Taking a Hatchet to healthcare (Pt. 1)

This will be a multi-parter on the P-Care proposal from Republicans.  I’m busy today.

Section 101: Repeal Obamacare
Standard Republican boilerplate with a lie in the first sentence as healthcare costs as a proportion of GDP actually decreased last year.

Section 201: Adopt Common-Sense Consumer Protections
Reinstate the popular to the employed middle class parts of Obamacare. Keep kids on parents’ insurance until the end of age 26, disallow life time limits. Tweak the age rating bands from a 3:1 ratio (Obamacare law) to 5:1 (pre-Obamacare usual and customary) despite that change having little acturial impact. The 3:1 ratio is roughly equal to the actual expected cost ratio for 21 to 64 year olds.
Guaranteed renewability is the Republican means of dealing with pre-exisiting conditions. However medical underwriting will now be allowed so the incentive will be for insurance companies to go do a very thorough record review to look for application ommissions such as failure to list acne as a pre-exisiting condition to deny cancer claims. It says there will be strong regulation, but really, how stupid are we to expect strong regulation from a Republican bill?
Section 202: Pre-exisiting conditions covered based on continious coverage
Continious coverage is the key here instead of the banning of medical underwriting. Basically, if someone is able to keep covered themselves insured, a new policy can’t be medically underwritten against them, they get general rates. The problem is people who have significant health problems AND significant income variation are highly likely to have months where they can not keep continous coverage. One bad stretch and a person is priced out of health insurance for life (although that life will be fairly short)
Section 203 – Empowering Small business and individuals
Basically allow for small business to pool resources together to reduce acturial variance and TAX CREDITS. Or we could just use the SHOP exchanges to do the same damn thing.

Refundable tax credits to individuals and families up to 300% Federal Poverty line. Obamacare has refundable tax credits up to 400% of FPL. Don’t allow those tax credits to be used for abortion (which basically would mean the individual health insurance market would offer very few if any policies covering abortion). Value of those credits are significantly reduced compared to Obamacare credits. For intsance a single 64 year old at 200% FPL would get a $3,720 Republican credit while s/he gets a $6,100 Obamacare subsidy. Two 64 year old non-smokers at 200% FPL would get $13,000 in subsidies from Obamacare or $8,800 from this Republican bill.

Oh yeah, since the Republicans have re-instated medical underwriting, those 64 year olds have the pre-exisiting condition of being OLD. They won’t get Obamacare rates, their rates for anything that provides decent coverage will destroy their subsidy in three or four months.
The idea behind the Republican bill’s smaller subsidy is that people have too much good insurance as it is, so a smaller subsidy will force more people to get catastrophic coverage only and then pay for day to day expenses out of pocket. The threat of destitution will make people extremely cost sensitive and thus extremely efficient shoppers.
Section 204 — More power to states
States can automatically enroll people into coverage equal to their subsidy value. I don’t have a problem with this. Given subsidy levels, these default plans will have deductibles in the $15,000 to $20,000 range. High risk pools will be formed again and be chronically underfunded. Interstate compacts are allowed (as they are now for regulation and selling of insurance, but the Georgia and Maine examples show that few companies really want to sell across state lines)
Section 205 Expand HSAs and Consumer Directed healthcare
Allow pre-tax dollars to pay for non-prescription and over the counter goods and services. Expand allowable uses of HSA dollars. Either of these proposals is worth talking about as they are fairly small bore.

Being broke is not being poor

Paul Krugman is reraising a common and key insight into poverty which is not well captured by federal poverty guidelines:

By security, I mean that you have enough resources and backup that the ordinary emergencies of life won’t plunge you into the abyss. This means having decent health insurance, reasonably stable employment, and enough financial assets that having to replace your car or your boiler isn’t a crisis.

There is a clear distinction between being broke and being poor from this insight.  Being broke means having no cash available, but having access to sufficient resources that the every day minor oh-shit moments are not a crisises as resources were available to manage the problem.  Being poor means the minor oh-shit moments can easily become a crisis because there are no resources available.

When I was in college, I was consistently broke.  I lived in a flophouse one summer with anywhere from seven to sixteen other people paying some share of the monthly rent.  The most I paid was $86.75 for August.   I sold myself to science as the pay and food was good, and I knew where there was free food offered by every department.  As a student I was broke and under federal poverty guidelines, I was poor.

