CBO Projects 13 Million More Nonelderly Uninsured by 2025 if the Individual Mandate is Repealed
Tag Archives: Health Policy
Podcast: ‘What The Health?’ Tax Bill Or Health Bill?
Republican efforts to alter the health law, left for dead in September, came roaring back to life this week as the Senate Finance Committee added a repeal of the “individual mandate” fines for not maintaining health insurance to their tax bill.
In this episode of “What the Health?” Julie Rovner of Kaiser Health News, Sarah Kliff of Vox.com, Joanne Kenen of Politico and Alice Ollstein of Talking Points Memo discuss the other health implications of the tax bill, as well as the current state of the Affordable Care Act.
Among the takeaways from this week’s podcast:
- The tax bill debate proves that Republicans’ zeal to repeal the Affordable Care Act is never dead. The new congressional efforts to kill the penalties for the health law’s individual mandate could seriously wound the ACA since the mandate helps drive healthy people to buy insurance.
- One of the most overlooked consequences of the tax debate is that it could trigger a substantial cut in federal spending on Medicare.
- A $25,000 MRI? That’s what one family paid to go out of their plan’s network to get the hospital they wanted for the procedure for their 3-year-old. Such choices are again drawing complaints about narrow networks of doctors and hospitals available in some health plans.
- Although they don’t likely say it in front of cameras, many Democrats are relieved at President Donald Trump’s choice to head the Department of Health and Human Services, former HHS official Alex Azar.
- Federal officials have given 10 states and four territories extra money to keep their Children’s Health Insurance Programs running but it’s not clear what couch they found the money hidden in.
- And in remembrance of Uwe Reinhardt, a reminder that he always stressed that a health care debate was about more than money — it was about real people.
Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.
Uwe Reinhardt, 80, Dies; a Listened-to Voice on Health Care Policy
Uwe Reinhardt, an economist whose keen, caustic and unconventional insights cast him as what colleagues called a national conscience in policy debates about health care, died on Monday in Princeton, N.J. He was 80.
The cause was sepsis, his wife, Tsung-Mei Cheng, said. He had taught in the economics department at the Woodrow Wilson School of Public and International Affairs at Princeton University since 1968.
Professor Reinhardt helped shape health care deliberations for decades as a prolific contributor to numerous publications, an adviser to White House and congressional policymakers, a member of federal and professional commissions and a consultant and board member, paid and unpaid, for private industry.
“His work was instrumental in advocating some of the reforms embodied in the Affordable Care Act, such as having Medicare pay for performance rather than entirely on a fee-for-service basis,” Professor Janet Currie, the chairwoman of the Princeton economics department, wrote in an email.
Another colleague, Stuart H. Altman, a professor at Brandeis University, wrote, “No one was close to him in terms of impact on how we should think about how a decent health care system should operate.”
In 2015, the Republic of China awarded Professor Reinhardt its Presidential Prize for having devised Taiwan’s single-payer National Health Insurance program. The system now provides virtually the entire population with common benefits and costs 6.6 percent of the nation’s gross domestic product (about one-third the share that the United States spends).
Just last month, he received the 2017 Bipartisan Health Policy Leadership Award from the Alliance for Health Policy, a nonpartisan research and educational group in Washington.
Professor Reinhardt argued that what drove up the singularly high cost of health care in the United States was not the country’s aging population or a surplus of physicians or even Americans’ self-indulgent visits to doctors and hospitals.
“I’m just an immigrant, so maybe I am missing something about the curious American health care system,” he would often say, recalling his childhood in Germany and flight to Canada and apologizing that English was only his second language.
Then he would succinctly answer the cost question by quoting the title of an article he wrote with several colleagues in 2003 for the journal Health Affairs: “It’s the Prices, Stupid.”
What propelled those prices most, he said, was a chaotic market that operates “behind a veil of secrecy.”
That market, he said, is one in which employers “become the sloppiest purchasers of health care anywhere in the world,” as he wrote in the Economix blog in The New York Times in 2013.
It is also defined by the high cost of prescription drugs, he said, and the astronomical amounts that hospitals spend in dealing with a maze of insurers and health maintenance organizations.
“Our hospitals spend twice as much on administration as any hospital anywhere in the world because of all of this complexity,” he told Managed Care magazine in 2013.
If the nation cut the cost of health care administration in half, he said, the savings would be enough to insure everyone.
Professor Reinhardt’s prescription for a more sensible system included imposing penalties on the uninsured so that people would not postpone buying policies until they got sick. That idea, the so-called individual mandate, requiring most people to purchase health insurance, became an integral component of the Affordable Care Act, otherwise known as Obamacare. Republicans in Congress are now seeking to repeal that provision as part of a tax overhaul.
Professor Reinhardt also advocated providing government subsidies so that low-income families could afford mandated insurance, another feature of Obamacare.
His ideal model was the German system in which insurers negotiate with health care providers to set common binding prices in a specific region.
“I believe it is still the best model there is, because it blends a private health care delivery system with universal coverage and social solidarity,” he told The Times in 2009. “It’s inexpensive and equitable. Coverage is portable. You’re never uninsured in Germany. No family goes broke over health care bills.”
Always opinionated, Professor Reinhardt was also unsparing in inflicting his mordant wit on any self-satisfied expert he considered hypocritical or illogical.
“He was a knife twister of the first class,” the health economist Austin Frakt wrote on the blog The Incidental Economist, of which he is an editor in chief. “Should you hold dearly an idea he targeted for systematic dismantling, you would squirm.”
