HHS Secretary Sebelius admits to double-counting in Obamacare budget

[Dave]

As Nancy Pelosi said a year ago today, we won't know what's in the bill until it passes. Well, we now know more and more of what's in the bill and its in some cases, not adding up to anything good. I can't say i'm to surprised when you consider that practically no one read the bill before it was voted on... bound to be plenty of problems when ya don't read the bill... but what do we know? We're just using common sense.

 

During a hearing on Capitol Hill Thursday, the secretary of the Department of Health and Human Services (HHS) admitted to double-counting in the Obamacare budget.

In her first appearance before the House Energy and Commerce Health Subcommittee since the health-care law passed, Kathleen Sebelius responded to a line of questioning by Republican Rep. John Shimkus of Illinois about whether $500 billion in Medicare cuts were used to sustain the program or pay for the law.

“There is an issue here on the budget because your own actuary has said you can’t double-count,” said Shimkus. “You can’t count — they’re attacking Medicare on the CR when their bill, your law, cut $500 billion from Medicare.”

He continued: “Then you’re also using the same $500 billion to what? Say your funding health care. Your own actuary says you can’t do both. […] What’s the $500 billion in cuts for? Preserving Medicare or funding the health-care law?

Sebelius’ reply? “Both.”

[ For complete coverage of politics and policy, go to Yahoo! Politics ]

The Obama administration and HHS have been criticized previously for double-counting. In a report last summer, HHS claimed a provision in the health-care law would extend the Medicare trust fund by 12 years. The Congressional Budget Office released a memo that said HHS’s math was more than a little off.

“[…] They cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs … To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings,” said the CBO memo.

“I was shocked to hear the secretary admit that $500 billion is double-counted in the health-care law,” said Shimkus after Thursday’s hearing. “We knew the health-care law’s actual cost was much greater than originally told to the public.  And now, the truth is slowly coming out in administration reports and testimony.”

Rep. Joe Pitts of Pennsylvania , the chairman of the subcommittee added, “The same dollar can’t be used twice. This is the largest of the many budget gimmicks Democrats used to claim Obamacare would reduce the deficit.”

UPDATE: When contacted by The Daily Caller, Richard Sorian, Assistant Secretary for Public Affairs had this to say:

“The scoring of the Affordable Care Act is entirely consistent with how legislation has been scored for the 30 years, under Presidents of both parties, and Congresses of both parties.  Savings in programs like Medicare and Social Security are scored as improving the solvency of those programs and reducing the deficit.”

[Dave]

And while we're talking about ObummerCare, there's this, another fine example of what happens when you don't read laws before you enact them:

 

Sandy Chung is grappling with a new kind of request at her pediatrics office in Fairfax, Va.: prescriptions for aspirin and diaper-rash cream.

Patients are demanding doctors' orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone's radar. It says people who want a tax break to buy such items with what's known as flexible-spending accounts need to get a prescription first.

The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription. The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.

"It drives up the cost of health care as opposed to reducing it," says Dr. Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children's cold medicine.

Though the new rules on over-the-counter drugs amount to a small part of the massive overhaul of the health-care system, the unintended side effects show how difficult it can be to predict how such game-changing legislation will play out in the real world.

Some doctors, irked by the paperwork and worried about lawsuits, are balking at writing the new prescriptions. Pharmacists and retailers say the changes mean they have to apply a personalized label on some 15,000 different everyday products for customers paying with certain debit cards.

The over-the-counter provision isn't the only part of the health-care law that has defied expectations.

Health-policy experts predicted that new insurance pools for high-risk patients would attract so many expensive enrollees that funding would be quickly exhausted. In fact, enrollment is running at just 6% of expectations, partly because of high premiums.

A provision preventing insurers from denying coverage to children with pre-existing health conditions prompted insurers in dozens of states to stop selling child-only policies altogether.

And a piece of the law designed to centralize patient care by encouraging health-care providers to collaborate is running into antitrust concerns from regulators.

