Tuesday, July 16, 2019

Gold plans are pretty cheap in Florida's ACA marketplace. They should be way cheaper

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Florida's ACA marketplace has benefitted from silver loading. But not as much as it should.

("Silver loading" refers to the pricing of Cost Sharing Reduction subsidies into silver plans only, creating discounts in bronze and gold plans. The practice began in 2018 after Trump cut off direct reimbursement to insurers for CSR. See note at bottom for a fuller explanation.)

Florida has more marketplace enrollees than any state -- and has marginally increased enrollment since 2016 (up 2%) while enrollment has dropped 10% nationally and 14% in the 39 states on the federal exchange, HealthCare.gov. There are several reasons for that:

Monday, July 15, 2019

Biden Plan: An ACA 2.0/Medicare for America hybrid

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Joe Biden released a healthcare reform plan outline today. It looks like a cross between the Medicare for America bill, which would create a strong national public option, and various "ACA 2.0" bills, which would bolster ACA premium subsidies and reduce enrollees' out-of-pocket costs.

In brief, here are the core features of these antecedents:
  • ACA 2.0 bills and plans, including Elizabeth Warren's, are generally variants on an ACA enhancement plan published in August 2015 by Urban Institute scholars Linda Blumberg and John Holahan.  The core is simply to increase ACA premium subsidies and extend them to more people. Blumberg and Holahan proposed raising the ACA benchmark, against which subsidies are calculated, from "silver" to "gold" - -that is, from an actuarial value of 70% (paying that percentage of the average user's annual medical costs) to 80%. They further proposed raising AV higher than that income levels up to 300% FPL, improving the ACA's Cost Sharing Reduction subsidies at lower income levels; reducing the percentage of income paid for the benchmark at every income level; and capping premiums as a percentage of income at 8.5% for anyone at any income level who lacks access to employer insurance or other insurance -- removing the ACA's 400% FPL income cap on subsidies. At bottom, I've posted Blumberg and Holahan's proposed premium and AV schedule.

  • The Medicare for America Act of 2019 would create a revamped Medicare available to people at all income levels, paying Medicare rates (adjusted modestly) to providers, and costing no one more than 8% of income. All Americans would be eligible for income-based premium subsidies, even if their employers offer affordable coverage. The plan would be free -- with no cost-sharing -- to people with incomes below 200% of the Federal Poverty Level (FPL). Newborns would be auto-enrolled. Employers could "buy in" by paying a payroll tax, or continue to offer coverage. Existing Medicare and Medicaid would be integrated into the new program, which would include long-term care insurance. Medicare would negotiate drug prices, and a price review board would be empowered to crack down on price gouging.
Ambiguity on key points

Biden's plan would establish "a public health insurance option like Medicare" that, "like Medicare...will reduce costs for patients by negotiating lower prices from hospitals and other health care providers."  Note that it's not entirely clear whether this option will simply adopt Medicare prices or negotiate separately -- in fact, the language implies the latter. The plan will be available to anyone, including those with access to employer insurance -- but here too the language is ambiguous; it's not clear whether those with access to employer insurance would be eligible for subsidies.

Wednesday, July 10, 2019

Sweeney's amendment to ACA exchange bill: Moar Medicaid enrollment integration?

Some clarification about what New Jersey state Senate president Stephen Sweeney was seeking when he held up passage of the bill to create a state ACA exchange -- other than leverage in bigger battles with Gov. Phil Murphy. 

After threatening not to allow a floor vote on the bill, Sweeney relented at the last minute after negotiating an amendment concerning integration of Medicaid processing in the platform. If the bill had not passed by the end of the legislative session, there would not have been time to meet federal requirements to get the exchange up and running in the fall of 2020 for enrollment in 2021.

Sweeney's amendment changed the language concerning Medicaid integration, directing the state to pursue federal funding for the integration. The text to be replaced is in brackets.

Friday, July 05, 2019

Mining the silver lode (or not): A tale of two blue states

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I have argued in recent posts that
  1. State insurance regulators should take the advice of actuaries Greg Fann and Daniel Cruz and force the silver loading spring -- that is, pretty much mandate that insurers price on-exchange gold plans below or at least only slightly above on-exchange silver plans. Fann and Cruz recommend that regulators require insurers to price silver plans more or less as if their actuarial value is 87% or higher, as it is for enrollees with incomes up to 200% FPL. If they do so, no one at incomes above 200% FPL will buy silver, so the AV estimate will become a self-fulfilling prophecy. (See note at bottom for a brief explanation of silver loading, which began in 2018.)

