Title VIII of Ryan’s Patients’ Choice Act

I have written lots about what I consider to be the hypocrisy of Rep. Paul Ryan for criticizing the IPAB given what is proposed in title VIII of the Patients’ Choice Act (two expert boards) that he introduced along with co-sponors Devin Nunes in the House and Sens. Burr and Coburn on May 20, 2009. This post outlines the argument, and looks closely at selected portions of the text, this one elaborates on the topic given a repeal-of-IPAB-hearing held during the Summer of 2011, and this one follows up by discussing a response from Rep. Ryan’s spokesperson to my criticisms.

Keep in mind that I praised the board contained in the Republican bill in this July 24 2009 newspaper column, and said that such a board based loosely on the base closing commission could represent a bipartisan way ahead to address costs! (silly me).

Here is a link to the full text of the Patients’ Choice Act, and below I reproduce the entirety of title VIII, subtitles A, B and C, so that you can read the text for yourself.

TITLE VIII–HEALTH CARE SERVICES COMMISSION

Subtitle A–Establishment and General Duties

Read more of this post

Patients’ Choice Act-Title II State Based Exchanges

The Patients’ Choice Act (PCA) represents Rep. Paul Ryan’s vision for what “replace” would look like for two-thirds of all Americans (160 Million now privately insured, and 50 million uninsured) if the Affordable Care Act were repealed. I am going to write a series of posts on the various Titles, or sections, of the bill. Past posts on the PCA:

This post looks at Title II of the PCA-State-Based Health Care Exchanges (pp. 18-26).

  • Sec 202 (b) (p. 20). Benefit Parity with Members of Congress. This section does not guarantee that all Americans will get the same type of health insurance enjoyed by members of Congress, at least not at the same price. I read the text as saying that states cannot mandate different benefit levels than those enjoyed by Congress, however, there is no limit to the premium or cost sharing that can be charged for these benefits (see Sec 202 (a)(4) p. 20). Further, the amount of the tax credit provided by the PCA ($5,710 for family coverage; $2,290 for individual, p. 28) is far below the cost of a typical private insurance policy, much less what is provided to members of Congress. The federal employees health plan provides a guaranteed percentage of the premium cost for plans regardless of what they cost, which the PCA does not do. In fact, the meta point of the PCA is to move away from a guaranteed amount of insurance coverage in favor of a defined federal contribution.
  • Sec 202 (c)(1) (p.21). Automatic enrollment procedures that are designed to get persons covered by health insurance are envisioned, and the phrase “universal” is invoked on line 1 of p. 21 even if some supporters are leery of such lingo. Settings/mechanisms for auto enrollment into health insurance mentioned include ERs, submission of state tax forms, workplaces, and state dept of motor vehicles offices, such as when people renew their drivers license. This subsection lays out other procedures designed to aid in enrollment, such as having open enrollment periods and specifies that all individuals can sign up for a plan so long as they agree to pay the premiums and cost share amounts. Sec 202 (c)(5) allows individuals to opt-out of health insurance.
  • Sec 202 (c)(4)(p. 22). Limitations of Pre-Existing Condition Exclusions. This section reads in full “The State Exchange shall ensure that health insurance coverage offered through the Exchange meets the requirements of section 9801 of the Internal Revenue Code of 1986 in the same manner as if such coverage was a group plan.” This places limits on pre-existing conditions, but does not ban them for policies sold in exchanges (exclusions limited to 6 months prior to enrollment to 12 months after).
  • Sec 202 (d)(1- 2)(p.22-25). Limitation on Exorbitant Premiums. Exchanges are directed to develop ways of protecting enrollees from “imposition of excessive premiums” and potential mechanisms include risk adjustment by a state-based board, high risk pools, reinsurance and interstate compacts. To fully evaluate these proposals requires far greater detail, like what would be expected if the relevant House committees marked up the PCA which must happen for this to ever become law. Then CBO could weigh in.

The PCA is a serious proposal that remains incomplete; many details are needed to make a full comparison with the Affordable Care Act possible. Reflecting on Title II, my biggest question is:

  • how different would aggressive auto enroll procedures be from the relatively weak penalty for not being insured contained in the Affordable Care Act in terms of insurance coverage attained? I sure would like to know what the CBO thought.

