They Are Starting To Get It

Here is a column that apparently gets it. They make some decent points, my comments as usual are in red.

Are Health Insurance Subsidies Enough for Low-Income Patients?

Medicaid expansion and health insurance subsidies have brought millions coverage, but they may not be enough for low-income patients to secure access to care.

May 08, 2017 - Despite financial penalties designed to prompt consumers to keep their health insurance, current efforts to subsidize care for low-income individuals may not be enough to incentivize patients, according to a recent study by economists at MIT and Harvard.

Of course they aren't. You have hinted and insinuated that health care is a right and should be free. You are no longer allowed to act surprised when folks take you up on that offer.

The study measured data from Massachusetts’ subsidized insurance program called CommCare.    Established in 2006, the program offers heavily-subsidized private plans to non-elderly adults below 300 percent of the poverty level who do not have access to insurance through an employer or another public program.

And it has been a boondoggle ever since, damned near bankrupting the state of Massachusetts.

For this program, public subsidies are essential, and leave enrollees with an average premium of $70 per month.  The average full premium is $422 per month.

Which means the Massachusetts taxpayer is eating $352 of premium per member. That is surely unsustainable for any long period of time. 

The Massachusetts plan does mandate coverage and is enforced by financial penalties if not followed.

Frankly, I think the state would rather have the penalty dollars than the coverage premiums. The premium dollars go to Harvard Pilgrim, the penalty dollars end up in the state treasury. Seems like a sweet deal for politicians.

However, patients who receive less money from the program are significantly more likely to opt out of health insurance coverage.   “As subsidies decline, insurance take-up falls rapidly, dropping about 25 percent for each $40 increase in monthly enrollee premiums,”the study found.

Of course, if you are below the 150% FPL, you are truly living day or sad to say, you have made life choices that say you have other priorities over buying health insurance. This gets exacerbated when these same people know they can show up in an ER and get covered under Charity Care. In my Medicare AEP retail location, I hear it all the time. "Why do I need your coverage when I can get it free at the ER?" Of course you get disheartened hearing such things but that is reality for some folks out there. Bottom line, any financial commitment laid upon someone who does not want to accept it, you will see nothing from it.

The average low-income enrollee was only willing to pay three to four times below what their medical costs would be with no assistance from insurance.  For an individual who has expenses of $100 per month, or $1200 per year, that means they would only be willing to pay insurance premiums of about $350 a year.

I am not sure it is even that high. I have seen Obamacare plans die for less premium than that.

“Further data indicated that if enrollee premiums were 25 percent of insurers’ average costs, at most half of potential enrollees would buy insurance, and even premiums subsidized down to 10 percent of average costs would still leave at least 20 percent uninsured,” said the study.

Yeah, that sounds about right. 

The report came to two important conclusions. First, enrollment was “highly sensitive” to premiums.  With each increase in premiums, by relation to the poverty level, enrollment dropped by 25 percent.

Correct, the more you ask, the less you will receive. You are dealing with a portion of the population who while maybe wishing to do good has to make life choices. Now some of those choices may well be made from positions of responsibility and frankly, some may be made from positions of irresponsibility. In either case, the more you ask from these folks the less you are likely to receive.

For those 150 percent or below the federal poverty level, the least expensive plans are free.  This level of subsidy indicated a 94 percent enrollment rate by eligible individuals.

This is interesting because I can almost guarantee you that a decent portion of that uninsured 6% is saying "why sign up when I can get charity care?" Yes, they risk the mandate penalty but they may also be thinking "You can't draw blood from a stone" and so they live consequence free. 

With an increase of $39 per month, for those just above the 150 percent poverty level, enrollment drops to 70 percent. The study notes that this occurs even though the subsidy still covers 90 percent of the premium.

Again, it goes back to the priorities thing we talked about prior.

The study did take into consideration those who have, or may have recently found out about a chronic condition.  Those rates of take-up were predictably higher.

Of course because in the real world it is called Adverse Selection and the carriers call it "buying a claim". Of course people with a chronic condition will take coverage.

The second important finding in the study showed that with progressive increases in premiums, that lower-cost enrollees disproportionately dropped out.  This was despite the mandate and penalties.

If you are that far below the FPL threshold you may not be making a large enough income so collecting that mandate penalty may be a tall order. They don't don't have it in wages and thus do not have it in a tax refund either. Where does Uncle Sam get it then?

This resulted in an insured pool of higher-claim enrollees, and higher premium rates for all those in the pool regardless of health status.

Ahhh but you miss the point. The MLR doesn't take individual claims into their calculations. The MLR is based off the entire pool of a product. For instance, the MLR and subsequent renewal rates will be based off of everyone in a Harvard Pilgrim HMO plan. They do not break it down to say the $20 copay or the $40 copay. Just the HMO plan is pooled in its entirety.

The researchers offer potential explanations for this decrease in enrollment, even with substantial subsidies.   The most prominent culprit for low-income individuals to skip coverage was access to care that required no insurance or participant payment, such as community clinics and dental buses.  The researchers pegged this availability of free care to account almost entirely for low-income individuals to drop coverage altogether.

See above, I make this very point.

By interpreting data on the value of insurance to low-income individuals, it became apparent that many would rather be uninsured than pay 20-35 percent (or more) for costs of care, even though it was substantially below costs incurred by payers. 

Again, this is a combination of triaging priorities and feeling "healthcare is a right and it should be free". You teach folks that, this is what you get.

“More generally, our results suggest a fundamental challenge in enrolling low-income people into health insurance markets, even with an insurance mandate: take-up is low not simply because of adverse selection but because people are not willing to pay the (gross) cost of coverage they impose on the insurer.”

“Even if insurers could offer actuarially fair, type-specific prices, at least 70 percent of the market would be uncovered.”

I would go higher. I am of the belief this number would be over 85%. If carriers charged what they needed to charge to cover all of the utilization costs based on an 85% MLR, the rates would be astronomical. This is why the solutions offered by the Robert W. Kulessa Agency make sense and would provide real relief while limiting government exposure or involvement.

The study concluded there existed two potential justifications for subsidies: “as an offset to the ‘tax’ that uncompensated care imposes on formal insurance, or as a means of redistribution to low-income households.”

