Medicaid could be scaled back sharply under GOP plans


Conservatives aim to cut federal funding for the state-run health programs for the poor if they control the White House and Congress.


VJune 27, 2012)

By Noam N. Levey, Washington Bureau

July 30, 2012, 8:39 p.m.

WASHINGTON — Nearly half a century after President Lyndon Johnson signed Medicaid into law, conservative critics of the massive government health insurance program for the poor are readying a new push to dramatically scale it back if Republicans control the White House and Congress next year.

GOP governors, emboldened by the Supreme Court decision on President Obama‘s healthcare law, are already balking at expanding Medicaid to meet the goals of the Affordable Care Act. Some are rolling back coverage now, arguing that the program is ineffective and unaffordable.

At the same time, congressional Republicans, backed by influential conservative activists, are renewing calls to convert Medicaid into a series of smaller grants to states, reprising the successful GOP strategy that cut cash welfare programs in the mid-1990s.

Former Massachusetts Gov. Mitt Romney, the presumptive GOP presidential nominee, has thrown his support behind a block grant plan that would cap federal spending, effectively slashing Medicaid funding by more than $1.5 trillion over the next decade in what would be the most sweeping change in the program’s history.

One of Romney’s lead healthcare advisors, Dr. Scott Gottlieb, has claimed that Medicaid is “worse than no coverage at all.”

“If we win, there are no more excuses,” said Rep. Jim Jordan (R-Ohio), chairman of the Republican Study Committee, a coalition of conservative lawmakers backing legislation that would cut about $2 trillion from projected Medicaid spending over a decade.

Virginia Gov. Bob McDonnell, chairman of the Republican Governors Assn., said states, which operate their own Medicaid programs, could handle cuts. “If the federal government would take off a lot of the micromanagement and the bureaucracy … we could probably get by with even less money,” he said.

But the drive to cut federal aid is stoking concern among hospitals and other medical providers that Medicaid cutbacks would swell the numbers of uninsured.

“We know that coverage saves lives,” said Dr. Bruce Siegel, president of the National Assn. of Public Hospitals and Health Systems. “People who have coverage are healthier. They live longer. And they are more financially secure. That is all at risk for millions of our neighbors.”

Siegel called the GOP campaign the most serious threat to Medicaid in decades.

The battle is brewing at the very moment that Obama and other Democrats are planning an unprecedented expansion of the 47-year-old program.

The new healthcare law is designed to make Medicaid the foundation for universal health coverage by guaranteeing insurance to all poor Americans for the first time. Today, the program primarily serves poor children, seniors and the disabled, excluding most other low-income adults.

With an infusion of hundreds of billions of federal dollars, every state’s Medicaid program was supposed to open in 2014 to any American making less than about $15,500. The recent Supreme Court decision to uphold the new healthcare law made that expansion optional for the states.

The guaranteed coverage reflects the belief by many experts that Medicaid, while imperfect, is best positioned to protect a population unable to buy insurance and increasingly shut out of employer-based coverage as businesses drop or scale back health benefits.

Medicaid and the relatedChildren’s HealthInsurance Program, or CHIP, cover about 70 million people at some point during the year. Half of them are poor children.

Another quarter is disabled or elderly. These beneficiaries are by far the most expensive, accounting for nearly 70% of all Medicaid spending, according to the Medicaid and CHIP Payment and Access Commission.

While the average child on Medicaid costs the program about $2,900 a year, the average senior costs more than $16,000. That is driven in part by nursing home and other home care not covered by Medicare. Medicaid is the largest payer of nursing home care in the country.

“You have a program with enormous responsibilities,” said Sara Rosenbaum, a George Washington University health policy professor. “We are talking about people who live outside the mainstream insurance market. They are very poor or they are very disabled or they are very vulnerable.”

States and the federal government, which jointly fund Medicaid, have struggled for years to finance this care. Medicaid now costs more than $400 billion a year, nearly double what it was a decade ago.

Much of the fiscal burden has been borne by the federal government — and will be in the future — but state budgets are being squeezed, forcing many states to cut other services. “To put another dollar into Medicaid means you are taking a dollar from someplace else,” said Wisconsin Health Secretary Dennis Smith, who oversaw Medicaid under PresidentGeorge W. Bush.

