Wednesday, August 31, 2016

Yes, the ACA marketplace needs to grow. But it also needs to shrink

As major health insurers cut back their participation in the ACA marketplace, observers have drawn the obvious conclusion that the market is too small to be viable. The CBO forecast year after year from 2010 through 2015 that 21-22 million people would be enrolled in marketplace plans in 2016; only 11 million currently are. The risk pool is older and too sicker than it should be; the marketplace needs an influx of younger and probably wealthier (and therefore healthier) enrollees.

All true. But it's probably also true that the marketplace needs to shrink even as it grows.

Sunday, August 28, 2016

Our failures of political rhetoric are asymmetric

The study of rhetoric can yield great insights into the way power is structured and masses of people are moved. But those who study rhetoric closely are prone to mixing up cause and effect.

So it is with an essay by New York Times CEO Mark Thompson that usefully traces The Dark History of Straight Talk -- that is, of politicians' claims to authentically channel the mystical will of the people. Simpson begins with Shakespeare's rendition of Mark Anthony's funeral oration for Caesar, in which he claims to be "no orator," but a "plain, blunt man," eschewing the rhetoric that was the chief marker of political authority in Rome. He moves on to reaction against the rationalist language of the Enlightenment, to the hookup of "anti-rhetoric" with nationalism and Heidegger's fetishization of "authentic" language, culminating in his embrace of Hitler. Finally he focuses on the anti-elitism and demonization of out-groups by the current crop of authoritarians in western democracies, culminating (for the moment) in Trump.

All good so far. But here's where I think Thompson confuses conditions that make large numbers people responsive to "authenticism" with the current condition of rhetoric itself:
What we have lost and must strive to regain is a conception of rhetoric that strikes a balance between the demands of reason, character and empathy, and that strives for genuine truthfulness rather than theatrical “authenticity.”
That makes me wonder whether Thompson has ever listened to a certain Barack Obama, who won the presidency by sheer force of rhetoric -- and whose rhetoric has arguably balanced "reason, character and empathy" as powerfully as any president's since Lincoln (whose rhetoric Obama constantly, consciously channels).

Re the qualities Thompson thirsts for: for empathy, I suggest watching Obama tear up when speaking of the Sandy Hook shooting, or listening to him sing Amazing Grace after the Charleston, or read how he delineates the emotional logic of those who perceive reverse racism in his More Perfect Union speech in March 2009*, or lays out the plights of individuals who lack health insurance in his speech to rescue the health reform bill in September 2009.**

Wednesday, August 24, 2016

HHS markets to the lower income brackets

I have complained more than once about HHS's mantra that most ACA marketplace shoppers can find a plan for under $75 per month. My beef has been that the message overemphasizes premium price at the expense of balancing premium with out-of-pocket costs. That's particularly perverse since most shoppers have to buy silver plans to access Cost Sharing Reduction subsidies that render silver a better value than bronze.

Well, CMS is at it again, and in light of the marketplace's recent travails -- insurer losses, insurer exits, premium price spikes -- I was struck by another problem with the "most can get plans for under $75" assurance.

Today HHS released a brief emphasizing that since 85% of enrollees qualified for premium tax credits in 2016, that same overwhelming majority will be protected from premium price hikes in 2017. The premise is simple: if you're subsidy-eligible, you pay a fixed percentage of your income for the benchmark silver plan in your area, regardless of its sticker price. When prices rise, subsidies rise, and the spread between benchmark silver plans and cheaper bronze plans will widen slightly, slipping slightly more applicants in under the $75 and $100 thresholds.* Hence this highlight:
In a hypothetical scenario in which all Marketplace qualified health plan premiums
were to increase by 25 percent from 2016 to 2017:
          o 73 percent of consumers could find coverage for $75 or less.
          o 78 percent of consumers could find coverage for $100 or less.
Okay, but all this "most-people" messaging also brings home the fact that HHS anticipates marketplace enrollment remaining concentrated in lower income brackets -- mainly under 200% of the Federal Poverty Level (FPL). In 2016, somewhere between 61% and 66% of enrollees had incomes below that level.   HHS estimates that 70% of enrollees could have bought plans for under $75 per month, which suggests that about 70% had incomes under, say, 220% FPL.**

Friday, August 19, 2016

What if a public option were added to the ACA marketplace now?

