Heleni Smith, MPH Candidate 2011

Republican Representative Paul Ryan, the new chairman of the House Budget Committee, is set to reveal his 2012 budget proposal this upcoming week. The proposal’s anticipated $4 trillion cuts on federal spending include dramatic changes to both Medicare and Medicaid. The Medicare changes would affect everyone bellow the age of 55 by converting the program into a premium support system. This means that by the time the aforementioned individuals reach the age of 65, Medicare will no longer exist in its current form. Participants would have to choose a private insurance coverage for which the government would pay the first $15,000 of premiums. Poorer or less healthy individuals would receive more money.  Ryan claims that Medicare is unsustainable in its current form and that these changes are necessary.  Opponents to Ryan’s proposal argue that health costs will rise at a higher rate than the proposed government subsidies, thus leaving many elderly with inadequate coverage.  As far as Medicaid, Ryan is proposing that the program turn into a block grant program in order to rein in state spending.

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A popular item on the republican agenda is turning Medicaid into a block grant program. While this is generating a lot of discussion, it is not the first time the issue has been addressed. President Ronald Regan and President George W. Bush both tried to implement the same changes. What exactly is a block grant program? Let’s begin with a few clarifications. Medicaid is an entitlement program-if an individual meets the eligibility criteria then he or she is guaranteed a spot in the program. It is currently administered by the states and financed by both federal and state government. The government has agreed to co-finance Medicaid as long as states cover specific groups of people, for example children. Switching to block grant financing would restrict the states’ ability to rack up the bill. The federal government would provide annual lump sums, and it would be up to the states to allocate them efficiently. Extra costs would then be the sole responsibility of the states. The democratic opposition fears that such a switch would lead to Medicaid being unable to maintain its current number of enrollees, let alone add more as the health reform bill suggests. If put to a vote, block grants would likely make it through the House, but fail to make it through the Senate.

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Healthcare reform has many stakeholders beyond government and providers. Case in point-health insurance brokers. Insurance brokers are becoming more vocal about the possible ramifications that the Patient Protection and Affordable Care Act might have on them and are taking their trepidations to congress and state legislatures. Their main concern revolves around maintaining their commissions as well as guaranteeing a position in the new healthcare landscape. There is debate around the effect insurance brokers have on overall premiums. Brokers are hoping to play an integral part in the creation of health insurance exchanges which will take effect in 2014. States seem to be divided on this issue. Iowa and Minnesota have both introduced bills that safeguard the future of brokers, while Maryland and the District of Columbia are drafting bills that would negate the use of brokers. The National Association of Insurance Commissioners is lobbying legislation on the national level that would exclude brokers’ commissions from the new 20% cap on health insurance administrative cap.

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ACOs have been generating alot of media buzz in the last few months, although the concept is still a bit foggy to many people. Here is a brief explanation of what an ACO is:
An Accountable Care Organization (ACO) is an entity created in order to tackle healthcare quality and rising costs issues. The main purpose of their creation is to simultaneously address payment methods and delivery reform. ACOs are generally a local entity comprised of at least physicians (primary and specialists) and hospitals that are responsible for the full spectrum of care for specific beneficiaries. ACOs provide financial incentives such as shared savings and bonuses for meeting certain predetermined quality measurements.

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