Although states have tried to control costs by cutting payments to doctors and hospitals, this has caused other problems as providers close their doors to Medicaid patients, undermining the promise of safety net coverage.

This has fueled a growing sense of crisis among Democrats and Republicans in state government who are struggling to keep their programs afloat even as the Affordable Care Act envisions as many as 18 million new Medicaid enrollees in the next decade.

Proponents of the expansion believe initiatives in the healthcare law to better coordinate care, particularly for costly elderly and disabled beneficiaries, offer the best hope to control spending and improve care. Some of these programs are already underway.

But the stresses on Medicaid have also revived the long-held conservative dream of overhauling the program entirely by converting Medicaid into block grants to states. That would reduce federal spending over time and give states the freedom to design their own programs and cover whomever they choose.

House Republicans have already voted for a budget plan developed by Rep.Paul D. Ryan(R-Wis.) that would do this by capping federal spending growth, though the legislation stalled in the Democratic Senate.

“The states are where it’s at,” said freshman Rep. Todd Rokita (R-Ind.), who is sponsoring an even more austere plan backed by 47 House Republicans that would freeze federal Medicaid spending. “Creativity will unleash significant cost reductions.… Some will do it better than others. But that is the responsibility and the magic of federalism.”

Americans for Tax Reform President Grover Norquist, a powerful force in GOP politics, recently suggested that Medicaid block grants would follow the example of welfare block grants, which he said “helped move people out of being locked into welfare dependency.”

But it remains unclear how states could maintain healthcare protections if federal aid did not keep pace with rising medical costs. The nonpartisan Congressional Budget Office concluded this year that states would find this very difficult under the Ryan plan.

“Even with significant efficiency gains, the magnitude of the reduction in spending … means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both,” budget analysts wrote. “Cutbacks might involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers or increased cost-sharing by beneficiaries — all of which would reduce access to care.”

The Romney campaign, which has backed Ryan’s plan, has not provided any details about how the GOP presidential hopeful would deal with these trade-offs.

And even some conservatives warn that simply cutting federal spending and giving states flexibility is unlikely to solve the Medicaid problem.

“States are not about to dig up a bunch of money on their own,” said American Enterprise Institute scholar Tom Miller, a former health economist at the congressional Joint Economic Committee. “And this is not a population that is just going to go away.”

Poll shows most Americans favor Medicaid expansion

Poll shows most Americans favor Medicaid expansion

9:46am EDT

By David Morgan

WASHINGTON (Reuters) – Most Americans back the idea of extending health coverage to their low-income neighbors through the government’s Medicaid program, unless it means higher costs for their own state, according to a new poll.

In a survey released on Tuesday by the nonpartisan Kaiser Family Foundation, 67 percent of respondents gave a favorable view of President Barack Obama’s healthcare reform provision to “expand the existing Medicaid program to cover more low‐income, uninsured adults.”

Support for the idea, which would expand coverage to as many as 16 million uninsured Americans, broke sharply along partisan lines. Nearly nine out of 10 survey participants who said they were Democrats and two-thirds of independents backed the expansion. Six out of 10 Republican participants said they opposed it.

Support dropped to 49 percent when poll participants were asked whether they would like to see Medicaid expanded in their home states, and a slight majority of 52 percent preferred maintaining the status quo when pollsters suggested an expansion could cost their states more money.

The results of the poll of 1,227 adults, conducted in July, have a 3 percentage point margin of error.

Medicaid, which is jointly funded by the federal and state governments and overseen by Washington, currently covers only narrowly defined groups of poor people in most U.S. states, including parents and pregnant women.

Obama’s healthcare law, which was upheld as constitutional last month by the U.S. Supreme Court, would expand Medicaid to cover people with incomes of up to 133 percent of the poverty line. Between 90 percent and 100 percent of the cost of expanded coverage would be borne by the federal government.

The high court ruling gave states the ability to opt out of the Medicaid expansion. Several Republican governors have since vowed to do just that while deriding the plan as a costly expansion of federal bureaucracy.

