Enrollment reminders on December Deadline day

Enrollment for January 1, 2016 coverage closes at midnight on the 15th for most states.  All states that use and most of the state based exchanges have a deadline then.  Here are a few reminders for how to make decisions as you look for on-Exchange healthcare.

  • If you make under 200% FPL (~$23,000 for a single person) look very strongly at Silver as Silver is bumped up to either Platinum Plus or Gold Plus coverage with Cost Sharing Subsidies.
  • Before you shop, write down your maximum comfort level of being hit with a mega bill.
  • Try to find coverage where the out of pocket maximum is slightly less than your discomfort level
  • Write down who your preferred doctors are and what hospitals you use or want to use
  • Check to see if those providers are in network
  • Make sure you have filed your taxes or will file them as soon as possible for 2014.
  • If you make over 400% FPL, look to buy off-Exchange as there are more plans as OFf-Exchange is all On-Exchange plus a few more options.
  • If you live in a Medicaid rejection state and your income is just below 100%, if you can make a good faith estimate to bump your income to 100.1% of FPL, do so.
  • If you need any help, talk to a navigator
  • Use this thread as a resource.  I’ll be checking throughout the day and will help when and where I can.

FTC and healthcare cost control

The Federal Trade Commission (FTC) was in the news earlier this week.  They, in conjunction with the Commonwealth of Pennsylvania, are filing suit to stop a hospital chain merger in the middle of that state.

The Federal Trade Commission has authorized an action to block Penn State Hershey Medical Center’s (Hershey) proposed merger with PinnacleHealth System, alleging that the combination of the two health care providers would substantially reduce competition in the area surrounding Harrisburg, Pennsylvania, and lead to reduced quality and higher health care costs for the area’s employers and residents….the merged entity would control approximately 64 percent of this market, likely leading to increased healthcare costs and reduced quality of care for more than 500,000 local residents and patients….Hershey is a 551 bed…Pinnacle is a not-for-profit three hospital system…combined total 610 beds….

1,161 beds is not a huge hospital system.  Two hospitals that I can see from the lunch room window have more beds that the four hospitals in question.  However the question is not about absolute size, but relative size and market power.

If we use beds in service as a reasonable proxy for market share in the market region, Central Pennsylvania is already a concentrated market. A merger would take a concentrated and minimally competitive market and make it far worse. HHI is a measure of market concentration, a larger number means less competitive (10,000 is pure monopoly).

I am making a worst case assumption that Rest of Market is a single provider, so the HHI Index value is a maximum number, if there are multiple independent hospitals, the HHI will decrease.

HHI index H-P Central PA, 2 scenarios

HHI index H-P Central PA, 2 scenarios

The FTC uses the HHI index as a fast guide to their analysis for future actions. Their guidelines are here. The most relevant part is on horizontal mergers paragraph C:

The Agency regards markets in this region to be highly concentrated. Mergers producing an increase in the HHI of less than 50 points, even in highly concentrated markets post-merger, are unlikely to have adverse competitive consequences and ordinarily require no further analysis. Mergers producing an increase in the HHI of more than 50 points in highly concentrated markets post-merger potentially raise significant competitive concerns, depending on the factors set forth in Sections 2-5 of the Guidelines. Where the post-merger HHI exceeds 1800, it will be presumed that mergers producing an increase in the HHI of more than 100 points are likely to create or enhance market power or facilitate its exercise. The presumption may be overcome by a showing that factors set forth in Sections 2-5 of the Guidelines make itunlikely that the merger will create or enhance market power or facilitate its exercise, in light of market concentration and market shares

The FTC’s job is to minimize the accumulation of hookers and blow by market moving entities at the expense of the public.  Mergers in already non-competitive markets to make the market is even less competitive are attempts to extract social surplus from the public and transfer it to the merged entity’s primary stakeholders in the form of hookers and blow.  Hospitals are already concentrated market movers.

 Cutler and Morton in 2014 found the following regarding hospital concentration:

More populous areas are less concentrated on average. Even still, concentration is pervasive. Nearly half (n = 150) of hospital markets in the United States are highly concentrated, another third (n = 98) are moderately concentrated, and the remaining one-sixth (n = 58) are unconcentrated. No hospital markets are considered highly competitive.[my emphasis]

The FTC can be a significant cost control lever.   An aggressive FTC that cracks down on almost all hospital mergers as a default response would increase competition.  There is some theoretical bipartisan support  to aggressive anti-trust merger review and potentially a coalition of wonks that would support actual trust and monopoly busting via the courts.  The question is whether or not the FTC in 2017 will have high level political support to engage in default opposition to most insurer and provider mergers in most market segments?

