A public option to get claims paid

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The top line in a new Kaiser Family Foundation analysis of claims data collected by CMS from insurers selling plans on HealthCare.gov is startling:

We find that, across issuers with complete data, 19% of in-network claims were denied by issuers in 2017, with denial rates for specific issuers varying significantly around this average, from less than 1% to more than 40%.

Caveats abound. Of 180 insurers selling plans on HealthCare.gov, only 130 submitted complete data enabling analysis by Kaiser.  The data does not include standardized "reason codes" and lumps together all denials, "including denials due to ineligibility, denials due to incorrect submission or billing, duplicate claims, and denials based on medical necessity." Most important, perhaps, there is no comparative data for employer-sponsored plans, which insure 15 times as many people as the marketplace (nor for off-exchange ACA-compliant plans).

There is, however, one useful point of comparison. Medicare Advantage plans deny 8% of claims, according to a September 2018 report from the Office of the Inspector General for HHS. That seems high in itself, but it's less than half the ACA marketplace rate, at least in the 39 HealthCare.gov states.

On modular Medicare expansions

On the BlueWaveNJ blog, I have a post ruminating over where a successful Democratic presidential candidate might land with respect to various bills and plan outlines to establish Medicare for All, Medicare for All Who Want or Need It, Medicare for More, etc. I speculate that such candidate might want to make a build-out as modular as possible:

A candidate who seeks flexibility might seek to make her plan as modular as possible. First steps might include a strong public option introduced into the ACA -- one tied to Medicare rates,that providers who accept Medicare would have to accept.  Such a plan would probably also entail raising the value of a benchmark ACA plan, as the Merkley-Murphy Choose Medicare Act does. The ACA's silver plan benchmark, designed to cover 70% of the average enrollee's costs, clearly has not cut it with the public (in some cases, it now includes deductibles as high as $6,000). Incremental steps could include allowing small business buy-in and then large employer buy-in.  Integrating first steps with an ACA upgrade enables next steps to be contingent -- on need, budget and system performance. 

The case against this would be losing a window to mandate sweeping systemic change. I can see that. In any case, I hope you'll take a look at my view of the spectrum of possibility.

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X-factor in Medicare X: A silver plan discount?

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The Medicare-X Choice Act of 2017, introduced by Senators Bennet (D-CO), Kaine (D-VA) and Feinstein (D-CA), offers a more incremental and modest expansion of Medicare than more recently introduced Medicare expansion* bills such as the Medicare for America Act or the Choose Medicare Act.

When the bill was introduced, the last of the ACA repeal bills had just been defeated and the ACA marketplace was perceived as more fragile than it is at present. Insurers had recorded big losses in 2016 and jacked up their rates in 2017, which proved to be a year in which they returned to profitability in the individual market. The specter of "bare counties," in which no insurer participated, had just receded. The bill accordingly takes as its starting point a proposal Obama himself had floated in a 2016 JAMA article: A public option to be offered in counties where no private insurers, or just one, had opted to participate.  By 2023, however, "Medicare-X" would be offered in all counties in the individual market, and in 2024, in the small group market as well.

Medicare-X would create a public option within the ACA exchange, offering ACA-compliant coverage at ACA metal levels. It does not directly enrich ACA subsidies or expand eligibility for them. Unlike Medicare for America, Medicare-X does not allow a subsidized buy-in for employees if their employers offer ACA-compliant insurance. Nor does it touch Medicaid or existing Medicare programs.

A hole in the heart of Medicaid/Medicare buy-in plans

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A catch-22 bedevils Medicaid or Medicare buy-in plans designed to co-exist with the ACA marketplace, whether on the state or national level.

On one hand: If the public option is integrated into the marketplace and conforms to ACA benefit and subsidy levels, it won't help subsidized buyers much. They will still pay the same premium for the same level of benchmark plan benefits. The affordability of their options besides the benchmark plan depends on price spreads -- how much less or more other options cost compared to the benchmark. It's highly unpredictable how a public option will affect those spreads -- unless the silver public option plan is the cheapest in that market and way cheaper than the benchmark.

