Congress can empower state governments to create genuinely free markets in health care. dailysign.al/2Rk903x via @DevonHerrick @DailySignal
@DevonHerrick @DailySignal Wharton economist Mark Pauly and his colleagues conducted an extensive study of the individual market in the pre-Obamacare era. They found that less than 1% of the population was both uninsured and uninsurable because of a preexisting condition.
@DevonHerrick @DailySignal What happened to those Americans? Prior to Obamacare, those with preexisting conditions were protected under the federal Health Insurance Portability and Accountability Act (1996), which required states to enact measures to protect such people.
@DevonHerrick @DailySignal Most states complied by setting up risk pools, which provided subsidized insurance. The insurance typically resembled a standard Blue Cross plan and the premium enrollees paid was often 50% to 100% higher than the premium paid for comparable coverage in the individual market.
@DevonHerrick @DailySignal The Affordable Care Act introduced a temporary program, effective in 2010-2014, prior to the full phase-in of the law, stipulating that people who were denied coverage in the individual market were able to enroll in a federally funded risk pool.
@DevonHerrick @DailySignal They would pay a premium no higher than the average premium charged to healthy people in the individual market.
Over a three-year period, roughly 135,000 people took up this offer.
Over a three-year period, roughly 135,000 people took up this offer.
@DevonHerrick @DailySignal Significantly, at the end of this period, virtually no one in the country was forced to be uninsured because of a health condition.
@DevonHerrick @DailySignal Despite this reality, Obamacare went on to impose massive changes to the market, in the form of a major new Washington-designed program that created heavily regulated “exchanges” to sell insurance products on the individual or small group market.
@DevonHerrick @DailySignal When the Affordable Care Act was enacted, many advocates probably imagined it would look like a typical employer plan or a standard Blue Cross individual policy. And in many markets, that’s how it started out.
@DevonHerrick @DailySignal When Blue Cross of Texas first entered the Dallas exchange in 2014, for example, its plan looked a lot like the plans it sold to employers. The coverage extended to virtually every hospital in the Dallas-Fort Worth area, including the prestigious UT Southwestern Medical Center.
@DevonHerrick @DailySignal But after sustaining huge financial losses, the insurer retreated the following year to a more restrictive plan that treated UT Southwestern as an out-of-network hospital. That meant patients faced steep out-of-pocket expenses on top of an already large deductible.
@DevonHerrick @DailySignal The following year, UT Southwestern was excluded entirely.
Today, not a single exchange plan in Texas covers UT Southwestern. The same process has been repeated across the country.
Today, not a single exchange plan in Texas covers UT Southwestern. The same process has been repeated across the country.
@DevonHerrick @DailySignal Many of the country’s top hospitals today are off limits to patients covered by Obamacare’s current plans. Take Houston’s MD Anderson Cancer Center, which was named America’s best cancer-care hospital by U.S. News & World Report in 13 of the past 16 years.
@DevonHerrick @DailySignal The hospital’s website suggests that it takes even garden-variety Medicaid, but it doesn’t accept a single private health insurance plan sold on the individual market in Texas.
@DevonHerrick @DailySignal Since Blue Cross of Minnesota withdrew from the individual market in 2016, the state’s Mayo Clinic—once cited by President Barack Obama as a model for the nation—has been off limits to many Minnesotans covered by Obamacare exchange plans.
@DevonHerrick @DailySignal Memorial Sloan Kettering appears out of bounds for every exchange plan in New York. Both hospitals are open to some Medicaid patients, although Mayo’s chief executive predicted publicly that Medicaid patients may eventually have to queue behind their privately insured peers.
@DevonHerrick @DailySignal Unlike Texas Blue Cross, many established insurance titans such as Aetna, Humana, and UnitedHealth Group have retreated from market after market. Meanwhile, the remaining insurers are offering products that look a lot like Medicaid.
@DevonHerrick @DailySignal Centene, a Medicaid contractor, stepped in to pick up more than half the U.S. counties that had no insurer for 2018. In fact, Centene now supplies about one in every five Obamacare plans in the country.
@DevonHerrick @DailySignal Centene’s core business is Medicaid managed care. About 90% of its exchange enrollees were eligible for premium subsidies as of 2016, and many rotate in and out of its Medicaid plans.
@DevonHerrick @DailySignal In a controversial 2014 decision, a Centene health plan refused to pay for a child patient’s emergency brain surgery at Children’s Medical Center in Houston. The hospital said its success rate for the surgery was close to 90%, while hospitals nationwide average only 47%.
