Medicare for all, means and ends

The Hill is reporting that all of the major health industry players are orgnizing an umbrella lobbying group against single payer systems.  They get a follow-up quote from Senator Sanders (I-Vt) that provides some very specific distinctions that we’ll ponder a lot on and waste an amazing number of pixels in 2021 if there is a Democratic Trifecta:


The critical phrase is “healthcare for all”.

  • Medicare for all.
  • Single Payer
  • Swiss style heavily regulated private exchanges
  • Singaporean style forced and subsidized savings models with owned providers models

Those are all universal coverage systems.

Is that the goal?

Or is the goal a particular economic and political arrangement?

Great Britain when they instituted their National Health Service had to stuff the mouths of the their doctors with gold to get buy in.  It produced a national universal coverage system.  Is that an acceptable trade-off for you?

What is the goal?


A wrong number and purpose

Yesterday, I had a busy day at work.  I was running SQL for a claims analysis of Medicare beneficiaries who had died in the Carolinas.  After that I was reviewing a data dictionary for complex chronic care conditions in alternative payment models.  And to take a break from that, I sketched out a table to describe the impact of the exclusionary criteria from a paper that my collaborator and I are working on a revise and resubmit.  It was a productive day.

However the most important thing was a wrong number leading to an illuminating conversation.



This was worth a chuckle at first, and then I had to think more about it.

The young woman on the line was new to the area and new to insurance. She was trying to follow her new doctor’s orders and get a simple thing done. The system was working against her best efforts and then she decided to reach out for help.  I’m listed as working at the Health Policy Center and my name is early on in the directory.  She has an insurance policy, and this seemed like a good spot to start.

I could not help her, but I understood where she was coming from.  She was trying to navigate a confusing system to take care of a problem.  And the system was throwing up road blocks.  And when she reached out to a seemingly plausible source of help, I was of no immediate assistance.  I helped her find the member service number on the back of her insurance card and wished her well.

She did not care that I am working on an evaluation of a fascinating palliative care model.  She does not care that I have a nifty little paper that has a really cool identification strategy.  She just wanted to solve a health problem and let the nerds in the background work towards helping her solve actual need.  This was a good reminder of the vast space between my interests and the outcomes that most people care about — can I get to my doctor or my test and can I afford to pay for that needed care?

Setting up, evaluating, arguing and assessing about the structure of healthcare delivery is critical; it shapes the hallways that the woman on the phone has to walk and it creates the choices that she needs to make, but in a day to day experience, it does not matter too much for the patient who is just trying to figure out how to follow their doctor’s recommendations to take care of a problem.



Ineffective catastrophic schemes

A few weeks ago, I read that the House had passed a bill that would expand eligibility for Catastrophic plans while tying those plans into the single metal risk adjustment process.

This irked me. It is dumb policy on any evaluation lens as it won’t do much of anything including what its sponsors want it to do namely — offer lower premiums for non-subsidized individuals. The mechanics just won’t work. So I decided to write up what I’ve been ranting about here at Balloon Juice and sent it to Health Affairs.

Unfortunately, these proposals work against themselves. In its analysis of the Alexander-Murray bill, the Congressional Budget Office estimated no change in covered lives and miniscule federal savings. Both HR 6311 and Alexander-Murray copper plan proposals suffer from the same defect. Risk-adjustment mechanics limit the impact of copper plans as currently proposed….

Bringing the tiny but generally healthy and young population that is currently in the stand-alone catastrophic pool into the much larger and more morbid metal risk pool will lower the average risk and thus lower premiums. This will lead to marginally lower index premiums, which will lead to slightly lower premium tax credit obligations for the federal government and slightly lower premiums for current metal band buyers who do not receive subsidies.

If you want lower premiums via the mechanism of tinkering with eligibility and benefit design there are few choices:

  • Lower actuarial value
  • Segregate low risk from high risk risk adjustment transfers as it is currently done with the Catastrophic while expanding access to the low risk pool to similar folks in the high risk pool.

If you want to get more ambitious, then you need to do aggressive outreach to pull in a massive number of low risk and low cost folks so that average morbidity goes down and therefore premiums go down.

It is not magic.

