Expanding Choice through Defined Contributions: Overcoming a Non-Participatory Health Care Economy

Blendon R. J. Benson J. M. , “Health Care in the 2010 Congressional Election,” New England Journal of Medicine 363 (October 27, 2010): E30(1)-e30(5), available at <http://www.nejm.org/doi/full/10.1056/NEJMp1011714>(last visited August 28, 2012).

Congressional Republicans campaigned against the legislation, while most Democrats ran away from defending the new law. Exit polling showed deep dissatisfaction with the new law, with voters nearly split on whether it should be repealed. Fox News, “Newly Empowered House Republicans Eye Repeal of ‘Obamacare,’” November 3, 2010, available at <http://www.foxnews.com/politics/2010/11/03/newly-empowered-house-republicans-eye-repeal-obamacare>(last visited August 23, 2012).

Rasmussen Reports, “63% Favor Repeal of National Health Care Plan,” May 24, 2010, available at <http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/may_2010/63_favor_repeal_of_national_health_care_plan>(last visited August 23, 2012).

Rasmussen Reports, “52% Favor Repeal of Health Care Bill,” June 28, 2010, available at <http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/june_2010/52_favor_repeal_of_health_care_bill>(last visited August 23, 2012).

Zogby Interactive Poll, “Zogby Interactive: 51% of Voters Oppose Healthcare Reform Act,” April 21, 2010, available at <http://www.zogby.com/news/2010/04/21/zogby-interactive-51-of-voters-oppose-healthcare-reform-act/>(last visited August 23, 2012).

Hacker J. , “Health Reform 2.0,” The American Prospect, July 2010, available at <http://prospect.org/article/health-reform-20-0>(last visited August 23, 2012).

Popular anxiety over costs, fear of losing coverage, and anger over insurance denials of claims or coverage have fueled majority support for major health care reform since the debate on the Clinton Health Security Act of 1993. For example, the Robert Wood Johnson–Harvard School of Public Health Survey in March 1993 found that 56 percent of Americans wanted a major overhaul of the health care system. On March 1, 2007, the CBS News/New York Times poll found that 54 percent of Americans wanted “fundamental changes” in the system. CBS News/New York Times Poll, “U.S. Health Care Politics,” March 1, 2007, available at <http://www.cbsnews.com/htdocs/CBSNews_polls/health_care.pdf>(last visited August 23, 2012).

On public response to the various Medicare reform proposals, see Blendon R. J. Benson J. M. , “The Public's Views about Medicare and the Budget Deficit,” New England Journal of Medicine 365 (July 13, 2011): E8(1)-e8(4), available at <http://www.nejm.org/doi/pdf/10.1056/NEJMp1107184>(last visited August 28, 2012).

Keehan S. P. , “National Health Spending Projections through 2020: Economic Recovery and Reform Drive Faster Spending Growth,” Health Affairs 30, no. 8 (August 2011): 1594–1605.

Foster R. S. , “Estimated Financial Effects of ‘The Patient Protection and Affordable Care Act’, as Amended,” Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, April 22, 2010, available at <https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf>(last visited August 23, 2012).

Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, “National Health Expenditure Data: Historical,” available at <http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage>(last visited August 23, 2012).

Conover C. J. , “Health Is the Health of the State,” The American: The Journal of the American Enterprise Institute, July 19, 2011, available at <http://www.american.com/archive/2011/july/health-is-the-health-of-the-state>(last visited August 23, 2012).

Elmendorf D. W. , Letter to the Honorable Nancy Pelosi, Speaker, the U.S. House of Representatives, March 20, 2010, available at <http://www.cbo.gov/ftpdocs/113xx/doc11379/amendreconProp.pdf>(last visited August 23, 2012).

Krugman P. , “Medicine: Who Decides?” New York Times, December 26, 2005, at A-31.

Rosenbaum S. , “A ‘Broader Regulatory Scheme’ – The Constitutionality of Health Reform,” New England Journal of Medicine 363, no. 20 (2010): 1881–1883, available at <http://healthpolicyandreform.nejm.org?p=12896&query=TOC>(last visited August 23, 2012).

