Finally, a universal healthcare proposal that would work for everyone
by Michael Hiltzik - LA Times - February 27, 2018
Up to now, single-payer and universal health coverage proposals in the U.S. have foundered on one shoal or another: They're ungodly expensive; they replace plans that people like; they're too sudden; they're not sudden enough; they're politically impossible, etc., etc., etc.
But now take a look at "Medicare Extra for All." It's a universal coverage proposal released last week by the Center for American Progress, a progressive think tank associated with the Democratic Party.
It's not quite "Medicare for All," to cite the mantra used by Sen. Bernie Sanders (I-Vt.) and others who want a near instantaneous, wholesale transformation of the American health coverage system into a public service. Instead, it would preserve privately financed employer coverage for as long as employers want to stay in.
But within a few years it would become "Medicare for Most," as healthcare commentator Andrew Sprung observes. That's because newborns and those turning 65 would automatically be enrolled, along with everyone buying insurance in the individual market and all uninsured people, including legally resident noncitizens. Eventually, Medicaid and CHIP, the Children's Health Insurance Program, would be folded in.
The proposal addresses many of the flaws of the Affordable Care Act, most of which could have been addressed routinely by Congress over the last seven years, if Republicans were interested in improving health coverage for their constituents instead of riding the ideological hobby horse of Obamacare repeal.
Medicare Extra confronts the reasons for the high cost of the American healthcare system head-on by placing caps on doctor and physician reimbursements, reducing administrative costs, and negotiating with drug and medical device companies. It doesn't treat the drivers of high costs as some sort of opaque mystery requiring the genius of Jeff Bezos, Warren Buffett and Jamie Dimon to unravel—because they're not a mystery.
That brings us to the politics of the plan. Plainly, it goes nowhere in a Republican-dominated Congress. If Democrats win control, however, Medicare Extra for All must be considered the best template for completing the transformation of the dysfunctional American health coverage system begun by the Affordable Care Act and reversing GOP sabotage of the ACA and Medicaid.
Extra also may be the only chance Democrats have to resist opposition by stakeholders in the present system, such as physicians, hospitals, drug makers and medical device manufacturers.
"The lesson Democrats have learned politically is that they're alone," health economist Harold Pollack observed at healthinsurance.org. "They're not going to get Republican support. They're not going to get stakeholder support for some of the most critical things." Following seven years of sabotage by the GOP, he predicted, "Democrats will be much more ruthless the next time around."
Let's examine the most important elements of Medicare Extra for All.
In addition to the automatic enrollment of newborns and the uninsured, everyone legally resident in the U.S. would be eligible for Extra: Traditional Medicare, Medicare Advantage, employer coverage and federal programs for military families, veterans or government employees would remain in place, but their enrollees could switch to Extra if they wished.
Extra would provide free preventive care, free treatment for chronic disease and free generic drugs, as well as services deemed essential by the Affordable Care Act such as hospitalization, prescriptions, maternity care and mental health and substance abuse treatment. It also would cover dental, vision and hearing services. Enrollees could choose from any doctor or hospital participating in Medicare, which is most of them.
Premiums and co-pays would be charged on a sliding scale. For households with income up to 150% of the federal poverty line — $18,210 for individuals and $37,650 for a family of four — there would be no premium or deductive. From there to 500% of the poverty level — $60,700 for one, $125,500 for four — premiums would be capped in a range rising with income, but no higher than 10% of income. Over 500%, the 10% premium cap would apply.
As we've reported recently, this would solve one of the most irritating aspects of the ACA — the sudden cutoff of premium subsidies for families making 400% of the poverty line, which means one dollar in additional earnings can result in a loss of all subsidies.
With the exception of employer plans, commercial insurers would be barred from duplicating Medicare Extra, though they could offer other benefits — cosmetic surgery coverage, for instance. That's wise, because U.S. employers currently provide coverage to 152 million Americans, paying $485 billion in annual premiums. Those that continued their plans could keep the tax deduction they get on those costs.
