Wednesday, January 16, 2019

Is the Drug Industry an Existential Threat to the Private Health Insurance Business?

At a time when many Democrats are calling for a single-payer health insurance system, are the drug companies inadvertently driving the system on a course to that end?

Consider this.

The longtime political firewall against a single-payer system has been the satisfaction consumers have had with their employer-sponsored health insurance. Most voters have had no interest in giving up their affordable and attractive employer health benefits for the uncertainty of a one-size-fits-all government-run plan.

Employer-sponsored health insurance covers 140 million people—by far the largest part of the under-age-65 health insurance system. Most of these people are in the politically all-important middle class.

But in recent years, the employer share of premiums and out-of-pocket costs has been exploding (Willis Towers Watson, November 2018):

Thursday, November 8, 2018

What Neither the Republicans Nor the Democrats Understand About Obamacare

The 2018 Elections Were Not About Obamacare--They Were About Health Insurance Security 

 

The 2018 midterm elections weren't a tsunami for Democrats--more like a blue wave hitting a red wall.  

 

Democrats are claiming the election vindicated Obamacare because they were successful in gaining control of the House of Representatives by criticizing losing Republicans for their votes to repeal the Affordable Care Act--including its key consumer protections.

 

My sense is that both Democrats and Republicans have missed the critical point.

Both sides don't understand that this was not about Obamacare. It was about health insurance security.

Friday, May 11, 2018

The Simple, Obvious, Time Tested Way to Reduce Drug Costs

I give the President great credit for shining his spotlight on the ridiculous place the U.S. finds itself over drug prices. They are way too high, the private market has proven incapable of dealing with it––PBMs have only made the drug market more opaque, and the biggest drug purchaser in the world, the U.S. government, has been politically unwilling to deal with it.

All while other industrialized countries have nowhere near the problem.

What is even more frustrating is to see an easy solution that has worked for years in these other industrialized countries that, rather than being a single-payer government-run solution, is as American-style free market as it could be.

Thursday, March 8, 2018

The CIGNA - Express Scripts Merger––So Much for Price Transparency and Competition

CIGNA just announced that it will buy pharmacy benefit manager (PBM) Express Scripts for $67 billion. In December, CVS said it would buy Aetna for $69 billion.

Already, UnitedHealth, through its Optum data technology and OptumRx pharmacy benefit manager subsidiaries, has detailed health care utilization information on over 115 million consumers, four out of five hospitals, 67,000 pharmacies, 100,000 physician practices, 300 health plans, and government agencies in 34 states and D.C.

Remember the good old days when we complained about the health insurance company oligopoly with just a few players controlling most of the market share in any given market?

We appear to be quickly on the way to a new and different kind of oligopoly controlling an even wider swath of the market with these new health care system aggregators being created.

Wednesday, January 31, 2018

Bezos, Buffett, Diamond, the Latest Newbies on the Health Care Block

I found it incredible that health care stocks tanked on Tuesday in response to an announcement from the Amazon, Berkshire Hathaway, and JPMorgan Chase CEOs that they were, as employer payers, going to become game changers in the health care market.

I have seen this movie before. Dozens of times over the last twenty-five years. The first time was when the leading employers in the Minneapolis-St. Paul market began the same effort in the early 1990s. That, and any other such initiative I have seen over the decades, went essentially nowhere.

But, this week, reporters were agog with the notion that these titans of business were going to wade in and change the health care world. After all, together these companies had a combined population of a million-people covered under their health benefit programs.

That is about as many people as Rhode Island and Delaware Blue Cross combined cover. So, I am not quite sure how these CEOs will bring a game changing critical mass to any provider bargaining table.

Wednesday, November 15, 2017

GOP's Obamacare Tax Scheme Will Create an Insurance Nightmare for the Middle Class

Senate Republicans just announced that the repeal of the individual mandate (in the form of reducing the penalty tax to zero) will be in the Senate Finance Committee's version of tax reform.

