Repeal + Replace

Repeal + Replace

A Better “Better Way”

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Reports coming out of Washington suggest that Republicans may have bitten off more than they would like to chew with repealing & replacing the ACA, with a proliferation of proposals and no consensus on which to support, or how to get the 60 Senate votes needed to turn an eventual consensus plan into law.

There is a general consensus in the GOP to proceed with the budget reconciliation process, but if they pass the bill the House passed in 2015, it will immediately defund plan subsidies and the Medicaid expansion, setting up 25 million or more to lose their coverage right around midterm elections in 2018.

Even a less drastic budget reconciliation bill, for example one that gets rid of the individual and employer mandates by deleting the penalties associated with them, would leave us with a, “zombie ACA”, with everything not budget-related still in place, but malfunctioning with unintended consequences.

All this uncertainty is bad—it’s bad for the government, it’s bad for industry, and most importantly, it’s bad for the tens of millions of confused consumers trying to make informed decisions about how and if they can get health coverage.

Taking a step back

As the saying goes, when you have a hammer, every problem looks like a nail. In this case, when you have a legislative majority, every problem looks like it should be solved by changing the law.

But does that have to be the case? What if Congressional Republicans were to take a back seat and let Tom Price and the Department of Health and Human Services (HHS) begin the process of reforming health reform?

Thanks to the AHCA We Could Now See Cervical Cancer Rates Increase

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In 2014 I took my first trip to Kenya. After my plane landed in Nairobi I rode for 10 hours with my medical colleagues to Bungoma, a town on the western edge of the country. We set up our clinic in the local hospital and then spent the week training local healthcare providers on a technique called ‘Visual Inspection with Acetic Acid (VIA)’. This is an inexpensive method to screen for cervical cancer and pre-cancer in low resource settings using vinegar. As a part of the training we screened 189 women for cervical cancer in that week.

The Papaniculou (pap) smear was revolutionary in cervical cancer prevention. The incidence of cervical cancer in the United States has decreased from 14.8 cases per 100,000 women in 1975 to only 6.5 cases per 100,000 women in 2012.

However, despite this relative ease of screening for cervical cancer it is still a health crisis in less developed countries. Worldwide, approximately 500,000 new cases of cervical cancer and 274,000 deaths are attributable to cervical cancer yearly, making cervical cancer the second most common cause of death from cancer in women.

Examining How Senate Republicans Frame Their Health Care Bill

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You can find the full text of the Senate Bill here.

Following is the Senate Republicans summary of their Obamacare replacement bill, with comments by NYU’s Jason Chung.

Seven years ago, Democrats imposed a risky health care experiment on Americans that led to skyrocketing costs and collapsing insurance markets.  Senate Republicans are working to fix the mess Democrats made by acting to rescue the millions trapped by Obamacare.

Jason Chung: While Obamacare has been largely successful in its aims to get millions of uninsured Americans medical coverage, including low-income and those with pre-existing conditions, it has also thus far failed to rein in premiums.  Some of that can be attributed to Obamacare failing to institute a public option, which would charge premium lower by 7% to 8% according to the Congressional Budget Office.

This is a nuanced position.  One can support former President Obama for extending coverage for up to 17.7 million more people and criticize him for failing to account for or communicate the possibility of rising premiums in an unchecked for-profit health insurance model.

Not Normal Chaos

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The short version of Vox’s Sarah Skiff on “Why Republican disarray on health care doesn’t doom repeal efforts” would read something like: “It always looks this way in the throes of preparing major legislation. Remember how wild and confusing it was when the Democrats were trying to put together healthcare reform in 2009? Joe Lieberman was insisting on a public option, ‘pro-life’ Democrats were insisting that anti-abortion language be written in? Just because it’s chaotic doesn’t mean it won’t get anywhere.”

She’s right, of course — and she’s wrong in a significant way: In 2009 Congress was debating different policy approaches and the tradeoffs involved. There was never a question whether what they were attempting was possible, just whether it was possible to find a political compromise that could garner enough votes to pass. This meant that it was reasonably predictable that they would come up with something they could call “healthcare reform.” 

