The Future of Health Policy After Obamacare
Consumer Power Report #414
As we all know, when President Barack Obama sold his health care law to the American people, he sold it to them primarily on the basis of cost. He did this because the polling was so unanimous: People weren’t demanding massive increased regulation of the insurance marketplace to achieve any particular moral goal about coverage levels or anything of the sort – the vast majority of Americans just cared that their health insurance premiums were too high. So Obama made the case for his law based not on increasing coverage, but on decreasing costs – and along the way, he promised no one would lose their doctor or their plan, or see worse coverage because of his law. In each case, his argument was in line with the polling data on what the American people wanted.
But what about making the case for health policy reforms in the post-Obamacare era? For most center-right health policy experts and opinion-makers, the assumption has taken hold that coverage levels must be sustained or even increased under any comparable reform. They believe the argument in favor of universal coverage has been lost, and that any plan that kicks people off of an entitlement program is doomed to fail politically.
This is an assumption held by most people in Washington and the media. Here’s an example from an unnamed GOP aide:
“If you want to say the further and further this gets down the road, the harder and harder it gets to repeal, that’s absolutely true,” the aide said. “As far as repeal and replace goes, the problem with replace is that if you really want people to have these new benefits, it looks a hell of a lot like the Affordable Care Act. ... To make something like that work, you have to move in the direction of the ACA. You have to have a participating mechanism, you have to have a mechanism to fund it, you have to have a mechanism to fix parts of the market.”
But I wonder how accurate this frame is. Post-Obamacare polling data on this question are lacking, but given the behavior of so many individuals and entities in reaction to Obamacare it’s possible the bulk of Americans still hold the same views they did prior to the law’s passage: they want to retain their current plans and they dislike disruption in their insurance experience, but most of all, they want lower costs for themselves, not broader coverage for everybody else. And as we all know, on that count, Obamacare has been an unmitigated failure, as Scott Gottlieb notes:
Earlier today I reported that health insurance premiums are showing the sharpest increases perhaps ever according to a survey of brokers who sell coverage in the individual and small group market. Morgan Stanley’s healthcare analysts conducted the proprietary survey of 148 brokers. The April survey shows the largest acceleration in small and individual group rates (for renewing health plans) in any of the 12 prior quarterly periods when the regular analysis has been conducted. The average increases for the present quarter are in excess of 11% in the small group market and 12% in the individual market, where consumers purchase coverage directly from health plans. Some states show increases 10 to 50 times that amount. The analysts conclude that the “increases are largely due to changes under the ACA.”
This coverage vs. cost debate is going to be tested in 2016 in a major way as Republican presidential candidates propose their favored strategies. Last week, Louisiana Gov. Bobby Jindal released his replacement plan. The FAQ is here. Whether Jindal decides to run for president or not, his plan represents a bet that the American people still care more about cost than they do about the promise of increased coverage. Phil Klein weighs in:
Under Jindal’s proposal, Obamacare would be replaced with a system that equalizes the tax treatment of health insurance. Instead of merely giving tax advantages to those who obtain insurance through their employers, the Jindal plan would create a standard deduction for health insurance for all taxpayers. His plan also allocates $100 billion over a decade for grants to states if they agree to set up a program to guarantee coverage for those with pre-existing conditions and drive down premiums. Additionally, the plan would return some money to states known as Disproportionate Share Hospital Payments – which were slashed as part of Obamacare – and states would have to direct the funding toward expanding health insurance. He said there would be more than enough money to finance the grants out of the savings generated by other elements of his plan. … Though many elements of the plan are ones that conservatives have advocated in the past, the question now facing Republicans is whether the implementation of the health care law – specifically the fact that there are now millions more people receiving government-subsidized insurance and Medicaid – changed the policy calculus.
I’m unsure where Jindal’s proposal will fall in the spectrum of replacement plans advocated in the 2016 cycle, but it seems significant he would decide to go this route when it comes to one particular point of comparison. When it comes to the expansion of Medicaid pursued so vigorously by Chris Christie and John Kasich, many on the right believe such expansions of the entitlement state to be eternal and unchallengeable in the court of public opinion. But the subtext of what Jindal is doing here indicates his position that this is not the case – that rolling back such entitlement expansions is key to any conservative reform, rather than getting into a back and forth with the left on who is more generous.
In making the case for his plan, Jindal repeatedly returned to the point that a bidding war with the Democrats is impossible to win within the arena of entitlement policy: They will always promise one dollar more to one more person. The favored strategy for winning that argument is going to be something voters will have to decide.
