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 .

1 comment:

  1. Well done as always!

    One small point....using the word "public option" in Item D is what Woody Allen would call 'jejune'. In the next sentence, you say that providers who accept Medicare (95% of them) would have to accept Medicare rates.

    That is not very 'optional' for providers! And I do not see why it is necessary to alienate them so profoundly at this point. Your other provisions are very positive in themselves.