Matthews M. , “America's Coming Health Care Oligopoly,” Forbes, July 7, 2010, available at <http://www.forbes.com/2010/07/07/healthcare-reform-insurance-hospitals-contributors-merrill-matthews-obamacare.html>(last visited August 23, 2012).

President Barack Obama, “Remarks by the President to a Joint Session of Congress on Health Care,” The White House, September 9, 2009, available at <http://www.whitehouse.gov/the_press_office/remarks-by-the-president-to-a-joint-session-of-congress-on-health-care/>(last visited August 23, 2012).

Kohn L. T. , Health Care Price Transparency: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care, U.S. Government Accountability Office, September 2011, available at <http://www.gao.gov/products/GAO-11-791>(last visited August 23, 2012).

See Elmendorf , supra note 13, at Table 5.

Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, May 13, 2011, at 41, available at <https://www.cms.gov/reportstrust-funds/downloads/tr2011.pdf>(last visited August 23, 2012).

United States Department of Justice & Federal Trade Commission, “Competition Law: Hospitals,” Improving Health Care: A Dose of Competition, July 2004, at 1, available at <http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf>(last visited August 23, 2012).

Christianson J. B. Tu H. T. Samuel D. R. , “Employer Sponsored Health Insurance: Down But Not Out,” Center for Studying Health System Change, Issue Brief No. 137, October 2011, available at <http://www.rwjf.org/files/research/73482hscib137employersponsoredinsurance20111103.pdf>(last visited August 23, 2012).

Staman J. , Memorandum to Sen. John Cornyn (R–TX), “Legal Analysis of Section 1311(e)(1)(B) of the Patient Protection and Affordable Care Act and State Sponsored Public Health Plans,” Congressional Research Service, September 24, 2010, at 3, available at <http://assets.opencrs.com/rpts/M20100924_20100924.pdf>(last visited August 23, 2012).

Book R. A. Ramlet M. , “What Changes Will Health Reform Bring to Medicare Advantage Plan Benefits and Enrollment?” Medical Industry Leadership Institute, Carlson School of Management, October 2011, at 7, available at <http://americanactionforum.org/sites/default/files/Embargoed_Book+Ramlet_MILI-Working-Paper_2011-10-13_Final.pdf>(last visited August 23, 2012).

Specifically, Congress provided a $250 rebate for Medicare beneficiaries who entered the “donut hole,” a pre-ordained gap in drug coverage where beneficiaries pay 100 percent of drug costs until they reach a specified catastrophic threshold. A feature of the Medicare Modernization Act of 2003, the donut hole was purely the product of congressional imagination. It was a way to provide a universal drug entitlement while attempting to control costs by creating an interim out-of pocket payment requirement. No such benefit design was found in the private sector. The Affordable Care Act basically fills up the “hole.” It requires companies to provide a 50 percent discount for brand-name drugs, and it imposes a 25 percent cap on total benefciary costs for those who find themselves in the “donut hole.”.

Merlis M. , “The Federal Employees Health Benefits program: Program Design, Recent Performance, and Implications for Medicare Reform,” Kaiser Family Foundation, May 2003, available at <http://www.kf.org/medicare/upload/The-Federal-Employees-Health-Benefits-Program-Program-Design-Recent-Performance-and-Implications-for-Medicare-Reform-Report.pdf>(last visited August 23, 2012).

Francis W. , “The FEHBP as a Model for Medicare Reform: Separating Fact from Fiction,” Heritage Foundation Backgrounder No. 1674, August 7, 2003, available at <http://www.heritage.org/research/reports/2003/08/the-fehbp-as-a-model-for-medicare-reform-separating-fact-from-fiction>(last visited August 23, 2012).

Francis W. , Putting Medicare Consumers in Charge: Lessons from the FEHBP (Washington, D.C.: The AEI Press, 2009): At 32.

America's Health Insurance Plans, “Medicare Advantage Plans,” available at <http://www.ahip.org/content/default.aspx?bc=39%7C341%7C321>(last visited November 10, 2011).

