ACA Repeal: The Latest

The Senate proposal is out. The proposed law is 142 pages of (perhaps unnecessary) complexity, and, given the rushed nature, probable errors. But it’s out.

It’s not out in time to prevent damage for 2018.

• Withdrawal of insurers: Aetna notified agents that it will be withdrawing from individual markets in 18 states. Notices to policy holders will be sent on or about July 1st. Other firms have announced withdrawals from a few states, most particularly Iowa and Indiana.
• Heavy rate increases: Insurers in the individual market in Virgina have asked for a 30% rate increase for 2018, based on uncertainty about whether the Federal government will continue subsidies for health insurance. Insurers in NY State have asked for a 16.6% increase. Most other states will be in that range.

The proposal represents a mixed signal for consumers.

• Pre-existing conditions: The Senate version conforms with the House version in requiring insurers to cover people with pre-existing conditions. HOWEVER . . .
• Coverage: States can apply for waivers allowing insurers to reduce the coverage they provide. Services required by people with pre-existing conditions may not be covered.
• Medicaid: The bill supports a contraction of Federal Medicaid funding, but delays the start of cutbacks until 2021. The House version started cuts in 2020, an election year. The Senate version of the cuts are later and deeper.
  • The Medicaid expansion was an increase of the income limit for eligibility from 100% of poverty level to 138%.
  • Under the Senate version people making more than 100% of poverty level would be prevented from enrolling in Medicaid starting in 2020.
  • All Federal funding for the expansion would be limited in 2023.
  • The impact on the Medicaid program for children, CHIP, is unclear at this time.
  • Inflation adjustments for Medicaid funding would be changed from an index based on medical costs to the overall Consumer Price Index (CPI), which would reduce annual increases in funding in all future years. (See graph.) (4) The focus of this change is strictly on reducing Federal spending, not helping consumers. Federal payments would lag behind increases in medical costs — who pays the difference?
• Tax credits to help pay for insurance: The House version based subsidies on age; the Senate version reverts to income as the basis, consistent with the existing ACA rules. However,
  • The Senate version reduces the maximum income eligible for these subsidies, making some people now receiving subsidies ineligible for them in the future. On low low end, the Senate version makes subsidies available for people earning below below poverty level who might not be eligible for Medicaid in their state. The Senate version maintains cost-sharing subsidies for insurers through 2019.
  • The Senate version reduces the amount of subsidy people receive, increasing out of pocket costs for everyone, and especially for those between age 50 and 64.
• Planned Parenthood: Both House and Senate versions remove funding for Planned Parenthood.
• Tax reductions for affluent households: The Senate and House versions are in agreement on this; the reductions remain intact.
• Individual mandate: Penalties for not having insurance are eliminated.

Sticking points:

• For conservatives: Treating healthcare as a human right. They would rather see the ACA eliminated without replacement.
• For moderates and those in competitive districts

Collateral damage:

• Insurance coverage: There’s a debate as to how many people will not have insurance coverage with this law.  Estimates vary between 13 and 23 million.  The reasons for the variance in estimates include:
  • Time frame — loss of coverage will build over time as insurance costs increase and subsidies don’t.
  • Medicaid — how many people will lose coverage under Medicaid. That impacts more people than you would expect. Most people don’t have Long Term Care insurance, and Medicaid has become the prime vehicle for paying for home health aides and nursing home costs. Since nursing home costs average nationally more than $9,000 per month and Medicare pays for only the first 100 days, there are a lot of middle income families that will be in trouble. Even some moderately affluent families will be affected, and the poor . . . forget about it.
• Tax increases: Healthcare for the uninsured will fall back on emergency rooms, largely of public hospitals. That will drive costs and budget increases and increases in local taxes. Tax savings for the rich will mean tax increases for everyone else.
• Economic stagnation: The US is a consumer economy. I’ve argued previously that money siphoned from consumers for education, housing and healthcare is money they can’t spend for anything else. One analyst sees 1.1 million jobs disappearing by 2020 with passage of the AHCA. (3)

 

---

Sources:

1. M. J. Lee, Tami Luhby, Lauren Fox, Phil Mattingley, “Senate GOP finally unveils secret health care bill; currently lacks votes to pass,” CNN, 22 June 2017. http://www.cnn.com/2017/06/22/politics/senate-health-care-bill/index.html
2. Stephanie Armour, Kristina Peterson and Louise Radnofsky, “Battle Lines Drawn on Health Care,” The Wall Street Journal, 23 June 2017, P. A1.
3. Josh Bivens, “Millions of people have a lot to lose under the AHCA,” Economic Policy Institute, 21 June 2017. http://www.epi.org/publication/millions-of-people-have-a-lot-to-lose-under-the-ahca/?utm_source=Economic+Policy+Institute&utm_campaign=50e819bfcb-EMAIL_CAMPAIGN_2017_06_23&utm_medium=email&utm_term=0_e7c5826c50-50e819bfcb-58834721&mc_cid=50e819bfcb&mc_eid=0541ad0f29
4. Federal Reserve Bank of St. Louis, Economic Research. Chart downloaded 25 June 2017. https://fred.stlouisfed.org/graph/?id=CPIMEDSL,
5. Bob Bryan, “Unveiled: The Secret Senate Healthcare bill,” Business Insider, 22 June 2017. http://www.businessinsider.com/senate-healthcare-bill-trumpcare-ahca-details-2017-6

