Mar
7

ACA Deathwatch – (some) Republicans reveal their bill

Good morning all – it’s going to be a busy day in health reform land – so here’s the latest.

Republicans have released their long-secret healthcare plans; don’t get all excited as it’s going nowhere, mostly because Congressional Republicans aren’t all behind it.

This legislation will have to pass the House and Senate.  It will not pass the Senate as is, because four Republican Senators have publicly stated they will not vote for the bill due to concerns over Medicaid coverage.  Three other Republican Senators have expressed concern with the cost of the bill, and appear reluctant to vote in favor.

For the bill to pass, at least 7 Democrats would have to get behind it- which is highly unlikely.

Republicans will not ask CBO to score the bill – thus we don’t know what the impact on federal deficits would be.  There’s also no estimate of how many would gain or lose insurance.

And, Freedom Caucus members in the House are denigrating the bill as “Obamacare Lite”, demanding a “clean repeal” instead of a replacement.

So, this is mostly an academic exercise, but does provide a starting point for the GOP.  Here are the key points from the bills, with my quick take appended:

  • Eliminates subsidies, replacing them with age-based tax credits ranging from $2000 to $4000
    MCM – this does little to help lower-income Americans; the current subsidies haven’t been enough to drive participation, so these lower amounts won’t do much.  Also, these aren’t income-based, so it amounts to a giveaway to wealthier Americans who don’t need the subsidy. UPDATElate change to the bill adds income levels that would change credits.
  • Eliminates premium-support and deductible/copay funding 
    MCM – these subsidies help poorer Americans pay for deductibles; eliminating them is a major concern of insurers, and several insurers have said they will immediately move to end coverage without the subsidies
  • Roll back Medicaid expansion, capping payments to states
    MCM – Anathema to many GOP Governors and several Senators from expansion states.
  • Delays the Cadillac Tax
    MCM – this would reduce tax receipts, leading to higher deficits
  • Ends most of tax provisions of ACA, reducing taxes to wealthiest Americans
    MCM – this will result in higher federal deficits, a key issue with at least three R Senators
  • Eliminates the individual mandate requirement and tax penalties for failure to maintain coverage
    MCM – this would likely reduce the number of young members who subsidize older and sicker people, leading to higher costs for older members.
  • Requires people to maintain coverage or be subject to a 30 percent penalty.
    MCM – Many would likely face this penalty as 24%+ of people 26-64 have a pre-existing condition, and those who lose employer-based coverage would have a tough time paying the entire premium themselves without a job
  • Ends all federal funds to Planned Parenthood
    This troubles some Republicans as PP provides a lot of healthcare to lower-income women.

The legislation is exposing splits among and between Republicans on ACA and health reform.  Republicans opposed ACA, but for diverse reasons; costs too high, mandate, tax provisions, Planned Parenthood.

But there is no unity around a solution.  It’s easy to rally opposition to a complex issue; many Democrats have been pointing out problems with ACA for years. It’s far harder to come up with a new solution because everyone has different priorities and ideologies.

What does this mean for you?

The ACA Deathwatch clock moved forward a bit – but not much…


Feb
28

ACA Deathwatch: Further and further away

The hands of the Deathwatch Clock have been moving back for some time now, signaling that your reporter believes the chances for ACA repeal have steadily receded.

The reason is clear – killing ACA would be politically devastating for Republicans, especially Republicans in vulnerable election districts. Two months ago I predicted ACA would not be repealed due to the political cost; if anything I feel more strongly today.  Here’s why.

  1. The President has acknowledged healthcare is enormously complicated.  Who knew? of course, MCM’s faithful readers knew…
  2. Governors could not come up with any consensus on what a replacement plan would look like, components thereof, funding, or even how to treat Medicaid.
  3. There is no consensus between Republican Congresspeople or Senators, with the Senate’s key leadership expressing notable reluctance to repeal without an agreed-upon replacement plan ready for a vote.
  4. Democratic Senators are – so far – standing unified in their opposition to repeal/replace.  Without at least 8 Democrats, a replacement is a non-starter.

So, what’s going to happen?

