Burwell Nomination: Faint echoes of a deal post ’14?

President Obama has nominated Sylvia Burwell to replace Kathleen Sebelius as Secretary of HHS. Burwell is the Director of the Office of Management and Budget and is noted for relatively good relations with Congressional Republicans. She is the type of person who could help broker a deal for modifications of the ACA after the 2014 election.

Changes to the ACA at some point are as inevitable as water seeking the lowest point when poured out of a glass. The question is when the politics allow the first deal that can improve the policy? In any sane system, we would have already revisited multiple things, but Republicans have heretofore chosen complete opposition. That may still be their best 2014 election strategy, but they are in dangerous territory of rendering themselves to be post-policy in the most important and difficult long run issue facing our country.

As easy and perhaps as effective as repeal blah blah blah is for 2014, I will be shocked if it is anything but a disaster for Republicans in 2016. A smart Republican nominee would want Congressional Republicans and the White House to reach a deal on some modifications. Hillary Clinton likely wouldn’t mind, and the Big Dog certainly would not be. And Burwell is a signal that the POTUS wants this as well.

What are some relatively simple modifications?

  • Replace the individual mandate with auto enroll procedures plus open enrollment with underwriting allowed if you don’t come in during the enrollment period as proposed by the Coburn-Burr-Hatch policy put out in January 2014.
  • Smooth the “cliff” effect of the ACA exchange subsidy structure by allowing persons with incomes above 400% of poverty to deduct their health insurance premiums. Most people get federal subsidy for their health insurance. We need a rationalization of the amounts and circumstances, but that will take time. This would be a placeholder and would reduce worries about employment effects of high implicit marginal tax rates from the subsidy cliff (that Coburn-Burr-Hatch shares).
  • Replace the cadillac tax with a capping of the tax exlcusion. Coburn-Burr-Hatch initially proposed quite an aggressive cap level, then backed off, but the private score has never been updated. So, they talk up one score, but another policy. In any event, not sure of the level, but capping the tax exclusion of ESI is a better policy because it signals the change to the person getting the now unlimited subsidy–people like me with good employer sponsored health insurance.

More complicated, but places I could see a deal going.

  • Provide more routinized state flexibility for states to do a variety of things with the low income portion of Medicaid. States can get waivers and the like as Arkansas is doing for a privatized Medicaid expansion, but this process could be made easier. I would want to be very cautious with changes in the dual eligible and long term disabled portions of Medicaid. We need a way to get the South to participate fully in health reform.
  • Decide what the maximum deductible should be, and create a “copper” level plan that might even simply be financial protection. Such a plan could even be what States auto enroll persons into. I would be open to an explicitly different max deductible amount by age (more for younger, less for older) and seek to get as close to universal coverage as we could. There are quite high deductibles in allowed in ACA plans now.

Eventually there will be a deal, just like water flows to the low point. The question is when will the politics be right for some of the things above?

Release of Medicare Part B data

I was a guest on NPR’s “Here and Now” today, discussing the release of Medicare Part B data. I think this portends a good move, especially for researchers. I have my doubts about the ability of consumers to use the data for personal health care decision making, but we shall see. A key issue: it is ridiculous that Medicare Advantage plans are censored for Medicare claims records for research purposes. Now that FFS Medicare has released full hospital (last year) and physician payment data this year, it is time to make Medicare Advantage claims accessible to researchers, at a minimum.

It is about 12 minutes long and includes Shannon Pettypiece from Bloomberg. Here is a link.

RAND study on health insurance

The RAND study on health insurance that leaked last week is out (or at least a fact sheet). update: link to longer document. A few top line findings

  • Rate of uninsured dropped from 20.5% in September 2013 to 15.8% in Mid-March 2014 (so before the surge at the end of open enrollment). The study appears to be ongoing, so there should be essentially tracking poll-like information.
  • They do a good job of demonstrating movement in and out of insurance and amongst types. From September to March, 14.5 Million gained coverage, while 5.2 Million lost it.
  • Net gain in coverage driven by: gains in ESI (+8.2 Million), Medicaid (+5.9 Million), and exchange based plans through mid-March (+3.9 Million)
  • They note that most newly covered by Medicaid were previously uninsured, while one-third of those covered by exchange plans were (again, prior to the March 2014 surge).
  • They say less than 1 Million persons had individual market plans and are now uninsured
  • 80% of adults had same coverage in March that they had in September

The best news is that they say they will update soon; more data is always good.