That is the political question.  I am not too optimistic about that answer as hospitals and  more importantly doctors are some of the most trusted individuals and entities in the American public discourse.  A doctor crying on camera that a merger disapproval will not let her treat her patients as well as she wants to is a powerful image that half a dozen policy nerds can’t credibly counter-act.  The fate of the Cadillac tax shows the limits of wonk power to change policy when that policy change enrages significant elements of both political parties coalitions.  Yet, an aggressive FTC is one of the few “easy” or at least non-legislative routes to containing healthcare costs.

Reference Pricing tweak for Medicaid

Reference pricing is a common payment reform for commercial insurance.  Common, non-urgent, deferrable procedures are prime candidates.  Hip replacement is the classic example in California.  There, CalPers sets a flat fee for hip replacement.  If a covered individual chooses a hospital that has a price below the benchmark, CalPers pays the full benefit minus any normal cost-sharing.  If the hospital price is above the benchmark, the individual pays normal cost sharing plus the gap between the reference price and the total price.

It is a scheme that delivers pain to non-preferred behavior.  Behavior has changed.  Hospitals over the benchmark reduced their prices and people shifted hospitals.

It works partially because employer sponsored insurance has built in expectations of high deductibles and co-payments and more importantly, employer sponsored coverage is for people who have some income and probably some assets that can cover a one time expense.

Reference pricing as it is currently built is problematic for Medicaid.  Medicaid covers people who don’t have significant assets nor income.  Furthermore, Medicaid is strictly limited in the out of pocket costs it can impose on individuals.  Non-waivered Medicaid may have only de minimis cost sharing. Waivered Medicaid limits cost-sharing to no more than 5% of a family’s income.  Traditional reference pricing can’t work if the total incremental cost of going to a high cost provider is capped at an extremely low level.

However, there is a potential tweak that could make this alternative payment system work well for Medicaid as well as incorporate my argument for three way gain sharing.

Read more

Better curves in the future

Many  health policy wonks going to sleep at night dreaming about curves.  Long sinuous curves, short sharp ones leading to discontinuous jumps and drops, local minima and maxima.  Curves are what they dream as changing the healthcare cost curve is one of the Holy Grails of American federal policy making as the cost of healthcare dominates the fiscal possibility space of the next two generations .

The Urban Institute had a briefing paper  on continuous coverage.  It is increasing.  From the September 2014 to September 2015, 5% more Americans had coverage for the entire year (80.9% vs. 75.6%).  The gain is evenly split from people who previously were uncovered and people who had sporadic coverage.


Urban Institute Continuous coverage

Why does this matter from a cost curve perspective?

Read more

Leave it to Rapist

The News Director Vlae Kershner at the San Francisco Chronicle thought it would be a good idea to compare Trent Mays, one of the teens who raped a girl in Steubenville last summer, to lovable scamp Eddie Haskell from Leave it to Beaver.

Fans of classic TV will remember Eddie Haskell from “Leave It To Beaver”. Making mischief, getting his friends in trouble, sucking up to their parents as if he were the nicest boy who ever lived.
If the writers had cast Eddie as the bad guy in a crime show instead of a sitcom, he might have resembled Trent Mays. He’s one of two teenagers convicted in juvenile court Sunday of digital penetration (which in Ohio constitutes rape) of an intoxicated 16-year-old girl in Steubenville last August.

So a helpful way to understand how this boy raped a girl, we should consider a late-50s fictional television personality who modeled mischievous boyhood?

And Happy Birthday to the Affordable Care Act! According to Michelle Bachmann, it’s old enough to kill all the women, children, and old people.

On today’s #TWiBRadio, we discuss how Republicans continue their #SayAnything2012 campaign, the legacy of Steubenville, and we take our listener feedback.

Subscribe on iTunes | Subscribe On StitcherDirect Download | RSS

And this morning on #amTWiB, #TheMorningCrew Elon and Aaron troll the show with their jukeboxing, the price to act like a slave, and the dangers of bikini waxing.

Subscribe on iTunesSubscribe On Stitcher| Direct DownloadRSS