Aaron E. Carroll's Blog, page 142

The AHCA’s mandate replacement doesn’t make sense to me

I’m having a really hard time with this. I’m going to try and walk through my dilemma in the hope that someone will be able to make me understand.

The Republicans hate the individual mandate. I get that. I don’t necessarily understand their rationale, but I accept it. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it.

We have discussed this before. There are many ways to solve this adverse selection problem without a mandate. Open enrollment periods, penalties for not signing up, loss of protections, inducements for keeping coverage, etc. We have written about this again and again and again and again and again and again. So I’m not saying that you can’t replace the individual mandate.

Many wonks believe that too few healthy people are joining the exchanges. This is leaving the risk pool too expensive and leading to higher premiums. To fix that, we could increase the size of the mandate penalty (stick), increase the size of the subsidies to make insurance cheaper (carrot), or both (carrot and stick).

The AHCA plan, though, goes at this sideways. It eliminates the stick. It reduces the carrot. And it then puts in a new plan – the 30% insurance markup if people lose continuous coverage.

In theory, making people pay a lot more if they don’t buy insurance as soon as they need to will make healthy people join the market. If they know it will cost a lot more if they wait until they are sick, or if they know it will mean they won’t have community ratings if they don’t purchase plans early, they should buy in – reducing adverse selection.

But this plan doesn’t really do that. It’s a one-time, one year, 30% markup on insurance. That’s a tiny, tiny penalty in the scheme of things.

Let’s say I’m single and I’m in my late 20’s, and insurance costs me $3000. With the promised $2000 subsidy, I’d have to pay $1000 more to get insurance. Or… I could just forego it this year, and if I need it next year, it will cost me $3900 (I will owe $1900). In just one year, I make money. If I skip a number of years, I can save even more. I’m not sure this is much of a stick.

They could fix this by increasing the size of the stick or by sweetening the deal with carrots, but they didn’t.

Moreover, the incentive is totally in the wrong direction. The individual mandate punishes those who don’t buy insurance – every year. As long as I remain uninsured, I will be penalized. I will be hit again and again, until I buy insurance. That’s a stick.

The new AHCA penalty works in the opposite direction. Once I’m out of the market, I’m left alone. It’s not until I re-enter that I’m hit with the penalty. The longer I stay out, the longer I avoid the pain. It’s an inducement to remain uninsured.

We know what needs to happen to reduce adverse selection. We need to make the carrots and/or sticks stronger. This seems to do the opposite. I don’t get it.

@aaronecarroll

P.S. I’m also not entirely sure that this aspect of the law can pass muster for reconciliation. It’s an insurance regulation, not part of the federal budget.

Healthcare Triage – The American Health Care Act: A Republican Response to The Affordable Care Act

After so many, many years, it’s finally here. The Republican bill for repeal and replace. Kudos to Mark and Stan for getting this up so fast.

Welcome to a very special episode of Healthcare Triage.

Text of the bill can be found here.

@aaronecarroll

If the AHCA can’t pass, what does @SpeakerRyan do next?

The House Republicans released the American Health Care Act (AHCA) on Monday. Aaron summarizes it here. Critics of the bill include all liberals, many conservatives, the major medical societies, and many health industry groups.

It will be challenging to pass the bill. On the one hand, Democrats will oppose it because it reduces taxes on people with high incomes while cutting Medicaid and health insurance subsidies. On the other hand, the conservative wing of the House Republicans may not support it because they view it as “Obamacare-lite“.

Nevertheless, the AHCA could pass Congress. Will House conservatives really vote against a bill that largely repeals the ACA? The House leadership is moving the AHCA forward as fast as possible, hoping they can pass it before opposition groups can mobilize. Senator McConnell can eliminate the filibuster rule so that the AHCA can be passed on a majority vote. He might then be able to hold his coalition together to get that majority.

But suppose conservatives refuse to support the AHCA and it is defeated in the House. What happens next?

Speaker Ryan will revise the bill to meet the conservatives’ demands and unite the Republican caucus. He’ll then pass the revised bill in the House. Here’s why.

