The logic underpinning Medicare for all who want it

Blog as sketchpad: as employer-sponsored insurance continues to slowly, steadily bleed Americans white, I think the case for a strong public option that anyone can buy into on an affordable, income-adjusted basis boils down to a few simple propositions:

1. Employer insurance is deteriorating because employers (through insurance intermediaries) lack pricing power. Every year, premium and OOP increases exceed inflation and wage growth.

2. The competition needed to endow them with that power is a strong public option paying providers Medicare rates or some variant.

3. Once such a public option establishes all-payer rates, either de facto or by fiat**, we will have space to determine whether private insurance adds any value

4. Under those revamped market conditions, we can afford to be agnostic as to whether private insurance survives or dies.

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FN - This little credo started life as a postscript to a slightly longer version of the argument.

* The Medicare for America bill, which establishes a strong public option paying modified Medicare rates (110% Medicare, with adjustments for primary care, mental health and underserved areas), stipulates that providers who accept the public plan must accept the same payment rates from commercial insurers. Competition from a strong public option could more slowly have the same effect.

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Just how big a bite does healthcare cost growth take out of earnings?

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The Kaiser Family Foundation's Employer Health Benefits Survey for 2019, released this week, shows a continued upward march in premiums and out-of-pocket costs. While costs have risen more slowly in the past five years than in the previous five, and in the last ten years (2009-2019) than in the previous ten (1999-2009), they continue to outpace inflation and wage growth. 

To get a feel for how much wage growth is eaten by health costs, let's look at some broad averages: the average increase in premiums and deductibles set against the average increase in the mean wage. Jeffrey Young's overview of the survey results at HuffPost provides a useful starting point:

In the past 10 years, the average premium for job-based health insurance that covers a family has risen 54%, to $20,756. Moreover, the amount of that premium workers pay for family coverage has increased 71%, to $6,015.

Employer-sponsored insurance as we know it is unsustainable. Now what?

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Kaiser's 2019 Employer Health Benefits Survey, released yesterday, highlights a basic I noted a month ago (based on a Kaiser precursor report): employer-sponsored health insurance is deteriorating. Average family plan premiums have topped $20,000; average deductibles have topped $1,600. Family premiums have increased 54% over ten years. That's actually down from the previous ten years, when rates more than doubled. But the climb in excess of inflation has been relentless.

The system most consistently fails low income workers -- many of whom would be better off if the employer offered no insurance, rendering them eligible for ACA marketplace subsidies. KFF president Drew Altman lays out the basics:

• Roughly 36 million American workers earn $25,000 per year or less — retail workers, personal care attendants, warehouse workers and many more.
• Just 33% of workers at lower-wage firms offering health benefits are covered by their employer’s health benefits, well below the 63% share at other firms offering coverage.
• These low-wage workers pay an average of $7,000 per year just toward the premium for a family plan.
• Workers in low-wage firms also face much higher deductibles: a $2,679 annual single deductible, while at other firms, the average is $1,610.

My takeaways:

Unsubsidized? Buy bronze (probably)

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In a post yesterday, David Anderson clarified something I understood only vaguely: once a health plan enrollee meets her deductible, her incurred costs will reach the plan's annual out-of-pocket (OOP) maximum much more slowly in a plan with a high actuarial value (say, a plan covering 80% of costs) than in a low-AV plan (covering 60% of costs).

The ACA requires plans to cap enrollees' annual OOP costs at no more than $7,900. Most plans at all metal levels have OOP caps over $5,000, with the exception of silver plans enhanced by strong Cost Sharing Reduction CSR) subsidies available to low income enrollees.  By the standards of the U.S.'s peer countries, that's a grotesque amount of risk for an average person to assume, but that's the world we Americans have made ourselves.

Anderson plots the rate at which an enrollee's total incurred medical costs will hit the maximum allowable OOP max in  bronze, silver, and gold plans with these features:

Elizabeth Warren's healthcare toggle switch: A two-year review

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An hour ago I stumbled on a two year old post teasing out Elizabeth Warren's ambivalence about Bernie Sanders' Medicare for All bill, as expressed on the occasion of her co-sponsoring it. That's led me to reflect on the apparent cross-currents in Warren's mind drawing her alternately toward and away from fast-track hard-core single payer.

Here are some longstanding key points in Warren's healthcare stance, fleshed out in the links provided at bottom.