Why dental insurance is a buyer’s club

Earlier this week, I had to go to the dentist as I was having a sharp pain in the same tooth which had a root canal performed on it earlier this year. I checked in, and the basic dental coverage I get through Duke basically is a buyer’s club discount card coverage. The in-network dentist office accepts the insurer’s fee schedule as the maximum allowable rate and the insurer pays a very small percentage of the claims. I paid the rest out of pocket. Forty minutes, an X-ray and

Dr. Marika Cabel’s award winning paper on post-facto adverse selection explains why dental insurance is barely an insurance product and it is more of a buyers club card. A significant portion of dental conditions that require treatment can be delayed into a future contract year if there are richer benefits available.

Because insurance coverage is typically determined by the treatment date, individuals may have
incentives to strategically delay treatments to minimize out-of-pocket costs. The strategic delay of treatment—a particular form of moral hazard— can be an important source of subsequent adverse selection, in which ex ante identical individuals select insurance coverage based on their differing accumulation of previously delayed treatments. This paper investigates these forces empirically in the context of the missing market for dental insurance. Using rich claim-level data, my analysis reveals that approximately 40% of individuals strategically delay dental treatments when incentivized to do so, and this flexibility in delaying treatment can explain why the market for dental insurance has largely unraveled.

When I signed up for dental insurance, I had no knowledge of my future claims probabilities besides two regular cleanings and an X-ray as I was going to be a new patient for the North Carolina practice. I was not a prospectively adverse selection risk. I could make a decision on the basis of premium and coverage.

40% of individuals have any dental coverage, and those with coverage actually have little insurance against dental risk. The typical dental “insurance” policy provides very incomplete coverage owing to a low annual maximum benefit, which is on average $1,100. Above this maximum benefit, “insured” individuals must pay the full cost of services.4 Although dental care can involve considerable uncertainty and financial cost, available policies tend to offer no coverage for
large, urgent dental expenditures.

Instead dental “insurance” is a combination of a pre-paid maintenance schedule where a significant proportion of premiums are used to pay for routine preventive office visits where the insurer leverages its membership pool to get good rates, and minimal limited insurance for bad things that surprisingly happen like the need for a root canal after tooth pain had limited me to sleeping only a few hours a night for several weeks straight.

Most dental expenses excluding root canals (as Dr. Cabel demonstrates) are deferable for a couple of months. If there was a policy that offered great benefits with a low deductible and a very high out of pocket cost, the people who are told that they need an implant or a cavity filled or anything else that can be delayed for a couple of months would delay treatment from the low cost and skimpy plans to the rich benefit plan.

She notes that most dental contracts are one year contracts. This one year contract feature offers a potential policy solution; extending the length of a dental insurance contract would most likely allow insurers to add insurance like functionality to the dental coverage. People may be willing to wait six months for better coverage to get a cavity treated but they are less likely to wait twenty three months for the better coverage to kick in. Also, fewer switching opportunities and longer shadows of the future will change behavior.

This paper has been stuck in my head for a while and as I was waiting for the dentist to check out my teeth earlier this week, I figured that I needed to share why dental insurance is mostly a buyer’s discount club card rather than decent insurance.

Montana, Massachusetts and Medicaid Buy-in

Over at Health Affairs, Dan Polsky and his co-authors looked at the breadth of networks and availability of initial PCP appointments for Employer Sponsored Insurance (ESI), broad Exchange networks and Medicaid in ten states in 2016.  Their results are valuable and not surprising in general.  Network breadth and appointment availability roughly coincide with the rates paid by the different types of insurance.  ESI has the most, Exchange is in the middle  levels of network breadth and availability while Medicaid tends to be skimpiest.

However, their Exhibit 3 and 5 intrigued me for two states.

Montana’s Exchange network were statistically indistinguishable from the Medicaid networks.  Montana’s Exchange PCP appointment availability were indistinguishable from Medicaid PCP appointment availability.  Massachusetts saw its Exchange products have similar PCP appointment availability than its Medicaid networks.

Medicaid buy-in is gaining popularity as a discussion subject.  I know New Mexico is aggressively exploring the possibility and other states are thinking about it. Emma Sandoe and I wrote about the evaluation lenses states need to have for buy-in proposals.

One of the challenges with a Medicaid buy-in is that it usually involves trade-offs.  Premiums tend to be lower as doctors and hospitals get paid less.  Lower payments usually implies skinnier effective networks and longer wait times.

