MedPAC’s Sweeping Agenda on Payment Reduction

John Wasik/Medicare NewsGroup

How Medicare pays providers is akin to a Russian Matryoshka doll in which progressively smaller dolls are nested within one large doll. If you can eliminate one or more of them—or reduce their size—the overall weight will be lower.

And so it goes with Medicare payments. In an effort to reduce overall payments, the Medicare Payment Advisory Commission (MedPAC), which is charged with advising Congress on how to improve the program, has suggested a number of new approaches.

While MedPAC’s 17-member panel hasn’t come to the conclusion that there’s a one-size-fits-all solution to reduce Medicare expenses, it has put some interesting proposals on the table that, if implemented by the Centers for Medicare and Medicare Services (CMS), promise to innovate the way in which providers get paid.

The latest MedPAC report contains some 435 pages, organized in 15 chapters. For policy wonks, it’s compelling reading and offers a template of things to come as Congress eyes reforming Medicare without the politically toxic alternatives of cutting benefits, raising taxes, or increasing the age of eligibility.

Kill the Sustainable Growth Rate

An independent body, MedPAC is also taking aim at some earlier reform measures such as repealing the sustainable growth rate (SGR), which sets a fixed amount of payment reductions for doctors. The SGR, universally despised by physicians and their powerful lobbies, has never been implemented.

MedPAC proposes repealing the SGR in Appendix B of this year’s report, and which endorses its 2011 position to Congress. What would replace the SGR? They suggest employing “legislated updates that would no longer be based on an expenditure-control formula.” In other words, Congress would no longer tell doctors how much they could charge, but instead would provide incentives for them to charge less. Instead of determining how much a treatment should cost, Congress would explore ways to ensure that doctors coordinate care for lower overall costs. This approach is less stick and more carrot.

Calling the SGR “fundamentally flawed,” MedPAC states that yearly stop-gap “fix” to the SGR—that is, delaying it—is “undermining the credibility of Medicare because they engender anger and uncertainty among physicians and other health-care professionals.”

MedPAC’s proposed payment updates, however, are complicated, in that they replace a flat percentage model with conversion factors tied to growth in services. An emphasis is made on access to “protected” primary care, which wouldn’t be subject to as many fee reductions as other services. Instead, these doctors would be hit with a 5.9 percent cut over the first three years. After that initial period, all payments would be frozen for the next seven years. That means, that on a per beneficiary basis, payments would rise only about 2.2 percent annually, from $64 billion in the first year to $121 billion in the last.

By scrapping the SGR, MedPAC hopes to offer a fairer payment model for doctors while ensuring that primary care remains accessible. One of the major complaints that doctors’ groups have is that the SGR, if enacted, actually would penalize primary care physicians, and thus would jeopardize health care access for beneficiaries. The threat of thousands of doctors refusing to accept Medicare patients because of payment issues constantly hung over the political debate.

While the SGR repeal only offers a small vessel of hope in the larger debate, it’s a step in the right direction in resolving the larger cost-shifting argument.

Getting Accurate Information

Another theme that MedPAC tackled is the question of how much time physicians spend on particular services. Many activities, such as administering flu shots, take minutes, while others, like consultations, take much longer. In Medicare parlance, MedPAC wants to get a better picture of Relative Value Units (RVUs), or the amount of work required to provide a service. MedPAC stated in its report that it doesn’t have “current, objective data” on RVUs.

The bottom line is that Medicare may not know how much doctors should be paid if they don’t have accurate information on the time spent on each service. Are some doctors overstating the time devoted to certain procedures? That may be the case, as illuminated by a recent piece in The New York Times on colonoscopy payments. According to the article, prices for the standard procedure vary widely: from $740 to $8,500.

Where is the Care Provided?

Where care is administered and who provides it also dominated the MedPAC report. Employing a raft of specialists in a hospital is the most expensive way to provide care. Is there a way to provide quality care outside of a large institution? MedPAC thinks so.

