Heart disease continues to be the number one killer in the United States. Because of that, billions of dollars are spent every year on medications that reduce your risk of disease and death. Compounding this problem, many of the risk factors for heart disease seem “baked into the cake”. Genetic factors can have a huge impact on people’s risk, and those factors are almost always outside of one’s control.
Because of this, there are some who feel a certain amount of powerlessness to prevent heart disease. Recent research contradicts this, though, and should give us all renewed hope. That’s the topic of this week’s Healthcare Triage.
The following is a guest post by Keith Humphreys, a Professor of Psychiatry at Stanford University and Former White House Policy Advisor.
Increasing government spending improves educational outcomes and doesn’t enhance them at all. Augmenting incarceration rates reduces crime and increases it. Raising the minimum wage will increase unemployment and not affect it in the slightest. These statements are neither Zen koans nor political doublespeak, but summaries of policy research findings that are not as contradictory as they at first may sound. All of them stem from a reality that is frequently forgotten in political discourse: In many public policy areas there exists a “sweet spot” in which pursuing a certain approach does maximal good, and beyond which further increments make less difference, no difference, or even make things worse.
Daily life is full of consistent rules which mathematicians call “monotonic” relationships. Pedaling your bike harder always makes you go faster rather than slower. Putting more of your paycheck into savings bonds always increases the interest you earn rather than decreasing it. Turning the heat up on the stove always makes water boil in less rather than more time. Yet sometimes life’s rules are not so simple.
Consider for example your body temperature. Imagine that after a long sleet-drenched walk on a windy, bitterly cold day, you enter your house with your knees quaking and your teeth chattering uncontrollably because your body temperature is at a near hypothermic 96 degrees. A cheery fire, a cup of hot cocoa and your favorite blanket raise your temperature by three degrees, leaving you feeling good as new. But by that evening, a virus you caught that day works its evil magic and raises your temperature a further 3 degrees, leaving you feverish, weak and miserable.
If asked to describe the effect of raising body temperature, you could give no simple answer. You would know from your own experience that it can be lifesaving or immiserating, depending on whether the change moves you towards or away from 98.6 degrees, the sweet spot for human body temperature.
Sweet spots abound in public policy. Consider the evergreen debate between those who believe that we should spend more on education to help children learn and those who believe such spending increases are wasteful and unnecessary. The Economist summarized international data on per pupil spending from age 6 to 15 and its relationship to performance on the “PISA” test, which assesses student performance in math, science and so on. If one compared a country spending less than $50,000 per child (e.g., Turkey) to a country spending about $50,000 (e.g., Russia) the case seems strong that more spending improves educational outcomes. But after that point the relationship nearly disappears such that countries like the United States and Luxembourg that spend many times what Russia spends don’t have better outcomes.
Forecasting the influence of increased educational spending in absolute terms, as is common in political debates, is thus a fool’s errand. The nuanced reality is that if you were running a national budget dedicated to improving the lives of children and were below the sweet spot, hiking educational spending would probably help children learn more. But above the sweet spot, you might help children more by spending on something else on which you were below the relevant sweet spot, such as removing lead from homes, building safer playgrounds, or expanding parenting effectiveness training programs. Health economists have described this phenomenon in terms of the healthcare production function: At some point further financial investment and evidence application in health care no longer generates as many positive outcomes (e.g., increased quality-adjusted life years) as would a comparable investment elsewhere.
Sweet spots are also a widely ignored reality in ongoing, bitter debates about crime, policing and incarceration. In the 1980s, increasing the likelihood of incarceration for criminal offenses contributed to the drop in the crime rate, but as mass incarceration emerged throwing ever more people in prison stopped reducing crime and may have even started to increase it. Similarly, increasing the number of police is grossly underpoliced areas has a profound deterrent effect on crime, but once a certain level is reached hiring more cops no longer affects the crime rate. So if a policymaker wanted to reduce crime, building prisons and hiring police could be a wise investment or a foolhardy one.
