Tom MacArthur's faith-based waiver for the AHCA

Representative Tom MacArthur, R-NJ, has taken the lead in advancing amendments to the AHCA designed to bring both the Freedom Caucus and the moderate Tuesday Group aboard.  For the moderates, MacArthur writes that there will be an additional $160 billion in funding over 10 years to increase tax credits for older buyers and preserve Medicaid coverage for new mothers (was that on the block?!) and addiction treatment. For the conservatives, an amendment has been published  that would allow states to opt out of prohibiting medical underwriting or requiring insurers to cover the ACA's Essential Health Benefits.

Actually, the amendment begins by purporting to restore EHBs, community rating and guaranteed issue, the prohibition on denying coverage or charging more to people with pre-existing conditions. But it then tacks round and enables states to seek "limited waivers" to amend the EHBs, community rating -- and medical underwriting, if the state establishes a high risk pool.

How are those waivers limited? There's the rub. Beginning in 2017, the Affordable Care Act enables states to seek waivers to change the structure of their ACA marketplaces, but requires that the state's alternative plan "provide coverage that is at least as comprehensive and affordable, to at least a comparable number of residents, as this title would provide; and that it will not increase the Federal deficit."

Two comparisons of Price plan vs. ACA marketplace are roughly congruent

Late last year, I put forward a simple measure of the value (to the beneficiary) of a government subsidy for health insurance in various programs: multiply the percentage of premium covered by subsidy by the actuarial value of the insurance obtained. (A somewhat more streamlined version of the comparison is here at HIO).

For the ACA marketplace, I multiplied the average premium subsidy as reported by HHS (73% of premium) by the weighted average actuarial value obtained by subsidized marketplace enrollees (81%, my calculation) to come up with 59% total subsidized costs.

I then calculated that Tom Price's replacement plan, which has subsidies based on age not income, would on average cover about 40% of ACA benchmark silver plan premiums. I estimated that those flat subsidies would cover about 60% of premium for the cheaper plans to be offered in Price's deregulated market, to which I charitably ascribed an average AV of 60% -- coming up with a total average subsidized cost of 35% or 36%.  Of course, that's for all buyers, whereas only about half of current individual market enrollees are subsidized. Thus Price's plan radically redistributes subsidies from low-income toward higher income prospective enrollees.

Yesterday David Cutler, a Harvard health economist, John Bertko, chief actuary for Covered California, and Topher Spiro, veep for health policy at CAP, published in Vox a more nuanced and sophisticated comparison of the ACA-governed individual market and Tom Price's plan that ended up in pretty much the same place.

TrumpCare's coming! What kind of garbage in a gold box awaits us?

The Washington Post's Robert Costa published the gist of an interview with Trump last night in which Trump claimed that his administration is putting the finishing touches on a health reform plan that would provide universal access to affordable, low deductible coverage. This is so apparently out of keeping with existing Republican ACA replacement plans that it's hard to know what to make of it. Here are three possibilities:

1) Trump's plan will depend heavily on "mini-med" plans for low income people -- that is plans with low up-front costs but tight caps on how much the plan will pay (annual caps, lifetime caps or both).  An ACA replacement plan put forward by Senator Bill Cassidy (R-Louisiana) and Rep. Pete Sessions (R-Texas) features such plans for the poor.

2) Trump will offer a plan that proposes something very like Medicaid for people higher up the income chain than the ACA does with something very like Tom Price's plan for people with somewhat higher incomes -- that is, relatively small tax credits, unadjusted for income, to be spent in a deregulated insurance market. I've proposed this myself, and I think it's too good to be Trump.

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).

Tom Price will probably cut your health insurance subsidy in half

Last week, I noted that the federal government pays a bit more than two thirds of total medical costs for the average traditional Medicare enrollee. That is, the government pays about 85% of the premium(s) for insurance that covers a bit more than 80% of the average user's annual medical costs (that latter percentage is known as a health plan's actuarial value). Subsidies for those who chose Medicare Advantage plans are comparable.

In a followup post, applying the same calculation to subsidized enrollees in the ACA marketplace and prospective enrollees in HHS Secretary nominee Tom Price's ACA repeal-and-replace plan, I came up with the following total subsidy values:

Traditional Medicare:  85% of premium paid for AV 81% coverage = 69% of costs

Subsidized ACA marketplace: 73% of premium paid for AV 81% = 59% of costs (highly variable)

Tom Price ACA replacement: 59% of premium paid for AV 60% coverage = 35% of costs

Tom Price's ACA replacement plan opens a sluice gate to privatizing Medicare

Tom Price, Trump's choice for HHS Secretary, is the author of the Empowering Patients First Act,  an ACA replacement plan that provides age-based subsidies for deregulated health insurance, unadjusted by income.

Those subsidies are skimpy, particularly for older buyers, as Price would loosen age banding, and for low income shoppers, as the subsidy level would leave coverage unaffordable.  Jed Graham of IBD runs the numbers for a 64 year-old couple earning 150 of the Federal Poverty Level (FPL) and finds that while an ACA plan might cost them 8-12% of their income (($2-3,000, out-of-pocket costs included) in a bad year, a plan purchased under Price's legislation would take 80% ($18,000).

The Price plan (let's call it EPFA)  is a bare-bones version of "premium support," in which the government gives beneficiaries a fixed sum and sends them to shop in a deregulated marketplace (the ACA sets up a more generous and regulated premium support program).  Since Price also aims to pass legislation this year to convert Medicare to a premium support system, his plan -- which allows people to opt out of Medicare and receive the plan's fixed tax credit --  can be viewed as an ultimate vision for Medicare, Republican style.

If King is upheld, what will Congress do?

Congressional Republicans, who have promised and failed to come up with a legislative alternative to the Affordable Care Act for five years, are now promising that they will have a replacement ready in case the Supreme Court upholds the plaintiffs  this June in King v. Burwell.  Here's Reuters:

Representative Tom Price, Republican chairman of the House Budget Committee, told a conservative forum that the high court's anticipated ruling in the case known as King v. Burwell could cause President Barack Obama's signature domestic policy to unravel quickly.

"We need to be ready, willing and able to move forward," said Price, a leading Obamacare critic who replaced Wisconsin Republican Paul Ryan as House Budget Committee chairman earlier this year.

“We believe we are going to get to that point. I believe the president is actually going to be open to a better way,” he added.

A ruling for the plaintiff in King would leave the body of the law intact, albeit in a vegetative state. The exchanges would still exist, though they would be completely dysfunctional in the states covered by Healthcare.gov. Governors and legislatures in those states would be responsible either for finding a way to continue to subsidize the premiums of tens or hundreds of thousands of state residents who have accessed coverage through Healthcare.gov, or for justifying the denial of subsidies to those residents.

Because the law would still be on the books, there is nothing to force the administration to negotiate a full "replacement" that would entail repeal (as in "repeal and replace"). That leaves the question: Are there possible amendments that would meet Republicans' alleged policy goals without shredding the ACA's coverage grant?  Under pressure of abruptly withdrawing coverage from 8 million Americans, is compromise conceivable?