The Obama administration announced in February that it would allow Arkansas to use the federal money intended for Medicaid expansion to buy private health insurance plans for individuals with incomes up to 133% of the federal poverty level. This week, Florida’s senate rejected the Medicaid expansion but left open the possibility that it would try to negotiate a similar deal with the Obama administration. Indiana and Ohio may follow suit.
At first glance, this seems like a political loss for Obama. Several states with Republican governors may now expand healthcare for the poor using a private payer model—the type of model Mitt Romney supported during the 2012 presidential race. Yet Obama’s compromise in Arkansas may ultimately be a win for the president. All of the 14 states that are not participating (as of now) in the Medicaid expansion have republican governors. The private insurer model would allow these governors to save face while ultimately expanding access to healthcare for the poor.
The looming sequester will have a significant impact on health care, including cuts to Medicare, FDA, CDC, NIH, and Affordable Care Act programs. Budget cuts could slow down the drug approval process, impede the tracking of infectious diseases, and lead to layoffs for hundreds of thousands of workers in the health care sector. Read on for sequestration by the numbers…
Medicare cut by 2% ($11 billion) (not set to begin until April 1st, 2013, unlike other sequestration cuts, which are set to begin on March 1, 2013)
Physicians’ payments cut by 2%
Hospital Medicare reimbursement cut by $5.8 billion
Loss of almost 500,000 health care sector jobs in the first year of the sequester according to an American Medical Association and American Hospital Association study, including job losses for 40,000 practitioners such as physicians and dentists
In the spirit of Valentine’s Day, I wanted to discuss an important issue: Can the FDA ban cupcakes? While this may seem like a silly question, the Center for Science in the Public Interest (“CSPI”) has filed a petition with the FDA urging the agency to regulate the amount of sugar (including high fructose corn syrup) in soft drinks. According to the executive director of CSPI, sugar is a “slow-acting but ruthlessly efficient bioweapon” that causes “obesity, diabetes, and heart disease.”
If soft drinks are a problem, surely cupcakes are too. A twelve-ounce can of Coca-Cola contains 39 grams of sugar. A seasonally-appropriate red velvet cupcake from Sprinkles contains 45 grams of sugar—and who can eat just one? National cupcake consumption increased 52% between 2010 and 2011, and U.S. consumers ate over 770 million cupcakes last year. Sugary soft drink consumption, on the other hand, is down 23% since 1998 and 37% since 2000.
While the FDA can’t regulate sugar as a bioweapon, it probably could regulate sugar as a food additive. Under the Food, Drug, and Cosmetic Act, a food additive is “any substance the intended use of which results or may reasonably be expected to result—directly or indirectly—in its becoming a component or otherwise affecting the characteristics of any food.” This broad definition would include sugar. The FDA does not, however, regulate food additives that are “generally recognized as safe” (“GRAS”). Presumably the FDA considers sugar to be GRAS—for now.
Beginning in 2013, W-2s for firms who file at least 250 W-2 forms will list the amount of money that employers and employees spend on health insurance premiums. As the New York Times reports, “[t]o some, it will be a surprise, perhaps even a shock.” Many people insured through their employer have no idea how much health insurance actually costs. The W-2 provision will change this, providing a yearly reminder about how much employer compensation goes into health insurance rather than wages. This gives employees exactly one salient number about health care: the yearly cost of their employer-provided health insurance.
More information for consumers about the cost of health care is a good thing, but making the cost of health insurance more salient may have some unintended consequences. Employees will be better able to compare the benefits of jobs with higher salaries but no health insurance to jobs with lower salaries and health insurance. This may lead employees to opt for lower salary jobs with health insurance, which could help decrease the number of employees who seek government-subsidized health insurance. The W-2 provision could, however, have the opposite effect. Now that employees can easily compare the cost of employer-sponsored insurance to government-subsidized insurance, employees eligible for government-subsidized health insurance may buy insurance through an exchange and then opt for a higher-paying job that does not offer insurance. Employers may be willing to pay the tax penalty, which is much less than the cost of insurance.
