Friday, January 20, 2017

Betsy McCaughey, mother of the death panel myth, is gaslighting the ACA again

Betsy McCaughey, chief gaslighter of the Clinton health reform plan in 1993, and originator of the groundless charges in 2009 that blossomed into Sarah Palin's viral lie that the ACA was creating death panels, is out with fresh nonsense about the current individual market for health insurance and how Republicans might improve it.

In a Wall Street Journal op-ed, McCaughey claims that high risk pools could easily and effectively protect those with pre-existing conditions and so safely return the individual market to medical underwriting -- that is, basing health insurance pricing and availability on the health of each applicant.

McCaughey's claim that only about 500,000 Americans would be "in jeopardy" if ACA protections for those with pre-existing conditions were repealed is off by a probable factor of 10. Her argument in favor of high risk pools as a panacea is false in every particular.

To get to 500,000, McCaughey cites a 2010 report issued by Henry Waxman and Bart Stupak, then-chairs of the House Energy and Commerce Committee, finding that the four largest health insurers denied some 257,000 people coverage in 2009 on the basis of pre-existing conditions. She suggests that that was the total number of denials in that year, then adds in 70,000 reported by the four insurers to have been denied coverage for specific claims on the basis of "riders" excluding coverage for their pre-existing conditions, and 225,000 covered by pre-ACA high risk pools, to get her estimate.

That estimate is ridiculous on its face. The Waxman-Stupak report spells out explicitly that the four insurers provided data representing only a slice of the market -- somewhere between 10 and 30%, most likely.* The key finding was that 15.3% of applicants were denied coverage by medical underwriting. The report further cites an internal insurance company document to suggest that about one third of applicants were effectively shut out of the market, as many were discouraged from applying by brokers, or past experience.

Those percentages suggest a large number of people shut out of the market.  The Kaiser Family Foundation estimates* 2010 individual market enrollment at 10.7 million (with small variation in years following, and so probably in 2009 as well). That suggests approximately 2.3 million outright denials that year (15.3% of 13 million), and a total of 5.4 million effectively shut out of the individual market (33% of 16 million).

McCaughey also cites the Waxman-Stupak finding that 70,000 enrollees covered by the study were subject to "riders" that excluded coverage for their pre-existing conditions." She adds that to her simple total of people who would be affected by medical underwriting. But that number too is likely off by a factor of nearly ten.

What about today? Just this past December, the Kaiser Family Foundation, whose findings McCaughey cites selectively throughout the article, published a study finding that 27% of U.S. adults under age 65, conservatively estimated, has a "declinable pre-existing condition" that would likely have left them uninsurable in the pre-ACA market in nearly all states. At present, according to various estimates, 18-20 million Americans are enrolled in the individual market, inside and outside the ACA marketplace. Marketplace enrollees, as has been widely reported, are less healthy on average than enrollees in employer-sponsored health insurance. Kaiser's estimates therefore suggest that upwards of 6 million current enrollees would be uninsurable under pre-ACA conditions. The same is doubtless true of at least a quarter of the 27 million currently uninsured, though at least half of them find coverage unaffordable for other reasons.

Finally, McCaughey uses sleight-of-hand to imply that Alaska implemented a high risk pool in 2016, magically stabilizing its market in the process. It didn't. Alaska allocated $55 million in state funds to implement a reinsurance program that replaced the federal ACA reinsurance program that expired after 2016, a major contributing factor to this year's premium hikes. That move has likely been effective, as the federal reinsurance program reduced premiums by 10 to 15%  in 2014, when it was going full blast. But reinsurance doesn't isolate those with likely high medical costs in a pool of their own -- they get insurance on the same terms as everyone else. And Republicans of course excoriated the reinsurance program as a "bailout" for the insurance companies -- notwithstanding that they themselves implemented a permanent one for the Medicare Part D program in 2003.

In any case, Alaska's relatively modest premium hikes in 2017 are largely due to the state having already had the highest premiums in the country. Most states that suffered dramatic spikes this year had premiums well below the national average.

