Wednesday, October 18, 2017

The Making of the Deal (Or Not)

The Making of the Deal (Or Not)

So, now we have a bi-partisan deal laid out by Lamar Alexander (Rep-Tenn) and Patty Murray (Dem-Wash). But what does it mean and is it too little too late to save the Affordable Care Act (ACA) even if the Republican Congress gets around to putting it into action? Here's the gist:

1. Cost-sharing reduction payments would be funded through 2019. As a reminder, these are payments to insurers to help reduce out-of-pocket expenses for low- and middle-income people. The loss of these payments to insurers is estimated to total $7 billion dollars this year and $10 billion next year. Without them insurers will face huge financial losses this year with subsequent dramatic increases in premiums.

Of note, even without the subsidies, the poorest will still be protected from premium increases by tax credits, required under the ACA. (This will result in a much higher burden on taxpayers in general.) People whose incomes are too high for these credits -- for example a single person making $65,000 or a family of four making $120,000 -- will face a dramatic increase in premiums.

2. Before his happy departure as Secretary of Health and Human Services, Tom Price had slashed the budget for advertising and providing information on how people can enroll in the insurance exchanges. Under the new bi-partisan deal, this program would be re-funded.

3. The deal would allow anyone to purchase a catastrophic plan with a high deductible. Currently this is limited to people under age 30. The risk with this provision is that this will draw healthier people out of the insurance exchanges.

4. States would have more flexibility to change some of the ACA requirements, although coverage for essential benefits and preexisting conditions would still be protected, at least on paper. To refresh your memory, here's a list of the essential benefits.

This deal is an agreement in concept only. It isn't clear if the Senate would even turn it into a bill. Some Democrats believe that the best they can hope for is to fold it into the spending bill at the end of the year.

Of note, if Congress decides to fund the CSR payments, Trump may (intentionally or inadvertently) have done a good thing in the long run. Obama had set them up as an executive decision, which made their Constitutionality questionable and so they were vulnerable from the start. If Congress can actually get its two heads together on this, then it would provide some ongoing support for the ACA.

What Happens Now With CSR Payments, Deal or No Deal

Even if Congress decides to fund CSR payments, it's probably too late for insurers to lower their rates for 2018. Medical costs are still out of control, and after the passage of the ACA more sick people than anticipated gained coverage. So premiums would be increasing, no matter what. 

However, before Trump's order to eliminate CSR payments, there's evidence that the insurance market was beginning to stabilize. According to a number of experts, premium increases in 2018 would fall between between 5% and 10%, plus an additional 3% increase from an insurance tax. After Trump's announcement insurers estimated the increase at an average of 40%.

Other Trump Actions That Can Add to the ACA Deterioration

In addition to cutting CRS funding, the Trump administration is threatening to end the individual mandate, which would take additional younger healthy people out of the insurance market.

And, to make this worst, he recently announced allowing organizations with similar missions to form associations through which members can purchase insurance – even across state lines. This puts them under the category of large-group plans, which makes them exempt from ACA requirements covering essential benefits, which apply only to individual and small group insurance policies.

He also lengthened the period of a skimpy short-term limited insurance plan so that people could be covered under it for a year, instead of just three months. These plays are totally exempt from ACA regulations. They don't have to cover essential benefits and can deny coverage to people with pre-existing conditions.

The result, again, even more healthy people will be drawn to these plans that will be cheaper and provide less coverage to those enrolled under them. So far, these executive orders don't have any effect and won't without HHS (now Priceless) making the regulatory changes to achieve them, which could take months.

Summarizing the Effects of Executive Actions and the Bi-Partisan Deal

The Obama administration had planned on a broad competitive market that included enough healthy people to keep rates low, but the GOP and Trump administration have done everything they can to sabotage this.  So, let's summarize all the potential changes, including those in the bi-partisan deal and Trump's orders that will alter enrollments so that healthier people will be drawn out of the exchanges, leaving the sick to face dramatically higher premiums:

·      The dumping of CSR funding
·      Getting rid of the individual mandate
·      Allowing associations with loosely grouped memberships that allow fewer benefits than required by the ACA.
·      Lengthening the duration of skimpy short-term policies that also do not require essential benefits

Putting all of these efforts together will push the healthy out of the exchange leaving the sick to face exorbitant rates, restoring the Dark Ages of American Healhcare that the GOP are so comfortable with. 