For example, take the cost of a standard echocardiogram. Medicare pays 140 percent more for this procedure in a hospital than in a free-standing doctor’s office. Is there any difference in the quality of service? Probably not, although hospital groups have increasingly hired doctors as employees so as to direct more services into their higher-priced facilities.

MedPAC identified 66 different treatments that could be provided at a lower cost in doctors’ offices. Medicare could save $1.5 billion annually by shifting these procedures from hospitals and surgical centers.

Hospital administrators oppose this idea, claming that it would force them to cut back services. According to another New York…

Medicare cuts continue as doctor slashes throats.

The nation’s lawmakers are at an impasse over the fiscal debt crisis, yet the majority of the House, 145 Republicans and 82 Democrats, are demanding a second delay in the implementation of a durable medical equipment Medicare cost-reduction initiative, scheduled to take effect July 1.

Excessive reimbursements for durable medical equipment, prosthetics, orthotics and supplies, or DMEPOS for short, have plagued Medicare for years. Now on the eve of meaningful spending cuts members of the House want a pass.

Medicare routinely pays more than double the current retail rate for DMEPOS equipment. Congress created the current DMEPOS reimbursement schedule in 1989, and then left it virtually unchanged, despite intervening cost reductions for dozens of the most costly product categories. Between 2000 and 2010, Medicare spent an estimated $69.4 billion on inflated DMEPOS reimbursement rates. DMEPOS fraud is rampant.

The straight-forward Medicare remedy is to force suppliers to compete on price. Numerous pilot programs have proven that competitive bidding will save taxpayers hundreds of millions of dollars each year with no harm to patient care. As authorized under the Affordable Care Act, competitive bidding in the DMEPOS marketplace is scheduled to begin July 1. The projected savings for taxpayers and Medicare beneficiaries over the next 10 years is $42.8 billion.

Apparently the hypocrisy in American politics has no bounds. The irony of the House-led stall is that the Democratic opposition voted on President Obama’s health care law and the GOP opponents are fighting against a free-market alternative.

Meanwhile, a Chicago hospital is accused of cutting throats for $160,000 from Medicare.

Based in part on surreptitious tape recordings, an FBI affidavit lays out allegations that a Sacred Heart pulmonologist kept patients too sedated to breathe on their own, then ordered unneeded tracheotomies for them — enabling the for-profit hospital to reap revenue of as much as $160,000 per case.

Sacred Heart hospital patients are not the only ones feeling the deep cuts. According to the Washington Post, on Friday a federal advisory panel said that Congress should move to cut payments to hospitals for services that can be provided in doctors’ offices at much lower costs.

The Medicare Payment Advisory Commission said the current payment disparities had created incentives for hospitals to buy physician practices, driving up costs for the Medicare program and for beneficiaries. Hospital buyouts of doctors, turning independent practitioners into hospital employees, have also led to higher spending by private insurers and higher co-payments for their policyholders, the commission said.

Ohio braces for Obamacare sticker shock with 88 percent rate hike.

The Ohio Department of Insurance announced their prediction that healthcare premiums will rise by 88 percent in 2014. The rate increase is a direct result of President Obama’s Patient Protection and Affordable Care Act (Obamacare).

The average cost of health insurance premiums for Ohio resident is expected to increase to $420 per person, “representing an increase of 88 percent” compared to 2013, the department reported.

A total of 14 companies filed proposed rates for 214 different plans to the Department. Projected costs from the companies for providing coverage for the required essential health benefits ranged from $282.51 to $577.40 for individual health insurance plans.

It is still to early to know if these rate increases will impact Medicare Advantage plans for Ohio seniors. Increasingly popular with Medicare beneficiaries, Medicare Advantage enrollment is up nearly 10 percent from 2012.

“We have warned of these increases,” said Lt. Gov. Mary Taylor, in a statement reported by Forbes. “Consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

Meanwhile, it seems Federal employees and lawmakers on both sides of the isle can’t abide being forced into the health care exchanges they created for the rest of us. According to a Politico report published today, Capitol Hill staffers are heading for the exits.