The survey results reported here were collected through March 28, 2014, but many panelists responded earlier in the month and may have made new insurance choices since then. Respondents will be surveyed again in April and our figures will be updated when new data is available.

Further, they note the error related to surveys:

Given the strong interest in understanding the impact of the ACA, a variety of different organizations, including the Urban Institute, are conducting surveys to estimate the impact of the ACA on insurance enrollment. When making comparisons, it is important to keep in mind that there is always a margin of error. In this case, because we are extrapolating from a small survey to the entire U.S. population, the margin of error is relatively large. For example, while we estimate 9.3 million individuals become newly insured, the margin of error is 3.5 million people.[2]Furthermore, the timing of surveys may vary. Given the surge in enrollment at the end of March, whether that period is included in the survey may dramatically affect results. Thus, it should not be surprising that our estimates may not match perfectly.

Cost savings–a bleg

My small brain is turned in knots on the seemingly simple question laid out below.

Say I have a clinical trial where the intervention is stopping the drug, and there are no mortality differences between treatment and control groups, and I want to estimate the cost savings of stopping the drug, based on the assumption that it is a good thing to do since it didn’t reduce mortality.

  • Option 1. cost savings are defined after randomization as: incurred costs of the continued group (assume +$10) + the avoided costs of the discontinue group (assume -$10). Savings = $20/person
  • Option 2. cost savings are defined after randomization as: the avoided costs of the discontinued group alone (assume =$10). Savings = $10/person

Option 1 highlights the counterfactual of continued use of the drug, and shows what could be achieved if you managed to get lots of folks to follow the results of the trial (I think). Option 2 is more conservative and only focuses on reduced costs/person who stops.

Which is correct?

ACA enrollment deadline

Midnight was the enrollment deadline, but people who were in process with applications can complete the process through the first two weeks of April. This is a big milestone in the law, but no matter how much everyone wants an instant assessment of the ACA as “working great” or “sucking” that answer is not forthcoming based on how many signed up. I will, however, go out on a limb and predict the answer is somewhere between “working great” and “sucking”.

Here is what I will look for over the next 6 months:

  • What happened to the rate of uninsurance? There is a RAND study that sounds like quite a comprehensive look at this question, but the details aren’t public. Coverage of the leak of the study is essentially a Rohrshach test for what you already thought. It seems likely that the uninsured rate has gone down, probably by quite a lot in historical terms, but likely not by as much as CBO projected it would in year 1. Some of this is related to explicit decisions by States, and other aspects are not. Note that the leak says the rate of uninsured for those age 18-64 fell from 20.9% last fall to 16.6% as of March 22. I would have to read the details of how the survey/study was done to really be able to say for sure what I think of it. Note that when Gallup polls, they include persons covered by Medicare, so they have uninsured as 18% in the last quarter of 2013, falling to 15.9% through February 2014.
  • Many are now realizing that there will never be a static number of people “signed up” just as there has never been a static number of people signed up for employer sponsored coverage (or the prior individual market). People get born, die, divorced, lose their job, become eligible for Medicaid, become uneligible for Medicaid, leave their job voluntarily, stop paying for coverage and so on. Monitoring rates of all these things is important, but they do not hold the breathless answer to “working great” v. “sucking” question in and of themselves.
  • Most important question is not how many young/healthy people signed up? It is, who did insurers plan to sign up and whether and how who actually signed up differs? The actual use of health care, as compared to what was assumed in setting premiums that were offered, is the key to what the premiums will be next year. And the answer to this will almost certainly differ by state, as well as by insurer within a state. We will have a sense of this when the premiums come out for year 2.

As always, the most important thing in public policy is the answer to the question: as compared to what? When people invariably ask me ‘does Obamacare suck or is it working great?’ I always ask them, as compared to what? They look at me like I have 3 heads, but I don’t know how else to even begin to provide them with an answer.

