Put Medicaid on Welfare

http://www.realclearhealth.com/articles/2017/06/07/put_medicaid_on_welfare_110620.html

Image result for Medicaid on Welfare

The American Health Care Act (AHCA), which was recently passed by the House of Representatives, proposes a radical change in Medicaid funding. Bill Clinton-era welfare reform served as a guide for the latest health care reform push—but to be successful, we must draw the correct lessons from those efforts in the 1990s.

Aid to Families with Dependent Children (AFDC), the pre-welfare reform cash assistance program for the poor, was a joint state-federal program, just as Medicaid is. Under this arrangement, Washington provides much of the funding and states operate the programs. Funds are distributed via matching grants, under which each dollar spent by states is matched by dollars from Washington. Medicaid varies the matching rate from between one and three dollars, with lower income states getting more. Notably, the Medicaid match has been open-ended–meaning as states spend more on approved coverage, they continue to receive more federal money.

The welfare reform signed by President Clinton in 1996 replaced AFDC with Temporary Assistance to Needy Families (TANF). TANF shares federal dollars using block grants, under which the federal transfer to a state in a given year is fixed, with relatively few strings attached. The AHCA proposes a slight variation on the block grant principle, with states receiving a fixed dollar amount per beneficiary beginning in 2020 (within five benefit categories). Federal assistance adjusts based on the number of enrollees. The AHCA also gives states the option of a straight block grant just as with TANF.

Block grants have been an important reason why there are 10 million fewer Americans on welfare today than in the early’90s, all without an increase in child poverty as critics of reform then feared. Matching grants create perverse incentives for states, which bear neither the full costs of over-generous programs nor retain the full amount of any savings from improved efficiency. As half or more of any Medicaid cost increase is paid for by Washington, state legislators are generous when spending federal dollars. Conversely, states only get to keep at most half of any savings from reducing Medicaid waste or abuse, thus there is little incentive to undertake any such efforts.

With block grants, meanwhile, states pay the full cost of expanding a program and keep all of the savings from reducing waste. The amount of federal assistance remains the same either way. State legislators must weigh the full cost of their generosity in such a system, enhancing efficiency in how they spend tax dollars.

Matching grants also impose conditions on state programs for eligibility, such as which groups of persons and types of care must be covered under Medicaid. Under AFDC’s matching grant system, states could not craft work requirements that best suited their population and economy without running afoul of federally imposed conditions.

Block grants, by contrast, allow states flexibility in designing programs to meet local needs and conditions. In the case of welfare reform, moving to block grants allowed states to tailor work requirement policies for local conditions.

Opponents of welfare reform in 1996 feared that some states would drastically slash benefits, forcing remaining states to do the same or become welfare magnets. This “race to the bottom” did not materialize because welfare reform wisely included maintenance-of-effort provisions, which limited potential state cuts in benefit levels. This safeguard prevented a wholesale diversion of the block grants to other state spending.

Also key to the success of welfare reform were the policy experiments that occurred before the 1996 law was signed. The innovative policies that transitioned millions of Americans from welfare to work emerged from waiver programs under the old AFDC. Similar recent experiments under Medicaid waivers suggest that the time may now be right for Medicaid reform.

One weakness of welfare reform was the rather narrow application of the block grants. TANF is but one of dozens of means-tested assistance programs. The benefits of welfare reform would have been greater if more assistance programs had been combined into one super block grant. Given the close connections between medical expenses and health choices, broad block grants would be particularly valuable for Medicaid.

A Medicaid program made more efficient due to block grants would be unlikely to produce the same reduction in enrollees as seen with TANF, which helped transition Americans off of welfare and into work. But block grants are a useful tool even when reducing enrollees is not the goal. A more likely outcome for Medicaid is better coverage for core beneficiary groups. States currently choose to cover optional treatments in pursuit of matching dollars, spreading available federal dollars very thin and contributing to the chronic problem of low Medicaid reimbursement rates.

