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Archive for January, 2017

What Trumpcare will likely look like

January 18th, 2017 Comments off

Donald Trump is following the path of every president elected before him from at least the Truman administration forward, proclaiming a public policy goal of providing medical insurance to all Americans. “We’re going to have insurance for everybody,” the soon to be president told The Washington Post last week. “It will be in a much simplified form,” he said. “Much less expensive and much better” than what’s available under the Affordable Care Act.

How will Trump bring that about? Wryly playing off then-House Speaker Nancy Pelosi’s famous statement in early 2010 that opponents of the Affordable Care Act would have to first vote for it in order to see all of its provisions, Trump similarly wants to see his Health and Human Services Secretary nominee Tom Price confirmed by the Senate before he reveals his plan.

I’ll go out on a limb and make some predictions on the rough outlines. This prediction assumes Trump will forge his own policy in this area and not necessarily conform to longstanding Republican principles that were posted to his transition website but have since been taken down. Trump’s reform plan won’t be a wholesale repeal of the Affordable Care Act. It will at least initially keep much of the omnibus reform statute intact and concentrate on scrapping Titles I and II dealing with the individual market reforms and expanded Medicaid eligibility to single adults given these components of the law have dominated the Republican reform agenda.

The Trump administration’s plan will give up on trying to make the problematic and inherently unstable individual market as it’s currently structured work with a mix of incentives and disincentives like those of the Affordable Care Act. The Trump plan will likely largely replace the nongroup market with something ironically along the lines of what Affordable Care Act designer Ezekiel Emanuel suggested last week: automatic enrollment in a catastrophic plan. Trump’s plan could offer a level of basic coverage for all working age Americans, starting when the reach their 18th birthday and lasting until they go onto Medicare at age 65 or older. As per Emanuel’s concept, there would be an option to enroll in supplemental plans for those who need or desire more generous coverage, similar to Medicare advantage plans. Most of the funding would come from new payroll and self-employment taxes. These supplemental plans could conceivably comport with Trump’s statement that his plan would offer low deductibles.

This reform of the nongroup market would also pave the way for a gradual transition away from employer-sponsored group plans. Employers would fund the aforementioned supplemental plans as an employee benefit. Or not. Either way, the dominance of employer-sponsored all inclusive medical coverage – which also dates to the Truman administration – would begin to go into decline.

As Trump stated previously, his plan will end the Title II Medicaid reforms and turn Medicaid into a state block grant program. Health savings accounts contribution limits will be increased and contributions permitted to cover supplemental plan premiums and any uncovered medical or dental expenses.

Finally, look for Trump’s plan to focus strongly on prescription drug costs to bend the medical care cost curve, creating a bidding entity or even a federal monopsony that will effectively set the prices of medications for all government programs, including the new basic health plan. Trump indicated in a news conference last week he will play hardball with the pharmaceutical industry.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

ACA architect Ezekiel Emanuel’s post-ACA alternative to individual market reforms: auto enrollment in catastrophic coverage

January 14th, 2017 Comments off

The Patient Protection and Affordable Care Act retains the current system in which those not covered by employer-sponsored and government plans purchase their own medical coverage from insurance companies. The individual or non-group market as it’s termed is like buying life insurance. A policy is issued and the covered party pays a monthly premium to keep the coverage in force.

To ensure the market functions well with large numbers of people in the risk pool and a good spread of risk among those who use little medical care and those who use a lot, the Affordable Care Act compels health plan issuers to make coverage widely available to anyone wanting to buy it. Similarly, it stimulates buyer demand by requiring everyone to have some form of medical coverage or pay an income tax penalty.

The problem is while Americans like the idea of being able to purchase coverage and not be turned down for underwriting reasons as they can when applying for life insurance, they don’t support being forced to purchase individual coverage and want the option to go without. That gives health plan issuers concern because with too many people “going bare,” they will be nakedly exposed to too many high utilizers who aren’t inclined to forgo coverage because they suffer from costly-to-treat medical conditions. Summed up, what the buy and sell sides of the market feels the other side must do to make it work, the other side dislikes. Sellers and buyers are forced into an uneasy relationship, one that needs many years to determine if can sustainably work after a somewhat rocky start. Four years isn’t likely to be long enough, but political exigencies are now requiring policymakers to reexamine the relationship.

One alternative is coming from none other than one of the Affordable Care Act’s primary architects, Ezekiel Emanuel. In remarks delivered at the Commonwealth Club of San Francisco this week, Emanuel suggested moving away from the market-based model of the law and toward making the individual market more like a government insurance program and specifically Medicare. Those eligible – presumably those not covered by an employer-sponsored or government plan – would be automatically enrolled in basic, catastrophic coverage. There would be an option to pay a premium for more generous coverage. Emanuel predicted that approach could garner bipartisan support. While he didn’t specifically raise the point, such as scheme could conceivably be funded at least in part by payroll and self employment taxes. It also wouldn’t be incompatible with conservative ideas such as providing a tax credit to help households offset the cost of medical insurance. Emanuel’s comments on this topic start at 13 minutes into this audio recording of his remarks.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Fate of individual market hangs in balance

January 11th, 2017 Comments off

An immutable truth of any market is sellers and buyers must be able to get together on mutually agreeable terms and conditions and do so on a sustainable basis. If that doesn’t occur, markets grow weak and eventually fail. Sellers withdraw and buyers don’t buy. That has certainly been happening in the individual medical insurance market. Some health plan issuers have pulled back their offerings in many states for the current plan year. Many consumers are reluctant buyers, accustomed for decades to all inclusive, low co-pay managed care plan model. They naturally see individual plans that come with both high premiums and high out of pocket costs as a poor value, expecting a greater inverse relationship between the two. Particularly if they don’t benefit from premium and cost sharing subsidies.

That’s not a prescription for long term buy side support. The Patient Protection and Affordable Care Act forces sellers and buyers of individual plans together by requiring sellers to sell regardless of an individual’s medical history and buyers to buy under pain of paying an income tax penalty for not having some form of continuous, credible coverage. But even those efforts to prop up the market appear less than certain to achieve a robust, well-functioning market. The big questions for the incoming administration and new Congress are:

  • Whether the individual medical insurance segment that covers a sizable and growing portion of the working age population can sustainably function as a market?
  • To what extent government policy should support the market and does the political will exist to do so?
  • If the market should be left intact, what must be done to make it actuarially viable over the long term and avoid its tendency toward adverse selection?
 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Trump Promises On Health Insurance Appealed To Family Struggling With Cost : Shots – Health News : NPR

January 10th, 2017 Comments off

Source: Trump Promises On Health Insurance Appealed To Family Struggling With Cost : Shots – Health News : NPR

Pocketbook issues can determine the outcome of elections. In this case, National Public Radio did a piece today profiling a young Pennsylvania family that perceives it is getting poor value in the individual health insurance market. They are among what I dubbed a few years back as the 401 percenters, households who earn more than 400 percent of federal poverty levels and thus ineligible for premium and cost sharing subsidies under the Patient Protection and Affordable Care Act.

Premiums for catastrophic coverage with high deductibles appear to this family more in line with those one might expect for a very generous plan with little or no out pocket costs. That’s the economic disconnect and sense of unfairness that Trump tapped into and was likely a major issue in his victory over Hillary Clinton. In 2013, I predicted the 401 percenters could seek political redress, feeling the Affordable Care Act has left them worse off than before. In 2016, at least a sizeable portion of that voter cohort did just that, donning red Trump hats and voting for what they hope will be a better deal under a Trump administration. It remains to be seen whether Trump and the new Congress can deliver one.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Pence calls for “market-based” medical insurance system. Problem is it already is.

January 6th, 2017 Comments off

President-elect Donald Trump has made repealing President Barack Obama’s signature healthcare law the “first order of business” and intends a smooth transition to a “market-based” medical insurance system, Vice President-elect Mike Pence on Wednesday.

Source: Pence Calls Obamacare Repeal ‘First Order of Business’

The Patient Protection and Affordable Care Act specifically kept intact the nation’s private medical insurance system that covers the bulk of Americans under age 65. The Affordable Care Act intervened in the private market with its managed competition-based approach, but by no means replaced it. It strongly intervened on both the sell and buy sides of the individual health insurance market in an attempt to rescue the segment from an adverse selection death spiral and restore it to healthy functioning. Doubts have been raised as to whether the rescue effort would have succeeded as premium rates rose and fewer plans were offered for plan year 2017. By the same token, rescinding the individual market reforms aren’t likely to restore it to health either given its deeply problematic nature.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

First step toward bending medical utilization cost curve is not equating medical care with health care

January 4th, 2017 Comments off

The Republicans’ primary strategy is to shift more expense to individuals through high-deductible plans and Health Savings Accounts. They hope people will seek services less often if they have to pay more for it. That’s a prescription for illness.

Source: Partisan battles shouldn’t afflict good health care | The Sacramento Bee

This assumes medical care is subject to the economic principle of price elasticity that holds demand for a product or service moves inversely to its price. But medical care isn’t a commodity like food, clothing and shelter. It’s not consumed on a regular basis throughout life. People generally use it only when they need it, not because they want to buy it at the mall. In addition, the vast majority of people tend toward health with healthy lifestyles and don’t require preventative care.

To begin bending the medical utilization cost curve, the first step is to not regard it as a consumer commodity. The goal is to avoid having to need medical care in the first place by taking good care of our health. That’s truly preventative care. Medical care isn’t a substitute for health care — something only people can give to themselves. Reducing its cost or making it more accessible won’t automatically translate to lower overall spending on medical care.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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