Single payer by inches?

File this under Half-baked Ideas and What's a Blog For?....

Dave Anderson, Louise Norris and I were noodling about stability funds, reinsurance, high risk pools, and the probably minuscule chance that Republicans would demand something acceptable in exchange for coughing up some federal "stability" money for states without repealing the ACA when a thought emerged...

What if the federal government undertook to foot the bill for all truly catastrophic claims -- say, those over $200,000 a year -- for all insurers, paying Medicare rates for care?

For hospitals and doctors, that would mean status quo ante payments for patients already on Medicare; a severe haircut for patients covered by commercial insurance; but a corresponding bump-up for patients on Medicaid. The rate (Medicare plus or minus a bit) could be calibrated to net out even, or a bit less than even in exchange for giving providers the certainty of getting major claims paid.

The tradeoff would be reduced rates for commercial insurance in exchange for a universal tax increase -- say, added to the Medicare payroll tax. In FY 2015, the 2.9% Medicare tax yielded $234 billion, so perhaps every additional 1% would yield another $80 billion, adjusted for growth and inflation.  If the reinsurance brought down commercial rates, that should translate into lower premiums and out-of-pocket costs for employees and/or higher wages.

Kaiser and me, on average AV

Drew Altman, president and CEO of the Kaiser Family Foundation, wrote on March 22 that under Ryan's ACA repeal plan, the average deductible in the individual market for health insurance would rise $1550 from current levels in the ACA-compliant market.

That was based on an estimate that the average actuarial value in the current market is 72%, vs. a norm of 65% that CBO calculated for Ryan's bill. Actuarial value (AV) is the percentage of the average user's yearly medical costs covered by plan. It's calculated according to a formula mandated by the ACA.

The 72% average AV figure jumped out at me, because in April 2016 I calculated the average weighted AV in the individual market as 75.5%.  Altman's piece cites an average AV in the ACA marketplace of 79%.That's exactly what I initially calculated, though I later bumped my estimate to 80%, based on likely silver plan selection by enrollees eligible for Cost Sharing Reduction at different income levels (see note at first asterisk, here).

The difference in the overall estimate appears to stem from estimates of metal level selection (bronze, silver, etc., with AV set by statute at each level) in off-marketplace enrollment, which is something of a black box. I used unsubsidized enrollees in the ACA marketplace as a proxy and calculated their average weighted AV at 68.7%.  According to an as-yet unpublished methodology note forwarded to me, Kaiser appears to have relied on 2016 data from the online broker eHealth, which included  a metal level breakout among their customers indicating an average weighted AV of 65.8%:

The cost of single payer: roughing it out

With sweeping ACA repeal apparently off the table for the moment, the Democratic imagination is turning once again toward some version of single payer, or Medicare for all.

I thought I'd try an overview from more than 30,000 feet -- say, from space -- of the tax revenue that might be required to move those now covered by commercial insurance into some kind of public insurance program.  That is, converting about a third of current total healthcare spending from private to public.  I hope this is not too general, or too vaguely informed, to be useful, but here goes...

1. According to the National Health Estimate, in 2015:

• Medicare spending was $646.2 billion, or 20 percent of total NHE.
• Medicaid spending was $545.1 billion, or 17 percent of total NHE.
• Private health insurance spending was $1,072.1 billion, or 33 percent of total NHE.
• Out of pocket spending was $338.1 billion, or 11 percent of total NHE.

2. Private health insurance covers more people than Medicare and Medicaid -- about 170 million (combining the employer and individual markets) vs. 120 million.* But it costs less in total -- about $1.1 billion vs. $1.2 billion.

3. At the same time, private insurance pays far higher rates to healthcare providers -- no one knows exactly how much more, but I've heard estimates in the 160% of Medicare range. Medicaid, in contrast, pays about two thirds of Medicare rates on average. [Update, 4/1: It's been pointed out to me that MEDPAC reports commercial rates for physician payments to be about 128% of Medicare -- that is, Medicare pays 78% of commercial rates on average. See p. 98 here. OTOH (added 4/4), a brand new CBO report estimates that commercial rates for hospital inpatient services average about 188% of Medicare, with wide variation. Hospital services accounted for a bit over $1 trillion in spending in 2015, compared to $635 billion for physician and clinical services.]