Professor Reinhardt excoriated college students who blamed loneliness for their binge drinking, describing them as “among the most pampered and highly privileged human beings on the planet.” He suggested that before applying for college young people “be required to spend one to two years in a tough job in the real world.”
And when critics complained that doctors were overpaid, he countered that their collective take-home pay amounted to only 10 percent of national health spending. Slicing it by 20 percent, he wrote, “would reduce total national health spending by only 2 percent, in return for a wholly demoralized medical profession to which we so often look to save our lives.
“It strikes me as a poor strategy,” he added.
With near unanimity, colleagues and admirers praised Professor Reinhardt for transforming raw data into moral imperatives.
Senator Bernie Sanders, the Vermont independent who advocates a “Medicare for all” national health care system, wrote in an email, “Uwe Reinhardt was one of the leaders in the effort to make health care a right, not a privilege.”
And Professor Elliott S. Fisher of Dartmouth called Professor Reinhardt “in so many ways the conscience of the U.S. health care system.”
Uwe (pronounced OO-vuh) Ernst Reinhardt was born on Sept. 24, 1937, in the city of Osnabrück in northwest Germany. His father, Wilhelm, was a chemical engineer. His mother, the former Edeltraut Kehne, was a photographer and painter.
He was raised near the Belgian border and the Hürtgen forest, where American and German soldiers engaged in hand-to-hand combat for four months in 1944.
“I could not help but become witness daily to the horrors of war,” Professor Reinhardt wrote in 2003 in a Times Op-Ed article, praising a Marine chaplain for urging soldiers to pray for their enemies ad well as themselves. “Millions of Europeans of my generation, whom many Americans now disparage so contemptuously as pacifists, had a similar experience.”
His exposure to the war so dismayed him that in the mid-1950s, at 18, rather than be drafted into the army and have to salute a German officer in the wake of “the unimaginable atrocities committed by Nazi Germany” years earlier, his wife said, he left the country, setting off for Canada and leaving his parents and four siblings behind.
He landed in Montreal with $90 in his pocket and no Canadian connections. Having had some apprentice training in shipping in Germany, he found work at a shipping company and worked nights parking cars in a parking lot. He always ate oatmeal for breakfast because it was cheap, his wife said, and to make extra money he routinely volunteered to work overtime for co-workers who had families.
After three years, he had saved enough money to enroll, hundreds of miles away, at the University of Saskatchewan in Saskatoon, the cheapest university he knew of, Ms. Cheng said. (Selling his used Chevrolet and beloved guitar helped defray the costs.)
He graduated with a bachelor of commerce degree and went on to Yale, where he received his doctorate. His thesis was titled “An Economic Analysis of Physicians’ Practices.”
In addition to Ms. Cheng, a health policy research analyst at Princeton who is known as May, he is survived by their children, Dirk, Kara and Mark Reinhardt; his sisters, Heide Cermin and Imeltraut Arndt; his brother, Jurgen; and two grandchildren.
Professor Reinhardt joined the Princeton faculty in 1968 as an assistant professor. At his death, he was the James Madison professor of political economy and professor of economics and public affairs at the Woodrow Wilson School.
“He was so inspired a teacher,” said Henry J. Aaron, a senior fellow at the Brookings Institution, the research organization in Washington, “that he could make accounting the most popular course at Princeton.” Among his students was Bill Frist, a surgeon and a former Republican Senate majority leader from Tennessee.
In 2015, Professor Reinhardt humbly — and facetiously — announced that after reflecting on the global economic crisis that had occurred several years earlier, he was calling it quits.
“After the near-collapse of the world’s financial system has shown that we economists really do not know how the world works, I am much too embarrassed to teach economics anymore,” he wrote.
In an interview not long before that, though, he belied any pretense of self-doubt when he was asked whether he was perplexed by the seemingly insolvable challenges of health care economics.
“Have you ever seen a perplexed economist?” Professor Reinhardt replied. “We have an answer for everything.”
House GOP tax plan eliminates tax-exempt bonds that finance hospitals
House Republicans recently unveiled a tax reform plan that calls for the elimination of private activity bond issuance, which is likely to significantly impact the entire nonprofit hospital sector.
Nonprofit hospitals issue tax-exempt bonds to finance capital projects. Under the tax plan, interest on newly issued private activity bonds would no longer be tax-exempt. This change would reduce financing options for lower-rated healthcare organizations by raising the cost of capital, according to S&P Global Ratings.
“From a credit perspective, higher borrowing rates can lead to budget imbalances, a challenge for all, and a hallmark of struggling credits,” said S&P. “We believe operating margin pressure is likely to be exacerbated by the House tax proposal, as it will pressure costs and hurt margins for a considerable portion of our rated healthcare providers.”
The American Hospital Association also noted how the tax plan could negatively impact healthcare providers. “For many communities, tax-exempt financing, such as private activity bonds, has been a key to maintaining vital hospital services,” said Tom Nickels, executive vice president of the AHA. “If hospital access to tax-exempt financing is limited or eliminated, hospitals’ ability to make investments in new technologies and renovations in the future will be challenged.”
Senate Finance Committee Chair Orrin Hatch, R-Utah, released a draft of Senate Republicans’ tax plan on Thursday. Unlike the House tax proposal, the Senate’s tax plan would not eliminate hospitals’ ability to access low-cost capital financing through tax-exempt bonds.
