Reports of the ACA's Death Have Been Greatly Exaggerated

A new survey out this week tells us that “31 percent believe Trump has repealed the Affordable Care Act, 49 percent say he hasn’t, and 21 percent are unsure.” To paraphrase Mark Twain: reports of the ACA’s death have been greatly exaggerated.

While the penalty for not having health coverage (the mandate) has been zeroed out starting in 2019, despite the constant attack, most of the law (Medicaid expansion, insurance subsidies, protections for those with preexisting conditions, etc.) remain the law of the land.

However, that doesn’t mean 2018 and beyond will be smooth sailing for the continued expansion of health coverage. Below we’ll talk about the future of health coverage and the ACA – both nationally and here in Maine.

Specifically, we’ll cover the following:

• Open-enrollment results
• Impact of zeroing out the mandate penalty
• Short-term plans
• But wait there’s more…

Open-Enrollment Results

Let’s start with the preliminary results of open enrollment for 2018 coverage. Going into open-enrollment, most observers (including me) were “sure” that the numbers would be significantly worse than last year due to the shorter enrollment period and the Administration’s sabotage. With open-enrollment over for much of the country, the results have been a very pleasant surprise. The final enrollment numbers will end up very close to last year’s total. It turns out the law is very much alive, and people really do want health insurance.

What happened? The shorter enrollment period was always part of the long-term plan for the ACA. The idea is that there would be several weeks each Fall when just about everyone in the country was enrolling in health plans: Medicare, the Marketplace, and employer coverage enrollment periods would all roughly coincide. To me, the shorter time frame itself wasn’t the problem, the reason for the concern was the cut in the advertising and outreach budgets. Luckily, I was wrong - there seem to be several factors that made up for the budget shortfall: 1) The very public fight over the ACA in the summer and fall made people more aware of open-enrollment 2) Insurance companies increased their advertising budgets 3) Heroic efforts by advocates and assisters to get people signed up, and 4) the increased subsidies resulted in many being able to purchase coverage for less than they paid last year (more about this below).

So, we’re starting 2018 with about the same number enrolled as last year – what happens next?

Impact of zeroing out of mandate penalty

As part of the tax bill recently signed by the President, the penalty for not having health coverage will be zero dollars beginning in 2019. For 2018 the penalty remains in effect and the IRS has announced they will reject tax returns for 2017 that don’t report coverage or claim an exemption (so even if you’re so inclined, don’t cancel your coverage yet).

The CBO estimates that eliminating the mandate would result in 13 million fewer insured. That translates to 50,000 fewer insured here in Maine if the CBO is correct. Although there is a growing feeling that the numbers may be overstated, there is no question that millions fewer will have coverage and premiums in the individual market will rise precipitously.

The greatest fear is that elimination of the mandate will lead to the dreaded death spiral. The ACA relied on both carrots and sticks to keep people in the market, zeroing out the mandate penalty eliminated the stick. Without the push to coverage, the theory goes that fewer healthy people will buy insurance, so the pool of people with insurance is “sicker” driving up premiums. The increasing premiums then drive even more healthy people out of the market, making the pool even sicker, driving up premiums even more. Hence the death spiral.

The reality is that the situation is more complicated than the theory (isn’t it always). The premium subsidies available to those earning less than 400% of the Federal Poverty Level (FPL) are based on the second to lowest cost silver plan premium in an individual’s market – as the premiums go up, so do the subsidies. So those who are subsidy-eligible will be shielded from the increases and still be able to afford the insurance – meaning there is a floor of subsidy-eligible individuals who will not abandon the market.

In fact, given the elimination of the cost-sharing payments to insurers and the resulting increase in silver plan premiums, the subsidies were more generous beginning this year, allowing for individuals to get a better deal. (One of the side effects were many people receiving subsidies were able to purchase bronze plans for just a few dollars a month.)

So, while the stick has been eliminated, for some the carrot has been enhanced; counteracting some of the expected market erosion. However, because the carrot is not available to everyone, it won’t eliminate all the erosion. The people who will face a dire situation are those earning more than 400% of FPL who receive no assistance. As premiums increase, they will be left without affordable options.

Some who voted for the tax bill and the elimination of the mandate penalty claimed to want to protect their constituents from the premium spike. Maine’s Senator Susan Collins made a “deal” to get two bills passed that she claims will mitigate the damage of eliminating the penalty. Let’s see if that’s true (spoiler alert – it’s not).

The first bill to consider is Alexander-Murray. This piece of legislation was designed to addresses the elimination of the cost-sharing reimbursement (CSR) to insurers. However, the bill was written months ago before we saw how the market would respond. As I reviewed above, the unintended consequence of the President cutting CSR reimbursement is that premium subsidies have risen providing a better deal for many who shop on the ACA marketplace.

This bill does nothing to mitigate the elimination of the mandate penalty – as the Democratic Sponsor Senator Murray noted, it would be like fighting fire with penicillin – have no impact at all. Additionally, many would be worse off if Alexander-Murray passed due to the change in silver plan premiums and the resulting change in subsidies.

The second bill is the Collins-Nelson Reinsurance bill (or possibly some other reinsurance bill). If adequately funded both in dollars allocated per year and in the number of years it will be funded (a big if), the bill could address one of the mandates policy goals – providing a stable insurance pool. But can the bill pass the House? Many conservatives are opposed to the bill, and Speaker Ryan has said he wasn’t part of that deal.

Even if it is adequately funded and does pass, it does not address other goals of the mandate such as increasing the number of insured.

We must also consider how insurance companies will respond to this further destabilization of the markets. Several insurers have already pulled back from participation in the marketplace, and I think it’s fair to say that trend will continue. Here in Maine, while I’m confident Community Health Options (one of the last remaining co-op plans) will remain, I think it’s an open question how Harvard Pilgrim (our other marketplace insurer) will respond.

There has been some talk of states imposing their own mandates as a response to the Federal change – in fact, Massachusetts still has theirs on the books from when Romney Care was implemented. While there is nothing legally preventing this from happening, we must acknowledge it would be a hard sell. There is no denying the mandate is the most unpopular part of the ACA, and it would be a heavy lift in most states to try and institute one.

