More Health Legislation to Come
Is our grassroots program ready?
By Jerome Connolly, PT, CAE
July 7, 2015
Compliments of the Physical Therapy Political Action Committee (PT-PAC), your lobbyist was afforded the opportunity on June 2 to have dinner with Rep. Paul Ryan (R-WI), chairman of the House Ways and Means Committee. For over an hour the chairman engaged in a discussion of a wide range of topics from trade to tax reform. Rep. Ryan shared his philosophy, goals, and strategies as a leader of the conservative movement, the Republican vice presidential nominee in 2012, and chairman of the powerful panel that oversees almost every issue—including Medicare—in the House of Representatives.
The chairman was demonstrably proud that Congress accomplished the reform of the flawed sustainable growth rate (SGR) Medicare payment formula in April, but he openly continues to harbor aspirations for reforming the entire Medicare benefit. He sincerely believes the program as it is currently structured is not sustainable. He is convinced that it can only be saved by converting the entitlement to a premium support plan.
This is not new. Private Practice Section (PPS) members will recall that as chairman of the House Budget Committee, Ryan twice proposed spending plans that would replace the traditional Medicare benefit with a voucher system. To offset the cost, Ryan’s 2015 budget would have taken $140 billion from the SGR (provider payments), and another $110 billion in general Medicare cuts.1 Today, as a consequence of the successful repeal of the SGR in April, such savings would be hard to find.
But now Chairman Ryan says converting Medicare to a premium support plan will pay for itself by increasing competition, improving quality, and giving the beneficiary the choice of the type of insurance coverage purchased on the private market.
This emphasis on private insurance would further empower health insurers that were situated strategically and considerably emboldened by the Affordable Care Act (ACA), which has resulted in record earnings reports of the nation’s largest insurers since the enactment of Obamacare. To wit: The five biggest insurers in the country are heading into a more stable future after their first quarter earnings reports show that they all are in good financial health in the post-reform market.2
- Aetna reported that it made $777 million in net profit and $15.09 billion in revenue, an 8 percent increase from last year.
- Anthem saw a 4.3 percent increase in enrollment (reaching about 38.5 total million members), particularly from its Medicaid plans’ 25 percent jump in enrollment to 5.6 million people in the first quarter. The company achieved a better-than-expected first quarter profit of about $865 million.
- Cigna’s revenues reached $9.5 billion, an increase of 11 percent from the same time last year, which reflected a growth in premiums and fees.
- Humana said its revenue rose 18 percent to $13.8 billion.
- UnitedHealth posted revenue of $36 billion and net income of $1.41 billion in the first quarter, amounting to a 13 percent year-over-year growth. The nation’s largest insurer also added 1.6 million members in the past year.
These are the same insurers who are proposing double-digit rate hikes for 2016.3
Chairman Ryan’s Medicare reform proposal would replace Medicare’s guarantee of health coverage with a flat premium-support payment, or voucher, that beneficiaries would use to purchase either private health insurance or a form of traditional fee-for-service Medicare. (It would also raise the age of eligibility for Medicare from 65 to 67.)
Despite promoting this idea for several years, Ryan has provided few specifications for his premium-support proposal. However, his staff says that he is considering the “average-bid” model described in a recent Congressional Budget Office (CBO) report.4 Under this illustrative option, the value of the premium-support payment in a given region would be based on a weighted average of bids made by participating private plans and traditional Medicare in that region. (The bids would represent the amount that a plan would require to provide Medicare to a beneficiary of average health.) Beneficiaries who chose a plan with an average bid would pay only the standard Medicare premium. Those who chose a plan with an above-average bid would have to pay a premium that was higher by the full amount of the difference.
The proposal’s impact on individual beneficiaries would differ depending on whether traditional Medicare or private plans cost less in their region, but it would disadvantage beneficiaries in at least two ways. First, in many regions, traditional Medicare would cost more than the premium-support voucher, so beneficiaries who chose to enroll in traditional Medicare would have to pay higher premiums than under current law. Second, beneficiaries who enrolled in a private plan would not receive the federally subsidized supplemental benefits that enrollees in private Medicare Advantage plans receive under current law.5
Chairman Ryan says that his premium-support proposal would not affect people aged 56 and older in 2014. But this claim is unlikely to be completely true since traditional Medicare would tend to attract a less healthy pool of enrollees (adverse selection), while private plans would attract healthier patients. The Medicare Advantage program provides a current example of this phenomenon. Although the proposal calls for “risk-adjusting” payments to health plans—that is, adjusting them to reflect their enrollees’ health status—the risk-adjustment process is highly imperfect and captures only part of the cost differences across plans that stem from differences in enrollees’ health.1
The process of legislating, according to Chairman Ryan, will essentially cease in Congress when the presidential political campaigns get going in earnest (some would argue they already are) so there is a limited legislative window. However, the GOP vice presidential nominee said he expects the Republican presidential candidate to be selected no later than May 2016 due to changes the Republican National Committee (RNC) has made to front-load the primary elections process. This means that little if any substantive legislation will get passed once Congress recesses for the holidays at the end of this year. Whatever does pass prior to that still must gain the approval of the current occupant of the Oval Office.