1. Warren's entire political outlook and diagnosis of the U.S.'s economic and political woes is founded on her understanding of the impact of medical debt and other costs of illness (e.g., lost wages) on ordinary Americans.

2. Warren's outrage against banks and other financial institutions that she views as helping Americans "drown in debt,"  taken up several notches in the wake of the 2008 financial crisis, transfers easily to outrage against health insurers -- which are, after all, financial institutions of a sort.

What's so great about Medicare?

Kaiser Family Foundation polling indicates that when a majority of Americans say they're in favor of Medicare for all, most are thinking of the program as it currently exists, not as Bernie Sanders re-imagines it.*

Which raises the question: Why is Medicare's brand so strong?  I've explored the question over at medicareresources.org, companion site to healthinsurance.org.

Personally I would rate Medicare somewhere along the lines of a review advertised by a Cleveland restaurant long ago: Not great, but more than adequate when you consider the alternatives. For all its gaps and flaws, Americans exhale when they hit age 65. Hope you'll click through for a bit more detail.
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* Most apparently are also thinking that everyone should be able to opt in, not that everyone should be auto-enrolled with no alternatives.

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Buttigieg goes first! -- Decries predatory hospital pricing and proposes to do something about it

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I have been part of a chorus of healthcare writers complaining that when Democratic presidential candidates excoriate profiteering by health insurers and pharma, they always give providers a pass. Relatedly, my last post salutes three hard-hitting stories published this year -- two of them in the last week -- that spotlight predatory billing or collections by hospitals and private equity-owned physician staffing companies.

While no candidate participating in the September 12 CNN debate took Kaiser Health News editor-in-chief Elizabeth Rosenthal's pre-debate invitation...

Will any of the candidates take on HOSPITALS' PRICING AND BILLING policies at tonight's #democraticdebate? They should and why they might not...in my latest for the @NYTimesOpEd. https://t.co/e808tYGdLe

— Elisabeth Rosenthal (@RosenthalHealth) September 12, 2019

one candidate caught the cue this week. Today, Pete Buttigieg is out with a "Medicare for all who want it" plan (rather like Biden's, FWIW). In a statement, as reported by HuffPost's Jonathan Cohn, Buttigieg rounded up the usual healthcare suspects -- plus one (my emphasis):

“For years, Washington politicians have allowed the pharmaceutical industry, giant insurance companies, and powerful hospital systems to profit off of people when they are at their sickest and most vulnerable,” Buttigieg said in a prepared statement. “My ‘Medicare for All Who Want It’ plan will create a health care system that puts power in the hands of each American.”

Healthcare regulation by exposé

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It's been said that shaming by journalists doth not a regulatory regime make. But in 2019, national healthcare reporters are giving it a go.

Back in January, Sarah Kliff, then at Vox (now at the NYT), reported that Zuckerberg San Francisco General Hospital, a go-to destination for trauma victims, did not accept any private insurance plans. Every private who enters the hospital gets balance billed (or did at the time of writing) -- often for tens of thousands of dollars. The stories were vivid and egregious.

The next shoe dropped in April:

Zuckerberg San Francisco General Hospital announced Tuesday it has overhauled its billing policies, a move that comes three months after a Vox story drew national attention to the hospital’s abnormal and aggressive billing tactics.

Uninsurance goes upscale: The Census's Health Insurance Coverage Update for 2018

Yesterday the Census Bureau* released its health insurance estimates for 2018. The top line showed a rise in the uninsured population of 1.9 million, or 0.5% -- the first increase since the ACA's main programs launched.

Disturbingly, the number of uninsured children increased by 425,000, or 0.6%, raising children's uninsured rate to 5.5%. That spike would appear to be due mainly to a drop in Medicaid coverage, given that  Medicaid and CHIP coverage for children was down 1.2%; and the overall percentage of children with public health insurance dropped 0.8%, while the percentage of children with private health insurance ticked up 0.2%. There was also, however, a sharp spike in the uninsured rate among children in households with incomes over 400% of the Federal Poverty Level (FPL), from 1.9% in 2017 to 2.6% in 2018 -- accounting for almost half of the increase in uninsured children.

Folks at Georgetown University and the Center for Budget and Policy Priorities will probably dive  into the spike in uninsured children, as they have been doing for at least a year. Here I just want to throw some sidelights on the Census numbers generally.

