Numerous bloggers on the left have pointed out that health reform is, at least as far as the insurance exchanges go, basically the same as health reform in Massachusetts. The latter was passed with a Democratic legislature, but then-Governor Mitt Romney, a Republican, signed off on it. It's important to analyze Republican opposition to the principles of health reforms, because sooner or later, they will come back to power - it's important to know and plan for what might happen.
Prior to reform, the state had very high health insurance coverage. Medical care is very expensive in Massachusetts, but standards of living are high. The state had strict insurance rating regulations, including community rating (everyone charged more or less the same price regardless of health) and guarantee issue (everyone who applies gets offered). These provisions meant that individual insurance was very expensive for young, healthy people. However, sicker and/or older people could at least get an offer of insurance.
Massachusetts created an insurance exchange in 2006. In addition to GI and CR, they imposed an individual mandate. This forced all (or most) of the young uninsured folks to get into the insurance pool and subsidize others. This was branded as a personal responsibility requirement by some Republicans. Massachusetts provides free health care to everybody under 150% of the Federal Poverty Limit through a program known as Commonwealth Care, or CommCare. CommCare also provides discounted insurance (on a sliding scale) to people from 151-300% of FPL. Everyone else in the exchange is on the Commonwealth Choice, or CommChoice, program.
Massachusetts mandates that all people eligible for CommCare receive it through the exchange. They mandate that the companies offer benefits in three broad tiers, Bronze, Silver and Gold. The deductibles and copays are standardized in each tier (e.g. all Bronze plans have a $2,000 deductible and $5,000 maximum out of pocket for individuals). Bronze plans cover an average of 65% (if I recall right) of your medical expenses. Silver does about 75% and gold does about 85%.
This level of regulation of the marketplace is objectionable to conservatives and probably leads them to think that the "Comm" in CommChoice stands for Communism. However, there is a good rationale for this. If you present people with too many choices, they will choose poorly. Evidence shows that having a large number of investment options in 401k retirement plans can cause people to not invest. Evidence shows that many people in Medicare Part D, which offers a large and sometimes confusing array of insurance companies, don't choose the plan which maximizes their savings - seniors who didn't choose the lowest cost plan could have saved an average of $360-520 by doing so. By standardizing the benefits to some degree and putting them in tiers, CommCare makes it easier for people to choose and easier for them to compare plans. It guarantees that all plans in each tier will provide about the same amount of coverage.
Even with the actuarial value specifications for each tier (i.e. the % of average expenses the plans cover), insurers can vary the designs quite a bit. They can also vary those policies to make their plans less favorable to people with certain conditions. For example, they could impose a separate and additional deductible for prescription drugs - this means that anyone with diabetes or asthma or depression would pay more, perhaps quite a bit more, on that plan, so they will choose another one. This pushes sicker people onto other plans, which raises their costs. If you allow unrestricted variation, you end up with some plans with relatively skimpy coverage and healthy people and some plans with generous coverage and very sick people. The latter plans are very expensive. This undermines the whole exchange system. Sarah Lueck of the Center on Budget and Policy Priorities has more on this topic.
Actuaries are able to do a function called risk adjustment, which is to redistribute premium payments on an exchange from the plans with healthier populations to plans with less healthy populations. This aims at correcting for insurers attempting to cause adverse selection like in the example I described above. However, risk adjustment isn't perfect. It doesn't compensate fully for people with higher medical expenditures. Additionally, it's harder to do when plans vary significantly in benefit design. And furthermore, if you have an exchange that is risk adjusted but insurers can still sell outside the exchange, then the plans will probably try to recruit healthy people outside the exchange and sicker people in the exchange. This could be as simple as a marketing campaign on college campuses or at gyms and fitness clubs. But it will undermine the exchange, because people on the exchange are supposed to cross-subsidize each other.
If we want to put up with a system of competing insurance companies, then this sort of infrastructure is required to ensure that the system runs well and pools risk properly. Some Republicans would just set up exchanges and let the companies run wild, but then they would merely be "innovating" on thousands of variations of benefit schemes with no apparent purpose other than to weed out unhealthy enrollees, instead of concentrating on improving efficiency, negotiating good prices with providers and manufacturers and managing their enrollees' chronic diseases. If and when the Republicans return to power in Congress, it is likely that they will attempt to overturn these regulations. However, doing so will cause the system to unravel, and any attempt to deregulate this system should be resisted at every opportunity.
Showing posts with label Health. Show all posts
Showing posts with label Health. Show all posts
Tuesday, April 06, 2010
Monday, April 05, 2010
Forward on Health Reform: Undocumented immigrants and healthcare
The United States has chosen, for better or worse, to organize access to health services on an insurance model. In contrast, in countries like the United Kingdom and Canada, you just show up with minimal documentation at a clinic or hospital, which gets reimbursed directly by the government.
In health reform, the issue of undocumented immigrants was so contentious that the Democrats left undocumented immigrants completely out of the bill. They are forbidden to participate on the exchanges at all. The original House bill would allow them to buy insurance on the exchanges if they used their own money.
Undocumented immigrants will continue to access community health centers, which will charge sliding scale fees. They will be eligible for emergency treatment, and hospitals will still receive compensation for treating them under Disproportionate Share Hospital funds (DSH, pronounced "dish", funds).
Access to care for this population will continue to be a problem. The U.S. will have to keep investing in community health centers, which will also serve Medicaid patients and many minority communities.
One anti-immigration commenter interviewed for the article said there is no foolproof way of verifying documentation to keep undocumented immigrants from participating on the exchanges. That's a fatuous comment, because there is no foolproof way of doing anything. That said, she does have a point in that someone with a false Social Security number belonging to a citizen could potentially get into the exchanges and receive subsidies. I don't expect that this will happen very much, though.
All permanent residents and refugees would be eligible for subsidies, and in the latter case, for Medicaid. If undocumented immigrants had participated in the exchanges, they would be easily identifiable because they weren't receiving subsidies. If the government wanted to round them up, the information on the exchanges could be subpoenaed. I'm not sure that many of undocumented immigrants would participate in health reform if they could, but I still think they should be given the chance. Furthermore, in the long run, we do not want a market outside of the exchanges for technical reasons. In any case, this is one of the things we will have to fix, along with the immigration system.
In health reform, the issue of undocumented immigrants was so contentious that the Democrats left undocumented immigrants completely out of the bill. They are forbidden to participate on the exchanges at all. The original House bill would allow them to buy insurance on the exchanges if they used their own money.
Undocumented immigrants will continue to access community health centers, which will charge sliding scale fees. They will be eligible for emergency treatment, and hospitals will still receive compensation for treating them under Disproportionate Share Hospital funds (DSH, pronounced "dish", funds).
Access to care for this population will continue to be a problem. The U.S. will have to keep investing in community health centers, which will also serve Medicaid patients and many minority communities.
What is clear is that as the ranks of the uninsured diminish, immigrants like Medrano will continue to patch together health care as they can — at health centers such as Fresno's Clinica Sierra Vista, at hospital emergency rooms, or through programs like Healthy San Francisco, which offers universal health care to all who live in the city.
"We have to be very creative — not asking for labs unless it's really essential, working with generics, working with drug companies, giving them samples," said Juan Carlos Ruvalcaba, the doctor seeing Medrano at Clinica, which charges on a sliding scale of $40 to $70, depending on the patient's ability to pay.
Once an undocumented immigrant himself, Ruvalcaba was able to become a citizen and attend medical school because of an amnesty program in 1986. He remains committed to serving all patients, no matter their insurance or immigration status, but there is only so much he can do, he said.
He was able to give Medrano the drugs she needed, but he asked, "What happens when they need a specialist? What if they end up in the emergency room, and end up with a big bill?"
Some who work with this population are afraid that with the focus shifting onto providing care for the newly insured, those shut out of the system will be forgotten, left to fend for themselves with even fewer resources.
"It may make things worse — if you say 32 million are covered, there may be less done for these large groups who are here, who are working, who are such a large part of our agriculture industry," said Norma Forbes, executive director of Fresno Healthy Communities Access Partners, a nonprofit network of eleven health care organizations in California's rural Central Valley.
One anti-immigration commenter interviewed for the article said there is no foolproof way of verifying documentation to keep undocumented immigrants from participating on the exchanges. That's a fatuous comment, because there is no foolproof way of doing anything. That said, she does have a point in that someone with a false Social Security number belonging to a citizen could potentially get into the exchanges and receive subsidies. I don't expect that this will happen very much, though.
All permanent residents and refugees would be eligible for subsidies, and in the latter case, for Medicaid. If undocumented immigrants had participated in the exchanges, they would be easily identifiable because they weren't receiving subsidies. If the government wanted to round them up, the information on the exchanges could be subpoenaed. I'm not sure that many of undocumented immigrants would participate in health reform if they could, but I still think they should be given the chance. Furthermore, in the long run, we do not want a market outside of the exchanges for technical reasons. In any case, this is one of the things we will have to fix, along with the immigration system.
