King v Burwell is a total win for the ACA

Chief Justice Roberts saved the ACA again, this time with a 6-3 ruling (Kennedy also joined the liberals) that says that tax credits can flow to persons in states that did not set up their own exchange, but who buy private coverage via healthcare.gov.

The case does not depend upon the so-called Chevron doctrine (where the executive branch of the govt is granted discretion when there is ambiguity in how to read a law).  Instead, the majority says that because tax credits (and therefore the ability of people to afford health insurance) is such a fundamental part of the law, that the plainest reading of a narrow section of the law couldn’t be read to mean that tax credits are not not available in all states, regardless of the type of exchange through which they get coverage.

This is a complete victory for the Obama Adminstration. A reporter just asked me “what does the North Carolina General Assembly need to do now?” Answer: they can keep doing what they have been doing on health care for quite a while: nothing.

I hope that they will not continue to do this, and that our state will work out a way to put together a reform of our Medicaid program (that I am in favor of), as well as a means of expanding insurance coverage (that I am also in favor of). Here is a concrete idea for how to do this that I put forth in January, 2014.

There have been some statements that they were holding back due to the uncertainty caused by the looming King v Burwell case. There is no longer any uncertainty on that front.

What will SCOTUS do? [Callie Gable guest post].

As the date of the Supreme Court ruling in King v Burwell looms, I knew that any self respecting health policy blogger should put forth some prediction. Alas, I could not muster the energy of a thoughtful one in the midst of an R01 deadline. Luckily, Callie Gable, a rising senior at Duke this fall is working with me, and so I outsourced the musings. Callie wrote this last Summer when she interned with Reihan Salam at the National Review, and she is one of the best health policy students I have ever taught, so listen up when you hear her name. You can follow her on twitter @CallieGable

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The days to conjure up a futile prediction about the King v Burwell decision are running out. It appears that the Supreme Court will finally end months of speculation on Thursday or Friday, one of the two new decision days that were just added to the calendar. Despite the best efforts of wonks everywhere, the outcome of this case is still basically unpredictable – but my money is on a ruling that keeps the subsidies flowing.

The plaintiffs win the argument but lose the case. The actual text is plain, straightforward, and unambiguous. As Justice Scalia said, “is it not the case that if the only reasonable interpretation of a particular provision produces disastrous consequences in the rest of the statute, it nonetheless means what it says.” But context trumps text in this case. The court doesn’t have tunnel vision; a few words that don’t jive with hundreds of thousands of others are unlikely to dismantle the whole law.

The plaintiff’s make a good case, citing – among other solid arguments – the legislative history of the law and the fact that U.S. territories like Guam have Obamacare, sans subsidies. But at the end of the day, these points pale in comparison to the power of congressional intent, and they likely mean less in the eyes of the Court than some may think. Regardless of whether or not the law was written to become unworkable should states decide to not participate, the intent of the law was, and still is, clear.

Ruling in favor of King would conflict directly with the intent of the law, potentially seriously disrupting states’ insurance markets and causing lots of people to lose insurance coverage (although the outcome may not be as disastrous as some make it out to be). And as Justice Kennedy pointed out, such a ruling could open another argument regarding the possibility that linking the exchanges to federal subsidies is coercive – though it seems to me that such an argument may have little merit. Finally, the only thing we can be fairly certain about is that Congress can’t be counted on to clean up the mess if the insurance market does go bust, making handing the law back to it another con for a pro King ruling.

A more interesting question, I think, is how exactly a pro Burwell decision would be executed. The court could hand down a straight forward ruling or some sort of compromise – the possibilities are endless. But another possibility is Chevron deference, meaning the original agency would be left to interpret the law, read: Obama interprets the law as he intended for the next year…but we don’t know who is going to be in the White House in 2016, and how he or she will interpret the statute, which would certainly make the 2016 race even more interesting.

We do know that the Court already bent over backwards to keep the ACA on the books in 2012, when Justice Roberts made an unlikely alliance with the Court’s liberal core. And a ruling in favor of Burwell would require far less a legal stretch than did the 2012 ruling.

Could we shift low value spending to high value spending in Medicare?