And, one more thing.

A dark undercurrent of resentment is running through the country that the GOP is taking advantage of and the Democrats are ignoring. Insured workers and those insured through the exchanges are all experiencing premium increases, limited physician networks, and higher out of pocket payments. In other words, although the rate of those who are insured has gone up since the ACA, so has the rate of underinsured. At the same time, under the ACA in the expanded states, Medicaid recipients still have rich benefits with limited or no out-of-pocket payments. (It should be noted that in the non-expansion state, Medicaid is not available at all to most of the very poor single adults.)

Although any medical payments can still be a burden for people at or below the poverty line, the perception among many among the employed middle class is that the very poorest have a health and financial advantage over the hard-working American.

This is creating a dangerous disparity with ugly results, but we have to listen to the people who are expressing their unhappiness. "I'm paying through the nose every month and I wasn't able to see the doctor I wanted, while that dead beat down the road gets to see a shrink for free." This perception will only get worse if Trumps initiatives go into effect. People with the lowest income will still be protected, while those with higher incomes (but who are by no means wealthy) will face extreme increases in rates.

Patching up the ACA isn't good enough. Until we have a system that has consistent base-line benefits, a single income-based premium for people of any age, and a method of controlling our costs we will not have workable health care.

Friday, September 22, 2017

Now, for Something Worse (Especially for New York)

As the last Zombie to thrash its way out of the Appeal-Replace graveyard, the Graham-Cassidy is also, like in every horror movie, the scariest. It appears to be benign, surrounded by a jungle of phrases and phony numbers that make it appear friendly.  So you really have to tear off its mask to see the terrifying face beneath.

Under this Act, the number of uninsured is expected to go even higher than the 32 million predicted with previous bills.  But in looking at how bad this bill really is, follow the money.

First, say good-by to Medicaid expansion by the end of 2019.

To start with, the feds will take all the money they currently pay for Medicaid expansion and package it with funds used for premiums, subsidies, and small business tax credits.  This chunk of money will be used for "short-term program funds", i.e, block grants, distributed to the states to "experiment with".  

Republicans rejoice.  States won't be tied down anymore with those nasty regulations. Unfortunately, experiments don't include using the money to cover low-income non-disabled adults, no matter how poor. The funds can only be used to cover children and adults who are pregnant, caretakers of minor children, or disabled. 

Second, the formula for redistributing the money skips millions of people

The amount of money allocated to a state is based on a ratio of the number of residents with incomes between 50% and 138% of the poverty line compared to that population in all states. So, here's who won't be counted in getting that money.
·      Most expanded states, like New York, cover any adult making less than 50%.  Since the grants won't include them, about 36 million of the poorest of the poor Americans will disappear.
·      Also, note that the money won't go to anyone who makes over 135% of the poverty line. Many expanded states provide tax credits for people up to 400% and cost sharing reduction to those up to 250% of the poverty level.  Gone.

Third, are the caps

Under the ACA, the feds paid a certain percentage of Medicaid costs. The Cassidy-Graham bills won't do this.  Instead it will set a funding cap for each eligible Medicaid beneficiary (those children and pregnant, caretakers and disabled adults making up to 135% of the poverty line). Once the number has been set, it won't matter if a state has a sudden inflow of population or a public health emergency. The amount of money remains the same.  The caps also grow more slowly year by year than medical costs traditionally have. 

Fourth, states are encouraged to shift coverage over to private insurers.

