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Little-known ACA provision could have big impact on hospitals’ bottom lines

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Investors should keep a close eye on healthcare, as a little-known element of the Affordable Care Act could leave some hospitals strapped for cash.

The ACA allows Medicare to adjust reimbursements based on workers’ productivity, meaning reimbursement rates decrease as productivity grows in the economy, according to an article from The Wall Street Journal.

The Congressional Budget Office projected (PDF) that this piece of the law would cause reimbursement rates to grow at 2.2% each year between 2012 and 2025, a decrease from 3% growth.

These changes could hurt the bottom line for hospitals. Although the consumer-price index for medical care has been slowing, it has grown by an average of 2.9% over the past five years, according to WSJ. A lengthy window of costs rising faster than reimbursement would widen the gap between revenue and cost.

In general, Medicare already pays less in reimbursement than commercial insurers. The CBO report suggests that if the reimbursement changes stick, the number of hospitals unable to turn a profit could reach 60% by 2025.

WSJ’s analysis did note, however, that this grim outlook did not take into account increased cost efficiency at hospitals. It also noted that the political climate, as the GOP continues to push for a repeal of the ACA, leaves plenty up in the air.

“The good news for investors is that most hospitals aren’t for-profit and few have publicly traded shares,” according to the article. “But the impact of financial pressure still could be significant.”

Also worth considering is the impact that the industry’s ongoing consolidation can have; Tenet Healthcare, for instance, is looking to divest its hospital portfolio.

Moody’s maintains for-profit hospitals’ stable outlook

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http://www.healthcaredive.com/news/moodys-maintains-for-profit-hospitals-stable-outlook/505680/

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Dive Brief:

  • Moody’s Investors Service announced in a recently released report that the outlook for U.S. for-profit hospitals is stable.
  • Outpatient services will drive revenue growth. Moody’s said outpatient service growth will result in EBITDA growth of 2.5-3% for for-profit hospitals over the next 18 months. That growth will be offset somewhat by higher patient costs and more uninsured Americans, which may lead to more bad debt for hospitals.
  • Moody’s warned that recent hurricanes in Florida and Texas, which are the two largest states by revenue among for-profit hospitals, may cause short-term financial issues, but Moody’s expects those hospitals will recover quickly.

Dive Insight:

Payers, both private and public, continue to squeeze hospital margins as they push patients to outpatient services. Moody’s said volumes to lower-cost settings will continue. Revenue growth from outpatient services will rise faster than inpatient services.

Moody’s said patients with high-deductible health plans, who pay more out-of-pocket costs, are going to seek less costly settings than hospitals to save money. Also, the CMS’ proposal to allow several orthopedic procedures on an outpatient basis could cause more financial harm for hospitals. “If finalized, this will further push surgeries out of the inpatient setting.”

For-profit hospitals will capture some of the added outpatient volume through their own outpatient departments and associated ambulatory surgery centers. However, some volume will go to competitors, Moody’s warned.

Moody’s expects payer rates will rise, but lower than usual — 1.5-2% net revenue per adjusted admission over the next 18 months. Some factors that will affect the slower growth include the CMS changing disproportionate share payments and proposing 1.75% rates for hospital outpatient procedures, and private payers implementing cost-controlling policies. These policies include Anthem’s plan to no longer pay for MRIs and CTs scans in hospital outpatient departments. Instead, patients will need to get the services at lower-cost, freestanding imaging centers.

Moody’s also warned that rising bad debt and expenses are pressuring margins.

“Higher patient responsibility and fewer insured patients will lead to lower volumes, but also higher costs of uncompensated care. Even with strong cost controls, given the high fixed costs of operating hospitals, it will be difficult to expand margins in an environment of weak patient volumes and rising bad debt expense. At the same time, nursing shortages and rising fees associated with medical specialists (including outsourced emergency departments) will also pressure margins,” said Moody’s.

However, some for-profit systems may see improved margins in the coming months. Moody’s said Quorum Health and Community Health Systems (CHS) will benefit from shedding less profitable facilities, while LifePoint Health and HCA Healthcare will improve margins over time as they improve efficiencies at recently acquired facilities.

Moody’s also warned that Hurricanes Harvey and Irma, which destroyed portions of Texas and Florida, will affect the largest for-profit hospitals: HCA Healthcare, Tenet Healthcare and CHS, which all have “significant presence” in those areas. For those states, Moody’s expects “incremental expenses,” such as cleanup and remediation, staffing and overtime, as well as transporting critically ill patients to other facilities, will play a financial role for those systems in the next two quarters.

The amended version of Graham-Cassidy is a mess

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The amended version of Graham-Cassidy is a mess

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The revised bill was leaked last night and will apparently be unveiled today. The reporting has suggested that it’s worse than before. Not only is Graham-Cassidy now full of bribes and giveaways to lure hesitant senators, but it also makes it much easier for states to avoid the application of the ACA’s insurance regulations.