Or they could shift their employees to Medicare Extra by contributing at least 70% of the premium or making lump-sum payments to the government. They'd lose the tax break in those cases, however. Employers with fewer than 100 full-time workers wouldn't have to make the payments.
Medicare Extra would save money by setting provider rates roughly at an average of Medicaid, Medicare and commercial reimbursement rates, which the drafters say would end up somewhat higher than Medicare but lower than commercial rates. Primary care doctors would get a bump up in reimbursements relative to specialists, to reduce the incentives for excessive specialty referrals.
Medicare Extra would have the authority to negotiate prices with drug companies and medical device and equipment manufacturers. The system, moreover, would cut administrative costs sharply by paring the role of commercial insurers — a boon to doctors and hospitals that have to spend heavily to manage claims.
The program still would need more revenue than what currently goes to Medicare, Medicaid and other government healthcare programs. The Center for American Progress proposes to raise at least some of it by taking back some of the tax cut giveaway to corporations and the wealthy enacted by the Republicans in December. Among the options are a surtax on high-income taxpayers, including a higher tax on capital gains.
This could include eliminating the step-up in capital gains basis enjoyed by families that bequeath their capital assets to the next generation. Under current law, this allows wealthy taxpayers to extinguish the tax on their capital gains permanently, an utterly unjustified handout to the rich. Healthcare tax breaks could also be reduced for higher-income taxpayers. Finally, excise taxes on cigarettes and sugared drinks could be raised to generate more income.
Health insurance expert Charles Gaba estimates that Medicare Extra could enroll 25 million to 30 million people immediately and then absorb enrollees who become dissatisfied with their employer plans because of rising premiums and deductibles, among other reasons.
Gaba is right to observe that Medicare Extra, as drafted, will tick off the fewest number of stakeholders in the present system while scaling up to "achieve universal coverage within eight years of being passed … which is about as quickly as anyone could reasonably expect it to happen."
It's not single-payer, exactly, but only single-payer dead-enders could object to its payer provisions. It's the best solution to the realities, politics and drawbacks of the U.S. health insurance system yet to appear, and the time to start pushing it is now.
Why are Democratic party thinktanks still not backing universal healthcare?
by Adam Gaffney - The Guardian - February 25, 2018
On Thursday, the Center for American Progress (CAP), a Democratic party-affiliated thinktank, launched a proposal confusingly called “Medicare Extra for All”. For proponents of a Bernie Sanders-style single-payer “Medicare for All”, this might seem like a positive development. Well, yes and no.
On the one hand, “Medicare Extra” is a step to the left for CAP, suggesting that the Democratic establishment is following the lead of its galvanized base. On the other hand, this new proposal would exact sacrifices from patients to placate the insurance industry, and could serve to divert the single-payer movement, which has been rapidly gaining steam.
A debate over the next step on health reform has roiled the Democratic party. Some, like Hillary Clinton, have advocated incremental changes to Obamacare, such as a “public option”. Others, led by Bernie Sanders, seek to replace the hodgepodge of private and public health plans with “Medicare for All” – a single-payer program covering everyone without copays or deductibles.
Though Trump’s victory might have dampened support for the more radical road, it did just the opposite. The president swore to repeal the Affordable Care Act, and try he did – but apart from felling the individual mandate, the effort flopped in Congress. He did, however, rouse millions of Americans behind the cause of healthcare justice. Single-payer bills in both houses of Congress accrued record support in 2017, including a majority of House Democrats and more than a third of Democratic senators.
The political winds had shifted: progressives were out of power, but they were coalescing around a post-Trump plan – improved “Medicare for All” –overwhelmingly popular with the party’s base: about 69% of Democratssupported it, according to a September survey.
Enter Medicare Extra. CAP’s proposal is a response to these shifting winds. The new Medicare Extra program would automatically enroll anyone without other insurance. Premiums and out-of-pocket payments (eg copays and deductibles) would continue, with limits based on income.