-- Benjamin Domenech
IN THIS ISSUE:
Over at the newly launched vox.com, Sarah Kliff has a piece attempting to offer an easy explanation of President Obama’s health care law. Kliff is always worth reading on health care policy, but when describing the cost of Obamacare, she writes, “Expanding health coverage to millions of Americans is expensive; it will cost more than $1 trillion over the next decade.” In reality, the Congressional Budget Office estimated this February that the cost would be slightly more than $2 trillion.
It’s important to keep in mind that there are several categories that have been generally cited as representing the cost of Obamacare: the gross cost, the net cost and the deficit effect.
When CBO analysts most recently looked at the gross cost of expanding Medicaid and giving subsidies to individuals to purchase insurance through the new exchanges – the bulk of the law’s spending – they came up with slightly more than $2 trillion for 2015 through 2024.
After deducting some offsets from the law – such as penalty payments from employers and individuals due to insurance mandates – CBO estimated the net cost at nearly $1.5 trillion.
The CBO hasn’t done a standalone deficit analysis on Obamacare since 2012, but at that time, its analysts estimated the law would reduce deficits by $109 billion, once all tax increases, cuts to Medicare and other savings are taken into account.
When referring to the “cost” of Obamacare, the fair thing to do is cite the $2 trillion figure – and no, that isn’t just because it’s a higher number. The gross figure represents how much the federal government will have to spend on expanding coverage through Obamacare, at least according to the CBO. If the government weren’t spending $2 trillion on insurance coverage, that’s money that could be going to reducing the deficit, spending more on infrastructure or a host of other theoretical policies.
SOURCE: Washington Examiner
The hikes – the largest in the past three years, according to Morgan Stanley’s quarterly reports – are “largely due to changes under the [Affordable Care Act],” analysts concluded. Rates have been growing increasingly fast throughout all of 2013, after a period of drops in 2012.
While insurers were hiking premiums since 2012 by smaller amounts, the lead-up to the Obamacare launch has seen the average rate at which premiums are growing fourfold.
The small group market saw a jump from a growth rate of close to 3 percent during Morgan Stanley’s September 2013 survey to just above 6 percent three months later in December – the month before a surge of Obamacare regulations hit insurance companies.
Over the next three months, the rate doubled again to the current average small growth premium growth rate of 12 percent.
Individual policies saw a much starker jump after the Obamacare exchanges launched, in anticipation of the health care law going live in 2014. Morgan Stanley’s September 2013 survey, like the previous three quarters, found a fairly constant growth rate around 2 percent – but in December, the rate had shot up to above 9 percent.
Morgan Stanley’s results echo what consumers are already seeing: the Affordable Care Act’s intensive regulation of the insurance market is driving health care premiums up strikingly.
SOURCE: Daily Caller
It’s far from clear that the NHIS survey is accurate. A much larger survey – this one from the U.S. Census Bureau – indicates that the net proportion of young adults with private health coverage is unchanged since 2008.
The NHIS survey – the one that Sommers cites – uses data from roughly 75,000 to 80,000 individuals of all ages. The Census survey, called the Current Population Survey or CPS, is more than three times larger; the CPS uses a sample of around 100,000 households, or around 250,000 individuals.
... [T]he Census’ numbers are somewhat different from those of the Centers for Disease Control. In particular, the Census data indicates a far smaller spike in uninsured young adults during the Great Recession. (One minor caveat is that the Census survey breaks out the 18–24 age group instead of the 19–25 group.) You’ll also notice that the Census survey is less noisy than the CDC data – an indication that it is likely to be more accurate.
Using Sommers’ preferred baseline of 2010, the proportion of young adults with private health coverage has increased by 2.1 percentage points, from 58.4 percent to 60.5 percent. Hence, between 2012 and 2010, according to the Census, the number of young adults with private health coverage increased by between 626,000 (on a 2010 population base) and 630,000 (on a 2012 population base).
And if you use the 2008 baseline, as I noted up above, the proportion of young adults with private coverage is, on a net basis, unchanged. It was 60.5 percent in 2008, and 60.5 percent in 2012.
Shortly after Mary West bought health insurance, she realized there was a problem.
For years, the Spartanburg resident was treated by a doctor at Spartanburg Regional Healthcare System.
Now that she has a shiny new health insurance card in her pocket, she will have to find somewhere else to receive care.
“I have to find a different health care provider,” she said. “It’s frustrating.”
West, who struggles with diabetes and high blood pressure, was a client at AccessHealth, a non-profit that links lower income patients to affordable options. Through AccessHealth, she was seeing a primary care doctor at Spartanburg Regional.
Then, she bought an insurance plan via healthcare.gov.
