Why inner city hospitals move to greener pastures

Kaiser Health News' Phil Galewitz has a story about inner city urban hospitals that are moving, or seeking to move, to greener pastures -- that is, into nearby suburbs:

By moving to wealthier areas, hospitals can reduce the percent of uninsured and lower-paying Medicaid patients, while increasing the proportion of privately insured patients—what hospitals refer to as attracting better “payer mix."

The "payer mix" concept reminds me of the old joke about economists. A research team made fifty people sit on blocks of ice and another fifty on radiators. On average, they were comfortable.

Hospitals serve people whose payers pay too much and others who pay too little. On average, if their administrators jigger things right (and their location allows, or can be changed), they're comfortable -- often very comfortable, nonprofit or no. The mix includes providing as many high margin procedures as possible -- "such as transplants, cardiac surgery, cancer treatments, and CT, MRI, and other imaging," as Ezekiel Emanuel summarizes in Reinventing American Healthcare (2014). But it also includes minimizing charity care and Medicaid and, to a lesser extent, Medicare in favor of privately insured -- or, best case, wealthy foreign uninsured -- patients.

ACA customer satisfaction: it's the prices

J.D. Power released a health insurance satisfaction survey this past week in which a headline finding was that customers who bought private insurance plans on ACA exchanges expressed slightly higher average satisfaction than people in employer-sponsored plans* - 696 to 679 on a 1000-point scale.

Power polled plan holders both on their satisfaction with the plan itself and with the enrollment process.  A few notes on specific findings:

1. Regarding the sources of satisfaction with the plans themselves, Power reports, "Cost is the most influential attribute driving satisfaction among Marketplace plan members" but also that "plan members are most satisfied with the provider selection and claims processing attributes." I'm not sure how those findings fit together. Perhaps plan members gave selection and claims processing the highest absolute ratings but also said that cost was the most important factor to them? I'll see if I can find out. [UPDATE 4/27: Rick Johnson, senior director of the health care practice at J.D. Power, confirms that the inference above is correct: respondents rated price their top concern, but gave the highest scores to provider selection and claims processing.]

2. Re the satisfaction related to cost: 87% of marketplace customers qualified for premium subsidies, and among those, the federal government paid 72% of the premium on average, leaving the customer with an average premium share of  $101. Small wonder if those low premiums were a source of satisfaction.

Scrap the ACA's awkward dual subsidy system?

I have devoted a lot of blog space to trying to figure out what proportion of low-income private health plan buyers on ACA exchanges have availed themselves of powerful Cost Sharing Reduction (CSR)  subsidies by buying silver plans -- silver being the only metal level at which CSR is available. I'd like to step back and ask knowledgeable readers: why is CSR sold separately, so to speak? 

As the ACA is now constructed, these subsidies are vital for buyers with incomes under 200%  of the Federal Poverty Level in that they lower out-of-pocket costs to something approaching affordability. For those with incomes under 150% FPL, CSR raises the plan actuarial value to 94%, better than most employer-sponsored plans. That generally puts the deductible in the $0--500 range. For those in the 150-200% range, CSR raises actuarial value to 87%. Deductibles might run $0 (rarely) to $1500.

The catch is that silver plans for CSR-eligible buyers can be expensive -- $118 per month for a single person earning $23,000 -- whereas bronze plans can be almost free, particularly for older buyers. But bronze plans usually carry deductibles over $5000; their actuarial value is just 60%. For a lot of low-income buyers, a lot of bronze plans are close to worthless.

Troubled by that bronze temptation, I proposed once that CSR attach to bronze plans as well, at proportional levels.  Richard Mayhew, an insurance professional involved in plan design and a blogger at Balloon Juice, has done me one better, proposing that CSR be integrated into the cost of plans at all metal levels. Richard's sketch -- which he floats as a potential "innovation waiver" proposal for a blue state -- is below.

Program note: Kevin Drum festschrift

I will be contributing to the Kevin Drum festschrift organized by Mother Jones as Kevin undergoes treatment -- thankfully, going quite well so farm and endured with grit and good humor --  for multiple myeloma. Kevin has perhaps been surprising himself with pretty active blogging through his chemo rounds, while Mother Jones staff and outsiders pitch in. Work on my contribution (finished, and running next week) along with this project has left this blog pretty fallow this week.

I note in the Mother Jones piece that I've always appreciated that Kevin's commitment to economic justice is tempered by political realism. His perceptions and assessments of Obama these past six years have also tracked pretty closely with -- and no doubt helped shape -- my own. That is, he sees Obama as "a sober, cautious, analytic, mainstream Democrat" who's substantively advanced a lot of progressive priorities while necessarily also disappointing liberal hopes on other fronts.

