Halbig case

Three judges from the D.C. Circuit court of Appeals today ruled that subsidies cannot legally flow to residents who live in States that did not set up their own health care insurance exchange (marketplace) under the auspices of the ACA. And since I started writing this post, the Fourth Circuit court of appeals reached the opposite conclusion. The litigation grinds on, and there will be no practical impact of the rulings on the functioning of exchanges or the flow of subsidies while the litigation continues, perhaps all the way to the Supreme Court.

Callie Gable, (a Duke undergrad whom I have taught is interning with Reihan Salam) has a post from last week on what might come next if the ruling that occurred today was issued. In it, I say that some states will move to set up a federal exchange via the easiest way possible (meaning that they will largely rely upon the federal website, but will either pass legislation or issue an executive order to ensure the flow of subsidies to their residents who got them to purchase private health insurance. The federal government will have lots of incentives to make this as easy as possible. Once a state has a state-based exchange, the subsidy question is no longer in doubt. It is a very technical enterprise determining exactly what constitutes a federal exchange and you can go elsewhere for detailed legal arguments, but they could include largely pointing people to the website used by the federal exchange. However, the states will have to act.

This is primarily a political question, and that is how I answered Callie, and that is how it will eventually be resolved. Here are some thoughts about what could happen:

  • While this was heralded as a political win for Republicans (I guess until the fourth circuit ruling), the reality of the DC Circuit ruling if carried out fully would mean that people in 36 states would lose private health insurance that was purchased in a market place using an income based subsidy. This won’t be a political winner for Republicans for long, and I would expect Democratic candidates for Senate to use this ruling to good effect in campaigning. Something like this in North Carolina: —>”The ACA was step one, but it needs to be revised and improved. I want to make clear that North Carolinians who are newly insured with private health insurance don’t lose that coverage and I have a one paragraph bill that will do just that. My opponent is opposed to Medicaid expansion AND private insurance expansion….” That sort of thing.
  • The two sides could actually have some sort of deal that included making it clear that tax credits could flow to residents in any state. Presumably there could be other changes, like getting rid of the employer mandate that no one wants, replacing the individual mandate with a variety of other risk pooling mechanisms that would be stronger than the weak mandate, altering the structure of tax credits, revising the Medicaid expansion, etc. Hard to imagine this happening prior to the 2014 election. In North Carolina, there are something like 350,000 persons who got a subsidy to purchase private health insurance, so it is not a trivial number. I have prattled on for years about how both sides need a health reform deal, there are many deals that are obvious in policy terms, etc. Eventually it has to happen…..I think.
  • Some states will move ahead to set up their own exchange in a manner that heavily uses the federal website and infrastructure, while identifying those items that must be deal with by states to be a state exchange (likely related to approval of plans able to be sold on the exchange in a given state). The Fourth Circuit ruling on the same day may slow the flow of States making this move.
  • Some states will hold out, with opposition to President Obama’s main policy initiative trumping all other considerations. How many is unclear. What if you played this out and imagined the ACA goes on unchanged, and this ruling held up by the Supreme Court, then it would be up to states to decide whether to set up an exchange or not. The states undertaking the current voluntary redistribution from Red to Blue states via not taking the Medicaid expansion, would have another way to couple their rhetorical disdain for the federal government, with actually saying no to the money.

Played out over many years with no revisiting of the ACA, the DC Circuit’s ruling when coupled with the Medicaid SCOTUS ruling would represent a profound calling of the bluff of the South (this is where the long term holdouts would be). Historically, we screamed about the federal government, all the way to the bank. Under this new regime, we could actually commit economic suicide if we really want to do so.