The Lewin Group, “Comparison of VA National Formulary and Formularies of the Highest Enrollment Plans in Medicare Part D and the Federal Employee Health Benefit Program,” December 10, 2008, available at <http://www.lewin.com/∼/media/lewin/site_sections/publications/3987.pdf>(last visited August 27, 2012).

Id.

D'Angelo G. , “The VA Drug Pricing Model: What Senators Should Know,” Heritage Foundation WebMemo No. 1420, April 11, 2007, available at <http://www.heritage.org/research/reports/2007/04/the-va-drug-pricing-model-what-senators-should-know>(last visited August 23, 2012).

Brunswick D. , “Health Insurance Costs to Rise Again Next Year,” CNN Money, September 22, 2011, available at <http://money.cnn.com/2011/09/22/pf/health_insurance_costs/index.htm>(last visited August 23, 2012).

Lemieux J. , Memorandum to the Medicare Commission, The National Bipartisan Commission on the Future of Medicare, February 17, 1999, available at <http://medicare.commission.gov/medicare/jeff.html>(last visited August 23, 2012).

Congressional Research Service (CRS), The Federal Employees Health Benefits Program: Possible Strategies for Reform, May 24, 1989, at 255. This CRS study remains the most comprehensive analysis of the FEHBP.

See Francis , supra note 28, at 112.

O'Grady M. J. , “Health Insurance Spending Growth: How Does Medicare Compare?” Report prepared for the Joint Economic Committee, June 10, 2003, available at <http://ogradyhp.com/yahoo_site_admin/assets/docs/JEC_HI_Growth_Rate_reportfinal.238132146.pdf>(last visited August 23, 2012).

See Francis , supra note 28, at 133.

CMS Actuary Richard S. Foster has said that the long-term viability of the Medicare payment reductions is “doubtful.”

See Foster , supra note 10, at 21. Likewise, CBO Director Douglas Elmendorf has said that the new law had put policies into effect that would be “difficult to sustain.”

See Elmendorf , supra note 13, at 14.

Kennedy K. , “Medicare Advantage: Enrollment is Up, Premiums are Down,” USA Today, February 1, 2012, available at <http://www.usatoday.com/news/washington/story/2012-01-31/medicare-advantage-enrollment-premiums/52906712/1>(last visited August 23, 2012).

Atherly A. Thorpe K. , “Value of Medicare Advantage to Low Income and Minority Medicare Beneficiaries,” Blue Cross and Blue Shield Association, September 20, 2005, available at <http://c0540862.cdn.cloudfiles.rackspacecloud.com/Ken_Thorpe_MA_Report.pdf>(last visited August 23, 2012). Estimates are in 2005 dollars.

The Medicare Payment Advisory Commission, Report to Congress: Medicare and the Health Care Delivery System, June 2011, at 68, available at <http://www.medpac.gov/documents/Jun11_EntireReport.pdf>(last visited August 23, 2012).

See Francis , supra note 28, at 27.

Kliff S. , “What a 76-Cent Premium Decrease Says about Medicare's Future,” Ezra Klein's Wonkblog, Washington Post, August 9, 2011, available at <http://www.washingtonpost.com/blogs/ezra-klein/post/what-a-76-cent-drug-premium-decrease-says-about-medicares-future/2011/08/02/gIQAZyI84I_blog.html>(last visited August 23, 2012).

Id.

The data are from the Office of the Actuary, CMS, “Comparison of the Office of the Actuary's Original Title I MMA Cost Estimates to those Underlying the CY 2011 Trustees Report,” August 2011.

Such criteria include appropriate testing, the use of certain drug therapies, mammograms, beta blockers for cardiovascular patients, and specific tests for diabetes.

Brennan N. Shepard M. , “Comparing Quality of Care in the Medicare Program,” American Journal of Managed Care 16, no. 11 (November 2010): 841–848, available at <http://www.ajmc.com/media/pdf/AJMC_10nov_Brennan841to848.pdf>(last visited August 23, 2012).

