Monday, January 13, 2020

Republican Health Care Reform: The Congressional Republicans' Irrational Opposition to Medicaid

Congressional Republicans have consistently, if not unanimously, opposed Obamacare's expansion of Medicaid.

Their opposition is irrational.

It is also unpopular with voters. In dark red states like Nebraska, Idaho and Utah voters recently went over the heads of their Republican legislators and governors by approving referendums to expand the program. And, Kansas is about to become the 37th state to expand Medicaid under Obamacare after a bipartisan agreement between the Democratic governor and Republican leaders in the legislature.

While Obamacare's individual health insurance reforms and subsidies have been a disaster for the middle class (See: Obamacare is "Stable" at an Incredibly Unstable Place), the Medicaid expansion in the states that have approved it has covered millions of people that would never have been covered otherwise––at a cost that could never have been less.

Republican opposition has centered around a number of arguments. Let's take a look at each of them.

We can't afford such a massive expansion of the welfare state and the impact that would have on deficit spending.

Our rapidly exploding deficits are a big issue we seem to have recently forgotten about.

But blowing up the deficit over health care didn't bother Congressional Republicans in 2003 when they created the Medicare Part D drug benefit and didn't pay for it adding $700 billion to the deficit over the following ten years (Part D added $140 billion to the deficit alone in 2018). But that unpaid-for entitlement expansion helped a big Republican constituency––seniors.

Blowing up the deficit by more than $1 trillion with the Republican tax cut bill didn't bother Republicans in 2017 arguing it was all going to pay for itself with economic growth––something that so far hasn't come close to panning out. Last November the CBO estimated that the annual deficit will remain between $1 trillion and $1.2 trillion each year through 2029.

And, just last month in the year-end spending bill, Congressional Republicans overwhelmingly voted to repeal the Obamacare medical device tax, the health insurance tax on insurance companies, and the employer health insurance "Cadillac" tax on high cost plans––taxes originally intended to pay for the Medicaid expansion and insurance subsidies in the first place. Doing so will cost $400 billion over ten years, again all just added to the deficit. None of that bothered Republicans one bit when they joined the Democrats to pass the larded up year-end spending bill at a time both the medical device and health insurance industries are reporting record profits.

But, money for the Medicaid expansion? Irresponsible.

Any Medicaid expansion should be paid for. Just like the Obamacare Medicaid expansion was fully paid for before Republicans joined with Democrats last month to repeal three of the law's key taxes!

Consumers should have mainstream private coverage not welfare coverage via Medicaid.

A noble objective but simply unaffordable both for low-income consumers and government.

Medicaid is, by far, the cheapest way for government to expand coverage. And, unlike individual health insurance, Medicaid doesn't have big deductibles and copays low-income people would find it hard if not impossible to pay.

The CBO has estimated that the Medicaid expansion cost $4,916 per enrollee in 2018––for a program with no consumer deductibles and co-pays. At the same time the CBO estimated that the average per-enrollee cost for the Obamacare insurance market subsidies was $6,300––and remember the Obamacare market plans have big deductibles and the government doesn't subsidize the entire cost.

The cheapest way, by far, to subsidize the poor into plans with minimal copays is through Medicaid.

And, while there are fewer providers participating in Medicaid than commercial insurance because of the lower reimbursement rates, rates of access to care and satisfaction with care among Medicaid enrollees are comparable to rates for people with private insurance.

Whatever the quality of care challenges in Medicaid, it sure beats being uninsured. 

Insurance should be provided by the private sector, not government.

Congressional Republicans love to take credit for the Medicare Advantage program that gives seniors a private insurance option. But, do they understand that most of the Medicaid program is today under private insurance company managed care organizations (MCOs) administration and risk-taking subject to competitive bidding?

In 2018, insurers had more than 49 million Medicaid beneficiaries in their programs––two-thirds of the enrollment.

Why don't these people just get a job with health benefits?

Sounds good. But what these Republicans don't seem to understand is that lots of employers don't offer health insurance benefits.

About 48% of private sector jobs are in small businesses and small business creates two-thirds of net new jobs.

The latest annual Kaiser Family Foundation survey of employer-based health insurance found that only 47% of employers with three to nine workers offer health insurance, for those with ten to 99 workers, it's 57%.

