In just over one week earlier this month, congressional leaders unveiled and approved budget resolutions for the upcoming 2016 Fiscal Year that starts on October 1^st.  They each embody an overall austerity approach to spending (except for defense), and revenue proposals that create no new income and cut taxes further for upper-income people and large corporations.  They also put “entitlement programs” squarely in the bullseye: Medicare, Medicaid, SNAP/Food Stamps, and (indirectly) Social Security.  Overall analyses of the House and Senate budget resolutions by the Center on Budget and Policy Priorities reveal the ugly details. 

 

Health care is always a very significant portion of the federal budget, and both the House and Senate resolutions propose large funding cuts and/or structural changes to health care programs.  What’s in their resolutions has raised much concern among health care advocates, particularly about the future of Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the Affordable Care Act (ACA.)

First, a bit on the larger context:

As many politicians proclaim, budgets are indeed the financial embodiments of our shared values as a society and nation.  Every budget has two parts: a) what we spend money on, how, how much, and why (spending policy); and b) where and who we get the money from to pay for all our spending, how we raise it, how much, and why (tax policy.)  When one looks at the federal spending in particular, there are a couple of additional ways to “slice-and-dice” it: mandatory vs. discretionary, and defense vs. non-defense.  The major federal health care programs are all mandatory:  Medicare, Medicaid, CHIP, and the most of the ACA.  That means that however many people may qualify for a given program, the government is required to provide the necessary funding, whatever it may be.

As for the budget process, it all starts in early February with the President putting out a proposal.  That is followed by congressional hearings where administration officials answer questions on it.  In mid-late March, congressional leaders put out their own proposals (which may or may not align with the President’s), and each chamber passes its own resolution.  By mid-late April, they try to agree on a joint resolution, and each adopt it.  It does not go to the President for signature.  It is just a blueprint to guide the subsequent detailed appropriations process that then occurs over the course of the late spring, summer, and early fall.

In total, 12 appropriations bills (each covering related groups of funding – one of them for health and human services) are (supposed to be) passed before by October 1^st when the new fiscal year begins.  These bills are negotiated with the President and require his/her agreement and signature.  In addition, Congress has the option each year to invoke “reconciliation instructions” for certain appropriations bills so as to use the budget process to enact broader policy goals while foregoing the Senate’s 60-vote “cloture” process, in order to move such bills forward on a simple majority vote.  The ACA was enacted in early 2010 per reconciliation instructions adopted in 2009.

 

As for health care provisions in this year’s Congressional budget resolutions (based on an analysis by the National Priorities Project):

Medicare:

• President Obama proposes to save $430M over 10 years by a) raising Part B and D premiums for wealthy beneficiaries, b) requiring co-payments for home health care, and c) negotiating lower prices for certain high-price specialty drugs
• The House Resolution raises Part B and D premiums for wealthy beneficiaries, and privatizes Medicare for beneficiaries who become eligible starting in 2025 by providing them vouchers to purchase private insurance.
• The Senate Resolution generates $430M over 10 years but does not specify how, instead leaving it up to the appropriations process to figure that out.

Medicaid and CHIP:

• President Obama proposes no major changes to either program, and renews CHIP funding for another 4 years.
• The House Resolution proposes to a) repeal the expansions made under the ACA, b) combine with CHIP, c) block grant them, and d) reduce the combined spending by nearly $1 trillion over 10 years.
• The Senate Resolution proposes to a) repeal the expansions made under the ACA, b) combines Medicaid with other mandatory domestic spending programs (CHIP, SNAP/Food Stamps), and c) cuts them in total by $4.3 trillion over 10 years, but does not specify how.

Affordable Care Act:

• President Obama proposes to no major changes.
• The House Resolution repeals the law, and invokes the reconciliation process.
• The Senate Resolution repeals the law, and invokes the reconciliation process.

Meanwhile, many health advocates look to the Congressional Progressive Caucus’ “People’s Budget” as a preferred alternative.  Among its health care provisions are:

• Repeals the excise “cadillac” tax on top-quality employer-sponsored health plans
• Creates a “public health insurance option” to be offered on the new health benefit exchange marketplaces
• Directs Medicare to negotiate drug prices with manufacturers
• Closes some Medicare tax loopholes
• Continues funding for the State Child Health Insurance Program (CHIP) for 4 years
• Expedites approvals of state single-payer programs

When Congress returns to session in mid-April, leaders will strive to work out the differences between the House and Senate resolutions, and then proceed to the appropriations bill process to culminate by late September.  Those bills will have to be negotiated with and signed by the President by October 1^st when the government’s new fiscal year begins.

