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HEALTH POLITICS: Senate Dems Not Giving Up On A Bipartisan Bill

Meredith Hughes — Mon, 23 Nov 2009 20:33:00 -0500

Maine's Republican Senators Susan Collins and Olympia Snowe both voted with fellow Republicans Saturday against the Democratic bid to bring health reform legislation to the Senate floor. Yet both are moderates who have broken with their party in the past, and both have signaled they would consider voting for the health bill -- if Democrats change it enough, reports The New York Times. Collins told the Times,

I have ruled out voting for this bill, but I still very much want to vote for a bill and that is why I am continuing to have discussions. I still cling to the belief that it is possible for a group of us to come together and rewrite the bill in a way that would cause it to have greater support.

Everyone was pretty excited when Senator Snowe decided to vote for Senate Finance chairman Max Baucus's version of a health care reform bill. Yet at the time, Senator Snowe warned her colleagues loudly and clearly that her vote to get that bill out of committee didn't assure her vote on final passage.

Since then, several moderate Senators expressed similar sentiments -- Ben Nelson (D-NE), Mary Landrieu (D-LA), Blanche Lincoln (D-AR), and Joe Lieberman (I-CT) voted to move ahead with debate but have made it quite clear they aren't entirely happy with the bill. Like Lieberman, Snowe is concerned about including the much debated public option. Collins worries the Senate bill does not go far enough in lowering health care costs and providing coverage.

In their remarks on the Senate floor this past weekend, neither Snowe nor Collins endorsed the bill, but they did not engage in the same line of anti-health reform attacks as other Republicans. According to the Times,

Both senators have talked privately with Democrats and independents about devising joint amendments on areas like cost control, and both said they would keep seeking compromises. Ms. Snowe said that would "be a true test of whether there is a will to improve this legislation in a non-ideological, bipartisan manner.

In the race to get to 60 votes on the Senate floor, every vote counts. With just a few moderate Democrats (and Independents) on the fence about health reform legislation, Senate Majority Leader Harry Reid might really need the support of moderate Republicans like Snowe and Collins to get final bill passed. Reid told the Times he isn't giving up on a bipartisan bill,

We reach out to our Republican colleagues, and we would like to work with them. But everyone should understand we're going to do a bill. We hope that we don't have to do it with Democrats, but if we have to, we will.

HEALTH REFORM: The Cost of Doing Nothing... Part 984,039,825

Allison Levy — Fri, 20 Nov 2009 21:49:00 -0500

As we have discussed several times, doing nothing is simply not an option. We need to reform our health care system -- not despite our economic crisis, but because of the significant impact health care has on U.S. workers and businesses.

In an article for the Washington Post this morning, Peter Orszag, Director of the Office of Management and Budget, stresses that "as we enter the homestretch, the greatest risk we run is not completing health reform and letting this chance to lay a new foundation for our economy and our country pass us by."

He states that if we do not do anything to slow the rising cost of health care, the federal government will end up spending more on Medicare and Medicaid than all other government programs combined. And our country could not afford to let that happen.

We have established that the cost of doing nothing is high, yet, as Orszag notes, some still have their reserves. These are the people wondering whether it is truly possible to achieve comprehensive health reform in a fiscally responsible and sustainable manner.

But just in time for the Senate vote, Orszag takes the time to explain why in fact we do not need to fear the fiscal impact of health reform.

First, he emphasizes that the nonpartisan Congressional Budget Office has concluded that both the House and Senate bill would reduce the nation's deficit over the next ten years (and by more in the following decade). And the CBO's analyses, he stresses, are "based on hard, tangible savings -- not on the harder-to-quantify, yet very real steps that hold the most promise of transforming health care." This is good news.

What should also come as good news is this letter to President Obama. And the fact that the four elements that this group of 23 economists (consisting of Republicans, Democrats, former Bush administration officials and Nobel laureates) believe are absolutely critical to keeping the cost of health care under control -- can all be found within the pages of the legislation currently being reviewed.

