millions of workers will have fallen out of grandfathered status - not 87 million but 78 million workers according to the most recent figures.
Still, the Republican assertion that these workers will be forced to "drop their current coverage" implies the workers will be left with a worse plan or none at all. There's little evidence for that. Many currently grandfathered plans already offer some or even all of the consumer protections required of new plans. So losing grandfathered status wouldn't necessarily require them to raise premiums or make other changes. What portion of plans fall into this category? There are not enough data to say.
The research is also limited when it comes to assessing the impact on those plans that will need to add consumer protections as a result of losing grandfathered status. Republicans argue that the requirements could prove expensive and that many insurers or employers will be forced to pass the cost on to consumers or cancel the plans altogether.
However, government estimates suggest that the problem may not be widespread. For instance, including coverage of preventive services was estimated to increase a plan's premiums by less than 2 percent, on average.
- N.C. Aizenman
The law's expansion of Medicaid will put massive pressure on state budgets at a time when many are already in crisis.
Twenty states are challenging the law's constitutionality in federal court, arguing that the Medicaid changes effectively require many of them to spend billions of dollars in "an unprecedented encroachment on the sovereignty of the states." Similar concerns have been raised by politicians including Pam Bondi, the Republican candidate for attorney general of Florida, and Rory Reid, the Democratic candidate for governor of Nevada.
HOW TRUE IS IT?
The impact will probably be small, but it's hard to say for sure. Technically, Medicaid is a voluntary partnership, with the federal government covering most of the cost and states paying a remaining share calculated according to their wealth. In practice, states would be loath to pull out of Medicaid because they would be giving up billions in federal assistance for their poorest citizens.
Until now, there has been wide diversity among the states on the question of who should be eligible for Medicaid. Some states limit assistance for adults to those who are disabled or truly indigent. Others have devoted extra money to cover, for instance, parents who earn up to at least 150 percent of the poverty level, or about $33,000 for a family of four.
Starting in 2014, the new law will require participating states to cover everyone earning 133 percent of the poverty level or less. It is estimated that this will bring 16 million to 23 million more people into Medicaid. The federal government will pick up nearly all the cost of these newly eligible beneficiaries, starting at 100 percent from 2014 to 2016 and gradually decreasing its share to 90 percent from 2020 onwards.
The impact of this mandate could vary considerably. States such as Texas and Alabama that have had narrow eligibility rules will add far more people to their rolls. But they will also get a lot more federal dollars to cover the extra cost. States such as Massachusetts and New York, whose current rules are more expansive, may see fewer new enrollees, but initially they'll get less federal help to cover them.
Such states could also see savings because many people they have been helping will be eligible for federal subsidies to buy insurance on state-based exchanges.
So what's the bottom line? Estimates vary widely.
In a study for the Kaiser Family Foundation, the Urban Institute estimated that, not counting offsetting savings, between 2014 and 2019, total state spending on Medicaid will increase by $22 billion, 1.4 percent more than they would have spent in the absence of the new law. But that masks considerable differences across states. Four will spend less than they would have otherwise. Nine will increase their spending by 3 or even 4 percent.
While the Urban Institute's analysis tracks with Congressional Budget Office estimates, several states have come up with substantially higher projections.
- N.C. Aizenman
The new law uses tax dollars to pay for abortions.
Groups including the Susan B. Anthon List and Americans United for Life have spent at least $2 million on television ads (watch two of the ads below), radio spots and billboards describing the law as the largest expansion of taxpayer-funded abortions in decades. In their "Pledge to America," Republican House leaders assert that the law and an accompanying executive order issued by President Obama are "inadequate to ensure that taxpayer funds are not used" to pay for abortions.
HOW TRUE IS IT?
Open to interpretation. Under the Hyde Amendment, which Congress has attached to yearly spending bills since 1977, federal dollars cannot be used to directly fund abortions, except in cases of rape or incest, or where the mother's life is in danger. This prevents abortions from being covered by insurance plans for federal employees, the Tricare plans for military families and the federally funded portion of Medicaid, the health program for the poor.
But the insurance system created by the new law does not lend itself to a straightforward segregation of federal funds in other plans.