The governors insist that the expansion will mean higher costs for states and lead to higher taxes or reduced funding for other programs such as education.

Proponents of reform say the Medicaid expansion would ultimately save money for states, while also saving lives by providing access to healthcare for those who need it.

(Editing by Leslie Adler)

Union president: State insurance exchanges are good for farmers, other rural residents

July 31, 2012


Farmers and rural Americans have much to gain from state insurance exchanges under federal health reform, according to a farmers union president.

By Tara Kapowry
Kentucky Health News

Farmers and rural Americans have much to gain from state health insurance exchanges under federal health reform, because “rural residents often have the hardest time getting health insurance,” the president of the Wisconsin Farmers Union argued in an op-ed piece in Madison’s Capital Times.

People who live in rural areas “are predominantly self-employed and run small businesses, with insurance costs too high because of small risk pools,” Darin Von Ruden pointed out. “They often pay way too much for terrible coverage. Some are uninsurable because of the high-risk nature of farming. Many can’t pay high premiums for the current system of individual and family coverage.” Insurance exchanges will “broaden risk pools” and bring down the overall cost, he argues.

Wisconsin has been one of the firmest states against implementing federal health-care reforms, including the exchanges, which will be marketplaces where people can choose from a variety of state-approved health-insurance plans. This month, Republican Gov. Scott Walker said he would not take any action to implement the law until after the November elections. After the U.S. Supreme Court upheld the law, Democratic Gov. Steve Beshear of Kentucky issued an executive order creating a Kentucky exchange. States have the option to run their own exchange or let the federal government do it for them.

Von Ruden said exchanges are “critical” for Wisconsin’s farmers and rural communities. “It’s disappointing, to say the least, that our legislative majority would be dragging their feet on getting this done,” he writes. “I can’t imagine why any of them would want to wait on this. Creating our own state exchanges keeps the control in Wisconsin.” He concludes, “Every American deserves health care that is comprehensive, affordable and accessible, regardless of occupation or geographic area.”

Kentucky Health News is a service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

The Affordable Care Act, Practically Speaking

From the Huffington Post
Posted: 07/30/2012 6:21 pm

Amidst all the posturing and second guessing about whether the Supreme Court’s ruling on the Affordable Care Act (ACA) is constitutional, a tax or bad policy, some important issues are getting short changed.

The ACA is without question the most sweeping piece of social welfare legislation since the New Deal. It is complicated and, whether you like it or not, it must be implemented.

Hospitals have a moral obligation to provide care to all patients, regardless of their ability to pay. According to the American Hospital Association, 5.8 percent of median expenses nationwide are attributed to charity care. At Mount Sinai alone, we provided $77 million of uncompensated care in 2011. Charity care comes not only as a cost to hospitals but impacts the well-being of those without insurance.

Charity care is almost always provided when illnesses have already reached advanced stages. Without insurance, individuals often do not get the right care at the right time. As a result, they may not comply with recommended protocols, such as taking medications regularly and making routine visits to their primary care provider. Thus starts rescue medicine, where the entry point for care is through the hospital’s emergency department when, more often than not, the condition is more expensive to treat, more disruptive to patients’ lives, and less likely to have ideal outcomes. We would much rather be treating these patients sooner with preventive and maintenance medicine, at early stages of disease with multidisciplinary teams. The ACA addresses this issue directly by enabling more than 30 million people to get comprehensive health coverage. It also means a measure of relief for hospitals by reducing uncompensated care.

Preparing for the influx of millions of newly insured patients is not something any medical center can take lightly. We must continue to invest in primary care medicine by providing more clinics and training the next generation of doctors. We must also make electronic medical records available across networks and between hospitals. Most importantly, we must take advantage of accountable care organizations and patient-centered medical homes in which physicians and hospitals are rewarded for reducing hospital readmissions and improving patient outcomes. As an example, Mount Sinai has an outreach program for high-risk patients which has cut hospital readmissions by 46 percent in a targeted population.

