Jonathan Cohn has a post urging Bernie Sanders to use his enhanced visibility in the Senate to push for incremental moves toward his long-term goal of a single-payer healthcare system. Shorter term goals within the realm of imagination include letting CMS negotiate drug prices (and, I would add, leave some drugs off the formulary); gradually opening Medicare to people under 65 (perhaps starting with a buy-in option at age 60); and pushing for the widely popular "public option" that didn't make it into the ACA.
So much for Bernie in the Senate. What about Hillary in the White House? Let's be optimistic for a few minutes and assume she gets there. What can she really do to improve healthcare access and affordability?
We don't have to speculate wildly. In typical Hillary Clinton fashion, she has posted a raft of proposals to supplement and strengthen the Affordable Care Act and rein healthcare cost growth. They're lightly sketched in, though, and it's hard to know where Clinton would place her emphasis
One obvious starting point is with those that can be effected by executive action and administrative focus rather than by legislation. Steps requiring legislation are for the most part unlikely to happen, except in the unlikely event that a Democratic blowout takes back the House as well as the Senate -- and legislative possibilities would probably be quite limited even with a narrow Democratic majority.
A possible exception might be fixing the ACA's "family glitch" -- an egregious flaw that Democrats could conceivably trade something to fix. As currently drafted, the ACA denies premium tax credits to families if an employer offers one of the adults "affordable" individual insurance, even if the employment offer of insurance for the whole family is unaffordable according to the ACA formula. The glitch has probably shut about two million people out of subsidized coverage. A fix would have to paid for -- but perhaps some kind of legislative trade is within the realm of possibility.
Clinton's proposals to improve ACA subsidies, however, and provide tax credits to those subject to high out-of-pocket expenses in employer-sponsored plans, are not going to happen. Ditto for proposals to allow Medicare to negotiate drug prices or to force drug companies to spend less on marketing and more on research.
That brings us to three administrative moves or orientations that could make a real difference. I"m going to consider one today, and one or two later this week. For today...
Help states form "public options" in their ACA exchanges. Touting her early support for establishing a public option in the ACA -- that is, federally or state-run health plans offered in the ACA exchanges to compete alongside private plans -- Clinton's platform pledges, "To make immediate progress toward that goal, Hillary will work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice."
That implies, more broadly, that a Clinton HHS will look with favor on state proposals to amend ACA architecture via the ACA's "innovation waivers"--if those proposals aim to make coverage more affordable. Under the waiver provision (ACA Section 1332), states can propose changes to virtually any ACA component if the plans credibly offer coverage as comprehensive and affordable to as many people as does the ACA, without increasing federal spending. That possibility exists now, but HHS criteria for assessing proposals can be more or less restrictive. One way HHS limited possibilities for 2017 was to not allow states to combine Medicaid waiver proposals (Section 1115) with proposals to alter the ACA benefit set per se (Section 1332). That means a state can't offset the costs of one waiver proposal with savings claimed via the other.
A state does not in fact need a waiver to stand up its own public option if that option competes on equal terms with private plans in its marketplace. At the same time, it's not clear that a state-level public option would radically improve affordability. As commonly conceived, a public option would be constrained by the ACA's subsidy structure, which is pretty skimpy as you move up the income scale. At present, the premium for the benchmark (second cheapest) silver plan in any region costs an enrollee who earns just over 250% of the Federal Poverty Level ($29,426 for a single individual) a bit over 8% of her income and has an actuarial value of 70%. That is, the plan is designed to cover 70% of the average enrollee's yearly medical costs -- which these days translates to an average deductible of about $3,000. At 300% FPL, that benchmark silver plan will cost almost 10% of income.
A well-priced public option might be the cheapest silver plan on an exchange and significantly underprice the (second cheapest) benchmark -- as private plans do in some but not most ACA markets. But it won't change the basics of ACA pricing. In fact, if it performs its intended function and drives down the price of competing private plans, it will also reduce subsidies. In that case, it would mainly benefit those who don't qualify for a subsidy. That's well worth doing, since about half of those who buy their own insurance plans (outside the employer context) are unsubsidized. But it doesn't necessarily help subsidized buyers. For them, the only pricing factor that matters is the spread between a plan they want and the benchmark silver plan.
States might get more creative, though, by leveraging their existing Medicaid managed care relationships and altering the ACA benefit structure. A starting point could be the ACA's Basic Health Plan (BHP) option. The ACA gives states the option of forming a BHP -- a low-cost, Medicaid-like plan offered to residents with incomes under 200% FPL who would otherwise have been eligible for subsidized private plans in the ACA marketplace. A BHP has to cover at least 94% of the average user's yearly costs. The federal government funds BHPs by providing 95% of what marketplace subsidies would have cost for enrollees who become eligible for the BHP instead. So far, only New York and Minnesota have formed BHPs.
