More on catastrophic options in the ACA

Joanne Kenen (@JoanneKenen) and Paul Houchens (@PaulHouchens) were tweeting about the Basic Health Plan (BHP) option provided to states for enrolling persons under 200% of the poverty level, pointing to this op-ed by Micah Weinberg raising questions about the wisdom of California’s plan to use a BHP for such persons. Micah’s most basic worry is that putting all Californian’s below 200% of poverty who are eligible for exchange subsidies into a BHP will pull out a large number of persons from the health insurance exchange (where consumers pick between Bronze, Silver, Gold or Platinum levels of cover, from different insurers) reducing the chance for competition between insurers for business to work.

One of the primary arguments for the BHP is to allow for unified insurance coverage (same insurance company) for a family that would be eligible for different plans. For example, at 150% poverty, a mom who was pregnant and a child would both be eligible for Medicaid, while the dad would not, but would be eligible for premium subsidies to defray the cost of private insurance sold in the state-based exchange. Paul Houchens tweeted out this document from Tennessee evaluating the use of the BHP v. other bridge product options available to states to unify family insurance coverage. This interesting document further expands on worries of providers (in Tennessee anyway, see pages 3-4) of low-income folks choosing the Bronze (catastrophic) level of private insurance coverage, which would have the lowest premiums but very high cost sharing, therefore not ameliorating the “bad debt” problem as viewed from the provider side of things. Several thoughts:

• The ACA has catastrophic coverage options available and always has.
• I have always thought of the BHP route as a baby step toward a state moving away from Medicaid for persons who were not dual eligibles or long term disabled, and eventually enrolling low income persons in private, subsidized insurance. A key issue is how/whether the federal BHP subsidies will be risk adjusted; there is still reg work to be done.
• The point of the op-ed is that removing such a large number of persons from exchanges could lessen the effects of competition between insurers on premiums. Alternatively, it could actually lessen the “average” premium if the morbidity of those in exchanges was less after removing persons below 200% of poverty. The relative impact of (1) morbidity of the entire pool and (2) competition on premiums in the exchange would seem to differ by state. The degree of spread around the average could also differ.
• I have further thought that BHP might be more likely to be taken up by “cold feet” states and/or states with one dominant insurer where concerns about lack of competition (because there weren’t many insurers offering products). However, the California story is not that one and it seems to be safety net providers calling for it. Perhaps in a “next round” of ACA implementation after the election that could ensue, and the lack of regs being finalized may be a source of flexibility.
• Estimating the relative impact of a BHP on an exchange needs to be done with counter-factual of how many low income persons will choose the Bronze level of coverage if they purchase coverage in the exchange. This would differ by state, I am sure.

Lots of work to do at both the federal and state level. Wonder when North Carolina will get started? Update: Bradley Flansbaum sends this NEJM piece my way on BHP, Bronze level, and continuity.

More on Obamacare not biggest tax increase ever

My earlier post really just pointed out how small the tax is that one owes if they choose not to purchase insurance. [anyone who knows anything about the federal budget would laugh hysterically at that one--it would raise $9 Billion in 2022 which is like standing on a pier and spitting into the ocean when viewed against the size of the federal budget, and the fact that CBO says having this tax in place would double the uptake of health insurance in the ACA shows that it is a relatively small tax that produces large benefits if you think expanding insurance coverage is a benefit.]

However, to measure increase, you really have to compare different tax bills in terms of the percentage increase in GDP.

If you take ALL the taxes (not what was declared a tax by the Supremes) raised to offset the spending (subsidies for private insurance, Medicaid expansions), the ACA falls in the middle of post World War II bills that raise taxes. Austin made the chart.

It costs money to expand insurance coverage to ~32 Million people. Here is Goldman Sach’s interepretation of the ACA, that has been around since April 2010, that clearly shows taxes and Medicare cuts to pay for expansion of health insurance.

More on North Carolina’s Medicaid Choice

Harold Pollack has a nice piece on the choice facing Red States regarding the ability to opt out of the Medicaid expansion in the ACA. He includes a map of Congressional districts that were considered “whip districts” for Democratic Representatives for the March 2010 vote on the ACA in the last Congress (in N.C. you can see that Mcintyre, Kissell and Shuler all voted no).

