Thus far, the Mayans have been proven wrong...and so (thus far) have Republicans. Both their professed fears of doom and universal collapse have failed to come to pass. December 21st came and went, and the sun came up the next day (which DID cause me to rush my Christmas shopping, since I'd put it off, just in case), and Barack Obama was re-elected serve a second term, and the sun came up after Election Day.
Those who had been living in political denial for the past couple years woke up after the election to find that The Affordable Care Act, which they'd been hoping Mitt Romney would make go away, was going to have to be implemented, after all. And among the biggest challenges entailed in implementing the law is developing and rolling out the electronic marketplaces called health exchanges in time to meet a federally-imposed deadline of January 1st, 2014...which, you might notice, is now less than a year away.
Doing that, it would seem, will be a tad more difficult than the experts might have expected.
First, as of December, 2012, only 19 states have introduced or passed legislation authorizing the formation of state-run exchanges. Only seven of these states have elected to develop an "active purchaser" model, whereby the exchange will negotiate with insurers to develop and market plans through the exchange itself (this type of exchange is modeled after the Connector in Massachusetts,which was the model for the exchange language built into PPACA). Six will serve as a clearinghouse, merely providing information and referrals on plans available to consumers, and another half dozen don't know WHAT they're going to do.
Seven states have elected to go with an as-yet-undefined "partnership exchange" with the federal government, whereby the feds will be doing...some things...and the states will be doing...some other things.
The remaining states have essentially punted to the feds, declining to develop their own exchanges and defaulting to whatever exchange the federal government eventually develops.
(A complete listing of which state is doing what is available from the Kaiser Family Foundation here:http://statehealthfacts.kff.org/comparemaptable.jsp?ind=962&cat=17)
It's no surprise that the majority of states which have chosen not to go forward with health exchanges of their own are headed by Republican governors. And many observers have noted the irony of "small government, state's rights" Republicans opting to default their right to operate and control health insurance regulation in their states (traditionally the states' purview) to the federal government.
But there might be a few good reasons a smart politician might drag his/her feet in setting up an exchange.
First, exchanges would seem to be quite costly to build and maintain. The fed has distributed tens of millions of dollars in grants to states wishing to establish their own exchanges, but has essentially left the cost of operating and maintaining exchanges to the states. In Massachusetts,the annual operating costs for operating the connector would appear to be about $30 million.
Beyond the operating costs, states have a legitimate fear of being stuck with some pretty hefty costs related to subsidizing the extension of coverage for the working poor. PPACA'a proposed subsidies for low-wage participants, and its small business tax credits, are scheduled to expire by 2017. The legislation is silent on what happens after that.
This is a big deal. Consider that the Massachusetts Connector, the only operating prototype, covers about 225,000 people after six years of operation....in a state with a total population of 6.6 million people. Of that number, over 190,000 participants are receiving subsidized coverage. Only 40,000 plan participants are purchasing non-subsidized health plans...and only about 2,500 of those participants are employees of small businesses...in a state with about 139,000 small businesses, which employ 2.7 million people.
(This means that the Connector, after 6 years of operation, has gained a whopping 3.4% total market share, and a market share of about 1/10th of one percent of small business employees...in a state in which purchasing health coverage has been mandatory since 2006...Just sayin'...)
The strong implication is that,when subsidies go away, states will be required either to pick up a gigantic tab, or may be forced to move people off the exchange's rolls and put them...where?
In that light, it might make practical political sense for state leaders to leave the potential downsides to the federal government...even if doing so results in laying the groundwork for a federal "takeover" of the nation's health insurance system, as some fear.
The Massachusetts experience also suggests that an exchange does not solve a lot of problems for small businesses. Absent a meaningful subsidy of some sort, there has been little sign that small businesses can get a better deal on small group coverage through the exchange than they can get in the general marketplace. That is unalloyed bad news, since exchanges will need a LOT of small group participation to grow and maintain any sort of rating integrity.
It'll arguably take a little more than 1/10th of one percent market share to enable that to happen. And of course, the inference is that 99.9% of Massachusetts small businesses are getting a better deal somewhere else.
I think there are a couple other, very important reasons for the difficulty facing the development of working health exchanges. One is that, to be frank, nobody's built a really good one yet. Massachusetts has made enormous (subsidized) investments in technology, infrastructure, and management bureaucracy, which has amounted to hundreds of millions of dollars, AND has had the benefit of national publicity for its efforts...and after all that, has acquired a 3.4% market share. The Connector's annual report is loaded with process metrics, but doesn't even mention that small fact.
And consider that, despite its fairly anemic showing, Massachusetts' experience is a thunderous success compared to the other operating public exchange, in Utah, where the exchange has been utilized by about 2,200 people.
It's hard to be a pathfinder. And for those who follow, it's nice to be able to look to a successful case study to illustrate what you'd like to be when you grow up.
Nonetheless, the feds have committed hundreds of millions of dollars into exchange development. What does success look like? I guess beyond adherence to federal regulations, the feds will know success when they see it.
But the BIG reason we haven't seen more focus on health exchanges is not strictly political: the big health insurers HATE the idea...
Market-leading health insurers are hard at work developing "private exchanges," which are essentially exercises in co-opting the language of health exchanges as they struggle to create software-based platforms and processes for "private label" exchange-type marketing channels.
This is why three big Blue Cross & Blue Shield plans bought a majority stake in Minneapolis-based Bloom Health. It was their intent 1) to keep anybody ELSE fro utilizing the Bloom platform, and 2)to use the Bloom platform/process as their own private fishin' holes....selling their products in their markets, so they could SAY that they were in the exchange business without actually becoming more efficient or transparent, or without risking that their products might be shown in comparison with other health plans.
The fact that Wellpoint/Anthem, which unveiled its Bloom Health portfolio to great fanfare in the fall, only to find that they weren't ready for prime time, ought to give entrepreneurs in the exchange business some comfort. The fact that Anthem struck a deal with the other high-profile "exchange operator," Liazon, creates opportunities for some outside-the-box innovation.
The market leaders won't play a real exchange game until they're forced into it. They have no incentive to do so.
One ought to ask: Who would benefit from a genuine health exchange? Consumers, for one. Health insurers which are not market leaders, for another. And health systems which might benefit from enhanced insurer competition (and a key differentiator against their own health system competition) would be a third.
Let's build a health exchange, okay?...
Friday, January 4, 2013
Thursday, September 20, 2012
First He Was For It, Then He Was Against It, Now He's...Sorta Stuck...
Poor Mitt Romney has had enough trouble these last couple weeks without my help, so I thought I'd hold off for awhile before looking more closely at his latest tap dance around the question of health care reform before sounding off about his disingenuousness. But it's a slow day today, so here goes.
As everyone paying even a LITTLE attention knows, one of the elephants in the room of the Romney campaign has been the little dichotomy between his denunciation of "Obamacare" and the fact that one of his key achievements as Governor of Massachusetts was the development of a health insurance reform plan...which served as the conceptual (if not the political) foundation of many of the insurance reforms found in PPACA. Even though the question of "How can you oppose something you took credit for creating in Massachusetts?" has dogged him since the campaign began, he never had a particularly clear answer.
Then last week, he got himself a little MORE twisted up when he suggested that, eve though he still thinks Obamacare is horrible, and needs to be repealed, there are a few parts of the law he sorta likes. They happen to be the provisions which have already been implemented in the marketplace, most notably the elimination of lifetime maximums on health policies and the extension of family health coverage to dependent kids under age 26 (for which, by the bye, our 23-year-old son is quite grateful).
