"SAVE AND STRENGTHEN MEDICARE ACT" INTRODUCED

On December 11, the outgoing chairman of the House Ways and Means Health Subcommittee introduced a bill (the "Save and Strengthen Medicare Act," H.R. 6645) that proposes major changes to the Medicare program. Rep. Wally Herger (R-CA), who is retiring from Congress at the end of this year, said that the bill "embrace[s] the best ideas that have been put on the table to date, from any political or ideological quarter."

The bill includes several proposals. Perhaps the most controversial is the concept of premium support, in which Medicare beneficiaries would receive subsidies from the federal government to buy private health insurance. Some previous such proposals have been criticized as "voucher programs" that would shift insurance costs to Medicare beneficiaries; Rep. Herger’s bill, however, would permit beneficiaries to choose to remain in traditional fee-for-service Medicare.

The bill proposes establishing incentives for people to delay enrolling in Medicare, through higher premiums for those under the "preferred Medicare age" (which will gradually be raised) and payroll tax breaks for those who delay retirement beyond age 65. The bill also proposes repealing the Independent Payment Advisory Board (IPAB) created under the Patient Protection and Affordable Care Act (PPACA). As it currently exists, the IPAB empowers the Secretary of the Department of Health and Human Services (HHS) to unilaterally implement the IPAB’s recommendations on reductions to Medicare payments if Congress fails to do so.

HHS ISSUES NINE CONDITIONAL APPROVALS FOR EXCHANGES

During the week of December 10, HHS issued conditional approvals for health insurance exchanges in eight states plus the District of Columbia. The deadline for states to file applications to operate their own exchanges was December 14. States may also elect by February 15, 2013 to operate exchanges in partnership with the federal government. In those states that do not elect to do either, the federal government will operate a "federally facilitated exchange." PPACA requires that an exchange be operating in every state as of January 1, 2014.

The states (and DC) approved by HHS were determined likely to be ready to process individuals’ applications when open enrollment begins on October 1, 2013. The HHS approvals were issued to Colorado, Connecticut, Kentucky, Maryland, Massachusetts (which already operates a state exchange), New York, Oregon, Washington, and the District of Columbia.

Separately, the governor of Utah has asked that its existing state exchange be certified as complying with PPACA. The state’s exchange, established before PPACA was enacted, offers state residents a choice of 140 different health insurance plans.

HHS REJECTS "PARTIAL" MEDICAID EXPANSIONS

In a December 10 memorandum, HHS Secretary Kathleen Sebelius informed the governors of all 50 states that PPACA "does not provide for a phased-in or partial expansion" of the Medicaid program. The Supreme Court’s June decision upholding the constitutionality of PPACA had stated that states cannot be penalized for opting out of the full expansion provided for in the law, but that those states that opt out will not receive full federal funding. Secretary Sebelius’s memorandum confirmed that a partial expansion will be treated as having opted out.

In PPACA, states were asked to expand their Medicaid programs beginning in 2014 to people with incomes of up to 138% of the federal poverty level. As proposed, the federal government will assume the entire amount of the states’ cost increases for three years, after which the government’s share will gradually decline to 90% of the incremental cost by 2020. According to the federal government, there will be 18 million new Medicaid beneficiaries if all states agree to the full expansion. Some states, however, have expressed reluctance to expand their programs because they are concerned that the federal government will reduce funding.