The point of the map is that most of the Dems who voted against the ACA represented districts with relatively high rates of uninsurance, so their no vote could be understood as being against the self interest of the people they represented. Of course, these Representatives voted no because the ACA was unpopular in their district, and they were mostly within states with strong Republican rule (in N.C. this was just before Republicans took control of the state House and Senate in Nov. 2010, at least partly due to anger about the ACA).

The ruling by the Supreme Court that states can now opt out of the Medicaid expansion in the ACA with no financial penalty to the state’s existing Medicaid program sets up a very important, and clarifying choice for North Carolina and other states. I think that is good, because we need to move beyond the general political equilibrium of the past 50 years or so in which much of the political establishment in the South railed against the evils of the federal government, while the net flow of federal money is roughly from the Blue states to the Red ones (with Texas being an exception (link for map below; interesting N.C. only analysis showing that 30 years ago N.C. was a net donor state).

States shaded as white above pay more in federal taxes than they receive in federal dollars, so are “net donor” states. Darker states are “net recipients.” North Carolina received $1.08 in federal expenditures for every $1.00 in federal taxes paid in 2005 (latest year I could find this analysis).

There will never be an easier way for states to greatly expand health insurance coverage to low income residents than via the implementation of the ACA (between 560,000-700,000 North Carolinians could be covered via the Medicaid expansion, with the federal govt paying 100% of the cost for the first 3 years, and 90% for the next 7). I realize that many have deeply held philosophical objections to federal programs and there are long term funding uncertainties, so I am open to hearing suggestions from my fellow North Carolinians about a better way to expand health insurance coverage in our state.

I suspect that deciding whether North Carolina will take the Medicaid expansion or not will become a key issue in all General Assembly races as well as a central one for the Gubernatorial one in November, as it should be. I am not sure what we will decide, but it strikes me as good and correct that if we as a state decide we are opposed to a federal program to address a public policy problem, that our opposition in this case will not only be rhetorical and noisy, but consequential and real. My guess is we will have more such real choices in the future.

This is an important decision for our state.

update: revised slightly.

Uninsured Tax is a Bit Less Than Largest Tax Increase in History

The “uninsured tax is the biggest tax increase in American history” meme is cranking up. CBO has the facts.

They estimate the tax paid by uninsured individuals who fail to purchase health insurance (called Penalty Payments for Uninsured Individuals above, but ruled a tax by SCOTUS yesterday) will equal $54 Billion over 11 years. For perspective, the total of all Federal income and payroll tax receipts for the federal government in FY2012 will be around $2.8 Trillion dollars (1 year). So, $54 Billion over 11 years –what the Supreme Court said yesterday was a tax–is somewhat short of the largest tax increase in American history. The aggregate amount in 2015 will be $3 Billion.

And keep in mind that CBO’s scoring of what would happen if the individual mandate (and the tax) were removed–16 Million fewer persons with insurance coverage, or about half of the net insurance coverage expansion to be achieved by implementing the ACA.

Update: Austin Frakt sends this from Paul Van de Water at CBPP on the same topic. His piece is clearer than mine–about 2 in 100 Americans would face the uninsured tax. The other 98 in 100 would be insured one way or another, or would be exempt from the tax. However, as noted above, CBO says the mandate and tax is key to expanding coverage.

There is a new flourish of “Obamacare” as the worst thing ever, etc pieces. In one sense I admire the tenacity with which Conservatives have bounced back from a defeat. However, I would love to see at least some of the energy Conservatives/Republicans are putting into this effort diverted to saying what they are for. After all, they have had 27 months since the ACA was passed. For example, I would love to see the Commerce committee mark up Jim Capretta and Tom Moffitt’s replace idea (or anything for that matter that was illustrative of their vision for the nation), see what CBO thinks and so on. If they actually then got that to the House floor and passed it, then someone might take the replace part of repeal and replace seriously. They could say on day 1 with a Republican Senate and President Romney we will pass this.

At this point, my conservative health policy friends mostly remind me of post-modern literary scholars–only deconstruction.