To the handful of congressional aides who came up with the idea to limit tax breaks on over-the-counter drugs, it was supposed to be a minor tweak to raise revenue and to discourage wasteful spending on health products.

Some 33 million Americans are in families that have flexible-spending accounts, which are funded through payroll deductions and allow consumers to pay for health expenses with tax-free dollars.

The change also applies to health savings accounts designed for consumers in insurance plans with high deductibles. If fewer people use these accounts to buy drugs, the government gets more tax revenue. Retail sales of over-the-counter medicines amounted to about $17 billion in 2010, not counting sales at Wal-Mart Stores Inc., according to Nielsen Co.

What the law's writers didn't anticipate was the determination of some people to squeeze every last drop of tax savings from their accounts.

When Dianna Greer of San Diego and her son came down with a cold, she wanted a $13 bottle of NyQuil and daytime cold medicine—and she wanted to pay for it by tapping the $5,000 in her flexible-spending account.

Ms. Greer says her doctor wouldn't write prescriptions without an office visit, so she went without the drugs. Later, she got the prescriptions from a doctor at the emergency room, where she was diagnosed with pneumonia.

"It feels like you're begging for something when it's your money," she says.

Much of the health law, which passed last year despite overwhelming opposition by Republicans, doesn't take effect until 2014. The nonpartisan Congressional Budget Office has projected that an additional 32 million Americans will get insurance, and the law has already extended tax credits to small businesses for buying insurance and allowed many parents to keep their children on their health plan until their 26th birthday.

But opponents say it costs too much and gives the federal government too much control over health care. Republicans in the House voted this year to repeal the law, though the measure died in the Senate. Opponents are trying to get it struck down in the courts, a fight that is likely to last until at least next year.

As that larger battle plays out, the over-the-counter provision is emerging as a top target for change. Republicans in both the House and Senate have introduced legislation to repeal it and return to the old system. The largest chain drugstore lobbying group is backing the effort, arguing that the new rules are inefficient and limit access to the medicines. Asked whether she would support such legislation, Kathleen Sebelius, secretary of Health and Human Services, said: "I'd take a look at it."

A spokeswoman for the Treasury Department, which oversees tax policy, says the provision "enjoyed bipartisan support in Congress, but, as the president said, anything can be improved, and we are always willing to listen to ideas about how to make health care better and more affordable."

Tax breaks for over-the-counter drugs date to 2003, as popular drugs like the allergy medicine Claritin began switching to over-the-counter status. The Internal Revenue Service loosened the rules on flexible-spending accounts so consumers could use them to buy thousands of nonprescription medications. The tax-free dollars can also go for insurance co-payments, eyeglasses and other out-of-pocket health costs.

Critics say the accounts encourage overconsumption of medical services. Since consumers typically must forfeit unused funds by year's end, they often ended up scrambling in December to drain their funds by loading up on aspirin, antacid and the like.

"The entire flexible-spending account thing is a waste of our taxpayer dollars," says Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology and a former paid consultant on the health law to the Department of Health and Human Services. "If you're going to scale it back, this is a natural place to start." (Another part of the law limits the amount consumers can save in flexible-spending accounts to $2,500 a year, starting in 2013.)

Peeling back tax breaks for health plans was on the table in 2009 when lawmakers began drafting the health overhaul. Inside the Senate Finance Committee, aides to three Democratic and three Republican senators hashed out the blueprint for what ultimately became the final bill.

Some big ideas—like limiting the tax break for employer-sponsored health insurance—lacked support, so committee aides lowered their sights. Making people pay the full price for over-the-counter medicines seemed like a way to reduce wasteful spending and generate money for the law's main goal: expanding health insurance to nearly every American.

An objection came from William Pewen, senior health-policy adviser to Maine Republican Sen. Olympia Snowe.

He believed the tax-free treatment could lower health costs and thought everyone should have access to a flexible-spending account. He told the group that he takes over-the-counter Prilosec, a heartburn medication, which meant he didn't need a more expensive prescription drug.

"I didn't want to see us set up perverse incentives for people to use more costly drugs than they needed," Mr. Pewen says.