He was not quite so glib about another PPACA provision: the elimination of pre-existing conditions exclusions. Apparently Governor Romney fully supports the elimination of those exclusions for those who already have health coverage, but not for those whose pre-existing coverage have thus far kept them out of the insurance pool.
Huh?...
Now The Tonight Show's Jay Leno is no investigative journalist. But during Romney's recent appearance of the show, Leno asked the obvious question: "A lot of guys I know, comedians, mechanics, waiters, who don't have health insurance now can't get it because they have some sort of pre-existing health condition. Don't we want to get them coverage?"
Romney's answer was typically maladroit: "Well, of course we want to get as many people covered as possible, but if one day a person shows up with cancer or a heart condition wanting to buy health coverage because they're sick, we want to be able to say, 'We don't play that game here.'"
Game?...
I only have three thoughts to share regarding this latest gaffe by the Republican candidate:
1) In expressing his support for the provisions he did, Romney joins the ranks of those faux-magnanimous insurance companies which pledged, even before the Supreme Court upheld PPACA, that they would not roll back the elimination of lifetime limits and the under-26 dependent provision.
In the insurers' case, it was meant to sound like a concession to the marketplace. It wasn't. The fact is that insurers have already baked the cost of these provisions into their products, and have found that those provisions haven't affected their profitability at all, and MAY have generated more cash for them. I've never known an insurer willingly to give up cash it's already collecting to reduce benefits.
Besides, lifetime limits have always been sort of bogus, and somewhere near six million generally healthy young adults who hadn't previously had health coverage have it now because of that new law...and this is PRECISELY the group which insurers want to cover, because they tend not to use health services very much; they're the "young invincibles" which insurers have wanted in their pools. They have them now, and they ain't giving them up.
For Romney, the concern is political. These are provisions of the law that have proved to be popular. And for all his rhetoric, he knows better than to be seen attacking a benefit which is already helping working families;
2) The arbitrary exclusion of some individuals from health coverage because of pre-existing conditions is one of the key reasons for our perceived health crisis. The use of health conditions to set prices in the small group and individual markets has always been a gimmick designed to benefit insurers.
I've written several times before about my case, which is typical: when my insurer found out from my medical questionnaire that I had a little hypertension (controlled with a medication which costs $3/month), a little gout (controlled with a medication which costs $4/month), and a borderline cholesterol count (also controlled with a $3/month prescription), my premiums TRIPLED over the initial quoted rate, from $600 to $1800/month. There's no excuse for that, except greed.
To be effective, health reform must reach out not just to the young and healthy, but must also provide access to coverage for those who've been excluded, AND provide some rate relief to those who are just getting screwed.
I'm not a big Obama fan. I think PPACA is a case of massive government overreach in many ways. But these insurance reforms represent good policy. Thus far, they've proven not to be costly; in fact, health costs for the last two years have risen only about a third as quickly as in the previous ten (as much a function of a recovering stock market, from which insurers get most of their profits when times are good, so they need to rely less on rates).
And insurers have had many years to see the light and enact some of these common-sense reforms voluntarily, and chose not to do so. Without the new law, it never would have happened.
3) As is the case with so many of his latest gaffes, this is an example of a presidential candidate who, whatever his core beliefs, has abandoned them for the sake of appeasing his rockhead conservative base. Most of the time, I'm guessing even HE doesn't believe what he's saying; he's just saying what his advisers brief him on. Whether on foreign policy, on health care, or on his "47%" gaffe, he's not speaking from his beliefs...he's talking back points he's heard from the people who surround him.
He's getting VERY bad advice. So when his answers sound cagey, or disingenuous, or just eye-poppingly inappropriate ("We don't play that game here"), he's only repeating what's been drilled into him by others. Sad...and scary...
As everyone paying even a LITTLE attention knows, one of the elephants in the room of the Romney campaign has been the little dichotomy between his denunciation of "Obamacare" and the fact that one of his key achievements as Governor of Massachusetts was the development of a health insurance reform plan...which served as the conceptual (if not the political) foundation of many of the insurance reforms found in PPACA. Even though the question of "How can you oppose something you took credit for creating in Massachusetts?" has dogged him since the campaign began, he never had a particularly clear answer.
Then last week, he got himself a little MORE twisted up when he suggested that, eve though he still thinks Obamacare is horrible, and needs to be repealed, there are a few parts of the law he sorta likes. They happen to be the provisions which have already been implemented in the marketplace, most notably the elimination of lifetime maximums on health policies and the extension of family health coverage to dependent kids under age 26 (for which, by the bye, our 23-year-old son is quite grateful).
He was not quite so glib about another PPACA provision: the elimination of pre-existing conditions exclusions. Apparently Governor Romney fully supports the elimination of those exclusions for those who already have health coverage, but not for those whose pre-existing coverage have thus far kept them out of the insurance pool.
Huh?...
Now The Tonight Show's Jay Leno is no investigative journalist. But during Romney's recent appearance of the show, Leno asked the obvious question: "A lot of guys I know, comedians, mechanics, waiters, who don't have health insurance now can't get it because they have some sort of pre-existing health condition. Don't we want to get them coverage?"
Romney's answer was typically maladroit: "Well, of course we want to get as many people covered as possible, but if one day a person shows up with cancer or a heart condition wanting to buy health coverage because they're sick, we want to be able to say, 'We don't play that game here.'"
Game?...
I only have three thoughts to share regarding this latest gaffe by the Republican candidate:
1) In expressing his support for the provisions he did, Romney joins the ranks of those faux-magnanimous insurance companies which pledged, even before the Supreme Court upheld PPACA, that they would not roll back the elimination of lifetime limits and the under-26 dependent provision.
In the insurers' case, it was meant to sound like a concession to the marketplace. It wasn't. The fact is that insurers have already baked the cost of these provisions into their products, and have found that those provisions haven't affected their profitability at all, and MAY have generated more cash for them. I've never known an insurer willingly to give up cash it's already collecting to reduce benefits.
Besides, lifetime limits have always been sort of bogus, and somewhere near six million generally healthy young adults who hadn't previously had health coverage have it now because of that new law...and this is PRECISELY the group which insurers want to cover, because they tend not to use health services very much; they're the "young invincibles" which insurers have wanted in their pools. They have them now, and they ain't giving them up.
For Romney, the concern is political. These are provisions of the law that have proved to be popular. And for all his rhetoric, he knows better than to be seen attacking a benefit which is already helping working families;
2) The arbitrary exclusion of some individuals from health coverage because of pre-existing conditions is one of the key reasons for our perceived health crisis. The use of health conditions to set prices in the small group and individual markets has always been a gimmick designed to benefit insurers.
I've written several times before about my case, which is typical: when my insurer found out from my medical questionnaire that I had a little hypertension (controlled with a medication which costs $3/month), a little gout (controlled with a medication which costs $4/month), and a borderline cholesterol count (also controlled with a $3/month prescription), my premiums TRIPLED over the initial quoted rate, from $600 to $1800/month. There's no excuse for that, except greed.
To be effective, health reform must reach out not just to the young and healthy, but must also provide access to coverage for those who've been excluded, AND provide some rate relief to those who are just getting screwed.
I'm not a big Obama fan. I think PPACA is a case of massive government overreach in many ways. But these insurance reforms represent good policy. Thus far, they've proven not to be costly; in fact, health costs for the last two years have risen only about a third as quickly as in the previous ten (as much a function of a recovering stock market, from which insurers get most of their profits when times are good, so they need to rely less on rates).