Affordable Care Anthem

In the fight against ACA repeal, the healthcare committee of our local advocacy group, BlueWaveNJ, cooked up some songs to warm the rallies and vigils aimed at the state's five Republican members of Congress -- four of whom came out against the AHCA, Ryan's repeal bill. Here's one of my contributions, with some local references -- e.g. to Rep. Rodney Frelinghuysen, NJ-11, chair of the House Appropriations Committee.  Here's a snippet from the local NBC affiliate that includes us singing outside his office.

The tune is This Land is Your Land....

After an election
we got a health scare:
Extremists tried to
take away our healthcare.
But we're united,
and they're divided...
Healthcare's a right for you and me.

Chorus

Healthcare is your right,
healthcare is my right,
Ii they try to take it,
we're gonna fight fight.
Tax breaks for the wealthy
won't make us healthy,
Healthcare's a right for you and me.

Uninsuring millions                                De-localized alt:
is a pill quite poison,                              should be rejected
so hear our voices,                                by those who hope to
Rep Frelinghuysen!                               be re-elected.
We sing in chorus:
Don't un-insure us...
Healthcare's a right for you and me.

"Medicaid expansion is the jewel of the ACA"

As Trump gleefully forecasts -- and thereby threatens to trigger -- the implosion of the ACA marketplace, methinks Democrats are starting to emotionally decouple from it. "You break it you own it" is a preemptive strike in messaging -- and potentially, a step toward planning the next phase when Democrats are in a position to shape public policy.

The AHCA's double-barreled assault on Medicaid -- repealing the ACA expansion and imposing per capita caps -- helped Democrats to see the ACA whole.  Hours before the bill hit, Andy Slavitt provided some clarity:

When #ACA replacement bill is out, don't get distracted by exchanges.

The big issue is dramatic cuts in Medicaid to pay for huge tax cuts.

— Andy Slavitt (@ASlavitt) March 6, 2017

Now enter Harold Pollack, who has a granular sense of how Medicaid functions in U.S. society, chronicling how Republican governors' support for the ACA expansion helped sink the AHCA. Pollack, like Slavitt, reframes the ACA -- at least in public discussion forever obsessed with the private plan marketplace:

In political and human terms, Medicaid expansion is the jewel of the ACA. Within the states that embrace it, Medicaid expansion is the most important public health advance in decades.

Medicaid, Medicaid...made in the shade with a garden spade. Better yet once ACA'd...

More startling still is Pollack's conclusion:

What comes after "catastrophic success"? Larry Jacobs on Democrats' healthcare choices

Now that the Republicans' main thrust to repeal the ACA's core benefits has failed for the present, what should Democrats do next?

I asked Lawrence Jacobs, a professor of politics and policy at the University of Minnesota who has closely studied the dynamics and incentives of legislative and presidential politics.

Here were the core questions:

Given unrelenting Republican hostility toward the ACA, and given that Republicans control the administration of its core programs as well as both houses of Congress, can Democrats do anything to shore up a stressed marketplace that needs a) competent administration committed to making it work and b) legislative fixes to improve the risk pool and keep insurers from bolting?

Should Democrats pursue legislative compromise that would alter marketplace structure more to conservatives' liking in exchange for, say, federal funding for reinsurance or other state programs designed to foster stability? (for more about possible components of such a deal, see my prior post.) Or should they step back and declare, in effect: the marketplace was more or less stable before the Trump administration began sabotaging it. Republicans now own it. We are going to look forward and propose bold measures to make insurance affordable for all that can be implemented when the American people return us to power.

What's next for Democrats in the healthcare wars?

While the ACA appears to have escaped repeal for the time being, the ACA marketplace remains under apparent and threatened assault from the Trump administration -- which, after all, has to administer it.