In the state-based exchanges that the law creates, people without employer-based coverage will be able to buy private insurance using a combination of their own money and federal subsidies that most will receive based on their income level. Drafters of the law attempted to assuage both sides of the abortion debate through a compromise that ended up pleasing neither.
Insurers are allowed to include abortion coverage in their exchange plans, but everyone who buys such a plan must make two separate premium payments: one covering the bulk of the policy and another, far smaller one, as little as $1 per month, for the plan's abortion coverage. Any federal subsidies can be applied only to the first payment.
Antiabortion groups complain that the arrangement amounts to little more than an accounting gimmick. Unless plans that accept federally subsidized customers are barred from covering abortion, they say, the government will effectively be using at least some tax dollars to fund abortions.
To reassure them, Obama issued an executive order immediately after the law's passage affirming his commitment to prevent federal funds from being used to pay for abortions. But the advocates complain that the order merely calls for compliance with the two-payment rule and is an "empty gesture." Meanwhile, abortion-rights supporters worry that in practice few if any plans on the exchanges will end up offering abortion coverage because insurers will find the two-payment rule cumbersome and consumers will consider it bizarre and objectionable. They also note that the law allows states to prohibit plans on their exchanges from offering abortion coverage, an exception that could affect large numbers of women.
- N.C. Aizenman
The law is driving up costs and premiums, and will continue to do so over the next several years.
Republican Ron Johnson, challenger to Sen. Russ Feingold (D-Wis.); the U.S. Chamber of Commerce, in an advertisement targeting Sen. Michael Bennet (D-Colo.), and Revere America, a group chaired by former New York governor George Pataki. (Watch video ads below)
HOW TRUE IS IT?
There may be very small increases initially. In the long term, any prediction is speculative.
Figuring out how the new law will affect health-care costs - and therefore premiums - is among the trickiest issues surrounding the statute. Not many people think costs will decline; the question is whether costs and premiums would go up faster with or without the law.
In the short term, state insurance commissioners say some providers of individual and small- group coverage are raising rates for next year by up to 9 percent. These insurers and Republican critics say that the law's consumer protection provisions, such as the prohibition on lifetime caps, are forcing them to raise premiums.
But the Obama administration, citing estimates from the Urban Institute, the human resources consulting company Mercer and others, says the law isn't responsible for any increase greater than 1 to 2 percent. That assertion is supported by one of the first major surveys to forecast what might happen next year. Hewitt, a consulting firm, said that large companies' premiums are expected to rise 8.8 percent in 2011 - 1 to 2 percent due to the law, the rest due to higher medical costs.
It's almost impossible to predict the long term. Last November the Congressional Budget Office analyzed the Senate bill, which is not much different from the law that eventually was passed. It found that premiums for small and large employers would likely not be much higher in 2016 than they would be absent the law - and might actually be lower.
But the CBO projections are based on assumptions about how the law might help constrain costs, and it's hard to know whether those assumptions are correct. Premium rates are driven by many factors, including what doctors and drugmakers charge, how many people need care (spending goes up during flu outbreaks), how much insurers spend on administration or keep in profits. Many of the provisions aimed at restraining those factors, such as those devised to reduce a unnecessary hospital readmissions, may not pay off for years.
The law also requires insurers to spend at least 80 percent of revenue on direct medical care. And the consumer exchanges that will open in 2014 - essentially, lists of private plans available in a region and their premiums - may also foster competition. But it's unclear how effective these steps will be at restraining costs.
What about people who buy their own insurance? The CBO projects that policies bought on the individual market will be 10 percent to 13 percent higher in 2016 than they would have been without the law, mainly because the coverage will be more comprehensive than what is often purchased on the individual market today. It estimates that about half of those buying their own coverage will probably qualify for government subsidies.
- Julie Appleby
The law will gut Medicare by cutting more than $500 billion from the program over 10 years; seniors will lose benefits and won't be able to keep their doctors.
Most notably the 60 Plus Association, a conservative seniors group, and Crossroads GPS, another conservative advocacy group, in campaign ads (see below) targeting Democratic incumbents in Congress. Some Republican candidates also have made the claim.
HOW TRUE IS IT?
The gutting-of-Medicare claim goes too far. The new law slows the growth of Medicare spending over the next decade. But it doesn't actually cut spending from one year to the next.
