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Johanns: CMS analysis more evidence health care bill does nothing to improve the system

Monday, January 11, 2010

WASHINGTON -- Sen. Mike Johanns issued the following statement regarding the analysis released over the weekend by the Center for Medicare and Medicaid (CMS) Actuary Richard Foster. The analysis was in response to a request Sen. Johanns and 27 Senators made to the CMS Actuary requesting an updated analysis of the Senate-passed version of H.R. 3590, the Patient Protection and Affordable Care Act (PPACA).

"Results of the analysis by President Obama's own actuarial experts is further confirmation that the health care legislation fails to lower costs yet cuts Medicare, and hurts existing coverage," Johanns said. "With all of the criticisms regarding distortions and dishonesty in this debate, here it is in black and white, no spin. After reading this analysis, no one who is truly interested in an honest debate can claim this bill improves our health care system."

Background on CMS Report:

Still bends the cost curve up: [W]e estimate that overall national health expenditures under this bill would increase by an estimated total of $222 billion (0.6 percent) during calendar years 2010-2019... (page 4)

Most newly covered would be on Medicaid: Of the additional 34 million people who are estimated to be insured in 2019 as a result of the PPACA, a little more than half (18 million) would receive Medicaid coverage due to the expansion of eligibility to adults under 133 percent of the Federal Poverty Level. (page 6) But, they point out that "it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years." (page 19)

Will hurt existing coverage: "The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers' willingness to treat patients with low-reimbursement health coverage." (page 20)

CMS is skeptical of the Medicare savings: The report uses terms such as "unrealistic," "doubtful," and "difficult to attain."

* They point out that "providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries)."

* They go on to say that 20 percent of Part A providers would become unprofitable in the first 10-year window as a result of Medicare cuts. This would likely compromise access to care. (Pages 8-9)

* And on page 19, they point out that "reductions in payment updates to health care providers, based on economy-wide productivity gains, are unlikely to be sustainable on a permanent basis. If these reductions were to prove unworkable within the 10-year period 2010-2019 9as appears probable for significant numbers of hospitals, skilled nursing facilities, and home health agencies), then the actual Medicare savings from these provisions would be less than shown in then memorandum. Similarly, the further reductions in Medicare growth rates mandated for 2015 through 2019 through the Independent Payment Advisory Board may be difficult to achieve in practice."

* "Also, the longer-term viability of the Medicare update reductions is doubtful."

More skepticism: In the "other provisions" section, they grow even more skeptical of savings. "We show a negligible financial impact over the next 10 years for the other proposals intended to help control future health care cost growth." And the "general fraud and abuse and administrative simplification provisions (that is, excluding the Medicare and Medicaid proposals), we find that the language as it now reads is not sufficiently specific to provide estimates." (page 13)

Caveats: "Although we believe that these estimates are reasonable and fairly portray the likely future effects of this comprehensive package of health care reforms, they are subject to much greater uncertainty than normal."

"Indeed, the future costs and coverage effects could lie outside of the range of estimates provided by the various estimators." (page 18)

The CLASS Act: "As discussed in the section of the CLASS program, we believe that there is a very serious risk that the program, as currently specified, would not be sustainable because of adverse selection." (page 19) And "there is a very serious risk that the program would become unsustainable as a result of adverse selection by participants." (page 20)

Comparative effectiveness research: "Other provisions, such as comparative effectiveness research, are estimated to have a relatively small effect on expenditure growth rates." (page 21)


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Sen. Mike Johanns
Sen. Mike Johanns
U.S. Sen. Mike Johanns is a former U.S. Secretary of Agriculture, Nebraska governor and Lincoln mayor.

Address: 404 Russell, Senate Office Building, Washington, DC 20510

Phone: (202) 224-4224
Fax: (202) 228-0436

You may contact Senator Johanns by emailing mike_johanns@johanns.senate.gov. If you would like to receive a response from Senator Johanns, please ensure you include your name, full address, and phone number.