Why were CSR improvements cut from Frank Pallone's ACA 2.0 bill?

There's one glaring omission in Frank Pallone's newly introduced "ACA 2.0" bill*, which sweetens ACA marketplace subsidies, funds reinsurance and advertising/outreach, fixes the family glitch and adds sundry other repairs. The new version cuts out the enhancement and extension of Cost Sharing Reduction (CSR).  The bill introduced last March would have extended 94% AV CSR to 250% FPL, and offered 87% AV CSR all the way up to 400% FPL.

In conjunction with lowering the percentage of income required to buy a benchmark silver plan  at all income levels, the CSR enhancements would radically reduce out-of-pocket costs at incomes ranging from 201-400% FPL, where ACA takeup has been poor. Why the cut?

One possibility occurs to me, though I'm not sure of the logic behind it (so it may be wrong, of course).  ACA 2.0 is a showcase bill, with no chance of passing the Senate. Improved CSR, on the other hand, may be negotiable separately -- because the Trump administration is over a barrel with respect to CSR funding.

2019 ACA Enrollment: More silver loading effects, CSR enrollment down in SBEs

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CMS released a final enrollment report for the ACA marketplace today, along with the public use files that provide extensive enrollment breakdowns.

The top lines we already knew: Enrollment in was down 3.8% in 39 HealthCare.gov states, up .09% in 12 state-based exchanges (SBEs), and down 2.7% overall.

CMS adds that the percentage of subsidized enrollees rose from 85% to 87%. Translation: unsubsidized on-exchange enrollment was down 12.8%; subsidized enrollment was down just 0.5%. Off-exchange enrollment in ACA-compliant plans was in meltdown in 2017 and 2018; it remains to be seen whether the contraction continued, in the first year in which the Trump administration was actively promoting lightly regulated, medically underwritten short-term plans.

A few more factoids derived from a first look:

1. Enrollment in plans with Cost Sharing Reduction dropped sharply as a percentage of overall enrollment -- but the drop was concentrated in state-based exchanges for some reason. In all states taken together, CSR enrollment dropped from 53.6% to 50.3% of total enrollment -- but it dropped from 51.3% to 41.2% in SBEs, just downticking from 54.4% to 53.6% in HealthCare.gov states.

Medicare for America might let private insurance thrive

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The Medicare for America Act, soon to be updated and reintroduced by Reps Rosa DeLauro and Jean Schakowsky, is a true "Medicare for anyone" bill. Any employer can buy in* by paying 8% of payroll, and any individual can opt in and pay between $0 and 9.69% of income (on a siding scale) for a plan to be accepted by all providers who accept current Medicare -- i.e. virtually all providers.

While the bill allows employers to keep providing insurance and preserves Medicare Advantage in the individual market, some people appear to read the bill as a phase-out of private insurance.   Kirsten Gillibrand, for example, in a town hall earlier this week, touted a Medicare buy-in for anyone at "4-5% of income" and suggested, "Those insurers -- I don't think they're going to compete...over a couple of years, you're going to transition into single payer."

That would not likely be the case if Medicare for America were to become law, at least not in its current iteration. While low income workers would probably mostly end up in the public program, the bill creates conditions under which employers might still find a competitive advantage in offering top-drawer coverage to higher-paid workers. It also creates conditions under which Medicare Advantage and Medigap policies might compete.

Medicare for America...for how many candidates?

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Two months after the Kaiser Family Foundation found 74% support for a "plan similar to Medicare open to anyone" that would "allow people to keep the coverage they have," several Democratic presidential candidates appear to have abruptly converged on the idea. The only bill out there that meets this criteria is the Medicare for America Act, introduced last December by Reps  Rosa DeLauro (CT-03) and Rep. Jan Schakowsky (IL-09), and soon to be reintroduced. 

Medicare for America does much more than create a strong public option that both employers and employees can buy into. It also absorbs Medicaid, transforms existing Medicare, and creates universal long term care insurance.  At healthinsurance.org , I ask whether candidates who have embraced the core concept, or some whisper or echo of it, will go for the whole package:

Perhaps it’s pusillanimous to balk at healthcare system transformation because of the certain all-out opposition of all major segments of the healthcare industry, not to say the Republican party and Fox News. But the question remains how much to bite off. The beating heart of Medicare for America, the transformative engine, is employer/employee buy-in to a strong public option, paying Medicare-plus rates and accepted by virtually all providers.

