Gnawing Away at Healthcare

Paul Krugman - May 7, 2018 - At the beginning of 2017, Republicans promised to release the kraken on Obamacare — to destroy the program with one devastating blow. But a funny thing happened: Voters realized that repealing the Affordable Care Act would mean taking health insurance away from tens of millions of Americans. They didn’t like that prospect — and enough Republicans balked at the backlash that Obamacare repeal fizzled.

But Republicans still hate the idea of helping Americans get health care. So instead of releasing the kraken, they’ve brought on the termites. Rather than trying to eliminate Obamacare in one fell swoop, they’re trying to undermine it with multiple acts of sabotage — while hoping voters won’t realize who’s responsible for rising premiums and falling coverage.

Which is why it’s important to place the blame where it belongs.

The first thing you need to understand is that Obamacare has been a highly successful program. 

When the legislation was passed, Republicans insisted it would fail to cut the number of uninsured and would blow a huge hole in the federal budget. In fact, it led to major gains in coverage, reducing the uninsured rate to its lowest level in history, at relatively low cost.

It’s true that the coverage expansion was somewhat less than originally predicted, although the shortfall was much less than you may have heard. It’s also true that after initially offering surprisingly cheap policies on the Obamacare exchanges, insurers found that the people signing up were sicker, on average, than they expected, leading to higher premiums. But as of last year, the markets appeared to have stabilized, with insurers generally profitable.

Nobody would claim that Obamacare is perfect; many Americans remain uninsured, and too many of those with coverage face troublingly high out-of-pocket expenses. Still, health reform delivered most of what its advocates promised and caused none of the disasters its opponents predicted.

Yet Republicans still want to destroy it. One reason is that much of the coverage expansion was paid for with taxes on high incomes, so repeal would be a way to cut taxes on the wealthy. More broadly, conservatives hate Obamacare precisely because it works. It shows that government actually can help tens of millions of Americans lead better, more secure lives, and in so doing it threatens their low-tax, small-government ideology.

But outright repeal failed, so now it’s time for sabotage, which is taking place on two main fronts.

One of these fronts involves the expansion of Medicaid, which probably accounted for more than half the gains in coverage under Obamacare. Now a number of Republican-controlled states are trying to make Medicaid harder to get, notably by imposing work requirements on recipients.

What is the point of these work requirements? The ostensible justification — cracking down on able-bodied Medicaid recipients who should be working but aren’t — is nonsense: There are very few people meeting that description. The real goal is simply to make getting health care harder, by imposing onerous reporting and paperwork requirements and punishing people who lose their jobs for reasons beyond their control.

The other front involves trying to reduce the number of people signing up for private coverage. Last year the Trump administration drastically reduced outreach — the effort to let Americans know when and how to get health insurance.

The administration is also promoting various dodges that would in effect let insurance companies go back to discriminating against people in poor health. And when Congress passed a huge tax cut for corporations and the wealthy, it also eliminated the individual mandate, the requirement that people sign up for insurance even if they’re currently healthy.

Preliminary evidence suggests that these efforts at sabotage have already partially reversed the coverage gains achieved under Obama, especially among lower-income Americans. (Curiously, all the coverage losses seem to have happened among self-identified Republicans.) But the worst is yet to come.

You see, G.O.P. sabotage disproportionately discourages young and healthy people from signing up, which, as one commentator put it, “drives up the cost for other folks within that market.” Who said that? Tom Price, President Trump’s first secretary of health and human services.

Sure enough, insurers are already proposing major premium hikes — and they are specifically attributing those hikes to G.O.P. actions that are driving healthy Americans out of the market, leaving a sicker, more expensive pool behind.

So here’s what’s going to happen: Soon, many Americans will suffer sticker shock from their insurance policies; federal subsidies will protect most of them, but by no means everyone. They’ll also hear news about declining insurance coverage. And Republicans will say, “See, Obamacare is failing.”

But the problem isn’t with Obamacare, it’s with the politicians who unleashed this termite infestation — who are doing all they can to take away your health coverage. And they need to be held accountable.

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Tom Price, Somewhat Belatedly, Starts Telling the Truth About Obamacare

It took longer than expected, but disgraced former Health and Human Services Secretary Tom Price appears to have been welcomed back into polite society. Untethered from the political concerns that dictated what he could say either as a congressman or Cabinet member, Price is now able to tell certain truths about health care policy—though, in telling them now, he only confirms his own dishonesty about them when it mattered. 

Speaking at the World Health Care Congress on Tuesday morning, Price laid out the consequences of congressional Republicans’ decision to eliminate the individual mandate penalty in last year’s tax reform bill. 

“There are many, and I’m one of them, who believes that [removing the mandate] actually will harm the pool in the exchange market, because you’ll likely have individuals who are younger and healthier not participating in that market,” he said, “and consequently, that drives up the cost for other folks within that market.” 

You’ve got to love the “actually” here. Actually, the mandate—an imperfect instrument—was put into the Affordable Care Act for a policy purpose. Democrats didn’t, actually, put the mandate into the bill because they found it politically wise to irritate constituents for the sport of it, actually. No, really. They actually did it to achieve balanced risk pools. And now that it’s gone, it will actually upset the balance of risk pools and increase premiums. This is an actual thing. 

Price’s point about the mandate is actually the opposite of what he said in his capacity as the administration’s point person on health care reform during negotiations over the bill last year. 