However, implementing the ACA will not address all the needs we have in this country to reform health care and reduce costs. More needs to be done to prevent and manage chronic conditions like diabetes, hypertension and Alzheimer’s disease. Diabetes impacts nearly 26 million Americans, and hypertension affects 30 percent of adults in the United States. Predicting, preventing or postponing onset of these conditions could bring tremendous savings to our health care spending. Consider too that one in eight adults 65 years of age and older has Alzheimer’s and with our nation’s aging population, that number is expected to soar over the next 50 years. It has been estimated that if, by 2015, we delayed the onset of Alzheimer’s by five years in the entire population, it would lead to a cost savings of $111 billion over 10 years.

Rather than treat late-stage illness with high tech treatments, we must invest in the development of novel therapeutics that will delay the onset of disease. We are at a point in medical history and scientific evolution which represents the golden age of biomedical advances. We must focus our efforts on developing diagnostics and therapeutics that should be made available to all Americans. We must continue investing in the future of medicine because only real innovation can bring greater value from our health care investments.

On the whole, medicine’s fee-for-service model must be reoriented to reflect our current and future population patterns: one that is older and has a high prevalence of chronic disease. We must manage population health better and be rewarded for keeping patients out of the hospital.

The ACA also includes multiple new taxes, cuts to reimbursement, and unfunded regulatory mandates — the combined impact of which will increase costs while reducing funding for medical centers. It calls for a $18.1 billion cut to federal payments in uncompensated care, and if lawmakers fail to reduce the deficit by $1.2 trillion over 10 years, there will be $123 billion lost in payments to Medicare providers. These numbers are particularly sobering for teaching institutions such as Mount Sinai that serve disproportionately large populations of Medicare and Medicaid patients and rely on Graduate Medical Education funding by the federal government to train the next generation of doctors and physician scientists.

The ACA is a strong step forward but there is still so much more to do. We in health care will continue to work to implement the ACA, and build an even better health system for our community and for the future of medicine.

Editorial – Gov. Rick Scott on Medicaid

From U.S. News & World

ReportHistory has repeatedly shown that the costs of many government healthcare programs far exceed early projections. Why does anyone expect the expansion of Medicaid would be any different? We don’t need the federal government telling us what to do when it comes to meeting the needs of the citizens of our states. And we don’t need Washington putting states on the hook for future budget obligations.

Medicaid expansion is bad for states because it would put a tremendous strain on state budgets and increase dependency on government programs. We don’t need to expand a big-government program to provide for everyone’s needs. What we need is to shrink the cost of healthcare and expand opportunities for people to get a job so more people can afford it.

In Florida, Medicaid is the fastest-growing part of our state budget — hands down. It is increasing at more than 3.5 times the rate of our general revenue. And that’s before we even begin talking about an expansion. It doesn’t take a mathematician to figure out that such a trajectory doesn’t bode well for our budget.

And unlike the federal government, which isn’t required to balance its budget, expanding Medicaid could only be paid for by increasing taxes or cutting from other parts of the state budget. The Medicaid expansion would put other vital government functions like education, public safety, and infrastructure at risk. Frankly, that isn’t something I’m willing to do.

Some might argue that the federal government will pick up the tab, so states won’t have to worry. But the truth is, they’re promising to pay for only the first couple of years before they begin shifting the burden to the states. Various groups, inside and outside of government, have estimated the impact to Florida would get increasingly more substantial as time goes on — totaling into the billions over the next 10 years.

Some argue that the states have the option to return to previous Medicaid spending levels after the federal government starts backing out, but that’s an unrealistic expectation. We saw that firsthand with education. When Washington cut off the roughly $1 billion in stimulus money to our education budget, our people demanded that our state legislature and I replace it. It wasn’t easy, but we did it. We don’t want to be forced into a position where we have to choose between Medicaid and education or other important parts of our state budget.

We just can’t afford this kind of “help” from the federal government.

The safety net programs already in place in our state cover the needs of the most vulnerable. But if we don’t implement a real solution to our healthcare and economic problems, there will never be enough to meet the demand.

We need to help people get the skills and education they need to get a job, and help the private sector succeed so it has jobs to offer. Then you’ll have fewer people dependent on government programs because they’ll be pulling themselves out of poverty and financial distress.

