The NAIC takes on balance billing

Of all the dysfunctions of the U.S. healthcare system, perhaps the most egregious (besides leaving tens of millions uninsured) is the "balance billing" of insured patients at in-network hospitals by out-of-network providers.

Elisabeth Rosenthal has documented some particularly extreme examples -- e.g.,  a man who arranged with his orthopedist for neck surgery at an agreed price -- and was billed $117,000 by an out-of-network assisting surgeon. Sarah Kliff found a particularly sharp illustration of the roulette-like character of hospital care, in which two women working for the same employer and having the same insurance gave birth within weeks of each other at the same hospital. One was billed $1600 for an epidural by an out-of-network anesthesiologist who happened to be at work that day; the other (who also had an epidural) was billed nothing.  A Consumers Union survey conducted this past March indicated that 30% of  privately insured Americans received a surprise medical bill in the past two years, with their health plan paying less than expected.

This week, the National Association of Insurance Commissioners (NAIC) adopted a model act for health plan network adequacy that includes some protections for patients faced with balance billing. Such model acts are meant to serve as templates for state legislatures to adapt to local needs and political propensities.

I plan to write about the balance billing section of the model rule in some depth next week. This post is a sketchboard -- and an invitation for anyone with expertise in the area or a personal experience to relate to comment or contact me.

HHS embraces high deductibles

It's funny how a trend impinges on your consciousness: you think something is new, then it gradually dawns that it's been going on for some time. Such is the case (for me) with an emerging mode of compensating for the unaffordability of healthcare at U.S. prices.

On Tuesday CMS, apparently stung by news accounts of ACA marketplace customers whose plan deductibles were so high they found care inaccessible, put up a blog post touting many plans' provisions of some services that are covered before the deductible is reached:

On Thursday, I took a look at the benefit structure provided by Centene's Ambetter, an insurer that has "cornered the silver market" in several large cities, including Miami, Chicago and Seattle. Ambetter plans feature high deductibles and a relatively broad array of services offered beneath the deductible:

Dollars to donut holes, Ambetter undercuts the competition (including UnitedHealthcare)

In late October, when Healthcare.gov first released plan prices for 2016, Jed Graham noted that Ambetter (parent company Centene) had "seized the pole position" in several of the federal exchange's largest markets, offering the cheapest bronze and the two cheapest silver plans in those markets.

Graham further pointed out, "By shrinking the cost of silver through its high-deductible strategy, Centene is lowering the subsidies available for all plans."  A few days later, Richard Mayhew wrote that Ambetter was "spamming" the exchanges by cramming a half-dozen barely-different silver plans into its lineup, all priced below the nearest competitor's cheapest silver. A managed Medicaid provider, Centene is fielding narrow networks in the ACA marketplace and probably paying very low rates to healthcare provides.

Yesterday I took a close look at the way Ambetter has combined sticker-shock silver deductibles (e.g., $6,400 for silver unenhanced by CSR in Chicago) with a relatively broad array of benefits that kick in before the deductible is reached. Swiss cheese coverage is apparently an ingredient in the secret sauce by which the insurer has calculated it can undersell its rivals.

In all Healthcare.gov markets taken together, we're told that on average the unsubsidized price of benchmark silver plans has gone up 7.5% (CMS), and for the cheapest silver plans in each market, 7% (Kaiser).  Not surprisingly, in markets in which Ambetter competes, the base price of the cheapest silver plan has generally gone down -- at the same time that most most of their competitors have felt compelled to raise their prices.

Ambetter's donut hole coverage: high deductibles alloy ACA silver

In pre-ACA times, many low income workers were enrolled in "mini-med" health plans that provided first-dollar coverage up to very low limits, and no insurance after those limits were reached. Such plans still exist, though they don't satisfy the ACA's "personal responsibility" requirement.

Also long available: "catastrophic" insurance that provides no coverage at all (or, post-ACA, preventive care only) until a high deductible is met. That's basically a stop-loss policy for people with enough assets not to be deeply indebted by by the time they reach the deductible. Many if not most bronze plans offered in the ACA marketplace are in this category: deductibles are usually north of $6,000 per person.

Yesterday, CMS touted an under-recognized fact: lots of marketplace plans offer some benefits before the deductible is met. Put this in the category of consolation prize:

In ACA exchanges, the key word is "exchange"

The Kaiser Family Foundation has published an in-depth analysis of rate hikes and their actual likely effects on users in the 2016 federal ACA marketplace (healthcare.gov).

Crunching the data for all of the counties in 36 states* in which last year's cheapest silver plan can be compared to this year's, Kaiser highlights the savings that many if not most current enrollees can realize by switching plans. The study focuses on the lowest-cost silver plan in each county, because those are the most popular plans.  Among the key findings:

• The average unsubsidized premium for the lowest-cost silver plan for a 40 year-old in 2016 is 7% higher than for the cheapest silver plan in 2015.