“The individual mandate is actually one of those things that is driving up the cost for the American people in terms of coverage,” Price said in a July 2017 interview on ABC’s This Week shortly after the dramatic failure of health care reform on the Senate floor. 

With legislative repeal-and-replace seemingly dead, Price was considering what administrative relief he could bring to health care markets, and an expansion of individual mandate waivers was high on the list. He didn’t get very far. In September, he resigned under scrutiny for chartering fancy planes for lengthy flights between D.C. and Philadelphia. Good to see that he’s landed on his feet. 

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Soaring premiums send thousands in Maine over a health care cliff

Insurance costs have grown by as much as 110 percent for those who earn too much to receive Affordable Care Act subsidies.

Escalating premiums and deductibles have driven about 10,000 Mainers over a health care “cliff,” where they can barely afford coverage thanks to a vulnerability in the Affordable Care Act exploited by the actions of the Trump administration.

Depending on the plan chosen, premiums have increased by about 70 percent or more since 2014 for people who earn too much to qualify for subsidies for the federal health care program. By contrast, ACA enrollees with subsidies have been mostly shielded from rate increases. The lack of a cap on premium increases, or other cost controls, for ACA enrollees who earn more than 400 percent of the federal poverty limit leaves them unprotected, making the “affordable” part of the program for some impossible.

Those cost hikes have accelerated since President Trump took office, and ratepayers are expected to be pummeled with giant rate increases again in 2019. Rates haven’t yet been filed with the Maine Bureau of Insurance, but will be by May.

“The cliff is real,” said Erik Wengle, a research analyst with the Urban Institute, a Washington-based think tank. “These plans have gotten quite expensive, and as they’ve gotten more expensive, we’re seeing people getting priced out.”

People earning more than 400 percent of the federal poverty limit – about $81,000 for a family of three, $65,000 for a two-person family or $48,000 for a single person – are not eligible for subsidies in the ACA marketplace.

“These are people firmly in the middle class,” Wengle said.

COSTS VARY COUNTY BY COUNTY
This subset – consistently about 10 to15 percent of the 75,000 Mainers who have ACA marketplace insurance – have seen their premiums soar. A 40-year-old single nonsmoker in Cumberland County who earns $50,000 per year has seen premiums for a silver plan increase from $284 per month in 2014 – the first year the ACA marketplace was in effect – to $489 in 2018, a 72 percent increase. If that same person lived in Aroostook County, he or she would have seen premiums increase from $376 per month to $790 per month, a 110 percent hike, according to an Urban Institute analysis.

Meanwhile, those who qualify for the subsidies are mostly protected from premium increases, because the subsidies go up roughly the same amount that premiums increase. For example, some silver plans in 2018 cost about $300 to $350 for those just under 400 percent of the poverty level, while bronze plans can be purchased for about $75 to $150, depending on where in Maine you live.
For those who don’t qualify for subsidies, they shoulder the entire burden of the increases.

Eric Cioppa, Maine Bureau of Insurance superintendent, said the state intends to start a reinsurance program for 2019 that will help keep insurance premiums in check, but affording insurance will still be difficult, especially for those who make more than 400 percent of poverty level.

“It’s literally becoming unaffordable if you’re over 400 percent,” Cioppa said.

The ACA categorizes its plans as bronze, silver or gold, with bronze having the lowest premiums but high deductibles; gold offering generous benefits, higher premiums and lower deductibles; and silver plans falling in the middle.

COUPLE ADVISED TO EARN LESS
For the Rices of Durham and the Williamses in Stonington, both empty-nester families that earn more than 400 percent of the poverty limit, going over the affordability cliff means sky-high deductibles and premiums.

“I have to bite my tongue when people complain about a $20 premium increase. I feel like saying, ‘Are you kidding me? Let me show you what I pay,’ ” said Jane Rice, a financial adviser who owns a Christmas tree farm with her husband, David, 60.

Rice, 57, said her husband has previously had prostate cancer and currently is being treated for esophageal cancer, and they expect to hit the out-of-pocket maximum, which this year is about $25,000, including premiums and deductibles.

Their total premiums are $1,500 per month with an $11,000 deductible.

Both are self-employed small-business owners who don’t have access to employer-based insurance – one of the key categories of people the ACA was designed to help. And for business owners who make less than 400 percent of the poverty level, it has kept insurance relatively affordable. But those who earn more have increasingly had to pay more.

Rice said she’s been told a few times that they “need to make less money.” The cliff effect creates a reverse incentive, because health care costs increase dramatically once enrollees earn slightly more than 400 percent of the poverty level.

“I reject that. I want to be successful and for our businesses to be successful,” Rice said.
She declined to list their family income, but she said the only way they’ve been able to afford insurance is by being frugal.

“We live within our means and we are hard-working people,” Rice said. “Sometimes it feels like we are paying the equivalent of insurance for six people, not two. It has just been ridiculous. It is just not right.”

Judy and John Williams of Stonington said they earn about $100,000 but they’ve also seen the cost of health insurance jump to nearly unaffordable levels. But as a couple nearing retirement age, they value insurance and know they need it, even though they’ve been generally healthy. As lobstermen, the couple don’t have access to employer-based insurance.

Ann Woloson of health advocacy group Consumers for Affordable Health Care says “we are creating a sicker, more expensive health insurance marketplace” when young people have little incentive to get coverage and people like John and Judy Williams, above, subsidize care for everyone else. 

John is 63 and Judy is 62, and they pay a combined premium of $1,997. Their deductible was $750 four years ago, but now it’s $5,400.

