Drew Altman, Larry Levitt, Gary Claxton

My colleagues have worked on this column with me and I invited them to join me as authors.

As with pretty much every other discussion of health care going back to the days of Roosevelt, the great reform debate of 2009 (and now 2010) has been distilled into an ideological battle over the role of government. A government-sponsored “public option” has been off the table for a while now, yet still critics say the Democratic reform plans would represent a “government takeover” of the health system.

And it’s through that filter that observers and the media reacted to the latest projections from the Centers for Medicare and Medicaid Services (CMS) showing that public spending in health will soon exceed private spending, as if the projections were an actuarial Rorschach test. Is it evidence that the government is “taking over the health care system”? Or that spending for Medicare and Medicaid is “out of control”? Or is it something else altogether?

Predictably, the projections show a big jump in national health spending as a percentage of GDP (to 17.3%). CMS actuaries estimate that health spending rose 5.7% in 2009 while the bottom dropped out of the economy. Equally unsurprising is their forecast that health spending will rise to 19.3% of GDP by 2019, further underscoring the need to get health care costs under control over the long term. (In fact, a little more surprising was their estimate that health spending will grow over the next ten years at an average of 1.7 percentage points faster than GDP. Over the last two decades, the average gap has been more like 2.0 percentage points.)

The conclusions that got more attention were that the public sector will start paying more than half of the nation’s health care bill starting in 2012, and that government spending will grow faster than private spending from 2009 to 2019 (an average of 7.0% per year vs. 5.2%). Why is this happening?

Public spending will exceed private spending because we are coming out of a long and deep recession and because of the basic arithmetic of the baby boom. And while this may surprise some or fly in the face of conventional wisdom, when you compare spending increases in public programs and the private sector fairly, neither looks as good as we would like, but public programs actually look somewhat better (despite the fact that they cover a sicker and more expensive population).

Let’s start with Medicaid. The actuaries estimate that Medicaid spending grew 9.9% in 2009 and will increase by 8.9% in 2010. But that rapid growth is mainly due to more families relying on Medicaid as workers lose their jobs, and with them, their health insurance. A survey of state officials  by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured found that Medicaid enrollment grew by 7.5% from June 2008 to June 2009. Medicaid is, as intended, serving a counter-cyclical role.

In Medicare — our other major public health insurance program — actuaries predict that spending will grow by 6.9% per year over the next decade vs. 5.2% for health spending in the private sector. The big driver there is an increasing number of people turning age 65 as a result of the baby boom, leading to more people covered by Medicare rather than private insurance. Indeed, Medicare’s trustees project that the ratio of workers to Medicare beneficiaries will fall from about 3.7 in 2008 to around 3 by 2018. That means that while the number of people covered by Medicare is projected to grow by about 30% over that period, the number of workers will grow by only about 6%.

In fact, government programs have done a little bit better job at controlling spending than the private sector. According to figures from the actuaries, Medicare per capita costs grew at an average annual rate of 6.8% over the ten years from 1998 to 2008, while private health insurance costs per capita grew by 7.1%. And, this overstates Medicare cost growth, since a new drug benefit was added during that period. Based on figures from the actuaries that compare costs on a “common benefits” basis, Medicare per capita costs grew at an average rate of 4.9% per year over the period, substantially less than the 7.1% rate for private insurance. Comparable Medicaid spending data only goes back to 2000, but shows a similar result: per capita spending increases for covered families averaged 5.2% per year over the period, compared to 7.2% for private insurance. (These Medicaid figures exclude the elderly and disabled, where cost growth was even lower due to modest increases for long-term care services.)

The share of health spending from public programs is growing, but it’s simply not true that public programs are “out of control” when fairly compared to the private sector on an apples to apples basis. Some argue that public programs achieve lower growth in per capita spending by underpaying providers. Others see their lower payments as a virtue, arguing that they simply succeed in driving a harder bargain than the private sector does. Whatever your view, their rate of increase in per capita spending has generally been lower despite covering higher cost patients.

