Friday, January 26, 2018

ACA/Obamacare: Why Were Coverage Gains So Tepid? Why Do So Many Remain Uninsured?


"Friends and foes of the Affordable Care Act (ACA) alike tend to target the relative effectiveness of the (soon-to-be-repealed) individual mandate as the key factor behind relatively higher levels of insurance coverage since the law was enacted in 2010. 

ACA supporters might wish that the mandate was much stronger, but they still claim that its repeal will trigger rising premiums and leave millions more Americans uninsured in the years ahead.

Many ACA foes often can’t decide whether repealing the mandate remains the key to unraveling Obamacare or if it simply should be eliminated as a matter of principle, regardless of the cost and coverage consequences.

Spoiler alert: They were both wrong about the past. They are likely to remain mistaken about the future.

In reality, overall coverage gains under the ACA hit a modest, but relatively stable, plateau well before last month’s tax-cutting budget reconciliation law decided to eliminate further penalties under the individual mandate as of 2019. Those initial reductions in the number of uninsured Americans were due primarily to expanded eligibility for Medicaid and, secondarily, to generous subsidies for lower-income enrollees in state-based health insurance exchanges. 

The less-explored question involves why Obamacare’s overall combination of taxpayer subsidies, expanded insurance programs, health benefits requirements, AND coverage mandates had so much less of an effect than the law’s architects envisioned.

It turns out that many of the nominally uninsured still have other alternatives to health care than just through heavily-subsidized Medicaid and exchange-based insurance. You might call such uncompensated care either an option for “implicit insurance” or a hidden tax on acquiring more formal coverage.

Health policy researchers Amy Finkelstein, Neale Mahonem and Matthew Nolowidigdo unravel the puzzle in a recent National Bureau of Economic Research paper. They explain why there is less “demand” than expected for the increased “supply” of subsidized coverage for lower income individuals and more limited take up of subsidized coverage than once predicted.

The bottom line is that the nominally uninsured (before and after Obamacare’s implementation) pay only a small share (one-fifth to one-third) of their medical expenses. Hence, they value formal health insurance at substantially less than its full cost to insurers providing such coverage. 

Among the sources of other financing for care provided to the uninsured are federal and state subsidies for uncompensated care, such as Disproportionate Share Hospital (DSH) payments (reduced more gradually and later than originally envisioned under the ACA), as well as part-year insurance coverage, direct care programs, and private donations.

The federal Emergency Medical Treatment and Active Labor Act (EMTALA) also requires hospitals to provide “emergency care” to screen and stabilize uninsured patients on credit. Nonprofit hospitals claim provision of charity care as one of the primary ways to fulfill their community benefit requirements for tax-exempt status. Retroactive look-back coverage under Medicaid also has provided a further modest financial cushion for some providers treating the nominally low-income uninsured.

Keep in mind, too, that the accounting lines between charity care and bad debt are far from clear cut, and they can be adjusted somewhat to match the financial reporting needs of nonprofit versus for-profit providers. Recovery rates for uncompensated care provided to low-income uninsured individuals with few assets are limited (roughly 10-20 percent at best) and further shielded by personal bankruptcy protections.

So, while financial and medical life for lower-income uninsured individuals is far from  comfortable or stable, Finkelstein, Mahonem, and Nolowidigdo find that these various backup “options” do reduce the willingness of low-income individuals to pay for the full --and in many cases even the generously subsidized, out-of-pocket -- premium costs of insurance coverage. For example, other research by Finkelstein estimates that adults living below the Federal Poverty Level would be willing to pay only 20 to 50 cents per each dollar of Medicare insurance coverage spent on their “behalf,” and they would rather give up Medicaid than pay the insurance costs of providing it." - The Real Hidden Tax on Increased Insurance Coverage, economics21.org, 01/25/2018

Link to the entire essay appears below:

https://economics21.org/html/real-hidden-tax-increased-insurance-coverage-2816.html

Monday, January 22, 2018

ACA/Obamacare: And About that Canadian Health-Care Model


"An Ontario doctor says health-care wait times have reached “insane” lengths in the province, as one of her patients faces a 4.5-year wait to see a neurologist.

When Dr. Joy Hataley, a family practice anesthetist in Kingston, Ont., recently tried to send a patient to a neurologist at the Kingston General Hospital, she received a letter from the specialist’s office telling her that the current wait time for new patient referrals is 4.5 years.

The letter said that, if the delay is “unacceptable” to Dr. Hataley, she should instead refer the patient to a neurologist in Ottawa or Toronto.

Dr. Hataley said she's used to hearing back from specialists who are unable to see her patients for months, and even up to 2.5 years. But a 4.5 year wait is "insane," she told CTVNews.ca in a telephone interview." -  'It's insane': Ont. patient told she'd have to wait 4.5 years to see neurologist, CTVNews.ca, 11/02/2017

Link to the entire report appears below:

https://www.ctvnews.ca/health/it-s-insane-ont-patient-told-she-d-have-to-wait-4-5-years-to-see-neurologist-1.3661114

Sunday, December 31, 2017

ACA/Obamacare: The Recent Tax Bill and Obamacare

Q: How did "Obamacare" wind up in the tax bill?

