HHS’s bellwether decision of last week to grant the State of Maine a three-year waiver from the medical loss ratio provision of the ACA may lead to new efforts by insurers across the country to persuade states to demand similar waivers.
The HHS decision on Maine was not unexpected. The ACA language clearly allows for waivers when imposition of the MLR 80/85 percent threshold penalties would lead to disruption of a state’s insurance market. Maine, a state with very few major employers, has a higher than average percentage of small group and individual policies which typically provide higher out-of-pocket costs—and consequently higher administrative percentages. HealthMarkets, one of the two dominant insurers in Maine, had threatened to abandon the state’s individual market unless a waiver was granted. (According to a Bloomberg report, HealthMarkets, which is majority-owned by two large investor funds, was recently sued by the City of Los Angeles for selling policies with provisions that allegedly effectively eliminated needed coverage.)
Three other states (Kentucky, New Hampshire, and Nevada) have already filed waiver requests with HHS, and an additional eleven states are reported to be preparing waiver requests.
Almost certainly, every insurer with significant business in the small group and individual markets will be eying the Maine waiver decision with a view to applying pressure to those state insurance regulators who are not yet preparing waiver requests. While Maine appears to have had an unusually strong case for a waiver, the absence in the ACA of any specific measures for “market disruption” may make it difficult for HHS to reject such requests.
Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care REFORM UPDATE.
Two cover stories in this week’s Time magazine debate a provocative question: Is America in decline?
Both the yes and no arguments are made persuasively, and I found myself on the fence after reading them, perhaps leaning ever-so-slightly toward the “no” side (optimist that I am). Sure, times are tough, but we’ve got the Right Stuff and we’ve bounced up from the mat before.
Then I considered the political fracas over Don Berwick’s appointment as director of the Centers for Medicare & Medicaid Services (CMS), and decided to change my vote, sadly. Yes, America is in decline, and this pitiful circus is Exhibit A.
Berwick, as you know, is a brilliant Harvard professor and founding head of the Institute for Healthcare Improvement. He is also the brains and vision behind most of the important healthcare initiatives of the past generation, from the IOM reports on quality and safety, to “bundles” of evidence-based practices to reduce harm, to the idea of a campaign to promote patient safety.
President Obama’s selection of Berwick to lead CMS last year was inspired. In the face of unassailable evidence of spotty quality and safety, unjustifiable variations in care, and impending insolvency, Medicare has no choice but to transform itself from a “dumb payer” into an organization that promotes excellence in quality, safety and efficiency. There is simply no other person with the deep knowledge of the system and the trust of so many key stakeholders as Don Berwick.
But Berwick’s nomination ran into the buzz saw of Red and Blue politics, with Republicans holding his nomination hostage to their larger concerns about the Affordable Care Act. In the ludicrous debate that ultimately culminated in Obama’s recess appointment of Berwick, the central argument against his nomination was that he had once – gasp – praised the UK’s National Health Service. Interestingly, without mentioning Berwick by name, Fareed Zakaria pointed to this very issue to bolster his “decline” argument in Time:
A crucial aspect of beginning to turn things around would be for the U.S. to make an honest accounting of where it stands and what it can learn from other countries. [But] any politician who dares suggest that the U.S. can learn from – let alone copy – other countries is likely to be denounced instantly. If someone points out that Europe gets better health care at half the cost, that’s dangerously socialist thinking.Continue reading…
Pending Supreme Court review, the provisions of Affordable Care Act (ACA) are gradually working their way through the system. But we are still three years away from the centerpiece of the ACA – the insurance exchanges. The combination of purchase mandates, taxes, subsidies, and underwriting restrictions that govern the exchanges has never been tried and no one knows if the exchanges will work. Even the academic theorists who assembled this patchwork quilt of rules and regulations have their fingers crossed.
