The Washington Post: On health-care hearing’s last day, Supreme Court weighs Medicaid expansion

http://www.washingtonpost.com/politics/on-last-day-of-health-care-hearing-supreme-court-considers-severability-medicaid-expansion/2012/03/27/gIQAv2zkfS_story.html?hpid=z1

By Robert Barnes and N.C. Aizenman, Published: March 28

The Supreme Court closed an extraordinary three-day review of President Obama’s health-care law Wednesday, with its conservative majority signaling that it may be on the brink of a redefinition of the federal government’s power.

Justices on the right of the deeply divided court appear at least open to declaring the heart of the overhaul unconstitutional, voiding the rest of the 2,700-page law and questioning the underpinnings of Medicaid, a federal-state partnership that has existed for nearly 50 years.

Much can happen between now and the expected ruling this summer, and a far more moderate tone may emerge. Broad statements come more easily in the court’s intense oral arguments than in majority opinions. Between now and the decision, supporters and foes of the law will be able to point to evidence that their side will prevail.

But the rhetoric of the past three days led Solicitor General Donald B. Verrilli Jr. to make an unusual and emotional plea to the justices for restraint. He asked them to respect Congress’s judgment rather than insert themselves into a partisan battle that has roiled the political landscape since the law was passed in 2010.

“The Congress struggled with the issue of how to deal with this profound problem of 40 million people without health care for many years, and it made a judgment,” Verrilli told the justices.

“Maybe they were right, maybe they weren’t, but this is something about which the people of the United States can deliberate and they can vote, and if they think it needs to be changed, they can change it.”

Verrilli made a direct appeal to Justice Anthony M. Kennedy, considered pivotal in the case because he is the conservative most often willing to side with the court’s liberal bloc. On Tuesday, Kennedy said he worried that the law’s mandate that almost every American either secure health insurance or pay a penalty undermines personal liberty and carries a “heavy burden of justification” under the Constitution.

Verrilli spoke about “millions of people with chronic conditions like diabetes and heart disease” who would be “unshackled” from their conditions and about families who would be freed from financial harm caused by high medical costs. The law will help ensure that they “have the opportunity to enjoy the blessings of liberty,” he said.

Paul D. Clement, representing Florida and 25 other states objecting to the health-care law, responded that “it’s a very funny conception of liberty that forces somebody to purchase an insurance policy whether they want it or not.”
The examination of the Patient Protection and Affordable Care Act was unlike any the court has conducted in decades. It has been nearly 50 years since the justices have devoted so much time to a subject.

Before this week’s arguments, many lawyers who practice before the court said privately that they thought the court’s precedents indicated that the Obama administration would emerge the victor. And the court’s four liberal justices showed themselves to be comfortable with the assertion of federal power in the law.

But there was deep skepticism among the conservatives. At times, Verrilli seemed shaken by the intensity of the questions. When Chief Justice John G. Roberts Jr. decided Wednesday that more time was needed to consider the constitutionality of expanding Medicaid, he told Verrilli that he would receive an extra 15 minutes.

“Lucky me,” Verrilli replied, evoking laughter in the crowded courtroom.

Justice Ruth Bader Ginsburg had wondered earlier in the day whether her colleagues were on a “wrecking operation” or a “salvage job” as they were deciding what to do about the rest of the law should the individual mandate be declared unconstitutional.

The court’s divisions were on vivid display Wednesday during a discussion of the law’s Medicaid expansion, which gives states more federal money if they agree to enroll more of the poor. States can refuse, but only if they pull out of the program altogether.

The states challenging the legislation say that is not an option. The Medicaid program has grown so large that it is impossible to forgo federal funding and still provide medical care to the poor, they say.

The question before the Supreme Court is whether the law violates limits the court has set in the past: that the federal government cannot impose conditions “so coercive as to pass the point at which pressure turns into compulsion.”
Liberal justices clearly thought the states’ argument lacked merit.

“Why is a big gift by the federal government a matter of coercion?” asked Justice Elena Kagan, saying the government is giving the states a “boatload of money.”

Justice Stephen G. Breyer said that under Clement’s theory, any expansion of Medicaid that comes with conditions would be unconstitutional. Ginsburg pointed out that “we have never had, in the history of this country or the court, any federal program struck down because it was so good that it becomes coercive to be in it.”

But Justice Samuel A. Alito Jr. said that in passing the health-care legislation, Congress operated on the assumption that the Medicaid program had become so large and essential that no state could turn down the government’s offer. “When that’s the case, how can that not be coercion?” he asked Verilli.
Kennedy added that states had “no real choice.”