Insurers Can Bend Out-Of-Network Rules For Patients Who Need Specific Doctors
The Affordable Care Act has so far survived Republican attempts to replace it, but many people still face insurance concerns. Below, I answer three questions from readers.
Q: I have a rare disease, and there is literally only one specialist in my area with the expertise needed to treat me. I am self-employed and have to buy my own insurance. What do I do next year if there are zero insurance plans available that allow me to see my specialist? I cannot “break up” with my sub-specialty oncologist. I must be able to see the doctor that is literally saving my life and keeping me alive.
If the plan you pick covers out-of-network providers, you can continue to see your cancer specialist, although you’ll have to pay a higher percentage of the cost than if you were seeing someone in your plan’s network.
But many plans these days don’t provide any out-of-network coverage. This is certainly true of plans sold on the health insurance exchanges.
The situation you’re concerned about — that a specialist you consider crucial to your care isn’t in a plan’s provider network — isn’t uncommon, said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.
If this happens, you can contact your plan and make the case that this particular provider is the only one who has the expertise to meet your needs. (Unfortunately, you probably can’t get this coverage assurance before you sign up.) Then ask your plan to make an exception and treat the out-of-network specialist as if she were in network for cost-sharing purposes. So, if in your plan an in-network specialist visit requires a $250 copayment, for example, the plan would agree that’s what you’d be charged to see your out-of-network specialist.
Or not. It’s up to the plan officials, and they may argue that someone in network has the expertise you need. If you disagree, you can appeal that decision.
But it may not come to that, said Corlette.
“Plans are prepared for this — the good ones are, anyway,” she said. “My understanding is that it’s pretty routine to grant exceptions for narrow subspecialties.”
Q: My company has asked employees to pay the Cadillac tax rather than putting the burden on the company. They are also telling us not to worry because it will never happen, but want us to agree that if it does we will take on the cost. Can they do that?
Let’s step back for a minute. The so-called Cadillac tax is a 40 percent surcharge on the value of health plans above the thresholds of $10,200 for single coverage and $27,500 for family plans.
A few months ago when it looked as if the ACA was going to be replaced, many employers believed, as yours apparently still does, that the Cadillac tax would never become effective. Both the House and Senate bills delayed the tax until 2026, and a lot can happen between now and then. With the collapse of efforts to repeal the ACA, however, the tax is on the front burner once again, said J.D. Piro, who leads the health and law group at benefits consultant Aon Hewitt. It’s set to take effect in 2020.
Under the law, insurers or employers would be responsible for paying the tax, but experts say the costs would likely be passed through to enrollees (whether or not you explicitly agree to absorb them). So it may not matter how you respond to your employer.
Also, employers who don’t want to pay the surcharge might sidestep the issue by reducing the value of the plans they offer, said Piro. For example, they could increase employee deductibles and other cost-sharing, make coverage less generous or shrink the provider network.
“That’s simplest way to avoid the tax,” he said.
Q: I need to purchase affordable health insurance for my two daughters who are 19 and 17. Is Trump insurance available yet? I need something I can afford and everything is so expensive.
President Donald Trump never put forward a proposal to replace the ACA. Instead, he backed the House and Senate replacement versions, which ultimately failed. But those versions might not have addressed your concerns, and you could have several options through the ACA.
“Coverage wouldn’t necessarily have been cheaper,” said Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.
Under the Senate bill, for example, the nonpartisan Congressional Budget Office predicted that average 2018 premiums for single coverage would be 20 percent higher than this year’s. In 2020, however, premiums would be 30 percent lower than under current law, on average. But deductibles and other out-of-pocket costs would be higher for most people under the Senate bill, according to the CBO.
Premiums for young people would generally have declined. The bill would have allowed insurers to vary rates to a greater degree based on age, resulting in lower premiums for young people. In addition, premium tax credits generally would have increased for young people with incomes above 150 percent of the poverty level.
Your current coverage options under the ACA depend on your family situation. If you have coverage available to you through your employer, you can keep your daughters on your plan until they turn 26. For many parents, this is the most affordable, comprehensive option.
If that’s not a possibility, assuming the three of you live together and you claim them as dependents on your taxes, you may qualify for subsidized coverage on the health insurance marketplace next year. Your household income would need to be no more than 400 percent of the federal poverty level (about $82,000 for a family of three). You can apply for that coverage in the fall.
If you live in one of the 31 states plus the District of Columbia that have expanded Medicaid coverage to adults with incomes below 138 percent of the poverty level (about $28,000 for a family of three), you could qualify for that program. You don’t have to wait for open enrollment to sign up for Medicaid.
Rising Health Insurance Costs Frighten Some Early Retirees
Don and Debra Clark of Springfield, Mo., are glad they have health insurance. Don is 56 and Debra is 58. The Clarks say they know the risk of an unexpected illness or medical event is rising as they age and they must have coverage.
Don is retired and Debra works part time a couple of days a week. As a result, along with about 20 million other Americans, they buy health insurance in the individual market — the one significantly altered by the Affordable Care Act (ACA).
But the Clarks are not happy at all with what they pay for their coverage — $1,400 a month for a plan with a $4,500 deductible. Nor are they looking forward to the ACA’s fifth open enrollment period, which runs from Wednesday through Dec. 15 in most states. Many insurers are raising premiums by double digits, in part because of the Trump administration’s decision to stop payments to insurers to cover the discounts they are required to give to some low-income customers to cover out-of-pocket costs.
