Tuesday, November 29, 2016

Health Care

Representative Tom Price of Georgia will be Donald Trump's new Secretary of Health and Human Services. 
There's a lot to discuss here.  Let's take this article piece by piece.  Throughout this blog post, the emphases added are mine.

Tom Price has made disingenuous statements concerning the rise of health care cost inflation under Obamacare:

Now, [Price] says: “Premiums have gone up, not down. Many Americans lost the health coverage they were told time and time again by the president that they could keep. Choices are fewer.”

It is true that premiums have gone up; this is to be expected with health care costs, whose inflation typically outstrips core inflation considerably.  However, health care inflation has come way down since Obamacare was implemented.  This is, in fact, one of the most notable achievements of Obamacare:

Health care costs are expected to grow 6.5% through next year. While costs have finally reached a point of equilibrium after years of double-digit growth, they are still expanding far faster than overall inflation, leaving employers and insurers trying to figure out how to stomach the new increases. The answer may not please many consumers.

So Tom Price is telling a white lie about premiums.

Tom Price is the author of the Empowering Patients First Act.  Let's discuss that act.

The legislation Mr. Price has proposed, the Empowering Patients First Act, would repeal the Affordable Care Act and offer age-adjusted tax credits for the purchase of individual and family health insurance policies.

The bill would create incentives for people to contribute to health savings accounts; offer grants to states to subsidize insurance for “high-risk populations”; allow insurers licensed in one state to sell policies to residents of others; and authorize business and professional groups to provide coverage to members through “association health plans.”

Tax credits again!  I sure hope they work.  The thing about an HSA (health savings account) is: it's just an account you put your own money in that might not be taxed all that heavily, on which you draw when it's time to pay a portion of a deductible.  It doesn't obviate the problem of the deductible in the first place.

This isn't a uniquely Republican idea - the Hillary Clinton plan for health care reform tweaks were based in large part around tax breaks as well, as mentioned in this very good and brief article discussing some of the issues with modern insurance.

Tom Price has a history of favoring the doctor over the patient:

He has introduced legislation that would make it easier for doctors to defend themselves against medical malpractice lawsuits and to enter into private contracts with Medicare beneficiaries. Under such contracts, doctors can, in effect, opt out of Medicare and charge more than the amounts normally allowed by the program’s rules.

Most people are patients and not doctors, and are therefore unlikely to be thrilled by Price's point of view.

The biggest cut to the poor in Price's plan is the full repeal of the Medicaid expansion, a program that currently covers millions of low-income Americans, which Price replaces with, well, nothing. 

The Empowering Patients First Act might make it possible for those people who are sick and suffer a lapse in coverage - perhaps from losing a job, or facing another economic hardship that makes maintaining insurance - pay the price:

Prices' Empowering Patients plan, like Obamacare, requires insurance plans to offer coverage to any patient regardless of how sick they are. But the Empowering Patients plan, unlike Obamacare, would let insurers charge sick people more if they did not maintain "continuous coverage.


Here's how it works: If a cancer patient goes straight from insurance at work to her own policy, her insurer has to charge her a standard rate — it can't take the cost of her condition into account. 

But if she had a lapse in coverage — perhaps she couldn't afford a new plan between jobs — and went to the individual market under Empowering Patients, insurers could charge her up to 150 percent of the standard premium for her first two years of coverage (you can read this section on page 151 of the bill). 

A patient can once again qualify for the standard rate if she maintains 18 months of continuous coverage — although that would likely be with premiums set at the higher rate. 

The Empowering Patients Rights Act is skewed to favor the younger, healthier portion of the population, and wouldn't necessarily be great for those preparing to bring a child into the world:

Empowering Patients makes the individual market more advantageous for healthier people. It eliminates the essential health benefits package, which mandated that all insurers cover a set of 10 different types of care including maternity services and pediatric care. Empowering Patients would allow insurers to cut whatever benefits they no longer want to cover — they could stop covering maternity benefits, for example, to make their plans less attractive to women who plan to become pregnant. This would likely benefit healthy people, who generally want less robust coverage at a cheaper price. But it'll send the cost of more comprehensive plans — the plans sicker people need — skyrocketing. And it could leave someone who, say, wants health insurance to cover her maternity costs completely out of luck. 

It would allow insurers to jack up prices on the elderly, and perhaps drive them out of the insurance market:

It does this by allowing insurers to charge their oldest enrollees as much as they want. Right now, insurers can only charge the oldest enrollees three times as much as the youngest — that constrains prices for patients in their 50s and 60s. 

Eliminating this regulation would increase "increases the overall number of people with coverage, but older people end up falling out of the market as premiums rise," says Christine Eibner, an economist with RAND Corporation who has modeled similar changes to Obamacare's age-rating provisions. 

The tax credits in Price's plan are based on age, not income, which leads to some interesting disparities:

Obamacare's tax credits are based on income, with those who earn less getting more help. Empowering Patient's tax credits would only be based on age, giving more help to those who are older (and who will presumably be charged higher premiums). The tax credits outlined in the bill are as follows:
  • $900 for children under 18
  • $1,200 for those between 18 and 35
  • $2,100 for those between 36 and 50
  • $3,000 for those 51 and older
This means that that Bill Gates would qualify for the largest tax credit simply because he is 61-years-old. Under the Empowering Patients bill, Gates' net worth of $83 billion — presumably enough to purchase health coverage — would do nothing to disqualify him. Under Obamacare, he gets no help. Conversely, a 23-year-old with little income and health problems gets minimal help under Price's plan — despite the fact that they need support much more than Gates does. 

One upside to Price's plan is that health coverage, while it might be less comprehensive, might also be cheaper:

The plans under Price's proposal would near certainly be cheaper because they wouldn't have to cover so many benefits. A 55-year-old under Empowering Patients might find lower premiums for plans that cover fewer benefits. But its also true that the plans that do offer comprehensive benefits would likely prove financially out of reach for many.

I try to keep an open mind when writing this blog, but the bottom line about Tom Price is: unless you are a committed ideological conservative, who values the unfettered free market at all times even if the result of the unfettered free market is widespread malaise and suffering, there's hardly anything to like about the Empowering Patients First Act, other than that it might save the government some money, but if the government is truly concerned with saving money, then why the likely tax plan?

One last bit, and then I think I need to table this already-lengthy blog post until tomorrow:

Most of the changes in Empowering Patients have to do with people who get insurance through Medicaid or on the marketplaces. But there is one important change the plan would make to employer-sponsored insurance: It would cap the tax exclusion for employer-sponsored coverage.

The health insurance tax break is the biggest in the federal budget; the government loses out on $260 billion annually by not taxing health benefits. And economists across the political spectrum agree that we should eliminate or at least reduce this tax break, which currently gives those with jobs a huge discount on their coverage — and an incentive to buy more coverage than they actually need. 

Price's bill proposes limiting the employer-tax exclusion for insurance to $8,000 for individual policies and $20,000 for individuals. 

As popular as this provision will be with economists, you can bet that the public will hate it, as it would make some health plans significantly more expensive — and face similar pushback to Obamacare's Cadillac tax.

There's a lot more to discuss, and we'll get to it.  For now, I leave you with Paul Krugman's testy denunciation of Trump voters who, perhaps, voted themselves out of health insurance coverage.  3.5 million Americans?

We'll find out!

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