In this study, Montana is not facing strong trade-offs between its Exchange and Medicaid.  Massachusetts is facing a network breadth trade-off but not an appointment availability trade-off.  This makes Medicaid buy-in an easier lift in these two states.

I bounced this idea off of some Montana folks, and they told me that the current focus for the Big Sky State is on the re-authorization of Medicaid expansion in 2019.  After that, there may be political and intellectual space for more ambitious proposals.

If Medicaid buy-in proposals get off the ground, the easiest lift will be in states where the Medicaid versus Exchange trade-offs are minimal.  Montana and Massachusetts are two plausible candidates.

Embracing the confusion

In Health Affairs, three researchers set up a simplified Medicare Part D choice experiment that used the plan finder to make better choices.  This is a big problem of choice on the Medicare Part D (and I expect on some ACA exchanges):

A sizable body of evidence indicates that suboptimal plan choices are pervasive. The vast majority of Part D enrollees do not choose the lowest-cost plan available to them.5 After the amount of protection that plans provide against unanticipated drug costs is accounted for, people are still estimated to overspend by about 30 percent of their total drug spending each year.6,7 Beneficiaries rarely switch plans, despite annual changes to plans’ costs and benefits,8,9 and it appears that plan selection has gotten worse over time despite older adults’ gaining more experience with the Part D program.7 …

When we examined the cumulative proportion of plans chosen by their total cost rank across the four study arms, we found that people in two of the experimental arms (the total cost only and total cost, premium, and out-of-pocket cost groups) selected the lowest- or second-lowest-cost plan about 65 percent of the time (exhibit 2). In comparison, people in the third experimental arm (the total cost and premium group) selected such plans 54 percent of the time, while control-group participants did so just 44 percent of the time.

Picking an insurance plan is tricky. And the business case of providing easy to make and near optimal choices is weak for an insurer.

If there is optimal choice defined as the patient minimizing their total expenditures and we assume that the prescribed drugs are going to be prescribed no matter what insurance policy, then an optimal choice means, from an insurer’s point of view, that they get some combination of lower premium revenue or higher share of drug expenditure as the out of pocket expenses that split the cost of the drugs are minimized. If everyone goes into the optimal plan for them, the insurer will be having lower premiums and higher expenses than if there is confusion and non-optimal and barely satificing choices made.

If one insurer offers exceptional decision support tools and another insurer offers mediocre or no tools to help with decision support (instead of merely marketing tools), the first insurer selects for a whole lot of uncompensated risk. Good decision support offered by an insurer is a risk selection magnet.

Now if we want people to have good decision support tools to help them make a complex choice, those tools have to be both effective and come from an outside third party. The current CMS tool for Part D plan choice does not seem too effective if less than half of the users pick a near optimal plan. This needs to get better.

If insurers know that there is a good, reliable, third party decision support tool that is widely used, they will adapt. Some of that adaption will be raising premiums for certain groups while other changes will be different benefit structures to capture small segments of the market.

I’m interested in this paper as I’m slowly putting together a research project that looks at ACA plan choices in an even simpler environment than the one that was tested. The TLDR from this project is that buying insurance is hard to do.

Silver switcheroo for you and me too

CMS released a technical guidance document on Friday that was very interesting to me, half a dozen other ACA pricing nerds and a bunch of insurers.  It has some very interesting news and hints about the future:

This is the federal government encouraging states to help their insurers hold harmless as many people as possible from the termination of regular CSR payments. And they even propose a twist that I had not thought about, Broad Switch.

Last year, we laid out four different options states had in the eventuality that CSR payments would be terminated.

Most states opted to allow insurers to put the CSR incremental costs onto only the Silver plans.  This is the “Silver Load” strategy that I’ve been talking about for over a year now.  Silver loading makes everyone but for off-Exchange Silver buyers either better off or worse off.  Silver loading requires these folks to either pay more or switch metal bands.

Some states, like California, took it a step further and had the CSR costs loaded onto only on-Exchange Silver plans with required near-mirror image off-Exchange only plans that had no CSR costs loaded.  This is the “Silver Switch.”

The Silver Switch holds everyone harmless if people are willing to spend time shopping for a plan of the metal type that they like.

CMS is strongly recommending states to Silver Switch.

This is interesting.  This improves the customer experience.  It also gives a hint that Silver Loading is here to stay.  I am updating my priors from Friday morning.  I think Silver Loading is far more likely to be around for the 2020 plan year than I thought last week.