Whether that public option drains out a quarter of the employer-sponsored insurance market, half of it, or all of it, it renders public insurance – and public insurance payment rates – dominant. Candidates who embrace that core element – which harks back to the earliest iterations of the public option concept – may opt to carve it out of the near-total system transformation mandated in Medicare for America. Or they may not. Each candidate needs to think hard about how much mandated transformation within a decade or less they think the system can bear.

I hope you'll read the whole thing. 

Would a public option mean fewer claims denials?

Here I'm going to pose a question for which I don't yet have good answers.

One strong appeal of the public option in various Medicare expansion bills -- e.g.,  Medicare X, Choose Medicare, Medicare at 50, Medicare for America -- is access to an all-but-unlimited provider network (effectively eliminating balance billing as well as limited choice of provider). My question To what extent does a national public option also promise to strongly reduce the agony inflicted on patients by coverage denials? And secondarily, to what extent would minimizing denials weaken legitimate cost control?

Pieces of the puzzle are provided by studies of denial rates in various markets and public programs. These studies are based on partial or not-so-partial data sets and may be measuring different things. One question that's often unclear to me when reading them is how many or what kinds of denials directly affect patients, and which are eaten by providers or represent (or trigger) a de facto negotiation between provider and payer. Not to mention how many are justified...

With that caveat, a few data points:

Hospital industry will brook no Medicare expansions

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The American Hospital Association has commissioned a study by KNG Health Consulting that fires a warning shot against any expansion of public coverage that draws people out of the private market.

The report purports to show that the Medicare-X Choice Act introduced in 2017 by Senators Bennet and Kaine, establishing a strong national public option in the ACA marketplace, would cut healthcare spending by $1.2 trillion over ten years. Hospital spending would account for $774 billion of the total.  The study also forecasts that 5.5 million uninsured people would gain coverage.

As U.S. per capita healthcare spending is more than double the OECD average, one might think that cutting costs while increasing coverage would be cause for celebration. Of course the AHA doesn't see it that way, and warns of dire results for hospitals resulting from some 35 million people* shifting from private to a public plan that pays Medicare rates for services.  Leaving aside assumptions about hospitals' adaptability, and the study's calculations with respect to hospital revenue, its assumptions about the impact of Medicare-X on enrollment in private insurance strike me as dubious.

New enrollment drops in ACA marketplace have decelerated since 2017

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In my last post, I noted that new enrollment in HealthCare.gov states in 2019 was barely half the 2016 total.  Here I want to spotlight an important point that I noticed late and had to add via update: The sharpest drop in new enrollment was in 2017. Reduced new enrollment, though still quite steep, is a decelerating trend. Conversely, improved retention after first payments are due has accelerated since 2016, though we don't yet have numbers for 2019.

Here's how new enrollment and first-quarter retention have played out since 2016, the year of peak enrollment so far:

New enrollment, HealthCare.gov states, 2016-2019

As of the end of Open Enrollment

2016*	2017	2018	2019	Change, 2016-17	Change, 2017-18	Change, 2018-19	Change, 2016-19
4,044,370	3,013,107	2,460,431	2,072,115	-25.5%	-18.4%	-15.8%	-48.8%

* Kentucky retired its SBE and joined HealthCare.gov in 2017. Kentucky new enrollment for 2016 (18,733) is added to the 2016 total above.

The shrinking but retentive ACA marketplace

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n.b. the next post constitutes an update.

One feature of the ACA marketplace under Trump administration: as new enrollment contracts, retention has improved. With enrollment down 10% overall since 2016, the market has apparently contracted to its core: those who are renewing know they need or may need care.

Zeroing out the individual mandate for 2019 cannot have helped new enrollment, though new enrollment shrank just as much in 2018 as in 2019, when the mandate repeal went into effect. As the mandate repeal was pending through the fall of 2017 and became law in December 2017, many may have thought the mandate had been repealed as of 2018 -- if not the whole ACA, as Trump kept screaming. At the same time, discounts generated by silver loading (cheap gold and often-free bronze plans*) have probably improved retention. A higher percentage of enrollees are now subsidized, and the 87% of enrollees who are subsidized are paying lower premiums on average, as Charles Gaba has noted. Attrition has for years been much steeper among unsubsidized enrollees.