CMS Revises Part D/Hospice Guidance

CMS today revised its guidance on procedures related to determining who pays for pharmaceuticals used by Medicare beneficiaries who elect hospice care. A hospice is responsible for paying for all drugs related to the terminal illness under Medicare regulations, a fact that was never in disupute conceptually. However, the March 2014 guidance that was aimed at ensuring that Medicare was not “double paying” for drugs (which would occur if Part D plans were billed for drugs that should be financed via Medicare’s per diem payment to hospice providers), had lead to gaps in the prescription for pain and other medications as patients trasnitioned from normal care into hospice, leading some patients to disenroll form hospice, or to needlessly suffer.

Specifically, the new guidance reduces the classes of pharmaceuticals that Part D plans must require prior authorization prior to filling once patients elect the hospice benefit in Medicare. These drugs groups: pain, anti-nauseants, anti-anxiety and anti-consitpation medications are they are groups of drugs that are almost always  a part of a hospice patients care regimen due to the common end of life symptom of pain, and dealing with the side effects of addressing pain using pharmaceuticals.

This is a common sense tweak to of a rule to address an unintended consequence of a legtitmate effort to ensure that Medicare does not double pay for drugs.

N.C. House v Senate Medicaid proposal

I am not opposed to managed care in Medicaid. In fact, in January 2014, I proposed an approach to both expand insurance coverage and reform Medicaid by using private insurance to cover newly eligible persons via Sec 1331 (Basic Health Plan) of the ACA that would have insurance companies and integrated delivery systems compete for the newly eligible beneificiaries. Down the road, the state could opt to place a large proportion of Medicaid beneficiaires into private insurance.

The move toward capitation throughout the health care system and for payers to insist on improved or at least steady quality per cost is inevitable and generally a necessary and good thing. My problem with the Senate Medicaid proposal is that it is too much, too fast. A few points on the two plans (both of which are quite incomplete because they don’t address expanding insurance coverage, and don’t address other things that I did, like the patient safety/medical malpractice situation and scope of practice laws): Read more of this post

Medicaid Managed Care Across the U.S.

The North Carolina Senate  discussed today a proposal for Medicaid reform that would be the broadest application of managed care in any State nationally. By broad I mean:

  • They want all categories of Medicaid beneficiary (children, adults, aged, blind and disabled–including the dual eligibles) to be a part of managed care
  • Soon: 2016 for those covered by private insurance company plans; 2018 for provider-based plans (think Duke offering a plan for Medicaid beneficiaries in Durham, Granville, Vance and Franklin counties)
  • For the full benefit package, including long term care and specialized services for the long term disabled, behavioral, etc
  • Based on a capitated payment (insurance plans or provider organizations get a fixed amount per month to be responsible for the full benefit package)
  • With the capitation rate set low enough so that North Carolina would spend less on Medicaid than it would under the default system

Actually doing this–putting all Medicaid beneficiaries, under full capitation, for the full benefit package within 2 or 4 years and reducing the state’s Medicaid costs–would amount to the grandest health policy change in U.S. history. And you thought liberals had wild eyed schemes! Read more of this post

Decreasing Medicaid eligibility: reducing or shifting costs?

North Carolina House and Senate Republicans are grinding toward a resolution of their differences in how to proceed with Medicaid reform. The latest from the Senate sounds mostly similar to their past offer (reduce Medicaid eligibility for some aged, blind and disabled beneficiairies, and move to bid out the full Medicaid program to private insurance companies, but allowing provider networks to bid). Hereis is a brief review until today of the many twists and turns since complete Republican control of state government commenced in January 2013.

I will get to the ins and the outs of the emerging plan when it emerges some more, and we hear from the House.

A quick point on the continued insistence of Senate Republicans to reduce eligibility for some aged, blind and disabled recipients–Rose Hoban quotes Senator Harry Brown (R-Jacksonville) in a committee meeting yesterday as follows:

“That is a major concession for us. We think that you eventually have to address eligibility requirements in Medicaid if you want to control costs,” Brown told the committee.