Tuesday, March 30, 2010
Mother Jones: The Man Who Almost Killed Health Reform
Rep. Bart Stupak, while sincerely committed to the pro-life position, was sincerely determined to see health reform pass. In the case of Richard Doerflinger, a senior analyst with the U.S. Conference of Catholic Bishops and a key architect of their anti-abortion campaign, the commitment to health reform is much less clear, as Mother Jones magazine reports. An excerpt:
Like many other Catholic groups, the bishops have long advocated for universal health care. But as abortion moved to the forefront of the health care debate, a schism occurred. As the health care bill neared a vote in the House last November, Stupak claimed that by providing tax credits to help people buy insurance, the legislation would result in government money being used to pay for abortions. With Doerflinger’s help, he drafted an amendment that required women to purchase a separate "rider" policy with their own money if they wanted abortion coverage. When the action shifted to the Senate, Sen. Ben Nelson (D-Neb.) inserted slightly different anti-abortion language requiring women who receive tax credits to cut a separate check to pay for the part of their insurance policy that would cover abortion. Many Catholic groups who favored health care reform decided that the Senate anti-abortion provisions were acceptable. By late March, Catholic nuns, the Catholic Health Association, and many individual pro-life faith leaders had admitted publicly that the Senate bill would not fund abortion, and expressed support for the Democrats' plan.
But the bishops wouldn't budge. Doerflinger insisted that the Senate bill would still lead to federal financing of abortion, and that only the House version would do. Soon, the ostensibly pro-reform bishops had joined forces with a coalition of conservative groups who had no desire to see a health care bill pass. These included Focus on the Family and the National Right to Life Committee (NRLC), which attacked the Democrats' plan as "death care" and warned that it would lead to the "rationing" of medical treatment.
Before long, liberal Catholics were questioning the motives of Doerflinger and the bishops in aligning themselves with these right-wing groups. In mid-March, the National Catholic Reporter slammed the bishops for embracing a "red herring" argument served up by the NRLC that the Senate bill would allow community health centers to fund abortions. In fact, community health care centers have never performed abortions and there was no plan for them to do so in future. "The bishops have to be clear that some of their talking points might lead honest observers to question their competence—or worse," the National Catholic Reporter concluded. (Doerflinger declined to respond to follow-up questions regarding the community health centers issue.)
...
Stupak pushed Doerflinger's position almost until the very end. On March 17, he told Fox News that he didn’t listen to nuns when drafting pro-life language, and instead relied on "leading bishops, Focus on the Family, and The National Right to Life Committee." But four days later, on the day of the final vote, he abruptly changed course. Over the bishops' objections, he accepted the White House’s compromise: an executive order reiterating that no government money would be used to pay for abortions.
In the days since Stupak voted for the bill, relations between his bloc and the bishops have soured. "The church does have some work to do in dealing with frayed nerves and divisions on policy questions," Doerflinger told Catholic News Service. Last week, Stupak attacked the bishops and other anti-abortion groups for "great hypocrisy" in opposing Obama's executive order after having supported former President George W. Bush's executive order banning stem cell research in 2007. He told the Daily Caller he believed the bishops and the groups they were allied with were "just using the life issue to try to bring down health-care reform." In other words, he suspected he was wrong to trust that his former allies were acting in good faith.
Like many other Catholic groups, the bishops have long advocated for universal health care. But as abortion moved to the forefront of the health care debate, a schism occurred. As the health care bill neared a vote in the House last November, Stupak claimed that by providing tax credits to help people buy insurance, the legislation would result in government money being used to pay for abortions. With Doerflinger’s help, he drafted an amendment that required women to purchase a separate "rider" policy with their own money if they wanted abortion coverage. When the action shifted to the Senate, Sen. Ben Nelson (D-Neb.) inserted slightly different anti-abortion language requiring women who receive tax credits to cut a separate check to pay for the part of their insurance policy that would cover abortion. Many Catholic groups who favored health care reform decided that the Senate anti-abortion provisions were acceptable. By late March, Catholic nuns, the Catholic Health Association, and many individual pro-life faith leaders had admitted publicly that the Senate bill would not fund abortion, and expressed support for the Democrats' plan.
But the bishops wouldn't budge. Doerflinger insisted that the Senate bill would still lead to federal financing of abortion, and that only the House version would do. Soon, the ostensibly pro-reform bishops had joined forces with a coalition of conservative groups who had no desire to see a health care bill pass. These included Focus on the Family and the National Right to Life Committee (NRLC), which attacked the Democrats' plan as "death care" and warned that it would lead to the "rationing" of medical treatment.
Before long, liberal Catholics were questioning the motives of Doerflinger and the bishops in aligning themselves with these right-wing groups. In mid-March, the National Catholic Reporter slammed the bishops for embracing a "red herring" argument served up by the NRLC that the Senate bill would allow community health centers to fund abortions. In fact, community health care centers have never performed abortions and there was no plan for them to do so in future. "The bishops have to be clear that some of their talking points might lead honest observers to question their competence—or worse," the National Catholic Reporter concluded. (Doerflinger declined to respond to follow-up questions regarding the community health centers issue.)
...
Stupak pushed Doerflinger's position almost until the very end. On March 17, he told Fox News that he didn’t listen to nuns when drafting pro-life language, and instead relied on "leading bishops, Focus on the Family, and The National Right to Life Committee." But four days later, on the day of the final vote, he abruptly changed course. Over the bishops' objections, he accepted the White House’s compromise: an executive order reiterating that no government money would be used to pay for abortions.
In the days since Stupak voted for the bill, relations between his bloc and the bishops have soured. "The church does have some work to do in dealing with frayed nerves and divisions on policy questions," Doerflinger told Catholic News Service. Last week, Stupak attacked the bishops and other anti-abortion groups for "great hypocrisy" in opposing Obama's executive order after having supported former President George W. Bush's executive order banning stem cell research in 2007. He told the Daily Caller he believed the bishops and the groups they were allied with were "just using the life issue to try to bring down health-care reform." In other words, he suspected he was wrong to trust that his former allies were acting in good faith.
Health Reform Watch: First administrative problem with health reform
Ezra Klein, who blogs on the Washington Post, reports that insurance companies initially tried to weasel out of the requirement to immediately. cover all kids regardless of pre-existing conditions. They agreed that, for kids they actually insured, they could not exclude pre-existing conditions. However, they argued that they were not subject to guarantee issue requirements and that they would not need to offer insurance to sick kids.
Clearly, Congress intended to have all kids covered. The insurers read the law correctly but they would not have been following the spirit of the law. This is irrelevant: the Secretary of Health and Human Services, Kathleen Sebelius, was infuriated and threatened to clarify in regulation that the insurers were subject to guarantee issue. The insurers have folded. If they had been willing to accept a PR disaster, the substantive consequences would not have been terrible, since most such children would be eligible for the Children's Health Insurance Program, the publicly-sponsored kids' insurance program which covers uninsured children. In any case, the insurers would have found it difficult to justify not covering children for obvious reasons - kids are ahead of even the military, small businesses and kittens in terms of public sympathy.
This does highlight the considerable challenge that HHS and other government entities will face in the years to come. It's simply not possible to write a law to cover every contingency - and some folks were already complaining about the 2700-page bill. We clarify a lot of the law in regulations. However, when the exchanges are up and running, a lot more wrinkles will surface at the exact same time. HHS and state agencies will need to be on their collective guard. Consumer representatives will need to hold their governments accountable.
Clearly, Congress intended to have all kids covered. The insurers read the law correctly but they would not have been following the spirit of the law. This is irrelevant: the Secretary of Health and Human Services, Kathleen Sebelius, was infuriated and threatened to clarify in regulation that the insurers were subject to guarantee issue. The insurers have folded. If they had been willing to accept a PR disaster, the substantive consequences would not have been terrible, since most such children would be eligible for the Children's Health Insurance Program, the publicly-sponsored kids' insurance program which covers uninsured children. In any case, the insurers would have found it difficult to justify not covering children for obvious reasons - kids are ahead of even the military, small businesses and kittens in terms of public sympathy.
This does highlight the considerable challenge that HHS and other government entities will face in the years to come. It's simply not possible to write a law to cover every contingency - and some folks were already complaining about the 2700-page bill. We clarify a lot of the law in regulations. However, when the exchanges are up and running, a lot more wrinkles will surface at the exact same time. HHS and state agencies will need to be on their collective guard. Consumer representatives will need to hold their governments accountable.
Saturday, March 27, 2010
Health Reform Watch: AT&T takes $1 billion charge from health reform, files Chapter 11
The folks on the Wall Street Journal are starting to get hysterical over the $1 billion charge that AT&T took due to changes in health reform. What happened, exactly?
First, some accounting. AT&T took a $1 billion charge against earnings. This is not the same as the company writing the government a check for $1 billion. And the headline about AT&T going bankrupt is a joke.
The company, being heavily unionized, has many retirees for which it provides health benefits. In this case, it pays them some benefits for Medicare Part D, which is the prescription drug benefit. Previously, those payments were deductible, meaning that the company could deduct the value of those retiree benefits from its earnings when figuring its tax liability - just like a company can deduct the cost of its employee salaries from its earnings. Earnings, in the accounting sense, are what a company earns after its cost of doing business (like infrastructure, administration, etc), but before depreciation, amortization and taxes.