In sum, block grants are not a panacea for federal and state budget woes, nor can they magically eliminate the cost of providing medical care to the nation’s poor—but their provision of flexibility and incentives for fiscal discipline allowed states to get welfare spending under control. It’s now time to put Medicaid on welfare.

Editorial: It’s now or never to fix next year’s insurance exchange rates

http://www.modernhealthcare.com/article/20170603/MAGAZINE/170609997/editorial-its-now-or-never-to-fix-next-years-insurance-exchange-rates

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As the ad hoc committee of 13 Republican senators rethinks the increasingly unpopular American Health Care Act, Congress and the administration face a more pressing question. Will they stabilize the individual insurance market for 2018?

Preliminary rate filings for next year suggest that some states are entering the first phases of the much-dreaded death spiral, where rising rates and declining enrollments feed on each other to climax in a collapsed market. Where last year it was mostly rural areas that suffered from a dearth of carriers offering exchange plans, major urban areas like Kansas City and Knoxville, Tenn., are now among the regions reporting no insurers interested in offering coverage.

Meanwhile, carriers are requesting double-digit rate hikes in many areas of the country. Increase requests as high as 50% have been reported.

Republicans blame the Affordable Care Act. But, in fact, blame rests squarely with the Trump administration and the Republican-controlled Congress, who’ve created tremendous uncertainty around the policies that make the ACA’s individual market work.

The biggest single problem is Congress’ failure to appropriate the $7 billion owed insurers for underwriting cost-sharing reductions for low-income plan purchasers. That affects about 7 million of the 13 million people who signed up for individual plans.

Last year, Congress also put a one-year hold on the surcharge on health insurance premiums that supports ACA subsidies. Without further action, the tax, which was slated to raise about $100 billion over the next decade, will go into effect in 2018.

From a budgetary perspective, the move is a wash. The increased tax collection will be offset by the increased subsidies given low-income people who buy plans. People who are unsubsidized—those most likely to be bitter opponents of Obamacare—will be hit dollar-for-dollar with the rate hike.

President Donald Trump​ also contributed to uncertainty over next year’s enrollment period. First, he halted media promotion of the 2017 open enrollment. Then, in February, he issued an executive order waiving the individual mandate, which is key to getting millions of younger, relatively healthy people into the individual market pool.

While Politico reported last month that the Internal Revenue Service didn’t carry out the president’s order this year, the atmospherics around these pronouncements will ensure that fewer people sign up for individual plans in 2018. Insurers are assuming they will be covering an older, sicker population, a surefire path to higher rates.

Last week, Bradley Wilson, CEO of Blue Cross and Blue Shield of North Carolina, dissected how these compounding uncertainties contributed to its request for a 22.9% rate hike. About half the increase came from the missing cost-sharing reduction subsidies; about a third from an expected increase in medical losses, driven by rising costs and a sicker pool; and the rest from the expected tax.

This Republican Congress and the administration could quickly solve these problems without sacrificing their political principles. The administration could signal it will enforce the mandate since it is still the law. Congress could appropriate the money for the cost-reduction subsidies. This would preserve the House’s lower court victory in its suit challenging the Obama administration’s lacking an appropriation.

And, in a nod to their goal of protecting people with pre-existing medical conditions, Congress could create a reinsurance program to cover the extraordinary expenses of high-cost patients in the individual market. Unlike state-run high-risk pools, which have never worked, a federally funded reinsurance program would preserve everyone’s access to health insurance in the individual market at affordable rates.

It’s up to Congress now. Insurers face a June 21 deadline for notifying HHS about participation in the exchanges, and final rates are due from states by Aug. 16; there’s not much time to act. We’ll soon find out if Trump and this Congress intend to deny millions of people access to affordable health insurance next year.

 

The ‘Kimmel test’ could be a good health care yardstick for the GOP

The ‘Kimmel test’ could be a good health care yardstick for the GOP

Should the “Kimmel test” help shape the health care bill that the US Senate is now working on behind closed doors? Republican senators could easily use it to vet the bill while staying true to their conservative roots.