Given all this, what’s the right way to answer some of the questions that have arisen as people have looked at the “inkblot” spending projections released by CMS:

With a greater share of health spending in government programs, will government have greater control over health care financing? YES, but that control is spread over the federal Medicare program and 50 state-federal Medicaid programs, so it’s quite diffused.

Is government health spending out of control? NO, and in fact contrary to conventional wisdom, government health programs are performing as well, if not better than the private sector.

Are we witnessing a government takeover of the health care system? NO. The greater share of health spending represented by government programs in the actuaries’ projections is not the result of any grand policy decision to push out the private sector, but rather just the byproduct of economic and demographic trends. And, rhetoric notwithstanding, health care in this country is delivered primarily though private doctors, hospitals and other providers. Nothing about that has changed, nor is it likely to do so regardless of what share of the health care dollar is public.

The real message from the CMS report has nothing to do with a government takeover. The report simply underscores the need to control health care costs in the public and the private sectors alike.

Tuesday, February 2nd marked a milestone of sorts in the health reform debate: there was no story on health reform in the New York Times (national edition).  I haven’t done a study, but as a professional New York Times (NYT) reader, I am virtually certain that this is the first day in over a year without a story in the NYT on health reform.

The day of silence in the NYT is reflective of the astonishing braking power health has shown as an issue since the special election in Massachusetts, going from 100 mph to about 10 mph in just a matter of weeks. 

National health reform legislation could still pass in the coming weeks; no one can claim to be able to predict for certain what will happen now.  But it is clear that leaders will now focus less on health and much more on jobs and the economy, and media coverage will follow their lead.  And as the national conversation shifts, polls are likely to begin to show health slipping as a public priority. But don’t be misled. That will not be because people are less worried about paying for health care or about losing their health coverage if they lose their job; they remain very worried about these things. It will simply be because leaders are talking less about health and health reform and the media is covering health less. When people hear less about an issue, their sense of its importance falls relative to other issues — remember the rise and fall of immigration.  And of course, the underlying problems health reform was designed to address have not gone away and will keep the public, employers and government concerned about health care. Just this week we learned from Centers for Medicare and Medicaid Services that health spending has reached 17% of GDP.

On the other hand, if and when leaders rekindle the debate, media coverage will follow and health will rise again as a priority in the polls.  Whether national leaders return to comprehensive health reform legislation this month, in a few months, or in several years, there will be an underlying reservoir of public concern for them to tap into.  This may surprise you, but polls show quite clearly that the underlying level of public anxiety about health has in fact been largely unchanged since the early 1990’s.  Consider these two measures as examples.  In 1992, 61% of the American people said they were worried about paying for health care in the future; a similar percentage, 62%, says the same thing today.  In 1992, 37% of the American people said “our health care system has so much wrong with it, it needs to be completely rebuilt”; 34% say that now.  On both questions (and there are many others), results have moved within a narrow range since the early 90’s.  Public concern has been a constant; it’s what leaders do that changes as we have elections and political control shifts, and that in turn drives what is on the media’s radar screen and on the public’s mind when they are asked in polls what the top issues are facing the nation or the president and the congress.  (When people are asked about what the top problems are facing them or their families they often give very different answers).

In the middle of the last big health reform debate, the percentage of Americans naming health as one of the top two issues facing the country shot up to more than 50%.  Immediately after that debate subsided, the percentage fell into the teens and remained there for 15 years.  Generally, only a big unexpected event can change the equation and propel an issue into the forefront, such as a war, a terrorist attack or a natural disaster (and controversial failed response) like Katrina.  There are big implications here for strategies to affect policy change. Are top-down or bottom-up strategies more effective?  Strategies that target the bottom and the top of the pyramid to influence policy are both important, but my subject today is a more limited one – anticipating the polls.

