United to sell ACA plans in North Carolina

There has been word of this for awhile, but this is the most public statement I have seen confirming that United will sell ACA plans in North Carolina next year. Historically, Blue Cross Blue Shield N.C. had over 90% of the individual purchase market in the state. Coventry was the only company that offered plans in addition to BCBS NC in 2014 (and only in around 35 of the 100 counties), but United says they will offer plans this coming year in nearly all 100 counties. 

North Carolina had one of their higher private insurance uptake rates in year one of the ACA. United says they are coming for a share of this (stronger than expected) market.

One of the key questions for any state’s ACA marketplace is how many insurers are going to offer their plans? The plain reality is that a year ago–and for the previous 20–there was really only one game in town for the individual purchase market. At the next ACA open enrollment in November, there will be three choices in at least some N.C. counties, and two is almost all of them.

If you think competition in insurance is good, this is an incremental, positive step.

CBO: 1974, 2014 & 2024

CBO has released a long term budget outlook update. It has more detailed than average discussion of their assumptions about economic growth–an interesting read. They also reduced again their 10 year Medicare spending projections. The continuing deceleration of Medicare spending is the most important policy story that does not get much attention. Still plenty of uncertainty about its etiology and how long it will last, but it is good news (which doesn’t travel fast), that is cooked into the cake so to speak, whatever comes next.

This figure 1-5 (p. 19) comparing the federal budget in 1974, 2014 and 2024 projection from the report caught my eye. The huge growth in Major Health Care Programs is both demographic (the baby boomers) and health care inflation the past 40 years (ACA contributes, but is not the main thing going on; see p. 12, table 1-2). Even as health care inflation has moderated, the baby boomers moving into Medicare (and also Medicaid via long term care expenses) foretells continued growth of the Major Health Care programs bucket in the federal budget. And the increase in Social Security is wholly demographic.

The demographic drivers of this were inevitable in 1974.

ScreenHunter_04 Aug. 27 10.21

Did the FDA under count the benefits of smoking cessation?

This is the third post in a series on the FDA’s recent rulemaking around Graphic Warning Labels (GWLs) for cigarettes. The first two:

At the heart of the FDA’s estimate of the cost of smoking (and therefore the benefits of cessation, which in turn provide the justification for the regulation) are the cost of smoking estimates that are the essence of our book The Price of Smoking. Frank Chaloupka and colleagues note in a paper commenting on the regulations that the FDA has undercounted benefits by relying on the estimates from our book that their review wrongly states were estimated with an improper control group. This is incorrect as noted in this post, (and Frank and I have communicated and he says that they will revise their paper as it moves toward publication).

However, the FDA estimates do appear to have under-counted the benefits of cessation by not including what we termed as quasi-external costs. We specified the NPV cost per pack smoked in 2000$ as follows:

  • $33 private cost: borne by the individual, primarily through a substantially shortened lifespan
  • $5.50 quasi-external cost: borne by the smokers’ family through increased health costs, slightly lower wages and other factors
  • $1.50 external cost: borne by society, and representing the net effect of things like taxes paid, Medicaid and Medicare payments, and Social Security received

The FDA analysis appears to only count the individual mortality effect, which is roughly the same as the private cost above. The external cost could rightly be excluded because the taxes collected, on average, more than account for these purely externals costs (though there would be some state-level distributional impacts due to state tax variation). However, excluding the quasi-external costs, which would be avoided with cessation, and thus become benefits of the new regulation, the FDA likely did under count the benefits of smoking cessation.

In the next post, I will take on the issue that my friend Chris Conover is addressing here–is government intervention warranted to stop an activity that mostly imposes costs on individuals through their own actions.

Mismatch between patient preferences and what Medicare covers

I have a new paper with Duke and NIH colleagues out today (early online) in the Journal of Clinical Oncology (update full pdf:JCO-2014-Taylor) that demonstrates gaps between the stated preferences of Medicare beneficiaries with cancer and their caregivers about what Medicare should cover, and what the benefit package actually covers. The gaps we highlight show beneficiaries and caregivers allocating finite resources toward now-uncovered benefits that broadly speaking are designed to maximize quality of life:

  • unrestricted cash  (some level chosen by 46%)
  • home based long term care (52% choose a level far beyond what home health would cover)
  • concurrent palliative care (45% chose a level beyond the current hospice benefit; such care without having to unelect curative treatments)

The numbers highlighted in yellow (from Table 3 in the paper) correspond to the text just above, and show the distribution of subjects choosing benefits not now covered by Medicare at the initial assessment in the study (subjects did multiple assessments; their selection of non covered benefits was relatively stable before and after facilitated discussions).

ScreenHunter_02 Aug. 25 16.17

The kicker is that these choices were observed under the imposition of a serious resource constraint. We asked subjects, what benefits are most important to you if you couldn’t have everything? The exercise was based on actuarial estimates, so respondents choosing now-uncovered benefits were allocating resources away from expensive, curative treatments, and toward less expensive care that is focused on quality of life (including unrestricted cash that could be spent for anything). They were not just adding new benefits on top of everything else; instead they were engaging in difficult tradeoffs. Around 1 in 5 respondents picked some level of each of these 3 uncovered benefits, and allocated around 30% of their total resources toward this care that is broadly focused on improving quality of life. In exploratory analyses, the only significant predictor of choosing all three of the highlighted, non covered benefits, after controlling for other factors was African American race (around twice as likely as whites to pick all 3).

