Health Care First Steps for President Biden and the Democratically Controlled Congress

After four years of the Trump administration's undermining of The Affordable Care Act/Obamacare, what can we expect over the next few months from the new administration?

On the regulatory side, not as much as you might expect.

During the campaign Biden talked about building on the law's success in covering the people it has covered––primarily through the Medicaid expansion and for lower income people who get the best subsidies in the insurance market.

A big difference will be an administration promoting the law, particularly during the fall's open enrollment, rather than decrying it as a complete failure

Democrats were harshly critical of the Trump administration's regulations to end the insurance exchange cost sharing subsidies as well as opening the market to lower cost short-term plans that did not comply with the ACA's benefit minimums.

But Trump's killing the cost sharing subsidies, that went to insurance companies, backfired by increasing consumer subsidies enabling people to buy the best Gold Plans while the carriers just raised the rates for the unsubsidized. If the Biden administration were to now repeal those regulations, before passing new legislation to improve the subsidy structure, it would mean that lower income people would see their subsidies reduced.

The Biden administration will have the same dilemma over the short-term plans. We now have about two million people covered by these plans, that critics often refer to as "junk insurance." These people largely bought these alternative plans because of the prohibitive premiums that those with minimal or no subsidies were faced with under Obamacare. If the Biden administration now repeals those rules, without first expanding the subsidies for these people, they will be left without any kind of insurance.

My sense is that the biggest short-term difference with this new administration will be one of attitude and support for the existing law and some minor regulatory changes around the edges. But, I would expect to see a backing off of Medicaid waivers that gave states the ability to broaden work requirements among other state flexibility that moved away from Medicaid's traditional entitlement promises.

Candidate Biden called for two major health care legislative initiatives: Controlling prescription drug prices through government price negotiation and expanding the ACA's insurance subsidies for the middle-class as well as adding a government-run public option.

The Trump administration began a regulatory process of having the federal government, through a pilot program, use a basket of other nation's negotiated drug prices here as well as to allow the "reimportation" of drugs from nations that have achieved lower prices for the same drugs. I would expect the Biden administration to take a careful look at these first steps in using government negotiation––albeit––another government's negotiation––short of getting the Congress to formally approve drug price regulation.

Candidate Biden also called for ending the income cap on who would be eligible for individual market insurance subsidies and lowering the maximum families would have to pay as a percentage of their incomes. Both of these steps would go a huge way toward making individual health insurance affordable for people who make too much for the best subsidies, or any subsidy.

First, it will likely be later this year before the Democrats can move on any major health care legislation. The slow start the Biden administration has had in the face of the election controversy, plus the time and political oxygen a Trump impeachment trial will take, doesn't make any quick action possible.

The Democrats will also have to use the Senate's budget reconciliation rules in order to move any such legislation with a simple majority.

The need to find a way to pay for any ACA/Obamacare expansion will also mean coupling health efforts with the budget reconciliation and Biden's promised tax increases for the wealthy.

Democrats have lots of spending priorities. Some of them could be wrapped up in an upcoming stimulus bill that will not be paid for with offsetting revenue. But under budget reconciliation rules, there will have to be offsets. The Democrats will have to first settle on just what they will do with the revenue from any tax increases.

None of this will be a slam dunk for a Democratic Congress that has a very slim working majority in the House and only a tie-breaking vice presidential vote in the Senate.

I don't doubt the votes will be there in both chambers to increase the subsidies. But passing a public option, taking on the drug industry lobby, and big tax increases to pay for it all, even on just the wealthy, will be by no means easy.

The Supreme Court Will Not Wreck Obamacare

This is an update of an article originally posted in September.

With the Supreme Court due to hear arguments this week on a case brought by a number of Republican state attorneys general that could throw out the entire health care law, and with conservatives now having a 6-3 majority on the Supreme Court, there is great concern among ACA/Obamacare supporters that this could well mean the end of the health care law.

The Obamacare case currently before the court deals with the 2017 repeal of the law's tax penalty enforcing the 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's tax penalty was repealed 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.  

What a Biden Win Means to Health Care

Biden has won. 

Presuming the North Carolina and Alaska Senate seats remain in Republican hands,  the Senate will come out no better for Democrats than a 50-50 tie with Vice President-elect Harris being the tiebreaker. And, if Republicans win at least one of the two Georgia run-off Senate races, the Republicans will maintain control and the Democrats will not have the votes to move any partisan health care legislation.

