Earlier this week Ben Carson released his “Prescription for Empowerment,” which is an outline of a health reform plan. For the American Journal of Managed Care, I answered a few questions about it. Here’s a teaser quote:
[R]aising the Medicare age only “saves” money if by “save” you mean “ignore how much more it costs,” which is a lot.
Meanwhile, here are a few other things I noticed in the proposal that I care to comment on (I’m letting a lot of other things go because I don’t have time):
“[M]inimal essential coverage” deemed satisfactory to Washington […] required [consumers] to pay for things like marriage therapy and acupuncture, whether they wanted them or not. [Cites this.]
Overall, the percentage of doctors who closed their practices to Medicare or Medicaid by 2012 had increased by 47 percent in just the four years since 2008. [Cites this.]
I don’t have time to fact check this (go ahead and click through to the citation to see for yourself), but I just wanted to flag that this is not a specific critique of Medicare. It conflates Medicare and Medicaid. Moving on,
[T]he Medicare Hospital Insurance Trust Fund will be depleted just 15 years from now, in 2030. [Cites this.]
The trust fund is always within some number of years of depletion, and 15 is fairly long as these things go. Typically, policy action occurs when we’re within seven years of depletion. So, if history is any guide, now is probably not the best time to succeed at Medicare reform. Still (and I mean this without implying endorsement), best of luck to Dr. Carson!
Survey research in health policy is having its moment, assuming abstruse methodology is ever vogue enough to have a “moment”: yesterday’s news about the Census revising its widely-used Current Population Survey sparked one of the nerdier rounds of Obamacare controversy we’ve seen yet. Relevant to this moment is a new paper (gated) from Laura Skopec, Thomas Musco, and Benjamin Sommers.
Setting aside sentiments about the CPS update, it’s always been the case the researchers will rely on more than one data source to triangulate the impact of the Affordable Care Act. To do that, you need to understand the data sources. Skopec et al focus on the Gallup-Healthways WBI survey, sizing it up against the Current Population Survey, the American Community Survey, the Medical Expenditure Panel Survey, the National Health Interview Survey, and the Behavioral Risk Factor Surveillance System. Gallup puts out periodic reports on the uninsured (among other things), but their data is also available for researchers to purchase.
One unassailable perk of Gallup’s surveys is turnaround time: national-level data is available for analysis within a week of collection (state-level estimates are only made available twice a year, though). For reference, yesterday’s fracas about CPS revisions centered on data we’ll get in September. Data about calendar year 2013.
Gallup had a robust sample size of 355,000, which was reduced to about 177,000 starting in 2013. That’s not the ACS’s 3 million, but it was higher than CPS (200,000—2013 data isn’t available from CPS yet, so we haven’t compared Gallup’s smaller sample size against Census estimates) and the most detailed health surveys (NHIS has a sample of 100,000, MEPS 35,000).
From 2008 through 2011, Gallup exhibited a lower baseline rate of uninsured than CPS, ACS, and NHIS, but trends over time were relatively consistent. The chart below tracks reported rates of uninsurance among the surveys examined by the authors.
It’s not all good news, though. One concern the authors cite is “frequent methodological and question changes [that] introduce a level of uncertainty not generally encountered in government surveys.” These changes are more opaque and more egregious than changes to government surveys—for example, Gallup halved their sample size starting in January 2013 to divert more resources to international polling. That kind of change is a huge blow to statistical power and precision.
This criticism of Gallup isn’t naive to the CPS’s upcoming changes:
While government surveys also change over time – in particular some government surveys are introducing question changes to better detect the coverage and access effects of the Affordable Care Act – these changes tend to be approached with caution and attention to minimizing breaks in trend. In addition to WBI’s unpredictability, the most concerning methodological limitation of the survey is its response rate of 11%. While this rate is similar to that of other telephone surveys, it is far below those of the government surveys (which range from 50% to 98%).
The way that Gallup reports income is also likely to frustrate health services researchers: instead of reporting specific dollar amounts (treating income as a continuous variable), Gallup records one of ten discrete income ranges. Painting income in such broad strokes obscures the thresholds built into the ACA, making it incredibly difficult to draw inferences about key topics like Medicaid eligibility and subsidy generosity.