First, although Ryan could conceivably pass a more liberal ACA replacement with Democratic votes, he won’t. Ryan believes what the conservatives believe. The current AHCA is his attempt to win just enough moderate Republican Senate votes to get the bill passed. The current AHCA was his move to the left, and he won’t make another one if it fails. Second, although Ryan’s in trouble if he can’t pass something, he’s finished as Speaker if he compromises with the Democrats on ACA repeal.

Ryan’s problem if he moves right is that a more conservative AHCA would probably lose moderate Senate Republican votes and be defeated in the Senate. However, that defeat would not cost Ryan his job and his credibility with the Republican base, and with them his prospects for enacting his legislative program. Moreover, the 2018 election has many Democratic seats at risk. If the Republicans take those seats and expand their Senate majority, the chances for a hard-right ACA repeal and replace bill get much better.

If I’m correct, the Democrats might think they are winning based on the critical reception of the AHCA, but they are actually in peril. They have to defeat the AHCA now and then win seats in 2018. The way to defeat the AHCA is to sustain and build the opposition to ACA repeal shown during the Congressional ‘town hall’ demonstrations this winter. They have to convince Republicans representing Blue districts and states that they are at risk if they vote for the AHCA.

@Bill_Gardner

AcademyHealth: Traditional Medicare is cheaper

Hold on to your hat: Medicare pays lower prices than commercial market insurers. Yeah, OK, you already knew that. But what are the implications for access to care? I answer that question in my latest AcademyHealth post.

@afrakt

 

Federalism and the American Health Care Act

For Vox’s Big Idea series, I’ve adapted my essay, Federalism and the End of Obamacare. Here’s an excerpt:

Republicans may talk the talk of devolving health care policy to the states, but that’s not what the American Health Care Act does. Instead, it starves health reform of the funding upon which it depends.

Most significantly, Republicans intend to phase out the Medicaid expansion and to impose a hard cap on federal contributions. If a recession forces a state to exceed its cap in a given year, any overruns will come out of its Medicaid payments the following year. With that kind of shortfall, the states will have to make savage Medicaid cuts to make ends meet.

Republicans also want to slash the subsidies that make insurance affordable in the private market. Under the ACA, no one making less than four times the poverty level has to devote more than 10 percent of her income toward private coverage; most pay much less. The American Health Care Act would erase that affordability guarantee and, instead, extend age-based subsidies that would be much too meager for most people to afford coverage.

If federal money is withdrawn, states will be stuck. Because of the countercyclical trap and ERISA, they won’t be able to enact and sustain coverage expansions on their own. The end result will not be the diversity that federalism celebrates. It will be a uniformly crappy system that leaves millions of the sick and poor without coverage.

It doesn’t have to be this way. A group of Republican senators led by Bill Cassidy (R-LA) and Susan Collins (R-ME) has floated an alternative, the Patient Freedom Act of 2017, that retains the ACA’s funding streams while giving the states more room to choose how to use that money. That’s a model that deserves serious attention from both Republicans and Democrats. It might enable partisans on both sides move past the rancorous debate over the ACA.

For now, however, the Republicans seem intent on dismantling coverage gains across the entire United States. Their proposals trade on the rhetoric of states’ rights, but they would have the perverse effect of inhibiting state power. That’s bad for federalism — and bad for the country.

@nicholas_bagley

JAMA Forum: Immigration Reform’s Potential Effects on US Health Care

From my latest post over at the JAMA Forum:

Immigration reform is a topic about which many people in the United States are passionate. It involves not only concerns about economic interests, but national security as well. Our health care system is especially sensitive to alterations in immigration policy. Recent events have highlighted the ways in which potentially small changes even to the ways we screen and admit refugees could affect the practice of medicine.

The US health care system is very dependent on immigration.

Go read the whole thing!

@aaronecarroll

The Golden State Mandate

Now that Republicans have finally released their alternative to Obamacare, I’ve got an op-ed in the Los Angeles Times encouraging California and other blue states to take action to protect themselves.

