Unsustainable Federal Health Spending, OTC Hearing Aids, and CDC Problems

While today’s newsletter starts with a somber look at the tremendous cost growth of Medicaid and Obamacare, there is some positive policy news: Patients will finally have access to over-the-counter hearing aids in a few months. Also of importance, the Centers for Disease Control and Prevention has finally issued a mea culpa for its problematic COVID response. 

Explosion of Medicaid and Obamacare Spending
 
On Friday, Health Affairs published a piece from me, which analyzed a recent health insurance subsidy report from the Congressional Budget Office and the Joint Committee on Taxation for the under-65 population. CBO and JCT project federal subsidies will total nearly $12 trillion over the next decade for this population—several hundred billion dollars above the amount they projected last year. This also does not include the increased spending associated with the expanded Obamacare subsidies from the Inflation Reduction Act. 
 
Typically, there are only small changes from one report to the next, but that is not the case with this year’s report. Medicaid enrollment and spending is much higher than was expected last year, as is Obamacare spending. Obamacare spending—accounting for the Medicaid expansion, health insurance subsidies, and Basic Health Program—is projected to exceed $200 billion this year. Some highlights:

  • “Actual Medicaid enrollment in 2021 for people below the age of 65 was 71.6 million people, 12 percent and nearly 8 million people above the 64 million figure CBO estimated in July 2021. More than one in four Americans is now enrolled in Medicaid.”
  • “[N]early 13 million Medicaid enrollees under the age of 65—or close to 20 percent of all enrollees—are only eligible for the program because the Biden administration has extended the COVID public health emergency far past the time of an actual public health emergency.” 
  • CBO projects that 19 million people have multiple sources of coverage in 2022, generally dual enrollment in Medicaid and an employer plan. This problem is driven by the continuation of the public health emergency, which precludes states from removing ineligible Medicaid enrollees. 
  • “Only 4.5 million people who are lawfully present in the United States lack health insurance and are not eligible for Medicaid, [subsidies] to buy an exchange plan, or employer-sponsored insurance.” This equals 1.7% of the under-65 population. 

It is particularly noteworthy that CBO projects no population growth among Americans under the age of 65 over the next decade. Population growth driven entirely by the elderly will accelerate the fiscal ruin of our entitlement programs, which generally transfer funds from workers to the elderly, without meaningful and timely reforms.  
 
I make several recommendations for Congress, including:

  • Accept the reality that government health care programs are unsustainable and threaten economic productivity and our standard of living.
  • Conduct vigilant oversight of Medicaid and the estimated $100 billion in annual improper payments. This includes requiring the Government Accountability Office and the Office of Inspector General at Health and Human Services to take appropriate actions.
  • Immediately permit states to remove ineligible Medicaid enrollees, while ending enhanced pandemic-era federal Medicaid payments going to states, and penalize states that fail to do eligibility reviews and that have high improper payment rates. 

 Three Cheers for OTC Hearing Aids
 
This past week, the Food and Drug Administration took the commonsense step to allow patients to buy hearing aids over the counter, meaning without a prescription. This action should help millions of Americans with hearing loss by reducing the cost, including wait times, of getting the assistance that they need. It should also spur competition among hearing aid manufacturers and distributors to better meet patient needs. 
 
Paragon’s senior policy analyst Drew Keyes and I co-authored a blog in Forbes on this positive action and gave President Biden some credit. Only after Biden issued an executive order did the FDA finally promulgate a rule required by legislation that President Trump signed in 2017. 
 
Millions of Americans will likely benefit from this action because they will no longer need to see an audiologist for a hearing aid prescription. As we write, “far too many Americans facing hearing loss simply cannot afford both the specialist visits, which can also involve taking time off work, and then the device. These burdens are especially acute for people in rural areas who may not have access to a local audiologist.”
 
Patients will also benefit from lower prices and more product options to meet their needs. We explain: “[b]y reducing the regulatory hurdles hearing aid manufacturers face to get their products to patients, the rule will make way for a more competitive market. With more companies competing in the space, and the products readily available to the general public, the variety of products will increase and prices will decline.”
 
We conclude our Forbes piece with a recommendation that the Biden administration and Congress build upon this deregulation, such as by allowing patients greater access to OTC drugs and the freedom to obtain eyeglasses and contact lenses without a prescription. 
 
Zinberg on Fox Business News
 
Dr. Joel Zinberg, who directs Paragon’s Public Health and American Well-being Initiative, was on Mornings with Maria on Thursday August 19 to discuss the problematic Inflation Reduction Act. When asked about the CDC’s admission that it “failed to meet expectations” in its response to COVID, Joel answered:
 
“It’s nice that Dr. Walensky has finally caught up with the rest of the country in knowing that the CDC needs to change its focus.”
 
Joel explained that the CDC had strayed from its “original purpose.”
 
“They’re talking about social justice, they’re talking about environmental issues. They’re talking about everything but their base, core mission.”
 
He continued: “At the outset of the pandemic, they issued a defective test in February of 2020 that meant that no one could be tested in this country. They’ve been way behind the curve on masks, issuing guidelines that everyone knew were ridiculous and misleading, leading to kids being masked in schools for longer than they needed to be.”
 
The admission of serious problems is a good first step. But whether there will be meaningful changes at the CDC is yet to be seen, and many initial changes look more consistent with big government bureaucracy than with sound science.  
 
In closing, I hope that you are enjoying some August recess with a time to relax and recharge. Next month, I look forward to providing some exciting information about additions to our policy team.
 

All the best,
 
Brian Blase
President
Paragon Health Institute

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