Me on TV talking SCOTUS

If you like my writing and want to see me talk about all this:

• On WRAL today at lunch broadcast. I stumbled out of the block because I was ready to talk politics and he asked me about my research!
• I will be on Capital Tonight with Tim Boyum On Time Warner Cable News 14 Channel; 7pm and midnight tonight (Thus June 28). The link is here. Update: this vid is a ~ 35 minute talk show format with many guests; the terms of use don’t allow me to edit out parts. The entire show is good, and has a N.C. focus. Friend of the blog and Wake Forest Law Professor Mark Hall is on from ~6:00-10:00 mark talking about his role in writing SCOTUS briefs. He was a key national figure. I am on with Karen Duquette from N.C. Civitas from ~21:00-27:00 minute mark.

Another good resource, Kaiser Health News roundtable on the decision (live at 4pm EST, June 28; archive later).

N.C. General Assembly Needs Special Session on Health Reform

Regardless of what the Supreme Court rules about the Affordable Care Act (aka Obamacare) tomorrow, the North Carolina General Assembly needs a special session on health reform, the sooner the better.

If the Supreme Court upholds the entire law, our state is woefully behind in moving to set up health insurance exchanges (think Orbitz.com, but for health insurance) that would be required by the law. If the State doesn’t address the details, the federal government will set up and run an exchange for our state, but it is hard to believe that anyone thinks that is the best option for North Carolina.

If the Supreme Court strikes down the entire law, there will be an incredible vacuum created and it is hard to see how Washington will respond quickly, as much as they need to do so. The people of North Carolina deserve to know what our elected leaders plan to do about health reform, and this should be a center piece of the Fall election. If this occurs, opponents of the Affordable Care Act will have their chance to say what they are for.

If there is a muddled decision that strikes down parts of the law while upholding others, which is the most likely outcome, our State leaders need to decide how to proceed in the way that is best for the people of North Carolina. This will take time, but we need to get started right away.

During the most recent session of the General Assembly, the primary health reform effort put forth by Republicans who controlled both Houses of the General Assembly, was House Bill 2, that said in essence that the Affordable Care Act did not apply in North Carolina. Rep. Paul Stam (the second highest ranking member of the State House) yesterday said that the General Assembly may revive this effort after the Supreme Court decision (it passed and was vetoed by Gov. Perdue).

While I am no constitutional scholar, two of the High Court’s decisions this week cast great doubt on this strategy. In both the Montana campaign finance case (a win for Conservatives/Republicans), and in the Arizona immigration case (a win for Liberals/Democrats), the notion that States can decide what federal laws to abide by was downgraded quite a bit.

The State needs a better health reform plan than saying the Affordable Care Act doesn’t apply in North Carolina.

While many will say the middle of an election is a terrible time for a special session, I think it is the opposite. Both parties need to make a clear case for what they would do to address the related problems of health reform: coverage, cost and quality of health care.

The people are waiting.

SCOTUS on Thursday; on Friday we still need a deal

The Supreme Court has set Thursday, June 28, 2012 as the last day of its term, and their ruling on the Affordable Care Act should be released shortly after 10am that day. Tyler Cowen has a useful note of caution to those who think they want the law struck down:

If the Supreme Court strikes down ACA in part or as a whole, and you did not like the law in the first place, do not assume you should be happy. It is far from obvious that we will end up with something better. I do hope that today (or later this week) is not simply a big exchange of anger and recrimination. No matter what happens, America still needs health care reform and this will require cooperation across the ideological spectrum.

The heart of my book Balancing the Budget is a Progressive Priority is that we need a long range sustainable budget, and that a necessary, but not a sufficient condition to getting one is a deal on health reform that identifies some steps we are willing to actually take. We have got to shift health reform away from being a political football, and into something that both political parties bear responsibility for seeing through. This piece provides what I claim to be what the beginnings of what a health reform deal would look like if the two “sides” actually negotiated based on their policy interests (more , more, more). My book nests health reform as central to the drive for a long range sustainable budget because health care costs are the primary cost side problem long term.