Perhaps Margot Sanger-Katz of the New York Times summed it up best: “The end of the mandate will establish a sort of natural experiment, in which its influence will become much more clear.”

Short-term plans

Adding to the market instability that will be brought about by the elimination of the mandate penalty is the upcoming loosening of regulations around short-term health plans and association health plans. These plans are not subject to the ACA – so they don’t cover the essential health benefits, and they don’t have any protections for those with pre-existing conditions. What they do have is medical underwriting.

Even before the ACA, these products were problematic. Only healthy people could buy them, and they usually found that if they got sick, the benefits were insufficient. The ACA and accompanying regulations helped to marginalize these products. However, the President signed an executive order in the Fall instructing that the regulations be loosened for these plans.

If these proposed changes proceed unchecked, these plans could further drain healthy people from the ACA compliant plan insurance pool (note we are expecting the new regulations early in January).

This is one area where states can effectively prevent the damage. These are insured products and so subject to state regulation. I encourage states to consider instituting additional consumer protections and limiting the damage these plans can do.

But wait there’s more…

Before we wrap-up, a few more items to note as we think about access to health coverage in 2018. Please don’t take the brief mentions below to signify that these issues are any less important than what we’ve already discussed – if I wrote as much as I wanted about each of these; I’d never stop.

Medicaid Expansion

Here in Maine voters passed a referendum to implement Medicaid Expansion. Governor LePage is against the idea and has put in place arbitrary roadblocks to the implementation. While I know the Democrats in the State Legislature will do everything they can to implement the referendum, I fear that it will be the new Governor who takes office in 2019 will be the one to implement expansion. The LePage Administration will drag its feet, and it’s possible the issue ends up in court – delaying the implementation even further. I hope I’m wrong about this one but…

Medicare/Medicaid/Social Security

Let’s start with a bit of good news. As part of the continuing resolution passed at the end of December, the “Paygo” provision that would have led to an automatic $25 billion Medicare cut was overruled by House and Senate.

However, while those automatic cuts won’t happen, Speaker Ryan has already said he wants to work on cutting Medicare/Medicaid/Social Security in 2018. Stay tuned.

CHIP / Community Health Centers

CHIP still has not been fully funded. While the Continuing Resolution included some short-term funding, it was inadequate. It included just $2.85 billion for CHIP through March 31. How important is CHIP? “From 1997, when CHIP was enacted, to 2012, the uninsured rate for children fell by half, from 14% to 7%.”

The lack of CHIP funding is a national embarrassment – but if possible, it’s even worse considering the recently passed tax bill. It will cost $100 billion to extend CHIP for five years compared to the unfunded $1.5 Trillion tax cut just passed.

In addition to not adequately funding CHIP, funding has not been assured for Community Health Centers. I’ll let the Commonwealth Fund describe the implications:

“If Congress does not act, community health centers will lose nearly 70 percent of the federal dollars they rely on to operate. The U.S. Department of Health and Human Services estimates that the significant funding cut would lead to one-quarter of community health centers sites closing, 51,000 workers being laid off, and 9 million people — more than one-third of all community health center patients — losing the comprehensive, high-quality, and low-cost care they need.”

Conclusion

As I try and peer into the health coverage landscape of 2018, I can’t help but invoke my spirit animal, shruggie: ¯\_(ツ)_/¯ We can make certain predictions about how things will play out, but if 2017 has taught us anything, it’s how silly we all were to think we could predict the future.

With that qualification in mind, here’s my best guess.

First the good news, the Medicaid expansion remains the expansion will be implemented in more states (including eventually Maine). Also, the subsidy-eligible will continue to be able to access the individual insurance market with products that if not as affordable as we’d like, will remain within reach. The existence of the subsidy-eligible population will mean that some (but not all) insurers will continue to participate.

Now the bad news, the law may effectively disappear for those who earn over 400% of FPL and have no access to employer-sponsored insurance. Many will be at risk who have protection today. Tim Jost, professor emeritus of Washington and Lee law school, summed it up this way: "The exchanges will essentially become a home for consumers for qualify for premium tax credits and a high-risk pool for everyone else, and a very uncomfortable place for insurers to be. The number of uninsured will shoot up, as will the uncompensated care burden for hospitals."

Additionally, while the law as currently configured will protect those earning less than 400% of FPL, the spike in premiums and the resulting spike in subsidy payments helps to draw a target on the subsidies as described by Sara Rosenbaum at George Washington University: “This, of course, sets the stage for terrible reductions in subsidies along with Medicare, Medicaid, and CHIP subsidies, ultimately.”

For today, despite continued frustrations, we must keep fighting the good fight as we stay aware of the dangers that lie ahead.

Once more unto the breach, dear friends

A new insidious threat reared its head yesterday when a provision eliminating the individual mandate was added to the Senate version of the tax bill.

Fellow Mainers, please let Senator Collins know this is unacceptable.

As many of you know, the mandate works to bring everyone into the system.  Without it, the CBO estimates 13 million fewer people would be covered and premiums would rise 10% over the baseline increase.  

Note that the CBO analysis assumes all else being equal, we still have the threat of the changes encouraged by the Executive Order (Donald Trump’s Terrible Executive Order on Health Care).

For those needing a refresher, Paul Krugman provides this explanation of why the mandate is needed (remember the three-legged stool?): 

"It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.

So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all.

But what if people can’t afford insurance? The third leg of the stool is subsidies that limit the cost for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid.
The key point is that all three legs of this stool are necessary. Take away any one of them, and the program can’t work."  

Source:  Three Legs Good, No Legs Bad

As you read about events, please don't be fooled by the bone being tossed of the Alexander Murray bill being approved in tandem with the tax bill.  Given the way the premium subsidy changes played out, Alexander Murray would end up cutting subsidies for some and doing little to stabilize the markets.  Senator Murray has already indicated that she would not support passage of her bill in light of the mandate being eliminated.

"But Ms. Murray rejected any suggestion that the mandate repeal could be paired with her legislation. 

“That is the exact opposite of what we should be doing,” she said. “Americans have stood up and spoken loudly for the last year saying they do not want the markets destabilized, and their provision in the tax bill that they are talking about will really destabilize the marketplaces.”"