Leave it to President Obama to figure out the most clever way of all to get Federal employees to voluntarily leave their jobs. Kudos to you, Mr. President.

How Medicare Can Save Big Dollars on Drug Costs

by John F. Wasik/Medicare NewsGroup

Cutting drug prices paid by Medicare and beneficiaries is becoming the ultimate low-hanging fruit. There’s only one problem: the pharmaceutical industry hammered out a private deal with the White House to protect their interests when the Affordable Care Act was proposed.

Medicare Part D premiums have been flat in recent years but will increase by 13 percent from 2015 to 2016. For 2016, the average monthly premium across Part D plans (PDPs) is $41.46. PDPs are also increasingly placing high-cost drugs on specialty tiers within formularies, which require patients to pay as much as 33 percent of the cost of these medications.

Given these rising costs, a growing number of policymakers believe the government, through the Secretary of Health and Human Services (HHS), should be allowed to negotiate drug prices in Medicare Part D. Eighty-three percent of the public supports allowing the government to negotiate with drug companies for a better deal on Medicare drug prices. However, federal law currently prohibits the government from negotiating with the pharmaceutical industry to lower the cost of drugs purchased under Medicare Part D. Instead, PDPs are required to negotiate directly with pharmaceutical manufacturers to obtain rebates and other discounts on drugs.

Proponents of government negotiation argue that HHS—because of its significant purchasing power—can more effectively negotiate drug prices than individual Part D plans. Opponents argue that allowing the government to negotiate prices for Part D would inhibit innovation and limit beneficiary access to medications.

In order to advance the debate on the appropriate role, if any, for HHS in Medicare Part D pricing negotiations, it is essential to understand what it means for the government to “negotiate” drug prices.

Potential Scope Of Negotiations

Before HHS could negotiate drug prices in Medicare Part D, policymakers would first need to define the scope of the government’s authority by considering these questions:

  • Which drugs would HHS have the authority to negotiate?
  • Would HHS be able to negotiate both the price of drugs and formulary design?
  • Would the negotiated terms apply to all Part D plans?

Which Drugs Would Be Negotiated?

Policymakers could choose either to specify the scope of HHS’ negotiating authority or to leave it to HHS to determine which drugs to negotiate. For example, HHS could be given the authority to select a drug to enter into the negotiation process based on its total cost to Medicare and/or based on a year-over-year price increase in excess of a predetermined threshold

Another key factor could be whether a drug has therapeutically equivalent substitutes, including generic drugs or other branded medications that produce similar patient outcomes. Some evidence suggests that PDPs effectively negotiate lower drug prices for medications that have substitutes.

It can be more difficult for PDPs to negotiate lower prices for drugs that do not have substitutes, such as those that are either first-in-class or superior to drugs in an existing class. The lack of competition for these medications presents a price-negotiating challenge for PDPs, which may face pressure from patients to cover them and are limited by regulation from excluding drugs from coverage.

What Is Being Negotiated?

Another important consideration is whether HHS would negotiate solely the price of drugs or, instead, both the drug price and formulary placement. Giving HHS broader authority over formulary design, such as the ability to give drugs preferred status on a formulary (e.g. requiring a lower patient copay), could enhance its ability to obtain discounts from manufacturers.

Would HHS Negotiate For All PDPs?

Lastly, HHS would have to decide how to implement its negotiated prices. One option would be to set the negotiated price as a ceiling for all PDPs, which would then retain the ability to negotiate even lower prices with manufacturers.

Another option would be for HHS to create a new Medicare-sponsored Part D drug plan that would compete against private PDPs, as has been previously proposed. Drug prices for private PDPs would still be determined by each PDP’s negotiations with drug manufacturers. The opportunity for cost savings would depend on the government-sponsored plan’s ability to provide coverage more efficiently than private plans and whether there would be increased competition among PDPs with the addition of a new public option.