Better retention is reflected both in year-over-year renewals and in the level of attrition after first payments are due and throughout the year. In the 39 HealthCare.gov states, renewals were up slightly in 2019, while new enrollment shrank 16% (see CMS final snapshots 2019 vs. 2018). In California, the largest state-based exchange (SBE),  renewals were up 7.5% while new enrollment contracted 24%. Overall enrollment was down 4% in HealthCare.gov states and virtually flat (down 0.5%) in California.

Blue states willing to invest in ACA marketplace: Help those over 400% FPL or under?

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From the beginning, the ACA's apparent Achilles heel has been the plight of those who must look to the individual market for coverage but earn too much to qualify for subsidies.

I say "apparent" because the marketplace is not exactly a roaring success among those eligible for subsidies. But bear with me through a short history of the highly visible plight of the unsubsidized.

The public option we really need

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I have argued, recently and also over time, that a public option introduced into the current ACA marketplace without a change in marketplace structure can only do so much good

The marketplace's dominant flaw is that it's under-subsidized, and a public option won't make coverage more affordable for subsidized buyers. If you're a solo person earning $31,000 per year and have to pay $220/month for a public plan with an actuarial value of 70% -- likely with a $3000 deductible --that's not going to look much more attractive than comparable private plans. The public plan may drive down base premiums and so help unsubsidized buyers.

A public option to get claims paid

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The top line in a new Kaiser Family Foundation analysis of claims data collected by CMS from insurers selling plans on HealthCare.gov is startling:

We find that, across issuers with complete data, 19% of in-network claims were denied by issuers in 2017, with denial rates for specific issuers varying significantly around this average, from less than 1% to more than 40%.

Caveats abound. Of 180 insurers selling plans on HealthCare.gov, only 130 submitted complete data enabling analysis by Kaiser.  The data does not include standardized "reason codes" and lumps together all denials, "including denials due to ineligibility, denials due to incorrect submission or billing, duplicate claims, and denials based on medical necessity." Most important, perhaps, there is no comparative data for employer-sponsored plans, which insure 15 times as many people as the marketplace (nor for off-exchange ACA-compliant plans).

There is, however, one useful point of comparison. Medicare Advantage plans deny 8% of claims, according to a September 2018 report from the Office of the Inspector General for HHS. That seems high in itself, but it's less than half the ACA marketplace rate, at least in the 39 HealthCare.gov states.

On modular Medicare expansions

On the BlueWaveNJ blog, I have a post ruminating over where a successful Democratic presidential candidate might land with respect to various bills and plan outlines to establish Medicare for All, Medicare for All Who Want or Need It, Medicare for More, etc. I speculate that such candidate might want to make a build-out as modular as possible:

A candidate who seeks flexibility might seek to make her plan as modular as possible. First steps might include a strong public option introduced into the ACA -- one tied to Medicare rates,that providers who accept Medicare would have to accept.  Such a plan would probably also entail raising the value of a benchmark ACA plan, as the Merkley-Murphy Choose Medicare Act does. The ACA's silver plan benchmark, designed to cover 70% of the average enrollee's costs, clearly has not cut it with the public (in some cases, it now includes deductibles as high as $6,000). Incremental steps could include allowing small business buy-in and then large employer buy-in.  Integrating first steps with an ACA upgrade enables next steps to be contingent -- on need, budget and system performance. 

The case against this would be losing a window to mandate sweeping systemic change. I can see that. In any case, I hope you'll take a look at my view of the spectrum of possibility.

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X-factor in Medicare X: A silver plan discount?

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The Medicare-X Choice Act of 2017, introduced by Senators Bennet (D-CO), Kaine (D-VA) and Feinstein (D-CA), offers a more incremental and modest expansion of Medicare than more recently introduced Medicare expansion* bills such as the Medicare for America Act or the Choose Medicare Act.