Source:  Senate Plans to End Obamacare Mandate in Revised Tax Proposal

There are many reasons to object to the tax bill.  Another one of relevance to the health care discussion is the CBO report yesterday that the GOP tax bill could spur $25 billion in Medicare cuts.  

I don't usually include a call to action in my writings, I try and explain a situation as I understand it and leave the rest to you.  But this time is different.  Without trying to be hyperbolic, I believe that passage of the Senate tax bill would be the beginning of the end of the ACA as a functioning law.  

If you are a fellow Mainer, please let Senator Collins know how you feel.  And if you've found this piece helpful, please share.

Evidence and Empathy – Two Reasons to Vote Yes on 2

On Thursday night November 2, I'll be speaking at "A Faith-Based Perspective on the Need for Medicaid Expansion in Maine" taking place at Woodfords UCC Church at 7 PM.  Below are my remarks.

I have spent my career working on various parts of our health care system. I started working for MetLife on long-term care insurance in 1991 and then spent over 15 years at Mercer Consulting in their healthcare practice.  I’ve lived in Maine for ten years during which time I’ve worked at Health Dialog, Consumers for Affordable Health Care and the Institute for Clinical and Economic Review.

As you might imagine, during this time my understanding of this complicated topic has grown, and my perspective has matured.  Today, when I analyze a proposed policy, I try and keep two things in mind; evidence and empathy.

Many speak of the need for evidence-based medicine.  Too much of our current treatment is based on what has been done in the past, not based on what works.  The same can be said of policy decisions.  Too many are made based on what sounds like a good idea, often contradicting the evidence of what has worked and what has not worked.

While evidence is crucial, equally important is maintaining empathy for the people we are trying to help.  If we start to treat them as data, we risk making decisions that denigrate their humanity.

Tonight, we’ll talk about Medicaid expansion through the lens of evidence and empathy. Spoiler alert, it passes both tests.  I’ll go over some of the evidence; providing some of the facts and figures.  My fellow panelists will then, much more eloquently than I’m capable of, talk about the empathetic and moral reasons why this is so important.

Before we dive into the details about the proposed Medicaid expansion, permit me to digress for one minute to remind you about another part of the ACA, the open enrollment period.

If you buy your health coverage on the individual market – that means you don’t get it at work and are not eligible for government programs like Medicaid, the open enrollment period started this week.

Sadly, the current Administration is doing everything they can to sabotage the process, so here are some very brief reminders:

1. The ACA was not repealed
2. Open enrollment has begun
3. Open enrollment is only half as long as last year, it ends December 15th
4. Yes, premiums are going up, but so are premium subsidies
5. Premium subsidies AND cost-sharing subsidies are still available
6. Due to distortions in premiums caused by the Administration stopping the payments to insurers for the cost-sharing subsidies, it is more important than ever to comparison shop. Increased silver plan premiums mean subsidies are higher so some will be able to buy insurance for less this year than last.  Some will be able to get bronze plans for free and some will be able to get a gold plan, with lower out-of-pocket costs than silver, for only a few dollars more a month than a silver plan.  So, if you are not eligible for cost-sharing subsidies and you purchased a silver plan last year, this year a bronze or gold plan might make more sense
7. Help is available, go to enroll207.com to find help here in Maine.

Thanks for listening to that now let’s get back to the reason we’re here tonight, talking about why a yes on 2 vote makes so much sense.  Or in other words, why we need Medicaid expansion.

Before I get into the facts and figures of what passing question 2 will accomplish in the future, let’s start with a brief history lesson.

Did you know that the way health coverage is structured in this country is Hitler’s fault?  Here’s why.  During World War 2, there were wage and price controls.  However, employers were desperate for workers, since much of the working age population was off fighting the war.  To help attract workers, they offered additional health coverage. They were allowed to do so on a pre-tax basis, not subject to the wage and price controls - and so employer-sponsored coverage spread rapidly. 

Fast forward to 1965, in order to provide health coverage to more of the population, President Johnson signed the law creating Medicare and Medicaid.   As you know, Medicare covers seniors and Medicaid covers a combination of low income, disabled and seniors.

Fast forward again to 2010 when the ACA was passed.  The ACA was designed to take our existing system and use all the elements to expand coverage, lowering the number of uninsured.  That included making it easier for those who didn’t have access to coverage through a job to either purchase their own on the individual market, or if their income was low enough, receive coverage through Medicaid.

According to the original intent of the law, those earning less than 138% of the Federal Poverty Level or FPL would be eligible for Medicaid.  Those earning above 100% of FPL would be eligible for premium subsidies.

So why are we voting on expanding Medicaid? 

In response to a legal challenge, the Supreme Court ruled that Congress could not require states to expand, making it an opt-in program.  So far, 31 states have expanded Medicaid, and Maine may become the next state to do so if the referendum passes.  In states that have not expanded Medicaid, those earning less than 100% of FPL and were not previously eligible for Medicaid are out-of-luck, they currently have no help available to them.

Our state legislature tried – they passed expansion five times.  But each time it was vetoed by the Governor and there were not enough votes to override the veto.

As of 2015, nationally about half of the population receives coverage from their employer.  Another 19% from Medicaid, 14% from Medicare, 7% from the individual market, 2% from other government programs such as the VA and about 9% are uninsured.  Although that last number is edging back up.

How much does the Federal government spend on this?  In 2016 the Medicare budget was 675 billion, the Medicaid budget was 450 billion and the employer tax exclusion for health coverage also cost about 450 billion.

I mention these dollar amounts so that as we proceed, we can take into account those who are already benefiting from Federal expenditures as we consider the fairness of adding additional populations who are in need.  Specifically, think about some of the opponents to the referendum who get health coverage from their employers – they don’t seem to worry about the lost federal revenue where their benefits are concerned.

With that background, let’s get into the specifics.  We’ll look at; who expansion will help, what it will cost, some of the additional benefits of the referendum, and some of the weak arguments against it.  Lot’s to cover so let’s keep going.

Who would this help?