 

What’s happening here in New York:

Since the debt ceiling fight in the summer of 2011, health care advocates have joined forces with other social justice advocates and labor unions in the statewide “Restore the American Promise” (RAP) campaign.  It is based on the premise that by joining forces, various issue advocates have more strength and effectiveness, vs. operating solely in their own silos.  Collectively, RAP focuses on issues of:

• Protecting and improving health care and social programs
• Fostering economic growth (vs. imposing budget austerity)
• Restoring tax fairness (vs. preserving and expanding special tax breaks and loopholes)
• Prioritizing job creation and income security
• Ending wasteful military spending

RAP holds bi-weekly conference calls, and conducts its work through local coalitions in politically strategic regions of the state.  It undertakes simultaneous, coordinated actions raising up particular priority issues at a given moment in time, depending on what’s happening in Washington.  Activities include urging Congressmembers to “do the right thing”, holding them accountable for their positions and votes, educating the public on key issues, and engaging local media.

Here in New York City, the RAP affiliate coalition is known as the “No Bad Grand Bargain” (NBGB) network, founded in 2012.  NBGB has focused on working with members of the NYC congressional delegation who are members of the Progressive Caucus, shoring up centrist politicians to fight for the needs of everyday New Yorkers, and working with local groups in the 11^th Congressional District, which covers Staten Island and a part of South Brooklyn, because it is often a swing district.

Two major health care issues long being pushed by advocates as needing Congressional action are finally moving forward as Congress approaches the coming Easter-Passover recess period, and they are being combined into one major bill.  The particular matters concern a) reforming the method and formula by which Medicare pays for physician services, and b) continued funding for the State Child Health Insurance Program (CHIP.)

First up, the CHIP story…

This program was created in 1996 in the wake of the failure of the Clinton administration’s comprehensive health care initiative of 1993-4 (“The Health Security Act”.)  It was a bipartisan effort in Congress spearheaded by Senator Ted Kennedy (D-MA) and Sen. Orrin Hatch (R-UT), with support from then First Lady Hillary Rodham Clinton and House Speaker Newt Gingrich (R-GA.)  It provides funding to states to provide health insurance for uninsured children in low and moderate income families, either through Medicaid, a special program, or some combination thereof.  New York has a mixed/blended program, which was created under the Pataki administration in 1997, building off of a rudimentary children’s health coverage program that had been created by his predecessor Mario Cuomo.

The program came up for reauthorization in 2007 and a 2-year fight ensued to do so, during which then President George W. Bush vetoed it 3 times because he did not support the expansions being promoted by Democratic congressional leaders.  Shortly after President Obama took office in 2009, the Children’s Health Insurance Program Reauthorization Act (CHIPRA) was finally enacted, to continue the program for another decade, and it included several improvements to cover more children, cover more benefits, and streamline enrollment.  However, actual funding for the full 10 year period was not included.  When the Affordable Care Act was enacted a year later in 2010, it provided funding up through 2015, and required states to maintain the CHIP programs they had in place with no cutbacks, despite the impacts of the Great Recession on state budgets.

Overall, CHIP has been a smashing success, and a rare bipartisan-supported program.  It covers 8M children nationally, including almost 300,000 here in New York.  The uninsured rate for children has dropped dramatically, and is now very low in New York.  The coverage is tailored toward the needs of children and adolescents, and is available to all children:  at no-cost (via Medicaid) for low-income families; low-cost for working-poor and moderate income families, and full-cost (still quite affordable) for upper-income families.  In short, we have universal coverage available for all children in New York.

While CHIP per se is in place legally for still another 4 years, the funding authorized for it ends as of Sept. 30 of this year.  Since many states, like New York, are developing and adopting their annual budgets now, action by Congress is needed pretty immediately and cannot wait until the fall, as states need clarity and certainty on the matter in order to plan accordingly.  This situation has engendered a “must-do” dynamic in Congress.  The current bill in the House (H.R. 2) would provide funding for CHIP as is for another 2 years, essentially punting the whole matter to the next President and Congress who will take office in 2017.  Congress says it will pay for this extension by booking additional savings to Medicaid reductions under its new budget proposals that came out last week (…and all of that is the subject of another whole blog post here sometime soon.)