The [State] Politics of Health Insurance

In the rush to repeal the Affordable Care Act, the Trump Administration has been repeating the mantra that the individual insurance marketplaces are “failing.” Like most statements made by politicians these days, the facts seem to be a little different.

Clearly, Iowa is in crisis. With the withdrawal of Aetna from the individual marketplace, there is a real risk they may have no insurers offering individual coverage through the marketplace in 2018.

My suspicion is that Aetna’s withdrawal has more to do with its stock price and financial liabilities after a failed merger attempt than with the ACA itself. Aetna has also stopped writing small group insurance in some states.

However, Pennsylvania has six carriers committed to the marketplace for 2018. The only concern is what the Trump administration might do the mess things up.

Further, another insurer, Centene, has announced that it is expanding individual marketplace coverage into three new states — Kansas, Missouri and Nevada.

So what’s the real story with Iowa? If the fault were with ACA, it would be impacting every state and every carrier, and that’s not the case. What have state officials done to mess things up?

If you know the story, please reply. I’d like to know, both about Iowa and about other states where local officials are whining about Obamacare. Let’s get the full story out into the open.

 

ACA Repeal: Update

I’ve been quiet about the recent AHCA legislation. Frankly, the House bill isn’t good for most Americans, but the assumption is that the Senate will heavily revise the bill before it has a chance for passage. So it’s hard to say what the final legislation will be at this point.

Then it goes to conference committee and the result will return to each chamber for a vote.  So this is a long way from being done.

There are a number of articles enumerating the problems in the House bill. The major issues are

• Loss of health insurance for millions of Americans
• Impact on the solvency of hospitals and clinics serving rural areas — where most of the poor live
• Reductions in Medicaid coverage, especially for children
• Allowing states to reduce coverage standards in insurance (depart from the ACA’s Minimum Essential standards) — reducing what the insurance buyer gets for their money
• Raising costs drastically for consumers between the ages of 50 and 64 (1)

With all of these issues, we are still expecting the repeal bill to result in sharply higher premiums for health insurance.

The only positives in this bill are tax reductions for the wealthy.

My major concern is with health screening and checkups. The ACA recognized that the main way to reduce health care expenditures is through early detection and treatment of disease. Removing access to doctors means later detection and much higher costs.

Example: breast cancer, cost of treatment by tumor stage

Stage

0                                         $71,909

I/II                                      $97,066

III                                      $159,442

IV                                      $182,655 (2)

Reduction is access to health care is a commitment to higher medical spending or to reduction of life expectancy.

---

Sources:

1. Harris Meyer, “15 quick facts from CBO report on Obamacare repeal bill,” Modern Healthcare, 24 May 2017. http://www.modernhealthcare.com/article/20170524/NEWS/170529946?utm_source=modernhealthcare&utm_medium=email&utm_content=20170524-NEWS-170529946&utm_campaign=mh-alert
2. Helen Blumen, Kathryn Fitch, Vincent Polkus, “Comparison of Treatment Costs for Breast Cancer, by Tumor Stage and Type of Service,” Am Health Drug Benefits. 2016 Feb; 9(1): 23–32.  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4822976/

Paradox: Breast Cancer Survival and Healthcare Costs

Metastatic breast cancer — where the cancer has spread to distant part of the body — is the most severe form of the disease.

A new study from NIH documents improvement in life expectancy among women with this form of the disease.

The researchers estimated that between 1992-1994 and 2005-2012, five-year relative survival among women initially diagnosed with MBC at ages 15-49 years doubled from 18 percent to 36 percent. Median relative survival time between 1992-1994 and 2005-2012 increased from 22.3 months to 38.7 months for women diagnosed between ages 15-49, and from 19.1 months to 29.7 months for women diagnosed between ages 50-64. The researchers also reported that a small but meaningful number of women live many years after an initial diagnosis of MBC. More than 11 percent of women diagnosed between 2000-2004 under the age of 64 survived 10 years or more. (1)

Obviously, the survival rates, while better, aren’t good. The best results occur when the cancer is caught at a much earlier stage where it is more easily treatable.

While improving the life expectancy of people with advanced cancer is a good thing, it means higher costs in treating the cancer. Simply, the patient is under treatment for a longer period of time.

The current health insurance system in the US basically penalizes everyone for patients surviving for a longer time with advanced disease. Costs go up, driving health insurance rate increases.