During the enactment of Part D, many companies threatened to drop drug coverage for their retirees, since they could then get the drug benefits through the public program. Congress then decided to give them a 28% subsidy to continue delivering the benefits - a significant subsidy. Corporations deduct salaries, retiree benefits and other costs like infrastructure from their revenue to figure their taxable earnings, and under the previous regimen, they were allowed to deduct the entire value of their contributions to drug benefits including the cost of the subsidy. Under health reform, companies are now not allowed to deduct the government subsidy from their earnings, which is what should have happened all along.
Ironically, this information comes from a WSJ article by David Reilly, Ellen Schultz and Ron Winslow.
At the time Congress granted the subsidy and allowed companies to deduct the subsidy from their taxes (and again, they should not have allowed companies to double-dip by also deducting the subsidy from their taxes), AT&T reduced its future tax liability by $1.6 billion. The charge they have taken for $1 billion affects their current earnings, but it is a non-cash charge. They will have to pay about $1 billion in extra taxes over a period of many years - basically, over the lives of their retirees. Due to accounting rules, they had to charge off the entire amount now.
A different WSJ article says that the impact to Caterpillar's bottom line, will be more like $7 million per year - in comparison, they took a $100 million charge, their retirees will receive $240 million in government subsidies from 2010-2019, and their profits last year were $895 million.
The companies probably correct in their accounting, but people should not be misled - AT&T is NOT out $1 billion in cash right this second because of health reform. Nobody is going to go bankrupt over this accounting change. In contrast, if we fail to control costs, the entire country is going to go bankrupt.
First, some accounting. AT&T took a $1 billion charge against earnings. This is not the same as the company writing the government a check for $1 billion. And the headline about AT&T going bankrupt is a joke.
The company, being heavily unionized, has many retirees for which it provides health benefits. In this case, it pays them some benefits for Medicare Part D, which is the prescription drug benefit. Previously, those payments were deductible, meaning that the company could deduct the value of those retiree benefits from its earnings when figuring its tax liability - just like a company can deduct the cost of its employee salaries from its earnings. Earnings, in the accounting sense, are what a company earns after its cost of doing business (like infrastructure, administration, etc), but before depreciation, amortization and taxes.
During the enactment of Part D, many companies threatened to drop drug coverage for their retirees, since they could then get the drug benefits through the public program. Congress then decided to give them a 28% subsidy to continue delivering the benefits - a significant subsidy. Corporations deduct salaries, retiree benefits and other costs like infrastructure from their revenue to figure their taxable earnings, and under the previous regimen, they were allowed to deduct the entire value of their contributions to drug benefits including the cost of the subsidy. Under health reform, companies are now not allowed to deduct the government subsidy from their earnings, which is what should have happened all along.
Ironically, this information comes from a WSJ article by David Reilly, Ellen Schultz and Ron Winslow.
At the time Congress granted the subsidy and allowed companies to deduct the subsidy from their taxes (and again, they should not have allowed companies to double-dip by also deducting the subsidy from their taxes), AT&T reduced its future tax liability by $1.6 billion. The charge they have taken for $1 billion affects their current earnings, but it is a non-cash charge. They will have to pay about $1 billion in extra taxes over a period of many years - basically, over the lives of their retirees. Due to accounting rules, they had to charge off the entire amount now.
A different WSJ article says that the impact to Caterpillar's bottom line, will be more like $7 million per year - in comparison, they took a $100 million charge, their retirees will receive $240 million in government subsidies from 2010-2019, and their profits last year were $895 million.
The companies probably correct in their accounting, but people should not be misled - AT&T is NOT out $1 billion in cash right this second because of health reform. Nobody is going to go bankrupt over this accounting change. In contrast, if we fail to control costs, the entire country is going to go bankrupt.
Health Reform Watch Post Mortem: Rep. Bart Stupak comments on why he wrote the Stupak-Pitts Amednent
Mr. Stupak, author of the infamous Stupak-Pitts amendment that would essentially have prohibited all insurance plans on the insurance exchanges from offering abortion services (although buyers might be able to shop for completely separate riders covering abortions), talks in a Washington Post op-ed about the flak he has taken from pro-lifers. Mr. Stupak and many of his original colleagues in the House dropped their earlier demands in exchange for an executive order.
His commitment to health reform as well as his pro-life principles seems clear to me. He even described the entire package, after his agreement with the President, as a pro-life bill, which was significant. In contrast, he says that many conservative pro-life organizations which rallied around him were doing so in hopes that the split on abortion would result in the bill's failure:
He admits that an executive order does not quite have the force of law. However, while an executive order can indeed be overruled by legislation or by the judiciary, the order that the President signed will likely not be overturned.
I absolutely disagree with Mr. Stupak that an accounting segregation of funds was insufficient, as well as on the basic issue of abortion. While abortion is never good, because it ends a human life, it does not end the life of a human person. It is a terrible choice that should be left to parents, if they feel they need to make that choice. However, it should be emphasized that Mr. Stupak was committed to passing health reform. Speaker Nancy Pelosi said so herself in an interview with Rachel Maddow. Pro-choicers should cut him a break - we can live with the resulting legislation, and again, abortion deeply divides the American people and this uneasy cease-fire is something we have to live with. Furthermore, Mr. Stupak is to be commended for his willingness to abide by his principles and to be flexible in doing so. If the pro-lifers who thought that insuring all Americans was not pro-life want to take shots at him, let them do so on their own.
His commitment to health reform as well as his pro-life principles seems clear to me. He even described the entire package, after his agreement with the President, as a pro-life bill, which was significant. In contrast, he says that many conservative pro-life organizations which rallied around him were doing so in hopes that the split on abortion would result in the bill's failure:
When I saw that Kathleen Parker's March 24 op-ed, "Stupak's original sin," defined me as a "backstabber," it reminded me of a Bible verse. Matthew 7:3 asks, "Why do you look at the speck of sawdust in your brother's eye and pay no attention to the plank in your own eye?"
The true motives of many blogs and organizations claiming to be pro-life have become clear in recent days: to politicize life issues as a means to defeat health care reform. One group even sent an e-mail to supporters saying they are "working feverishly to stop this legislation from going forward."
The pro-life groups rallied behind me -- many without my knowledge or consent -- not necessarily because they shared my goals of ensuring protections for life and passing health-care reform but because they viewed me as their best chance to kill health-care legislation.
He admits that an executive order does not quite have the force of law. However, while an executive order can indeed be overruled by legislation or by the judiciary, the order that the President signed will likely not be overturned.
Therefore, I and other pro-life Democrats struck an agreement with President Obama to issue an executive order that would ensure all Hyde Amendment protections would apply to the health-care reform bill. No, an executive order is not as strong as the statutory language we fought for at the start. We received, however, an "ironclad" commitment from the president that no taxpayer dollars will be used to pay for abortions.
Throughout history, executive orders have carried the full force and effect of law and have served as an important means of implementing public policy. Perhaps the most famous executive order was the Emancipation Proclamation signed by President Abraham Lincoln in 1863. More recently, in 2007, President George W. Bush signed Executive Order 13435, restricting embryonic stem-cell research. This executive order protected the sanctity of life and was "applauded" and "welcomed" by pro-life advocates. That these same people would now claim that President Obama's executive order maintaining the sanctity of life is not worth the paper it is written on is disingenuous at best.
Some, including Parker, have criticized Obama's executive order as unenforceable in the courts and therefore just a "fig leaf." Yet the language that critics point to is standard language with any executive order, including Bush's ban on embryonic stem-cell research. Again, many of these pro-life groups did not express concern over the Bush language but claim it is unacceptable under Obama.
To further protect against federal funding for abortion, during floor debate on the health-care reform bill I engaged in a colloquy with Rep. Henry Waxman to make clear congressional intent that the provisions in the bill, combined with the executive order, will ensure that outcome. Such colloquies are often referred to in court cases when an attempt is being made to determine Congress's intent. This, too, was no minor concession by those opposed to our efforts, and it is a tremendous victory for those protecting the sanctity of life.
I absolutely disagree with Mr. Stupak that an accounting segregation of funds was insufficient, as well as on the basic issue of abortion. While abortion is never good, because it ends a human life, it does not end the life of a human person. It is a terrible choice that should be left to parents, if they feel they need to make that choice. However, it should be emphasized that Mr. Stupak was committed to passing health reform. Speaker Nancy Pelosi said so herself in an interview with Rachel Maddow. Pro-choicers should cut him a break - we can live with the resulting legislation, and again, abortion deeply divides the American people and this uneasy cease-fire is something we have to live with. Furthermore, Mr. Stupak is to be commended for his willingness to abide by his principles and to be flexible in doing so. If the pro-lifers who thought that insuring all Americans was not pro-life want to take shots at him, let them do so on their own.
Monday, March 22, 2010
Health Reform Watch: Abortion Update
As readers probably know, the House passed both the Senate health reform bill and a reconciliation package containing some fixes. The underlying bill now goes to the President for his signature. The reconciliation package goes to the Senate where it must pass by a mere 50 votes out of 100, as opposed to the regular 60.