The Negotiation Process

A mechanism would also need to be created for negotiations to take place between HHS and drug manufacturers. Congress could, in theory, grant the Centers for Medicare & Medicaid Services (CMS) the authority to set the price of drugs or require manufacturers to give PDPs a certain discount on their medications. These approaches, however, would be different from a “true” negotiation between Medicare and drug companies, in which the two parties enter into a predefined process to reach a mutually beneficial outcome. One model for such a true negotiation process was proposed by economist Richard Frank before he became the HHS Assistant Secretary for Planning and Evaluation in 2014.

Frank proposed that the government and manufacturers be given a set period to negotiate a price. If they were unable to come to an agreement, the parties would enter into binding arbitration led by an independent arbitrator who, after considering the arguments of both sides, would choose between their best-and-final offers. An alternative model is tri-offer arbitration, in which the arbitrator selects a third price named by an independent expert.

With either model, Frank argues, the arbitrator would need additional “fact-finding” support from experts, such as the Congressional Budget Office (CBO), to help arrive at a decision based on the expected break-even price, the market size of a drug’s indication, research and development costs, and the incremental benefit of the drug relative to its cost.

Additional Details Needed

Under an arbitration model, policymakers would also need to select a pricing framework to guide arbitrators in their decision-making, including how different types of evidence and other considerations ought to inform conclusions on drug price. For example, an arbitrator could take into account evidence of clinical benefit and the impact of drug pricing on future pharmaceutical innovation. How the pricing framework incorporates such criteria would inform the negotiating positions of the government and drug manufacturers

Estimated Cost Savings Of HHS Price Negotiations

In 2007, CBO estimated that there would be a “negligible effect” from allowing HHS to negotiate Part D drug prices if there were a ban on a federally required formulary. So the government’s ability to pressure drug companies to lower their prices depends on the additional authority to establish formularies or take other regulatory action. To date, there is no CBO estimate on the effect of allowing HHS to negotiate both drug prices and formulary placement

Researchers have also concluded that the federal government could save $15.2 billion to $16 billion annually if it negotiated with drug manufacturers and achieved the same prices as those paid by Medicaid or the Veterans Health Administration (programs that receive mandatory rebates on drug prices). Other researchers have suggested that Medicare would save $541 billion over 10 years if prices were negotiated down to the levels paid for prescription drugs by consumers in Denmark.

However, these analyses assume that the prices obtained from negotiations would equal those obtained in other federal or state programs or by international payers. Without additional information on the scope of HHS’ negotiating authority, including which drugs are selected for negotiations and the extent to which HHS would be able to negotiate on both price and formulary placement, it is unclear whether similar cost savings could be achieved for Medicare Part D.

Next Steps

Any proposal advocating for an HHS role in Medicare Part D price negotiations must include details on the scope of the government’s authority as well as the mechanism for negotiating drug prices. Important considerations, such as what is being negotiated (e.g., prices and/or formulary placement) and what to do if the negotiating parties are unable to come to agreement, need to be specified. A pricing framework to guide an arbitrator in determining the price of drugs is also needed to facilitate the negotiation process and capture the relevant factors that would be considered in determining the appropriate price for a drug.

Former Journalist Gives Voice to End-of-Life Discussion

by Susan Pasternak/The Medicare NewsGroup

After Nadine Epstein’s mother passed away, a process fraught with family disagreements about her mother’s end-of-life care and burial, Epstein stumbled upon The Conversation Project, a not-for-profit organization dedicated to helping people express their wishes regarding death.

“With my mother, we all muddled through it rather painfully,” Epstein said. “It was very unclear what (my mother’s) wishes were. I happened to run across The Conversation Project right after this, and realized it would be incredible to have this conversation with my dad.”

The Conversation Project, based in Cambridge, Mass., hopes that its efforts will foster a culture that encourages and accepts as the norm family conversations about death and dying. While 70 percent of people say that they want to die at home, that same number actually ends up dying in hospitals, nursing homes or long-term care facilities, in part because their wishes were not articulated to their family members, according to Ellen Goodman, co-founder and director of The Conversation Project.