Employers could choose to offer private coverage, or switch their employees into Medicare Extra. Notably, private insurers would get a big slice of the Medicare Extra market, enrolling millions in “Medicare Choice” coverage modeled on today’s wasteful, privatized Medicare Advantage plans, which in effect cost taxpayers “104% of per capita traditional Medicare spending” per enrollee, as noted in the Journal of the American Medical Association.
What’s not to like?
First, there’s the proposal’s voodoo economics. The US healthcare system hemorrhages cash through useless billing and bureaucracy, the inevitable consequence of battles between our jumble of profit-seeking insurers and the country’s providers. Transitioning to single-payer could end this waste, saving about $500bn annually; multi-payer systems such as Medicare Extra that add yet another plan to the existing slew of private insurers cannot. And without these efficiencies, expanding to fully universal coverage could prove unaffordable.
Second, because the economics don’t work, the coverage is insufficient. Although Medicare Extra would be more generous than most Obamacare plans, it would still leave millions encumbered with copayments and deductibles, which force people to choose between healthcare and other necessities. Keep in mind that one survey found that almost half of Americans couldn’t afford an unanticipated $400 expense, per the Washington Post.
Indeed, under the CAP program, some might see their coverage worsen if their employer elected to transition them to Medicare Extra. Consider that large employers’ plans cover, on average, 85.4% of healthcare costs. But Medicare Extra would cover only 80% of costs, for at least some families (depending on income). Republicans would have a field day scaremongering about the government taking away your healthcare plan. While CAP touts the political advantages of their plan, it may well be a juicier target for such scaremongering than “Medicare for All”, which would cover 100% of healthcare costs.
Medicare Extra offers an inferior policy option, when a better one is on the table. Improved “Medicare for all” can affordably provide healthcare to everyone. It’s widely supported by the progressive base – and indeed by the majority of the nation in most polls. And it can serve as a powerful political promise as we wade into the profoundly consequential 2018 and 2020 election season. Democrats would be wise to unite behind it, rather than be sidetracked by CAP’s second-rate scheme.
by Margaret Flowers - HealthOverProfit.org - February 21, 2018
The Center for American Progress (CAP), a Washington-based Democratic Party think tank funded by Wall Street, including private health insurers and their lobbying group, unveiled a new healthcare proposal designed to confuse supporters of Medicare for All and protect private health insurance profits. It is receiving widespread coverage in ‘progressive’ media outlets. We must be aware of what is happening so that we are not fooled into another ‘public option’ dead end.*
The fact that CAP is using Medicare for All language is both a blessing and a curse. It means Medicare for All is so popular that they feel a need to co-opt it, and it means that they are trying to co-opt it, which will give Democrats an opportunity to use it to confuse people.
This effort could be preparation for the possibility that Democrats win a majority in Congress in 2018 or 2020. It is normal for the pendulum to swing to the party opposite the President’s party during the first term in office. If Democrats win a majority, they will be expected to deliver on health care, but they face a dilemma of having to please their campaign donors, which includes the health insurance industry, or pleasing their voters, where 75% support single payer health care.
The public is aware that the Affordable Care Act (ACA) protects the profits of the medical-industrial complex (private health insurers, Big Pharma and for-profit providers) and not the healthcare needs of the public. “Fixing the ACA” is not popular. Last year during repeal attempts, people made it clear at town halls and rallies that they want a single payer healthcare system such as National Improved Medicare for All (NIMA). By offering a solution that sounds good to the uninformed, “Medicare Extra for All,” but continues to benefit their Wall Street donors, Democrats hope to fool people or buy enough support to undermine efforts for NIMA.
This is an expected development. If we look at the phases of stage six of successful social movements by Bill Moyer (see slide 8), we see that as a movement nears victory, the power holders appear to get in line with the public’s solution while actually attacking it. If the movement recognizes what is happening, that this is a false solution and not what the movement is demanding, then we have a chance to win NIMA. If the movement falls for the false solution, it loses.
Our tasks at this moment are to understand what the power holders are offering, recognize why it is a false solution and reject it.