To cite an example from labor policy well-described by Kevin Drum of Mother Jones, California activists who support a $15 minimum wage cite studies finding that increasing the minimum wage does not lead to fewer jobs. But as Drum noted, all these studies have been conducted within the narrow range of changes in the minimum wage that have occurred over time, and a $15 minimum wage is far outside it. There is definitely a point at which higher wages will cause unemployment (otherwise, make them $1,000,000/hour and we can all retire after one day’s work), and there is no guarantee that the sweet spot at which workers lives are improved without job loss isn’t well below $15/hour.
For a range of political, tribal and emotional reasons, sweet spots are always going to be underappreciated in political debates, when tend to be dominated by shouting matches between proponents of simplistic positions that do not change in light of current circumstances, e.g., “More money for health care!”, “Lower taxes now!”, “Tough on crime!”, “Mass incarceration has failed!”. But a sophisticated policy maker, journalist, researcher or voter should recognize that there are few absolutes in public policy. Very often the policy change that worked at a different point in the curve will no longer yield a benefit or even be counterproductive of further pursued. Our political life is usually characterized by the search for simple answers, but good governance depends on the search for sweet spots.
My middle son became a Bar Mitzvah this last weekend, so I’m in major catch-up mode. Sorry! I forgot to post when this appeared, so I’m making up for it now.
Not long ago, an interesting study appeared that shows that as employer-sponsored insurance has become expensive, many more children are actually being covered by public programs. It’s not a great sign for the private insurance market, regardless of what you think of the ACA. Go read about it over at the AcademyHealth blog!
Multiple chronic conditions and the taking of many prescription medications to treat them — polypharmacy — are common among the elderly. Studies have found an association of polypharmacy with adverse outcomes. An important question is, to what extent does polypharmacy cause bad outcomes? And, if it’s causal, what can be done?
After campaigning for years on a plan of “repeal and replace Obamacare,” Republicans finally have the means within their grasp to make much of that possible. They control the presidency, the House, and the Senate. The filibuster still poses some potential threats to their plans, but it’s also within their means to abolish its widespread use in such a way that they could both repeal the Affordable Care Act and replace it with something of their own design.
What would that be? In contrast to what many say, there are Republican plans out there to consider. They’re the topic of this week’s Healthcare Triage.
American life spans are rising, and as they are, health care spending is, too. But longevity is not contributing to the spending increase as much as you might think.
The median age in the United States will rise to about 40 by 2040, up from 37.7 today. That’s partly because the average American lives three years longer today — reaching nearly 79 years old — than in 1995. The Congressional Budget Office credits population aging for a substantial portion of its projected increase in health care spending — from 5.5 percent of the economy today to almost 9 percent by 2046.
But research suggests that living longer, by itself, isn’t a big driver of rising health care spending. Because the baby boom generation is so large — members of which are now in their 50s to late 60s — the average age of Americans would rise even if life expectancy didn’t. For every 100 working-age American today, there are about 25 Americans over 65. By 2040 there will be 37.
Older people need more health care, and they spend more. Compared with the working-age population (people 19 to 64 years old), those 65 to 74 spend two times as much; those 75 to 84 spend four times as much; and those 85 and older spend six times as much. And the growth in health care spending is faster for retirees than for younger Americans.
The real culprit of increased spending? Technology.
Every year you age, health care technology changes — usually for the better, but always at higher cost. Technology change is responsible for at least one-third and as much as two-thirds of per capita health care spending growth. After accounting for changes in income and health care coverage, aging alone can explain only, at most, a few percentage points of spending growth — a conclusion reached by several studies.
But other analysis suggests that the leading causes of death, including cancer, heart disease and stroke, are being pushed off until later in life, giving us more years of good health. A recent study by Mr. Cutler and researchers from Harvard and the National Bureau of Economic Research found that between the early 1990s and the late 2000s, the elderly population gained more disability-free years than years with disability.
Perhaps some of the additional money we pour into the health system each year is doing some good. “Certainly we must address the problems associated with financing health care spending and health disparities,” said Michael Chernew, a Harvard health economist and a co-author on the study. “But we can take some solace in evidence that more people are living longer and better.”
These findings are consistent with other work showing that higher health care spending by older patients has more to do with their proximity to death than with their age. One study found that hospital expenses grow 1,000 percent in the last five years of life, but increase only 30 percent from 65 years old to 80. Another study found that a majority of Americans over age 85 have no limitations to their daily activities because of health, which suggests that age is a poor marker of health and its associated costs.