Right now we “have a conspiracy of silence,” Goodman said. “The project is an engagement campaign that aims to have everyone’s end-of-life wishes expressed and respected.”

The Conversation Project began in 2010 when Goodman and a group of colleagues, clergy and media and medical professionals gathered to share stories of “good deaths” and “bad deaths” within their own personal circles. Understanding the need for a cultural change, they developed a plan to create the grassroots campaign using both traditional and new media.

In September 2011, the organization collaborated with the Institute for Healthcare Improvement, a not-for-profit organization that helps lead improvement of health and health care throughout the world.

Utilizing traditional media, social networking and engagements with select communities, workplaces and places of worship, The Conversation Project hopes to “enable and energize groups to spread the conversation,” Goodman said.

The Conversation Project offers a “starter kit” for those who seek a way to more comfortably engage family members or loved ones on the difficult subjects of death and dying. The starter kit asks the participants to self-reflect and answer questions such as “What matters to me is (fill in the blank)” and ranking on a scale of one to five the statement “I want to live as long as possible, no matter what.”

The kit then offers icebreakers for introducing the subject and specific talking points that should be addressed during the conversation. The talking points address such issues as the circumstances that the person considers worse than death (i.e., the need for a breathing machine or feeding tube) versus the kinds of aggressive treatments that are desirable.

Having conversations about end-of-life issues has “helped me to provide patients with better care because it helps me understand who they are as individuals,” said Jennifer Obel, M.D., a medical oncologist with Illinois-based NorthShore University HealthSystem and a member of a task force that has created a guidebook for clinicians when having discussions with patients about end-of-life wishes. “And it helps their family members understand what they want. Most family members want to do what the patient wants, but because we don’t talk about end of life, we’re left not knowing.”

While Epstein’s father, a vivacious 92-year-old who still drives and is physically active, said he wants to leave it up to his children to determine his care, Epstein did learn through her conversation with him that he would like to donate his organs to science. Epstein’s 20-year-old son was also present during the conversation, and came up with his own “Harry Potter gauge” for when his mother faces her end of life.

“I said if there ever comes a point where I no longer want to read Harry Potter, or Lord of the Rings, or other fantasy novels, or you’re reading them to me and I can no longer understand them, then it might be a time when you can consider pulling the plug,” Epstein said. “We also agreed to revisit the topic as I get closer to being an older woman.”

While many end-of-life conversations in the public and political space focus on cost of care, The Conversation Project is solely focused on empowering people to have the dying experience they want.

“We don’t care what people choose,” Goodman said. “We just want them to express their wishes. (People) generally do choose less aggressive treatment, and their survivors are less depressed. But we’re not saying what their wishes should be. We’re saying ‘let’s listen’.”

Medicare Advantage Plans grow amid pay cuts by the Obama Administration

Although complaining about the proposed cuts to Medicare Advantage plans, more private insurance companies are entering the government health program to offer health services to seniors.

The healthcare insurance industry is in a tizzy over the Obama administration’s proposal to cut payments to Medicare Advantage plans in 2014, with reports claiming a cut by as much as 8 percent in payments will lead to higher premiums and less access to the plans. However, the numbers tell a different story.

Health insurer applications to the Medicare Advantage progam are up by as much as 50 percent.  The most recently available statistics from the Centers for Medicare & Medicaid Services (CMS) shows 48 Medicare Advantage applications for 2013, compared to 31 application for the 2012 plan year.

Application figures are based on the parent companies, not the actual health plans provided. In 2012, there were just over 3,500 Medicare Advantage plans available across the country. The 2013 plan year saw 200 additional health plans in the face of CMS weeding out low quality plans.

The growth in plans is being fueled by demand, as the number of seniors entering the private insurance market continues to grow.  Health plans are responding to the business opportunity from the growing population of aging baby boomers.

The industry sees the budget cuts as harmful to the growth of the Medicare Advantage business. “The proposed changes to Medicare Advantage payments are a crushing blow to the millions of seniors and people with disabilities who count on this critically important part of Medicare,” said Karen Ignagni, America’s Health Insurance Plans president and chief executive.

