• Senator Lamar Alexander and endless can-kicking repeal

    Senator Lamar Alexander understand how hard crafting health policy is.

    Alexander said replacing Obamacare could take longer than the education bill he worked to pass last year, which took six years.

    “That was hard, but this is even more difficult because we spent six years as the Hatfields and the McCoys adopting our positions and shooting at each other,” he told reporters. “So building consensus in an environment like that is hard to do. But if we keep in mind that we’re trying to help people who are hurting and trying to keep people from being hurt, then that will encourage consensus.”

    More than six years! Making predictions in this environment is a fool’s errand, but I’ll do it anyway. I expect repeal with delay will happen by reconciliation. But the delay will be two years. (Maybe, maybe if members of Congress get a little spooked they’ll delay repeal for three or four years, but not six.)

    Then, if Senator Alexander is right, there will be no GOP replace plan in time. What then? Either Congress will kick the can and delay repeal further or key parts of the ACA will expire. This process will repeat itself indefinitely or until Democrats control the government again.

    If the GOP cannot craft a plan in two or so years, they will never do so. Never. Each election cycle will be too disruptive. A health care bill is much harder than an education bill. If you haven’t noticed, health care is a third rail onto which primary and general election opponents attempt to push one another.

    Endless, can-kicking repeal will be the best, achievable alternative.

    But the uncertainty is terrible for insurers, as well as hospitals and state legislators trying to manage Medicaid programs. Repeated delayed repeal will probably lead to states with no marketplace insurers, a cessation if not retrenchment of Medicaid expansion, and will threaten the movement toward value-based payment.

    Senator Alexander may get this, but I’m not sure the rest of his caucus does.

    @afrakt

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  • Politics aside, we know how to fix Obamacare

    The following originally appeared on The Upshot (copyright 2016, The New York Times Company). I wrote it before the election. Had I not done so, I probably wouldn’t have written it at all. It would surprise me very much if the Republican Congress and administration gave any consideration to something that could so easily be viewed as fixing Obamacare.

    President Obama’s Affordable Care Act marketplaces were supposed to give consumers choices of health plans from insurers that compete to keep premiums down. But fewer insurers are participating, and premiums are increasing sharply.

    Fixing this problem will obviously be politically difficult with a Republican-controlled Congress that has vowed to “repeal and replace.” President-elect Donald J. Trump has also said he wants to get rid of the Affordable Care Act, although he amended that recently by saying he’d like to keep some elements. Replacing the law, without a Senate supermajority, would also be politically difficult.

    From a policy standpoint, however, some solutions to problems facing the marketplaces are ones that Republicans have endorsed before: for Medicare.

    The number of insurers participating in the Obamacare marketplaces is falling. This year, 182 counties had only one insurer offering plans. Next year, that will be true of nearly 1,000 counties, or almost one-third of the total. An average marketplace will offer 17 fewer plans in this fall’s open-enrollment period than last year’s. Fewer choices make it harder for consumers to find plans that meet their needs, like including doctors and hospitals they prefer and covering the drugs they take.

    Shrinking choice isn’t the only problem facing the marketplaces. On average, the most popular type of plan will cost 22 percent more next year than this year. However, in some regions, premium increases are much larger; residents of Phoenix will see a 145 percent rise. (In some regions, increases are low; Columbus, Ohio, is facing only a 3 percent increase.)

    Insurers’ exits and rising premiums are related. Both are happening because the number of enrollees and their health care needs are not what insurers expected. One piece of evidence that this occurred is that the Obamacare marketplace plans attracted more older people than the administration’s initial projection. Another factor: In states that did not expand their Medicaid programs, some sicker, higher-cost consumers that would otherwise be Medicaid-eligible are in marketplace plans.

    If insurers attract too few consumers with little or modest health needs and, instead, attract a larger proportion of sicker ones, health care costs outstrip premium revenue. In the worst case, an insurance company throws up its hands and exits the market. Some insurers that have left Obamacare markets stated they did so because they could not earn enough money to keep up with costs.

    Increasing premiums might close the revenue-cost gap. However, premium increases can further discourage consumers, particularly healthier ones, from enrolling, worsening the problem.

    As competition decreases, the remaining insurers have greater market power to increase premiums. States with the fewest insurers have the largest premium increases while those with more insurers have more modest premium growth. These facts are consistent with findings from both government and non-government organizations.

    A study done in part by Leemore Dafny, a health economist now with the Harvard Business School, also illuminates the competition-premium connection. She and co-authors found that premiums in the first year of the marketplaces were 5.4 percent higher just because one national insurer opted out. Another study, published in Health Affairs, found that premiums fall by 3.5 percent with the addition of another insurer.

    “Marketplaces will only succeed if enough insurers participate, and many are running away from what they perceive as a high-risk, low-reward market opportunity,” she said.