“We have to spend nearly $12,000 before the insurance kicks in,” John Williams said. “We’re very fortunate that we can pay the premiums, but it’s a lot of money.”

He said that they are looking forward to age 65 when Medicare kicks in and coverage is free, although many often purchase “gap insurance” to pay for things that insurance doesn’t cover. But he said he doesn’t mind knowing that people who earn less can get insurance for far less.

People earning up to about $27,000 in Maine can qualify for zero-premium bronze plans through the ACA, while typical premiums for people who earn about $40,000 to $45,000 are about $200 to $300 per month, depending on age and where you live. Insurers can charge up to three times more based on age, and can charge more based on address.

Williams said the disparity is unfortunate, but doesn’t change his opinion that insurance should be affordable. He said it doesn’t bother him that some at lower incomes have access to zero-premium insurance while he and Judy have expensive insurance.

“People that need insurance should be allowed to have it. Everyone should be able to afford insurance,” Williams said.

ACA FIXES HAVEN’T BEEN ENACTED
The Trump administration in 2017 ended cost-sharing reduction payments to insurance companies – payments that were designed to help lower-income people afford out-of-pocket costs such as co-pays and deductibles. Ending the cost-sharing reduction payments had no effect on lower-income people, but increased premiums for people earning more than 400 percent and skewed the market. To prevent further weakening of the ACA marketplace, state insurance commissioners, including in Maine, responded with complicated work-arounds that resulted in zero-premium bronze plans and lower-cost gold plans that were much better deals than in previous years.

The ACA, as former President Barack Obama’s signature domestic policy achievement, has been caught up in partisan politics almost since it was signed into law in March 2010. Trump campaigned against it, and has vowed to get rid of it.

Most Republicans in Congress agreed with Trump, while Democrats have stood behind it and worked with a few moderate Republicans, including Maine Sen. Susan Collins, to save the law.

In 2017, Congress attempted to repeal the ACA, but those efforts failed by one vote in the Senate, with Collins one of three senators to buck the party and vote to preserve Obamacare. But in a year-end party-line vote, Collins sided with Republicans on a tax cut package that included repealing the Affordable Care Act’s individual mandate. Collins supported the tax bill in exchange for Republican leadership promises to pass ACA stabilization measures, but those efforts collapsed last month.

Repealing the individual mandate – which requires people to purchase insurance or pay a penalty – makes it more likely that young, healthy people will not purchase insurance, driving up costs, according to health care experts.

Ann Woloson, executive director of Consumers for Affordable Health Care, an Augusta-based health advocacy group, said the cost of insurance for those making more than 400 percent of the poverty limit prices people out if they have any kind of significant debt – such as car payments, mortgages and other loans.

“It is unaffordable and unsustainable for people,” Woloson said. “We are creating a sicker, more expensive health insurance marketplace.”

One of the fixes touted by Collins – a federal plan to direct $30 billion over three years for reinsurance – would have helped keep premiums in check for people above the subsidy threshold. But it was paired with another reform – restoring the cost-sharing reduction payments – that received a mixed review in a Congressional Budget Office report released last week.

The work-arounds created by states lowered premiums for many, so unwinding those work-arounds when restoring the insurance company payments would cause many earning less than 400 percent to experience premium increases. The mixed CBO report and a fight over Obamacare abortion restrictions supported by Republicans deep-sixed the deal.

Democrats have since launched a counterplan that would, among other things, cap costs for those making more than 400 percent of poverty level to 8.5 percent of their income. With Republicans in control of Congress, it’s not likely to go anywhere, at least this year.

Woloson said the ACA is still standing and helping about 20 million Americans, through Medicaid expansion and ACA coverage. Maine voters approved Medicaid expansion in November but Republican Gov. Paul LePage is fighting Democrats in the State House over implementation costs.

‘ESSENTIAL’ BENEFITS NOT COVERED
Complicating the health care picture is a state-run reinsurance program that was put on hold when the ACA started. A LePage-era reform, it is likely to be relaunched and take effect in 2019.

The state’s reinsurance plan – called the Maine Guaranteed Access Reinsurance Association – redistributes insurance money by charging a fee of $4 per person per month on individual, small and large group plans, and funneling the revenue only to individual plans. The plan would also tap into federal money to help pay for what is estimated to be a $90 million program in 2019, according to Milliman, an insurance consultancy firm. That will help keep premiums 10 percent lower than they otherwise would be, but since rates haven’t been filed yet, Cioppa, the Maine Bureau of Insurance superintendent, said it’s unknown what the rate hikes will be for 2019.

The Trump administration is also promoting the expansion of short-term and association plans that would further undermine the ACA markets, Woloson said. Those short-term and association plans would be exempt from “essential health benefits” that all ACA plans are required to cover, such as maternity care, mental health, prescription drugs and substance use treatment. While they would carry lower premiums, Woloson said, patients would often find that many services aren’t covered, which was often the case with individual plans purchased prior to passage of the ACA. Often these plans were called “junk insurance” and if allowed to flourish would further weaken the ACA and could cause premium spikes, Woloson said.

The Trump administration has indicated that the association and short-term plans are on the way, but they are still going through federal rule-making.

Kevin Lewis, chief executive officer of Community Health Options, a nonprofit that provides ACA insurance, said what will happen with short-term and association plans is a “big looming question” of “paramount importance.”

Cioppa said Maine law currently allows for “rigorous” regulation of short-term and association plans. As long as the federal government doesn’t try to usurp state authority to regulate those plans, Cioppa said that Maine will be able to prevent them from weakening the ACA marketplace.

