A few weeks ago as the Senate introduced the BCRA, I made a note on the cost equivalence of using the baseline 58% Actuarial Value (AV) subsidy funds for Medicaid. Medicaid pays providers a lot less than most commercial plans in most states. The AV difference is meaningful and significant.
The cost effectiveness is the part that has me scratching my head. 58% AV insurance would presumably be paying providers at or above Medicare rates. More likely in most regions, the policies that would be sold on the Exchanges would be paying providers standard commercial rates. This is a major cost effectiveness issue.
The Kaiser Family Foundation estimates that Medicaid pays providers on average 66% of what Medicare Fee for Service (FFS) pays. As we saw yesterday, the Congressional Budget Office has evidence that commercial group insurance from national carriers pay roughly 50% more than Medicare FFS for the same procedure code.
Let’s work through two scenarios that apply to Antos and Capretta’s argued high point that poor people can buy subsidized private plans. We will assume that some of the private plans will be paying their providers 120% of Medicare FFS on average. These plans will be narrow network plans with significant gatekeepers. The second iteration assumes the plans will pay 150% of Medicare FFS. These plans will be broader networks with fewer gatekeepers.
This is important. Commercial plans on a per dollar basis buy a lot less than a Medicaid plan. The trade-off is network size (all else being equal) and responsiveness.
I’m bringing this back up as Seema Verma, CMS Administrator, seems to be proposing a back-door CSR add-on for Medicaid wrap-around to buy down deductibles and buy up actuarial value.
Top Trump health official is pushing an interesting Medicaid plan, per AK's Sullivan / @StevenTDennis reporting https://t.co/qL7JbkATAq pic.twitter.com/o86q6OW0PP
— Zachary Tracer (@ZTracer) July 20, 2017
If we think that individuals who are Medicaid Expansion eligible because their incomes are under 138% FPL (~$16,300/yr) will have significant pragmatic barriers to care because of high initial dollar cost sharing, then minimizing cost sharing makes sense. In the ACA, the ideal is people making under 138% FPL have nominal cost sharing, people making between 138% and 150% FPL have a $300 deductible and people making between 150% to 200% FPL have a $1,000 deductible with CSR.
Adding the Medicaid expansion population to the CSR population that would shift to 58% AV plans creates a huge pool of people who need assistance to buy up. Buying up from 58% AV with a $7,000 deductible to 85% or 90% AV with a $1,000 or $750 deductible is expensive no matter what the per unit cost is. And since the expense for a significant portion of this pool in need is moving from low cost Medicaid to high cost Commercial insurance, the incremental cost would be very high.
$200 billion to buy up a back-door CSR for both the current CSR population and the Medicaid Expansion and Medicaid Expansion eligible populations is a pittance.
FlipYrWhig
A lot of this is over my head but I wanted to ask a basic question. What are they trying to accomplish, exactly? What problem are they trying to solve? Is it just that they are trying to find ways to have people on private insurance rather than on public insurance? Because of their devotion to the idea that shopping around / competition is always favorable, on principle? Or because they don’t believe The Government should be in this line of work? Even trying to give them the benefit of the doubt that their total social vision isn’t “save up, buddy boy, because if you get sick or hurt it’s your problem not mine,” I’m at a loss.
rikyrah
@FlipYrWhig:
never ever give them the benefit of the doubt.
Percysowner
@FlipYrWhig: 1) They are trying to take money out of funding Obamacare and then apply it to giving tax breaks to millionaires. Tax bills can’t pass if they increase the deficit.
2) Many Republicans don’t believe it is the government’s job to make certain citizens can get health care. They really do believe
Several Republicans have stated as much, including saying there should be NO insurance for preexisting conditions because that is just like buying car insurance after having an accident.
FlipYrWhig
@rikyrah: There’s that option too…
But I mean from an Avik Roy perspective or something. It seems like the problem he’s trying to solve is how to get people on health insurance without putting Big Government on the hook for it, because the government ruins things and markets/competition/choice/Milton Friedman-ish whatever makes them better. So the underlying problem ideologically to someone like that is that Medicare and Medicaid even exist. What should exist is, at most, a voucher system to help people buy private insurance. That’s a cruel bastard thing to think, but it has an internal logic.
So by extension it seems like the big problem with Obamacare is that it’s too expensive or something, so the thing to do is make it more expensive, prohibitively expensive, because that means that low-cost plans spring up in its place, and those low-cost plans will be great because of… markets? Why would an insurance company want to be in the business of giving sick and needy people better service for less money? What business model is that? That’s what they think is going to happen? Why?
