Friday, December 09, 2016

Give PriceCare to the not-poor

As I noted last week, Tom Price's 2015 ACA repeal-and-replace bill, dubbed the Empower Patients First Act, is a grossly inadequate offering for the 20-plus million mostly poor and near-poor people who have so far gained health insurance through the Affordable Care Act.  Its limited premium subsidies for shoppers in the individual market, adjusted for age but not income, would leave coverage unaffordable for most of the 9 million subsidized enrollees in the ACA marketplace. Worse, by repealing the ACA's Medicaid expansion, it would un-insure virtually all of the roughly 12 million who have gained coverage through the ACA's expansion of eligibility.

Price's EPFA does, however, provide significant aid to those who earn too much to qualify for ACA marketplace credits -- which includes some younger buyers with incomes as low as 250% FPL and a considerable number in the 300-400% FPL range. Insurance seekers who are subsidy-ineligible (or close to it) but not wealthy fare worst under the ACA, as the Urban Institute's Linda Blumberg and John Holahan have highlighted:

Price's subsidies would cover, on average, about 40% of the premium for the average benchmark silver plan offered in the ACA marketplace, and a higher percentage of the premium for the skimpier plans that would be on offer in the deregulated individual market his replacement bill would create. Coupled with an HSA, and possibly with full tax deductibility for any plan purchased in the individual market (as Trump's campaign website proposed), and with continuous coverage protection, it's a program that could work for the modestly affluent (at least, with some compromise preserving essential health benefits as a broad outline while giving states more autonomy to flesh them out).

In a world in which Republicans were capable of compromise  -- or in a world in which Trump had any interest in squaring his promise to replace the ACA with "something terrific" with his party's extremist agenda -- the modest but substantial Price subsidy for private insurance could be the basis of a compromise.  Here it is: rather than repealing the ACA's Medicaid expansion, extend it higher up the food chain--I would say to 300% FPL.  Above that level, remake the individual market along Price's lines, with his modest subsidies.

A variant, adapting Medicaid-like coverage to income groups that can afford some "skin in the game," would be to a establish a Medicaid-like program like the Basic Health Programs the ACA authorized states to form for lower-income enrollees who would otherwise be eligible for the marketplace. Two states, Minnesota and New York, currently run BHPs for people who earn too much to qualify for Medicaid (over 138% FPL) but less than 200% FPL. These are similar to managed Medicaid programs, run by private insurers. Minnesota's BHP, MinnesotaCare, charges enrollees considerable but affordable premiums and copays on a sliding scale. New York's BHP, the Essential Plan, pays participating insurers Medicaid + 20% for enrollees who earn too much to qualify for Medicaid.

At a stroke, this fusion -- Medicaid or Medicaid-like program up to a given income threshold,  Price-style individual market for everyone above it -- provides affordable coverage to basically everyone currently helped by the ACA and to many of those it leaves out in the cold. It does so at a discount to the government, since enrollees up to 300% FPL would be served by programs paying low rates to healthcare providers.

The fatal flaw here is that Republicans hate Medicaid, or at least love to hate on it.  If they don't kill the ACA Medicaid expansion outright, they're likely to swing the other way, and encourage or mandate Arkansas-style "private options" that put those currently eligible for Medicaid in private plans, with low premiums and cost-sharing. That would be fine too, if Republicans wanted to pay for it -- which they wouldn't, in a plan of their own making.

Price would admittedly hate my compromise. As a healthcare policymaker, his chief goal seems to be to free doctors and other healthcare providers to charge as much as they like. Far from extending the realm of Medicaid, where state and federal government wield pricing power, he'll aim to strip the federal government of its rate-setting power in Medicare, by privatizing that program. Still, this compromise, while taking perhaps 10 million people out of the individual market and placing them in Medicaid or something like (and likely growing that affordable market), would enable Republicans to remake the individual market for the more affluent, for whom it's more appropriate in any case.

At present, there are about 10 million unsubsidized individual market enrollees. With EPFA subsidies, their ranks might grow. Lower income insurance seekers would have "something terrific," at least financially. Republicans could call the ACA repealed. They could give states wide latitude to develop Medicaid-ish programs to cover people up to the agreed-upon threshold. ACA repeal would be off their backs without millions thrown off their insurance.

In a world in which such compromises were possible -- say, 1980s America -- the threshold between the Medicaid-ish program and the Price-molded subsidized individual market would probably be lower than I'd prefer-- maybe 200% FPL.  In that case, some progressivity might be introduced to the premium subsidies in the individual market at lower income levels.

In fact, even with a 300% FPL threshold, , the Price subsidies would be inadequate for many not-wealthy older buyers, especially since the ACA's 3-to-1 limit on age banding would go away. But compromises are painful on all sides. Under this one, everyone would get something.

Related: Medicaid envy in the rust belt

* New York's Essential Plan enrolls not only those who would have been marketplace-eligible, at 139-200% FPL, but also legally present noncitizens with incomes below 138% FPL who are  barred from federally-funded Medicaid. For those enrollees, plans are paid Medicaid rates rather than Medicaid + 20%.

1 comment:

  1. I know Minnesota Care pretty well, with two children on it and my age.
    ncy experience. So you are on a good track here, but let me raise two points:

    a. Minnesota Care premiums range from $5 to $80 a month per person
    . That is really too low.

    b. Minnesota Care requires about $4000 per person in different forms of taxpayer money to keep going. Hard for me to see how Republicans could support that.

    Thanks for your efforts!