Does Avik Roy want to preserve or privatize the Medicaid expansion?

Conservative healthcare wonk Avik Roy, unlike Republicans in Congress, wants health insurance to be affordable for all Americans. But his proposal for an amended AHCA has an enormous hole in it: Medicaid.

Roy favors income-adjusted tax credits, which the AHCA maintains on an interim basis until 2020, with age-based adjustments to the ACA schedule. In 2020, a credit that adjusts only for age (and not sufficiently for that) takes over. Here's Roy's suggested amendment:

If the Senate were simply to remove the House bill’s uniform tax credit and continue the hybrid model past 2019 through 2020 and beyond, the bill would most likely get a better coverage score from the C.B.O. The Senate would be able to direct more financial assistance to those who need it, whether because of old age, ill health or low income. Indeed, the Senate could tweak the exact formulas for age and income adjustment, to maximize the number of people with health insurance in the most cost-effective way.

Under the 2018-19 subsidy schedule that Roy wants to make permanent, enrollees with incomes "up to" 133% of the Federal Poverty Level pay 2% of their income for a benchmark plan.The ACA specifies, however, that eligibility for credits begins at 100% FPL -- and the AHCA does not repeal that provision (and uses the same "up to 133" language in its subsidy schedule).. In states that accepted the ACA Medicaid expansion (after the Supreme Court made it optional for states in 2012), adults with incomes under 133% FPL (138% FPL in practice, because of a 5% deduction), are eligible for Medicaid. What happens to them under Roy's plan? Or to those with incomes under 100% FPL in non-expansion states, who currently are left out in the cold?

CBO flips off the Upton Amendment to the AHCA

The CBO report on the amended AHCA that passed the House expends considerable ink on the malign effects of the MacArthur amendments that won over the Freedom Caucus. Those amendments allowed states to opt out of ACA regulations banning medical underwriting and mandating that all qualified health plans cover ten Essential Health Benefits.   CBO forecast that states encompassing one sixth of the U.S. population would  fully embrace the opt-out -- and that in those states, guaranteed issue would effectively end, and services removed from EHBs such as maternity care would become prohibitively expensive. The individual market in these states would  thus become unstable, according to CBO.

When the MacArthur amendment became part of the AHCA, many Republican moderates anticipated such results and announced that they could not support the legislation because it did not adequately protect people with pre-existing conditions. A critical mass flipped back, however, when Fred Upton -- one of those who said he could not support the bill with the MacArthur amendment -- introduced an amendment allocating a mere $8 billion over 10 years for states to use to lower premiums for those harmed by the return of medical underwriting.  While that amendment was widely derided as a band-aid on a gunshot wound, Upton issued a statement declaring it sufficient:

“This week, I expressed my deep concerns with the AHCA as it was written to both President Trump and our leadership. We immediately got to work on a responsible fix.

AHIP puts Medicaid first in "do no harm" plea to Republicans

Early this week, in a letter to Senate Finance Committee Chair Orrin Hatch, the America's Health Insurance Plans (AHIP), the largest association of private health insurers, basically begged Republicans to stop threatening to uninsure tens of millions in the name of reform. 

AHIP voiced support for community rating, guaranteed issue, income- and age-based subsidies, and an enforcement measure sufficient to induce people to buy insurance. In other words, for preserving the ACA marketplace with a few regulatory teaks  -- and with the AHCA's $138 billion in federal funding for state reinsurance or other "stability" measures tossed in.

Striking on its face though the health insurance industry's renunciation of medical underwriting may be, the most remarkable part of the letter comes early, in its reframing of what healthcare "reform," Republican-style, is all about. AHCA opponents have been screaming for months that at the bill's core is a $900 billion tax cut* paid for by an $800+ billion Medicaid cut. It's been hard to break through the noise with that core equation, given the AHCA drafters' high-strung debates about various proposed malformations of the individual market. AHIP puts the pieces in perspective:

CBO: Some states will kill protections for those with pre-existing conditions -- and oh yes, the AHCA still eviscerates Medicaid

In late April, Matthew Fiedler explained in a Brookings brief that the MacArthur amendment to the AHCA, which allowed states to subject people who fail to maintain continuous coverage to medical underwriting, would not just affect those who fail to maintain continuous coverage. Fiedler's summary:

...the framework created by the waiver would allow states to effectively eliminate community rating protections for all people seeking individual market coverage, including people who had maintained continuous coverage.