Congressional Republicans are up a different creek right now: What they are attempting is mathematically impossible. The things they and President Trump have promised do not add up. Literally. Their problem is arithmetic. Getting more people covered, with better coverage, with lower deductibles and out-of-pocket costs — all that will cost more money, lots of it. Getting rid of the tax penalties for not having insurance (the “individual mandate” that is the most-hated part of Obamacare) and the taxes built into Obamacare on wealthy people and on segments of the healthcare industry — all these will cost the government revenue, the very revenue it would need to pay for the better coverage of more people. All this while they aim to cut taxes and lower the deficit. And of course they have on every Holy Book within reach that they will repeal Obamacare, so they can’t just leave it in place. This means it is highly unpredictable what they will come up with, or that they will come up with anything at all.

The House Republicans’ Terrible, Horrible, No Good, Very Bad Obamacare Replacement Plan

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It won’t work.

Obamacare works for the poorest that have affordable health insurance because all of the program’s subsidies tilt in their favor.

Obamacare doesn’t work well for the working and middle class who get much less support––particularly those who earn more than 400% of the federal poverty level, who constitute 40% of the population and don’t get any help.

Because so many don’t do well under the law, only about 40% of the subsidy eligible have signed up and, with so many insurers losing lots of money, the scheme is not financially sustainable because not enough healthy people are on the rolls to pay for the sick.

To fix it, House Republicans are proposing a very attractive program for the better off and, with the Medicaid rollback, gutting the program for the poor to be able to pay for it.

A Health Plan CEO Daydreams

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Jim was at his desk, looking weary.

The last few weeks had been brutal.  Despite working twelve-hour days, he felt that he had little to show for it.  His annual board meeting was to take place the next day, and he expected it to be tense.

With a replacement bill for the ACA about to be voted on, and with Trump in the White House, the situation seemed particularly precarious.  The board members had asked him to present a contingency plan, in case things in DC didn’t go well.

As CEO of a major health insurance company, Jim was well aware that business as usual had become unsustainable in his line of work.  No matter what insurers had tried to do in the last few years—imposing onerous rules, setting high deductibles, pushing for government subsidies—prices had been going up and up.

Premiums, of course, had had to do the same but, evidently, the limit had now been reached.  The horror stories being told at town hall meetings across the country were all too real.  People were fed up, and politicians were feeling the heat.

Something needed to be done to change course, but what?  He did not have any good plan to propose to the board.

The BCRA Is An Improvement Over Obamacare. Here’s Why..

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Dr. Jha writes on these pages in typically stirring fashion about his views on the recent health care kerfuffle and rightly so fingers what the real focus of our efforts should be: Cost.  He ends by slaying both sides because of their refusal to confront the hospital chargemonster – the fee schedule hospitals make that remarkably only really applies to the uninsured.

Unfortunately, the solution proposed ensures hospital fee schedules for the uninsured are no greater than Medicare reimbursements, which is far from perfect.  Consider that the Medicare reimbursement for a stent placed to an ischemic limb is in the range of $15,000.  While this makes for a less daunting bill for the uninsured, in reality for the vast majority of folks that are uninsured $15,000 is about as far away as $150,000.

But my major disagreement with the good Dr. Jha relates not to his attempt to slay the chargemaster, but his underappreciation for the attempts made in the GOP bill to control health care spending.  A conservative mantra about the why of health care costs focuses on the existence of deep pocketed third party payers that make costs opaque to patients.  Attempting to have patients understand what they’re being charged has been conservative dogma, and there are a number of studies that suggest patients with health saving accounts are more cost conscious when they interact with the health care system.  Dr. Jha glosses over this important point – This is the Republican attempt to bend the cost curve!  And at least to this physician who’s lived through the last eight years, a plan that has a considerably greater chance of success than any number of failed acronyms designed so far by enlightened theorists from the Acela corridor.

HSA chart

The policy experts are hard to convince about HSAs, and point to the above chart as evidence of the uselessness of HSAs.