That’s because states that want to get out from under the ACA no longer have to submit waivers that the Trump administration has to then approve. They just have to submit applications. Once they do, section 204 of the bill appears to allow the states to establish their own rules for their insurance markets.

Section 204 is really convoluted. Even for lawyers who do this kind of thing for a living, it’s difficult to parse. And on one critical point in particular—whether insurers will be allowed to charge sicker people more for their coverage—it appears to be internally inconsistent.

In general, section 204 says that the states are free to adopt new rules for any insurance plans supported by the Graham-Cassidy block grants. To the extent that the states’ new rules diverge from certain specified ACA rules—the “non-applicable provisions”—the new rules supersede the ACA’s rules.

Which ACA rules can be superseded? It’s a familiar list: the requirement to cover the essential health benefits, the cap on cost-sharing limitations, and the obligation to sell tiered plans (gold, silver, bronze). Insurers can exclude preventive services, including contraception, and states no longer have to treat insurers as part of a single risk pool.

Look carefully at section 204(b)(2), however. It says that the rules that can be superseded include subsections (ii) and (iii) of 42 U.S.C. 300gg(a)(1)(A), which governs community rating. If you chase down that cross-reference, you’ll see that (ii) and (iii) allow health insurers to vary their premiums based on age and rating areas.

But here’s the key: the basic obligation of 300gg(a)(1)(A)—the requirement that premiums can’t vary along anything but the specified conditions—isn’t listed as one of the provisions that states can supersede. No matter what rules the states adopt, then, insurers still can’t discriminate based on health status.

Or can they? If you keep reading, section 204(c) asks states to supply a “description” of the state’s new rules. In that description, the state must specify “[t]he criteria by which, and the degree to which, a health insurance issuer of such coverage may vary premium rates for such coverage, except that in no case may an issuer vary premium rates on the basis of sex or on the basis of genetic information.”

The suggestion is pretty clear: states can allow insurers to vary their premiums, including on the basis of health status, so long as insurers don’t discriminate on the basis of sex or genetics. Plus, it doesn’t make much sense to give the states the freedom to establish separate risk pools if insurers still had to charge the same rate to everyone, healthy or sick.

So what the hell does section 204 mean? Can states discriminate on the basis of health status or not? Who knows?

The craziest thing is that the sloppy drafting may be intentional. It reads to me like a deliberate effort to allow senators to read whatever they want to into the bill. Senator Cassidy and other moderates can claim it preserves the protections for preexisting conditions. Senator Cruz and other conservatives can claim it doesn’t.

Both have a point—but they can’t both be right. One of them is being sold a bill of goods.

My own tentative view is that the statute doesn’t allow insurers to vary their rates based on health status. Nothing in section 204(c) expands the carefully specified list of ACA provisions that can be superseded. There’s internal tension, to be sure, but absent something more, my working assumption is that insurance plans nationwide will remain subject to rules on community rating.

Even if that’s right, however, Graham-Cassidy would still allow insurers to discriminate against the sick. States could liberate insurers to sell plans with huge deductibles and missing benefits, which will discourage sick people from signing up. Since those plans would be in their own risk pools, they could keep their premiums low. Sick people would then be forced into comprehensive plans with sky-high premiums. (Thanks to Tim Jost for walking me through this.)

However you read Graham-Cassidy, then, it allows insurers to screw sick people. It’s just not clear exactly how they can screw them.

Diabetic Amputation Rates Soar in California, Nationally

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https://www.medpagetoday.com/Endocrinology/Diabetes/68086?xid=fb_o_

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No clear cause, but experts suggest numerous possibilities.

Over the past 7 years, California clinicians have been amputating toes, feet, ankles and legs of patients with diabetes-related ischemia with much greater frequency than before, and public health officials, diabetes clinicians, and surgeons said they’re puzzled by the trend.

Statewide, there was a 31% increase in these non-trauma amputations after adjusting for changes in population from 2010 to 2016. Adjusted increases reached 66% in San Diego County, with a population of 3.3 million.

In other populous areas of the state, Riverside County (population 2.4 million) had a 62% increase in diabetes amputations among residents. San Bernardino County (2.1 million) had a 61% increase. Sacramento County (1.5 million people), 47%. And Los Angeles County, with more than 10 million people, saw a 20% increase.

By raw numbers statewide, there were 12,490 diabetes-related amputations in 2016, up from 8,980 in 2010, with almost all counties seeing steady increases year over year.

The data — filtered for more than 100 ICD-9 and ICD-10 codes by county, hospital, body part surgery, and payer — was requested from the Office of Statewide Health Planning and Development, the California agency that collects diagnostic codes for inpatients treated by all hospitals within the state. It was then analyzed to adjust for changes in population.

Asked for comment, officials for the California Department of Public Health responded with one sentence, saying it “does not have information” on possible reasons.

CDC Taking Note

Edward Gregg, chief of epidemiology and statistics for the CDC, said the trend is troublesome. National statistics for 2010 to 2014 show a 27% increase; before 2009, amputation rates had been dropping.