In addition to the 10,000 who have ACA marketplace plans and earn more than 400 percent of the federal poverty limit, an additional 9,000 people have off-marketplace plans, and many of them also would not qualify for subsidies.

Meanwhile, John Williams, the Stonington lobsterman, said the system needs an overhaul.

“All I know is, there’s got to be a better way of doing this than what we’re doing now,” Williams said.

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Maine Passes a Ballot Initiative to Expand Obamacare

In another blow to Trump, voters in the state approved Medicaid expansion.

In a night full of repudiations of Donald Trump, here’s one more. Maine voted on Tuesday to embrace a key element of Obamacare, approving a ballot initiative to accept the Affordable Care Act’s expansion of Medicaid to everyone who makes up to 138 percent of the federal poverty line. (In 2017, that’s $16,642 for an individual or $33,948 for a family of four.) It’s expected that around 80,000 people in Maine will gain Medicaid coverage when expansion is implemented.

As I wrote earlier Tuesday, expanding Medicaid in Maine will offer a variety of benefits for the state:

For a rural state like Maine, expanding Medicaid could shore up finances for a number of hospitals that are in danger of closing—more than half the state’s hospitals are currently losing money. Part of the problem is that the ACA cut funding for health providers who provide uncompensated care to uninsured patients—patients who were now supposed to be covered under Medicaid. But when Maine and other states refused to expand Medicaid, health care providers were left without any way to recover those funds.

Studies have shown that Medicaid expansion has both benefited the people who gain coverage and also reduced costs for everyone who buys insurance. A 2016 government study looked at how Medicaid expansion lowered the cost of premiums for people who buy insurance on Obamacare’s individual exchanges, finding (when controlling for various factors) that premiums were 7 percent lower in places with Medicaid expansion. 

Expansion won’t immediately go into effect. As Emma Sandoe, a former Department of Health and Human Services spokesperson, explained earlier this week, there are various ways that Republican Gov. Paul LePage, a vocal opponent of Medicaid expansion, could slow-roll the initiative.

This is the first time voters have directly weighed in on Medicaid expansion. There are currently 19 states (if you include Maine) that haven’t implemented the program. As Republican governors continue to block this part of Obamacare, it’s likely that health care advocates in other states will try the ballot initiative route.

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The ground has shifted on US health care reform: Opinion

— Congress's failed effort to undo Obamacare this year revealed an important political shift in the U.S.: Americans are no longer content to let people go without health insurance. As the Affordable Care Act has taken root, most have come to believe the federal government has a responsibility to make sure everyone is covered.

Republicans should take note: Another stab at destroying Obamacare is not what voters want. Instead, both parties should dedicate themselves to building on it — and, to that end, work is needed by the end of this month, when insurers are due to sign contracts to sell policies on the state exchanges next year.

To be sure, merely shoring up Obamacare won't bring universal coverage. The law has cut the number of uninsured by half, but 26 million people remain without coverage, and that number is expected to rise. To eliminate this gap, big new initiatives are needed: automatic enrollment of the uninsured into subsidized, no-frills plans, for example, or state programs that let people buy Medicaid policies.

For the moment, however, it's essential to keep the ACA functioning. President Donald Trump and Republicans in Congress have argued for dumping Obamacare and starting over, but the most sensible path toward universal coverage is to build on the progress already made toward that goal.

The immediate danger is that individual policies sold through state exchanges may be priced out of the market. This threat stems directly from the Trump administration's efforts to destabilize that market. Each month, the president holds out the possibility that he might refuse to reimburse insurers for lowering some policy holders' out-of-pocket costs, as the ACA provides. And this is driving insurers to either push up premiums or leave the market altogether.

Here are four things all advisors should know about the current state of single payer in California and beyond.

Congress could counteract the sabotage by expressly appropriating the subsidies, at least through 2018. It could also create a permanent federal reinsurance program to help insurers pay the biggest claims. Alaska and Minnesota have demonstrated how this strategy keeps premiums to a minimum.

Such steps will appeal more to Democrats than to Republicans — so in return Democrats should agree to allow states greater authority to determine the minimum requirements for insurance policies sold on the Obamacare exchanges. Some states, for example, would like to allow relatively cheap catastrophic-care policies combined with health savings accounts to be sold on their exchanges.

Republican Senator Lamar Alexander of Tennessee and Democratic Senator Patty Murray of Washington are having a conversation of this kind. Their push for legislation is made more urgent by the White House's continuing efforts to sow division. Most recently, the Trump administration slashed the ACA's advertising budget by 90 percent. If that results in fewer healthy customers being attracted to open enrollment this fall, premiums could rise higher.

Recognizing that the country's attitude to health care has shifted should make bipartisan compromise on the issue — hitherto hard to imagine — possible for the first time. Congress needs to stop fighting over Obamacare, and begin discussing how best to get from here to granting all Americans access to health insurance.

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Republicans' Proposed Medicaid Cuts Would Hit Rural Patients Hard

For the hundreds of rural U.S. hospitals struggling to stay in business, health policy decisions made in Washington, D.C., this summer could make survival a lot tougher.

Since 2010, at least 79 rural hospitals have closed across the country, and nearly 700 more are at risk of closing. These hospitals serve a largely older, poorer and sicker population than most hospitals, making them particularly vulnerable to changes made to Medicaid funding.