A decade ago, in a study published in Health Policy, two German health economists calculated how much incorporating the effect of shifting the spending near death could reduce health care spending projections. They took an extreme approach by assuming all of the increase in health care spending as one ages is in the proximity to death (none to greater age). So imagine that instead of incurring high costs and dying at, say, 75, one lives five more years in relative health, shifting those higher costs to just before age 80. The effect, according to their study, is to reduce estimates of health care spending because of aging by 40 percent.
In other words, living longer doesn’t increase health care spending so much as it delays the large amount spent near death. Some health care spending is associated with those intervening, relatively healthy years, just not much compared with that spent in one’s final years.
Living longer offers many benefits. That it isn’t, by itself, a major contributor to health care spending is a nice bonus.
Lots of action on Health Twitter. Senators Cassidy and Collins have a “compromise” plan for the ACA. The highlights:
Revenue generators (taxes, fees) left in place.
Annual and lifetime limits remain.
Family plans still allow kids up to 26.
States can choose one of three (really four) options:
Keep running the ACA as is
Bail on the ACA entirely
Take the same amount of federal money you’d get for the Medicaid expansion and subsidies and instead give it directly to your people, who will be automatically enrolled in a high deductible catastrophic plan. The money they get is based on age, not income though.
Leave the Medicaid expansion in place and instead do #3 only for the exchange market
I have no idea why any state would choose #2, but that’s me.
Progressives:
Pros – Many states will keep ACA as is. Medicaid expansion, too. Much of ACA left intact.
Cons – Many states will bail. It’s likely that states choosing option #3 (or #4) will have plans with fewer benefits. Poor people will be hit hardest, as subsidies not tied to income. (Austin reminds me that there’s a 5% cut in all subsidies)
Conservatives:
Pros – States get to choose. Subsidies tied to age, not income. More defined contribution than defined benefit. Might get some “compromise” points. (There’s also the 5% cut in all subsidies)
Cons – Leaves much of ACA intact (taxes and fees). Leaves feds still on the hook for a lot of $$$. Some will not view this as repeal.
Let’s be honest, though. At the moment, there’s no reason for Dems to support this. It will piss off a lot of conservatives. It runs counter to President Trump’s EOs. I see no support in leadership. And, there’s no score or details on this yet. If this were pre-ACA, I might view this like Wyden-Bennett. But in today’s climate, I don’t see how this gets much support from either side at the moment.
This post was coauthored by Nicholas Bagley and Adrianna McIntyre.
The executive order President Trump signed on Friday does not have any immediate policy effect, but it does call attention to the wide range of administrative actions that a Trump administration could take to change the Affordable Care Act—all without legislation from Congress.
We’ve compiled a list of those actions. It’s not exhaustive; there is a lot more a Trump administration could do. Nor do we mean to suggest that these actions would be legal. Declining to enforce the individual mandate, in particular, would be problematic, although the Trump administration might seek cover from dubious enforcement decisions made by the Obama administration (like the “like it, keep it” fix and employer mandate delays).
Whether and which actions a Trump HHS chooses to pursue will depend on the administration’s willingness to gamble the stability—already quite fragile, in some states—of the individual market. And it will depend, too, on what Congress is willing to do through legislation. If Congress wipes out the individual mandate, for example, there’d be no need to change the rules governing hardship exemptions.
Individual insurance market
End the cost-sharing payments to insurers.
Narrow the essential health benefits rule.
Refuse to settle the risk corridor litigation.
Change the rules governing risk adjustment.
Reduce reinsurance payments to insurers.
Expand or curtail hardship waivers from the individual mandate.
Decline to enforce the individual mandate.
End the “like it, keep it” fix.
Alternatively, expand the “like it, keep it” fix to exempt a wider range of plans from insurance rules.
Limit special enrollment periods.
Reduce insurer assessments for participating on HealthCare.gov.
Make it easier for online brokers like eHealthInsurance to sell subsidized coverage.
Medicaid
Allow work requirements, premiums, and more cost-sharing under 1115 waivers.
Allow states to limit how long beneficiaries can be continuously enrolled in the program under 1115 waivers.
Permit more states to use Medicaid dollars to subsidize private exchange coverage.
