What’s a couple trillion among friends

The Committee for a Responsible Federal Budget ran the numbers on the Sanders’ healthcare plan and its financing and depending on the assumptions, the Sanders plan is either $3 trillion dollars short over 10 years or $14 trillion dollars short over ten years compared to what the campaign is claiming.

That Sen. Sanders has shown a commitment to paying for his new initiatives and has proposed specific concrete changes to do so is quite encouraging. However, by our rough estimates, his proposed offsets would cover only three-quarters of his claimed cost, leaving a $3 trillion shortfall over ten years. Even that discrepancy, though, assumes that the campaign’s estimate of the cost of their single-payer plan is correct. An alternateanalysis by respected health economist Kenneth Thorpe of Emory University finds a substantially higher cost, which would leave Sanders’s plan $14 trillion short. The plan would also increase the top tax rate beyond the point where most economists believe it could continue generating more revenue and thus could result in even larger deficits as a result of slowed economic growth.

Sanders is not running in the Republican primary where the ability to propose programs with multi-trillion dollar piles of bullshit is an asset.  His campaign should respond to CRFB and Thorpe’s cost estimates on a non-ad-hominem basis to explain why their estimate that single payer is a net neutral fiscal move instead of a massive budget buster.

Less stupid fucking in Maryland

At least that is the the public health take-away of a recent study analyzing the public health impacts of an increase in the alcohol tax in Maryland.

The Baltimore Sun:

Maryland recorded 7,400 cases of the bacterial infection in 2010, when alcohol, like other goods, was taxed at 6 percent. But two years later, with a 9 percent levy tacked on to booze sales, gonorrhea cases in the state dropped below 5,700, even as infection rates grew nationally.

Researchers at the University of Florida say they can only find one explanation: the alcohol tax.

“We know increasing alcohol taxes decreases alcohol consumption,” said Stephanie Staras, the lead author of the study, published in the American Journal of Preventive Medicine. “We also know that people who are using alcohol are more likely to have risky sexual behavior.”

Besides being a great opportunity to for an excellent post title, this is a good illustration of how insurance design is important but far less important to general health than general socio-enviromental factors.  Maryland was looking to raise revenue and perhaps decrease drunk driving when they increased the tax.  Tertiary impacts on sexually transmitted infection (STI) rates were most likely not part of the political debate.

However, if these results hold up, and logically they make sense as alcohol consumption leads to bad decision making, avoiding seventeen hundred STI cases avoids significant treatment cost and more importantly, it avoids significant pain and risk for individuals.  Avoidance through changing the environmental and economic matrix is far more efficient treatment than post-infection treatment.



Good news everybody

In 2014, the nominal economic growth rate in the US was 3.91%.  Not a great number but not a bad number.

In 2014, healthcare spending grew by 5.3%.  Given context that is a great number

Total spending for health care in the United States increased 5.3 percent and reached $3.0 trillion in 2014, or $9,523 per person (Exhibit 1). This was faster than the rate of growth in 2013 (2.9 percent), which was the lowest in the fifty-five-year history of the National Health Expenditure Accounts. The acceleration in health spending growth in 2014 followed five consecutive years of historically low growth, which averaged 3.7 percent. Health care spending grew 1.2 percentage points faster than the overall economy in 2014 (when the nominal gross domestic product [GDP] increased 4.1 percent), resulting in a 0.2-percentage-point increase in the health spending share of GDP—to 17.5 percent. By comparison, the health spending share of GDP remained between 17.3 percent and 17.4 percent from 2009 to 2013.

The past few years had seen healthcare spending at or below nominal growth in the economy.  That led to a stabilization or decline in healthcare spending to GDP ratio for several years which is a massive deal for long term federal fiscal planning.

But 2014 saw the share of GDP going to healthcare go up.  Did something strange happen in 2014?

Why yes, 15 million more people got coverage and they used that coverage.

If it costs .2% GDP net to cover 15 million or more people that is dirt cheap and a good value for the money.

And a final piece of intriguing potential for good news:


Cadillac tax alternatives


TLDR: Changing the Cadillac tax from a fixed rate surcharge to elimination of deductible benefits workers with lower incomes but very high health insurance compensation while keeping the incentives aligned for better cost control measures. This tweak could get some unions back on board while also simplifying the tax code. Should be a double win. It won’t be.

HDHPs, HSA and no deductible Silvers

In yesterday’s thread that PPOs are merely a plan design and not an indicator of quality nor shittiness, Dr. Bloor restates a very important point about high deductible plans in response to another comment:

The High-Deductible Health Plans scare me. Are the prescription rates for these plans pre-negotiated, or do you eat the cost of prescriptions at retail rates until you hit the deductible?

You should never take on more of a deductible than you can assume you’ll spend in the course of a year. Folks who either opt for big deductibles or have them foisted on them by their employers for the sake of saving a few bucks on their monthly premium are aching to be victims of the penny-wise-pound-foolish approach to insuring their families.

High deductible health plans (HDHPs) are “consumer-driven” health insurance. The theory of change is that the consumer (not patient, and not person but consumer) will be able to effectively assess their healthcare needs and since they are paying the first several thousand dollars in expenses, they will not use healthcare that is low value to them. The IRS defines a HDHP as having a deductible of at least $1,300 for an individual in 2016.   A HDHP at $1,300 deductible and no other cost sharing has an actuarial value of 77% or 78% at a rough back of the envelope guess.

HDHPs are often tied to Health Savings Accounts (HSA) where people can put pre-tax money into an account to cover the deductible.  The money rolls-over year after year (unlike a Flexible Spending Account) and it can be placed on Red at the casino or invested.

I am not a big fan of high deductible health care as the evidence is good that they reduce utilization but the utilization reduction is not targeted at bad or low value care, it is not targeted at all.  Good care is excluded due to cost.  Recent evidence has shown that there is not a cost cascade two or three years out after employer sponsored insurance switches to HDHPs from low deductible health plans, but that study is fairly limited to a healthy population (employed individuals).

This is a problem with the ACA.  Catastrophic, Bronze and non-cost sharing Silver plans are low actuarial value plans when taken in the context of defining a HDHP.  Most of these plans have HSAs attached.  However I have a question about whether or not HSAs can be attached to some Silver plans?  Do no deductible Silvers qualify for HSAs?

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