@DevonHerrick @DailySignal The insurer claimed the hospital was out of its network for the patient’s plan, but relented after its decision was criticized in media reports.
@DevonHerrick @DailySignal After conducting a yearlong investigation into the Texas Medicaid program, The Dallas Morning News uncovered hundreds of cases in which “essential medical care was delayed, denied or not delivered to people with critical health needs.”
@DevonHerrick @DailySignal Many of the insurers that provide Medicaid plans in Texas offer similar coverage in the Obamacare exchanges. One of Centene’s subsidiaries has the state’s highest rate of appeals for denials of care under Medicaid. It offers similar coverage to Obamacare enrollees.
@DevonHerrick @DailySignal One survey found 72% of insurers feature narrow networks in the plans offered through the federally managed exchanges (HealthCare.gov). This is in stark contrast to 5% to 7% of employer plans that limit worker choices to a narrow network of physicians and hospitals.
@DevonHerrick @DailySignal A report by health consulting firm Avalere found Obamacare plans typically contract with one-third fewer doctors and hospitals, on the average, than commercial plans.
@DevonHerrick @DailySignal This equates to 42% fewer heart specialists and cancer doctors, one-third fewer mental health and primary care providers, and one-quarter fewer hospitals.
The main reason Obamacare plans have narrow networks is to hold down costs.
The main reason Obamacare plans have narrow networks is to hold down costs.
@DevonHerrick @DailySignal That leads to lower premiums making the plans more attractive to buyers, especially buyers who don’t have any health problems. A 2017 study in the journal Health Affairs found premiums for narrow network plans in the exchange were about 16% lower than plans with broader networks.
@DevonHerrick @DailySignal As the Obamacare exchanges were enrolling their first members, Watchdog.org contacted 18 hospitals ranked the highest by U.S. News & World Report. It found that only one plan in all of Ohio (Medical Mutual of Ohio) included the Cleveland Clinic in its network.
@DevonHerrick @DailySignal In California, the premier Cedars-Sinai Medical Center was in only one Obamacare plan network. Nationwide, 61% of the top hospitals were covered by only one or two Obamacare plans.
@DevonHerrick @DailySignal In 2018, USA Today reported that Vanderbilt University Medical Center was not covered under any Obamacare plan in the Nashville, Tennessee, area.
@DevonHerrick @DailySignal Vanderbilt is an academic medical center. Patients who relied on specialty care at Vanderbilt had to buy coverage off the exchange and forgo subsidies.
@DevonHerrick @DailySignal Poor access to specialty care also has been a problem from the very beginning. Time and time again, consumers who enrolled in Obamacare plans heard a common refrain when they tried to see a doctor: “We don’t take Obamacare.”
@DevonHerrick @DailySignal Obamacare enrollees often find plans cover fewer high-cost drugs or have higher cost-sharing compared to employee health plans. Higher cost-sharing for expensive drugs is a means to steer members to cheaper drugs.
@DevonHerrick @DailySignal For instance, generic drugs may be free or available for nominal fees. Specialty medications costing thousands per month may require patients to pay one-third of the cost.
@DevonHerrick @DailySignal Patients with a bronze plan who were prescribed Copaxone (for multiple sclerosis), the Humira Pen (an immunosuppressive drug for arthritis, Crohn’s disease, and ulcerative colitis) or Enbrel (rheumatoid arthritis) had to pay about $2,000 a month.
@DevonHerrick @DailySignal The drug Tecfidera, used to treat psoriasis and multiple sclerosis, required cost-sharing of nearly $3,000.
Patients with silver or gold plans faced out-of-pocket costs almost that high.
Patients with silver or gold plans faced out-of-pocket costs almost that high.
@DevonHerrick @DailySignal Seeing primary care physicians is not always easy for Obamacare enrollees. In an interview on CNBC’s “Squawk Box,” health care executive Alan Miller explained providers tend to prioritize appointments—giving favorable access to patients with employer plans that pay higher fees.
@DevonHerrick @DailySignal Rather than deferring to states, which have long experience regulating insurance, the Obama administration put in place a federal one-size-fits-all risk adjustment program where risk was poorly assessed.
@DevonHerrick @DailySignal The results drove some insurers bankrupt and other insurers with small market shares out of the market altogether. Some insurers passed along the cost to certain patients through higher out-of-pocket charges, according to a 2016 study by Harvard and University of Texas economists
@DevonHerrick @DailySignal Since Obamacare drove up coverage costs, millions of healthy people chose to remain uninsured. Only when they get sick do they enroll, and then they tend to choose plans with the most generous subsidies and lowest out-of-pocket costs.