And it will take a tax increase over historical levels in the long run given any plausible level of spending if we are to ever have anything near a balanced budget again. And keep in mind, for all the discussion of the Ryan health reform plans, the primary House committees (Ways and Means and Commerce) where the heavy health policy lifting will have to be done have taken no steps beyond being clear about what they are against in the 17 months that Republicans have controlled that chamber. What that means on the meta level is that the Republican party:

• claims to have a long range balanced budget as a key policy goal
• Is opposed to one of the things it will take to get one (a tax increase) and has no plausible plan for the other (health reform)

In other words, they have no chance of achieving their stated goal, especially when you factor in their preferences for Military spending.

As I have said over and over, the Republicans desperately need a health reform deal, and seem to be the last to know. Think of how much political capital the Democratic party invested in passing the ACA, and then consider the likelihood that Republicans would ever invest this much in any health reform effort. Not going to happen. More important than the politics, the entire country needs for the two parties to reach some sort of a deal, so that we can address the human suffering caused by lack of health insurance, while beginning to take steps to address health care cost inflation that is unsustainable as the baby boomers move into Medicare and Medicaid.

Thursday will come, but so will Friday.

Overview of Supreme Court Health Cases

Monday June 25 is the last scheduled date for the release of Supreme Court opinions, but SCOTUSblog says that they fact the Justices did not today announce that Monday will be the last day of the session means that opinions will be released after Monday. There are 5 cases left to be announced if you consider the health care cases to be one. In fact, there are three cases that were heard and it is unclear if there will be three sets of opinions, or a unified opinion of some sort.

SCOTUSblog provides great plain english summaries of all Supreme Court cases that are linked below, with my understanding of the bottom line questions to be decided in each case.

U.S. Department of Health and Human Services v. Florida.

• Can Congress require most everyone to purchase health insurance or pay a fine?
• Since no one has yet had to pay this fine (couldn’t until 2014), is it too soon to decide this question?

National Federation of Independent Business v. Sebelius.

• Can Congress make states choose between complying with the ACA or lose federal Medicaid funding?
• If the requirement for most everyone to purchase health insurance or pay fine is unallowable, does that invalidate the entire law or just the insurance provisions?

Florida v. Department of Health and Human Services.

• Can Congress make states choose between complying with the ACA or lose federal Medicaid funding?
• If this is unallowable, does that invalidate the entire law or just the Medicaid expanions?

The entire ACA could be upheld or struck down, or only certain provisions could be struck down (such as the requirement to buy insurance or pay a fine, the so-called individual mandate), or the Medicaid expansions. Most writing has focused on the title I aspect of the case, the individual mandate and private insurance changes. However, around half of the coverage expansions contained in the ACA come via Medicaid. In policy terms, if the Medicaid expansion is struck down (basically saying it is coercive for the federal govt to provide states with “an offer they can’t refuse a la the Godfather”) that would have a huge impact on the ability of the federal government to use one of its most straightforward tools to expand insurance coverage.

If the individual mandate is struck down, there are other policy mechanisms through which to pool risk (and the penalty is quite weak), though revisions to the law to bring them about would require 218 votes in the House, 60 in the Senate and 1 in the White  House and it is hard to see those three bodies agreeing that today is Thursday at this point.

As far as predictions go, I am not an experienced court watcher and have no idea what they are going to rule.

Talking health reform on Voice of Russia Radio

I didn’t even know Voice of Russia radio was a thing, but it is. Here is a link to a ~15 minute discussion of my book, health reform, and the looming SCOTUS decision between myself and Carmen Russell-Sluchansky.

Op-Ed in Raleigh, News and Observer

I have an op-ed in the Sunday Raleigh (N.C.) News and Observer offering a bipartisan way forward on health reform that I think makes sense regardless of what the Supreme Court says about the Affordable Care Act. If you are a reader of this blog, it will be familiar fare.

If you are coming here from the op-ed, here are some related posts:

• Laying out general compromise with a bit more detail
• The ACA actually allows high deductible plans
• Comparing my catastrophic ideas with those of Martin Feldstein
• Post with overview of all the health policy suggestions from my book
• My book Balancing the Budget is a Progressive Priority frames health reform as central to ever having a balanced budget; a necessary, but not a sufficient condition to getting there. The other thing that must occur is a tax increase given any plausible level of federal spending. Many other things are covered in the book, but without health reform and a tax increase over the long run, we will never have a balanced budget.