Earlier, the court considered whether the entire law should be scrapped should the individual mandate be declared unconstitutional. Even though there are many elements in the legislation that have no connection to the mandate, including funding for ongoing federal programs, Clement said the entire law should fall.

“Let’s just give Congress a clean slate,” he said.

The government argued that only two provisions of the law — a prohibition against insurers discriminating against people with preexisting conditions and a limitation on how insurers set rates — depend on the mandate. The rest of the law should stand, it said.

Again, the justices seemed to split along ideological lines.

It was in a discussion about what Congress would prefer if the mandate fell — all of the law minus the mandate, most of the law or none of the law — that the court began to discuss the political dimensions of its decision and the partisan climate in which it operates.

Clement was greeted with laughter when he said that if the entire law were struck down, it should take Congress only a few days to pass the parts on which members overwhelmingly agreed.

Later in the day, as Clement presented the arguments of the states he represented against the Medicaid provision, Ginsburg reminded him that other states had filed a brief with the court saying they want the federal expansion.

Scalia asked: “Mr. Clement, I didn’t take the time to figure this out, but maybe you did. Is there any chance at all that 26 states opposing it have Republican governors and all of the states supporting it have Democratic governors? Is that possible?”

“There’s a correlation, Justice Scalia,” Clement replied.

Los Angeles Times: New rules aim to ease state-run health insurance exchanges

The exchanges are a key feature of President Obama’s healthcare law, but questions — and criticism — have grown as the deadline approaches for setting them up.

http://www.latimes.com/health/la-na-healthcare-exchanges-20120313,0,5088888.story

By Noam N. Levey, Washington Bureau
6:44 PM PDT, March 12, 2012
Reporting from Washington

In the face of mounting resistance from Republican state leaders and other critics, the Obama administration moved Monday to ease development of state-based insurance exchanges, a key feature of the new healthcare law.

The law envisions that states will set up these exchanges for Americans who do not get health coverage from their employer or who work for small businesses.

More than 30 million Americans ultimately are expected to use the exchanges, which are designed to allow consumers to shop online for health plans in 2014 much as they shop for hotels or airplane tickets. Many Americans will qualify for federal aid to help them buy coverage.

But the administration has been wrestling with how to set standards for the exchanges to protect consumers without saddling states, insurers and businesses with crippling new regulations.

That has become a growing concern as the deadline for setting up the exchanges approaches. States must decide by the end of the year if they are going to run their own exchanges or let the federal government operate them. Insurers also are scrambling to figure out how to adjust their health plans to meet new requirements in the health law.

The rules issued Monday give states some flexibility in deciding how to run their exchanges, while also allowing states that are not ready by 2014 to get help opening their exchange a year later.

“These policies give states the flexibility they need to design an exchange that works for them,” said Health and Human Services Secretary Kathleen Sebelius.

But it remains unclear whether the rules will be sufficient to overcome political resistance in many Republican-led states to establishing anything that would support the law. On Monday, Virginia Gov. Bob McDonnell, who chairs the Republican Governors Assn., criticized the new regulations as inadequate because they did not address key questions such as what a federal insurance exchange might look like.

Thus far, only 12 states and the District of Columbia have passed legislation creating some kind of state-based health insurance exchanges, according to the National Conference of State Legislatures.

Leading consumer groups were more supportive. They praised new protections designed to give consumers representation in running new exchanges. Industry groups praised rules that give small businesses more choices in deciding what coverage options to give their employees

But many remain concerned that key regulations have not been issued.

“Even if everything goes perfectly down the line, it is going to be tough to get to the opening bell,” said Neil Trautwein, a vice president of the National Retail Federation.

Los Angeles Times: To stay fiscally healthy, state’s hospitals want fewer patients

Healthcare reforms will mandate more treatment in doctors’ offices and clinics. The changes take effect in 2014, but some California institutions are trying to get an early start.

http://www.latimes.com/health/la-me-hospital-changes-20120305,0,5184223.story

By Anna Gorman, Los Angeles Times
5:15 PM PST, March 4, 2012

To survive the unprecedented challenges coming with federal healthcare reform, California hospitals are upending their bedrock financial model: They are trying to keep some patients out of their beds.

Hospital executives must adapt rapidly to a new way of doing business that will link finances to maintaining patients’ health and impose penalties for less efficient and lower-quality care.

It’s too soon to know precisely how the changes will affect patients. But experts say more will be treated in clinics and doctors’ offices than in hospitals. And when they are admitted, their hospital stays could be shorter.