He proposed a compromise that he concedes "was not the ideal solution." People could spend tax-free dollars on over-the-counter drugs, but only if they got a doctor's prescription. It wasn't exactly a new idea: Medicaid, the federal-state program for the poor, already covers some over-the-counter drugs if they are prescribed.

Congress's number-crunchers estimated the change would generate $5 billion over a decade. Hardly anyone noticed it, even as it stayed in the bill through passage in March 2010.

Only after the president's signature was dry did the American Medical Association realize what had happened and send a letter to the government warning of unintended consequences, including more office visits and extra paperwork.

Sure enough, when the change took effect Jan. 1, patients began bringing lists of over-the-counter drugs to office visits and also requesting over-the-counter prescriptions by phone, doctors says.

While it may not be worth the trouble for some patients, the savings can add up for those with chronic conditions, especially if the doctor writes multiple refills. A survey late last year by Nielsen found that nearly half of consumers with flexible-spending accounts would request the prescriptions as a result of the changes.

Among those most upset by the changes are pediatricians, who say that small sizes of children's medicines and multiple children per family make the requests particularly burdensome.

"It's an amazingly disruptive policy," says Jesse Hackell, a Pomona, N.Y., pediatrician who is charging $5 to fill such requests via phone. "I am now doing the IRS's work, and that's what I resent most."

After writing two over-the-counter prescriptions free of charge in January, pediatrician Richard Schwartz of Vienna, Va., says he began imposing a $10 surcharge for each prescription, on top of the office co-payment. That is likely to discourage some patients from asking for a prescription, as the surcharge could outweigh the tax savings from using a flexible-spending account.

Doctors are also concerned about malpractice lawsuits, since a prescription potentially puts them on the hook for any problems a patient suffers from over-the-counter drugs.

Some malpractice insurers are urging doctors not to write any prescription without seeing the patient in person, says Lawrence Smarr, president of the Physician Insurers Association of America, which represents malpractice insurance providers.

Retailers and pharmacies, meanwhile, say another aspect of the change caught them flat-footed. Many flexible-spending accounts come with a debit card, making it easy for consumers to draw down the money in the accounts when they shop at a pharmacy. But under the original IRS guidance, people couldn't use those cards for the prescribed over-the-counter medications.

An industry group representing Wal-Mart, CVS Caremark Corp., Visa Inc. and other large corporations warned that could temporarily halt use of the debit cards for any pharmacy purchase. The IRS eventually decided the cards could be used—as long as the pharmacist labels and processes the over-the-counter item exactly like a prescription.

That had another unintended effect. Thousands of over-the-counter products now must pass behind the pharmacist's counter when the customer pays with the special debit card.

"At the moment it's considered a prescription, it's subject to all the regulatory requirements," says Mike DeAngelis, a spokesman for CVS. "It runs through our quality assurance process. We have to generate a label." The chain also puts each of the prescribed drugs in an individual paper bag.

Despite the hopes of Mr. Pewen in the Senate, some consumers think they will be better off getting a prescription-only drug in place of an over-the-counter medication.

In the Nielsen survey, 37% of flexible-spending account users said they would ask their doctor about prescription drugs that could replace their over-the-counter medicines.

Dr. Chung, the pediatrician in Fairfax, Va., says she recently imposed a policy under which her office writes prescriptions only for chronic conditions, like allergies. That deflects pleas from parents wanting a quick Rx for their child's cold, but she's worried about pushback. "It makes us look like the bad guy," she says.

Write to Janet Adamy at [e-mail]

[XLFD]

That's totally ridiculous.  And one of a whole lot of loopholes in the gigantic Obamacare mess that are sure to come out of it if it isn't repealed.

[masonco]

We went through this over in LT where I got railroaded out for saying the bill wasn't a good solution. Something about I needed to trust our lawmakers to do the right thing...like they care they opted out of it.

[Guidothesemipsuedocaptitalistpig]

And now we learn the entire state of Maine has opted out of the program. Whats wrong with this picture?????