Private Score of Burr, Coburn, Hatch Plan

Brad Flansbaum sent me a link to a private score of PCARE, the reform plan released on Monday by Republican Sens. Burr, Coburn, and Hatch. I don’t know the Center for Health and the Economy, though I do know several members of their advisory board and many of you will as well. I don’t have my own simulation model to be able to verify these sorts of results, and the CBO is the final word, but I will just assume that a group that has Uwe and Holtz-Eakin on the Board must be somewhat credible. There is much to be learned here, even if you assume this to be an overly optimistic score.

First off, lets just say that the rage machine that has been perfected to argue against the ACA could get plenty cranked up from the these results. There is a breathless Americans for Prosperity Ad running in North Carolina talking about a nice lady losing her doctor in an Obamacare plan, in health policy speak, due to the rise of the narrow network. Yep, this score says PCARE will have a slight increase in persons covered by 2023 compared to the ACA, but most of that arises from a shift of people into narrow network plans.

ScreenHunter_05 Jan. 30 09.02

Now narrow network plans don’t bother me one bit (I thought everyone wanted to reduce costs!), but the ad machine that is trying to give the Republicans the Senate in 2014 is demagouging something that is a feature and not a bug of the plan put forth by Republican Sens. Burr, Coburn, Hatch. They achieve coverage expansions via an increase in individual based coverage (up 30% by 2023) at the expense of employer sponsored coverage (down 2% by 2023) and Medicaid (down 11% by 2023). What impact does this shift have on access? They calculate a “Provider Access Index” that identifies the degree to which persons insured by different options can pick the providers they want and they say:

With respect to patient’s access to their providers of choice, the CARE Act is expected to achieve similar access to current law, based on the H&E Provider Access Index (PAI).[6] The proposal is projected to reduce the average PAI in the individual market, due to an influx of consumers enrolling in low-cost narrow network plans. However, that reduction is offset by a reduced reliance on Medicaid to insure the low-income population.

On premiums, the analysis says they will be generally lower in the non employer market, but most of the decline is among individuals and not families.

By 2023, the proposal is expected to yield substantially lower premiums than current law in individual insurance product categories with savings of 2 – 11 percent for single policies. H&E predicts that family policies will see a modest decrease ranging from 0.3 – 1 percent.

On the overall federal budget, they expect a 10 year reduction as compared to current law (ACA), a reduction of about $1.5 Trillion over 10 years. This is actually consistent with the co-sponors saying the plan will be “roughly revenue neutral” because of how large the federal budget is from 2014-2023 ($46.7 Trillion, see p. 8), the appropriate denominator to have in mind. For example, CBO’s budget forecast over the same period was reduced by ~$618 Billion just from their February, 2013 to June, 2013 estimates! It is illustrative to look at the components of the estimated deficit reduction from passage of PCARE over the 10 year window:

ScreenHunter_08 Jan. 30 09.49

Yep, most of the action is achieved by the capping of the tax exclusion of employer sponsored health insurance. You know what this would be called if this (good in my opinion) policy were to replace the cadillac tax in the ACA? A Trillion dollar tax increase (Ah-Trill-Yun! with scary music in the background). The Medicaid changes which will result in blood on the floor debate yield around $150 Billion in savings over 10 years, and the savings from medical malpractice reform are essentially a rounding error in the context of the 10 year federal budget.

So, this score says that PCARE will achieve similar levels of insurance coverage as the ACA by 2023, and will result in a reduction of the federal budget as compared to the ACA, primarily by shifting people into narrow network private insurance plans, and increasing taxes of persons with generous employer sponsored health insurance. It doesn’t analyze the generosity of benefits covered (at least that I can tell, but they had to make assumptions), nor does it identify the impact on out of pocket costs that will result in these coverage levels; these are important items to understand, especially given that there are no proposals about transitioning to different models of care and the like.

Taking a look back in time through the lens of this proposal, I can’t help but thinking that Sens. Burr and Coburn missed a big opportunity in January 2010, by not throwing Sen. Olympia Snowe a lifeline (remember, she voted for ACA out of the Senate Finance Committee), which would likely have brought along Sen. Collins. Those four together could have gotten a lot once Scott Brown was elected. Instead they choose full opposition, and gross over-statements in their arguments against the ACA, especially given the proposal they now put forth. In the end, they helped to create and exacerbate the political culture that will make it so hard for their proposal to be given the subtle, and nuanced listen that it deserves.

Update: I am trying to get details of the model, assumptions and the like. I have requested it officially for the site that put out the score. I have also been talking on twitter with members of the Advisory Board. I think the model is an update of Steve Parente’s model (old one, paper likely behind new one). Will confirm/clarify as I get info.

Update 2: I confirmed that Steve Parente did the simulation. Here is a pdf of the paper linked above Parente.hesr_12036 behind the model, published in HSR. However, it is based on ACA uptake after SCOTUS ruling, so I am still trying to understand PCARE assumptions; Steve and I are going to talk.

