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Don’t Assume That Private Insurance Is Better Than Medicaid
As we recently wrote, it’s better for patients to have Medicaid than to be uninsured, contrary to critics of the program. But is having Medicaid, as those critics also say, much worse than having private insurance?
This idea has become a talking point for conservatives who back big changes to Medicaid, as the Senate health bill proposes. The poor would benefit simply by being ushered off Medicaid and onto private insurance, they write.
But it’s far from proven that Medicaid is worse than private insurance. A lot depends on what kind of insurance is compared with Medicaid, and how they are compared.
Many studies that measure Medicaid against private insurance suffer from the same flaws that compare Medicaid with being uninsured. They’re terribly confounded, and can show only associations, not causation. People with private insurance are healthier and wealthier than those on Medicaid, and in ways not fully controlled for in statistical analyses. These factors almost certainly predispose someone on Medicaid to have worse outcomes than someone with private insurance.
Perhaps the most convincing way to compare Medicaid and private insurance would be with a randomized controlled trial that pits them head to head. No such trials exist. Recall that the Oregon Medicaid study randomly offered, via a lottery, the opportunity for low-income adults to enroll in Medicaid. It did not have another study arm that offered private insurance.
But we do have a decades-old trial that looked at varying levels of cost-sharing: the RAND Health Insurance Experiment. This is relevant because one substantial difference between Medicaid and most private coverage is the level of cost-sharing. Medicaid is nearly free. Most private coverage comes with deductibles and co-payments.
The RAND study randomly assigned 2,750 families to one of four health plans. One had no cost-sharing whatsoever — kind of like Medicaid. The other three had cost-sharing (money people had to pay out-of-pocket for care) at levels of 25, 50 or 95 percent — capped at $1,000 at the time, which is about an inflation-adjusted $6,000 today. This level of personal liability acts like a deductible, making the plan with a 95 percent level of cost-sharing comparable to a “Bronze” plan on the Affordable Care Act’s exchanges today.
The RAND study found that the more cost-sharing was imposed on people, the less health care they used — and therefore the less was spent on their care. The study also found that, over all, people’s health didn’t suffer from lower health care use and spending.
Lower spending and no decline in health — these are the results that everyone cites to justify increased cost-sharing, and to justify shifting people from Medicaid to private plans with high deductibles.
But the results of the RAND study, like so much in health care, are complicated. A deeper dive into the data shows that people decreased their consumption of necessary health care in equal measure to unnecessary health care. As a rule, people are terrible discriminators of what care is needed and what’s not. Since most people under the age of 65 are healthy, even in the RAND study, that doesn’t matter much.
But even if most people are healthy, some are not (and particularly those on Medicaid). In the RAND study, poorer and sicker people — exactly the kind more likely to be on Medicaid — were slightly more likely to die with cost-sharing.
Free care also resulted in improvements in vision and blood pressure for those with low income. As an influential 1983 New England Journal of Medicine paper put it: “Free care does make a difference.”
One limitation of the RAND study is its age. It took place between 1971 and 1982. There have been no studies of cost-sharing to rival it since. Still, the best recent evidence we have is that giving free care to poorer and sicker people improves health and saves lives. It is reasonable to conclude that switching them to a plan with high cost-sharing (even a private plan) would do the opposite.
Some of the more recent studies were nicely summarized in a paper by Katherine Swartz for the Robert Wood Johnson Foundation’s Synthesis project. She found that increased cost-sharing for low-income populations was associated with a shift toward more costly services, like increased emergency room visits because people skipped taking their drugs. She also found that increased cost-sharing affects poor people differently than everyone else, confirming RAND’s findings. A more recent study found that enrollment in plans with high deductibles led to reductions in necessary care, which would have consequences for the poor and sick.
Austin wrote previously herehow increased cost-sharing may lead people to take fewer drugs for their high cholesterol, hypertension and diabetes. In his first Upshot column, Aaron wrote that parents delay taking their children for asthma treatment when cost-sharing rises.
Even small premiums can lead to problems. A $10 increase in monthly Medicaid premiums was followed by a 6.7 percent reduction in Medicaid and coverage of CHIP (Children’s Health Insurance Program) for people just above the poverty line.
