Rumors have been circulating in the marketplace all week that the administration was thinking of extending the individual health insurance policies that Obamacare was supposed to have cancelled for as much as three more years.
That the administration might extend these polices shouldn’t come as a shock. My sense has always been that at least 80% of the pre-Obamacare policies would ultimately have to be canceled because of the administration’s stringent grandfathering rules that forced almost all of the old individual market into the new Obamacare risk pool.
But with the literal drop dead date for these old policies hitting by December 31, 2014, that would have meant those final cancellation letters would have had to go out about election day 2014. That would have meant that the administration was going to have to live through the cancelled policy nightmare all over again––but this time on election day.
The health insurance plans hate the idea of another three-year reprieve. They have been counting on the relatively healthy block of prior business pouring into the new Obamacare exchanges to help stabilize the rates as lots of previously uninsured and sicker people come flooding in.
With enrollment of the previously uninsured running so badly thus far, getting this relatively healthier block in the new risk pool is all the more important. The administration’s now doing this wouldn’t just be changing the rules; it would be changing the whole game.
Republicans, and a few vulnerable Democrats, had essentially called for this last fall when legislation was floated in both the House and Senate with the “If You Like Your Policy You Can Keep It,” proposals. At the time, the administration and Democratic leaders rightly said if this sort of thing would have been made permanent it would have a very negative impact on what people in the new pool would pay––and on their already high deductibles and narrow networks.
At the beginning of this post I asked, Is Obamacare unraveling?
First, as I have said before on this blog, the law’s reinsurance provisions will mean Obamacare can keep limping along for at least three years. And, even making this change won’t alter my opinion on this. It will just cost the government more reinsurance money to keep the carriers whole.
By asking if it is unraveling, what I really wonder about is the whole sense of fairness in the law and the expectation that everybody needs to get the Democrat’s definition of “minimum benefits” whether they want them or not.
The Republican plan targets many of the most unpopular parts of the Affordable Care Act such as expensive mandated benefits and the resulting lack of choice, the individual mandate, the employer mandate, and age-rating disruptions.
My sense is that most independent voters––the ones that matter in an election-year––don’t want Obamacare repealed; they want it fixed.
The problem for Republicans is that they have such a visceral response to the term “Obamacare” that they just can’t bring themselves to fix it. The notion that Obamacare might be fixed and allowed to continue as part of an Obama legacy and as a Democratic accomplishment is something they can’t get past.
So, the only way Republicans can propose an alternative to Obamacare is to first wipe the health insurance reform slate clean and start over.
No-one can say any longer that Senate Republicans are entirely deaf to calls to describe how they would replace the much maligned Affordable Care Act.
This week, three senior GOP senators (Orrin Hatch, Tom Coburn, and Richard Burr) announced their proposed Patient Choice, Affordability, Responsibility, and Empowerment (or Patient CARE) Act. Given that each of this group is a heavyweight mainstream Republican and that Senator Coburn is one of the few physicians in the Congress, the draft Act deserves a serious look.
Although the first part of the draft would repeal the ACA, other parts would continue a number of the ACA’s reforms while introducing some changes in attempts to control costs and reduce the numbers of uninsured, creating a kind of Obamacare Lite.
The draft proposes to continue the ACA’s ban on lifetime insurance caps, its coverage of dependents up to the age of 26, and the ACA’s savings in Medicare costs. It also continues, although in a weaker form, the ACA’s subsidies for low-income individuals and the ban on medical underwriting, and allows states to continue to operate insurance exchanges (although without any federal funding).
On the other hand, the three parts of the ACA that have taken the most heat from Republicans – the individual mandate, the Medicare IPAB, and the expansion of Medicaid eligibility – would all be eliminated.
President Obama rarely shies away from an opportunity to tout successes in U.S. health care, but in last night’s State of the Union oddly omitted any mention of the new and optimistic report about U.S. health spending from actuaries at the Centers for Medicare and Medicaid Services (CMS).
The finding: from 2009 through 2012, health care spending in the U.S. grew at the slowest rate since the government started collecting this data in the 1960s.
The actuaries found that in 2012 spending “stabilized,” growing by 3.7 percent in 2012, and health care accounted for a slightly smaller percent of GDP than the prior year, 17.2 percent versus 17.3 percent in 2011.