The ACA attempted to address the paradox by driving consumers to have more frequent exams and earlier detection of disease.

The AHCA, by reducing enrollment in health insurance, actually makes the situation worse. 

---

Sources: National Institutes of Health, “Study estimates number of U.S. women living with metastatic breast cancer,” press release, 18 May, 2017. https://www.nih.gov/news-events/news-releases/study-estimates-number-us-women-living-metastatic-breast-cancer

 

The Definition of Idiocy

Been there. Done that. Tried it. It failed. So let’s do it again!

To paraphrase Einstein’s famous quote, stupidity is doing the same thing over and over again and expecting a different result.

In surfacing the concept of “high risk pools”, Congress is reusing an idea that has failed repeatedly in the past when used with either auto insurance or healthcare.

The idea of the high risk pool is to group people who are very ill and provide a special pool of funding for their insurance. With government subsidy, the pool would in principle provide “affordable” rates for these people.

The ACA in fact used a high risk pool for people with pre-existing conditions (PCIP) during the transition period between 2010 and 2014. It produced the result that high risk pools have always produced:

• Excessive costs to consumers
• Cost overruns requiring bailouts
• Fewer people being insured.

As Kaiser comments:

PCIP was operational in all 50 states by the fall of 2010.  By late 2012, just over 100,000 individuals were enrolled and program expenses had consumed nearly half of the $5 billion appropriation.  For the final 12-month period for which PCIP expense data were reported, net losses for the program were over $2 billion. (1)

State health insurance pools restricted access to only a small fraction of those needing coverage, and even then require huge bailouts from taxpayers.

New Jersey tried a high risk pool for auto insurance. It failed to prevent rates from soaring, and went bankrupt.

My interpretation: Basically, what Congress is doing in the AHCA bill is “passing the buck” either to future Congresses or to taxpayers.

 

---

Sources:

1. Karen Politz, “High-Risk Pools For Uninsurable Individuals.” Updated 22 February 2017. http://kff.org/health-reform/issue-brief/high-risk-pools-for-uninsurable-individuals/

ACA Repeal — the Backdoor Method

Apparently, the bill to keep the government operating excludes payments to insurance companies that subsidize healthcare for those buying insurance through the Marketplace. The tactic is to force insurers out of the market, thus closing the door on the Affordable Care Act.

In theory, that would cost anyone with a subsidy their healthcare.

We’ll see what happens next.

ACA Repeal, Again

According to Bloomberg, the White House wants Congress to vote on a revised bill next week.  There are some proposed amendments to the bill that failed in March in an effort to try to unify GOP House members to support the bill, but nothing has been finalized.

One item being considered is a proposal by Representative Tom MacArthur (R, NJ):

The amendment, reported earlier by Huffington Post, would allow insurers to charge higher premiums to people with pre-existing conditions in states that get a waiver. To obtain the waiver, states would have to provide sick people priced out of commercial insurance access to a so-called high-risk pool run by the federal government, or establish their own, and satisfy other conditions. (1)

A separate commentary on the same issue goes further:

According to a draft of the tentative deal obtained by POLITICO, the latest proposal would allow states to apply for “limited waivers” that would undermine Obamacare’s protections for pre-existing conditions. Under these waivers, states could opt out of Obamacare standards setting minimum benefits that health plans must offer and a requirement — called community rating — forbidding insurers from charging different prices to people based on health status. Both are provisions that the GOP’s ultraconservatives have pushed to eliminate as part of the repeal effort, contending that these coverage mandates drive up the cost of insurance.

What this means in practice is a two-tiered health system based on where people live. People in places like Mississippi and Kentucky that have relatively poor healthcare now, will have less access to healthcare and higher costs in the future. Conversely, states that offer better healthcare will maintain existing benefits. That’s a compromise that could pass, or could just make everyone unhappy.

Overall, this attempt keeps the negatives associated with the bill, and adds one more. Historically, risk pools haven’t worked. They’ve been budget-breakers when they’ve been tried for auto and health insurance in several states. If anything, more people will lose health coverage and costs will escalate as predicted by the CBO.

---

Sources:

1. Billy House, Jennifer Jacobs, “White House, GOP leaders at odds over plans for Obamacare vote,” BenefitsPro, 20 April 2017. http://www.benefitspro.com/2017/04/20/white-house-gop-leaders-at-odds-over-plans-for-oba?kw=White%20House%2C%20GOP%20leaders%20at%20odds%20over%20plans%20for%20Obamacare%20vote&et=editorial&bu=BenefitsPRO&cn=20170420&src=EMC-Email_editorial&pt=News%20Alert
2. Adam Cancryn and Josh Dawsey, “White House plans Obamacare showdown next week,” Politico, 20 April 2017. http://www.politico.com/story/2017/04/20/obamacare-repeal-republicans-new-deal-237397