“This has become a nightmare,” said Don Clark. “We are now spending about 30 percent of our income on health insurance and health care. We did not plan for that.”
Karen Steininger, 62, of Altoona, Iowa, said her ACA coverage not only gave her peace of mind but also helped her and her husband, who is now on Medicare, stay in business the past few years. But they too are concerned about rising costs and the effect of the president’s actions.
The Steiningers are self-employed owners of a pottery studio. Their income varies year to year. They now pay $245 a month for Karen’s subsidized coverage, which, like the Clarks’, has a $4,500 deductible. Without the government subsidy, the premium would be about $700 a month.
“What if we make more money and get less of a subsidy or just if the premiums increase a lot?” Karen Steininger asked. “That would be a burden. We’ll have to cut back on something or switch to cheaper coverage.”
The experiences of the Clarks and the Steiningers point to an emerging shortfall in the ACA’s promise of easier access to affordable health insurance for early retirees and the self-employed. Rising premiums and deductibles, recent actions by the Trump administration, and unceasing political fights over the law threaten those benefits for millions of older Americans.
“These folks are rightly the most worried and confused right now,” said Kevin Lucia, a health insurance specialist and research professor at Georgetown University’s Health Policy Institute in Washington, D.C. “Decisions about which health plan is best for them is more complicated for 2018, and many people feel more uncertain about the future of the law itself.”
At highest risk are couples like the Clarks who get no government subsidy (which comes in the form of an advanced tax credit) when they buy insurance. That subsidy is available to people earning up to 400 percent of the federal poverty level, or just under $65,000 for a couple. Their income is just above the amount that would have qualified them for a subsidy in 2017.
Premiums vary widely by state. Generally, a couple in their late 50s or early 60s with an annual income of $65,000 would pay from $1,200 to $3,000 a month for health insurance.
Premiums rose an average 22 percent nationwide in 2017 and are forecast to rise between 20 and 30 percent overall for 2018.
In an analysis released this week based on insurers’ rate submissions for 2018, the Kaiser Family Foundation found that individuals and families that don’t qualify for a subsidy but are choosing plans on the federal marketplace face premiums 17 to 35 percent higher next year, depending on the type of plan they choose. (Kaiser Health News is an editorially independent program of the foundation.)
A similar increase would be expected for people who also buy on the marketplaces run by some states or buy directly from a broker or insurance company.
The substantial premium increases two years in a row could lead fewer people to buy coverage.
“I’m really worried about this,” said Peter Lee, CEO of Covered California, the exchange entity in that state. “We could see a lot fewer people who don’t get subsidies enroll.” He said that California has taken steps to mitigate the impact for people who don’t get subsidies but that “consumers are very confused about what is happening and could just opt not to buy.”
There are already signs of that, according to an analysis for this article by the Commonwealth Fund. The percentage of 50- to 64-year-olds who were uninsured ticked up from 8 percent in 2015 to 10 percent in the first half of 2017. In 2013, the figure was 14 percent.
Indeed, the ACA has been a boon to people in this age group whether they get a subsidy or not. It barred insurers from excluding people with preexisting conditions — which occur more commonly in older people. And the law restricted insurers from charging 55- to 64-year-olds more than three times that of younger people, instead of five times more, as was common.
The law also provided much better access to health insurance for early retirees and the self-employed — reducing so-called “job lock” and offering coverage amid a precipitous decline in employer-sponsored retiree coverage that began in the late 1990s.
Only 1 in 4 companies with 200 or more workers offered any kind of coverage to early (pre-65) retirees in 2017 compared with 66 percent of firms in 1988, reported the Kaiser Family Foundation. And the vast majority of small firms never did offer such coverage.
Overall, before the ACA became law, 1 in 4 55- to 64-year-olds buying coverage on their own either couldn’t get it at all because of a preexisting condition or couldn’t afford it, according to AARP.
“The aging but pre-Medicare population was our major reason to support the ACA then and it still is now,” said David Certner, director of legislative policy at AARP. “This group benefited enormously from the law, and we think society and the economy benefited, too.”
Just how many 55- to 64-years-olds have been liberated from job lock by the ACA has yet to be fully assessed. But recent data show that 18 percent of people ages 55 to 64 who were still working in 2015 got coverage through the ACA marketplaces, up from 11.6 percent in 2013, according to an analysis for this article by the Employee Benefit Research Institute.
Also, a report released in January 2017 by the outgoing Obama administration found that 1 in 5 ACA marketplace enrollees of any age was a small-business owner or self-employed person.
A bipartisan effort is underway in Congress to provide dedicated funds to woo enrollees to healthcare.gov and help state agencies explain changes in the law for 2018 triggered by the Trump administration. But the fate of the proposed legislation is uncertain.
The Clarks said they’ll look carefully at options to keep their premiums affordable in 2018.
Said Don Clark, “If we get to a point where we have a $10,000 deductible and pay 40 percent or more of our income for health insurance, I’m not sure what we’ll do. We can’t afford that.”
The Senate Tax Bill Threatens Access to Health Care
This week, Senate Republicans announced that they plan to pay for their tax cuts for large corporations and millionaires not only by imposing tax increases on the middle-class but also by undermining people’s access to health care. Specifically, they have proposed eliminating the Affordable Care Act’s (ACA) individual mandate, which helps keep premium costs affordable by ensuring that both healthy and sick people have health insurance.
