Tag Archives: Health Policy

Federalism and the End of American Healthcare Act

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http://www.yalelawjournal.org/forum/federalism-and-the-end-of-obamacare

Federalism and the American Health Care Act

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Republicans may talk the talk of devolving health care policy to the states, but that’s not what the American Health Care Act does. Instead, it starves health reform of the funding upon which it depends.

Most significantly, Republicans intend to phase out the Medicaid expansion and to impose a hard cap on federal contributions. If a recession forces a state to exceed its cap in a given year, any overruns will come out of its Medicaid payments the following year. With that kind of shortfall, the states will have to make savage Medicaid cuts to make ends meet.

Republicans also want to slash the subsidies that make insurance affordable in the private market. Under the ACA, no one making less than four times the poverty level has to devote more than 10 percent of her income toward private coverage; most pay much less. The American Health Care Act would erase that affordability guarantee and, instead, extend age-based subsidies that would be much too meager for most people to afford coverage.

If federal money is withdrawn, states will be stuck. Because of the countercyclical trap and ERISA, they won’t be able to enact and sustain coverage expansions on their own. The end result will not be the diversity that federalism celebrates. It will be a uniformly crappy system that leaves millions of the sick and poor without coverage.

It doesn’t have to be this way. A group of Republican senators led by Bill Cassidy (R-LA) and Susan Collins (R-ME) has floated an alternative, the Patient Freedom Act of 2017, that retains the ACA’s funding streams while giving the states more room to choose how to use that money. That’s a model that deserves serious attention from both Republicans and Democrats. It might enable partisans on both sides move past the rancorous debate over the ACA.

For now, however, the Republicans seem intent on dismantling coverage gains across the entire United States. Their proposals trade on the rhetoric of states’ rights, but they would have the perverse effect of inhibiting state power. That’s bad for federalism — and bad for the country.

 

Traditional Medicare is cheaper

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http://www.academyhealth.org/blog/2017-03/traditional-medicare-cheaper

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OK, you knew that already. But what are the implications for access to care?

t probably won’t come as a surprise to you that traditional Medicare (TM) pays lower health care prices than commercial market insurers. We’ve known this for quite some time. A significant issue, however, is whether lower TM rates lead (or could lead) to reduced access to care for Medicare beneficiaries.

Jacob Wallace and Zirui Song took up the issue in a Health Affairs paper published last year. They examined health care price and utilization of outpatient imaging and outpatient surgical procedures across the 65-year divide — when most people become eligible for Medicare. Their data included just over 200,000 individuals captured in Truven Health Analytics’ 2007–2013 Medicare and Commercial Claims and Encounters database with broad-network, commercial market insurance before age 65 and TM from age 65 onward.

As shown in the chart just below, unadjusted, per beneficiary, quarterly spending trends for outpatient imaging and procedures are about the same before and after Medicare eligibility, but there is a large discontinuity when Medicare eligibility begins. In the last quarter before age 65, spending for a privately insured patient is about $119. At age 65, on Medicare, that drops 25% to about $89. After adjusting for age, quarter, year, and individual fixed effects, the relative change upon Medicare eligibility is even larger: 32%.

 

Healthcare Triage – The American Health Care Act: A Republican Response to The Affordable Care Act

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Healthcare Triage – The American Health Care Act: A Republican Response to The Affordable Care Act

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After so many, many years, it’s finally here. The Republican bill for repeal and replace. Kudos to Mark and Stan for getting this up so fast.

Welcome to a very special episode of Healthcare Triage.

The AHCA’s mandate replacement doesn’t make sense to me

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The AHCA’s mandate replacement doesn’t make sense to me

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I’m having a really hard time with this. I’m going to try and walk through my dilemma in the hope that someone will be able to make me understand.

The Republicans hate the individual mandate. I get that. I don’t necessarily understand their rationale, but I accept it. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it.

We have discussed this before. There are many ways to solve this adverse selection problem without a mandate. Open enrollment periods, penalties for not signing up, loss of protections, inducements for keeping coverage, etc. We have written about this again and again and again and again and again and again. So I’m not saying that you can’t replace the individual mandate.