Aetna's sudden sharp cutback in its participation in the ACA marketplace has renewed discussion of how the marketplace might be stabilized. The most obvious fix is to boost the subsidies and thus lower subsidized  enrollees' premiums and out-of-pocket costs. At present, Kaiser estimates that about 64% of people eligible for subsidies are enrolled in marketplace coverage. Many of the subsidy-eligible uninsured find the offered coverage unaffordable. If the marketplace were attracting 90% of those eligible the risk pools would be much deeper. That would in turn moderate the pending price hikes for the unsubsidized.

The premium hikes and large-insurer pullbacks have also renewed calls to create the public option -- a government-run plan competing on equal terms with private insurers in the marketplace. In the runup to the ACA's passage, progressives regarded the public option as a linchpin, an essential means of keeping private insurers from price-gouging. Its absence from the final bill was regarded as a major defeat.

What would be the likely effects of adding a national public option now, if it were politically possible? A few points:

1. Before risk adjustment and reinsurance are factored in, ACA-compliant plans were calculated to have paid out an average 110% of premiums collected in medical claims in 2014 and, for  the entire individual market 4th-largest health insurer HCSC* in 2015,, 117% .  Those negative loss ratios have driven average weighted average premium increases of 24% this year (though the increases will likely prove lower for the plans most people will buy). Those losses have led to exits and pullbacks that, according to Avalere Health, will leave 55% of rating areas nationally with two or fewer competitors (though that number disproportionately includes low-population areas, and so most buyers will probably have more choices).  In many regions, if a public option managed to significantly underprice the competition, it might well become the only option.

Thursday, August 18, 2016

In which Gingrich sums up his whole career

Via Brendan Nyhan, I happened on a July 22 CNN interview with Newt Gingrich in which that Trump precursor was astonishingly open about his theory of fact.

The interviewer was Alyson Camerota, and the subject was Trump's convention speech. Here's a transcript (my emphasis). Video clip at bottom.
CAMEROTA: Some people think it was too bleak. That he painted too bleak a picture of where we are in America. Crime is down in America. Violent crime is down. The economy is picking up --

GINGRICH: It is not down in the biggest cities.

[08:35:01] CAMEROTA: Violent crime, murder rate is down. It is down.

GINGRICH: Then how come it's up in Chicago, up in Baltimore, and up in --

CAMEROTA: There are pockets where certainly we --

GINGRICH: Your national capital, your third biggest city --

CAMEROTA: But violent crime across the country is down. We're not under siege in the way that we were in say, the 80s.

Wednesday, August 17, 2016

Underlying Aetna's ACA pullback: Despair of Congress?

In a major scoop, Jonathan Cohn and Jeffrey Young of the Huffington Post obtained via FOIA a July 5 letter from Aetna CEO Mark Bertolini to the Justice Department spelling out that Aetna would cut back its participation in the ACA marketplace if Justice moved to block the company's pending merger with Humana.

Citing Aetna's losses in the ACA marketplace to date and the costs of a busted merger, Bertolini wrote that if  DOJ opposed the merger -- as it did two weeks later -- Aetna would cancel plans to expand its participation in the ACA marketplace from 15 states to 20, and instead cut back to 'no more than 10 states" --- and probably exit the market entirely in future years.

Cohn and Young provide a balanced view of partisan perceptions that Aetna is, in one view, engaging in regulatory hardball (or blackmail) or, in the other, responding to real losses and difficulty in the ACA marketplace.. Probably a bit of both, as Nicholas Bagley suggests  While Bertolini expressed conditional optimism about the ACA marketplace as recently as an April earnings call, Cohn and Young cite an Aetna spokesman's claim that losses have accelerated since then.

Regardless of the precise mix of Aetna's motives and calculations, Bertolini's response to a question about the ACA marketplace* in the April call, quoted by Cohn and Young, is interesting in retrospect. Below is a longer excerpt from his response, with the portion cited by Cohn and Young bolded.

Let me just give you a different basis to think about our participation in the exchanges. We have 911,000 members on the public exchange as individual. We have 1.2 million members that are exchange or ACA compliant.

If we were to go out and buy those members, it would cost us somewhere around $1.2 billion to acquire them. If we were to build out 15 markets, it would cost us somewhere between $600 million to $750 million to enter those markets and build out the capabilities necessary to grow that membership.

So in the broad scheme of things, we are well, well below any of those numbers from the standpoint of losses we've incurred in the first two-and-a-half years of this program. So we see this as a good investment, hoping that we have an administration and a Congress that will allow us to change the product like we change Medicare every year, and we change Medicaid every year.