Key Takeaways From the Price Confirmation Hearing

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As DC readies for the Inaugural fest, the four-hour confirmation hearing for President-elect Trump’s nominee for HHS Secretary, Tom Price, an orthopedic surgeon and six term House of Representatives’ member from the Atlanta suburbs, was the focus yesterday. For healthcare industry watchers, the contentious hearing surfaced several themes likely to mark the new administration’s approach to its health policies.

Key takeaways from yesterday:

Party posturing: The orchestration of each party’s messaging was evident and in stark contrast. Democrats on the Senate’s Health, Education, Labor and Pensions (HELP) committee sought to discredit the nominee as a tee-party ideolog whose views are out of touch with mainstream views about the health system. Republicans sought to reinforce “Dr. Price” pedigree as a clinician whose clinical and political experience equipped him well to lead the massive HHS machinery. Going in, the Democratic spin machine sought to paint Price’ as a corrupt politician who’d made $300,000 worth of stock trades in drug and device companies while legislating in their favor. The Republican PR machine sought to mute their attacks, noting the candidate’s trades had been cleared by the Office of Government Ethics.

Repeal and Replace: Democrats probed for specifics of the replacement for the Affordable Care Act, with particular attention to Price’ solution for the 20,000,000 newly insured thru the exchanges and Medicaid expansion. The candidate’s “Empowering Patients First” plan, introduced in 2015, served as the focus for his antagonists: it proposes the use of tax credits of $900-$3000 to permit individuals to buy private coverage, state-administered risk pools for those uninsurable, premium support for Medicare, health savings accounts with a one-time $1000 incentive and easing of restriction on insurers to allow them to sell cheaper policies. On the GOP side, the ACA was called a “disaster” due to insurance premium hikes and growing frustration of physicians. The nominee repeated “access to affordable coverage” and “giving patients more choices of plans and physicians” as his guiding principles while avoiding specifics about how President-elect Trump’s campaign promises to insure everyone and avoid Medicare cuts would be realized.

Insurance market reforms: Price stated that universal access to affordable insurance coverage is the aim and regulatory relief for insurers in the individual and small group insurance markets as keys. Dem’s probed the distinction between access and actual coverage, noting that last week’s Congressional Budget Office’ report estimated a spike in the numbers who will go without coverage in coming years if “replace” doesn’t achieve current levels of coverage. Frequently, Price criticized the ACA for limiting access to physicians by allowing insurers to use narrow networks to premium costs. He noted that one third of physicians refuse Medicaid coverage and one-eighth refuse Medicare coverage due to reimbursement rates and administrative complexities involved in participation, suggesting these were the direct result of the ACA.

Drug prices: The costs of drugs, and their well-publicized price hikes, drew barbs from Dems who noted the nominee’s plan was mute on drug prices. They asked specifically for Price to go on-record about allowing Medicare to contract directly with drug manufacturers instead of through private insurers and PBMs. The nominee said he viewed market forces as a solution, suggesting (inaccurately) that generics reflected the market’s constraint on drug prices.

Meaningful use: Only one committee member referenced HIT and meaningful use, Sen. Tim Cassidy (R-LA) a gastroenterologist who assailed the hassle and unnecessary costs associated with electronic health records. The nominee agreed, while conceding that “interoperability is the goal..and it’s good for patients”.

Medicaid: Questioning by Democratic panelists sought to discern the nominee’s views about its expansion and funding. Price offered innovation in the way Indiana’s plan was structured as a promising start whereby states could be granted more flexibility, and the long-term forecast for Medicaid expansion and funding was not addressed.

Value-based payment programs: Value-based programs were referenced three times in passing reference. Sen. Baldwin (D-WI) acknowledged the prevalence of ACOs as an innovation she hoped would continue, and two GOP panelists, both clinicians (Paul and Cassidy), questioned the value of demonstrations sponsored by the Centers for Medicare and Medicaid Innovation (CMMI). Price offered that innovation in the health system is needed and CMMI’s mandates were counterproductive. He noted that bundled payments per se were promising, but dictates from Medicare to physicians about the prostheses they could use discounted their value. (CMS does not dictate the prostheses).

Rural health: GOP committee members Murkowski (AK) and Enzi (WY) inquired about the nominee’s views about protection for rural hospitals, prevalent in their states. The nominee expressed understanding pledging that federal regulatory constraints could be eased to facilitate their survival.