There are several limitations to this work, most notably that these were theoretical choices being expressed that did not influence actual health care coverage. However, the point of the research is to point out the gaps between what is covered by Medicare, and the preferences of some Medicare beneficiaries with cancer and caregivers (people for whom the issues underlying the discussion are not theoretical).

What might these findings this mean? First, our results suggest a possible benefit structure in Medicare in which beneficiaries could be granted flexibility in how they will receive their entitlement; our study poses the choice in cost neutral terms to Medicare. Second, our study was designed to detect Black/White differences in end of life preferences, and we did so, but we consider these findings exploratory, and they are being more fully investigated via qualitative methods. Third, patients and caregivers were able to make choices, tradeoffs and to discuss difficult topics in a reasoned fashion during this study (more background on the study).

The most difficult aspect of determining what this study means and determining how it could be used for policy making is trying to imagine how our society could have a similarly reasoned dialogue around what types of services should be covered by Medicare for persons with cancer who are near the end of life, and whether we would grant patients discretion in how they consume their benefit entitlement. Patients and family members appear to be ready for this discussion and hard decisions. I am not so sure about the rest of us.

 update: fixed a few typos and revised for clarity


*Donald H. Taylor, Jr., Marion Danis, S. Yousuf Zafar, Lynn J. Howie, Gregory P. Samsa, Steven P. Wolf, Amy P. Abernethy. There is a Mismatch Between the Medicare Benefit Package and the Preferences of Patients with Cancer and Their Caregivers. Journal of Clinical Oncology 2014; Published early online ahead of print on August 25, 2014 http://jco.ascopubs.org/content/early/2014/08/25/JCO.2013.54.2605.full.pdf+html

Avik Roy to guest lecture in my health policy class

This fall is around the 15th time I have taught my undergraduate course, Intro to the U.S. Health Care System. I used to pride myself in students not being able to tell what I really thought. However, after the debate around the ACA, and all the columns I wrote for the News and Observer, public speaking, my book and this blog, it became impossible for students to not know my position on various issues.

For this reason, I now try and have someone with a very different view than myself to come and lecture. I ask them to provide the students with a presentation based on “their view of how the health care system should be.” The point is to make sure that the students are exposed to divergent views, as well as to learn how to consume polemic (I don’t think this is a bad word). We do an entire session section of the course on various Republican health reform alternatives, and I think I can do this fairly and thoroughly, but that is not the same as hearing someone deliver their vision of how the world should be. 

I am pleased to announce that this Fall, Avik Roy will be at Duke Nov. 10-11, 2014 in part to lecture to my class. This is particularly timely given the publication of his reform plan last week. Last year Reihan Salam visited, and the fall before that Michael Cannon did so. 

No Medicaid short session in North Carolina

A few weeks ago, there seemed to be an agreement between the N.C. House and Senate to have a special session on Medicaid reform in late November, 2014. That no longer appears to be the case, unless the Governor called the General Assembly back for a special session, which I believe that he has the ability to do if he so wishes.

I have mixed feelings about this. On the one hand, given all the words that Republicans spilled about Medicaid being messed up, it is astonishing they managed to agree among themselves (they control the House, the Senate and Governorship) about …..nothing. Quite a failure if you take their own words about Medicaid seriously. On the other hand, they didn’t do anything really bad, and there were points during short session that outcome was not inevitable.

Conservatives often say it is good when legislative bodies do nothing. Perhaps that was the best realistic outcome possible for the short legislative session.

Hospice enrolling well patients to kill them?

The online headline of the WaPos latest on the Medicare hospice benefit (in fairness to the author, they typically don’t have control over headlines; but the article itself has such competing themes, it would be hard to figure out the headline):

Lethal doses: the dangers of hospice care

The hospice industry is booming, but concerns are rising about treatments for patients who aren’t near death.

If you stopped at the headline, and sub-headline you would get several ideas:

  • Hospice is enrolling patients who aren’t dying
  • Lethal doses of medicines are being given, meaning either euthanasia or homicide is occurring (depending upon the state there is no legal difference between the two)
  • Hospice is booming, presumably due to enrolling and then killing patients who aren’t dying

Not sure where to start, so I will just make a few points (busy day).

  • There are legitimate worries about long hospice stays, particularly that go beyond the presumptive period of 180 eligibility for hospice. But, the business model for hospices getting rich by enrolling non dying patients into hospice is not to kill them, but to bill Medicare for their care for a long time. Hospice is reimbursed on a per diem amount. The financial maximization incentive is to serve them longer, not shorter. Long hospice stays are a problem, but this article’s mashup of enrolling patients who aren’t dying to get rich and then killing them quickly makes no logical sense together.
  • There are some very bad stories in this article. At least one of them is essentially an accusation of homicide. If I talked to a reporter about the care described, I would definitely take the next step and talk to the district attorney in the county in question.
  • There is a story of a patient getting better, but the hospice continuing to provide care without acknowledging this reality and continuing to provide hospice. This is one example of the traditional long stay hospice concern. Purposefully giving your patients fatal overdoses is directly contra to the financial motive of wanting to bill Medicare for a long time for patients who don’t need hospice.

To say that this article went for the sensational is a bit of an understatement. However, it bizarrely throws together different types of sensational narratives in a way that makes little sense. They are bilking Medicare via long stays! They are killing their patients with overdose! Logically, there could of course be examples of both, but this story does not do a good job of setting these cases against the general context of hospice care. And given that this is a part of a series on hospice, I would expect better in a newspaper of this stature.  


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