Gregg said that from a public health standpoint, “the rate of amputations is a very important indicator of overall diabetes care. If we see it going down, then it’s a good sign, because so many aspects of good diabetes care in theory are affected. And when you see it going up, that’s a concern,” he said.

He couldn’t say definitively why rates have been increasing, adding that the CDC will be working on the issue. But he and others offered theories.

For starters, the nation is aging, and advancing age is a risk factor for diabetes, and more people are being diagnosed with diabetes. But neither explanation can account for much of the recent increases, Gregg said. For one thing, rates in the diabetic population are increasing too, even after adjusting for age: from 2.7 per 1,000 in 2009 to 4.1 in 2014.

Clinician Factors

Though amputations can stop infection and save lives, diabetes-related amputations deprive patients of independence, increase the need for social services, and add to disability and medical costs. On occasion, they must be repeated when infections spread and amputation incisions don’t heal. But amputations are drastic, and should be performed only when other remedies fail, many experts stressed.

But too many clinicians are impatient, said Caesar Anderson, MD, a University of California San Diego diabetes wound and emergency medicine specialist, who said he was “shocked” by the data. He pointed to emergency room personnel and surgeons who he sees rushing to amputate “even when the wound is not that alarming.”

Anderson blamed a “culture of frustration” among clinicians who say to the patient “you’ll never get better; we’ll probably just save you the headache and just amputate … and we have some fantastic protheses we can get you into … let’s just get it over with.”

Misty Humphries, MD, a vascular surgeon and diabetes-related amputation researcher at the University of California Davis, also noticed the increase with data she collected between 2010 and 2013. She suggested hospitals may be more diligently coding patients with diabetes because of payment rule changes that increase reimbursement when health services involve patients with multiple comorbidities.

But that appeared unlikely, at least for parts of the California. According to the state’s data, the number of patients admitted to any San Diego hospital for any reason who were coded for diabetes increased only one-fifth of 1 percent from 2010 to 2016.

Humphries said that better medication and devices such as pacemakers are keeping people with high blood pressure and cardiac disease alive longer, but those medical advances don’t “protect the rest of their body from age-related deterioration” of blood vessels in their lower limbs. “We do see an increase in amputations for that particular group of patients who are now elderly, non-ambulatory, and not really doing as much but they are still alive.”

Patient Factors

Humphries said she believes a big part of the problem is how common diabetes now is, with an estimated 29 million nationally with the disease. Being diabetic may have become so much the norm, patients think they “can just take a pill … and you don’t really have to change your diet.”

Benjamin Cullen, MD, a foot and ankle surgeon with Scripps Mercy Hospital, noted that many patients may delay care until a family member notices the wound, and rushes them to the emergency room.

California’s data underscored Cullen’s point: At least in San Diego County, more than 76% of the patients who received an amputation entered the hospital through the emergency room, suggesting that patients waited, or even didn’t recognize a problem, until it became acute.

“With diabetes, patients have neuropathy, so they can’t feel their foot,” Cullen said. “They get a wound, don’t know it’s there, the wound gets infected and they don’t realize it. The first sign that they have is a foul odor coming from their foot, or a family member notices drainage.”

Often, the infection has gotten into the bone, he said, leaving “no choice but to go ahead with the amputation” to try to save other parts of the limb.

Cullen and others noted that after patients with diabetes-related infections or other wounds are seen by a doctor or at a hospital, surgeons often perform revascularization procedures to restore circulation.

Then, patients are often referred to wound clinics and given prevention instructions going forward.

System Factors

But those strategies don’t work for everyone, said James Longobardi, DPM, chief of surgery at Scripps Mercy’s Chula Vista campus, just north of the Mexican border, and one who specializes in diabetes-related foot care.

He blamed the increase at his hospital on health literacy. Many of his patients — for a variety of cultural, dietary and other reasons — “can’t grasp the seriousness of the situation, and it’s very, very frustrating to many of our clinicians.”

Gregg speculated that the American Diabetes Association’s 2010 recommendation that clinicians use A1c tests to diagnose diabetes may be capturing patients with “worse heath status, higher blood pressure, worse circulation” than fasting glucose tests. “That could affect rates of amputations too,” he said.

Other factors include less attention to risk factor management by patients or clinicians, and perhaps some subgroups getting screened later or less often than recommended, Gregg said.

Linda Geiss, director of the CDC’s diabetes surveillance section, postulated some of the increase may be delayed fallout from the 2008 recession, when people lost jobs and health insurance, and perhaps skipped medical care for several years. The Affordable Care Act’s health coverage expansions could explain increases from 2014 to 2016, but not those between 2010 and 2013.

In California, many clinicians had numerous explanations for higher numbers, especially in certain counties.

Jonathan Labovitz, DPM, a Pomona foot and ankle surgeon and podiatry researcher affiliated with the UCLA Center for Health Policy Research, blamed the state Medicaid program’s policy change in July 2009, and documented his reasons in this June policy brief.

