Tuesday, April 30, 2019

What if a candidate took voters' stated healthcare priorities literally?

In its low-key way, the Kaiser Family Foundation has been warning Democrats for some time that the electorate is not strongly demanding Medicare for All, or sweeping healthcare system change generally.

With about 90% of the population insured (and perhaps a third underinsured), Drew Altman noted a month ago that voters' main overall healthcare priority is lowering their own out-of-pocket costs. The latest Kaiser tracking poll, conducted this month, fleshes this out:

Drug costs. Surprise bills. Access to affordable insurance if you get sick (e.g., if you lose your job). Underlying these concerns, Altman pointed out, is the poll finding that half of people who are sick have trouble paying their medical bills. With deductibles soaring, 43% said it was hard to pay their medical bills before the deductible kicks in.

Secondarily, there is broad support for expanding financial help to more people who need to buy health insurance in the individual market. There's majority support, in theory, for Medicare for All, but Kaiser's January tracking poll found that that support collapses collapses from 56% to 37% when people are asked if they would support a program that raises most people's taxes or eliminates private health insurance companies.

Meeting voters where they are on healthcare

These responses raise the question: what would a healthcare platform that aims to give voters what they say they want look like?  Addressing voters' stated wishes piecemeal may not be optimal policy: systemic change might be needed to address core concerns. Most fundamentally, reducing individuals' out-of-pocket costs requires bringing down the underlying cost of care, if the cost is not simply to be shifted to the tax burden.

At the same time, a candidate who floats a plan that would leave the current core elements of our health insurance sources intact -- preserving employer-sponsored insurance, existing Medicare, Medicaid and the ACA marketplace -- might have some running room to impose reforms that pinch healthcare industry revenues.

Providers would fight a strong balance billing ban and a strong public option in the ACA marketplace -- but they might ultimately  settle for these reforms that don't radically shrink the employer insurance cash cow. Ditto for insurers. They will fight a public option in the ACA marketplace -- but it's less of a threat than Medicare for All, or a public option that's affordably open to pretty much anyone. As for pharma...let's assume for the sake of argument here that it's possible to take on one healthcare industry head-on if you're not taking on all at once.

So, here's the hypothetical platform:

Strong balance billing protection. Balance billing is the one form of abuse in the U.S. healthcare system that's so egregious, even Americans may not stand for it much longer -- hence the bipartisan draft legislation introduced in the Senate to provide relief. Vox and Kaiser Health News have been doing God's work exposing shocking-but-routine instances of price-gouging. As cited in a Brookings analysis, some 20% of emergency room episodes, 9% of scheduled procedures and 50% of ambulance services result in out-of-network bills for patients

A strong solution would ban balance billing for a) people brought to an out-of-network ED in an emergency, b) people who get emergency care at an in-network facility, and c) people who schedule a procedure with an in-network primary provider at an in-network facility. A viable solution should also not drive up the cost of care by requiring insurers to pay billed costs at huge multiples of Medicare rates, as do some proposals and state bills that mandate arbitration, or use billed costs as a benchmark..

A strong solution put forward in the Brookings analysis would a) cap all out-of-network billing at 125% Medicare and b)  ban independent billing for targeted specialties, e.g.,  emergency, ancillary clinician, hospitalist, and neonatology services delivered at an in-network facility.  That puts the onus on hospitals to negotiate rates acceptable to those specialists.

Prescription drug relief. Medicare should negotiate rates not only for Medicare Part D but for the whole nation -- joining virtually every other wealthy country in having the national government negotiate uniform rates for prescription drugs for all payers. Medicare should also be empowered to create a formulary, i.e. not cover every drug, i.e. have the power to walk away when there's a viable alternative.  This is not going to happen. But in the proposal phase, go big here to balance the moderation of the overall package. Fallbacks might include a) empowering Medicare to negotiate for Part D plans only; b) creation of a drug oversight board empowered to flag and punish or roll back price-gouging as defined by statute; and c) various current bipartisan initiatives to encourage generic production and competition.

Augmented ACA.  Improvements to the ACA should a) make individual market coverage affordable, including via affordable out-of-pocket costs, for anyone at any income level who lacks affordable access to other insurance (e.g., affordable employer insurance or Medicaid); and b) control underlying costs, so that the improved subsidies required by a) are affordable to the Treasury.