Other
Expand the reach of the contraceptive mandate accommodation (currently available to religious nonprofits and closely-held for-profit companies).
Striking contraception from the list of women’s preventive services, or eliminating women’s preventive services altogether.
Delay enforcement of the employer mandate.
Delay enforcement of taxes on the insurance, pharmaceutical, and medical-device industries.
Eliminate the Hill fix.
Delay enforcement of the Cadillac tax in 2020.
Allow commingling of savings for 1115 and 1332 budget neutrality calculations.
Adjust the guidelines for 1332 waivers.
Adopt rules under section 1333 to enable more flexible cross-state insurance sales.
Pull the plug on mandatory (or voluntary) demonstration projects through the Innovation Center.
Curb nondiscrimination protections, which the Obama administration interpreted to cover gender identity.
Some misconceptions are floating around about what the executive order does and doesn’t do. Let me try to clarify.
As I explained in a post last week, “[a]uthority to implement the ACA … is vested in the Secretaries of HHS, Treasury, and Labor—not the President. In the context of the ACA, an executive order won’t be anything more than a document containing a president’s instructions to his subordinates.”
That’s all this E.O. is. It’s a set of marching orders. It has no legal force. It changes nothing on its own.
And these marching orders are pretty vague. After pruning away the bureaucratese, the executive order tells federal agencies, especially HHS, to do everything they can:
To eliminate any “fiscal burden on any State” or any “cost, fee, tax, penalty, or regulatory burden” on individuals and providers.
To give the states more flexibility.
To encourage the interstate sale of health insurance.
It remains to be seen how and when these orders will be carried out. But we can make some educated guesses (most of which we could’ve made even in the absence of the executive order).
The instruction about state flexibility probably relates mainly to Medicaid waivers. Under President Obama, CMS refused to grant waivers that would have allowed states to impose certain types of burdens on Medicaid beneficiaries—especially work requirements, substantial cost-sharing, and time caps on eligibility for non-disabled adults. I expect Trump’s CMS to be more accommodating. I also expect HHS to issue revised guidance expanding the scope of 1332 waivers, which enable states to opt out of the ACA’s regulatory requirements if they devise an alternative.
On interstate sales, HHS has authority under section 1333 of the ACA to bless “interstate compacts” that allow for the sale of insurance across state lines. Obama’s HHS hasn’t issued rules to implement the provision, but Trump’s HHS could. (Not that it’ll accomplish much. Insurers aren’t much interested in selling across state lines.)
Much more significant, however, is the instruction to “waive, defer, grant exemptions from, or delay the implementation of” any “cost, fee, tax, penalty, or regulatory burden.” This reads like bureaucratic code for “kill the individual mandate by any means possible.” Some of that should be easy: I expect hardship exemptions to be expanded and IRS enforcement of the mandate to fall.
What troubles me most is the instruction to “delay the implementation of” any “tax” on individuals. Back in 2013, the Obama administration delayed the implementation of both the employer mandate and some of the ACA’s insurance rules. The implementation delays were unlawful, as I argued at the time. I warned, too, that they were shortsighted:
A future administration that is less sympathetic to the ACA could invoke the delays as precedent for declining to enforce other provisions that it dislikes, including provisions that are essential to the proper functioning of the law. The delays could therefore undermine the very statute they were meant to protect—and perhaps imperil the ACA’s effort to extend coverage to tens of millions of people.
Delaying the individual mandate is precisely what I feared most. (The E.O.’s instruction to consider delaying implementation of taxes on “makers of medical devices, products, or medications” could also lead to the suspension of the medical device tax and the tax on the pharmaceutical industry. That’d be a sweetheart gift for industry.)
If the IRS “delays” the individual mandate, the insurance markets in many states could go into a tailspin. Rates for 2018 will skyrocket and some insurers could fold. In addition, delaying the mandate would preempt any debate in Congress about whether to keep the mandate in place during a transition period to a yet-to-be-disclosed replacement.
For now, the executive order hasn’t changed anything. Reading between the lines, however, it may signal that Trump has no interest in trying to make the ACA work while Congress debates repeal.
Austin and Aaron are participants in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.
01/31/2017
Aaron Carroll