The avowals of Trump and other Republican leaders, including Ryan and McConnell, that the marketplace will implode or is in a death spiral; the withdrawal of advertising for the marketplace in the closing weeks of open enrollment last January; the threat not to enforce the individual mandate; the possibility of destroying the marketplace immediately by stopping federal payments to insurers for Cost Sharing Reduction subsidies; and, most recently, the walk-back of avowals that Ryan's repeal bill is dead -- all these factors have left insurers and therefore the marketplace in a shaky position. Insurers may withdraw, and premiums are likely to spike, as they did last year.

Even if Hillary Clinton had won the presidential election, the marketplace would be in need of fixes. The risk pool is sicker, older and smaller than originally envisioned. The subsidies are smaller than they should be. Millions whose employers offer nominally "affordable" individual insurance but unaffordable family insurance are denied marketplace subsidies through the family glitch. The trio of risk control programs designed to smooth insurers' losses in a new kind of market expired too quickly, and one -- the risk corridor program -- was sabotaged by Republicans.

Given the need for fixes, and the at least momentary acknowledgment by Republican leadership that "we're going to be living with Obamacare for the foreseeable future," as Paul Ryan rather astonishingly put it last Friday, a number of progressives have started to scope out possible means by which Democrats in Congress could win Republican support for legislation that would improve competition, participation and affordability in the marketplace. If such a deal were possible, it would entail agreeing to provisions that would reshape the marketplace more to Republicans' liking. These might include:

Progressives, don't forget: The Freedom Caucus killed the AHCA

Defenders of the ACA are right to take some satisfaction and pride in the failure of Paul Ryan's repeal bill, the American Health Care Act.  All those packed Town Halls, jammed phone lines and floods of mail had their effect. Dozens of Republican reps and senators, moderate and not so moderate, expressed qualms about un-insuring tens or hundreds of thousands of their constituents -- and tens of millions of Americans.

As we consider next steps, though, it's important to take full measure of the rather mind-bending fact that it's the Freedom Caucus that really sank the bill. They reportedly killed it partly because Trump managed somehow to trivialize their concerns even as he caved to most of them -- but more fundamentally, because it left some ghost of the ACA tax credits and consumer protections intact for those seeking insurance in the individual market.

For these zealots (and their right-wing think tank backers), the AHCA wasn't harsh enough.  It didn't cut the taxes that fund Obamacare benefits fast enough. It didn't uninsure beneficiaries of the Medicaid expansion fast enough. It didn't kill the concept of subsidized private insurance dead enough. It didn't take us back to the future of medical underwriting and health "insurance" that would render unaffordable coverage for such incidentals as childbirth and mental health treatment.

Trump threatens ACA marketplace collapse and nuclear blame war

In one sense, it may have been the worst-timed op-ed of all time. I argued in a piece published in the online NYT yesterday (submitted back on March 13!) that Senate Democrats should engage with sponsors of the Cassidy-Collins ACA reform bill to shore up Republican moderates who I thought likely to ultimately pass some lightly sanded version of the AHCA, or otherwise act to eviscerate Medicaid in particular.

While there was obviously a good chance the AHCA would not pass the House this week, I never dreamed the Republicans would simply give up for the present. For me the truly astonishing moment was when I saw Ryan quoted on Twitter saying "“We’re going to be living with Obamacare for the foreseeable future,”

That's the Trump factor. Just as he swung wildly and obliviously into the Freedom Caucus camp to allow them to pull any fig leaves of rationality from the AHCA, when thwarted he swung wildly back to call off the whole thing.

But it's that very swing that leaves my core point relevant: Democrats still need to find a way to win a measure of Republican buy-in to the ACA, because the Trump administration can kill it administratively -- swiftly or slowly, subtly or obviously. That goes in part for Medicaid, via a rush of work requirements and administrative harassment, as well as for the marketplace, which can be destroyed at a stroke by stopping CSR payments or by a host of more gradual means, already begun, nicely chronicled by Dan Diamond.

That's where Trump's at just now.  Check out last night's insanity:

The semi-satisfied unsubsidized

I have a post up on healthinsurance.org delving into the experience of four unsubsidized enrollees in the ACA marketplace who have pre-existing conditions, or children with pre-existing conditions.