That cost-cutting move excluded podiatry services from being reimbursed, except in certain situations. That may have reduced wound and foot care services that allowed conditions to worsen, said Labovitz, who also is assistant dean at Western University of Health Sciences College of Podiatric Medicine.

State health officials confirmed the policy change, but declined to comment on whether it increased amputations.

David Armstrong, DPM, MD, PhD, of the University of Southern California’s Keck School of Medicine, theorized that a small portion of the increase might be due to the American Diabetes Association’s broadened definition of diabetes in 1997, from at least 140 mg/dL fasting glucose to at least 126 mg/dL.

That lower threshold resulted in healthier people being captured in the denominator, and made the rate of amputations among people with diabetes appear to drop over the next decade or so, he said. It’s possible that over the next 10 to 20 years, as those people with diabetes progressed, more developed severe blood circulation problems that since 2010 resulted in them having to undergo limb surgery, Armstrong suggested.

But if that indeed is an important factor, the increased rates of amputations would not be as dramatic since 2010, he acknowledged. In the California data, the denominator is hospitalized patients with diabetes, not all diabetes patients.

“It’s just as likely, if not more so, that the economic funk in 2009, [which also was] when podiatric care was eliminated for people with diabetes, contributed to a bump in amputation rates,” he said.

Anne Peters, MD, director of the University of Southern California Clinical Diabetes Program, blamed regional impediments to access to care.

For example, she said, San Diego has no county hospital, like Los Angeles and many other large counties. She stressed the need for better access to care and stronger prevention messages, “letting people know what to look for and where to go should they develop a small lower extremity lesion so it can be treated before it becomes an amputation.”

Could more amputations be better?

Several diabetes specialists and public health officials suggested the increase in amputations could be a good thing, a sign that persistent diabetes-related wounds are not being allowed to fester. Maybe with more distal amputations of toes, and feet, ankles and legs are being spared, they said.

It could be “more a marker of success than failure,” said Philip Goodney, MD, a vascular surgeon and limb amputation researcher with the Dartmouth Institute in New Hampshire, which analyzes Medicare data to see health trends.

While it’s hard to know what California’s data means without more complicated analyses, Goodney said amputations of toes and transmetatarsal procedures across the foot may spare the ankle and leg, and still maintain enough of the foot so patients can still walk.

“I tell my patients that the toes are there for decoration. If we can help you keep your foot, then you can live at home and live independently. It’s when you get your below-knee amputation or your above-knee amputation that the sort of major impacts on quality of life starts to happen,” Goodney said.

The CDC’s Gregg, however, was doubtful. “It’s hard to buy the argument that an increase is good,” he said.

GOP’s Obamacare Repeal Looks to Be on the Verge of Collapse … Again

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With just five days left for Republicans to pass an Obamacare repeal bill in 2017 without fear of facing a Democratic filibuster, the push by Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) entered a new phase Sunday night. Call it the “if at first you don’t succeed, try to buy the votes you need” stage. But even with the changes, the GOP’s health care reform effort looks likely to fall short.

What It Does: The revised legislation, formally introduced Monday, sweetens the deal for some states that just so happen to be home to senators who represent the deciding votes on the bill. The updated bill would still pool together Obamacare money for insurance subsidies and expanded Medicaid and deliver it to states in the form of block grants, but it changes the distribution of that funding. The bill also creates a carve-out allowing Alaska to get a 25 percent increase in federal Medicaid matching funds. And it makes it easier for states to roll back federal insurance regulations, a step that health care analyst Larry Levitt of the Kaiser Family Foundation says could leave people with pre-existing conditions priced out of insurance markets.

A state-by-state summary of the effects of the bill released by Cassidy shows Alaska gaining 3 percent from 2020 through 2026 compared to current law, Arizona getting 14 percent more, Kentucky getting 4 percent more and Maine gaining 43 percent. Some analysts charge that the updated numbers aren’t accurate because they don’t reflect Medicaid spending caps introduced by the legislation while treating reduced spending by states as a result of the elimination of Medicaid expansion as “savings.”

What It Means: “The substance of the Senate’s latest health care bill is different from its predecessor, but the politics are not, in part because only a few Republican senators care about the substance of the bill,” Axios’s Sam Baker writes.

Sen. Rand Paul (R-KY) on Monday reiterated his opposition to the bill. Sen. John McCain (R-AZ) had objected to the bill on more fundamental grounds, saying last week that health care reform ought to go through a bipartisan process and regular order in the Senate. The current scramble hardly qualifies on either front. Sen. Susan Collins (R-ME) said Sunday that “it’s very difficult for me to envision a scenario where I would end up voting for this bill.” The revisions don’t do much if anything to address her stated concerns. And Sen. Ted Cruz has also voiced concerns about the bill. “Right now, they don’t have my vote and I don’t think they have Mike Lee’s vote either,” he said Sunday, referring to Utah’s junior senator. The changes haven’t gotten him to “yes.”

The Bottom Line: Even President Trump is skeptical about the bill’s chances of passing. “Looks like Susan Collins and some others who will vote against,” Trump said Monday during an interview with the Alabama-based “Rick & Bubba” radio show. “We’re going to lose two or three votes and that’s the end of that.”