Bart Stupak, a Democrat from Michigan who inserted the Stupak-Pitts amendment that would have essentially barred all plans on the exchanges from offering abortion services, struck a deal with the President to drop his earlier requirements. In exchange, the President will issue an executive order stating that the Hyde Amendment applies to the exchanges. That amendment was the first pro-life victory after Roe v Wade. It mandates that no federal dollars can be used to subsidize abortion services, except where the mother's life is endangered. Executive orders come close to having the force of a law passed by Congress, although a future President can undo them.
Substantively, this is no change from the proposed policy from the view of the pro-choice side. The bill is already relatively restrictive of access to abortion. I think we can live with this.
However, I believe one of the major concerns on the pro-life side is that the Hyde Amendment is an annual amendment. Although it's practically permanent law, if the Congress didn't pass it one year, then abortion services would be available on the exchanges and the plans would not have to take steps to segregate the dollars, accounting-wise.
Also, it appears that Mr. Stupak may have seen that his previous "money is fungible" argument was incorrect. Either way, the pro-life Democrats have agreed that this is an acceptable compromise.
These contortions are symptomatic of Americans' conflicted attitudes toward abortion. The uneasy detente between pro-choice and pro-life was nearly shattered during health reform, and it could have taken the bill down. It's good that it didn't.
Going forward, the pro-life side is likely to seek a permanent passage of the Hyde Amendment. The Catholic Bishops still don't agree with the compromise and they are likely to press for changes.
A number of pro-choicers are not happy with this compromise. The pro-choice side wanted to work with the President to loosen the Hyde Amendment. If that is not possible, my guess is that pro-choicers will work to secure funding to make sure that abortion services are affordable.
For those interested in reading further, Kaiser Health News has two op-eds, one from the Chuck Donovan with the conservative Heritage Foundation and another with Jessica Arons of the liberal Center for American Progress.
Bart Stupak, a Democrat from Michigan who inserted the Stupak-Pitts amendment that would have essentially barred all plans on the exchanges from offering abortion services, struck a deal with the President to drop his earlier requirements. In exchange, the President will issue an executive order stating that the Hyde Amendment applies to the exchanges. That amendment was the first pro-life victory after Roe v Wade. It mandates that no federal dollars can be used to subsidize abortion services, except where the mother's life is endangered. Executive orders come close to having the force of a law passed by Congress, although a future President can undo them.
Substantively, this is no change from the proposed policy from the view of the pro-choice side. The bill is already relatively restrictive of access to abortion. I think we can live with this.
However, I believe one of the major concerns on the pro-life side is that the Hyde Amendment is an annual amendment. Although it's practically permanent law, if the Congress didn't pass it one year, then abortion services would be available on the exchanges and the plans would not have to take steps to segregate the dollars, accounting-wise.
Also, it appears that Mr. Stupak may have seen that his previous "money is fungible" argument was incorrect. Either way, the pro-life Democrats have agreed that this is an acceptable compromise.
These contortions are symptomatic of Americans' conflicted attitudes toward abortion. The uneasy detente between pro-choice and pro-life was nearly shattered during health reform, and it could have taken the bill down. It's good that it didn't.
Going forward, the pro-life side is likely to seek a permanent passage of the Hyde Amendment. The Catholic Bishops still don't agree with the compromise and they are likely to press for changes.
A number of pro-choicers are not happy with this compromise. The pro-choice side wanted to work with the President to loosen the Hyde Amendment. If that is not possible, my guess is that pro-choicers will work to secure funding to make sure that abortion services are affordable.
For those interested in reading further, Kaiser Health News has two op-eds, one from the Chuck Donovan with the conservative Heritage Foundation and another with Jessica Arons of the liberal Center for American Progress.
Monday, March 15, 2010
Urban Institute: The cost of failing to enact health reform will be high
The Republicans have constantly assailed the proposals for health reform as a government takeover of healthcare. They harp on the promise that then-Senator Obama promised in his campaign that if you like your health insurance, you can keep it.
The Republicans are wrong in that this is a government takeover of healthcare. The part of the plan involving the insurance exchanges is basically the bipartisan solution in Massachusetts - that then-Governor Mitt Romney signed off on. It is basically what the Republican Senator John Chafee proposed in response to the Clinton health reform proposal.
However, without health reform, if you like the insurance you have, you may be unable to keep it. The Urban Institute has projections of what happens without reform, and things look quite bad. Under their intermediate scenario, where incomes grow and the historical rate of healthcare cost growth slows somewhat, the 55.9% of Americans who are covered through their employer would decline to 50.8% in 2020. An estimated 18.4% of people are now uninsured, but that rate would rise to 21.9% in 2020. Presently, about 5.5% of Americans purchase non-group coverage on the individual market; this number would decline by about 1% in 10 years as such coverage became less affordable.
Most of the decline in employer-based coverage would occur among small and medium-sized firms - basically, people working at employers with less than 1,000 employees. Furthermore, Americans further up the income scale would be affected. Presently 7% of individuals or families over 400% of the poverty level are uninsured. In 2020, the Urban Institute estimates that 13% of them would be - nearly twice the present rate. For a family of 4, 400% of the poverty level means an income of over $80,000 a year.
Medicaid enrollment would pick up some of the slack, increasing from 16.9% of the population to 19.6%. It obviously wouldn't be enough. Furthermore, the Urban Institute assumed that states maintained their present eligibility levels. If health care costs continued to grow, state governments would likely decrease their eligibility levels or freeze enrollment unless the Federal government subsidized them at greater rates.
None of the solutions the Republicans have proposed attack the underlying problem of cost growth. The Republicans boast that their proposed package of reforms would decrease costs. However, the Republican plans would make it cheaper for healthier people to get coverage but harder and more expensive for older and sicker people to get coverage. Again, they do not attack the problem of cost growth, whereas the plans the Democrats have put forward do everything that we know works except start a government body to approve or disapprove treatments or set payment rates, or open a publicly-sponsored insurance plan that pays Medicare rates. If the Republicans don't want a government takeover, they need to get with the current plan, because if they win and the status quo remains, the only thing that will work in 10 years is a real government takeover.
The Republicans are wrong in that this is a government takeover of healthcare. The part of the plan involving the insurance exchanges is basically the bipartisan solution in Massachusetts - that then-Governor Mitt Romney signed off on. It is basically what the Republican Senator John Chafee proposed in response to the Clinton health reform proposal.
However, without health reform, if you like the insurance you have, you may be unable to keep it. The Urban Institute has projections of what happens without reform, and things look quite bad. Under their intermediate scenario, where incomes grow and the historical rate of healthcare cost growth slows somewhat, the 55.9% of Americans who are covered through their employer would decline to 50.8% in 2020. An estimated 18.4% of people are now uninsured, but that rate would rise to 21.9% in 2020. Presently, about 5.5% of Americans purchase non-group coverage on the individual market; this number would decline by about 1% in 10 years as such coverage became less affordable.
Most of the decline in employer-based coverage would occur among small and medium-sized firms - basically, people working at employers with less than 1,000 employees. Furthermore, Americans further up the income scale would be affected. Presently 7% of individuals or families over 400% of the poverty level are uninsured. In 2020, the Urban Institute estimates that 13% of them would be - nearly twice the present rate. For a family of 4, 400% of the poverty level means an income of over $80,000 a year.
Medicaid enrollment would pick up some of the slack, increasing from 16.9% of the population to 19.6%. It obviously wouldn't be enough. Furthermore, the Urban Institute assumed that states maintained their present eligibility levels. If health care costs continued to grow, state governments would likely decrease their eligibility levels or freeze enrollment unless the Federal government subsidized them at greater rates.
None of the solutions the Republicans have proposed attack the underlying problem of cost growth. The Republicans boast that their proposed package of reforms would decrease costs. However, the Republican plans would make it cheaper for healthier people to get coverage but harder and more expensive for older and sicker people to get coverage. Again, they do not attack the problem of cost growth, whereas the plans the Democrats have put forward do everything that we know works except start a government body to approve or disapprove treatments or set payment rates, or open a publicly-sponsored insurance plan that pays Medicare rates. If the Republicans don't want a government takeover, they need to get with the current plan, because if they win and the status quo remains, the only thing that will work in 10 years is a real government takeover.
Saturday, March 13, 2010
Catholics in Alliance for the Common Good and Catholic Health Association both urge passage of health
Both the Catholics in Alliance for the Common Good (joined by other Catholic and Evangelical leaders) and the Catholic Health Association, which represents Catholic health systems, have both urged Congress to pass the reform bill. They feel the restrictions in the Senate bill do not constitute federal funding for abortion and are no more lenient than current law.
Friday, March 12, 2010
Subsidies for abortion and other things: economic standards versus accounting standards
Congressman Bart Stupak, a Democrat from Michigan, has gotten a lot of press lately. He has vowed to oppose health reform if it does not contain restrictive provisions on abortion. In particular, he and the U.S. Conference of Catholic Bishops oppose the Senate bill's treatment of abortion. In the Senate bill, people buying coverage through the exchanges would have to make a separate payment to cover the actuarial value of the abortion services in a plan.