But the Democrats will control the Department of Health and Human Services and the federal government's health care regulatory apparatus.

I will suggest that the health care plan Biden campaigned on can be summarized into three primary parts:

• Fixing the Obamacare/Affordable Care Act (ACA) individual health insurance subsidies for the middle class. 
• Giving Medicare the power to negotiate prescription drug prices.
• Creating a government-run individual health insurance plan option called the Public Option.
  

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.

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).

Where Does The Health Insurance Reform Debate Go From Here?

See my post at Forbes

"Republicans Are Being Awfullly Naive" About the Transition Period in "Repeal and Replace"

"To have an orderly ["Repeal and Replace"] transition, I think Republicans need to reimplement the risk corridors by February or March. That is the only chance they have. I don't think there is a single Republican member of Congress who has thought about this. I am reading all of these quotes and they're completely blind to the fiasco on the individual market that they're about to create."

Read my complete interview with Sarah Kliff at Vox.

Will It Take a Crisis to Replace Obamacare?

My interview this morning with Steve Inskeep on NPR's Morning Edition. 

We discussed repeal and replace, Republican proposals for replacement, the fundamental differences between Democrats and Republicans on health insurance reform, and the outlook for what is likely to happen.

"Now What Do We Do?" Trumpcare?

Of course, "Now what do we do," is the famous line from Robert Redford's character in The Candidate, stunned by his victory and confused about what to do next.

But it doesn't really apply here.

A few thoughts as all of this sinks in:

Obamacare: Dead Law Walking!

There is no doubt that Obamacare is dead.

The only question is just exactly how Republicans will get rid of it.

While Republicans have the votes they will need in the House, Republicans will not have the 60-vote Senate supermajority necessary to get rid of all of it. Therefore, they will use their slim Senate majority and Senate budget reconciliation rules. It takes just 51 Senators to make spending decisions.

There are two routes they will consider:

The Good and the Bad of Obamacare

See my comments on CNBC today using this link.

In this interview, I mentioned the information a broker in Naples Florida sent me regarding some of their customers buying Obamacare compliant individual health insurance.

Here are the broker's 2017 examples:

Family of four, mom and dad age 40, two kids. Lowest Bronze annual premium $13,176. Deductible $7,150 single, $14,300 family. Income $130,000. Not eligible for subsidies. Exempt from the individual mandate because their premium exceeds 8.16% of their modified adjusted gross income (MAGI). The broker points out that their premium plus one deductible totals $20,236––16% of MAGI––the point at which they can begin to collect on claims (there may be some nominal first dollar benefits such as a wellness benefit).

Single woman age 45. Lowest Bronze premium $4,968. Deductible of $7,150. Income of $50,000. Not eligible for a subsidy. Exempt from the individual mandate because her premium exceeds 8.16% of her MAGI. Broker points out that her customer's premium plus the deductible totals $12,118––24% of the customer's MAGI––the point at which she can begin to collect on claims.

Couple ages 64 and 61. Lowest Bronze premium $20,004. Deductible of $7,150 single and $14,300 family. Income of $150,000. Not eligible for subsidies. Exempt from the individual mandate because premium exceeds 8.16% of MAGI. The broker points out that the total of their annual premium and one deductible is $27,154––18% of their MAGI––the point at which they can begin to collect on claims.

Premiums obviously vary by market. Rather than taking my word for it, I suggest you go to HealthCare.gov and check out a few markets. You do not need to log in to browse the plan offerings. You need only insert a zip code and age and family status, as well as to enter a big income like $100,000 to be assured of getting the unsubsidized price no matter their status. The unsubsidized price is the price that half of the people buying Obamacare compliant plans are paying.

Will the Administration's Making Good on Billions of Dollars Due the Health Plans Solve Obamacare's Exchange Problems?

Amy Goldstein at the Washington Post is out with a story reporting that the Obama administration is looking to use an obscure federal law to pay billions of dollars in Obamacare risk corridor liabilities to participating insurance companies.

Detailed Obamacare Blue Cross Enrollment--About Half the Enrollment Doesn't Get a Subsidy!

About half of those buying Obamacare compliant individual health plans do not receive a subsidy.