Many wonks believe that too few healthy people are joining the exchanges. This is leaving the risk pool too expensive and leading to higher premiums. To fix that, we could increase the size of the mandate penalty (stick), increase the size of the subsidies to make insurance cheaper (carrot), or both (carrot and stick).

The AHCA plan, though, goes at this sideways. It eliminates the stick. It reduces the carrot. And it then puts in a new plan – the 30% insurance markup if people lose continuous coverage.

In theory, making people pay a lot more if they don’t buy insurance as soon as they need to will make healthy people join the market. If they know it will cost a lot more if they wait until they are sick, or if they know it will mean they won’t have community ratings if they don’t purchase plans early, they should buy in – reducing adverse selection.

But this plan doesn’t really do that. It’s a one-time, one year, 30% markup on insurance. That’s a tiny, tiny penalty in the scheme of things.

 

MedPAC discusses Part B reforms, MACRA: 6 takeaways

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http://www.beckershospitalreview.com/finance/medpac-discusses-part-b-reforms-macra-6-takeaways.html

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The Medicare Payment Advisory Commission held a public meeting March 3, where commissioners discussed recommendations to reduce growth in Part B drug spending and ways to help physicians transition from Medicare’s Merit-based Incentive Payment System to Advanced Alternative Payment Models.

Here are six takeaways from MedPAC’s discussion.

1. Commissioners addressed the chairman’s many proposals for reforming Medicare Part B, which covers prescription drugs administered in a physician’s officer or hospital outpatient department. The proposals call for modifying the reimbursement for Part B drugs that are paid for based on wholesale acquisition cost — a manufacturer’s undiscounted price to wholesalers or direct purchasers. Under the proposals, the payment rate for WAC-priced drugs would be reduced to WAC plus 3 percent, down from the current rate of WAC plus 6 percent.

2. Under the proposals, all Part B drug manufacturers would be required to submit annual average sales price data. Currently, only Medicare Part B drug manufacturers with Medicaid drug rebate agreements are required to submit annual average sales price data. The proposals would also increase the penalties for not reporting.

3. For drugs that are paid for based on average sales price, physicians and hospital outpatient departments are typically paid the ASP of a drug, plus a 6 percent add-on. The proposals would require manufacturers to pay Medicare a rebate with the ASP for their product if it exceeds an inflation benchmark such as the consumer price index.

4. The Medicare Access and CHIP Reauthorization Act established two pathways for clinician participation: the Merit-based Incentive Payment System, or MIPS, and the Advanced Alternative Payment Models, or Advanced APMs. To help move clinicians from MIPs to Advanced APMs, the commissioners discussed limiting the potential upside in MIPS.

5. The commissioners also discussed proposals that would make Advanced APMs more attractive to clinicians, including creating an additional upside for two-sided ACOs.

6. MedPAC will vote on the proposals next month for possible inclusion in the commission’s June report to Congress.

The American Health Care Act: 10 things to know

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http://www.beckershospitalreview.com/hospital-management-administration/gop-health-bill-is-out-10-things-to-know-this-morning.html

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After years of lobbying to repeal and replace the ACA, House Republicans put forth The American Health Care Act on Monday. Here are 10 things to know about the legislation.

1. The AHCA would eliminate the ACA’s individual mandate, or requirement for American adults to enroll in health insurance. Further, the legislation eliminates the tax penalty adults faced if they were not covered. However, the concept of penalties still remains in some form: To encourage people to buy coverage, the AHCA lets insurers charge a 30 percent penalty for those who let their health plans lapse and try to buy a new policy, according to NPR.

2. The AHCA calls for Medicaid expansion to remain in effect through Jan. 1, 2020. This is different from earlier drafts of legislation, which called for an immediate reversal of Medicaid expansion. Thirty-one states, plus Washington, D.C., have opted to expand Medicaid under the ACA. By 2020, the government will “freeze” the expanded programs and restrict funding only to people who were in the program as of then — no added enrollees from that date on. States would keep getting that amount of federal aid for each Medicaid enrollee as long as the enrollee doesn’t lose eligibility for more than a month. There is also a provision in the AHCA that calls for grants of extra Medicaid provider reimbursement funds to go toward states that didn’t expand Medicaid.