  2. New Jersey enrollment has suffered since 2017 from a lack of discounts in bronze and gold plans that silver loading has produced in many other states. 
States that have refused to expand Medicaid have a built-in silver loading advantage. Since eligibility for marketplace subsidies in nonexpansion states begins at 100% FPL rather than the 139% FPL threshold in expansion states,  the nonexpansion states have a high concentration of silver plan enrollees who obtain the highest level of CSR, which raises the actuarial value of a silver plan 94%.  Still, some expansion states have enjoyed pronounced silver loading effects, while others have seen almost none.

Below, I contrast the experience of two expansion states, New Jersey and California. All enrollment figures are derived from the 2019 state-level Public Use Files published by CMS, unless otherwise noted.  I am going to indulge in a bit of shorthand in this post and neglect to provide definitions and back story, excepting the note on silver loading at bottom.

Monday, July 01, 2019

Turning Washington's public option to gold

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Washington state legislators made ACA history last month by passing the first state-based "public option," to be sold in the state ACA marketplace. An unkind reaction reaction, partly prompted by the main actors' own assessments, would be that the creators labored mightily to produce a mouse.

In an early version, the bill to create the public option stipulated that the program would pay healthcare providers at Medicare rates. As the bill neared passage, the payment rate jumped to 150% Medicare -- and then, at passage, to 160%. David Frockt, the bill's sponsor in the state Senate, claimed that providers would not participate at lower rates, particularly in rural areas, where the state has had a hard time attracting insurers into the exchange.* Frockt later told Sarah Kliff that the bill would not have passed without the rate bump.

State officials estimate that the plan will reduce individual market premiums by a modest 5-10%. That's a boon to unsubsidized enrollees -- with no guarantee of any pricing benefit to subsidized enrollees, who pay a fixed percentage of income for the benchmark (second cheapest) silver plan in their area. In fact, lower base premiums sometimes reduce affordable options for subsidized enrollees as lower premiums tend to reduce price spreads between the benchmark, which determines subsidy size, and cheaper plans.

Perhaps the public option's chief benefit is the guarantee that at least one insurer, paying not-exorbitant rates to providers, will operate in rural areas ( though the bill also empowers the state exchange to pay higher rates in areas where they can't attract sufficient providers). That's not nothing, but it's not exactly a game changer [though per update at bottom, 14 of 39 counties in 2019 had just one insurer, and some have no bronze plans]. The state exchange also will design the plans with an eye to reducing deductibles and offer some services not subject to the deductible, presumably favoring those that meet a stated goal of encouraging "choice based on value." A plan designed with the intent to maximize benefit to enrollees is good -- but there's just so many ways to slice the actuarial value  mandated for each metal level by the ACA. And the state will not administer the plans -- it will engage private insurers to do so.

Some regulatory alchemy is needed

There is a way, however, that the plan's administrators (which include the state exchange, the insurance commissioner, and the state Health Care Authority), could  increase the value of the public option to enrollees at the upper income levels of  subsidy eligibility. They could require  that gold plans be priced more cheaply than silver plans. They should be, because Washington's silver plan enrollees, taken together, obtain a slightly higher actuarial value than do gold plan enrollees -- and that value difference will expand if the plans are priced appropriately. (Actuarial value is the percentage of the average enrollee's costs a plan is designed to cover, computed according to a federally mandated formula.)

Friday, June 28, 2019

New Jersey Senate passes bill to establish state-based ACA exchange: What was the holdup about?

Updated in 7/10/19 post: the question was how much Medicaid integration to seek, and when.

After an alarming delay,  the New Jersey Senate passed a bill late yesterday afternoon to create a state-based exchange. State Senate President/boss Stephen Sweeney had held the bill (S3807/A5499) up, and if it had not passed by the end of this month, when the legislative session ends, it would likely not have been possible to get the exchange up and running in time for Open Enrollment 2021, i.e. by November 1, 2020 (which may prove difficult in any case).

The state exchange is Gov. Murphy's initiative, and Sweeney may just have been holding it as a pawn in their death match over the state budget. But Sweeney claimed to have a substantive point that he needed fixed, and he appears to have got what he said he wanted -- though why anyone would object, I don't know.  Here is a statement he put out yesterday:
“We are in the process of amending the legislation creating the state health care exchange to include Medicaid eligibility. This is a significant improvement that will provide a single front door access point for enrollees and a single eligibility process for health insurance coverage.