Medicare's chief actuary, Rick Foster, estimated that the law could reduce projected Medicare spending by more than $575 billion over 10 years. The savings - which will help pay for the expansion of coverage to the under-65 uninsured - come from slowing the growth of fees paid to hospitals, home health agencies and other providers, and reducing payments to private Medicare Advantage insurance plans.
What this means for seniors is a bit murkier. None of the basic benefits provided under traditional Medicare will be eliminated; in fact, some new benefits have been added. But Democrats have downplayed the potential impact on seniors who have Medicare Advantage plans. Foster says the lower reimbursement to insurers means such seniors may pay hundreds of dollars more per year in out-of-pocket costs. The cuts, which begin in 2012, may well prompt the private plans to trim or eliminate extra benefits, which sometimes include vision and dental care and gym memberships. About 24 percent of seniors in Medicare are enrolled in private plans.
Some Medicare Advantage plans might shut down altogether. That would force enrollees to go back to traditional Medicare or switch to another private plan, which could also mean changing doctors. The nonpartisan Congressional Budget Office estimates that, because of the law, Medicare Advantage plans by 2019 might cover 4.8 million fewer people than the 13.9 million projected without the health-care overhaul law.
Some seniors have expressed concern that they won't be able to keep their doctors or find new ones if they have to. And it's true that some doctors are declining to accept new Medicare patients, saying the program doesn't pay enough, a complaint that predates the new law. The doctors' biggest headache is a 1997 law that will reduce doctors' Medicare payments by 23 percent on Dec. 1 unless Congress postpones the cut, an action that most lawmakers believe is likely. Under the overhaul law, some primary-care doctors will also get 10 percent bonus payments in Medicare from 2011 to 2015.
The law also adds some new benefits to Medicare, including free preventive screenings and $250 rebates this year to seniors who hit the prescription-drug coverage gap called the "doughnut hole." That means that the net Medicare savings generated by the law total less than the 10-year estimate of $575 billion.
Still, the savings mean the Medicare hospital trust fund will remain solvent until 2029, a dozen years longer than projected without the law, according to the latest Medicare trustees' report. On the other hand, not all the savings may materialize, because Congress may tinker with the formula over time if enough medical providers have trouble getting by on the slower-growing payments.
- Julie Appleby
The law amounts to a government takeover of health insurance and health care.
Some GOP politicians, including Rep. Wally Herger (Calif.), the ranking member of the Ways and Means subcommittee on health, who says the law is a "government takeover of health care" and should be repealed. (Watch video ads below)
HOW TRUE IS IT?
The law does signal a sharp expansion of the federal government's involvement in health care. It requires most Americans to have insurance and imposes a raft of federal rules on insurers. It also vastly increases the number of people who will qualify for Medicaid, the federal-state program for the poor, and offers subsidies to others who can't afford private coverage. Still, it falls short of a government takeover.
Most people younger than 65 will continue to receive health insurance coverage through private employers and insurers. Medical care will be provided by private hospitals and doctors. Drug companies and device makers will continue to develop and sell their products. Prices in the private market will be determined by competition and negotiations; fees paid to doctors and hospitals by Medicare will continue to be set by the government.
Insurers will be barred from rejecting applicants with health problems and will be required to use a certain percentage of the premiums they collect on medical care - as opposed to administrative expenses or profits, for example. Premium increases will get more scrutiny but won't be directly regulated by the federal government.
The law doesn't create government-run insurance plans. But states (or the federal government) will run "exchanges" - marketplaces - where private insurers will sell insurance to individuals and small businesses.
The law also promotes the creation of consumer co-op plans, which would be member-run, nonprofit insurers.
The government's share of the nation's health-care tab will continue to grow as more people sign up for Medicaid and the baby-boom generation hits Medicare age. By 2012, Medicare actuaries estimate, the government will be paying for slightly more than half the nation's health-care bill, up from 48 percent in 2008.
- Julie Appleby
This package of stories was produced through a collaboration between The Post andKaiser Health News. KHN, an editorially independent news services, is a program of the Kaiser Family Foundation, a non-partisan heath-care-policy organization that is not affiliated with Kaiser Permanente. Send comments on the package to email@example.com.