This is really the big question behind the notion that value (defined as benefits of care greater than costs for patient) could be increased in the Medicare program while overall costs stay the same or decrease. This may sound too good to be true, and might be, but I think the best chance to pull this off is for Medicare to expand their covered benefits to include long term care. I outline the idea in this Health Affairs post (study referred to in the post).

The comments I have gotten (and that are left on the post) are roughly of two types:

  • great idea, LTC is such an important issue! Most of these folks have personal experience with our LTC system
  • you nut, Medicare is insolvent now and you want to add a new entitlement + unicorns don’t exist

The you are a nut response always has a chance of being correct, and this does sound too good to be true. And I am saying we can shift spending from low value, to high value care; I am not saying lets simply add more benefits on top of everything else. Why I think it might be possible in three simple bullets.

  • we spend so much on medical care that doesn’t help patients (so is low value)
  • LTC is such a tremendous need, and funding more of this will be high value (benefits > costs for patients)
  • If patients have broader options, including flexible LTC, many will choose a path that has less low value care (therefore shifting low value spending to higher value spending)

Pessimism is always warranted. But, this is my story and I’m sticking to it. The best way to increase the value of Medicare spending, is to expand coverage of LTC.

North Carolina ACA Plan/Insurer Update for 2016

The News and Observer has a story on proposed rates for 2016 ACA plan offerings. Some quick thoughts:

  • A fourth insurer is entering the N.C. ACA landscape; Humana will offer plans in the Winston-Salem and Charlotte areas. Blue Cross/Blue Shield is the only one to sell in all 100 counties. Consumers can choose from 4 insurance companies in some counties, and while BCBS NC remains the dominant insurer, the ACA has increased the number of companies selling indy plans in N.C. In some counties there are 4 choices. This wouldn’t have happened without the ACA.
  • The top line headline has been proposed rate increases, with premium changes across the 4 carriers ranging from a 4.3% decrease to a 40.2% increase. For BCBS NC, increases range from 5% to 32%. Premiums rise when actual costs are higher than expected among the insured book of business, and they vary based on age, where you live, whether you smoke. You can only by insurance based on your own characteristics in the county where you live, so the sensible thing to do is to check out how much your premium would be when open enrollment comes.
  • Premiums quoted in the story are actual premiums, and not what consumers pay. The ACA provides income based subsidies to defray the cost of insurance for persons with incomes between 100% and 400% of poverty. And around 90% of North Carolinians who are covered this year got subsidies, so most will be cushioned against these increases (magnitudes are big; avg NC premium ~$400/month, with subsidy ~$315/month).
  • A key issue will be increasing enrollments of younger, healthier customers, which is key for the long term viability of any insurance market. It is likely that expanding Medicaid would help with the risk pool as well, at least by reducing the uninsured (persons in the so called coverage gap–below 100% and above 0% of poverty if a childless adult–are exempt from the mandate penalty).
  • The following statement from the BCBS chief actuary is important (the bold is mine):

The company’s chief actuary, Patrick Getzen, said the ACA continues attracting people who had trouble getting insurance in the past: sicker, older customers who tend to run up medical costs. Getzen said 94.2 percent of Blue Cross’s ACA customers qualified for financial subsidies and nearly a fifth of them discontinued coverage after several months.

“Most of these customers purchased a plan, paid their initial premium, used costly health care services, then dropped their coverage,” Getzen said. “This is an unintended consequence of the way the law is written.”

He says “nearly a fifth” of their enrollees signed up, and later discontinued paying premiums. Then he says “most of these” (presumably those who disenrolled) used “costly health care services” before they disenrolled. Several points here.

  • Disenrollment could occur because a person got a job and therefore insurance, transitioned into Medicare eligibility, or bad reasons, like signing up, getting care and then disenrolling.
  • At least there is some magnitude of the number here, but this points out our need for better data with which to evaluate the functioning of the exchange in North Carolina (Nearly a fifth times “most of these” might be 0.18 x .66 ~.12 which when applied against the BCBS NC sign ups of 400,000 would be 48,000 people).
  • A national estimate of disenrollment is that 1.5 Million on a base of 11.7 Million signed up as of February, 2015 which is 13%.

It would be lots simpler if we just had good information about how many people disenrolled. in what counties? What were their reasons and/or to what insurance status did they disenroll to (uninsured, Medicare, private, etc.)? And how much care did they use prior to disenrollment?