Given the lengthy wait between passage and full implementation of the ACA, it was inevitable that the op-ed pages would be filled with alternatives to exchanges. Some critics would scrap them in favor of some bastardized version of the status quo, leaving tens of millions uninsured. But commentators on the right and left have offered bolder ideas for expanding coverage. Some conservatives promote voucher plans. These proposals feature open enrollment periods and a few other mechanisms that will promote broad risk pools without all the other regulatory bells and whistles. Some liberals renew the call for a single payer system. Frankly, I think both of these “ideologically pure” approaches will be more successful than the mongrelized ACA.
This is why I am intrigued by a bill that is flying under the radar screen in Congress. This bill, which has the support of President Obama, would allow states to implement their own rules for expanding health insurance coverage. If the bill provides enough carrots in the form of tax subsidies (that would have otherwise funded the ACA exchanges), then several states might just play along. If that happens, we would have a golden opportunity to discover the strengths and weaknesses of alternative approaches. Unfortunately, I suspect that this legislation will not give states enough time to act or enough money to make it worth their while, and the vast majority of states will leave the problem of financing and implementing health reform to the feds.Continue reading…
“In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed” Charles Darwin
As the legislative reform volcano rumbles and angrily spews magma into the Washington night, nervous industry stakeholders competing for survival on this unstable island of American healthcare are still betting that the seismic activity is merely a false eruption.
Survivor contestants are using every possible means to ensure they are not voted off the island. The stakeholders are a veritable who’s who of personalities – the powerful, the wealthy, the prima donnas, the tough love advocates, the national health zealots, the well-intended academics, the bellicose politicians, the under-employed, the overweight, and the disenfranchised. It remains to be seen whether Congress, market forces or the American people will be the ultimate judge of who stays and who goes.
If the contestants cannot change in the next five years, 2015 will find them staring at a terrifying wall of regulation and governmental intervention that will be more destructive than the changes from the 2010 proposed legislation.Continue reading…
Who will be hurt the most by the health reform legislation Congress passed last year?
Answer: The most vulnerable segments of society: the poor, the elderly and the disabled. That’s right. Virtually everyone in Congress who is left-of-center voted for a law that will significantly decrease access to care for the people they claim to care most about.
Why isn’t anyone writing about this?
Answer: Because almost all the people who write about health care know almost nothing about economics.
Basically, there are two ways to reform health care. One way is top down. The other is bottom up. The latter is based on the economic way of thinking. The former rejects that way of thinking. The latter gets the economic incentives right for all the individual actors, leaving the social result largely unpredictable. The former starts with a social goal and tries to impose it from above, leaving individuals with perverse incentives to undermine it. The latter depends for its success on people acting in their self-interest. The former depends for its success on preventing people from acting in their self-interest.
I think I can probably count on the fingers of two hands the number of people in health policy who accept the economic way of thinking. All the rest — 99.9% of the total, including a lot of people with “Ph.D., economist” after their names — reject it in spades.
The following article, forthcoming in U. Penn. L. Rev., pinpoints the strongest arguments for and against federal power under the Commerce Clause to mandate the purchase of health insurance: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1747189
Among the key points I make in defense of this federal law are:
1. The “commerce” in question is simply health insurance, and not the non-purchase of insurance as challengers have framed it. Because “regulate” clearly allows both prohibitions and mandates of behavior, mandating purchase is lexically just as valid an application of the clause as is prohibiting purchase or mandating the sale of insurance.
2. Although existing precedent might allow a line to be drawn between economic activity and inactivity, there is no reason in principle or theory why such a line should be drawn in order to preserve state sovereignty. Purchase mandates, after all, are as rare under state law as under federal law.
The tone on Capitol Hill during Tuesday’s debate was more civil, the partisan rhetoric less harsh than previous exchanges on the House floor. But there’s little doubt that the Republican-led House will vote later today to repeal President Obama’s signature health care reform law.
That largely symbolic vote – there’s almost no likelihood the Democratic Senate will follow, nor would the president sign the bill – signals the start of a two-year campaign by newly empowered Republicans in the House to undermine the new law. Proponents of “repeal and replace” will next turn to eliminating the most unpopular elements of the law—including the individual mandate – and to cutting off funding for implementation.