And along the way, the panelists on each side opined on their favorite targets: Dems assailed the drug companies, lack of GOP attention to climate change as a health factor, and inconsistencies between the Trump, Ryan and Price plans. Republicans attacked the credibility of the CBO’s recent forecasts predicting costs would increase post-replace adding to the deficit, the need for medical malpractice as part of the replacement and the need for less regulation.

My take:

The confirmation hearing was a media event: it’s unlikely votes on either side changed and virtually certain that Congressman Price will be the next HHS Secretary due to the GOP’s majority on the committee (11-10) and control in the Senate (52-48). Notwithstanding several assertions requiring fact-checking, Dr. Price was poised and remained on message: ‘give patients more choices, let physicians practice without constraint, let markets work, and manage spending aggressively’.

The winners in the Price scheme for ACA replacement are the insurers who’ll see more flexibility in their plan designs, and physicians who’ll have an active supporter in the top job. Those likely to be challenged are hospitals, where commentary was scant in the hearing, states, who’ll shoulder more of the responsibility for the new normal, and individuals newly insured through the ACA who are anxious.

More to come. Stay tuned.

 

Healthcare Insurance: America’s Collective Action Nightmare

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Across the country, ugly confrontations are occurring between Republican lawmakers who pledged to repeal Obamacare and Americans who are afraid of losing their healthcare coverage.  The protesters’ fears are understandable.  The cost of medical services can be devastating.  The chief selling point for Obamacare was that, between the guarantee of coverage on the exchanges and the expansion of Medicaid, the vast majority of Americans would be protected.  And the main difficulty that Republicans face in repealing Obamacare is the widespread concern that tens of millions of people might be tossed off the rolls.

The confrontations are the unavoidable consequence of a collective action dilemma.  The dilemma is this: To achieve good collective outcomes, government must often prevent people from doing what they think is best for themselves.  Individually, I might like to be free to dump trash in the most convenient place, to pollute the waterways and skies, to fish and hunt without limit, to drink and drive, or to use other people’s property and possessions without their permission.  Millions of other people might want these liberties too.  But collectively, we’re all vastly better off when everyone’s freedom to do these things is constrained.  One of the benefits of government is that it can prevent people from acting in ways that are individually rational but that, when practiced widely, make us collectively worse off.

In healthcare, the collective action dilemma stems from the fact that comprehensive coverage—by which I mean all forms of third-party payment, including Medicare and Medicaid, as well as private insurance—is the main driver of the healthcare cost spiral that gone unchecked since the mid-1900s.

The problem is a vicious circle.

America’s Health and The 2016 Election: An Unexpected Connection

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Donald Trump’s stunning upset victory has occasioned a lot of searching among political analysts for an underlying explanation for the unexpected turn in voter sentiment. Many point to Trump’s galvanizing support among white working class and middle income Americans in economically depressed regions of the US- particularly Appalachia and the upper middle west “Rust Belt” – as the main factor that put him in office.

While the Democrats concentrated on the so-called “coalition of the ascendant”- voter groups like Hispanics and Millennials that are growing, Trump rode to victory on a “coalition of the forgotten”- working class Americans in economically depressed regions of the U.S. who had been left behind by the economic expansion of the past seven years.

When the Economist searched for a more powerful predictor of the Trump victory than white non-college status, they found a surprise winner: a composite measure of poor health (comprised of diabetes prevalence, heavy alcohol consumption, lack of physical activity, obesity and life expectancy). Believe it or not. this measure of health status predicted a remarkable 43% of the improvement of Trump’s vote percentage compared with the 2012 Republican candidate Mitt Romney, compared to 41% for white/non-college.

A month after the election, the Centers for Disease Control released its 2015 morbidity and mortality trends in the US.  The CDC Report showed that  Americans’ life expectancy actually declined for the first time in 22 years. Except for cancer where we saw continued progress, death rates rose for eight out of the ten leading causes of death, most sharply for Alzheimer’s Disease.  The decline in life expectancy was confined entirely to the under 65 population!