Here, in order of likelihood, are my best guesses.  I reserve the right to change the order based on future developments – or the lack thereof.

  • Minor tweaking
    Republicans will futz around with the mandate, premium supports, Medicaid funding, and a few other less-important aspects, call it a huge improvement, and be done. Dems will support these changes, as they’ve been trying to get their R colleagues to do this for years.
  • Nothing
    Attempts to tweak ACA will come to naught as the House Freedom Caucus and arch-conservatives in the Senate will refuse to do anything until their party delivers on its campaign promises to “rip it out root and branch”.
  • Bigger tweaking
    Remember – ACA includes major changes to Medicare reimbursement, medicaid expansion, the individual mandate, a variety of taxes and fees, medical education funding, and on and on.  It does NOT lend itself to big tweaks, but some Republicans are hellbent on doing whatever they can that doesn’t require any Democrats to support it.  For example, use reconciliation rules to block grant or per-capita cap Medicaid

When will this occur?

Next year is looking more and more likely, however insurers selling via the Exchanges will need some assurances within a month if they are going to feel any degree of comfort in setting rates.

Those assurances are anathema to the Freedom Caucus, so we may see a fist fight between that faction and more centrist Republicans in the House.  The centrists will win that fight.

So, expect no practical changes to ACA thru the end of 2018.  There will be much window-dressing as Republicans seek to show voters that they delivered on their promises, but it will be just that – window-dressing.

What does this mean for you?

Likely no major changes till 1/1/2019 – if then.


Feb
22

ACA Deathwatch: Two Immutable Truths

Two immutable truths were behind much of ACA’s original construction. These same truths are giving Republicans seeking to repeal/replace major heartburn.

First, healthcare is the single largest part of America’s economy.  One out of every six (soon to be five) dollars flows thru the healthcare system.

“Controlling cost” really means someone is going to make less money. 

As most of you reading this get a big chunk of your income from healthcare, that’s a problem. For politicians trying to come up with a plan to reform the reform, solving healthcare means some very, very powerful entities are going to get screwed. 

The question is, which ones?

  • Hospitals are often the largest single employer in an area.
  • Pharma is hugely profitable and pharma workers are very well paid.
  • Medical device and equipment companies are similarly disposed and their employees similarly compensated (the largest employer in our town is WelchAllyn)
  • Healthcare professionals enjoy good incomes and generally good working conditions (full disclosure – our daughter and her husband are both ER RNs)
  • Healthplans have generally done well under ACA – remember the Exchanges are just a small part of their overall business.
  • Taxpayers, who don’t want to pay higher taxes

You can’t cut costs without cutting hospital revenues, reducing doctors’ incomes, lowering pharma prices, or slashing profits for device companies. (Healthplans are a bit of a separate issue as their gross income is based on underlying costs, so if healthcare costs go down, so do their revenues).

The power of the healthcare lobby is beyond measure; three years ago the industry spent over a half-billion dollars on lobbying in DC.  Pikers.  Last year,

So, which one of these incredibly well-funded and well-connected stakeholders is going to willingly give up a few tens of billions of dollars to keep your insurance costs and taxes down?

Put another way, are you personally ok with a lower paycheck?

Truth Two – Older people vote, younger people don’t.

(credit US election project)

If you’re trying to keep insurance costs low, you have to get more healthy people (i.e. younger people) into the pool to help pay costs for us older folks.  To get more people to buy insurance, you have to keep premiums low.  The best way to do that is by allowing a big premium disparity between older and younger folks.

Currently, ACA only allows insurers to charge old folks 3 times more than young ones. The result – insurance for younger people is higher than it would be if healthplans could split the population into, say, five “age bands” and charge older people 5 times more than the youngest. Sure, it’s likely a lot more young people would sign up if their premiums were lower – and they would be – about 15 percent lower.

But if they do, the oldest people – who are about 2.5 times more likely to vote than the youngest group – are going to be hopping mad. Estimates are premiums for the older group would jump 22%.

What do these Two Immutable Truths mean for you?

It could mean your income drops a lot, your taxes go up, your premiums go up or down, your stock portfolio suffers…

Net is, to “fix” healthcare someone’s ox is going to be gored.  And pissed-off oxen are scary indeed.