Where I've parted company from Kevin (and this is not the focus of next week's piece) is in reaction to Obama's rhetoric. He sees Obama's 2008 speeches and catch-phrases as "nothing more than typical campaign windiness." I see his rhetoric as an expression of the pragmatism Drum admires, articulating a nuanced, incremental sense of how progressive change occurs. That argument played out here and here.

New York to make health insurance *really* affordable for low-income residents

Very quickly, as I'm leaving the house in 40 minutes, big news (via Charles Gaba, natch)  from New York: it's becoming the second state to offer a Basic Health Plan (BHP) for lower-income insurance seekers, as enabled by the Affordable Care Act. A BHP is a low-cost, low-premium offering for buyers with incomes between the Medicaid eligibility cutoff (100% or 138% of the Federal Poverty Level*) and 200% FPL.   The premiums and cost-sharing compare very favorably with the mainstream private health plans offered on ACA exchanges as previously priced for low-income buyers. New York's BHP will have two tiers, with virtually no cost for plan holders with incomes between 100% and  150% FPL and just a $20 monthly premium and minimal cost-sharing for buyers in the 150-200% FPL range.

The 100% FPL starting point presumably means that the upper end prior Medicaid-eligibles (100-138% FPL) will be transitioned in. The benefit summary is below the jump. The plans will be available in 2016; enrollment will begin in November. The state will contract with private insurers to deliver the benefits.

While this is excellent news for New Yorkers with incomes under 200% FPL, it may raise challenges for the private insurance market in New York. In 2014, 53% of private health plan buyers had incomes under 200% FPL, so the market is being sliced more than in half. Minnesota, which has had a low-cost option for residents under 200% FPL since the launch of the ACA markets (and in somewhat similar form, before the launch), has struggled to meet enrollments targets. Enrollments are currently just under 62,000; the state is now aiming for 95,000 private plan enrollments by the end of next year, versus early projections at least twice as high.. The state's lowest-cost insurer in 2014 exited the market this year.

Preview: Lots of Medicaid-eligible Pennsylvanians re-enrolled in QHPs

I have drafted and am now shopping an article positing that tens of thousands of Pennsylvanians who renewed private plan coverage on healthcare.gov for 2015 are now eligible for Medicaid -- and so, theoretically at least, are ineligible for the private plan subsidies they obtained last year and are counting on this year. Pennsylvania launched a "private option" Medicaid expansion (now in process of being converted back to traditional Medicaid) effective Jan. 1, 2015.

Here's the calculation.  Of the roughly 318,000 Pennsylvanians who were enrolled in private coverage via healthcare.gov as of May 1, 2014, probably about 30% are eligible for Medicaid. That is roughly the percentage of of private-plan enrollees in non-expansion states on healthcare.gov who would have been eligible for Medicaid if their states had expanded (that is, the percentage of enrollees with incomes between 100% and 138% of the Federal Poverty level).  If Pennsylvania enrollees' income profile roughly matched that of all the non-expansion states in aggregate, there were about 95,000 Medicaid-eligibles within that original group. Yet the number of Pennsylvanians who re-enrolled in private coverage for 2015 was just shy of 279,000 -- less than 40,000 fewer than the peak enrollment total.

Does inequality make us more conservative? Maybe, but so does liberal policy enactment

Thomas Edsall cites disturbing research indicating that as inequality has grown in the U.S. over the last forty years, Americans' support for policies that redistribute wealth has shrunk. Specifically, more recently, support for universal healthcare has declined over the period in which the ACA was debated, passed and enacted:

The erosion of the belief in health care as a government-protected right is perhaps the most dramatic reflection of these trends. In 2006, by a margin of more than two to one, 69-28, those surveyed by Gallup said that the federal government should guarantee health care coverage for all citizens of the United States. By late 2014, however, Gallup found that this percentage had fallen 24 points to 45 percent, while the percentage of respondents who said health care is not a federal responsibility nearly doubled to 52 percent.

This shorter term shift is unsurprising.  As I've noted before, Henry Aaron and Gary Burtless calculated in early 2014 that the ACA would directly distribute income only to Americans in the lower 20-25% of the income distribution. Data recently published by HHS bears this out: 68% of the 11.6 million private plan buyers on the ACA exchanges have incomes below 200% of the Federal Poverty Level -- and all 12 million beneficiaries of the ACA Medicaid expansion have incomes under 138% FPL. We all stand to benefit if the ACA really is helping to control healthcare cost growth, as from the certainty of available (and, in periods of low income, affordable) insurance -- pre ACA, a third of the population in a three-year period suffered periods of uninsurance. Large portions of the population also suffer periods of poverty. But the perception that the ACA right now is primarily benefiting the poor is grounded in reality.

Obamacare customers "stick with" healthcare.gov

Enrollment in private health plans on healthcare.gov seems to have been very sticky.  For the 37 states using healthcare.gov, the renewal rate for those who were enrolled in plans just prior to the start of open season for 2015 was over 90%..