"A lot of hospitals like [ours] could get hurt," says Kerry Noble, CEO of Pemiscot Memorial Health Systems, which runs the public hospital in Pemiscot County, one of the poorest in Missouri.

The GOP's American Health Care Act would cut Medicaid — the public insurance program for many low-income families, children and elderly Americans, as well as people with disabilities — by as much as $834 billion. The Congressional Budget Office has said that would result in 23 million more people being uninsured in the next 10 years. Even more could lose coverage under the budget proposed by President Trump, which suggests an additional $610 billion in cuts to the program.

That is a problem for small rural hospitals like Pemiscot Memorial, which depend on Medicaid. The hospital serves an agricultural county that ranks worst in Missouri for most health indicators, including premature deaths, quality of life and even adult smoking rates. Closing the county's hospital could make those much worse.

And a rural hospital closure goes beyond people losing health care. Jobs, property values and even schools can suffer. Pemiscot County already has the state's highest unemployment rate. Losing the hospital would mean losing the county's largest employer.

"It would be devastating economically," Noble says. "Our annual payrolls are around $20 million a year."

All of that weighs on Noble's mind when he ponders the hospital's future. Pemiscot's story is a lesson in how decisions made by state and federal lawmakers have put these small hospitals on the edge of collapse.

Back in 2005, things were very different. The hospital was doing well, and Noble commissioned a $16 million plan to completely overhaul the facility, which was built in 1951.

"We were going to pay for the first phase of that in cash. We didn't even need to borrow any money for it," Noble says while thumbing through the old blueprints in his office at the hospital.

But those renovations never happened. In 2005, the Missouri legislature passed sweeping cuts to Medicaid. More than 100,000 Missourians lost their health coverage, and this had an immediate impact on Pemiscot Memorial's bottom line. About 40 percent of their patients were enrolled in Medicaid at the time, and nearly half of them lost their insurance in the cuts.

Those now-uninsured patients still needed care, though, and as a public hospital, Pemiscot Memorial had to take them in.

"So we're still providing care, but we're no longer being compensated," Noble says.

And as the cost of treating the uninsured went up, the hospital's already slim margins shrunk. The hospital went into survival mode.

The Affordable Care Act was supposed to help with the problem of uncompensated care. It offered rural hospitals a potential lifeline by giving states the option to expand Medicaid to a larger segment of their populations. In Missouri, that would have covered about 300,000 people.

"It was the fundamental building block [of the ACA] that was supposed to cover low-income Americans," says Sidney Watson, a St. Louis University health law professor.

In Missouri, Kerry Noble and Pemiscot Memorial became the poster children for Medicaid expansion. In 2013, Noble went to the state capital to make the case for expansion on behalf of the hospital.

"Our facility will no longer be in existence if this expansion does not occur," Noble told a crowd at a press conference.

"Medicaid cuts are always hard to rural hospitals," Watson says. "People have less employer-sponsored coverage in rural areas and people are relying more on Medicaid and on Medicare."
But the Missouri legislature voted against expansion.

For now, the doors of Pemiscot Memorial are still open. The hospital has cut some costly programs — like obstetrics — outsourced its ambulance service and has skipped upgrades.

"People might look at us and say, 'See, you didn't need Medicaid expansion. You're still there,' " Noble says. "But how long are we going to be here if we don't get some relief?"

Relief for rural hospitals is not what is being debated in Washington right now. Under the GOP House plan, even states like Missouri that did not expand Medicaid could see tens of thousands of residents losing their Medicaid coverage.

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GOP Plan To Trim Insurance Benefits Might Not Tame Premiums

As House Republicans try to find common cause on a bill to repeal and replace the Affordable Care Act, they may be ready to let states make the ultimate decision about whether to keep a key provision in the federal health law that conservatives believe is raising insurance costs.

Conservatives from the House Freedom Caucus and members of a more moderate group of House Republicans, the Tuesday Group, are working on changes to the GOP health overhaul bill that was pulled unceremoniously by party leaders last month when they couldn't get enough votes to pass it.

At the heart of those negotiations is the law's requirement that most insurance plans offer 10 specific categories of "essential health benefits." They include hospital care, doctor and outpatient visits and prescription drug coverage, along with things like maternity care, mental health and preventive care services.

The Freedom Caucus had been pushing to strip required benefits, arguing that the coverage guarantees were driving up premium prices.

"We ultimately will be judged by only one factor: if insurance premiums come down," the Freedom Caucus chairman, Rep. Mark Meadows, R-N.C., told The Heritage Foundation's Daily Signal last month.

But moderates, bolstered by complaints from patient groups and constituents, fought back. And a brief synopsis of a proposal outlined by Rep. Tom MacArthur, R-N.J., suggests that the compromise could be letting states decide whether they want a federal waiver to delete essential health benefits.
"The insurance mandates are a primary driver of [premium] spikes," Meadows and Sen. Ted Cruz, R-Texas, wrote in March.

But health analysts and economists say that eliminating those benefits probably won't bring premiums down — at least not in the way conservatives are hoping.

"I don't know what they're thinking they're going to pull out of this pie," says Rebekah Bayram, a principal consulting actuary at the benefits consulting firm Milliman. She is the lead author of a recent study on the cost of various health benefits.

Opponents of the required benefits point to coverage for maternity care and mental health and substance abuse treatment as things that drive up premiums for people who will never use such services.

But eliminating those benefits wouldn't have much of an impact, Bayram says. Hospital care, doctor visits and prescription drugs "are the three big ones," she says. "Unless they were talking about ditching those, the other ones only have a marginal impact."