Feb
14

ACA Deathwatch: Where are we today?

The net – we’re further away from repeal and replace than we were even a week ago.

The details

There’s been a good deal of understandable confusion about the fate of ACA; first it was going to be repealed on Day One of the new Administration, then January 27 was the day, now it’s either sometime late this year or early next. Or perhaps, not.

What’s indisputable is this;  undoing ACA and “replacing” it with legislation that will reduce costs, increase coverage options, and not leave anyone with coverage today uninsured is not possible – unless drastic cost-reduction measures are implemented, measures that are anathema to free-market Republicans.

Republicans sought to use the budget reconciliation process to undo much of ACA, figuring that would allow them to kill components such as the mandate that are particularly offensive to the GOP, while working on a replacement bill that might or might not be passed with a final “repeal” bill.  As reconciliation bills can’t be filibustered, the initial step in the repeal process passed easily.

But here’s the problem – the proverbial clock is ticking, and the longer this drags on, the less likely it is a Repeal/Replace bill will happen.  

First, insurers MUST have some idea what will happen in 2018 before they can come up with rates for coverage in the Exchanges. And they need to know this by May 3 – at the very latest.

Second, Governors need to know what’s going to happen with Medicaid. Seniors need to know what their Medicare Advantage costs will be.  Hospitals need to know what they will get paid for Medicare, Medicaid, and in DSH and other payments before they can set prices.

As has been well-documented here, there’s little consensus among Congressional Republicans on what a replacement would look like. And there are a bunch of other high-priority bills that are must-pass; tax reform, budget, spending and the like, all of which will take a lot of time off the legislative calendar.

And there’s this – Once a budget resolution for 2018 is passed, the current ACA reconciliation bill is null and void. While it’s possible Republicans delay the Fiscal Year 2018 resolution as they try to cobble together a replacement bill, this will greatly complicate the legislative process, likely hinder another key priority – tax reform, and as of today there’s no consensus even among Republicans on what “replacement” would look like.

While it’s theoretically possible Republicans pass another reconciliation bill for the FY 2018 budget year to further kick the ACA can down the road, it’s highly unlikely.

Lots more detail on this here.

What does this mean for you?

Yes, it’s certainly possible ACA will be repealed and replaced. Just a little less possible with each passing day.

 


Feb
13

ACA Deathwatch: Healthcare and Snow storms

Happy Monday!  Up here in the northeast we’re still digging out from a major snowstorm that’s a long way from being over.

I’ll make a lousy analogy; that’s pretty much what’s happening in DC.  For local governments, getting the snow off the streets is the political test that ensures mayors another term, or ends their political career.

Healthcare is the national equivalent, with a rather important difference.  Unlike snow removal, healthcare is devilishly complicated.  It’s not just coordination of more plows, salt, drivers, and tow trucks.

Premium subsidies are one example.  About $9 billion goes towards helping poorer folks pay their deductibles, copays, and other costs.  Back when Republicans were in the opposition, they sued the Obama Administration to block those payments. If the suit were to succeed today, insurers would suddenly find themselves forced to:

  • come up with the $9 billion out of their own pockets or
  • terminate coverage for millions of members.

Not surprisingly, Republicans have apparently decided to keep paying the premium subsidies for the time being.

Kicking-the-can-down-the-road doesn’t do anything other than prolong the inevitable, which, stated simply, is this: Congressional Republicans are stuck.  It’s not possible to ensure poorer folks keep their coverage while reducing costs and de-regulating the health insurance markets.

Pre-election promises that voters can “Have their cake, Eat it too, and Not get fat” are coming up against the hard reality that healthcare is really complicated; and insurance companies, pharma, doctors, and healthcare systems are in business to make profits.

For insurers to be profitable, they have to:

  • enroll lots of people by charging premiums low enough to
  • get enough healthy people to join so they can pay for sick peoples’ care, yet
  • set premiums high enough to pay pharma and healthcare providers so those industries make a profit;

Without premium subsidies, lots of lower-income people can’t afford insurance, insurance companies can’t afford to insure those people, and more and more healthy people will drop coverage. Republicans’ apparent decision to maintain premium support will keep things calm for now.  The individual market looks pretty stable – rate increases have stabilized and enrollment, despite Republicans’ efforts to hinder sign-ups, is adequate.