• In 73% of counties examined, last year's cheapest silver plan is not this year's.


• The premium for last year's cheapest silver plan will rise an average of 10% for a 40 year-old earning $30,000, and 28% for a 40 year-old earning $20,000.

The 7% average hike bespeaks some pain for the federal treasury, and the volatility in plan price and rank spells trouble for many who auto-renew without comparison shopping. However: 

"A million bin Ladens will bloom"

Whatever else it offers, Twitter often serves up some remarkable juxtapositions.

Last night, someone posted one more demonstration that The Onion is our oracle of Delphi, except that it speaks unambiguously (cf. Bush's inaugural: "our long national nightmare of peace and prosperity is finally over"). On March 23, 2003, the paper published a Point/Counterpoint: This War Will Destabilize The Entire Mideast Region And Set Off A Global Shockwave Of Anti-Americanism vs. No It Won’t. Startling verification of one of those representative opinions also turned up on Twitter yesterday.

The Onion's "point person" argues that an attempt to impose democracy by force on a foreign culture is doomed to fail. It includes a prophecy:

A month of "yes buts"

For some reason, in the past month or so I've found myself pushing back against, or at least qualifying, assertions about the ACA by people with deep expertise in healthcare, or economics, or healthcare economics. They all know a good deal more than I do, but touched on areas that I've been preoccupied with.

These posts aim to put a corrective lens on...not myths, but partial truths that in some cases leave a misleading impression. Specifically:

It's fair, O Robert Pear, to spotlight high deductibles in ACA plans. But some context is missing.

An article by the New York Times' Robert Pear, spotlighting the plight of ACA marketplace customers who bought plans with sky-high deductibles, had my eyeballs shooting lasers in two directions.

On the one hand, kudos to Pear, not only for showing the absurdity of offering plans with deductibles north of $6,000 per person to people who are not affluent, but for spanking HHS for emphasizing low premiums uber alles:

Sylvia Mathews Burwell, the secretary of health and human services, issued a report analyzing premiums in the 38 states that use HealthCare.gov. “Eight out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits,” she said.

I have complained about that misdirection repeatedly, most recently noting that only about 5 in 10 will be able to buy a silver plan for under $100 and thus access the Cost Sharing Reduction (CSR) subsidies that are available only with silver. So Burwell is effectively hawking bronze plans to those who, as Pear illustrates, won't be able to use them.

On the other hand, Pear exaggerates the prevalence of super-high deductibles among marketplace enrollees. His acknowledgment of CSR is buried deep and lacks context:

Premium vs. deductible: New tools oversimplify

Buying health insurance is hard, we're told. Forced to weigh premium against deductible and other out-of-pocket costs, people will make the wrong choice more often than not.  Decision support tools like total cost estimators can reduce that likelihood.

Maybe, maybe not. It seems to me that a cost estimator has to be pretty sophisticated not to oversimplify the decision.

The new Plan Match tool rolled out this month by DC Health Link, the District's ACA marketplace, is in one way at least more informative than healthcare.gov's Total Cost Estimator. The DC tool, furnished by Consumer Checkbook, provides not only a Yearly Cost Estimate that factors in the user's rating of his health, but also an estimate of "Cost in a Bad Year." The latter total is simply the plan's yearly out-of-pocket maximum plus the annual premium.

I'm not sure that that information doesn't give the wrong impression by leaving out a vast middle.

The tool might actually be more useful in any market other than DC -- which, uniquely, extends Medicaid eligibility to adults with incomes up to 210% of the Federal Poverty Level (FPL).  By so doing, DC eliminates the strong Cost Sharing Reduction (CSR) subsidies that are available in most states* to private plan buyers with incomes up to 200% FPL -- but only to buyers of silver plans. For those up to that income threshold, silver plans' out-of-pocket maximum is capped at $2,250  -- compared  to a $6,850 allowable OOP max for bronze plans. In most ACA markets, the "Cost in a Bad Year" would reflect that yawning gap for buyers under 200% FPL.

Weaker CSR is available, in DC and everywhere else, to buyers with incomes in the 200-250% FPL range. At that income level, the out-of-pocket maximum for silver plans is $5,450. That smaller contrast does come into play in the Cost in a Bad Year estimates.

The Counter-Upshot: Obamacare is quite as egalitarian as it appears

Tyler Cowen draws a rather odd conclusion from the spike this year in premiums for health plans sold in the nongroup market: The ACA is not as egalitarian as it appears.