Last month, talk show host and comedian Jimmy Kimmel shared with his audience a story about his son, Billy, who had been born a few days earlier with a heart defect called the tetralogy of Fallot and needed open heart surgery at three days old.

“If your baby is going to die, and it doesn’t have to, it shouldn’t matter how much money you make,” pleaded Kimmel in an impassioned take on health insurance that has been viewed by millions.

Not long afterward, Republican Senator Bill Cassidy, a physician who represents Louisiana, said that any Republican health care legislation would need to pass the “Jimmy Kimmel test.” Morally and politically, Cassidy is right.

Every day in my work in a pediatric emergency department, I see firsthand that the Affordable Care Act, the law that the Republican House and Senate are determined to replace, saves lives. Before the ACA, children born with pre-existing conditions were often uninsurable, their families left to struggle with an unmanageable economic burden.

Kimmel thinks the solution is easy: “Don’t give a huge tax cut to millionaires like me and instead leave it [the ACA] how it is.” But the solution is far from easy.

As a physician, a conservative Republican, and a health insurance scholar, I believe that government intrusion into private insurance has had serious consequences. Families across America are paying thousands of dollars a year more in higher health insurance premiums. Insurers, which have been losing money, have started abandoning entire markets. The House of Representatives passed the American Health Care Act in early May, believing it had to do so to stabilize markets and reduce premiums. But the Congressional Budget Office finally reported that the AHCA strips away most protections for pre-existing conditions and pushes an estimated 23 million more Americans into being uninsured.

Can we Republicans pass the Kimmel test, improving on the AHCA while still ensuring the sustainability of American health care? Senate Republicans have expressed skepticism, but I believe we can. The key is to stay true to our roots by adhering to four conservative principles.

First, private markets must remain free. Healthy people will need to help pay for sick people — that’s how health insurance works — but they must be allowed to choose their own insurance. The ACA coerced the healthy into paying above-market rates for insurance, and so it prohibited the lower-premium catastrophic plans that make sense for most families.

Second, the poor should never pay for government benefits to the wealthy. The main way the ACA tries to help families with pre-existing conditions is by regulating insurance premiums, but that means its benefits are indiscriminate. The young and healthy, many of whom are struggling economically, pay more. The elderly, many of whom need help but some of whom are wealthy, pay less. We should use America’s progressive tax system, where the wealthy pay more in taxes, to implement a means-tested health insurance system that specifically helps the needy. Republicans don’t love taxes, but a hidden tax is worse than a visible one, and it is utter anathema that the ACA moves even a single dollar from the poor to the rich.

Third, redistribution must be transparent. The ACA mainly forces higher costs onto private insurance plans, which invisibly pass those costs to healthy consumers. Democrats may prefer this hidden tax politically, but to abide by conservative principles, a subsidy must come with a budget that can be seen, understood, and voted on.

Fourth, health insurance subsidies must be structured to reduce expenditures over time. Just as welfare should be a bridge to independence for individuals, subsidies should be a bridge to sustainability for the health care industry.

The ACA introduced some promising cost-reductions, like financial responsibility provisions for hospitals and limits on luxury plan tax deductions. The Senate needs to continue these efforts. Subsidized care must be adequate and compassionate, but it should insist on using generic drugs (when available) rather than brand-name ones, and it should not cover newly constructed hospitals or low-value services. Medicine must de-intensify, helping patients receive care at home instead of in hospitals when appropriate and using social workers to meet social needs. We also need to help subsidized patients take more responsibility for their health — showing up for appointments, taking prescribed medications, and, if needed, quitting smoking and receiving treatment for addiction.

In my view, the best way to accomplish these four goals would be through either a federally funded expansion of Medicaid or a federally run high-risk pool, which would offer families a means-tested option to buy in once medical bills reach a certain point. Such a plan would intentionally have high deductibles and copays, but it would offer extra assistance to needy families. The private insurance market would be free to compete on price and quality, innovating new ways to deliver value.