The economists argue that responsible health reform legislation must include deficit neutrality, an excise tax on high-cost insurance plans, an independent Medicare commission and delivery system reforms:

Including these four elements ... will reduce long-term deficits, improve the quality of care, and put the nation on a firm fiscal footing. It will help transform the health care system from delivering too much care, to a system that consistently delivers higher-quality, high-value care. The projected increases in federal budget deficits, along with concerns about the value of the health care that Americans receive, make it particularly important to enact fiscally responsible and quality improving health reform now.

To all of you losing sleep over the impact of health reform on our budget -- rest easy tonight.

WORLDVIEW: Assume There's Morality

Joanne Kenen — Thu, 19 Nov 2009 21:16:00 -0500

Not many health writers -- not many writers of any ilk, for that matter -- can match T.R. Reid's ability to bring a light, witty touch to really serious topics. Like health policy around the globe.

Tom (that's what the "T" in "T.R." stands for) was the featured speaker at the Peterson Institute of International Economics today. Not the usual venue for the book tour for his best-seller, "Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care." Before his talk, he told me he was planning to stress the moral case for covering everyone. Not the approach, perhaps, that this particular crowd was used to hearing. Go ahead, I told him. It is, after all, a roomful of economists eating a free lunch.

And that's what he did.

Every rich western democracy (and a few of the not so rich and not so democratic ones), he said, covers everyone. We don't.

None of their systems are perfect. Like us, they wrestle with the rising price of pharmaceuticals and medical technology, and with the needs of an aging population. But they all cover everyone. It's time, he said, for us to do the same. It's been time for a long time.

Reid argued that health care is a basic human right -- a controversial notion in the United States, but received wisdom elsewhere. He threw in some economic lingo as well. Covering everyone (and everyone, he said, means everyone) also brings about efficiencie that make the system work better. He talked about "distributional ethics." Every American -- both Bill Gates and the guy who mows his lawn -- each have one vote. But they don't each have one yacht. Health care, he said, should be more like a vote than a yacht.

Nor does he believe (as some Americans seem to, judging from decibel level of our national health reform debate) that expanding coverage is a zero sum game. I get more, you get less. He argues that we can all get more. More efficiency. More morality. If we find the will, other wealthy industrialized countries can show us a plethora of ways.

Two New America colleagues have reviewed his book. Phil Longman in the Washington Post called the book " a service to his nation," Shannon Brownlee in the Washington Monthly wished he had written more on the lack of evidence behind some of the treatments widely used in the U.S. We liked the film Reid did for Frontline last year, "Sick Around the World" and we liked the book, a readable account of different national health systems interspersed with his own amusing but enlightening global search for a fix for his bum shoulder. How can you not like a book that has sentences like:

France [is] a mirror image of the United States when it comes to health care: Americans strongly dislike their national health care system but haven't found the political will to change it; the French are highly satisfied with theirs but change it all the time."

Or, after having his shoulder treated (quite successfully) by traditional healers in India, when he wrote:

When the front office at the Arya Vaidya Chikitsalayam handed me a detailed accounting -- dozens and dozens of pages listing every navarakizhi, every poojah, and ever ancient herbal medication I had experienced -- I realized instantly that my U.S. insurance company was never going to pay this bill.

He didn't care. His shoulder was better -- and he had lost nine pounds.

Reid's message is not always wry or witty. Far from it. At the beginning of his book, and again near the end, he writes about Nikki White. She died of lupus at age 32. Not because her disease was so severe or untreatable. But because once she became too sick to work, she lost her insurance. And once she lost her insurance, she got sicker. She could not get the treatment she needed until she was so sick that it was too late.

"No other rich country would have tolerated the inequality that left Nikki White dead," he wrote. Designing a health system is an economic question, a medical question, a political question, he acknowledged. But in the end, he concluded, " the primary decision to be made is a moral one."

Greetings from the Financial Aid Office!