A public option may help unsubsidized buyers by providing a low-overhead choice and possibly stimulating lower unsubsidized premiums across the board. That helps the federal treasury too. But it may compress premium spreads and so make subsidized buyers' choices worse. The problem for subsidized buyers (over 85% of enrollees on ACA exchanges and over 60% of enrollees in ACA-compliant plans) is that the marketplace is under-subsidized. Premiums and out-of-pocket costs are just too high at income levels above 150% FPL.

Federal government's new CSR liability boosts Democrats' leverage in Congress

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Good news: Democrats in Congress understand that if they're going to join with Republicans to appropriate funds to  directly reimburse health insurers for Cost Sharing Reduction (CSR), they need to extract a price. They have the leverage to demand a price -- and two federal judges increased that leverage last week in rulings that vastly increased the government's potential liability for stopping direct CSR payment.  A letter to CMS Administrator Seema Verma from Democratic Senators Patty Murray and Ron Wyden and Reps Frank Pallone and Bobby Scott flexes that leverage.

Briefly: The ACA directs the federal government to reimburse insurers for the CSR they are legally obligated to provide to marketplace enrollees with incomes below 250% of the Federal Poverty Level who select silver plans. In one of several fits of absent-mindedness, the ACA's creators neglected to make the payment part of mandatory spending, leaving it to Congress to appropriate funds. The Republican Congress did not appropriate; the Obama administration made the payments anyway; the Republican House sued to stop them; and Trump cut the payments off in October 2017. State regulators, having prepared during the long months that Trump threatened the cutoff, allowed insurers to price CSR into premiums for silver plans only, since CSR is available only with silver. Since income-adjusted premium subsidies are set against a silver benchmark, "silver loading" predictably created discounts in gold and bronze plans. That created a bounty for many subsidized enrollees with incomes too high to qualify for strong CSR -- i.e. those with incomes in the 200-400% FPL range.

Medicare at 50 Act: A bonanza for low income near-elderly

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The Medicare at 50 bill introduced last week by Senator Debbie Stabenow (D-MI) is a pretty bare outline that raises a lot of questions.

The bill allows people aged 50-64 to buy into Medicare. Those who qualify for ACA tax credits -- i.e., have incomes below 401% of the Federal Poverty Level and lack access to employer-sponsored insurance, Medicaid or other public insurance -- can apply those credits to the Medicare premium.  No new program is created; no adjustments to the over-65 Medicare benefit to make the program fit the needs of younger enrollees are specified.  To note a few oddities:

1) Enrollees can choose traditional fee-for-service Medicare (Parts A, B, D) or a Medicare Advantage plan. No annual cap on out-of-pocket costs is added to traditional Medicare, so those who choose it will forgo that ACA marketplace benefit, which currently caps costs at about $7,900 per person -- unless they qualify for Cost Sharing Reduction (CSR), per the next point below.  Enrollees in traditional Medicare can buy Medigap policies on a guaranteed issue basis. With no OOP cap, traditional Medicare would not qualify as ACA-compliant coverage -- except that the bill specifies that it shall.

The Choose Medicare Act: How strong is this public option?

The Medicare for America Act, introduced last December by Reps Rosa DeLauro (CT-03) and Jan Schakowsky (IL-09), is a halfway house -- or two-thirds-way house -- to single payer -- and arguably a complete route to all-payer.  This bill (summary here) creates a revamped Medicare that auto-enrolls all children born in 2022; allows employers and employees to buy in; and folds in Medicaid and senior Medicare. It preservers a role for private insurance, via Medicare Advantage and the remaining option for employers to provide private insurance.

The bill would effect a less radical and somewhat more gradual transformation of American healthcare than Bernie Sanders' Medicare for All bill -- but a sweeping, sudden and very expensive transformation nonetheless, undertaking to transform Medicaid, senior Medicare, and long-term care (for which it provides coverage) as well as the individual and employer markets (the latter would be empowered to pay Medicare rates, set at 110% of current Medicare in the new public program). Insurers should be able to ultimately live with it; providers would fight it tooth and nail.

For those more comfortable with more incremental change, the Choose Medicare Act introduced by Senators Jeff Merkley (D-OR) and Chris Murphy (D-CT) last April (summary here) has a somewhat similar architecture but does not a) autoenroll newborns, b) fold in Medicaid, c) include long-term care or d) much change senior Medicare, except to add a yearly cap on out-of-pocket expenses to traditional Medicare.  What it does do:

What if the Obama administration had ended direct CSR reimbursement in 2016?

