As legislative repeal of the ACA is likely down for the year, we need to think about what is next. We need to lay out a couple of critical questions.
1) Money
I’ll support a fully funded high cost risk pool. I’ll support fully funded single payer. If the mechanism means that at least as many people have coverage that is at least as good, I’m on board with the mechanism. The money must match the promises being made.
2) Corner cases
The $12 million dollar man in Iowa is a market distorting corner case that drove every insurer but one out of the market. How does any policy handle a case like this? California has a $21 million dollar claim year from a single individual on Medicaid. What happens when state revenue collapses and eligibility goes up? Is this person sacrificed?
3) Recessions
How does a bill work during a recession? Are we adding a counter-cyclical piece of macro-economic insurance or a pro-cyclical tool for mini-Hoovers to do their worse?
4) Experimentation
How can states experiment? How are good successes disseminated more widely? How are seemingly attractive but ineffective ideas shot down? Who determines success?
These are the first set of questions at the top of my mind right now.
Sentient AI from the Future
Well in the first “market distorting” case, the market distortion is a direct consequence of our approach to IP and drugs. Maybe if march-in rights or compulsory licensing were on the table, the market distortions wouldnt be quite so excessive.
ETA: “on the table” meaning both not relentlessly opposed by the fed itself (not to mention rights holder coalitions of every stripe) but an avenue for individual states to address public health without obliterating their budget.
TooTall
The solution for corner cases “should” be simple. Like there is a “stop-loss” feature for people, the insurance companies could have a yearly “stop-loss” feature, so that the claim dollars over “x” level are covered by federal funds.
cervantes
Well, obviously you need to federalize those outliers. Think of it as reinsurance. That’s how casualty insurance works, in case there’s a hurricane or whatever.
low-tech cyclist
What TooTall and cervantes said, with a modification: let the Feds pick up 80% of the costs over, say, $2M for any individual case.
The remaining 20% would be to leave the insurance company with enough ‘skin in the game’ so that it doesn’t just approve everything above $2M automatically, but keeps on reviewing claims the same way they would for lesser amounts.
Under this system, the $12M case would become a $4M case for the insurer, and the $21M case would become a $5.8M case. Still big, but not quite as much of a market-buster as before.
cervantes
Yes, with reinsurance the original insurer is still responsible for part of the total cost. It just prevents them from being wiped out.
niepolski
Slightly OT:
David thanks so much for your posts on health insurance & the Republican’s threats to the ACA, especially contraception coverage. They motivated me to get myself to an OB/GYN for an IUD (Paraguard), because the university clinic can’t do it. Since this annoys the nurse practitioner I saw, I blame the TX Republicans & Legislature. Here’s to my baby-free decade!
(except for my cat, who thinks he’s people)
Maeve
Alaska is already doing the re-insure part, if I understand it correctly.
https://www.adn.com/alaska-news/health/2017/08/01/premera-expects-a-21-6-percent-decrease-in-individual-market-premiums-for-2018/
Premiums going down at least 20% next year for the exchange. We are down to only one provider, the other withdrew after the first year.
The article said decrease was also due to less utilization, could be small number statistics, more people choosing higher deductible plans or that we got Medicaid expansion late and the was a bump in utilization as people caught up on their healthcare needs.
TooTall
As for experimentation, would insurers be able to write plans that go across state boundaries, when there are are low population states involved? When you deal with a state like Iowa, with a lot of corn, but not many people, you would rather add Iowa to Nebraska, & South Dakota and come up with a regional pool, and spread the risks out more evenly.
Bob Hertz
I would bet that the vast majority of corner claims have drug costs as the primary driver. Of course, someone could stay in an ICU for a year, but even that would not come to over $1.2 million.
I would probably fit rather well on the staff of the British health care boards. I would deny payment for any drug whose price for a one month supply exceeded a ceiling amount. (perhaps $10,000, which means a maximum claim of $120,000 a year.
In most cases the drug companies would come around. If they did not, then the death of the patient is on them, and I would shout that out from the rooftops. At some point there is the idea of the greatest good for the greatest number,though Americans resist this mightily.
One of the few parts of the ACA that I did NOT support was the elimination of annual limits. Instead I would favor a form of mandatory assignment, where the government says to providers that this is all you can charge.