One of the most troubling aspects of Gallup’s data is their Medicaid estimates: these come in at about half the enrollment in government surveys, a margin of four to five percentage points. It seems likely that some number of Medicaid beneficiaries are mistakenly reporting “other/non-group” coverage; Gallup has an unusually high proportion of respondents in that category. Given that, their data on enrollment in Medicaid and the private market should be used with caution.
All in all, it’s a mixed bag: There are serious limitations for empirical research, but Gallup data seems adequate for the rough cuts of information that our impatient news cycle seems to demand:
Gallup-Healthways WBI data seem particularly well-suited for real-time analyses of certain changes in health care trends that do not require distinguishing between different types of insurance coverage, such as whether the ACA had reduced the number of uninsured adults in the U.S., similar impacts of state expansions, and the impact of these changes on access to care.
Update: This post was modified to reflect that Gallup’s sample size changed (from 355,000 to 177,000) starting in 2013.
I would be interested in hearing your thoughts on how you might have changed the ACA—or if you would have—had you known “then” what we “know” now.
I’ll play this hindsight game, so long as we all understand that it is, by definition, unfair to presume that what we know and would do now could have been known and done then. With that in mind, here are two things, among many, we now know (or know better):
The Medicaid expansion is optional and resisted in about half the states
The individual mandate remains unpopular and divisive
(In contrast, we don’t yet know that the exchanges are, broadly, a failure or that enrollment will be lower than expected or too highly skewed unhealthy/old. It’s too early to draw any conclusions about these. But I already have ideas—which I’ll save for another time—to offer in case these come to pass.)
In light of these, if I had the power to go back in time and change the ACA, I’d have made exchange subsidies available down to 0% FPL, with the state option of allowing individuals with incomes below 133% FPL to enroll in Medicaid as another choice, alongside exchange plans. That is, publicly administered Medicaid would be a state-discretionary “public option” for poor individuals. They could use their exchange subsidy to enroll in Medicaid or any participating private plan.
Clearly, subsidies would have to be at least generous enough to make Medicaid, if not private options, affordable for very low income individuals. The upside here is that all poor Americans, even in states that didn’t want to offer a Medicaid expansion/public option, would have access to subsidized coverage.
I’m leaving out some details about how to set subsidy rates down to 0% FPL. (I see several approaches.) Any way you slice it, I think it’s likely that a reasonable approach would cost more than the ACA’s original design, because subsidies for poor Americans in states that refused the Medicaid option (if not also in states that accepted it) would likely have to be higher than the cost of Medicaid.
How would we pay for that extra cost? One way is to cap the employer-sponsored insurance (ESI) tax subsidy to an extent that would generate more revenue than the Cadillac tax. Another way is to move Medicare/Medicare Advantage to a competitive bidding (premium support) regime. These are not mutually exclusive and both are appealing policy options to conservatives. Finally, one could extend the Medicaid public option up to higher incomes and or the Medicare FFS public option to younger ages. These might appeal to progressives. All of the above would save money or generate revenue, and some versions of them have been scored by the CBO, I believe. (With apologies, I’m not link hunting right now.)
As for the individual mandate, I’d have dumped it for a late enrollment penalty of a size that compensates insurers for any additional cost they might incur under such a scheme (e.g., if late enrollees are disproportionately sicker than the insured pool at time of sign-up). Obviously the precise penalty level would have to be either set in the market (risk rating for late enrollees?) or revisited over time for calibration. Many options here.
This leaves open the problem of the uninsured imposing costs on the system (uncompensated care). To the extent that would remain an issue, it might require slightly higher taxes to deal with it.
I could entertain other ways in which the past me (were he king) would change the ACA if he knew what the current me knows (some are here), but this is enough for now. I’ll conclude with a major caveat: the utility of policy proposals, with or without hindsight bias, is attenuated to the extent they are politically infeasible. I’m not at all confident what I suggested above would have passed Congress in 2009-2010 or any particular Congress in the future.
Two of Avik Roy’s tweets yesterday, pertaining to the recently released Senate GOP health reform plan (the Patient CARE Act) and discussion thereof, are very revealing.
.@matthewherper By repealing and replacing Ocare, the plan is more disruptive than it needs to be. But repeal needed for Right viability.
I do not mean “revealing” in a gotcha or gaffe sense. In fact, I largely agree with Avik. Repealing the ACA is not necessary to further a conservative health policy agenda. Therefore, as Avik correctly points out, it’s unnecessarily disruptive to do so. Yet this is what the Patient CARE Act does. And then it, in some ways, replicates some of the structure of the ACA, though in other ways it departs from it. (See Don Taylor’s summary.)