None of them regarded their coverage as perfect. All were glad to have it – and confident that they would have fared worse if the ACA had not become law. Yet the piece does highlight that the status quo is unsatisfactory -- and deteriorating -- for a likely majority of the 8-10 million unsubsidized buyers in the individual market.

Here is a sliver of one person's experience:

AHCA vs. ACA: Total subsidized shares of costs at different income levels and ages

Late last year I cooked up a simple measure of the value of any given health insurance subsidy: the percentage of the premium paid multiplied by the actuarial value (AV) of the insurance obtained. AV is the estimated percentage of the average enrollee's medical costs paid for by the insurance.

In traditional Medicare, for example, for all but the highest-earning 5% of enrollees, the federal government pays about 85% of the combined premium for Parts A,B and D - which have a combined actuarial value a bit north of 80%. Hence the total subsided share of costs (can we call it TSS?) is about 69%.  Employers, according to the Kaiser Family Foundation, pay an average of 82% of the premium for individual insurance and 71% for family coverage. Given an average AV of 82% -- also a Kaiser estimate -- that yields a TSS of 66% for individual coverage and 58% for family.

I've previously estimated (see first link above) that the average subsidized ACA marketplace enrollee obtains a TSS of 59% -- with the federal government picking up an average of 73% of the premium for insurance with an average AV of 81%. Subsidies vary tremendously, however, ranging from 0% for the half of individual market enrollees who don't qualify for any help to over 90% for the lowest income enrollees obtaining silver plans enhanced with Cost Sharing Reduction.

Now, with the help of CBO analysis of the House repeal-and-replace bill, the American Health Care Act, it's possible to compare the federal TSS for people of varying income and ages under the ACA and the AHCA.

Christopher Ruddy's alt-Trump

Christopher Ruddy, Trump buddy and CEO of the gaslight site Newsmax, wantonly misrepresents the ACA while proposing what he regards as a Tumpian alternative to "Ryan Care II" (for which Trump has now gone all-in, flaunting his powers of intimidation even as he yields to right-wing demands that the bill un-insure millions more swiftly).

Let's leave the lie-specking for later (see bottom).  Buddy Ruddy does Trump the doubtless undeserved honor of crediting his stated intentions for health reform as expressed in, for example, Trump's January 15 Washington Post interview:

“We’re going to have insurance for everybody,” Trump said. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.” People covered under the law “can expect to have great health care. It will be in a much simplified form. Much less expensive and much better.”

Also promised: "lower numbers, much lower deductibles."

There is only one mode of healthcare delivery in the U.S. that can deliver on those promises. And lo, Ruddy makes it his centerpiece -- Point 4 in a 7-point program:

David Frum for HHS Secretary

For ten years now, David Frum has wowed me with the clarity of his critiques of Republican extremism, notwithstanding the craziness of some of his own policy prescription (most in foreign policy; he is, after all, Mr. Axis of Evil).  He's been a hero dissecting and crying out against emerging U.S. authoritarianism for the past year. And in fact, he was doing that too back in 2009/10. Here's from his famous post-mortem on the passage of the ACA in March 2010:

I’ve been on a soapbox for months now about the harm that our overheated talk is doing to us. Yes it mobilizes supporters – but by mobilizing them with hysterical accusations and pseudo-information, overheated talk has made it impossible for representatives to represent and elected leaders to lead. The real leaders are on TV and radio, and they have very different imperatives from people in government. Talk radio thrives on confrontation and recrimination. When Rush Limbaugh said that he wanted President Obama to fail, he was intelligently explaining his own interests. What he omitted to say – but what is equally true – is that he also wants Republicans to fail. If Republicans succeed – if they govern successfully in office and negotiate attractive compromises out of office – Rush’s listeners get less angry. And if they are less angry, they listen to the radio less, and hear fewer ads for Sleepnumber beds.

So today’s defeat for free-market economics and Republican values is a huge win for the conservative entertainment industry. Their listeners and viewers will now be even more enraged, even more frustrated, even more disappointed in everybody except the responsibility-free talkers on television and radio. For them, it’s mission accomplished. For the cause they purport to represent, it’s Waterloo all right: ours.