1. Affluent uninsured population spikes. Notwithstanding a drop of 2 million  (0.7%) in Medicaid enrollment, the sharpest increases in the uninsured were at high incomes. At 300-399% FPL, the insured rate dropped a full percentage point, from 92.9% to 91.9%, and at over 400% FPL, the rate dropped 0.8%, from 97.3% to 96.6%. Together, these two income groups account for 55% of the population. Particularly striking, the number of uninsured at incomes over 300% FPL increased 23.8% (from 6.631 million in 2017 to 8.215 million in 2018).  The spike in uninsured children at high income levels seems congruent with this drop.

When silver loading discounts trump strong CSR (the nonexpansion state "advantage," take 5)

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This post picks up where the last one left off, further examining potential partial explanations for why ACA marketplace enrollment declines on HealthCare.gov in 2019 were much sharper in states that have expanded Medicaid than in states that have refused the expansion. I raised a question in that post, bolded in the excerpt below.

Enrollment changes by income, HealthCare.gov states
2019 enrollment as a percentage of 2018, as of the end of OE in each year

State group	Total enrollment	100-150% FPL	150-200% FPL	100-200%  FPL	200-400% FPL	Unsubsidized
Expansion*	93%	93%	91%	92%	95%	88%
Nonexpansion	99%	100%	98%	100%	102%	82%

* Excluding Virginia and Maine   Source: CMS state-level public use files 

The enrollment performance gaps at 100-200% FPL and 200-400% FPL are comparable. I would be tempted to suggest that the gap at 100-150% FPL is due to the concentration of low income enrollees in the nonexpansion states (those at 100-138% FPL, who pay less for top-level CSR silver plans than do those at 138-150% FPL), and that the gap at 200-400% FPL is due to stronger silver loading in the non-expansion states. But the large performance gap at 150-200% FPL kind of belies that -- unless, perhaps, silver loading at that income level is pulling more prospective enrollees into free or ultra-cheap bronze plans in the nonexpansion states. In the silver loading era, silver plan selection at 150-200% FPL has dropped from 83% in 2017 (pre silver loading) to 76% in 2019 in HealthCare.gov states. The lure is bronze coverage that is often free at that income level, while benchmark (second cheapest) silver costs about $130/month at 200% FPL. I guess I need to test whether bronze selection in this income band has risen faster in nonexpansion states.

Why 2019 ACA enrollment drops were concentrated in Medicaid expansion states on HealthCare.gov, Take 4

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In December and January, I took several whacks at explaining why 2019 enrollment losses in the 39 HealthCare.gov states were concentrated in the states that had expanded Medicaid. In those 21 states, plan selections as of the end of Open Enrollment were down 7% from 2018, compared to a 1% drop in 16 states that have refused to expand Medicaid. (I excluded Virginia and Maine, which expanded Medicaid in 2019, affecting enrollment options and results.)

First hypothesis was that the heavy concentration of enrollees in non-expansion states with incomes that would have qualified them for Medicaid in expansion states is especially "sticky." People in this income group (100-138% of the Federal Poverty Level) pay just 2% of income for a benchmark silver plan that comes with the highest level of Cost Sharing Reduction (CSR), raising the actuarial value of a silver plan to 94%, which usually translates to a deductible in the $0-500 range.  About a third of enrollees in nonexpansion states are in this income category. While about 15% of enrollees in expansion states have incomes in the 138-150% FPL range, which qualifies them for the 94% AV silver, they pay 3-4% of income for the benchmark.

Second hypothesis was that silver loading effects are stronger in nonexpansion states, because all those low income enrollees raise the average actuarial value of silver plans (which varies with income). In Florida, the blended AV of all silver plan enrollees is 91.5% in 2019.  (If you're unfamiliar with silver loading, see the note at bottom.)

Recently a third possible factor occurred to me: expansion states have a higher percentage of enrollees with incomes too high to qualify for subsidies, and enrollment losses among the unsubsidized were much steeper in the market as a whole than among the subsidized. This factor did play a role, but it was partly offset by the fact that in this category losses were steeper in nonexpansion states. The higher concentration of unsubsidized enrollees in expansion states cancelled out that advantage, however, so that losses in unsubsidized enrollment took basically equal bites out of total enrollment in both groups.

For further study

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I'm going to be a little Labor Day weekend lazy here and jot down a few questions I'd like to look into, rather than provide any actual information about them. If you have any answers, please comment!