In brief, healthy people would have a strong incentive to “opt out” of the community-rated pool and instead pay a premium based on health status. With healthy enrollees opting out of the community-rated pool, community-rated premiums would need to be extremely high, forcing sicker individuals—including those with continuous coverage—to choose between paying the extremely high community-rated premium or being underwritten themselves. Either way, people with serious health conditions would face prohibitively high premiums. As a result, community rating would be eviscerated—and with it any meaningful guarantee that seriously ill people can access coverage.

The CBO analysis of the amended AHCA released yesterday reproduces this argument:

Medical Billing: The Ten Do-well Commandments (after Elisabeth Rosenthal)

Elisabeth Rosenthal, reporter of the monumental Paying Till it Hurts series in the New York Times and author of  An American Sickness: How Healthcare Became Big Business and How You Can Take it Back, has been out front with the "Ten Economic Rules of the Dysfunctional Medical Market" with which the book leads off -- e.g., on Twitter and on Medium.

To those of us who have saturated themselves in Lin-Manuel Miranda's Hamilton (which already feels like a relic of a bygone era), "10 rules"  inescapably conjure up The Ten Duel Commandments. So I have set them to imagined music below. At bottom, the rules as Rosenthal worded them.

A disclaimer: While the rules in isolation may seem excessively cynical, I don't think Rosenthal's point is that all providers follow them all the time, but that the incentives in our dysfunctional system pull them this way.  Another disclaimer: I haven't read the book yet. Too much current bad news to absorb. But I'll get there.

The Ten Billing Commandments

Number one: The treatment. More is always better.
Feed the bottom line, be a real go-getter.

Number two: Keep 'em coming. More is always more.
A lifetime of treatment trumps a simple cure.

Number three: Amenities and marketing are the way it's done.
Look like Cedars-Sinai and the battle is won.

Single Payer in CA? The impediments are mountainous

The widely reported topline of the analysis of California's single payer bill released by the state Senate Appropriations Committee is a highly uncertain forecast that the state would need to roughly double its revenue to pay for the benefit. That is, the total cost of care could run to $400 billion per year,  offset by up to  $200 billion in existing federal funding for Medicaid and Medicare -- if  HHS granted basically every waiver sought to transfer that funding from multiple programs. The spending would also replace an estimated $100-150 billion in employer-sponsored insurance. Funding it would require an estimated 15% payroll tax or equivalent revenue.

That level of spending, and cost-shifting from the private to the public sector, could be defensible, in the abstract. But the report, released under the name of committee chair Ricardo Lara and consultant Brendan McCarthy, asserts a host of practical impediments to implementation, including:

1. No cost control: The Healthy California Act imposes no premiums, no deductibles and no copays on enrollees (who include every resident in the state) and mandates no gatekeeping functions -- any enrollee can contract with any accredited provider and get 100% coverage for service.  Payment is essentially on a fee-for-service basis:

While the bill would allow for other forms of payment, the basic requirement in the bill that payments be cost-based and requirements in the bill that patients are able to see any willing provider of services would make it difficult for the Board to create capitated payment systems that would work under those constraints.

Consequently, and given the participation of every provider in the state, "the analysis assumes a 10% in health care service utilization over fee-for-service Medi-Cal...likely a conservative assumption."

My letter to the Senate Finance Committee about ACA repeal legislaton

Topher Spiro, veep for health policy at the Center for American Progress and a forceful ACA advocate on Twitter (@topherspiro), got hold of a letter from Senate Finance Committee Chair Orrin Hatch to healthcare "stakeholders," inviting their input by May 23 on Republican senators' efforts to write an ACA repeal bill. Hatch asked that letters be sent to HealthReform@Finance.Senate.gov.

Since the Republican senators' bill-writing process is as secretive and rushed as the House's, Spiro seized the opportunity to encourage non-privileged "stakeholders" -- all of us -- to send their two cents to the email address provided. He has offered to tweet any letters tweeted at him, with a screenshot.