[T]he Republican bill would set chaos in motion because it would immediately eliminate the individual mandate — that is, the tax penalty imposed on those who don’t purchase insurance. Without that mandate, some healthy people will choose to forgo coverage, knowing they can always enroll later if they get sick. Those who keep their insurance will therefore be less healthy than average. Insurers will have to jack up their premiums to cover those sicker enrollees.

That means California’s stable market will start to teeter. Large premium spikes are likely; in some rural areas, insurers might pull out altogether. The Commonwealth Fund estimates that 1 out of 4 people on the exchanges would lose their coverage.

Here’s the takeaway, then: Obamacare wasn’t collapsing — but it could if the Republicans get their way.

California has a shot at preventing that collapse, however, as do other states where Democrats are in charge, including New York, Connecticut, Washington and Oregon. For 2018 and 2019, almost every part of Obamacare except for the individual mandate will remain intact. California can patch that hole by replacing the individual mandate at the state level. Call it the Golden State Mandate.

Read the whole thing!

@nicholas_bagley

Exciting Microbe Research? Temper That Giddy Feeling in Your Gut

The following originally appeared on The Upshot (copyright 2017, The New York Times Company).

While we have long known about the existence of microbes — the tiny bacteria, fungi and archaea that live all around, on and in us — our full relationship has become one of the hottest topics for research only in recent years.

Scientists believe that every person contains as many independent microbial cells as human cells. This collection of life, known as the microbiome, provides useful functions for us. Indeed, some of the things we think our bodies do are actually the abilities and enzymes of life-forms living within us. They can help with digestion, vitamin synthesis and even immunological responses.

But, as with many new breakthroughs and advances, the hype of the microbiome often outweighs the reality. This seems especially likely in the field of nutrition. Doing research on the microbiome is not easy, and there are many opportunities to foul things up. To accomplish human studies, large samples of people and microbiomes are needed to account for potential confounding variables.

Specimens have to be collected and stored carefully because contamination has been a big problem. DNA has to be extracted, amplified and sequenced. Finally, powerful bioinformatics tools are necessary to assemble and analyze the huge amount of data contained in a sequence of nucleotides — all of which has resulted in a wide range of new “omics,” including genomics, proteomics, transcriptomics and metabolomics.

Of course, if we think that microbes play a large role in health, we have to rethink the role that antimicrobials play in our lives. In this thinking, antibiotics and antifungals could be life-changing or life-threatening. But that’s not the case. There are many reasons to avoid unnecessary use of these medications, but the microbiome appears able to withstand most treatment.

Still, antimicrobials clearly have an effect on the microbiome. Many studies, along with common sense, suggest that when we treat people with antibiotics, we change the amount and type of microbes that live in our gut. We’ve seen this with Clostridium difficile.

C. diff, as it is also known, is a bacterium that lives in many healthy people. The presence of other microbes keeps its numbers in check. But when we treat people with antibiotics that kill off other bacteria, but not C. diff, it can increase its presence and lead to serious illness. Infection with C. diff is hard to treat, and it’s not uncommon. In 2011 in the United States, there were more than 450,000 cases, causing 29,000 deaths.

A number of studies have shown promise in using the microbiome to treat C. diff. Fecal transplant (which is exactly what it sounds like) effectively fixes a damaged microbiome by infusing it with a healthy one. This type of therapy could theoretically work in treating other diseases.

But there’s a huge gap between “holds promise” and “definitive treatment.” After all, there’s a direct biological explanation for why the microbiome and antibiotics play a role in C. diff. That direct link is much harder to describe when talking about other disorders.

Many have postulated that the microbiome has an important part to play in inflammatory bowel diseases, which, because of my condition, I follow quite closely. Others have attempted to link it to disorders of development and behavior, like autism. Because the microbiome takes root in childhood, studies have explored if pregnancy, method of delivery or even the environment might hold some meaning in the microbiome’s development and later health.