When the bill was introduced, the last of the ACA repeal bills had just been defeated and the ACA marketplace was perceived as more fragile than it is at present. Insurers had recorded big losses in 2016 and jacked up their rates in 2017, which proved to be a year in which they returned to profitability in the individual market. The specter of "bare counties," in which no insurer participated, had just receded. The bill accordingly takes as its starting point a proposal Obama himself had floated in a 2016 JAMA article: A public option to be offered in counties where no private insurers, or just one, had opted to participate.  By 2023, however, "Medicare-X" would be offered in all counties in the individual market, and in 2024, in the small group market as well.

Medicare-X would create a public option within the ACA exchange, offering ACA-compliant coverage at ACA metal levels. It does not directly enrich ACA subsidies or expand eligibility for them. Unlike Medicare for America, Medicare-X does not allow a subsidized buy-in for employees if their employers offer ACA-compliant insurance. Nor does it touch Medicaid or existing Medicare programs.

A hole in the heart of Medicaid/Medicare buy-in plans

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A catch-22 bedevils Medicaid or Medicare buy-in plans designed to co-exist with the ACA marketplace, whether on the state or national level.

On one hand: If the public option is integrated into the marketplace and conforms to ACA benefit and subsidy levels, it won't help subsidized buyers much. They will still pay the same premium for the same level of benchmark plan benefits. The affordability of their options besides the benchmark plan depends on price spreads -- how much less or more other options cost compared to the benchmark. It's highly unpredictable how a public option will affect those spreads -- unless the silver public option plan is the cheapest in that market and way cheaper than the benchmark.

A public option may help unsubsidized buyers by providing a low-overhead choice and possibly stimulating lower unsubsidized premiums across the board. That helps the federal treasury too. But it may compress premium spreads and so make subsidized buyers' choices worse. The problem for subsidized buyers (over 85% of enrollees on ACA exchanges and over 60% of enrollees in ACA-compliant plans) is that the marketplace is under-subsidized. Premiums and out-of-pocket costs are just too high at income levels above 150% FPL.

Federal government's new CSR liability boosts Democrats' leverage in Congress

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Good news: Democrats in Congress understand that if they're going to join with Republicans to appropriate funds to  directly reimburse health insurers for Cost Sharing Reduction (CSR), they need to extract a price. They have the leverage to demand a price -- and two federal judges increased that leverage last week in rulings that vastly increased the government's potential liability for stopping direct CSR payment.  A letter to CMS Administrator Seema Verma from Democratic Senators Patty Murray and Ron Wyden and Reps Frank Pallone and Bobby Scott flexes that leverage.

Briefly: The ACA directs the federal government to reimburse insurers for the CSR they are legally obligated to provide to marketplace enrollees with incomes below 250% of the Federal Poverty Level who select silver plans. In one of several fits of absent-mindedness, the ACA's creators neglected to make the payment part of mandatory spending, leaving it to Congress to appropriate funds. The Republican Congress did not appropriate; the Obama administration made the payments anyway; the Republican House sued to stop them; and Trump cut the payments off in October 2017. State regulators, having prepared during the long months that Trump threatened the cutoff, allowed insurers to price CSR into premiums for silver plans only, since CSR is available only with silver. Since income-adjusted premium subsidies are set against a silver benchmark, "silver loading" predictably created discounts in gold and bronze plans. That created a bounty for many subsidized enrollees with incomes too high to qualify for strong CSR -- i.e. those with incomes in the 200-400% FPL range.

Medicare at 50 Act: A bonanza for low income near-elderly

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The Medicare at 50 bill introduced last week by Senator Debbie Stabenow (D-MI) is a pretty bare outline that raises a lot of questions.

The bill allows people aged 50-64 to buy into Medicare. Those who qualify for ACA tax credits -- i.e., have incomes below 401% of the Federal Poverty Level and lack access to employer-sponsored insurance, Medicaid or other public insurance -- can apply those credits to the Medicare premium.  No new program is created; no adjustments to the over-65 Medicare benefit to make the program fit the needs of younger enrollees are specified.  To note a few oddities:

1) Enrollees can choose traditional fee-for-service Medicare (Parts A, B, D) or a Medicare Advantage plan. No annual cap on out-of-pocket costs is added to traditional Medicare, so those who choose it will forgo that ACA marketplace benefit, which currently caps costs at about $7,900 per person -- unless they qualify for Cost Sharing Reduction (CSR), per the next point below.  Enrollees in traditional Medicare can buy Medigap policies on a guaranteed issue basis. With no OOP cap, traditional Medicare would not qualify as ACA-compliant coverage -- except that the bill specifies that it shall.