A bill that might fit the, um, bill would

a) Raise the benchmark plan in the ACA marketplace, for which enrollees pay a fixed/sliding percentage of income, from 70% actuarial value to 80% AV, i.e. from silver level to gold in the current marketplace scheme. 80% AV is near the average for employer-sponsored insurance.

b) Erase the current subsidy cliff, which renders coverage extremely expensive for many who are just beyond the income threshold for subsidies (400% of the Federal Poverty Level, or roughly $49,000 for an individual/$100,000 for a family of four). Cap premiums for the benchmark plan at 8.5% of income for anyone otherwise eligible with an income over 400% FPL.

c) Improve premium and cost sharing subsidies at incomes below 400% FPL, requiring a lower percentage of income to pay the benchmark premium and providing higher AV for benchmark plans.

d) Create a strong public option, paying Medicare rates to providers (with some adjustments for rural hospitals and primary care) and requiring providers who accept Medicare to accept the public plan. This would also push down the rates that commercial marketplace insurers pay providers, and remove providers' incentive to refuse to accept the commercial marketplace plans, most of which would probably pay more than the public option.

e) Enable people whose employers offer insurance to access subsidies for marketplace coverage if the employer plan a) costs more than 8.5% of income, including for family coverage if the employee has a family, and/or b) offers less than 80% AV coverage.

Point e) does not open the sluice gates to the public plan as wide as does the Medicare for America bill, soon to be reintroduced by Reps Rosa De Lauro and Jan Schakowsky, which allows anyone to buy into the public plan at no more than 10% of income (and much less at lower incomes, including $0 for people with incomes up to 200% FPL).  Because the public option in Medicare for America is free to people with incomes up  200% FPL (with zero out-of-pocket costs as well), it also entails folding Medicaid into the new public plan -- and existing Medicare, with long-term-care added. It also auto-enrolls newborns as of 2022 (or probably 2023 in the upcoming update).

Medicare for America opens a plausible path either to Medicare for All (albeit with out-of-pocket costs for most enrollees) or to a de facto all-payer system, since the bill stipulates that providers must accept the public plan's payment rates from commercial insurers (in employer insurance and Medicare Advantage). It's a coherent set of measures for major system transformation.

The plan above is much more limited. It's also a much lighter lift. But it does cram an awful lot of systemic reform into the Overton Window  opened by Medicare for All and Medicare for America -- while leaving a candidate like Elizabeth Warren free to propose spending trillions on education, childcare and other priorities .

Saturday, April 27, 2019

Let's call it 160% Medicare...Washington state public option

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[Updates at bottom: bill is on the Governor's desk]

A few days back, I noted that the state public option bill working its way through the Washington legislature provides an object lesson in how hard it is to expand the pool of people in health plans paying Medicare rates.  An early iteration of the bill had the public plan paying Medicare rates, but a version that passed the House on April 10 had upped the maximum aggregate payment rate to 150% Medicare. The Senate declined to pass this bill, and it went to conference.

Now a new version (ESSB 5526) has emerged from Senate-House conference (kindly flagged for me by Amy Lotven of Inside Health Policy, who will have a story up about it later today). And guess what -- the maximum aggregate payment rate* is up to 160% Medicare.  For reference, commercial payment rates to hospitals average 188% Medicare nationally, according to a 2017 CBO report, and about 128% Medicare for physicians, according to MEDPAC.

Further, the director of the state Health Care Authority can waive the rate cap if she "determines that selective contracting will result in actuarially sound premium rates that are no greater than the qualified health plan's previous plan year rates adjusted for inflation." The director can also waive the rate cap if a carrier contracted to provide the public option can't form a provider network that meets the stipulated network adequacy standards, or if the carrier can offer premiums 10% lower than those of the previous plan year without conforming to the rate cap.

100% Medicare, 150%, 160%.... I am reminded* of the accounting approach of Rabbit, Winnie the Pooh's friend:

Wednesday, April 24, 2019

Medicare-X 2.0 deserves a second look

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As originally introduced by Senators Bennet and Kaine in October 2017, the Medicare-X Choice Act (summary here) placed a big fish --  a strong public option -- in a small pond, the ACA marketplace.