John Bertko, an actuary who worked in the Obama administration and served on the board of Massachusetts' health exchange, agrees: "You would either have very crappy benefits without drugs or physicians or hospitalization, or you would have roughly the same costs."

Maternity care and mental health and substance abuse, he says, "are probably less than 5 percent" of premium costs.

Of course, requiring specific coverage does push up premiums to some extent. James Bailey, an assistant professor of health economics at Creighton University in Omaha, has studied the issue at the state level. He estimates that the average state health insurance mandate "raises premiums by about one-half of 1 percent."

Those who want to get rid of the required benefits point to the fact that premiums in the individual market jumped dramatically from 2013 to 2014, the first year the benefits were required.

"The ACA requires more benefits that every consumer is required to purchase regardless of whether they want them, need them or can afford them," Ohio Insurance Commissioner Mary Taylor said in 2013, when the state's rates were announced.

But most of that jump was not due to the broader benefits, Bayram says, but to the fact that for the first time sicker patients were allowed to buy coverage.

"The premiums would go down a lot if only very healthy people were covered and people who were higher risk were pulled out of the risk pool," she says. (Some conservatives want to change that requirement, too, and let insurers charge sick people higher premiums.)

Meanwhile, most of the research that has been done on required benefits has looked at plans offered to workers by their employers, not policies available to individuals who buy their own coverage because they don't get it through work or the government. That individual market is the focus of the current debate.

Analysts warn that individual-market dynamics differ greatly from those of the employer insurance market.

Bailey says he "saw this debate coming and wanted to write a paper" about the ACA's essential health benefits. But "I very quickly realized there are all these complicated details that are going to make it very hard to figure out," he says, particularly the way the required benefits work in tandem with other requirements in the law.

For example, says Bertko, prescription drugs can represent 20 percent of costs in the individual market. That's far more than in the employer market.

Another big complication is that the required benefits do double duty, Bayram says. They not only ensure that consumers have a comprehensive package of benefits, but enable other parts of the health law to work by ensuring that everyone's benefits are comparable.

For example, the law adjusts payments to insurers to help compensate plans that enroll sicker-than-average patients. But in order to do that risk adjustment, she says, "all of the plans have to agree on some kind of package. So if you think of essential health benefits as an agreed-upon benchmark, I don't know how they can get rid of that and still have risk adjustment."

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

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President Obama's memo on the eve of Republican vote to repeal and replace Obamacare

"When I took office, millions of Americans were locked out of our health care system. So, just as leaders in both parties had tried to do since the days of Teddy Roosevelt, we took up the cause of health reform. It was a long battle, carried out in Congressional hearings and in the public square for more than a year. But ultimately, after a century of talk, decades of trying, and a year of bipartisan debate, our generation was the one that succeeded. We finally declared that in America, health care is not a privilege for a few, but a right for everybody.

The result was the Affordable Care Act, which I signed into law seven years ago today. Thanks to this law, more than twenty million Americans have gained the security and peace of mind of health insurance. Thanks to this law, more than ninety percent of Americans are insured – the highest rate in our history. Thanks to this law, the days when women could be charged more than men and Americans with pre-existing conditions could be denied coverage altogether are relics of the past. Seniors have bigger discounts on their prescription drugs. Young people can stay on their parents’ plans until they turn 26 years old. And Americans who already had insurance received an upgrade as well – from free preventive care, like mammograms and vaccines, to improvements in the quality of care in hospitals that has averted nearly 100,000 deaths so far.

All of that is thanks to the Affordable Care Act. And all the while, since the law passed, the pace of health care inflation has slowed dramatically. Prices are still rising, just as they have every year for decades – but under this law, they’ve been rising at the slowest rate in fifty years. Families who get coverage through their employer are paying, on average, thousands of dollars less per year than if costs kept rising as fast as they were before the law. And reality continues to discredit the false claim that this law is in a “death spiral,” because while it's true that some premiums have risen, the vast majority of Marketplace enrollees have experienced no average premium hike at all. And so long as the law is properly administered, this market will remain stable. Likewise, this law is no “job-killer,” because America’s businesses went on a record-breaking streak of job growth in the seven years since I signed it.

So the reality is clear: America is stronger because of the Affordable Care Act. There will always be work to do to reduce costs, stabilize markets, improve quality, and help the millions of Americans who remain uninsured in states that have so far refused to expand Medicaid. I’ve always said we should build on this law, just as Americans of both parties worked to improve Social Security, Medicare, and Medicaid over the years. So if Republicans are serious about lowering costs while expanding coverage to those who need it, and if they’re prepared to work with Democrats and objective evaluators in finding solutions that accomplish those goals – that’s something we all should welcome. But we should start from the baseline that any changes will make our health care system better, not worse for hardworking Americans. That should always be our priority.

The Affordable Care Act is law only because millions of Americans mobilized, and organized, and decided that this fight was about more than health care – it was about the character of our country. It was about whether the wealthiest nation on Earth would make sure that neither illness nor twist of fate would rob us of everything we’ve worked so hard to build. It was about whether we look out for one another, as neighbors, and fellow citizens, who care about each other’s success. This fight is still about all that today. And Americans who love their country still have the power to change it."

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The Original Lie About Obamacare

President Obama signing the health insurance reform bill at the White House in 2010. Credit Doug Mills/The New York Times 

 

David Leonhardt NYTimes

You hear it from Republicans, pundits and even some Democrats. It’s often said in a tone of regret: I wish Obama had done health reform in a bipartisan way, rather than jamming through a partisan bill.