In the Supreme Court’s recent decision in Auburn Regional Medical Center, the Court held that a suit against HHS by eighteen hospitals alleging intentional underpayment of Medicare reimbursements was barred by a 180-day internal agency deadline for appeals of reimbursement decisions. The rub is that the hospitals only found out about the underpayments, which allegedly occurred from 1987 to 1994, in March of 2006. These underpayments affected thousands of hospitals and added up to billions of dollars. Yet under Auburn, since the hospitals did not sue within 180 days of the underpayment (or even within an extended three-year window for “good cause”), they cannot recover. The Court in Auburn rejected the hospitals’ argument that equitable tolling should apply, finding instead that “the presumption in favor of equitable tolling does not apply to administrative appeals of the kind here at issue.”
The Auburn decision raises important questions about the ability of the federal government to intentionally underpay healthcare providers. In oral argument, the lawyer for the hospitals characterized HHS’s actions as “intentional concealment . . . [and] misconduct by the Secretary, that caused the statute of limitations time to be missed.” While there are good reasons not to disturb decades-old reimbursement decisions, it is sobering that the federal government can intentionally conceal underpayments and—if it conceals the underpayment for only 180 days—never have to reimburse the injured party. This situation presents a striking contrast “to 42 CFR § 405.1885(b)(3) (2012), which permits reopening of an intermediary’s reimbursement determination ‘at any time if it is established that such determination . . . was procured by fraud or similar fault of any party to the determination.’” In other words, HHS can reopen reimbursement decisions if a provider intentionally conceals important information, but not vice versa.
This November, voters weighed in on an array of state ballot initiatives on health issues from medical marijuana to health care reform. Ballot outcomes by state are listed below (more after the jump).
Voters in Alabama, Montana, and Wyoming passed initiatives expressing disapproval of the Affordable Care Act, while a similar initiative in Florida garnered a majority of the vote but failed to pass under the state’s supermajority voting requirement. Missouri voters passed a ballot initiative prohibiting the state executive branch from establishing a health insurance exchange, leaving this task to the federal government or state legislature. Florida voters defeated a measure that would have prohibited the use of state funds for abortions, while Montana voters passed a parental notification requirement for minors seeking abortions (with a judicial waiver provision). Perhaps surprisingly, California voters failed to pass a law requiring mandatory labeling of genetically engineered food. Several states legalized medical marijuana, while Arkansas voters struck down a medical marijuana initiative and Montana voters made existing medical marijuana laws more restrictive. Colorado and Washington legalized all marijuana use, while a similar measure failed in Oregon. Physician-assisted suicide was barely defeated in Massachusetts (51% to 49%), while North Dakotans banned smoking in indoor workplaces. Michigan voters failed to pass an initiative increasing the regulation of home health workers, while Louisiana voters prohibited the appropriation of state Medicaid trust funds for other purposes.
Affordable Care Act:
Alabama Health Care Amendment, Amendment 6: Approved 59.52% to 40.48% (prohibits mandatory participation in any health care system)
Florida Health Care Amendment, Amendment 1: Defeated 51.46% to 48.54% (required 60% support to pass) (would have prohibited passing laws compelling the purchase of health insurance)
Missouri Health Care Exchange Question, Proposition E: Approved 61.8% to 38.2% (“prohibit[s] the Governor or any state agency, from establishing or operating state-based health insurance exchanges unless authorized by a vote of the people or the legislature”)
Montana Health Care Measure, LR-122: Approved 66.83% to 33.17% (prohibits “the state or federal government from mandating the purchase of health insurance coverage or imposing penalties for decisions related to the purchase of health insurance coverage”)
Wyoming Health Care Amendment, Amendment A: Approved 76.98% to 23.02% (stating that “the right to make health care decisions is reserved to the citizens of the state of Wyoming”)
This November, Floridians will vote on whether to amend the Florida constitution “to prohibit laws or rules from compelling any person or employer to purchase, obtain, or otherwise provide for health care coverage.” Similar constitutional amendments are on the ballot in Alabama and Wyoming and have already been adopted in Arizona, Oklahoma, and Ohio. While Florida’s proposed amendment has not received much attention after the Supreme Court’s decision to uphold the individual mandate requirement of the Affordable Care Act (“ACA”), these state constitutional amendments should not be written off entirely.