Eventually the healthcare “snow” is going to pile up deep enough that Congress is going to have to start plowing.

Either that, or this…

What does this mean for you?

Don’t expect much REAL progress on healthcare legislation in the next month or two.  Or maybe even longer.

Got your shovel ready?

 


Feb
6

ACA Deathwatch: Whoa, there, cowboy!

The news from the White House is the “replacement” isn’t going to appear until the end of this year – or perhaps sometime in 2018.

That’s a very good thing.

For those that have been following our ACA Deathwatch, that is no surprise.  In fact it’s a good thing, as the plans proffered by Ryan, HHS-Secretary-designee Price, and various other Republicans are short on details, conflict with Republican Governors’ wishes, and would result in major disruption to health insurance markets and imperil the Medicare Trust Fund.

There is no consensus among Republicans around key aspects of a replacement plan or the timing thereof. The White House’ latest announcement is at odds both with previous statements that the replacement bill would be released right after Tom Price’s confirmation as HHS Secretary, Speaker Ryan’s commitment to introduce a bill in March and Majority Leader McConnell’s promised timetable.

Here are the key problems facing the Repeal-and-Replace crowd.

  • ACA is NOT a bunch of totally separate and stand-alone laws, regulations, fees, taxes, policy requirements, and standards. The fees, taxes, and reimbursement changes provide funding for Medicaid expansion, Seniors’ drug costs, premium support, technology, guideline development, and hundreds of other initiatives, many close to the heart of really powerful constituencies.
    Republican leaders who once hooted at the length and complexity of the ACA bill are now learning that fixing healthcare is, shockingly, really complicated.
  • Republican Governors are quite concerned that a replacement will drastically cut funding they rely on for Medicaid, community health centers, public health, and other budget-critical programs. They expanded Medicaid based on a promise that the Feds would pay almost all of that cost; none of the plans currently under discussion live up to that promise.
  • AARP is marshalling its very large and very vocal membership to complain about higher premiums for the 50-64 year old group that would result from changing age bands and reductions to Medicaid that would hurt dual-eligibles.
  • Budget hawks are stuck because repealing ACA – or even just the taxes that are part of ACA – would lead to Medicare insolvency as early as this year.
  • Most troubling of all – loss aversion.  Now that people have coverage, they will be furious if Republicans don’t deliver on their oft-stated promises to reduce costs, preserve coverage, and expand choice.  And no, the attempts by politicians to wordsmith their way out of this commitment by talking about “healthcare access” and “access to insurance” will NOT placate voters who lose coverage.

This last is the key.

The political cost to Republicans of failing to deliver on an impossible campaign promise will be high indeed.  For now, they are going to push the deadline out as far as possible, perhaps pass a repeal-in-name-only bill, then wait till after the mid-term elections – or even the next presidential election – before doing anything serious.

What does this mean for you?

Republicans won’t pass and sign a true repeal bill for months.

 

 

 


Feb
2

ACA Deathwatch – quick update

After a few days of wonderful California weather and Golden State hospitality its back to work.

There’s been so much coming out of DC on all manner of topics healthcare has been somewhat under-covered.  No worries – I got this.

Quick take is Senate Republicans are no closer to a repeal today than they were a month ago. In fact, the “repeal clock” has moved backwards over that time as key Senate Rs have realized repeal is fraught with political landmines.

This bubbled up publicly when Sen Alexander, Chair of Senate HELP Committee and Sen Hatch got into a disagreement over Hatch’s push to repeal the tax provisions of ACA now, then work on a replacement later.

Hatch’s move would have effectively forced many insurers to drop their insureds’ coverage this year, as without premium support low-income insureds would have no funds to cover their share of the premiums deductibles, etc. Insurers would be faced with the need to either a) come up with the money themselves or b) drop out of coverage leaving insureds without coverage.