3. The AHCA restructures Medicaid’s federal funding to a per-capita cap opposed to the current open-ended federal entitlement, reports Politico. States would receive capped payments based on how many people are enrolled in Medicaid. The plan also calls for more frequent eligibility testing of Medicaid enrollees.

4. The AHCA restructures Americans’ tax credits to buy health insurance. It replaces income-based subsidies under the ACA with refundable, age-based and income-capped tax credits, according to Politico. These credits increase with age, from as low as $2,000 for those under 30 or as high as $4,000 for those over 60. There would be a limit as far as credits for a single household — $14,000 — and subsidies would be eliminated over time for individuals with annual income of $75,000 and for families with annual income of $150,000, according to the report.

5. A few ACA staples roll over in the AHCA. The ACA provision related to pre-existing conditions would remain intact, meaning insurers would not be able to deny coverage or increase prices for people with such conditions, reports Reuters. Also, the AHCA retains provisions allowing adults up to age 26 to maintain coverage through their parents’ health plans, according to the report.

6. The AHCA eliminates the cap on the tax exemption for employer-sponsored insurance. Although earlier drafts of legislation capped the exemption at 90 percent of current premiums, the final version eliminated the proposal, according to Politico. The bill also gets rid of the penalty for businesses that do not offer employees health coverage.

7. The AHCA delays the effective date for the ACA’s Cadillac Tax on costly health plans from 2020 to 2025, according to The Hill. GOP lawmakers are delaying but keeping the tax to make certain their replacement plan will not increase the national deficit after a decade.

8. The AHCA bars federal Medicaid funds or federal family planning grants for Planned Parenthood clinics, according to the report. (Separate from the AHCA, the White House earlier this week extended terms for a compromise to Planned Parenthood by proposing maintained federal funding if the group agrees to discontinue providing abortions, according to ABC News.)

9. The cost of the AHCA is not yet known. The nonpartisan Congressional Budget Office has not yet scored the legislation, which means there is neither a cost estimate for the plan or how many Americans would gain or lose insurance under it.

10. What’s next? The House Ways and Means and Energy and Commerce committees are expected to review the AHCA legislation Wednesday. If the committees approve the measure, the full House could potentially act on it before April 7, according to The New York Times. The measure would then be taken up by the Senate.

Fitch: Changes to Medicaid in ACA repeal bill pose risks for hospitals

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http://www.beckershospitalreview.com/finance/fitch-changes-to-medicaid-in-aca-repeal-bill-pose-risks-for-hospitals.html

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House Republicans’ proposed ACA repeal and replacement plan, known as the American Health Care Act, calls for changes to Medicaid that expose states and hospitals to new fiscal risks, according to a Fitch Ratings report.

The AHCA would eliminate Medicaid’s entitlement structure and restructure the program’s federal funding to a per-capita cap system on Jan. 1, 2020. This change is intended to slow Medicaid spending growth. The Kaiser Commission on Medicaid and the Uninsured estimates switching to a per-capita cap system would reduce federal spending on Medicaid by $1 trillion (or 26 percent) over 10 years. This reduction would require states to make significant budgetary changes and could result in reduced reimbursement for hospitals, according to the report.

The AHCA calls for the government to freeze expanded Medicaid programs on Jan. 1, 2020, and restrict funding only to people who were enrolled in the expanded programs as of Dec. 31, 2019. Under the ACHA, states that expanded Medicaid “will be faced with a unique policy predicament of denying Medicaid access to individuals who would otherwise qualify beginning in 2020, or taking on significant costs they had anticipated would be bored largely by the federal government,” according to Fitch.

Moody’s: GOP’s American Health Care Act is credit negative for nonprofit hospitals

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http://www.beckershospitalreview.com/finance/moody-s-gop-s-american-health-care-act-is-credit-negative-for-nonprofit-hospitals.html

OR Efficiencies

If House Republicans’ proposed ACA repeal and replacement plan, known as the American Health Care Act, were to become law in its current form it would be credit negative for nonprofit hospitals, according to Moody’s Investors Service.