The lament seems to have the ring of truth, given that not a single Republican in Congress voted for Obamacare. Yet it is false —demonstrably so.

That it’s nonetheless stuck helps explain how the Republicans have landed in such a mess on health care. The Congressional Budget Office released a jaw-dropping report Monday estimating that the Republican health plan would take insurance from 24 million people, many of them Republican voters, and raise medical costs for others. The bill effectively rescinds benefits for the elderly, poor, sick and middle class, and funnels the money to the rich, via tax cuts.

The AARP doesn’t like the bill, nor do groups representing doctors, nurses, hospitals, the disabled and people with cancer, diabetes and multiple sclerosis. Other than that, Mrs. Lincoln, it’s a great bill.

If Republicans still pass it, they will take political ownership of the flawed American health care system — after making it much more flawed. Tom Cotton, the Republican senator from Arkansas, has said the bill is so bad that it would “put the House majority at risk next year.” On the other hand, if Republicans fail to pass their own bill, they’ll look weak and incompetent, which is also not a good look to voters.

How did the party’s leaders put themselves in this position? The short answer is that they began believing their own hype and set out to solve a problem that doesn’t exist.

Obamacare obviously has flaws. Most important, some of its insurance markets — created to sell coverage to the uninsured — aren’t functioning well enough. Alas, Paul Ryan, Mitch McConnell and Donald Trump are not trying to fix that problem. They’re trying to fix a fictional one: saving America from a partisan, socialistic big-government takeover of health care.

 

To understand why that description is wrong, it helps to recall some history. Democratic attempts to cover the uninsured stretch back almost a century. But opposition to universal government-provided insurance was always too strong. Even Lyndon Johnson, with big congressional majorities, could pass programs only for the elderly and the poor — over intense opposition that equated Medicare with the death of capitalism.

So Democrats slowly moved their proposals to the right, relying more on private insurance rather than government programs. As they shifted, though, Republicans shifted even farther right. Bill Clinton’s plan was quite moderate but still couldn’t pass.

When Barack Obama ran for president, he faced a choice. He could continue moving the party to the center or tack back to the left. The second option would have focused on government programs, like expanding Medicare to start at age 55. But Obama and his team thought a plan that mixed government and markets — farther to the right of Clinton’s — could cover millions of people and had a realistic chance of passing.

They embarked on a bipartisan approach. They borrowed from Mitt Romney’s plan in Massachusetts, gave a big role to a bipartisan Senate working group, incorporated conservative ideas and won initial support from some Republicans. The bill also won over groups that had long blocked reform, like the American Medical Association.

But congressional Republicans ultimately decided that opposing any bill, regardless of its substance, was in their political interest. The consultant Frank Luntz wrote an influential memo in 2009 advising Republicans to talk positively about “reform” while also opposing actual solutions. McConnell, the Senate leader, persuaded his colleagues that they could make Obama look bad by denying him bipartisan cover.

At that point, Obama faced a second choice – between forging ahead with a substantively bipartisan bill and forgetting about covering the uninsured. The kumbaya plan for which pundits now wax nostalgic was not an option.

The reason is simple enough: Obamacare is the bipartisan version of health reform. It accomplishes a liberal end through conservative means and is much closer to the plan conservatives favored a few decades ago than the one liberals did. “It was the ultimate troll,” as Michael Anne Kyle of Harvard Business School put it, “for Obama to pass Republican health reform.”

Today’s Republican Party has moved so far to the right that it no longer supports any plan that covers the uninsured. Of course, Republican leaders are not willing to say as much, because they know how unpopular that position is. Having run out of political ground, Ryan, McConnell and Trump have had to invent the notion of a socialistic Obamacare that they will repeal and replace with … something great! This morning they were also left to pretend that the Budget Office report was something less than a disaster.

Their approach to Obamacare has worked quite nicely for them, until now. Lying can be an effective political tactic. Believing your own alternative facts, however, is usually not so smart.

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Obamacare Repeal Is Failing Because It Was Based on a Lie

With Trump in office, Obamacare is becoming more popular. Photo: Pacific Press/LightRocket via Getty Images

Last week, Richard Hanna, a Republican from central New York who just retired from Congress, admitted something that almost no member of his party in elected office has been willing to concede in public. “At the end of the day, the Affordable Care Act will in some form survive, and the millions of people who are on it will have insurance,” he said. “It’s something this country needed and something people want. Politically, it’s untenable to just wipe it away. So who really won? In my argument, the president, Obama, won. At the end of the day we will have some sort of national health care that’s going to look very similar to what we have.” The mania for destroying the law is faltering because the Republican crusade to kill Obamacare was always based on delusions that are no longer possible to conceal.

In the aftermath of the presidential election that handed them full control of government, Republicans quickly converged on a plan to execute their longtime battle cry of repealing Obamacare: They would immediately repeal the law, perhaps even signing the bill to do it on Inauguration Day, after which they would have leverage over shattered Democrats to force the opposition party to supply votes to pass whatever the majority came up with. Since that point, they have moved steadily backward.