The Florida amendment could have some effect on the upcoming presidential election. Since the amendment is included on the ballot, it could help win votes for Romney and other Republican candidates by reminding undecided swing voters about the ACA as they are filling in the ballot. If the amendment passes—which requires sixty percent of the popular vote—it will almost certainly be seen as a referendum on the ACA that will give ammunition to Republicans in future elections.
The existence of these state amendments and other similar legislation also raises the stakes of future Supreme Court litigation over the ACA. While the Supreme Court may be loath to revisit the ACA anytime soon, opponents are likely to continue challenging different aspects of the ACA that have not yet been litigated. Some of these cases could eventually end up in the Supreme Court, especially if there is ambiguity around whether the ACA preempts certain aspects of state constitutional amendments.
The New York Times recently reported that the switch to Electronic Health Records (“EHRs”) may be contributing to rising Medicare costs. The Times described two hospitals where the portion of patients billed at the highest reimbursement rate rose by over 40% when the hospitals adopted EHRs. The Times also reported that in hospitals that switched to EHRs between 2006 and 2010, Medicare payments rose 47%. Medicare payments for hospitals that did not adopt EHRs rose 32%.
A third explanation is that EHR systems actually change the way doctors practice medicine. In the process of asking doctors for particular data points, EHR systems may remind doctors to look for particular symptoms or to provide particular treatments that doctors may not have considered otherwise. It is thus possible that EHRs have led to higher Medicare bills because they have increased the amount of time doctors spend diagnosing and treating patients.
New York City’s Board of Health has recently approved a ban on all sugar-sweetened drinks over sixteen ounces sold in restaurants, fast food chains, movie theaters, sports stadiums and food carts (with some exceptions). The ban does not prohibit consumers from buying multiple sixteen-ounce beverages or from buying over sixteen-ounce beverages at grocery or convenience stores. The ban has been lauded by some as an effort to curb obesity and criticized by others for doing too little or for invading personal liberty. Photos of members of the Board of Health snacking on junk food and drinking a thirty-two ounce beverage—at the meeting discussing the soda ban—have provided some comic relief in an otherwise heated debate. Now that the ban has passed, restaurant associations and beverage associations have claimed they are going to file suit. Do they have a case? Probably not.
One claim opponents can make is that the Board overstepped its authority by regulating soft drink container sizes. It is unclear if this claim would succeed. The Board of Health has broad authority under New York City’s Health Code, which states that “[s]ubject to the provisions of this Code or other applicable law, the Department may take such action as may become necessary to assure the maintenance of public health, the prevention of disease, or the safety of the City and its residents.” New York City will argue that the ban is “necessary to assure the maintenance of public health” in the face of an obesity epidemic, and will point to the apparent success of the City’s trans fat ban as evidence that such bans are effective in decreasing the intake of unhealthy foods. The beverage industry will likely respond that the ban is not “necessary” because it does not really address obesity—consumers can too easily evade the law by buying multiple smaller sodas or by buying sodas at convenience stores.
Unsurprisingly, Title 21 of both the USC and the CFR grew in length between 1999 and 2011. More interestingly, however, the USC grew by 50% while the CFR grew by only 10%. If the purpose of regulations is to interpret and flesh out statutes, common sense would suggest that food and drug regulations would grow at a greater rate than food and drug laws (or at least at the same rate). Karst’s explanation for his findings is that the “FDA has been issuing far fewer regulations, and instead, has been implementing the law through guidance and other policy documents.”