The "Medicare-X" public option would first be introduced into low-competition areas in the ACA marketplace, and then into all rating areas. The public plan would pay Medicare rates to providers, and providers who accept Medicare would be required to accept it. But in the first iteration, eligibility for subsidies adhered to ACA criteria, and the subsidies themselves were not improved. While it might improve affordability for the unsubsidized, its appeal to subsidized enrollees might be more limited, though the full Medicare provider network might be a powerful draw. As to premium, however,  I noted recently
By conforming to current ACA subsidy structure, Medicare-X runs afoul of the ACA paradox: measures that reduce unsubsidized premiums do not improve affordability for the two thirds of current individual market enrollees who receive subsidies. In fact, premium reductions often reduce discounts by compressing price spread between benchmark plans, against which subsidies are set, and cheaper plans, to which the subsidy can be applied.
The bill did phase in a small business buy-in, and that might be attractive, as the unsubsidized price might be a relative bargain for small businesses, and the provider network would be unbeatable. It might thus expand the small group market,  which enrolled an estimated 13.6 million people in 2016.

The update introduced this month (bill here, summary here) widens the pool of potential beneficiaries, combining measures that expand subsidy eligibility and reduce unsubsidized premiums -- potentially offsetting the cost of subsidizing more enrollees. It's a limited and cost-conscious expansion of benefits that might make the ACA work more as designed.

Toward universal coverage: A bestiary of Democratic healthcare bills

I have a post up at BlueWaveNJ that offers a framework for assessing more than a half dozen Democratic bills that would build on or replace the ACA to move the U.S. closer to universal healthcare. Here's the premise:
The extent to which these various bills address the demand for affordability can be viewed in two dimensions.

First is the degree to which they make coverage more affordable and reduce out-of-pocket costs for the ACA's original intended beneficiaries: those who lack access to other affordable insurance, mainly employer-sponsored insurance. Second is the degree to which they impact affordability for the 150-plus million current enrollees in employer plans.

A third question is the degree to which each bill reduces healthcare costs on a per person basis, including costs paid by government. Most (not all) Medicare expansion/public option bills increase the population enrolled in plans paying Medicare rates to healthcare providers, as opposed to much higher commercial rates. Most also establish some kind of drug pricing commission enabling Medicare to negotiate or regulate prescription drug prices.
The post, an updated and somewhat streamlined version of this one, overviews seven bills.  Hope you'll take a look.

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Monday, April 22, 2019

Medicare at Will

I have posited repeatedly (here, here, here) that the gateway to real healthcare system transformation (and cost control) is a buy-in to a strong public option that's open to employees as well as employers. A strong public option is one that pays providers at Medicare rates or some adjusted variation, and that all providers who accept Medicare are required to accept.

The public plan must set premiums and out-of-pocket costs at affordable levels for all comers and must be truly available to all, including those whose employers offer private insurance. It should be the baseline against which private coverage must compete, setting a de facto all-payer rate (unless those offering and buying top-drawer coverage want to pay above that baseline).

The Medicare for America bill does all this and also a great deal more -- transforming existing Medicare, including long-term care, folding in Medicaid, auto-enrolling all newborns four years after enactment. I'm not sure the U.S. political system can handle all that mandated transformation at once: in my view the buy-in for employers and employees is the essential core.

This kind of public option, which dates back to the early 2000s in basic concept, has a branding problem. "Medicare for All" has been a dominant watchword and battlecry since 2016, courtesy of Bernie Sanders. "Medicare for America" does not differentiate itself conceptually.  "Medicare for All Who Want or Need It" is...ugh.  Articles such as this one put the buy-in concept under the rubric of Medicare for All, where it doesn't fit.

So I'm here today just to float a name and creed: Medicare at Will. The public plan should  be an affordable option that anyone can choose, with premiums and OOP adjusted to income even if other insurance is available.  Medicare at will is in syllabic balance with Medicare for All. It incorporates the "if you like your plan you can keep it" meme without making any unsustainable promises. In fact it's all about a promise kept: Medicare is always there if you want it or need it.

#MedicareAtWill, friends.

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Sunday, April 21, 2019

Expanding the footprint of Medicare payment rates is hard: Washington State edition

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It's ironic that the path for healthcare reform preferred by allied U.S. healthcare industries is embodied in a bill introduced by Elizabeth Warren.