The components of the AHCA most likely to negatively affect hospitals are transitioning federal Medicaid payments to a per-capita payment to the states, the Medicaid expansion freeze in 2020 and how subsidies are calculated for individuals who purchase insurance on the exchanges, according to Moody’s.

Under the legislation, the uninsured rate would rise, which would cause hospitals’ bad debt and uncompensated care costs to increase, according to Moody’s.

The AHCA’s retention of Medicaid expansion and elimination of scheduled disproportionate share cuts for states that did not expand Medicaid would have a positive impact on nonprofit hospitals, according to Moody’s. However, the rating agency said the positive effects are not enough to compensate for the credit negative components of the AHCA.

Outcomes for High-Needs Patients: Practices with a Higher Proportion of These Patients Have an Edge

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http://www.commonwealthfund.org/publications/in-the-literature/2017/mar/outcomes-high-need-patients?omnicid=EALERT1177058&mid=henrykotula@yahoo.com

Synopsis

Patients with high health care needs enrolled in Michigan primary care practices that treat a large proportion of such patients had lower health care costs, fewer hospital admissions, and fewer emergency department visits than those enrolled in practices serving smaller proportions of high-need patients. Small practices—those with one or two physicians—exhibited lower overall spending for high-risk patients, though not lower utilization of services, compared with larger practices.

The Big Picture

The finding that practices with a large proportion of high-need patients had lower levels of spending was surprising given that these patients require more time, resources, and expertise to manage their conditions effectively. The authors suggest that practices treating more high-need patients might have structural advantages over other practices or specific approaches developed over time that position them to provide better care. “It may be that practices with a greater proportion of complex patients reach a ‘tipping point’ where they have gained the experience and economies of scale necessary to effectively target care processes to this population’s unique needs,” they write. As to why smaller practices and practices with more high-need patients had lower quality-of-care scores, the authors posit that the quality measures may have been targeted toward adherence to best care practices for healthy patients or those with only one health condition rather than capture the distinct care needs of more complex patients.

The study’s results have important policy implications. Efforts to direct high-need patients to specialized sites of care that serve a high proportion of these patients have shown early promise and could be bolstered with support from policymakers and payers. In addition, there is a consistent trend toward consolidation of primary care to large practices, but these results and others affirm the value of smaller practices. Policymakers should find ways to support and preserve small primary care practices across the country.

The House GOP Leadership’s Health Care Bill Is ObamaCare-Lite — Or Worse

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https://www.cato.org/blog/house-gop-leaderships-health-care-bill-obamacare-lite-or-worse

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During the presidential campaign, Donald Trump promised legislation that “fully repeals ObamaCare.” Monday night, the Republican leadership of the House of Representatives released legislation it claims would repeal and replace ObamaCare. Tuesday afternoon, Vice President Mike Pence will travel to Capitol Hill to pressure members of Congress to support the bill. On Wednesday, two House Committees will begin to mark-up the legislation. House and Senate leaders are hoping for quick consideration and a signing ceremony, maybe by May, so they can move on to other things, like tax reform and confirming Supreme Court nominee Judge Neil Gorsuch.

Everyone needs to take a step back. This bill is a train wreck waiting to happen.

The House leadership bill isn’t even a repeal bill. Not by a long shot. It would repeal far less of ObamaCare than the bill Republicans sent to President Obama one year ago. The ObamaCare regulations it retains are already causing insurance markets to collapse. It would allow that collapse to continue, and even accelerate the collapse. Republicans would then own whatever damage ObamaCare causes, such as when the law leaves seriously ill patients with no coverage at all. Congress would have to revisit ObamaCare again and again to address problems they failed to fix the first time around. ObamaCare would consume the rest of Congress’ and President Trump’s agenda. Delaying or dooming other priorities like tax reform, infrastructure spending, and Gorsuch. The fallout could dog Republicans all the way into 2018 and 2020, when it could lead to a Democratic wave election like the one we saw in 2008. Only then, Democrats won’t have ObamaCare on their mind but single-payer.

First, let’s look at how the main features of this bill fall short of repeal.