Thursday, September 24, 2020

Trump Claims to Be Able to Guarantee the Converge of Preexisting Conditions by Fiat

For more than twenty years we debated ways to protect people from preexisting conditions limitations in health insurance. We finally got those protections when the Congress passed, and the President signed (and the Supreme Court upheld), the Affordable Care Act, or Obamacare.

So, after twenty years of national public policy debate and hard-fought Congressional and Presidential approval, how does Trump conclude he can restore these protections should the Republican Supreme Court suit overturn them with a simple executive order?

Trump and the Republicans couldn't pass an alternative to Obamacare in 2017 when they controlled the White House and both houses of Congress. But, now he can just sign an executive order and everything is fixed?

He has signed a number of health care related executive orders, including on drug pricing policy, and just about all of them are tied up in the byzantine federal regulatory process, or have faded away.

This is just an election-year gimmick in an attempt to persuade voters that Trump has health care policy under control.

There are a lot of governments in the world that operate by executive fiat. Ours is not one of them.

At least it hasn't been.


Recent Post: The Supreme Court Will Not Wreck Obamacare

Wednesday, September 23, 2020

The Supreme Court Will Not Wreck Obamacare

Now that it appears certain that the Republicans will approve a new Supreme Court justice in the coming weeks, there is great concern among Obamacare supporters that this could well mean the end of Obamacare.

That concern is being amplified in the hyper partisan environment in the ramp-up to the election––it makes for good scare tactics.

The Obamacare case currently before the court deals with the 2017 repeal of the law's individual mandate for people to buy health insurance coverage. In 2012, Chief Justice John Roberts cast the deciding vote in the 5-4 decision upholding Obamacare generally, and the individual mandate specifically, as valid under the Congress' taxing power. After the mandate repeal in 2017, a number of Republican state attorneys general sued, arguing that since the mandate was no longer tied to a specific tax penalty, it had lost its legal underpinning. They also argued that because the individual mandate was key to a number of the law's provisions that made it a workable system of insurance, the entire law should fall, including preexisting conditions protections.  

This whole legal process is now being driven by one decision by one Texas federal judge that bought the plaintiff's painfully tenuous arguments in deciding that the entire law is unconstitutional.

While it is certainly possible the Supreme Court could toss all of Obamacare before the end of this term, I see that as highly unlikely for the following reasons:

  • I don't know of any conservative legal scholars that led prior Supreme Court challenges to Obamacare who see the current challenge as credible on the merits. For example, the architect of the last challenge, Jonathan Adler of Case Western University, said in a friend of court brief the current challenge is, "unmoored from law or contemporary doctrine."
  • Those now arguing that the Court is capable of wrecking the law appear to believe Republican appointed justices are purely partisan political animals marching to the Trump political line. That reflects a lack of understanding about the justices and their dedication to the rule of law. According to the Supreme Court Database, from 2000 to 2018, 36% of all decisions were unanimous. Their 7-to-2 or 8-to-1 decisions made up 15 percent of decisions. The 5-to-4 decisions, by comparison, occurred in only 19 percent of cases. And, in the 2019-2020 term, with Gorsuch and Kavanaugh aboard, only 21% of the decisions were 5-3 or 5-4.
  • The concerns over the Court wrecking the whole law lie with the dubious notion that if the individual mandate is gone so should the broader parts of the law such as the Medicaid expansion and the individual insurance subsidies. The Medicaid expansion, for example, has absolutely nothing to do with the individual mandate that was originally placed in the law as a means to support insurance companies' ability to underwrite individual health insurance policies.
  • If the justices decided that the whole law had to go, they would force upwards of 20 million people onto the rolls of the uninsured overnight on the dubious premise that the excising of the individual mandate, which has actually already happened in the 2017 tax bill, undercuts the entirety of the coverage expansion. It is hard to see how one gets from eliminating the individual mandate, that has already been gone for three years, to justifying blowing up coverage for millions in an instant.

But many Democrats now want to paint that picture, if for no other reason that it fits an effective election season argument, that Republicans want to take away your preexisting condition protections, your insurance subsidies, and your Medicaid expansion.

And, since Republicans have brought this suit and the White House has supported it, their actions legitimately lay Republicans wide open to that claim. And, that begs the question of why Republicans would do such a stupid thing.

Ironically, Republicans are now moving to blow up the law in court after abysmally failing to repeal and replace Obamacare in 2017 (in part leading to their 2018 election defeats) and abysmally failing to come up with a new replacement proposal since then.

Luckily, the Supreme Court is staffed by adults and will save Obamacare and the Republicans from themselves.

Tuesday, September 8, 2020

Would the Biden Health Plan Work?

IF the Democrats capture the White House, keep the House and take over the Senate the Biden health care outline stands a good chance of being enacted.