Perhaps an actuarial report proclaiming stable growth doesn’t make for much of an applause line for a State of the Union speech. But for confessed policy wonks like me, it’s as good as a Hollywood blockbuster.
So get out your popcorn, here are five Hollywood moments in the report.
1. Ninja Combat
When the report came out in early January, the Obama administration quickly ascribed the good news to Obamacare. But, lo and behold, the actuaries wielded their slide rules like weapons.
They respectfully disagreed with their president, pointing out that few of the provisions in the health reform law were actually in place during the slow-growth years in question. The actuaries conclude that most of the cost stability results from the economic recovery process.
Given the silence in the State of the Union, they may have been given the last word on the subject.
Here’s a point most of us can agree on. Tackling ballooning health care costs requires more than insurance reform because the charge and cost structure for health services in the U.S. is inconsistent and irrational. The same quality CT scan that costs $500 at one outpatient facility costs $2,000 at a nearby teaching hospital.
Obamacare’s typical high-deductible insurance plans encourage many cost-conscious consumers to shop around for low-ticket items below their deductible — and that is good. However, the bulk of health care spending is attributable to patients who rapidly blow through their deductible, after which they have no incentive to shop for value. Those 5 percent of people — who spend a whopping 50 percent of the nation’s health care dollars — have little incentive to consider price. With the cost of multiple medications, frequent doctors visits, use of specialists and one or more hospitalizations a year, these 5 percent will exceed even the highest deductible in the first few months of each year.
So what might be the single most powerful tool to slow the seemingly intractable yet unsustainable increases in health spending affecting practically every family in America? “Referenced-based” pricing for health services encourages patients — most significantly, those with the highest costs — to act as smart consumers by seeking the most cost-effective care, even after they have exceeded their deductible.
Here’s how it works. Insurance companies or employers set a limit they are willing to pay for a specified service of excellent quality — say, $1,000 for a CT scan — and communicate that reference price clearly to consumers. If patients choose a location where the charge is below the maximum set reimbursement rate, they pay nothing. If they choose a provider where the charge is higher, they pay the difference.
As patient-consumers shop around for the best price and quality services, competition in the market pushes prices down and value up.
Avik Roy has done the unthinkable. In a recent op-ed title he used “conservative’s case” and “universal healthcare” in the same sentence. And bridged these disparate words by the preposition for.
Spoiler alert: Roy has asked Republicans to embrace universal healthcare.
The Twitterverse is abuzz. An angry Gary P. Jackson, a self-affirmed conservative, tweeted:
“there is NEVER a conservative case for Marxism….especially Universal healthcare.”
Stated differently, universal healthcare is the worst form of Marxism except for all other forms of Marxism.
Thus far Roy has not been asked to produce his birth certificate, which is just as well. Roy, a prolific Forbes columnist and a scholar at the Manhattan Institute, was healthcare policy adviser to Mitt Romney. He is not a cheerleader of the Affordable Care Act.
There are things one may disagree with Roy. However, his short treatise, How Medicaid Fails the Poor, was impressive, as it deftly dealt with Medicaid’s structural problems. That a right-of-center policy analyst would write a book with that title is one of the many ironies I am now accustomed to encountering (the other delicious irony was the love of Cadillac health plans by unions).
“…[conservatives] have to agree that universal coverage is a morally worthy goal.”
The arguments put forward by Roy are pure common sense. No one objects to public education as “socialized education.” If conservatives are afraid that universal healthcare means big government, government is already heavily involved in healthcare.
And not just Medicare, which a certain tea party placard asked the government to keep its hands off! Continue reading…
Karen DeSalvo started as the new National Coordinator for Healthcare Information Technology on January 13, 2014. After my brief discussion with her last week, I can already tell she’s a good listener, aware of the issues, and is passionate about using healthcare IT as a tool to improve population health.
She is a cheerleader for IT, not an informatics expert. She’ll rely on others to help with the IT details, and that’s appropriate.
What advice would I give her, given the current state of healthcare IT stakeholders?
1. Rethink the Certification Program – With a new National Coordinator, we have an opportunity to redesign certification. As I’ve written about previously some of the 2014 Certification test procedures have negatively impacted the healthcare IT industry by being overly prescriptive and by requiring functionality/workflows that are unlikely to be used in the real world.