“How can we change our mind-set from how many patients we have in the beds to how many patients we are keeping healthy and out of the hospital?” asked Michael Rembis, president and chief executive of Hollywood Presbyterian Medical Center. “We haven’t figured out how to do that yet.”

The federal reform law changes the way hospitals and doctors will be paid. Going forward, fees will be based on patient outcome rather than on how long patients stay in the hospital or how many services they receive. And hospitals will be penalized for preventable readmissions and hospital-acquired infections.

Promoting higher-quality hospital treatment is long overdue, said Anthony Wright, executive director for the consumer group Health Access. “We were inadvertently subsidizing bad care,” he said.

Wright said he hopes the new incentives will lead to more coordinated treatment for patients.

In preparation for the healthcare overhaul, many hospitals are replacing paperwork with electronic record systems and working more closely with physicians to improve care and reduce the number of unnecessary tests.

“As hospitals and physicians think about how they are going to care for populations, they recognize they have to collaborate,” said David O’Neill, senior program officer at the California HealthCare Foundation.

Some hospitals are going a step further and partnering with physicians to form accountable care organizations, groups that agree to offer coordinated care for Medicare patients. Under the reform law, the organizations will share the savings from lowering costs and improving care.

The California Medical Assn., a leading doctor alliance, says the new accountable care groups will succeed only if physicians still have the autonomy to make medical decisions on behalf of their patients.

“If they are dominated by the hospitals, they will fail,” said Francisco Silva, the association’s general counsel. “They will not reduce costs or improve efficiency…. It has to be a true partnership.”

Hospitals that don’t adapt may have to eliminate services or close their doors, according to the California Hospital Assn. Already, the state has fewer hospital beds per capita and shorter hospital stays than the national average.

“Everyone is scrambling on the hospital side to prepare for fewer patients,” said Jim Lott, executive vice president of the Hospital Assn. of Southern California. “It does change the paradigm.”

The shifts — which will occur along with ongoing cuts in Medicare and Medi-Cal — don’t take effect until 2014, but already they are prompting hospitals to cut costs and stop duplicating services wherever possible.

Hollywood Presbyterian is working with nearby hospitals to identify the best and most cost-effective treatments. In addition, the hospital is trimming expenses and entering new partnerships with outpatient clinics to keep discharged patients from returning to the hospital unnecessarily.

Providence Health & Services, Southern California, which operates five hospitals, has offered voluntary buyouts and streamlined supply purchases. The hospital group also is trying to reduce the chances of medical complications and is standardizing treatment of some illnesses to improve efficiency.

The Providence hospitals couldn’t afford to wait until healthcare reform takes effect in two years, said senior vice president and chief executive Michael Hunn. “The numbers are not sustainable,” he said. “We have got to get our arms around waste.”

The most significant moves are driven by cuts to Medicare and Medi-Cal, which in California make up more than half of hospitals’ gross revenues. California also has some of the lowest Medi-Cal reimbursement rates in the country.

Because government insurance programs don’t cover costs, hospitals have traditionally relied on private payers to make up their deficits. But that is becoming more difficult because insurers are under pressure to reduce rates as part of healthcare reform.

Hospitals are launching their transformation when revenue growth at some facilities is running at 20-year lows, according to Moody’s Investors Service.

“They are being hit on both fronts — fewer patients and getting paid less for each patient,” said Brad Spielman, vice president of healthcare ratings for Moody’s.

Michael Blaszyk, chief financial officer of Dignity Health, which operates more than 40 hospitals in California, Nevada and Arizona, said healthcare reform has placed hospitals at a “fundamental crossroads.”

“All hospitals have had to make choices about what services are appropriate and what services are not,” he said. “You cannot continue to operate at a financial loss.”

Smaller hospitals will be among the hardest hit because they are on their own in paying for administrative costs and negotiating rates with insurance companies, said Richard Scheffler, a UC Berkeley health economics professor. The ones that join larger health systems are more likely to survive, he said. “Mom-and-pop hospitals have two choices: disappear or join the party,” he said.

Long Beach’s Community Hospital executives knew their bottom line wasn’t improving. So last year, the hospital decided to join MemorialCare Health System, which runs several hospitals in Southern California. Now the hospital is in the black and can focus on care rather than finances, said former board chairwoman Nancy Myers. “If we had not merged … we probably would not have been able to make it,” she said.

Even as hospitals rush to revamp their care, there is still uncertainty about what lies ahead, said Allen Miller, an L.A.-based healthcare consultant. An increasing number of aging baby boomers may require more hospitalization in the years ahead, complicating efforts to reduce costly admissions.

“No matter how much we think we can decrease hospital admissions, we are still going to need the beds,” he said.