I was struck by this comment coming from one of Obamacare's most vocal supporters, Vox's Sarah Kliff:

Obamacare's insurance expansion is on the path to looking like other safety net programs we know, offering limited services to a predominantly low-income population.

She might be right about Obamacare devolving into a low-income style safety net program. But she couldn't be more wrong about the people who have no choice but to buy Obamacare if they want health insurance.

In the September 2016 issue of the trade publication, The AIS Report on Blue Cross and Blue Shield Plans, reporter Steve Davis did something no other reporter I know of has done. He called a number of Blue Cross plans and asked how many of their Obamacare individual health insurance policyholders get a subsidy and how many do not. His report covers 26 state Blues plans.

Big Obamacare Rate Increases Don't Reflect What People Actually Pay––Wrong!

How many people in the individual health insurance market don't get a subsidy to pay for their health insurance, or wouldn't be eligible for one it they did buy it?

Here is what an Obama administration spokesperson said yesterday about all of the big 2017 Obamacare rate increases: "Headline rate increases do not reflect what consumers actually pay," said Kathryn Martin, acting assistant secretary for planning and evaluation at the Department of Health and Human Services.

What she is once again referring to is that 85% of those getting subsidies could get their rate increases eliminated or blunted by the subsidies. It is worth pointing out that the consumer only avoids the big increase if they are in, or move to, the lowest or second lowest cost Silver Plan.

Staying with a higher priced plan they might now be in will not avoid the increases.

And, once again, the administration doesn't tell us that moving to a lower price plan may require higher deductibles and co-pays and more limited provider networks.

But more importantly, why does this administration, and so many Obamacare supporters that parrot this line, continue to ignore the many millions of people who do not get a subsidy and have no choice but to take the full whack from these rate increases if they want to stay covered?

"The Blues Have Deep Reserves and They'll Be Here Long After We're Gone"--Here's How It Really Works

The denials about just how bad the Obmacare exchange situation is keep piling up.

Maybe the most uniformed and naive was this comment in the Dallas Morning News:

"The Blues have deep, deep reserves, and they'll be here long after we're gone,"[Sabrina] Collette [a research professor at Georgetown University], said. "They're probably calculating they can ride out this rocky time and emerge with a dominant position."

In the same article it was reported that local Dallas HMO Scott and While Health Plan is withdrawing from the exchanges. The article also pointed out that Texas Blue Cross has lost more than $1 billion on the exchanges over the last two years and is now seeking a rate increase of 60% for 2017.

These Blue Cross plans, particularly the community-based not-for-profits like Texas, do not have a bottomless bank account.

Obamacare on Life Support?

My comments on CNBC today.

"Those Whining Obamacare Insurers"

Affordable Care Act defenders need to understand that if we don't quickly move on to a robust conversation about how to fundamentally make the individual health insurance market viable many of the remaining often not-for-profit plans will have to walk away from the Obamacare exchanges.

See my post at Forbes

Obamacare Is Failing. And There Is Only One Way To Fix It

See my op-ed at CNBC

And my earlier post on the steps necessary to make Obamacare viable

According to Aetna We Have Two Kinds of Insurance Companies Under Obamacare: The "Less Worse Off" and the "Worse Worse Off"

Surviving Co-Ops Sue Feds Over Inadequate Obamacare Reinsurance Payments While Aetna Complains the Payments Aren't Enough For Their Only "Less Worse Off" Financial Results

I don't know if you noticed the recent juxtaposition between the surviving co-ops complaint that they shouldn't have to pay the big legacy carriers money under the Obamacare "3Rs" reinsurance scheme with Aetna's complaint this week that these same payments aren't enough for them to be confident they will continue in the exchanges.

Everything Will Be Fine As Soon As The Obamacare Market "Stabilizes"––Not

North Carolina Family Plans Already Cost More Than $10,000 a Year With Rates Going Up By Double Digits for 2017

With one state after another announcing big 2017 Obamacare rate increases the latest refrain from Obamacare supporters is that with maybe one or two more years of rate increases everything will be fine.

Talk about missing the forest for the trees.

The latest example is in North Carolina where market leader Blue Cross, the biggest insurer with 330,000 people covered, is asking for an 18.8% 2017 rate increase. Aetna, with 130,000 customers is asking for 24.5%.
See My Post at Forbes