David Anderson

The Associated Press is reporting that the Biden Administration is rewriting regulations at the Department of Health and Human Services (HHS) to allow DACA recipients access to the ACA and to ACA premium subsidies:

The action will allow participants in the Obama-era Deferred Action for Childhood Arrivals program, or DACA, to access government-funded health insurance programs. The officials spoke on the condition of anonymity to discuss the matter before the formal announcement on Thursday…

Charles Gaba has an estimate of who might be newly eligible:

There’s roughly 580,000 immigrants who have DACA status as of today. While all of them would presumably become eligible for ACA enrollment (and, therefore, federal ACA subsidies) via the change in their residency status, that doesn’t mean 580K new ACA exchange enrollees. According to the Kaiser Family Foundation, around 39% of them are currently uninsured, or roughly ~230,000, give or take. The rest have other types of healthcare coverage just like most other Americans do.

Besides salami slicing some of the population that remains uninsured, what does this do to the ACA markets?

Individuals with DACA status are, by definition, fairly young. A couple hundred thousand fairly young and likely to be healthy individuals entering the ACA risk pools likely brings down the average risk score by a smidge. If premiums were automatically reflected of the likely risk pool, premiums are likely to drop a little bit. However, the premium setting cycle is pretty slow. The 2024 rates are being set right now with modest tweaks allowed through the summer but rates lock in for all of 2024 in September 2023 based mostly on 2021-2022 and some 2023 data.

Some states will have disproportionally more individuals with DACA status than other states. We would expect bigger (still small but bigger) changes in premiums here in either 2024 or more likely 2025. If there is not a rapid adjustment to the calculation of premium, we would think that we should see lower Medical Loss Ratios in the states with more DACA recipients than in states with fewer DACA recipients.

DACA and the ACAPost + Comments (14)

Urgent care centers have sprouted like weeds over the past two decades.  These centers can be almost anywhere.  The one that my family used for years was in a strip mall between a Panera and an Ann Taylor’s Loft.  The center typically had one or two physician assistants or certified nurse practicioners on duty plus a few nurses and a med tech.  It was convenient for low to mid-acuity things such as needing a prescription for antibiotics for one hell of a nasty sinus infection but it was limited for things with moderate to high acuity such as a 4 year old’s asthma attack that was not responsive to the first drowning of albuterol.

There is a big question in the economics literature — do these urgent cares save money?  Do they prevent expensive services — either hospitalizations or Emergency Department (ED) visits that don’t result in admissions — or do they offer value by convenience but does not divert enough/any hospital based care?

Janet Currie et al ask and answer this question in the current issue of the Journal of Health Economics:

  When residents of a zip code are first served by a UCC, total Medicare spending rises while mortality remains flat. In the sixth year after entry, 4.2% of the Medicare beneficiaries in a zip code that is served use a UCC, and the average per-capita annual Medicare spending in the zip code increases by $268, implying an incremental spending increase of $6,335 for each new UCC user. UCC entry is also associated with a significant increase in hospital stays and increased hospital spending accounts for half of the total increase in annual spending. These results raise the possibility that, on balance, UCCs increase costs by steering patients to hospitals.

There can be a solid argument that urgent cares create value for patient acting as a consumer for preference based purposes. But these are unlikely to be cost-saving.

Urgent care and induced demandPost + Comments (34)

Yesterday, a federal district court judge in North Texas handed down the remedy to his Fall 2022 ruling that the preventive care and PrEP (pre-exposure prophyslasis preventive pills for HIV infection avoidance) no-cost sharing benefit mandates in the ACA were either unconstitutional or illegal.  The PrEP rule was struck on religious liberty grounds of the plaintiff but only for the plaintiff.  The preventive care ruling was struck nationwide on constitutional grounds for everything that was added to the list after 2010.

We have a preventive care mandate because if it is not there, there are few incentives in one year contracts with the option to leave or renew at the end of a year for insurers to pay for prevention.  Anything more complex than a flu shot will not be cost-effective in a year from the payer’s point of view.  Many preventive care services are value enhancing but not cost-saving.  Mandates get around this problem.  They are not completely effective at getting people preventive care (paper coming out next week on that topic!) but they help.