This is precisely why I’ve responded to journalists’ inquiries about the Patient CARE Act by pointing out, among other things, that it’s clearly designed to serve the objectives of the campaign(s)—2014 and then, perhaps, 2016—not as an effort to engage in good faith negotiation with Democrats on health policy.
This gets to Avik’s second tweet. I think it’s overly broad, but still suggests a good point. Good faith policy making in the realm of health care is not going to happen anytime soon. And the reason isn’t that the ACA and the Patient CARE Act couldn’t be reconciled—they’re similar enough that a nip here and a tuck there and compromise isn’t too hard to fathom. (See this other Don Taylor post.) The reason is purely political.
Title 1 of the Patient CARE Act repeals Obamacare to provide “needed relief from job-crushing mandates.” That’s all it does. That’s its sole purpose—on paper. But Title 1 isn’t really there, on paper, to repeal Obamacare. It’s there to satisfy the need of GOP candidates to appear to be against everything actual and implied by Obamacare on the campaign trail and in primary debates, if not those for the general election. It’s there so that more moderate GOP Senators and Representatives can say they have a reform plan, but still minimize the risk they’ll be challenged on the right by a Tea Party candidate who is “really” for repeal.
Meanwhile, Democratic candidates, by and large, cannot be for repeal. Obamacare is their law, and explicitly so if they voted for it. Therefore, it hardly matters if the Patient CARE Act is similar in many ways to the ACA. No Democrat can be for anything that begins with repeal no matter how similar the guts are to the ACA (whether initially or after some compromise). That’s admitting political defeat on the ACA and handing victory to the GOP. Why would Democrats do that?
They won’t. They won’t today. And they won’t after the midterms. There’s no compromise here. One side needs to be for repeal, for political reasons. The other side cannot be, again for political reasons. Yes, there are also policy reasons to be for or against repeal, but those could easily be reconciled by negotiating on the underlying policy preferences. That’s a theoretical possibility, but not in the political context.
The two sides cannot be reconciled right now or soon. (Don Taylor is more optimistic.) The best bet for health policy compromise, in my view, is if the GOP sweeps in 2016. It is hard for me to believe they would actually repeal the law in that case without implementing a substantially similar replacement. Nothing of the sort could happen before 2018 anyway.* And by then, four years after full implementation of the ACA’s insurance reforms, as well as many years into its payment and delivery system reforms, far too many people and stakeholders will be invested.
What could happen in 2018, under a unified GOP government, is something called “repeal and replace” that alters the landscape a bit, but not too much. It may not be viewed as completely benign by all parties, but it won’t be a complete gutting of Obamacare either in anything but name only. Meanwhile, some moderate Democrats will likely go along, and will certainly be interested in negotiating. If the GOP controls the government and is unified in purpose, there’s no stopping them anyway.
Conservative means to progressive ends is the best bet for evolution of health policy. That’s how we got a Medicare drug benefit. And, despite the howls of protest, that’s how we got the ACA. It may not be conservative enough for 2014, but it’s not that far off either, if the Patient CARE Act is any guide. By the time the GOP could actually gut Obamacare, they won’t, despite the rhetorical packaging and campaign promises.
But that time is 2018, not sooner.*
* Legislation passed in 2017 is not likely to be implemented until 2018.
President Barack Obama and his party have suffered in public-opinion polls amid the health site’s troubled rollout and as some five million people lost existing coverage that didn’t meet new standards, even as the law seeks to expand coverage to many more Americans. Some Republicans are now worried that a GOP proposal to begin taxing health-care benefits offered through employers—which would affect some 160 million Americans—would cause market disruptions far more severe and expose the party to its own political peril.
In a new column at Bloomberg, I suggest that even liberals should accept some aspects of conservative health reform. You’ll regret not reading it! If nothing else, it’ll give you something to say about health care policy to both your conservative uncle and your liberal sister-in-law at Thanksgiving.
I’d love reader feedback on this, in the comments, on Twitter, by email, whatever. Below is a list of potential changes to the ACA that might be appealing to conservatives, and maybe even some near-center liberals. I’ve listed them in approximate order of technical — not necessarily political — feasibility (lower number = more feasible; ties are possible). But I could be wrong in ordering. (These are rough guesses.) So, correct me! I am almost certainly wrong in completeness. What did I leave out? And, which ideas aren’t as appealing to conservatives as I might be implying?
