Medicare Advantage Cuts Don't Bite: Health Insurers Stocks Rally

Late Friday, after the stock market closed, the Centers for Medicare & Medicaid Services (CMS) announced proposed new rates for Medicare Advantage plans. These are Medicare plans that are run by private insurers that give seniors more choices than they have under traditional Medicare Part A (hospital) and Part B (physician) benefits.

The result? Health insurers' stocks rallied.

Read more at John Goodman's Health Policy Blog.

Will the Federal Government Turn a Profit on Risk Corridors? That Can Be Stopped

I have written twice about the “risk corridors” in Obamacare’s health-insurance exchanges. The first post described how risk corridors will work in the exchanges. Risk corridors exist for three years and are designed to partially immunize insurers from losing money in the exchanges.


Originally, the Congressional Budget Office (CBO) had estimated (“scored”) that the risk corridors would be revenue neutral. That is, the amount of money that the federal government takes from the health insurers will be equal to the amount it has to pay out to the losers.

A few days ago, however, the CBO issued a new budget outlook that anticipates the government turning a profit of $8 billion during the risk corridors’ existence: $16 billion of revenue versus $8 billion of spending (see especially pp. 114-115). I find the CBO’s reasoning difficult to accept, and expect the risk corridors to lose taxpayers’ money. However, that does not matter: Congress is bound to take CBO’s estimates seriously.

Read the entire column at The Independent Institute's Beacon blog.

Health Spending By State And Local Government Workers Has Increased One Fifth More Than Medicaid Spending

In a previous post I reported that health benefits for government workers cost 40 percent more than benefits for private-sector workers. This extra cost imposes a significant burden on taxpayers. Researchers at the Pew Charitable Trusts have now answered another, related question: How does spending on health benefits for state and local government workers compare with spending on Medicaid?

In a recent report, the researchers conclude that state and local spending on government workers increased by 444 percent in real, inflation-adjusted terms from 1987 through 2012. Spending on Medicaid grew by 375 percent.

That is, spending on government workers increased almost 20 percent more than spending on Medicaid.

Read the entire column at John Goodman's Health Policy Blog or The Independent Institute's Beacon blog.

Whose Blood Is It Anyway? On the New Clinical Lab Regulations

Many patients’ group and their allies understandably cheered a new regulation that just came about as a result of many years of advocacy: Nationwide, patients now have a “right” to access their lab results directly. The “right” to receive test results directly from labs now ranks equally with the “right” to get our medical records.

I certainly applaud the outcome. Nevertheless, I question whether the means fully justify the end. I have three major concerns, in increasing order of importance.

Read the entire column at The Independent Institute's Beacon blog or John Goodman's Health Policy Blog.

Senate Republicans' Health Reform Proposal Imposes 37 Percent Marginal Income-Tax Hike On Many Middle-Income Households

The Patient CARE Act, put forward by Senators Hatch, Burr, and Coburn, continues to attract attention. While it has many merits, it also suffers from one of the same drawbacks as Obamacare. The CARE Act would institute changes to marginal-income tax rates that would increase disincentives to work for many, especially those in prime earning years.

This is not unique to the CARE Act. It is a characteristic of the American welfare state. Economists describe these as “notches” or “cliffs”, and Obamacare is stuffed with them.

Read the entire column at Forbes.com The Apothecary or The Independent Institute's Beacon blog.

Senate Republicans' Health-Reform Proposal Leaves Significant Room for Improvement

The health-reform proposal put forward by three Republican Senators (Hatch, Burr, and Coburn) has attracted a lot of attention as the so-called Republican alternative to Obamacare.

Although the reform includes a grab bag of previous Republican reforms, including medical malpractice and Medicaid, its most radical element is a significant change to the private, employer-based system. The proposal includes a significant tax hike of $1.5 trillion over ten years that will harm most working Americans, in return for a tax credit which very few will enjoy.

The good news is that if the proposal evolves to give more – or even all – Americans the same freedom, it could be an excellent replacement for Obamacare.

Read the entire column at Forbes.com The Apothecary or (a slightly earlier version) at the Independent Institute's Beacon blog.

Improving the Senate Republicans' Health Reform Bill: Continuous Coverage

Three Republican Senators have released a health-care reform proposal that has attracted much attention. One of the three, Orrin Hatch, is likely to chair the Senate Finance Committee if the Republicans win the majority in the Senate.

One important part of the proposal that has not received enough critical attention is “continuous coverage protection,” in Section 202 of the summary. This is basically a “super-HIPAA” provision, and it has problems not immediately apparent to the casual reader. There is a better way.

Read the entire column at John Goodman's Health Policy Blog or The Independent Institute's Beacon blog.