One big challenge for health is that it has never really broken through as a voting issue even when it ranks fairly highly on the public’s issue priority list.  The recent special senate election in Massachusetts was an exception, and even there for Brown voters health was primarily a proxy for broader voter discontent. With very few exceptions, health has not been a decisive issue in elections, either by rewarding or punishing candidates who take strong positions on health reform.  The upcoming midterm elections will be the next test of whether that will happen in key races, with key swing voting groups such as seniors or independents, or in the electorate overall.  If health reform fails, we will see if the narrower slice of the electorate that tends to vote in midterms will punish Democratic candidates for failing to deliver or reward Republican candidates who run on anti-health reform planks.  But if history is a guide, other factors — the qualities of the candidates themselves, local issues, other national issues and especially jobs and the economy – will have a much greater influence on people’s votes.  So don’t be surprised if health does not register as a critical voting issue in the midterm election exit polls, it almost never has.

It’s hard to put an overly positive face on the apparent pause in the health reform effort or, at this point, to say with any certainty what will happen next.  But there is at least one side benefit if a pause eases public anxiety.  The rancorous and fiercely partisan debate has made the public anxious about change and it has made health reform a symbol for many voters of what they don’t like about the policy making process and the political system overall.  This is one reason why our polls show that the public is so sharply divided about the legislation overall, but much more positive about the legislation when we tell them what it actually would do.  The legislation became a symbol of deeper divisions in America beyond its substance which, with a few notable exceptions, people like.  The pause, even a short one lasting a month, could lower temperatures enough so that health reform debate focuses more on the substance and what it does for people and is less of a lightening rod for deeper divisions in our country.  Well, maybe.

In any case, don’t make too much of polls showing health dropping as a public priority or of exit polls in the midterm election showing health was not a critical factor if and when they emerge.  The public’s underlying concerns about the affordability of health care will not really have changed.  And if health does not drop as a priority as national discussion moves on to other issues (or actually rises), or if health registers as a voting issue across the country, that should really send a message to elected officials.

The February Kaiser Health Tracking Poll finds the public still split on health care reform legislation, with 43 percent in favor and 43 percent opposed. However, the poll also finds that majorities of Americans of all political leanings support several provisions in the health reform proposals in Congress and most attribute delays in passing the legislation to political gamesmanship rather than policy disagreements.

The poll finds that at least six of every 10 Republicans, Democrats and independents back at least some of the key provisions in the reform bills that have passed the House and Senate. They include measures that would: reform the way health insurance works, such as preventing insurers from excluding people because of pre-existing conditions; offer tax credits to small businesses to help their workers get coverage; create a new health insurance marketplace; help close the Medicare “doughnut hole” so that seniors would no longer face a period of having to pay the full cost of their medicines; and expand high-risk insurance pools for individuals who cannot get coverage elsewhere. Providing subsidies to lower and middle income people also receives strong support from Democrats and independents and near majority support from Republicans.

 News Release

Findings (.pdf)

Chartpack (.pdf)

Toplines (.pdf)

This fact sheet profiles the health status of Haiti prior to the devastating earthquake that hit the island nation on January 12, 2010. It reviews the major U.S. government global health and development programs operating in Haiti and examines the U.S. response to the quake and the future health challenges as the nation rebuilds.

Fact Sheet (.pdf)

This report finds that 44 states and the District of Columbia are experiencing higher than expected program enrollment and spending for fiscal year 2010. At least 29 states say they are considering additional mid-year cuts in provider rates and program benefits.

The recession and the scheduled end on Dec. 31, 2010 of enhanced federal matching money for Medicaid that was provided through the American Recovery and Reinvestment Act of 2009 will have a significant impact on state fiscal year 2011 budgets, Medicaid directors reported.

The report augments the most recent annual Medicaid budget survey report, released in September 2009, and is based on discussions with leading Medicaid directors and a brief survey of Medicaid directors in all 50 states and the District of Columbia late in 2009.

NOTE: Updated report on fiscal years 2010 and 2011 now available.