In early January, several Senate Republicans indicated opposition to repealing Obamacare without a replacement — enough defections to kill repeal, given that the party can only lose two Senate votes. The plan to quickly repeal, and then figure out a replacement, appears to have been halted, and the party has yet to decide what will take its place. A week after the inauguration, a secret recording of a Republican Congressional brainstorming session revealed the party had not advanced beyond step one in conceptualizing a plan, let alone achieving consensus on any of the numerous dilemmas they would need to resolve. “We’re in the information-gathering mode right now,” says Representative Mark Meadows. At the current trajectory, sometime next week, a Republican staffer will Google “What is health care?”

In an interview Sunday with Bill O’Reilly, President Trump conceded that health care was “very complicated,” and floated a timetable for devising a replacement that could extend into next year:

Yes, in the process and maybe it’ll take till sometime into next year, but we’re certainly going to be in the process. Very complicated — Obamacare is a disaster. You have to remember Obamacare doesn’t work, so we are putting in a wonderful plan. It statutorily takes a while to get. We’re going to be putting it in fairly soon. I think that, yes, I would like to say by the end of the year, at least the rudiments, but we should have something within the year and the following year.

While Trump is known to be an unreliable narrator of his own administration’s policy, the climbdown from his characteristic boasting of rapid victory is nonetheless striking. He seems to have absorbed from his advisers the difficulty of the situation and the need to reel back expectations.

As the Republicans continue their long retreat, they are encountering every false premise that brought them to this point. The most important of these is a misconception about Obamacare’s popularity. For most of the time since 2010, polls have showed negative approval for the law, the single fact that conservatives have leaned on most heavily since 2010. Of the countless polemics against the Affordable Care Act that have appeared since 2010, the law’s mediocre approval ratings are the data points conservatives invoke more than any other. It is the foundation for their belief the law is corrupt and was passed illegitimately, that the public shares the GOP’s root-and-branch rejection of its very design, and that Republicans have a mandate to repeal it.

  

Supporters of the law have had a different explanation for its poor approval ratings. People have very little information about what the law does, and even many people who benefit from it are not aware. 

  

The long, tortured negotiations required to pass the law did not prove the process was corrupt or failed, but that health-care reform is intrinsically difficult. People will fight much harder to avoid losing a benefit they have — even if that benefit is not actually at risk — than to create a new one they don’t. Proponents of health-care reform always believed that bringing health care into reality would make it much easier to defend.

 That has turned out to be correct. The law’s growing popularity can be seen across several dimensions. Repealing Obamacare first, without a replacement, is wildly unpopular, drawing 20 percent approval or less. Repealing the law and starting over with a new one — the Republican position since 2010 — draws support from one-third of the public, while keeping Obamacare and fixing it gets nearly twice as much support. On the straightforward question of whether Barack Obama’s health-care reform was a good idea or a bad one, for the first time ever, “good idea” now wins:

And Americans by a significant margin believe it is the government’s responsibility to make sure everybody has coverage:

The chart above is especially telling. Notice that a huge majority agreed that the government should cover everybody before and after Obama’s presidency, but that support collapsed during the time of an administration attempting to implement this goal. Political scientists have long recognized that public opinion has a thermostatic element, demanding more government services during Republican presidencies, and less during Democratic ones. It is striking how fast public opinion has swung — this is even before Republicans have begun to publicly debate an alternative plan, which would contain all sorts of unpopular specific elements that would drive down its support even farther.

  

Republicans suffer from an additional handicap that Democrats did not face in 2010: they are not merely over-promising what they can deliver, they are promising the exact opposite. While GOP rhetoric has lambasted the cost of plans offered by Obamacare, their alternatives would all impose even higher costs. An extended public debate over actual, filled-out Republican plans that force people onto catastrophic plans that do not cover basic medical expenses would be a political debacle.

It is not only majority opinion that is swinging against Republicans on health care. Lobbyists, too, tend to organize against change. Hospitals are demanding that Republicans either keep covering the Americans who have insurance through Obamacare, or else compensate the hospitals for the losses they would suffer from facing millions of customers who can longer pay for their care. AARP has staked out opposition to one of the GOP’s favorite proposals to tweak Obamacare, which would allow insurers to charge even higher rates to older customers. Obamacare only permits insurers to charge older customers up to three times as much as the young. Republicans have railed against the burden this places on younger workers buying insurance — and it’s true that Obamacare makes the young pay more so the old can pay less. But now Republicans are learning the difference between posturing against a law, and cherry-picking its downsides, and actually having to endorse an alternative position. When you have to pick winners and losers, not just complain about the losers in the other party’s law, you make people mad.

The energy among political activists has reversed, too. In 2009, tea-party activists flooded town halls and harried Democrats, often frantic with terror at imaginary “death panels” they believed the law would contain. Now it is advocates of Obamacare mobilizing in anger and chasing terrified Republican members of Congress down the street. Conservatives spent years lionizing demonstrations against Obamacare as the justifiable anger of a free people. Now they can see what health-care reform looks like from the opposing end.

There is no guarantee that Obamacare will survive. The Republican majority may decide melting down the health-care markets is worth the backlash. It wouldn’t be the first time they have taken a political gamble that seemed irrational. It’s possible that the Trump administration might intend to preserve Obamacare but wind up killing it through sheer managerial incompetence; a White House that can screw up something like an introductory phone call with the prime minister of Australia could screw up anything.

Still, the pattern of the three months since the election shows the cause of Obamacare repeal collapsing. Obama and his party were able to design a plan that squared the minimal humanitarian needs of the public with the demands of the medical industry. There is no evidence at all that Trump and his party can do the same. It is dawning on the Republicans that the cost of destroying this achievement in social policy may well be to destroy their majority.

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