The most important reason to vote for question 2 is that it would provide health care coverage to more than 70,000 Mainers.  The group eligible for Medicaid would be expanded to include all those who earn less than about $16,000 a year for an individual or $34,000 for a family of four.

It’s worth noting that many of those who would be newly eligible are working while others are unable to work.

Half of the adults who would be covered by the Medicaid expansion are permanently disabled, have serious physical or mental limitations or are in fair or poor health. Low-wage jobs are often physically demanding, precluding those with limitations from employment.

Of the other half, who might be viewed as “able-bodied,” 62 percent are already working or in school and 12 percent are looking for work; only 25 percent of that half are not currently working or in school.

The bottom line then is that only 13 percent of adults covered by Medicaid’s expansion are able-bodied and not working, in school, or seeking work. Of that small group, three-quarters report they are not working in order to care for family members and the rest report other reasons, like being laid off.

Keep in mind that contrary to what those who are against the expansion would have you believe, even if you are working it does not mean you have access to affordable health coverage. Only 28 percent of employees of private firms with low wages such as retail, food service, and agriculture get health insurance through their jobs. Almost half of employees (42 percent) of these firms are not even eligible for job-based health insurance.

Surveys of Medicaid expansion beneficiaries in Ohio and Michigan have found that Medicaid expansion has actually made it easier for people to look for work and maintain employment.  In Ohio, among expansion enrollees who were unemployed and looking for work when they gained coverage, 75 percent said Medicaid made the task easier.  Among those who were employed, half said Medicaid made it easier to stay working.

Although some of these people, those earning more than 100% of FPL, are currently eligible for premium subsidies, at those incomes, visits to a doctor or filling a prescription are not in the budget.  Many are overwhelmed by the deductibles and co-payments for health care services. The reality is that despite the improvements under the ACA, there are still working Mainers who simply cannot afford health insurance coverage.  As the Congressional Budget Office reported, many poor people would choose not to be covered, because even if they could afford the premiums with help from tax credits, deductibles and co-payments would still be prohibitively expensive.

Cost

So, what would this cost Maine? Is it a good deal for us?  The Office of Fiscal and Program Review, a non-partisan part of our state government, said expansion would cost taxpayers $54 million a year while Maine would receive $525 million a year from the federal government for Medicaid expansion.  Note that the $54 million represents only five percent of current state Medicaid expenditures and 2 percent of our state budget.

The Feds will pay 94 percent in the first year declining over time to a federal match rate of 90 percent by the state fiscal year 2021.

The federal money brought into the state would be used to pay for medical services – it will be distributed to hospitals, clinics, and doctors’ offices.

Maine taxpayers are already paying for Medicaid expansion in other states. We should also get the benefits here.

Additional benefits

In addition to providing health coverage to over 70,000 people – providing the physical well-being and mental peace of mind that goes along with having coverage - there are additional reasons why expansion makes sense.

We hear about the nation’s and Maine’s opioid crisis every day.  Expanding Medicaid will help to address Maine’s drug crisis by greatly improving access to treatment services for currently uninsured people struggling with addiction;

Covering these 70,000 people would also reduce the uncompensated care burdens on our hospitals, especially important for our struggling rural hospitals.  In states with Medicaid expansions, uncompensated care fell sharply resulting in improved financial margins. These effects were not observed in non‐expansion states.

And as I alluded to earlier, rather than discourage work, there is evidence that Medicaid helps to keep people working.  John Kasich, Republican Governor of Ohio recently wrote: “According to a recent assessment of Ohioans who gained coverage through Medicaid expansion, a majority now find it easier to find or keep a job, manage their health to avoid costly trips to the hospital down the road, and even find it easier to put food on the table.”

Objections

Given the times we’re living in, sadly it seems every issue is contentious.  Even, or maybe especially, issues like this designed to help those in need.  This is certainly true of question 2.  While the objections have been loud, they are not particularly compelling.  Let’s take a few minutes and review some of the details.

Objection: We tried this already

Maine’s earlier Medicaid expansion in 2001 resulted in uninsured rates dropping substantially.  Despite claims that this rise was associated with steep cost increases to the state budget. An analysis of the Maine experience shows that cost increases were in line with Medicaid cost increases nationally and that most of the cost increase was attributable to factors associated with the major recession in the early 2000s – that is, to increased enrollment in the traditional Medicaid program.

Objection: Medicaid doesn’t work

Not true.  Just one example is a Kaiser Family Foundation survey explored the experiences of those currently covered by Medicare and Medicaid. Very large majorities of those covered report positive experiences with Medicare (91%) and with Medicaid (86%).  These numbers are similar to what people with employer coverage say (87% positive).

Objection: We’ll hurt seniors

AARP, although not taking a position on the referendum, issued a statement in response to claims that seniors would be harmed: “These claims are inaccurate,” reads the AARP statement. “Multiple independent fact checkers and nonpartisan analysts including the Kaiser Family Foundation have confirmed that there is no connection between Medicaid expansion and waiting lists for long-term care services for the aged and disabled including nursing homes and home and community-based services (HCBS). In fact, the vast majority of states without HCBS waiting lists have expanded Medicaid.”

There is also no evidence from other states that Medicaid expansion caused states to reduce care for the elderly, cut school funding or do any of the other scary things opponents say will happen if Question 2 passes in Maine.

There are no waiting lists to enroll in Medicaid; states must enroll all eligible beneficiaries, including children, seniors, people with disabilities, and adults, in coverage — without exception.  States can — and many do — have waiting lists for Medicaid’s home- and community-based services (HCBS), which give people needing long-term services an alternative to nursing homes. Gov. LePage and other conservative policymakers have said the Medicaid expansion is responsible.  There’s no connection between the two.  Nine of the 11 states without HCBS waiting lists are expansion states, and the non-expansion states of Florida and Texas have the biggest waiting lists.

Final thoughts

I started out talking about passing the dual tests of evidence and empathy.  The evidence is clear, expanding Medicaid will help over 70,000 Mainers by providing them with health coverage and does so in a fiscally responsible fashion.  On the empathy front, to me, it’s also clear - taking care of one another is just the right thing to do.  I’m sure our next speakers will elaborate a bit more eloquently on that point.