Patients’ Choice Act Needs to Meet the CBO

As I noted Thursday, Rep. Paul Ryan‘s speech last week embracing the Patients’ Choice Act (PCA), completed the “replace” part of his call to “repeal and replace” the Affordable Care Act.  While the details of Rep. Ryan’s plan differ for the various parts of the system, the overriding idea is moving toward a defined contribution from the federal government, instead of a commitment to providing a given level of insurance coverage, shifting costs to either individuals or states. The outline of Rep. Ryan’s overall “replace” plan is:

  • Medicare (45 Million persons in 2011). No great changes for those now covered by Medicare, or who will be so covered in the next 10 years. However, for those who become eligible for Medicare more than 10 years from now, they would receive a voucher with which to purchase private health insurance. Eventually, Medicare as a government insurance plan would go away with the death of the last beneficiary, replaced by this system of private coverage.
  • Medicaid (60 Million persons in 2011). Block grant the program to states, fixing the cost to the federal government and shifting the balance to the states.

These two policies were adopted  in broad form (235-189) when the House of Representatives passed its Budget Resolution on April 15, 2011, and have been much discussed; I am not going to get into them (Austin has written a lot on the Medicare proposal). I am going to instead focus on the last part of Rep. Ryan’s replacement strategy, the Patients’ Choice Act, that would directly impact around two-thirds of the U.S. population almost immediately if passed:

  • Privately insured (160 Million persons in 2011) and uninsured (50 Million persons in 2011). The Patients’ Choice Act represents Rep. Ryan’s vision for how health insurance would be remade for persons who are not elderly and not poor enough to qualify for Medicaid. In short, the tax preference of employer paid insurance would be repealed, all persons/families would get the same tax credit with which to purchase private health insurance, either inside or outside of state-based exchanges. The premium levels are far below average premiums today, meaning they would finance only catastrophic levels of coverage. There are many details that need to be considered. I outlined some of them last week.

I am going to drill down on these details by going through several of the key Titles of the PCA over the next couple of weeks. However, the punch line for this analysis is clear regardless of what I think:

  • the House Republicans need to mark up the PCA in committee (Commerce and Ways and Means for sure, perhaps Budget), pass the bill out of the relevant committees, and see what the CBO has to say about them.

Politically, it is an advantage to “have a plan” but not commit to the nitty gritty details. The PCA has been around for a while, having been introduced into the 111th Congress on May 20, 2009 but has never been scored by CBO since it did not see the light of day in the last Congress because the Democrats controlled the House of Representatives. However, the Republicans have controlled it for the past 9 months, and there is nothing standing in their way of filling in the blanks, passing the  PCA out of committee(s) and seeing what the CBO has to say. To paraphrase what a Little League umpire once told me, the PCA is nothing until CBO tells us what it is. Only then can the country understand the replace part of repeal and replace.

From the archives: Patients’ Choice Act

Paul Ryan‘s speech on Tuesday outlined the balance of his “replace” strategy to go along with the Medicare and Medicaid reforms passed in the House Budget. A House Budget Committee spokesman confirmed via email that they are not introducing new legislation, but that Ryan’s efforts will be built upon the Patients’ Choice Act, introduced into the 111th Congress on May 20, 2009. Some of my blogging about the PCA (many links) is here and here. I wrote the following column in the Raleigh, (N.C.) News and Observer on July 24, 2009 about the Patients’ Choice Act. I think it holds up pretty well 26 months later as outlining the key issues with the PCA; I will blog more about them in the future.

******************

Sen. Richard Burr, R-N.C., is a co-sponsor of the Patients’ Choice Act, the major Republican health care reform alternative in Congress. It has yet to be “scored” by the Congressional Budget Office (CBO), and important details are unclear. However, this Act would represent a consequential change by repealing the tax exclusion of employer-paid insurance premiums and replacing it with tax credits. The Act differs in many ways from the Democratic bills in Congress, but there are some points of potential compromise.

The Act would provide an advanceable, refundable tax credit ($5,710/ family or $2,290/individual) that non-elderly individuals would use to purchase insurance. States would arrange “health care exchanges” through which private insurers would voluntarily offer plans that would be mandated to provide a benefit package similar to what Congress enjoys.

The plan would increase insurance coverage (how much is unclear) and likely result in an increase in deductibles of those covered. This is because the amount of the tax credit is less than half the current average premium ($13,000 family; $5,000 individual) of a private insurance plan. As premiums fall, deductibles rise, exposing individuals to more of the actual cost of their care. This aspect of the Act has the potential to reduce use, and therefore costs.

Employers could still pay premiums on behalf of their employees, but this would be taxable income. If a high-deductible plan costing less than the tax credit is chosen, the balance is placed in a Health Savings Account (HSA). Families can put $5,950/year ($3,000 for individuals) into a HSA and the money can be used to pay for care or insurance premiums. Individuals would be more involved in arranging their own insurance under this plan.