It can not POSSIBLY be to help cover claims from uncovered individuals as the penalty is such a spit in the bucket that the thought is even laughable. No, this is a windfall profit for the state government. It helps wit their whole redistributionist ideal. The funny thing is, you are taking from the poor to give to the poor. Robin Hood would be scratching his head right now.

The alternative of reducing or removing subsidies entirely would lead to a mass exodus of coverage by low and even middle income individuals, the researchers asserted.   There exists abundant evidence that low-income individuals value health insurance below the cost they impose on the insurance company.

Of course as they do not understand that claims have real world effects and utilization actually effects rates. Individuals who are below a certain FPL threshold have been cared for by the government for so long that it their having any skin in the game seems foreign to them.

In conclusion, the study suggests a healthcare system that does not involve subsidies may be the solution to extending participation rates and coverage, particularly to those lower-income individuals.

Yes, if you did an unsubsidized plan with full underwriting, a decent portion of the population would instantly see lower rates and thus you would see higher participation numbers. This is because the younger and the healthier (of all ages) would be able to use those factors in creating rate structures that would actually benefit them and the carriers would be able to predict utilization costs for that year which would significantly lessen those absurd renewal increases.  

The Lie Behind ACA Reinsurance-The Next Step Towards Single Payor

Ok, usually I will post an entire article and then put my comments in red alongside of the part of the column I wish to comment on.
Not so with today. Today, I am just going to post the column here and then explain my opposition to reinsurance and why I strongly believe it is the ultimate backdoor into single payor.
Here is the news piece in question.
http://khn.org/news/hhs-states-move-to-help-insurers-defray-costs-of-sickest-patients/
We are hearing from Washington that states are looking to the federal government for help in addressing their massive double digit ACA premium increases. At face value it is beyond laughable. Are people actually looking for solutions from the same people who purposely caused this problem to begin with? Here the federal government creates the plans that caused these problems and now the solution they have come up with is an extremely complicated method of mitigating risk called "reinsurance"?
Does anyone know what Reinsurance actually is? Reinsurance at face value is rather simple. Companies will take out a policy called a Reinsurance policy which is designed to help companies with risks that are too large or put the company in grave danger of folding should those claims ever get filed.
The company will apply for reinsurance like any other insurance product, the RE company will underwrite the risk and then issue a corresponding premium amount for them to accept the risk. It is how insurance is supposed to work and has worked for hundreds of years. The problem here is the logistics. How will the reinsurance product work? Will the feds reinsure at a dollar amount? Will they reinsure on a per policy level like other reinsurance carriers? How will the feds underwrite reinsurance policies? Will it be by state and will policies from the larger more populated states like NY and California pay more because of the elevated risk of exposure to a high dollar claim? These are all questions we must ask before we allow our government to start playing reinsurance company.
The federal government is not a reinsurance company and shouldn't even be a standard risk company. No one has explained how this will work. Ok, so the states are now able to go to the feds for a bailout should utilization start crushing plans. Reinsurance will only help adjudicate those high dollar claims. It will do nothing to help with premium amounts as they are advertising. Why is that, you ask? Well it is simple. This reinsurance policy will do nothing to address utilization. Yes, it may in the end through the feds eating the high dollar claims but it will do nothing to address the issues of utilization and the way it drives up premium costs. Those utilization costs will be there no matter who is adjudicating the claim which is why the reinsurance plan looks more like a scam. Where is the federal governments insurable interest here? I mean, why would the feds take on such enormous risk if there is no pay-off? Reinsurance carriers do it because the premiums are set after underwriting has determined the risk an acceptable one in which the risk exposure is minimized and the chance to profit is in their favor. The government's plan looks more like a kick in the teeth. No underwriting, no risk management....just pure risk. Taking on all that risk is what makes me think this is the next step towards single payor.
It makes sense that this is another and potentially the final step in the march to Single Payor. First the feds come up with the ACA to begin the federal compartmentalization of healthcare. It is now blowing up as they intended. Now the feds are coming up with this ridiculous reinsurance idea as a way to start actually paying claims. So now you have the federal government building and offering plans AND you will have the federal government paying claims, ironically the most expensive claims. The next logical step is for the feds to say that they are getting killed on reinsurance costs and the only way to control those costs is if they are the ones adjudicating those claims from the start as they can best negotiate fees and rates. Of course they will considering they built all of the fee and rate schedules. Now, at that point you have single payor. It probably won't be called that of course but the end result will be the same. Your healthcare will be offered, managed and adjudicated by the federal government. A rose by another name....
This is horrendously bad government policy and one I hope that never sees the light of day.

Another Well Made Case Against Single Payor

I found this one over the weekend and it intrigued me because it is a well written piece making the case against Single Payor Health Coverage. She did a fantastic job but the reason why I wanted to write this is because she left a few pieces out that I will add in. As usual my comments are in red.

Single Payer Is Fool's Gold For California

• SALLY C. PIPES
• 3/31/2017

While the latest Republican attempt to repeal and replace ObamaCare may have failed, Democrats in California and in D.C. are just getting started in their effort to eliminate the health law.

Yes, just as they intended to do 7 years ago.

Unfortunately, they're angling to replace ObamaCare with something even worse.

Yes, that's true but this was indeed all part of the plan. Set the free market up to "fail" so they can come in with a "fix" that will solve all of our "problems".

In California, State Senators Ricardo Lara and Toni Atkins introduced the details of the "The Healthy California Act," on March 30 which would create a "single-payer health care coverage program and a health care cost control system." And they're considering using the flexibility afforded by ObamaCare's "state innovation waivers" to enact this vision.

So many buzzwords, so much losing. Notice they take the word "insurance" out of it. They need to kill that word so that when they start hemorrhaging cash by the billions, they can't be held to task for ignoring Actuarial Science and Risk Management principles. It will be quite interesting to see how they attempt to control costs when they will cover everyone for everything at no cost. Utilization costs will drive them into bankruptcy inside of 18 months. 

As Sen. Lara put it, "now more than ever is the time to talk about universal health care."

The opposite is true. Since ObamaCare became law seven years ago, the case for single-payer has only grown less convincing.