Unquestionably, private coverage can work very well for many people. Take us, for instance. The insurance that we each have from our employers is probably better for us than Medicaid would be. Though these plans come with cost-sharing, we have incomes that can handle it. Our plans cover things that Medicaid often does not, like dental checkups.
Our plans have great networks, and they reimburse well for the care we receive. Just like Medicaid enrollees, we also receive support from the federal government, which waives tax collections on dollars contributed to premiums. That tax break is higher than the cost of Medicaid in many cases.
We’re also relatively healthy and would probably be fine on any plan (unless and until our health deteriorates).
But because our plans require considerable cost-sharing, even Medicaid enrollees would struggle on them. More important, neither House nor Senate repeal and replace bills offer poor Medicaid enrollees plans as generous as ours.
The Senate’s health care plan, for example, would offer much less generous plans. A 64-year-old woman with an income of $11,400 would face a deductible of at least $6,000. For her, such a plan is not better than Medicaid; it is most likely much worse if she is also sick. Because of the deductible, the care she’d need would be financially out of reach.
A recent paper in Health Affairs documented that outcomes in Arkansas, which allowed poor people to buy private plans on the exchanges, were similar to those in Kentucky, which expanded access to poor people through Medicaid. But those private plans came with significant cost-sharing subsidies, which would be stripped away by the Senate’s bill. Even so, the evidence did not suggest that the private coverage of Arkansas was better than the public coverage of Kentucky.
There are certainly private plans for poor and sick Americans that are better than Medicaid. But plans with very high cost-sharing — which are the ones being offered in Congress as A.C.A. replacements — are not among them.
Five takeaways from the GOP’s healthcare reboot
Senate Republican leaders are pushing ahead with their plan to vote next week on an ObamaCare repeal bill after releasing a revised version of the legislation Thursday to mixed reaction.
For three weeks, leadership has been pulling concerned members into their offices to discuss changes to the legislation. The tweaks released Thursday were aimed at shoring up support within a Republican conference that has been deeply divided over what to do.
Just a few hours after the new bill was released, two senators said they wouldn’t vote for a motion to let the Senate debate the Republican healthcare bill; that means Senate Majority Leader Mitch McConnell (R-Ky.) can only afford to lose one more vote.
Other moderates held their fire on the bill, giving McConnell a chance to win them over in the coming days. And in a big win for GOP leadership, Sen. Ted Cruz (R-Texas) said he would vote for a motion to proceed to the bill, likely neutralizing conservative opposition.
Here are five takeaways from the big unveiling.
It includes a provision key to earning conservative support
An amendment pushed for weeks by Sen. Ted Cruz (R-Texas) could go a long way toward gaining conservative support for the legislation.
A version of the Cruz proposal that was included in the bill would let insurers offer health plans that don’t comply with ObamaCare regulations, as long as they also sell plans that do.
“I think this new bill represents a substantial improvement over the previous version,” Cruz told reporters after leaving a briefing on the draft Thursday.
“If this is the bill, I will support this bill. If it’s amendment, and we lose the protections that lower premiums, my view could well change.”
Another conservative holdout on the bill, Sen. Mike Lee (Utah), worked with Cruz on the amendment, but has not yet said if he supports the bill overall.
“The new Senate health care bill is substantially different from the version released last month and it is unclear to me whether it has improved,” Lee said in a statement.
“I will need time to study the new version and speak with experts about whether it does enough to lower health insurance premiums for middle class families.
Several centrist Republicans have expressed concerns about how this provision would impact people with pre-existing conditions, however, and it’s unclear whether they will accept its inclusion.
The bill would also create a fund to help insurers cover people with expensive medical costs, but it’s unclear if that will be enough to appease moderates.
Medicaid cuts are largely kept in place.
The updated legislation left the deep Medicaid cuts from the first version of the bill essentially unchanged, which could be a big problem for moderate GOP senators like Rob Portman (Ohio), Shelley Moore Capito(W.Va.) and Lisa Murkowski (Alaska).
