Kamis, 28 September 2017

Congressional inaction threatens health care access

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Today's Managing Health Care Costs Number is 8.9 million

We've stepped back from the cliff as Mitch McConnell withdrew the ill-conceived Graham Cassidy bill,  which would have thrown tens of millions off of the insurance rolls and eliminated protections for all Americans.  But the Republicans continue to prevent serious efforts to fix some of the flaws of the Affordable Care Act (ACA) by saying that they intend to continue repeal efforts, presumably until the end of this Congressional session - and maybe longer still.

The executive branch continues its efforts to undermine the ACA.   The open enrollment season is earlier and shorter.  There will be no television ads, although they have been shown to be most effective at attracting younger and healthier enrollees.   The navigator program has been strangled.  And healthcare.gov will be down for "maintenance" all but one Sunday during waking hours through the short open enrollment period.

But the Congressional threat to health care access remains real.  Congress must act on a number of pieces of legislation to maintain existing funding for important access programs - and this has received little attention.
 

None of these bills are likely to lead to hundreds of protesters packing a hearing room - and it's tougher to protest damaging Congressional inactionthan proposed harmful Congressional action. Congress holds in its hands the ability to make health care dramatically worse for millions over the coming weeks.  The outlook for health care access in America is still unsettled or worse.

Jumat, 22 September 2017

Why are exchange premiums rising so fast?

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Today's Managing Health Care Costs Number is 17%
 

Kaiser Family Foundation and the Health Education Research Trust release a comprehensive review of employer sponsored health insurance each September - and that report dropped this week.   One of the takeaways is that employer sponsored health insurance is increasing in cost at a rate dramatically less than the Affordable Care Act exchanges.  This was picked up by Kaiser Health News (Phil Galewitz briefly quotes me) and by the New York Times.  The graphic above shows a 17% gap between the rate of premium increase for employer sponsored plans compared to individually-purchased exchange plans. 

Employers are making some important efforts to improve the cost effectiveness of care.  This includes narrow high performance networks, earlier intervention with metabolic syndrome, and centers of excellence.  But there are other big reasons why the costs of employer sponsored insurance, especially large self-insured companies, are more stable than the costs of the exchanges.

  1. Risk selection
    Employees tend to be healthier than those purchasing insurance on the exchanges.   They often leave their employment if they get exceptionally sick.  But more importantly, an employer offers coverage to all of her employees - and the 10% with the highest risk all take up the offer, but they are "diluted" by the fact that 70 or so percent of all employees accept insurance- so members in the top decile of risk only represent 1/7 of the total population.  Insurance takeup at smaller employers is lower - often closer to 30% - so those in the top decile of risk could represent 1/3 of the insured population.    It's even worse in the individual market - where the top decile of risk could represent as much as a majority of all insured.   Individual markets are especially susceptible to "death spirals," where the increasing cost of insurance chases away all potential low-risk subscribers.  

    The individual mandate should help keep younger and healthier people in the risk pool - but the Trump Administration has signaled that it is loath to enforce this. 

    The Trump Administration also cut 90% of the advertising budget and has     forced firing of most of the health care navigators across the states by not approving budgets.   Sick people are likely to find their way to the exchanges - while we are not making it easy for those without a large illness burden to do the same
     
  2. Government Interference
    The     Congressional Budget Office notes that rate increases of 15% on the ACA exchange markets could be related to the uncertainty about whether the Cost Sharing Reduction (CSR) payments will continue through the next calendar year.  The Trump Administration has offered mixed messages on this - and insurers have to build rates as if they will not get these payments at some point in the future.

    CMS has also     used ACA funds to produce material discouraging ACA enrollment - which can lead to market confusion and worsening risk profile of those who do enroll. 
     
We don't adequately appreciate that the Affordable Care Act has actually helped lower the cost of employer sponsored health insurance, too.    The ACA included decreases in the rate of increase of Medicare fee schedules.   Most commercial health plans pay fee for service for care delivered - and these fee schedules are almost all based on Medicare fee schedules.  As the Medicare fee schedule stays closer to flat - it's easier to avoid raising the commercial fee schedules as well. 

Selasa, 19 September 2017

Another Round of Zombie TrumpCare

Another Round of Zombie TrumpCare

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Today’s Managing Health Care Costs Number is 50


We might have thought that the Republicans would give up on repealing the Affordable Care Act (ACA)  - since they have come up with no alternative that would not lead to tens of millions more uninsured. Many of their proposals would paradoxically increase the cost of health care – whether through increasing premium subsidy cost by eliminating subsidies that decrease out of pocket costs for the poor, by removing minimum medical loss ratios, or removing prohibitions on physician ownership of ambulatory facilities.

