Saturday, June 24, 2017

Annals of Derp: The Map of Doom

the map

According to the Center for Medicare and Medicaid Services, 47 counties in 4 states could have no online marketplace insurance provider in 2018—the red ones here. The 47 counties are underpopulated farm country, and currently have a total of 35,000 active Exchange enrollees, out of a nationwide total of some 9.2 million Exchange enrollees, or 0.038%. And 320 million or so total health insurance purchasers in the United States.

According to Republicans, this shows that the Affordable Care Act is "imploding", or in a "death spiral". To save those 35,000 folks from Missouri, Nevada, Ohio, and Washington from going without health insurance, they tell us, we need to adopt a new law that will take health insurance away from 23 million or so (mostly Medicaid patients, of course, but something close to 9 million from other places, very much including the exchanges) over the next ten years.

Not an expression I often use, but "Let that sink in."

The problem would be really easy to solve, too, for instance through legislation introduced by Missouri Senator Claire McCaskill allowing customers in those counties to buy health insurance through the District of Columbia SHOP exchange, one of the country's healthiest, the one that serves members of Congress (defined by the Grassley Amendment to the ACA as an exceptional small business that doesn't have to provide employer insurance) and their staffs and 60,000 other people already. Another possibility that doesn't depend on Congress is probably already in motion, I heard this morning on NPR, where small and flexible insurers are planning to move in to these areas that the behemoths have abandoned.

The yellow counties, all, you'll note, in deeply Republican parts of the country, are where there is just one insurer offering exchange policies, creating a local monopoly. Again, they're rural areas, without a lot of people, so while it's 32% of the nation's counties, it's just 21% of the policy holders, 1.9 million. Monopolies, of course, lead to high premium prices, though most of the 1.9 million don't feel that, since their low incomes entitle them to subsidies; it's the government that has to pay, on the whole, and that also provides Cost Sharing Reduction subsidies to reduce the out of pocket spending on copays and coinsurance.

Here's where Trump voters really do have a beef, by the way. As the relatively wealthier residents of this kind of territory, and independently employed, not working for big companies, they are disproportionately the kind of people who have to buy unsubsidized health insurance from the exchange, and their premiums are relatively high anyway because they're older and sicker, and when lack of competition drives the premiums up, they definitely end up paying more.

It will be even worse for those guys if the Republican ideas become law, of course, when insurers in the individual market will be allowed to charge the 50-to-64 age band five times what they charge younger adults, instead of the three times they get under current law, state governments will be able to deregulate coverage requirements so that insurers won't have to pay for as many services as they do now, premium subsidies will cut off at 350% of the poverty level instead of the current 400%, and deductibles will go up. Oh, and if you earn less than $200,000 a year you won't benefit from the tax cuts.

Or you could improve the ACA rules to cover more people, Trump voters included. I'm not vindictive, I'd vote for that.

Needless to say, the Republican bill will do nothing to encourage competition in health insurance markets. They seem to have dumped the beloved GOP idea of selling insurance across state lines (allowing a company in one state to sell policies in the state next door while ignoring its regulations, what a great federalist thought that was), which wouldn't have worked anyway. And the $50-billion market stabilization fund intended to encourage insurers to compete won't work either (nor would the $112 billion offered in the House bill, but even the chief proponent of the idea, Sen. Ron Johnson of Wisconsin, doesn't believe $50 billion is enough).

This is because, in the basic setup of the Senate bill, keeping the Obamacare prohibition on denying insurance to people with preexisting conditions but getting rid of the Obamacare individual mandate (that's the idea Obama himself was promoting during the 2008 campaign, before he understood that Hillary Clinton was right and it couldn't be done without the individual mandate), the 13 old white men are creating the conditions for the exact death spiral that they falsely claim we're in right now: what happens when healthy people refuse to buy insurance and the insurance company's costs go so high that the premiums become unaffordable so that sick people can't by it either and the industry can't exist. That money could help Obamacare as it is, but without the individual mandate there's be no shared risk group to stabilize by the time this bailout shuts down in 2019.

The ways of ensuring competition in an insurance market like the Obamacare individual market are pretty well known, as it turns out, and they are all—surprise!—part of the Affordable Care Act, as also of the successful Medicare Advantage and Medicare Part D programs—permanent risk adjustment, and temporary reinsurance and risk corridors. But wait, you ask, if that's the case, what's up with all those yellow counties on the Map of Doom?

The permanent risk adjustment program, which levels the playing field by transferring funds from unexpectedly low-risk plans to unexpectedly high-risk plans, has actually been working pretty well, and is undergoing substantial improvements (accounting for enrollees who are only in for part of the year and taking prescription drug costs into consideration) this year.

The transitional reinsurance program worked extremely well
The program has had a significant effect on individual market premiums, accounting for premium reductions of 10 to 14 percent in 2014, 6 to 11 percent in the 2015, and 4 to 6 percent for 2016,
—but it's over, and some of the premium rises and pullout of insurers we've seen in 2017 could be chalked up to that.

Then the transitional risk corridor program, transferring money insurers paying out less in claims than they were supposed to under the medical loss ratio rules—effectively profiteering—to insurers paying out more: this was the crucial program for the nonprofit CO-OPs (Consumer Oriented and Operated Programs) that were to provide the most significant competition, and it was wrecked, partly by unwise Obama decisions that let the main funding source off the hook, mostly by sabotage from Republicans on one side and for-profit insurers on the other (see Charles Gaba for the gory details), and of course by the fact that 30 to 80% of new businesses fail.

The Affordable Care Act is doing fine, all things considered. It's going to take a lot of work to turn it into Germany, no doubt (low premiums linked to income level and fixed by the government and jointly paid by employer and employee, no for-profit insurers except for the wealthy 12% who opt out of the public system, very low copays, only for drugs and such, and no out-of-pocket for doctor visits or hospital stays), but I still think it's a lot easier, and a lot more stable long-term, than achieving a "single-payer" system in the US.

The sabotage, though, is clearly getting worse—indeed, that's one of the reasons for thinking McConnell and the Senate Republicans might not really be planning to pass the current terrible bill: all this dithering and indecision creates the uncertainty that makes insurers want to get out, and increases the GOP hope that the system really will collapse on its own and Obama get the blame. If they really cared about competition, on the other hand, they could make the ACA work (starting with the McCaskill plan or reviving CO-OPs or pushing the Multi-State Plans of which there are supposed to be two available in every state), instead of giving way to monopolists like Aetna and Humana at every turn.

A weird little note at the HHS website, devoted to propaganda instead of information under secretary Tom Price, reads:
The Department of Health and Human Services (HHS) is committed to doing everything in our power to provide relief immediately. Within what the law allows, HHS is taking action to stabilize the individual and small group insurance markets (the markets most affected by the ACA) so that they work better for everyone.
If you mean that, Tom, you'll find the law allows quite a bit.

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