The welfare state is already too big. 
The first Republican president, Abraham Lincoln, famously said, "The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot so well do for themselves in their separate or individual capacities."

Medicaid eligibility extends up to 138% of the federal poverty level in the 36 states that have expanded the program under Obamacare. That is an annual income of $17,236 for a single person and $35,535 for a family of four.

Back in 2013, before Obamacare became effective, it wasn't uncommon to find a health insurance plan that would cost a family of four about $5,000 in premiums with a $1,000 deductible––if they had no pre-existing conditions and could get insurance.

There is no way a family making $35,000 could afford to pay all of those 2013 premiums and deductibles today without assistance, any more than they could back in 2013. Even if Republicans take us back to the 2013 health insurance market, just how do they think the Medicaid eligible would be able to access health insurance without the Medicaid expansion?

Republican plans like the failed 2017 health care bill passed by the Republican controlled House make more sense than the existing Medicaid expansion.

In 2017, House Republicans would have repealed the Medicaid expansion and the individual market subsidies and would have repackaged them into a program that took some, but not all, of that money and sent it to the states. Each state legislature would have been expected to take that money and craft a health insurance reform plan of their own making––fifty different states doing what the Congress has been unable to find a way to do.

Here is the Congressional Budget Office's (CBO's) July 2017 evaluation of that plan. The CBO calculated the Republican House plan, assuming the fifty states would have each found a way to pass a plan, would have spent $1.3 trillion less than Obamacare over ten years on Medicaid and insurance subsidies:

The CBO estimated that these funding cuts would have led to: 
  • Nine million people being pushed out of Medicaid by 2020 growing to 14 million in 2026––and then having to enter the individual market as their only option for coverage, unless they found their way to employer coverage.
  • The individual market shrinking by ten million in 2020, and six million by 2026. 
The CBO therefore concluded that the number of people eligible for the individual market would increase dramatically as the reduced Medicaid population was forced to seek private individual coverage–– but in a market where money for the individual coverage subsidies was also substantially cut.
The 2017 House Republican plan's combination of dumping more people into the pool by shrinking Medicaid––and therefore increasing the number of people eligible for individual coverage––and cutting the subsidies in the private market, could only have had the result of making the percentage of eligible people buying a private health plan even worse. That in turn could only lead to even worse individual market affordability and resulting underwriting anti-selection than what we have had under Obamacare.

I have been in the health insurance industry for 47 years. I am not an advocate for a government takeover of the system.

But, I have also learned in these years that the private sector on its own is not the answer.

The answer lies in a carefully crafted system that includes both the private sector and government seamlessly doing "for a community of people whatever they need to have done, but cannot do at all, or cannot so well do for themselves in their separate or individual capacities."

I wish the Congressional Republicans could come to the same conclusion that Lincoln did.

    Wednesday, January 8, 2020

    Biden, Bloomberg, and Buttigieg Have the Health Plans That Can Become Law and Will Work

    In an earlier post, I pointed out that there is no better chance of passing a Medicare for all health care plan through Congress in the coming years than there was in 1977, or 1993, or 2009.

    Then Elizabeth Warren showed us just how politically unrealistic single-payer health care is when she released her funding plan and then quickly backtracked to the public option approach in the face of rapidly declining polls. See my post: Elizabeth Warren Backs Into the Public Option and Effectively Takes Medicare for All Off the Table for Democrats in 2021

    In a separate post, I pointed out that single-payer advocates, like Sanders and Warren, have yet to answer the biggest financial questions surrounding putting the entire country on a single government reimbursement system: How will their paying providers Medicare rates for everything not bankrupt hospitals and doctors? And, if they don't pay providers these lower Medicare rates, how will their proposals save us any money?

    In another post, I argued that the original Biden plan had the best chance of passage through the next Congress and contained all of the essential ingredients to fix what has been wrong with Obamacare for the first ten years of its life––in particular fixing the horrible impact it has had on middle-class consumers who buy their health insurance in the individual market.

    Subsequently, Pete Buttigieg and Mike Bloomberg adopted proposals very similar to Biden's.

    In another post I argued that with Trump and the Republicans not even having a plan, and based upon their policy efforts to date that would've made the individual market a lot worse, at least so far they aren't even in the running for who could do the best job of fixing the system.