But Graham-Cassidyis here – and it’s been blessed by “moderates” like Dean Heller.  John McCain and Lindsey Graham are best friends -- so he might just vote for this bill.   and Bill Cassidy is a physician from Louisiana,  a state that just over 400,000 new residents with its Medicaid expansion, and decreased the uninsured rate from 21.7% to 12.7%.   


The bill would make massive cuts in Medicaid –much like the other plans that the CBO projected would lead to loss of insurance by more than 20 million Americans.  It would change funding for both Medicaid and exchange subsidies to be a block grant to states – and redistribute the smaller pot of money from states that had expanded Medicaid to those which did not.   It would allow states to waive the essential benefits and the insurance reforms of the ACA –so goodbye to protections for the sick.  It would allow catastrophic health plans and mini-med health plans, prohibit any tax credits to any plan that covered abortions, and explicitly allow states to impose work requirements for Medicaid beneficiaries.   The individual mandate would lapse- making the insured pool sicker and therefore increasing health care premiums.

The R’s have less than two weeks to get a Congressional Budget Office (CBO) score and an approval from the Senate Parliamentarian to pass this egregious bill under the “reconciliation” procedure that requires only 50 votes (with VP Mike Pence as a tiebreaker).  But they can do it – and the pressure on that 50th Republican Senator to not be the one who prevented this travesty will be massive.

Some argue that state based programs are better than a federal program because states are able to be more nimble and innovative, and what’s good for Massachusetts is simply not what is good for Mississippi.    Here are four reasons why moving Medicaid to state block grants is a terrible public policy idea.

1.     Medicaid spending spikes during economic recessions – and the feds can run a deficit but the states cannot. So block granting this program (even if it were not woefully underfunded) doesn’t make economic sense.
2.     Nineteen states have not expanded Medicaid given the option with almost no state contribution– proving that their politicians are simply not committed to addressing the problem of uninsurance.   In Alabama a family of four cannot qualify for Medicaid unless their income is less than $4000 a year.   I’m not sure what makes us think that the state would be any more likely to use these new funds to bolster care for the poor.   
3.     We want more labor flexibility – especially in an environment with low unemployment.  Medicaid eligibility rules changing at the state line doesn’t help this.
4.     States are not especially adept at technology  - and many states (including well-meaning blue states) wasted scads of money trying to set up their exchanges only to throw their hands in the air and opt for joining the federal exchange.  Technology will be key to sending all possible dollars toward health care –and not toward administrative costs.

Many governors would like a big block grant.  Money is fungible –and they could use that block grant to supplant other funds the state previously spent on public health or health care and free up those dollars to go to other priorities.   We would likely see regressive tax cuts and giveaways to well-connected hospitals.  

I’m hopeful that Graham-Cassidy is here too late to upend the health insurance market.  But I’m not sure.  And I’m worried.

Rabu, 13 September 2017

Dueling visions of health care policy

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Today's Managing Health Care Costs Number is 30 million


Two competing health plans have been in the news today. Bernie Sanders has rolled out his "Medicare for All" plan, and the Lindsey Graham Bill Cassidy proposal has gained new "moderate" support and will be yet another Republican attempt to repeal Obamacare.

First, the Republican plan.   David Leonhart titled his post on this "New TrumpCare Deserves a Quick Death." He points out that although the sponsors claim that this bill would allow states freedom to innovate - it would rapidly decrease the available funds.  Even states committed to universal health care access might be hacking away at the number of those with subsidized insurance very quickly.  The Congressional Budget Office hasn't weighed in yet -but this bill is close enough to past TrumpCare bills that he estimates it would lead to 15 million additional uninsured in 2018, and 30 million losing insurance over the next decade.

It's hard to say that Graham-Cassidy absolutely won'tpass, and it would be a deeply disruptive bill that would make health care in the US much worse than it currently is.  The more time Congress spends on that bill, the less effort it will put into the market fixes we so desperately need for the Affordable Care Act.