The legislation would put a cap on federal Medicaid reimbursement for states, dramatically changing the program from an open-ended entitlement. It would end ObamaCare’s increased funding for states to expand Medicaid by 2024, and cut the rate of inflation.
Taken together, the bill would cut $772 billion from Medicaid funding over a decade and result in 15 million fewer people enrolled, according to the Congressional Budget Office.
Medicaid has always been one of the thorniest issues for Republicans to navigate during ObamaCare repeal. Twenty GOP senators represent states that expanded Medicaid. Since the original legislation was released in June, some of those senators have said the Medicaid cuts are their top reason for opposing the bill.
Murkowski as recently as Wednesday had argued that Medicaid reforms should be handled separately from the legislation repealing and replacing ObamaCare.
The lack of major revisions to the Medicaid provisions has already cost GOP leaders the support of Sen. Susan Collins (Maine), who announced she wouldn’t support a procedural motion to allow debate on the bill.
By keeping the cuts in place, McConnell is banking on moderates flipping to “yes” without their No. 1 priority being addressed.
Sen. Dean Heller (R-Nev.) previously said he wouldn’t vote for the bill in its current form, citing the phase-out of extra federal funds for Medicaid expansion as a main concern. Heller on Thursday said he was undecided about moving to proceed. Portman also said he was undecided on the motion to proceed.
The bill includes more money to combat the opioid crisis.
Originally, the Senate healthcare bill included $2 billion to help combat the opioid crisis, a far cry from the $45 billion Sens. Portman (R-Ohio) and Capito were pushing for.
The new version has exactly that: $45 billion.
But that doesn’t mean the funding will be enough money to win their support. On Thursday, neither senator would say whether they would support a motion to proceed to the bill.
In a statement, Portman said, “I opposed the last draft of the Senate health proposal because I had concerns about the measure’s Medicaid policies, especially those that impact drug treatment for those suffering from addiction.”
Ohio Gov. John Kasich (R) has called for a bipartisan compromise on healthcare and has also urged Portman not to be won over by minor concessions.
“I told him, ‘If they hand you a few billion dollars on opioids … that’s like spitting in the ocean,’ ” compared with the billions the bill would cut from Medicaid, Kasich told reporters last month.
Previously, Capito indicated bolstering the opioid fund probably wouldn’t be enough to garner her support.
“More opioid funding would be very good and very beneficial, but the core for me is the Medicaid provision,” Capito said.
She added: “If you can’t access the treatment, it’s not going to do you any good.”
The bill keeps ObamaCare taxes on high earners.
Republicans reversed from their initial draft and decided to keep ObamaCare’s taxes on high earners.
The bill will keep ObamaCare’s 3.8 percent net tax on investment income and a 0.9 percent payroll tax on individuals making more than $200,000.
The legislation also keeps an ObamaCare rule that prevents insurance companies from writing off compensation that they pay their executives.
The initial draft scrapped all ObamaCare taxes, including those on high earners.
Sen. Bob Corker (R-Tenn.), who pushed McConnell to keep the taxes on high earners, said many senators had an issue with giving rich people a tax break while reducing subsidies for low-income people.
“I think that was something that was felt by many, many, many people in our caucus,” Corker told reporters Thursday.
The measure still repeals other ObamaCare taxes that Republicans say directly impact consumers and drive up premiums, including taxes on the medical device and prescription-drug industries.
Much of ObamaCare would remain.
The bill probably can’t escape the “ObamaCare lite” moniker.
It keeps the structure of ObamaCare’s tax credits to help lower income Americans afford insurance in place, though they would be less generous. A tax on high earners would remain. In short, it’s not a straight repeal of the law.
This means getting Sen. Rand Paul’s (R-Ky.) vote is likely out of the question. Previously, he’s suggested changes that haven’t made it into the bill, such as eliminating a stability fund, repealing more ObamaCare taxes and dropping the continuous coverage provision.
“The thing is that I thought we were pretty clear,” Paul said after the closed-door GOP meeting. “We promised to repeal ObamaCare, this frankly doesn’t repeal ObamaCare. It keeps the subsidies, it keeps the taxes, it keeps the regulations. I think we’re going back on a promise.”
When asked if this bill was worse than ObamaCare, Paul replied, “yes.”