Ed Policy — Thu, 19 Nov 2009 16:30:00 -0500

[Last week, we reported (see here and here) on the fact that some of the student loan industry's most fervent supporters in the financial aid world are potentially putting their schools and students at risk by refusing to take even the initial steps to prepare for a possible shift to direct lending next fall. Since then, we've been wondering how these aid directors would explain their inaction to students. So, after hearing the comments that financial aid administrators and lenders made at last week's Lexington Institute event and on the Finaid-L listserv, we decided to write up a fictional account of how these aid officials might explain themselves. We hope you enjoy it.]

Dear Students,

As you may have heard, we have recently taken action that could potentially disrupt your ability to obtain federal student loans next fall. But we want to assure you that there is absolutely nothing to worry about. Our good friends in the student loan industry have a sure-fire strategy in place to stop any efforts in Washington that would force us to change the way we do business. And for that we're very grateful because we can't imagine doing things any other way.

Here's some background. Last month, we received a letter from U.S Secretary of Education Arne Duncan urging us to take at least the initial steps to become "Direct Loan-ready" for the 2010-11 academic year. As you may know, the Obama administration has proposed ending the Federal Family Education Loan (FFEL) program in favor of 100 percent direct lending. Under the plan, tens of billions of dollars in savings from making the switch, and eliminating lender subsidies, would be used to provide a substantial boost in spending on Pell Grants, which go to the most financially needy students. This may sound good but it won't help us much because we don't enroll many of those students. In other words, the upper middle income students we predominantly serve will be left out in the cold!

Now it's not exactly clear where this legislation is headed. As of now the measure appears to be stalled in the Senate, where the never-ending health care debate drags on. But even if this bill doesn't go anywhere, we won't be out of the woods. That's because a federal law that has been propping up the FFEL program over the last year and half -- known as ECASLA -- is set to expire in July and neither the Obama administration nor Congressional Democrats want to extend it. If lenders can't get access to government financing to make federal student loans, the FFEL program will be sunk. At least that's the excuse Secretary Duncan is giving us for why we need to be prepared to flip the switch. But we told him to take a hike. That's a lot of nerve, telling us how to run a federal program that benefits students.

You see we used to be in the Direct Loan program more than a dozen years ago, and the program ran into some administrative difficulties. At the same time, Republican Congressional leaders tried to kill direct lending, and when that failed, they did everything they could to put it at a competitive disadvantage to FFEL, including preventing the U.S Department of Education from being able to market the program to schools and preserving generous subsidies for lenders that they used to woo financial aid offices like ours. So it is not surprising that we had lenders literally banging down our doors each week trying to convince us to switch back to FFEL. Some of the offers they made were just too good to pass up, and they are worth holding out for despite what the Obama administration says! [Enough said about that. We don't want to get into any details just in case that jerk Cuomo gets hold of this letter -- no offense intended, of course, Mr. Attorney General.]

Yes, we know that some of our colleagues in the financial aid world have made the switch to direct lending and say that it went much more smoothly than they had imagined. The problems we experienced a dozen years ago have long since been fixed, they say, and in fact are ancient history. But do we really want to take that risk? Our lender friends -- at least those that in the student loan business because of the help they received as a result of ECASLA -- say we shouldn't. Because after all, what has the government ever done right?

So please don't be worried about your loans because there's really no need for concern. Our friends in the loan industry assure us that they can spread enough fear and confusion on Capitol Hill to convince Congress that a switch to 100 percent direct lending would lead to a catastrophic breakdown. But in order to help them, we must do our part. If enough colleges like us dig in their heels, and refuse to take even the most rudimentary steps to prepare, we may be able to help lenders scare lawmakers away from enacting any real student loan reform and maybe even get them to extend ECASLA for another year.

So have no fear. This is definitely a gamble worth taking. Because if there's anything the loan industry does well, it's spreading fear and confusion. What else do you think they hire those high-priced lobbying and communication firms to do?

Sincerely,

Your trusty financial aid director

Duncan: Early Ed Can Get Schools Out of 'The Catch-Up Business'

Lisa Guernsey — Thu, 19 Nov 2009 04:37:00 -0500

U.S. Secretary of Education Arne Duncan presented the fullest picture yet of his vision for a birth-to-8 education system in remarks yesterday at the opening of the annual meeting of the National Association for the Education of Young Children.

