Medicaid in Idaho

Idahoan citizens are gathering signatures to put Medicaid expansion on the ballot for the Fall of 2018. This could be interesting!

Idaho has not expanded Medicaid through the ACA. However it is an actively engaged health policy state:

Idaho is odd. It is a Republican tri-fecta state. It runs its own state based Exchange for the ACA. It has not expanded Medicaid. It has a pair of fascinating waivers that they want to submit to the Center for Medicare and Medicaid Services.

The first waiver is a Section 1115 Medicaid Waiver. They are not asking for an ACA Medicaid Expansion. Instead, they are asking for the authority to create a high-risk pool in Legacy Medicaid for about 1,500 people who have certain severe, high-cost conditions including hemophilia, cystic fibrosis, and certain cancers.

Straight up Medicaid Expansion could still work with the Idaho 1115 waiver to selectively expand Medicaid for certain conditions. The entire package would just cost Idaho less of some of the people who were getting pulled out of the Exchange pool would now be qualified for high federal match Medicaid Expansion instead of normal match Legacy Medicaid.

This is interesting, and if you live in Idaho, help them get the signatures!



Science, success and paying for it

The New England Journal of Medicine just published a paper on gene therapy for hemophilia-B. The results look promising:

This was a safety trial and not a full phase 3 trial so there is still a long period between promising early results which these are and a treatment going on the market.

Hemophilia is an expensive disease. We’ve talked about it before. Maintenance medications can easily run six figures and a bad bleed can be a million dollar event without too much going wrong.

If the treatment eventually goes through FDA approval, it looks like it will be a game changer for individuals with at least some types of hemophilia. And that leads to the question of pricing. A cure should be worth more than the average year of treatment. The key questions is how much more? Is a cure worth 2 years of normal treatment? Is it worth 20 years of normal treatment costs?

Whatever number that the payers actually pay (let’s ignore list price as that is a fantasy only slightly richer than the letters section of Huster…), it is going to be a big number.

Insurers and other payers will need to figure out how to finance and pay for a really costly but socially cost efficient cure. It is a complex challenge as the current regime of paying for treatments creates two decision flows. The first is the simple one. If any individual is projected to cost the particular insurer more than the cost of the cure in a reasonably short time frame, paying for the cure is, to the payer, the easy thing to do. So people who are highly likely to not churn and who are highly likely to be a costly outlier will get approved.

People who are either likely to churn to another insurer or have low annual costs are far less likely to be readily approved on a pure cost effectiveness ground. Hurdles will be thrown up, pre-authorizations will be required and the pathway to approval will be a random and idiosyncratic obstacle course. Insurers will fear that if they pay for a cure then the patient gets all the benefit as soon as they change insurers. Insurers will also restrict their networks to avoid including the providers and hospitals where these types of treatments can be offered. It will be a race to the bottom to avoid a large expenditure that can not be recaptured by lower future claims.

Some very smart people at Duke-Margolis are thinking about this problem:

vA range of approaches has been proposed to alleviate the short-term budgetary pressures created by one-time payments for curative therapies, as noted by the ICER’s White Paper: Gene Therapy, Tapestry Network’s series of discussions with health care stakeholders, IMS Health’s White Paper on Cell and Gene Therapies and Alliance for Regenerative Medicine’s new payment and financing models for curative regenerative medicines. Models include new financing arrangements, such as providing a loan mechanism for certain payers (for example, states and smaller insurance companies) or providing a contractual annuitization mechanism to commit payers to make payments over time. These financing arrangements could be encouraged and augmented by government funding, such as government bonds or subsidies (for example, reinsurance), and publicly supported efforts to promote risk pooling across payers that face uncertainty from high costs of gene therapy treatments.

These financing arrangements are potentially helpful in addressing budgetary pressures.

I like the concept of residual bonds where future insurers pay an annual fee back to the insurer that paid for the cure. But this is a challenge. The science looks promising and now the delivery and financing system needs to be worked on.








Alexander-Murray; outcomes and distribution of concessions

The Washington Examiner had a piece earlier this week on how House Republicans want another pound of flesh to pass Alexander-Murray:

A top House Republican said Democrats need to make concessions that make them “wince” in order to get a vote on two Obamacare stabilization bills….Cole, a member of the House’s whip team, said the two bills are going to be a tough sell to Republican as they’re currently written.