And insurers have had many years to see the light and enact some of these common-sense reforms voluntarily, and chose not to do so. Without the new law, it never would have happened.
3) As is the case with so many of his latest gaffes, this is an example of a presidential candidate who, whatever his core beliefs, has abandoned them for the sake of appeasing his rockhead conservative base. Most of the time, I'm guessing even HE doesn't believe what he's saying; he's just saying what his advisers brief him on. Whether on foreign policy, on health care, or on his "47%" gaffe, he's not speaking from his beliefs...he's talking back points he's heard from the people who surround him.
He's getting VERY bad advice. So when his answers sound cagey, or disingenuous, or just eye-poppingly inappropriate ("We don't play that game here"), he's only repeating what's been drilled into him by others. Sad...and scary...
Tuesday, August 28, 2012
What If The Health Care Cost Curve Doesn't (You Should Pardon The Expression) Get Bent?...And A Couple Other Questions
If I were a health care policymaker, I'd probably spend a whole lot more time than most of them do talking with real people who have real, "micro-world" questions which can illuminate the "macro-world" questions which the deep thinkers...well, think about.
Last week I spent a few hours over beers with a few friends who are pretty knowledgeable small business owners. Practical guys, with practical questions. The biggest one was this: Irrespective of the politics of Obamacare, what is the likelihood that some kind of regulatory or market force will actually bend the cost curve down?
Keep in mind that for most small business owners, annual premium increases of 15-25 percent per year have been the norm, not the exception. Even for fairly large small companies, premiums are doubling every five to six years.
I had to tell them the bad news: there's really nothing in the Affordable Care Act which has any concrete potential to reduce the rapidly-escalating price of health coverage, at least in the short to intermediate term.
That's because the Affordable Care Act essentially ignores the principal driver of health care cost increases: provider costs, especially on the hospital side.
Over eighty percent of health costs relate directly to payments to hospitals, physicians, drug and equipment companies, and other providers. And despite the potential promise of some of PPACA's experiments with delivery system reform, the likelihood is that those costs will continue to hyper-accelerate.
There is certainly a tempting target for cost containment: the estimated 210 billion dollars being spent on over-testing and over-treatment.
I wrote a little something about this phenomenon last year (http://polkiananalysis.blogspot.com/2011/10/economicsand-ethicsof-just-being-sure.html). And a recent column in The New York Times (http://well.blogs.nytimes.com/2012/08/27/overtreatment-is-taking-a-harmful-toll/?ref=health&wpisrc=nl_wonk ) expands on the theme.
Twenty to thirty percent of what we spend on health care can be retrospectively labelled as unnecessary. Let's pretend for a moment that, since one person's unnecessary treatment is another person's "do what it takes to help my Mom," only half that percentage is truly wasteful.
Would it/ should it be worth our time to figure out how to cut $100 billion or so per year out of our health expenditures? A reasonable person would say so.
But doctors get paid for how much they do. And while hospitals' primary business is treating disease, they are also in the business of maximizing revenue.
Unless there's a revolutionary (and counter-intuitive, for those revenue-conscious providers) trend toward awarding clinical efficacy versus the volume and intensity of services rendered, the cost curve isn't gonna bend appreciably over the next ten years or so. And until we can get to these root costs, we can expect to see health premiums double or triple over the same period.
What about defined contribution? Won't that have an effect on health costs?
A switch to a defined contribution will certainly do a lot to reduce small employers' cost exposure. But only by shifting the cost burden to employees, and making hyper-inflation their problem.
The myth of defined contribution is that employers will pass along a portion of the savings they experience by capping their own expenditures with their employees in the form of higher wages, which employees might use to pay for their share of health premiums. By and large, this won't happen.
The best example of why not is the proliferation of high-deductible health plans. The myth of HDHP's is that employers would establish partially-employer-funded Health Savings Accounts to enable their workers to cover their deductibles. Only about ten percent of small employers did this; the rest just saved the money.
And while defined contribution models are fine for large, self-insured employers...whose costs are lower to start with, and whose relationships with employees is largely...statistical...small employers tend to have personal relationships with their workers. Most (not all) understand that their employees are only a medical disaster from financial ruin. They see just unloading their problem on their workers not just as worrisome, but as an idea that can jump up and bite them, especially if their employees under-insure or, worse, take the employer contribution and pocket it.
Most small employers will not be subject to the mandate, but most suspect that, in the face of trouble, their employees, or their employees' lawyers, or, worse yet, the IRS, will be calling the business owner first.
My small business owner friends saw defined contribution as a short-term band-aid that simply sets the table for trouble down the road.
Won't health exchanges do something to reduce health costs?
I've written before that, properly organized and operated, health exchanges could do a lot to empower purchasers by aggregating demand and increasing purchasing power through effective administration and negotiation.
Haven't seen too many "active purchaser" exchange models yet. The Massachusetts Connector has certainly improved access for folks in that state, but hasn't had an appreciable effect on price increases.
And as of today, the vast majority of states have yet to begin seriously organizing their health exchanges; in fact, about 26 states have basically refused, for political and budgetary reasons, to consider getting into the exchange business. Most of these "hell, no, we won't go" states have Republican governors and legislatures.
It does strike me, a non-politician, as odd that these state leaders, proclaiming so loudly against federal interference in their health care systems, would default on the development of their own exchanges and create the scenario for a massive federal takeover of their health systems through the formation of a gigantic federal health exchange.
Maybe they're all expecting a Romney victory in November to make this issue go away.
But what if they guess wrong?
That's a damned fine question.
If they guess wrong, and President Obama is re-elected, I expect we'll see the Administration issuing waivers to states to give them more time to build their own exchange plans. So the "drop-dead date" for the formation of health exchanges will slip from January, 2014 to 2015 or later.
None of this should leave small business owners hopeful for long-term price relief any time soon. And yet, despite the confusion, the health insurance environment for small businesses hasn't really changed all that much. After all, if you've been swallowing 15-25 percent per year increases for the last 15 years, can it really get worse?
Last week I spent a few hours over beers with a few friends who are pretty knowledgeable small business owners. Practical guys, with practical questions. The biggest one was this: Irrespective of the politics of Obamacare, what is the likelihood that some kind of regulatory or market force will actually bend the cost curve down?
Keep in mind that for most small business owners, annual premium increases of 15-25 percent per year have been the norm, not the exception. Even for fairly large small companies, premiums are doubling every five to six years.
I had to tell them the bad news: there's really nothing in the Affordable Care Act which has any concrete potential to reduce the rapidly-escalating price of health coverage, at least in the short to intermediate term.
That's because the Affordable Care Act essentially ignores the principal driver of health care cost increases: provider costs, especially on the hospital side.
Over eighty percent of health costs relate directly to payments to hospitals, physicians, drug and equipment companies, and other providers. And despite the potential promise of some of PPACA's experiments with delivery system reform, the likelihood is that those costs will continue to hyper-accelerate.
There is certainly a tempting target for cost containment: the estimated 210 billion dollars being spent on over-testing and over-treatment.
I wrote a little something about this phenomenon last year (http://polkiananalysis.blogspot.com/2011/10/economicsand-ethicsof-just-being-sure.html). And a recent column in The New York Times (http://well.blogs.nytimes.com/2012/08/27/overtreatment-is-taking-a-harmful-toll/?ref=health&wpisrc=nl_wonk ) expands on the theme.