In a wide-ranging speech that emphasized the importance of "raising the bar" on the quality of early learning environments, Duncan said that early childhood advocates now face two challenges. One, he said, is the need for better transitions and "follow through" between pre-K and the K-12 years. The other is what he sees as a necessary shift in thinking about how to measure quality -- moving from "inputs" like teacher qualifications and child-to-staff ratios to "outcomes" that indicate whether children are developing and learning well.

Duncan praised the NAEYC, the nation's largest membership organization of preschools, child care centers, kindergartens and public elementary schools, for its insistence that to close the achievement gap, we must prevent the gap through high-quality early learning experiences.

"I want our schools to get out of the catch-up business," he said. "To prevent the gap," he continued, "we must be ready to dramatically improve outcomes for our children."

Later in his speech he provided more context for how he might define "outcomes," noting that measures of "school readiness have historically been treated as if they are apart from a child's social and emotional development." Today, he said, "We recognize that a child's ability to engage in self-regulation and cooperative play are critical to school readiness success ... It's time to recognize that they are inextricably linked."

Duncan did not address how those outcomes might be measured and used. Here at Early Ed Watch we see this question as critical and expect to be digging into it over the coming year. We agree that without indicators of children's progress - without measures of "outcomes" - we will never have a full enough picture of how well an early learning environment is meeting their needs.

We also agree with the need for "follow through" into the K-12 years. His remarks regarding the need for "better transitions" were especially encouraging.

"The best early learning system is of little use," he said, if a child ends up in "an inadequate or lousy elementary school." He added: "We cannot diminish the importance of K-12 reform."

As longtime readers of this blog know, we strongly support PreK-3^rd strategies that align curricula, standards and assessments from pre-K to kindergarten and on up through the third grade. Instead of educators focusing on the divide between early childhood community and the K-12 world, children would be far better served by a system that makes no distinctions, providing children with rich instruction, content knowledge and social interactions that are aligned and build on each other throughout each year of their early lives.

Duncan briefly mentioned the prospect of new public funding for early education in the proposed Early Learning Challenge Grants, the Race to the Top initiative and the Investing in Innovation, or i3, Fund. He also spoke about the Education Department's relationship with the Department of Health and Human Services (which administers Head Start). He said he sees a "new sense of partnership" between the two agencies, adding that Jacqueline Jones, senior advisor for early learning in the Ed Department, and Joan Lombardi, deputy assistant secretary of the HHS's Administration for Children and Families, work together daily.

The secretary also gave voice to some of the obstacles to creating high-quality environments by describing what he called the "iron triangle" that affects publicly funded preschools and child care centers. On one side, providers are being asked to open more slots for more children, otherwise known as "increasing access." On another side, providers are being asked to "boost quality," by paying higher salaries that attract more qualified teachers and investing in professional development. And on the third side, they are being asked to cut costs and show savings.

He did not offer step-by-step guidance on how to break free of this iron triangle, but he did commend several states for making progress. He singled out Oklahoma for "showing it's possible" and praised Pennsylvania, North Carolina, Alabama and New Jersey for being leaders in building high-quality early learning systems. He also singled out the Harlem Children Zone and the CLASS observational assessment developed by Robert Pianta at the University of Virginia.

Nor did Duncan's speech answer the toughest questions in early childhood -- such as how to improve teacher compensation, how to do appropriate assessments and how to use assessment data, and where states should look for sustainable funding streams. But he was interrupted by applause throughout his remarks and the audience of thousands -- sitting amid rows and rows of chairs in the cavernous Washington Convention Center -- gave him a standing ovation. As the NAEYC meeting goes into full swing over the next several days it will be interesting to see how preschool teachers digest the many details in his speech. We'll keep our eyes and ears open, and we encourage you in the blog comments below to give us your take on Duncan's vision.