Alexander’s position was strengthened yesterday by multiple announcements from big insurers about likely withdrawals from the individual markets, as well as news that both the Senate and the House have scaled back plans to do a big bill to repeal and replace ACA.

What does this mean for you?

ACA Repeal is NOT a done deal.


Jan
18

ACA Deathwatch: the GOP’s “repeal”

If you are confused and frustrated with the Republicans’ moves to repeal and replace ACA, rest assured they are way more frustrated – and more than a little concerned – than you are.

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Here’s what’s going on.

There are two main issues.

  1. Repeal without replacement is a budgetary and political minefield.
  2. Congressional Republicans aren’t even close to agreeing on what a replacement bill would look like

Republicans are working to finalize a bill that would defund major parts of ACA. There is NO consensus among Republicans on the details of this bill – and won’t be until at least January 27 (don’t be surprised if the replacement bill isn’t ready till well after January 27…). This won’t require any Democratic support as it is a budget bill. The GOP will own the bill – and the bill’s repercussions.

Earlier this week the CBO gave us a taste of what a repeal without credible replacement would look like, and that taste was bitter indeed.

  • 18 million would lose health insurance within twelve months
  • Premiums would jump by 20 percent to 25 percent immediately

BTW the CBO’s Director was appointed by Republicans in 2015.

If the GOP moves forward with repeal without a replacement bill – which looks highly likely – it will get hammered by Democrats in what will be reminiscent of the Tea Party’s assault on Democrats during ACA’s passage. Dems will turn the tables on Republicans, and with voters primed to fear losing coverage, the message will resonate.

The GOP’s problem is simple – ACA funding is very complex and cutting funding (which is how Republicans are “repealing” ACA);

  • decreases the number of people with insurance and/or
  • increases state government budget deficits and/or
  • increases the federal deficit and/or
  • hurts Medicare, and/or
  • hurts hospitals, and/or
  • hurts insurers.

There’s intense lobbying going on as device manufacturers, hospitals, governors, insurance companies, the very wealthy and other special interests seek to protect themselves.

While Republicans do have “plans” to replace ACA, they do NOT have consensus on “A plan”.  There’s a plan from HHS Secretary nominee Tom Price, another from Speaker Ryan, other plans based on prior GOP bills, plus lots of ideas from GOP-affiliated think tanks and lobbying groups. Make no mistake, there’s a lot of ideological division among Congressional Republicans.

When the GOP does write a replacement bill, it will be scored by the CBO.  A part of that scoring has to do with the definition of health insurance. Up till now, CBO used the ACA’s definition; now that ACA is going away, it will revert to the previous definition.  Not to get too deep in the weeds here, but that’s NOT good news for the GOP.

The dilemma facing Republicans is simple; there’s no way they can deliver on their promises to ensure people don’t lose coverage, reduce costs, and improve access.

Republicans are about to pull a Wile E Coyote, running full speed off the cliff. Given Democrats’ amazing ability to turn certain victory into crushing defeat by losing the messaging battle, the GOP may make it to the other side unscathed.

What does this mean for you?

The CBO is the key.


Jan
17

ACA Deathwatch – The Impact on Workers’ Comp

With Republicans getting closer to repealing ACA, it’s time to consider how this would impact workers’ compensation.

I’ve discussed the possible impact of ACA here; net is the big increase in the insured/employed population may be at least partially responsible for the flat-to-declining work comp medical costs we’ve seen over the last two years.

There’s also this.  A colleague alerted me to a 2014 RAND study that assessed the potential impact of ACA on liability insurance, including workers’ comp in 2016.

RAND’s main takeaway:

“the ACA is expected to reduce auto and workers’ compensation insurer costs and increase medical professional liability insurer costs by a few percentage points as of 2016.”

The report is fairly complex (a summary is here); here’s what it had to say in bullet points.

  1. RAND estimated work comp costs would be $930 million lower due to ACA.
  2. This reduction is driven by lower fees and other insurance coverage for workers.

“Lower fees” derive from lower fee schedules (we’ve seen this in imaging in CA and FL and facility and surgery in other states) and lower prices due to providers less concerned about indigent care and associated bad debt.

