Posts tagged ‘AHCA’
Five things I think I think about the next phase of health care reform
Photo by Jon Collier
This is not the end of Obamacare; it’s the beginning
In a surprising move, Paul Ryan pulled the American Health Care Act, the Republican ACA repeal and replace bill, last Friday. It had become clear that there was no movement to the left or the right that would garner enough votes to allow passage in the House. Even if it had passed in the House by moving right, much of that movement was likely to be stripped out in the Senate, where the Republican majority is slimmer, but no less internally conflicted. The president has stated he is moving on to other issues like tax reform and infrastructure building.
So you might think that health care reform on the federal level is done for now. Whether that is true or not, it is also pretty clear to me that there is still a great deal of work to do to stabilize and improve the ACA. Cost constraints are still lacking, and insurance marketplaces at the state level are still suffering from shrinking insurer participation. While coverage has vastly improved under the ACA, affordability remains elusive if you don’t qualify for a subsidy.
Where are we going next? Some (including me) are hoping that this opens the door to real bipartisan negotiation. Here’s the theory. The Trump administration cares about the appearance of winning, not ideology. If you can’t work over the Freedom Caucus to get the votes, you go to the Tuesday Group, a group of moderate Republicans. Perhaps they’ll even appeal to the next group over from them, moderate Democrats, to get onboard for something.
Here are five things I observed from this last round of negotiations:
- The Freedom Caucus has a literal interpretation of the phrase “repeal and replace”. All the rhetoric about removing Obamacare “branch and root”? Turns out it wasn’t simply rhetoric for them. They believe that Medicaid expansion to childless adults must be removed entirely, because it is enabling able-bodied citizens to get care without working for it. All the headlines about 24 million more uninsured shocked many of us, but for conservatives was actually not a bad thing, and for some a desired outcome, judging from the rhetoric surrounding the debate.
- Loss aversion works. One of the truisms of behavioral economics is that fear of loss is about three times as motivating as desire for gain. This has been shown over and over again by people like Amos Teversky and Danny Kahnemann in psychology experiments. Thus, some people didn’t like the Affordable Care Act until they faced the possibility that they would lose coverage if it was repealed. For the first time in years, public approval of the ACA is greater than disapproval. (By the way, now that the immediate threat of repeal is gone, I predict those numbers will reverse again.) If you want people to value something, don’t try to sell it to them; give it to them and then try to take it away (the Classic Coke strategy).
- Trying to sneak legislation through in the age of Twitter is like trying to sneak to the bathroom in your pajamas through Grand Central Station. Hiding stuff so you don’t get criticized for it doesn’t work. Nor does speeding up timelines for the same purpose. We may have to do this a few more times before people get it, but the old days of passing legislation that hasn’t been dissected under a microscope I think are gone. There are too many smart people out there with time on their hands and a Twitter following to feed. They have an immediate platform to do the Roman thumbs up or down on literally everything in view, and are just waiting for something to tweet about.
- The emerging centrist view is that we need to maintain coverage for everybody who has it now, but get to cost containment to make the system sustainable. In a previous post, I talked about the hard truths that both sides are avoiding by blaming the other guy. But what do we do to control costs? The conservative answer is market forces, and the progressive one is government regulation. Neither one has a great track record when it comes to health care. So what’s an industrial superpower to do? There was funding in the ACA to set up CMMI, and much of their work has been on alternative payment models intended to bend the cost curve over time. But pragmatically the experience has been mixed for medical homes, bundled payment, and population-based payment. Rollout has been slower than many would like, and affect too few providers to declare it a success. I would love to see a real and thoughtful bipartisan discussion on some hybrid possibilities.
- And there is no guarantee the next move is toward bipartisanship. Winston Churchill said, “Americans will always do the right thing—after exhausting all the other possibilities.” If the last twenty years teaches us anything, it’s that governing from the extremes doesn’t work very well. So you’d think that the next move would be to try to govern from the center. But this is one of those Clayton Christiansen moments. Christiansen says that the winners of the last game are unlikely to be the inventors of the new game, since the new game displaces the old one. The existing game goes like this:
- Point out what’s wrong with any plan offered by your opponents, which is much easier to figure out than how to make things work (boring). It also gets a lot more attention on Twitter. And, the bonus is that you get to go home to your district and tell people you stood on principle, and that everyone else has the morals of a used car salesman.