Even more significantly, many have begun to hypothesize that it has a significant role in the current obesity epidemic. Studies have shown that transferring the microbiome from a thin mouse to an obese one, or vice versa, could lead to a change in body size to match. It was this type of study that roused much of your ire when I dismissed it in my discussion of artificial sweeteners. Other studies show that changes in diet can change the microbiome in human beings.

But when you analyze all these studies together, as scientists did in a meta-analysis last summer, the certainty of those links becomes much less certain.

This doesn’t mean that the microbiome doesn’t play a role in nutrition. Some important research has begun to show that chronic malnutrition probably causes changes in the microbiome that make treating the problem much harder than many anticipate. Problems with substandard sanitation can also contribute to microbial changes in very poor environments, compounding the problems of malnutrition. But we haven’t yet figured out how to translate these findings into easily used treatments.

The problem with getting too enthusiastic about the microbiome isn’t much different from the problem with getting too enthusiastic about any research advances. Many mistake correlation for causation; just because some people have a different microbiome doesn’t mean that microbes are responsible for other differences. Studies in mice are not the same as studies of humans; diet is incredibly complex, and rarely do results in genetically similar animals easily translate to diverse groups of people.

And the microbiome is very, very complicated. We understand so little about it, and the idea that we can make accurate representations about it, let alone manipulate it, is somewhat far-fetched.

As with the genome before it, our greater understanding of the microbiome has spurred great excitement and interest. Last May, the White House began the National Microbiome Initiative, with huge public and private investment into research. We hope these investments will yield great returns, but it will be important to temper our enthusiasm with an appropriate amount of skepticism. Health advances usually proceed more slowly than the hype.

@aaronecarroll

Healthcare Triage: Wearable Tech Probably Won’t Help You Lose Weight

I once received a lot of blowback for an Upshot article in which I showed (with evidence) that exercise is not the key to weight loss. Diet is. Many, many readers cannot wrap their head around the notion that adding physical activity, and therefore burning more calories, doesn’t necessarily translate into results on the scale.

Well, here we go again because some of those folks also believe that fitness devices — Fitbit, Vivosmart, Apple Watch — must be helpful in losing weight. Unfortunately, evidence doesn’t support this belief either.

That’s the topic of this week’s Healthcare Triage.

This episode was adapted from a column I wrote for the Upshot. Links to further reading and sources can be found there.

@aaronecarroll

The Republicans’ “American Health Care Act” in a few words as I can manage

The repeal and replace bill is here: The American Health Care Act. There will be a gazillion explainers, and that’s not my goal here. I’m trying to describe the bill in a few words as I can manage, to make a Healthcare Triage script. So here is my attempt. I’m going to leave comments open, and I encourage you to tell me where I’m wrong or missed something. I don’t tape until tomorrow. You can also tweet me suggested changes. Text of the bill here.

Medicaid

Medicaid is complicated. First of all, the bill leaves the expansion intact – for now. Everyone who signs up by 2020 gets to keep their Medicaid. But in that year, entry into the expansion is frozen, and people will only remain eligible if they don’t have a lapse in coverage of more than a month.

In some ways, this bill incentivizes states to sign up as many people as possible in the next three years, so that they qualify for a higher match amount when that goes into effect in 2020.

In 2020, we change Medicaid to a per capita block grant program. The cap rises by medical CPI plus 1%. The initial rate will be set by looking at 2016, and then increasing spending to 2019 based on that formula. That could lead to a drop in relative funding in 2020 if health care spending increases faster than inflation from now until 2020.

The amount allocated per person is based on five groups: (1) kids, (2) the elderly, (3) blind and disabled people, (4) previously eligible adults (pregnant women, parents), and (5) expansion eligible (working adults).

Lottery winners are not eligible for Medicaid. They spent a full six pages of the bill discussing this. I have no idea why.

The essential health benefits requirement for some Medicaid benchmark plans goes away. This seems to include the requirement that mental health services be covered the same as other health benefits.

Retroactivity changed. As of now, you can get Medicaid today and get it cover your spending for up to three months ago. This is important, because people could get coverage for things that occurred for some time before they signed up. That’s now reduced to the month in which they apply. Huge deal.