The Partnership For America's Health Care Future, a coalition of major hospital, health insurance, physician and pharma trade groups formed to preemptively nuke any expansion of pubic insurance, would like government to spend more to insure more people and lower their out-of-pocket costs. But they want government to do this while paying commercial rates to providers. Robert Pear summarizes:
The coalition, like President Trump, attacks any proposals that smack of socialized medicine. But it also has a positive agenda. It wants to expand Medicaid under the Affordable Care Act in Texas, Florida and other states that have yet to do so. It wants to expand federal subsidies under the health law so insurance will be affordable to more people. And it wants to stabilize premiums by persuading states to set up reinsurance programs, using a combination of federal and state funds to help pay the largest claims.
While preserving the core ACA structure, Warren's bill removes the ACA's income cap on eligibility for premium subsidies and gives a major boost to ACA premium and cost sharing subsidies at all income levels. While it would tighten insurers' margins a bit, and impose stricter standards on their provider networks, it would boost enrollment and the federal government's share of premiums paid. Insurers should be happy with it,  notwithstanding the rhetorical broadside against insurers with which Warren introduced the bill. It should also be attractive to providers, since it does not impose caps on provider payment rates. .

Should Democrats gain control of the presidency and both houses of Congress, boosting ACA marketplace subsidies -- and, to a certain extent -- eligibility -- should be relatively easy. What won't be easy: expanding the footprint of public insurance that pays Medicare rates (or less) to providers (an exception is Medicaid expansion, for which the target population generally lacks access to commercial insurance).

Monday, April 15, 2019

Cold comfort for low income workers insured through their employers

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The Kaiser Family Foundation and the Peterson Center on Health Care released a report yesterday showing that low income families enrolled in employer-sponsored health insurance (ESI) pay a much higher percentage of their income on premiums and out-of-pocket expenses than do higher income employees. That isn't surprising, though the percentage of income eaten up by healthcare is disturbing. Families in ESI earning up to 199% of the Federal Poverty Level (FPL) spend an average of 14% of income on healthcare, according to Kaiser's analysis of Census data. Families with at least one member in poor or fair health spend an average of 18.5% of income on healthcare.

What is somewhat surprising -- to me, anyway -- is that lower income families with ESI do not spend more in absolute terms than better-paid employees. I was under the impression that low income workers are often offered much skimpier insurance than higher income workers. That impression was at least partly derived from Kaiser's annual Employee Health Benefits Survey. Here's the contrast between employers with mainly low- vs. high-income employees from the 2018 survey:

Friday, April 12, 2019

Latinx enrollment continues to *rise* in HealthCare.gov states

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In 2019, an anomaly in ACA marketplace enrollment continues: for the third straight year, Latinx enrollment has risen in HealthCare.gov states, while overall enrollment has fallen.

Caveats abound. Ethnic data is self-reported, and about a quarter of enrollees don't report ethnicity -- which CMS has broken out separately from race since 2017*. But still, the steady rise in the percentage of enrollees who self-report as "Hispanic/Latino" is striking.

Latinx enrollment, 2016-2019, HealthCare.gov states
Self-reported ethnicity 

Enrollee group
All enrollees
Percent Latinx

* Because Kentucky switched to the HealthCare.gov platform in 2017, I have added the state's totals to the 2016 totals for HealthCare.gov states. Because there is no 2016 breakout of Hispanic enrollment in KY in  2016 (as it was an state-based-exchange), I have estimated the total (1656) by adding 14.8% to the 2017 total (1442), as that's the degree to which 2016 enrollment exceeds 2017 in the state.

Wednesday, April 10, 2019

BlueWaveNJ on the cost of ACA nullification

Here's what BlueWaveNJ thinks of Donald Trump's now-total support for the ridiculous suit seeking to nullify the entire ACA:
The Trump administration's recent shift to full support of a lawsuit filed by 20 Republican attorneys general and governors seeking to have the entire Affordable Care Act declared unconstitutional is a legal absurdity and a wantonly cruel and reckless policy decision. The plaintiffs argue, and the Trump administration now agrees, that the entire ACA became unconstitutional when Congress reduced the individual mandate penalty to zero in late 2017, because the Supreme Court in 2012 held that the mandate was Constitutional only as an exercise of Congress's taxing power. That is rank sophistry rejected by attorneys and legal scholars across the political spectrum -- suggesting in effect that the Republican Congress repealed the ACA by accident when it zeroed out the mandate penalty as part of the tax package passed in December 2017 after failing in multiple attempts to repeal the law's core programs earlier that year.
There's more...  