Creativity might come into play by extending BHP eligibility on some terms to people above the 200% FPL threshold. In Minnesota, two proposals are currently afoot, though neither is likely to become law while the state House of Representatives is in Republican hands. One is to extend eligibility for MinnesotaCare, a longstanding Minnesota public health program that was converted into a BHP to access federal funding, to 275% FPL -- where, ironically, it was pre-ACA. That would mean that most state residents who would have been eligible for premium subsidies in the ACA marketplace in the absence of a BHP would be eligible for the BHP. The other proposal is to let anyone buy in to the BHP, which would maintain an actuarial value of 87% -- higher than anything currently available to Minnesotans over 200% FPL in the private plan marketplace.
The latter proposal could really knock the private market in Minnesota cockeyed. In fact, it could replace it. MinnesotaCare is delivered via private managed care providers offering competing plans, differing mainly in their provider networks (the benefit schedule is the same in all plans). That marketplace could ultimately replace the private marketplace: all options for those who need to buy their own insurance could be public instead of private. That possibility could very well force HHS to reject a waiver proposal putting forth this plan, since any waiver proposal has to be designed not to damage the state's ACA private plan marketplace. But state officials can be pretty creative when presenting projections and proposals to the federal government, Measures might be added to support the private market -- for example, adding "copper plans" with low actuarial value and low premiums. In any case, a Clinton HHS could be more receptive to outside-the-box state waiver proposals than is Obama's HHS.
On the other hand, Clinton, like national Democrats generally (with the possible exception of Bernie Sanders) is committed to the basic ACA architecture, for which the flagship is the private plan marketplace (someone misleadingly, as the law has insured more people, and insured them more satisfactorily on the whole, via the Medicaid expansion). The public option was always a fraught feature, in that it could either make the private marketplace perform better or kill it altogether. Whether a Clinton HHS would be receptive to blue state waiver proposals that shake the apple cart is anyone's guess.
Related: What if all ACA "options" were "public"?
So much for Bernie in the Senate. What about Hillary in the White House? Let's be optimistic for a few minutes and assume she gets there. What can she really do to improve healthcare access and affordability?
We don't have to speculate wildly. In typical Hillary Clinton fashion, she has posted a raft of proposals to supplement and strengthen the Affordable Care Act and rein healthcare cost growth. They're lightly sketched in, though, and it's hard to know where Clinton would place her emphasis
One obvious starting point is with those that can be effected by executive action and administrative focus rather than by legislation. Steps requiring legislation are for the most part unlikely to happen, except in the unlikely event that a Democratic blowout takes back the House as well as the Senate -- and legislative possibilities would probably be quite limited even with a narrow Democratic majority.
A possible exception might be fixing the ACA's "family glitch" -- an egregious flaw that Democrats could conceivably trade something to fix. As currently drafted, the ACA denies premium tax credits to families if an employer offers one of the adults "affordable" individual insurance, even if the employment offer of insurance for the whole family is unaffordable according to the ACA formula. The glitch has probably shut about two million people out of subsidized coverage. A fix would have to paid for -- but perhaps some kind of legislative trade is within the realm of possibility.
Clinton's proposals to improve ACA subsidies, however, and provide tax credits to those subject to high out-of-pocket expenses in employer-sponsored plans, are not going to happen. Ditto for proposals to allow Medicare to negotiate drug prices or to force drug companies to spend less on marketing and more on research.
That brings us to three administrative moves or orientations that could make a real difference. I"m going to consider one today, and one or two later this week. For today...
Help states form "public options" in their ACA exchanges. Touting her early support for establishing a public option in the ACA -- that is, federally or state-run health plans offered in the ACA exchanges to compete alongside private plans -- Clinton's platform pledges, "To make immediate progress toward that goal, Hillary will work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice."
That implies, more broadly, that a Clinton HHS will look with favor on state proposals to amend ACA architecture via the ACA's "innovation waivers"--if those proposals aim to make coverage more affordable. Under the waiver provision (ACA Section 1332), states can propose changes to virtually any ACA component if the plans credibly offer coverage as comprehensive and affordable to as many people as does the ACA, without increasing federal spending. That possibility exists now, but HHS criteria for assessing proposals can be more or less restrictive. One way HHS limited possibilities for 2017 was to not allow states to combine Medicaid waiver proposals (Section 1115) with proposals to alter the ACA benefit set per se (Section 1332). That means a state can't offset the costs of one waiver proposal with savings claimed via the other.
A state does not in fact need a waiver to stand up its own public option if that option competes on equal terms with private plans in its marketplace. At the same time, it's not clear that a state-level public option would radically improve affordability. As commonly conceived, a public option would be constrained by the ACA's subsidy structure, which is pretty skimpy as you move up the income scale. At present, the premium for the benchmark (second cheapest) silver plan in any region costs an enrollee who earns just over 250% of the Federal Poverty Level ($29,426 for a single individual) a bit over 8% of her income and has an actuarial value of 70%. That is, the plan is designed to cover 70% of the average enrollee's yearly medical costs -- which these days translates to an average deductible of about $3,000. At 300% FPL, that benchmark silver plan will cost almost 10% of income.
