New Dems and revisiting Alexander-Murray

The New Democratic Coalition wants to revive Alexander-Murray again. Modern Healthcare has the details:

The 101-strong New Democrat Coalition wants to fund reinsurance and cost-sharing reduction payments in a package that closely resembles the deal struck last Congress by Senate health committee leaders Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.)….
To prod leadership into action, the group sent a letter urging prompt committee action to key committee leaders—Frank Pallone (D-N.J.) of Energy and Commerce, Chair Richard Neal (D-Mass.) of Ways and Means, and Bobby Scott (D-Va.) of Education and Labor.

Kimberly Leonard notes that this has an interesting intra-caucus tension:

An associate jackal sent me the letter which will be below the fold.

Alexander-Murray was a good bill for its context. It sought to address significant concerns and possible concerns. Everything in that bill except for the catastrophic plan section had a straight forward chain:

Identifiable Problem — Clear text with a clean logic model — Problem addressed with a high probability of solving the problem that was identified

  • It appropriated funds for Cost Sharing Reduction (CSR) for two years as almost everyone except for Balloon-Juice readers were convinced that not funding CSR would do very bad things to the market.
  • It handled a variety of 1332 issues that several states had complained about.
  • It sent the navigation and enrollment assistance funding away from HHS and to the states.
  • It kicked CMS in the butt to get Section 1333 (interstate compacts for opt-in multi-state markets) regulations written.
  • Significant reinsurance funding to lower non-subsidized premiums.

All of that made sense at the time.

And most of that bill still makes sense. Section 1332 waiver boundaries and rules can be cleaned up. Navigation and enrollment assistance to the states at Alexander-Murray levels would increase enrollment. Section 1333 regulations would be a good thing for states that want to create larger, inter-state risk pools to reduce variance costs. Reinsurance or other forms of assistance would help the non-subsidized buyers.

However as I have argued many times, the termination of cost sharing reduction subsidies is not sabotage. It instead has actually strengthened the market. The cohort of people earning between two and four times the federal poverty level are seeing much lower net of subsidy pricing.

As I noted in October 2017, the world has changed:

Inaction means, over the long run, more people will get low(er) out of pocket expenses/lower deductible insurance for lower premiums through structured, subsidized exchanges. I think that after a year or two, the expected social contract of what “acceptable” publicly subsidized insurance will move to Gold instead of Silver plans. Lower cost Gold plans and very affordable Bronze plans will increase long run uptake of PPACA insurance among people who earn between 200 percent and 400 percent FPL. This is a group with more political power than Medicaid recipients and Medicaid recipients were able to successfully mobilize to defend their interest this year. Appropriating CSR and thus maintaining the status quo is closer to conservative policy and ideological preferences than resetting the effective benchmark to Gold.

Ironically, we’re now far closer to the Obama 2007 healthcare plan today than we were on January 19, 2017.

There can be good reasons for liberals and Democrats to agree to appropriate CSR. Rep. Pallone’s 2018 HR 5155 appropriated CSR but used the fund flow to expand CSR eligibility and levels as well as expand premium tax credit subsidy eligibility to more people. But the fundamental nature of the ACA has changed due to the termination of CSR and the politics have changed since October 2017 when there was a legitimate fear that not paying CSRs would cause the market to collapse.

But that trade-off has to be made with a recognition of reality. Terminating CSR has created a different market that is more favorable, in isolation, to Democratic policy preferences than Republican policy preferences. The New Dem coalition needs to realize that it was not effective sabotage but a backdoor incidental strengthening.
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Medicaid Partial Expansion and the Counterfactual

What is the counterfactual?

That is the critical question in evaluating any policy. What are the policy outcomes being compared against? Is the counterfactual current law/current guidance of the law? Is the counterfactual current local policy? Is the counterfactual something else? These are all valid counterfactuals for a variety of questions. Choosing one counterfactual over another sometimes will not matter. Sometimes it matters a great deal.

It matters a great deal when analyzing the implications of Medicaid Partial Expansion. The relevant counterfactual will be different depending on the state. Massachusetts should have a counterfactual of current law of full expansion while Georgia should have a counterfactual of current law and local policy of no expansion. Utah is a special case and I’m not sure what the right counterfactual is.

Why does this matter?

Healthcare Dive is highlighting a report from the Kaiser Family Foundation:

Partial Medicaid expansion with Affordable Care Act matching funds could limit state spending, but it will come at the cost of fewer people insured than full Medicaid expansion, according to the Kaiser Family Foundation.

Yes, partial Medicaid expansion will cover fewer people than full Medicaid expansion. If that is not the case, someone is doing partial wrong. But is that the relevant counterfactual in states like Georgia or Tennessee?

I don’t think it is the right counterfactual.