I am going to extensively quote Nick Bagley, a University of Michigan heath and admin law professor and a co-author of mine, as he explains things in a Health Affairs Forefront blog post:

Judge O’Connor hasn’t backed down. Earlier today, he issued a decision preventing the government from enforcing one of the ACA’s most significant and popular features: a requirement that all insurers cover certain preventive care services without asking patients to pay anything out of pocket. The U.S. Department of Health and Human Services estimates that about 150 million individuals in private health plans and 80 million individuals with Medicare and Medicaid have benefited from the policy….

The principles of value-based insurance design were embedded in section 2713 of the ACA. Under that provision, health insurers can’t require patients to pay anything out of pocket for preventive care services that have an A or a B rating from a federal advisory committee called the U.S. Preventive Services Task Force. That care must be free (or, rather, its costs are folded into your insurance premium).

Over the years, the Task Force has given more than 50 services an A or a B rating, including screenings for depression and cancer, medications to help people quit smoking, and drugs to reduce the odds of contracting HIV. Because of section 2713, those services are now available to patients for free…

Braidwood’s main legal claim rests on an obscure but significant provision of the U.S. Constitution called the Appointments Clause. Simplifying a bit, the Appointments Clause says that legally significant government decisions must be made by federal officers who are appointed by the president or by a department head. Braidwood argues that, because the members of the Preventive Services Task Force aren’t so appointed, they aren’t federal officers. Instead, they’re private experts who, by law, “shall be independent and, to the extent practicable, not subject to political pressure.”

That last part is not a banana pants argument to make given the past decade of Supreme Court rulings.

So what happens?

It depends.

I would be shocked if the Department of Justice is not filing for stays at any and all levels it can.

There is likely disparate outcomes based on the type of insurance and the regulatory umbrellas your coverage operates under.  The two basic types of insurance and thus regulatory regimes are fully insured where the insurer takes on full financial risk in return for a set premium over a constract length.  Fully insured plans, including ACA policies, are mostly regulated by states.  Self-insured plans use the insurer to run the administrative side of things while the employer takes on the financial risk of paying claims.  Self-insured plans are mostly ERISA regulated.  ERISA is almost anything goes.  (My classmates in my health law class are putting their heads into their hands and groaning at my flippancy now).

Self-insured plans can do almost whatever they want if it is not expressly forbidden by federal law or a contract.  Self-insured plans could plausibly contact their insurance company that merely acts as administrators and implement a mid-year benefit change to put some or all preventive care to cost-sharing of some sort.  It might take a week or two to do the back end testing but that is purely a plumbing problem.

Fully insured contracts are almost always a year long contract.  Individual contracts run through December 31, 2023.  Small group contracts usually expire at the end of a quarter.  I don’t think mid-year benefit changes can readily occur.

I would recommend that if you’re looking to get a preventive care service to both call your insurer to confirm the cost-sharing status AND get it down sooner rather than later.

Congress can step in and act.  It would be a two section law.  The first section would be to incorporate all recommendations from 2010 to present from the USPCTF into the no-cost sharing service requirement.  The second section would be a mandate that the Secretary of Health and Human Services would have final approval on incorporating new USPCTF recommended services into the no cost sharing bucket with the ability to reject the recommendation.

This is probably a 2 page bill if Congress wants to fix the problem.

 

 

Preventive care rulingPost + Comments (31)

Last week, Texas seized the assets of Friday Health Plan in Texas because the insurer is insolvent as Modern Healthcare reports.  More interesting to me is the risk-adjustment correlated risk problem:

Friday Health estimates it will owe $535.9 million in risk-adjustment payments to other Texas insurers for 2022…. Bright Health Group, for example, estimates it will owe a $723 million in risk-adjustment payments to other Texas insurers for last year, according to financial filings…Oscar Health, which announced a new CEO Tuesday, expects to owe $1.5 billion in risk-adjustment payments across multiple states including in Texas, according to financial filings.

OSCAR has a national footprint, but between Friday and Bright, there is $1.25 billion dollars in risk adjustment payables that are liabilities of companies that are in really poor financial health.  Risk adjustment payables occur when an insurer covers a population that codes as lower expected cost/better health than the state wide average.  The other insurers in Texas were (mostly) covering people who as a population code as sicker than average and thus the insurers were expecting to get $1.25 billion dollars from low risk insurers in the state.  If all or a substantial chunk of the money either never gets paid or gets paid only after several years of litigation, smaller insurers that did well on their own and managed their finances appropriately might be in trouble.

Correlated risk is a nasty thing.

Correlated risk in risk adjustment?Post + Comments (2)