The biggest question is how the state insurance exchanges would work. There is no individual mandate to purchase insurance, but the Act envisions states developing automatic enrollment provisions whereby persons would be signed up for high-deductible plans when they did things like renew a driver’s license, unless they opted out.

This “soft individual mandate” is important because the plan bans health insurers from denying coverage based on pre-existing conditions, so you need a way to get healthy people into the insurance pool.

Because the tax credits can be used to buy plans both inside and outside of the state-based exchange, there is a danger that only the sickest patients will seek coverage via the exchange, since coverage cannot be denied. If this happened systematically, it could result in death spiral whereby only poor risks are included in exchange-based plans. However, the Plan notes that exchanges “shall develop mechanisms to protect enrollees from the imposition of excessive premiums, reduce adverse selection, and share risk.”

While the devil is in the details, this vagueness provides an opportunity for compromise, as the risk adjustment provisions for setting premiums from the Kennedy-Dodd Senate HELP committee bill (on which Burr sits) could fill in the blanks and are noncontroversial. These provisions allow for the consideration of family structure, actuarial value of benefits, geographic area and age only in setting premiums (premiums couldn’t vary more than 2 to 1, oldest to youngest).

Both plans ban exclusion on the basis of pre-existing conditions. And if auto enroll procedures are aggressive, there may only be semantic differences between Burr’s approach and the individual mandate which is included in all Democratic bills.

The cost of the tax credits in the Patients’ Choice Act alone is likely to be larger than the amount saved by repealing the tax exclusion for employer-provided insurance. And a big question is how many persons would be insured by the Act. These two crucial pieces of information will only be available after the CBO scores the bill. The CBO is playing the role of umpire in health reform, judging all bills in terms of their cost to the federal treasury and impact on insurance rates.

Several provisions in the Patients’ Choice Act would reduce the plan’s cost to the federal government, but these costs would mostly shift to states. The most notable such change is the proposed block-granting of the federal share of Medicaid’s long-term care coverage of the elderly and disabled, which might reduce the federal cost by up to $600 billion over 10 years.

However, this would either increase state costs, or necessitate changing how care is provided to such persons, with the impact on access and quality of care being unclear. The plan includes several other provisions, such as changes in how Medicare Advantage plans are paid, means-testing Part D prescription benefits and a modest malpractice reform.

The most intriguing aspect of the Act is the creation of a Health Services Commission, to be run by five commissioners appointed by the president and confirmed by the Senate. The purpose of the commission is to “enhance the quality, appropriateness, and effectiveness of health care services through the publication and enforcement of quality and price information.”

A systematic look at the Medicare program (treatment coverage decisions, payment approaches, quality improvement strategies) that was insulated from Congress in a manner similar to the military base-closing commission would be a good first step toward addressing cost inflation in Medicare in a comprehensive and reasoned manner. Lessons learned from Medicare could then be applied more broadly to the health system.

Any such effort will undoubtedly be called rationing by those wanting to kill it, and quality improvement and cost-effectiveness by those arguing for it. Whatever we call it, we must begin to look at inflation in the health care system generally and in Medicare in particular.

Patient CARE Act Posts

On Monday, January 27, 2014 Republican Senators Richard Burr (N.C.), Tom Coburn (OK) and Orrin Hatch (UT) released a fairly detailed outline of a new health reform plan: (The Patient Choice, Affordability, Responsibility, and Empowerment Act, or PCARE). I will aggregate my posts on this proposal in this post:

Senators Burr and Coburn (and Rep Paul Ryan and Devin Nunes) introduced the Patients’ Choice Act in May, 2009. Here are several links to that proposal (that differs in important ways from the most recent proposal)

In February, 2012 Senators Burr and Coburn introduced the Seniors Choice Act, that focuses on Medicare. The most recent proposal does not mention Medicare, nor SCA

Seniors’ Choice Act and under-65 Medicare

Harold Pollack asked me via twitter (@haroldpollack) on Tuesday “What happens to the under-65 Medicare population in the Seniors’ Choice Act?”

The short answer is that the Seniors’ Choice Act white paper is not very clear on how Medicare beneficiaries younger than 65 (end stage renal disease, permanently disabled, etc.) would be treated. The language in the white paper focuses on “seniors” and of course the impact of any such proposal on elderly Medicare beneficiaries can be expected to capture most of the policy–and all of the political–discussion. A few thoughts on how the proposal would treat under-65 Medicare beneficiaries.