The individual mandate has never been successful toward the objective of attracting people to the program. There are much better ways to do that.

But killing the mandate while simultaneously opening up the market to cheaper stripped down alternatives would combine to create unintended consequences the Republicans haven't appeared to comprehend.

Thursday, October 19, 2017

The Outlook for Stabilizing Obamacare in 2018 and the President Who Can't Shoot Straight

The Alexander-Murray bipartisan effort to stabilize the Obamacare individual insurance markets will not pass the Congress on its own. 

The only chance it now has is to be added to a must-pass legislative deal, such as the one needed to fund the government by the December 8th deadline in order to avoid a government shutdown.

Also sitting in the queue, and certain to pass at some time, is the Children's Health Insurance Program (CHIP) reauthorization bill. The Congress is currently struggling over the pay-fors for this reauthorization but there is wide bipartisan agreement that it must be funded before the states start running out of money, which will begin in a few weeks. CHIP now covers nine million kids.

Conservative Republicans are adamant that they do not want to pass an “insurance company bailout” bill like Alexander-Murray. Particularly in the House, where Republicans were able to pass a "repeal and replace" bill, these members have already taken a controversial vote to cut Medicaid and insurance subsidy support and after that tough vote don't now want to have to explain why they have backtracked to "bail out" Obamacare with the Alexander-Murray short-term patch bill.

Sunday, October 15, 2017

Donald Trump Doesn't Know the Diffrence Between an Unfunded Mandate and a Bailout

By killing the cost sharing reduction (CSR) subsidies has Trump stopped what he has called an "insurance company bailout"? Or, has he created an unfunded mandate?

The Obamacare statute requires the health plans to provide cost sharing reduction subsidies to reduce the deductibles and co-pays in the Obamacare compliant individual health insurance market for those who make less than 250% of the federal poverty level. It is a mandate. Funding a mandate is not a bailout. In Washington, DC we call failing to fund a mandate an unfunded mandate.

What Trump's Obamacare Cost Sharing Subsidy Rollback Means to Health Insurers and the Middle Class

My NPR All Things Considered Interview with Michel Martin:

MICHEL MARTIN, HOST:
We have one more conversation about healthcare. As we just heard, health insurers are trying to figure out what to do without the [cost sharing reduction] reimbursement from the government that the Trump administration says will no longer be paid. The question is, will insurers raise their rates or withdraw from the health exchanges created by the Affordable Care Act? For perspective on this, we called Robert Laszewski. He's a former insurance executive who's now a health policy consultant. Mr. Laszewski, thanks so much for speaking with us.

ROBERT LASZEWSKI: You're welcome.

MARTIN: So based on your knowledge of the industry, what are the options that insurers are considering to deal with the lack of these subsidies?

Wednesday, September 20, 2017

The Republican Senators' Cassidy-Graham Conundrum

If you were a Republican Senator today, would you rather risk losing your Senate seat because the base was angry with your failure to pass an Obamacare repeal and replace plan, or because you did pass it but blew up the insurance system?

See my op-ed at CNBC.com

Tuesday, September 12, 2017

The Preconditions Necessary for a Bipartisan Solution to Obamacare

It is now clear that Republicans cannot unilaterally tackle Obamcare.

But, I will suggest, it is also clear that both Republicans and Democrats can't even begin to have conversations about fixing the health law until they can agree on broader principles.

See my op-ed at CNBC.com.

Wednesday, August 23, 2017

How Democrats and Republicans on the Senate Health Committee Could Agree to Shore Up the Obamacare Markets

When Congress returns in September, Senate health committee chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA) will attempt to find a way to at least temporarily shore up the Obamacare individual health insurance markets.

First, they will try to guarantee the low-income cost sharing reduction (CSR) subsidies for at least a year in order to give participating insurers the confidence to charge rates that will often be 15% to 20% lower than they would otherwise have been. A good step that Democrats will have no trouble supporting.