While Ryan is realistic, he is also determined to use the legislative process in every way possible to help the GOP win the White House in 2016, thus enabling one-party control of the legislative and executive branches. Once this occurs, he will be positioned to attain his goal of “voucherizing” Medicare.
In addition to Medicare reform, Chairman Ryan will attack other health care issues throughout the remainder of the year including bolstering the health savings account program, which he says was eviscerated by the ACA. Two other ACA provisions on Ryan’s radar for repeal include the medical device tax and the Independent Payment Advisory Board (IPAB); provisions that were included as a way to help pay for the health reform legislation. Moreover, he is also interested in reforming the post–acute care market by introducing bundled payment.
Given Ryan’s health policy priorities and our as yet unaddressed PPS priorities that include locum tenens, opting out of Medicare, and the therapy cap, it is clear that there is considerable cause for vigilance and engagement for the remainder of 2015.
Your PPS lobby team is leading the staunch effort on locum tenens and opt-out and participating with the American Physical Therapy Association (APTA)-led Therapy Cap Coalition in positioning the therapy cap repeal for the optimal political outcome.
However, a full PPS membership effort will be needed to accomplish our legislative goals and that brings me to the strength and effectiveness of our PPS grassroots mechanism.
Your advocacy team was pleased with the responsive engagement many PPS members demonstrated in response to our numerous grassroots alerts on the SGR and therapy cap legislation in April. A similar membership-wide effort will be necessary again this year if we are to succeed.
While we can be justifiably proud that we have grown a large Key Contact program, it must be pointed out that we still lack Key Contacts for important target legislators (see sidebar). Therefore, it is critical that we quickly take determined strides to broaden and strengthen the PPS Key Contact program through which a PPS member acts as a trusted resource and PPS ambassador to a specific member of Congress.
In the Senate alone, a dozen critical legislators do not yet have a PPS member constituent committed to serve as a resource, an educator, and a relationship builder. These vacancies include four senators (Coats, Nelson, Stabenow, Warner) on the important Finance Committee and four members of the Health Education Labor and Pensions (HELP) Committee (Collins, Kirk, Murkowski, Sanders). Separately, three members of Senate leadership (Barrasso, Klobuchar, Wicker) are also without a PPS Key Contact.
In April, we fell two votes short of passing an amendment on the Senate floor that would have fully repealed the therapy cap. Sure, we can be proud of coming so close, but at the same time we should be disappointed. Two changed votes could have permanently eliminated an adverse and discriminatory policy that has been dogging our profession and our patients for nearly two decades. Yet we lack strong constituent relationships with twelve critical senators.
If we had had those strong relationships, which can be established and nurtured through an effective Key Contact program, would the outcome in the Senate have been different? We will never know for sure. However, what I do know from my vantage point of working in congressional relations for over 20 years is that without such connections, the chance of optimal outcome on such a vote is diminished if not obliterated.
On June 4, APTA coordinated a physical therapist Hill Day preparing and ushering nearly a thousand APTA members to Capitol Hill for a rally and for visits with their members of Congress. The previous evening, in her remarks opening the APTA Annual Conference (“NEXT”), legendary tennis professional Billy Jean King stated: “Every single one of you is an influencer.”
PPS has established a Key Contact Task Force charged with the mission of recruiting and training PPS members to become effective Key Contacts. For your patients, your profession, and your practices, please step forward and let’s fill our Key Contact vacancies with eager and enthusiastic private practice physical therapy advocates. Please contact task force chair Kathleen Picard (firstname.lastname@example.org) and tell her you are willing to do your part.
“Every single one of you is an influencer!”
1. Van de Water P, Medicare in Ryan’s 2015 Budget, Center on Budget and Policy Priorities, April 8, 2014.
2. Insurers Navigate Health Overhaul to Rising Profits, Associated Press, April 29, 2015.
3. Nesper M, Insurers propose double-digit rate hikes, Employee Benefit News, June 3, 2015.
4. Congressional Budget Office, A Premium Support System for Medicare: Analysis of Illustrative Options, September 2013.
5. Congressional Budget Office, A Premium Support System for Medicare, pp. 4-5.
Jerome Connolly, PT, CAE, is a registered federal lobbyist whose firm, Connolly Strategies & Initiatives, has been retained by PPS. A physical therapist by training, he is a former private practitioner who throughout his career has served in leadership roles of PPS and APTA. Connolly also served as APTA’s Senior Vice President for Health Policy from 1995–2001.