A: The Senate version repeals the Affordable Care Act's tax penalties on people who don't have health insurance. That would result in government savings from fewer consumers applying for taxpayer-subsidized coverage, giving GOP tax writers nearly $320 billion over 10 years to help pay for tax cuts.
What's more, repealing the fines would deal a blow to the Obama-era health law after a more ambitious Republican takedown collapsed earlier this year.

Q: Those fines have been very unpopular, so how could repealing them undermine the health law? Other parts of the ACA will remain on the books.

A: Premiums will go up, and that's never popular. The fines were meant to nudge healthy people to get covered. Because insurance markets work by pooling risks, premiums from healthy people subsidize care for the sick.

Without some arm-twisting to get covered, some healthy people will stay out of the pool. That's likely to translate to a 10 percent increase in premiums for those left behind, people more likely to have health problems and need comprehensive coverage, says the Congressional Budget Office.

The CBO also estimated that 13 million more people would be uninsured in 2027 without the penalties. If they have a serious accident or illness, uninsured people get slammed with big bills, and taxpayers wind up indirectly subsidizing the cost.

Q: So just taking away an unpopular penalty would destabilize the health insurance law?

A: Repealing the fines is part of a broader context. - Q&A: Tax bill impacts on health law coverage and Medicare, Newser, 12/05/2017

Link to the entire article appears below: 

http://www.newser.com/article/4729348d72844801ae4686e91afbb1fb/qa-tax-bill-impacts-on-health-law-coverage-and-medicare.html

Friday, December 8, 2017

ACA/Obamacare: Eliminating the Individual Mandate

“There are powerful reasons to kill ObamaCare's individual mandate to buy health insurance. This regressive tax has fallen primarily on modest earners who face a choice of paying a fine or buying the cheapest $7,000-deductible plan, which may be of little use until long after their finances are in distress.

Yet how the individual mandate is eliminated makes all the difference in the world. If done while easing up on ObamaCare's counterproductive rules — from the employer mandate to coverage options that have led just as many people to leave subsidies on the table as to claim them — getting rid of the mandate could facilitate a big step toward universal coverage.

But getting rid of the mandate in the way Republicans propose, as a $300 billion pay-for that will help keep the cost of tax legislation under the $1.5 trillion maximum allowed under Senate rules, would not only ensure that millions of people drop their insurance on top of the 28 million already uninsured, but it would deepen already-daunting fiscal challenges and seriously undermine any hope of fixing our troubled individual insurance market for the foreseeable future.

Understanding the true impact of repealing the individual mandate is necessary for making sense of the Joint Committee on Taxation's official score of the Senate tax legislation. Because millions of individuals would give up their health insurance tax subsidies, JCT found that households earning up to $40,000 a year would face an ever-larger tax hike equal to $6.4 billion in 2021 alone (or a $4.4 billion tax hike once the effect of the corporate tax cut is considered).

Republicans say, in essence, "No harm, no foul." If people are voluntarily dropping coverage, that hardly amounts to a tax increase. Yet the GOP argument that people would be giving up coverage they don't want, while technically true, depends on a flawed presumption that all those millions of people with modest incomes would reject health insurance, not because of a lack of affordability, but because they would prefer to be uninsured.

Just consider a scenario in which people were able to use their available health insurance subsidy to cover the full cost of a high-deductible or catastrophic health insurance policy and have at least $200 left over for a Health Savings Account deposit — $100 of which could be cashed out if left unspent at year end.

If there were this kind of flexible option that included free cash on the table, the word would get out and there likely wouldn't even be any need for advertising to get close to 100% enrollment among the subsidy-eligible group.

While this hypothetical isn't necessarily an ideal model, it is eminently possible to combine the health care security Democrats insist upon with the freedom that Republicans believe in, killing the mandate while dramatically reducing premiums and continuing to provide moderate-income households ample reason to get covered instead of rolling the dice.

The key point is that every dollar of the projected savings from killing the individual mandate depends on keeping ObamaCare just as consumer unfriendly as it was in 2017. In other words, taking those savings – all that extra tax revenue lying around because even more people leave their health insurance tax credits unclaimed — and applying it to tax cuts means that a significant chunk of the funding now available for health insurance premium tax credits will essentially disappear, all but ruling out consumer-friendly and coverage-increasing reforms of the ACA in a fiscally fraught future.” - The Right Way To Kill ObamaCare's Individual Mandate, Investor’s Business Daily, 11/28/2017

Link to the entire article appears below:

https://www.investors.com/politics/policy-analysis/the-right-way-to-kill-obamacares-individual-mandate/

Note: Yet another interesting demand-side argument. However, “affordability” of healthcare and hence the price of health insurance is a supply-side and demand-side phenomena. Moreover, health insurance price is, in the main and upon normal occasion, a reflection of the price to supply healthcare. The constant stream of demand-side arguments is going to do little to affect the supply-side price. More importantly, the supply-side price is not strictly a result of market forces as much as it is a function of special interest legislation and certificate of need (CON) legislation providing the conduit of distorted price and limited competition that the providers within the greater supply-side enjoy at the expense of the consumer of healthcare.