Since 2009, I’ve advocated free-market reforms of patient choice, competition, accountability, and personal responsibility to lower healthcare costs. That’s the real problem with our system. If we can make healthcare more affordable and help people get jobs, more people will have access to the care they need, and we won’t overburden the nation’s taxpayers in the process.

NY Times Editorial

July 28, 2012

Medicaid After the Supreme Court Decision

Last week there were two disturbing reports about Medicaid, a program of health insurance for the poor that is mostly managed by the states and jointly paid for by the federal and state governments. The Congressional Budget Office predicted that states with a large number of poor people would not expand their Medicaid programs as required by the health care reform law now that the Supreme Court had made expansion optional. And a Harvard study unrelated to the court decision made it clear that a failure to expand Medicaid would likely doom thousands of low-income people to death or poor health.

Revising earlier estimates to take account of the decision, the budget office said that making expanded assistance optional could leave three million more people uninsured in 2022, saving the federal government $84 billion through 2022 because it would not have to subsidize their coverage.

The analysts made no effort to predict which states would or would not expand Medicaid. Instead, they looked at various factors that might influence the states’ decisions and predicted that some would not respond to even the extremely generous matching money that the reform law provided.

They forecast that some states that already had trouble paying for their existing Medicaid programs would put off expanding Medicaid until their economies improved, or would expand the program partially, not to the extent originally required. Other states may shun the program entirely, as some Republican governors have vowed to do. By 2022, the budget office projects, only two-thirds of those who would become newly eligible for Medicaid if all states expanded to the levels sought by the reform law will actually gain eligibility. One-third will not, either because their states refuse to expand Medicaid at all or expand it only partially.

Leaving low-income people uninsured will almost certainly damage their health. A study by three researchers affiliated with the Harvard School of Public Health, published by The New England Journal of Medicine, compared three states (New York, Arizona and Maine) that had already expanded coverage of childless or disabled adults with four neighboring states (Pennsylvania, New Mexico, Nevada and New Hampshire) that had not. Deaths among people ages 20 to 64 dropped in the three expansion states by about 1,500 a year, adjusted for population growth, whereas death rates in the comparison states went up. Expansion also brought a 21 percent reduction in cost-related delays in getting care.

Some critics, mostly conservative Republicans, contend that Medicaid does not improve the health of beneficiaries and may even harm them. The new study should lay that canard to rest. State officials who want to save money by not expanding Medicaid will be harming their most vulnerable residents, and will most likely shift the cost of any emergency care they need to safety net institutions, taxpayers and charities.


Who Pays for Texas?

Who covers health care for Texas’ uninsured? Taxpayers

By Tami Luhby @CNNMoneyJuly 30, 2012: 1:13 PM 

NEW YORK (CNNMoney) — Texas Governor Rick Perry says he won’t expand Medicaid eligibility under the health reform law because he wants to spare taxpayers billions of dollars.

But many Texas taxpayers are already shouldering the burden of the state’s uninsured through higher property taxes and heftier health insurance premiums.

Travis County residents, for instance, are paying for Jeff Kehoe to see the doctor for his high blood pressure and asthma.

Kehoe, a part-time event coordinator who hasn’t had insurance since 2006, goes to People’s Community Clinic for his primary care. When he can afford it, the Austin resident pays up to $30 for an office visit.

The rest is picked up by taxpayers and donors.

The Travis County Healthcare District pays the clinic $133 for each visit by a patient whose income is below 200% of the poverty line. And the district gets its funding from property owners, who last year forked over $79 for every $100,000 of home value. The rate has been on the rise for the past four years.

Kehoe, 53, would most likely qualify for the expanded Medicaid program under the Affordable Care Act, which would broaden the health insurance safety net to adults with household incomes up to 133% of the poverty line.

A U.S. Supreme Court ruling essentially left it up to the states to decide whether to implement the Medicaid expansion. At least 10 governors, including Perry, quickly announced that they would not or did not plan to participate. Many cited the cost of covering more uninsured residents.

“I will not be party to socializing healthcare and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government,” Perry said in a statement rejecting the expansion.

Under the Affordable Care Act, the federal government will pay the full cost of the Medicaid expansion for three years. After that, the funding will phase down to 90%.