More on hospice concurrent care

I spent a lot of last week in Washington DC, first at the Hospice Action Network event Tuesday on length of hospice use, and then being a part of the Friday research plenary at the National Hospice and Palliative Care Organization’s (NHPCO) Management and Leadership conference. There was a great deal of discussion of the recently announced CMMI Concurrent Hospice Demonstration program, and it is striking how little understanding there is in the field of exactly what the demonstration entails. A few quick thoughts:

  • My understanding of the program as a essentially a test of the “Temel study” in which the $400/month would fund goals of care discussions and some phone monitoring, with hospices then able to bill the hospice per diem if they provided more care is wrong. The language about billing other parts of Medicare under Parts A, B and D seems to refer to, for example, the ability of a hospice to provide social worker care that could be billed separately to Part B. However, it is quite complicated to determine when that is allowable as a one-off, and many hospices are not set up to do this in the first place.
  • One key issue in all this is inducement. We have generally spent lots of time worrying about providers inducing patients to receive further services provided by the same providers, but the goal of concurrent hospice seems to actually be inducement at some level (to get people to elect hospice who ohterwise would not have). Some new thinking on this general issue is needed with respect to hospice and palliative care.
  • If it really is the case that you get $400/month and essentially are responsible for the entirety of the hospice benefit, then I don’t think anyone will apply for the demonstration.
  • At the NHPCO meeting on Friday, an official from CMMI came and talked generally about the demonstration and the hospice benefit and industry. I heard him say fairly clearly that CMMI was open to more discussions about the shape of the concurrent care demonstration should take. Others seem to have heard differently. Some more refinement and discussion is needed.
  • Keep in mind that patients have to be eligible for hospice to qualify for the demo, which means they can be certified as having less than 6 months of life. They are eligible to elect hospice at that point, but they have not chosen to do so. It is a good idea for CMMI to try out a new approach that allows for concurrent care for this group of patients to see if you can: (1) improve their quality of life; and (2) potentially increase their likelihood of electing hospice; and (3) potentially reduce costs even in the subset of patients who will not elect hospice. I know many are critical of the focus on hospice-eligible patients only because they believe concurrent hospice/palliative care should be pushed further up the disease course. I agree with them generally, however, but focusing a small intervention on patients who are hospice eligible but who have not elected it seems a reasonable place to start, if a plausible demo can be constructed.
  • A key issue is what is it that participating hospice providers will be promising to patients, family members and the rest of the health care system for $400/month?
  • Two options to push the conversation: First, hospice providers could describe what they could do for $400/month, and propose that to CMMI. Say clearly, here is what we could do for that. Is that what you want to try? And make clear that the constraint is what can be promised to patients, caregivers and the system. Second, propose a concurrent hospice model(s) for hospice-eligible patients, along with the financial resoruces that it would take to undertake a proposed demo. Simply say, we would love to try this; will you let us?
  • I believe that a test of the Temel “early palliative” model that begins with a goals of care discussion, and proceeds with monitoring and information sharing, and integration of the hospice team into big decisions could be a fruitful approach, that is not risky in terms of the amount of money risked. The key is getting a realistic reimbursement level for the delivery of hospice/palliative services. There may be other models to test as well.

I give CMMI credit for rolling out this demonstration. However, I think it really needs to be the beginning of a more detailed discussion to identify the exact nature of what demos will actually be tried, and not the last word on the demo.

The beginning of the end of college sports as we know it

I suspect today will be remembered as a seminal event in making college athletics whatever it will become; and it will be something much different than it is today.

Northwestern’s football team is free to seek union representation to bargain with the University, according to a ruling by the National Labor Relations Board.

During the labor board hearing, CAPA and former Northwestern quarterback Kain Colter, who spearheaded the movement, had to prove that players were employees and not just student-athletes. These are the points that ended up convincing the board to let them unionize:

  • Northwestern profits from football players’ work. The decision notes that the university made $235 million in revenue thanks to ticket sales, television contracts, merchandise sales, and other licensing agreements from 2003 to 2012, along with less measurable but still important value in the form of alumni donations and the university’s general reputation.

  • Players are compensated for that work. Players receive scholarships and stipends in exchange for playing football for the university. Players sign a “tender” at the beginning of each scholarship period that tells them the rules and conditions of their scholarship; it is in effect, the board says, an employment contract. If a player leaves the team or abuses team rules, the scholarship can be revoked—proof that the compensation is based on playing football.

  • Northwestern exerts significant control over players’ daily lives. Players spent 50 to 60 hours a week on football-related activities during training camp and 40 to 50 hours a week during the regular season, easily equivalent to a full-time job. The decision says players’ schedules, including practices, meals, games, and travel, were often up to coaches, while other things like living arrangements, outside employment, personal vehicle use, off-campus travel, internet posting, and alcohol use were subject to restrictions or coach permission thanks to NCAA rules and university policies.

The underlined and bolded part is the key, I think. While Northwestern’s players say they don’t want salary, but other types of benefits, it seems only a matter of time. Past blogging on the general issue of the economics of colleges sports here, and my proposal for how players in revenue sports could be paid.


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