Right now, it does not look like full expansion of Medicaid to adults earning no more than 138% federal poverty level(FPL) is on the table. The choice set is either a change in current policy in the form of a partial expansion of Medicaid to adults earning up to 100% FPL or no change in policy. No change in policy means people earning over 100% FPL and less than 138% FPL still qualify for exchange subsidies and out of pocket assistance. No change in policy means there is significant friction on enrollment that keeps people in this cohort from being continually covered. No change in policy means that almost everyone who earns under 100% FPL will not be exchange assistance eligible and many will not be able to be eligible for Medicaid. That, I think, is the relevant counterfactual for current non-expansion states.

Now for states that have already fully expanded Medicaid but would like to off load some costs back to the Federal government in the form of a partial expansion of Medicaid, current policy and current law is the relevant counterfactual.

Determining the right counterfactual determines the questions which determines the answers one gets. Getting the counterfactual right is critical.

The Senate, the 2020 Democratic Primary and health plans

This is just a reminder.

Democratic candidates for President will be releasing quite a few health policy plans now and over the next several months. Those plans will be some variant of Medicare for All or pothole fillers for the ACA or somewhere in between. Some of them will be technically good in the sense that they have a clearly defined logic model that explains where we are, where they want to go and how to get there. They won’t invoke magic. Other plans are fantasies and feel good signifiers that would fall apart at the first touch of legislative text in a universe with seventy five willing Senators and 290 willing members in the House.

All of that is important. I like candidates who don’t invoke magic to explain how they intend to achieve their policy ends.

One of the critical things to remember though is that these plans don’t matter too much. The critical combination (as always) is 218-51-1-5 in 218 votes in the House (including the Speaker willing to schedule the vote), 51 in the Senate (including the Majority Leader willing to schedule the vote) a President to sign the law and 5 votes on the Supreme Court to interpret the law against highly probable challenges.

Under one branch of highly plausible scenarios, the winning coalition of 51 votes in the Senate will have Senator Manchin (D-WV) as a key member of the winning coalition on any health insurance reform bill. Under another branch of plausible scenarios, the marginal Senate vote is either Senator Collins (R-ME) or Senator Murkowski (R-AK).

Keep that in mind as you evaluate plans.

I think that the process of planning reveals quite a bit about candidates and their ability to be an executive even if there is a significant probability that anything that they propose won’t ever pass as initially proposed.

So remember the Senate as we listen to campaign promises.

Catastrophic plans in a no subsidy cap world

Rep. Frank Pallone (D-NJ) is a Congressman to watch if one is interested in health policy. He is the chairman of the House Energy and Commerce committee.  This is a key healthcare committee.  He introduced HR 5155 last Congress that was a pragmatic set of tweaks and fixed to the Affordable Care Act.  His bill is an off-tackle run that is seeking to advance the football without trying to score an eighty three yard touchdown on a single touch.  I think a bill like this will be seen as a “minimal 10 day fix” bill if there is a Democratic trifecta in 2021 and that trifecta decides to spend its effort and time on another domain and wants to get a medium sized healthcare bill out during lull times.

One of the sections is the removal of the 400% FPL cap on premium tax credits.

This solves the ACA cliff problem. Someone making 399% FPL has a very strong incentive to not earn another dollar as that dollar could cost them thousands or tens of thousands of dollars in premium subsidies depending on location, age and family size. Cliffs are usually a BAD THING (TM) in public policy.

A side effect of this proposal or any other proposal that removes the subsidy cap is that it makes the Catastrophic plans pointless. This is not a big deal as Catastrophic plans have never been more than a small part of the risk pool. They are a specialized plan which have fascinated me.

Catastrophic plans are currently available to anyone who is younger than age 30 or who has a hardship exemption. A common hardship exemption is that there is no “affordable” coverage available to an individual. “Affordable” means an insurance plan was offered for less than 8.16 percent of income in 2017. In 2019, an additional hardship exemption will broaden catastrophic eligibility as people who live in single insurer counties will automatically qualify for a hardship exemption. Catastrophic plans are not eligible for premium tax credits, which means that buyers pay the full premium without assistance from the federal government.

Catastrophic plans in 2019 have slightly lower actuarial value in comparison with bronze plans. The deducible is set at the maximum allowed out-of-pocket limit ($7,900 in 2019), and after that all costs are covered. Three primary care visits are excluded from the deductible. Currently, catastrophic plans are risk adjusted only against other catastrophic plans.

They have a non-subsidized pricing advantage over Bronze only because they are not in the shared risk adjustment pool.

If there is universal subsidization, then their pricing advantage is highly likely to disappear. Subsidies change the relevant premium numbers for buyers from the price level to the price spreads. Silver gapping matters to catastrophic buyers.
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Medicare for (what do you mean…)

Austin Frakt and Aaron Carroll at the New York Times Upshot lay out the ten different Medicare for (SOMETHING) plans that are floating out there. They illuminate the trade-offs. They show the choices that the different plans are making.

And then they bring in an expert panel of some of the best health policy and health economic voices to bring some more insight to the challenges. Finally, and best of all, they ask you for your opinions on the major choices.

Below is my preference set as compared to the Medicare for (Something) plans out there.  My big priority is universal coverage.  Everything else is a detail in my mind.  Different values and different judgement will produce different results.