Additionally, now states have to re-determine eligibility for people on Medicaid at least every six months. This will lead to many people losing coverage, cause that’s much more of a pain than you think.

Other Payments

Disproportionate hospital payments are restored immediately to states that didn’t expand Medicaid, and to all states in 2020.

In 2018 and 2019, $15 billion is allocated for states to do with what they want. They could make high-risk pools. Or they could increase the size of the subsidies/tax credits. Or they could reinsure insurers to protect them from really high-cost patients.

From 2020 through 2026, that amount is reduced to $10 billion a year. To claim that money, states have to match in in increasing amounts, from 7% in 2020 to 50% in 2026.

Subsidies

Anyone who maintains continuous coverage will keep their community ratings – they can’t be charged more than others. If, however, they let their coverage lapse for 63 days in a year, they can be charged 30% more for 12 months.

The subsidies change, too. Now. They’re called tax credits. (Here’s a secret – they were tax credits before). But now they’re not based on how much you earn; they’re based on how old you are.

They also start to phase out when you earn $75,000 a year ($150,000 for joint tax filers).

As you can see from this handy chart from the KFF, a 27-year-old will get $2000, a 40-year-old will get $3000, and a 60-year-old will get $4000. That’s true if they make $20,000 or $75,000. Under the ACA, they got more money if they were poorer, and less if they were richer. Those making $75,000 get nothing now, for instance.

This means that poorer people, especially non-young poorer people, are going to have a much harder time affording insurance. People making more, ironically, are potentially in for a windfall.

Cost sharing subsidies are not appropriated for 2017, 2018, or 2019 – and they’re eliminated in 2020. Your subsidies also can’t be used to purchase any insurance that covers abortion.

The exchange market

There’s no more individual mandate or employer penalty – retroactive to 2016. Insurance companies will hate that. This will likely lead to adverse selection. That’s made worse ironically by the 30% penalty for late enrollment. Healthy people, once they’re out, simply won’t buy coverage until they’re sick – cause you’ll get the same penalty no matter what. Death spirals seem much more likely with this plan.

Age bands (the difference between what you can charge young and older people for insurance) are increased from 3:1 to 5:1 starting in 2018. This will make insurance cheaper for younger people and more expensive for older people.

Taxes

For 2017, all the taxes remain in effect. In 2018, though, they’re gone. This includes the Cadillac tax (delayed until 2025, which is the same thing), the medical device tax, the tax on high salaries of insurance executives, the Medicare tax on higher earners, taxes on insurance companies, pharma, and tanning salons, etc.

Misc.

The bill defunds Planned Parenthood, bur increases funding for community health centers.

People could now put even more money into their health savings accounts. The limit increases to at least $6,550 for an individual and $13,100 for a family in 2018.

What’s untouched?

Young adults can are still covered by family plans until they are 26.

Guaranteed issue and community ratings still exist (subject to continuous coverage).

Essential health benefits remain intact in the exchange market, including preventive services and maternity care.

Annual and lifetime limits are still banned.

My thoughts

There’s no CBO score yet, and it’s hard to know exactly what they find. But here are my thoughts: it’s hard to see how this won’t lead to a reduction in insurance coverage. Many people will find the subsidies insufficient to buy care.

It’s also hard to see how it will lead to much of a deficit reduction in the long term. There’s still a decent amount of spending in there and a declaration that many of the taxes/sources of revenue will end. That’s unless they plan deep, deep cuts to Medicaid in the future – which will come with its own issues.

I’m actually worried that their continuous coverage plan could actually make adverse selection worse. Why wouldn’t a healthy person go without insurance for a couple years if all they’re gonna see is a one year 30% increase in premiums as a penalty?

There’s a fair argument to be made that this is Obamacare Lite. There’s still a fair amount of regulation, the expansion is left intact until 2020, subsidies still exist – even the taxes don’t go away yet. But this is still a big difference from the ACA. The subsidies shift away from the poor to others. And Medicaid undergoes a huge sea change in 2020.

It’s a bill. It desperately needs a CBO score.

@aaronecarroll