- Foment anger and frustration, and promise that you are the only person capable of breaking through the mess. Do this, while you are all the while perpetuating the mess.
- Repeat, and fund-raise.
Both parties have had the chance to be in the majority and the minority in the last two decades, and both have gotten pretty good at the existing game. It will take a sea change to find the next game that rewards centrist compromise. Here’s hoping we exhaust all the other possibilities sooner rather than later.
CBO score shows 24 million more uninsured by 2026 under AHCA
Photo by Andrew Malone
Getting everyone into the tent proves trickier than anticipated
On the surface, it can be confusing what Republicans are trying to accomplish with their recently introduced American Health Care Act (AHCA). After all, no one consciously drafts a plan to reduce coverage and raise premiums; the ever-rising cost of health care will do that quite well on its own. The CBO score shows higher costs in the near term, but then a 10 percent reduction in projected average premiums vs. the status quo in 2026. CBO also projects that we will have 52 million uninsured in 2026, or an increase of 24 million over today. As discussed in a previous post, for progressives this is ideologically unacceptable since they consider health care to be an absolute right. Others with concerns likely fear the use of the increased number of uninsured as a campaign issue in the next election cycle.
Well, exactly what were the drafters trying to accomplish? As we discussed in a previous post, many of the maneuvers in AHCA are purposed to draw in young, healthy people into the insurance pool, in order to offset the cost of older and sicker people. In the conservative view, it is wrong for government to mandate the purchase of health insurance; instead, the product must be made attractive enough that young invincibles buy it voluntarily. The increase in the allowed rating multiple from 3:1 to 5:1 does this, since having older people pay more means younger people pay less. Another measure is the $100 billion Patient and State Stability Fund, which is money in the bill that is likely to be used by some states to make reinsurance payments to health plans, thereby lowering everybody’s premiums somewhat.
So could that work? It’s possible to make insurance more affordable for the young by taking those steps, in my opinion. The problem is that those actions also have other consequences:
- First, when you shift the cost of insurance away from the young and healthy, you have to put it somewhere, and that appears to be to the old and sick. Premium projections for poor 60 year olds net of subsidies go up by about $10,000 a year. For someone in this working poor group, the premium could be half of their entire salary. As a result, CBO projections suggest that the uninsured rate for those age 50-64 making <$30K/yr. will rise from 12% to an impressive 30% of the population. Again, no plan is able to take the same benefits and make the cost lower for everyone; if somebody pays less, somebody else has to pay more. In essence, some of the people you were trying to subsidize in the first place end up uninsured as a consequence of the effort to make it more affordable for the young invincibles.
- Second, the CBO projections say that by 2020, about 9 million fewer people will be buying coverage in the individual market. By 2026, those losses shrink to 2 million less, but this is largely because the CBO anticipates some employers stopping providing insurance as a benefit altogether, shifting people from employer-sponsored insurance to the individual market. The CBO agrees that more young people will sign up, but that will be more than offset by older people dropping coverage because they simply cannot afford it. The reasons are complicated, but have to do with the CBO’s lack of confidence that the penalties in the AHCA for being uninsured will be as compelling as the individual mandate in the ACA.
The AHCA still has to work its way through more committees before it makes its way to the floor of the House. There may still be amendments and revisions along the way. There is even talk about a “sidecar” bill addressing sale of insurance across state lines and association health plans. But currently, this shift of cost from younger and healthier to older and sicker is a big issue for Democrats and moderate Republicans (not to mention AARP, who have termed the AHCA an “age tax”). That, in addition to the substantial increase in the uninsured rate, makes this bill tough to swallow for a broad swath of Congress and its constituents. Whether it can survive with this shift is something that will be hotly debated in the next couple of weeks before Congress’ Easter recess.
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