But we haven't been able to touch this product because of the politics. But if we can get to that point, we believe we are in a very good place to make this a sustainable program.
While Bertolini's letter to DOJ cites the sunk costs of the merger as a reason to cut losses in the marketplace, this earlier statement cites the costs of getting established in the marketplace as a relative bargain (which would in turn become sunk costs if Aetna exits altogether).

So that's one side of the equation. On the other is Bertolini's rueful closing comment about the politics of the ACA.  He suggests that a public benefits program can't be frozen in amber: it requires constant adjustment. Unspoken: Republicans' rooted enmity against the ACA is making such adjustment impossible.

The same point was made implicitly in a report issued yesterday by Georgetown healthcare scholars Sabrina Corlette and Jack Hoadley, laying out Lessons from Medicare as a source of strategies to stabilize the ACA marketplace. The chief (implicit) lesson: get a Congress willing to fix problems as they arise.

The report usefully illustrates that the price spikes and insurer exits that the ACA marketplace is currently experiencing are far from unique, and are in fact par for the course for insurance markets. Similar gyrations have occurred in the Federal Employees Health Benefits Program, state Medicaid managed care programs, and Medicare Advantage. The history of MA is particularly instructive:
 Between 1998 and 2002, the predecessor to today’s MA program (called Medicare+Choice) faced insurers’ decisions to terminate nearly half of the existing Medicare contracts.13 These terminations meant that between 300,000 and 1,000,000 enrollees annually could not stay in the plans they had selected. Terminations occurred disproportionately in rural counties where payment rates were lower. Total enrollment dropped between 1999 and 2003 from 6.4 million to 4.6 million. When Congress increased payment rates, the market stabilized and enrollment grew rapidly. In 2016, there were 17.2 million beneficiaries in Medicare Advantage...

In the wake of high-profile market exits in the Medicare Advantage program, policymakers were able to entice insurers back into the program by increasing payment rates. The Medicare Modernization Act (MMA) of 2003 changed the method Medicare uses to pay plans to a system in which plans bid against a benchmark price that varies geographically. Overall, the new system led to payments to plans that were approximately 10 percent higher relative  to local fee-for-service (FFS) costs from about 2006 to 2010.

These changes, together with other changes described below, led many insurers to re-enter markets they had departed and brought other insurers into the program. Whereas 31 percent of Medicare beneficiaries had no private plan option available in 2000, by 2006, nearly every Medicare beneficiary had access to at least one MA plan. Enrollment more than doubled from 2005 to 2010.
Fixes are (relatively) easy when no one hates a program. A functional equivalent of raising MA payments to insurers in the ACA marketplace would be to improve the premium and cost-sharing subsidies, which many prospective buyers find too skimpy to render coverage attractive -- particularly those with incomes above 200% of the Federal Poverty Level (FPL), the current cutoff for strong Cost Sharing Reduction (CSR) subsidies. At present, most subsidized buyers with incomes over 200% FPL can't afford a plan with an actuarial value higher than 73%, or over 70% for those with incomes above 250% FPL. The latter generally AV translates to deductibles in the $3000-5000 range. To take an example from the Chicago marketplace: If you're a single mother earning $32,000, you just may be willing to pay $175 for a benchmark silver plan for yourself (with your child placed in CHIP) -- but a deductible of $3,500 or $4,500 may make that plan seem close to useless. Boosting the subsidies is one of Corlette and Hoadley's "lessons."

Subsidies were sweeter in the version of the ACA passed by the House in November 2009, which could not be properly reconciled with the Senate bill after Democrats lost their filibuster-proof majority in January 2010.  In the House bill, the benchmark plan for those with incomes in the 200-250% FPL range would have been 85%, vs. 73% in the enacted ACA, and 78% for those in the 250-300% FPL band, vs. 70% in the ACA. Premium subsidies in the House bill were higher for those under 200% FPL, though not for those much above that threshold (and in fact somewhat lower for those over 300% FPL). For those not eligible for cost sharing reduction subsidies, three levels of coverage were available, at actuarial values of 70%, 85% and 95%.There was no AV 60% tier equivalent to ACA bronze, which carry prohibitively high deductibles and copayments for low income buyers.

Improving ACA subsidies would cost money, of course. A Dec.2009 Urban Institute-RWJF analysis estimated that House-level subsidies would cost about 16% more than those included in the bill introduced by Senate leadership in November 2009, which had a subsidy schedule close to that enacted by in the ACA, though with somewhat weaker CSR.  But part of the cost would be offset by improving the risk pool, helping to prevent steep premium hikes.

