AHCA and Autoenrollment

There has been talk that the Senate is talking about auto-enrollment as the Senate Republican caucus is chewing over the AHCA bill that the House passed. I think there are two major show stoppers to auto-enrollment in a Senate Republican reconciliation bill.

Let us assume that any auto-enrollment process looks something like that in Cassidy-Collins. That bill contained significant language that most likely would be ruled as not germane to the revenues or expenditures. It sets up significant number of rules and requirements for what an auto-enrolled plan had to cover.

More prosaically, I am having a hard time seeing this work if we use the auto-enrollment proposal in Cassidy-Collins and the subsidy levels in the current AHCA ($2,000 for 29 and under, $2,500 for 30-39, $3,000 for 40-49, $3,500 for 50-59, $4,000 for 60+) as any reasonable estimate of uptake would cost a tremendous amount of money.

The challenge of grafting Collins-Cassidy auto-enrollment into the AHCA is one of funding. The CBO projected that the AHCA would leave 24 million more people uninsured compared to current law. That would leave 52 million people uninsured according to the March 2017 CBO analysis. There are approximately 11 million undocumented immigrants of which some have health coverage through some means. Let’s work with 42 million people under the AHCA would be eligible for a credit.

Right now the AHCA has a net deficit savings of $150 billion dollars over ten years. That will decrease when CBO releases a revised score. But let’s keep things simple. If we assume an average $3,000 subsidy and an opt-out rate similar to Medicare Part A (<1%) an opt-out program costs $125 billion dollars per year or $1.25 trillion dollars over ten years. An opt-out program forces the AHCA to either reduce the value of the monthly subsidy to a trifling average amount ($30 per person per month) or actually make the AHCA a healthcare bill and get rid of all the tax cuts. And even then, the actuarial value of the coverage that can be funded with the AHCA credits is much lower than the the actuarial value of the ACA plans.

Universal coverage at any level that is greater than giving people three aspirins and telling them to rub some dirt on it is expensive. It is a legitimate debate as to whether or not we want low actuarial value catastrophic plans with near universal coverage in all states through an opt-out plan or scattered results ranging from higher actuarial plans in Massachusetts to one in five people in Texas still being uninsured due to opt-in plan and state policy choices. Those are legitimate questions but unless the Senate completely junks everything in the AHCA, opt-out plans don’t fit in any context that is defined by the AHCA.

Auto-enrollment trade-offs

Sarah Kliff at Vox highlights one area of plausible discussion among liberals and some conservative Senators on health care. She looks at the idea of automatic enrollment with opt-outs from a catastrophic plan. This idea is part of Cassidy-Collins state option.

Republican legislators and policy experts are kicking around a novel way to increase health coverage: automatically enrolling millions of uninsured Americans into low-cost insurance plans….

And unlike Republicans’ other ideas, automatic enrollment is the rare health proposal that doesn’t reflexively alienate liberals. They are generally enthusiastic about policies that would lead to greater coverage.

“It’s a viable idea,” says Andy Slavitt, who ran Medicare under President Obama and is an ardent Affordable Care Act advocate. “What’s appealing about it to Republicans and to Democrats is you want people to have free choice but not be free riders.”

There is a major operational challenge of assignment. I don’t think it is as big of a deal as others make it out to be as I conceptualize it as effectively similar to Medicaid presumptive eligibility with retroactive payments. A region could be set up and insurers could bid on providing coverage to effectively the uninsured for an estimated pot of money. We don’t need an ugly database tracking enrollment.

But that is a detail.

The key thing is to look at the trade-offs between an opt-in and out-out auto-enrollment program.

The ACA is an opt-in program. People have to sign up for an Exchange plan, they have to sign up for Medicaid. Not everyone signs up. Auto-enrollment basically has everyone sign up.

We need to hold money constant for a minute to see the implications. The first pass will not be an ACA vs AHCA analysis. It will be an illustration. We’ll get a little more complicated in the second iteration of analysis. Read more

Market power strikes again

An interesting paper in Health Services Research by Dr. Seidu Dauda* looks at market power between payers and providers to tease out the effects of increasing concentration on prices. The effect that is actually being measured is how does the changing relationship of market power between payers and providers change prices.

The results aren’t surprising. Concentrated providers lead to price increases. Increasingly concentrated payers lead to price decreases. This is expected.

A hypothetical merger between two of five equally sized hospitals is estimated to increase hospital prices by about 9 percent (p < .001). A similar merger of insurers would depress prices by about 15.3 percent (p < .001). Over the 2003–2008 periods, the estimates imply that hospital consolidation likely raised prices by about 2.6 percent, while insurer consolidation depressed prices by about 10.8 percent....

What does this mean for policy? Read more

Medicaid in the President’s budget request

The Department of Health and Human Services accidentally leaked their own budget this evening. Bob Herman at Axios saved a copy. The biggest aspect of the budget is it laid out another $600 billion dollars in cuts to Medicaid and CHIP over ten years in addition to the $820 billion in Medicaid cuts in the AHCA.

Between these two documents Medicaid would lose 47% of its federal funding over a decade.

Loren Adler at Brookings thinks the cuts would be to tie the AHCA block grants to no more than inflation rate growth without regard to population or case mixture. As the Baby Boomers retire, more of them will require nursing home care that is currently paid for by Medicaid but there would be no federal money.