Twenty to thirty percent of what we spend on health care can be retrospectively labelled as unnecessary. Let's pretend for a moment that, since one person's unnecessary treatment is another person's "do what it takes to help my Mom," only half that percentage is truly wasteful.
Would it/ should it be worth our time to figure out how to cut $100 billion or so per year out of our health expenditures? A reasonable person would say so.
But doctors get paid for how much they do. And while hospitals' primary business is treating disease, they are also in the business of maximizing revenue.
Unless there's a revolutionary (and counter-intuitive, for those revenue-conscious providers) trend toward awarding clinical efficacy versus the volume and intensity of services rendered, the cost curve isn't gonna bend appreciably over the next ten years or so. And until we can get to these root costs, we can expect to see health premiums double or triple over the same period.
What about defined contribution? Won't that have an effect on health costs?
A switch to a defined contribution will certainly do a lot to reduce small employers' cost exposure. But only by shifting the cost burden to employees, and making hyper-inflation their problem.
The myth of defined contribution is that employers will pass along a portion of the savings they experience by capping their own expenditures with their employees in the form of higher wages, which employees might use to pay for their share of health premiums. By and large, this won't happen.
The best example of why not is the proliferation of high-deductible health plans. The myth of HDHP's is that employers would establish partially-employer-funded Health Savings Accounts to enable their workers to cover their deductibles. Only about ten percent of small employers did this; the rest just saved the money.
And while defined contribution models are fine for large, self-insured employers...whose costs are lower to start with, and whose relationships with employees is largely...statistical...small employers tend to have personal relationships with their workers. Most (not all) understand that their employees are only a medical disaster from financial ruin. They see just unloading their problem on their workers not just as worrisome, but as an idea that can jump up and bite them, especially if their employees under-insure or, worse, take the employer contribution and pocket it.
Most small employers will not be subject to the mandate, but most suspect that, in the face of trouble, their employees, or their employees' lawyers, or, worse yet, the IRS, will be calling the business owner first.
My small business owner friends saw defined contribution as a short-term band-aid that simply sets the table for trouble down the road.
Won't health exchanges do something to reduce health costs?
I've written before that, properly organized and operated, health exchanges could do a lot to empower purchasers by aggregating demand and increasing purchasing power through effective administration and negotiation.
Haven't seen too many "active purchaser" exchange models yet. The Massachusetts Connector has certainly improved access for folks in that state, but hasn't had an appreciable effect on price increases.
And as of today, the vast majority of states have yet to begin seriously organizing their health exchanges; in fact, about 26 states have basically refused, for political and budgetary reasons, to consider getting into the exchange business. Most of these "hell, no, we won't go" states have Republican governors and legislatures.
It does strike me, a non-politician, as odd that these state leaders, proclaiming so loudly against federal interference in their health care systems, would default on the development of their own exchanges and create the scenario for a massive federal takeover of their health systems through the formation of a gigantic federal health exchange.
Maybe they're all expecting a Romney victory in November to make this issue go away.
But what if they guess wrong?
That's a damned fine question.
If they guess wrong, and President Obama is re-elected, I expect we'll see the Administration issuing waivers to states to give them more time to build their own exchange plans. So the "drop-dead date" for the formation of health exchanges will slip from January, 2014 to 2015 or later.
None of this should leave small business owners hopeful for long-term price relief any time soon. And yet, despite the confusion, the health insurance environment for small businesses hasn't really changed all that much. After all, if you've been swallowing 15-25 percent per year increases for the last 15 years, can it really get worse?
Wednesday, June 6, 2012
Will CO-OPs Bring A Sense Of "Community" Back To Health Care?
Okay, so...
The Supreme Court has upheld the constitutionality of PPACA. And the sun came up the next day.
I don't expect that the Court's decision changed anybody's mind about Obamacare. People who hated it still hate it, and are adjusting their political strategies accordingly. And those who hailed the law still like it.
But only in Washington does passing (or sustaining) a law mean the same thing as solving a problem. With the constitutionality of the law settled (for now, at least), the next focus should be on execution...implementation of some parts of the law that could have a positive impact on the availability of affordable health coverage in a more transparent and competitive market.
And one element of Obamacare which may have the potential to change a few markets is, in effect, an experiment to turn back the clock to a simpler (and vastly less expensive) time, when the health of a community was in the hands of community members themselves.
These experiments are called "Consumer Operated And Oriented Plans," or "co-ops."
Before there was employer-sponsored health coverage, before there were insurance companies, health care was often a community responsibility. The "communities" were church groups, ethnic organizations, or "benevolent societies," self-selecting communities through which members cared for one another. Everybody pitched in a little money, and if any member became ill, the "community" would assist the family in meeting medical expenses.
Those societies began to be replaced in the 1930's by Blue Cross and Blue Shield plans, larger, non-profit mutual insurance companies with Boards selected from among the members. These plans became the vehicles through which, especially after World War II, large employers began to provide health coverage to their workers, with the premiums covered as a substitute for wages, which were frozen for a time after the War.
Relatively few of these not-for-profit entities remain in the market today. The Cross and Shield plans began consolidating in the '90's into corporate giants. The Boards of a number of once-prominent non-profit health plans decided around the same time that their members' interests would be best served by being acquired by larger companies, the proceeds of the sale being used to set up foundations to maintain a sense of "community purpose."
Each step in the evolution of non-profit benevolent societies into corporate giants has moved health plans an additional step or two away from the interests of the member/customer/patient. With few exceptions, health plans are very large, very corporate, and their leaders are very dependent upon meeting the expectations of Wall Street, rather than of "Main Street."
That could begin to change...Maybe...
Thus far, 16 non-profit groups in 16 states have received nearly $1.25 billion in loans to establish non-profit health plans whose governing bodies will be selected from among their members, and whose surplus earnings (if there are any) will be re-invested in the development of improvements to the plans themselves, rather than distributed among stockholders. A complete list of the groups which have received funding is here: http://www.healthcare.gov/news/factsheets/2012/02/coops02212012a.html.
With the issue of PPACA's constitutionality settled, these groups should begin receiving funds to get themselves organized, and to achieve the killer deadline of bringing new, non-profit health plans into their markets by December, 2013, with coverage effective dates of January 1, 2014.
Most of these erstwhile co-ops have already announced their plans to offer plans in co-operation with their states' insurance exchanges...even in states which have yet to act to get into the exchange business.
The non-profits sponsoring these co-ops have considerable expertise, and some presence, in their states' health care and insurance markets, often as Medicare and Medicaid managed care plans. Some have a particular affinity for groups within their states, i.e., targeted markets to serve; the biggest winner is New York's Freelancers Union, which has won $340 million in loans to create plans for self-employed professionals in New York, New Jersey, and Oregon.
All of these groups have pledged to be "not just another insurance company." In many cases, that translates into pay for co-op leaders which is not "excessive." Other than that, plus the composition of their Boards (presumably volunteers), and their pledge to re-invest their surplus earnings, I'm hard-pressed to see what important differentiations will separate them from all those other insurance companies.
Co-ops must still enter into agreements with hospitals, physicians, and other providers, at some cost. Some co-ops are sponsored by existing managed care plans, which see branching out into the private market as a way to augment patient volume. Will those providers expect their privately-insured customers to be treated at about the same rates as their Medicare and Medicaid recipients, or will they expect a higher rate of payment, thus leading to the cost shifts typical of most provider networks?