Report (.pdf)

Medicare Health and Prescription Drug Plans Monthly Tracking Reports

These briefs present monthly data on Medicare Advantage participation, enrollment and penetration. They also summarize recent activities by the Centers for Medicare and Medicaid Services (CMS), participating health plans, and the research community pertaining to the Medicare Advantage program and prescription drug plans that began serving the Medicare population in January 2006. The reports were prepared by researchers at Mathematica Policy Research Inc.

April 2010 Report (.pdf)

March 2010 Report (.pdf)

February 2010 Report (.pdf)

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December 2009 Report (.pdf)

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December 2007 Report (.pdf)

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Februrary 2007 Report (.pdf)

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December 2006 Report (.pdf)

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April 2006 Report (.pdf) April 2006 Report Addendum (.pdf)

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Now Available: 2011 Medicare Advantage Spotlight: Plan Availability and Premiums

The Kaiser Family Foundation has issued a series of data spotlight looking at the 2010 Medicare Advantage plan options and trends around the Medicare Advantage plan. These spotlights were prepared by a team of researchers at Mathematica Policy Research Inc. and the Kaiser Family Foundation.

Plan Enrollment Patterns and Trends

Benefits and Cost Sharing

Plan Availability and Premiums

This data spotlight examines trends in benefits and cost-sharing for Medicare Advantage plans in 2010, including the wide variations found across plans and the rapid increase in cost sharing requirements for some benefits, including stays in skilled nursing facilities. It also examines the annual limits on out-of-pocket spending set by most Medicare Advantage plans and the availability of coverage for drugs in the Medicare drug benefit’s coverage gap, or “doughnut hole.”

This data spotlight is one in a series looking at the 2010 Medicare Advantage plan options and trends around the Medicare Advantage plan. These spotlights were prepared by a team of researchers at Mathematica Policy Research Inc. and the Kaiser Family Foundation.

Data Spotlight (.pdf)

The Massachusetts special election has roiled the political world and profoundly affected the prospects for health reform just when it looked like passage was a lock.  Efforts are underway to put health reform legislation back together again on Capitol Hill, but not since powerful Ways and Means Chair Wilbur Mills fell into the Tidal Basin with Fanne Foxe in 1974, halting momentum on a deal on health reform that seemed ready to happen, has something this unexpected so affected the prospects for health reform at the eleventh hour.

Since the Massachusetts vote many have claimed it was a referendum on national health reform. To test that assumption with actual data we conducted a post-election poll of Massachusetts special election voters with the Washington Post and colleagues at Harvard University. The findings suggest that the story of health care and the special election is far more nuanced than some have made it out to be.

First, while health care policy did top the list of voting issues, the economy and general discontent with Washington also were significant factors for Brown voters. Second, and perhaps more importantly, Brown voters’ top complaint about health reform was not about the substance of the legislation itself or its perceived impact on them or their families, but about a policymaking process that they seemed to think had gone badly wrong.

For Brown voters health reform became a reflection of, and in some ways a proxy for, deeper concerns about how Washington works today. We saw health care play this kind of larger symbolic role once before in another special election that marked an historic moment in health reform: the 1991 Pennsylvania Senate race in which Democrat Harris Wofford pulled a surprise victory over Republican Dick Thornburgh.  Our polls showed that health care was the number one issue in that race too.  But in 1991 in Pennsylvania, health was largely a proxy for the deeper voter worries about the economy. That race marked the occasion of the first Kaiser poll and spurred our decision to get into the business of doing independent polling and survey research on health policy.

Our more recent post-election poll of special election voters found health care was the top issue in Massachusetts, both among those who supported now-Senator Scott Brown and among those who voted for Democrat Martha Coakley, named by about one in three voters as the primary factor in their vote.  Overall, nine in ten voters said health care was a factor at some level in their voting decision.