This is a budget wishlist that pits old people versus kids, the disabled against the pregnant and state budgets against upper income tax cuts in the federal budget.

Call Congress and give them an earful.

Rewind the timer to 90 days

The Cost Sharing Reduction suit, House vs Price, had a status meeting this morning in front of the DC Court of Appeals. Nothing much happened. Both parties asked for another ninety day extension.

States are trying to become intervenors with the argument that the House does not have standing. Nicholas Bagley explains:

If the states are allowed to intervene, however, they could pursue the appeal even if Trump decides to drop it. With the appeal in place, the injunction couldn’t take effect until the case is heard and decided.

What’s more, the states are very likely to prevail. Not on the merits: as I’ve written before, the House is right that there’s no appropriation to make the cost-sharing payments. But the D.C. Circuit is likely to be skeptical of the district court’s conclusion that the House of Representatives has standing to sue. That’s why the states want to court to decide the case quickly: they hope to get rid of the lawsuit once and for all…
Courts try to strike a balance. They insist that third parties intervene as early as possible. They also don’t allow intervention if someone who’s already a party can be counted on to represent the third party’s interest.

That’s why the states couldn’t have intervened when the case was before the district court. The Obama administration was vigorously defending the constitutionality of the cost-sharing reductions, much as the states would have done. Their interests were aligned. Even after Trump’s election, it looked like the Justice Department would keep defending the payments—which is perhaps why an earlier effort to intervene in House v. Price was rebuffed.

Matters are very different today. Cementing his reputation as the world’s worst client, President Trump has publicly toyed with the idea of cutting off the cost-sharing reductions in an effort to force concessions from Democrats….

At this point, it’s nuts to think the states can count on the Trump administration to represent their interests.

A key reminder. The short cut fuse of the CSR bomb is limited. If it does not explode by early Fall, carriers can survive paying increased benefits without corresponding revenue if they jack up their rates in 2018 to compensate.

We have one more CSR court cycle to go through before it is resolved one way or another.

Actually, this is a good bill

The Senate is actually working on a good healthcare bill.  No, not the AHCA or the doppelganger of the AHCA.  The Chronic Act is winding its way through the committee process. This bill is full of little technical corrections to Medicare and tweaks for experiments.  Let’s look at what’s happening in it.

Section 101 expands a demonstration project that has good initial results.  The Independence at Home program is a pilot program that uses intensive primary care and care coordination to specifically target high risk and high cost Medicare beneficiaries for more intensive services.  Its initial evaluation found significant savings and quality improvements.  This section expands the time frame and the number of beneficiaries who can be enrolled in the study.  The goal, I think, is to see how this project can scale up and move it towards a national model.

Section 102 allows for some telehealth visits to be used to supervise/coordinate dialysis care.  This would be an option not a requirement. It should improve access and quality of life for people on dialysis who live far away from their nephrologists and clinics.  It might save a little bit of money as the telehealth visit would not be allowed to charge a facility fee.

Section 201 modifies how care coordination is managed for individuals who are dual enrolled in Mediare Advantage and Medicaid through the SNP program.  Care coordination meetings are mandated.  Rules are to be developed for a uniformed complaints and grievances process.  Eligibility is defined as either rare or costly.  There is a section that warms the cockles of my heart on statistically validity of quality measures relating to population size.

Section 301 is a Medicare Advantage benefit design waiver pilot program.  The concept of Value Based Insurance Design (VBID) is that patients should pay nothing for very high value care and a lot for low value care.  In this frame work, insulin and test strips should be no cost sharing to Type 1 diabetics.  Ten states would be allowed to experiment with benefit design.  The goal is to get people better while lowering costs.  I don’t know if this will work but it is a reasonable experiment.

Section 302 allows Medicare Advantage firms to apply for waivers to give non-medical benefits to chronically ill patients.  Again, I don’t know if this will bend the cost curve and improve outcomes but it is a reasonable thing to try.

Section 303 and 304 and 305  expands telehealth options for Medicare Advantage and Accountable Care Organizations (ACO), and stroke patients.  I like that telehealth is not being allowed to count towards network adequacy.  The trade-off will be if lower cost visits leads to more visits and more net costs with or without net patient benefit.

Section 401 allows ACO patients to be assigned prospectively.  This means the ACO could be chosen by beneficiaries at the start of the year. Attribution is a major challenge and source of technical risk.  Retrospective attribution means the ACO is responsible for a population that is only defined after the contract.  Prospective attribution allows an ACO to know its patient roster at the start of the contract.  This is weedy but useful.

Section 501 allows ACO’s to use member incentive programs for primary care and care coordination purposes.  This ties into the same general concept of Section 301 where Congress would like Medicare to make it easier for people to make good choices.

And then there are several sections authorizing the Government Accountability Office (GAO) to conduct studies on interesting questions regarding care coordination.

None of these sections are home runs.  There might be a bunt single and perhaps a well hit ball that falls in between the shortstop and the left fielder for a hit.  But this is what a decent healthcare focused bill can actually look like.  We should encourage this.



NB — we should also encourage a better name for the bill to avoid late night Taco Bell jokes.




We can write letters too

Write a letter to Senator Hatch at HealthReform@finance.senate.gov and give him your interested stakeholder input. For some of us, your interest is your life. For all of us, it is the type of society we want to live in.