How will they distribute and sell their products? Will they try to develop networks of agents, and pay them accordingly, or will they take the risk of experimenting with more cost-effective, technology-oriented marketing solutions?
While they may be technically non-profit, presumably the co-ops will still be subject to state premium taxes. They will have to maintain state-mandated reserves. The plans will need to comply with all coverage mandates required by their states.
My sense is that, whatever they may SAY, in real life, co-ops will need to operate very much like real insurance companies in order to compete and succeed in the marketplace. They're going to have to pay providers, sell products to customers, pay claims, and market themselves in states which are already dominated by huge competitors with very deep pockets. A very tall order.
The way for these groups to succeed will be 1) to get some sort of preferential pricing from providers (good luck), 2) keep their administrative ratios under 15%, 3) sell direct via the Web, and 4) use whatever short-term advantages they can produce to create enough critical mass (customers) to strengthen their hands in their continuing dealings with providers who want to get paid.
Co-ops will work best if their Boards see themselves as advocates for their members, and are in a position to negotiate in a constructive, but adversarial way with their providers. AND if their product and pricing mix is attractive enough that their markets view the co-ops as THEIR health plans, working for them. Part of that will be marketing, but a LOT will be execution, for the long term.
A famously aggressive Cleveland hospital CEO once responded to being cut out of a regional PPO network by starting up her health system's own health plan. To attract providers, the plan offered higher levels of reimbursement than the big PPO did. To attract distribution, the plan offered higher commissions. Employees of the health system were required to obtain coverage through the system's own health plan. At first, there was a lot of fanfare, including the CEO's own pronouncement that "any fool can run a health plan." The company soon went bust. Turns out the CEO was right: Any fool CAN run a health plan. But it takes a very special kind of fool to run a health plan right...and for the right reasons: to benefit the members collectively, for the long term...
The Supreme Court has upheld the constitutionality of PPACA. And the sun came up the next day.
I don't expect that the Court's decision changed anybody's mind about Obamacare. People who hated it still hate it, and are adjusting their political strategies accordingly. And those who hailed the law still like it.
But only in Washington does passing (or sustaining) a law mean the same thing as solving a problem. With the constitutionality of the law settled (for now, at least), the next focus should be on execution...implementation of some parts of the law that could have a positive impact on the availability of affordable health coverage in a more transparent and competitive market.
And one element of Obamacare which may have the potential to change a few markets is, in effect, an experiment to turn back the clock to a simpler (and vastly less expensive) time, when the health of a community was in the hands of community members themselves.
These experiments are called "Consumer Operated And Oriented Plans," or "co-ops."
Before there was employer-sponsored health coverage, before there were insurance companies, health care was often a community responsibility. The "communities" were church groups, ethnic organizations, or "benevolent societies," self-selecting communities through which members cared for one another. Everybody pitched in a little money, and if any member became ill, the "community" would assist the family in meeting medical expenses.
Those societies began to be replaced in the 1930's by Blue Cross and Blue Shield plans, larger, non-profit mutual insurance companies with Boards selected from among the members. These plans became the vehicles through which, especially after World War II, large employers began to provide health coverage to their workers, with the premiums covered as a substitute for wages, which were frozen for a time after the War.
Relatively few of these not-for-profit entities remain in the market today. The Cross and Shield plans began consolidating in the '90's into corporate giants. The Boards of a number of once-prominent non-profit health plans decided around the same time that their members' interests would be best served by being acquired by larger companies, the proceeds of the sale being used to set up foundations to maintain a sense of "community purpose."
Each step in the evolution of non-profit benevolent societies into corporate giants has moved health plans an additional step or two away from the interests of the member/customer/patient. With few exceptions, health plans are very large, very corporate, and their leaders are very dependent upon meeting the expectations of Wall Street, rather than of "Main Street."
That could begin to change...Maybe...
Thus far, 16 non-profit groups in 16 states have received nearly $1.25 billion in loans to establish non-profit health plans whose governing bodies will be selected from among their members, and whose surplus earnings (if there are any) will be re-invested in the development of improvements to the plans themselves, rather than distributed among stockholders. A complete list of the groups which have received funding is here: http://www.healthcare.gov/news/factsheets/2012/02/coops02212012a.html.
With the issue of PPACA's constitutionality settled, these groups should begin receiving funds to get themselves organized, and to achieve the killer deadline of bringing new, non-profit health plans into their markets by December, 2013, with coverage effective dates of January 1, 2014.
Most of these erstwhile co-ops have already announced their plans to offer plans in co-operation with their states' insurance exchanges...even in states which have yet to act to get into the exchange business.
The non-profits sponsoring these co-ops have considerable expertise, and some presence, in their states' health care and insurance markets, often as Medicare and Medicaid managed care plans. Some have a particular affinity for groups within their states, i.e., targeted markets to serve; the biggest winner is New York's Freelancers Union, which has won $340 million in loans to create plans for self-employed professionals in New York, New Jersey, and Oregon.
All of these groups have pledged to be "not just another insurance company." In many cases, that translates into pay for co-op leaders which is not "excessive." Other than that, plus the composition of their Boards (presumably volunteers), and their pledge to re-invest their surplus earnings, I'm hard-pressed to see what important differentiations will separate them from all those other insurance companies.
Co-ops must still enter into agreements with hospitals, physicians, and other providers, at some cost. Some co-ops are sponsored by existing managed care plans, which see branching out into the private market as a way to augment patient volume. Will those providers expect their privately-insured customers to be treated at about the same rates as their Medicare and Medicaid recipients, or will they expect a higher rate of payment, thus leading to the cost shifts typical of most provider networks?
How will they distribute and sell their products? Will they try to develop networks of agents, and pay them accordingly, or will they take the risk of experimenting with more cost-effective, technology-oriented marketing solutions?
While they may be technically non-profit, presumably the co-ops will still be subject to state premium taxes. They will have to maintain state-mandated reserves. The plans will need to comply with all coverage mandates required by their states.
My sense is that, whatever they may SAY, in real life, co-ops will need to operate very much like real insurance companies in order to compete and succeed in the marketplace. They're going to have to pay providers, sell products to customers, pay claims, and market themselves in states which are already dominated by huge competitors with very deep pockets. A very tall order.
The way for these groups to succeed will be 1) to get some sort of preferential pricing from providers (good luck), 2) keep their administrative ratios under 15%, 3) sell direct via the Web, and 4) use whatever short-term advantages they can produce to create enough critical mass (customers) to strengthen their hands in their continuing dealings with providers who want to get paid.
Co-ops will work best if their Boards see themselves as advocates for their members, and are in a position to negotiate in a constructive, but adversarial way with their providers. AND if their product and pricing mix is attractive enough that their markets view the co-ops as THEIR health plans, working for them. Part of that will be marketing, but a LOT will be execution, for the long term.
A famously aggressive Cleveland hospital CEO once responded to being cut out of a regional PPO network by starting up her health system's own health plan. To attract providers, the plan offered higher levels of reimbursement than the big PPO did. To attract distribution, the plan offered higher commissions. Employees of the health system were required to obtain coverage through the system's own health plan. At first, there was a lot of fanfare, including the CEO's own pronouncement that "any fool can run a health plan." The company soon went bust. Turns out the CEO was right: Any fool CAN run a health plan. But it takes a very special kind of fool to run a health plan right...and for the right reasons: to benefit the members collectively, for the long term...
Tuesday, May 1, 2012
"The Uninsured" Aren't "Them"...They're Us...