Even though I’m not considering politics here, you can. How would you reorder the list in terms of political feasibility?
The possible “conservative-appealing (?)” adjustments are:
Some type of malpractice reform
Support for more competition among providers (including reform of scope-of-practice laws)
Paring back essential health benefits
Permitting more catastrophic plans on exchanges
Eliminating the employer mandate
Replacing the individual mandate with some other inducement (late enrollment penalty?)
More support (in some fashion) for coverage for medical tourism
Allowing inter-state competition among health plans
Permitting all Medicaid eligibles to shop on exchanges (akin to Arkansas’s private option)
Capping and/or more quickly phasing out of the employer-sponsored health insurance tax subsidy
Equalizing tax treatment of all plans and medical savings vehicles, regardless of source or type
Creating high risk pools for sicker individuals without continuous coverage, if only as a transitional measure
Universal, zero- or low-premium catastrophic (akin to Singapore)
Risk rating (or a lot more of it). Note, if only tweaking the age-based constraints on premiums, this is a lot more feasible — move it up to near the top of the list.
To be clear, my notion of technical feasibility here is the extent of interference/disruption of the existing ACA structure and/or other insurance arrangements (like Medicaid or employer-sponsored coverage). I’ve deliberately ignored Medicare, but one could draw up a list for that program. My read of recent right-of-center thinkers is that structural reform of Medicare has fallen away or taken a back seat. The focus seems to be on how the ACA impacts group and non-group markets for the non-elderly, as well as Medicaid.
Have at it!
LATE ADDITIONS: I don’t want to further mess up the numbering, so here are some other ideas from comments: Price transparency (not sure what the specific policy is, but I’d give this a low number on the list because it’s not disruptive to the structure of the ACA at all.)
Health reform is a presidential nightmare. No sane presidential consigliere would ever recommend his or her boss try it. Our health care system is so complicated and convoluted that any conceivable proposal is bound to make someone worse off. And in health care, worse off can mean real pain and suffering that creates powerful, emotional stories that echo through the news cycle. There is simply no way for presidential health care reformers to avoid grievous political harm, as the experience of President Barack Obama is now demonstrating in spades.
Which raises the question: why bother? It would have been so easy for President Obama, in the midst of the Great Recession of 2008, to kick the health care can down the road, saying that his all-consuming priority was economic revival, and that health reform could wait.
Not without some hedging, Ross Douthat suggested the possibility that a conservative reform might be less disruptive to insurance coverage and markets than the Affordable Care Act.
The conservative alternative I have in mind is not what you might call “the full McCain” — the conversion of the existing employer tax exclusion for health insurance into a universal credit, which is an elegant idea in conception but which would indeed disrupt existing arrangements more dramatically than the Affordable Care Act, and which (on the evidence of the 2008 campaign) is about as politically sale-able as single payer. Rather, it’s the more modest plan the American Enterprise Institute’s James Capretta has done the most work fleshing out, in which a cap on the employer deduction helps pay for a flat credit available only to those Americans who don’t receive coverage through their workplace.
Liberals object to this plan for a variety of reasons: The credit would fund catastrophic coverage rather than the comprehensive insurance they prefer, and it would require expanding high-risk pools to cover current uninsurables rather than folding them into the existing insurance system. But on the specific question of existing-plan disruption — who bears the burden of reform, and why — I think the Capretta plan has advantages over Obamacare that even liberals should be able to recognize.
Were I president, in exchange for fiscal, institutional, and broadly bipartisan political support from conception through implementation, I would accept (or would have accepted) something like this proposal. Before I comment on how disruptive it might be relative to the Affordable Care Act — Douthat’s focus — there are a number of other important points worth bearing in mind. With apologies for the length of this post, they are:
The details matter: What is catastrophic? To many, plans supported by the Affordable Care Act are catastrophic plans, with actuarially equivalent coverage as low as 60% and allowable cost sharing in the multi-thousands of dollars for individuals. One can’t even point to Singapore as the benchmark for catastrophic coverage because the circumstances are entirely different. There, deductibles are actually fairly low (US$1,200), but that’s in large part because health care services are highly subsidized, among other government interventions heretofore anathema to the American electorate.