Oh, I disagree. Now is INDEED the time to talk about Single Payor. Every time we ignore these people, they take our silence as assent and implement their agenda. We need to confront it every time it pops its ugly head up. They want to talk about Single Payor Universal Coverage, fine. We will show them what a failure it is.

Consider the two states that have already tried and failed to launch single-payer systems.

Vermont's attempt imploded in 2014 following news that it would cost $4.3 billion a year — nearly as much as the state's entire budget. Gov. Peter Shumlin concluded that the taxes and regulations required to fund the program — an 11.5% payroll tax on business and a tax of up to 9.5% on individuals — "might hurt our economy." No kidding.

Colorado voters had a chance to adopt a single-payer system with a ballot initiative last November. The reform, known as Amendment 69, would have imposed a 10% payroll tax, and would have nearly doubled the state's $27 billion budget.

It would have also eliminated most private coverage throughout Colorado. Eighty percent of voters rejected the proposal. Even the state's Democratic governor, John Hickenlooper, opposed the initiative.

Outrageous taxes are perhaps the least troubling consequence of single-payer care. Indeed, had residents of Colorado or Vermont gone through with their reforms, they would have soon faced long delays for substandard care.

The single-payer system I grew up under in Canada, also known as Medicare, condemns sick patients to delays that have grown ever-longer over the past few decades. Last year, Canadians waited an average of five months for medically necessary specialist treatments after receiving a referral from a general practitioner, according to the Fraser Institute, a Canadian think tank.

That's almost two weeks longer than the previous year's wait times from seeing a primary-care doctor to getting treated by a specialist — and more than twice the average wait-time in 1993.

Now while that may indeed be simply because of substandard care but the increased wait times seem to be more of a symptom of an increasing population using a system not designed to care for such an increasingly large number of patients. This is what happens when liberal immigration policy meets liberal healthcare initiatives.

Canadians seeking an MRI can expect to wait 11 weeks, while those in need of neurosurgery face an average wait of more than 11 months.

The evidence from the United Kingdom's single-payer system — the National Health Service — is even less encouraging. Unlike in Canada, the U.K. allows patients to purchase private coverage outside of the government-run system. But the majority of Brits who rely on NHS hospitals face what the British Red Cross recently described as a "humanitarian crisis."

Yes, I heard that myself while touring London last fall. I spoke to people in pubs around London, just striking up conversation and while everyone wanted to talk about Trump, most also took the opportunity to rail against National Health.

That's not an exaggeration. Chronic overcrowding forced 20 hospitals to issue "black alerts" earlier this year, meaning that they couldn't guarantee life-saving emergency care.  Last year, more than 2 million Britons waited more than four hours for emergency-room care.

Here in the United States, our own version of a single-payer system — the Veterans Health Administration — offers another cautionary tale.

Exactly. You want to see the future of Single Payor in America, look to the VA. It's a mess.

Predictably, patients stuck in the system face chronic shortages of and delays in care. Just last year, a federal report found that 215 veterans died while awaiting potentially life-saving care at a VA facility in Phoenix.

This discovery came two years after a scandal in which VA employees were caught covering up evidence of excessive wait times at the same Phoenix hospital. After a national outcry — and a high-profile federal reform effort — veterans still must withstand potentially fatal delays when seeking care.

What makes this example even worse is the limited number of Americans using VA. Less than 2% of Americans will be associated with our Armed Forces. The fact is, we can't even treat 2% of our population without screwing it up. Imagine increasing that number fifty fold? The failure would be staggering.

Nevertheless, California lawmakers like Lara and Atkins remain captivated by the idea of a government-run health care. Sen. Bernie Sanders, I-Vt., is also under the spell of single-payer, and has promised to introduce national "Medicare for All" legislation soon.

And here exactly is why I chose this piece. This is where Ms. Pipes hits the target but misses the bullseye. This isn't about compassion or coverage or Universal Healthcare. Not at all. This is about money and who controls it, plain and simple. When the government can control every premium dollar, every deductible dollar and every coinsurance dollar and then control how it is distributed and to whom, well that is real power. 

The ACA has a Medical Loss Ratio (MLR) of 80%. That means for every $1 taken in premium 80 cents must go out in claims. That sounds fine until you realize that health reform states like NJ had an 85% MLR which means the government is looking to keep an extra 5 cents of every dollar collected. In fact, the government doesn't need an MLR because the MLR was designed to prevent insurance companies from hoarding claims money and "increasing profits". Government should never run a profit in anything, it should be a revenue neutral operation. Budget, allocate, spend and put anything extra back in the hands of the people. Single Payor ensures that the power will now reside in big government. Big Government will collect your premiums, keep your health records, decide what health plans you will have and will decide how and if your claims are paid. Orwell's 1984 was a novel not a field manual.

But as Canada's Medicare system, the NHS, and the VA make clear, single-payer is the only approach to health reform that has performed worse than ObamaCare these last seven years.

ObamaCare was supposed to underperform, it was designed to do as such. Beware the hucksters who sell Single Payor as the cure for the problem they caused.

Krauthammer Gets It Right

In a NY Daily News piece, Charles Krauthammer stumbles on to a truth I have been saying for awhile that the ACA was designed to get us to a Single Payor delivery system. For anyone who knows the business, it was clear that the ACA was the necessary precursor to Single Payor.
Here is Charles Krauthammers column, my comments as usual are in red.

Single-payer, here we come: The health care revolution in waiting

CHARLES KRAUTHAMMER

NEW YORK DAILY NEWS

 

Thursday, March 30, 2017, 8:00 PM

Repeal-and-replace (for Obamacare) is not quite dead. It has been declared so, but what that means is that, for now, the President has (apparently) washed his hands of it and the House Republicans appear unable to reconcile their differences.

No sir, they were just caught in a moment where they had to act and for once do something but knowing their ultimate goal was Single Payor they believe they acted correctly.

Neither condition needs to be permanent. There are ideological differences between the various GOP factions, but what’s overlooked is the role that procedure played in producing the deadlock. And procedure can easily be changed.

