In 2020 and beyond, under the Senate’s BCRA, the working poor will have a very hard time finding primary care providers (PCP) who will schedule appointments with them.  Providers, rightly, fear bad debt from high deductible plans.  They will discriminate on the ability to pay upfront.

In the NEJM, Karin Rhodes,  Genevieve Kenney, and Ari Friedman looked at PCP appointment availability in the from the end of 2012 to Spring 2013.  They found that appointments were usually quickly available if the person had insurance and unavailable if they were cash paying patients who could not afford the median price of services.**

The overall rate of new patient appointments for the uninsured was 78.8% with full cash payment at the time of the appointment (Figure 2). The median cost of a new patient primary care visit was $120, but costs varied across the states, as indicated in the figure legend. Only 15.4% of uninsured callers received an appointment that required payment of $75 or less at the time of the visit, because few offices had low-cost appointments and only one-fifth of practices allowed flexible payment arrangements for uninsured patients.

Why does this matter in the BCRA environment?

The baseline plan will be a plan with a $7,500 deductible for a single person.  For people with means, paying $120 for a PCP visit is unpleasant but not onerous.  If I had to do that this afternoon, I would grumble as I pull out a credit card.  I would pay that credit card off tomorrow after I got the transaction points.  Not everyone can do that.

Craig Garthwaite raises a good point this morning:

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Andrew Sprung at Xpostfactoid notes one group of low income people who could be better off under the BCRA; poor people who would have been Medicaid expansion eligible if they lived in states that expanded Medicaid. The subsidy structure of the BCRA sells the baseline plan at 2% of income for people up to 100% of Federal Poverty Line. The Benchmark plan is 58% actuarial value.

The BCRA does toss a bone to the dis-insured poor by offering private-market subsidies to those who are shut out of Medicaid. Under the ACA, in the 31 states plus D.C. that accepted the law’s Medicaid expansion (rendered optional to states by the Supreme Court), anyone whose household income is below 139% of the Federal Poverty Level (FPL) qualifies for Medicaid, and so not for subsidies in the private plan marketplace (with one class of exceptions*). In states that refused the expansion — a possibility not envisioned by the law’s drafters — eligibility for Marketplace subsidies begins at 100% FPL, and those below that level are left out in the cold — because their state’s governors and legislatures wanted it that way. The BCRA allows people with incomes in 0-100% FPL range to buy a “benchmark” plan for 2% of income, and those in 100-133% FPL range** to buy one for no more than 2.5% of income…

For low income enrollees [ACA] – the majority of marketplace enrollees — silver plans are enhanced by Cost Sharing Reduction (CSR) subsidies that raise AV to 94% ….That usually means deductibles in the $0-250 range for people with incomes up to 150% FPL…
The Senate bills drops the AV of a benchmark plan to 58% — below that of the ACA Marketplace’s bottom-level bronze plans, which have an AV of 60%. Bronze plans generally have single-person deductibles over $6,000

Prof. John Graves from Vanderbilt has a great illustration of comparative actuarial value:

How generous are plans in the BCRA compared to other insurance types?

Here’s an update to my graphic: pic.twitter.com/CHVgMnfyDO

— John Graves (@johngraves9) June 23, 2017

The value of these plans mainly accrue to providers and hospitals.

It is very hard to design a 58% AV plan given the lack of change in out of pocket maximum where there are any services excluded from cost sharing. Donut designs where a few PCP visits and low cost generic drugs are no cost sharing are plausible at 60% or 61% AV. Using the 2018 AV calculator, I could only get a 59% AV Bronze plan with a $7,150 deductible that applied to everything.

There is some money allocated to bring down out of pocket expenses. If it is used as a state based CSR, it is grossly insufficient compared to current funding. There is less money and a larger gap. Someone who makes 100% FPL today receives a 24 AV point bump to get to a 94% plan with a $100 deductible and $1000 out of pocket maximum. That same 24 point bump produces an 82% AV plan with an $1825 deductible that applied to everything. That person is still massively underinsured as the out of pocket exposure of 10% of their income.

So when someone who earns 100% of FPL or less has a catastrophic event, the benefits will be in the form of unpayable debt and care for them. The doctors and hospitals will have a fixed limit of unpayable debt. If there is matched CSR, it might be $1,825. If there is no CSR, it could be $7,500. For diagnoses that routinely generate $100,000 claims over the course of treatment in a year, this is an acceptable discount. For PCPs and low level specialists, this will be 100% bad debt.

This has an interesting risk pool aspect. Third party payment of premiums will be quite common for patients who are guaranteed to run up $50,000 or more claims. Paying a few hundred dollars to minimize the amount of bad debt an oncology practice incurs is a smart business decision. It will make the risk pool even uglier.

So yes, there will be some poor people who are better off because their states have refused to accept significant federal funds to provide 98% actuarial value insurance. Now they will be getting 58% actuarial value insurance for 2% of their income. But they won’t be able to use it for common care as they can’t come up with out of pocket first dollar cost sharing.

Dylan Scott in Vox yesterday looked at what the health insurance lobby got from not actively fighting against the BCRA/AHCA in the Senate:

The major health insurance companies made a tactical decision to work with Republicans on their plan to repeal and replace Obamacare rather than lobby to stop it….

For insurers, at least for now, there is a lot to like in the Senate plan. It repeals Obamacare’s tax on health plans, a $144 billion tax cut over 10 years, per an analysis of the House bill. It provides $50 billion in federal funding in the short term to shore up the private insurance market and $62 billion over the longer term for state programs that help stabilize their insurance markets.

I don’t grok this.

I’m looking at things through the lens of profitability not total revenue.

The individual market so far has been a break even at best business for most insurers. 2017 is looking better with very low MLR in quite a few states for a wide variety of providers. But it is not boringly profitable. Medicaid managed care is boringly profitable. A barely competent MCO should scrape out a consistent 1% or 2% per year. When I worked at UPMC Health Plan, we budgeted for 2% profits and as I was leaving we were looking at 5%+ profitability for FY17. Medicaid is getting whacked. One of the first things states will do to compensate for less federal funding is squeeze MCO profit margins by reducing rates while mandating a year to hold providers harmless. Medicaid anyways is a much bigger market than the individual market.

The thing that I really don’t get is the push to eliminate the health premium tax. It is a tax that all fully insured plans pay. This basically means small and medium group employer sponsored plans, individual policies, and Medicare Advantage plans pay. Large, self insured, employer groups don’t pay, traditional Medicare fee for Service does not pay. If we assume a perfectly elastic market, I could see the self-interested push to eliminate the tax as it would make going fully insured marginally less expensive than going to self-insured ASO contract arrangements for medium size employers or make Medicare Advantage bids slightly more attractive. But in the individual market all of the carriers in the 2018 rate filings indicate that the insurers assume it is a market with low elasticity of demand. The tax incidence is overwhelmingly borne by the buyer and does not eat into the operating margins of the insurer.

Most of the tax savings will accrue to the policy buyers not the insurers in competitive markets. In non-competitive markets like Alabama with a dominant Blue, more the tax savings can be captured by the insurer. But I am trying to figure out exactly how much more profitable this tax cut makes insurers. It will be billions but it will not be a hundred billion dollars of additional profitability.

I’m having a hard time grokking the actual incremental profitability that insurers got out of the BCRA compared to the assured losses they will be taking on Medicaid managed care cuts.