A Better “Better Way”

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?

Here’s what that would look like:

Tom Price gets on a call with the leadership of Aetna, UnitedHealth, Anthem, Humana, Centene, Molina, and the Big Blues (BlueCross BlueShields). On this call, he tells them:

  • The Administration is committed to reforming the individual health insurance market, and to making sure it is sustainable for all stakeholders including insurers.
  • Health and Human Services will use its broad administrative authority under the ACA to make the public exchanges much more attractive for insurers immediately.
  • Essential Health Benefits (EHBs), the standard benefits that all ACA plans are required to offer, can be relaxed. This is possible because while the EHBs are defined in the ACA, the plan certification process lives with HHS, an artifact of the messy way in which the ACA was passed back in 2010.
  • He asks which EHBs need to be curtailed to bring the cost of plans down.
  • He makes it clear that HHS will look very favorably on innovative plans that cover less and cost less as a result.
  • To close the deal, he assures them that helping stabilize the individual market in the near term will get them a seat at the table for the longer-term redesign of health reform.

If 4 of those 7 stakeholders agree to offer plans on the public exchanges in 2018, you have a functioning individual health insurance market.

With the relaxed EHBs, premiums will go down significantly, and with it, enrollment numbers should go up.

And breathe

A year from now, Republicans could credibly say:

The ACA was in a death spiral a year ago. Since then we’ve lowered premiums and raised enrollment with common-sense policy changes. We’ve done all that we can do without changing the law, and now Congress needs to pass a law to fix the other pieces that are broken.”

The success of this short term “band-aid approach” would make it a lot easier for Republicans a year from now to find the 60 votes they will need in the Senate to pass replacement legislation. And most importantly, the country would be spared an incredibly volatile year in which tens of millions of Americans will risk losing their health coverage.

George Kalogeropoulos is the Founder and CEO of HealthSherpa, where over 800,000 people have enrolled in health coverage.

Categories: Uncategorized

7 replies »

  1. Thanks George. The concept here is good….Price and Verma need to do lot more to stabilize the market as 2018 enrollment approaches. They know that. Some kind of a deal is a likely scenario. But Rs in Congress are not going to back off. Some think they gotta repeal and replace. Price will keep them informed, no doubt, having come from the House. And he could well eat them to the punch given that there’s no consensus approach.
    State flex like 1115 and 1332 waivers could also happen sooner and administratively than action in Congress. And that builds towards the 60 Senate votes too….if the moderate Red states (that have expanded Medicaid) and the Blue state governors and Senators win concessions on doing what they want, even keeping Obamacare structure.
    Beware overly skimpy plans. Bad policy…always was. Higher deductibles, yes. That’s a consumer choice and well accepted path now, though it shifts whooping amounts of risk to consumers.

  2. Bob, I agree the largest cost is in guaranteed care. We must make it like car insurance where it’s individual, not group. The difference is that your rates could not go up over the new healthy signup price as long as you keep paying the premium.

    Making more standard templates would fix the 15-20% cost inefficiency of mandated benefits. Please check out my petition for published pricing healthcare: https://www.change.org/p/hhs-secretary-of-tom-price-one-published-pricing-healthcare

  3. A minor point. Over a man’s lifetime of 85 years $1,000 with annual compound interest of 20% becomes $5,375,339,686. If I am correct that is about half of what our government spends every day.

    Bob, these so called little numbers are a lot larger than you believe.

  4. I don’t think 15-20% is anything to dismiss as inconsequential. In fact, when one considers compounding of increases over time I think it is huge.

  5. The elimination of most benefit mandates will have a minor effect on premiums,,,15-20 per cent at most.
    The only mandate removal that would really drive down premiums would be the end of guaranteed issue…..and of course this is the most controversial.
    This would be pleasant for healthy persons, and a total disaster for those with current illnesses. We must tread very carefully here.

  6. George, I agree that the GOP needs to be talking more about fixing than repealing. But I agree with Paul that we need to be bolder.

    1) The Marketplace should be licensed privately under an auction that mandates it be a turned into the Ebay of healthcare, searchable with advanced functionality to provide price and satisfaction statistics on every item code and every provider. This happens through a mandate that every item has one price which is published, changeable, but not discountable. This eliminates predatory pricing and local provider dominance created monopolies. Breaking state barriers would do nothing if private networks were allowed to stand. Insurer/providers like Kaiser Permanente or HMOs would still be allowed to act like a closed network, but they would not survive long IMO if all the competition had national omnipresent access.

    2) Allow HSAs to pay insurance premiums. Greatly increase the caps, indexed by age. This puts employers in a position to contribute to an individual’s plan and portability is built in by default.

    3) Standardized fee for service and HMO templates to comoditize insurance as well as facilitating regulation and orderly response to future market changes.

    4) Willing seller/willing buyer policies that once signed become non-discriminate and non-voidable by seller except for uncured payment default. Health Insurance becomes more like life insurance. This allows for eventual phase out of Medicare.

    4) End of employer and group favoritism by disallowing group discounts. All insurance become individual and no longer employer centered.

    5) Truly universal coverage floor for the poor and self-insured that eliminates Medicaid but imposes an individual cost, collected according to means by IRS.

    6) Insurance tiers based on premium care as well as degrees of self-insurance.

    Here is a link to an online pdf of the plan’s 9-page Q&A

    Here is Steven I. Weissman’s 111,000 signatured petition to have one published price healthcare? https://www.change.org/p/end-predatory-healthcare-pricing

    Here is my petition: https://www.change.org/p/hhs-secretary-of-tom-price-one-published-pricing-healthcare

  7. Sounds pretty good, but couldn’t we be a little bolder? Like:
    1. Allow companies to sell a national plan that is exempt from state mandates. This would make it much easier for insurers to compete across state lines. It would break up the oligarchic structure of regional insurers…..and will result in the mark up from insurers to drop into single digits from the current 12% or so. Even more importantly it would lead to insurers acting as employer agents to get lower prices……whereas now they really act as funders of hospital systems.
    2. Announce no enforcement of HiTech electronic health record mandates/penalties/subsidies. Immediate $ savings and improved doctor productivity and doctor satisfaction. Nobody talks about it much, but the EHR mandates have been a financial and clinical disaster. Most importantly, it will force EPIC and others to innovate to make the purchase of an EHR a compelling choice, not a coerced one……real clinical utility.
    3. Eliminate health insurance subsidies and instead of paying the insurance company pay into individual’s health savings accounts that can be used to buy your slimmed down benefits package.

    Or do you think these sorts of things have to come later? If so, why?