Repealing the mandate would drive up premiums by 10 percent in 2019 and lead to 13 million fewer people having health insurance by 2025. A Congressional Budget Office (CBO) report also revealed that the similar House version of the tax bill would result in $25 billion in cuts to Medicare in fiscal year 2018 and hundreds of billions of dollars of cuts to the program overall. Taken as a whole, the tax bill would not only increase taxes for millions of middle-class families but would also have disastrous effects on people’s health care.
A typical middle-class family buying individual market insurance would see premiums increase nearly $2,000
The Senate tax bill would substantially increase premiums in the individual market for health insurance, and middle-class families would bear the brunt of the price hike. The bill would eliminate the individual mandate—the requirement that people maintain health coverage or pay a penalty. Without the mandate, people would only purchase coverage when they needed it, resulting in adverse selection that would drive up premiums. The CBO estimates that premiums would increase about 10 percent as a result of this adverse selection.
The Center for American Progress estimates that this premium increase translates to an extra $1,990 for benchmark plan coverage for an unsubsidized middle-class family of four. Families with incomes above 400 percent of the federal poverty level (FPL)—more than $98,400 for a family of four in the lower 48 states—are not eligible for premium tax creditsto reduce the cost of marketplace coverage. The 10 percent increase would be an even greater financial burden for families in states with higher premium levels, increasing costs by $2,900 in Alaska, $2,350 in Maine, and $2,060 in Arizona.
13 million more people would be uninsured by 2025
The CBO estimates that repeal of the mandate would result in 4 million fewer people having coverage in 2019 and 13 million fewer with coverage by 2025. As a result, about 16 percent of the nonelderly population would not have health insurance by 2025, compared with about 10 percent currently.
The individual mandate is necessary because of the consumer protections put in place by the ACA. The ACA banned discrimination by insurance companies against people with pre-existing conditions, required that people be charged the same amount regardless of health status, and eliminated annual and lifetime limits on coverage. But these protections would also make it easy for people to game the system by only buying health insurance once they needed it. To address this concern, the ACA coupled these reforms with an individual shared responsibility provision, also known as the individual mandate, which requires that everyone maintain health insurance coverage so that the overall insurance risk pool is healthy and premium rates are kept in check.
Repeal of the mandate would have two effects on the individual market. First, people who expect to be healthy would avoid purchasing coverage until they need it. As a result, the remaining enrollees in the individual market would be sicker on average, and insurance companies would need to raise rates to cover the increased average cost. Second, the resulting higher premiums would discourage additional people from purchasing coverage through the individual market. Those who become uninsured would no longer have financial protection against catastrophic medical costs, and hospitals and other providers would be forced to provide more uncompensated care.
Medicare would be cut by $25 billion in 2018
In addition to its frontal assault on health care for the middle class, the Senate bill would also secretly cut Medicare. Because the tax cuts for the wealthy in the proposed bill are not fully paid for, they would increase the deficit by more than $1.4 trillion over 10 years. But the little-known Statutory Pay-As-You-Go Act of 2010 requires that any deficit-increasing legislation be offset with cuts to other mandatory programs, including Medicare. The CBO has estimated that the offsetting spending reductions for the similar House version of the tax bill would cut Medicare by about $25 billion in fiscal year 2018. Given that similar cuts would be required in subsequent years, the total cost imposed on the Medicare program would be hundreds of billions of dollars over the next decade. This would have a particularly harmful effect on rural hospitals with thin margins, which could be at risk of closure as a result.
Asking millions of middle-class families to pay more in taxes so that corporations and the wealthy few can pay less in bad enough. But to use those cuts to also undermine health care for middle-class families is unconscionable. Once again, the congressional majority seems to be doing everything in its power to make life harder for everyday Americans, just so it can provide giveaways to the wealthy few.
Methodology
Our estimated reduction in coverage in 2025 due to repeal of the mandate is based on national projections by the CBO. The CBO estimates that 13 million fewer people will have coverage in 2025, including 5 million fewer people with Medicaid, 5 million fewer people with individual market coverage, and 3 million fewer people with employer-sponsored insurance. We used data from the 2016 American Community Survey Public Use Microdata Sample (ACS PUMS), available from the IPUMS-USA to tabulate the number of nonelderly people in each state by primary coverage type using a coverage hierarchy. We then assumed that each state’s reduction in coverage was proportional to its share of the national total for each of those three coverage types. For more on the IPUMS-USA data set, see Steven Ruggles and others, “Integrated Public Use Microdata Series: Version 5.0” (Minneapolis: Minnesota Population Center, 2010).
We made two adjustments to our ACS PUMS tabulations to account for potential effects of Medicaid expansion in Maine, given voters’ recent approval of expansion. We increased the number of Medicaid enrollees in Maine by 51,000 based on projections by the Urban Institute. We also decreased the number of people with coverage through Maine’s individual market by 20 percent to account for the fact that some enrollees will lose access to marketplace premium subsidies when they become Medicaid eligible under expansion. Enrollment data from the Centers for Medicare and Medicaid Services (CMS) show that 27 percent of 2017 marketplace plan selections were by people with family incomes between 100 and 150 percent of the federal poverty level.