  • Maximum out-of-pocket protection would apply to all Medicare beneficiaries, and the extra cost-share for higher income beneficiaries would as well. The under-age 65 Medicare beneficiaries would be disproportionately low-income, and those who are not dual eligibles (also eligible for Medicaid) could benefit from this maximum out of pocket benefit.
  • The voluntary care coordination benefit could help medically complex patients, such as those with permanent disability or end stage renal disease. Page 3 of the white paper says, “All Medicare beneficiaries that fit certain medical and clinical criteria would be eligible for a new, voluntary care coordination benefit. All seniors in the traditional Medicare program could select this care coordination benefit, but it would only be activated if they met certain medical criteria.” This seems to include, and perhaps to even target Medicare beneficiaries younger than age 65 for care coordination. It is not clear exactly what such coordination would consist of, and it is possible I am parsing the words of a first-step white paper too finely (all v. Seniors above). The care coordination benefit aspect of the proposed policy is interesting, and the authors assert that it will allow focus on disease-identified groups of patients in ways that ACOs will not; we need to hear more about this.
  • Premium Support/Competitive bidding could apply to the under 65 Medicare population. Around 1 in 10 Medicare Advantage patients are currently enrolled in so-called Special Needs Plans which are private insurance plans. The big idea in the proposal is to transform the how of the private insurance Medicare option into a competitive bidding approach, and there is no technical reason why this could not be done for under age 65 Medicare beneficiaries. You can imagine many questions that will need to be clarified for particularly vulnerable under age 65 beneficiaries. This series of posts I did on Special Needs Plans outlines some of the issues (post 1, post 2, and a 3 part interview on SNPs with Marsha Gold, part 1, part 2 and part 3).

All of these details will need to be clarified if this is to be a serious proposal, especially for the proposed care coordination benefit. Some of my past blogging on how to best care for the dual eligibles (some of whom are younger than age 65) could be relevant to this discussion (here and here). Further,  I have proposed federalizing the care of the duals. While that could be viewed as the opposite of seeking to move them into private insurance Medicare options, both share a basic goal of making one payer responsible for improving the care that very vulnerable and expensive beneficiaries receive. Both ideas would seem to be helped by the poor nature of the status quo.

DT

(Past TIE Seniors’ Choice Act blogging: here, here, here)

Update: Marsha Gold has a piece in NEJM today on private insurance in Medicare.

 

One more thing on Seniors’ Choice Act

Even if we managed to get the details straight for Sens. Burr and Coburn’s proposal to move toward a competitive bidding/premium support approach in Medicare (my early take, Austin’s thoughts; more this morning on premium support), it is impossible to fully evaluate their proposal without knowing what they plan to do about the ACA. Their latest proposal assumes implementation of the ACA, but they continue to call for its repeal and presumably, replacement. And of course the Seniors’ Choice Act would increase the eligibility age for Medicare, making the question of access to health insurance for the near elderly even more important.

Sens. Burr and Coburn co-sponsored a proposal to address coverage for younger persons in the last Congress (The Patients’ Choice Act), but it has never been scored by the CBO. Presumably, that could change, and it would be a useful step. You cannot fully evaluate the Seniors’ Choice Act without knowing the health insurance plan for the under-65 age group that would operate along side it.

DT

Burr and Coburn intro Seniors’ Choice Act

Senator Richard Burr (R-NC) and Tom Coburn (R-OK) today will announce their Medicare reform bill, The Seniors’ Choice Act. Avik Roy gave me the text and has a lengthy post up and he is a fan.

The devil is in the details, and with any premium support approach to allow Medicare beneficiaries to purchase private insurance, the most important detail is how the premium support amount will be set. The TIE FAQ entry on competitive bidding is required reading for anyone interested in this type of policy. The broad outline of the plan:

  • Maintain traditional FFS Medicare, but introduce a premium support approach designed to get traditional and private Medicare to compete. Again, the details are the key
  • Raise the Medicare eligibility age. TIE FAQ on that
  • New out of pocket cost maximum, unified across all parts of Medicare, with higher cost sharing for high income persons
  • Creation of a voluntary care coordination benefit
  • Repeal the IPAB. This one is particularly ironic given Burr and Coburn’s Patients’ Choice Act (introduced in May 2009), which I argue has similar boards with far more power than IPAB

Politically speaking, this further reinforces that Republicans realize the plan to move to eventually do away with FFS Medicare altogether is a non starter. It brings about the move toward a new premium support approach sooner (2016) than does the Wyden-Ryan plan. As said now three times in this post, the details are the key for any premium support/competitive bidding approach, although I suspect that if there ever is a deal on Medicare it will be called premium support/competitive bidding. I need to look more closely at what is written, but the maximum out of pocket cost benefit and the means testing of this is worth a closer look. More later

DT

Is There A Downside to Patient Choice-II?