Here's mine:

Dear Members of the Senate Finance Committee:

As a constituent, husband and father of two adult children, son and son-in-law of four aged parents, member of a community and citizen of a nation with many people who lack affordable, reliable access to health insurance or are at risk of losing newly obtained insurance, I urge you

• not to eviscerate Medicaid by imposing per capita caps on federal funding or imposing a block grant formula; 
• not to phase out the ACA Medicaid expansion or reduce the enhanced federal funding that enables it;
• not to end income-based subsidies for premiums and out-of-pocket medical expenses that render individual market coverage and actual healthcare affordable to millions of low-and moderate-income Americans; 
• not to compromise the ACA's ban on medical underwriting or mandating of guaranteed issue or requirement that health plans provide Essential Health Benefits; and 
• not to repeal the ACA taxes that have enabled some 20 million Americans thus far to gain insurance coverage.

CMS's warmup for AHCA-world: Guidance on ACA innovation waivers

CMS recently issued guidance to states seeking ACA Section 1332 "innovation waivers," by which states can apply to alter or even thoroughly redesign their ACA marketplaces.

The checklist offers explicit encouragement to states to seek federal funding for reinsurance programs or high risk pools:

In particular we welcome the opportunity to work with states to pursue Section 1332 waivers incorporating a high-risk pool/state-operated reinsurance program. State-operated reinsurance programs have a demonstrated ability to help lower premiums, and if the state shows a reduction in federal spending on premium tax credits a state could receive Federal pass-through funding to help fund the state’s reinsurance program. 

Encouragement to states to implement a reinsurance program is good news, as reinsurance does keep down premiums, and the expiration of the ACA's federal reinsurance program after 2016 contributed to the 2017 premium spike. Including the high risk pool (HRP) option is a bit of a mystery, since 1332 waivers cannot be used to waive the ACA's ban on medical underwriting or guaranteed issue. (The waivers can be used to alter the ACA's Essential Health Benefits required of all qualified health plans, as well as subsidy formulas and the individual and employer mandates.)

A Sparer means to universal health insurance

Last November Michael Sparer, chair of Columbia's Mailman School of Public Health, proposed that managed Medicaid programs be used as a fallback for regions of the country in which no insurer was participating in the ACA marketplace.  Today Sparer went one better and proposed, in a NYT op-ed, that managed Medicaid replace the ACA marketplace:

Some liberals have proposed using Medicare, the federal health care program for the elderly and disabled, as the basis for providing universal health insurance. But Medicaid is the better fit. It has a more generous benefits package, is less costly and is developing more innovative care-management strategies. Moreover, the integration of the Obamacare exchanges into Medicaid would be relatively seamless: Many health plans are already in both markets...

Moderates in both parties recognize that the chance of success for an insurance marketplace that serves only the self-employed, part-time workers and small businesses, as Obamacare does now, is small. So why not eliminate the insurance exchanges — enabling Mr. Trump to claim he “repealed” Obamacare — while allowing exchange beneficiaries to buy into Medicaid, using tax credits to pay the premiums. Recent surveys showing that Medicaid beneficiaries are generally satisfied with their coverage, more so than their exchange counterparts, makes the case even more persuasive.

Of course this excites me, since so far as I can tell the only person who has consistently suggested that managed Medicaid, or something close to it, is the best way to serve those currently dependent on the individual market is...me. I have argued that using a solo public option to push private insurers' costs down is pushing on a string; that marketplace enrollees have given ample testimony to Medicaid envy; that insurers are happier in markets in which government effectively sets rates (happier than in the individual market, at any rate); and that managed Medicaid is the only path to fulfilling Trump's healthcare promises (not that those promises are worth anything).

The Beatles mourn Republican moderates

Okay, this is silly, but...
Every time I hear or think "Cassidy-Collins" I hear "Eleanor Rigby." So...

Cassidy-Collins
Pick up the vibes from a House
Where a bill has been passed.
Relevant at last...
Work on the sidelines
Hauling in one or two Dems as they walk by the door...
Come, let's make law...
Ah the lonely moderates,
Where do they all come from?
Ah the lonely moderates,
Where do they all belong?

Also undead: Cassidy-Collins

Rising out of the grave with the monstrous AHCA, or at least wriggling its toes a little, is the more moderate Cassidy-Collins ACA remake bill, dubbed the Patient Freedom Act. That bill, introduced in January, preserves the ACA's funding base and allows states to maintain the Medicaid expansion and, if they wish, their ACA marketplaces in their current form.  