However, I had resources.  I had good health insurance through my parents.  When I woke up and my knee was swollen to the size of a grapefruit while the patella had dislocated itself, I swore in pain but not in concern about how to get through the day without seeing a doctor.  I went to student health services after calculas, and then hopped a bus to see an orthopedic surgeon.  She  drained 38 CC of fluid.  I owed $20 in co-pays and had to buy a cane. I would have rather spent the $20 on beer, but oh well, I could walk well enough in three days.   When I was scrambling to come up with a security deposit for the first apartment that I would share with my girlfriend and now wife, I could go to my parents and ask that the security deposit and a good dinner with family be my graduation present. 

This is a crucial distinction between being poor where there are few good choices over the long run as people operate from scarcity thinking  and being broke.  I was able to access resources and behave almost a Friedmanesque lifetime income hypothesis individual.  (As a side note, this is why I discount the experiences of the 1% who claim they were poor in college — they might have been broke, but mommy and daddy could take care of anything)  This is a weakness of the poverty guidelines as they are income based and not resources based.  Some people may have rather low incomes but have the ability to call on resources in an oh-shit scenario, and others may have slightly above poverty level incomes but have no resources that turns an oh-shit scenario into a crisis. 

Health insurance is one of the most important resource that is an on-call and hopefully not needed resource, so two individuals with the same income but where one has decent health insurnace and the other does not have two very different abilities to absorb bad news from a doctor.

7 million will be reached

Some important news on Exchange enrollment from the Health and Human Services blog:

Since the beginning of open enrollment, millions of Americans are gaining access to health coverage–many for the very first time—thanks to the Affordable Care Act. The most recent data indicates that approximately 3.0 million people have now enrolled in a private health insurance plan through the Federal and State-based Marketplaces since October 1.

This data strongly implies one million people enrolled for the February 1st coverage start date during the month of January.  That is a minimal pressure deadline as someone who was healthy enough to not get in on the December rush is probably healthy enough to not really need to get in on February. Procrastination is only so much fun.  I am projecting the same number of people will sign up for the March 1, 2014 coverage start date by February 15th.  That pushes the number to roughly 4 million private policies. 

The Massachusetts experience was that the greatest wave of enrollment was right before the hardest deadline when actual money was on the line.  We know there was a big flurry of older and probably sicker people signing up in December.  The young are entering the pools number, so getting an enrollment wave as large or larger than December for the March 15th deadline is highly probable.  And if that is the case 6.5 to 7 million people will be enrolled by April 1, 2014.  And then there will be the normal enrollment churn as people have different qualifying events that will put them on and take them off Exchange. 


Open Thread – When I make a word do a lot of work like that, I always pay it extra…

I love words, despite the indignities I enforce upon them, so I relish a little bit of grammar geekery.

Geoffrey K. Pullum has a wonderfully nasty post up at Lingua Franca and a wonderfully wonky post up at Language Log, both discussing an article by Washington Post blogger Alexandra Petri.

Petri piles on poor old Bill Keller (isn’t being married to Emma punishment enough for you jackals?), not only for being a concern troll and a horrible human being but, worse still, a blatant and premeditated user of “passive constructions” in his writing. As Petri puts it:

Concern trolls thrive on passive constructions the way vultures thrive on carcasses.

Pullum wonders whether Petri might be getting her “passive” confused with her “obscured agency”, and details his analysis in the Language Log post. There are tables and numbered lists. It’s great fun.

Pullum also links to his tutorial essay which provides a “clear and simple explanation of what a passive clause is” in English, and his forthcoming article Fear and Loathing of the English Passive (pdf):

No folk rhetorical property could yoke together this diverse array of constructions. What is going on is that people are simply tossing the term ‘passive’ around when they want to cast aspersions on pieces of writing that, for some ineffable reason, they don’t care for. They see a turn of phrase that strikes them as weak in some way, or lacks some sort of crispness or brightness that they cannot pin down, and they call it ‘passive’ without further thought. And such is the state of knowledge about grammar among the reading public that they get away with it.

If concealed passives dipped in a little bit of scorn are your thing, then that will keep you entertained for a while.