When we asked those health care voters who went for Brown what they meant when they said reform efforts were a factor in their vote, the top response – offered by thirty percent of this group – revolved around their anger with some aspect of the political process. What about the process was making Massachusetts voters so “wicked mad”, as we famously say in Boston?  Here is a flavor of what our poll respondents said in response to an open-ended question that enabled them to tell us what was on their minds:

“I don’t like the way that the healthcare plan is being handled. They have bought senators’ votes. They have paid off senators in Louisiana and Nebraska and they made a special deal with labor unions regarding the Cadillac healthcare plan. They fixed it.”

“I don’t like the way they vote on everything behind closed doors. Obama does just what he wants to do because he is president and no one really seems to know what’s going on.”

“There hasn’t been any meaningful discussions. They are behind closed doors. [They] need to back up and take this more slowly. We have universal health care in Massachusetts.  Not perfect, but a model.”

“No one has told us anything that is going on in health reform. We have been given no specifics. I am recovering from leukemia and I have no idea of what coverage will be available and also the costs I will face.”

“[I am] offended they are pushing the health care bills down our throats. They are rushing the greater good by getting it done, instead of getting it done right.”

“I feel they are not looking out for the individual, they are looking out more for the political party. They are not listening to the people who elected them, just to the political party.”“The health care bill [is being] rammed through, and it’s important to have this.  With Coakley there would be less of a chance to have a better bill.”

This is not to say that opposition was solely about the process, or that all Brown supporters would back a public option and a boost in the subsidy levels if only these were first discussed in lengthy, open-door meetings covered by C-SPAN. Many Brown voters expressed opposition to the proposed legislation (22 percent) or concern about the personal impact of reform (13 percent). Still, it’s worth emphasizing that substantive objections to policy did not top the list. One reason is that people don’t understand the details of the legislation.  Another is that Brown’s campaign focused less on the substance of the legislation – much of which is similar to the plan adopted in Massachusetts with his support – and more on his campaign argument that Bay State residents, who already have health reform, would have to pay higher taxes if national health reform passes, and on the special deals made in Washington to win support from key Democratic senators.

So what now? What do Massachusetts voters want their newly elected Republican senator to do on health reform when he goes to Washington? According to the poll, seven in ten voters, including nearly half of Brown supporters (48 percent), want Senator Brown to work with the Democrats on health care reform. The same opinions held for independents: nearly two thirds of independents (64 percent) say they want to see Brown work in a bipartisan way on the health care proposals put forward by President Obama and the Democrats in Congress.  (And ultimately Senator Brown will need to run for reelection in Massachusetts, a state that elects Republicans but moderate to liberal ones).

Yes, health reform was a factor in my home state. But the message from Massachusetts seems to have been more about dissatisfaction with Washington and the political process than about the substance of health reform itself. Meanwhile, this same dynamic appears to be playing out in national views of health reform legislation. The proposed reforms have taken a beating in public debate and in the polls, including our own surveys which show the public split down the middle when you ask them for a general up or down opinion on the proposed legislation. But as our latest tracking poll shows, when we ask the public about the actual specifics of the legislation they tend to be much more supportive. Here too the public may be reacting more to the exaggerations of the debate, the inherent combativeness of the process and the general failure to communicate the ways in which the proposed legislation would benefit ordinary Americans than to the substance of the legislation itself.

Angry voters are angry voters, and it’s not necessarily good news for our political system, or for incumbents, if the voters are rejecting the process more than the substance. But it’s better news for health reform than the post- Massachusetts conventional wisdom would have us believe. It suggests both an opportunity missed and an opportunity still ahead to communicate more effectively with the public about what health reform will do for them.

Health reform bills passed in the House and Senate would create a national high-risk pool insurance program to offer health coverage to otherwise uninsurable individuals during the interim period between the enactment of legislation and the implementation of broader health care reform. This issue brief discusses the structure, operation, benefits and challenges of state high-risk pool programs and describes how temporary national high-risk pool would be created as part of health reform.

Issue Brief (.pdf)