“Other insurance coverage” refers to group health or Medicaid coverage for non-occ conditions, as well as substituting for workers’ comp in some instances.

If ACA is repealed without a simultaneous and credible replacement, we may well see a rise in the number of workers without health insurance. The key issue to track is a cutoff of funding for Medicaid expansion – ACA added about 13 million more employed people to the insured rolls; if they lose coverage they’ll need a different payer to cover their injuries. Bad news for workers’ comp.

There are other issues, but Medicaid is the big one.

What does this mean for you?

Be careful what you wish for.  And be even more careful of hasty and simple solutions to very complex problems.


Jan
13

Friday catch-up

2017 is starting off to be the most interesting/bizarre/entertaining/terrifying year in memory.

As one who tracks the goings-on internationally and in DC with some diligence, it’s been impossible to keep up with the craziness. Here’s my attempt to summarize the week that was.

The one thing you missed – and why you shouldn’t have

Trying out a new mini-post on the most important thing may have missed this week. Today’s it’s UnitedHealthcare’s acquisition of a big outpatient surgical clinic company.

This is important because the giant ($175 billion) healthcare company is investing more in care delivery – likely to better control its “cost of goods sold”.  As vertically integrated healthcare systems (think Kaiser, UPMC) get better at insurance, insurers have to get better at care delivery.

ACA Deathwatch

The reports of ACA’s death appear to have been greatly exaggerated. 

Yes, the Senate passed a bill that is the first step in a repeal process.  But it is ONLY a first step. Without diving too deep into the nerdy details, the bill just instructs Senate Committees to begin drafting a repeal bill and lays out general principles.  But there’s no consensus on when the repeal would take effect, what a replacement would look like, or even how it would be funded.

Things are going to get pretty complicated, especially in the Senate. There’s a lot of concern among Republicans in key leadership positions that quick movement on a bill would lead to a considerable backlash – and major political damage.

For freemarketers and Libertarians, there’s this:

“We did have the government out of the individual market up until 2014 [when most of the ACA provisions went into effect], and we know exactly what happened: There were millions of people who couldn’t get coverage,” Field said.

The ACA created a market that did not exist before — one that insures sick people. Field says it’s a market failure that the industry on its own will not cover the highest-risk customers. “If you want to cover everyone, the government has to do something.”

Town said pushing the government out of the equation will leave many citizens without access to health care.

“If you want to live in that world, so be it,” he said. “But I think we as a society have made the joint decision that having a vast part of a population uninsured and having limited access to health care is not a route that we want to go. Getting rid of the ACA is not going to get rid of the government’s role in health care.” [emphasis added]

Here’s a good summary of some of the issues the Republicans face – and why they are treading carefully…key quote:

The real reason health care premiums and deductibles are so high is that medical care is very expensive in the United Statesfar more costly than it is anywhere else in the world. The United States pays very high prices to doctors and hospitals and drug and device makers, and Americans use a lot of that expensive medical care. [emphasis added]

And here’s why keeping only the popular parts of ACA won’t work.  Alas.

Work comp

The M&A activity level has dropped off considerably – if not precipitously. The WLDI sale – a relatively small transaction – is one of the very few recent deals. Don’t expect activity to ramp up as the industry is:

  • pretty consolidated already, so there are fewer companies available to buy;
  • work comp is a declining industry with negative growth – not very attractive to investors;
  • prices were really high for a long time, and company owners still expect to get paid a lot. Sellers still expect to get those high prices, but…
  • buyers are much more cautious due in large part to the “OneCall Effect” (financial returns haven’t met expectations).

Don’t miss the Rx Drug Abuse Summit – April 17-20 in Atlanta.  It’s the most comprehensive and focused event on the biggest issue in workers’ comp.

Nothing is more important to work comp than the overall economy.  Read this – when you have time – for a solid grounding on what to watch for in 2017.  Spoiler alert – economic growth, which has trended up significantly over 2016, is likely to moderate over the next two years. And watch out for inflation.

 

Finally, for management wonks, here’s a great piece on execution from Harvard Business Review.