    So, to me, the conclusion is obvious:
    • Biden, Buttigieg, and Bloomberg have plans that could easily pass a Democratic controlled Congress.
    • Their plans would make the individual health insurance market workable for everyone in that market.
    • Their plans would preserve the Medicaid expansion that is working to provide health insurance to people that under no circumstances could afford coverage in any other system.
    • Their plans would continue the unqualified coverage of those with pre-existing conditions.
    • Their plans would leave intact the employer-based system that consumers still largely support.
    • Their plans would not create a financial upheaval among health care providers that a single-payer plan would.
    I can't say that about any other candidate––Republican or Democrat.

    That is not to say their proposals are perfect.

    Their biggest problem being how they would pay for it.

    For example, Biden and Buttigieg would use the repeal of many of the Republican tax cuts to help pay for their expansion of health care subsidies rather than use any repeal to pay down the federal debt and deficits that the Republican tax cuts created when they were passed––effectively adding much of the cost of their proposals to the national debt. Bloomberg has yet to detail how he would pay for his plan.

    And, make no mistake, the Biden outline is a health insurance reform plan--it is not a plan to overhaul a health care system whose costs continue to expand at unaffordable levels.

    But at this point one thing is clear to me, only Biden, Bloomberg and Buttigieg have plans that have a realistic chance of becoming law––and fixing the health insurance system.

    Thursday, December 19, 2019

    Health Care Special Interests Four Hundred Billion - Consumers Zero

    That's the Congressional health care score card for December.

    As the year winds down and must pass year-end spending bills are completed––and with that any chance of attaching and approving health care legislation––the special interests have won big and consumers have lost big.

    Employers, unions, and insurance companies won big with the repeal of the "Cadillac" tax on high cost benefit plans at a cost of $200 billion over ten years as well as the repeal of the health insurance tax (HIT), and the 2.3% medical device tax sales tax.

    The total cost for repealing just these things will add about $400 billion to the deficit over a decade and are part of a mammoth $1.4 trillion spending bill larded up for lots of different interests.

    Wednesday, December 18, 2019

    Buttigieg and Biden Spend What They Would Gain Repealing the Republican Tax Cuts on Health Care

    Shouldn't any gain from repealing the Republican tax cuts on the wealthiest go toward fixing the debt and deficit problems these tax cuts have contributed to?

    Democratic presidential candidates Joe Biden and Pete Buttigieg both rely on repealing some of the Trump tax cuts––particularly those for the "rich"––to pay for their very similar and incremental health care plans that rely upon making a government-run public option available to consumers.

    On one level that notion can be attractive to Democratic voters turned off by the 2017 Republican tax cuts.

    But when those tax cuts were passed, the Congressional Budget Office (CBO) estimated those cuts would add $1.6 trillion over ten years to the deficit. The Democrats were apoplectic over the Republican irresponsibility of it all.

    Wednesday, December 11, 2019

    Greed Outranks Compromise in Congressional Attempts to Fix Surprise Medical Bills

    There are few things in our health care system that are more unfair than surprise medical bills. Consumers think they have good coverage and are getting treatment in their health plan network only to get a huge unexpected bill in the mail because it turned out that something like the anesthesiologist at their recent surgery wasn't covered.

    How were they to know that? As you're sitting on the gurney about to be rolled into surgery do you need to do a provider roll call asking each to confirm their network status?

    The worst of these examples often has to be with air ambulances sending patients bills for tens of thousands of dollars they had no reason to expect. As the patient lays there with burns over 60% of their body and they need to be transferred to the regional burn center, are they supposed to say, "Before you put me on the helicopter, what is this going to cost?

    Now, every politician I know of says that all of this needs to end.

    But, they are yet to end it.

    Monday, December 9, 2019

    The Trump/Republican 2020 Health Care Plan

    The Republicans don't yet have a health care plan less than a year before the 2020 elections.

    But based upon their 2017 Obamacare repeal and replace efforts, as well as a major document recently issued by the House Republican Study Committee, what might a Republican plan look like?

    Monday, December 2, 2019

    Elizabeth Warren Backs Into the Public Option and Effectively Takes Medicare for All Off the Table for Democrats in 2021

    Medicare for all is dead because Democratic voters aren't buying it.