One Other Complication: Even if this bill fails, the push to repeal Obamacare may not be over. Graham said Sunday that he and Sen. Ron Johnson (R-WI) would not vote for a 2018 budget resolution “that doesn’t allow the health care debate to continue.” Squeezing both health care and tax reform into the budget resolution may be possible, but it would further complicate an already difficult task for Republicans.

Five things to watch for in CNN’s ObamaCare repeal debate

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Five things to watch for in CNN’s ObamaCare repeal debate

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CNN will host a health care debate Monday night between Senators as the GOP makes a last-ditch effort to repeal ObamaCare.

The debate pits GOP Sens. Lindsey Graham (S.C.) and Bill Cassidy (La.) against Sens. Bernie Sanders (I-Vt.) and Amy Klobuchar (D-Minn.) in a town hall-style event.

The debate will be moderated by CNN anchor Jake Tapper and chief political correspondent Dana Bash live from Washington, D.C.

Graham and Cassidy are the authors of the latest Republican ObamaCare repeal effort, which appears to be on life support given GOP defections from the right and center.

Sanders brings political star power to the debate, as well as some risk for Democrats. He is championing a single-payer bill that would revolutionize the nation’s health-care system, something Graham has lambasted as socialism. Republicans are expected to try to attack the Sanders proposal during the debate.

Here are five things to watch for.

Will Republicans turn Monday into a debate on single-payer?

If ObamaCare is not repealed, Graham says the U.S. will head toward a single-payer system.

“It’s coming down to a choice between Federalism vs. Socialism,” Graham tweeted Monday morning. “I chose federalism.”

Graham will likely put a big focus on Sanders’s “Medicare for all” bill, which he recently introduced with the support of 16 of his Democratic colleagues — though not Klobuchar.

Sanders is more likely to defend the Affordable Care Act than seek to tout his own bill.

“The focus is going to be on exposing Graham-Cassidy as the most destructive piece of legislation in the modern history of our country,” a Sanders aide told The Hill.

He will be “defending the ACA, as he has for the last nine months.”

Debating pre-existing conditions and Jimmy Kimmel

Sanders and Klobuchar are expected to zero in on Democratic arguments that the GOP bill would hurt people with pre-existing conditions.

While the bill would leave intact an ObamaCare rule banning insurers from denying coverage to people based on their medical history, Graham-Cassidy lets states waive requirements barring insurers from charging higher premiums to people with pre-existing conditions.

States may also waive out of essential health benefit requirements, which mandate what services insurers must cover.

The bill does require states to show how they will maintain access to “adequate and affordable health insurance coverage for people with pre-existing conditions,” but what that means is open for interpretation by the administration.

“Insurers might have to sell coverage to people with preexisting conditions, but it could be very expensive,” Tim Jost, a emeritus professor at the Washington and Lee University School of Law who opposes the bill, wrote in a blog Monday morning.

Democrats have an ally in the late-night comedian Jimmy Kimmel, who has advocated against several GOP repeal bills, including Graham-Cassidy.

Kimmel, whose son was born with a serious heart condition, last week accused Cassidy of lying to his face over the bill’s treatment of people with pre-existing conditions.

Cassidy had said the bill meets what he had called the “Jimmy Kimmel test” that all children would be ensured coverage. But Kimmel argues the provisions allowing waivers to states could put coverage out of the price-range of millions of Americans.

Which side will be more divided?

Graham and Cassidy are generally united on health-care policy as the authors of the latest repeal plan. But some Republicans have issues with it.

Sen. Rand Paul (R-Ky.) argued the proposal doesn’t go far enough in repealing ObamaCare and has said he won’t vote for it unless certain demands are met.

Among other things, he wants to substantially reduce the amount of funding states would be given through block grants. A number of states are already slated to lose funding under the bill, and cutting funding even more would further alienate moderates.

Sen. John McCain (R-Ariz.) announced his opposition to the bill Friday, saying Congress should return to “regular order” for health care changes.

Moderates like Sens. Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska), who voted against the last repeal bill, haven’t come out against the bill, but have said they have concerns about its impact on their states.

A number of Republican governors have also opposed the bill, citing concerns about how it will impact their states.

On the other side, Sanders and Klobuchar support ObamaCare, but aren’t united on single payer. Klobuchar wasn’t one of the 16 Senate Democrats to co-sponsor Sanders’s “Medicare for all” bill last month.

How will Democrats defend ObamaCare?

Democrats have defended ObamaCare amid efforts from Republicans to dismantle it, but they’ve also acknowledged it needs improvements.

Klobuchar and Sanders will have to have good answers about the double-digit premium increases forecast for 2018.

They’re likely to point to what Democrats have described as “sabotage” from the Trump administration. Insurers across the country have hiked premiums for 2018 amid uncertainty over whether key ObamaCare payments called cost-sharing reductions will be paid.