The House leadership crafted a bill that would meet the delicate requirements of “reconciliation” in order to create a more achievable threshold of 51 rather than 60 votes in the Senate. But this meant that some of the more attractive, market-oriented reforms had to be left out, relegated to a future “phase three” measure that might never actually arrive.

If "Phase three" means Single Payor then yes it may arrive but any phase that sends healthcare back to the private market is as DOA as the last bill they "debated".

Yet the more stripped-down proposal died anyway. So why not go for the gold next time? Pass a bill that incorporates phase-three reforms and send it on to the Senate.

Because it might pass the Senate and if it did, Trump would sign it and that's the last thing they need.

September might be the time for resurrecting repeal-and-replace. That’s when insurers recalibrate premiums for the coming year, precipitating our annual bout of Obamacare sticker shock. By then, even more insurers will be dropping out of the exchanges, further reducing choice and service. These should help dissipate the pre-emptive nostalgia for Obamacare that emerged during the current debate.

No way. You can't try to negotiate a near wholesale replacement of health coverage while actuaries are busy constructing rate structures to be approved by state government banking and insurance committees. No, the time is now unless the goal is another charade then yes, by all means wait until September to try and pass a bill that will not become effective until at minimum 2019. By then, the Dems may win the House back and reverse it all....meaning Single Payor is closer than ever.

At which point, the House leadership should present a repeal-and-replace that includes such phase-three provisions as tort reform and permitting the buying of insurance across state lines, both of which would significantly lower costs.

Tort Reform may lower premiums because it would lower reimbursement costs to the doctors because docs would begin to pay less for their own Malpractice coverage. Crossing state lines may increase competition but as long as networks are in place and utilization costs are what they are, there is no guarantee Reciprocity will get us to where we need to be. No, I believe it will end up being a group of issues combined that will help lower rates.

Even more significant would be stripping out the heavy-handed Obamacare coverage mandate that dictates which medical benefits must be included in every insurance policy, regardless of the purchaser’s desires or needs.

Yes, "ala carte" is the new conservative buzzword. Ok, how do you rate that? Where will the actuarial numbers fall on 2,000 potential plan descriptions available and how do you do that on a guaranteed issue system?

Best to mandate nothing. Let the customer decide. A 60-year-old couple doesn’t need maternity coverage. Why should they be forced to pay for it? And I don’t know about you, but I don’t need lactation services.

True but actuarial science may have problems with this.

This would satisfy the House Freedom Caucus’ correct insistence on dismantling Obamacare’s stifling regulatory straitjacket — without scaring off moderates who should understand that no one is being denied “essential health benefits.” Rather, no one is being required to buy what the Jonathan Grubers of the world have decided everyone must have.

This sounds nice and all Libertarian but you will end up running into a form of adverse selection when the folks who need the once mandated "Essential Health Benefits" go to build that new "Ala Carte" plan only to find out that because of utilization ratio numbers, this plan will be monstrously expensive because the odds are the people who buy this plan will use it...a lot. Once again, unchecked utilization with no underwriting to accurately price this plan will cause renewals to spike as they chase prior year losses.

It is true that even if this revised repeal-and-replace passes the House, it might die by filibuster in the Senate. In which case, let the Senate Democrats explain themselves and suffer the consequences. Perhaps, however, such a bill might engender debate and revision — and a possible compromise. This in itself would constitute major progress.

Doubt it. Any attempt to dismantle Obama's legacy will be met with open warfare.

That’s procedure. It’s fixable. But there is an ideological consideration that could ultimately determine the fate of any Obamacare replacement. Obamacare may turn out to be unworkable, indeed doomed, but it is having a profound effect on the zeitgeist: It is universalizing the idea of universal coverage.

Yep and that was the plan all along. We warned you guys but the Wizards of Smart told us we were silly. We told you to watch for Blue Cross. We told you to watch for spiked renewals on plans whose new business numbers were not based on anything in reality. We told you this plan was designed to falter and give Democrats and Single Payor advocates the opportunity to say "well, we did it your way and it failed. Now it's our turn." 

Acceptance of its major premise — that no one be denied health care — is more widespread than ever. Even House Speaker Paul Ryan avers that “our goal is to give every American access to quality, affordable health care,” making universality an essential premise of his own reform. And look at how sensitive and defensive Republicans have been about the possibility of people losing coverage in any Obamacare repeal.

And it worked exactly as it was supposed to do. You gave away free stuff to voters and now you want to take that free stuff away. It'll never work. We are stuck. You hate Trump but Trump is the only one who is willing to do battle with an openly hostile press. Congress on the other hand will whimper and run the first time the NY Times editorial board calls one of them "evil, greedy, heartless and a pawn for Big Insurance".

A broad national consensus is developing that health care is indeed a right. This is historically new. And it carries immense implications for the future. It suggests that we may be heading inexorably to a government-run, single-payer system. It’s what Barack Obama once admitted he would have preferred but didn’t think the country was ready for. It may be ready now.

Of course the people think that. You did that when you allowed healthcare to be given away...oops, I mean "subsidized". We are absolutely heading towards a Single Payor system. I have been telling my liberal friends they are looking very foolish with all of their yelling and screaming because the fact is, they won and don't even realize it.

As Obamacare continues to unravel, it won’t take much for Democrats to abandon that Rube Goldberg wreckage and go for the simplicity and the universality of Medicare-for-all. Republicans will have one last chance to try to convince the country to remain with a market-based system, preferably one encompassing all the provisions that, for procedural reasons, had been left out of their latest proposal.

Again, that's the plan. Let the plan fall apart and instead of taking the blame for being the architects, they will simply come up with a new solution which will be the plan they wanted all along...Single Payor. Oh and it will appear like it works because Congress can do something the private carriers can not; deficit spend. Congress will enact Single Payor, take control of those trillions of dollars, decide how they get spent and when they run out of money instead of eliminating plans or going out of business, Congress will raise the debt limit and keep chugging on.

Don’t be surprised, however, if, in the end, single-payer wins out. Indeed, I wouldn’t be terribly surprised if Donald Trump, reading the zeitgeist, pulls the greatest 180 since Disraeli dished the Whigs in 1867 (by radically expanding the franchise) and joins the single-payer side.

Like I said, Chuck. You were warned 7 years ago. You guys chose not to listen.