Last week, Avalere Health published a study of renewal rates that found an average of 79% renewals among existing enrollees in private plans (so-called Qualified Health Plans, or QHPs) on healthcare.gov and 65% on the state exchanges. But Avalere tracked attrition from the end of the first open season, in April 2015, until the end of the second one, in March 2015.  The methodology was simple:

Why did Healthcare.gov outdraw the state exchanges in 2015?

Avalere Health has found, in a study of 2015 ACA private plan enrollment data, that healthcare.gov outperformed state exchanges on two measures: retention of 2014 enrollees and enrollment of new customers.

To explain the lower retention in states that ran their own exchanges, Avalere floats the possibility* that those states (all but one of which expanded Medicaid) may have had more churn into Medicaid than states using healthcare.gov (where over 70% of enrollees were in states that refused the Medicaid expansion). I'll cite some evidence below that many states that expanded Medicaid did not have low retention in the private plan market.  But I do think that Medicaid enrollment may partly explain the second discrepancy -- why state-based exchanges had lower private-plan enrollment growth in 2015 than states on healthcare.gov.

An Israeli moderate's breathtaking sense of entitlement

As the Netanyahu cabinet unites in full-voiced opposition to the framework agreement with Iran and gears up to pull its strings in the U.S. Congress, the relative sobriety of former head of Israeli military intelligence Amos Yadlin, who would have been defense minister if Zionist Camp had won the March 17 election, offers a sharp contrast.  Yadlin, a major general who was one of the pilots who bombed the Iraqi reactor in 1981, allows that compared to realistic alternatives, the framework is "not a bad agreement,"  Acknowledging in an interview with Al-Monitor's Ben Caspit  that the Iranians have adhered to the terms of the interim agreement, he offers this conditional support:

If they implement the principles of the agreement presented yesterday in the same way, then for the next 15 years they will be frozen at a point of being one year away from a nuclear bomb, and I think this is not a negligible achievement...Let’s think: After all, even a US attack will not distance Iran for 15 years from a nuclear bomb, so why not freeze it in place for the same time — without a war?

Give his relative pragmatism and moderation, the window that Yadlin opens on Israel's assumptions about the terms of the country's relations with the U.S. is all the more striking. If Netanyahu had been savvier, he suggests, he would be in position to influence the shape of the ultimate deal -- and brought home additional bacon for Israel. My emphasis below:

Why do more people say the ACA has harmed than helped them?

One ongoing frustration for ACA supporters in public opinion polling is the fact that the number of people say that the ACA has directly harmed them and their families consistently outstrips the number who say it has directly helped them.

Now that the ACA is directly subsidizing health insurance for about 20 million people, that particular perception has narrowed but not closed. Here's a graph from the Kaiser Family Foundation, which polls on this question regularly:

Since last May, the gap has narrowed from 24-14 to 22-19. But it's still there, and the question is where the perception (and/or reality) of direct harm comes from.

Sharing the cost-shifting

Small businesses and their employees pay more for health insurance than larger ones, and after many years of relentless price increases, many of them are tapped out. While the ACA has not so far caused those yearly price increases to spike, it's added new costs and new pressures.

I have an article up at SHRM.org examining how some small businesses are coping and options they're examining -- including sending workers to the ACA exchanges. One interesting part concerns the various ways employers can, so to speak, share the cost-shifting to employees by partially funding tax-favored savings accounts dedicated to out-of-pocket medical costs:

Affordable health insurance vs. affordable health care

One of the flaws of the Affordable Care Act is that it partially (not entirely!) confuses affordable insurance with affordable health care.

On the plus side, for insurance purchase purposes, the ACA benchmarks affordability to silver-level plans and calibrates the out-of-pocket costs these plans impose on buyers to income, via Cost Sharing Reduction (CSR) subsidies, which raise the plans' actuarial value to 94% for buyers with incomes under 150% of the Federal Poverty Level and to 87% for buyers under 200% FPL.

On the minus side, CSR fades to near-insignificance at 201% FPL; silver plan premiums slope toward unaffordability for a lot of buyers somewhere over 150% FPL; and the ACA dangles cheaper bronze plans with deductibles north of $5,000 in front of low-income buyers, for many of whom many of those plans will do very little good.

Also on the downside, for the purposes of determining whether a person or family has access to "affordable" insurance (and so whether they are subject to the mandate to purchase it), the ACA benchmarks affordability to the cheapest available bronze plan -- which, again, is likely to have a per-person deductible and out-of-pocket maximum in the $5000-6,600 range. Some bronze plans offer some services, such as low-copay doctor visits or generic drugs, before the deductible is reached, but many (my spot-checks make me suspect most) do not. They do offer mandated free preventive services, but those are a patchwork.