Back then, Medicaid expansion was a bad thing from Frum's conservative point of view -- something Republicans could have avoided had they negotiated the ACA in good faith:

Squish!

The meme that Republican senators in states that have embraced the ACA Medicaid expansion will block the House repeal bill from passing substantially as is and save the expansion continues. Here's Politico's Burgess Everett with news of a closed-door meeting in Nevada:

Sen. Dean Heller panned House Speaker Paul Ryan's bill to repeal and replace Obamacare during a closed meeting with constituents on Saturday, according to audio obtained by POLITICO.

The remarks by Heller, the most vulnerable GOP senator on the ballot next year, are another sign of the difficult prospects the House bill faces in the other chamber. Already, more than a half-dozen senators have criticized the bill, and Republicans can afford to lose only two votes.

Hail defender! As Nevada's Republican governor, Brian Sandoval, boasted in a letter to the House leadership in January, Nevada has slashed its uninsured rate almost in half since ACA enactment, from 23% to 12% -- mainly through the Medicaid expansion, which has increased Medicaid enrollment by 288,000 since September 2013 in a state with 2.5 million residents. Plenty to defend!

So what is Heller's promise to Nevadans? Back to Politico:

"Moderate" Republican opposition to AHCA is looking very squishy

Hours before House Republicans published a full draft of their ACA repeal-and-replace bill, the so-called American Health Care Act, four Republican senators in states that have expanded Medicaid -- Portman, Capito, Gardner and Murkowski -- sent a letter to Mitch McConnell from warning that the repeal bill should provide "stability" for beneficiaries of the expansion.

Given the letter's timing, and its expressed concern for beneficiaries of the Medicaid expansion, some accounts of the repeal bill's release (e.g., Chait's) interpreted it as opposition to the bill. But it was not that. In fact it may have been the opposite. Those who are anticipating rejection of the House bill by Senators who have expressed qualms about un-insuring expansion beneficiaries should take warning.

Psst, Democrats: Help Republicans out of the repeal box via Cassidy-Collins

I don't want to be prematurely optimistic, but the House ACA repeal bill, the so-called American Health Care Act, seems despised from all sides -- so much so that both Jonathan Chait and Jonathan Bernstein speculate that it's designed to fail. It's being denounced by Tea Partiers as Obamacare Lite and by progressives -- and conservatives with any commitment to extending insurance access -- as certain to un-insure millions to tens of millions of low income ACA beneficiaries.

More to the point, its release was immediately preceded by a letter to Mitch McConnell from four Republican senators in states that have expanded Medicaid -- Portman, Capito, Gardner and Murkowski -- warning that the repeal bill should provide "stability" for beneficiaries of the expansion.

Still, perceptions of the way things are likely to fall out change quickly. Leadership in both the House and Senate have declared they want to move quickly -- McConnell indicating he'd give the House bill a quick floor vote in the Senate, though later half-walking that back. Underlying the process is the enormous pressure Republicans have built under themselves over seven years to rip the ACA apart. If the bluster from the far right about faux repeal blows over, the moderates defending Medicaid could go wobbly. In fact, they've left themselves space to. Look at the language with which they've "defended" the expansion (my emphasis):

Do we have to repeal the ACA to find out what's in it?

No one is claiming that the ACA led us into health access paradise. The ACA marketplace and wider individual market as open enrollment for 2017 began. But they were (and are) troubled markets, in need of adjustment, e.g. along lines sketched by scholars at Georgetown and the Urban Institute. The networks keep narrowing, premiums and out-of-pocket costs have spiked, and choice has narrowed in many markets. The roughly half of marketplace enrollees with strong Cost Sharing Reduction subsidies are partly but not wholly insulated from this deterioration.  Those who are unsubsidized or lightly subsidized have in many cases been hit hard.

The Medicaid expansion has been a clear boon to those who gained access through it, as well as to state budgets, state economies, state public health, and access to drug treatment. It's also, to some extent, highlighted the law's political weakness, apparently triggering a fair amount of Medicaid envy and resentment among the somewhat more affluent and the fact that the ACA's most direct beneficiaries are generally the poor and near-poor.