    Fixing Obamacare and adding a public option is the health care policy territory first staked out by Democratic Presidential candidate Joe Biden.

    Writing about Biden's plan recently on this blog, I said:
    IF the Democrats capture the White House, keep the House, and take over the Senate, no matter who they elect as President, this Biden health care outline, not Medicare for all, will likely be the plan Democrats embrace in 2021.
    Not even I thought Elizabeth Warren would act so quickly to move off her only days-old detailed Medicare for all plan and onto about the same place all of the leading Democratic candidates, save Bernie Sanders, sit on health care––just fixing Obamacare and adding a public option.

    Tuesday, October 29, 2019

    Medicare for All––the Bernie Sanders and Elizabeth Warren Health Care Plans

    The Question That Single-Payer Medicare for All Advocates Need to Answer

    You are probably thinking that question is, How are you going to pay for it?

    Ultimately, yes.

    But, I will suggest there is another critically important issue that is part of the overall question about how it will be paid for––What will your plan do to our existing health care system?

    Medicare and Medicaid cost less than commercial insurance because Medicare and Medicaid pay providers––doctors, hospitals, and other health care providers–– a lot less for their services.

    Advocates argue their single-payer Medicare for all health care system will overall cost us all a lot less. They are right that their systems can be a lot less expensive by expanding Medicare to everyone––primarily because government payment rates are so much smaller.

    But here's the hitch––paying Medicare rates on behalf of all patients would literally bankrupt the system we have.

    Wednesday, October 23, 2019

    The Public Option's Silver Lining?

    Joe Biden's Health Insurance Plan Would Fix the Individual Health Insurance System and Have the Potential to Politically Stabilize the Entire Private Health Insurance Market for Decades to Come

    Biden's Public Option

    In a prior post, I argued that the Biden health plan directly takes on the most problematic parts of Obamacare by making individual market coverage affordable––and would therefore make the individual insurance system much lower in cost and therefore financially sustainable.

    A lower cost individual market would also make the entire private insurance market more politically sustainable––if people find their coverage affordable why move to a complete government takeover such as Medicare for all?

    As part of his plan, Biden also calls for a "public option."

    Monday, October 21, 2019

    Joe Biden's Health Insurance Plan Would Fix the Individual Health Insurance System

    IF the Democrats capture the White House, keep the House and take over the Senate, no matter who they elect as President, this Biden health care outline, not Medicare for all, will likely be the plan Democrats embrace in 2021

    The Biden health care proposal directly takes on the big things that haven't worked in Obamacare.

    Wednesday, October 16, 2019

    Obamacare is "Stable" at an Incredibly Unstable Place

    The Democrats Want to Move Beyond Obamacare Because We Have No Other Choice


    Before I start talking about the presidential candidates' health care plans, let's review just exactly where we are with the Affordable Care Act (Obamacare).

    Monday, October 14, 2019

    There is Now No More Support for a Medicare For All Single-Payer Health Care Than There Was in 1977, or 1993, or 2009

    Buy HMO Stocks––They're a Bargain

    The more things change the more they stay the same.

    With many of the Democratic presidential candidates' flirtation with Medicare for all, the topic is once again front and center going into the 2020 presidential campaign.

    Just like it was when Jimmy Carter ran on a Medicare for all platform in 1976––and it turned out there weren't the votes for it in 1977 even though Carter had a filibuster-proof 61 Democrats in the Senate and a whopping 292 Democratic House seats. In fact, Carter failed to move any significant health care legislation.

    In 1993, the Clintons didn't even try to move a single-payer plan even though the Democrats controlled 57 Senate seats and 258 House seats because only about half of the House Democrats favored a single-payer system.

    The same for 2009 when both Hillary Clinton and Barack Obama ran on health care platforms during the primaries that looked a lot like the eventual Obamacare because again only about half of the House Democratic caucus favored a single-payer program.

    Now in 2019 we are in the very same place we were in 1977, 1993, and 2009––only about half (118 as of September 6th) of the House Democratic caucus now supports the Medicare for all proposal introduced by Progressive Caucus Chair Pramila Jayapal (D-WA).

    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.

    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.
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