Reports out of Washington indicate Pres. Bush’s plans to expand HSAs by increasing the amount individuals can set aside tax-free are not gaining much traction on Capitol Hill. Sen. Chuck Grassley (R Nebraska) and other Republicans are not in favor of the move.
This is not Bush’s only problem related to health care. Some 60 House Republicans have refused to back the Bush Medicare budget cuts, breaking wiith the President despite calls for fiscal prudence. One wonders if election year politics has anything to do with this. Actually, there’s no wondering.
Republicans, faced with a President with historically low approval ratings (well, pretty close to historical lows) look to be scrambling for cover – and with seniors particularly upset with the GOP over the Part D mess, a cut to Medicare would increase their problems.
The situation on the Hill makes CMS Director McClellan’s recent pronouncements about adding HSAs to Medicare (Part G?!) somewhat…puzzling? Faced with concerns about both HSAs and Medicare among their own party leaders, why is McClellan floating this trial balloon? One can only imagine the reaction among seniors who have been tearing their hair out over Part D. If we thought Part D was complicated and hard to explain, I can’t wait to see our nation’s political leaders on a bus traveling around talking to seniors about HSAs.
What are these people thinking? Or rather, are these people thinking?
What does this mean for you?
Politics in an election year can be good and bad – killing the ill-conceived HSA expansion while not addressing some of the real concerns with Medicare are two great examples.

Director of the Center for Medicare/Medicaid Services Mark McClellan was up on Capitol Hill yesterday testifying on Part D, conveying the message that all was going better, improvements were being made, and the cost of the program was lower than anticipated.
When one remembers that McClellan is the brother of White House press secretary Scott, his facile comments and ability to re-interpret reality are more understandable.
I’m reminded of the comments whispered to me by the mother of the young lad named “most improved” at a youth football dinner: “he was so bad at the start of the season that just running without falling down was a huge improvement”. While the Part D program is nowhere near running, and has yet to even advance beyond the crawling stage, it is likely to improve. That’s the good news. The bad news is the fatal flaw of adverse selection, discussed here ad nauseum, but still eluding the denizens of Capitol Hill.
One highly contentious issue continues to be the law preventing HHS from negotiating directly with pharmaceutical companies on drug prices. According to ABC News; Sen. Snowe (R ME) and what a great name for a senator from Maine…
“questioned the way the program was working and pushed for legislation that would allow the government to negotiate for better drug prices. The initial legislation included no such provision, an omission that at the time was seen as a boon to drug companies.
Snowe and Sen. Ron Wyden, D-Ore., have drafted bipartisan legislation that would give government the power to negotiate prices.
“I can’t imagine why we’d spend $700 billion on this benefit and not allow the secretary to maximize the taxpayers’ money,” Snowe said.
Me neither.

A June 2005 CMS Office of the Actuary report estimated there would be a total of 36.8 million enrolled in Part D in fiscal year 2006. Thus HHS Sec. Leavitt’s stated goal of 28-30 million enrolled in Part D by the end of 2006 either reflects an updated guesstimate or indicates the previous goal is now viewed as unreachable, or perhaps both. (remember almost 22 million seniors were automatically enrolled in Part D on 1/1/06) Especially when one recalls that the calendar year has three more months than the fiscal one.
As Bob Laszewski points out, historically the big enrollment date for employee benefits and health plans has been January 1. With all the hype, publicity, politicians-on-the-road-show circuit and marketing leading up to that date, and with that date well behind us, it looks very doubtful that enrollment numbers will even come close.
The well-publicized enrollment mess surely has not encouraged seniors to jump into a plan that had already confused them.
So, despite the taxpayer funding 75% of the costs of the program, millions of dollars in advertising and strong support from elected leaders (sell, some of them at least) and six weeks into the program, we have enrolled a grand total of less than 4 million into the voluntary program.
Not exactly a ringing endorsement of a privatized health care plan based on competition in the private sector.
What does this mean for you?
Bad news for advocates of national health insurance provided by private payers. That was me too, but I’m not nearly as convinced today as I was this time last year…

There is an excellent objective review of the role of PBMs in managing Part D costs at California HealthLine. While I hesitate to summarize what is already a summary, here are the main points.
1. The absence of any “transparency” requirements in the Part D enabling legislation makes it impossible to determine without legal investigation how PBMs may benefit from rebates and other confidential financial transactions.
2. There was an amendment proposed that would have addressed this but it was shot down due to the administrative expense ($40 billion over ten years).
3. Self-dealing, namely the direction of patients to a PBM-owned pharmacy, is not illegal, and is a likely fallout from Part D. This is not bad per se, as mail order costs are significantly cheaper, and the home delivery service means folks do not have to get out of the house to get their scripts (which may actually be a good or bad thing).
4. Not noted is the failure of the legislation to allow CMS to negotiate drug prices, not even as a last resort. I don’t get this.
PBMs Medco, Express Scripts, and Caremark have been besieged by allegations of impropriety, civil complaints, and customer action. While this PBM-pharmacy manufacturer-pharmacy-CMS-employer-patient thing is enough to make your head spin, this will confuse you even more –
If PBMs screw up really badly and lose a lot of money during the next two years, the taxpayers will bail them out .
What does this mean for you?
less faith in “free-market” capitalism?