That will hit Texas, which has the highest share of uninsured in the nation. The expansion in Medicaid is expected to cost about $1.3 billion through fiscal 2017, according to the state Health and Human Services Commission.

While Perry’s decision will spare the state the additional cost, the burden of covering the uninsured will still be borne in part by residents. Most of Texas’ larger urban areas have public health districts like the one in Travis County that help pay for the uninsured.

The uninsured have their care paid for in other ways too.Even without the expansion, hospitals still receive federal Medicaid money to cover the uninsured who come through their doors.

Also, some doctors’ groups provide care at various Texas clinics without charge through programs such as Project Access Dallas.

And insurers may raise their premiums to cover costs incurred by the uninsured.

Nearly a third of working-age Texans, or 4.8 million people, currently lack insurance, according to Stacey Pogue, senior policy analyst for the Center for Public Policy Priorities, which advocates for low-income Texans.Medicaid expansion could provide coverage for up to 2 million of this group.

“We are paying for the cost of care for uninsured folks now,” she said. “Expanding Medicaid just shifts the cost from local taxpayers and people with health insurance in part to the state budget and federal government.”

Even though some uninsured have found ways to have their basic care covered, some are hoping Perry changes his mind and expands Medicaid coverage to all adults.

Gerard McMahan hasn’t had insurance since he had to drop his private coverage plan in 2005 because he couldn’t afford the $500 monthly fee. Plagued by congestive heart failure and attached to an oxygen tank, McMahan sees Project Access Dallas doctors who donate their time at a clinic in his hometown of Garland.

But the former painter still relies on his church to help cover his medications — he takes 25 pills a day. McMahan still has to dodge collection calls from doctors. And he still has to wait six months to see his cardiologist.

“If I had insurance, a lot would change,” said McMahan, 53. “I’d get the proper help that I need.” To top of page

47th Birthday – Medicare & Medicaid

Monday, July 30, 2012

Happy Birthday MEDICAID and MEDICARE!

 From Longterm care leader

Today marks the 47th anniversary of Medicare and Medicaid. President Lyndon B. Johnson signed both programs into law on July 30, 1965.  You can read LBJ’s speech at the signing ceremony, listen to his taped conversations and find a brief history of the programs here.

The Medicare bill had been hotly debated in every Congress for 13 years before it was passed.  Since its inception, Medicare has helped provide health care coverage to millions of our nation’s elderly.  Today, Medicaid is an important payment source for our nation’s seniors and persons with disabilities.  According to AARP, over 40 million people currently rely on the Medicaid program; this includes 64% of nursing home patients and 13% of assisted living residents who need the program to help pay for their everyday care.

80 percent of Employers Plan to Keep health Benefits

July 27, 2012

Study: 80 percent of employers plan to continue offering health insurance benefits

1 in 10 companies say they will drop coverage

By Lorie Hailey
Associate Editor

A new study released Tuesday reveals that most U.S. employers, 80 percent, plan to continue offering health insurance benefits in the next three years, but changes that shift financial risk to employees are likely.

The Deloitte Center for Health Solutions (DCHS), the health services research arm of the consulting firm Deloitte, conducted a web-based survey of 560 randomly selected employers with 50 or more workers that offering health benefits. Its 32-item questionnaire asked for employers opinions about the Affordable Care Act (ACA), which the Supreme Court upheld as constitutional in June, as well as anticipated strategies for employee health benefits coverage and cost containment.

More than 160 million Americans are covered by employer-sponsored health insurance; 60 percent of all U.S. firms offered health benefits in 2011, according to the Kaiser Family Foundation.

The majority of employers surveyed said they do not intend to drop health benefits coverage. Nine percent of companies representing 3 percent of the workforce anticipate dropping coverage in the next one to three years, versus 81 percent of companies representing 84 percent of the workforce that plan to continue. Ten percent of companies representing 13 percent of the workforce are not sure.

Most employers surveyed said they will increase use of co-pays, deductibles and increased premium participation to reduce healthcare costs.

