Tag Archives: obamacare

Could Medicaid for all be the answer?

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Putting it all together

The Affordable Care Act is a complex law, but for a major piece of legislation that actually made it all the way through a very open legislative process, it’s remarkably coherent. Republicans have tried to sabotage it since before it was passed, and yet it still managed to succeed while a Democratic Administration remained in power. I have predicted in the past that if Republicans actually managed to poison Obamacare that they would come to regret it, because it would lead eventually to the rise of a single payer (i.e., truly socialist) system.

I assumed that the move toward single payer would take a generation to happen and would be driven at the federal level. But Nevada’s quick embrace of Medicaid for everyone surprised me, and it looks like a good option that addressed a lot of tough healthcare financing problems. Even if this Nevada plan ultimately dies on the vine, it provides a template for other states.

Here’s the basic story behind the Nevada Care Plan: Obamacare supporters are worried about what will happen to people who use the exchanges/marketplaces if Trump or Congress is successful in destroying the markets. Trump has been wreaking havoc on the marketplaces by threatening to cut off the subsidies that make premiums and out-of-pocket expenses affordable. The American Health Care Act (AHCA), aka Trumpcare, Ryancare, etc. would be the death knell. As a result, millions of people who get insurance through exchanges today would be out of luck.

A Medicaid for all approach enables people at any income level to buy into Medicaid, paying premiums if their income is too high to qualify under current rules or if they are are otherwise ineligible. Medicaid provides a very comprehensive set of benefits –broader, in some ways, than commercial plans or Medicare. Prescription drugs are covered, and so is nursing home care. Even better for the patient, there are no co-pays or deductibles. Cost per patient is lower than commercial plans or Medicare because Medicaid pays physicians and hospitals rock bottom rates, and by law Medicaid gets the best pricing on drugs.

Interestingly, many of the insurance companies that have succeeded on the exchanges are Medicaid managed care plans like Centene and Molina that have adapted their products to the Obamacare population.

Medicaid for all would not preclude private plans from participating in the market. In fact, its existence could pave the way for a variety of supplemental or upgraded plans that could be purchased by individuals or offered by employers. That approach is similar to what happens in other rich countries like the UK.

In summary, Medicaid for all has some really good features:

  • It bends the cost curve considerably by forcing lower prices on hospitals, physicians and other providers. The main reason healthcare spending is higher in the US than in other rich countries is because unit prices are higher here. In one fell swoop that could be addressed, even if providers aren’t entirely pleased.
  • Drug pricing, which is such a lightning rod, could also be addressed quickly by bringing prices into the Medicaid framework, the one place where they are reasonably well controlled.
  • It would enable everyone who wants to be covered to be covered.
  • It would eliminate the vagaries of the exchanges. No one would need to worry about whether insurance companies would offer plans from year to year.
  • In theory, it could enable states to innovate, assuming that they are given the freedom to modify benefits around the edges.

Admittedly, Medicaid for all might dampen innovation by reducing the financial incentives for the introduction of new drugs and devices and placing more control in the hands of government. But frankly commercial health plans have not done a good job of spurring innovation or cutting costs; few people are likely to shed a tear if their role is reduced.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Goodbye Obamacare? More like hello single payer!

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Once Donald Trump enters office, Republicans will be in a good position to repeal Obamacare, something they have been foaming at the mouth to do for quite some time. Democrats might be able to filibuster to prevent an outright appeal, although the majority has other ways to gut the law, such as the reconciliation process.

I say let them go ahead and repeal Obamacare without putting up a big fight. As Trump told 60 Minutes, “I am going to take care of everybody. Everybody’s going to be taken care of much better than they’re taken care of now.” He also promised to provide “quality, reliable, affordable health care.”

I look forward to hearing the great ideas revealed by Trump and the Republicans in Congress. If they can do what they say then I’m entirely in favor of it and will give them the credit that’s due.

Meanwhile, I’m going to feel free to criticize the stock initiatives of the Republican party, which were largely mirrored in Trump’s campaign statements:

  • Repeal Obamacare, by which they really mean keeping the popular pieces like making health plans accept members with pre-existing conditions without charging higher premiums, but at the same time jettisoning the unpleasant aspects such as the individual mandate and taxes that help subsidize coverage. Sounds nice, but without a mandate, plans will suffer from adverse selection, premiums will skyrocket, and people will be left uninsured
  • Let health plans sell insurance across state lines. This one is highly touted but in reality it’s a big yawn. The plans themselves have little appetite for moving across borders and even if they did, most new entrants won’t be able to establish strong enough negotiating positions in the markets to bring down premiums
  • Change Medicaid to block grants so states can do what they want with the money. This isn’t a terrible idea because it could allow states to more freely innovate and tailor Medicaid to meet local needs. In practice it’s likely to be used just as a way to screw the poor
  • Promote drug re-importation. Remember the senior citizen buses to Canada in the 1990s before Medicare Part D and the mail order pharmacies with drugs supposedly from Canada, that disappeared once Obamacare required drug coverage? Well, the GOP might bring these back. But the drug market has changed and the most pricey new meds won’t necessarily be attainable from abroad anyway
  • Let individuals who buy their own health insurance take a tax deduction the way businesses already do. Again, sounds great in theory but it’s a regressive approach that rewards higher income people who are in the top tax brackets. It also encourages premiums to rise and widens the budget deficit. The Cadillac tax or some variant that limits deductibility by businesses is more fiscally responsible
  • Expand Health Savings Accounts (HSAs), allow them to be shared among family members and passed on as part of one’s estate. Not a bad idea but hardly a game changer in its own right