UPDATE 11/19 1:35 PM: The full text of Duncan's remarks is now available on the Ed Dept web site, and J.M. Holland over at Inside Pre-K has posted an audio recording.

COVERAGE: Accidental Costs of Being Uninsured in the USA

Allison Levy — Wed, 18 Nov 2009 21:05:00 -0500

Here is more evidence that the uninsured fare worse than the insured. Including trauma patients in the emergency room.

The AP's Carla Johnson reported on a troubling study published in Archives of Surgery, Downwardly Mobile: The Accidental Cost of Being Uninsured. She writes that "uninsured [adult] patients with traumatic injuries, such as car crashes, falls and gunshot wounds, were almost twice as likely to die in the hospital as similarly injured patients with health insurance."

Under a 1986 law known as EMTALA (Emergency Medical Treatment and Active Labor Law), anyone who shows up in an emergency room needing emergency treatment will receive treatment to stabilize him or her. That statute is intended to "prevent hospitals from rejecting patients, refusing to treat them, or transferring them to ‘charity hospitals' or ‘county hospitals' because they are unable to pay or are covered under Medicare or Medicaid."

Despite adjusting for race, gender and age, the researchers concluded that the uninsured still have an 80 percent greater chance of dying than those with insurance. Even in a setting where equitable treatment is mandated by federal law, the uninsured still experience significantly worse health care outcomes.

What gives?

The researchers offer several possible explanations for this glaring disparity:

Uninsured patients may experience treatment delay. (A separate study published in the Journal of Pediatric Orthopaedics demonstrates that children with private insurance receive more timely care than children with public insurance or no coverage at all.)
Uninsured trauma patients are less likely to be admitted to the hospital and receive fewer services during their admission when compared to insured trauma patients.
Institutions treating a higher proportion of uninsured patients may have fewer available resources.
Lower health literacy, and less ease and skill in communicating with ER physicians or other health care providers, may play a role. (In 2008, 88 percent of all uninsured adults in America did not have a college degree.)

"I'm really surprised," Dr. Eric Lavonas of the American College of Emergency Physicians and a doctor at Denver Health Medical Center told the AP, "It's well known that people without health insurance don't get the same quality of health care in this country, but I would have thought that this group of patients would be the least vulnerable."

This leads us to the "accidental" part of the disparity question.

The researchers do acknowledge the limits of their study and that some of their explanations for the gap are speculative. They note that "treatment is often initiated before payer status is recognized; thus, this provokes the question of whether differences exist in processes of care during the hospital stay." (Meaning not the first encounter with the ER but the ongoing care.)

But even in a setting where equitable care is "not only expected but mandated by law" and providers may be unaware of their patients' insurance status -- health outcomes of the uninsured are significantly worse. There must be some other explanation. Or might it just be an "accidental cost" of being uninsured in the United States?

"This is another drop in a sea of evidence that the uninsured fare much worse in their health in the United States," explains senior author Dr. Atul Gawande. As the study concludes, these unintended consequences that the uninsured pay may just be "too high to continue to overlook."

HEALTH POLITICS: Steady as She Polls

Paul Testa — Wed, 18 Nov 2009 14:13:00 -0500

If polling on health reform were a band, we'd call it The Hold Steady.

Several new surveys out this week show the public remains as conflicted as ever on health reform -- convinced of the need for change, but worried about the impact on their lives and the lives of their family.

A Washington Post-ABC News poll released Tuesday shows 48 percent of those surveyed supported the proposed reforms; 49 percent opposed them. An AP poll released Monday found a similar split, with 41 percent in favor; 43 percent opposed and 15 percent undecided.

These even divides are consistent with past polls, suggesting that the uproar in August was more of a bump in the road than turning point. However beneath the topline questions are some interesting trends.

First, as the Washington Post points out, while public approval of President Obama's handling of health reform has declined he still holds a double digit lead over Republicans. Possibly more importantly, support for reform among seniors -- the group most critical of current proposals -- is up 13 percent from September, suggesting that some of most offensive scare tactics directed at seniors, such as death panels and socialized medicine, may be losing their edge.