Meanwhile, in segues, music. Sunday is Australia Day, and one of Australia’s proudest traditions – besides pretending to have invented pavlova*; meat pies; footballers in tiny shorts; dispossessing indigenous peoples; and shipping coloured people back where they came from – is the Triple J Hottest 100. Voting on the best music releases for 2013 has ended, but if you feel like an Aussie weekend, tune in online at 12 noon Sunday Sydney time (Saturday evening for most of you).

You may have to crank up the thermostat and buy some Australian beer to get you in the mood. Think James Boag or Little Creatures. Please don’t buy Fosters, because it is watered-down mule piss.

Cheers, buckeroos. I’m off to bed, for there is to be much drinking today, so that we’ve got a headstart on Sunday. I’ll post a post at Hottest 100 kickoff time for anyone who wants to listen along.

ETA: * Edited for accuracy

EATA: Jesus, you’re going to turn me into Greenwald.

Petri probably was using the term “passive construction” in some rhetorical sense to mean “hiding behind the alleged views of others”, but that means she was being unclear, and exposing herself to the argument that she didn’t know what the term meant. I’m a writer who agonises over every word (and I still manage to fuck up half my posts). I try to use words in a way that avoids confusion, and Petri wasn’t doing that.

I agree, however, that that doesn’t mean she deserves to be called a nincompoop.

EOATA: It is, of course, entirely possible that Ms Petri is, in fact, a nincompoop.

At this stage, I’m just enjoying typing “nincompoop”.

On Target

The big news in the healthcare world was that Target Corporation would stop offering health insurance to part time workers effective 4/1/14.  Over the long run, this is good policy news. 

Here is the Minnesota Star Tribune:

The Minneapolis-based retailer will give each worker $500 to help buy health insurance, and has arranged for one-on-one consultations with benefits manager Towers Watson to help with the transition….In the article, Kozlak acknowledged the disruption to workers. But she said the exchanges might offer options that some workers will prefer, and noted that those who qualify for subsidies and tax credits could find insurance that is less expensive than their current plan offered by Target….

Target, the nation’s second-largest discount retail chain, said less than 10 percent of its workforce of about 361,000 participates in the health plan for part-time workers….

The change goes into effect April 1, the company’s normal open-enrollment period. It will affect those who average 20 to 31 hours a week.

Health policy wonks across the political spectrum have at least a shared common stated goal of decoupling employment from health insurance over the long run.  Companies don’t want to be health insurance purchasers and managers, people don’t want to be tied to a job because that is the only place they can get health insurance and the federal government does not want health insurance tied to employment for tax reasons.  It is a massive economic and societal distortion that should be facilitated away. 

Target’s plan to shift 35,000 people to the Exchanges is the first of many companies deciding that it does not want to be the health insurance point of contact when an adequate or better replacement is available.  This was part of the plan of PPACA as the Exchanges in 2014 were overwhelmingly built for individuals and very small companies, by 2017, they are able to be open to any employer group. 

And honestly speaking, most of the people who are no longer eligible to renew their plan at Target because Target is not offering it will be better off.  Assuming an average wage of $10 an hour and a full work year, the income ranges from $10,500 to $16,750.  In expansion states, that is the sweet spot of the Medicaid expansion so people will be getting very low co-pay insurance and a $500 bonus from Target.  In non-Expansion states, this a little messier.  If the person is single, the vast majority of people are subsidy eligible, and can get cost-sharing assistance Silver plans with a very significant subsidy.  If the person is trying to insure a family, they might be stuck due to fucking Chief Justice Roberts et al as their income (if this is a sole source of income for the family) is too high for legacy Medicaid but too low for subsidies.  I am hoping Target is thinking this through to make sure these people are no worse off. 

Over the long run, we should expect to see more employers put their employees on the Exchange either directly by no longer offering coverage and paying the employer mandate fee OR by giving their employees a subsidy to buy insurance on the SHOP exchanges in the next couple of years.  And from a policy perspective, this is a good to very good thing.

Good news everybody

Covered California is reporting some good enrollment numbers for coverage effective February 1st.

And the preliminary total of enrollments in Covered California health insurance plans from Oct. 1, 2013, through Jan. 15, 2014, has increased to more than 625,000….