America's Health Insurance Plans, Center for Policy and Research, “Working Paper: A Preliminary Comparison of Utilization Measures Among Diabetes and Heart Disease Patients in Eight Regional Medicare Advantage Plans and Medicare Fee-for Service in the Same Service Areas,” September 2009, available at <www.ahip.org/MA-vs-FFS-Report-2009/>(last visited August 27, 2012). The findings were based on risk-adjusted data.

Donahue M. , “The Medicare Drug Benefit (Part D) and Treatment of Heart Failure in Older Adults,” American Heart Journal 160, no. 1 (July 2010): 159–165, available at <http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2898511/pdf/nihms-204918.pdf>(last visited August 23, 2012).

McWilliams J. M. , “Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults with Limited Prior Drug Coverage,” JAMA 306, no. 4 (July 2011): 402–409.

Davis K. Schoen C. , “Managed Care, Choice and Patient Satisfaction,” The Commonwealth Fund, August 1997, available at <http://www.commonwealthfund.org/Publications/Fund-Reports/1997/Aug/Managed-Care–Choice–and-Patient-Satisfaction.aspx>(last visited August 27, 2012).

Id.

Id.

The United States Office of Personnel Management, Fiscal Year 2010: Summary of Performance and Financial Information, at 15, available at <http://www.opm.gov/gpra/opmgpra/OPM2010_SummaryPFI.pdf>(last visited August 23, 2012).

Ayres McHenry and Associates, “National Survey of Seniors Regarding Medicare Advantage,” February 26-March 2, 2007.

KRC Research, “Seniors Opinions about Medicare Rx: Sixth Year Update,” October 2011, available at <http://www.hlc.org/blog/wp-content/uploads/2011/10/Oct-2011-KRC-Medicare-Today-Survey-of-Seniors-with-Medicare-Rx-10-14-11-FINAL1.pdf>(last visited August 23, 2012). In 2011, KRC survey found only 11 percent of respondents saying that they were not satisfied. The high rates of enrollee satisfaction in Medicare Part D have been consistent since March of 2006. Since the fall of 2007, more than half of enrollees have described themselves as being “very satisfied” with the program.

Butler S. M. Fraser A. A. Beach W. W. , eds., Saving The American Dream: The Heritage Plan to Fix the Debt, Cut Spending and Restore Prosperity, The Heritage Foundation 2011, available at <http://savingthedream.org/>(last visited August 23, 2012).

Cunningham R. , “Joint Custody: Bipartisan Interest Expands Scope of Tax-Credit Proposals,” Health Affairs (September 18, 2002), available at <http://content.*healthaffairs.org/content/early/2002/09/18/hlthaff.w2.290.citation>(last visited August 28, 2012).

Sheils J. , “Ideas for Financing Health Reform: Revenue Measures That Also Reduce Health Spending: Statement for the Committee on Finance,” May 12, 2009, available at <http://finance.senate.gov/imo/media/doc/John%20Sheils.pdf>(last visited August 23, 2012).

Carroll R. Opinion , “Almost Everyone Would Do Better Under the McCain Health Plan,” Wall Street Journal, October 27, 2008, available at <http://online.wsj.com/article/SB122506862956370705.html>(last visited August 23, 2012).

See Butler , supra note 58, at 27.

In a proposal developed by the Heritage Foundation, the funding for traditional Medicaid for the very poor and disabled would be converted into a capped amount and allotted to the states in the form of a block grant; the amount of that assistance would be annually indexed to the growth of medical inflation. While the states would be required to meet some basic national performance standards in the administration of the program, they would also have real flexibility in meeting these performance standards and in achieving national goals and outcomes. Id., at 25–28.

When the majority of the National Bipartisan Commission on the Future of Medicare endorsed a premium-support system of financing for the program in 1999, they proposed that the government pay 88 percent of the cost of a competing health plan, though they adjusted that contribution for income. Historically, taxpayers have financed, on a pay-go basis, roughly 88 percent of the Medicare program's total cost.