Yesterday I posted on a JAMA study that showed that critical access rural hospitals (CAHs) have higher adjusted mortality for 3 common conditions. 30 day mortality for patients admitted for AMI, CHF and pneumonia remained higher in CAHs even after controlling for fewer resources (less likely to have an ICU, cardiac cath lab, Electronic Health Records), reduced clinical personnel, membership in a hospital or health care system, and degree of rurality.

The authors note that they were unable to control for patient health behaviors that are known to be higher/worse in rural areas (obesity, smoking, exercise). Further, in the Medicare program, patients have absolute choice of what hospital they use for health care services, and there are always worries about patient selection effects (patient choices being related to mortality in ways that are not obvious). Of course in the case of emergencies (AMI is one of the conditions studied) choice may be irrelevant. Do these unmeasured individual variables explain the observed mortality differences?

Typically when you have an observational study and concerns that unmeasured indivdiual variables could explain the differences in observed outcomes, the holy grail is a randomized control trial (RCT) to determine whether outcomes and quality are truly worse in CAHs. However, in this case, I don’t think a RCT could really provide a meaningful answer (which is good news, because you could never do the trial). The reason is that people don’t live in clinical trials. Some of them live in rural areas–about 60 Million Americans. They choose to live there and we have to have a health care system that works for such citizens.

There are two types of questions that need to be addressed to inform policy:

  • Can we determine whether unmeasured patient characteristics explain the outcome differences? I am unsure of how to best investigate this question, especially on a national level. We likely need more targeted micro studies in states or parts of individual states.
  • If patient factors do not explain all of the differences, how big of a outcome/quality difference are we willing to tolerate to allow CAHs to remain in rural America? I have some thoughts about this that I will address tomorrow.

 

 

 

Is There A Downside to Patient Choice?

A new study in JAMA shows that patient choice may be bad for the health of some rural Medicare beneficiaries who experienced worse outcomes when treated for common serious conditions in critical access rural hospitals (those with less than 25 beds and more than 35 miles from the nearest hospital) as compared to other facilities.

Patients treated in CAHs had higher 30 day adjusted mortality rates for AMI 23.5% v. 16.2%; CHF 13.4% v. 10.9%; pneumonia 14.1% v. 12.1%. All comparisons were statistically significant and were adjusted for age, race, sex, and medical comorbidities. These findings remain even after further controlling for selected hospital characteristics including volume, ownership, electronic medical records, and patient choices such as use of hospice. The study population was comprised of fee for service Medicare beneficiaries hospitalized nationally from 2008-09.

Choice is a powerful cultural symbol in the  U.S. Fear of being denied the ability to choose where one gets care often drives  anxiety about health reform. As I noted yesterday, you need to know the quality or effectiveness of care provided to be able to fully evaluate the up and downside of choice.  This appears to be a case in which the unfettered choice of hospital that is afforded to Medicare beneficiaries means that patients are allowed to choose to go to hospitals with poorer outcomes. The results of the study seem fairly straightforward in this respect as the authors note in the abstract

Compared with non-CAHs, CAHs had fewer clinical capabilities, worse measured processes of care, and higher mortality rates for patients with AMI, CHF, or pneumonia.

 However, it is difficult to know what we do about this? It is not a small problem, as around 1 in 5 Medicare beneficiaries receive care in CAHs. Over the next couple of days, I am going to do a series of posts more fully exploring what the results of this study mean for Medicare policy specifically, and what they tell us about the value of patient choice, more generally. Future posts will cover topics such as:

  • how do CAHs differ fron non-CAHs in terms of the care they can provide?
  • are there ways to improve the quality of care in such hospitals? Are there success story examples?
  • methodological issues in claims-based research studies
  • how important are patient preferences to receive care close to home? Are we willing to tolerate/accept worse outcomes if that is where patients want to be treated? How much worse?
  • what is Medicare’s responsibility to inform patients of differences in quality among providers?

 h/t Brad Flansbaum who may be blogging on this paper from the perspective of a hospitalist.

update: added a sentence about mortality findings holding up after adjustment for more covariates.