    All of this — insurer withdrawals and sharply escalating premiums — was avoidable and is fixable. We know how to draw insurers into markets, keep them there, and limit premium growth. We can do so by subsidizing plans more and by limiting their risk of loss. We’ve done both before.

    In the early 2000s, Medicare+Choice — then the name of what is now the Medicare Advantage program, which offers private plan alternatives to traditional Medicare — was struggling. The proportion of Medicare beneficiaries with access to a Medicare+Choice plan declined from 72 percent in 1999 to 61 percent in 2002. The number of plans offered dropped 50 percent, and enrollment dropped 21 percent. Insurance industry representatives said that the problem was that government subsidy payments to plans were not keeping up with costs.

    After payments to plans drastically increased as part of the 2003 Medicare Modernization Act — passed by a Republican Congress and signed by President George W. Bush — insurers flooded the market. This was controversial. Members of Congress from both parties expressed concern that plans were overpaid, wasting taxpayer resources.

    By 2007, every Medicare beneficiary had access to at least one plan. The market stabilized, so much so that even as payments to plans were cut by the Affordable Care Act, plan enrollment continued to grow. Today, about one in three Medicare beneficiaries is enrolled in a private plan — a record high. Increasing the subsidization of Obamacare plans might have the same effect — reducing costs to consumers and drawing more of them, and insurers, into the market.

    The Medicare Modernization Act also established Medicare’s prescription drug program, Part D, which offers another lesson. It’s also run entirely through private plans. They’re cushioned against large losses by a risk corridor program. This helps plans stay in the market if they miscalculated the mix of patients they’d attract, and it allows them to keep premiums lower than they might need to if they had to hedge against the full brunt of potential losses.

    The Affordable Care Act included a risk corridor program for marketplace plans, too, but it expires at the end of this year. So does a reinsurance program that compensates insurers for unusually high-cost enrollees. Following the model of Part D and making the risk corridor program permanent, as well as the reinsurance program, could help stabilize the marketplaces.

    There are other ways to shore up Obamacare. Including a public option in the marketplaces would increase competitive pressure. A public option means having the federal government offering insurance plans, providing an additional choice (or choices, if the government offers multiple plans). If plans included more doctors and hospitals in their networks, it might pull more expensive patients from private plans, reducing the risks.

    Another idea is to require insurers to participate in broad regions, which would limit their ability to selectively work in more profitable ones and shun ones that are less so, like rural areas. This would be consistent with Medicare Part D, which requires insurers that offer stand-alone drug plans to do so in multistate regions.

    Yet another approach is to increase the penalty for eschewing coverage, which for many people is cheaper than buying insurance. Here again, we could look to Medicare, which includes penalties — which grow the longer one waits — for failing to enroll in coverage for physician services or drugs.

    There’s one significant problem with all these ideas, of course: They’d need to pass the Republican Congress and be signed into law by Mr. Trump. Though the G.O.P. has endorsed some of the ideas before — for Medicare — it’s a safe bet they won’t do so for the Affordable Care Act.

    @afrakt

     

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  • The GOP could kill traditional Medicare without premium support. Here’s how.

    Not a word of this is intended as endorsement of any particular policy.

    If you’re concerned that Speaker Ryan’s, and perhaps President-Elect Trump’s, ambition is to enact a premium support regime in Medicare that would effectively phase out the traditional program, you’re probably worried about the wrong thing. There’s a much simpler, and more politically feasible way to kill off traditional Medicare (TM), leaving only private plans in the program. Here’s how:

    Step 1: Do not repeal the Affordable Care Act’s (ACA’s) cuts to traditional Medicare reimbursement rates. Over time, they will compound to deep cuts to what TM pays hospitals and doctors. Just look at these charts from the CMS Office of the Actuary:

    hosp-cuts

    phys-svcs-cuts

    Leaving TM’s cost control in place might be viewed as a victory by Democrats. But, watch out …

    Step 2: Sever the link between TM spending and government subsidies paid to Medicare Advantage (MA) plans. Right now, thanks to the ACA, payments to MA plans are tied to TM per capita spending. So, as per capita TM spending falls (or rises more slowly than the cost of care) — as it will given the charts above — so do subsidies paid to MA plans. This, more or less, keeps the attractiveness of MA and TM in balance. In contrast, more money to MA relative to TM allows plans to offer more benefits above and beyond TM, thereby enticing more enrollees away from TM (a good deal for beneficiaries is not necessarily one for taxpayers).

    MA payments weren’t always tied to TM spending in this way. Pre-ACA, they weren’t. They soared. Severing that link again (paying them more) would make MA comparatively more attractive than TM to beneficiaries, and increasingly so over time.

