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‘Price Is Right’ for Obamacare Repeal and Replacement

December 1, 2016

Consumer Power Report #527

Affordable Care Act (ACA) co-architect Dr. Ezekiel “Zeke” Emanuel recently expressed his willingness to assist President-elect Trump appointees or members of Congress in their quest for an Obamacare replacement plan, as long as these officials pursue health insurance coverage for all Americans, controlling health care costs, improving “the consistency of quality,” and ensuring individuals with preexisting conditions can obtain insurance.

Emanuel also expressed his concern that Republican proposals to replace ACA fall short of these goals, including a plan sponsored by Rep. Tom Price (R-GA), Trump’s appointee-in-waiting to head the U.S. Department of Health and Human Services (HHS).

The irony here is double. Not only has ACA fallen woefully short of Emanuel’s stated goals, Price’s proposed replacement plan would do more to achieve them (as would other proposed Republican plans).

Before examining Price’s House Resolution 2300, the Empowering Patients First Act, consider ACA’s failure to achieve Emanuel’s goals.

Although approximately 20 million previously uninsured people have supposedly gained health insurance coverage under ACA, most have obtained coverage through their employer or Medicaid expansion, not through the law’s signature marketplaces for the individually insured.

Another 20 million people are going uninsured. As Chris Jacobs, CEO at Juniper Research Group, noted on November 29, about 8 million of these people choose to pay the tax penalty for lacking insurance, while about 12 million seek exemptions to the insurance mandate and penalty, including more than 600,000 people enrolled in faith-based health care cost-sharing ministries.

States that expanded Medicaid under ACA grossly underestimated the number of people who would sign up for the new entitlement. Counting the District of Columbia, 32 states expanded Medicaid to cover able-bodied adults with incomes less than 138 percent of the federal poverty level. Of these states, 24 have released enrollment data for at least one complete year. On average, enrollment exceeded projections by 110 percent--more than double--in these states, in some cases exceeding projections by a factor of 3 or 4, according to a November 2016 report by the Foundation for Government Accountability.

The cost of covering newly eligible Medicaid enrollees under ACA was $6,366 per person in 2015, or 49 percent more than the $4,281 per person Centers for Medicare and Medicaid Services (CMS) projected in 2014. Put differently, Medicaid expansion cost $68 billion in 2015, almost 1.5 times as much as CMS’ projected cost of $42 billion--a $26 billion difference.

Moreover, expanding Medicaid coverage increases emergency room use alongside use of nonemergency services, according to a New England Journal of Medicine study published in October 2016. This finding debunks President Barack Obama’s 2009 assertion, “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.”

Speaking of ACA’s failure to control costs, the average premium for the Obamacare plan HHS uses to track health insurance costs will increase by 25 percent in 2017.

Emanuel should rest easy. National health care legislation has nowhere to go but up, and Trump’s decision to appoint Price signals improvements are coming.

Price’s plan, the Empowering Patients First Act, is one of several Republican proposals to give tax advantages to individuals to offset their insurance costs. Like House Speaker Paul Ryan’s (R-WI) Task Force plan, “A Better Way,” Price’s plan would give individuals without employer-sponsored insurance a tax credit to help them purchase insurance.

An intriguing nuance of Price’s plan--and an important departure from Obamacare and other Republican plans--is the awarding of these tax advantages based on the recipient’s age. The plan would give $1,200 to adults aged 18–35, $2,100 to adults aged 35–50, and $3,000 for adults over 50. The plan would also give families a credit of $900 per child.

These credit amounts must seem inadequate to people conditioned to pay sky-high Obamacare premiums, but as Washington Examiner Managing Editor Philip Klein noted on November 30, “In a more market oriented system, insurance is going to be a lot cheaper for younger people. Imagine giving a 30 year-old with a low income the highest tax credit available under the Price plan--$3,000 per year. If, in a market-based system, that 30 year-old could easily find insurance for $100 per month, or $1,200 per year, it means the government is leaving $1,800 in subsidy money on the table that in the age-based system would go toward helping somebody older with more expensive insurance.”

Moreover, a health insurance tax credit based on age is superior to a tax deduction based on income, because the latter would not benefit people with no tax liability, Pacific Research Institute President Sally Pipes told Health Care News.

Like other Republican proposals, Price’s plan would expand the use of health savings accounts (HSAs), which current law permits only in conjunction with a qualifying high-deductible insurance plan.