Democrats also are likely to note that bipartisan efforts to lower premiums and stabilize ObamaCare’s insurance markets for next year were put on hold after the Graham-Cassidy proposal began to gather support in the Senate.

But the increasing costs of premiums has been a criticism of ObamaCare before President Trump was elected. Democrats might have to answer questions about what they would do to improve ObamaCare, while still trying to defend the law.

How will the moderators handle it?

ObamaCare is a testy issue that Democrats and Republicans have been unable to find compromise on in its seven years of being law.

It will be interesting to see what questions Bash and Tapper ask and if they’ll interject to correct the record.

Audience members will also be able to ask questions.

CNN said it selected audience members with varying political affiliations with a focus on those who would be impacted by the proposed repeal plan.

The GOP can’t quit Obamacare repeal because of their donors

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https://www.vox.com/policy-and-politics/2017/9/25/16339336/graham-cassidy-republican-donors

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Graham-Cassidy has gained steam because many Republican senators care primarily about pleasing their donors.

Senate Republicans are trying yet again to repeal Obamacare, despite seemingly having all the political and substantive reasons in the world not to.

Like all the other bills, the newest one, sponsored by Sens. Lindsey Graham and Bill Cassidy, is horrendously unpopular, with only 24 percent support. The rushed and slipshod process around the bill means its consequences still aren’t well understood, but it’s clear enough that tens of millions of people would likely lose coverage if it passes, that several statesrepresented by Republican senators would lose billions of dollars in federal funding, and that the bill badly violates President Trump’s campaign promise not to cut Medicaid.

Instead of putting repeal to the side after its failure in the Senate in July, though, Republicans just keep coming back to it, and are pushing toward a Senate vote on Graham-Cassidy this week. They’re doing so in part because they feel obligated to fulfill a longtime campaign promise, and because they fear electoral consequences for being viewed as failures.

But one more crucial motivator explains a whole lot: Republican Party donors want it.

The evidence that the GOP is trying to please donors here is adding up. An anonymous Republican senator told Politico that McConnell might be returning to health care to show donors “that the Senate GOP tried again.” Senate Republicans were warned at a private meeting that fundraising was slow because donors were disappointed at their lack of accomplishments, per the New York Times. And in recent months, senators “faced an unrelenting barrage of confrontations with some of their closest supporters, donors and friends” over Obamacare repeal’s failure, according to the Washington Post.

This pressure seems to be able to move votes. One moderate senator, Dean Heller (R-NV), conspicuously switched from being a public critic of repeal efforts to a strong supporter of Graham-Cassidy. That came after he reportedly got an earful from Sheldon Adelson and Steve Wynn, two billionaire GOP donors in his state.

Steve Schmidt, who ran John McCain’s presidential campaign in 2008, told Vox recently that donor concerns seem to be dictating the GOP’s legislative strategy. “There’s not an actual human constituency for any aspect of the Republican Congressional agenda,” Schmidt says. “Instead it’s an inside game that is judged, win or lose, on the basis of which entrenched permanent interests gain advantage or disadvantage, and how that affects the endless fundraising process.”

“You’re voting to reorganize one-sixth of the economy without any sense of how much it costs, or who it’s gonna affect, and with 13 percent approval of it at a national level,” Schmidt continues. “The drivers of it are something other than the voters.”

And if you assume the goal of passing repeal is primarily to please donors and goose fundraising, a whole lot about congressional Republicans’ bizarre approach to repeal — particularly, their disinterest in policy details or in how restructuring the health system will impact their constituents — makes a lot more sense.

What, exactly, do these donors want?

One interesting feature about this donor pressure Republicans are facing is that it does not appear to be coming from insurance companies or other health care industry stakeholders hoping to profit greatly from changes to the Affordable Care Act. (Health industry lobbyists in fact have been caught by surprise by the Graham-Cassidy boomlet.)

Instead, it appears to be a sentiment broadly shared among much of the GOP donor class. Paul Kane, who wrote a Washington Post report on pressure Republican senators faced after their initial failure on repeal, tweets that he’s heard “local Chamber types” or “longtime supporters” who’ve donated to them for years were particularly influential.

But super-wealthy donors are making their voices heard too. Doug Deason of Texas, who is part of the Koch brothers’ donor network, said earlier this year that his “piggy bank” would be closed until congressional Republicans “get some things done,” according to the Associated Press.

In trying to understand why these donors want Obamacare repeal so badly, I think it’s helpful to think of two somewhat overlapping sets of motivations.

The first is, essentially, a desire for their political “team” to win. These donors have been funding GOP candidates for years, and those candidates have been campaigning on repealing Obamacare. And while they may not care all that much about health policy, they care about broader matters like whether the Republican Party can get things done, or whether they feel their team is fighting for its principles.

Ken Vogel, who’s covered megadonors for years at Politico and now the New York Times, has said that he thinks a lot of them “treat this almost like a hobby” or game that they’re trying to win. “These folks have all this money, and they’re doing something they believe in. If they win, great; if they don’t win, they had fun doing it.”