Covered California™ and the California Department of Health Care Services (DHCS) announced today that 500,108 Californians enrolled for health insurance and selected plans through the end of 2013

 soaring past November’s enrollment of 78,377…

California added 125,000 individuals between January 1st and January 15th to Exchange plans.  These people will receive coverage starting February 1st. 

I want to pick out a couple of important notes.  First, enrollment is deadline driven so a significant drop-off between enrollment before Dec. 24th and Jan. 15th was expected.  Secondly, if I am reading the statement correctly, the 125,000 people signed up only signed up in January, so it is a monthly pace of a quarter million people or 8,000 people a day.  That is more than triple Covered California’s November pace.  Covered California did not have significant website issues suppressing the enrollment in November.

And now onto some extrapolations and suppositions:

1) Doing a linear population weighted extrapolation, the February 1st coverage national cohort could be a million or more people.

2) I’m betting the risk pool for Covered California got a little bit healthier and a little bit younger than the 4th quarter 2013 enrollment risk pool.

3) I’m also betting narrow networks were more frequently chosen.  This is a bet based on the assumption that people with the highest known healthcare needs have mostly already signed up.  These people had pre-established relationships with providers and they’re willing to pay extra to keep those relationships intact.  If the risk pool is younger and healthier, fewer people will have frequent contact with the medical care system, so more people will be shopping primarily on price instead of network.

4) February 20th to March 15th will be massive.

Narrow networks and price takers

A regular commenter asked me a good question via e-mail this morning:

This morning on my local NYC public radio station, there was a call in segment regarding  the cost of polices on the exchanges coming in lower than anticipated. A woman caller, claiming to be a physician, was stating that she would not buy her coverage on the exchange, because the payment rates to providers was less than what is paid, if she buys her insurance directly from the provider. (Blue Cross.) She also stated that a significant number of doctors will not accept the exchange coverage policies as a result of the lower levels of reimbursement. If this is true….

This is true.  This is the provider side of low cost narrow networks. 

Wonkblog has a good explainer on narrow networks from the patient point of view:

Narrow networks are health insurance plans that place limits on the doctors and hospitals available to their subscribers…

Less choice in a health plan typically means lower premiums. First, the insurance plan can decide to only sign contracts with the hospitals that charge lower prices…

Narrow network plans have become increasingly popular in recent years, growing from 15 percent of the insurance plans that employers offered in 2007 to 23 percent in 2012….

approximately 70 percent of the exchange plans are either narrow or ultra-narrow plans, according to a study by McKinsey and Co. The consulting firm defined “narrow” as having at least 30 percent of the 20 largest hospitals in the geographic region not participating

Pricing and indepdendent quality metrics are at best minimally correlated.  Narrow networks can be both cheap and effective at delivering high quality health care.  They can also be cluster-fucks, but that is not a function of narrowness per se. 

So how does a network go from being a broad network to a narrow network.  Let me take Mayhew Insurance as an example.  We offer two networks on the Exchange.  The first is our regular commercial network minus a few idiosyncratic opt-outs.  It is 99.8% of our regular network.  Since we are including everyone, we don’t have a ton of pricing leverage as the providers know we are the price-taker in this case.  We’ve offered our standard commercial rates which range from Medicare plus 20% to Medicare plus 125% depending on specialty, location and group size/clout. 

The other network is Mayhew Narrow.  This is a network that is 47% of the general network.  The way that the network was assembled was that we set a price that we would pay at Medicare plus a smidgen (highly technical term right there).  Company reps went out to the general network and asked if they wanted into the Exchange network at Medicare plus a smidgen.  This allowed us to be price-makers as a company.  The first round produce a network that was almost good enough to sell.  A second pass at a slightly better smidgen went to several selected specialty groups that filled out the network to a point where the sales people thought we could sell a broad enough network at a low enough price point. 

There are a lot of providers who aren’t in Mayhew Narrow but are in Mayhew Big.  Most of those providers are out for one of two reasons.  The first is that they were willing to take Medicare plus a smidgen but did not have admitting privileges to hospitals that were also willing to take Medicare plus a smidgen and were unwilling to get privilges at a Mayhew Narrow hospital.  The second is a provider or their finance manager looked at Medicare plus a smidgen and laughed at the number.