OVERNIGHT HEALTH: Cost of exchanges doubles

by Sam Baker and Elise Viebeck - 04/10/13 10:30 PM ET

Setting up insurance exchanges — the centerpiece of President Obama’s healthcare reform law — is costing the Health and Human Services Department a whole lot more than it originally expected. According to budget documents released Wednesday, the department expects to spend $4.4 billion on exchange grants to the states by the end of this year — double its estimates a year ago.

The HHS is also asking Congress for another $1.5 billion to set up a federal exchange in 26 states. The department has cobbled together money from other programs to get started, but officials said they need another $800 million for operational costs and $550 million for outreach and education.

{mosads}What happens if Congress doesn’t approve the extra funds? After all, it rejected a similar, but smaller request just last month. An HHS budget official didn’t say, offering only that the department is committed to making exchanges work.

Healthwatch has all the details on the rising costs.

Budget hits drug makers: President Obama’s budget proposal doesn’t include any unexpected changes to entitlement programs. The big-ticket item is the “chained CPI” in Social Security, as expected, and his proposed Medicare changes are mostly standard items like increased means testing and restructured premiums.

The biggest healthcare savings would come from the pharmaceutical industry. Obama proposed $150 billion in cuts to drug makers, including his controversial proposal to let some low-income seniors pay Medicaid’s cheaper drug prices, rather than Medicare rates.

Hospitals and nursing homes would also take a hit. Healthwatch has the breakdown of Obama’s proposed cuts.

Drug makers hit back: The Pharmaceutical Research and Manufacturers of America was none too pleased with the president’s proposals.

“This budget is bad for patients, bad for innovation, and bad for the economy,” PhRMA Senior Vice President Matthew Bennett said in a statement.

The industry group said Obama’s proposals would threaten critical research and innovation, as well as the high-paying jobs that research supports.

“President Obama has pressed for innovation and biomedical research, job creation, and controlling health care costs and yet his 2014 budget includes stale, previously rejected proposals that would undercut all of these efforts,” PhRMA said.

More mixed reviews: Abortion-rights supporters were of two opinions on the budget. On the one hand, Obama would allow Medicaid coverage for abortion in the District of Columbia, and would give Peace Corps volunteers limited abortion coverage in line with what’s available to women servicemembers. But the plan still contains the Hyde Amendment, banning Medicaid coverage for abortion in most circumstances.

“Women deserve comprehensive health insurance that covers all their pregnancy related needs, including abortion care,” said Nancy Northup, president and CEO of the Center for Reproductive Rights, in a statement.

“By retaining the Hyde Amendment, women who depend on federal programs for their health care will continue to be subject to a cruel and discriminatory policy that keeps them from exercising their constitutionally-protected right to abortion. This unjust restriction on women’s reproductive health care must end.”

Abortion-rights opponents counter that taxpayer dollars should not fund abortion coverage. They criticized Obama’s budget Wednesday for, among other concerns, directing funds away from an abstinence education program.

Double trouble: Advocates are urging the Obama administration to clarify a policy they fear will confront chronically ill patients with out-of-pocket healthcare costs of up to $12,000 next year. The National Health Council is circulating a letter challenging the Department of Labor to modify a policy that could allow certain health plans with multiple service providers to apply the Affordable Care Act’s out-of-pocket spending cap to each provider, rather than cumulatively, in 2014.

In practice, this means that someone with individual coverage could be twice charged the law’s out-of-pocket limit if separate service providers handle their medical and drug benefits.

“Permitting these plans to have a total annual out-of-pocket limit that is twice the amount of other plans subject to this requirement is contrary to the ACA,” the groups wrote. “Separate limits should not be developed in a way that discriminates against patients with high costs within a particular benefit.”

The letter had more than 50 groups as co-signers on Wednesday.

Thursday’s agenda

America’s Health Insurance Plans President Karen Ignagni, Families USA Executive Director Ron Pollack and other leaders will unveil policy recommendations for transforming the U.S. healthcare system at the National Press Club.

The Senate Health, Education, Labor and Pensions Committee will hold a hearing on the Affordable Care Act — its implementation and consumer protections.

The House Energy and Commerce subcommittee on Health will hold a hearing on Medicare’s benefit design.

The House Oversight subcommittee on the Federal Workforce will hold a hearing on the Federal Employee’s Health Benefits Program.

Nine health workers will be honored with REAL Awards in a ceremony on Capitol Hill. The event will featured Sen. Lindsey Graham (R-S.C.) and Ambassador Jimmy Kolker, principal deputy assistant secretary for global affairs at the Department of Health and Human Services.

State by state

North Dakota AG seeks war chest to defend abortion law

Colorado’s pitch to business: Healthy, lean workers cost less

Kasich ‘profoundly disagrees‘ with House on Medicaid expansion

Reading list

SGR fix may be coming soon, senator says [free registration required]

The White House wants to reverse $500 million in Medicaid cuts

FDA requests budget increase to implement food safety law

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