So, I’ll conclude with two final figures.  First, support for expansion crosses party lines - 17 Republican governors fought to maintain Medicaid expansion as the Administration worked on repealing the ACA.  Second, we know that expansion works - the uninsured rate declined an average of 48 percent in expansion states and only 28 percent in non-expansion states from 2013 to 2016. The ACA was always meant to work in two major ways, private insurance reforms, and Medicaid expansion.  Without expansion, we’re leaving the work unfinished.

So please vote yes on question 2 to pass Medicaid expansion.

Can the Senate Function as Intended?

Yesterday afternoon it was announced that Senator Murray and Senator Alexander had reached a bipartisan agreement to provide funding for cost-sharing reduction subsidies and make other minor changes to how the ACA is currently being administered.

This is how the Senate is supposed to work, two sides meet and hash out a compromise.  However, questions remain as to if the compromise will be fully accepted (more on that below). 

After reviewing the bill, my bottom line is that this is a good deal for supporters of the ACA.  It represents some compromises, but to me, the benefits far outweigh my concerns.

Summary of the bill (being circulated by Andy Slavitt):

If you’re interested, here is the full text of the bill.

As mentioned above, as of this morning, acceptance of this compromise by all parties is far from assured.  While passage in the Senate is the easier lift, Senator McConnell (as of this writing) has not yet committed to bringing it to a vote.

Prospects in the House are even more questionable, as some conservative Republicans have already come out against the bill.

There are suggestions that the compromise may be part of the next funding bill for the Federal Government (needed by December 8) but those are just rumors at this point.

Finally, the President has been ambiguous in his reaction, while praising the compromise in an afternoon news conference, in the evening he made the following remarks:

It’s also worth remembering that we thought there was a deal to reauthorize CHIP, but we’re still waiting on that to be introduced in both chambers as well as waiting on Community Health Center funding.

So, as of this morning, while I would vote for this bill, it’s unclear if enough of our representatives would do so, or if they will even have the chance to do so.

But hope springs eternal, so let's review a few things about the specifics of the compromise:

• The copper/catastrophic plan is just another option – they will be part of same risk pool as other plans so do not present an adverse selection risk.  At the end of the day, due to limits of out-of-pocket max, the plans are not that different than Bronze plans
• This is not a “bailout” – these payments are about providing insurance companies funding for the benefits (cost-sharing subsidies) they are legally obligated to provide
• It is unclear (and to me doubtful) that this will impact rates currently set for 2018.  To do so the bill would have to move much more quickly than expected and there would need to be a delay in the start of open enrollment.  That said, there will be a mechanism so that insurers are not paid twice for the cost-sharing subsidies
• There is funding in the bill to support enrollment.  The money would be sent to each state, and for states that did not want to spend the money (good morning Maine) there are provisions for the Feds to allocate the money within the state so that it would still be utilized

We can expect to hear a lot more in the next few days about if and how this compromise moves forward.  

In the meantime, remember that open-enrollment starts on November 1 and if you purchase individual coverage it is urgent that you comparison-shop, given the current state of the market.  This morning’s New York Times has a good rundown of the state of things absent passage of Murray-Alexander:  Trump’s Attack on Insurer ‘Gravy Train’ Could Actually Help a Lot of Consumers.

As always, thanks for reading and stay tuned.

Waking up to ACA chaos

Yesterday morning, the President signed an executive order instructing several federal agencies to consider actions which will further undermine the ACA. 

As I said to the Press Herald yesterday (Trump’s executive order could alter Maine insurance market) :

“As of the signing of the executive order, absolutely nothing changes,” said Mitchell Stein, an independent insurance industry expert. “It only instructs agencies to look at making changes, but any changes would require standard rule-making, which is a lengthy process. It’s likely nothing would happen for the 2018 calendar year.”

The wildcard, Stein said, is how individual insurance companies – most of which are already plagued with uncertainty – react to another layer of uncertainty.

“There certainly is potential to undercut the individual market,” he said.

To reiterate, the changes “suggested” have the capacity to cause a lot of damage, but nothing will happen immediately. Here’s a good summary from the NY Times: What Did Trump’s Health Care Executive Order Do?

I went to sleep with those calming thoughts but woke up to more chaos.  Apparently when told the order would not have an immediate impact, the Administration said, “hold my beer” and announced that they would cease making the cost-sharing reduction (CSR) subsidy payments to insurers.

This action has been expected for some time.  Many states, including Maine, have accounted for this possibility in their 2018 rates. 

Please keep the following in mind:

1) The payments will still be made to individuals; the insurers have a legal obligation to provide the subsidies.

2) Here in Maine, the individual plans have built a lack of subsidy payments into their rate for 2018.  That means the market won't collapse.

3) If you purchase an individual plan, this has implications for how to make your 2018 choice (remember, open enrollment starts 11/1):

• If you receive a premium subsidy, you are protected - that is because the premium subsidy is based on the benchmark silver plan (whose rates account for the lack of CSR payment)
• If you receive a premium subsidy and a CSR purchase the silver plan just as you would have last year (you must purchase silver to receive the CSR
• If you receive a premium subsidy but no CSR, consider a Bronze or Gold based on your circumstances (your premium subsidy will go further for these plans because they don’t have the CSR surcharge built in)
• If you do not receive a premium subsidy and want to purchase a silver plan, consider purchasing off the marketplace – those plan premiums do not have the CSR surcharge built in
• Bottom line, be an active shopper for 2018

The act of stopping these payments is not only vindictive; it is foolish.  The premium subsidy payments will go up more than if the CSR subsidy payments were made (The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments), plus the insurers will sue the government for the payments.  

You can read more of the gory details in this excellent post by a health policy attorney: Cutting off the cost-sharing payments.

The bottom line this morning is more chaos and confusion.  None of these actions will reduce costs or improve benefits, but wasn’t that the goal?

Yes, they managed to make it even worse

Late last night, revised text was released for the Graham Cassidy repeal and replace legislation.

The headlines are saying that Maine (among a few other states) will benefit from the new language in an attempt to convince Senator Collins to vote for the bill.

Take those headlines with a huge grain of salt. The estimates being used are from the bill’s authors – the authors whose estimates for the previous version of the bill were discredited by every independent analysis conducted.