Cartoon – An Operation might have saved him, but
Cartoon – Pre-Existing Conditions…
Cartoon – Which is Worse?
Cartoon – Untreatable Pre-Existing Condition
Senate Republicans unveil revised healthcare bill
Senate Republican leaders on Thursday unveiled a revised version of their bill to repeal and replace ObamaCare as they race toward a high-stakes vote next week.
The measure includes changes intended to win over additional votes, with leadership making concessions aimed at bringing both conservatives and moderates on board. (READ THE BILL HERE.)
But Senate Majority Leader Mitch McConnell (R-Ky.) is facing a tough task in finding enough votes to pass the bill. Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) appear to be firmly against the measure, and one other defection would kill the bill.
Overall, McConnell appears to have shifted the revised bill more toward the conservatives than the moderates.
Importantly, the bill largely keeps the Medicaid sections the same, meaning that deeper cuts to the program will still begin in 2025, and the funds for ObamaCare’s expansion of Medicaid will still end in 2024.
The changes to Medicaid have emerged as a top concern for moderates such as Sens. Rob Portman (R-Ohio), Shelley Moore Capito (R-W.Va.) and Lisa Murkowski (R-Alaska).
The Congressional Budget Office (CBO) found that those Medicaid changes in the original bill would result in 15 million fewer people being enrolled in the program and cut spending by $772 billion over 10 years.
Collins said she still plans to vote against a motion to proceed to the bill, adding that the legislation should move through the normal committee process.
“My strong inclination and current intention is to vote no on the motion to proceed,” Collins told reporters after leaving a briefing on the legislation.
“The only way I’d change my mind is if there’s something in the new bill that wasn’t discussed or that I didn’t fully understand or the CBO estimate comes out and says they fixed the Medicaid cuts, which I don’t think that’s going to happen.”
For the conservatives, the measure includes a version of an amendment from Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah) aimed at allowing insurers to offer plans that do not meet all of ObamaCare’s regulations, including those protecting people with pre-existing conditions and mandating that plans cover certain services, such as maternity care and mental healthcare.
Conservatives argue the change would allow healthier people to buy cheaper plans, but moderates and many healthcare experts warn that premiums would spike for the sick people remaining in the more generous insurance plans.
Cruz said he will support the bill so long as the provisions he sees as a priority are not changed in amendment votes on the floor.
“If this is the bill, I will support this bill,” Cruz told reporters after a meeting of GOP senators. “Now, if it’s amended and we lose the protections that lower premiums, my view could well change.”
Senate Republicans had vowed to not change the ObamaCare protections for people from being charged more based on their health in their bill, which is why the debate over the Cruz-Lee amendment has been heated.
A Senate GOP aide said Thursday it is possible that the Cruz amendment would not be analyzed by the CBO in time for the vote next week. It is possible the Department of Health and Human Services could provide an alternative analysis.
Lee cautioned that he was not involved in the changes to the proposal, including the amendment, and would have to review the new language before deciding whether to support it.
The bill does include new funding, $70 billion over seven years, aimed at easing costs for those sick people remaining in the ObamaCare plans.
However, the new measure does not boost the generosity of the tax credits, as some moderates wanted. It still replaces ObamaCare’s tax credits to help people afford insurance with a smaller, scaled-down tax credit that provides less assistance.
The Kaiser Family Foundation found premium costs would increase an average of 74 percent for the most popular healthcare plan, given the reduced assistance in the GOP bill.
The new measure will leave in place two ObamaCare taxes on the wealthy, in a departure from the initial bill.
That original measure lacked the support to pass, as more moderate members pointed to the CBO’s finding that 22 million fewer people would have insurance over a decade.
Senate Republicans are now awaiting a new score of the revised legislation from the CBO, which could come early next week.
The new bill does include $45 billion to fight opioid addiction, but moderates such as Capito and Portman who hail from states where the problem is rampant have said they also want changes to the Medicaid portion of the legislation.
Portman said his position on the bill had not changed, but he did not give a clear answer on whether he’d back his party on the procedural vote.
“I’m the same position I’ve been in. I’m looking at the language,” he said.