But the administration won a powerful set of centrist allies on Tuesday as it scrambled to set in motion reforms that it believes will be popular with the American people once its key provisions go into effect. The new law, signed by Obama last March, is designed to provide about 32 million previously-uninsured Americans with coverage either through Medicaid or subsidized private insurance sold through state-based insurance exchanges. The total cost of the program of about $900 billion will be paid for by a combination of tax increases and slower growth in Medicare spending. The law also places consumer-friendly restrictions on insurance carriers, funds Medicare pilot models in alternative care delivery, and creates a government-run long-term care insurance program.
Tomorrow night the House of Representatives will debate the repeal of the Patient Protection and Affordable Care Act (ACA), what many call “ObamaCare.” Some critics complain that this is a futile exercise because there is little chance of short-term success. But that’s the wrong way to look at it.
At the time of its passage, most members of Congress had no idea what was in the ACA. Nancy Pelosi was more correct than she realized when she said, “We have to pass it to see what’s in it.” Even now, we don’t know half of “what’s in it,” but we know enough to have an intelligent debate. Ideally, tomorrow night’s proceedings will be educational — in a way that the debate last spring was not.
In anticipation of the event, representatives from the National Center for Policy Analysis, the Heritage Foundation, the American Enterprise Institute, the Cato Institute and the American Action Forum will conduct a briefing on Capitol Hill tomorrow at noon. Our goal: to discuss ten structural flaws in the Affordable Care Act. We believe each of these is so potentially damaging, Congress will have to resort to major corrective action even if the critics of the ACA are not involved. Further, each must be addressed in any new attempt to create workable health care reform.
This week’s House health care repeal vote is little more than a political stunt–everyone knows the effort will die in the Senate.
But, when the day is done the only way for the Republicans to do anything with the new health law will be to work out a compromise—repeal before the 2012 elections is impossible and it isn’t very likely after the 2012 elections. Even if the Republicans sweep the White House and both houses of Congress in 2012, it is highly unlikely they will have the 60 Senate votes needed for a full repeal.
So, in the end, a compromise will be needed.
During the past week, more than one Democrat has indicated an interest in at least looking at compromise amendments to the health care bill—particularly on the individual mandate. But so far, Republicans are showing no signs of being interested in fixing what they say is a bill so bad it should only be repealed.
The House vote will take place against a backdrop of increasing debt and enormous fiscal challenge. In recent days, the national debt passed the $14 trillion mark—that is $45,300 for every person in the country!
Half of our national debt was added in just the last six years. The debt was “only” $7.6 trillion in January 2005 and $10.6 trillion the day President Obama was inaugurated just two years ago.
“The primary ethical issue of modern medicine and public health is the outcome gap,” write Paul Farmer and Nicole Gastineau Campos in an essay published in 2004. Entrenched in “growing social inequalities,” this gap is immediately evident to every physician: poverty is inversely proportional to health. “The growing gap,” they elaborate, “constitutes the chief human rights challenge of the 21st century.” The proliferation of people who never experience abuse of their civil rights, but lack access to medical care, has damaging societal implications: “what does it mean when an African-American neonate does not have ready access to a neonatal intensive care unit?” The answer is that “[w]henever more effective technologies are introduced there will be, in the absence of an equity plan, a growing outcome gap.”
Around the country, this gap is exploding. Surviving an illness may sometimes depend on the good will of kids. I kid you not. Carlos Olivas, Jr., a 12 year-old boy, in view that Arizona’s cuts to Medicare meant certain death to a man who he had never met named Francisco Felix, decided to help, raising money in the street. Carlos’ empathy toward Mr Felix―at least in part―originates from the thought of finding his father (who has cirrhosis) in a similar situation.
A sense of responsibility toward others, as exhibited by this young man, is the foundation of all societies. Carlos is an exemplary citizen, proof that the Social Contract is an intuitive concept. His behavior is strictly rational: today, I’m strong and can help the weak; tomorrow, when I’m not as strong, someone will help me.