This block grants can't be used to re-establish coverage through Medicaid for people who used to be eligible.  Instead, states would have to come up with options that only use private insurers for coverage, even though Medicaid is known to be a cheaper form of coverage than private insurance.  States can also move people already on Medicaid or CHIPs (the program that covers nearly all American kids) into the commercial market. Furthermore, according to Health Affairs "in creating these alternative programs, states can seek federal waivers to allow insurers to waive numerous ACA protections," including rates based on one's health status, preventive and maternity care, and other essential health benefit

Fifth, sixth, seventh and eighth ways that states will lose money for their poor
  • ·     The bill will shrink the amount of money paid into CHIPS -- that's the Medicaid money that covers most kids in the Unites States. 
  • ·      It eliminates money that allows states to cover health care costs for people with catastrophic illnesses who were eligible but had not enrolled in Medicaid at the time of their illness. (This safety-net feature has been in place since 1965)
  • ·      It reduces by one-third the matching funds for traditional programs that states have generated through their own taxation.
  • ·      And, of course, it defunds Planned Parenthood for a year

Ninth, use it or lose it.

States have two years to come up with a  process that will distribute these grants to their populations. Remember the start of the ACA?  States had three years to establish insurance markets, and most ended up relying on the federal exchanges. Under the Graham-Cassidy bill there is no federal backup.  So if the states can't figure out how to dole out their Medicaid dollars in two years, presumably they lose it. 

Finally tenth, the biggest financial losers are the states that did the most to help their poor and the winners are those who did the least

Analyses estimate that, overall, by 2026 all states could lose between $215 and $300  billlion in Medicaid funding. And, there are no funding options after 2026, so the cumulative loss rises to $489 billion in the following year. 

It's critical to look at specific states, however.  The end result of the Graham-Cassidy block-grant formula is to decrease and shift Medicaid dollars currently paid to expanded states, like New York, to those who decided not to, like Texas.  In other words, states that had chosen to support their poorest would be punished.  Those who hadn't get rewarded.

According to the latest analysis New York will lose $45 billion by 2026, second only to losses suffered by California ($78 billion). And it will only get worse after that. In looking at the numbers of those who will be uninsured, New York currently has 6.3 Medicaid enrollees. The 2 million covered under the expansion program will lose coverage under this act, with another 200,000 losing it from other sources.

Now let's look at the changes in funding for the states that avoided expansion. Texas is the most egregious example. It has the harshest Medicaid eligibility requirements in the country, where no childless non-disabled adult is covered and parents of children can be insured only if their incomes are 18% of the poverty line.  While, over the course of the ACA, New York's uninsured rate went from 15% to 7%, in Texas it started at 30% and dipped to only 25%, the highest in the nation. Over 680,000 residents now have no access to insurance at all. But Texas, under the Graham-Cassidy bill, will enjoy the largest increase in funds of all states –an estimated $35 billion by 2026.

 (As a side note, it's interesting to look at the effect on Cassidy and Graham's home states.  South Carolina, Graham's non-expansion state, will see an increase of about $3 billion.  Louisiana, Cassidy's expanded home state will lose $8 billion. Both states will have higher numbers of uninsured  -- about 600,000 in South Caroline and 419,000 in Louisiana.)

In Conclusion

The Senate has until September 30 to pass this bill with 50 votes.  After that, they'd need 60, which wouldn't happen.  (In any case, if Congress doesn't act by October 1, New York could lose up to $2.6 billion in federal aid that helps cover costs for hospitals that serve those who have no insurance or are underinsured. Cuomo was quoted, "There's no way we can absorb $2.6 billion. It's mathematically impossible." )

And here's an important message for John Faso.  What's missing in this bill is the amendment he had proposed, and which was included in previous bills, that would prevent New York from using property taxes to help pay for Medicaid.  Whether you think this is a good idea or not, Faso now has no reason to support the Graham-Cassidy bill if it gets into the House.  It's devastating for New Yorkers.  Be sure he knows this!