Although Price’s plan does not address the stated intentions of many Republicans to block-grant Medicaid to the states so they can establish innovative cost-saving measures, doing so is a tenet of the Trump campaign’s “Healthcare Reform” paper and remains a favorite strategy of Ryan’s plan and other Republican proposals. These plans would also allot federal subsidies to help states cover so-called “uninsurable” populations, people with pre-existing conditions.

Emanuel desires a noble thing: high-quality, affordable health care coverage for all who want it (and all who don’t). Replacing Obamacare under Trump, Price, and a Republican-controlled Congress will get him closer to it.

-- Michael T. Hamilton (mhamilton@heartland.org) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.


IN THIS ISSUE:


STUDY: TWO-THIRDS OF NEW MEDICAID ENROLLEES IN 2014 WERE ELIGIBLE BEFORE OBAMACARE, MEANING FEDS ARE OVERPAYING, STATES UNDERPAYING

A new study by Jonathan Gruber, one of the Affordable Care Act’s (ACA) chief economic architects, suggests that roughly two-thirds of new Medicaid enrollees in 2014 were eligible for the program under previous state eligibility criteria--meaning that they were not made eligible by the ACA. If accurate, then a much smaller share of new Medicaid enrollees were made eligible for the program by the ACA than Washington experts commonly believe. For example, the Congressional Budget Office’s (CBO) most recent projection is that only one of six new Medicaid enrollees were eligible for the program before the ACA. Gruber’s results, combined with much higher than expected Medicaid enrollment and spending over the past three years, has profound implications for the distribution of program costs and the effect of a repeal of the ACA.

First, Gruber’s results suggest that people who were already eligible for Medicaid before the ACA have been inappropriately categorized as though they are newly eligible because of the ACA. This is important because the ACA requires the federal government to pay a lot more of the cost of covering newly eligible enrollees than it does for those eligible for Medicaid before the ACA. Thus, it appears the federal government is paying a lot more than it should be and that states are paying far less. Second, Gruber’s results suggest that if the ACA were repealed, a lot fewer people would likely lose coverage than previously thought. …

SOURCE: Brian Blase, Forbes


HEALTH CARE EXECUTIVES PUSH MASSACHUSETTS LAWMAKERS TO REGULATE SURPRISE BILLING PRACTICES

Marylou Sudders, the secretary of the state’s Office of Health and Human Services, said her late sister was a health care expert. But despite that expertise, after a visit to the ER and a handful of medical tests, her sister ended up with a $10,000 bill for seeking care “out-of-network.”

The charges were dropped after Sudders said she fought them with her sister’s insurance company.

“My sister knew her insurance plan inside and out,” Sudders said during a state hearing on Tuesday. “It was never disclosed to her. The ER room, at the moment she was not conscious to make decisions, when she did (make decisions, the out of network aspect) was never explained to her … No consumer, while they are in a hospital system … you won’t sit there and say, ‘Are you in network?’ The patient is assuming.”

Sudders was one of several health care executives of the state’s Provider Price Variation Commission that pushed for the state to regulate out-of-network billing practices -- one of the few topics on which commission members have actually agreed. The commission, which met for the fourth time on Tuesday, has been charged by the governor to look at the differences hospitals charge for the same service.

Out-of-network-billing is a broad term that includes when a patient willingly seeks care at a hospital or with a doctor outside of his or her insurance network, as well as when an individual unknowingly interacts with doctors within an in-network hospital that don’t contract with an insurer and are thus ... considered “out of network.”

The state could set a default reimbursement rate for patients that receive care out of network, and could also mandate that patients in some scenarios not be held accountable for those charges. …

Despite consensus, the specifics have yet to be worked out. Dr. David Torchiana, president and CEO of Partners HealthCare, cautioned that setting a “default rate” for all out-of-network experiences would tie the hands of the hospital when it’s trying to negotiate rates with insurers.

Blue Cross Blue Shield suggested that a default rate would apply only when a patient is taken to an out-of-network hospital for an emergency. Others wanted default rates for a broader swath of scenarios. …

SOURCE: Jessica Bartlett, Boston Business Journal


INDEPENDENT DOCTORS SAY HOSPITAL, CERTIFICATE-OF-NEED LAW, THWART COMPETITION

Days after they opened Northeastern Reproductive Medicine in a glass-and-granite building on Water Tower Hill, Doctors Christine Murray and Peter Casson were sued by the University of Vermont Medical Center.