She chose Consumers’ Choice, one of three insurance providers with plans on the exchange. BlueCross BlueShield (which has two plans) and Coventry, which was acquired by insurance giant Aetna last year, are the other two. Consumers’ Choice has sold more plans than any other provider on the marketplace, according to a company spokesperson.
What West learned after she bought insurance caught her by surprise.
“Consumers’ Choice (representatives) told me I could go to Regional, but I was going to have to pay out of pocket,” West said.
Of the insurance providers with plans for sale on healthcare.gov, Spartanburg Regional has a contract only with Coventry. It will accept patients with the other plans, but those patients must pay out-of-pocket expenses.
Spartanburg Regional did not respond to questions about why it contracts only with Coventry, whether it is losing patients and about the need for patients it has served for years to go elsewhere.
Spokeswoman Maria Williamson did issue the following statement: “Spartanburg Regional Healthcare System is committed to helping patients navigate the complexities of health plans.” Williamson said there is a phone line patients can call with questions they may have regarding their health plans. She said that while the hospital is currently contracted with Coventry, it is in negotiations with the other providers. The extent of the negotiations is unclear.
SOURCE: Spartanburg Herald-Journal
The federal agency that runs Medicare has reversed at least some proposed cuts to private Medicare Advantage plans – the second time in two years that insurers have persuaded the agency to abandon cuts.
The Centers for Medicare and Medicaid Services said Monday it would turn a roughly 2 percent cut first proposed in February into a 0.4 percent payment increase for Medicare Advantage plans.
Insurers, however, have said the proposed cut was much bigger – closer to 6 percent. They argued that payment reductions would cause plans to either cut benefits or raise premiums.
The insurance industry lobbied hard to reverse the proposed cuts, corralling supportive statements from more than 270 members of Congress including a slew of Democrats.
Insurers successfully turned last year’s proposed cut into a payment increase, and were hoping to repeat that lobbying win this year.
Roughly 30 percent of Medicare beneficiaries – about 16 million seniors – use the privately administered Medicare Advantage plans. The program continues to grow, despite the Affordable Care Act’s cuts. Enrollment rose in 2014 to 15.9 million – roughly a 9 percent increase from the year before, according to a new analysis from the consulting firm Avalere Health.
HOSPITALS VS. COMMUNITY HEALTH CENTERS
For a quarter-century, Mary’s Center, a community health center in Adams Morgan, has served patients too poor to be treated elsewhere. Like many other safety-net providers, which are required by the government to treat patients regardless of their ability to pay, the center has struggled constantly for money.
So officials were looking forward to the opening of the new health insurance exchanges created by the Affordable Care Act: More patients with coverage would bolster the bottom line. To attract more young professionals and families, they decided to offer walk-in services for problems such as strep throat and sprained ankles.
But in November, regional hospital giant MedStar Health opened a pair of clinics two blocks away offering just those services – and wide-screen TVs, to boot – so Mary’s Center dropped its plans. It shelved proposals to offer radiology services, because MedStar was providing them. And then it began losing patients and doctors to MedStar …
The tension is an unintended consequence of the health-care law, which has set off an intense competition for a growing number of privately insured patients, who tend to be the best-paying customers. Under the law, thousands of people in the Washington area and millions across the country are getting coverage for the first time. That has prompted a variety of health providers to move into neighborhoods that were once the exclusive turf of community health centers, which are designed primarily for low-income patients.
SOURCE: Washington Post
Bottom Line: Individuals posing as patients covered by private insurance were more likely to secure a new-patient appointment with a primary care physician compared to individuals posing as patients covered by Medicaid or uninsured.
How the Study Was Conducted: The authors sought to estimate a baseline for primary care access before the ACA coverage expansions took effect in January 2014. Trained field staff called primary care offices in Arkansas, Georgia, Illinois, Iowa, Massachusetts, Montana, New Jersey, Oregon, Pennsylvania and Texas to ask about making a new patient appointment between November 2012 and April 2013. The callers posed as nonelderly adults with either private insurance, Medicaid or no insurance. A total of 12,907 calls were made to 7,788 primary care practices between November 2012 and April 2013.
Results: Across the 10 states, 84.7 percent of the callers who said they had private insurance were able to get an appointment, as were 57.9 percent of callers claiming to have Medicaid coverage. Appointment rates were 78.8 percent for uninsured patients offering full cash payment but only 15.4 percent if the payment required at the time of the visit was $75 or less. Median (midpoint) wait times ranged from between five and eight days for private and Medicaid callers. About 75 percent of callers in both those patient groups were able to get a new-patient appointment in less than 2 weeks.