 

Meanwhile, concerning Medicare payments to doctors,…

Back in 1997 as part of the Balanced Budget Act, Congress attributed budget savings to Medicare under a “Sustainable Growth Rate” (SGR) formula that envisioned gradual reimbursement rate reductions for physicians over time.  However, every time since then when one of these cuts were to happen, physicians would threaten to stop taking Medicare claiming they would not be receiving adequate payments, and Medicare patients would clamor for Congress to forego the decreases.  As a consequence, for nearly 2 decades now the “SGR problem” has continually resurfaced as a political crisis with piecemeal, temporary patch-ups, and the system as a whole was never implemented.  The problem could have been addressed long ago but for how to pay for the cost of foregoing the scheduled reductions, which by now have grown to be quite sizeable in the aggregate.  By now, all stakeholders agree that it must be discontinued and a new method to control physician costs in Medicare put in its place.

Again, enter the Affordable Care Act.

While the ACA is most well-known for its insurance coverage provisions, the law itself also contains many provisions that may be described collectively as “delivery system reforms” which, among other things, encompass payment reforms, either explicit or implicit.  Since the ACA’s enactment some 5 years ago, the Obama administration has proceeded with slowly implementing these provisions, including policies to move away from currently-nearly-universal piecemeal fee-for-service methods to new “alternative payment methods” (APMs) such as bundled payments, global budgets, payments for episodes of treatment, and payment for value and outcomes.  All of these ideas are designed to curtail well-documented financial waste and inefficiency in the U.S. health care system.  Just recently, the Centers for Medicare and Medicaid Services (CMS) announced a goal of shifting payment for 50% of Medicare services to these APMs by 2018.

By moving forward with incorporating these APMs into Medicare, Congress has found a way to offset the cost of discarding the SGR scheme.  However, it also is booking some savings/offsets in ways that will affect some Medicare beneficiaries directly in 2 ways: upper-income beneficiaries will pay a slightly higher premium for their Part B coverage, and all beneficiaries will have to incur the standard Part B deductible (currently about $148/year) regardless of whether or not they carry a private supplemental “Medigap” policy or are enrolled in a private “Medicare Advantage” plan.

As for what advocates think of all this,… as with any piece of major legislation, it’s a bit of a mixed bag, reflecting political compromise across both sides of the aisle.

On the one hand, the whole “SGR problem” is finally resolved once and for all and goes away.  However, this progress comes at the cost of some additional out-of-pocket costs for Medicare beneficiaries, and continued erosion of Medicare’s “universality”, a process that began under the Medicare Modernization Act of 2003 which introduced various “means-testing” measures into the program.

On the other hand, CHIP funding is renewed “cleanly” without any cutbacks whatsoever (despite what appeared in recent CHIP reform proposals from Congressional leaders, and again that’s a subject for another future post here), and including some scheduled increases in funding to states that will go into effect this fall.  While the House is proposing to extend CHIP funding for only 2 years and not the 4 years needed to align with the program’s existing legal authorization, Democrats in the Senate are signaling that they will push for a 4-year extension.

A couple of other unrecognized aspects of this bill… one good, one problematic.  The bill does continue special ACA funding for 2 years for Federally-Qualified Health Centers (FQHCs), the Teaching Centers Program, and the National Health Service Corps, which provides placement of newly-graduated health care professionals in medically-underserved communities, such as urban centers and rural counties where physicians are scarce.  However, it bans FQHCs from using the additional money to pay for abortion services, a provision that has aroused opposition from reproductive rights advocates.  Such restrictions have been in place for FQHCs for quite some time now via appropriations bills, but not via statute.

Finally, the politics of it all…

The House bill is expected to pass the bill by the end of this week, but it will likely require more-moderate Republicans joining forces with Democrats to do so, since far-right Republicans are balking at the unpaid-for cost and a straight-forward continuance of CHIP as is.  In fact, this “grand compromise” on Medicare SGR and CHIP is the result of behind-the-scenes negotiations between House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA), a move that has surprised everyone and upset Boehner’s more-right-wing colleagues.  The Senate will take up the matter when they return from recess in mid-April.

On the whole, advocates are generally supporting the bill, urging the House to proceed and then turning to the Senate to make improvements.  While the bill has problems and shortcomings, many believe that it’s the best deal possible given the circumstances and players involved, and that by removing these matters from the upcoming budget debates of this spring, summer, and fall, they are protecting them against far worse prospects.

(For a full summary and analysis of the bill, here’s a 4-page brief from the Center on Budget and Policy Priorities.)

As the New York State Legislature’s annual budget session draws to a close by the end of this month, advocates are corralling their forces to influence the negotiations between Governor Cuomo, the State Senate, and the State Assembly, and weighing in with their top policy and funding priorities.