In this case, the donors spent on the 2016 election, won, and now feel they’re owed a prize. If they don’t get a prize, then, well, they might not be so eager to open their wallets again. However, they don’t have particularly strong views or interests in the details of Obamacare repeal or how it should be replaced — so it makes sense that many Republican senators channeling their views would be similarly indifferent to what their bill actually does.

The ideological motivation: Obamacare repeal is the best chance to slash government spending

But a second set of donor motivations — that do help explain one major feature of nearly all the repeal bills we’ve seen — are ideological.

Across nearly every major version of Obamacare repeal that the House and Senate considered this year, there’s been one constant: hundreds of millions of dollars on cuts to government spending on health insurance. (Even the massive tax cuts for the wealthy in earlier versions of the bill were eventually scaled back to protect these spending cuts.)

The persistence of these cuts has been odd. If the GOP’s goal was simply to pass something, scaling back the cuts could have helped improve coverage numbers and win over wavering moderates. Furthermore, the bills’ deep cuts to traditional Medicaid go beyond merely rolling back Obamacare, as well as violating President Trump’s campaign promises not to cut that program.

These cuts make a whole lot more sense, though, when you view them as part of a long-term ideological project.

In addition to more traditional business and corporate donors, the GOP gets a great deal of its financial backing from megadonors with ideological motivations, like Charles and David Koch. These donors just don’t want to feel good by winning — they want to dramatically shrink the size of the federal government. And the way that’s done is by cutting spending.

In recent years, they’ve had little success. President George W. Bush found it to his political benefit to hike spending, and Donald Trump promised to protect entitlement programs. While an appealing slogan in the abstract, cutting spending usually proves to be difficult and unpopular in practice.

But Obamacare repeal is different, politically. It’s tied to the despised (on the right) figure of Barack Obama, it can be sold as a fix for the health system’s woes more generally, and the entire Republican Party (including the president) have campaigned on it for years. And it can be done through the budget reconciliation process.

As such, it’s clearly the Republican majority’s best chance for enacting deep spending cuts — and a fantastic Trojan horse if that is the true goal of some of their donors.

Dean Heller looked like he’d stop repeal in his tracks. Then he changed his mind.

Now, as Republicans are facing a tough fight to hold onto Congress in 2018, they’re reportedly finding that fundraising is more difficult than they’d expected.

Sen. Cory Gardner (R-CO), who runs the Senate GOP’s fundraising arm, warned his colleagues at a lunch two weeks ago that their legislative failures, including on Obamacare repeal, were badly hurting fundraising. That’s according to a fascinating report by the New York Times’ Carl Hulse, who writes:

[Gardner] warned that donors of all stripes were refusing to contribute another penny until the struggling majority produced some concrete results.

“Donors are furious,” one person knowledgeable about the private meeting quoted Mr. Gardner as saying. “We haven’t kept our promise.”

Donor influence has been the most obvious in the case of Sen. Dean Heller.

Heller is facing a tough reelection fight in 2018. Hillary Clinton won his state, which also happens to have benefited greatly from Obamacare’s Medicaid expansion. Naturally, then, Heller was hesitant to support an Obamacare repeal bill that would gut Medicaid. So in June, he publicly announced his opposition to one version of the Senate health bill alongside Nevada’s popular moderate Republican Gov. Brian Sandoval.

What happened right afterward, according to a report by the New York Times’ Jonathan Martin and Kenneth Vogel, was that two Nevada billionaires and leading GOP donors let him know that they were very unhappy with him:

Mr. Adelson and Mr. Wynn, two of Las Vegas’s leading gambling titans, each contacted Mr. Heller at the request of the White House last week to complain about his opposition to the Republican-written health overhaul, according to multiple Republican officials.

One ally of Mr. Heller’s acknowledged that Mr. Adelson and Mr. Wynn were unhappy with the senator at the moment and that their relationship needed some repair work.

Soon after this, Heller’s approach to the issue changed dramatically. He stopped sticking his neck out with public opposition. And though he did vote no on two versions of the Senate’s bill in July, he was willing to vote yes when it really counted, on the “skinny repeal” bill. Then, to rebuild his conservative cred further, he added his name to the Graham-Cassidy repeal proposal.

Now, with Graham-Cassidy becoming essentially the Senate GOP’s main repeal plan, Heller doesn’t even seem to be considering a no vote — even though, like the version of the bill he opposed back in June, this bill would make deep cuts to Medicaid and is opposed by Gov. Sandoval.

Heller likely didn’t change his mind only because of annoyed billionaires. After all, in August, Nevada business executive Danny Tarkanian announced he would challenge Heller in the Republican primary, presenting a threat to his right. Since President Trump is still quite popular among GOP primary voters, defying him may have seemed increasingly dangerous after that.

But as Heller runs for reelection in what’s expected to be a hugely expensive race, it would certainly be nice if he had the backing of a pair of deep-pocketed billionaires who can donate unlimited amounts to outside groups who will run ads supporting his candidacy, both in the primary and the general. And his political logic seems to be shared by most of the Senate GOP.