Our estimates of 2019 premium increases are based on the CBO projection that mandate repeal will increase individual market premiums 10 percent. We used the HealthCare.govplan information to calculate the 2018 average marketplace benchmark—second-lowest cost silver—plan in each state, weighting by the geographic distribution of current marketplace enrollment. We then inflated that premium to 2019 levels according to National Health Expenditure projections for per-enrollee cost growth. To calculate the 2019 average benchmark premium specific to a typical family of four, we borrowed the example family composition that the U.S. Department of Health and Human Services uses in its reports: 40-year-old and 38-year-old parents and two children. We estimated that the family would pay an additional 10 percent of that 2019 benchmark due to mandate repeal. Premium data were not available for all states.
Finally, our estimates of state-level cuts to Medicare in fiscal year 2018 divided the $25 billion total Medicare funding reduction projected by the CBO proportional to each state’s share of national Medicare spending as of 2014, the most recent year for which CMS National Health Expenditure data is available, using data published by the Kaiser Family Foundation.
Health Care for Millions at Risk as Tax Writers Look for Revenue
The Republican tax plans are suddenly looking a lot more like health-care bills, with provisions that may affect coverage and increase medical expenses for millions of families.
The House version of the tax bill, which President Donald Trump endorsed on Tuesday, would end a deduction that allows families of disabled children and elderly people to write off large medical expenses. The Senate plan would repeal the Obamacare requirement that most Americans carry insurance, a move that insurers promise would raise premiums in the nationwide individual insurance market.
The provisions would help offset the cost of large tax cuts for corporations and individuals. But the move has sparked a new wave of opposition from the health-care industry and others who are concerned about its impact — the same political headwinds that tanked Republican efforts to repeal the Affordable Care Act earlier this year.
Either proposal, if signed into law, “could be devastating for some families with disabilities,” said Kim Musheno, vice president of public policy at the Autism Society, a Bethesda, Maryland, organization that advocates for people with autism. “Families depend on that deduction. And if they deal with the individual mandate, that’s going to cut 13 million people from their health care,” she said, citing a Congressional Budget Office estimate.
Republicans and some conservative groups, though, argue that removing the penalty for uninsured individuals would represent a tax cut for many low-income people who pay it now. Americans for Tax Reform, the group led by anti-tax crusader Grover Norquist, said that Internal Revenue Service data from tax year 2015 show that 79 percent of households that paid the penalty earned less than $50,000 a year.
Most Americans already think the tax legislation is designed to benefit the rich and oppose the bill by a two-to-one margin, according to a Quinnipiac University poll released on Wednesday. The survey was conducted between Nov. 7 and Nov. 13 — before the repeal of the Obamacare mandate was introduced — and has a margin of error of 3 percentage points. Some of the details in both tax plans have changed since the survey, and the Senate tax-writing committee is still working on its draft.
Republican Concerns
Few Republicans have spoken out about the House bill’s repeal of the medical-expense break. The bill faces a vote on the House floor Thursday. But some criticism has begun to surface as advocacy groups including the AARP and the American Cancer Society have highlighted the harm the House bill could have on families battling diseases and on the elderly. People with tens of thousands of dollars in annual medical expenses often rely on the tax deduction to make ends meet.
Representative Walter Jones, a North Carolina Republican, said Wednesday he’ll vote against the House bill in part because it eliminates the deduction for out-of-pocket medical expenses.
“There are a lot of seniors in my district and this is life and death for them,” he said.
The deduction is allowed under current law if medical expenses exceed 10 percent of a taxpayer’s adjusted gross income. Almost 9 million taxpayers deducted about $87 billion in medical expenses for the 2015 tax year, according to the IRS.
Representative Greg Walden, an Oregon Republican who chairs the Energy and Commerce Committee, said some of his constituents who live in expensive elder-care facilities could be harmed if the deduction is scrapped.
“I think it’s one we have to continue to massage a bit,” he said. “There’s a lot of things out there and there’s maybe going to be an opportunity to adjust some of them.”
He declined to elaborate.
Obamacare Repeal
On the other side of the Capitol, Senate Republican leaders’ sudden decision to add a partial Obamacare repeal to their bill has energized Democratic opposition.
“You don’t fix the health insurance system by throwing it into a tax bill and causing premiums to go up 10 percent,” Senator Sherrod Brown, an Ohio Democrat, told reporters Wednesday.
Were the ACA’s insurance mandate repealed absent a new policy to compel the purchase of coverage, the CBO projects that premiums would rise 10 percent for people who buy insurance on their own and more than 13 million Americans would lose or drop their coverage.
But a reduction in the number of people with insurance also translates to less taxpayer money spent to provide subsidies for premiums under the ACA. Ending the requirement as of 2019 would save the government an estimated $318 billion, helping to offset the cost of lowering the corporate tax rate.
In addition, the Senate’s tax plan could trigger sharp cuts to Medicare and other programs in order to meet budget deficit rules, according to CBO.
Easy Ads
The move to target Obamacare comes after Republicans lost elections in Virginia and other states earlier this month. Health care was a significant factor in those races and Republicans will face punishing campaign ads if they try to chip away at Obamacare or end the medical-expense deduction while cutting taxes, said political analyst David Axelrod, a former top adviser to President Barack Obama.
“The thing that makes it more of a potent issue is that it’s all being done to facilitate what essentially is a massive corporate tax cut and an individual tax cut that’s skewed to wealthy Americans,” he said in an interview. “You don’t have to work very hard to make those ads.”
The White House argues that the ACA’s insurance mandate isn’t popular and disproportionately affects low- and middle-income Americans who are forced to buy insurance that may be more expensive than they can afford.