McCaughey has been gaslighting like this for a quarter century. Republicans lap up her lies and make them party lore. That's pretty much how we got to Trump.

Update (next post, 1/23/17): In the pre-ACA individual market, more than half of those who needed insurance were either denied coverage, discouraged from applying, offered insurance that excluded coverage for their pre-existing condition, or offered coverage at above-market rates

----

* Just what percentage of the market the data in the Waxman report represents is elusive. The report spells out  that the four insurers who supplied information covered 2.8 million enrollees in 2009, but that one of them only supplied information from a subsidiary accounting for 32% of its enrollees. Based on this market share estimate from Farrah Associates, I'm guessing it was Wellpoint:

Individual Major Medical
Market Share
2009
Covered Lives
Percent
Change
Parent
2009
2008
WellPoint
21.4%
2,132,558
2,284,259
-7%
HCSC
7.9%
786,254
669,403
17%
Aetna
4.5%
450,823
250,212
80%
BCBS of FL
3.7%
370,675
357,543
4%
Humana
3.7%
368,247
326,590
13%
Total Top Five Companies
41%
4,108,557
3,888,007
6%
Source: MFA's Individual Market Date



Perhaps other participating insurers did not provide data on all their individual market business.

The Waxman report also cites an older Kaiser estimate to the effect that there were 15.7 million enrollees in the individual market in 2009 -- a figure more than two thirds higher than the later Kaiser estimate for 2010 I cited above. The estimates changed, according to Kaiser's Cynthia Cox, because "administrative data we use to measure the size of the nongroup market did not become available until 2010 (with passage of the ACA). Prior estimates of nongroup size rely on survey data that general put the size of the nongroup market at much higher numbers than admin data would suggest. We have an explainer here."  In any case, what matters, again, is the percentage of applicants declined or discouraged, and the Waxman estimates on that front are in line with others. Kaiser's recent report referenced above estimates denials at 18%. A 2009 survey by the America's Health Insurance Plans (AHIP) pegged the percentage at 12.7%.

3 comments:

  1. Ignore for the moment the number of people who are expensive and would qualify for the high risk pool. Just look at the ratio of the funding for the high risk pool versus the total premiums paid by all subscribers. Ryan's promising $2.5 billion for the high risk pools. A reasonable guess for the total premiums paid by all in private insurance is on the order of $100 billion. If you subsidize them with a subsidy of $2.5 billion, you're only lowering average premiums by 2.5%. Doesn't matter whether you put high-risk people in one pool and everybody else in the other or whether you stick them all together, you're still only lowering premiums by 2.5%. So either nobody gets much of a premium break, or you jack up premiums enormously on the high risk group to lower premiums for everyone else.

    Putting people in high risk pools doesn't make their health care costs any cheaper.

    ReplyDelete
  2. You are correct that McGauphey is very devious, but actually I saw a ray of hope in her article. She did state that it might take $32 billion to cover high risk persons. That is better than Tom Price or Paul Ryan, who apparently intend to leave high risk persons to the not so tender mercies of each state.

    The Republicans have one half an argument. The fastest and surest way to bring lower insurance premiums to 75% of people is to bring back medical underwriting. You do get into the greatest good for the greatest number here. The challenge is, how to you get the 'winners' who are preferred risks to pay some tax money to help out the losers.

    ReplyDelete
  3. Let me expand on my short argument yesterday.

    Assume that before the ACA, a healthy 40 year old paid $150 a month for decent health insurance, and a sick 40 year old (5-10 per cent of the group).

    Then we get guaranteed issue and community rating in the ACA, and both persons above must pay $450 a month in most states, and so need subsidies.

    Wasn't there a way to leave the healthy guy alone and give subsidies to the sick guy? Now maybe the taxpayers would not have approved such subsidies, so a universal guaranteed issue plan was the only way to go. Comments welcome.

    Even a broken clock is right twice a day, in terms of underwriting.

    ReplyDelete

Share