Repeal + Replace

Repeal + Replace

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.

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!

Pig in a Poke Health Reform

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Uwe ReinhardtFrom a political perspective, House Speaker Paul Ryan’s trashing of ObamaCare (a.k.a. the Affordable Care Act or ACC) during CNN’s recent town hall meeting probably was quite effective. One would, of course, not expect a staunch political opponent of ObamaCare to render a “fair and balanced” picture of the program, to plagiarize a Fox News mantra. Not surprisingly, the Speaker dwelt solely on some serious shortcomings of ObamaCare that are by now well known among the cognoscenti.

The question now is precisely what would replace ObamaCare, as Republicans fall over one another in their haste to repeal it. Enumerating principles, as has been done in sundry tracts in recent years and is done once again in the House of Representatives’  “A Better Way”, is no longer enough. Yet even at this time of imminent repeal of ObamaCare, the crucial details of any replacement plan remain a mystery. Surely the time has come to let the cat out of the bag.

During the town hall meeting, for example, Speaker Ryan proposed the general outline of a system that would rely on high risk pools for Americans with pre-existing medical conditions, coupled with a market for individually purchased insurance policies whose modus operandi was largely unspecified. What would be the parameters of the high risk pools? Granted, it would have been difficult to be much more specific on this point than the Speaker was in a town hall meeting. But it would certainly have been helpful had there been a website to which he could have directed his audience for the specifics of a replacement plan built on a Republican consensus.  To my knowledge, there is no such website.

Risk pools have long been the workhorse of Republican rhetoric on health reform. One can think of such a pool as just another health insurance company selling insurance in the individual market for such policies to relatively sick applicants for insurance. To assess the merits of the coverage it sells, one surely would want to know: 

The Rust Belt Is Burning: Republicans Lay Waste to their Base on Health Reform

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William Tecumseh Sherman, who laid waste to the South at the end of the Civil War, famously said, “War is Hell”.  So, too, is health reform.  And like Sherman’s infamous March to the Sea, where he burned town after Confederate town, the Republican War on Obamacare entered its attrition phase with the introduction on Monday in the House legislation to repeal and replace ObamaCare.  Except that Ryan is marching in the wrong direction; his troops are marching “north” and burning towns behind their own lines.

Ryan’s bill released Monday was greeted with a chorus of derision from the newly empowered Republican base; some conservative wags dubbed the bill “RINOCare”. Thoughtful conservative analysts savaged it.  Michael Cannon, the hard core libertarian Cato Institute health analyst, called it “a trainwreck waiting to happen” and suggested  that “ it will create the potential for the sort of wave election Democrats experienced in 2008”    In Reason.com, Peter Sunderman wrote,  “it’s not clear what problems this particular bill would actually solve.”

Ryan’s draft neither repeals nor replaces ObamaCare.  

It Begins

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For the second time in a decade, a president and Congress will undertake a large-scale effort to re-engineer the health care system.   

Politics and debate over policy are not the primary cause of this continued upheaval.  It is our patchwork, Rube Goldberg-like system, developed ad hoc over 50 years.      

As THCB readers know, we have an insurance and care delivery system that works less well—in terms of public health, coverage, patient outcomes, and cost—than health care in most of the rest of the developed world. 

And, things are getting worse.  To wit: rising death rates among middle-aged, low- and middle-income white Americans; the unchecked rise in obesity and preventable chronic diseases and opioid addiction; and woefully slow progress to reduce medical errors and improve patient safety.    

The Arc of Justice in Healthcare

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We all fear that phone call.  A medical report turns out the wrong way and life may never be the same.  When that call arrives we all have the same needs:  A doctor who cares, a place to go for treatment and the finances to afford what’s needed.  Starting on January 20th, some of my patients will join the 20 million whose lifeline to those fundamental needs becomes jeopardized.  

One of my patients facing this threat lost his job and health insurance during the 2008 recession.   Because he’s a diabetic and has a special needs son, no insurance company would sell his family a policy.   Why would they?   Diabetics and others with serious illnesses pose high risks for future health expenses.  Insurance companies make money by avoiding such risk.   After exhausting all the options, he sweated out 18 months with no coverage.   Finally, the roll-out of the California Exchange, funded by the Affordable Care Act (ACA), allowed him to buy an Anthem Blue Cross policy for his family.  

Do we really want millions of our fellow Americans to relive those nightmares?  We all benefit from the ACA’s fundamental commitment: That everyone deserves access to healthcare regardless of their ability to pay.  The policies guided by this principle moved us toward the achievement of universal coverage without changing the existing care of the majority of working families with employer based plans nor those with self-funded coverage.   

I Dub Thee “Three Pronged” Care

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There are approximately 18 million Americans who purchase health insurance on the so called individual market, on and off the Obamacare exchanges. There are another 14 million or so who could be buying insurance on the individual market, but choose not to buy anything. This puts the total individual market at about 10% of Americans. Half of those are, or are eligible to be, heavily subsided through Obamacare (including those huge deductibles). The other 5% are facing the full brunt of health insurance price increases under Obamacare. Of those, 3% are paying for Obamacare health insurance and getting garbage in return for their money, while the remaining 2% are uninsured.

This is the magnitude of the primary problem we are supposedly trying to solve. The 17% of Americans on Medicare are not upset at Obamacare. The approximately 23% of Americans on, or eligible to be on, Medicaid are not angry at Obamacare either (although the 1% eligible for the Medicaid expansion in states that chose not to expand it, might be angry with their Governors). Some of the 50% or so, who are getting health insurance through their employer, and used to get rather flimsy insurance in the past, may be somewhat disgruntled because the Obamacare imposition of “essential benefits” caused their share of premiums and deductibles to rise, and their ability to choose their doctors to plummet.

This is the secondary problem we are supposedly trying to solve. The American Health Care Act (AHCA) addresses neither problem and exacerbates both.

Here’s What Won’t Happen in 2017
(And What Will)

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In the political drama surrounding the new administration, healthcare is certain to take center stage as the 115th Congress convenes tomorrow and Donald Trump is sworn in as our 45th President and Chief Executive January 20. As it turns out, healthcare was a major issue in Campaign 2016, especially with Clinton-Sanders followers who wished expansion of coverage and a vocal minority of GOP voters who liked the promise of Repeal and Replace. Now it’s time to govern.

For the new Congress and administration, governing healthcare will play out against a testy backdrop: it will not be easy.

The Nation is Divided about the Affordable Care Act (HR3590): Only one in four Americans and one in two Republicans surveyed after the election wants the ACA repealed. By contrast, 30% want it expanded and 19% want it to remain as is, (Kaiser Family Foundation Poll December 28, 2016). Elements of the law are popular, like protections against denial of coverage due to pre-existing condition and continuation of coverage for young adults under 26 on their parents’ policy. But the individual mandate became a rallying cry for opponents who labeled it “government run healthcare” and partisans who tagged it ‘Obamacare’ voting to repeal it more than 60 times in the House. Objectively, for the past four years, the ACA has been shorthand for a debate about health insurance coverage and premium costs. The law imposed restrictions on how insurers operate and expanded coverage via Medicaid expansion and subsidies for those between 100 and 400% of the federal poverty level. Access increased–20 million are now covered that weren’t before—and premiums went up for everyone because the law imposed restrictions on how plans were required operate. Ironically, the insurance reforms are in Title I of the ACA “Quality, Affordable Health Care for all Americans”; delivery system reforms that address gaps in quality, care coordination, healthcare workforce innovation and unnecessary care are covered in the other 9 titles that got little attention from media, political pundits and politicians. Nonetheless, the ACA divides America though most know little about what’s in it.