A well-priced public option might be the cheapest silver plan on an exchange and significantly underprice the (second cheapest) benchmark -- as private plans do in some but not most ACA markets. But it won't change the basics of ACA pricing. In fact, if it performs its intended function and drives down the price of competing private plans, it will also reduce subsidies. In that case, it would mainly benefit those who don't qualify for a subsidy. That's well worth doing, since about half of those who buy their own insurance plans (outside the employer context) are unsubsidized. But it doesn't necessarily help subsidized buyers. For them, the only pricing factor that matters is the spread between a plan they want and the benchmark silver plan.
States might get more creative, though, by leveraging their existing Medicaid managed care relationships and altering the ACA benefit structure. A starting point could be the ACA's Basic Health Plan (BHP) option. The ACA gives states the option of forming a BHP -- a low-cost, Medicaid-like plan offered to residents with incomes under 200% FPL who would otherwise have been eligible for subsidized private plans in the ACA marketplace. A BHP has to cover at least 94% of the average user's yearly costs. The federal government funds BHPs by providing 95% of what marketplace subsidies would have cost for enrollees who become eligible for the BHP instead. So far, only New York and Minnesota have formed BHPs.
Creativity might come into play by extending BHP eligibility on some terms to people above the 200% FPL threshold. In Minnesota, two proposals are currently afoot, though neither is likely to become law while the state House of Representatives is in Republican hands. One is to extend eligibility for MinnesotaCare, a longstanding Minnesota public health program that was converted into a BHP to access federal funding, to 275% FPL -- where, ironically, it was pre-ACA. That would mean that most state residents who would have been eligible for premium subsidies in the ACA marketplace in the absence of a BHP would be eligible for the BHP. The other proposal is to let anyone buy in to the BHP, which would maintain an actuarial value of 87% -- higher than anything currently available to Minnesotans over 200% FPL in the private plan marketplace.
The latter proposal could really knock the private market in Minnesota cockeyed. In fact, it could replace it. MinnesotaCare is delivered via private managed care providers offering competing plans, differing mainly in their provider networks (the benefit schedule is the same in all plans). That marketplace could ultimately replace the private marketplace: all options for those who need to buy their own insurance could be public instead of private. That possibility could very well force HHS to reject a waiver proposal putting forth this plan, since any waiver proposal has to be designed not to damage the state's ACA private plan marketplace. But state officials can be pretty creative when presenting projections and proposals to the federal government, Measures might be added to support the private market -- for example, adding "copper plans" with low actuarial value and low premiums. In any case, a Clinton HHS could be more receptive to outside-the-box state waiver proposals than is Obama's HHS.
On the other hand, Clinton, like national Democrats generally (with the possible exception of Bernie Sanders) is committed to the basic ACA architecture, for which the flagship is the private plan marketplace (someone misleadingly, as the law has insured more people, and insured them more satisfactorily on the whole, via the Medicaid expansion). The public option was always a fraught feature, in that it could either make the private marketplace perform better or kill it altogether. Whether a Clinton HHS would be receptive to blue state waiver proposals that shake the apple cart is anyone's guess.
Related: What if all ACA "options" were "public"?
Andrew
ReplyDeleteI can speak for NYS and close friends in CA. I just dont see a tilting point at which most middle class plus folks would accept a mgd medicaid network. In MN, most might find something to like at a decent price--but all I can see is massive pushback if ESI folks got jettisoned into that world in some of the weightier states. Its not uniform solution, just a band aid. It would take years to jump start the program in places that hold sway and might move the nation.
Brad
That may well be true, in that MinnesotaCare lacks the Medicaid 'stigma' and is also run by mostly the same (nonprofit) cos that run the private plans, and I gather fields decent networks. But I wasn't suggesting ESI pushed into the pool -- just everyone in the individual market. What if NY allowed buy-in into the Essential Plan, , as NY's Community Service Society proposed pre-ACA (with a plan very like the Essential Plan)?
DeleteWho would buy in? Very few individuals would choose to go to city hospitals and bustling clinics. If you are financially strapped, of course, but the minute you have an opportunity to jump--unless these networks really get their game up (read: window dressing, tech, and customer service) and make it worthwhile--there will be a ceiling in growth. It will help, but nothing to build a movement. Again, I have such a big city skew. Mileage will vary in fly over country and second tier cities. Medicaid plays different there.
DeleteBrad
As someone who has followed the public option issue very closely since 2008, let me mention a few very important questions:
ReplyDelete1. What will be the starting price of the public option plan? Minnesota Care costs between $400 and $500 a month, over all ages, which is not terribly cheap. It may have narrow networks, but co-pays and deductibles are tiny so there is high utilization. Anyways, what will be the first premium
2. If the public option has claims that exceed revenue, will the public option raise its premiums?
I promise you that most people who say they like the public option are assuming that the premiums will NOT increase every year, and that premiums will go up like Medicare Part B while the taxpayers cover any larger losses.
I once read about 100 articles on the public option and not one of them echoed my concerns. Maybe Jeff Goldsmith a little. Ywt I still think I am onto some very key questions.
Bob, while Sen. Sheran emphasized that the actuarial analysis that would determine MinnesotaCare pricing hasn't been done yet, she did toss out $400 as a sort of starting/guess-point. She also wrote that it would not be age-rated, as you suggested in another comment.
Delete