1. Credential inflation.  My wife, a certified nurse-midwife, rolls her eyes at the increasing impossibility of getting credentialed in her field without a doctorate. She spoke recently to a young labor & delivery nurse who's planning to become a midwife and is facing four years of study and likely debt. Apparently you can't get certified as a midwife in NJ now without doing the doctorate (not a Ph.D.), and that's a nationwide trend. "We have to do it," was the word for a university program director, because all the other nursing specialty and other non-physician medical professions like OT are doing it.

Healthcare reformers can't leave employer-sponsored insurance untouched

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Presidential candidates and other Democrats who want to patch or build on the ACA rather than create a substantially new system generally neglect, to varying degrees, an attendant problem: employer-sponsored insurance (ESI) is also in dire need of reform.

A Kaiser Family Foundation's report on large employer coverage released this month found that health spending by families in large employer plans has grown twice as fast as wages over the past decade. The employer share of costs in family coverage (premium plus out-of-pocket) has downticked only slightly:  it was 68% in 2008 and 66% in 2018.  But families and employers alike are tapped out: total costs increased 67% over those ten years. The total cost of large group coverage for a family of four now averages $22,000 per year. Reducing healthcare costs is among voters' top priorities.

Beyond the steady-but-high yearly increases recorded by Kaiser, yesterday NYT reporters Reed Abelson and Katie Thomas spotlighted a recent development that could be destabilizing: the proliferation of specialty drugs for rare diseases, which can carry price tags in the millions per patient per year. As Abelson and Thomas note, about 10% of the population is afflicted with rare diseases,  and more than half the drugs approved in 2018 targeted such diseases.

Who pays for astronomically expensive orphan drugs? Some questions prompted by the NYT report

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The Times' Reed Abelson and Katie Thomas have a major story exploring a key factor in rising healthcare costs: specialty drugs for rare diseases, which increasingly can carry price tags in the millions per patient per year. The trend and the impact are laid out succinctly:

Rare diseases, however, aren’t all that rare. There are an estimated 7,000 of them, and about 30 million Americans have one — roughly the same number of people in the United States with diabetes. And although there are no treatments for most rare diseases, new therapies are coming on the market nearly every month,  with some reaching beyond $2 million a year for a single treatment. Of 59 new drugs approved in 2018, more than half, or 34, were for rare diseases. 

Leaving aside the broad question of how the U.S. might contain costs for these drugs without choking off their development, the story prompted a few thoughts and questions about how these costs are currently distributed, and how that might change. Some factors to consider:

Surprise! New Jersey ACA marketplace outperforms the national market

When CMS reported enrollment totals in the ACA marketplace at the end of Open Enrollment last December, the news for New Jersey was disappointing.

Despite (or per below, partly because of) a 9% average reduction in premiums last year, fruit of a new reinsurance program and a state-enacted individual mandate, on-exchange enrollment dropped 7.1% -- a performance that lagged the national marketplace (down 2.7%) and the 39 states that rely on the federal HealthCare.gov platform (down 3.8%) -- though right at the median for HealthCare.gov states that have expanded Medicaid (and so get less juice from silver loading)*.

When the state released off-exchange numbers in June, the results provided a measure of consolation. Off-exchange enrollment was up 3%, shrinking the total individual market enrollment loss to 4% from Q1 2018 to Q1 2019.

The main cause of the contrary results is not hard to find. Three quarters of on-exchange enrollment in New Jersey is subsidized.  In David Anderson's pithy formulation, "Reinsurance, all else being equal, helps the unsubsidized and hurts the subsidized." That's true of any measure or market force that reduces average premiums. When the benchmark (second cheapest silver) plan premium goes down, subsidies are reduced accordingly, and price spreads between the benchmark and cheaper plans tend to shrink, reducing discounts.

The retentive ACA marketplace, revisited

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In my last post, I noted that enrollment drops in the ACA marketplace recorded in each year of the Trump era at the end of Open Enrollment more or less evaporate in yearly comparisons of average monthly enrollment, or end-of-year enrollment.

That is, it seems that fewer people in the last two years drop out without paying, and perhaps a higher percentage remain enrolled all year (many people in the ACA marketplace do have good reasons not to remain enrolled all year -- one of the marketplace's vital roles is as a stopgap). That's congruent with another change recorded in 2019: new enrollments down (-15.7%), re-enrollments up (2.3%), as of the end of Open Enrollment.