Thursday, June 27, 2019

Elizabeth Warren is faking it on healthcare, part 2

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I was deeply disappointment by Elizabeth Warren's response to a question about Medicare for All in last night's debate. In brief, she went all in for Bernie's bill and Bernie's short path.

Charles Gaba usefully contrasts Warren's response last night to her response to a  question from a union member worried about losing good private insurance in a March Town Hall. There, Warren expressed openness to an incremental path either to Medicare for all (lower case "all," given the multiple paths she name-checked) or to universal coverage with a role for private insurance preserved (temporarily or permanently).

I don't think it's wise for Warren to leave herself no wiggle room to pursue health reform short of Medicare for All.  Last night she didn't:
There are a lot of politicians who say, oh, it's just not possible, we just can't do it, have a lot of political reasons for this. What they're really telling you is they just won't fight for it. Well, health care is a basic human right, and I will fight for basic human rights...
Fight, yes, but pick your battles and their pacing. If Warren fights all-out for Medicare for All -- Bernie's bill, which eliminates all other forms of insurance within four years and would require at least a doubling of federal revenue -- what happens to all those other plans she's got? Is she going to "fight for" universal childcare and free public college and near-total student loan forgiveness and a wealth tax and a sweeping new corporate charter -- all while making an industry that accounts for 1/6 of the country's economy in one fell swoop? And all with a razor-thin Senate majority -- if she's lucky.

Warren is doubtless aware of the extent to a drive to remake healthcare would absorb all political capital -- hence her earlier touting of multiple paths to universal coverage. I doubt Warren would disagree with this well informed liberal realist:

Promising to fight for M4A might be tactically justifiable in a Democratic primary -- particularly for someone promising to fight moneyed special interests on all fronts and fighting Bernie Sanders for the left-end vote. But as in the past, Warren's diagnosis of what's wrong with U.S. healthcare is one-dimensional -- and disingenuous.
WARREN: So, yes. I'm with Bernie on Medicare for all. And let me tell you why. I spent a big chunk of my life studying why families go broke. And one of the number-one reasons is the cost of health care, medical bills. And that's not just for people who don't have insurance. It's for people who have insurance.

Look at the business model of an insurance company. It's to bring in as many dollars as they can in premiums and to pay out as few dollars as possible for your health care. That leaves families with rising premiums, rising copays, and fighting with insurance companies to try to get the health care that their doctors say that they and their children need. Medicare for all solves that problem.
She added in a later interjection:
...the insurance companies last year alone sucked $23 billion in profits out of the health care system, $23 billion. And that doesn't count the money that was paid to executives, the money that was spent lobbying Washington. We have a giant industry that wants our health care system to stay the way it is, because it's not working for families, but it's sure as heck working for them. It’s time for us to make families come first
$23 billion! American payers (federal and state government, employers, individuals) spend $3.5 trillion per year on healthcare. Insurers are certainly part of the systemic problem -- but mainly because they pay too much to providers in our divide-and-conquer payer system.  Medicare for All is as much anathema to hospitals and doctors as it is to insurers, as it would radically cut their payments rates. Warren knows this, but she never mentions providers' role in making healthcare ruinously expensive and a source of constant financial threat in Americans' lives.  As I noted after hearing Warren speak about healthcare in January 2018:
...she also presented the unaffordability of healthcare in the U.S., and the huge out-of-pocket costs that many insured Americans face, as purely a product of insurance industry rapine. Not a word about pricing-gouging by hospitals and doctors; the fine science of upcoding; the loopholes allowing self-dealing; the privileging of expensive procedures; the outsourcing to hedge fund- and private equity-backed price maximizers; the predatory balance billing. Providers got a total pass. I sentence Senator Warren to read Elisabeth Rosenthal's An American Sickness, which meticulously documents all these cost inflators and their evolution
I am a Warren admirer. I have heard her deliver her capsule diagnosis of American economic and social woes -- we sold our birthright for a mass of Reaganite pottage -- and I think all her many plans are designed (many if not all well-designed)  to undo galloping oligarchy. But on her policy piano, healthcare gets her left hand.

Warren is willing to take on banks and the tech giants -- and health insurers -- but healthcare providers are spared from her rhetorical fire. That won't make them any the less anxious to defeat her if she remains all-in on Medicare for All.