Cowen legitimately spotlights the weakness of the ACA value proposition for uninsured people with incomes above 250% of the Federal Poverty Level (FPL) and so for a large group of the remaining uninsured. But his discussion of its "egalitarian" impact is limited by his leaving the Medicaid expansion out of the equation (if not entirely out of the discussion).

Cowen bases his case that "by some measures, the Affordable Care Act has had only a limited impact on economic inequality" mainly on a recent study* by Wharton School researchers led by health economist Mark Pauly.* Pauly et al found that slightly less than half of the still-uninsured who are eligible to buy health plans on the ACA exchanges would not experience "welfare improvements" if they buy health plans. Cowen summarizes:

An NHIS non sequitur

Back in February, I complained that Gallup had conflated the effects of a state expanding Medicaid with the effects of a state running its own ACA exchange. All states running their own exchanges but one (Idaho) accepted the Medicaid expansion, making the conflation easy. But their superior performance in reducing the uninsurance rate was due entirely to the Medicaid expansion, not the decision to create their own exchanges. State-run exchanges got good press early on because most were not as dysfunctional as healthcare.gov in fall 2013. But some were even worse, and by the end of open season 2015 they had not collectively outperformed the federal exchange with regard to enrolling their potentially eligible populations.

CDC today released results of the National Health Interview Survey for the first 6 months of 2015. It's a trove of information about who's gained insurance over the last two years and who's still uninsured. But it contains one apparent non sequitur that recalls Gallup's:

Your health insurer may not want to control the cost of medical care

Two facts about the business of health insurance that must be obvious to practitioners and those who study the subject occurred to me recently.

First, if the cost of medical care goes up and the actuarial value of a health plan remains the same, consumers' out-of-pocket costs will go up.  87% of $5,000 is more than 87% of $4,000.

Second: A rise in the cost of medical care (theoretically) does not affect insurers' profit margins, since actuarial value and medical loss ratio stay the same. But the cost-hike does increase their revenue. They are, in a sense, reselling medical care to plan holders. Selling more expensive care is equivalent to selling more of it. If I sell you $120 in care and keep 20% of it, I earn more than if I sell you $100 worth and kept 20%.*

Supporting the biggest decision for ACA marketplace shoppers

People make poor decisions when buying health insurance. So demonstrates health economist Austin Frakt in a review of studies probing Americans' health insurance decisions and knowledge base. Frakt cites studies finding that:

• most people choose wrong when faced with relatively small tradeoffs between premium and deductible; 
• Americans have a poor grasp of core insurance terms like "coinsurance; 
• low income people will choose a plan labeled "gold" over one labeled "bronze" even if the "gold" plan is manifestly inferior (researchers swapped the labels to test comprehension); and
• when given an estimate of our yearly medical costs, a typical ACA marketplace shopper can't determine which plan would cost them least.

The upshot: When choosing among Medicare plans, employer-sponsored plans, or private plans on offer in the Affordable Care Act marketplace, we all need help.

But what kind of help? That depends, in part, on the menu of choices. And the ACA marketplace is unique -- different in at least one vital way from the markets for Medicare or employer-sponsored plans.

How bronze plans offer fool's gold to the Treasury

I have more than once expressed frustration that HHS, when urging the uninsured to buy health plans in the ACA marketplace, emphasizes low premiums at the expense of good coverage. For example, CMS's snapshot of plan prices for the Open Season beginning today leads like this:

The next Open Enrollment period for the Health Insurance Marketplace begins on November 1, 2015 for coverage starting on January 1, 2016. According to an HHS analysis, about 8 out of 10 returning consumers will be able to buy a plan with premiums less than $100 dollars a month after tax credits; and about 7 out of 10 will have a plan available for less than $75 a month.

Only perhaps 5 out of ten returning customers will be able to buy a silver plan for under $100 per month, and many of those who slip beneath that round-number threshold by buying bronze plans will be forgoing the Cost Sharing Reduction (CSR) subsidies that are available only with silver plans.  Yet the messaging about CSR on healthcare.gov and in HHS's communications is confusing and underemphasized.

Perhaps the ambivalence or inattention to CSR stems in part from a financial conflict of interest between the federal government and shoppers on the ACA exchanges.  When a CSR-eligible shopper selects a bronze plan, the Treasury saves not only on the forgone CSR subsidy, but also, in some cases, on the premium subsidy. Bronze plans are in some regions priced so low that the full unsubsidized premium is less than the premium subsidy to which the buyer is entitled, which is calculated to leave her paying a fixed percentage of income for the second-cheapest silver plan available. That's likeliest to be the case for older buyers, for whom unsubsidized premiums can be up to three times as high as for young buyers

This pricing permutation is very much in play in California in 2016. In 2015, 53.5% of California's subsidized enrollees were between the ages of 45 and 64 -- and again, for older buyers, premium subsidies often cover the whole cost of a bronze plan, and then some.