The implementation of PPACA, is it arrogance, stupidity or just politics?

The Secretary of HHS’s recent letter to Medicare Advantage insurers started me thinking, always a dangerous endeavor.  In her letter, she admonishes them to

 “Focus on price and quality rather than asking seniors who need health care the most to pay more for it.” 

Umm, does that imply that CMS will no longer raise Medicare premiums, of course, it does not, but then again CMS does not have to worry about staying in business or the deficit it creates.

Her letter was the result of a letter a group of Democratic lawmakers sent Sebelius asking her to thoroughly vet MA plans’ 2011 bid submissions. The letter stated that the new health reform law eliminated overpayments to MA plans. Yeah, just as it eliminated what is now called a windfall for employers by changing the tax status of retiree prescription drug rebates, the purpose of that original law notwithstanding.

The letter continued,

“In phasing out these overpayments, CMS must ensure that plans work to trim administrative costs and other overhead, rather than merely shifting additional costs onto beneficiaries to preserve their bottom line”

In her letter to insurers, Sebelius reminded insurers that she can deny insurers’ bids with powers granted under the new health reform law if they request excessive price increases, as if they needed reminding.  That kind of reminder used to be called a threat, and in some places, an offer you can’t refuse. The administration thinks it unfair that Advantage plans start passing costs on next year when the cuts start in 2012 (but fees are frozen in 2011).  That’s like saying if you know your pay is going to be cut next year you should keep spending and build up your credit card debt, hey, no need to worry until next year!  As I said at the start, is it stupidity, arrogance or simply politics?

Would logic not tell us that in a competitive environment insurers would always be trimming administrative costs and other overhead to be competitive and attract new participants?  Medicare Advantage is an option; people can enroll and dis-enroll.  Why do they enroll?  Because it is a better overall deal than basic Medicare, but now the plans are going to trim benefits and will eventually have to raise premiums as the Medicare payment is frozen and then decreased (but, if you like the coverage you have, you can keep it).  This strategy of criticizing, scapegoating and then threatening is typical of this administration as soon as it becomes obvious that things are not what they appear to be, or cost what they said they would cost.

To put it simply the administration and Congress rammed through a massive new law and in the process targeted specific industries, and manipulated budget projections while claiming those with other ideas were obstructionists.  Specifically, we have a law that is budgeted over ten years, but whose major costs run for six of the ten years.  There is a strategy that encourages employers to shift costs to the government while government accounts for “savings” by changing the tax status of the retiree prescription drug rebate program.  Congress cuts costs and then restores them after the fact as with physician payments under Medicare.  PPACA contains effective dates and the administration bullies insurers and employers to ignore them.  We get an interpretation of the law with regard to collectively bargained plans from the Assistant Secretary of Labor that is clearly counter to the text of the law and many years of past practice. Democrats (with a lot of help from the AARP) blast Republicans for passing Part D of Medicare and adding to the deficit, then turn around and increase that deficit by “improving” Part D claiming that the original program was inadequate and unfair to seniors. One wonders how a $400 billion dollar new entitlement can be inadequate when compared to no entitlement at all, at least this one wonders.  I can’t wait until we hear that the five year waiting period to collect on the new Long Term Care insurance under the CLASS Act is unfair and needs to be eliminated.  Speaking of class act, I wonder who will be next in the Administration to seek a target to “kick ass?”

The law cuts payments to vendors and then the administration threatens them when they react in a protective and quite logical manner. Of course, it is all right when Congress passes a law that increases taxes before any benefits are forthcoming, but if an insurer anticipates a reduction in its revenue, it is harming senior citizens or anyone who needs health care.  We see scapegoating to the ultimate degree to deflect criticism from a strategy that will fail to control health care costs.  Then we have blatant and misleading promotion of the law through Medicare communication aimed at groups likely to be long time losers, the same senior citizens HHS says are most vulnerable.

One has to wonder if this behavior affects far more than health care (he said with tongue in cheek).

It should be a surprise to no one that Medicare Advantage plans, insurers in general; drug companies and medical equipment makers are all going to raise their premiums and prices in response to new taxes, penalties or lower payments.  The same holds true for health care providers, cut their payments under Medicare and there will be a reaction.  They either drop out of Medicare or raise prices for the non-Medicare population.  Moreover, guess what that does, it raises the cost of health care for everyone in the private sector that is then reflected in health insurance premiums.  No matter, those increased premiums will still be “affordable” because for millions of Americans the premiums will be subsidized by taxes paid by millions of other Americans, or the next generation whichever comes first.

A basic knowledge of human nature should tell anyone, even a politician, that for every action, there is a reaction and along the way, there are many unintended consequences. Perhaps we are at a new point of realization that politicians simply do not care.  It is more important for something to look good than to actually be good. It is more important to solve an immediate problem even if a larger problem is created in the future.

Something is fundamentally wrong with the behavior of individuals running our government.  Perhaps it is a reflection of their generation, perhaps it is the tone set by the President and his Chicago experience, or maybe it is simply those in the party of power flexing their muscle while they can.  I do not know for sure, but I do know that such behavior is not good for the American people regardless of their social or political persuasion.

blogsurfer.us