“Medicare Extra for All” versus National Improved Medicare for All
The basic outline for the new proposal is that people would be able to buy a Medicare plan, a form of ‘public option,’ including the Medicare Advantage plans offered by private health insurers. People who choose to buy a Medicare plan would pay premiums and co-pays, as they do now for private health insurance. The new Medicare system would replace Medicaid for people with low incomes.
Private health insurance would still exist for employers, who currently cover the largest number of people, federal employees and the military. While workers would have the option to buy a Medicare plan, it is unclear how many would do so given that most employers who provide health insurance have their own plans and that private health insurers are experts at marketing their plans to the public.
NIMA, as embodied in HR 676: “The Expanded and Improved Medicare for All Act,” would create a single national healthcare system, paid for up front through taxes, that covers every person from birth to death and covers all medically-necessary care. NIMA relegates private insurance to the sidelines where it could potentially provide supplemental coverage for those who want extras, but it would no longer serve as a barrier for people who need care.
Here are the flaws in the CAP proposal:
- CAP’s plan will continue to leave people without health insurance.Instead of being a universal system of national coverage like NIMA, coverage under the CAP plan relies on people’s ability to afford health insurance. Only people with low incomes would not pay, as they do now under Medicaid. Just as it is today, those who do not qualify as low income, but still can’t afford health insurance premiums, would be left out. Almost 30 million are without coverage today. There is no guarantee that health insurance premiums will be affordable.
- CAPS’s plan will continue to leave people with inadequate coverage. Under NIMA, all people have the same comprehensive coverage without financial barriers to care. The CAP plan allows private health insurers to do what they do best – restrict where people can seek health care, shift the cost of care onto patients and deny payment for care. This is the business model of private health insurers because they are financial instruments designed to make profits for their investors. People with health insurance will face the same bureaucratic nightmare of our current system and out-of-pocket costs that force them to delay or avoid health care or risk bankruptcy when they have high health care needs.
- CAP’s plan will continue the high costs of health care. NIMA has been proven over and over to have the best cost efficiency because it is one plan with one set of rules. It is estimated that NIMA will save $500 billion each year on administrative costs and over $100 billion each year on reduced prices for pharmaceuticals. As a single purchaser of care, NIMA has powerful leverage to lower the costs of goods and services. The CAP plan maintains the complicated multi-payer system that we have today. At best, it will only achieve 16% of the administrative savings of a single payer system and it will have less power to reign in the high costs of care.
- CAP’s plan will allow private health insurers to continue to rip off the government. NIMA is a publicly-financed program without the requirement of creating profits for investors. With a low overhead, most of the dollars are used to pay for health care. The CAP plan maintains the same problems that exist with Medicare today. Private Medicare providers cherry pick the healthiest patients and those who have or develop healthcare needs wind up in the public Medicare plan. This places a financial burden on the public Medicare plan, which has to pay for the most care, while private health insurers rake in huge profits from covering the healthy with a guaranteed payor, the government.
- CAP’s plan will continue to perpetuate health disparities. NIMA provides a single standard of care to all people. Because all people, rich and poor (and lawmakers), are in the same system, there are strong incentives to make it a high quality program. CAP’s plan maintains the current tiered system in which some people have private health insurance, those with the greatest needs have public health insurance, some people will have inadequate coverage and others will have no coverage at all.
- CAP’s plan will continue to restrict patients’ choices. NIMA creates a nationwide network of coverage and consistent coverage from year-to-year so that patients choose where they seek care and have the freedom to stay with a health professional or leave if they are dissatisfied. CAP’s plan continues private health insurers and their restricted networks that dictate where patients can seek care. Private plans change from year-to-year and employers change the plans they offer, so patients will still face the risk of losing access to a health professional due to changes in their plan.
- CAP’s plan does not guarantee portability. NIMA creates a health system that covers everyone no matter where they are in the United States and its territories. CAP’s plan maintains the link between employment and health coverage. When people who have private health insurance lose their job or move, they risk losing their health insurance.