FlipYrWhig
@Percysowner: I realize that, but that’s not trying to solve a social problem, that’s trying to worsen a social problem, on principle. That’s what I’d like to hear making its way back into the debate: both “what are you trying to accomplish in the first place?” and “do you even think that the government is supposed to try to solve social problems?” Verma here seems to think so. Roy seems to think so. They just have bizarre and counterproductive ways to attempt it. I’m just flabbergasted that this is happening on two irreconcilable tracks, one where Republicans are trying to solve a social problem in a way that’s consistent with their preexisting ideological positions, and one where they are refusing to solve a social problem because the idea of solving social problems is _itself_ inconsistent with their preexisting ideological positions. Maybe this is why they can’t get any votes for anything. They don’t even know what they’re supposed to be trying to do.
MomSense
David, I have a request for you. We have qualified a Medicaid expansion question for the November ballot. As we gear up for lots of persuasion calls and opinion pieces, I was hoping you might provide us with some analysis of the situation here in Maine.
I really think that the persistent movement to expand Medicaid and to ensure access to health care in our state explains why Collins has been opposed to the GOP deny health care plans.
jo6pac
We won’t need to know any of this if there was greatly improved Medi-Care for all from birth to death. No Medicaid it is in the long run very cruel.
dopealope
I think we need an analysis/comparision of the costs of treating Giablastoma with or without insurance. That is, how much it would cost the average American to deal with Senator McCain’s diagnosis if they had no insurance, a catastrophic policy, and ACA compliant policy. Even start the analysis 5 years before the diagnosis so everybody can see how much money was “wasted” on ACA premiums.
Clem
I think the main GOP goal is to erase Obama. Unfortunately they are sniffing their own glue and beyond their diatribes, don’t have any policy or economic expertise to sanely analyze either the their skewed problem or their skewed-up solution. YYMV
My rep has harped repeatedly, on phoney phone halls, that expanding Medicaid is unsustainable and putting middle-income (welfare), able-bodied, childless, adults on medicaid jeopardizes Medicaid coverage for children. She wants to put them into the free market system where they can purchase insurance that works for them. Interstate Sales, + HSA’s, + medical malpractice reform + association health plans = access to healthcare that works for everyone! Oh the joy, feel the glory of it!
Also too, medicaid expansion has resulted in providers refusing to cover new medicaid enrollees. So people that need access to healthcare can’t find anyone to see them.
She has the GOP story line down real good. And since she only does phoney phone halls, there is no retort, no feedback to challenge the GOP story, no boos, no anger overflowing into the isles. Just the same stuff you get on CNN or MSNBC when they interview a House Republican. SSDD
FlipYrWhig
@Clem: That’s one of these “it works in practice but does it work in theory?” kinds of objections. (Not yours, your Congresscritter’s.) Expanding Medicaid to places it shouldn’t be interferes with the robust free market that was… doing what for people in the same situation before Obamacare? Leaving them behind, that’s what. And then the things Republican politicians don’t like about Obamacare include the very regulations that make policies this group would be able to buy _worth buying_. Seems to me that if your ideological objection is that Medicaid shouldn’t be for people who have the capacity to fend for themselves and buy their own plans, then you also need to support regulating the marketplace so that the people who buy these plans aren’t left in the lurch when they get hurt or sick LIKE HAPPENED ALL THE TIME BEFORE OBAMACARE HOLY SHIT IT WAS ALL OVER THE NEWS FOR FUCK’S SAKE ALREADY
It just seems like saying there’s no need to have a municipal water supply because with resourcefulness and gumption you can just dig a well deep enough or hire someone to dig it as deep as you need. Not fucking really. I want not to worry about where my water is coming from or how I’m going to pay for medical treatment. I could give sweet fuck-all about the psychological benefits of freedom. I know they’re an uncaring bunch of assholes but, damn, for the love of God, let’s talk this out and air out these competing visions and see which one sounds better.
Franz
David, quick question — how would you define an “insurance plumber”? Do they deal with claims processing nuts and bolts (payment rules etc.), or more abstracted statistical analysis (risk scoring algorithms, IBNR, etc.) Is there a hierarchy of plumbers, with actuaries at the top? Or are they distinct? Google is only giving me results for plumbing insurance. Thanks!