Today's Managing Health Care Costs Number is 150,000
Obamacare has had more than its share of detractors, but it also has real problems. Most of these are problems that could be addressed with straightforward legislation and thoughtful regulation -and now that the Trump Administration and Paul Ryan have stated that the ACA is the "law of the land," here is how they could address the ACA's problems. Many of the solutions I'm noting here are anathema to conservatives - but perhaps there is hope.
David Leonhardt noted today in the NY Times that the executive branch could easily destroy the individual markets - which serve those between 133% and 400% of the federal poverty level. It could encourage more uncertainty or more adverse selection, and insurers will run. Medicaid is harder to dislodge without 60 votes in the Senate. It would be ironic if the Republicans strangled the exchanges, which utilize private health insurance plans and were initially designed by conservatives at the Heritage Foundation, while they provided ongoing support for Medicaid, which is a government program with no free market elements.
Here are the major problems with the ACA, and what the Republicans could do to address these problems
Too few healthy people have enrolled.
The AHCA tried to solve this by allowing insurers to charge older people more. This might have chased away the old and sick - but on its own would not recruit a lot of young healthy folks. To attract more of the young healthy into the exchanges:
- Enforce the individual penalty (and make it larger)
- Advertise!
- Keep the rates low - perhaps through larger subsidies
- Assure all that the cost sharing reductions will remain in place . See Monday's post on this. Good news is The Hill reports that senior Republicans are supporting this.
The out of pocket costs of health plans are too high, as are the premiums for those without subsidies.
Out of Pocket: The CSR helps those below 250% of FPL -these could be extended to higher incomes. (They phase out at 250% of FPL - this could be at 400% or more).
Premium Costs: Subsidies for those under 400% of FPL are a big help. But even those at 400% of FPL have a hard time affording premiums, especially in rural areas. We could put in place a hard limit to portion of income that could be spent on premiums for a basic plan, making plans affordable for more.
Efforts to lower the overall costs of health care are critical here - that includes aggressive market-based payment reform, like bidding first for commodities (like durable medical equipment) and later for other medical services.
The FDA could consider safety, efficacy, AND cost effectiveness. That feels like more regulations- but if we want less expensive health care like the rest of the developed world, we need to control pharmaceutical costs.
We could think about price ceilings, perhaps as a percent of Medicare, too. This would diminish much of the effort currently spent on negotiation - and could allow more aggressive competition among health plans. Health plan fragmentation would no longer allow exceptionally high prices.
Too few people are covered
Medicaid is the least expensive way to provide medical care for the poor and near poor. 19 states could expand Medicaid -- which would increase coverage by over 4 million. This could also help take some pressure off of the exchanges, where those under 133% of FPL who had signed up had disproportionate illness - raising premiums for all exchange enrollees. Of course this means that the government will pay - but it will do so at a reduced rate, and Medicaid programs have been exceptionally effective at providing health care to those with extreme needs. Breaking news - Kansasis now (again) considering Medicaid expansion. The State Senate passed Medicaid expansion overwhelmingly last year but it was vetoed by Governor Sam Brownback. This could cover 150,000 additional Kansans.
So- there it is. The big ACA problems - and how to fix them. If the Republicans want to make the ACA's exchanges work - they can do it.
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