The Choose Medicare Act: How strong is this public option?

The Medicare for America Act, introduced last December by Reps Rosa DeLauro (CT-03) and Jan Schakowsky (IL-09), is a halfway house -- or two-thirds-way house -- to single payer -- and arguably a complete route to all-payer.  This bill (summary here) creates a revamped Medicare that auto-enrolls all children born in 2022; allows employers and employees to buy in; and folds in Medicaid and senior Medicare. It preservers a role for private insurance, via Medicare Advantage and the remaining option for employers to provide private insurance.

The bill would effect a less radical and somewhat more gradual transformation of American healthcare than Bernie Sanders' Medicare for All bill -- but a sweeping, sudden and very expensive transformation nonetheless, undertaking to transform Medicaid, senior Medicare, and long-term care (for which it provides coverage) as well as the individual and employer markets (the latter would be empowered to pay Medicare rates, set at 110% of current Medicare in the new public program). Insurers should be able to ultimately live with it; providers would fight it tooth and nail.

For those more comfortable with more incremental change, the Choose Medicare Act introduced by Senators Jeff Merkley (D-OR) and Chris Murphy (D-CT) last April (summary here) has a somewhat similar architecture but does not a) autoenroll newborns, b) fold in Medicaid, c) include long-term care or d) much change senior Medicare, except to add a yearly cap on out-of-pocket expenses to traditional Medicare.  What it does do:

What if the Obama administration had ended direct CSR reimbursement in 2016?

Trump's bid to fund his wall with money not appropriated by Congress has set me thinking about the Obama administration's far better grounded, but still dubious, determination to fund the ACA's Cost Sharing Reduction (CSR) subsidies without an explicit appropriation from Congress.

That decision was challenged in court by the Republican Congress in 2014 and, with the suit still pending, countermanded by Trump in October 2017, with disruptive but far from catastrophic consequences.

I'm thinking not of tendentious comparisons between Obama's executive actions and Trump's, but rather about a counterfactual: What if the Obama administration had taken the likely Congressional refusal to appropriate funds at face value, and declined to directly fund CSR?

Should Democrats seek to kill the anti-ACA lawsuit with legislation? Bagley v. Jost

Progressive legal opinion is divided with respect to how Democrats should fight the latest ridiculous suit seeking to have the ACA declared unconstitutional, Texas v. U.S., The suit was upheld in December by an extremist U.S. District Court judge in Texas, Reed O'Connor, who stayed the ruling pending appeal.

The question: should the Democratic House simply join the defense against the suit in court, which it has opted to do, or also pass legislation that would render the suit moot if it became law? Taking opposite sides are two progressive stalwarts of the ACA's legal wars.

The water is wide: Health Policy Valentines 2019

Postscript, Feb. 17: Inspired by an inhalation, one ex post factoid #HealthPolicyValentine:

                                                                 Roses are comely,
                                                                 Lilies are aromatic.
                                                                 Enrollment in Medicare at birth
                                                                 May soon be automatic.

                                                                    *          *         *

Love grows old, and waxes cold...but HealthPolicyValentines must be maintained (or endured) year over year.  So here we go again, with a cache that should grow through 2/14.

For those who never get enough, here's Health Policy Valentines (2018) Love Knows No Repeal (2017),  Love in the Time of Obamacare (2016), love, 2015, and first love, 2014.

Untriggered warning: many of these are valentines to Twitter's healthcare stalwarts. I'll leave the footnotes to the Norton anthologist...

The water is wide,
I cannot get o'er.
Universal healthcare
Is on the far shore.

   *     *     *

Courting is pleasure,
And parting is grief,
But a Utah legislator
Is worse than a thief.

   *     *     *

Medicare for All
Is your fantasy lover.
Medicare E
May get everyone covered.

   *     *     *