Still, industry observers believe that health insurers will more than make up the revenue lost from payment cuts on the sheer volume of seniors enrolling in Medicare Advantage plans.  With Medicare Advantage enrollment eclipsing 14 million this year, up from 12.8 million seniors in 2012, plans have volume on their side.

CMS is quick to point out that the Affordable Care Act includes incentives that reward Medicare Advantage plans with bonus payments when they achieve established quality benchmarks and ratings.

“The Medicare Advantage program is stronger thanks to the health care law, with estimated premiums down 10 percent and enrollment up 28 percent since the law was enacted,” a spokeswoman for the Centers for Medicare & Medicaid Services said. “We are reducing taxpayer-funded overpayments to insurance companies, and giving more incentives for them to provide quality care for seniors.”

Is Obama’s $500 million crackdown on Medicare fraud doomed to failure? (video)

Reason TV talks with the National Association of Medicaid Directors’ Matt Salo, former director of the Centers for Medicare and Medicaid Services, Thomas Scully, and Reason magazine’s Peter Suderman, who agree that despite recent headlines, there’s little reason to think that Medicare and Medicaid fraud will become a thing of the past.

In February, the Health and Human Services Department announced a record recovery of more than $4 billion. However, as much as three-quarters of this year’s recovery comes from the resolution of a lawsuit for fraud committed during the Clinton administration.

Through the Affordable Care Act and other stimulus monies, President Obama has committed a half-billion dollars to fight Medicare and Medicaid fraud. Strike forces and a computer system that’s modeled on technology used to detect credit card fraud are heralded as the solutions needed to stop the fraud. But, is it working?

Medicare fraud is thought to be the biggest scam in America. At a staggering $100 billion a year upper end estimate), Medicare fraud is bigger than the illegal drug business and makes the sum total of credit card fraud look like petty theft. The annual amount of Medicare fraud is more than the annual spending for health care under ObamaCare.

No fuss over Medicare cuts by sequester. Why not?

With the looming sequester hatchet ready to fall tomorrow, Medicare providers are among those that will take a two and a half percent reduction from the government.

Under normal circumstances, you’d be hearing a big fuss from the industry. Why are they so silent?

There are two reasons. First, the Obama Administration already announced its 2014 cuts to hospitals, doctors and private insurers for the Medicare Advantage program. The cuts amounted to a two percent reduction across the board.

Second, and more importantly, the budget cuts would likely be much worse if President Obama and Congress actually came to agreement on an overall deal to cut the federal deficit. That’s because the automatic cuts taking effect tomorrow only reduce Medicare spending by $100 billion or so over the next ten years.

A federal deficit reduction deal would likely cut the program to the bone.  Obama put $400 billion in health care cuts on the table prior to the election, mainly from Medicare. The Republicans wanted even more.  Remember the voucher plan?

What the Medicare industry is concerned about is a massive deficit deal that would hit the Medicare program for as much as $500 billion by reducing payments to providers and increasing Medicare premiums and co-payments.

The sequester cuts are a good deal for Medicare providers. Hear their silence.

Medicare Advantage, not fee-for-service, is the best way forward

Additional wholesale cuts to Medicare, such as the looming 2014 cuts to the Medicare Advantage program, have no political support and will backfire. Dramatic cuts in senior health care merely shift health care costs elsewhere. This was the consensus of a handful of senators and health care policy experts on Wednesday’s Senate hearing on the issue.

David Blumenthal, M.D., president of the Commonwealth Fund, suggests “Instead, the most effective way of reducing federal health care costs is moving across-the-board away from the current fee-for-service reimbursement system.” His opinion appeared to represent the consensus of those who testified at the hearing.

Fee-for-service reimbursement policies, he said, “encourages volume rather than value.”

Instead, Blumenthal says “put in place policies to reduce unnecessary utilization, increase care coordination and improve outcomes.”

Doing so, Blumenthal suggests, would align “incentives for providers, consumers and payers to reward choices that lead to better patient outcomes and use resources wisely.”