 

The process began in late January with the Governor’s release of his proposed budget.   The Legislature began its work in early February with a series of joint hearings throughout the month on various parts of the budget, hearing from and questioning the various commissioners and stakeholders, including advocates.  The hearing on health provisions was held on February 2^nd.  In late February, the Governor released his 30-day amendments.  In early March, working off the Governor’s proposals, each legislative chamber crafted their own “one-house” bills, which were each enacted by March 12.  Conference committees were then appointed to publicly debate the differences with each other and the Governor, and 3-way negotiations began in private between the Governor, Senate, and Assembly leadership.  A final agreement is expected by late March, with bills voted on by April 1^st.

HEALTH CARE FOR ALL NEW YORK (HCFANY), a consumer health advocacy coalition focusing on all things related to Affordable Care Act (ACA) implementation, has identified the following issues of importance:

Funding for the “NY State of Health” health benefits exchange marketplace:  As of the end of February, over 2.1 million New Yorkers have enrolled into insurance coverage through this new program since it opened in October 2013, either through Medicaid, Child Health Plus, or the new private “qualified health plans” (QHPs), far exceeding all predictions.  88% of them were previously uninsured, and 80% of those enrolling in private coverage were eligible for financial assistance either in the form of premium subsidies or cost-sharing reductions.   In short, it’s proven a smashing success!

While the federal government has provided administrative funding for the first 2 years of its operations, this marketplace must be self-sustaining starting in 2016.  Governor Cuomo has proposed a modest, broad-based assessment on all insurers in all markets to raise the needed funds, since it serves as the safety net for all uninsured New Yorkers and benefits the state’s entire health insurance system.  The Assembly has agreed with the Governor, and added an important consumer protection that the assessment cannot be passed along to policyholders in their premiums, but rather, must come out of insurers’ windfall profits given all the new customers they now have.  Surprisingly, the Senate did not include any funding mechanism for the marketplace in their one-house bill, saying they disagreed with the Governor’s approach but offering no alternative.

Funding for the “Community Health Advocates” (CHA) program:  CHA is New York’s official consumer assistance program for health insurance, created under the ACA.  It is comprised of a network of non-profits across the state who help people with all kinds of “post-enrollment” issues related to using health insurance, or accessing needed services if they are uninsured.  CHA too has proven a smashing success, serving hundreds of thousands of people and saving them millions of dollars in total since it began in 2010.  With now 2.1 million more New Yorkers gaining coverage, demand for CHA’s services has increased dramatically.

The federal government provided start-up funds for these state consumer assistance programs like CHA, but it ends as of this June.  Governor Cuomo proposed to provide $2.5M to keep the program in operation.  The Assembly raised that amount to $3M, but the Senate one-house bill did not include any funding.  At its previous height of maximum federal funding, CHA operated at $5M/year, providing on-the-ground services in every county statewide, with an additional focus on serving small businesses as well as individual consumers.  As federal funding diminished in the last couple of years, CHA had to scale back that effort.  HCFANY is calling for the Governor and Legislature to restore CHA to the full $5M/year level so that it can return to its formerly-robust level of operations.

Funding for operating a new “Basic Health Program” (BHP):  Under the ACA, states have the option to set up a BHP to provide very low-cost insurance coverage to the working poor who have too much income to qualify for Medicaid yet have difficulty affording the costs of purchasing and using private insurance.  In last year’s budget agreement, a BHP was authorized, making New York only the second state to do so, and the Cuomo administration has proceeded with plans to set one up, with the goal of opening it for enrollment in January 2016.  BHP coverage will be paid for by federal funds, but the administrative costs to operate it won’t.  Governor Cuomo proposed to reallocate existing funding within the Department of Health’s budget to do so, and the Assembly agreed, but the Senate’s one-house bill repealed the whole program.  Senate leaders are apparently worried that come 2017, with a new president and new Congress, the ACA and/or parts of it (such as funding for BHPs) could be repealed, leaving the state responsible for the entire cost of it.

Indigent care funding for hospitals:  The ACA requires that federal “Disproportionate Share Hospital” (DSH) funding be directed to states with high levels of uninsurance who target these funds to hospitals that serve high numbers of Medicaid and uninsured patients.  In 2012, New York revised its Indigent Care Pool (ICP) allocations to meet ACA requirements, but allowed hospitals a three-year transition period to conform.  Now, Governor Cuomo proposed to provide an additional three-year transition period, and the Senate and Assembly agreed.  It is unclear if the federal government will accept this further delay.  HCFANY disagrees with this approach and urges that the ACA’s new system go into effect now so that hospitals that actually provide lots of indigent care receive the DSH funds they deserve, while others that don’t won’t get this funding any longer.