I am not writing to advocate for any specific plan. Instead, I offer conservative principles as a yardstick: Does the program provide compassionate, adequate coverage to the sick? Is it transparent, fair, and sustainable? Are the healthy still free to choose their own insurance?

Republicans can craft sensible, conservative subsidies to protect our most vulnerable citizens while also preventing hidden taxes and blank checks. Kimmel is right: No parents should have to choose between bankruptcy and saving their child’s life. Nor does our nation have to choose between fiscal irresponsibility and compassion for our most vulnerable.

Are Republicans ready to give up on repeal? Here’s what might happen next.

https://www.washingtonpost.com/blogs/plum-line/wp/2017/06/06/are-republicans-ready-to-give-up-on-repeal-heres-what-might-happen-next/?utm_term=.064d61593064

Senate Republicans are moving into high gear on their effort to repeal the Affordable Care Act, making it likely that within the next few weeks they’ll either pass something and keep the process hurtling forward, or abandon it altogether.

Judging from what they’re saying, it looks like the latter is the most likely scenario: They fail to pass their version of repeal, then say, “Well, we tried,” shake that albatross off their shoulders, and move on to the rest of their agenda. It would leave many in the party infuriated, but it might be the best of the bad options available to them.

The latest developments suggest Senate Majority Leader Mitch McConnell (R-Ky.) may be hoping to rip the Band-Aid off as quickly as possible and get this whole thing behind them.

After spending a month deliberating over a response to the House’s passage of a bill to repeal the law, Senate Majority Leader Mitch McConnell (R-Ky.) is accelerating the party’s stagnant work as a jam-packed fall agenda confronts congressional leaders and President Donald Trump. Republican leaders want resolution to the tumultuous Obamacare repeal debate by the Fourth of July recess, Republican sources said, to ensure that the whole year isn’t consumed by health care and that the GOP leaves room to consider tax reform.

It’s a gut-check situation for Republicans, who are about to be confronted with tough choices that may result in millions fewer people with insurance coverage as a condition for cutting taxes and lowering some people’s premiums.

While it’s possible that McConnell is pushing this accelerated schedule because he thinks it’ll produce a bill that passes before anyone has a chance to realize what’s happening, that seems like a long shot, particularly given how many Republicans are expressing doubts about whether they can get the 50 votes they need to pass it (the current GOP margin in the Senate is 52 to 48):

  • McConnell himself said “I don’t know how we get to 50 at the moment” in an interviewtwo weeks ago.
  • “I don’t think there will be” a successful vote this year, said Sen. Lindsey O. Graham (R-S.C.). “I just don’t think we can put it together among ourselves.”
  • Sen. Richard Burr (R-N.C.) said the same thing last week: “I don’t see a comprehensive health-care plan this year.”
  • And Sen. Jeff Flake (R-Ariz.) said: “There are some still saying that we’ll vote before the August break. I have a hard time believing that.”

That’s a whole lot of skepticism. One big problem they’re facing is that there are multiple factions and working groups among Senate Republicans, all potentially coming up with their own very different versions of the bill. That’s a result of McConnell’s decision not to run the bill through the ordinary committee process, since he didn’t want there to be public hearings at which Democrats would have a chance to speak and question witnesses. In that vacuum, everyone wants to exercise their own influence. So apart from the 13-member group that McConnell appointed, there’s also a group led by Sen. Susan Collins (R-Maine) and Sen. Bill Cassidy (R-La.), and a group led by Sen. Rob Portman (R-Ohio).

But the intractable problems are likely to be substantive. Can senators from states that have benefited hugely from the ACA’s Medicaid expansion — such as West Virginia, where 28 percent of the state population is now enrolled in Medicaid, including 170,000 citizens who got it because of the expansion — come to an agreement with senators such as Ted Cruz (Tex.) and Mike Lee (Utah) who would like to see Medicaid undermined if not utterly destroyed? And can they all agree on something that can also get a majority in the House, where ultra-conservative Freedom Caucus members wield so much power?