But for there to be any chance that Republicans would support a stabilization bill, they will also have to get some concessions. The most likely concession to draw Republicans onside would be one that granted the marketplace more flexibility and a resulting better risk pool so that health plans could come up with better prices.

Opponents of this flexibility will argue that there is no free lunch. Plans with fewer benefits will cost less because they offer less.

Actually, not quite.

Thursday, August 3, 2017

The Number of People in the Off-Exchange Individual Health Insurance Market Plunged 29% in the Last Year

Is the individual health insurance market stable?

With Trump threatening to make things worse in the individual health insurance market, was it stable even before he made his threats?

See my op-ed in the National Review.

Friday, July 28, 2017

Strike Three! A Statesman and Two Adults––Republicans Fail to "Repeal and Replace" Obamacare

The latest attempt by Senate Republicans to "repeal and replace" Obamacare––the “skinny” plan––failed early this morning on a vote of 49-51.

The deciding vote came from John McCain (AZ), joined by Republican Senators Collins (ME) and Murkowski (AK).

Trying to pass the “skinny” bill was a fool’s errand. How did McConnell think he was going to do any better bringing 240 House Republicans—including the Freedom Caucus—into a process that he could get no more than 45 Republican votes for in his own Senate?

Lindsey Graham (R-SC) had earlier said the “skinny” plan was a “half assed” bill whose only purpose was to keep what had been so far a horribly failed process alive—just before he voted for it.

Now what?

The focus now has to be on what will happen to the failing Obamacare exchange markets.

Will there be a bipartisan effort to shore them up?

I will suggest that there are two pre-conditions for any Congressional bipartisan solution:
  1. Democrats will have to admit the problems with Obamacare are more than “imperfections”––they will have to admit that Obamacare has been a dismal failure for those who have no choice but to buy their health insurance in the individual health insurance market and make too much money to qualify for a subsidy––40% of American households make more than 400% of the federal poverty level, which is the cutoff point for subsidies.
  2. Republicans will have to admit that most American households not eligible for Medicare, employer-based health insurance, or the pre-2014 Medicaid program, cannot afford to buy health insurance on their own—even if we had 2013 premium rate levels.
Will Trump make things worse in the Obamacare insurance exchanges?

Probably:


Wednesday, July 26, 2017

Strike Two––The Republican Obamacare "Repeal and Replace" Fiasco

Three strikes and you're out.

On Monday, Senate Republicans approved proceeding to debate on "repealing and replacing" Obamacare by a vote of 50-50-1, with Vice President Mike Pence casting the deciding vote.

Strike One
Yesterday, Senate Republicans failed to approve the bill they had been working on for over a month, which included the Cruz amendment that would have bifurcated the individual health market into separate healthy and sick pools. The vote was 43-57. Of course, all Democrats voted no. The nine Republicans voting against the leadership bill included Collins (ME), Corker (TN), Cotton (AR), Graham (SC), Heller (NV), Lee (UT), Moran (KS), Murkowski (AK), and Paul (KY).

Interestingly, West Virginia’s Capito, who had expressed lots of reservations about the Senate bill, did not vote against it.

The list of those voting no included both the most conservative and the most moderate. Both Maine and Kansas have not expanded Medicaid. Yet, Collins and Moran both voted no, at least in part, because of the impact the long-range caps on Medicaid would have on the large senior populations (nursing home payments) benefiting from the baseline Medicaid program in their states.

Lee and Paul voted no because the Senate bill didn’t go far enough to reduce the cost of insurance. Paul’s objective is complete repeal generally wanting to go back to 2013. Lee also wants a wide-open market.

The rest, in one way or another, just saw the Senate bill as leaving too much trauma in its wake, with the CBO estimating that 22 million fewer would ultimately be covered, and are generally are calling for a return to the "regular order" committee process and bipartisan negotiations with Democrats. The problem with that approach is that most of the 43 Republican Senators that voted for the bill want nothing to do with an agreement that makes Senate Democratic Leader Chuck Schumer happy.