Mr. Stupak's argument is that because the government is providing tax credits to people to buy insurance plans, that is the same as funding abortion because even if they use their own money to buy abortion services, they wouldn't have been able to do so without the subsidies. The only solution, in his mind, is that plans on the exchanges cannot offer coverage for abortion.
Clearly, Stupak isn't an accountant. The Generally Accepted Accounting Principles, which guide the accounting practice in the US, contain provisions that deal with segregation of funds. A religious soup kitchen receiving public subsidies would separate funds used for religious purposes from public subsidies under GAAP.
If GAAP standards aren't enough, then we must also eliminate the tax exclusion for employer-based health care: most employer plans offer abortion services. Furthermore, we should stop paying taxes: they fund the government's purchase and maintenance of nuclear weapons, and the only potential use for nuclear weapons is murder (or perhaps deflecting incoming asteroids and propelling spacecraft, but that's another story).
I've argued that tax expenditures, which occur when a government excludes something like employer-sponsored healthcare, from taxable income, are effectively subsidies. That is true but it is completely different from arguing that GAAP standards are meaningless. They are not the same because if the government provides you a tax credit, those dollars could have been used for anything from buying abortion, to buying food, to buying components for the nuclear weapon you're building in your back yard. If the government wanted to change that, it would have to take the incredibly intrusive steps of controlling every cent you spent.
I do not want my taxes funding offensive nuclear weapons or wars, but the solution to that is not to stop paying taxes. The solution is to help educate people to seek peace and to urge my politicians to vote for peace. If you think abortion is bad, then unless you want to ban it and force people to use coat hangers instead, your solution is to educate people not to have abortions, to teach people to refrain from having premarital sex or to use contraception properly, and to create socioeconomic conditions that reduce the need for abortions.
Mr. Stupak's argument is that because the government is providing tax credits to people to buy insurance plans, that is the same as funding abortion because even if they use their own money to buy abortion services, they wouldn't have been able to do so without the subsidies. The only solution, in his mind, is that plans on the exchanges cannot offer coverage for abortion.
Clearly, Stupak isn't an accountant. The Generally Accepted Accounting Principles, which guide the accounting practice in the US, contain provisions that deal with segregation of funds. A religious soup kitchen receiving public subsidies would separate funds used for religious purposes from public subsidies under GAAP.
If GAAP standards aren't enough, then we must also eliminate the tax exclusion for employer-based health care: most employer plans offer abortion services. Furthermore, we should stop paying taxes: they fund the government's purchase and maintenance of nuclear weapons, and the only potential use for nuclear weapons is murder (or perhaps deflecting incoming asteroids and propelling spacecraft, but that's another story).
I've argued that tax expenditures, which occur when a government excludes something like employer-sponsored healthcare, from taxable income, are effectively subsidies. That is true but it is completely different from arguing that GAAP standards are meaningless. They are not the same because if the government provides you a tax credit, those dollars could have been used for anything from buying abortion, to buying food, to buying components for the nuclear weapon you're building in your back yard. If the government wanted to change that, it would have to take the incredibly intrusive steps of controlling every cent you spent.
I do not want my taxes funding offensive nuclear weapons or wars, but the solution to that is not to stop paying taxes. The solution is to help educate people to seek peace and to urge my politicians to vote for peace. If you think abortion is bad, then unless you want to ban it and force people to use coat hangers instead, your solution is to educate people not to have abortions, to teach people to refrain from having premarital sex or to use contraception properly, and to create socioeconomic conditions that reduce the need for abortions.
Businessweek: Lessons of a $680,000 death
Amanda Bennett and Charles Babcock write a very compelling story on Businessweek about Amanda's husband's death at age 67. It details his multiple struggles with a very aggressive cancer and their struggles to keep him alive. It also highlights the tension between wanting to live, or at least not die before one's time and the costs of heroic medicine. It's very well-written, not quite on par with Dr. Atul Gawande's famous (or infamous) story about McAllen, TX's excesses, but still very very good. No matter what your position on palliative versus heroic care, it's worth ploughing through its whole 6 pages.
Monday, March 08, 2010
Half the Utah Senate fell victim to misinformation about permanent resident children
The Utah Senate recently voted 14-13 against a bill that would remove a provision that bars permanent resident children from receiving benefits under the Children's Health Insurance Program, a government-sponsored program that covers children who do not have access to health insurance from their parents' employers. About 800 children are affected. The report comes from the Salt Lake Tribune.
Sen. Christensen clearly has not read the law. Citizens who sponsor permanent residents into the country promise to support them at an income level equal to 125% of the Federal Poverty Limit. Sponsors do not agree to provide health insurance for the people they sponsor. This would be an impossible promise to keep anyway: many families who earn this amount do not have access to employer-sponsored health insurance and would not be able to afford to purchase individual health insurance.
Sen. Christensen and his colleagues have jeopardized the health of 800 children who are legal immigrants and whose parents are already playing by the rules. Furthermore, the recent reauthorization of CHIP granted states the option to cover immigrant children and receive federal matching funds; previously, states could do so but had to use their own funds. Kids are generally cheap to cover and these are vulnerable kids, being both immigrants and poor. Sen. Christensen and his colleagues are not merely guilty of idiocy, they are guilty of a great sin.
I should note that this should not be a partisan issue. There are 30 State Senators in Utah, and only 8 are Democrats. At least 5 of the yes votes were by Republicans.
But Sen. Allen Christensen, R-North Ogden, said immigrants are expected to play by the rules upon arriving here -- and he said removal of a five-year waiting period would change the rules. Immigrants are expected to provide for themselves or have their sponsors do so for five years, he said.
Sen. Christensen clearly has not read the law. Citizens who sponsor permanent residents into the country promise to support them at an income level equal to 125% of the Federal Poverty Limit. Sponsors do not agree to provide health insurance for the people they sponsor. This would be an impossible promise to keep anyway: many families who earn this amount do not have access to employer-sponsored health insurance and would not be able to afford to purchase individual health insurance.
Sen. Christensen and his colleagues have jeopardized the health of 800 children who are legal immigrants and whose parents are already playing by the rules. Furthermore, the recent reauthorization of CHIP granted states the option to cover immigrant children and receive federal matching funds; previously, states could do so but had to use their own funds. Kids are generally cheap to cover and these are vulnerable kids, being both immigrants and poor. Sen. Christensen and his colleagues are not merely guilty of idiocy, they are guilty of a great sin.
I should note that this should not be a partisan issue. There are 30 State Senators in Utah, and only 8 are Democrats. At least 5 of the yes votes were by Republicans.
Washington Post: The Healing - After Being beaten in his home country, he fled to the United States -- and sought refuge at a Maryland agency that hel
In another immigration-related story, the Washington Post profiles a refugee to the United States who was beaten in his home country and suffered post-traumatic stress disorder. It details the health services he had to use for rehabilitation and it demonstrates the struggles that refugees go through. A previous Australian economic study showed that the refugees were the most costly immigrant population among all others (including family-based and skill-based immigrants). It's money well-spent, but this article shows how crucial it is to maintain well-funded services for refugees.
Thursday, February 25, 2010
Why health reform is an issue for younger voters
The Pew Research Center released a report on the Millennial generation yesterday - that's those folks presently aged 18-29. At age 29, I am the oldest member of the generation. Pew mentions that many Millennials are confident in the economic future of America despite having their careers badly set back by the recession.
Fellow Millennials: our economic future is contingent upon us passing health reform. Without meaningful health reform, it all goes down the toilet.
Today, Kaiser Health News linked to several reports showing that one in three adults aged 20-29 is uninsured. We are the largest single chunk of the uninsured.
In one or two states, Minnesota being one, dependent children can stay on their parents' health insurance plans up to age 26. After that, you get kicked off. Alternatively, if you marry before that, as many people do, you get kicked off.
Normally, people our age would graduate from college and get jobs. These days aren't normal. Pew indicates that at the moment, 22% of 18-29 year olds are unemployed. 24% of us are working part time, and you can bet a lot of those would rather be working full time. These figures are higher than for both older cohorts, the Gen Xers and the Boomers. Of those of us who are employed, 31% of us say we are making enough money to lead the kind of life we want. We are far more likely to change jobs than older cohorts. Many of the jobs we are working in will not be with large employers who offer employer-sponsored health insurance - the most stable and functional part of the present health insurance market.
We need an individual market that offers us choice and portability, whether we are coming into it for the first time or sticking with it for a few years. We need subsidies to be able to afford health insurance. The health reform bills that the Democrats have proposed would do that. The Wyden-Bennett bill, which has some bipartisan support, would also do so - W-B is a more radical proposal in that it would essentially destroy the employer-sponsored system within a few years, so I'd be cautious about this; the link goes to the Center on Budget and Policy Priorities analysis of the bill.