Monday, April 08, 2019

CSR takeup bends slightly under silver load at incomes up to 200% FPL

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For ACA marketplace enrollees with incomes up to 200% of the Federal Poverty Level (FPL), silver-level plans are almost always the wisest choice. Through 2017, silver plans were priced as if they had an actuarial value of 70%, compared to 60% for bronze plans and 80% for gold. The Cost Sharing Reduction (CSR) subsidy, however, raises the AV of a silver plan to 94% for those with incomes up to 150% FPL, and to 87% for those with incomes in the 151-200% FPL range. Insurers were reimbursed separately for CSR, and it wasn't priced into premiums.

That changed when Trump cut off direct CSR reimbursement in October 2017. In 2018, CSR was priced into premiums -- in most states, into silver premiums alone. By 2019, almost all states allowed this "silver loading." Since ACA premium subsidies are designed so that the enrollee pays a fixed percentage of income for a silver benchmark plan, inflated silver premiums boost subsidies and so create discounts for subsidized buyers in bronze and gold plans. But these discounts are not enough to offset the value of the CSR that's available up to 200% FPL.

The story is quite different at 201-250% FPL, where CSR is weak, raising the AV for silver plans to just 73%. In that income range, gold and bronze plan discounts often do outstrip the value of CSR -- almost as strongly as they do at incomes above 250% FPL, where the silver AV is 70%.

Friday, April 05, 2019

The ACA as recession insurance

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The ACA private plan marketplace was always and obviously under-subsidized. A healthy young adult earning, say, $31,000 per year is not likely to feel enthusiastic about paying $220 per month for a benchmark silver health plan with a deductible averaging just over $4000 (albeit often with many services not subject to the deductible).  It's true that if this person were insured through her employer, her premium for somewhat better insurance would average $575 per month and consume 22% of her pre-tax compensation. But with the employer contributing 83% of that premium on average, most people don't recognize how much of their compensation is eaten up by premiums.

Costs in excess of what many people consider affordable is a principle reason that enrollment in the exchanges, averaging about 10 million per month, is less than half what the Congressional Budget Office forecast in 2009.  That said, the ACA marketplace has always faced other headwinds. One is the well-documented one of Republican sabotage (through Congress, from 2010 forward, and via Trump's HHS as well since 2017).  A second is unbroken job growth since mid-year 2009, reducing the number of people who need to look to the individual market for health insurance. From March 2010 through January 2019, the economy added just shy of 21 million jobs.

Conversely, the marketplace -- along with the ACA Medicaid expansion -- stands in reserve as a shock absorber when the next recession or financial crisis hits.

Wednesday, April 03, 2019

Which Democratic healthcare reform bills offer the most affordable coverage to the most people?

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Drew Altman, president and CEO of the Kaiser Family Foundation, has a message for elected officials and candidates. With regard to healthcare policy
it’s the candidates who can connect their plans and messages to voters’ worries about out of pocket costs who will reach beyond the activists in their base. And the candidates aren’t speaking to that much, at least so far.   
That claim is based mainly on Kaiser polling, which finds that 48 percent of voters worry about paying their health care bills, and half of people who are sick have trouble paying their medical bills.

The extent to which various Democratic bills to improve or replace the ACA address the demand for affordability can be viewed in two dimensions. First is the degree to which they make coverage more affordable and reduce out-of-pocket costs for the ACA's original intended beneficiaries: those who lack access to other affordable insurance, mainly employer-sponsored insurance (ESI). Second is the degree to which they impact affordability for the 150-plus million current ESI enrollees (roughly 56% of the population under age 65).

The bills affect the affordability of ESI in three ways.

Monday, April 01, 2019

Trump healthcare reruns: Graham-Cassidy and the Sundowning Kid

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April Fool! Trump is once again promising an ACA replacement with low premiums and low out-of-pocket costs.
It's coming along great:
The president brought up healthcare again on Friday, claiming he would have a “much better” plan than Obamacare. “The health care’s going very well,” he told reporters in Florida.
Takes a person back...to, say, Jan. 15, 2017
President-elect Donald Trump said in a weekend interview that he is nearing completion of a plan to replace President Obama’s signature health-care law with the goal of “insurance for everybody"...

Trump said his plan for replacing most aspects of Obama’s health-care law is all but finished. Although he was coy about its details — “lower numbers, much lower deductibles” — he said he is ready to unveil it alongside Ryan and Senate Majority Leader Mitch McConnell (R-Ky.).

“It’s very much formulated down to the final strokes. We haven’t put it in quite yet but we’re going to be doing it soon,” Trump said.