Remember, thought, that the Republican ideas above were presented by conservatives, while Trump himself has been at least a liberal and frankly more of a socialist when it comes to health care policy, at least based on his earlier writings. Once he learns that the ideas of the conservatives in Congress won’t produce universal coverage, he may well go back to improving –instead of replacing– Obamacare, moving to a Canadian style single payer system, or opening up Medicare for all, just like Bernie and much more radical than Hillary.

I can’t wait to see how it all plays out.

Image courtesy of Thanamat at FreeDigitalPhotos.net


By healthcare business consultant David E. Williams, president of Health Business Group.

 

How narrow is a narrow network?

Is narrow good or bad?

Is narrow good or bad?

Health Insurance Exchanges are one of the most interesting and potentially impactful features of the Affordable Care Act. The exchanges allow eligible individuals to compare health plans on an apples-to-apples basis and choose the one that’s most appropriate for their individual circumstances.

Health plans are interested in participating in these exchanges because they offer one of the few sources of member growth. Federal subsidies make exchange plans affordable for middle income buyers who make too much to qualify for Medicaid.

Not surprisingly, exchange customers are price conscious shoppers. That means plans have to work hard to offer low enough premiums to be competitive. The Affordable Care Act outlaws some of the ways health plans used to stay competitive, such as charging different prices based on health status, refusing to cover certain patients, making exclusions for pre-existing conditions, and offering skinny benefits packages.

One of the few things plans can do is to offer different networks of physicians, hospitals and other providers. Exchange plans have embraced the concept of “narrow networks,” which offer a smaller than usual collection of providers as a way to hold down costs. I have heard and seen a lot of anecdotes about what this means in practice, but now there is some real data.

Avalere has conducted an analysis of health plans in the top five exchange states to compare the size of exchange plan networks with the size of commercial networks in the same geographies. Sure enough, the plans included an average of 34 percent fewer providers on average, and 42 percent fewer oncologists and cardiologists.

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Although anyone’s initial reaction is that a bigger network is better, that is not automatically the case. If the narrower networks exclude the wasteful, low quality providers the result could be increased quality and cost effectiveness.  If network inclusion is based just on unit costs, then who knows the outcome on quality. And if fewer providers means it’s harder to get an appointment, that could be problematic. Patients might even end up spending out-of-pocket for out-of-network coverage.

I asked Avalere vice president Elizabeth Carpenter to answer a few questions that immediately came to mind: You report the average, but how much variability is there? How have network sizes changed since last year? How often do exchange members go out-of-network?

Elizabeth answered the first question as follows, “Overall, we did see noticeable variation among the five states we examined. However, interestingly, it was not consistent across provider type. For example, exchange plans in one state may cover a higher percentage of primary care physicians than another state’s exchange plans but may cover a lower percentage of hospitals.”

As I expected, Avalere hasn’t yet done the work to answer the other questions. Clearly there are lots of interesting studies to be done on the impact of exchange plans on costs, quality, and the overall insurance market. I eagerly await them.

Image courtesy of marcolm at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

Health Business TV: Obamacare premiums, First Opinion, Healthcare Compass, and more

In the second edition of Health Business TV, I discuss Obamacare exchange premiums for 2015, the First Opinion app for inexpensive doctor/patient texting, the launch of Healthcare Compass for comparing primary care practices, and the results of last weekend’s Massachusetts Democratic party convention.

Please subscribe to the YouTube channel and tell your friends!

By healthcare business consultant David E. Williams of the Health Business Group

ObamaCare signups: More than just the exchange numbers

All that hyperbole for nothing!

All that hyperbole for nothing!

President Obama just announced that 8 million people signed up for coverage on federal and state health insurance exchanges during the initial open enrollment period for the Affordable Care Act, aka ObamaCare. That’s higher than originally projected, and much higher than how things looked when the glitch-filled healthcare.gov sputtered out of the gate. Cynics will pick at that accomplishment, claiming that it overstates the law’s impact by counting people who already had insurance, and those who don’t end up paying their premiums.

ObamaCare is a complex law (remember the big excitement about how many pages it takes to spell out) and it’s much more than just the exchange websites.