Wednesday, September 6, 2017

ACA Enrollment: Too Pricey for Price

This is Part 2 in a series on how Tom Price, Secretary of Health and Human Services (HHS) can destroy the Affordable Care Act (ACA) all by himself.  You can read Part 1 here.  As mentioned in the first article Price has had it in for the ACA starting when he was a Congressman.  Now that he's wielding the power to kill it, his first step was to cut enrollment in the health insurance exchanges.  And he's done it in the following ways:

Cutting Ad Money on Enrollment
The administration pulled back on emails and paid advertising that informed and encouraged people on enrolling in health insurance exchanges.  The cuts began last year at the end of the open enrollment period, right after Price was crowned HHS Secretary. About 500,000 fewer people enrolled in 2017 than in the previous year. 

This year, with enrollment starting in a couple months, HHS has announced that the administration will spend only $10 million on marketing, down from $100 million budgeted under Obama. 

Adding Money on ACA-Attack Ads
HHS has not ended all advertising. They have released 23 videos that attack the ACA, with 130 more in the pipeline.  Each video is an interview with someone who has been negatively affected, usually from high premiums and deductibles.  (Not mentioned in these videos is that most of these problems are due to insurance instability brought on by GOP policies to undercut the ACA.) Here's the YouTube page with all the HHS videos; scroll down and you'll find these interviewsPrice and the Trump Administration are now seeking $547 million to produce more of them. 

Shortening the Open Enrollment Period

One of Price's first decisions was to reduce the annual open enrollment period when anyone can buy coverage in the insurance through the exchanges.  Under Obama, you had three months to get coverage -- from November 1 and January 13.  Now, you only have 45 days, from November 1 until December 15th.

Discouraging Enrollment When You Need It

People who experience life changes that require buying insurance outside the open enrollment can do so under "special enrollment".  Such changes include losing a job, getting a divorce, getting pregnant, or having an income change. Tom Price, like too many Republicans, frets about poor people "gaming the system" by enrolling only when they get sick, although there's no evidence that this is true to any significant degree. Anyway, to make things harder, every person who seeks coverage through special enrollment must now send in documentation that proves they need it. And they only have a month to do this. Then they have to wait for approval (although they can get coverage during this period.)  A previous study of a pilot program that used these restrictive requirements found a 20% reduction in special enrollment, particularly among healthy individuals.

Cutting the Navigator Programs
The government has now dramatically cut the navigator program, which helps guide people through the enrollment process. HHS argues that last year navigators received $63 million but only enrolled about 81,400 people.  And, 78% failed to achieve their goal. So, this year, navigators will receive only the amount of funding based on achieving their enrollment goals last year. In practical terms, this means that funding will fall by 40% to about $36 million. 

However, opponents argue that the logic is flawed.  Navigators perform many services other than simply getting people enrolled. They educate them on financial assistance; provide information on plan options and subsidies; help people with grievances; and last year they spent a lot of time clearing up the confusion over the GOP bills. Navigators also often need to spend a disproportionate amount of time reaching small populations, such as those in rural areas or with limited English -- in general, individuals who need the most help.

Ending Contracts In 18 Cities that Aid Enrollment
In July, HHS pulled the contracts for organizations in 18 cities that help people sign up for the ACA in public spaces, like local libraries and businesses.  These organizations focused on the healthy-young adults needed to keep insurance market stable and premiums low. 

Bottom Line

Not only will these changes reduce enrollments in general, but people less likely to enroll are younger and healthier and so aren't generally motivated to look for this information.  The fewer the healthy insurance buyers, the higher the premiums for sick people, and the more money for attack videos. So it goes.

Friday, August 18, 2017

How Price Can Trump Us All

Tom Price, our Secretary of Health and Human Services (HHS) can't stand the Affordable Care Act, which is his job to administer.  In fact, back when he was a Congressman from Georgia, before he was secretary of HHS, he proposed his own repeal bill– perhaps the most conservative of all the GOP miseries. This is part 1 in a series on how Tom Price can ruin the ACA all by himself.