Talk about disruption? About kicking over the furniture? That would be an American Krakatoa.

Don't blame Trump for nonsense that precedes him by 7 years. You Establishment Republicans had all the time to craft a bill to be ready the moment a Republican is ever elected. You chose not to which tells me one of two things. It is either you are incompetent and have no idea what you are doing or those 68 bills were shams to make it look like you wanted repeal to the gullible voters when in fact Single Payor and the trillions of dollars that would be made available to you was the REAL goal. In either case, we are on to you.

The ACA Repeal Bill In All Its Glory (or Whatever)

I have attached a link to the Committee Print for the Budget Reconciliation Legislative Recommendations Relating to Repeal and Replace of the Patient Protection and Affordable Care Act.

http://www.foxnews.com/politics/interactive/2017/03/06/text-american-health-care-act/

Here are my thoughts.

I don't believe this is as great as the GOP will say it is or as scary as the Dems will say it is. There is a little bit here for everybody.

Admittedly the Democrats will be incensed by the abortion language in the bill as the Committee made it very clear they will fund abortion in only the most strict circumstances. The Republicans may be a bit miffed in that a lot of the safety net of the ACA is still in place.

I am now going to go through the bill and talk about notes I made while reviewing it.

Sec 103 Federal Payments to States Section B

In the Definitions section of this, it is made clear that places like Planned Parenthood will now be considered "Prohibited Entities" and will receive no federal funding for their abortion operations.

Sec 112 Repeal of Medicaid Expansion (A, 1)

There is a clause about "at the option of the state" and it is very confusing over whether the state may option to cover an expansion of their Medicaid rolls or of the state can apply for an exception. In either case, it is clear that the thing we wrote about last week about California may have California correct in their reading.

Sec 112 Section C

The Essential Health Benefits Requirement is gone. This can be both good and bad. While removing some of these "essential health requirements" may lower premiums, it may alter plan descriptions in a way that reduces the amount of care a member can get. We will talk about the counter to this in a bit because there is an answer to this.

Sec 114 Reducing State Medicaid Costs

Bottom line, if you win the Mega Millions lottery and you are on Medicaid....you aren't anymore. They count lottery winnings against income and that will push you over the threshold and you are done with Medicaid.

Sec 114 Subsection 1

It looks like there will no longer be any backdating of effective dates into Medicaid. It looks like the government is no longer in the business of buying claims.

Sec 114 Subsection 2

No Medicaid for illegal aliens. This section makes it crystal clear there will be no Medicaid payments for any unauthorized individuals and increased verification checks will be completed prior to authorization with no medical claims paid until authorization is released. There is language in the bill saying the states can adopt their own "grace period" but the question is, if they do provide coverage is the state on the hook for it or can they pass it off to the feds as a "qualified expense". The bill is not very clear on this.

Sec 115 Safety Net Funding (yes, that is the actual title)

Subsection 2 jumped out at me because it deals directly with providers and it appears that there will no longer be any balance billing on ACA or Medicaid plans. While at face value that doesn't mean much because of current patient financial responsibility on Medicaid but it does set a standard that says the providers will be taking the government offered reimbursement. Let's see who actually does and who actually walks.

Sec 116 Providing Incentives for Increased Frequency of Eligibility Determinations

Subsection K will give our Democrat friends fits because it drops the eligibility checks down to every 6 months. I believe we in NJ have been doing this already but it will be interesting to see how this plays out in states where this will be something new.

Sec 121 Per Capita Allotment for Medical Assistance

While this section had a lot of meat in it and I will be reading this through a few times but Medicare Cost Sharing is now considered an Excluded Expenditure. My question is what Medicare Cost Share? Is it like where PAAD pays for Medicare premiums and copays?

Sec 121 Subsection 2

This deals with members I would consider Dual Eligibles and how Medical Assistance Payments will be made.

Sec 121 Subsection D

This section deals with HSA contributions but what really stuck out to me was how taxpayers with seriously delinquent tax debt will not be able to receive or place HSA account deposits. All the new HSA rules will kick in for 2018.

Sec 6050X Returns by Health Insurance Providers Relating to Health Insurance Coverage Credit

Two things stuck out to me in that it looks like reporting is now at a federal level and no longer the state and there will be no more monkeying around wit the WR-30 as employers and such used to do back in the day (much to our chagrin).

Sec 6050X Subsection 2

Acknowledgement of the utilization issue. This validates my whole argument with the ACA. It's nice to see Congress sees it as well.

Sec 6050X Subchapter C (B)

In here they talk about repayment limit on million dollar claims. The question is they never stated whether it was single occurrence or aggregate.

This same subchapter also notes how states will be forced to take a bigger bite in paying Medicaid claims.

Sec 2711 Encouraging Continuous Health Insurance Coverage

There is now a Late Enrollment Penalty similar to Medicare Part D but the new LEP is equal to 30% of the monthly premium rate. It looks like the LEP only lasts a year unlike the Medicare Part D LEP which is a lifetime penalty.

Subtitle II
This section deals with several taxes and fees that have been eliminated

For 2018 the tax on Prescription medications has been repealed
For 2018 the tax on OTC drugs has been repealed
For 2018 the tax on health insurance has been repealed
For 2018 the tax on Net Investment Income has been repealed
For 2018 the tax on tanning salons has been repealed

There will also be a new rating system for coverage in 2018. This means your rate is going to move one way or the other. The bill does not say exactly what the new rates will be based on but seeing how it is all guaranteed issue, I don't see major changes here.

So, there it is. This is a basic outline. I will keep reading this and see if anything else jumps out at me but for now this is it.

Like I said, I don't think it is as great as the GOP says or as horrible as the Dems say it is.

Another Example Why The World Laughs At California

There are so many pejoratives on California that I could fill an entire blog with them but frankly who has the time. Well, here we have another example. Once again, California shows why they are the liberal laughingstock of the world. Go ahead, guys. Go ahead and secede and become a third world nation in debt over your eyeballs...at least you will have Hollywood and the porn industry.
The LA Times is either willfully ignorant in not knowing how the insurance industry operates or they don't care and want to push a leftist agenda in gaining a Single Payor health plan.
Here is one of the funniest columns you will read on healthcare reform. As usual, my comments are in red.