@DevonHerrick @DailySignal In the first four years of the Obamacare exchanges, the average premium doubled and some families saw their premium increase fivefold. The average deductible in exchanges is about three times the deductible in a typical employer plan.
@DevonHerrick @DailySignal Before Obamacare, the customers for individual market insurance were either self-employed or buying coverage between jobs. They were mainly seeking financial protection against potential future medical expenses.
@DevonHerrick @DailySignal Obamacare attracted a new set of customers responding to the law’s offer of subsidized insurance to pay for their current medical expenses, including costly customers who migrated into the individual market from other coverage.
@DevonHerrick @DailySignal That skewed the individual market toward a risk pool disproportionately consisting of older, less healthy, and costlier-to-insure individuals. The resulting premium increases then prompted a growing exodus of unsubsidized customers.
@DevonHerrick @DailySignal Health insurance expert Robert Laszewski explains that we are in what some people would call a “death spiral” in the unsubsidized part of the individual market. Healthy people are dropping out of the market–making the rational decision to remain uninsured until they get sick.
@DevonHerrick @DailySignal But as the healthy leave, the cost of covering the remaining enrollees becomes that much more expensive. For example:
—Between March 2016 and March 2018, more than 1 of every 5 people (4.5 million) with individual insurance dropped out of the market.
—Between March 2016 and March 2018, more than 1 of every 5 people (4.5 million) with individual insurance dropped out of the market.
@DevonHerrick @DailySignal Among middle-income families who were not eligible for a subsidy, almost one-half (47%) dropped out of the market.
Both in the Medicaid expansion coverage and in the private insurance exchanges, the sick are enrolling and the healthy are not.
Both in the Medicaid expansion coverage and in the private insurance exchanges, the sick are enrolling and the healthy are not.
@DevonHerrick @DailySignal In Medicaid, for example, the average cost of new enrollees is 50% more than the cost of the previously enrolled.
In the exchanges, Laszewski gives the example of a family of four in northern Virginia which is among the 40% of families who do not qualify for a subsidy:
In the exchanges, Laszewski gives the example of a family of four in northern Virginia which is among the 40% of families who do not qualify for a subsidy:
@DevonHerrick @DailySignal The family faces a premium of $19,484 plus a $6,500 deductible.
—In essence, the family will have to spend $25,984 before they can collect any meaningful benefits.
No wonder almost 29 million people have decided to avoid health insurance altogether.
—In essence, the family will have to spend $25,984 before they can collect any meaningful benefits.
No wonder almost 29 million people have decided to avoid health insurance altogether.
@DevonHerrick @DailySignal What would the individual health insurance marketplace look like if it were designed to meet consumer needs as well as other markets?
Instead of running away from sick people, health plans would compete to meet their needs.
Instead of running away from sick people, health plans would compete to meet their needs.
@DevonHerrick @DailySignal Cancer Treatment Centers of America, as one example, would want to enter the individual market. They would advertise and actively seek enrollees who have cancer. It would do that because it could receive a premium for each patient that covers the expected cost of their care.
@DevonHerrick @DailySignal Could there be a real market for patients with cancer, diabetes, heart disease, and other chronic conditions? One already exists.
@DevonHerrick @DailySignal More than one-third of seniors on Medicare are participating In the Medicare Advantage program, which gives them access to private coverage–similar to the health plans employers offer.
@DevonHerrick @DailySignal Seniors pay community-rated premiums, and no one can be penalized because of a health condition–just like Obamacare. But unlike Obamacare, special-needs plans that attract high-cost enrollees receive risk-adjusted additions to the standard premium to cover the costs of their care
@DevonHerrick @DailySignal Risk adjustment in Medicare Advantage is done by Medicare itself. And like all government programs, it is far from perfect. However, economist John Cochrane has shown how we can have market-based risk adjustment without government involvement
@DevonHerrick @DailySignal A Goodman Institute piece expands on how Congress can empower state governments to create genuinely free markets. To enable those reforms, Congress should empower the states to carry out needed changes.
@DevonHerrick @DailySignal The Health Care Choices Proposal, developed by the Health Policy Consensus Group and supported by dozens of policy leaders across the country, would convert Obamacare funds into grants to the states and give them wide discretion to reform individual health insurance markets.
@DevonHerrick @DailySignal These ideas, especially if combined with other changes to empower patients, could form the basis for real reform that helps sick patients access the care they need.