 

This Week’s Other Looming Health Care Crisis

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https://newrepublic.com/article/144979/weeks-looming-health-care-crisis

The Republicans’ latest Obamacare repeal attempt may fail, but two vital programs that serve 18 million Americans are set to expire.

This week, 18 million of the most vulnerable people in America will wait nervously to see if Republicans in Washington will axe their health coverage. I’m not talking about the repeal of Obamacare. Two other programs expire at the end of this week, and without their reauthorization, millions of impoverished children and the desperately poor will be cut off from the only source of health care coverage they could ever hope to obtain. It’s an example of how Obamacare has overwhelmed every other health care public policy issue, and the results could be catastrophic.

As of Monday morning, we’re still not sure that there will even be a Senate vote on the latest repeal effort, Cassidy-Graham. With two Republicans (Rand Paul and John McCain) firmly opposed and one more, Susan Collins, all but against it, there seems to be no path to the necessary 50 votes. Even Ted Cruz begged off on Sunday. But Republicans have backed themselves into such a corner with their base, promising repeal for seven years, that the leadership keeps plugging away. That’s likely to continue until the September 30 deadline under current reconciliation rules.

This uncertainty is toxic for other important measures that face the same deadline. As of last year, 8.9 million children, mostly those whose families earn less than 200 percent of the poverty line, get covered through the Children’s Health Insurance Program (CHIP), which also pays for thousands of births and postpartum care services for low-income pregnant women. CHIP operates like Medicaid, as a state-federal partnership, and federal funding must be reauthorized by the end of the month.

Children wouldn’t be cut off right away; it depends on how states manage their programs. But at least ten, including California and its two million enrollees, would see fairly immediate impacts, including enrollment freezes and a shortfall in paying for care. The Senate Finance Committee announced an agreement on a five-year extension last week, but with the Cassidy-Graham mess, it’s unclear if they’ll get the floor time to pass it. And the House hasn’t acted at all.

But that’s not all. Enhanced funding for thousands of community health centers, which have provided care for underserved communities since being established during Lyndon Johnson’s War on Poverty, also faces a Saturday expiration date. Community health centers are the dirty little secret of the U.S. system—a safety net that looks as much like Britain’s National Health Service as anything. In most cases, anyone can enter a center for care, regardless of ability to pay or even immigration status. More than single payer, this is actually socialized medicine.

It’s also astonishingly popular. If no action is taken this week, 70 percent of current funding levels for community health centers would be lost, likely forcing the closure of 2,800 facilities nationwide and the loss of 50,000 provider and staff jobs. Twenty-five million Americans use these centers each year, nearly three-quarters of them below the poverty line. An estimated nine million would be left with no medical home if funding expires.

These clinics serve a diverse set of communities—downtrodden urban areas and low-density rural regions with no other health care providers. One in ten Montanans get some health care from a community health center. Four hundred thousand Tennesseans use them, and almost that many South Carolinians. With that deep a funding cut, all of these facilities, in red states and blue states, are at some level of risk, forced to bar new patients, scale back services like dental care or drug treatment, or shut down. And local papers from California to North Carolina are raising the alarm.

Maybe no other major issue could get 70 senators from both parties on a letter of support, but Democrat Debbie Stabenow and Republican Roy Blunt did it for community health center funding last week. For all the ideological hot air, Democrats and Republicans are perfectly thrilled to support something as centrally planned and disruptive to the marketplace than any single payer system. Independent Bernie Sanders and Republican Bill Cassidy will be debating health care on CNN on Monday night, but both of them signed this letter to expand a government-funded health care provider network. (Sanders was actually instrumental in getting five years of enhanced community health center funding into the Affordable Care Act. Congress extended the funding in 2015, but only through September.)

Despite this rare bipartisan support, nothing has been done to extend the funding. A five-year extension has been introduced in the House, but no floor time has been scheduled. Consumed with the war over Obamacare, Congress has let this enormously successful program get lost in the shuffle.

Put together the patients at risk from expiring CHIP funding and community health center funding, and you get 18 million. And this population of Americans, which includes the homeless, poor pregnant women, the uninsured, the addicted, and the undocumented, is by and large more vulnerable to loss of health care access as those at risk in Obamacare repeal.

Obamacare has taken on a meaning that goes far beyond its actual function. It has helped to dramatically lower the uninsured rate, no doubt. But it’s still just part of a series of programs that assist people with coverage. Allow any one of those to falter and the whole system buckles. Obamacare could be working spectacularly, but without CHIP or community health center funding, the nation’s health care system would sink into absolute crisis.

Maybe you believe, as I do, that such a Rube Goldberg delivery system for health care makes no logical sense. In fact, the looming CHIP/community health center deadline serves as a good argument for a single-payer system where no one part of the program can fall through the cracks so easily. But that’s not where we are this week. We’re staring down the barrel of a health care catastrophe, and congressional leaders are busy trying to salvage campaign promises and play to their most ideological of supporters.