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

Here are the things that are most broken in Obamacare:

  • The individual health insurance premiums and deductibles are, and have from the beginning of the program, been unaffordable for many but the most subsidized consumers.
  • That has led to dramatic anti-selection in the risk pool––particularly among those who get little or no subsidy. 
  • That in turn has led to a cycle of ever higher and more unaffordable premiums and deductibles––it isn't uncommon to now see unsubsidized family premiums in the $15,000 to $20,000 annual cost range with deductibles of $7,000 per person.
  • That has led to dramatic shrinkage in the number of those covered in recent years––particularly among the unsubsidized where the number of those covered fell by 40% during 2016 and 2017.
  • To counter substantial underwriting losses early in the insurance exchanges, the insurance companies dramatically increased premiums until the most highly subsidized and premium insulated consumers dominated the enrollment and the carriers had the premiums high enough that they made record profits––they are slated to rebate $800 million this year because they exceeded the law's profit limitations.
What has worked is the Medicaid expansion where 12 million people have gained coverage in the 38 states and DC that have expanded it––likely more states will do so shortly because public support in one traditionally Republican state after another––such as Virginia, Nebraska, Maine, Idaho, and Utah––has grown.

With that backdrop, here is what Democratic presidential candidate Joe Biden is proposing.

First, he is proposing to fix what he sees as wrong with the Obamacare individual health insurance market––not proposing a single-payer Medicare for all plan and thereby not doing away with employer-based care or tinkering with Medicare as we now have it for seniors.

Biden has a comprehensive plan to make the Obamacare individual market policies more affordable.

He would:
  • Base policy subsidies on the more expensive "Gold" plans that have relatively low deductibles, rather then the "Silver" plans that have higher deductibles. This would dramatically reduce the deductibles and co-pays subsidized people now face.
  • Make most families and individuals eligible for premium subsidies by removing the current cap limiting subsidies to only those who make less than 400% of the federal poverty level––under his plan all individual market consumers would pay no more than 8.5% of their income on health insurance premiums. 
  • Make coverage available to the 5 million low-income consumers in states that have not expanded Medicaid by offering access to a federal premium-free option.
The Biden plan directly takes on the most problematic parts of Obamacare by making individual market coverage affordable––particularly for the middle-class who are now the ones most hurt by the existing program.

The fundamental reason the Obamacare individual market policies have seen a long succession of more and more unaffordable rate increases is because of "anti-selection"––as the prices increase more, and more healthy people find the coverage unaffordable, and as a result take the risk of dropping out, leaving the sickest participants behind, and the prices even higher.

A healthy and efficient risk pool requires about 75% of the market to participate in order to ensure there are enough healthy people paying into the pool to pay the claims of the sick. It is likely that as much as 40% of today's high rates are directly the result of premium loading to counter the fact that less than 40% of the eligible market ever enrolled. That loading essentially amounted to the big Obamacare rate increases in recent years that were in excess of baseline health cost inflation.

Ultimately, as enrollment would ramp up under the Biden plan to an efficient level, the anti-selection premium-load carriers have had to apply to Obamacare in recent years, because healthy consumers fled the program, could be reversed as those same healthy consumers returned.

That is a process that would likely take a few renewal cycles as the risk pool improved and health plans were able to recognize better results. And, I would expect Democrats would reinstate an incentive for people to carry insurance as they have done in a number of Democratic states. Separately, premiums would continue to rise to offset annual health care inflation.

Biden also deals with a number of other health care system issues:
  • Medicare could negotiate directly with drug companies for lower prices in that program.
  • Launch prices for drugs that face no competition would have their Medicare and individual market prices tied to a process called "external reference pricing"––based on what a market basket of other nations are willing to pay thereby bringing U.S. prices more in line with what is paid in other industrialized economies.
  • Biden would increase the community health center budget to improve care for underserved populations.
Biden would pay for his plan by:
  • Eliminating the 20% flat tax on capital gains for those with incomes over $1 million and have them pay the top tax rate of 39.6% on capital gains.
  • Roll back the Trump tax cuts for the "very wealthy" and restore the top bracket to 39.6%.
Biden is also proposing a public option to be marketed alongside the private individual health insurance options in the insurance exchanges:
"Whether you're covered through your employer, buying your insurance on your own, or going without coverage altogether, the Biden Plan will give you the choice to purchase a public option health insurance option like negotiating lower prices from hospitals and other health care providers."

Biden goes beyond the historic definition of a public option by making it available to people beyond the individual health insurance market––even letting those participating in employer-based care to opt out of their coverage to take advantage of it.

This is the most controversial part of his plan. Insurance companies, hospitals, doctors, and other health care providers are likely to cheer his proposed efforts to make individual market policies more attractive––and thereby enable insurers to sell more policies in a more stable market and have those private policies pay providers for more care at commercial reimbursement rates.

But effectively putting Medicare in direct competition with the insurance companies and paying providers at Medicare rates––about 50% lower than commercial rates for hospitals and 20% less on average for doctors, and much less for certain specialties––will be a much heavier political lift.

But, most Democrats now regret that they didn't include the public option when they passed Obamacare in 2010 and found themselves in bed with the insurance industry as Obamacare floundered in the face of unaffordable premiums for the middle-class.

If Democrats can't get to Medicare for all in 2020, and as I said in an earlier post I don't believe they can, they will surely settle for nothing less than a public option.

IF the Democrats capture the White House, keep the House and take over the Senate this Biden health care outline stands a good chance of being enacted.  

Related post:

Obamacare is "Stable" at an Incredibly Unstable Place





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