In addition to changing the funding formulas, in an attempt to sway more conservative Senators, the bill removes, even more, consumer protections.

Below we’ll take a brief look at the regulatory changes, then a look at the funding.

Regulatory Changes 

• States would have more flexibility to set many of their own health insurance standards without getting waivers from the federal government (e.g., allow insurers to not cover some of the essential health benefits)
• States could set their own limits on out-of-pocket costs that differ from the federal limits
• States could allow insurers to set higher premiums based on a person’s health status

Here are additional observations from Larry Levitt, Senior VP, Kaiser Family Foundation (Source: https://twitter.com/larry_levitt/status/912135675159314437)

• States no longer have to submit waivers of insurance rules under the revised Graham-Cassidy bill. They just have to describe their plans.
• Under the revised Graham-Cassidy bill, states decide how much insurers can charge people who are sick, required benefits, and cost-sharing.
• Under the revised Graham-Cassidy bill, states can alter the federal cap on patient out-of-pocket costs, allowing for bare bones insurance.
• Remember the single risk pool requirement? The revised Graham-Cassidy bill allows multiple risk pools.
• If there was any question about Graham-Cassidy's removal of federal protections for pre-existing conditions, this new draft is quite clear.

Funding

• Revises formula that determines the allotment of funds, does not change the total amount spent
• The new CMS table (that shows the increased funding for Maine) does not include effects of Medicaid per capita cap. The state-by-state estimates are on subsidies/expansion vs. block grants, they don’t factor in Medicaid per capita caps (a cut previously estimated at $1 trillion)*.
• Even if slightly more dollars for now (for a few select states), this ignores the cliff in 2026 when the block grant goes away and all states would see deep funding cuts
• Most states that appear to “win” in the near term only do so because the bill assumes they won’t expand Medicaid.

Conclusion

As I said in the title, they managed to take what was already the worst of the repeal and replace bills and make it even worse.  The earlier version of the bill was rejected by national groups representing physicians, hospitals and insurers. In an unprecedented move, six organizations, including the American Medical Association and the American Hospital Association, issued a joint statement urging the Senate to reject the measure.

Don’t be fooled by headlines saying Maine will get more money – First, it’s definitely not true in the long run and probably not true in the short run.  And second, this bill essentially eliminates the consumer protections implemented by the ACA and:

“This revised bill is tantamount to federal deregulation of the insurance market,” Larry Levitt of Kaiser Family Foundation said. “If there were any doubt that people with pre-existing [conditions] are at risk of being priced out of individual insurance, this bill removes them.”

Remember, this bill is part of the reconciliation process – the CBO and Parliamentarian must weigh in before a vote – it’s unclear how that will happen before Saturday (Sept. 30 when the reconciliation measure expires).

A bad bill and a bad process – September 30 and the end of this chapter of repeal and replace can’t come soon enough.

Sources:

• Senators Revise Health Bill in Last-Ditch Effort to Win Votes (NY Times)
• Graham, Cassidy revise Obamacare repeal bill, appealing to holdouts (Politico)
• Here's the new Graham-Cassidy bill (Axios)

*” Apart from the block grant, all states would experience deep and growing cuts to their Medicaid programs for children and families, pregnant women, seniors, and people with disabilities. Like prior Republican repeal bills, Cassidy-Graham would radically restructure financing for all of Medicaid. Starting in 2020, Cassidy-Graham would replace the existing federal-state financial partnership, under which the federal government pays a fixed percentage of a state’s Medicaid costs, with capped federal Medicaid funding at a set amount per beneficiary, irrespective of states’ actual costs. Cassidy-Graham would annually adjust these cap amounts at a rate that’s lower than projected growth in state Medicaid costs per beneficiary, forcing every state to make large and growing Medicaid cuts over time. The federal cut to Medicaid spending would total $1.1 trillion between 2020 and 2036 (and that doesn’t count the end of the ACA’s Medicaid expansion), the independent consulting firm Avalere estimated.” Source: https://www.cbpp.org/blog/no-state-wins-under-cassidy-graham-despite-its-funding-redistribution

Learning about our health care system from the inside

It was a dark and stormy night – actually it was another beautiful summer day here in Maine, Tuesday, August 29^th. I had been experiencing a little shortness of breath when walking my dog Beau, so I made an appointment with my primary care doctor. Three days, two hospitals, and an ambulance transfer later, I was the proud container for two stents and had three daily medications I’ll be taking for a while.

I spend most of my days thinking about the health care system, but until now I’ve been incredibly lucky, having had minimal dealings with the system from the inside. While previously I’ve always tried to value the patient perspective, there is nothing quite like experiencing things for yourself. My direct exposure reinforced some of my ideas, caused me to re-examine others, and overall left me with a greater appreciation of all the individuals who make up our “system.”

I didn't think my shortness of breath was a big deal, but when my PCP did an EKG, she saw something that alarmed her and consulted with a cardiologist. A few hours later I was in the emergency room getting pumped full of blood thinners, so I didn't have a heart attack while they figured out what was going on. After a diagnostic catheterization at Mid-Coast Hospital revealed several blocked arteries, I was transferred to Maine Medical Center, where I had two stents inserted. Along the way, I couldn’t help myself and kept reflecting on our health care system – what was working, what wasn’t working and of course cost.