Why have apparent enrollment drops as of the end of OE in each of the last three years either shrunk or eroded entirely over the course of the year? A few possibilities:

CMS subtext: The ACA marketplace is in recovery

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The CMS report on long-term enrollment trends in the ACA marketplace has a stark lede:

During two successive years of declining enrollment, from 2016 to 2018, unsubsidized enrollment declined by 2.5 million people, representing a 40 percent drop nationally. 

That's bad. But the report includes data that leads to a clear conclusion: The ACA-compliant individual market has stabilized. It is rife with problems and there are many enrollees whom it does not serve well, but it's passed through a crisis. Consider the following points (some derived from the report, others not):

1. Subsidized enrollment was higher in 2018 than in 2016, generally understood to be the enrollment peak. In fact, total on-exchange enrollment was higher in December 2018 than in 2016. (Off-exchange enrollment, where the bulk of unsubsidized enrollment occurs, did drop sharply in those years.)


2. Subsidized enrollment is higher in 2019 than in 2018, as of February of each year, when all enrollees have had at least one payment due (see CMS's  (2018 and 2019 Effectuated Enrollment Snapshots). 

Is subsidized enrollment in the ACA marketplace really up since 2016?

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CMS's report on long-term enrollment trends in the ACA marketplace released this week emphasized the 40% drop in unsubsidized enrollment from 2016 to 2018. But the counterpoint came as something of a surprise: subsidized enrollment, according to CMS, is up since 2016.

If you look at the most often cited enrollment numbers for each year -- total plan selections reported by CMS annually at the end of the open enrollment season  -- total subsidized enrollment is down substantially -- 7.1% from 2016 to 2018, and 7.7% from 2016 to 2019. But average monthly enrollment was higher in 2018 than in 2016 -- and probably will be slightly higher this year.

It might appear that retention has improved -- more people stay in their plans for more of the year. But that's not clear, as average monthly enrollment in 2018 is not quite the same measure as in years prior.  Let's look at the numbers:

CSR attrition vs. silver loading stimulus, 2017-2019

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In my last post, I noted that in the Trump era, ACA marketplace enrollment has shifted toward the middle of the income distribution. While enrollment has cratered for the unsubsidized, and eroded by 16% since 2016 among low income enrollees (100-200% FPL, in HealthCare.gov states), it's stayed basically flat at the upper end of the subsidy-eligible income scale, 201-400% FPL.

In brief, the market got much worse for the unsubsidized, as premiums spiked 21% in 2017 and 26% in 2018, and marginally worse for low income enrollees, as out of pocket costs rose yearly in plans with fixed actuarial values. It got better, however, for many enrollees in the 200-400% FPL income range, since a) rising premiums made more people at the upper end of the range subsidy eligible, and b) Trump's cutoff of direct CSR reimbursement for insurers in fall 2017 induced "silver loading" that created discounts in bronze and gold plans (see note below if you're unfamiliar with silver loading).

ACA marketplace enrollment is down at low incomes as well as at high ones

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[Update, 8/15: CMS data on average monthly enrollment in each year appears to suggest that apparent year-over-year enrollment drops among the subsidized as of the end of Open Enrollment may have evaporated (in 2018, and perhaps 2019) as the year progressed. See this post.]

CMS is out with a report highlighting, not to say gloating over, a steep decline in unsubsidized enrollment in the ACA-compliant individual market from 2016 to 2018.  Nationally, while subsidized enrollment was up 1.3% in that period, unsubsidized enrollment crashed 40%, from an average monthly enrollment of 6.27 million in 2016 to 3.77 million in 2018.

That's not surprising, given premium increases averaging 21% in 2017 and 26% in 2018, and the obvious fact that the ACA marketplace was under-subsidized from the start and essentially unaffordable for many people with incomes modestly above the 400% FPL subsidy cutoff, as Urban Institute scholars Linda Blumberg and John Holahan pointed out in 2015:

Here I'd like to add a corollary: Enrollment since 2016 has declined not only at the top of the income scale, among those with incomes above 400% FPL, but at the bottom, among those with incomes up 200% FPL. It's shifted toward the upper end of subsidy eligibility, into the 200-400% FPL income range. The percentage of enrollees with incomes in that range has risen from 29.5% in 2016 to 34% in 2019 in HealthCare.gov states, and from 40.4% to 44.1% in California.