All of this was made more complicated this week when the Senate parliamentarian ruled key provisions in the Senate bill out of order under budget reconciliation rules. These included the six-month lockout substitute for the individual mandate, association health plans, and going from 3:1 age rating to 5:1 age rating.

Strike Two
Repeal, with a two-year period within which to create a replacement, also failed, on a 45 to 55 vote. This time the Republican no votes included Alexander (TN), Capito (WV), Collins (ME), Heller (NV), McCain (AZ), Murkowski (AK), and Portman (OH).

The Last Attempt:
Now, McConnell will likely proceed to pass a “skinny” bill that only repeals provisions that arguably have unanimous support among Republicans: Repealing the medical device tax, the employer mandate, and the individual mandate.

His purpose is to just pass something that would keep this alive by having a bill to take back to the House for a conference. His hope is that he can ultimately hash out an agreement with the House. But that is nuts. The House bill is arguably even more conservative than the Senate bill. What makes McConnell think by bringing the Freedom Caucus back into these discussions that he can find a way to keep his moderate Republicans onside?

No one knows if this “skinny” strategy has 50 votes and won’t until the vote is taken.

Even if McConnell can pass the "skinny" option, I just can’t see a viable end game here for Republicans on their own.

There is also a zero chance of any kind of bipartisan agreement so long as a substantial majority of Republicans––as well as the Twitter in Chief––find a “bailout” of Obamacare unacceptable.

Let me also suggest that the Jeff Sessions fiasco has relevance here.

President Trump has said repeatedly that Obamacare is imploding. Any attempts now by the Secretary of HHS to administratively shore it up would likely put Secretary Price in the same boat that Attorney General Sessions is sitting in right now.

And, if we needed any more complications, the Anthem CEO’s comments this morning won’t help. He said, “We don’t believe we have been heard,” when referring to the largest Blue Cross carrier’s warnings to Congress and the administration about the precarious state of the individual health insurance market. He also said uncertainty over whether the $7 billion in low-income cost sharing subsidies would be paid by the Trump administration would lead to 20 points more in rate increases on top of the average 20% rate increases Anthem has already applied for. He also said that Anthem would consider getting out of more states if the Obamacare insurance exchanges aren't quickly stabilized.

The Anthem comments just underscore that the only thing a successful "skinny" strategy on the part of Republicans could lead to is a 2018 individual market fiasco, particularly for the individual market participants who don't get a subsidy.

If you had set out to design the perfect nightmare you couldn’t do it this well.

Tuesday, July 18, 2017

The Post-Republican Obamacare Market Will Be "Stable" and Very Profitable for Health Insurers

Predictions that the individual health insurance market will now implode are misplaced.

First, in the wake of the Republican collapse of efforts to replace Obamacare, Medicaid will continue on unaffected. The Obama Medicaid expansion is fully funded for years to come. The nineteen states that did not take the expansion will continue to be on the outside looking in as their taxpayers continue to fund the expansion in the 31 states that did expand. And, health insurers will continue to enjoy that growth in their business as states continue to benefit from the open-ended federal funding.

The individual health insurance market will not collapse.

With about 3,000 counties in the U.S., I can't give you an absolute guarantee that there won't be a few that will not have an insurance carrier serving the Obamacare market in 2018. But generally, the vast majority of people eligible for subsidies will have at least one carrier to buy from.

The Kaiser Family Foundation is out with a recent study looking at medical loss ratios in the first quarter of 2017. They concluded that "individual market insurers on average are on a path toward regaining profitability in 2017."

I wouldn't go so far as to say that participating health plans will generally make money in 2017––the first quarter medical loss ratio is always better early on as consumers satisfy their ever-growing Obamacare deductibles.

But I do think 2018 could be a decent bottom line year for most Obamacare exchange insurers. And, 2019 should be just fine.

Does this mean the Obamacare insurance exchanges are working well?

No.
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