Focusing just on the 8 million who have signed up through the exchanges actually seriously underestimates ObamaCare’s impact on the number of people with insurance. Consider:

  • Close to 4 million people have signed up for Medicaid since October. It would have been more if opponents hadn’t blocked Medicaid expansion in so many states
  • Millions have signed up for private health insurance outside of exchanges: through brokers or directly with the health insurers
  • Many formerly uninsured young adults are insured through their parents up to age 26 instead of being dropped

There’s also another way to look at the folks who already had insurance who have signed up on the exchange. ObamaCare opponents have made a big deal out of people having their plans canceled because those plans didn’t meet the new law’s requirements. We’re suddenly told how everyone loves their existing plan –something I never heard touted prior to ObamaCare. Considering the hassle involved in getting a policy through an exchange, one could reasonably assume that people are getting better, cheaper coverage than what they had before. Even if that doesn’t increase the number of insured people, it improves the overall level of insurance within the population.

 

photo credit: Fresh Conservative via photopin cc

By healthcare consultant David E. Williams of the Health Business Group

Despite botched ObamaCare rollout, public still trusts Democrats on health care

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The AP is running a  story purporting to show a “potentially bigger problem for President Obama’s health care overhaul” than the botched launch of the federal insurance exchange: “Americans who already have coverage and aren’t looking for any more government help are blaming the law for their rising premiums and deductibles.”

The basis for the story is a new AP-commissioned poll, which shows that those who are experiencing rising premiums or deductibles associate those changes with the implementation of ObamaCare. The story goes on and on about the problems this represents for the President, even bringing in a noted Harvard professor to reinforce the point and piling on a few anecdotes for good measure.

But another reading of the results could lead to almost the opposite conclusion.

Why do I write that?

Respondents were asked, “Which party do you trust to do a better job of handling health care?”

Answer: 32 percent said Democrats and 22 percent Republicans. In other words, if everyone thinks that the rollout of the exchange has been terrible (which they do), and a high percentage of people associate rising premiums with ObamaCare, and have heard unrelenting criticism of ObamaCare from the GOP, how come these same people still place much higher trust in the Democrats? Maybe because the average person is a little more sophisticated than those who are looking for a sexy angle on a news story.

What’s going on? The answer is that it’s easier to follow the current narrative that ObamaCare is a big disaster than to engage in independent thinking. The poll is biased and so is the interpretation. Here are a couple examples:

  • The poll asks about changes in job-based insurance coverage, but almost all the changes are negative ones, e.g., is your premium rising, is your deductible increasing, is your plan being discontinued, is spousal coverage being restricted, are fewer types of medical care being covered? (Only one positive change is asked about: whether the plan is expanding to cover more types of medical care. And interestingly, more people (21%) answered yes to that question than the 18% who answered yes to the question about fewer types of care being covered.) If all the questions about plan changes are negative and people associate change with ObamaCare then of course it’s going to look like people are blaming ObamaCare for problems. If all the questions had been positive, (e.g., can adult children remain on my plan longer, is spousal coverage being increased, are preventive services being covered with no co-pay?) then the story would have to say people are crediting ObamaCare for the changes
  • A significant macro story is that medical inflation is decreasing. In facts, medical inflation was lower last year than it’s been in 50 years. Maybe the poll should have asked about the relationship of that with ObamaCare. That could have captured some the subtleties beyond just “is your premium rising?” Maybe the story should have highlighted the fact that 30 percent of people in the poll said their premiums were not increasing or made some comparison to prior years

Bottom line: sloppy and irresponsible reporting on the part of the AP.

photo credit: HonestReporting.com via photopin cc

By David E. Williams of the Health Business Group.

Does ObamaCare really depend on the young?

Health Law’s Success Rests on the Young” is the headline on a front page Wall Street Journal article today. The Journal’s Op/Ed pages have been hopelessly reactionary for decades, but it’s only recently that the news section has started to become polluted with bias.

The article makes it seem as though ObamaCare’s survival depends on 20-something’s signing up for health insurance to pay for all the old, sick people out there. The article also points to Portland, OR to demonstrate that subsidies for those with low incomes will be lower than expected and thus will discourage people from signing up. The implication is that young adults won’t sign up for health insurance because it will be cheaper to pay the penalty for violating the mandate than to buy insurance.

The article includes a balanced view if you look carefully, but t de-emphasizes a number of important points:

  • Penalties may be low at first, but they go up by a factor of 4x over the first three years starting in 2014. So even if it seems worthwhile to pay the penalty at first, that calculus will change over time
  • The reason subsidies are lower than expected is because some insurance companies are being more aggressive than expected in offering low-priced plans. Those low prices are available to all –whether they are eligible for subsidies or not– and I expect people to choose those inexpensive plans. Contrary to what critics expected/hoped for, prices on the exchanges will be aggressively low
  • The exchanges are only one of the ACA’s mechanisms for offering health insurance to young adults. Everyone can stay on their parents’ plan till age 26, small employers will receive subsidies for coverage, and Medicaid eligibility will be expanded. It’s a real stretch to assert that those who aren’t covered by any of these mechanisms are the key to the law’s success