“If that is what you want to get through, you had better put something with it that Republicans like because in the package right now there isn’t anything commensurate with what they are being asked to give up,” he told reporters on Monday.

This is a fundamental misreading of leverage and policy preferences.

There are four major elements in Alexander-Murray. The first is a two year appropriation for Cost Sharing Reduction subsidies. Secondly, outreach activities would be sent to the states instead of HHS. Finally there would also be reasonable changes to 1332 requirements and window-dressing changes to Catastrophic plans.

What happens if CSR is appropriated when measured against current reality instead of CBO baseline?

  • Significant money (CBO estimates $194 billion) is pulled out of the individual market
  • Senator Collins has an easier time voting yes for the tax bill
  • Late October, the following occurs:
    • Headlines “ACA rates drop for 2019….”
    • Subsidized buyers go from seeing really good deals to normal deals (from Avalere)

That is what would happen if Alexander-Murray passed this afternoon with no modifications.

Why would Democrats want or need to make further concessions?

Making it easier for Senator Collins to vote for the tax bill increases the probability that thirteen million more people are uninsured according to the CBO. That is not a Democratic policy preference.

Muddling the messaging that the Republican Party owns healthcare is not a Democratic political preference going into the midterms.

Making insurance more expensive for subsidized buyers is not a Democratic policy preference.

Walking away from an Alexander-Murray bill that funds CSR produces acceptable outcomes for Democrats. I do not understand the analysis that suggests that Democrats are the ones who need to offer concessions for the outcomes that Alexander-Murray delivers.



CHIP and my daughter

2010 was a rough year financially for my family. I had been laid off the previous September. My wife was working part time in a position that did not utilize her skills to the fullest of her ability. We were both looking for full time work in our respective fields and finding nothing.

We also have an amazing (and increasingly not a ) little girl. I was lucky, I was able to spend fifteen months of the most critical developmental time with Elise.

We had a routine and we had fun. Long walk to the library on Monday and Wednesday for story times, bus rides for lap sits and finger plays on Tuesday and Thursdays. Playground time with her little buddies almost every day so that they could toddle and I could talk with other adults. Fridays usually meant we had lunch dates with the moms in the group that we had assembled. I don’t know how much of this routine was for her and how much of it was for me as it was my social life as a stay at home parent.

When I had been laid off, I tried to COBRA my family’s coverage. We had the stimulus subsidy of 65% of the COBRA premium helping, but health insurance was still one of my four unemployment checks for a policy with a $2,500 individual deductible. My wife and I quickly realized that this would blow through our savings and run up credit card debt too quickly. We decided to see what we could find for Elise while we applied for an underwritten plan with a $12,500 deductible, no maternity and a 6 month non-emergency surgery exclusion waiver for under $100. We could not afford a $12,500 deductible but we could probably pay that off over several years if we got a cancer diagnosis.

We applied for CHIP, and after the application ping-ponged back and forth between the Medicaid qualification team and the CHIP team, we put Elise on heavily subsidized CHIP. $25 a month for UPMC for Kids. It had a big network, low co-pays and good customer service. And we barely used it for her. She had her one year old visit covered by CHIP. I betrayed her as I held her down as the nurse gave her the vaccines. Daddy was supposed to protect her. I was not supposed to aid and abet people stabbing her. Ice cream fixed that betrayal.

And then mid-summer came. She suddenly transitioned from being a happy go lucky kid to being a complete cranky pants. In the last week of June she would just sit down in the middle of a walk and cry. She would reach for Mom or Dad to carry her instead of running with the other kids. She was not herself.

We took her to the pediatrician, he saw nothing, but said to trust our instincts. A few days later on the 4th of July, we knew something was not right so we took her to the ER. They X-rayed her and thought nothing too strange was happening and sent us back to our PCP. He saw her again and set up an appointment with an orthopedist as he saw that Elise was not walking right.

Three days later, I took her to the orthopedist. He made funny faces at her and offered her a lollipop as the grown-ups talked. He poked and prodded. He thought he saw something on the original X-ray, and ordered another that focused more on her shin than her ankles. Four minutes later, we had a diagnosis, a green stick fracture. Once he had a clear indicator, he showed me how the ER team missed it as the break had not been obvious.