“The President’s priorities for tax reform have been clear from the beginning: make our businesses globally competitive, and deliver tax cuts to the middle class,” White House spokesman Raj Shah said in a statement. “He is glad to see the Senate is considering including the repeal of the onerous mandates of Obamacare in its tax reform legislation and hopes that those savings will be used to further reduce the burden it has placed on middle-class families.”
‘Cut Top Rate’
Trump, though, has said proceeds from repealing the insurance mandate should be used to cut taxes even further for wealthy people.
“How about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further?” Trump said Monday in a tweet. “Cut top rate to 35% w/all of the rest going to middle income cuts?”
Like Republicans’ failed attempts to repeal the ACA, the tax plan is amassing a growing list of opponents from the world of medicine.
Insurers, hospital groups and disability advocates have spoken out forcefully against the health-care proposals in the bill. Hospitals and insurance groups wrote a letter to Congressional leaders on Tuesday warning of dire health-care outcomes if the tax measure becomes law.
“Repealing the individual mandate without a workable alternative will reduce enrollment, further destabilizing an already fragile individual and small group health insurance market on which more than 10 million Americans rely,” said the letter, signed by six health-care groups, including the American Hospital Association and America’s Health Insurance Plans.
Use of Paid and Unpaid Personal Help by Medicare Beneficiaries Needing Long-Term Services and Supports
Abstract
- Issue: Older adults who reside in communities, as opposed to nursing homes or other residential institutions, are largely dependent on family and unpaid caregivers for assistance with daily activities, like preparing meals or laundry, and self-care tasks like bathing or dressing. For low-income older adults, assistance with such activities, also known as long-term services and supports (LTSS), can also come from Medicaid. These sources of support will be increasingly inadequate as the population ages.
- Goals: To examine the extent of paid and unpaid personal care assistance used by community-residing people who require LTSS; and to analyze how this differs by demographics and the economic status of Medicare beneficiaries.
- Methods: Descriptive analyses of the National Health and Aging Trends Study (NHATS), 2015.
- Findings and Conclusions: Medicare beneficiaries needing LTSS rely predominantly on unpaid care. Hours of unpaid care are not substantially lower when paid care is also received. Findings suggest that public financing of LTSS would not replace but rather supplement the contribution of family and unpaid caregivers to support individuals living independently in the community.
Introduction
Despite the increasing number of adults with functional disabilities and cognitive impairments, financing for long-term services and supports (LTSS) has made little policy progress in the past few decades.1 One possible reason for the impasse is policymakers’ concern about the cost of undertaking such an initiative. Currently, financing for LTSS is split between the federal and state governments through the Medicaid program, which accounts for two-thirds, and private sources, which pay the other one-third. Of the $211 billion spent on LTSS in 2011, $45.5 billion (22%) was paid out of pocket.2 For low-income Medicare beneficiaries who meet income and asset eligibility, as well as the institutional level of need requirement, Medicaid covers some LTSS, although availability and accessibility vary greatly across states.3 As estimated by the Congressional Budget Office (CBO), family caregivers contribute the most care, at an estimated economic value of $234 billion in 2011.4 Many policymakers fear that providing public financial support for LTSS will replace the care that is currently being provided for free by family caregivers. This issue brief uses data from the National Health and Aging Trends Study (NHATS) from 2015 to examine use of paid and unpaid care among community-residing people who need LTSS.
Availability of Help for Older Medicare Beneficiaries Who Need Long-Term Services and Supports
In this first part of our analysis, we focused on the people with probable dementia (see How This Study Was Conducted) or those who have difficulty with activities of daily living (ADLs) or instrumental activities of daily living (IADLs). ADLs are also known as “self-care activities” and include eating, bathing, dressing, transferring in and out of bed, toileting, and walking across the room. IADLs are higher-level activities that allow an individual to continue living independently, such as medication management, meal preparation, grocery shopping, finances, and laundry.
Two of five older adults in this population report not receiving any help. Older men were more likely to report not receiving any help than were older women (49% vs. 37%) (Exhibit 1). Rates of not receiving help were particularly high among blacks and other minority groups (41% and 52% respectively), as well as those who lived alone (50%). Even among those who lived with their spouse, two-fifths of respondents reported not receiving any help.
Conclusion
Long-term services and supports are not covered under Medicare despite many beneficiaries reporting needing help with self-care activities.8 The resistance to a public financing option for LTSS is based largely on the costs of such a program and the concern that it would substitute for care that is already being provided by family caregivers.9 This issue brief confirms that older adults who need LTSS rely heavily on family caregivers. However, this method of providing care is unsustainable, given the increasing numbers of older adults who will require LTSS as well as the declining availability of family caregivers.10 In addition, study results find that significant numbers of community-residing older adults with a need for LTSS do not receive help.
This analysis shows that the amount of unpaid care provided varies little between those who receive both paid and unpaid support and those who receive unpaid support only, suggesting that paid care does not replace unpaid care, but supplements it. Addressing and supporting the need for LTSS can result in savings to individuals and the government through delayed nursing home and Medicaid entry.11 A public LTSS financing solution, like Medicare Help at Home,12 that supports individuals and family caregivers would improve the supply of long-term services and supports and allow for their quality to be monitored to ensure older adults can live safely in the community.
Uwe Reinhardt: Giant, mensch, knife twister
The renowned Princeton University health economist Uwe Reinhardt died today. The email from his Dean at the Woodrow Wilson school said he passed peacefully and surrounded by family.