- CAP’s plan will perpetuate physician burn-out. NIMA creates a healthcare system that is simple for both patients and health professionals to use. Under the current system, which the CAP plan will perpetuate, health professionals spend more time on paperwork than they do with patients and physician offices spend hours fighting with health insurers for authorization for care and for payment for their services. This is driving high rates of physician burnout. Suicides among physicians and physicians-in-training are higher than the general population.
These Are The Real-Life Effects Of Trump’s Obamacare Sabotage
A new study predicts premiums going up by 18 percent and millions of Americans losing their coverage.
by Jonathan Cohn - Huffington Post - February 26, 2018
Somebody has finally put some numbers on what the Republican effort to undermine Obamacare will mean for everyday Americans.
Come 2019, the number of people without health insurance will rise by nearly 5 million, while millions more will enroll in “short-term” plans, according to Urban Institute research released Monday. The study is the first serious effort to assess the combined effects of several major health policy changes that President Donald Trump and his allies have made over the past year.
Those short-term plans will be popular because they are dirt cheap, relative to the usual price of health insurance. But that’s only because they aren’t available to people with pre-existing conditions and leave out key benefits like mental health, maternity care and prescriptions ― which at least some of those beneficiaries will need when they get sick.
Meanwhile, some people who need or want more comprehensive coverage will have to pay more for it, as the study predicts premiums for such plans will rise 18 percent. And the federal government, which subsidizes plans for lower-income consumers through tax credits, will have to spend more money.
This is still a far cry from full repeal of the Affordable Care Act, which is what Trump and the Republicans tried to pass last year. But it represents a significant reversal of the changes that the 2010 health care law unleashed.
What Trump And The Republicans Have Done
One of the most significant recent policy shifts is the decision to end the individual mandate, which imposes a fine on people who could afford to pay for insurance but decline to do so. Trump signed tax legislation in December that ends the mandate starting next year.
But that is not the only big change Trump and congressional Republicans are making. Trump is using his executive authority to undermine Obamacare’s insurance rules, including those that prohibit insurers from declining coverage to people with pre-existing conditions, as well as some that require insurers to cover 10 “essential benefits” such as mental health, maternity and prescription drugs.
The most vivid example of this is a regulation the Trump administration formally proposed last week. It would allow insurers to sell “short-term” or “limited duration” plans that would last for up to one year. Such plans can deny coverage for pre-existing conditions and don’t have to cover all of the essential benefits, engaging in the sorts of practices that the 2010 health care law sought to prohibit altogether.
These plans have existed for a long time. But they could not last for more than three months under regulations the Obama administration put in place ― and they would not count toward the individual mandate.
The rule didn’t go into effect until in 2016, and some insurers already flout it by packaging together multiple plans so they last for a year. Still, with the mandate in place, the plans have mostly served a relatively small niche market: those with brief lapses in coverage.
With the dissolution of the individual mandate, these changes have potential to shake up the markets for people buying coverage on their own.
People in relatively good health will increasingly sign up for short-term plans, which will be cheaper because they are less widely available and cover fewer services than more regulated Affordable Care Act plans. People with more serious medical needs won’t make the shift, leaving existing plans with a less healthy pool ― forcing insurers to raise premiums for those plans by 18 percent, according to Urban Institute researchers.
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To be clear, that is 18 percent above and beyond any other premium increases.
It’s also an average figure, with considerable variation from state to state, and even within individual states. Under the Affordable Care Act, anybody with household income of less than four times the poverty line ― about $100,000 a year for a family of four ― is eligible for tax credits that discount premiums. As the premiums go up, so do the tax credits, insulating these people from the effects of the increases.
But that also means the tax credits will end up putting a greater strain on the federal treasury. The cost of tax credits will go up by about 9 percent, according to the study.
Meanwhile, the number of people without health insurance will go up by several million, according to the Urban study. The actual number depends on how you define insurance.