Tuesday, November 28, 2017

ACA/Obamacare: Math Quest Edition

"A headline this week in The Hill shocked me: "ObamaCare enrollment strong in third week of sign-ups." The Hill is a serious, well-respected, non-partisan news source. But any reader taking this headline at face value would be seriously misled about what is really going on with Obamacare enrollments during this fifth open enrollment season.

The Hill's reporter correctly notes that "the pace of sign-ups has exceeded last year: In the first 26 days of last year's open enrollment period, 2.1 million people signed up compared to the 2.3 million people who signed up the first 18 days of this year's period."

Those figures imply that the daily rate of sign-ups this year is outpacing last year's rate by 58% [originally reported as 28%: Update #2]. Surely that is evidence of strong enrollment, no?

The reason it is not is buried at the tail-end of the story where the reporter notes "the enrollment period ends Dec. 15, which is about half as much time as people had to sign up last year."

Yipes! If enrollees have only half the time to sign up, then by pure arithmetic, the daily enrollment pace needs to be double last year's in order for total enrollment at the end of the enrollment period to match the level reach at the end of last year's enrollment period: 12,216,003.


But if current enrollment is 158% [originally reported as 128%: Update #2] of last year's when it needs to be 200%, a more accurate way to frame this year's performance would be to say that Obamacare is on track to sign up 21% [originally reported as 36%: Update #2] fewer enrollees than last year (i.e., 158/200=79% which would mean signing up 21% fewer). [originally reported as 128/200=64% which would meaning signing up 36% fewer: Update #2]. That's a pretty bad news story rather far removed from the rosy picture painted by The Hill's headline." -  No, Obamacare Enrollment Is Not Strong, Not By A Longshot, Forbes, 11/24/2017

Link to the entire article appears below:

https://www.forbes.com/sites/theapothecary/2017/11/24/no-obamacare-enrollment-is-not-strong-not-by-a-longshot/#439262b4919d


Monday, September 18, 2017

Bernie-Care (Medicaid for All) and the Magical Moment of Cost Effectiveness.

“Robert Frank made the familiar cost-effectiveness case in the New York Times earlier this summer, and, as usual, it left me with more questions than answers. Frank made three points. First, administrative costs are lower in single-payer systems. Second, single-payer systems save money by not having to advertise. Third, the government can use its monopoly on demand to negotiate lower fees paid to providers.

Even if all three points are true, it is unclear why they are unique to health care. Someone arguing for single-payer plumbing or single-payer automotive maintenance would probably make the same points. To what extent is the case for single-payer health care different from the case for government financing of all goods and services? Frank doesn’t say.

As for whether costs are indeed lower, “you get what you pay for” would seem to apply regardless of whether the payer is the government or a private insurance plan. Want better fraud detection? Administrative costs have to go up. Want more program utilization? Increase advertising costs. Want better doctors? Compensate them more. How a single-payer system is supposed to change this basic relationship between cost and quality is not clear.

Compare health care with education. Public schools are essentially single-payer education systems within the areas they cover. When was the last time we heard anyone argue that public schools are a great tool for containing education costs? When has Bernie Sanders or any Democrat called for the government to push down teacher salaries in order to save money? Any suggestion that teachers should be paid less is met with the obvious counter-argument that teaching quality would suffer. And yet single-payer health care, which comes with the explicit promise to pay doctors less, is supposed to reduce costs without reducing quality. By what magic?” - The Single-Payer ‘Cost-Effectiveness’ Mystery, national review.com, 09/14/2017


Link to the entire essay appears below:

http://www.nationalreview.com/corner/451384/single-payer-health-care-cost-effectiveness

Thursday, July 27, 2017

What is the “Skinny Repeal” of ACA/Obamacare?

“There is an alternative, if not a very satisfying one. Republicans seem to be able to achieve near-unity on ending the individual mandate, allowing insurers to offer discounts for younger people, protecting taxpayers from having to subsidize abortion coverage, and giving states some freedom to relax regulations. They should work for legislation that achieves these goals and includes as much Medicaid reform as 50 senators are prepared to tolerate.

 Republicans should not claim that such legislation would repeal and replace Obamacare, since it would not, and should make it clear that additional legislation will be needed in the future. The conservative holdouts should be prepared to judge this limited legislation based on whether it gives people more freedom to choose the health insurance they want, not on whether it does everything for which Republicans have been campaigning over the last seven years.” - Don’t Settle for Nothing, National Review, 07/18/2017

Link to the entire article appears below:

http://www.nationalreview.com/article/449616/republican-health-care-bill-fails-obamacare-repeal-mitch-mcconnell