Trump's bid to fund his wall with money not appropriated by Congress has set me thinking about the Obama administration's far better grounded, but still dubious, determination to fund the ACA's Cost Sharing Reduction (CSR) subsidies without an explicit appropriation from Congress.

That decision was challenged in court by the Republican Congress in 2014 and, with the suit still pending, countermanded by Trump in October 2017, with disruptive but far from catastrophic consequences.

I'm thinking not of tendentious comparisons between Obama's executive actions and Trump's, but rather about a counterfactual: What if the Obama administration had taken the likely Congressional refusal to appropriate funds at face value, and declined to directly fund CSR?

Should Democrats seek to kill the anti-ACA lawsuit with legislation? Bagley v. Jost

Progressive legal opinion is divided with respect to how Democrats should fight the latest ridiculous suit seeking to have the ACA declared unconstitutional, Texas v. U.S., The suit was upheld in December by an extremist U.S. District Court judge in Texas, Reed O'Connor, who stayed the ruling pending appeal.

The question: should the Democratic House simply join the defense against the suit in court, which it has opted to do, or also pass legislation that would render the suit moot if it became law? Taking opposite sides are two progressive stalwarts of the ACA's legal wars.

The water is wide: Health Policy Valentines 2019

Postscript, Feb. 17: Inspired by an inhalation, one ex post factoid #HealthPolicyValentine:

                                                                 Roses are comely,
                                                                 Lilies are aromatic.
                                                                 Enrollment in Medicare at birth
                                                                 May soon be automatic.

                                                                    *          *         *

Love grows old, and waxes cold...but HealthPolicyValentines must be maintained (or endured) year over year.  So here we go again, with a cache that should grow through 2/14.

For those who never get enough, here's Health Policy Valentines (2018) Love Knows No Repeal (2017),  Love in the Time of Obamacare (2016), love, 2015, and first love, 2014.

Untriggered warning: many of these are valentines to Twitter's healthcare stalwarts. I'll leave the footnotes to the Norton anthologist...

The water is wide,
I cannot get o'er.
Universal healthcare
Is on the far shore.

   *     *     *

Courting is pleasure,
And parting is grief,
But a Utah legislator
Is worse than a thief.

   *     *     *

Medicare for All
Is your fantasy lover.
Medicare E
May get everyone covered.

   *     *     *

Medicaid expansion to just 100% FPL: What's the effect on marketplace risk pool?

Utah legislators voted this week to contravene the will of Utah voters, expressed in a 2018 referendum, by limiting the ACA Medicaid expansion to adults with incomes up to 100% of the Federal Poverty Level, instead of the 138% FPL threshold stipulated by the ACA statute and the referendum.

The more limited expansion would be bad for Utahns in the 101-138% FPL range, as explained below, though it would save the state some outlays (if approved by CMS), since the federal government pays 100% of marketplace subsidies and "only" 90% of premiums for the Medicaid expansion population.

Leaving aside for a moment the effect on low income Utahns, and on state finances, I want to consider a tertiary question: How would expansion affect the risk pool in the state's ACA marketplace? (David Anderson has touched on this, at least on Twitter, and may be looking at it in more depth.)

In 2016 the answer would have been straightforward: the 101-138% FPL population is less healthy on average than higher income enrollees, and so raises costs and premiums. A 2016 CMS study estimated that premiums are about 7 percent lower in expansion states, controlling for a variety of other factors.

Does silver loading improve the risk pool?

The picture has been clouded, however, by "silver loading" -- state marketplaces' adaptation to Trump's cutoff of direct reimbursement of insurers for Cost Sharing Reduction subsidies that they are obligated to provide to low income enrollees who select silver plans. Those subsidies are highest in the 100-150% FPL range, where they raise the actuarial value of a silver plan from a baseline of 70% to 94%.

How many might be loathe to trade employer-sponsored insurance for expanded Medicare?