Overall, Urban’s researchers predict, the number of uninsured people in 2019 should be 4.7 million higher than it would have been if Republicans had not touched the Affordable Care Act at all. That reflects a number of smaller shifts in coverage ― including a decline in Medicaid enrollment because the mandate encourages people to investigate their insurance options and some inevitably discover they fall within Medicaid’s eligibility guidelines.
But even that figure doesn’t fully capture the coverage impact of GOP changes. In particular, it doesn’t include more than 4 million additional people who would be “insured” but have these short-term plans without the pre-existing condition and essential benefit guarantees, the researchers say.
Putting those two numbers together would mean the number of people without comprehensive coverage ― in other words, the type that meets the Affordable Care Act’s standards ― will rise by nearly 9 million, according to the Urban study.
Some Will Win, Some Will Lose, Some Will Lose Big
That is not to say 9 million people will be unhappy.
Some people prefer not to buy insurance, and by next year they won’t have to choose between going without coverage and paying a penalty.
Many who buy short-term plans will appreciate the chance to get insurance for much lower monthly premiums. If not for the availability of short-term plans, some of them would not have gotten any insurance at all. But those plans also don’t provide the same kind of protection against medical bills, which means that some people who buy the plans will discover ― upon getting sick ― they don’t have coverage they need.
Meanwhile, those who already have pre-existing conditions generally won’t have access to these policies. Higher premiums will “disproportionately” hit middle-income Americans who already have health problems, according to the Urban researchers.
Like all projections on the effects of health care policy changes, this latest one is subject to plenty of uncertainty ― in other words, the precise figures aren’t actually that precise. But Urban’s model is widely cited and respected, and few experts would dispute that it is “directionally” correct.
In other words, most experts would say, the types of changes the researchers expect ― higher premiums for comprehensive coverage, more uninsured, higher federal spending ― are almost certain to happen. It’s just a question of how big the effects are.
by Catherine Ramped - Washington Post - February 26, 2018
Last year , much of the country watched with growing fury as Republicans tried to undo President Barack Obama’s signature achievement, the Affordable Care Act.
Americans stormed town halls. They jammed congressional phone lines. Some got hauled off to jail for acts of civil disobedience. Bill after bill attempting to dismantle Obamacare imploded. By October, it looked like Republicans had given up at last.
How wrong that was.
In the months since the last Obamacare vote in the Senate, the Trump administration and Republicans on Capitol Hill have engaged in a sneakier, backdoor repeal.
It’s been less telegenic than those big congressional fights, but it has been more destructive.
Washington Post Hate Mail: Catherine Rampell
The Washington Post readers are some of the most critical out there. Opinion writer Catherine Rampell reads and responds to her hate mail from readers. (Adriana Usero, Kate Woodsome/The Washington Post)
In fact, next year there will be about 9 million fewer Americans with real health insurance coverage than would have been the case had pre-Trump policies stayed in place, according to a report released Monday by the Urban Institute.
By “real health insurance,” I mean plans that actually cover things — as opposed to plans that just take your money and then, legally, pay few if any claims. (These are sometimes nicknamed “buffalo plans,” because they pay out pretty much only if you get run over by a herd of buffalo.)
A handful of relatively low-profile, boring-sounding actions are to blame for the drop-off in the insured. They include repealing the individual mandate (which encouraged young, healthy people to buy insurance, holding down premium costs for the overall pool), shortening the open enrollment period, reducing outreach and advertising, and killing subsidies designed to help pay for low-income people’s out-of-pocket spending.
Then last week, with little fanfare, the Trump administration released an even-more-damaging new policy: an expansion of “short-term” insurance plans.
Short-term insurance is supposed to provide just that — short-term coverage. Maybe you need a stopgap plan before school starts, for instance. These niche plans are exempted from Obamacare’s basic consumer protections.
They don’t, for example, have to be issued to people with preexisting conditions. There also are no federal requirements for what kinds of care they have to cover, or how much of it. If these plans want to take your premium money and then never pay out a dime on prescription drugs or cancer treatments, under federal law, they don’t have to.