The complaint drafted by Eric Miller -- now U.S. attorney for Vermont -- alleged that Murray and Casson tried to steal patients from the medical center, where they had run the infertility program for nearly two decades.

The lawsuit included five counts of breach of contract and one count of trade secret misappropriation. …

The lawsuit brought by UVM Medical Center against Northeastern Reproductive Medicine is just one of several examples detailing what independent doctors in Vermont say has been decades of the hospital consolidating its power, and using that power to crush competition. The medical center’s monopoly has led to higher costs for health care, fewer choices for patients, and long waits for appointments with specialists, according to these doctors. …

Dr. Gregory McCormick is an eye surgeon and a partner in Ophthalmic Consultants of Vermont, an independent practice in South Burlington. A graduate of the medical school at the University of Vermont, McCormick joined the practice in 2006. He claims UVM Medical Center and a local developer denied him a clinic of his own by sabotaging his effort to build an ambulatory surgery center.

By 2009, Ophthalmic Consultants was reaching a crisis point because of the lack of operating room time available at the Burlington hospital. …

Early in 2011, McCormick and his partners attempted to open Vermont’s second ambulatory surgery center.

McCormick’s first step was to acquire a certificate of need from the Vermont Department of Banking, Insurance, Securities and Health Care Administration, which oversaw the process before the Green Mountain Care Board was created. McCormick described the process as the most onerous in the nation. A study this year by the Mercatus Center at George Mason University in Virginia said Vermont has more laws governing certificates of need than any other state.

“Clearly there is more work to be done in explaining to legislators and health care policymakers about the potential limiting effects these laws have on achieving high-quality, low-cost health care,” the Mercatus report concludes. …

SOURCE: Dan D’Ambrosio, Burlington Free Press


LAME DUCK U.S. HOUSE PASSES $6.3 BILLION ‘21ST CENTURY CURES ACT’ FOR OBAMA RESEARCH INITIATIVES

After three years of debate, countless hearings, and pleas from patient advocates, lawmakers on Tuesday approved legislation to speed new medicines to market and to authorize an additional $4.8 billion in spending for medical research.

The House of Representatives passed the 21st Century Cures Act by a 392 to 26 vote, showing a bipartisan spirit that has been rare in recent years. The Cures Act now heads to the Senate, for a vote early next week. …

“We are on the cusp of something special -- a once-in-a-generation opportunity to transform how we treat disease,” said Representative Fred Upton (R-Mich.), who marshaled the legislation through the House. …

The landmark legislation provides $4.8 billion for the three signature Obama administration research programs over the next 10 years: Vice President Joe Biden’s cancer moonshot, the BRAIN Initiative, and the Precision Medicine Initiative. It would also give states $1 billion to fight the opioid crisis, and deliver an additional $500 million to the FDA.

The bill heads to the Senate for a vote early next week. Senator Harry Reid (D-Nev.), the minority leader, acknowledged that there had been “angst” over the legislation among his colleagues, and several, including Senators Elizabeth Warren (D-Mass.) and Dick Durbin (D-Ill.), have said they will oppose it. …

Dr. Michael Carome, director of Public Citizen’s Health Research Group, said he was especially concerned about Cures Act provisions that will allow the FDA to consider “real world evidence” when approving drugs and allow companies to submit summaries of study data, rather than full clinical trial records.

“The summary data could hide important information about the safety and effectiveness from the FDA scientist reviewing the data,” Carome said. “I’m disappointed to see it.”

This was the second time that the House approved the Cures Act, which the chamber initially passed by an overwhelming margin in July 2015. Since then, it has been a long slog.

In the Senate, lawmakers split down party lines. Democrats would not approve the accelerated approval provisions unless funding for the National Institutes of Health and the FDA was included. For their part, Republicans said they would not support mandatory funding without figuring out how to pay for it. …

House and Senate leaders last Friday unveiled a new, compromise version of the Cures Act, which funds the research in part by selling off some of the Strategic Petroleum Reserve and in part by drawing down on funding for prevention programs in the Affordable Care Act. …

SOURCE: Sheila Kaplan, STAT

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Michael Hamilton writes and edits for the liberty-minded clients of Good Comma Editing, LLC, a freelance writing and editing company.
media@heartland.org @MikeFreeMarket