Thanks to Trump and the GOP, a California single-payer healthcare system is now possible

By: David Lazarus

Could California have its own single-payer health insurance system providing coverage for all residents? A bill has been introduced in the state Legislature that would do just that — and its chances of success could be vastly improved by President Trump and the Republican-controlled Congress.

Thanks, guys!

First, a little history lesson. Stick with me because this is important.

California flirted with a single-payer system when the Legislature signed off on the idea in 2006 and again in 2008. The bills were vetoed by former Gov. Arnold Schwarzenegger, who declared in 2006 that “socialized medicine is not the solution to our state’s healthcare problems.”

He was right.

Those legislative efforts were spearheaded by Sheila Kuehl, who was then a state senator and is now a Los Angeles County supervisor. She and I spoke frequently during California’s flirtation with single payer and we caught up on the topic this week.

Her biggest mistake in 2008, Kuehl told me, was not effectively countering the “socialized medicine” line from Republicans and conservative critics.

You mean you couldn't pull the wool over the people's eyes good enough.

“What we should have done from the very beginning was use the phrase ‘Medicare for all,’ ” she said. “People are familiar with how Medicare works. They would have understood that we weren’t taking over healthcare providers.”

And obviously you aren't familiar with how Medicare works. Medicare is not "free" insurance and you have had to "pay" into it through quarters of qualified employment to be eligible or pay a large premium to participate. Actually YES, YOU ARE taking over healthcare providers but you are doing it in such an insidious manner. The regulations you create for providers to be considered for "Medicare Assignment" absolutely reeks of government control.

Under the typical single-payer system, payroll taxes replace premiums, deductibles and co-pays as a funding mechanism for health insurance. This is how almost all other developed countries succeed in providing affordable coverage for everyone — and for about half as much as what Americans pay.

Hmmm....under the old system that "didn't work", premiums were taken out of payroll. What makes this any better? What are the utilization numbers in those "developed nations"? What are the pools and the demographics? You are comparing apples to artichokes and then hailing some sort of success.

No one is proposing a government takeover of hospitals and doctors’ offices.

See above. Yes you are. You may not be educated enough to realize it, though. Those of us in the industry know otherwise. When the government sets plan descriptions, sets MLR rates, sets up exchanges, certifies both providers and brokers and then is the approving body for rate structures both new and renewal...what else do you call this other than government takeover?

“Single-payer isn’t socialized medicine,” Kuehl said. “It has nothing to do with hospitals and doctors. It’s purely a form of insurance. But we didn’t communicate that as well as we could have.”

No, you explained your position most admirably. We who disagree just pointed out your flaws and the public agreed with us. See my previous quote above this for the evidence.

Messaging aside, she thinks the public has become more open to new ideas.

Only because the last idea in the Affordable Care Act was so horrible.

“With so much uncertainty from the Trump administration,” Kuehl said, “I’m more convinced than ever that single-payer is the way to go for California. It’s a very, very good idea.”

Uncertainty from Trump? His voice and his position is the most stable we have seen on this issue in years. You may not agree with his policies but they are transparent and doable.

The idea is back in play thanks to state Sen. Ricardo Lara (D-Bell Gardens), who last week introduced a bill aimed at creating a Medicare-for-all system for Californians.

It doesn’t yet say how this would be accomplished. Instead, it declares the Legislature’s “intent” to pass a law that would “establish a comprehensive universal single-payer healthcare coverage program and a healthcare cost control system for the benefit of all residents of the state.”

Healthcare Control System......read, "rationing". You see as I will explain further down in this column, there are only a few ways to lower healthcare expenditures.

Details, presumably, will come later.

Of course, they will. You have to pass it to see what's in it. Leave it to California to employ one of the tactics used by their most "popular" representative, Nancy Pelosi.

“If Republicans abandon California and Congress moves to cut Medicaid, we will insist that the federal government treat us like any other state and give us the flexibility and freedom to address the health needs of our entire population through a universal healthcare system,” Lara told me.

Ok fine, no problem. Let's say that California decides to go it alone and form their own utopian single payor plan. What happens to residents when they travel? What happens when your Malibu resident movie star decides to jump over fly over country and go to NY and suddenly needs care. Who pays? Yes, the ACA says emergency care is mandated but if California builds a single payor plan, that is outside of the ACA, no state will honor California's contracts. So, in fact, a California resident traveling out of state runs the risk of having no insurance because there will be no reciprocity agreement in place. Reality sorta sucks, doesn't it?

Studies have shown that a single-payer system would result in lower out-of-pocket costs for most California residents.

See below. I address this outright lie.

But one big problem with Kuehl’s earlier bills was how the $100-billion Medi-Cal program — the state’s version of Medicaid — would integrate with a California single-payer system. Medi-Cal covers about a third of the state’s population. About $67 billion in funding comes from the federal government.

Your Medicaid problem is one third of your population and you think diverting that money to the remainder of your population will lower out of pocket costs to your residents? This is insanity. How do you cover the utilization costs of the remaining two thirds while keeping the guaranteed issue and the no Pre-X clause? Who eats those utilization charges? 

That state-federal partnership meant Washington would have needed to sign off on any move to incorporate Medi-Cal into a state single-payer plan, and Kuehl acknowledged at the time that this probably would have been hard to obtain.

Thanks to Trump and the Republican-controlled Congress, things are now very different.

“We should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out,” Trump said in his speech to Congress this week.

What he and Republican leaders mean by that is giving states a fixed amount of Medicaid money in the form of block grants to cover low-income people. States currently are guaranteed at least $1 in federal funds for every $1 in state spending.

The Republicans’ goal is for the federal government to pay less for Medicaid annually. But what they’re also unintentionally doing is removing perhaps the biggest obstacle to California and other states establishing their own single-payer systems.

It should be all government's responsibility to find ways to pay less for their social safety net. There are ways if you are open minded enough to see them and not glued to Single Payor.

With block grants, states wouldn’t need congressional approval to use Medicaid money for a broader insurance program.

