Repeal + Replace

Repeal + Replace

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.

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.

 

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.   

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 Art of the Deal: Coming
to Rx Prices Soon

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screen-shot-2016-12-28-at-2-21-40-pmDuring the campaign, President-elect Trump said “(w)hen it comes time to negotiate the cost of drugs, we are going to negotiate like crazy.”

While the President-elect’s pronouncements can’t always be taken at face value, this one should be.

In its December 7, 2016 prescription drug report to Congress, HHS reported Medicare (Parts B and D) and Medicaid Rx expenditures equaled $165.5 billion in 2014. Total 2014 retail and non-retail Rx spending was $424 billion.

HHS also reported that Rx spending “has been rising more quickly than overall health care spending . . . [and in] recent years, growth in prescription drug spending has accelerated considerably”.

If the reported annual rate of growth in 2014 (12%) holds for 2015 and 2016, Medicare/Medicaid’s Rx spending and total Rx costs in 2016 will exceed $200 billion and $500 billion, respectively.

As fiscal pressures to control healthcare costs build, Rx prices may be the ripest big ticket item on the table.

As the Trump Administration looks for bipartisan support for an ACA replacement, Rx prices could also provide some glue.

Interview with Mark Pauly: Part 1

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Community Rating – The Worst Possible Way To Do a Good Thing

I have a grudging respect for health economists, “grudging” because, like many doctors, I want my pieties unchecked. Health economists check our pieties with quantitative truths. They describe the way the healthcare world is – a view from 29, 000 feet, pour cold water on the way we think the world should be, and guide, with abundant disclaimers, the way we can make things better. It’s unwise climbing Everest without a Sherpa, nor is it wise reforming healthcare without listening to health economists from across the political spectrum.

President Trump, along with the Republican House and Senate, will be dismantling the Affordable Care Act (ACA). In a sense, President Trump is not just descending Everest, a treacherous feat in its own right, but scaling a peak arguably more dangerous than Everest. Despite their differences, Mr. Obama and Mr. Trump share one commonality – an implicit distrust of the health insurance industry.

How did the American health insurance industry become so vilified? This is, in part, because necessity is the father of all vilification. Insurers are a necessary evil in a country where there’s still deep mistrust of the government. Partly, this is because we transfer our angst about the uncertainty of our future, the dice which plays with our lives, to insurers who are in the business of rolling the dice. But mostly it’s because the misdeeds of the insurance market have been grossly exaggerated, and the benefits of the market have been attenuated by a few damning anecdotes. This is what Mark V. Pauly (MVP), Professor of Health Economics at the University of Pennsylvania, and one of the most eminent health economists of his generation, believes.

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: 

Make Trumpcare the First Big Step toward a Free Market in Healthcare

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Say what you will about Obamacare—at least President Obama eventually took ownership of it. When it comes to the American Health Care Act, President Trump isn’t ready to do that. He’s discouraging people from calling it “Trumpcare.” Since Trump normally he puts his name on everything within reach—even the trash can liners at the Trump SoHo Hotel bear his moniker—he must be keeping his distance from the AHCA because he’s ashamed of it.

The editors of The New York Times think he should be. They accuse Trump and the rest of the GOP of “Trading Health Care for the Poor for Tax Cuts for the Rich.” The charge is based on the CBO’s prediction that Trumpcare will immediately cause 14 million Americans to lose their coverage through private insurers or Medicaid, with that number rising to 24 million by 2026. Adding those people to the existing un-covered population, 52 million Americans will be uninsured a decade after Trumpcare incepts.

The consensus among policy wonks on the left and the right is that this would be a disaster for the country. Rolling back Medicaid will harm the states that expanded their programs on the promise that the federal government would pick up the tab. It will damage hospitals and other providers too as the demand for charity care goes through the roof. The newly uninsured will suffer worst of all. Without private insurance or Medicaid to rely on, many will forgo needed medical treatments and all will face the risk of financial catastrophe associated with serious injury or illness. All of these possibilities worry Republican governors and legislators, who fear losing office when the healthcare sector revolts and voters take revenge at the polls.

One can, however, see the GOP’s predicament as an unparalleled opportunity. Instead of vewing the 52 million un-covered Americans as pathetic creatures with nowhere to turn, one could regard them as an enormous army of consumers who will have to buy their own healthcare and who will be hungry for medical services that are effective and cheap. If we were talking about housing, transportation, energy, food, clothing, televisions, cell phones, or computers, we might already see them that way.

Letter from Washington:
Don’t Jump … Yet

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Washington, D.C. hardly seems like a town on suicide watch.

As November turned to December, from the venerable Old Ebbitt Grill near the White House, to Charlie Palmer Steak at 101 Constitution and over to The Capital Grille at 601 Pennsylvania, revelers abounded, in both food and drink.

At the Capitol Hyatt on New Jersey Avenue though, some contrasts were evident. While contestants from the Miss World 2016 pageant moved in and out of the upper lobby to awaiting buses, in the lower-level meeting rooms, also from November 30 to December 2, the mood was hopeful optimism meets whistling past the graveyard.

There the Jefferson College of Population Health summit brought forth Andy Slavitt, Michael Leavitt, Farzad Mostashari, NCQA President Peggy O’Kane, former advisors from the George W. Bush and Obama administrations, officials from Johns Hopkins, the Henry Ford Health System, Brookings, Deloitte, AMA, AHA and the American College of Physicians and many more to dissect MACRA and ponder “population health strategy under the new administration.”

The consensus on where value-based care (VBC) is heading?

Wait and see.

Democrats Paid a Steep Price For Ignoring the CBO. Republicans Will Too.

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Eight years ago it was Democrats who were criticizing the Congressional Budget Office. Now it’s Republicans who are bashing the CBO for estimating that 14 million Americans will lose their health insurance next year if the House Republicans’ “repeal and replace” bill becomes law.

The media and the blogosphere have done a reasonably good job of debunking the Republicans’ criticisms of the CBO. Any citizen paying attention can discover that although fewer people enrolled in the Obamacare exchanges in 2014 than the CBO predicted in 2010, the CBO correctly forecast that the uninsured rate would fall by about half and that employers would not stop offering health insurance. The attentive citizen can also discover that the CBO’s predictions were more accurate than those of many other experts.

The media has also reported that Democrats leveled their own unfair criticisms against the CBO back in 2009 and 2010. Obama, Nancy Pelosi, and Max Baucus, to name just a few prominent Democrats, criticized the CBO for not giving the alleged cost-containment provisions in the Affordable Care Act more credit.

I want to make three points here that I have not seen made elsewhere:

(1) The criticism that both Democrats and Republicans make of the CBO consists almost exclusively of raw opinion, usually delivered in a huff, and almost never cites or discusses research;

(2) The CBO may have been off in predicting how many people would enroll in Obamacare and Medicaid, but it was accurate in predicting the failure of the managed care fads written into the ACA to cut costs; and

(3) Today, more than ever, America needs the CBO because the CBO adheres to the quaint principle that evidence should trump ideology.