One of the most negative aspects of 2014 certification is the concept of “certification only”. No actual clinical use or attestation is required but software must be engineered to incorporate standards/processes which are not yet mature. An example is the “transmit” portion of the view/download/transmit patient/family engagement requirements.
There is not yet an ecosystem for patients to ‘transmit’ using CCDA and Direct, yet vendors are required to implement complex functionality that few will use. Another example is the use of QRDA I and QRDA III for quality reporting.
We will be blunt. Hidden under the cloak of expanding health insurance, the Affordable Care Act (ACA) has fostered a massive subsidization of healthcare goods and services.
These subsidies often have little or anything to do with what economists would consider the “insurance” part of health insurance – providing protection against financial catastrophe.
Perhaps more troubling, if the past is prologue these subsidies will continue to grow, transferring huge amounts of money to politically favored groups and doing very little to decrease aggregate health spending – a presumed goal of health reform.
In order to understand these claims, it is necessary to take a step back and explain why insurance (of any form) is a good thing in the first place. Simply stated, insurance provides individuals with protection against unpredictable financial hardships not of their own making.
Most of us don’t like risk, and therefore we are willing to pay other people to avoid uncertain outcomes. Therefore the benefits of insurance are to protect us from uncertain events.
The key here is the uncertainty. If something is not going to cause financial distress, or the expense is relatively predictable, then, by definition, the service is not insurable. A health plan could cover the service, but that is a subsidy, i.e. other people in the insurance pool or an outside actor such as the government are simply paying for your service. It is not insurance.
Sadly, most of the discussion around what constitutes “real” health insurance under the ACA bears only a passing resemblance to the protection against financial risk that is the hallmark of insurance. For example, Secretary of Health and Human Services Kathleen Sebelius said: “Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus … They’re really mortgage protection, not health insurance.”
What does Secretary Sebelius think insurance is? We don’t expect auto insurance to pay for our gasoline.
The U.S. House of Representatives thinks it’s an important topic. They just passed legislation requiring weekly updates on the operation of healthcare.gov.
But here is one proposed measure that can help cut through the maze of competing claims and partisan spin:
The percent of persons with either 1) “silver” or 2) “bronze” plans who have gone two or more months without paying their insurance premium.
Why, you ask? The silver and bronze plans, because their monthly premium is lower, will attract a disproportionate number of persons who were previously unable to afford health insurance and are now newly insured.
According to this just published JAMA article, even if their monthly premiums are fully or partially subsidized, these lower-cost insurance plans cover only up to 60% to 70% of medical expenses.That means cost sharing that can be excess of $6000 and $12,000 for individuals and families, respectively.
In my last post, I asked, “But what if most of the uninsured literally don’t buy Obamacare?”
“Only 11% of consumers who bought new coverage under the law were previously uninsured,” according to a survey of 4,563 consumers eligible for the health insurance exchanges done by McKinsey & Company and reported in Saturday’s Wall Street Journal.
The Journal reports that “insurers, brokers, and consultants estimate at least two-thirds” of the 2.2 million people who have so far signed up in the new exchanges are coming from those who already had coverage.
This is consistent with anecdotal reports from insurers I have talked to that are seeing very little net growth in their overall individual and small group markets as of January 1.
That’s even worse than I thought it would be even considering the January 1 individual policy cancellations and small group renewals that are driving employers to reconsider offering coverage––and that is saying something. The vast majority of the individual cancellations, particularly because of the early renewal and extension programs, are yet to come. The same can be said for the small group renewals.
This also tells us why the first three months of the Obamacare enrollment had a relatively high average age––they came from the same market that tended to skew older that the health plans already covered.
When McKinsey asked why subsidy eligible people weren’t buying, 52% cited affordability as the reason. Readers of this blog will know that I’m not shocked to hear that given what I have been writing about the high after-tax premiums, net of the subsidies, people are finding, as well as the high deductibles and narrow provider networks the subsidized Silver and lowest cost Bronze exchange plans are offering people.
Another 30% cited “technical challenges” with the website as reasons they have not yet bought. That said, enrollment in the state exchanges that have generally been running well––California, Washington state, New York, Connecticut, Kentucky, and Colorado are also only enrolling a very small number of people relative to the number of policy cancellations in their markets and the size of their uninsured population.
Private exchange Health Markets reports that of the 7,500 people it has enrolled, 65% had prior coverage.