Read more of this post

Study on ACA projections in North Carolina

Steve Parente has an op-ed (full study) that paints a gloomy Obamacare picture for North Carolina, beginning in 2017. The op-ed is a bit hyperbolic and breathless for my taste, but it’s on the opinion page, so to each his own. It is important to look for things that need to be fixed/improved/altered in the ACA, and considering projections, and how they actually perform as compared to the unfolding reality is a worthwhile exercise. A few quick thoughts:

  • Why does he say things will get bad in 2017? The so-called risk corridors end (think of these as a “net” preventing insurance companies from losing too much, but also a ceiling to limit how much profit they can earn). Parente says without them, premiums will spike and plans will be unaffordable due to “structural problems” with the law.
  • Do other federal programs use risk corridors? Yes. Medicare Part D plans (private prescription drug plans subsidized by government + premiums), brought into being by the Medicare Modernization Act of 2003 (coverage started in 2006) still have risk corridors today, and they are never scheduled to go away.
  • Why do the risk corridors in the ACA go away in 2017? The idea was that if you got a large enough risk pool for individual private insurance coverage (and cover many others via Medicaid expansion), you wouldn’t need them. If his numbers are correct, it could signal an issue(s) that need to be addressed.
  • Could the risk corridors be extended beyond 2017? Sure. See Medicare Part D. It would be an easy fix….I am not sure that it will be needed. We need to see more years of enrollment data, and do need to constantly be asking how the ACA can be improved. [one post with some ideas]
  • A pet peeve. Anytime someone provides you with numerators, and not denominators, be wary. He does this throughout the piece, be it the increase in premiums, the number of insured, uninsured, etc. To put all of these figures in proper context requires the denominator (for example, the total population of the state; I could dig them all up but don’t have the time). Similarly, you need to compare all of these metrics to trends before the law, and what would happen to them  if you did away with the law, if you are interested in the impact of the ACA. You could also compare ACA projections to a different law that might be passed. Steve was involved in the private score of the Coburn-Burr-Hatch reform (12 posts) that I have called the most comprehensive “replace” plan. I would note that Steve never did update the private score (so far as I know) of CBH after the sponsors backed off on their aggressive changes in the tax treatment of ESI that was the key to the deficit reduction in the above linked private score.

My biggest question about Steve’s study that is behind his op-ed is how well did his model predict the actual ACA signups in North Carolina this year? He could easily run this simulation using the assumptions and methods he is using to project into the future. How well his model has already worked would be useful to know in thinking through what his projections might mean for the future.

Others move ahead on Medicaid while N.C. stands still

New Hampshire became the latest state to move ahead with a Medicaid expansion tailored to the preferences of their state (adults with incomes up to 138% of poverty can be covered by their Medicaid managed care program, or they can receive payments to subsidize employer provided health insurance for workers with low wages). New Hampshire has divided government (Dem Governor, divided Legislature), as does Arkansas that has adopted a privatized Medicaid expansion under which federal money will be used to purchase private health insurance for those who would otherwise qualify for Medicaid.

So far 7 states with Republican Governors have managed to figure out a beneficial means of expanding Medicaid in spite of not being a big fan of the President’s, and 3 others: Utah, Pennsylvania, and Indiana are currently negotiating with the federal government to obtain waivers that will allow them to expand under state-specific details/models (that generally include some sort of privatized expansion).

Drew Altman notes that Red States will pay close attention to what other Red States do regarding Medicaid expansion/health reform, and there will likely be a drip-drip-drip move toward expansion/reform proposals that make sense within the politics of a given State, that will eventually give way to a rush of expansions except for perhaps the deep south. In North Carolina, which is totally red in terms of control (Governor, both state houses), but which had the closest margin of any State in the last two Presidential elections (14,000 and about 100,000 votes), the Republican party appears to be dead in the water on Medicaid, unable to negotiate with itself, leaving our state which was once thought of as a leader in the South, relegated to the sidelines to watch others embark on state-specific reform plans.


Get every new post delivered to your Inbox.

Join 150 other followers