As we've noted before, support for the major policies of health reform legislation remain generally strong. But the answers to these questions often depend on how the question is framed. In the AP poll 67 percent favor requiring all Americans to have some form of insurance, but 64 percent opposed a law that "would require every person to have health insurance and pay money to the government as a penalty if they did not, unless the person is very poor." The fluidity of such answers reinforces the points made by Robert Blendon in a recent column for Kaiser Health News:

[P]olls show countervailing concerns about the congressional plans. These involve the potential impact of the bills on Americans' health costs and affordability, their taxes, the extent of government interference in their health care decisions, and worries that health care for those receiving Medicare will deteriorate. Regardless of public enthusiasm for health reform as a principle, and support for many policy elements in the House bill itself, most Americans do not see their healthcare situation as getting better if this legislation is signed into law, and some see their situation as getting worse.

In the weeks ahead, Americans are unlikely to read the 2000-page House bill. Rather, they will form their judgment about the final legislation based on others' assessments. They will rely on those whom they trust as intermediaries to clarify its impact on them.

That impact is unclear as the Senate stages a sort of modern adaption of Samuel Beckett's classic work, with it's current production of "Waiting for CBO." The release of a bill and CBO cost estimate, which could come later Wednesday, should help lessen our existential unease, but the real challenge for proponents of reform will be explaining the bill in a way that makes its benefits clear and its costs worthwhile. The jury of public opinion is still out, but its verdict may come quickly.

COSTS: The Price of Pessimism -- What the CMS Actuaries Missed

Len Nichols — Tue, 17 Nov 2009 21:24:00 -0500

Last week, Medicare's chief actuary (formally known as the Office of the Actuary, or OACT) released an analysis of the financial impact of the health reform legislation recently approved by the House of Representatives (H.R. 3962). Here are a few thoughts:

Get familiar with the source. Remember their history. The Medicare and Medicaid actuarial team's job is to track and understand Medicare spending patterns. By design, it is also their job -- and their historical pattern -- to be skeptical about proposals for change. Just for context, the office's estimate of the cost of the Medicare Modernization Act in 2003 (the bill that created the Medicare prescription drug program, Part D) was $100 billion, or 25 percent, more than the Congressional Budget Office's (and CBO is also conservative by nature and design). Last year CMS's Chief Actuary testified to Congress that the 10-year cost of the Medicare drug benefit is 37 percent lower than originally projected in 2003, and 17 percent lower than the previous year's updated projections. Don't get me wrong. We need conservative estimators to prevent Pollyanna policy from being enacted into law. But we should take that conservatism for what it is: a useful check on the naturally optimistic expectations of reformers.

Incentives can change behavior. The actuary's office loathes predicting behavioral changes. It therefore underestimates the private sector's ability to adapt to new incentives. This is why the only real savings they score are direct and unambiguous price changes, like the House bill's reductions to yearly market basket updates. They discount and ignore the impact of the Center for Medicare and Medicaid Innovation, which is charged with implementing every reasonable payment reform pilot imaginable, including: accountable care organizations, medical homes, and bundled payments that give clinicians across organizations incentives to coordinate and improve patient care.

Further, the CMS actuaries express worry that the profitability of hospitals, skilled nursing facilities, and home health agencies would be so grievously harmed by the proposed payment cuts that they would cease to accept Medicare's business. This reflects a pessimistic belief that providers could not become more efficient. A recent McKinsey memo, described by Jonathan Cohn in The New Republic (subscription required), concludes the opposite.

"McKinsey seems convinced that this entire package of reforms will influence behavior," Cohn says. "McKinsey's analysis suggests that -- as long as they adjust to the new incentives -- doctors, hospitals, and insurers will be just fine."

The McKinsey memo also suggests that both CBO and the CMS actuary underestimate the ability and self-interested drive of providers to respond to incentive changes. That leads to these overly pessimistic estimates about the effectiveness (or ineffectiveness) of reform legislation. Now I ask you, dear reader: Who knows the health industry and their clients best -- McKinsey or the well-intentioned but relatively cloistered actuaries for Medicare?