Back in March, in the New York Times online, I urged Senate Democrats to engage on the Cassidy-Collins, if only to shore up Republican Senate moderates in their efforts to stave off roughly matching trillion-dollar cuts to benefits and revenue. I submitted the piece on March 13, and it appeared on March 24, hours before House Republicans pulled the AHCA without a vote. When Paul Ryan declared that "Obamacare will be with us for the foreseeable future," the op-ed seemed insta-obsolete. No more.

An ill-timed vacation

Back in prehistory, in October, my wife and I booked a long-postponed trip to Italy -- for now. So here I am, watching the ACA apparently about to get gutted, from a distance.  I saw last night the horrible posse of senators assigned to task. I imagine the only glimmer of hope is that moderates will balk, and I've always considered them squish. Glimmer 2: House and Senate can't agree. Glimmer 3: some crisis, hopefully not world- or democracy-ending, distracts everyone.  Ping me if any such glimmer peeks through.

Medicaid is cheaper. Ergo...

In Inside National Health Reform (2012), John McDonough, a former Senate aide who was in at the birth of the ACA, recounts how the ACA's threshold for expanded Medicaid eligibility came to be set at 133% of the Federal Poverty Level (de facto 138% FPL, as everyone gets 5% of income discounted). In so doing he highlights a rather obvious fact about Medicaid: it's cheap.

The decision to go higher than 100 percent of the federal poverty level in the Senate and the House were driven by dollars. The Congressional Budget Office, the nonpartisan congressional advisory body, estimated much higher costs to cover individuals through an exchange rather than through Medicaid because the latter pays medical providers much less than private insurers can get away with and because Medicaid administrative costs are much lower. In the early summer of 2009, when Senate Majority Leader Harry Reid and the White House pressured Baucus to abandon plans to tighten the federal health insurance tax exclusion as a financing source, Senate Finance leaders and staff scrambled to find new revenues and to hold down costs—moving from 100 to 133 percent of the FPL for Medicaid eligibility was one important step in that direction. Why not 150 percent? Finance officials knew there were existing Medicaid populations at 133 percent of the FPL, including children up to age six and pregnant women, while there were none at 150 percent of the FPL—it would be a more difficult and complex change. Further, governors and some Democratic senators felt going higher than 133 percent of the FPL was a line they were not willing to cross: 133 was it.

Start over, MacArthur

Decry his poor policymaking and gaslighting, but give Rep. Tom MacArthur this: he painstakingly crafted an intraparty compromise that got the Freedom Caucus behind the American Health Care Act. The MacArthur amendment allows states to re-instate medical underwriting -- charging people different rates for health insurance based on the medical history -- if they either establish a high risk pool or create a reinsurance program. It also allows states to alter the Essential Health Benefits that the ACA mandates to be covered by all qualified health plans.

Will Medicaid drown in a high risk pool? (updated)

Update, 5/3/17: $100 billion over ten years for high risk pools, as speculated below? Ha ha ha -- a HRP patch has been proposed, and it's all of $8 billion over 5 years. That's after a $15 billion "invisible risk" fund was tacked onto a $115 billion state stability fund... the math outlined below still broadly applies. As Larry Levitt said of the $15b infusion, it's all chump change. And they're making the ACA look simple.
----
Rumor has it that Republican leadership may lure "moderates" holding out against AHCA passage by throwing perhaps $100 billion over ten years into high risk pools. Moderates could then declare themselves satisfied that prospective individual market enrollees who have pre-existing conditions will have access to coverage.

Leaving aside the historic poor performance of high risk pools, this reinforces my fear that all the public hand-wringing about medical underwriting is a smokescreen, giving moderates cover to eventually sign onto a bill that still rolls back the Medicaid expansion and cripples all Medicaid via per capita caps.

In fact, the patchwork of funding grants slapped onto the bill via amendment  (pregnant women and addiction! invisible risk! more medical expense deduction!) can be used to obfuscate and only modestly soften the original AHCA's basic math: over ten years, $1.2 trillion in healthcare spending cuts offsetting $880 in revenue loss stemming from repeal of the ACA's taxes and mandates. In the original bill, the spending cuts include:

The pre-existing condition smokescreen

In a snappy summary by Axios's David Nather of  the latest AHCA stall-out, this caught my eye:

The holdouts are mainly worried about weakening coverage for sick people. Rep. Ryan Costello of Pennsylvania: "Protections for those with pre-existing conditions without contingency and affordable access to coverage for every American remain my priorities for advancing healthcare reform, and this bill does not satisfy those benchmarks for me."