In my last post, I stressed that a significant and politically powerful subset of the 156-odd million Americans who get health insurance through employers have coverage way better than the norm. Those with the most generous employer-sponsored coverage (ESI) might be averse to transitioning to a public plan with significant cost sharing -- say, to a plan with coverage comparable to a typical Medicare Advantage plan.

Out-of-pocket costs for enrollees in ESI have risen rapidly in recent years; premiums have risen more slowly, but steadily. Nonetheless, a lot of people have coverage a good deal more generous than the norms reported in the Kaiser Family Foundation's 2018 Employer Health Benefits Survey -- e.g., deductibles well below the $1,573 average for single coverage, and premiums well below the $99 per month average for single and $462/month average for family coverage.

The figures below**, taken from the Kaiser survey, highlight benefits enjoyed by insured employees with the most generous coverage.

• For 12% of covered workers, the employer pays 100% of the premium for single coverage. Another 8% of workers in single coverage pay less than $500 per year. Just 3% of covered workers pay nothing for family coverage; another 4%, pay under $1500 annually.

What to expect when Democrats are weighing single payer

Last week, Kamala Harris was asked about her support for single payer healthcare and responded, with respect to employer-sponsored insurance, "let's eliminate all that. Let's move on." Then Cory Booker was asked an imprecisely worded question  -- would he "do away with private health care" --  and gave an equally imprecise answer (no..) that left ambiguous whether health care or health insurance was under discussion. Ever since, warnings have been percolating on healthcare Twitter against framing single payer as all-or-nothing -- no more private insurance, or no Medicare for all.

Now cometh Sarah Kliff to inject some nuance. One point: "even countries we think of as single-payer still have some level of employer-provided health insurance." In Canada, everyone has "Medicare" -- fairly comprehensive insurance in which government (provincial and federal) does pay the providers. But most people also have employer-provided supplemental insurance to cover prescription drugs, dental, vision, and/or other services not covered by Canadian Medicare.

Another point: whether a transition away from private primary insurance in the U.S. is successful depends mainly on what people are asked to transition to:

Transitioning half of all Americans from one type of health insurance to another is no-doubt a huge undertaking. But whether or not it’s successful, I think, rests on what kind of coverage is on the other end. If it’s a government plan where Americans feel like they can afford to go to the doctor, then I’d expect any frustration with the transition to eventually dissipate. If it’s a government plan where co-payments and deductibles are high — especially if they’re higher than employer-sponsored coverage — then frustrations would almost certainly only grow over time.

Quite so. But I'd like to add some nuance to the nuance, on a couple of fronts.

Beyond healthcare reform at Health Action 2019

For the past three Januaries, it's been my delight to attend Families USA's annual Health Action conference, which brings together healthcare advocates, enrollment counselors, scholars and policymakers to analyze the functioning and malfunctioning of U.S. healthcare and report on plans to improve access and delivery.

As my experience of the conference dates to the dawn of the Trump era, it's wedded in my mind to the high drama of resisting massive rollback of the federal commitment to make healthcare affordable to most (we're still far from all) who make their home in the U.S.

In 2017, the dominant chord was to my mind struck by incoming FUSA executive director Frederick Isasi:  "Our action should lead to inaction."  That is, ACA defenders needed to slow down Republicans' legislative drive to repeal the ACA to make it run aground on its own contradictions.

That...happened. The 2018 conference celebrated, reliving miracles wrought by the Little Lobbyists, Indivisible, ADAPT and others who brought home the human cost of repeal.  It was also a forum for feeling out the shape of healthcare reform to come. I wrote last year that the tea leaves seemed to shadow forth a Medicare-like public option that employers and employees could buy into, as Jacob Hacker proposed back in 2007. That still seems to me where we're headed.

This year too had its note of triumph and promise -- beginning with a keynote from Nancy Pelosi celebrating the centrality of healthcare in the November election. Yet the really sustained focus, through three plenary sessions was on the gross inequities, based mainly on race and ethnicity, in our healthcare delivery system and beyond, in housing, criminal justice, mental health, diet -- basic conditions of life that shape health (actually, that was true last year too).

A persistent theme was that a lot more has to change than the number of people with insurance that provides access to healthcare as we know it. Another was the enormous challenge of moving equity to the center of system reform efforts.