Reactions on Twitter resonate with my own. They reflect Uwe’s contributions to and presence in health care policy and education — “insightful, “a treasure,” focused on the “moral underpinnings of policy,” “one of the nicest and funniest people in the field of health econ,” “a godfather of health policy and economics,” “a unique and disarmingly powerful voice in health policy,” a “world-class mensch,” “a gifted teacher and inspiring leader,” one of the “most acerbic speakers in Health Care over the last 20+ years. Never afraid to speak truth to power,” “engaging and understandable,” “a giant.”
I once called him “the narrator of U.S. health care policy.” Any journalist who could get hold of him for a health care story was sure to get pure gold. His wit and precision were evident in his spoken and written word. His command of English was tremendous. His ability to explain to lay audiences, legendary. If you’re unfamiliar, go read anything he wrote for The New York Times Economix blog, where he posted regularly for years. He can teach. You will learn.
Born and raised in Germany, he did it all in a second language. Of this, he reminded audiences regularly. The title of one of his presentations was, “Still Confused, After 40 Years in America!” Don’t believe it. Uwe was always the least confused person in the room.
He opened many speeches with, “I’m just an immigrant so maybe I am missing something about the curious American health care system” (or similar). I heard it many times. It never got old, particularly because I knew what was coming next. Just after such an opening, he would reveal some peculiarity of the health system I had never noticed in the same way. And then he proceeded to show how it was illogical, in violation of basic concepts of economics, immoral, or hypocritical.
He was a knife twister of the first class. Should you hold dearly an idea he targeted for systematic dismantling, you would squirm. If only I could write half as well or think one-third as clearly.
He touched so many lives and careers, including my own.
My first engagement with Uwe was in 2009, over one of his Economix posts. In the comments to that post, I asked him for an economics argument in favor of a public option. He was kind enough to respond at length directly to my inquiry in a follow-up Economix post. I was thrilled, even as I took a beating. I documented the encounter on this blog.
Perhaps due to my repeated blog-based engagement with him — like a fly that just won’t go away — Uwe took some interest in what I was doing on TIE. He noticed my many posts on hospital cost shifting and suggested that an updated literature review should be published. I counter-offered that we do it together, and he accepted.
I knew exactly what this meant. I was to write the first draft and he would serve as senior author and tell me how much more work it needed. Here’s where Uwe surprised me and earned my deepest respect. His response to my first draft was that it was so good he did not think it right that his name appear on it. Instead, I should publish it solo, with his support. This is good mentorship. It was my first solo-authored paper and is my most cited publication.
I met Uwe in person only once, in Princeton in 2010. I was there to visit my parents and give a talk at the Woodrow Wilson School. Learning I’d be in town, he invited me to lunch. I thought it was just going to be the two of us, but he insisted I bring my parents too — his treat. (In advance of the lunch, with some help from YouTube, I practiced how to pronounce his name. It’s “oo-va” not “you-ee.”)
Though I never saw him again in person, for years I encountered him over email. Usually our threads began with me asking a question or him sharing one of his lengthy emails to some other scholar or policymaker. (Oh, what a shame it is he didn’t post those emails for all to see. They were gems.) But frequently he would email out of the blue to inquire about my family. He took an interest in hearing what my children were up to and used that as an opportunity to remind me how different parenting or childhood was in his day.
“Child rearing is so different nowadays,” he wrote me once. “When we were little, we left the house after lunch and came home for supper, roaming the country side in the meantime (and playing with live ammunition [left over from WW II]).” I have very few folders of saved emails, but this one and others of his I filed away, not to be deleted.
Frequently, in the email back-and-forth that ensued he would type out some amazing story of past hijinks. Here’s one:
Once, at a Duke University private sector conference, the entire brass of the AMA happened to be there. It was my turn at the podium and I could not resist the following stunt.
The late James Sammons, then head of the AMA, had given interview in which he said Congress had carved Medicare to death like a turkey. I showed a slide of that quote which happened to have his picture next to it. I then showed data according to which between 1980 and 1988 constant-dollar Medicare spending on physician services per beneficiary rose 83%. Apologizing for this low number on behalf of taxpayers (the growth of 83% real allegedly did not permit physicians to give the elderly adequate care), I asked the AMA people: “What increase would have been adequate in your view?” So I counted out numbers (on a slide) like an auctioneer – 100%, 120% , …– but never got any takers. After +160% I left a blank spot and said: “Evidently 160% would not do it, so you give me the number. Is it 300%?” Icy silence. I then had a slide quoting country-music singer Conway Twitty or whoever it was from his song: “I need more of you (moolah) – more, anything less would not do.”
I then I ended saying that Karen Davis and I, both then serving on the PPRC (now Medpac) would propose a budget for Medicare physician payment (the VPS), because the docs would not come to the table with a reasonable number.
For a while I literally was banned at the AMA; but later I ended up on the JAMA board.
With tales like this, I thought of him as the Richard Feynman of health policy — brilliant in his field but with an appetite for adventure and practical jokes. I encouraged him many times to write up stories like these in a book, interwoven with health policy analysis or history. Sadly, he never did. Though he took pride in his past escapades, perhaps he saw himself differently late in his career.
“When I was younger I was more brash,” Uwe wrote me. “Now I’ve mellowed.”
There are many giants in academia, and many in health care. But there are none I know like Uwe.
HENRY KOTULA 