A report by the Commonwealth Fund should serve as a reminder that "the uninsured" are not a single population, but instead a diverse group of individuals who, for many different reasons, share one thing in common: for some period of time, they lack health coverage. And when that happens, they're often on their own...not in the "rugged individualist" or "free rider" context often suggested by their critics, but because they're essentially frozen out of the market by current "pre-PPACA" industry practices.
More information on the complete study is available here:http://www.commonwealthfund.org/Publications/Issue-Briefs/2012/Apr/Gaps-in-Health-Insurance.aspx
Commonwealth's study of over 2,300 individuals found that twenty-six percent of Americans went without health insurance for some period of time in 2011. And for the most part,those without coverage lost it because they'd lost their jobs.
Seven out of ten of those who lost their employment-based coverage were uninsured for more than a year. There are a number of reasons.
Because the continuation of coverage provisions under COBRA are mandatory only for companies with more than 20 workers (and often COBRA administrative services aren't available to groups with fewer than 20 employees), one reason for the coverage gap is that a continuation of employer-sponsored coverage isn't available to them at any price.
And even for COBRA-eligible employees, the cost of continuing coverage under COBRA, at the employer's cost plus two percent, makes it too expensive for families whose earning power has already been undermined by a layoff.
The individual market is no solution in most states. Individual policies tend to cost more, and cover less, than do group plans. And because most states still permit insurers to deny applicants for individual coverage due to health concerns, forty-five percent of those who applied for non-group coverage couldn't find any at an affordable cost.
For those who have the money, but are shut out of the market due to health, high-risk insurance pools can be a partial solution. Some states, and the federal government, operate plans to provide subsidized coverage for those with pre-existing conditions which make them ineligible for commercial coverage. The Federal government recently reported that over 50,000 Americans had enrolled in its temporary Pre-Existing Conditions Insurance Plan (PCIP) in its first 18 months of operations.
Participants in the PCIP rang up some $1.45 billion in health costs, largely for big-ticket items such as cancer and COPD. The plan's participants' costs averaged nearly $29,000 per person, and required a direct federal subsidy of some $600 million to augment what they'd paid in in premiums.
Looked at in another way, given that the current average per-employee cost of health coverage is about $13,000 per year, each participant in the PCIP requires at least one premium-paying adult to utilize nothing in order to create a subsidy for one PCIP participant.
In an earlier article (http://polkiananalysis.blogspot.com/2012/02/one-percent-most-of-us-are-headed-for.html), I pointed out that it takes six people paying premiums and using zero coverage to subsidize the costs on each member of the country's one percent of highest utilizers of health services. And it takes three healthy Americans to subsidize the costs of the next highest four percent of utilizers.
In "the olden days," health care coverage was sold on a "community-rated" basis, with an explicit understanding that those who didn't use a lot of health coverage would be paying a little more for their coverage so that those who really needed it could pay a little less.
The market has "evolved" to a point at which sharp dealers in the insurance business have convinced us that the insurance market is an "everyone for himself" market, in which we should pay for what our own coverage costs, with no sense of responsibility for the "community" in which we live and work. And, of course, many insurers have made a tidy buck by finding ways to avoid covering individuals whose needs would require more of a subsidy than their own premiums could cover. This sort of "precision..." dividing up the underwriting world into universes of one...has neither moderated health premiums for everyone nor made coverage more accessible to those who need it.
Instead we've created "ghettos" in which these "high-risk" individuals either receive crappy coverage at high costs, or are forced to do without.
And we demonize "the uninsured" as freeloaders who take advantage of "us..." a classic gambit of "blame the victim."
But increasingly, the uninsured aren't "them." They're us...our neighbors, our family members, our friends...and their families.
I can't speak for the big thinkers, but Ive had the experience of being without work, and of being expected to find $1800 a month for health coverage which my insurer initially offered me for $600 a month, till they found out I had a little high blood pressure and asthma.
It was agonizing to go without, but the monthly premiums were the equivalent of a monthly mortgage payment. We prayed every day that we'd remain healthy, and that our kids wouldn't break a leg playing soccer.
I didn't feel like a freeloader. I was terrified for my family. We were very close to the edge, and a single significant health problem would have driven us into the 40% of Americans whose bankruptcy filings are due to health care expenses. But our insurer's position was, "It costs what it costs. Take it or leave it."
We were lucky to find a job with employer-sponsored benefits eight months later.
I'll never forget that terrible time. But for most of The Deep Thinkers, with their comfy jobs and generous health benefits, that'll probably never be a worry. That makes it easier for them to think of the uninsured as "them."
Maybe a year or two without health coverage for all members of Congress would remind them that they're one of us.
More information on the complete study is available here:http://www.commonwealthfund.org/Publications/Issue-Briefs/2012/Apr/Gaps-in-Health-Insurance.aspx
Commonwealth's study of over 2,300 individuals found that twenty-six percent of Americans went without health insurance for some period of time in 2011. And for the most part,those without coverage lost it because they'd lost their jobs.
Seven out of ten of those who lost their employment-based coverage were uninsured for more than a year. There are a number of reasons.
Because the continuation of coverage provisions under COBRA are mandatory only for companies with more than 20 workers (and often COBRA administrative services aren't available to groups with fewer than 20 employees), one reason for the coverage gap is that a continuation of employer-sponsored coverage isn't available to them at any price.
And even for COBRA-eligible employees, the cost of continuing coverage under COBRA, at the employer's cost plus two percent, makes it too expensive for families whose earning power has already been undermined by a layoff.
The individual market is no solution in most states. Individual policies tend to cost more, and cover less, than do group plans. And because most states still permit insurers to deny applicants for individual coverage due to health concerns, forty-five percent of those who applied for non-group coverage couldn't find any at an affordable cost.
For those who have the money, but are shut out of the market due to health, high-risk insurance pools can be a partial solution. Some states, and the federal government, operate plans to provide subsidized coverage for those with pre-existing conditions which make them ineligible for commercial coverage. The Federal government recently reported that over 50,000 Americans had enrolled in its temporary Pre-Existing Conditions Insurance Plan (PCIP) in its first 18 months of operations.
Participants in the PCIP rang up some $1.45 billion in health costs, largely for big-ticket items such as cancer and COPD. The plan's participants' costs averaged nearly $29,000 per person, and required a direct federal subsidy of some $600 million to augment what they'd paid in in premiums.
Looked at in another way, given that the current average per-employee cost of health coverage is about $13,000 per year, each participant in the PCIP requires at least one premium-paying adult to utilize nothing in order to create a subsidy for one PCIP participant.
In an earlier article (http://polkiananalysis.blogspot.com/2012/02/one-percent-most-of-us-are-headed-for.html), I pointed out that it takes six people paying premiums and using zero coverage to subsidize the costs on each member of the country's one percent of highest utilizers of health services. And it takes three healthy Americans to subsidize the costs of the next highest four percent of utilizers.
In "the olden days," health care coverage was sold on a "community-rated" basis, with an explicit understanding that those who didn't use a lot of health coverage would be paying a little more for their coverage so that those who really needed it could pay a little less.
The market has "evolved" to a point at which sharp dealers in the insurance business have convinced us that the insurance market is an "everyone for himself" market, in which we should pay for what our own coverage costs, with no sense of responsibility for the "community" in which we live and work. And, of course, many insurers have made a tidy buck by finding ways to avoid covering individuals whose needs would require more of a subsidy than their own premiums could cover. This sort of "precision..." dividing up the underwriting world into universes of one...has neither moderated health premiums for everyone nor made coverage more accessible to those who need it.