As mentioned in a prior post, I have a piece shopping that spotlights very mixed experiences of unsubsidized marketplace enrollees with pre-existing conditions -- grateful for access but dealing with rising costs.

Another piece relaying a wide variety of experience and perception, by Jay Hancock of Kaiser Health News, is a striking contrast to the polarized praise/denunciations that used to be common fare in ACA coverage. There is a really striking degree of nuance in these mostly Republican reflections, as well as a refreshing awareness in some cases of the ACA's different component parts. If nothing else, the rough number of people who have gained insurance through the law seems finally to have been hammered home. I hope Hancock doesn't mind my extracting all of the article's citizen testimony, as I do think it has a strong cumulative effect:

Short history of the decline and fall of American democracy

I switched on Twitter for 15 minutes at 7:00 a.m. this morning and felt I was watching democracy die before my eyes as a fascist and possibly traitorous president threatened to prosecute Obama.

That led me to a flash review of our decline and fall as the narrative has taken shape in my mind in recent years:

• The Kochs plotted long and hard, building their network of extremist think tanks, fake news sources, astroturf advocacy groups and corporate lobbying groups.


• Reagan ripped the lid off inequality and disinherited the middle class with a cocktail of tax cuts for the wealthy, deregulation, weakened antitrust enforcement and union-bashing.


• Rupert Murdoch and Roger Ailes prepped 30-40% of the population for fascism with twenty years of progressively more extreme gaslighting.

Pre-ACA, patchwork protections worked for the lucky

The pre-ACA individual market was not entirely devoid of protections for people with pre-existing conditions. These varied widely by state, however. Five states -- Maine, Massachusetts, New Jersey, New York, and Vermont -- had guaranteed issue and community rating, meaning that insurers could not deny coverage based on medical history or charge more to people on the basis of their medical history. In New Jersey, an insurer could bar coverage for the applicant's pre-existing condition for up to twelve months, though that period could be reduced or eliminated if the person had maintained continuous coverage prior to applying. In the other 45 states, the rules according to which insurers could ascribe a pre-existing condition to an applicant varied.

HIPAA, the Health Insurance Portability and Accountability Act of 1996, though focused mainly on rules governing employer-sponsored plans, provided some "continuous coverage" protection in the individual market, though the degree of protection varied by state. In some states, if you had maintained continuous coverage in a group health plan or via COBRA for eighteen months, any insurer selling individual coverage in the state had to offer you coverage, though HIPAA did not regulate how much the insurer could charge. Different states offered different degrees of protection, however.

Recently, a well-informed retired attorney in Atlanta, Gary Ratner, recounted to me how HIPAA, enhanced by Georgia state law, enabled him and his wife to maintain good if eventually very expensive coverage...not in the individual market per se, but as individuals without access to conventional group coverage, until they qualified for Medicare. Gary's tale makes an interesting counterfactual for older current enrollees in the individual market who wonder how they may have fared pre-ACA. Gary and his wife fared pretty well -- though if they were in the ACA-compliant individual market today, as his calculations below indicate, they would fare comparably. And they were lucky. They threaded a couple of needles.

"Where the hell are you?"

For the three or four people who may be wondering why I haven't blogged for a near a week: I've been taking testimony, so to speak, from a bunch of people who are buying unsubsidized health insurance in the individual market -- but who, thanks to pre-existing conditions, are more or less grateful for what they can get and worried about what the future may hold.

Some are members of of a political advocacy group here in North Jersey, whose tales I'm collecting for a story bank; others from Georgia Maine and Michigan as well as Jersey, have recounted their experiences for an article I hope to place elsewhere. In age they range from 20s to 60s. Because of their pre-existing conditions, or their propensities as people aware of risk, or their political sympathies, or all of the above, all are people who value insurance at its actual cost.

Virtually all of those who have been in the marketplace (or individual market) for some years have suffered premium increases, and out-of-pocket increases, and narrowing of networks, and in some cases, narrowing of choices. The collective picture of how the market's changed from 2014 to this year isn't pretty. And yet all are sensible of what the market was like, or will be like, without guaranteed issue and mandated comprehensive benefits.