None of the proposals that the Republicans have put forward would do so. The recent bill they released that would cover a net 3 million additional people would merely weaken the quality of coverage we could buy. Overall, 3+ million young and healthy folks would now find insurance cheap enough to afford. However, some less healthy and older people would now be unable to afford insurance. Trust me, any of us could develop a chronic disease. And all of us are aging by the second. Senator McCain's campaign proposal is the Republican plan that comes the closest to helping people of our generation. It would end the tax exclusion for employer-sponsored insurance and give everyone a voucher to buy insurance. Many Millennials would be able to buy coverage. However, the McCain plan made no modifications to the insurance marketplace to end discrimination by health status - meaning that if you had a bout of depression, which is one of the most common illnesses known to humankind, insurance companies might well refuse to cover you. Or if you had a bout of asthma, or you developed diabetes.
If the Republicans were truly interested in good governance and compromise, then they could back either the Wyden-Bennett bill, or the bill proposed by the Bipartisan Policy Center. Either of these plans is workable. The current Senate bill looks a lot like the BPC bill. Or they could propose modifications to the bill - perhaps they could suggest a tougher version of the excise tax and tougher cost controls coupled with removing some of the taxes on unearned income.
I'm just throwing some suggestions out there for them. However, I listened in on the health reform summit. Truly, it does not sound like the Republicans are able or willing to admit there is a problem with our health insurance system. They probably do not care about the 45 million or so uninsured people.
Again, health reform is a key issue for Millennials. Many of us are one serious illness or accident away from bankruptcy. The future's not going to look so bright with a ton of medical debt. We need reform, and we need it right now.
Fellow Millennials: our economic future is contingent upon us passing health reform. Without meaningful health reform, it all goes down the toilet.
Today, Kaiser Health News linked to several reports showing that one in three adults aged 20-29 is uninsured. We are the largest single chunk of the uninsured.
In one or two states, Minnesota being one, dependent children can stay on their parents' health insurance plans up to age 26. After that, you get kicked off. Alternatively, if you marry before that, as many people do, you get kicked off.
Normally, people our age would graduate from college and get jobs. These days aren't normal. Pew indicates that at the moment, 22% of 18-29 year olds are unemployed. 24% of us are working part time, and you can bet a lot of those would rather be working full time. These figures are higher than for both older cohorts, the Gen Xers and the Boomers. Of those of us who are employed, 31% of us say we are making enough money to lead the kind of life we want. We are far more likely to change jobs than older cohorts. Many of the jobs we are working in will not be with large employers who offer employer-sponsored health insurance - the most stable and functional part of the present health insurance market.
We need an individual market that offers us choice and portability, whether we are coming into it for the first time or sticking with it for a few years. We need subsidies to be able to afford health insurance. The health reform bills that the Democrats have proposed would do that. The Wyden-Bennett bill, which has some bipartisan support, would also do so - W-B is a more radical proposal in that it would essentially destroy the employer-sponsored system within a few years, so I'd be cautious about this; the link goes to the Center on Budget and Policy Priorities analysis of the bill.
None of the proposals that the Republicans have put forward would do so. The recent bill they released that would cover a net 3 million additional people would merely weaken the quality of coverage we could buy. Overall, 3+ million young and healthy folks would now find insurance cheap enough to afford. However, some less healthy and older people would now be unable to afford insurance. Trust me, any of us could develop a chronic disease. And all of us are aging by the second. Senator McCain's campaign proposal is the Republican plan that comes the closest to helping people of our generation. It would end the tax exclusion for employer-sponsored insurance and give everyone a voucher to buy insurance. Many Millennials would be able to buy coverage. However, the McCain plan made no modifications to the insurance marketplace to end discrimination by health status - meaning that if you had a bout of depression, which is one of the most common illnesses known to humankind, insurance companies might well refuse to cover you. Or if you had a bout of asthma, or you developed diabetes.
If the Republicans were truly interested in good governance and compromise, then they could back either the Wyden-Bennett bill, or the bill proposed by the Bipartisan Policy Center. Either of these plans is workable. The current Senate bill looks a lot like the BPC bill. Or they could propose modifications to the bill - perhaps they could suggest a tougher version of the excise tax and tougher cost controls coupled with removing some of the taxes on unearned income.
I'm just throwing some suggestions out there for them. However, I listened in on the health reform summit. Truly, it does not sound like the Republicans are able or willing to admit there is a problem with our health insurance system. They probably do not care about the 45 million or so uninsured people.
Again, health reform is a key issue for Millennials. Many of us are one serious illness or accident away from bankruptcy. The future's not going to look so bright with a ton of medical debt. We need reform, and we need it right now.
Wednesday, February 24, 2010
Katherine Baicker and Amitabh Chandra: Malpractice reform would only have a limited effect on medical costs
Professors Katherine Baicker and Amitabh Chandra, of Harvard's School of Health Policy and Management and Kennedy School of Government respectively, speak about the effects of malpractice and malpractice insurance premiums on health care costs. They conclude that while the effect is not zero, the Republicans may be overstating their case:
There is a great deal of public debate about potential reforms of the malpractice system. A closer look at available data sug- gests that some of the rhetoric surrounding this debate may be misleading. First, increases in malpractice payments do not seem to be the driving force behind increases in premiums. Second, increases in malpractice costs do not seem to affect the overall size of the physician workforce, although they may affect some subsets of the physician population more severe- ly. Furthermore, no research has linked the decline in physi- cian supply to worse health outcomes or reduced patient sat- isfaction. Third, we find evidence that the strongest effect of greater malpractice pressure is in increased use of imaging services, with somewhat smaller effects on the use of other discretionary, generally low-risk services such as physician visits and consultations, use of diagnostic tests, and minor procedures. We find little evidence of increased utilization of major surgical procedures.
While our study does not speak directly to the effect of malpractice reforms, it does provide insight into the mecha- nisms through which those reforms are likely (and unlikely) to operate. Our analysis suggests that state-level tort reform is unlikely to affect the practice of medicine by averting local physician shortages. We also find no relationship between the level of malpractice premiums and the presence of traditional tort reform measures such as damage caps. This evidence does not imply that traditional tort reform measures are inef- fective, for they may have reduced the growth of (perhaps unusually high) premiums in the states where they were enacted. However, our results do call into question the view that states with traditional tort reforms have lower levels of premiums or defensive medicine than states that have not implemented such reforms. Last, while increasing malprac- tice liability pressures do seem to substantially increase expenditures on diagnostic procedures, we find little evidence that malpractice payments are driving the dramatic increase in overall health care expenditures.
There is a great deal of public debate about potential reforms of the malpractice system. A closer look at available data sug- gests that some of the rhetoric surrounding this debate may be misleading. First, increases in malpractice payments do not seem to be the driving force behind increases in premiums. Second, increases in malpractice costs do not seem to affect the overall size of the physician workforce, although they may affect some subsets of the physician population more severe- ly. Furthermore, no research has linked the decline in physi- cian supply to worse health outcomes or reduced patient sat- isfaction. Third, we find evidence that the strongest effect of greater malpractice pressure is in increased use of imaging services, with somewhat smaller effects on the use of other discretionary, generally low-risk services such as physician visits and consultations, use of diagnostic tests, and minor procedures. We find little evidence of increased utilization of major surgical procedures.
While our study does not speak directly to the effect of malpractice reforms, it does provide insight into the mecha- nisms through which those reforms are likely (and unlikely) to operate. Our analysis suggests that state-level tort reform is unlikely to affect the practice of medicine by averting local physician shortages. We also find no relationship between the level of malpractice premiums and the presence of traditional tort reform measures such as damage caps. This evidence does not imply that traditional tort reform measures are inef- fective, for they may have reduced the growth of (perhaps unusually high) premiums in the states where they were enacted. However, our results do call into question the view that states with traditional tort reforms have lower levels of premiums or defensive medicine than states that have not implemented such reforms. Last, while increasing malprac- tice liability pressures do seem to substantially increase expenditures on diagnostic procedures, we find little evidence that malpractice payments are driving the dramatic increase in overall health care expenditures.
Friday, February 12, 2010
What is going on with Anthem Blue Cross in California?
Anthem Blue Cross/Blue Shield (a for-profit BCBS entity owned by the national insurer, Wellpoint) recently announced rate hikes in the individual insurance market in California. Some of the hikes were as high as 39% - and people are outraged. The Obama Administration pounced on Anthem, with Katherine Sebelius, the Secretary of Health and Human Services, demanding that they explain their rate hikes.
As Johathan Cohn explains in his blog on The New Republic website what happens when insurers sell in the individual insurance market:
In other words, it is likely that the blocks of business receiving the rate hikes have deteriorated significantly, in that many of their healthier members have left due to affordability concerns. Anthem explained that the rate hikes were due to a combination of this process, known as adverse selection, and general medical cost inflation. Indeed, Bob Laszewski of the Health Care Policy and Marketplace Review finds Anthem's explanation not implausible:
Even if Anthem were non-profit, it would likely have had to make significant hikes to its rates as well. Of course, we don't know their profit margin on those blocks of business. We can say that the hikes averaging 20% can't be due to health care inflation, and the bulk is probably due to adverse selection.
