1332 juiced up

Margot Sanger-Katz from the NY Times flags an interesting pre King vs. Burwell Republican plan that is actually interesting in a non-sarcastic manner.

Let’s look at it with the 53 page PDF here:

Section 101 is the three options a state has if the Supreme Court ruled in favor of the fabulist argument advanced in King. Option 1 would be to stay under PPACA and establish a state based exchange. Option 2 would be a complete withdrawal from PPACA with no subsidies. Option 3 would be to establish a HSA like equivilent of coverage with most of the regulator requirements, taxes and mandates of PPACA thrown out. This is actually interesting if the funding makes sense. The default assumption is a complete opt-out. States would have to to opt into either Option 1 or Option 3.

Section 102 talks about the state alternative with HSA. It wipes out mandates and federal regulation. Essential health benefits, minimal actuarial value coverage and other regulatory requirements of PPACA that define a qualified health plan also are junked in this section. 102-4-A authorizes an initial HSA grant and the rest of 102-4 describes the mechanics of that grant. 102-C establishes a public health block grant that is 2% of the eligible funds for the HSA.

Section 103 determines the size of the HSA subsidy. This is where the money matters. The HSA amount is age and geography adjusted which is very similar in function as the ACA benchmark Silver is determined by zip code and age of the recipient. Bingo — 103-1-B is good news.
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Fee Schedule

The Society of Actuaries commissioned Milliman to do a great review of the different payment methodologies and their risk profiles for a wide variety of stakeholders in 2015.  It is a great read (for the right definition of a great read).  One of the things that I want to pull out is the chart below.  It is a fairly standard commercial, employer sponsored insurance contract.  The number is the multiplier applied to the Medicare fee for service fee schedule.

Let’s follow the money to see what we actually value.

There are a couple of very useful things to pull out of this table. First, the topline number is that the same services for a commercial plan will cost 170% or more than what Medicare pays.  This is why one of the major goals of liberal health policy is to drive more services to pay providers rates closer to Medicare than Commercial.

The second most interesting thing to me is the payment for evaluation and management services.  E&M codes are the primary care physician codes.  These are codes that involve a good deal of time and talking and far less cutting and doing.  We pay people lots of money to either cut something or do something.  We don’t pay for talking as much.  So we get a lot of cutting and doing and not as much talking.



Time to not hate on Manchin

Senator Joe Manchin (D-WV) is in a horrendous political position of dead incumbent walking. He is a Democrat in West Virginia with an election coming up in 2018. West Virgnia has steadily been going Republican for a generation and it went heavily for Trump in 2016. It is also heavily dependent on Medicaid and the Exchanges because it is a state with a lot of very poor people in it with high health needs.

Earlier this month, Senator Manchin made his comments on the ACA:

Instead of repealing the Affordable Care Act, Congress should work together to fix the parts of the law that don’t work, Sen. Joe Manchin, D-W.Va., told reporters Wednesday.

Manchin said Congress should work on the law “piece by piece,” instead of repealing the entire thing….

He followed up earlier this week reiterating the “Repair” language with Jake Tapper.

This is straight out of the Mend don’t End messaging playbook and I think this also works with a general Democratic defense of the law. LGM has a good preview:

As with all other issues, the default position of the Democratic caucus should be “no.” Make it clear that there will be no initial negotiations on a replacement plan. Hope that the tensions within the Republican caucus either cause the effort to collapse on itself, or results in repeal-and-replace. The longer this drags out, the better the chances of preserving the ACA. Obstruct. Delay. Vote no.
If the Republicans were to offer cosmetic changes to the ACA — slightly less generous subsidies and more rentier skimming for Medicaid, say, but preserving the basic structure of the ACA and making it worse in ways that could be fairly easily fixed by the next Democratic Congress — this would be one of the few instances in which the bad politics of collaborating with Republicans would be substantively beneficial enough to be worth it. But I think this will be a moot point. This would be the smart political play for Republicans, and I suspect McConnell would go along — but I don’t think Ryan will.

The ACA needs a technical correction bill. If Manchin is on board with cosmetic changes that make the bill slightly worse (Copper plan for instance) while getting a host of technical corrections in place (family glitch is the big one) at the trade-off of more Health Savings Account tax breaks, that would be great. I don’t know if that is where Manchin wants to go. But if the most vulnerable Democratic incumbent is on the Repair rather than Repeal kicker, this is good news for caucus unity.

The privilege behind bake sale and GoFundMe “insurance”

The grocery store near my old house has a set of jars out collecting change for a young girl with cancer.

GoFundMe has a huge numbers of campaigns for people who need help paying for care.

A Tweep and an occassional beer drinking buddy pointed the limitations of community charity based fundraising for care:

More importantly, let’s think about what a successful fundraising drive for $20,000 or more needs?