Other than being funded adequately, there's a more fundamental way the ACA marketplace could be made more like Medicare Advantage: the federal government could be the ultimate payer. In MA, the government sets a benchmark capitated rate for each region, calculated so that insurers can be profitable paying something close to traditional Medicare rates to providers. MA is therefore really neither a "public option" nor a private one; it's a menu of public-private options.  The great advantage is that provider payment rates are controlled, at one remove, by the government. The same is true -- at lower payment levels -- for managed Medicaid plans, and for the Basic Health Plans run under the ACA by New York and Minnesota. I've argued before (once, twice) that the ACA marketplace should be structured this way.

In addition to proposing subsidy sweeteners, Corlette and Hoadley suggest other incremental reforms, such as easing network adequacy requirements for new entries in a a market, or to create a "fallback plan" for markets left with no regular market entrants, or rendering the reinsurance program permanent.

All of those changes, except perhaps the network adequacy requirements, are premised on a Congress motivated to make the marketplace work better. As Bertolini suggested, the first requirement for a program like the marketplace is that it be treated as a perpetual work-in-progress.  It's hard to see that requirement being fulfilled in the foreseeable future. Perhaps the dominant element in Aetna's exit is political despair.

* Posed by Anne Gupte of Leerink 

Monday, August 15, 2016

Could the ACA help the Democrats take Florida?

The latest battleground state polls show Trump trailing Clinton by a narrow margin in Florida, a must-win state for him. One factor tilting the Florida field against Trump is surging voter registration among Latinos.  As flagged by Greg Sargent, Politico's Marc Caputo reports:
Since the 2012 presidential election, Florida’s voter rolls have grown by 436,000 — and only 24 percent of that increase is from non-Hispanic white voters while non-whites grew by 76 percent, according to new voter registration numbers released in advance of the Aug. 30 primary.

The number of Hispanic voters leaped by 242,000, which was 55 percent of the increase. Latinos are now 15.4 percent of the voter rolls, up from 13.9 percent overall in 2012, when President Barack Obama narrowly carried Florida thanks to the outsized backing of minority voters.

Recent Florida polls show Trump is losing the Hispanic vote by historic margins to Hillary Clinton after the Republican’s incendiary comments about illegal immigrants, which offended a broad array of Latino leaders, including many in his own party.
Latino voters have no shortage of reasons to reject Trump.  But what about positive motives to come out for Clinton and the Democrats generally? The Affordable Care Act -- generally a political loser for Democrats to date -- could be a factor. Latinos in particular, and minorities generally, have benefited hugely from the ACA in Florida. Here are the salient enrollment facts:

Sunday, August 14, 2016

The fastidious fascist strikes again

Being criticized makes Donald Trump's skin crawl:
We've been here before. We know that Trump's mission in life is to cleanse the world of forces that corrupt the country's fortunes and his own pristine image:

Trump on Kasich: 'Never seen a human being eat in such a disgusting ...
The Hill
Apr 25, 2016 - "It's disgusting. ... RealDonaldTrump, we were looking for some Trump steaks for the governor, but no one seems to sell ... Tags: Donald Trump.

Donald Trump Calls Clinton's Bathroom Break 'Disgusting' | TIME
Dec 21, 2015 - Donald Trump used strong language Monday to describe Hillary ... “I know where she went — it's disgusting, I don't want to talk about it,” Trump ...
Nov 12, 2015 - I think it's disgusting," Trump told Bartiromo Thursday morning. ... has been updated to reflect the exact wording of Donald Trump's quotes.

Trump: 'It's disgusting what's happening to our country" | Boston Herald
Boston Herald
Sep 15, 2015 - DALLAS — Republican presidential candidate Donald Trump is renewing his campaign against illegal immigration, telling a cheering crowd of ...

Monday, August 08, 2016

Yes We HCAN, sort of: Richard Kirsch's blow-by-blow account of the grassroots battle for health reform

I have been picking my Twitter-induced-ADHD-addled way through Richard Kirsch's Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States, published in 2012. Kirsch, a lifelong public action exec trained by Ralph Nader, was national campaign manager from 2008-12 for Health Care for America Now (HCAN), a massive umbrella group formed by unions and progressive nonprofits to advocate for universal health care. The book is a blow-by-blow account of the organizing and lobbying efforts that built support for the ACA and pushed it over the finsih line.