HCFANY also supports the Assembly’s proposal to reconvene the Medicaid Redesign Team Technical Assistance Committee to make recommendations to adjust ICP payments if New York’s DSH funding is reduced because of non-compliance.  In addition, HCFANY supports a proposal from the Governor and Assembly to make the state’s “financial assistance compliance pool” permanent, and opposes the Senate proposal to eliminate it after 2016.  This pool rewards hospitals that comply with the state’s hospital financial assistance law by providing low-income, uninsured patients with access to and help with enrolling in their financial assistance programs.

Private equity demonstration projects:  Governor Cuomo proposes allowing a demonstration project that would allow private equity firms to invest in the restructuring of up to 5 financially-precarious hospitals across the state that operate in medically-underserved areas.  The Senate raises the number of allowable hospitals to ten, while the Assembly opposes the whole idea outright.  HCFANY agrees with the Assembly, and believes that an influx of private equity would inappropriately shift the incentives of these hospitals away from providing access to quality care, particularly low-income and uninsured patients, in favor of creating profits for investors, thereby draining overall financial resources that are desperately needed by these facilities.

 

MEDICAID MATTERS NEW YORK (MMNY), a lead consumer health advocacy coalition focusing on all things related to Medicaid and public insurance programs, has identified the following issues of importance:

New co-pays for some Medicaid patients:  Governor Cuomo has proposed modest co-payments for Medicaid patients enrolled in managed care plans who have incomes above the poverty level (currently, about $16,000/year.)  The Assembly has rejected this idea, and the Senate’s bill is unclear.

Preserve important consumer protections of “spousal and parental refusal” and “prescriber prevails”:  Governor Cuomo has proposed to eliminate the rights of spouses and parents to hold back a given amount of family income and assets from being taken into consideration when being determined eligible for long-term care services under Medicaid, in lieu of having to divorce a spouse or give up custody of a child to the state.  The Senate and Assembly have both rejected this idea, as they have for many years now when proposed by various Governors.

Governor Cuomo has also proposed to eliminate the right of patients enrolled in traditional fee-for-service Medicaid to access medicines not listed on the state’s Medicaid preferred drug list when they are prescribed by the patient’s doctor as the only suitable course of treatment in a particular situation.  The Senate and Assembly have both rejected the Governor’s idea, as they have for many years now when proposed by various Governors.

Funding for “transitional immediate need Medicaid” services:  Currently, New York offers Medicaid coverage for critically needed personal care and urgent medical care while a Medicaid determination is pending (which can take up to 45 days) because doing so can avoid unnecessary hospitalization and/or institutionalization of patients.  Governor Cuomo has proposed to end such coverage.  The Senate did not address the matter in its one-house bill, while Assembly proposes to continue access through allowing a “presumptive eligibility” determination.

Funding for the Independent Consumer Advocacy Network (ICAN):  As New York proceeds to transform its entire Medicaid program into a “care coordination” approach across the board, it created ICAN within last year’s budget.  ICAN’s mission is to assist people on Medicaid needing long-term care and other special services with the transition from the old fee-for-service system.  This year, the Governor proposed a $5M allocation for the program, which the Assembly supported but the Senate did not address in its one-house bill.

Adopting a “Community First Choice” (CFC) option:  CFC is a federal Medicaid funding initiative that allows states to more widely provide long-term care to people in their homes and communities rather than solely in institutions, and states that enact a CFC program receive an additional federal Medicaid funding.  Governor Cuomo’s budget includes an exemption from the Nurse Practice Act for new “Advanced Home Health Aides”, thereby increasing the availability of personnel necessary to fully implement a CFC program, and enhancing federal approval of the state’s CFC proposal submitted in December 2013.  The Governor’s budget also includes authorization to reinvest savings resulting from a CFC approach (estimated to be approximately $300 million annually) into initiatives that will further the state’s Olmstead Plan” to de-institutionalize as much long-term care as possible.  The Assembly supports the Governor’s CFC proposals, while the Senate rejects them.

Capital funding for community-based entities:  Governor Cuomo has proposed $1.4B in new capital funding for hospitals, yet none for community-based entities.  As the state proceeds with its “Delivery System Reform Incentive Payment” (DSRIP) program under Medicaid and its broader “State Health Improvement Program” (SHIP), both of which emphasize and prioritize non-institutional, community-based care programs working in collaboration with hospitals, MMNY believes it is important that they too have access to capital funds.  The Assembly directs $10M for community health centers, while the Senate adds $500M more and directs that capital allocations be available to all providers, to be determined in consultation with the Legislature.