Today’s Managing Health Care Costs Number is Six
We can spend the weekend celebrating the failure of Congressional Republicans to repeal and replace Obamacare. The American Health Care Act was ill-conceived, would have led to loss of insurance for 24 million, and would have led to higher health care costs and less meaningful health insurance coverage for additional millions – and it is dead. For now.
But the opportunity to damage the Affordable Care Act remains.
Salonhas an insightful piece today about how the Republicans have been undermining the ACA since it was passed. Marco Rubio and others slipped a provision into a budget bill that gutted risk corridor payments to health plans that lost money in the ACA’s early years, when actuaries lacked enough claims to make good estimates of projected costs. The federal government owed insurers $2.9 million, but only paid out $400,000. This was a major reason for the failure of the COOP plans, and a lawsuit on this was dismissed last week.
There are many other ways that the Trump Administration can undermine the Affordable Care Act, and help fulfill Donald Trump’s predictions about the ACA “imploding” or “exploding.” Today, I’ll focus on what the administration can do to undermine the law – and in a future post I’ll talk more about what it could do to make the law work better.
1. Stop paying insurance plans for the “cost reduction subsidy,” the CSR. The ACA limits out of pocket spending for individuals at under 250% of the federal poverty limit, and the federal government writes a check to health plans to cover this expense. The expense is not factored into premium costs. But the House Republicans sued the Obama Administration - asserting that it could only pay these funds if they were appropriated. A district court found for the House, and the Obama Administration lodged an appeal. The Trump administration and Paul Ryan have asked the Appeals Court to delay hearing the case. If the Trump Administration decides not to defend against this suit and to renege on payment to health plans – we’re going to see a mass exodus of insurers from the ACA marketplaces.
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2. Not enforce the employer mandate
One of the biggest impacts of the ACA was that it set standards for “minimum essential coverage,” and employers had to meet those standards or would be subject to penalties. These penalties were delayed by the Obama Administration (although it’s not clear they had the authority to do so.) But there has been widespread belief that employers that did offer the ten essential benefits as required by each state, or had premiums that were unaffordable for their employees, would have to pay a penalty someday. If it’s clear there will never be a penalty, we could lose many of the benefits of a national standard for employer sponsored health insurance.
3. Not enforce the individual mandate
We need to have healthy people in the insurance pool, because insurance is wealth transfer from the healthy to the sick. Many healthy people (yup – guys in their 20s) feel invincible – so there has to be some “stick” to encourage them to sign up for (and pay for) health insurance. Hence the reviled mandate. The Trump administration has already instructed the IRS not to collect data from individuals documenting health coverage. Further moves to telegraph that the requirement is dead could help make all of the “death spiral” talk a reality.
4. Give states Medicaid waivers that allow them to sharply diminish the numbers of those covered, or the quality of the coverage. Medicaid is the most cost effective way to cover the poor – and is far less expensive than commercial insurance, generally due to low provider fees. States have asked for waivers to require work, to require more cost sharing, and to require more bureaucracy. These efforts will push many away from Medicaid – which will lead to worse health outcomes and expose providers to bad debt.
5. Cancel marketing plans. The Affordable Care Act works to reduce uninsurance when there is aggressive marketing. The Trump Administration pulled ads at the end of the last enrollment period, and when they pulled ads, enrollment dropped. The ACA only succeeds with robust enrollment. It won’t work if the ACA is a closely guarded secret.
6. Abandon payment reform. Let’s face it- the real problem with the ACA is that health care is too expensive. I don’t believe for a minute that payment reform will by itself cure our health care cost problem. But I believe that aggressive experimentation with different payment models can help drive clinical transformation. Medicare is a critical player in payment reform, and the efforts of CMS and CMMI (Centers for Medicare and Medicaid Innovation) have helped foment substantial payment reform on the commercial side. However, if providers generally think that the Tom Price HHS doesn’t care for any payment reform, we could see a substantial drop in provider ACO activity. Providers who continue to do what they have historically done are not going to help us control health care costs.
It was easy for the Republicans to vociferously oppose the Affordable Care Act, but hard for them to agree on a meaningful alternative. It was easier for the Democrats to oppose the poorly-drafted AHCA, and will be harder for them to push the executive branch to do effective rule-making and enforcement now that Ryan and Trump have agreed that the ACA is the "law of the land."
Additional sources for this post are articles by Margot Katz-Sanger of the New York Times, Anna Maria Barry-Jester of 538.comand Adam Cancryn and others of Politico.
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