This does underscore the need for national reform. While California could reform the rating and issue rules on its own, it does not have the budgetary power to subsidize individual market purchasers enough to get them to buy insurance. The proposed reforms will make premium increases in the individual marketplace far more stable and predictable. The reforms would give people considerable subsidies. The reforms also give the insurance exchanges the explicit authority to disallow unreasonable charges - plus the ability to assess whether the charges are reasonable. Congress must act now.
As Johathan Cohn explains in his blog on The New Republic website what happens when insurers sell in the individual insurance market:
When insurance companies sell coverage in the individual market--that is, when they offer polices to people one-on-one, rather than through employers--they don’t typically put everybody’s premiums into one big pot. Instead, they usually break up their business into different “blocks.” A block could be everybody living in a particular area, everybody fitting a certain demographic profile, or everybody buying a particular type of policy, just to use a few examples. And after enough people are in a block, the insurer will often “close” it, meaning they don’t add new beneficiaries to that particular group.
Insurers will set the premiums in each block based on their projection of what kinds of medical bills people in the block are going to incur. And so, for example, a block that has a a lot of young, healthy men will probably have really cheap premiums--since, on the whole, young, healthy men tend not to have very high medical expenses.
(Young, healthy women are another story. They have the actuarially unfortunate habit of getting pregnant and having babies.)
Over time, the blocks evolve. And, inevitably, some of those young, healthy men will develop medical problems. They’ll get injuries or develop life-threatening illnesses--the type that require extended hospitalizations, long stints in rehabilitation, and all sorts of prescriptions. Rates in the group will start to go up.
At that point, people in the block will seek better deals. And the healthy ones will find such deals quickly. But the ones with the medical problems won't have such an easy time. If they shop around, they're likely to find only policies that provide way too little coverage or cost way too much. Whether they stick with their existing coverage or decide to switch, they're going to end up paying a lot more for their medical care.
In other words, it is likely that the blocks of business receiving the rate hikes have deteriorated significantly, in that many of their healthier members have left due to affordability concerns. Anthem explained that the rate hikes were due to a combination of this process, known as adverse selection, and general medical cost inflation. Indeed, Bob Laszewski of the Health Care Policy and Marketplace Review finds Anthem's explanation not implausible:
Falling back on my industry experience it is probable:
The “39%” headline is anecdotally the biggest increase the press has found—the average is probably less albeit in the high 20% range.
This is likely driven by a combination of increasing medical cost trend, a bad economy, and anti-selection as healthier people disproportionately drop their coverage leaving a sicker group in the pool.
The rate increase is probably “defensible,” at least actuarially, based upon the actual experience in that block.
Even if Anthem were non-profit, it would likely have had to make significant hikes to its rates as well. Of course, we don't know their profit margin on those blocks of business. We can say that the hikes averaging 20% can't be due to health care inflation, and the bulk is probably due to adverse selection.
This does underscore the need for national reform. While California could reform the rating and issue rules on its own, it does not have the budgetary power to subsidize individual market purchasers enough to get them to buy insurance. The proposed reforms will make premium increases in the individual marketplace far more stable and predictable. The reforms would give people considerable subsidies. The reforms also give the insurance exchanges the explicit authority to disallow unreasonable charges - plus the ability to assess whether the charges are reasonable. Congress must act now.
Tuesday, February 02, 2010
Rep. Paul Ryan (R-WI) would balance the budget by cutting Medicare and Medicaid
Representative Paul Ryan, the Republican representative from Wisconsin just released his anti-budget for the U.S. today, which Ezra Klein from the Washington Post deconstructs. Ezra is well worth reading. However, the upshot is that Ryan would balance the budget by cutting Medicare. Not only that, but he would cut Medicaid.
He would actually privatize those two programs, plus privatize Social Security. However, that is actually besides the point. Ryan's proposal would issue Medicare and Medicaid beneficiaries a health insurance voucher. However, that voucher's value would grow by the average of the Consumer Price Index and the medical component of the CPI. The CPI is the U.S.' primary measure of inflation. The CPI-medical measures medical and health insurance costs; in general, healthcare costs have been growing about 2% faster than GDP, which has itself been growing a bit faster than inflation. Thus, in the long run, Ryan would balance the budget by cutting Medicare. And Medicaid.
In the absence of other measures in the health reform bills, the private insurance companies would most likely respond by increasing co-pays and deductibles. If Medicare and Medicaid were to remain government programs, this is also the most likely thing they would do. In contrast, the Democratic health reform proposals would have set up the infrastructure for these programs to ration services by their comparative effectiveness and would not have cut the benefits promised to beneficiaries in the statutes. Ryan condemned comparative effectiveness research, and in fact I believe his anti-budget would not implement such research. Thus, the foremost avenue to contain costs will be to increase cost-sharing - which will put many effective treatments out of the reach of low- and moderate-income people.
He would actually privatize those two programs, plus privatize Social Security. However, that is actually besides the point. Ryan's proposal would issue Medicare and Medicaid beneficiaries a health insurance voucher. However, that voucher's value would grow by the average of the Consumer Price Index and the medical component of the CPI. The CPI is the U.S.' primary measure of inflation. The CPI-medical measures medical and health insurance costs; in general, healthcare costs have been growing about 2% faster than GDP, which has itself been growing a bit faster than inflation. Thus, in the long run, Ryan would balance the budget by cutting Medicare. And Medicaid.
In the absence of other measures in the health reform bills, the private insurance companies would most likely respond by increasing co-pays and deductibles. If Medicare and Medicaid were to remain government programs, this is also the most likely thing they would do. In contrast, the Democratic health reform proposals would have set up the infrastructure for these programs to ration services by their comparative effectiveness and would not have cut the benefits promised to beneficiaries in the statutes. Ryan condemned comparative effectiveness research, and in fact I believe his anti-budget would not implement such research. Thus, the foremost avenue to contain costs will be to increase cost-sharing - which will put many effective treatments out of the reach of low- and moderate-income people.
Wednesday, January 27, 2010
The New Republic: Study: Carbon Price May Be Worth It On Health Grounds Alone
Bradford Plumer writes for The New Republic:
Debates about the costs and benefits of reducing carbon emissions usually get conducted along very narrow lines. First you add up the amount people will have to pay in higher energy bills and then compare that with the benefits of avoiding big temperature increases. Et, voila. Except the problem with this approach is that it ignores many of the indirect benefits (and, yes, indirect costs) of shifting to cleaner forms of energy. And some of those secondary effects might be very significant.
Case in point: Shifting away from fossil fuels helps cut down on other, more conventional pollutants that cause all sorts of medical problems: SO2 and NOx and mercury and particulates. And how much is that worth? That's what a new study from Gregory Nemet, Tracey Holloway, and Paul Meier at the University of Wisconsin-Madison tried to figure out. The researchers surveyed 48 studies on the subject and found that, while estimates of the health benefits can vary quite a bit, they average $44 per ton of CO2 in wealthy countries and $81/ton in developing countries. That's bigger than the expected carbon price under a U.S. cap-and-trade system (around $20-$30 per ton). In other words, the air-quality improvements alone could offset the cost of cutting carbon. A cap could be "worth it" for public health reasons, regardless of how one feels about global warming.
Now, this public health angle is especially likely to make a difference in the developing world, where creaky coal plants and noxious car fumes are rampant—in many poorer countries, the health gains could entirely pay for the price of tackling carbon emissions. Indeed, there have already been a few examples of governments thinking along these lines. In India, the city of Delhi recently announced that it would shut down all three of its coal-fired plants and switch to natural gas, even though electricity prices will likely rise as a result. The city's not doing it for climate reasons—officials are trying to chip away at all the smog choking the air. But it's going to have a big impact on greenhouse gases all the same.
Debates about the costs and benefits of reducing carbon emissions usually get conducted along very narrow lines. First you add up the amount people will have to pay in higher energy bills and then compare that with the benefits of avoiding big temperature increases. Et, voila. Except the problem with this approach is that it ignores many of the indirect benefits (and, yes, indirect costs) of shifting to cleaner forms of energy. And some of those secondary effects might be very significant.
Case in point: Shifting away from fossil fuels helps cut down on other, more conventional pollutants that cause all sorts of medical problems: SO2 and NOx and mercury and particulates. And how much is that worth? That's what a new study from Gregory Nemet, Tracey Holloway, and Paul Meier at the University of Wisconsin-Madison tried to figure out. The researchers surveyed 48 studies on the subject and found that, while estimates of the health benefits can vary quite a bit, they average $44 per ton of CO2 in wealthy countries and $81/ton in developing countries. That's bigger than the expected carbon price under a U.S. cap-and-trade system (around $20-$30 per ton). In other words, the air-quality improvements alone could offset the cost of cutting carbon. A cap could be "worth it" for public health reasons, regardless of how one feels about global warming.
Now, this public health angle is especially likely to make a difference in the developing world, where creaky coal plants and noxious car fumes are rampant—in many poorer countries, the health gains could entirely pay for the price of tackling carbon emissions. Indeed, there have already been a few examples of governments thinking along these lines. In India, the city of Delhi recently announced that it would shut down all three of its coal-fired plants and switch to natural gas, even though electricity prices will likely rise as a result. The city's not doing it for climate reasons—officials are trying to chip away at all the smog choking the air. But it's going to have a big impact on greenhouse gases all the same.