Finally, when compared to the CBO, the CMS actuaries predict 5 million fewer people will get coverage and twice as much revenue will be raised from the individual mandate penalty under the House bill. This is another example of the CMS skepticism about behavioral effects. I think it is fair to say that CBO analysts spend a lot more time than do Medicare's actuaries thinking about people under 65 and their potential responses to changing insurance prices. I have to give more weight to CBO's estimate here.

Reducing overpayments will not deprive Medicare beneficiaries. The CMS actuary's memo states that the Medicare Advantage (MA) overpayment reductions in the House bill would mean fewer benefits in most MA plans. It neglects to mention, however, that it would not reduce benefits below the statutory benefit package guaranteed to our nation's seniors. In addition, the CMS actuary memo fails to mention that current Medicare Advantage payment levels overcompensate plans by quite a bit (14 to 18 percent, according to most independent analysts). Only some of this extra compensation translates into additional benefits for some of the one-fourth of Medicare beneficiaries enrolled in Medicare Advantage plans. In short, this analysis is overblown, especially since it does not mention that the competitive bidding approach to changing Medicare Advantage plan payment in the Senate Finance bill would preserve the incentive to provide extra benefits made possible by the efficiencies of some plans.

Small growth in National Health Expenditures is a good deal. The CMS actuaries estimate that after all is said and done, national health spending will claim 0.3 percent more of GDP in 2019 than under current baseline trajectories. They come to this conclusion despite being pessimistic about behavioral responses to delivery system reforms and despite assuming we will be covering 34 million more Americans by that time. In other words, even analysts who are pessimistic about savings assert that we can just about pay for covering most of the uninsured out of savings from elsewhere in the health system. Even a little more success than they project (far less than the percentage they were wrong about the Medicare Drug Benefit) and we will be covering the uninsured at lower cost than we would have spent without reform.

In sum, there are some fine analysts at OACT, and Rick Foster and his team serve our nation well as actuaries of the Medicare program. When it comes to knowledge of the delivery system and the under-65 population, however, they are perhaps less up to speed than McKinsey or CBO. People should not get hung up on their judgments about the potential for delivery system change. People should notice, however, that they estimate the savings provisions in the House legislation will generate $20 billion more over 10 years than CBO estimates. This is their area of relative expertise. Predicting behavioral responses, of hospital CEOs or of uninsured individuals, is not.

Comparing House and Senate School Facilities Programs in the Student Loan Bill

Jennifer Cohen — Tue, 17 Nov 2009 20:31:00 -0500

In July we analyzed funding for K-12 school facilities in the student loan reform bill, the Student Aid and Fiscal Responsibility Act, as passed by the House Education and Labor Committee. The full House passed the bill in September and preserved the $2.0 billion per year school repair program. Although the Senate has not yet acted on a similar student loan reform bill, a version drafted by the Senate Health, Labor, Education and Pensions Committee was leaked a couple of months ago. The leaked bill suggests the Senate is headed in a different direction than the House when it comes to funding school facilities construction.

Both of these pieces of legislation provide a glimpse into the federal government's first major foray into directly funding K-12 school facilities and neither propose an insignificant amount of money. The most striking difference between the two versions is that the House includes a two-year, formula-based investment in K-12 school facilities, and the Senate bill creates a five year competitive program for K-12 school repair, renovation, and construction.

The House bill distributes funds for repair, renovation, and modernization among states and school districts according to each state and district's share of total federal Title I dollars. This means that every school district in the nation that receives Title I funds will receive some share of its state's school facilities funds after the state withholds up to 1 percent for administrative purposes.

Unfortunately, the House bill spreads just over $2.0 billion in each year over more than 13,000 eligible school districts. In the end, it's likely to amount to a drop in the bucket relative to the total expense of modernizing schools. Additionally, the House bill prohibits spending on new school construction, with the exception of $30 million each year for Louisiana, Mississippi, and Alabama.