And the data show they often don’t, which is why this is such a lucrative business to be in.
In 2016, the top seller of short-term plans, Tokio Marine Holdings, paid out only 47 cents of every dollar it received from premiums on medical claims, according to the National Association of Insurance Commissioners. Obamacare-compliant plans, for context, generally have to spend at least 80 percent of their premiums on claims and quality improvement.
These lightly regulated, short-term plans are typically much cheaper than Obamacare-compliant ones. But the reason they’re so cheap — the fact that they cover so little — is not always apparent when they’re being sold. Predictably, many consumers have gotten scammed. In some particularly egregious cases, insurers pulled coverage immediately after a cancer diagnosis or heart attack. State insurance regulators have issued warnings to residents about widespread fraud.
“A lot of this stuff has been sold by con artists,” says Sabrina Corlette, a scholar at Georgetown University’s Health Policy Institute.
The Obama administration tried to address these problems by restricting short-term plans to no more than three months. But under the Trump administration’s newly released rule, they would be allowed to expand up to 364 days.
This will have a few major consequences.
First, it will become even harder for consumers to tell the difference between plans that actually pay for things and those that don’t.
Second, for all the Trump administration’s rhetoric about improving mental-health care, fewer people will have access to it. After all, unlike ACA-compliant plans, short-term plans don’t have to cover mental illness.
Third and most important, it will further destabilize the individual insurance markets.
These not-so-short-term short-term plans will siphon off more young and healthy people from the exchanges. The older, more expensive enrollees who remain will cause premiums to spike; more young and healthy people will drop off the exchanges; prices will rise further; and so on.
Hence the predicted decline in the number of nonelderly Americans with real, non-buffalo insurance.
Meanwhile, even as all these various backdoor repeal policies reduce the number of people with insurance, federal health spending on non-elderly Americans will go up. In fact, it will be $33 billion higher than would have been the case under previous law, according to the Urban Institute. That’s because as premiums rise, subsidies rise automatically, too.
What, you thought gutting Obamacare would at least save the government some money? Well, consider yourself buffaloed.
A Big Divergence Is Coming in Health Care Among States
by Margot Sanger-Katz- February 29, 2018
Little by little, the Trump administration is dismantling elements of the Affordable Care Act and creating a health care system that looks more like the one that preceded it. But some states don’t want to go back and are working to build it back up.
Congress and the Trump administration have reduced Obamacare outreach, weakened benefit requirements, repealed the unpopular individual insurance mandate and broadened opportunities for insurers to offer inexpensive but skimpy plans to more customers.
Last week, the administration released its latest proposal along these lines, by changing the definition of so-called short-term plans. These plans don’t need to follow any of the Obamacare requirements, including popular rules that plans include a standard set of benefits, or cover people with pre-existing conditions. If the rule becomes final, these plans could go from short term to lasting nearly a year or longer.
Taken together, experts say, the administration’s actions will tend to increase the price of health insurance that follows all the Affordable Care Act’s rules and increase the popularity of health plans that cover fewer services. The result could be divided markets, where healthier people buy lightly regulated plans that don’t cover much health care, lower earners get highly subsidized Obamacare — and sicker middle-class people face escalating costs for insurance with comprehensive benefits.
But not everywhere. Several states are considering whether to adopt their own versions of the individual mandate, Obamacare’s rule that people who can afford insurance should pay a fine if they don’t obtain it. A few are looking to tighten rules for short-term health plans. Some states are investing heavily on Obamacare outreach and marketing, even as the federal government cuts back.
The result is likely to be big differences in health insurance options and coverage, depending on where you live. States that lean into the changes might have more health insurance offerings with small price tags, but ones that are inaccessible to people with health problems and don’t cover major health services, like prescription drugs. States pushing back may see more robust Obamacare markets of highly regulated plans, but the price of those plans is likely to remain higher.