Capito also said she doesn’t know whether she’ll vote to proceed to the bill.
“We have another meeting this afternoon on the Medicaid cuts,” she told reporters. “I need to really look at it, look at the score; I still have concerns.”
Asked if she would vote for the motion to proceed next week, she said, “Wait and see.”
In a change that could appeal to Murkowski, the bill sets aside 1 percent of the stability funds for states with costs that are 75 percent above the national average, which would benefit high-cost states like Alaska.
The updated Senate health care bill: What you need to know
What the latest Senate health care bill does to Obamacare
| Slimmed-down benefit requirements |  new |
| Opioid funding | new |
| Taxes | new |
| Catastrophic health plans | new |
| Health savings accounts | new |
| Market stabilization | new |
| Traditional Medicaid | changed |
| Pre-existing conditions | changed |
| Medicaid expansion | changed |
| Insurance subsidies | changed |
| Individual mandate |  eliminated |
| Cost-sharing subsidies | eliminated |
| Planned Parenthood funding | eliminated |
The massive Senate GOP shift on pre-existing conditions
https://www.axios.com/the-massive-senate-gop-shift-on-pre-existing-conditions-2458798705.html
- When Senate GOP leaders first presented their plan to the caucus in a PowerPoint presentation, it explicitly said that pre-existing conditions wouldn’t be touched, aides say.
- As recently as two weeks ago, aides said members were surprised and angry to learn that Sen. Ted Cruz’s Consumer Freedom Option would allow plans that didn’t include the Affordable Care Act’s pre-existing conditions protections. (They could only be sold by insurers that also offered plans with the protections.)
- Sen. Bob Corker: “I think people understand that’s got to be protected, and people understand what happened when the House dealt with it and opened it up, and it’s just not something that senators are wishing to do.”
- Sen. Shelley Moore Capito over recess: “I think that reopens an issue that I can’t support, that it would make it too difficult for people with pre-existing conditions to get coverage.”
- Sen. Chuck Grassley last week: “There’s a real feeling that that’s subterfuge to get around pre-existing conditions.”
Now, that resistance is “melting away,” as one Senate Republican aide put it today. “No one wants to be bad guy.”
Indeed, almost seven hours after the revised bill — including the Cruz provision — had been released, no Republican senator had threatened to vote against the bill unless the provision is removed. In fact, Republicans had surprisingly little to say about it.
What the Consumer Freedom Option does:
- It allows insurers that offer ACA-compliant plans to also sell plans that do not comply with ACA regulations, including the law’s essential health benefits and its pre-existing conditions protections.
- Advocates of the bill say that while this could sort sick and healthy people into two different marketplaces, causing premiums to skyrocket for sick people, they’ll be insulated from these costs by premium subsidies and the bill’s stabilization fund.
- Members “don’t realize we are basically creating single payer for sick people,” the GOP aide told me, saying that Republicans’ support is growing because people with pre-existing conditions can still get exchange plans.
- The problem: “If there were hearings, everyone would have a lot more information about Cruz. Right now, Cruz is the only seller of the amendment and he’s the only one with information about the amendment,” said one well-connected GOP lobbyist, who said Cruz’s sales pitch seems to be convincing members to support his idea.
What insurers and experts are saying:
- America’s Health Insurance Plans: “Patients with pre-existing conditions … would potentially lose access to comprehensive coverage and/or have plans that were far more expensive.”
- Scott Serota, president and CEO of the Blue Cross Blue Shield Association: “The ‘Consumer Freedom Option’ is unworkable as it would undermine pre-existing condition protections, increase premiums and destabilize the market.”
- Kaiser Family Foundation: 1.5 million people with pre-existing conditions could have higher premiums under the Cruz amendment.
Yes, but: The conservative groups love it, as it addresses the ACA regulations that weren’t fully addressed in the previous version of the bill. They believe those regulations are driving up the cost of insurance. Stripping the provision could lose these groups’ support.
And Michael Cannon of the libertarian Cato Institute says the provision “would make access to healthcare more secure for patients who develop expensive conditions” — because it would free insurers to introduce a wider variety of health plans and make them less likely to leave the markets.