Instead we've created "ghettos" in which these "high-risk" individuals either receive crappy coverage at high costs, or are forced to do without.
And we demonize "the uninsured" as freeloaders who take advantage of "us..." a classic gambit of "blame the victim."
But increasingly, the uninsured aren't "them." They're us...our neighbors, our family members, our friends...and their families.
I can't speak for the big thinkers, but Ive had the experience of being without work, and of being expected to find $1800 a month for health coverage which my insurer initially offered me for $600 a month, till they found out I had a little high blood pressure and asthma.
It was agonizing to go without, but the monthly premiums were the equivalent of a monthly mortgage payment. We prayed every day that we'd remain healthy, and that our kids wouldn't break a leg playing soccer.
I didn't feel like a freeloader. I was terrified for my family. We were very close to the edge, and a single significant health problem would have driven us into the 40% of Americans whose bankruptcy filings are due to health care expenses. But our insurer's position was, "It costs what it costs. Take it or leave it."
We were lucky to find a job with employer-sponsored benefits eight months later.
I'll never forget that terrible time. But for most of The Deep Thinkers, with their comfy jobs and generous health benefits, that'll probably never be a worry. That makes it easier for them to think of the uninsured as "them."
Maybe a year or two without health coverage for all members of Congress would remind them that they're one of us.
Tuesday, April 3, 2012
President Obama DARES Supreme Court To Throw Out PPACA...Who's Advising This Guy?...
I've long believed that if we held conversations only about what we knew, and not what we thought, those conversations would be a lot shorter.
So I was going to keep my big trap shut rather than join the chorus of talking heads and partisans of both persuasions about the possible outcome of the Supreme Court's review of PPACA's constitutionality.
But then The President goes and does something really, really dumb...
In remarks yesterday, President Obama declared that for the Justices to overturn PPACA on constitutional grounds would be a new high water mark for judicial activism. And that nine unelected judges shouldn't be permitted to overturn a law which had been enacted by a duly-elected Congress.
THEN he said that, since the linchpin of PPACA is the individual mandate, invalidating the mandate would essentially invalidate the law.
Set aside for a moment that, as my Mom would often comment, "What do you EXPECT the guy to say?". He is, after all, defending what he sees as the hallmark of his term.
But I'm astonished at the politically maladroit nature of his speech, and what those remarks imply about the nature and quality of the advice Obama is receiving from his handlers.
First, while the First Sports Fan is undoubtedly familiar with the term "a win is a win is a win," it's very clear to those of us at the grass roots that the passage of PPACA was a narrow partisan exercise. The law passed by one vote...hardly (you should pardon the expression)a mandate.
Second, there's growing evidence that, even though many Americans (seniors, dependent children and young adults, those with pre-existing health conditions whose coverage might otherwise be discontinued) have benefited significantly from the early enactment of provisions of the law, PPACA remains quite unpopular with voters. Perhaps because there hasn't been any REAL debate on the law's merits. The Administration has done a lousy job of making its case in the court of public opinion, instead banking on the smug position that once people understand how great the law is, they'll support it. I don't see that happening, do you?...At least not in the two years since its passage.
Then, to substance: Irrespective of whether the individual mandate was initially a trope of conservatives, it is just that: a trope, a commonly-stated idea which has been adopted as truth, despite there being little evidence to support it.
The mandate was a political tool, a sop to liberals who were seeking a "public option" for health coverage. Despite its being lionized on the left and vilified on the right, I've seen nothing from a credible third party which suggests that the economics of a mandate would lead to lower utilization of services or less cost-shifting from the uninsured to the insured. I've written about this before, here: http://polkiananalysis.blogspot.com/2011/01/what-difference-does-mandate-make.htmlt
My objection to the mandate has nothing to do with liberty. It's that the mandate will not achieve the economic goal it's been enacted to achieve, and that the enactment of the mandate will blow the lid off premiums, since the cost of coverage will no longer matter; the government says you have to have coverage, not that coverage needs to be affordable.
Finally, there's the issue of "severability." Virtually every piece of legislation incorporates a provision which states that parts of the law might be changed without invalidating the rest of the law.
What GENIUS in the Administration decided to leave severability language out of PPACA? I hope he or she is no longer employed. I'm sure it sounded like a swell idea at the time; "This way, if anybody decides to attack a component of the law they don't like, we can get right up in their faces and say, 'Oh yeah?...Well, just TRY to toss that provision out. You can't do that without throwing out the whole thing'."
And what GENIUS said, "That seems like a GREAT idea!"?
Even with all that, The President KNOWS the Supreme Court has essentially three options: they can maintain the entire law as constitutional; they can throw out the mandate and a couple related provisions and let the rest of the law stand; or they can toss the whole thing out.
Seems to me The President has DARED the Court to throw the whole law out the window, by making the political (not the economic) case that without the mandate the rest of the law can't stand.
And they might just accommodate him, and use his own words against him.
What do I THINK is going to happen? I think the Court will toss out the mandate, plus guaranteed issue and community rating, preserve those elements of the insurance reforms which have already taken effect (since, theoretically, the associated costs have already been baked into their rates, and say it's too early to make judgments on the rest of the law, since most of the provisions have yet to be enacted.
What do YOU think is going to happen, and what facts do you use to support your position?
So I was going to keep my big trap shut rather than join the chorus of talking heads and partisans of both persuasions about the possible outcome of the Supreme Court's review of PPACA's constitutionality.
But then The President goes and does something really, really dumb...
In remarks yesterday, President Obama declared that for the Justices to overturn PPACA on constitutional grounds would be a new high water mark for judicial activism. And that nine unelected judges shouldn't be permitted to overturn a law which had been enacted by a duly-elected Congress.
THEN he said that, since the linchpin of PPACA is the individual mandate, invalidating the mandate would essentially invalidate the law.
Set aside for a moment that, as my Mom would often comment, "What do you EXPECT the guy to say?". He is, after all, defending what he sees as the hallmark of his term.
But I'm astonished at the politically maladroit nature of his speech, and what those remarks imply about the nature and quality of the advice Obama is receiving from his handlers.
First, while the First Sports Fan is undoubtedly familiar with the term "a win is a win is a win," it's very clear to those of us at the grass roots that the passage of PPACA was a narrow partisan exercise. The law passed by one vote...hardly (you should pardon the expression)a mandate.
Second, there's growing evidence that, even though many Americans (seniors, dependent children and young adults, those with pre-existing health conditions whose coverage might otherwise be discontinued) have benefited significantly from the early enactment of provisions of the law, PPACA remains quite unpopular with voters. Perhaps because there hasn't been any REAL debate on the law's merits. The Administration has done a lousy job of making its case in the court of public opinion, instead banking on the smug position that once people understand how great the law is, they'll support it. I don't see that happening, do you?...At least not in the two years since its passage.
Then, to substance: Irrespective of whether the individual mandate was initially a trope of conservatives, it is just that: a trope, a commonly-stated idea which has been adopted as truth, despite there being little evidence to support it.
The mandate was a political tool, a sop to liberals who were seeking a "public option" for health coverage. Despite its being lionized on the left and vilified on the right, I've seen nothing from a credible third party which suggests that the economics of a mandate would lead to lower utilization of services or less cost-shifting from the uninsured to the insured. I've written about this before, here: http://polkiananalysis.blogspot.com/2011/01/what-difference-does-mandate-make.htmlt
My objection to the mandate has nothing to do with liberty. It's that the mandate will not achieve the economic goal it's been enacted to achieve, and that the enactment of the mandate will blow the lid off premiums, since the cost of coverage will no longer matter; the government says you have to have coverage, not that coverage needs to be affordable.