The details matter: What is affordable? A way to make a proposal cheaper to taxpayers is to make coverage less affordable for consumers. (Obvious note: taxpayers are consumers, highlighting the fact that all such proposals are transfer programs.) There can, and will, be heterogeneity in the degree of rate shock and premium joy under almost any reform. The plan to which Douthat compares the ACA would change the nature of tax-subsidization of health insurance in ways that surely will create both losers and winners. Seeds of disruption should start to germinate in your mind already.
High risk pools are not without limitations. The James Capretta-authored document to which Douthat links makes no mention of high risk pools. However, the two documents it cites for elaboration do, though somewhat briefly. The details are vague and seem to vary by document, so some things are unclear to me. (Perhaps I read them too quickly.) High risk pool coverage is, by definition, expensive. To what extent would it be subsidized? To what extent does a high risk pool constitute a cost shift to the sick? To what extent could or would employers shunt sick workers to such pools? Wouldn’t that be disruptive?
Medicaid would be transformed. Under the Capretta plan, Medicaid eligible individuals would participate in the same individual market as other consumers, though with additional financial assistance. The funding relationship between states and the federal government would also be adjusted. Whether these are for the better or not, they would dramatically alter the nature of Medicaid. This is disruptive by definition and design. (Note: Disruption is not always bad.)
Default plans. The Capretta proposal would assign individuals who don’t actively select a plan to one by default. Opting out is permitted, though at some potential future risk or cost. Again, this may be good. It may be reasonably characterized as a “nudge.” But it surely can be interpreted as disruptive to some extent.
There is no coalition for this. Just as it is wrong to say there are no conservative reform ideas, it is equally incorrect to suggest that there is a law-enacting coalition for one. True, this is in large part because Democrats control the Senate and the White House, but them’s the breaks. Having said that, Democrats are well aware of the limitations and problems with the Affordable Care Act. Some are so troubling that the administration is considering some interesting proposals that would require Congress to act. Point being, there is leverage for some negotiation on some aspects of the law. And, crucially, some of the things Capretta has proposed fit within the structure of the ACA, such as allowing Medicaid enrollees to buy exchange plans (see Arkansas), capping the employer-sponsored insurance tax subsidy (see the Cadillac tax), or making exchange plans more catastrophic. But that brings me to …
Exchanges are key. There is no conservative proposal that doesn’t rely on exchanges. Where is the full-out, bipartisan support for their implementation? It’s hard to perceive it through the din of “repeal.”
Repeal is for campaigns, not for governing. There will be no repeal, a point Capretta almost concedes and one I accept as obvious. The law is not going to fully fail, even if it is not a smashing success. More to the point, repeal is not the best way to achieve conservative reform. Any reform would have to offer a navigable glide path from what is to what will be. You don’t get there through repeal. You don’t fight disruption with more disruption! You achieve reform through gradual transition, which is not to say there won’t be any disruption, but to say that it must be delivered in digestible doses.
Now, back to Douthat’s point: Is the Capretta proposal more or less disruptive than the Affordable Care Act? I’ve already discussed how the Capretta plan is disruptive, as any reform must be and as Douthat acknowledges. However, I do not think it’s possible to evaluate whether it would be more or less disruptive than the ACA. One would have to carefully define what “disruption” means. Is it the number of people whose plans or options change in any way? Is it the dollar amount of change in out-of-pocket or total cost? Do we make a distinction between disruption we like (costs going down, options going up) vs. dislike (costs going up, options down)? Do they offset each other? Disruption most certainly should not be measured by the amount of hand wringing by pundits or anecdotes reported on network TV.
For all that, given #8, above, I don’t think disruption relative to the ACA is the right line of inquiry. The ACA is happening, and we have to accept the disruption that comes with at least its initial implementation. The right question is, how much more disruption do we want and in what ways?
Here, there is a canyon of subjectivity (see #1, #2, #4, #5, for example), which can only be resolved through the political process. Since the ACA is the law and the Capretta proposal is a few white papers, perennial gridlock and status quo bias are not working in conservatives’ favor.
That could change. But I doubt it will change by convincing even moderate Democrats to repeal the law. The right approach, in my view, is to recognize that ACA proponents want to amend the law. Conservatives interested in governing ought to work with them on that as a means of finding vehicles to change the law in ways that might be appealing both to Republicans and moderate Democrats.
Meanwhile, save “repeal” for the campaign. It may be how you’ll get elected (in some districts), but it’s no way to govern.
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.
12/11/2015
Austin Frakt