Blumenthal also opposes cutting Medicare spending in response to the country’s health care cost problems. He said, “Solutions to the larger health spending problem are not likely to be effective if pursued only in one part of the health care system rather than system-wide”.

For instance, “drastically cutting reimbursement rates in public programs could shift costs onto private payers and do little to solve the underlying problem,” Blumenthal explained.

Consistent with Blumenthal’s analysis, even the heavily criticized Medicare Advantage system, which is facing serious cuts in 2014, was supported.

The Chairman of the of Health Policy and Management Department at Emory University, Kenneth E. Thorpe, Ph.D, said that the experiences and research conducted through the Medicare Advantage program shows that prevention and care coordination play a key role in cost reduction and improving the quality of health care. Thorpe’s testimony took place at a hearing of the Special Committee on Aging on Strengthening Medicare for Today and the Future.

Meanwhile, Juliette Cubanski, Ph.D., associate director, the Program on Medicare Policy, at the Henry J. Kaiser Family Foundation, testified that “While Medicare faces long-term financial challenges, it is also important to remember that Medicare is a vital source of financial and health security for 50 million people today, and the vast majority of seniors say that Medicare is working well for them.

Cubanski said that recent polling by the Kaiser Foundation uncovered that “While policymakers weigh potential Medicare savings options to reduce the deficit, the public does not perceive a need for significant cuts.”

“In fact, 58 percent of Americans say they would not be willing to see any reductions to Medicare as part of deficit reduction discussions,” she said.

Cubanski said when asked about specific proposals to reduce Medicare spending in the context of deficit reduction, a majority of Americans support two proposals:

  1. Requiring drug companies to give the federal government a better deal on medications for low-income people on Medicare; and
  2. Requiring high-income seniors to pay higher Medicare premiums; these proposals were supported by 85 percent and 59 percent of Americans, respectively.

“Notably, the survey also shows that relatively few Americans (roughly 20 percent) are aware that wealthier Medicare beneficiaries already pay higher premiums for their Medicare coverage,” she testified.

Will ObamaCare cause franchise employment of seniors to increase?

A recent article by the Wall Street Journal, ObamaCare and the ’29ers’, explains how new mandates and regulations are beginning to reduce full-time employment and reshape hiring practices. As I read the WSJ piece I could not help but wonder if employers have thought about the millions of seniors shoved out of the workplace throughout this recession.

Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more “full-time equivalent workers” to offer health plans to employees who work more than 30 hours a week. (The law says “equivalent” because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don’t offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.

At age 65, seniors qualify for Medicare benefits. As a small business employee, the senior then becomes an immediate cost advantage over a younger person, because their health insurance requirements are already met.

Although the federal mandate for employers to offer health insurance to full-time employees doesn’t take effect until 2014, the measurement period used by the feds to identify a company’s full-time employee base started last month. The employment cutbacks are now underway.

If you’re a senior with Medicare and you’re trying to find employment, update your resume. Highlight that you offer an employment savings compared to younger workers. As a Medicare beneficiary, seniors can work full-time or part-time without an impact to a franchise owner. This is a big deal to the franchise industry. Here’s why:

A 2011 Hudson Institute study estimates that the ACA insurance mandate will cost the franchise industry $6.4 billion and put 3.2 million jobs “at risk.” The insurance mandate is so onerous for small firms that Stephen Caldeira, president of the International Franchise Association, predicts that “Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business.” The franchise association says the average fast-food restaurant has profits of only about $50,000 to $100,000 and a margin of about 3.5%.

Employment cuts won’t be limited to franchisees or restaurants. A 2012 survey of employers by the Mercer consulting firm found that 67% of retail and wholesale firms that don’t offer insurance coverage today “are more inclined to change their workforce strategy so that fewer employees meet that [30 hour a week] threshold.” Although hiring more seniors will not change the trend towards reducing employee hours to meet the 30 hour per week “part time employee” threshold, it eliminates the $2,000 annual penalty on the senior citizen worker.