Saturday, November 19, 2016

A managed Medicaid bailout for repeal-and-delay Republicans

A week ago I suggested, in a kind of desperate good-Trump fantasy, that if Trump really wanted to fulfill his campaign promise to replace the ACA with "something beautiful," he could replace the ACA marketplace with a managed Medicaid buy-in for anyone who needed it.

Earlier this week, Michael Sparer, Chair of Columbia's Mailman School of Public Health, published in NEJM a somewhat akin proposal that could serve as both a basis for permanent compromise and a stopgap if we end up in "repeal-and-delay" limbo. Rather than creating a "fallback" public option from scratch, as President Obama and others have proposed,
A better idea, I believe, and one that could conceivably lead to a political compromise, is to rely on Medicaid managed-care plans to offer an exchange plan wherever they operate where there would otherwise be only one participating insurer. This strategy could work even if ACA premium subsidies for exchange enrollees were eliminated and replaced by some alternative version of tax credits or rebates.
That too might seem like a pipe dream, in that it requires constructive Republican action to keep people insured, not to mention expanding the Medicaid expansion. But maybe not! Austin Frakt's* reading of the political tea leaves suggests that some kind of stopgap staving off total collapse may become the new normal. Reacting to Senator Lamar Alexander's forecast that Republicans might need six years to forge an alternative that could overcome a filibuster, Frakt writes:
More than six years! Making predictions in this environment is a fool’s errand, but I’ll do it anyway. I expect repeal with delay will happen by reconciliation. But the delay will be two years. (Maybe, maybe if members of Congress get a little spooked they’ll delay repeal for three or four years, but not six.)

Then, if Senator Alexander is right, there will be no GOP replace plan in time. What then? Either Congress will kick the can and delay repeal further or key parts of the ACA will expire. This process will repeat itself indefinitely or until Democrats control the government again.

If the GOP cannot craft a plan in two or so years, they will never do so. Never. Each election cycle will be too disruptive. A health care bill is much harder than an education bill. If you haven’t noticed, health care is a third rail onto which primary and general election opponents attempt to push one another.

Endless, can-kicking repeal will be the best, achievable alternative.
The Medicaid fallback could actually make can-kicking repeal sustainable. So perhaps there's some slim chance it will happen.

Sparer goes on to suggest that the manged Medicaid fallback would have been preferable to creating a public option from scratch had Hillary Clinton won the election:
Linking insurer participation in Medicaid managed care to participation on the exchanges (even if only as a fallback option) is supported by the evidence that Medicaid plans are the best fit for the exchange marketplace — in contrast to the “big five” insurers, which are likely to enter and exit the exchanges with some regularity but whose primary focus will always be the large-group market. This approach would further consolidate Medicaid and the exchanges and avert the need to create new health plans, with new infrastructures, whose developers would have to find and contract with a new network of health care providers. It would be true even if Hillary Clinton had become President and proposed a new Medicare-like “public option.” Why create a new Medicare-like fee-for-service plan when you can more easily incorporate existing Medicaid managed-care plans and thereby consolidate rather than fragment the public insurance marketplace?
I would take this a step further (and have). I don't see why managed Medicaid couldn't essentially replace the ACA marketplace. As Sparer suggests, the Medicaid MCO companies have emerged as the insurers best equipped to compete sustainably in the current Marketplace. Managed Medicaid programs generally are exchanges, in that enrollees choose from among different insurers offering plans. And a model for extending plans like this to the not-poor exists in the Basic Health Plans formed under the ACA by Minnesota (which adapted an existing program) and New York.

The chief advantage of a Medicaid-like market is that the insurers would pay Medicaid-like rates to providers (as indeed, some do now in the ACA marketplace). As enrollment grew, pressure would probably grow to increase payment rates somewhat and so widen the networks. If enrollment did grow to the levels originally forecast for the ACA marketplace, the pressure would also work the other way -- on providers, to accept the insurance. And hence one more slice of the U.S. healthcare system, covering maybe 25-30 million people, would be paying government rates to providers. If only.

* Corrected - originally attributed this to Aaron Carroll


  1. Biggest problem is multiple MCO plans will offer a converged market so any place where there is a large Silver gap from a single carrier will see lots of subsidized members far worse off

  2. Alexander knows they cannot grasp the nettle. He seems to want Congress to temporize (while appearing to work) at least through the 2018 midterms, so that R's can continue to run for office on the promise that they will soon replace the ACA with something wonderful that saves community rating but ends the individual mandate? That is, "any day now we'll have that great thing we promised, just vote for us so we can work the bugs out." Because as soon as they do a real replacement, the incompatibility of their preferences will become apparent, and they will (once the extent of the damage sinks in) be in political trouble.