Other findings:

— Most employers believe they have a good understanding of the new healthcare law, but understanding of delivery system changes in the ACA is low. Familiarity with the individual mandate is the highest (72 perecent). Eemployer penalties for not offering benefits (66 percent), essential benefits (53 percent), and health insurance exchanges (45 percent) were also familiar to many employers. But bundled payments, accountable care and other parts of the law are not understood, Deloitte found.

— Thirty percent of employers view the ACA as “a good start,” while 59 percent called it “a step in the wrong direction.”

— Most employers say their company is “not well prepared” to implement the 2014 provisions of the ACA.

— The majority of those surveyed said they believe the U.S. healthcare system underperforms; 64 percent graded the system with a C, D of F. Eighty percent of employers believe high costs are driven by hospital costs. Inefficiencies and unhealthy lifestyles were also named as cost-drivers.

— Employers believe that health insurance exchanges may be a viable channel for employer benefits strategies. Smaller employers view exchanges more favorably than do bigger companies – particular interest is held in exchanges that offer a wide choice of plans and that operate as a non-profit entity.

— Some employers believe direct contracting with provider organizations will be a viable cost containment strategy.

— Most employers support reforms in medical liability, Medicare and Medicaid, and repeal/delay of the ACA as means of reducing the federal deficit. Across the board cuts in government spending are considered a higher priority than changes to the health care system, Deloitte found.

In analyzing the implications of the data, Deloitte said employer-sponsored health benefits are not likely to disappear, but changes that shift the financial risk to employees are certain.

“Therefore, industry and policy-makers should consider the appropriate sets of tools, incentives, and precautions associated with the shift,” the study said.

It also said because employers do not understand the full scope of the ACA, policy-makers and industry leaders should consider investing in education about and active improvement of the ACA. Popular areas where employers are directly impacted are better understood than those that are intended to improve the efficiency and quality of the delivery system.

McKesson Settles Medicaid Price Fixing Claims,0,6072141.story

McKesson settles Medicaid drug price fixing claims

Illinois to get $10M in $151M deal with 30 states


11:45 AM CDT, July 27, 2012


U.S. drug wholesaler McKesson Corp. has agreed to pay $151 million to settle state claims that it inflated pricing information for over 1,400 brand name drugs, causing Medicaid to overpay for the drugs.

New York Attorney General Eric Schneiderman said the settlement resolves claims by 30 states that McKesson violated state and federal false claims acts. New York and California led negotiations for the states, Schneiderman said in a statement on Friday announcing the settlement. Illinois also is part of the settlement.

Kris Fortner, a spokesman for San Francisco-based McKesson, did not immediately respond to requests for comment. McKesson denied wrongdoing when it settled a similar case with the federal government in April. At that time, it agreed to pay $190 million over the federal portion of the Medicaid costs.

Medicaid, a health care program for people with low incomes, is jointly funded by the federal government and states.

In his statement, Schneiderman said McKesson reported inflated pricing data to First DataBank, a publisher of drug prices that most state Medicaid programs use to set payment rates for pharmaceutical reimbursement.

McKesson marked up prices by 25 percent on brand name prescription drugs when reporting to First DataBank, although those prices did not reflect what the company actually charged for the drugs, court papers said.

New York will receive $64 million of the $151 million in restitution, Schneiderman said, more than any other state. Illinois will receive $10 million, according to a press releasr from Attorney General Lisa Madigan.

“This settlement holds McKesson accountable for attempting to make millions of dollars in illegal profits,” Schneiderman said in the statement.

California will receive more than $23 million, according to California Attorney General Kamala Harris. “We cannot allow dollars meant for patients to be diverted to inflate corporate profits,” Harris said in a statement.

Federal and state governments have recovered more than $2 billion from drug companies alleged to have reported inflated pricing information, U.S. Attorney Paul Fishman in New Jersey, who announced the federal settlement, said in April.

McKesson reported fiscal first-quarter earnings Thursday well above forecasts, helped by cost cuts and lower-than-expected taxes, but its revenue came in below Wall Street projections.

McKesson rose 62 cents to $92.88 in late morning trading.

The case is U.S., ex rel. Morgan v. Express Scripts Inc et al, U.S. District Court, District of New Jersey, No. 05-01714.