Tuesday, January 26, 2010
Center on Budget and Policy Priorities: Changes to Excise Tax on High-Cost Health Plans Address Criticisms, Retain Long-Term Benefits
Dr. Paul Van de Water of the Center on Budget and Policy Priorities backs up what I said earlier about the modifications the unions arranged to make to the excise tax with the President before health reform fell apart.
He reiterates numerous well-regarded economic studies that show that firms which restrain the growth of healthcare premiums will pass the additional money to their workers in the form of higher wages. Moreover, the paper cites statements by union leaders where they explicitly say that they bargained for stronger healthcare coverage and lower wages - and one statement where teachers in Madison, Wisconsin were considering which side to take in the tradeoff between wages and health insurance. Again, I do worry somewhat about non-unionized firms with low-wage workers, but the public and Congress could monitor the situation.
Furthermore, he says that allowing unions a transition period is justifiable. Many unions whose plans would otherwise be subject to the tax are locked in collectively-bargained agreements for several years. They will be able to address the issue at their next round of negotiation, but will not be forced to do so before.
He further assesses the distributional effects of the legislation:
Last, Van de Water notes that the change would approximately halve the revenue collected in the first ten years, but in subsequent years, the tax would collect a good portion of the revenue originally planned for. Policymakers would obviously have to offset that amount, but basically, the tax is not being weakened significantly in the long run.
He reiterates numerous well-regarded economic studies that show that firms which restrain the growth of healthcare premiums will pass the additional money to their workers in the form of higher wages. Moreover, the paper cites statements by union leaders where they explicitly say that they bargained for stronger healthcare coverage and lower wages - and one statement where teachers in Madison, Wisconsin were considering which side to take in the tradeoff between wages and health insurance. Again, I do worry somewhat about non-unionized firms with low-wage workers, but the public and Congress could monitor the situation.
Furthermore, he says that allowing unions a transition period is justifiable. Many unions whose plans would otherwise be subject to the tax are locked in collectively-bargained agreements for several years. They will be able to address the issue at their next round of negotiation, but will not be forced to do so before.
He further assesses the distributional effects of the legislation:
Critics of the excise tax also argue that it would be less progressive than some other possible sources of revenue, such as the high-income surcharge included in the House-passed bill.[12] This observation is correct, but it has been overstated.
MIT’s Gruber estimates that the excise tax will raise workers’ wages substantially over the next decade, and the bulk of these additional wages will accrue to middle-income households.[13] Under the Senate-passed version, for example, workers earning less than $100,000 would receive two-thirds of the wage increases, but they would pay only 49 percent of the tax. In contrast, workers earning more than $200,000 would receive 10 percent of the wage gains and pay 16 percent of the tax.[14]
More important, by limiting the existing tax bias in favor of employer-sponsored health insurance, the excise tax would curtail an inequity in the existing tax system. At present, a worker with a health insurance plan that costs $26,000 — for whatever reason — gets twice the tax break that goes to an otherwise similar worker whose insurance costs only $13,000. A worker without employer-sponsored insurance receives no tax benefit at all. The excise tax would reduce, but not eliminate, this disparity.
The excise tax also needs to be viewed in the context of the entire health reform legislation. The House and Senate bills are full of provisions that would create a fairer distribution of health insurance costs, not the least of which is the limit on age-based variation in premiums. Any final legislation that is comprehensive would likely include other tax provisions that fall primarily on very-high income people, such as the Senate’s increase in the Medicare payroll tax on high-wage earners. Any such legislation likely would also provide new health insurance subsidies that would make coverage more adequate and affordable for low- and moderate-income people who purchase insurance through the new health insurance exchanges. Thus, health reform as a whole would improve the progressivity of the federal tax and transfer system.
Last, Van de Water notes that the change would approximately halve the revenue collected in the first ten years, but in subsequent years, the tax would collect a good portion of the revenue originally planned for. Policymakers would obviously have to offset that amount, but basically, the tax is not being weakened significantly in the long run.
Rethinking the individual mandate
Through the health reform debate, the mandate for individuals to buy insurance has drawn fire from both the left and right. It does impinge on individual autonomy and the subsidies to ensure that people can afford insurance fall short of what is needed. Additionally, the U.S. has never forced people to buy a product from a private company as a consequence of basically being alive and in the U.S. - one could theoretically avoid buying auto insurance by not driving.
The technical reason to include an individual mandate is simple - without one, people will simply wait until they are sick before getting coverage. I recall hearing that in Massachusetts, there is some evidence that people are getting insurance, getting a whole bunch of procedures done, and then dropping the insurance. This activity will disrupt the market.
I initially never questioned the need for a mandate. However, now that health reform is being rethought, one has to wonder if dropping the individual mandate would get enough political support from both sides to pass something and while also being technically sound. Kaiser Health News has some quotes from Stuart Butler of the Heritage Foundation and Joseph Antos of the American Enterprise Institute. Both are deeply conservative scholars (Dr. Butler has done a considerable amount of bipartisan work in the past). Dr. Butler wonders if automatic enrollment could replace a mandate:
Dr. Antos has similar thoughts:
There is a similar penalty in Medicare Part D (the prescription drug coverage) for those who enroll later than the time they first enter into the program. I think their premiums are raised by something like 1% per year. I would be very hesitant to charge laggards based on their health status, because they might genuinely be unable to afford insurance. However, if we placed limits on the variation in health status, or we simply assessed a flat dollar penalty, then this soft penalty would serve much the same substantive function as the original individual mandate, while also not forcing people into a choice they may not want to make.
It is very likely that adverse selection would be higher than without a mandate, even if the subsidy levels were identical. The stricter the penalty, the less adverse selection. Lawmakers will have to balance the need to combat adverse selection with the need to not unfairly penalize people. However, this could be one potential way to move the debate forward.
That said, Mitt Romney Central, which promotes the former Republican Governor of Massachusetts for a 2012 Presidential campaign, cites numerous conservative sources (AEI and the Ethan Allen Institute, a free market think tank in Vermont) praising the individual mandate requirement in Massachusetts' own health reform push. This seems a little inconsistent unless they've rethought things.
The technical reason to include an individual mandate is simple - without one, people will simply wait until they are sick before getting coverage. I recall hearing that in Massachusetts, there is some evidence that people are getting insurance, getting a whole bunch of procedures done, and then dropping the insurance. This activity will disrupt the market.
I initially never questioned the need for a mandate. However, now that health reform is being rethought, one has to wonder if dropping the individual mandate would get enough political support from both sides to pass something and while also being technically sound. Kaiser Health News has some quotes from Stuart Butler of the Heritage Foundation and Joseph Antos of the American Enterprise Institute. Both are deeply conservative scholars (Dr. Butler has done a considerable amount of bipartisan work in the past). Dr. Butler wonders if automatic enrollment could replace a mandate:
Butler at the Heritage Foundation and others say there are ways to encourage most Americans to buy coverage, short of a mandate. One way would be to automatically enroll people in coverage through their jobs. Employers would either sign up workers for employer-based coverage if they offer it, or enroll them in the lowest-cost plan offered on an exchange.
Workers could opt out, but Butler suspects many won’t. "If you don't have to do anything to be in something, you'll be in it,” he says, pointing to automatic enrollment in 401(k) programs as an example of how it could work.
He also suggests another way to prompt laggards: a "soft penalty." After an initial period of open enrollment, premiums would be higher for those who have been uninsured for an extended period. In addition, there could be high-risk pools for individuals who have serious illnesses.
Dr. Antos has similar thoughts:
Joseph Antos of the American Enterprise Institute, a conservative think tank, proposes an initial one-time open enrollment period during which all Americans could sign up for health insurance without facing higher premiums for their health status, and limited premium increases for their age. But if someone chooses to remain uninsured after open enrollment ended or has a lapse in coverage, Antos says, that person would face potentially higher premiums based on age, gender and health status.
There is a similar penalty in Medicare Part D (the prescription drug coverage) for those who enroll later than the time they first enter into the program. I think their premiums are raised by something like 1% per year. I would be very hesitant to charge laggards based on their health status, because they might genuinely be unable to afford insurance. However, if we placed limits on the variation in health status, or we simply assessed a flat dollar penalty, then this soft penalty would serve much the same substantive function as the original individual mandate, while also not forcing people into a choice they may not want to make.
It is very likely that adverse selection would be higher than without a mandate, even if the subsidy levels were identical. The stricter the penalty, the less adverse selection. Lawmakers will have to balance the need to combat adverse selection with the need to not unfairly penalize people. However, this could be one potential way to move the debate forward.
That said, Mitt Romney Central, which promotes the former Republican Governor of Massachusetts for a 2012 Presidential campaign, cites numerous conservative sources (AEI and the Ethan Allen Institute, a free market think tank in Vermont) praising the individual mandate requirement in Massachusetts' own health reform push. This seems a little inconsistent unless they've rethought things.
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