For what it’s worth, here are some random thoughts:

• Nurses are angels – not all of them and not all the time, but most of them and most of the time. From the one who after checking the pulse on my leg at two in the morning gave my ankle a squeeze of reassurance after I had told her how unsettled I was, to the one who laughed at my lame jokes when I was trying to think about anything but my heart. Nurses do a tremendous amount of work, have an incredible amount of knowledge and move through their day in a caring and concerned manner. They truly make the system work
• WTF, I was offered oxycodone – of course, not everything was positive (this is the real world after all) – I was shocked and appalled that when I said I had a headache, I was told I had been pre-approved for receive oxycodone for pain. I was there for heart issues, I wasn’t having surgery (catheterization is much less invasive), and there was no reason for me to have anything but Tylenol (which is what I took). Given what we now know about substance abuse issues, I should not have been offered such a powerful drug
• I like the hub and spoke/feeder system of smaller hospitals sending patients to centers for specific complicated procedures. That’s how it works in Maine for the placement of stents – while the community hospital I started at did a diagnostic catheterization when it was determined I needed stents places, I was sent on to Maine Med. This means that the only people doing the procedures are the ones most qualified to do so. Makes sense, doesn’t it? Of course, there are financial implications both for the system and for low-income family members, but those are complications to be addressed, not reasons to abandon the approach
• Riding in the back of an ambulance I was not checking prices, network participation or quality statistics. Talking about health care, I’ve often said that people don’t comparison price riding in an ambulance – so of course, when I was actually riding in one, I couldn’t help but consider the irony. But it was true, the last thing I was thinking about was being a good consumer – and call me crazy, but I don’t think we want to put that kind of stress on patients needing care by expecting them to do so 
• Electronic records actually work – In the space of 72 hours I was at a doctor’s office and two hospitals – everyone knew who I was, what was going on, and what had come before. The interventionist had seen the film of the diagnostic catheterization; they knew my PCPs name (and had sent her my hospital records). EMRs get a lot of well justified bad press, but my experience reminded me that they are worth the trouble to get right

Was I thinking about all this to avoid thoughts of my mortality? Probably. But also, because this stuff is important. It is all incredibly complicated – coming up with solutions requires the participation of people with varied skill sets and perspectives. And finally, because as those who know me will understand, I can’t help myself. So, there you have it, if you were wondering what I’ve been this week, I’ve been on assignment inside the health care system. 

Next steps – as of Thursday, July 20

Given the pace of developments, I felt compelled to put today’s date in the title.  I hope the contents will continue to be relevant and helpful, but as I’ve said before – I know nothing ¯\_(ツ)_/¯

With that in mind, I’m writing under the assumption that “repeal & replace” and “repeal & delay” are both dead.  Of course, that may yet prove to be false, but if the vote scheduled for next week does fail, we’ll need to be prepared to act quickly – so here is my look at what needs to be done.  

Contrary to what you have heard, the ACA is not failing.  For many people in many places, it’s working well.  According to the Administration’s own report, the markets are not imploding, and health plans are reporting better financial results this year.  That said, there are issues both with the law itself and with how the Administration is doing their administering.

Short of repeal, there are ways the Administration can undermine the law, and sadly it continues to do so. You’ve probably read about the sabotage, but here’s a quick review: Holding the cost sharing reduction payments to insurers hostage (in the announcement yesterday that they would be paid this month, no assurance that would be the case next month), lack of enforcement of the mandate, lack of support for open enrollment, and the release of misleading information (and here’s a story that broke today about using ACA funds to distribute that misleading information).  

The purpose of this post is to address what needs to be done immediately – as identified by both Democrats and Republicans.  For today we’ll forgo more expansive changes to the existing system, but of course, they loom over all our conversations. 

The four issues that can and should be addressed immediately:

Cost sharing reduction (CSR) payments

As you may know, the ACA calls for those earning less than 250% of FPL (federal poverty level) to receive a second subsidy – in addition to their premium subsidy, their cost sharing (deductible, copay, and coinsurance) are reduced.  The law required insurers to provide this benefit, but the funding for the benefit is not “mandatory,” and the Republicans in Congress have sued to prevent payment. The Obama Administration made the payments, and so far, the Trump Administration has as well.  However, the Trump Administration keeps threatening to stop the payments. 

Due to that threat, insurers have been “baking in” the cost of the CSRs in their 2018 premiums.  This, along with mandate issues (discussed below) is being referred to as the “Trump Tax.”  Half of proposed rate hikes for 2018 are due to these actions by the current administration.

Kaiser has estimated that not making payments incurs a net cost of over $2 billion.  That’s because the lack of payments is being built into the premium, and the increase in premium will result in increased subsidy costs of $12 billion vs. the cost of payments of $10 billion.

Needed immediate action:

Funding these payments with certainty for at least the next several years.

Underserved counties

Due to market instability, there are some counties that may have no insurers offering a plan in 2018.  There are also an additional number that will only have one insurer offering a plan.  There are several suggested ways to address this issue quickly.  While I would prefer that these actions are taken if there are less than two insurers present in a market, some action must be taken at least in markets where there are no insurers.

Needed immediate actions (for this issue I provide several alternatives, moving forward with one of the three options would address the issue):

• The Federal Employee Benefit Plan (FEBP) has insurers offering plans in every county in the country.  For underserved counties, require the two largest FEBP plans to offer a silver plan on the marketplace
• Medicaid buy in - Offer a “plan” on the marketplace allowing individuals to receive Medicaid coverage for a specified cost (can be thought of as a stop-gap public option)
• Incentivize insurance companies to participate by requiring those firms in a state bidding for Medicaid contract to offer an exchange plan, or by requiring any insurer that wants to sell off the exchange in a state to sell in every county on the exchange as well. 

Degradation of risk pool

We need young healthy people to buy insurance.  If they don’t, we end up with a higher percentage of older and sicker people in the risk pool, driving up premiums because there are fewer people to cover their costs. 

Needed immediate actions:

• Enforcement of the mandate (there is currently a provision in the House budget to prevent the IRS from spending money on mandate enforcement)
• Sufficient marketing efforts supporting/encouraging enrollment (the administration cut advertising and promotion during the end of the open enrollment period)
• Enrollment support through the hiring and promotion of navigators

Premium level

While making the CSR payments and enforcing the mandate will help lower premiums, it seems clear that more action is needed.  As noted in a recent Huffington Post article:

“The Senate bill that GOP leaders just abandoned included $182 billion for shoring up state insurance markets, including $50 billion dedicated to a reinsurance program. When Hillary Clinton ran for president, her agenda included $250 billion in new tax breaks to help consumers pay premiums or out-of-pocket costs.

Somewhere in there is a compromise. It might not be enough to fix all of the Affordable Care Act’s problems, but it could still mitigate them significantly.”