Finally, there's the issue of "severability." Virtually every piece of legislation incorporates a provision which states that parts of the law might be changed without invalidating the rest of the law.
What GENIUS in the Administration decided to leave severability language out of PPACA? I hope he or she is no longer employed. I'm sure it sounded like a swell idea at the time; "This way, if anybody decides to attack a component of the law they don't like, we can get right up in their faces and say, 'Oh yeah?...Well, just TRY to toss that provision out. You can't do that without throwing out the whole thing'."
And what GENIUS said, "That seems like a GREAT idea!"?
Even with all that, The President KNOWS the Supreme Court has essentially three options: they can maintain the entire law as constitutional; they can throw out the mandate and a couple related provisions and let the rest of the law stand; or they can toss the whole thing out.
Seems to me The President has DARED the Court to throw the whole law out the window, by making the political (not the economic) case that without the mandate the rest of the law can't stand.
And they might just accommodate him, and use his own words against him.
What do I THINK is going to happen? I think the Court will toss out the mandate, plus guaranteed issue and community rating, preserve those elements of the insurance reforms which have already taken effect (since, theoretically, the associated costs have already been baked into their rates, and say it's too early to make judgments on the rest of the law, since most of the provisions have yet to be enacted.
What do YOU think is going to happen, and what facts do you use to support your position?
Friday, February 3, 2012
The One Percent Most Of Us Are Headed For Eventually
A recent Federal study makes perfectly clear the massive subsidies baked into our public and private insurance systems resulting from an inescapable fact: demographics.
Most people know this stuff, but it's good to be reminded (I found it interesting, anyway).
The Agency For Healthcare Research And Quality got some headlines recently regarding its review of national health care expenditures distributed by demographic group (if you's like the whole thing, go here:http://meps.ahrq.gov/mepsweb/data_files/publications/st354/stat354.shtml). The major findings:
---In 2009, the top one percent of those utilizing health care services consumed nearly 22% of the value of health care services (20.2%) in 2008, for a mean expenditure of $90,061;
---In 2008 and 2009, the top five percent of utilizers consumed 49% of the value of services, with mean expenditures of $35,829;
---The top 10 percent of utilizers incurred 63.6% of costs in 2008, and;
---The bottom FIFTY PERCENT of utilizers incurred about THREE PERCENT of expenditures in the same period.
---The people most likely to be in the top ten percent are over 45, and covered by some form of public or private insurance. And once you're in, there's nearly a 50% chance you'll be a top ten percenter for a long time...nearly a 60% chance if you're a woman.
These findings are relatively consistent with research conducted annually since 2002. So the distribution is pretty constant. If you're interested in more detail and subtlety than I'm capable of here, you should look at the whole briefing.
The thing I find interesting is that the curve hasn't changed much for as long as I can remember.
And the data suggest that, for all the talk about consumer education and empowerment, incentives, wellness, whatever...No matter what we do, about ten percent of our population are going to consume over sixty percent of our health care dollars. Most of them will be older. And those old folks are going to be in the queue for a long time. AND those in the top ten percent are receiving a massive subsidy from the vast majority of health plan participants who are younger and healthier.
I don't use the term "subsidy" as conservative screed. It's a fact of demographics.
The old, sick folks who are receiving significant services today (and, really, at a mean expenditure of $90,000, the number IS significant, but not outrageous) were once, and for a long time, among the younger and healthier cohort. For a generation or more, they were the susidizers. Now they're the subsidized.
At a macro level, this all makes perfect sense. It's perfectly reflective of the notion of shared risk which is (or used to be, at least) the essence of group health coverage.
But I wonder what the implications are for the uninsured population (I think we're back to 47 million). About 6 million dependent kids got absorbed into the system thanks to SCHIP expansions and the new federal mandate on group health plans for kids under 26. About a third of the uninsured are uninsured for 60 days or less; they're in transition. Supposedly about a third are "young invincibles," who don't buy coverage because they consider it expensive or unnecessary.
But the remaining third are problematic. I suspect that a disproportionate share of the remaining population are people with enough health problems that they're either extremely expensive or impossible to insure. With a mean expenditure among the top 5% of users is $35,000, you probably don't need to be THAT sick to qualify for the top ten percent.
It will take more than 20 invincibles paying $350 per month in premiums, and using nothing, to subsidize one member of the top one percent. Even with a mandate, is there that big a group out there?...The numbers don't make sense to me.
Most people know this stuff, but it's good to be reminded (I found it interesting, anyway).
The Agency For Healthcare Research And Quality got some headlines recently regarding its review of national health care expenditures distributed by demographic group (if you's like the whole thing, go here:http://meps.ahrq.gov/mepsweb/data_files/publications/st354/stat354.shtml). The major findings:
---In 2009, the top one percent of those utilizing health care services consumed nearly 22% of the value of health care services (20.2%) in 2008, for a mean expenditure of $90,061;
---In 2008 and 2009, the top five percent of utilizers consumed 49% of the value of services, with mean expenditures of $35,829;
---The top 10 percent of utilizers incurred 63.6% of costs in 2008, and;
---The bottom FIFTY PERCENT of utilizers incurred about THREE PERCENT of expenditures in the same period.
---The people most likely to be in the top ten percent are over 45, and covered by some form of public or private insurance. And once you're in, there's nearly a 50% chance you'll be a top ten percenter for a long time...nearly a 60% chance if you're a woman.
These findings are relatively consistent with research conducted annually since 2002. So the distribution is pretty constant. If you're interested in more detail and subtlety than I'm capable of here, you should look at the whole briefing.
The thing I find interesting is that the curve hasn't changed much for as long as I can remember.
And the data suggest that, for all the talk about consumer education and empowerment, incentives, wellness, whatever...No matter what we do, about ten percent of our population are going to consume over sixty percent of our health care dollars. Most of them will be older. And those old folks are going to be in the queue for a long time. AND those in the top ten percent are receiving a massive subsidy from the vast majority of health plan participants who are younger and healthier.
I don't use the term "subsidy" as conservative screed. It's a fact of demographics.
The old, sick folks who are receiving significant services today (and, really, at a mean expenditure of $90,000, the number IS significant, but not outrageous) were once, and for a long time, among the younger and healthier cohort. For a generation or more, they were the susidizers. Now they're the subsidized.
At a macro level, this all makes perfect sense. It's perfectly reflective of the notion of shared risk which is (or used to be, at least) the essence of group health coverage.
But I wonder what the implications are for the uninsured population (I think we're back to 47 million). About 6 million dependent kids got absorbed into the system thanks to SCHIP expansions and the new federal mandate on group health plans for kids under 26. About a third of the uninsured are uninsured for 60 days or less; they're in transition. Supposedly about a third are "young invincibles," who don't buy coverage because they consider it expensive or unnecessary.
But the remaining third are problematic. I suspect that a disproportionate share of the remaining population are people with enough health problems that they're either extremely expensive or impossible to insure. With a mean expenditure among the top 5% of users is $35,000, you probably don't need to be THAT sick to qualify for the top ten percent.
It will take more than 20 invincibles paying $350 per month in premiums, and using nothing, to subsidize one member of the top one percent. Even with a mandate, is there that big a group out there?...The numbers don't make sense to me.
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