With great fanfare, Bernie Sanders has introduced his Medicare for All plan today.   He has 17 cosponsors in the Senate (he had none when he introduced his last universal health care bill), and about 60% of House Democrats have endorsed a different universal health care bill.   The Sanders approach is aspirational - In an interview with Vox, he says:

I mean, this is a big issue, and we are introducing comprehensive legislation at a time when we have Donald Trump as president, who wanted to throw 32 million people off the health insurance. You know, Mitch McConnell, Paul Ryan, running the Senate and the House. We're not going to get this thing done with these guys in power.

Sarah Kliff has a summary of the details of the Sander's plan.   The initial plan was explicit about benefits and cost sharing (rich benefits for all, no substantial cost sharing for patients) and mum on costs; this afternoon he released additional details including a 7.5% employer payroll tax exempting small businesses (that's much less than most employers spend on health coverage), and a 4% income tax on individuals exempting low income people. For many, this would be a good deal.

And that's the problem.   If Sanders is able to provide insurance for all with close to no cost sharing (which means there will be more discretionary utilization), it's either going to cost more (much more, as California discovered) or providers will be paid much less.  The Sanders plan would create a national fee schedule (Medicare), but would increase payment to providers caring for Medicaid beneficiaries.   The decline in provider reimbursement would have to be huge to provide enough savings to make this work.

We need meaningful reform of the health care system - and we need lower unit prices.  There will be plenty of time to evaluate whether the Sanders plan is the best way to get to universal access - and I'm in favor of modest cost sharing as opposed to no cost sharing at all.  Today lets us all see the vision of each party -- one is satisfied to leave 30 million additional Americans uninsured; the other wants to insure everyone, but there is a danger that this is the "unicorn" plan in that it is rooted in fiction in that it might not be affordable.




Selasa, 12 September 2017

Developing a new drug does NOT cost $2.7 billion

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Today's Managing Health Care Costs Number is $648 million


Source  Dark bars are R&D costs, while lighter bars are revenue.   One of 9 medications has not yet paid back its R&D costs 

JAMA Internal Medicine published an analysis of the cost of bringing a new cancer drug to market yesterday - and the cost is only 1/3 of what researchers at Tufts had previously estimated.  The researchers used SEC filings for 10 small companies which had no drugs on the market in 2007 - and divided the reported research and development costs of each company by the number of approved drugs to estimate total R&D cost.   The median estimated R&D cost was $648 million.

The  payoffs for these companies was enormous.  Total estimated R&D costs were $7.2 billion ($9.2 billion with discounting), and revenue for these drugs was $67 billion - and that revenue will continue for years to come.

This methodology to estimate research and development costs is not perfect.   It could substantially underestimate the cost to the extent that the researchers are only including companies that succeeded.    Many potential oncology drugs fail - and thus the researchers would not have been poring through their company's SEC 401K filings.  Further, companies expend resources on activities other than research to bring a drug to market.  On the other hand, the analysis doesn’t account for tax benefits for R&D -  which lower the cost substantially.

Most of the cost of developing new drugs is not due to regulations - and is especially not due to "excess regulation".  Half of these new medications were approved through the FDA's expedited process.  These drugs are indicated for small populations, so the FDA accepted studies that were small for their approval.

The New York Times has an article on its current electronic front page asserting that the $475, 000 cost of Kymriah will be the norm for gene therapy.  The article notes that there are 34 gene therapy drugs in the pipeline, and 470 in initial clinical trials. 

This research on the cost of new drug development helps show that such high prices are not "necessary" to support research and development.  But the pharmaceutical companies will continue to charge these high prices as long as they are able to.  We clearly need ceiling prices, barriers to approval based on initial price, or system-wide price negotiations if we don't want to see pharmaceutical costs continue to drive lack of health care affordability.


Senin, 11 September 2017

CHIP program in jeopardy

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Today's Managing Health Care Costs Number is 8.9 million


This is the Congressional imperative that we just don't hear enough about.  Sure, there is the debt ceiling to keep us from defaulting on our national obligations, and the budget to keep us from a government shutdown.  And we definitely need to provide relief for the victims of Hurricanes Harvey and Irma. 

But we don't hear nearly enough about the Children's Health Insurance Program, CHIP, which provides coverage for 8.9 million kids.   Its authorization is up at the end of this month, and states will start running out of resources for CHIP by December.   CHIP was co-authored by Orrin Hatch and  has earned wide bipartisan support in its past reauthorizations - but Washington is strangely silent on this program.

CHIP was initially created after the failure of "HillaryCare" in the later Clinton administration; since its initiation, the rate of uninsurance among children has declined from 13.9% to 4.5%.