Update 3: Loren Adler has 7 important questions/points in his twitter timeline about detail gaps in the private score. I have conversed quickly with Steve Parente via email, but don’t have enough yet to clarify. I will likely do so in another post when I understand more.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

13 Responses to Private Score of Burr, Coburn, Hatch Plan

  1. Pingback: Go read Don Taylor on scoring the Patient CARE Act | The Incidental Economist

  2. Ross McKinney says:

    I appreciate your comment on the passage of the original ACA. The window for compromise sadly slammed shut. To get the PCARE passed will require fairly radical shifts in philosophy, although the “it’s not Obamacare” perspective will undoubtedly help. I suspect the origins in the Senate, even from Republicans, will make it dead in the water, although an interesting exercise. In that regard, I’m trying to grasp the impact of the mass migration to narrow provider networks from the point of view of Health Systems. This may actually begin to apply some meaningful pressure to lower costs so that the systems can compete for business. Or it may simply decrease access across a wide spectrum of the public to the more expensive (and presumably but not necessarily better) providers. In our region, for example, will Duke, UNC, Wake, and Novant compete on price to be included in the narrow networks, or will they choose to opt out and rely on Employer backed insurance? And what will the impact be as a higher proportion of patients moves to high-copay, high deductible plans? Will employers opt to move employees, esp. lower wage, to the exchange (a given), and when that happens is it going to damage the historical subsidization of Medicaid through higher-pay insurance plans, at a time when Disproportionate Share is going away?

  3. Steve_L says:

    Per this story the tax provisions appear to have changed very significantly in the last few days:

    http://talkingpointsmemo.com/dc/gop-obamacare-alternative-tax-increase

    would be curious to know how this is accounted for in the scoring

    • Don Taylor says:

      Steve L
      I am seeking clarification about the score (what benefit package assumed, what about OOP analysis, distributional effects of uninsured/insured by age for this v ACA and the like). I think it is the case that the materials put out didn’t accurately describe the plan, but am not certain. As I say, trying to get more details and will post when I do
      Don

  4. Pingback: Still Seeking Clarity on Private Score | freeforall

  5. Pingback: Republicans Endorse Obamacare Lite, Ctd. | Konfeksiyon Tekstil

  6. Micah Weinberg says:

    A number of things – One, they’ve totally changed their proposal as mentioned above to remove the best part of it (the cap on employer tax exemptions for health insurance) but I’d bet they’re still going to talk about this now entirely irrelevant score! Two, it turns out that the cost of the ACA is now predicted to be lower by virtue of the use of … narrow networks. Certainly happening in CA. So there’s no magic here that isn’t already in the ACA. Totally agree that these are (if properly constructed) a feature rather than a bug, pretty much the only way to effectively bring down healthcare costs. I think that Andrew Sullivan said it best: “GOP’s alternative looks a hell of a lot like Obamacare – but with some gratuitous unconcern for some of the most vulnerable.”

    • Don Taylor says:

      Micah
      I am awaiting word from the people who did the scoring. It seems likely that they have changed their proposal, or that the what was scored was not what they (the Senators) intended. If they have backed off on the tax exclusion a great deal, then they lose their most of the cost saving potential, and you are correct it renders this score irrelevant. I actually think that capping and moving it slowly down is a good policy and have written lots calling for a replacement of the caddy tax with a capping; doing this is actually a progressive means of financing, since the benefit of the tax code viz health insurance is “upside down” meaning more flows to high wage workers. Big picture though, this proposal is an acknowledgment that repeal is gone, it is a matter of modification. The episode shows that it is very hard to shift from a scorched earth footing on health reform to making policy proposals. For intellectual wonk/conservative types, changing the tax treatment of ESI is really their main thing to offer….if that is gone….

  7. Pingback: Patient CARE Act Posts | freeforall

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  9. JIMFIRZSR says:

    WE HAVE THE BEST GOVERNMENT THAT THE 1% CAN BUY!!!!

    LETS CONTINUE TO REDUCE UNEMPLOYMENT BENEFITS AT THE FEDERAL AND STATE LEVEL..
    CHANGE ELIGIBLITY REQUITEMENTS SO THEY HAVE TO WORK 20 HOURS PER WEEK
    AND PASS DRUG TESTS TO QUALIFY!

    SINCE WE CAN NOT REPEAL OBAMACARE LETS REPLACE IT WITH THE REPUBLICAN PLAN=

    LET THE INSURANCE COMPANIES BE ABLE TO CANCEL AND INCREASE PREMIUMS IF YOU MISS A PAYMENT!

    ELIMINATE OBAMACARE CORPORATE TAXES ON INSURANCE AND REPLACE WITH TAX ON EMPLOYEES WHO GET EMPLOYER BASED POLICIES!

    INCREASE INSURANCE PREMIUM FOR OLDER FOLKS TO 5 TIMES WHAT A 25 YEAR OLD WOULD PAY!

    ELIMINATE CORPORATE TAXES AND REPLACE WITH A FLAT TAX!

    I CAN NOT WAIT UNTIL THE NEXT ELECTION IN 2014!!!!!!!!

  10. Pingback: Sen Burr talking about his health plan | freeforall

  11. Pingback: More on implicit taxes and the counterfactual | freeforall

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