Price's Powers

Now he doesn't need a bill to ruin much of the ACA.  Under this Act, the HHS secretary has enormous powers, including, but not limited to, running the following organizations and programs:
  • ·      Centers for Medicare and Medicaid Services (CMS)
  • ·      Children's Health Insurance Program (CHIPS)
  • ·      The Health Insurance Marketplace
  • ·      Centers for Disease Control and Prevention (CDC)
  • ·      National Institutes for Health
  • ·      Food and Drug Administration (FDA)
  • ·      Indian Health service (HIS)
  • ·      Substance Abuse and Mental Health Services Administration

Price also oversees dozens of task forces, advisory committees, and many programs, including those designed to change the way our country pays for health care.  From this tower, his all-seeing eye is scanning the landscape and readying his Obamacare Wraiths. 

Targeting the ACA Innovation Centers

The Center for Medicare and Medicaid Innovation is important tool that the ACA had put in place to reduce health cost drivers.  It funds programs in different states that are designed to reformsystems and costs. One feature of many of these programs is to change the way Medicare reimburses doctors, from a fee-per-service to a value-based system. With fee-for-service, the more stuff you do, the more you get paid. Doctors, especially surgeons, can bill for expensive and unnecessary treatments or diagnostic tests that don't always provide the best care.  Primary care doctors, on the other hand, get paid a set fee per patient, so that the more time they spend with one, the less money they get.  By replacing fee-for-service with a payment system based on quality, surgeons could be paid less; physicians who talk to patients could get more.
It's important to remember that before Price was a Congressperson from Georgia, he was an orthopedic surgeon, the most highly paid specialty of all. Orthopedic surgeons, with an average income of about $490,000, make more money than any other physicians.  At the bottom of the list are the primary care doctors: pediatricians ($202,000) and family physicians ($209,000).

In fact, a major factor in the higher health care costs in America compared to other nations are the higher incomes in general, and, in addition, the higher number of specialists compared to primary care physicians.  Obama had hoped to reverse this trend.

Unbundling the Bundled Payment

On the other hand, Price is out to get rid of the innovation centers and their accompanying payment reforms, and restore the system that had rewarded him and his colleagues so well. 
So this week he started doing just that. One way some Innovation Programs are looking to save money an increase quality if by instituting so-called bundled payments. So, using hip replacements as example, the usual practice has been to pay separately for each player in the procedure—the orthopedic surgeon, the nurse, the hospital. Starting in April 2016, 800 hospitals in 67 cities were required to use the bundled payment model. Under this system, Medicare gives the hospital a cost target for the entire event – from the surgery, to the hospital stay, through rehabilitation. If the hospital's costs come in below that amount, it gets to keep the money.  If the costs go over, the hospital has to pay the difference.

Even before Price first took over HHS, mandatory bundled payments for replacement surgeries stuck in his craw, possibly because the surgeon's fee might be hit during the sharing process.  (Did I mention Price had been an orthopedic surgeon, the highest paid specialty of all?)  Furthermore, right before he took office, three programs for treating heart disease were also set up for mandatory bundled payments. 

Price made his opposition to bundled payments clear, but many people expected him to keep the programs but make them voluntary.  Instead, he canceled the cardiac programs outright and cut back on the locations for the joint-replacement programs from 67 to 34 cities.

A 2017 study estimated that if every hospital used this model for joint replacement it would save Medicare $2 billion every year. Even the existing model in 67 cities was expected to save $204 million over the next three years.  By making it voluntary in many locations, the model will save $90 million less.  The cardiac models were estimated to save Medicare $159 million over five years.  That will all be gone. 

Other Ways Price is Helping Out His Pals

Price announced  recently that Medicare might pay for total knee and hip replacement procedures in outpatient settings, which pleases orthopedic surgeons who run their own clinics. But lots of hospital leaders are not happy, concerned about quality and a major loss of their own revenue. 

He is also reinstating an AMA commission of physicians that determines how doctors are paid under Medicare.  This allows doctors themselves to tell the government how much to pay them.  The composition of the panel has also always favored specialists, particularly surgeons, over primary care physicians, creating an imbalanced payment structure.

So Price is a champion among many doctors, particularly surgeons, but among hospitals and primary care docs, not so much.