For a successful campaign a few things are needed.  First the beneficiary has to be sympathetic to the public.  An eight year boy who needs a lung transplant to play baseball is sympathetic.  A forty seven year old with Hep-C because of a bad series of decisions made in her twenties is not sympathetic.  We’ll also need to throw in considerations of broader sympathy for race, age, and disease type.  We quickly devolve into a discussion of the deserving versus non deserving poor.

After we have a sympathetic beneficiary, the fundraising drive needs a core nucleas of powerful, forceful advocates who can make the fundraising their primary activity and focus for months if not years on end.  This excludes people who are new to areas, it excludes people who have lost significant elements of their family (if my family had a need, my older sister is the natural point person to organize anything needed), it excludes general assholes and curmudgeons.

And once a sympathetic beneficiary is identified with a forceful advocate, they have to access a broad network of both tight and loose ties in order to actually raise money.  There are quite a few kickstarters and GoFundMes that fail misterably because the people who are pushing great ideas or truly needy projects either have no ability to connect to a wide network or can connect to a wide network that has minimal ability to give.

The Balloon Juice community has demonstrated the power of loose ties to raise significant sums of money for a sympathetic beneficiary (MARC animal shelter) with a strong advocate (John).

So the GoFundMe and bake sale method of health care financing is fraught with privilege and let’s remember that when we hear calls to rely on the charity of neighbors instead of systemic funding for a humane baseline of care via collective social action.

Incentives matter


This is why we call. This is why we organize. This is why we politely but firmly get in our representatives faces. Representatives are mostly lazy and they’ll go down the route that promises them the easiest win. We need to change that calculus and making the lives of representatives who are persuadable but currently voting against our interest unpleasant in a legal and above board manner will change priorities. Repeal and not Replace has, in my opinion, a short time frame for the act to be commissioned. It has to happen fast or it won’t happen as more and more of the 218 people who will vote to screw tens of millions of our fellow citizens for ideological reasons will get scared of the blowback. Let’s keep on informing the swingables that there will be blowback.

And let’s make it clear that opposition is a clear winner for any and all Democrats even the ones that drive most of this readership (myself included) nuts during normal times.

But to get away from healthcare for a moment, let’s look at where the incentives may be conceivably perverted:

The Trump administration could have a strong incentive to hope for a terrorist attack within the United States. It did not hurt Bush and the Republicans in 2002 or 2004. And it would allow for a massive shock doctrine purge of the civil service in the intelligence community.  People rally around the flag, people get suspicious of expanding the circle of US instead of THEM and the fear of another attack shuts down critical thinking and allows the few voices speaking out to be marginalized as Saddam lovers (that was the 2002 play-book as I remember it).

So incentives matter and in this last case, they are perverted.

Pessimism Index update

I have moved from 70% pessimism to 80% pessimism given the fast Senate and House vote to kick off reconciliation and a few other things that I’ve heard that the plan really is to jump off a cliff and weave a parachute out of pubic hair and pocket lint on the way down.

US Drug price negotiating and OECD subsidization

I’m trying to figure out a model to make the following make sense to me regarding the US negotiating or not negotiating drug prices through the purchasing power of Medicare.  I’m picking on Enplaned from comments just because this is a fairly common argument structure:

Health authorities of other countries routinely get lower prices for their citizens on drugs than are charged in the US. What this means is that US consumers effectively subsidize those of Europe, for instance. This makes sense for drug companies because selling it for less in Italy or Germany or whatever is still additional profit, assuming it’s greater than the cost of production.

What’s the model that produces this statement?

My best bet at figuring out a model is one that assumes drug distributors are actually profit satisficing entities and not profit maximization entities.

By this I mean the implied model assumes that the C-level of a major multi-national drug company will decide that they want a set annual return on equity for the next fiscal year.  They can sell in three markets.  The United States, the rest of the OECD (middle class and higher industrial countries) and the rest of the world.  Rest of the world is broke so most of the sales of expensive drugs there are marketing loss leaders and charity care.  The primary decision point then is how to allocate profits from the disjointed US market where almost no one with market power can say no and the rest of the OECD where locally concentrated buyer power can effectively say no.   So it is an allocation decision that the US will supply 75% of the net profit and the rest of the OECD will supply 25% of the profit.  Now under this profit satisficing model if Medicare is authorized to say no and exclude certain drugs from coverage, the US, all else being equal would now only supply 60% of the profit and without any other changes the OECD would supply 25% of the profit and then there would be a 15% decrease in net profits.  However in this story, the drug companies now will raise rates in the rest of the OECD so they supply 40% of the profits so total profits under either scenario are the same.

I have a hard time buying this and reconciling this implicit model with the left/liberal critique that drug companies are soulless bastards who are trying to make money above all else.

What if we follow the logic of profit maximization through the entire drug pricing decision chain?

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