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.
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