True but what happens when you apply the Medicaid grant into the general treasury to pay for all of "Cali-Care" or whatever you call it only to find out it wasn't enough? If you are getting crushed and need that Medicaid block grant, expanding your eligible pool is potentially budget crushing and fiscally irresponsible.

“Yes, that solves the problem,” said Gerald Kominski, director of the UCLA Center for Health Policy Research.

See above. No, it doesn't.

But he noted that block grants create a different issue in the form of program sustainability. Unless the annual grants grow with healthcare costs, states will find themselves increasingly underfunded in covering Medicaid populations.

If you can't handle your Medicaid problem now, how are taxes going to handle a situation that will only get worse tenfold when you then take on the healthcare platform for your entire state???

“If the grants are linked to inflation, that won’t be sufficient,” Kominski said. “Healthcare spending always grows faster than the overall economy.”

And a California Single Payer plan will remedy that how exactly? 

The average cost of living for Americans rose about 2% last year. Healthcare spending, meanwhile, climbed 4.8%, and is expected by the Centers for Medicare and Medicaid Services to rise 5.4% this year.

Once again, utilization is the killer. Single payer does nothing to address that. No matter who is paying the bills, utilization is utilization. No matter who is paying the bills, actuarial science is present. The only way you can lower costs is by doing a few things none of which will be popular. You can reduce access or limit exposure through limited participation networks, higher deductibles and coinsurances to the insured. Unfortunately that will be extremely unpopular with voters. You can reduce reimbursements to providers through renegotiating capitation or reducing fee for service payments. Unfortunately, that will make doctors unhappy and they in turn will refuse to accept that network leaving members out in the cold and again, making voters unhappy.

“Block grants are a poison pill,” Kominski said. “They’re a slow-acting poison that cuts off your healthcare funds.”

That’s not an insurmountable problem. California could structure a single-payer system so that it’s sustained by a greater share of state tax revenue, with program efficiencies offsetting a gradual decline in federal dollars.

And how pray tell do you do this with your already bloated public assistance entitlement budget along with your state government employee benefit requirements?

A 2005 study by the Lewin Group found that a single-payer insurance plan would save California nearly $344 billion over 10 years, primarily by streamlining bureaucratic overhead and relying more on bulk purchases of prescription drugs and medical equipment.

Are you really going to use a 12 year old study to justify an ever expanding and bloated healthcare platform? Bulk purchases do nothing to remedy the problems brought on by utilization. You don't believe me? Ask United Healthcare what happens when you offer a zero premium Open Access Point of Service Medicare plan in an area that demographically skews heavy towards a medicare eligible population. Let's just say it lasted one year before they lost their shirts and had to discontinue the plan and move them to the Open Access HMO Medicare plan. Utilization is the killer. Learn that and you will see where the real problem lies in your plan. 

The study also predicted a significant economic boost for businesses because they’d no longer be responsible for employees’ health coverage. This, in turn, would probably spur job creation.

Wrong. The fact is most businesses were already paying the 10% employer minimum contribution. Let's say the premium for a single employee is $350 dollars and the employer is paying the 10% minimum with a roster of 10 employees. The savings would be $350. What employee are you going to hire for $350 a month?

A single-payer system would be a clear improvement for California and would serve as a model for the rest of the nation. Don’t forget: Canada didn’t adopt a single-payer system overnight. It rolled out its universal-coverage program gradually, province by province. The same methodical approach would be prudent for the United States.

And yet Canadians in the province of Ontario run into Buffalo NY for treatment or major surgery.

But now another question arises: What sort of single-payer system do we want? They’re not all created equal.

Are you serious?!?! Single Payor not all created equal? If it is single payor it is single payor. One governing body that adjudicates claims, designs products, credentials providers, approves brokers and sets/approves rates. 

On Tuesday, we’ll look at alternative approaches to covering everyone.

I've already done it. Go to my blog.

Interesting Study on ACA Participation

The Commonwealth Fund released a study a few months back that just came across our desk this morning. It deals with whether or not the ACA had an effect on declining uninsured rates.
I believe in the end, yes, the ACA lowered the uninsured rate but it wasn't because of anything purchased. What the ACA did was pass off the costs from the consumer to the government making health insurance "affordable". How did they do that, you ask? Well, the ACA made provisions for subsidies to be paid out for lower income Americans which took a normal $400-600 premium and through subsidies made it under $100. The American taxpayer ate the rest. For the truly low income individuals, the expansion of Medicaid created a $0 premium plan with (in most cases) $0 copays, coinsurances and deductibles.
So of course people are going to sign up for something free. In that case, yes, the ACA did indeed lower the uninsured rate.
The flip side of that coin was the ACA drove people into the marketplace who were happy with their group plans by rewriting the rules on who can qualify for group coverage. One of the biggest crimes of the ACA was the destruction of the two life group. The vast majority of small group insurance was written on businesses with under seven lives and for the most part were two life "mom and pop" groups. When the ACA said no greater than 51% of a single family could make up a group health plan roster, that essentially killed small group health insurance and drove people to the marketplace. The participation as you can see is not because of the quality of the plans or the desire to go to the marketplace, it was because of legislation that destroyed the plans they liked and could no longer keep.
The bottom line is you can not pass off costs to government be it state or federal and then crow about the "success" of your plan when the fact is without the government handouts, no one would have gone to the marketplace. We are burdening our children with a debt tomorrow to fuel our socialist desires today.
Take a look at the study and see first hand how they made this horrible piece of legislation seem all sweetness and light.

http://www.commonwealthfund.org/publications/issue-briefs/2016/dec/aca-declining-uninsured-rate

Responsibility Is Now Hell?

I found this piece on Real Clear Politics today and felt it needed discussing. This column shows why any real health reform is a pipe dream. When the only method of properly rating a plan or managing risk towards a carrier is called "A Circle of Hell", we have problems.

As usual, my comments will be in red.

Welcome Back To The Medical Underwriting Circle of Hell

By John McDonough and William Seligman

February 15, 2017 Real Clear Health

All leading Republicans who are committed to repealing all or key parts of the Affordable Care Act (ACA) also emphasize their commitment to maintaining the law’s most popular part: banning pre-existing condition exclusions and medical underwriting by preserving the ACA’s (also known as Obamacare) policy of “guaranteed issue.” But the fine print in Republican proposals betrays that commitment, including legislation filed on January 26 by House Energy and Commerce Committee Chairman Greg Walden (R-OR) threatening health security for tens of millions of Americans.