Many important questions. I wish we were collecting better data.

Academic Freedom, Racism & Bad Social Science

The title of my post sums up my thoughts on Duke Political Science Professor Jerry Hough’s comments on a NYT editorial on racism (via Mark Anthony Neal) over the weekend.

  • He is free to say what he wishes, and I defend this right
  • I think his words are racist; to me, the plain meaning of racist is believing you know everything about someone else, including their motives, based on the color of their skin
  • When he identifies himself as a professor (and social scientist), then it is reasonable to expect evidence to back up claims, which he does not provide. The more sweeping the claims (“Every Asian student”…”Virtually every black”…) the more one should expect evidence, especially from a professor

Our students deserve our best, and at least the benefit of the doubt. In this case, a professor makes claims about his students to justify his broader views about macro issues such as the role of racism versus other etiologies in explaining poor life outcomes among African Americans. The students deserve better. And coming on the heels of the noose incident at Duke this Spring, and subsequent adjudication that concluded the act was caused by “a lack of cultural awareness” this has been a very hard year at Duke for many black students.

I just want to say to our black students that I am sorry, and that I am glad that you are at Duke.

Impact of hospice on costs for patients in Nursing Homes

A new study by Pedro Gozalo and colleagues from Brown finds that Medicare beneficiaries who die in nursing homes have less intensive treatment in the last year of life, but the overall cost to Medicare of their care in the last year of their life, is higher.

Some key bullet points and issues:

  • What did they find? Hospice was associated with less hospitalization and fewer ICU days during the last year of life, but higher overall costs incurred by the Medicare program (around $6,700 more).
  • What didn’t they study? The impact of hospice on quality of life of the patients (at least directly; you could normatively infer benefit from less ICU use and hospital days; they discuss this), or families. However, they were using Medicare claims that don’t measure such variables.
  • What is new about the study? They use a clever, three part counterfactual strategy to identify the impact of hospice on costs. A key issue in observational assessments of the impact of hospice on cost is that persons who choose hospice differ from those who do not. Past work (our study from 2007; Amy Kelley’s from 2013) has used cross-sectional matching using observed variables to identify the most relevant comparisons to hospice users in order to isolate the hospice impact. Gozalo et al. use traditional observed covariate matching as well (part 1) but within a difference-in-difference approach (part 2) that takes advantage of secular trends in hospice use from 2004 to 2009 (much more likely later) to isolate the impact of hospice on Medicare costs. In short, there are decedents in 2004 who did not use hospice who would have done so under 2009 rates, and vice versa. This allows for isolating the impact of hospice on costs in 2009 on persons who were “new” users due to increasing use rates as compared to those who would have used hospice even without an increase. The same comparison is done in 2004, and the difference in the difference provides the estimated impact of hospice on costs. Finally, because all the subjects lived in Nursing Homes (NH), some variables like DNR or do not hospitalize orders that are unobserved but important are available for matching (part 3).
  • Who did they study? All subjects lived in Nursing Homes. This is a key contextual variable, and one that is missed if you say “this study shows hospice increases Medicare costs” because it is found to increase Medicare costs only among persons who died in NH. Most persons receive hospice in their homes, but the subgroup of those receiving it in NHs may be key from a cost standpoint.
  • Around 6 in 10 subjects had dementia, the disease associated with the longest period of hospice use in this as well as past studies. This is largely due to the unpredictability of death (as compared to other primary diagnoses) and does not invalidate the study by any stretch, but it helps to highlight the study patients. The hospice benefit has had a per diem payment that was not modified by diagnosis since its inception in 1983. The general trend toward increasing use of hospice, which has meant an increase in dementia as a primary diagnosis, along with a related increase in hospice length of use for dementia that has been widely noted, really signals that a disease specific hospice benefit may be needed if cost is a concern.
  • Last year of life costs are an easy concept to grasp, but may not be the best way to assess the impact on hospice on Medicare costs. The limitations of cross-sectional propensity score matching such as what I and colleagues used in a 2007 paper deserve to be noted (Amy Kelley et al added covariates, but has the same general problem), but the focus on measuring cost of cases (hospice) and controls (not hospice) from the point of hospice initiation until death strikes me as a more precise means of estimating the impact of hospice (regardless of how the counterfactual used to identify cases and controls is constructed). Further, the savings identified in past work accrues primarily in the last few weeks prior to death, and it seems conceptually suspect to infer that something used for 90 days should reduce cost over the last 365 days of life. It is a fair point to say that in our paper as well as Amy Kelley’s, all cases of hospice do not match to “statistically good” controls but Medicare has to pay for the care for all patients, but the same can be said for the new paper as well. Pedro and colleagues rightly note that the last year of life is a commonly used time frame, but that doesn’t do away with this conceptual issue. It is an interesting conceptual discussion about the appropriate dependent variable for such a study: full last year of life costs or costs from the date of hospice initiation until death. To push it ahead, I would just like to see more analysis. Pedro and colleagues could update their estimates using the approach that we used and that Amy Kelley etc followed–measuring savings (or not) from the onset of hospice to death and assess their cost findings.