Legislation to replace the individual mandate has already been introduced in Maryland and New Jersey with prominent sponsors. Political leaders in other states, including California, Washington, Rhode Island, Vermont, Connecticut as well as the District of Columbia, are weighing options for replacing the mandate this year, as Stephanie Armour reported in The Wall Street Journal. The mandate was designed to give healthier people an incentive to buy insurance before they fell ill, lowering the cost of insurance for everyone who buys it.
“Clearly, I think the federal administration and Congress are moving in one direction,” said Brian Feldman, a Maryland state senator who leads the state health subcommittee and was the primary sponsor of mandate legislation there. “And I think states like Maryland would like to move in a different direction.”
Mr. Feldman and his colleagues aren’t planning simply to replicate the federal individual mandate. Instead, they are trying a new strategy. People who fail to obtain insurance would still be charged a fine, but they would be allowed to use that money as a “down payment” on a health plan if they wished. Legislators estimate that many people subject to the penalty would not owe anything more to buy health insurance, after federal tax credits are applied.
Other states are hoping to mimic the expiring federal policy more closely. The board governing the insurance marketplace for the District of Columbia voted last week to recommend the adoption of an individual mandate replacement. Connecticut’s governor, Dannel Malloy, is considering a proposal by a Yale health economist.
Those plans are more similar to the Affordable Care Act’s approach, in part for expedience. The federal mandate is set to expire next year, and insurance companies need to develop their health plans and submit 2019 prices by this summer.
“The idea that a state would be able to stand up something, and put out any guidance, and advise stakeholders, and be able to do it by 2019, is pretty infeasible,” said Jason Levitis, a former Obama administration Treasury Department official who has developed legislation to help states draft mandate replacement bills.
Imposing state-level versions of the mandate may be a political challenge even in blue states. But other strategies are in play, too. California is one of a handful of states considering a bill that would effectively ban the short-term insurance plans proposed by the Trump administration. (New York, New Jersey and Rhode Island already effectively block them.)
A number of states across the political spectrum are also considering policies that would provide so-called reinsurance funds, to help protect health insurers from rare, very expensive patients, and help them lower the prices for everyone else.
Alaska, Minnesota and Oregon have already adopted such plans. Washington, New Jersey, Maine, Colorado, Wisconsin and Maryland are working on proposals. Heather Howard, who directs the state health and values strategies program at Princeton University, said that reinsurance plans operated more like a “carrot” in stabilizing insurance markets. They may prove appealing to a broader array of states, while the mandate, a “stick,” may interest politicians only in the most liberal places.
Some Obamacare-averse states are pursuing policies meant to circumvent the health law’s rules for insurance, and broaden options for cheaper, lightly regulated health plans. Idaho has announced a plan to allow insurers to offer health plans that don’t comply with many of Obamacare’s core rules, and one insurer, Blue Cross of Idaho, has said it will begin selling such plans next month.
Alex Azar, the Health and Human Services secretary, has been cagey about whether he will step in to enforce federal law forbidding such products. Meanwhile, the Iowa legislature is considering a bill that would allow a different type of health plan to circumvent Obamacare rules, as The Des Moines Register recently reported. Medica, the only insurer currently offering Obamacare plans, said it might depart the Iowa market if the plan were approved.
The Affordable Care Act was drafted with room for state customization, but one of its primary goals was to make health insurance around the country more uniform. Thanks to state resistance to the health law, varying local conditions and a Supreme Court decision that made the Medicaid expansion optional, results have been much more uneven. Some states have seen much bigger reductions in the share of the uninsured than others. Only some states have seen insurance premiums stabilize.
“Without question I think we’re going to see a natural experiment in the states and a growing divergence in outcomes,” said Sabrina Corlette, a research professor at Georgetown University’s Health Policy Institute.
Evidence of that divergence is already here. This year, signups for Affordable Care Act health plans were nearly flat compared with last year, despite huge cuts in federal outreach and advertisement. But states that ran their marketplaces and spent heavily on advertising saw stronger signups, while states that were more resistant to the health law experienced drops. The loss of the mandate, and the proliferation of health plans that don’t follow Obamacare’s rules, are likely to widen those gulfs.