Medical underwriting is the insurance industry practice of issuing and pricing health insurance based on an individual’s current or prior medical condition. Insurers use medical underwriting and pre-existing condition exclusions to avoid covering anyone who might cost them money. The Walden bill, called the “Preexisting Conditions Protection and Continuous Coverage Incentive Act,” pretends to continue the ACA’s ban on medical underwriting, but would, in reality, do the opposite.What are pre-existing conditions that can prevent you from obtaining coverage?

Excuse me, but Medical Underwriting and Risk Management are the only ways to effectively the level of risk a carrier is taking on with this member. Guaranteed Issue with coverage for pre-existing conditions is what is causing your 200% rate increases as the carriers chase prior year losses.

What are pre-existing conditions that can prevent you from obtaining coverage? Here is a list of hundreds that are used to exclude or limit health insurance: acne, cancer, domestic violence, leukemia, pregnancy, sleep apnea, and much more.

Not every Pre-X gets you a decline letter. Some pre-X conditions will get you a premium increase to cover the increased risk. Some Pre-X conditions will get you limited coverage but considering we have plans with $2500 deductibles and $8500 Out of Pocket limits, this will probably never be an issue.

Walden’s bill would require that insurers not use medical underwriting and pre-existing condition exclusions against applicants for insurance, though with provisos. For example, though insurers couldn’t refuse to issue a policy because of someone’s current or past medical condition, nothing in his draft prevents insurers from using medical underwriting in setting premiums. In other words, health care consumers could acquire insurance despite their medical history, yet still see huge increases in month premium expenses.

This makes sense. The carrier won't decline the applicant but will instead rate the policy just like they do with life insurance, disability insurance, long term care insurance and even auto and homeowner insurance. For an insurance company to remain solvent, they must have a reasonable understanding of the risk they are taking on. That doesn't change in a single payor system either. Risk Management and Actuarial Science exist no matter who is adjudicating those claims.

Even more important are the bill’s final words: “Title II – Continuous Coverage Incentive [Placeholder].” That’s it, there is no more. What does Walden mean by “continuous coverage”?

Just about every ACA replacement proposal advanced by Republicans since 2013 includes this “continuous coverage” provision. It means that you are protected from pre-existing condition exclusions only if you are able to maintain coverage for the minimum required period and have no gaps longer than allowed by law. The proposed time periods vary between 6 to 18 months. Walden’s new Republican draft is silent on this detail and everything else. Under Speaker Paul Ryan’s “Better Way” plan released last summer, those who fail to maintain “continuous coverage” will be newly subject to medical underwriting and pre-existing exclusions when they try to purchase coverage. In other words, they get a one-way ticket to the medical underwriting circle of hell.

Continuous Coverage prevents Adverse Selection, plain and simple.

How many Americans might fall into this circle of hell? It's hard to say, but it is likely that most of the 28 million to 29 million currently uninsured Americans would fall into it, plus a large share of the 20-22 million who gained coverage under the ACA. Most people in the latter group receive subsidies through Medicaid or tax credits for private insurance. But Republicans want to replace these income-scaled subsidies with a flat tax credit. This would harm the tens of millions of Americans at the bottom of the income ladder, many of who have health coverage under the current law.

In other words, some of these folks don't have money to provide coverage and want an already bankrupted government to pay their premiums for them. Using pretend money to pay for real services has always been a really bad idea. 

Guaranteed issue with continuous coverage is the Republicans’ favorite path to repeal the ACA’s unpopular individual mandate. However, the mandate was built into the health care law to ensure the workability of guaranteed issue, among the most liked parts of the ACA. The irony here is that both continuous coverage and individual mandates try to get at the same thing: to create broad insurance risk pools that attract healthy and younger enrollees to keep premiums as low as possible.

The risk pools aren't for the young and healthy. The state High Risk Pools are for the folks who utilize their coverage. To pool these less than healthy members into a government system is asking for the taxpayers to "buy claims". That is the fast track to insolvency.

Which is more punitive – the individual mandate or continuous coverage? In 2015, about 6.5 million Americans paid the individual mandate penalty of $325 dollars (which rose to $695 in 2016) versus tens of millions who would be vulnerable to medical underwriting under Republican continuous coverage provisions, and left with no other option but to buy insurance through re-invented state “high risk” pools in which premiums are often as much as 50 percent higher than in regular markets.

Asking people to have continuous coverage is not punitive. Ok, no problem. Let's say I agree with you gentlemen that Continuous Coverage is punitive and the only compassionate idea is to eliminate this draconian policy, then lets restrict what activates a Special Election Period. We eliminate the Continuous Coverage provision while reducing and nearly eliminating the opportunity for Adverse Selection.

The health insurance industry – though they are willing to work with congressional Republicans to modify the ACA – don’t want to return to medical underwriting, and many in the field advise against it. Most of the industry does not appreciate being the bad guys who deny coverage. Typically, health insurance providers prefer the Affordable Care Act, so long as the market ensures a broad risk pool, and mechanisms such as reinsurance are set in place to prevent excessive costs.

Who the hell told you that nonsense?!?!?!? We are ALL ABOUT underwriting. It is the only way a carrier can protect itself against catastrophic loss. Oh and about reinsurance, can you guys please stop using that silly talking point? No worthy Reinsurance carrier is going to take on a secondary payor role on non underwritten risks. A Reinsurance carrier is even more restrictive than your standard risk management company. Do you know what health insurance carriers "typically" liked? They liked the idea of the individual mandate until they saw what a train wreck it was now they don't "typically" like it.

It’s the Republican Party, standing alone, who wants America to return to the medical underwriting circle of hell. Across the country, Americans are saying “no.” Let’s hope members of Congress listen.

And it was the Democrats standing alone who shoved this mess down our throats. What Americans are saying No? Donald Trump was elected on repealing this abomination. The people did indeed speak, let's hope Congress does in fact listen to them.

John McDonough and William Seligman are with the Harvard TH Chan School of Public Health in Boston.