There is agreement from both sides that we need additional reinsurance/risk adjustment to help lower premiums (remember, the ACA had three risk adjustment programs, but they were temporary and underfunded).  There are several ways to proceed:

• Utilize the bones of the Medicare Part D risk corridor program
• Utilize a reinsurance program modeled on Alaska’s (which just received a waiver from CMS for 2018 to help fund their reinsurance program).
• “Another idea is to require insurers to participate in broad regions, which would limit their ability to selectively work in more profitable ones and shun ones that are less so, like rural areas. This would be consistent with Medicare Part D, which requires insurers that offer stand-alone drug plans to do so in multi-state regions.“ Austin Frakt writing in the NY Times

Regarding reinsurance, note that there are several different methodologies being discussed.  (You may recall the discussion around false claims re Maine’s plan that was part of PL 90.)  The key to all of them is funding.  If you want to provide the same benefits but lower premiums the lost funds must come from somewhere.  There are better and worse ways to allocate that funding, but the bottom line is you need that additional funding.

Needed immediate action:

Pick a methodology, fund it, and implement it. 

That’s the immediate stuff.  While “nothing is easy” in my more optimistic moments I believe bipartisan action on the four items reviewed above is possible.  

Of course, that’s just for now.  Moving forward we need to address costs – both the out-of-pocket costs faced by individuals and the overall cost of care provided by our system.   Those conversations will, in fact, be complicated.

Appendix: Various “fix” proposals

Senator Chuck Schumer:

1. CSR payments
2. In underserved counties, buy from DC exchange (like Congress does)
3. Permanent reinsurance provision

Center for American Progress:

1. CSR payments
2. In underserved counties: a) suspend tax, b) public option c) buy into FEBP
3. Reinsurance

Tim Jost:

1. “Second, Congress should ensure coverage for bare counties. The Federal Employees Health Benefits Program (FEHBP) offers private insurance coverage from multiple insurers in every county in the nation. For 2018 and 2019 only, the largest two FEHBP insurers in any county should be required as a condition of continued participation in the program to offer at least one silver-level plan through the federal exchange in all counties that would otherwise be without coverage. These plans should be eligible for premium tax credits and could otherwise charge actuarially appropriate premiums.”
2. CSR payments
3. Coverage for bare counties (Federal employee health benefit plan)
4. Reinsurance
5. Risk Corridor
6. Mandate enforcement
7. More generous tax credits for young
8. Deductibility of premiums for individuals

The Urban Institute:

1. Replace mandate w late enrollment penalties used in Medicare Parts B and D
2. End employer mandate
3. Replace Cadillac Tax with cap on tax exclusion for employer-sponsored insurance
4. Reduce premium and cost-sharing for low-income individuals, cap premium at 8.5% of income for all
5. Given 4, relax 3:1 age band
6. Reevaluate essential health benefits
7. Increase marketplace enrollment
8. Address insurer/provider concentration by capping rates in those markets (use Medicare or Medicare Advantage rates)
9. Use broad revenue source to fund reinsurance

The Senate Bill and Pre-existing condition protections. A response to Senator Johnson

In today's New York Times, Ron Johnson, Republican senator from Wisconsin argues against the Senate health care bill because it DOES NOT remove the protections for coverage of pre-existing conditions (https://www.nytimes.com/2017/06/26/opinion/senate-health-care-bill.htmlhttps://www.nytimes.com/2017/06/26/opinion/senate-health-care-bill.html)

Guess what, it already does.  I've put together the following explanation of what's going on in the current draft of the Senate bill.

Let’s start with what the bill does not do:

“There’s nothing in the Senate bill that specifically would allow withdrawal of coverage for a person with a preexisting condition,” said Timothy Jost, emeritus law professor at Washington and Lee University in Virginia and an expert on health reform. “What it does do is allow states to get waivers” allowing exceptions to rules requiring comprehensive coverage, he said. (http://khn.org/news/promises-made-to-protect-preexisting-conditions-prove-hollow/)

The trouble lies with what some have been calling the “back door” approach, the potential for states to waiver the essential health benefits requirement.  The waiver provision in the Senate bill is large enough to drive a truck through (https://www.vox.com/the-big-idea/2017/6/23/15862268/waivers-federalism-senate-bill-essential-benefits). 

The ACA deems ten categories of coverage to be essential, that was a huge step forward for the private insurance market as it made junk coverage a thing of the past (with some exceptions, but that’s for another time).  The Senate waiver provisions basically allow a state to eliminate that requirement on insurance plans for no reason.  That means plans can (and will) be offered that don’t offer drug coverage, or maternity coverage, or radiation coverage…

Here’s why. 

“Once a state waived EHBs, insurers would begin a race to the bottom to provide the most bare bones coverage. Those who provided more comprehensive coverage would attract less healthy customers and see their costs rise accordingly. To avoid this issue, insurers would jettison coverage of expensive treatments and try to cherry-pick only healthier customers. The CBO predicted, “Services or benefits likely to be excluded from the EHBs in some states include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits.” The CBO’s prediction matches the reality of the pre-ACA insurance market, in which the vast majority of plans did not cover maternity care and a significant number of people did not have coverage for substance abuse or mental health services. Under the AHCA, people whose needs were not met by standard insurance would be forced either to buy coverage riders, which would expand the coverage provided by their policy for an added cost or to find a more expensive plan that provided a broader range of benefits.” (https://www.americanprogress.org/issues/healthcare/news/2017/06/20/434670/senate-health-care-bill-drive-coverage-costs-maternity-care-mental-health-substance-use-disorder-treatment/).

Basically, healthy people will want a cheaper plan, insurers will offer bare-bones plans that only the healthy will want.  Only sick people will want comprehensive plans, meaning the costs will escalate quickly, making them unaffordable.

So while it’s true the Senate bill does not explicitly take away the pre-ex protections, the waivers mean the market still allow (force) insurers to do so.

Here are several sources:

http://khn.org/news/promises-made-to-protect-preexisting-conditions-prove-hollow/

https://www.americanprogress.org/issues/healthcare/news/2017/06/20/434670/senate-health-care-bill-drive-coverage-costs-maternity-care-mental-health-substance-use-disorder-treatment/

https://www.theatlantic.com/business/archive/2017/06/ahca-senate-bill-preexisting-conditions/531375/