This is an important paper with a very clever estimation strategy, that deserves to be discussed, technically and conceptually (especially my last point above), as well as for what it might mean in terms of policy adjustments. I will have some thoughts on this in a follow up post.

Post Doc Position in Health Policy at Duke

I am searching for a post-doctoral research fellow at Duke; I will be the primary supervisor of the fellow. The Post Doctoral Fellowship Description.4.13.15 is also pasted below.

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Post-Doctoral Fellowship in Health Policy and Health Services Research

Duke Clinical Research Institute (DCRI), Duke University

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The Duke Clinical Research Institute (DCRI) seeks a full-time Post-Doctoral Research Fellow with training in Health Policy, Health Services Research, Public Policy, Epidemiology, Informatics/Statistics, Economics, Sociology or related discipline. The successful candidate will join a multi-disciplinary team of investigators working on a variety of policy-relevant projects, with a focus on projects that are seeking to develop new models of delivering care to persons with advanced, life limiting illness. The goal of the fellowship is to advance the intellectual and professional development of the fellow as they transition toward being an independent researcher.

Funding, Role and Primary Tasks:

  • Funded 100% by the Duke Center for Medicare and Medicaid Innovation (CMMI) Award that is demonstrating Community Based Palliative Care and assessing its impact on patient outcomes and costs to the Medicare program and developing new ways for the Medicare program paying for palliative care services. Funding can remain 100% on this project for 2 years. There will also be options to shift funding to other projects based on shared interests.
  • The CMMI Innovation award is a demonstration project that is being implemented in 12 Western North Carolina counties by Four Seasons Hospice, and Duke’s role in the project includes collection of quality monitoring data; assessment of the acceptability of palliative care to patients, providers and others; linking demonstration data with Medicare claims records using Duke’s Virtual Data Research Center (VRDC) which is a secure linkage that allows access to CMS data; identifying propensity score matched controls to allow for assessment of the impact of palliative care on cost to Medicare; the extrapolation of the impact of palliative care on Medicare costs to simulate the impact of broad uptake of palliative care nationally; and development of proposed modifications to the existing Medicare payment structure in order to incentivize the increased use of palliative care. The post-doctoral fellow will work on all aspects of this project described, working as a member of a growing interdisciplinary team.
  • The purpose of the post-doctoral fellowship is to both complete the work of the CMMI innovation award as well to assist the fellow in developing their own research agenda. This will include working on grant proposals that are of mutual interest to the DCRI and the fellow.

There are opportunities for the fellow to transition into a faculty position in one of several departments at the Duke Clinical Research Institute (DCRI), Duke University School of Medicine, Duke University and/or the Duke University Health Care System. Salary is commensurate with experience and background, and includes the full Duke University benefit package. The fellowship is open immediately.

The fellow will be supervised by Donald H. Taylor, Jr. Ph.D., Professor of Public Policy, Duke University and Faculty member, Duke Clinical Research Institute (DCRI). To apply, please send a CV, a cover letter outlining the candidate’s interests, and the names and contact information of 3 references. Please send materials via email to Don Taylor (don.taylor@duke.edu) and Abby Hardaway (abigail.hardaway@dm.duke.edu) with DCRI Post Doc in the message line with the noted items attached. The post is open until filled.

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