She got a walking boot. Three odd steps and a high five to the orthopedists, and we were on our way. And then she was back to being a happy kid as we stopped at the mall to let her play in some air conditioned space:

CHIP made sure my little girl was safe, CHIP made sure my little girl got the care that she needed. CHIP made sure my little girl was not walking around in pain for the summer. CHIP made my little girl’s life a whole lot better.








Aetna, CVS and data thoughts

CVS has agreed to buy Aetna for a lot of money. This raises a lot of questions including, what is the value proposition?

There is the obvious value proposition that CVS has 10,000 physical locations on the same information platform. I am spitballing and harkening back to my days as an insurance data geek and there are three inter-related items that could generate an incredible amount of revenue for the Aetna/insurance side of the deal. This is a risk adjustment data gold mine.
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Bronze and CSR Silver trade-offs

Andrew Sprung has a good point on the value of $0 Bronze premiums that I want to explore some more:

The prevalence of free bronze plans for enrollees with incomes under 200% FPL (and for a fair number of older buyers over that threshold) is head-turning. But for those who know they need healthcare and have little or no savings or spare income, a bronze plan — free or otherwise — can be close to useless….

Take the case of a family of four, parents aged 46 and 44, with an income of $49,000, just under 200% FPL in Durham, NC (zip 27702), where the state BCBS has a monopoly. The kids are in CHIP, and that’s good. Strong CSR raises the actuarial value of a silver plan — the percentage of the average enrollee’s costs the plan is designed to provide — to 87%, and that’s pretty good by current standards — better than the average employer sponsored plan, in fact. It’s also better than Medicare….

The bronze plan is free — but if the family has no assets or surplus cash flow, it’s largely worth what they pay for it, or may feel that way. No benefits except the mandated free preventive kick in before the enormous deductible. In many markets, bronze plans that do not subject doctor visits or generic drugs to the deductible are available. That’s helpful, but not does mitigate the risk inherent in enormous bronze out-of-pocket maximums.

The silver plan offers more attractive coverage. But $242 per month is a big bite on $49k for a family of four.

The fundamental question is how valuable is additional option space?

In previous years, the same family in the same situation would have had an option to buy the least expensive Bronze for some premium value that was equal to or greater than zero and less than the Benchmark Silver post-subsidy premium price of $257/month. That has always been the case in counties where a Silver and Bronze plan is offered. For this particular family, the least expensive Bronze premium, after subsidy in 2017 would cost slightly more than $100 a month. Now there is a $2,900 difference in annual premiums between CSR Silver and Bronze.

CSR Silver only has incremental value to the family if there are individual medical expenses between $800 and $6,650 without considering the difference in premiums. The additional 6% in family income that is not being spent on premiums pushes the breakeven point of the the CSR Silver $3,700 in medical expenses for one individual or up to $4,500 in expenses for the couple. In 2017, that same set of calculations has Silver CSR having incremental value at $2,000 in medical expenses for an individual.

Most people don’t have $3,700 in medical expenses in a year. Most people don’t have $2,000 in medical expenses in a year. It is a gamble that 2018 will be a decent year of health for a couple in their mid-40s. If they know that they are on multiple medications and are anticipating a minor surgery next year, Silver makes a lot of financial sense. If they think that they are relatively healthy and they are insuring against a cancer diagnosis then Bronze can make sense.

The difference in 2018 versus previous years is that the Silver vs. Bronze trade-off point changed. The option space got bigger.








Individual insurance market possibilities for 2019

Given that it is extremely likely that the individual mandate will be repealed in the next couple of weeks and the rule making for limited duration plan extensions is slowly grinding forward, what will the individual market look like on January 1, 2019?

Right now for someone who has to either buy their insurance on the individual market or go uninsured, there are a couple of broad pathways. They can buy a subsidized or unsubsidized ACA plan, they can participate in a Health Sharing Ministry, get on a three month short term plan or go uninsured.

The individual health insurance market in 2019 will look very different. The Office of Management and Budget (OMB) are processing rules for association health plans and 364 limited duration plan expansions. Those are plans that can underwrite people out of coverage and limit benefits. The lack of the individual mandate will also increase the price of the ACA community rated, guaranteed issue policies. So what happens?

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