We talked about the private insurance market yesterday and how the PCARE proposal would change it compared to the baseline of Obamacare (as that is where we are today.) Today let’s review government programs that provide healthcare.
Section 301 Capitation payments for Medicaid
The most important thing about 301 is it is the implementation of a massive clawback of Medicaid that happened in Section 101 which repealed all of PPACA. This means the Medicaid expansion got rolled back for working age adults who make below 138% of Federal Poverty Line. From here, the Medicaid formula is readjusted to account for lagging population in poverty and it would be limited to the classes of people who were eligible in 2009. Long term care (a major Medicaid expense) would be block granted and the block grant would grow at CPI+1% or in most years, a decrease in real purchasing power.
This section has several significant problems if one believes people should be covered. First, the block granting system creates a strong incentive for states to cherry pick healthy populations for coverage as that would bring in “profitable” federal money that can then be skimmed off for tax cuts for the job creators as having a job makes you healthy (let’s not worry about causality direction here). Secondly, it immediately screws quite a few people who are now covered but lose coverage and the ability to afford coverage.
In West Virginia, the old Medicaid guidelines would not cover a health, childless adult between 18 and 64. Under expansion, that individual can get coverage. Under this proposal, someone 33 years old making $5,200 a year gets a $1,560 tax credit and told to find coverage on their own. The only coverage they can get at their pricing is catastrophic coverage with $15,000 or $20,000 deductibles (and that assumes the individual passes underwriting as a great bet — which is unlikely).
Section 302 Reauthorize Medicaid HSA demonstration program
Minor piece of housekeeping, a demonstration program allowed states to offer high deductible health plans with state/federally funded health savings accounts. This demonstration program would be extended. I don’t think HSAs and high deductible health plans are particularly appropriate for people who don’t have the financial resources to take either an unexpected $2,500 expense or recurring $1,000 expenses, but this is fairly anodyne.
Section 401 Tort Reform
Defund a major Democratic donor class. The Texas system of damage caps and tilting the field in favor of providers did not solve a fundamentally minor problem although it made trial lawyers significantly poorer, and thus the Texas Democrats significantly poorer and weaker.
Section 501 Price transparency
The first few sentences are a de facto brag that your insurance will get worse, cover less and may not even cover you at all. That is how insurance companies can most easily reduce premiums — don’t pay out high cost claims by not covering high cost services or high cost individuals. The second paragraph is a repeat of Obamacare mandates that plan designs are made available in plain English (we’re still working on that as an industry).
The policy meat of this section is the last paragraph which is actually interesting exercises in division:
our proposal would require hospitals who participate in Medicare to provide to consumers the average amount paid by uninsured and insured patients for the most common inpatient and outpatient procedures.
This is not a bad idea. Massachusetts is taking this idea and supersizing it by requiring providers provide accurate pre-service pricing estimates that are customized to the patient. Price transparency is a good thing.
And that is part 2.