So here are the potential outcomes:

With Spotlight on Obamacare, Public’s Opinion of Drugmakers Softens

https://morningconsult.com/2017/06/05/spotlight-obamacare-publics-opinion-drugmakers-softens/

Consumer perceptions of several major pharmaceutical companies have softened in recent months amid an industry push to counter public uproar over high drug prices, Morning Consult Brand Intelligence data show.

Large drugmakers this spring have seen a decline in the the percentage of Americans who view them unfavorably, according to weekly national surveys of thousands of U.S. adults.

The Pharmaceutical Research and Manufacturers of America, the industry’s largest trade group, took action in January to revamp its public image by rolling out a multiyear ad campaign that promotes breakthrough medicines. The drug lobby, which consistently outspends other industries in an effort to exert influence on Capitol Hill, spent $245 million last year, an increase of more than $18 million since 2013, according to the Center for Responsive Politics.

The shift in public opinion has occurred amid GOP efforts to overhaul the nation’s health insurance system and the high-profile battle over the Affordable Care Act. The White House has prioritized replacing the 2010 ACA over lowering drug prices, though newly installed Food and Drug Administration Commissioner Scott Gottlieb announced last month that his agency is looking for ways to reduce some costs to consumers.

Since the House GOP health care legislative effort began in earnest in March, some of the most unpopular drugmakers have seen declines in the percentage of Americans who view them unfavorably. Still, favorability rankings for drugmakers have not improved significantly.

Some of the most-liked drugmakers include Johnson & Johnson and Bayer — the most well-known drug manufacturers among U.S. consumers.

Results are based on online surveys, with a nationally representative sample of adults, that ask participants if they have a favorable or unfavorable impression of certain companies.

Pfizer, which last year killed a proposed $160 billion merger with Allergan after the Obama administration announced new rules on tax inversions, had the highest unfavorability percentage among drugmakers tracked in March, at 29 percent. As of June 5, that figure had fallen to 12 percent.

Another drugmaker – Bristol-Myers Squibb – saw its unfavorability decline 13 percentage points during the same time period, from 23 percent in March to 10 percent in June. Merck had its unfavorable views peak at 25 percent in March before falling to 12 percent in June.

AHCA Defeat Is Not the End of Repeal Efforts, Analysts Say

http://www.healthleadersmedia.com/health-plans/ahca-defeat-not-end-repeal-efforts-analysts-say

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The Trump administration will likely chip away at healthcare reform through administrative actions to reduce subsidies and weaken health insurance exchanges.

he American Health Care Act (AHCA) may have been scrapped, but that doesn’t mark the end of efforts to repeal the Affordable Care Act (ACA).

Instead, opponents will likely take a piecemeal approach to dismantling the ACA through administrative action, analysts said.

The Trump administration is unlikely to renew its push to repeal and replace the ACA through a single bill like the AHCA, but may attempt to water down elements of healthcare reform through administrative actions designed to reduce federal subsidies and weaken health insurance exchanges.

The War Isn’t Over
“This is an enormous, significant defeat, but I don’t think the war on the ACA is over yet,” said Gerald Kominski, PhD, director of the UCLA Center for Health Policy Research.

“Of course, the White House can disrupt the Affordable Care Act by issuing regulations that destabilize the market and make it more difficult to renew [coverage] or enroll for the first time.”

In January, the Trump administration took actions along those lines when it cut federal funds designed to help state health exchanges advertise and reach consumers with notices about the annual deadline for open enrollment.

The Trump administration could attempt to reduce or eliminate federal subsidies and take other actions to weaken state and federal health insurance exchanges, said Micah Weinberg, president of the Bay Area Council Economic Institute.


“First, the Trump administration needs to decide whether they want to burn down the house we’re all living in through regulatory actions that will end the viability of the exchanges,” said Weinberg. “If they want to destroy the thing, they can. So the ACA is very much not out of the woods.”