The Trump Budget proposed a 2 year extension of CHIP - but would have cut federal subsidies by 38% ($16.7 to 12 billion from FY 2017 to FY 2018).   Clearly - you can't provide coverage for the same number of kids with over 1/3 less funds.

It's a no-brainer to reauthorize CHIP, without the Trump-recommended draconian cuts.  When states had greater discretion to exclude children from the program (before the Affordable Care Act increased funding in 2010) often offered little access; in Arizona, the waiting list for CHIP was 5 years long!  Some "blue" states would be likely to move children to Medicaid (where federal expense would be the same or higher, assuming that the Republican Congress does not change Medicaid to block grants). "Red" states would either leave children uninsured or move them to exchange plans. These have high deductibles and aren't appropriate for families with few resources.

Children are inexpensive to insure (yes - less than $2000 per insured!)  Better access to medical care in childhood can lead to better health for a lifetime.   The CHIP population can benefit from the two medical interventions that actually save money (childhood immunization and birth control).  An no one can "blame" kids for their poverty. 

For those who want universal access to health care - we should guarantee it first for kids.  For those who want to be most cost-effective, we should purchase health care for kids using a Medicaid fee schedule. For those who want to have states control most policy decisions - CHIP is a program that allows substantial differences from state to state.

I'm hopeful that CHIP reauthorization will be attached to a must-pass bill that does not include a poison pill - one so that Republicans and Democrats can both endorse.   I'm worried the clock is running out.









Jumat, 08 September 2017

Trump efforts to keep heathy people out of the exchanges

Trump efforts to keep heathy people out of the exchanges

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Today's Managing Health Care Costs Number is  90%


We want those with serious illness to have health insurance as a matter of public policy and basic human decency. We don’t want US residents dying on the hospital steps, and we don't want people to have bake sales to pay for their chemotherapy.  We also don't want hospitals going bankrupt caring for those without insurance, and we don't want individuals losing their homes to liens placed by hospitals for emergency care delivered.

We also want healthy people, those least likely to "need" insurance, to have health insurance.  If only the sick have insurance, premiums would go through the roof.    If most healthy people opted out of health insurance, the insurance market would shrivel and die, as those with the least needs dropped out each successive cycle. That's the essence of the dreaded "death spiral."

The Trump administration announced this week that it would cut advertising for the Affordable Care Act exchange plans by 90% for this open enrollment period.   Having failed to repeal the law, they are seeking to fulfill their predictions of the ACA imploding by starving the exchanges of their lifeblood- the relatively healthy.

There's been good reporting in the New York Times and Vox about the other efforts the Trump Administration has made to decrease the likelihood that healthy people would sign up for insurance through exchanges this next cycle.

  • The New York Times reports that CMS removed "helpful links on its website on the day of Trumps inauguration, including summaries of benefits, emergency services, and doctor choice, making it more difficult for consumers to learn about the law."
  • CMS announced a 40% cut in navigators to do Obamacare outreach.   Sarah Kliff of Vox reports today that the navigator cut is worse still.  The navigator nonprofits have received no funds at all -and have been told that no grants will be retroactive so that staff must be laid off now. Perhaps they will still be available to be rehired for the November 1 open enrollment.  Perhaps not.
  • HHS is spending some of the marketing dollars not attracting healthy people into the ACA markets, but rather attacking the law.  The New York Times notes that CMS produced dozens of YouTube videos and infographics with strident anti-ACA messages.
  • The IRS announced it would accept tax returns with no notations in the query about health care coverage, telegraphing a lack of interest in collecting the individual mandate penalty, which is largely aimed at being sure to encourage healthy low-cost people to join or remain in the plan
  • The monthly threat to withhold Cost Sharing Reduction payments has led many health plans to price their premiums assuming the CSRs will go away - making health insurance less affordable - especially for those who get little or no government subsidy


It's no secret that the Trump Administration is filled with those who want to eliminate the Affordable Care Act.  They failed legislatively - and they have shifted their effort to strangulation of the ACA exchanges.   Efforts to deprive the exchange plans of the healthy members they need for financial viability could still make ACA plans unavailable for millions, and unaffordable due to adverse selection for millions more.  In some instances, their efforts could persuade more insurers to exit the market - which will lead to more "bare counties," lost subsidies, and millions more uninsured.  

These executive actions aren't subject to Congressional Budget Office study- so we won't see headlines about their impact.  But they will certainly lead to a higher percentage of Americans uninsured in 2018.