Today’s weather forecast here in Raleigh includes a tornado advisory. According to the CBO’s latest report on the impact of the law’s employer mandate, Obamacare’s forecast is and will continue to be cloudy with a chance of not working.
Starting in 2015, be on the lookout for a drought in Medicare funding as well as a flash flood of more government funded health plans. Here’s what’s brewing:
Next year brings two more critical provisions of the federal health law that will likely be perpetual talking points for the media: The Independent Payment Advisory Board (IPAB) — more commonly known as Obamacare’s "death panels" — and the Basic Health Program (BHP). Congress included these two provisions as a means to control Medicare expenditures and bridge the affordability gap for those who make to much to be eligible for Medicaid but can’t afford private health coverage offered on the exchanges.
The Independent Payment Advisory Board — This board will be made up of 15 unelected bureaucrats (appointed by Obama and the Senate) who will be bestowed with unfettered power to cut Medicare if expenditures exceed a specified target. Moreover, the board can make further cuts even if expenditures remain below the targeted budget. One outcome of this scenario could be that, if Medicare drastically reduces reimbursement levels for specific services, physicians would indeed opt out of offering such services. This, in turn, could create medical access issues for the Medicare population.
This extra-legal, politically-insulated body encompasses both executive and legislative powers and is not subject to any meaningful checks. The Cato Institute has dubbed IPAB the most unconstitutional provision of Obamacare:
If the president fails to appoint any board members (or the Senate fails to confirm the president’s appointments, or a majority of the board cannot agree on a proposal) the Act authorizes the Secretary of Health and Human Services to exercise the board’s powers unilaterally.
Furthermore, judicial review does not exist regarding any of the board’s legislative proposals. The only way a proposal can be overturned is if Congress drafts an alternative proposal that rations Medicare just as much if not more than IPAB’s original plan of action. Finally, if an alternative obtains approval, the document makes its way to be signed off by the man who is willing to work solo with a pen and a phone.
And the only way for Congress to forever abrogate IPAB is for them to act within a specified 9-month time frame in 2017. Otherwise, Congress somehow has the right to bind future Congresses?
…More to come on IPAB in future newsletters…
The Basic Health Program — Section 1331 of Obamacare grants states the option to implement a Basic Health Program that offers subsidized coverage to individuals living between 139-200% of the Federal Poverty Level (FPL). Prior to the Supreme Court’s ruling that Medicaid expansion must be optional for states, the Basic Health Program sought to bridge the affordability gap for those with fluctuating incomes above Medicaid eligibility levels but who couldn’t afford subsidized private health plans offered on the exchange.
All plans offered through the BHP must offer the law’s required 10 essential health benefits. Essentially, these plans compare to plans offered on the exchange, but eligible individuals may receive even greater cost-sharing and premium reductions at the state’s discretion. To finance the BHP, the federal government would shift 95% of the subsidies the BHP population would have received had they purchased private coverage through the exchange. According to a 2011 report by Milliman, North Carolina’s projected BHP cost would total $1.2 billion.
If North Carolina were to implement a BHP, some unfortunate consequences could occur. The Kaiser Family Foundation reports that further cost-sharing reductions for the BHP population could mean provider reimbursement rates close to Medicaid levels. It would be very interesting to see how many medical providers would be on board with this proposal, as many are being reimbursed by exchange plans at Medicare levels now. The Obama administration should realize that paying providers less does not increase access to health care.
Lastly, the BHP has the potential to further destabilize the exchange risk-pool, as it would reduce the exchange population by a third.
The adage goes that one cannot fight the wrath of Mother Nature, but hopefully the wrath of Obamacare can still be fought.
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