    Step 2 would require Congress to act. Could it be accomplished under budget reconciliation, thereby avoiding a filibuster? It sure seems budget relevant to me, but it’s not my call. More importantly, it’s deep in the weeds. Lots of Americans would not understand what had happened.

    In contrast, pursuing premium support is a high-visibility and high-stakes drive into a political wall. Because it could erode TM in a more explicit way, resistance would be severe. Charges of taking away grandma’s health care would be easier to make. Either Speaker Ryan will recognize this in advance or he’ll pursue a premium support plan and fail. Then he’ll probably fall back to the sketch I just outlined.

    That’s my prediction anyway. Don’t be surprised when it happens. And, if you care about TM’s viability, start worrying about this now.

    @afrakt

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  • All the cognitive biases

    Via Jay Van Bavel (Click to enlarge. Yeah, it’s still too small. You get the idea though.):
    cog-bias

    @afrakt

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  • Walking back repeal

    That was fast.

    Mr. Trump, in an interview to be broadcast on CBS’s “60 Minutes,” said the guarantee of coverage for people with pre-existing conditions was “one of the strongest assets” of the law. He also said he would try to preserve the measure allowing young adults to remain on their parents’ insurance until age 26.

    “We’re going to do it simultaneously — it’ll be just fine,” he said.

    That’s from The New York Times. The Wall Street Journal has more:

    On health care, Mr. Trump said a big reason for his shift from his call for an all-out repeal was the meeting at the White House with Mr. Obama, who, he said, suggested areas of the Affordable Care Act, widely known as Obamacare, to preserve. “I told him I will look at his suggestions, and out of respect, I will do that,” Mr. Trump said in his Trump Tower office.

    “Either Obamacare will be amended, or repealed and replaced,” Mr. Trump said.

    So, possibly just amended then? That could mean anything. Nevertheless, given his track record, I would not take President-Elect Trump’s recent statements to the bank. Best to assume everything’s on the table, and he — with the help of Congress — could bring it all crashing down to the floor.

    @afrakt

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  • AcademyHealth: Plan-provider integration in Medicare Advantage, a growing trend

    Health care provider organizations are increasingly offering Medicare Advantage (MA) plans. My new AcademyHealth post provides a description of growth in this phenomenon and quality of the plans.

    @afrakt

     

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  • Today’s repeal and replace reading list

    It’s hard to keep up. Here are things I’ve read so far today. I’ll add more throughout the day, as warranted. (Provision of this list does not imply endorsement or non-endorsement of anything at the links.)

    @afrakt

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  • Repeal and replace: The Democrats’ role

    Avik Roy articulates how Democrats might be drawn onto the repeal and replace wagon:

    [I]t is definitely possible for the GOP to repeal and replace Obamacare. The sequence would go something like this:

    1. Partially repeal Obamacare via reconciliation, with the subsidies expiring in 2019.
    2. Get Republicans to agree on a pathway to market-based universal coverage that reduces, instead of increasing, the federal role in health care.
    3. Use the two-year window to achieve market-based universal coverage by repealing the ACA’s premium-hiking regulations, replacing it with a system of means-tested tax credits.

    There are likely to be 60 votes for the Obamacare replacement under this scenario, because once Obamacare’s subsidies have been repealed, Republicans will have negotiating leverage with Democrats who would prefer a more statist approach.

    This is clever. To get around a filibuster, it puts a gun to the Senate Democrats’ heads, so to speak. “Do you want something or nothing?”

    @afrakt

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  • Stuff for Health Care Systems (PHMD2350)

    What is this post about? Look here.

    @afrakt

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  • Repeal and replace watch

    It’s way too early to tell with much certainty, but what could this mean?

    House Speaker Paul Ryan on Wednesday suggested Congress would seek to use a budget tool known as reconciliation to repeal the Affordable Care Act under the incoming Trump administration.

    But at a Capitol Hill press conference later in the day, Senate Majority Leader Mitch McConnell would not commit to using the process to repeal the law.

    Since Majority Leader McConnell has also indicated that repealing the ACA is “high on our agenda,” this could mean he intends to remove the filibuster as a means by which Senate Democrats could oppose repeal. (Budget reconciliation bills cannot be filibustered.)

    On the other hand “high on our agenda” leaves lots of wiggle room.

    More on the filibuster here.

    UPDATE: Ben Carson may be involved in crafting a replacement plan.

    Ben Carson says he’s still ironing out his role in the incoming administration of President-elect Donald Trump, but one thing’s certain: He’ll have a role in helping craft the replacement plan for Obamacare.

    “I think the replacement obviously must come first and it must be something that is very appealing and easy to understand. And then, only then, would you dismantle what’s in place,” the retired neurosurgeon said in an interview.

     Asked if he intends to be involved in designing that plan, Carson said, “Yes, of course.”

    @afrakt

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