The leaked version of the Senate bill, however, avoids the danger of spreading the funds too thin by creating a competitive program administrated by the states but funded by the federal government. Essentially, the program distributes $500 million each year from 2010 to 2014 to states according to their share of Title I funds, much like the House program. However, once states receive their funds, they must create a competitive grant program through which they will award funds to selected school districts and charter schools within the state.

The Senate version does place some restrictions on how the funds must be divided among schools. For example, the proportion of each state's facilities funds distributed to charter schools must reflect the proportion of funds that charter schools receive under Title I. For example, if charter schools received 30 percent of a state's Title I allocation, then 30 percent of the state's facilities funds must also be awarded to selected charter schools. Similarly, the Senate legislation states that the competitive grants must be awarded to both selected high-need and rural school districts in proportion to the amount of Title I funds each type of school receives. Any remaining funds can be distributed to regular, high-need, and rural districts or charter schools as the state sees fit.

Additionally, the Senate bill outlines some priorities for the competitive grants including districts with large impoverished populations, high need for school repair and construction, plans to support "green" practices, or a lack of fiscal capacity to fund construction or repair activities.

The Senate bill also requires that school districts provide matching funds for the federal grants for facilities they receive. However, the required match amounts can be determined on a sliding scale based on the relative size of the impoverished population in each district in a state. Charter schools are not required to supply matching funds.

In all, the Senate program for school facilities is much more likely to have a lasting impact on the condition of school buildings in America. It provides consistent funding over five years, rather than two, for select districts and charters identified through a competitive grant process. As a result, it will provide an infusion of funds in particularly needy schools rather than a small amount of money across the board. It also targets high-need, rural, and charter schools which typically require the most assistance with facilities. Additionally, it requires matching funds, assuring that districts and charters are committed to the facilities investments they are making and that the federal dollars go as far as possible.

The student loan legislation represents a major shift in the federal government's role in K-12 school facilities. Past efforts have mainly involved tax credit bonds and programs for schools with large populations of students that live on military bases or Indian reservations. Although we don't know whether the Senate version of the student loan bill has changed since it was leaked over the summer, we hope that it maintains the targeted and competitive aspects that are likely to make it more effective.

REFORM: Increasing Medicare Payroll Tax Musters Support

Allison Levy — Mon, 16 Nov 2009 20:22:00 -0500

The Center on Budget and Policy Priorities concludes that the idea of raising the Medicare payroll tax "on high-wage earners would represent a sound and well-targeted way of paying for health reform."

Senate Majority Leader Harry Reid is reportedly considering raising the Medicare payroll tax to 1.75 percent (up from 1.45 percent) for individuals earning more than $200,000 a year and couples earning more than $250,000 a year. Reid needs to fill a health reform financing gap if he raises the threshold for taxing the so-called "Cadillac" plans to $8,500 for individual plans and $23,000 for couples (up from $8,000 to $21,000, respectively). Scaling back the reach of that excise tax would please labor unions, among other groups, who have expressed opposition. The Medicare alternative has quickly gained popularity.

The CBPP report has several interesting conclusions:

Additional revenues are essential for crafting a health reform bill that provides adequate tax credits to make health coverage affordable to low- and moderate-income families, requires people to have insurance, and avoids adding to the federal deficit. By one estimate, a 0.5 percentage point increase in the employee share of the Medicare tax would raise $54 billion over ten years.

The proposal would target those best able to pay. Although distributional estimates are not available, the proposal is likely to affect only those in the top 5 percent of the income distribution.

Raising the Medicare payroll tax would extend the life of Medicare's Hospital Insurance trust fund. Under current law, the HI trust fund is projected to become insolvent in 2017; the proposal would likely push back the date of insolvency by at least four to five years.

The study concluded that a "modest increase in the Medicare payroll tax" may go a long way in funding health reform. AFL-CIO President Richard Trumka argues that this is "far preferable to taxing the plans." The Senate is still waiting on CBO estimates -- which will significantly shape the final version of the Senate bill.