Saturday, June 22, 2019

Did the Trump administration just open a back door to to a massive "Medicare" buy-in?

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The Trump administration has potentially shaken up American health insurance markets by finalizing a new rule allowing employers of all sizes to fund employees' health insurance premiums in the individual market in lieu of offering them access to an employee-sponsored group health plans. They can do this by funding Health Reimbursement Arrangements (HRAs), currently used for medical expenses excluding premiums for individual market plans, to fund individual market premiums to any level they choose -- e.g., to roughly the percentage of premiums they currently contribute to group health plans.

Many healthcare scholars and stakeholders worry that the alternative will be particularly attractive to employers with older, sicker employees, or that large employers will find ways to send sicker employees to the individual market. As a defense against that, the rule stipulates that a given employee group (sliced various ways, e.g., part-time vs. full time) can't be offered a choice between a group health plan and the individual market -- the employer must offer either/or. The rule also suggests (pdf pg 9) that the narrow provider networks prevalent in the individual market would be more attractive to healthier than to sicker populations -- and presumably, such preferences would influence the choices employers offer.

The administration forecasts that over ten years, about 11 million people will access HRAs to enroll in individual market coverage, while the number of people covered in employer-sponsored plans will drop by about 7 million (current ESI enrollment is about 150 million). The impact on the individual market would be major, but on the employer group health market, relatively modest.

But the HRA rule potentially cracks the door for a future Democratic Congress and president to vastly expand access to public insurance within the current Affordable Care Act structure. Suppose the next Congress, enabled by a Democratic president, injects into the ACA marketplace a national public option, paying Medicare rates to providers or some adjusted version of them, and requiring providers who accept Medicare to accept the public option?

Wednesday, June 19, 2019

Voters understand Medicare-for-all better than Bernie does

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I would think long and hard about contradicting Larry Levitt (of the Kaiser Family Foundation) and Jonathan Cohn (of HuffPost) together on anything but semantic grounds.  But on semantic grounds...I don't think their framing of the results of a Kaiser poll voters' understanding of "Medicare-for-all" is quite right.

Kaiser asked some 1200 voters what the healthcare system would look like "under a national health plan, sometimes called Medicare-for-all." Majorities, varying moderately by partisan affiliation, assumed:
  • Taxes for most people would increase 
  • People would continue to pay premiums, deductibles and copays for medical services
  • People with private insurance would be able to keep their plans
  • Private health insurance companies would not be the primary way Americans can get health coverage*
  • All U.S. residents would have health insurance coverage
On Twitter, Larry Levitt alluded to "how confused the public is about Medicare-for-all based on our new poll." Jonathan Cohn, who wrote about the results, tweeted, "Voters like Medicare for All, but there's a catch: They don't understand what it'd do."

I don't think the survey respondents and focus group participants were collectively confused, though they're not informed about current bill specifics. I think they're realistic about the furthest likely extent of next-gen Democratic healthcare reform. Their responses lack coherence only to the extent that "Medicare-for-all" can't be understood to encompass "Medicare access for all," particular in the refracted context of a "a national health plan, sometimes called Medicare-for-all."

Tuesday, June 18, 2019

New Jersey off-exchange enrollment rose in 2019: Did cheap off-exchange silver help?

Good news for New Jersey's individual market for health insurance: while on-exchange enrollment, announced late last December, was down a disappointing 7%, those losses were partly offset (as some observers had hoped) by off-exchange enrollment gains announced today:

Total Covered Lives Comparison
Why was enrollment down on-exchange, and up off-ex?  In brief: the state's swift action in 2018 to stand up a reinsurance program and pass a state individual mandate resulted in an average premium decrease of 9%, That drop did not help the large majority of on-exchange enrollees who obtained premium subsidies. As I explained last January:
base premiums affect only unsubsidized buyers, and in 2019 premiums in New Jersey were actually higher than in 2018 for most subsidized enrollees, as benchmark silver plan premiums, which determine subsidies dropped further than the average for all plans. For a 40 year-old with an income of $30k, the cheapest bronze plan cost 12-22% more in 2019 than in 2018 (varying by region) -- that is, $13-$25 more per month. Cheapest silver was also up slightly in most of the state
The drop did help unsubsidized enrollees, however. And as DOBI notes today, the unsubsidized had some motive to migrate off-exchange: