Tag Archive: Ezekiel Emanuel

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

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. 

Shift away from employer coverage would provide triple fiscal benefit to federal government

As a candidate in the 2008 presidential election, President Obama initially favored shifting to a single payer (government paid) system of universal health coverage but later altered his stance. Instead, Obama favored what he described as a less disruptive brand of health care reform that retains the current system of private insurance sponsored by employers that covers the vast majority of working age Americans.

Ironically, Obama’s Patient Protection and Affordable Care Act could have the opposite effect, according to one of the chief drafters of the law. Ezekiel Emanuel, former Obama administration official, foresees a shift away from employer-based coverage over the next decade, with few private employers offering health coverage by 2025. Amplifying Emanuel’s prediction was a Kaiser Health News report last week on a new paper by the Urban Institute strongly suggesting that one of the linchpins of the ACA to ensure the continuance of employer-sponsored coverage – the mandate that employers of 50 or more offer coverage to most of their workers – ultimately won’t have much of an impact in terms of expanding coverage and keeping people medically insured.

The reason: Adam Smith’s law of rational economic self-interest could trump any penalties these employers will face starting in 2015 if they don’t offer coverage. Some large employers could conclude it will cost them less to pay the penalty than provide coverage through a group health plan or self-insuring employee medical costs. Not only that, the Affordable Care Act ironically cuts against employer sponsored coverage by imposing a large excise tax beginning in 2018 on employers who sponsor overly generous plans.

Even without this tax on so-called “Cadillac” plans, the federal government stands to reap a triple fiscal benefit from increased revenues from any major shift away from employer-sponsored coverage. First, employers not offering coverage would of course be unable to take an income tax deduction for offering coverage. Second, any additional amount of money they provide employees as higher compensation or stipends to purchase individual coverage would generate higher individual tax revenues since they would be taxable to employees. Third, the large employer mandate penalties plus increased individual employee tax liability could also benefit the federal government by offsetting advance tax credit subsidies for plans sold in the public exchange marketplace to workers with household incomes below 400 percent of federal poverty.

 


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. 

Individual market could turn into SHOP’s biggest competitor

In a post last December, I characterized small group as the most voluntary – and consequently the most vulnerable – health insurance market segment notwithstanding Patient Protection and Affordable Care Act reforms designed to improve it. Whether these reforms will ultimately help shore up this distressed market segment remains to be seen, I wrote at the time.

A key ACA reform to create market power on the buy side to help drive down rising premiums – small employers identify high premiums as the biggest barrier to covering their employees – is the mandate each state health benefit exchange establish a voluntary small employer purchasing pool known as the Small Business Health Options Program (SHOP). However, experts have recently suggested that in the eyes of potential small employer SHOP enrollees, SHOP’s biggest competition could come from the individual marketplace as they cease providing employer-sponsored coverage.

Ezekiel J. Emanuel, who helped draft the Affordable Care Act as a health policy adviser to the Obama administration, had this to say to The New York Times small business blog You’re the Boss:

I’ve always been a bit perplexed by the idea of setting up a SHOP exchange, since I don’t understand why it’s just not better if you’re a small business to say, all right, everyone, I’m just going to give you X amount of dollars and let you shop in the individual market. That seems to me to be a way to go – why should a small business set up a lot of machinery around it? Why should exchanges set up a lot of machinery? And it would be better for exchanges to have these workers in the individual exchange.

As small employers who early renewed plan year 2013 plans late last year migrate to ACA-compliant plan year 2015 plans, a quarter of small group plan members could end up moving to individual coverage from November 2014 through January 2015, estimates health insurance industry veteran and consultant Michael Lujan. Lujan is former SHOP director at California’s exchange, Covered California.

 


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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