This is one of those blog-as-you-read posts, which you could make a case against, but which I enjoy doing as a book pulls me in various directions. I'm on vacation this week and will not trouble myself with excerpts. So far (I'm a bit more than halfway through), the two themes dominate:

o The ACA would not have been possible without massive, coordinated grassroots organizing -- meeting constantly with congressional reps, recruiting people who suffered for lack of health insurance access to tell their stories, raising large numbers of demonstrators to counter the Tea Party at Town Halls, calibrating support for and pressure on wavering reps, etc.

o Squishiness on the public option on the part of Obama and the Democratic Party as a whole was a self-inflicted wound that gravely weakened reform. I do not entirely buy into this, and I have much more yet to read about how that fight played out. That said, a few takeaways and preliminary thoughts:

1. The Tea Party's hysterical, misinformation-fueled, rage-filled hijackings of congressional reps' town hall meetings focused on health care in the summer of 2009 anticipate the Trump rallies of today -- with reps shouted down and drowned out by chants, disabled citizens testifying about their health care struggles booed off the stage, posters of Obama with a Hitler mustache, and equations of end-of-life counseling with genocide.  The funding of these oppo efforts by the Kochs' Americans for Prosperity trace a line from hardcore ideological libertarianism to Trumpian fascism, the common denominator being the sabotage of fact-based discourse.

Friday, August 05, 2016

The system is blinking red at Trump

There is as yet no cascade of elected Republican officials disowning Trump -- that is, stating that they won't vote for him or support his campaign to be president. Still, denunciations of him by conservative and (allegedly) nonpartisan partisan establishmentarians are growing ever less inhibited. Below, some remarkable indictments.

First, knee-jerk neocon Charles Krauthammer, who never met a proposed military action he didn't like, but can recognize a personality who will up-end the U.S.-dominated world order:
Of course we all try to protect our own dignity and command respect. But Trump’s hypersensitivity and unedited, untempered Pavlovian responses are, shall we say, unusual in both ferocity and predictability.

This is beyond narcissism. I used to think Trump was an 11-year-old, an undeveloped schoolyard bully. I was off by about 10 years. His needs are more primitive, an infantile hunger for approval and praise, a craving that can never be satisfied. He lives in a cocoon of solipsism where the world outside himself has value — indeed exists — only insofar as it sustains and inflates him.
Next, David Brooks, self-appointed moral arbiter, finding a true north with his often erratic moral compass:

Thursday, August 04, 2016

On-exchange or off-exchange, the unsubsidized seem to make similar choices

Back in April, I set out to compare the coverage obtained by subsidized enrollees in health insurance plans in the ACA marketplace in 2016 with the coverage obtained by unsubsidized buyers. The measure compared was actuarial value (AV) -- the percentage of the average enrollee's annual medical costs paid by the insurer.

Long story short: the average weighted AV for subsidized buyers in the 38 states using was 81.4%, right in line with estimated averages for employer-sponsored insurance. For the 15% of enrollees who did not qualify for subsidies, average weighted AV was 68.9%. Averages in the state-based exchanges are probably about the same. The more comprehensive coverage obtained by subsidized enrollees stems from the fact that about two thirds of them also access secondary Cost Sharing Reduction (CSR subsidies, available only with silver plans.

I also inferred that the coverage obtained by those who bought ACA compliant plans outside the marketplace was roughly comparable to that obtained by  unsubsidized marketplace enrollees.  And I've just happened on some corroboration.

Wednesday, August 03, 2016

Obama calls Trump unfit for the presidency. Republican react in outrage, right?

Yesterday, Obama called Trump "unfit to serve" as president. In fact, he made the case at length.
Using the formal backdrop of a joint news conference with Prime Minister Lee Hsien Loong of Singapore, Mr. Obama suggested that Mr. Trump would not abide by “norms and rules and common sense” and questioned whether he would “observe basic decency” should he reach the Oval Office.

The president said he would have been disappointed to lose in 2008 or 2012, but added that he had never doubted whether his Republican rivals in those races, John McCain and Mitt Romney, could function as president or had the knowledge to make government work.

“That’s not the situation here,” Mr. Obama said.
Alarm bells went off for those familiar with basic political dynamics (or schooled, like me, by political scientists contributing to mainstream journalism in recent years).  Presidents polarize. When the president comes out in favor of something, the out-party turns agin it, by reflex. That goes triple in the Obama era, when the right wing scream machine has demonized the president's every move, including his birth.