What this tells me is that the moderates will ultimately go along with ending the ACA Medicaid expansion and girdling all federal Medicaid spending with per capita caps.  I have long worried that Republican relative moderates will go squish on Medicaid if AHCA damage to the individual market is moderated past a certain threshold.

Now more than ever, the bottom line remains what Andy Slavitt said it was two months ago:

Sing away the AHCA

For months, New Jersey activists have been staking out the local offices of New Jersey Rep. Rodney Frelinghuysen (NJ-11), a onetime Republican moderate pulled relentlessly right in recent years. While voting for almost all of the Trump agenda, Frelinghuysen stunned the world on March 24 with a pivotal statement against the AHCA on  grounds that the bill "would place significant new costs and barriers to care on my constituents in New Jersey. In addition to the loss of Medicaid coverage for so many people in my Medicaid-dependent state, the denial of essential health benefits in the individual market raise serious coverage and cost issues."

Noble words, but now Frelinghuysen is wavering -- with Ryan reportedly threatening to strip him of his treasured chairmanship of the House Appropriations Committee -- and Jersey progressives are going all-out to provide the counter-pressure, as in this petition.  With the AHCA risen from an unquiet grave, we are reviving old (month-old) arguments. So why not a months-old songbook? Here's one that I had to serenade solo in Morristown upon one freezing day. I can't say it's "sung to the tune of Hamilton's My Shot, but it's intoned to something like the rhythm of it:

Our Shot 

We are not throwing away our...SHOT
We are not throwing away our..SHOT
Ya know, we're just like Obama,
all action, no drama,
and we're not throwing away our..SHOT.

We're gonna stand outside your windows, Frelinghuysen
chantin singin make-all-kinda-noisin
until you let us freezin girlz and boyz in
to prove to you that Ryancare is poison --

The Kaiser misunderstanding

The Kaiser Family Foundation has a useful measure of how close to capacity the ACA marketplace is operating. Well, check that...Kaiser has two measures, and one has generated some confusion for some time.

The more useful measure is a national and state-by-state estimate of  Marketplace Enrollees Receiving Financial Assistance as a Share of the Subsidy-Eligible Population. For this, Kaiser combines analysis of enrollment data provided by CMS with Census data on income and insurance status. Importantly, Kaiser accounts for people whose income would qualify them for subsidies but who are disqualified by an offer of employer insurance, as well as people disqualified by immigration status.

As of  March 31, 2016*,  Kaiser estimated that 64% of those eligible for premium subsidies nationally were enrolled. State scores ranged from 92% in Florida, which has developed a culture of enrollment, with plenty of assistance available and advertised, to 31% in Colorado.** Kaiser estimated last October that 5.3 million of the uninsured were eligible for marketplace subsidies.

Tom MacArthur doesn't want you to know he's ready to uninsure millions

Defending his support of the ACA repeal bill, the American Health Care Act (AHCA), Rep. Tom MacArthur scolds a constituent who accused him of hypocrisy for "partisan finger-pointing." Yet MacArthur's rebuttal is riddled with obfuscations and errors.

1) MacArthur claims that a court found the ACA's Cost Sharing Reduction subsidies, which reduce out-of-pocket costs for low income enrollees, unconstitutional. Not true. A lower court agreed that if Congress does not allocate funds for those subsidies, as the ACA drafters intended and for which they budgeted, the executive branch lacks authority to pay insurers for them. If Congress allocates the funds, they are unambiguously legal. There is nothing inherently unconstitutional about them, and the Republican Congress's refusal to appropriate the budgeted funds is pure sabotage.

2) MacArthur implies that he's protecting the 11 million Americans and 500,000 New Jerseyans who gained coverage through the ACA's Medicaid expansion. Yet he supports repeal of enhanced federal funding for new expansion enrollees as of 2020. That effectively ends the expansion, as people typically churn in and out of Medicaid at short intervals. The Congressional Budget Office (CBO) forecast that if that cut occurs, the higher federal payments will apply to just 5% of enrollees by 2024.

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."