Thursday, October 19, 2017

The Outlook for Stabilizing Obamacare in 2018 and the President Who Can't Shoot Straight

The Alexander-Murray bipartisan effort to stabilize the Obamacare individual insurance markets will not pass the Congress on its own. 

The only chance it now has is to be added to a must-pass legislative deal, such as the one needed to fund the government by the December 8 deadline in order to avoid a government shutdown.

Also sitting in the queue, and certain to pass at some time, is the Children's Health Insurance Program (CHIP) reauthorization bill. The Congress is currently struggling over the pay-fors for this reauthorization but there is wide bipartisan agreement that it must be funded before the states start running out of money, which will begin in a few weeks. CHIP now covers nine million kids.

Conservative Republicans are adamant that they do not want to pass an “insurance company bailout” bill like Alexander-Murray. Particularly in the House, where Republicans were able to pass a "repeal and replace" bill, these members have already taken a controversial vote to cut Medicaid and insurance subsidy support and after that tough vote don't now want to have to explain why they have backtracked to "bail out" Obamacare with the Alexander-Murray short-term patch bill.

Tuesday, Trump pulled his initial support for the bill. That he would first support it and then abandon it just speaks to how little he understands the health issue and how essentially worthless his presidential leadership is toward getting a solution for Obamacare. This Trump flip-flopping just proves that there is only one place health care gets decided—in the Congress and a very divided Congress at that.

On health care, if leading conservative organizations told Trump to sign a ham sandwich he would do it and declare it, “A Marvelous victory, really a very marvelous victory.” 

If you want a description of a President who can't shoot straight, look at Trump’s citing the stock price gains among the big managed care companies as justification for his killing the cost sharing subsidies (CSRs) for low-income people in the insurance exchanges. 

Hasn’t anyone told Trump that almost all of those big publicly traded health insurers he's been railing against for their big stock price appreciation since Obamacare launched––Aetna, United, Humana, and Anthem–– have bailed, or are in the process of bailing, on all or most of their insurance exchange business and won’t be hurt by his action? It’s the not-for-profits that have largely stayed in the exchanges, not his intended targets!

There is no hope of the Republican caucus in either the House or the Senate advancing anything in the coming months—repeal and replace or a short-term patch––on their own. We saw them exhaust all of their policy ideas over the past four months. They claim they will again try to advance a Graham-Cassidy-like bill focusing on state block grants but until they can reconcile the cuts to Medicaid and the insurance subsidies the conservatives want with the cuts the moderates don’t want, they aren't going to pass anything.

That leaves us with the Democrats. The Dems don’t have a majority in either house. But there are must-pass bills on the table—such as funding the government by December 8 to avoid a shutdown and the reauthorization of CHIP before the states run out of money to continue health insurance for nine million kids. The most likely vehicle for them to exert their leverage will be on the shutdown bill. It will take 60 Senate votes to avert a government shutdown just before the Congressional holiday break (never underestimate an ideologues desire to get his holiday vacation). Look for the Dems to try to take the December 8th funding bill hostage toward getting something like Alexander-Murray. 

Of course, it they are successful, any short-term help for the insurance exchanges will be too late for 2018 since next year's open enrollment is scheduled to end on December 15th.

Sunday, October 15, 2017

Donald Trump Doesn't Know the Diffrence Between an Unfunded Mandate and a Bailout

By killing the cost sharing reduction (CSR) subsidies has Trump stopped what he has called an "insurance company bailout"? Or, has he created an unfunded mandate?

The Obamacare statute requires the health plans to provide cost sharing reduction subsidies to reduce the deductibles and co-pays in the Obamacare compliant individual health insurance market for those who make less than 250% of the federal poverty level. It is a mandate. Funding a mandate is not a bailout. In Washington, DC we call failing to fund a mandate an unfunded mandate.

What Trump's Obamacare Cost Sharing Subsidy Rollback Means to Health Insurers and the Middle Class

My NPR All Things Considered Interview with Michel Martin:

MICHEL MARTIN, HOST:
We have one more conversation about healthcare. As we just heard, health insurers are trying to figure out what to do without the [cost sharing reduction] reimbursement from the government that the Trump administration says will no longer be paid. The question is, will insurers raise their rates or withdraw from the health exchanges created by the Affordable Care Act? For perspective on this, we called Robert Laszewski. He's a former insurance executive who's now a health policy consultant. Mr. Laszewski, thanks so much for speaking with us.

ROBERT LASZEWSKI: You're welcome.

MARTIN: So based on your knowledge of the industry, what are the options that insurers are considering to deal with the lack of these subsidies?

Wednesday, September 20, 2017

The Republican Senators' Cassidy-Graham Conundrum

If you were a Republican Senator today, would you rather risk losing your Senate seat because the base was angry with your failure to pass an Obamacare repeal and replace plan, or because you did pass it but blew up the insurance system?

See my op-ed at CNBC.com

Tuesday, September 12, 2017

The Preconditions Necessary for a Bipartisan Solution to Obamacare

It is now clear that Republicans cannot unilaterally tackle Obamcare.

But, I will suggest, it is also clear that both Republicans and Democrats can't even begin to have conversations about fixing the health law until they can agree on broader principles.

See my op-ed at CNBC.com.

Wednesday, August 23, 2017

How Democrats and Republicans on the Senate Health Committee Could Agree to Shore Up the Obamacare Markets

When Congress returns in September, Senate health committee chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA) will attempt to find a way to at least temporarily shore up the Obamacare individual health insurance markets.

First, they will try to guarantee the low-income cost sharing reduction (CSR) subsidies for at least a year in order to give participating insurers the confidence to charge rates that will often be 15% to 20% lower than they would otherwise have been. A good step that Democrats will have no trouble supporting.

But for there to be any chance that Republicans would support a stabilization bill, they will also have to get some concessions. The most likely concession to draw Republicans onside would be one that granted the marketplace more flexibility and a resulting better risk pool so that health plans could come up with better prices.

Opponents of this flexibility will argue that there is no free lunch. Plans with fewer benefits will cost less because they offer less.

Actually, not quite.

Thursday, August 3, 2017

The Number of People in the Off-Exchange Individual Health Insurance Market Plunged 29% in the Last Year

Is the individual health insurance market stable?

With Trump threatening to make things worse in the individual health insurance market, was it stable even before he made his threats?

See my op-ed in the National Review.

Friday, July 28, 2017

Strike Three! A Statesman and Two Adults––Republicans Fail to "Repeal and Replace" Obamacare

The latest attempt by Senate Republicans to "repeal and replace" Obamacare––the “skinny” plan––failed early this morning on a vote of 49-51.

The deciding vote came from John McCain (AZ), joined by Republican Senators Collins (ME) and Murkowski (AK).

Trying to pass the “skinny” bill was a fool’s errand. How did McConnell think he was going to do any better bringing 240 House Republicans—including the Freedom Caucus—into a process that he could get no more than 45 Republican votes for in his own Senate?

Lindsey Graham (R-SC) had earlier said the “skinny” plan was a “half assed” bill whose only purpose was to keep what had been so far a horribly failed process alive—just before he voted for it.

Now what?

The focus now has to be on what will happen to the failing Obamacare exchange markets.

Will there be a bipartisan effort to shore them up?

I will suggest that there are two pre-conditions for any Congressional bipartisan solution:
  1. Democrats will have to admit the problems with Obamacare are more than “imperfections”––they will have to admit that Obamacare has been a dismal failure for those who have no choice but to buy their health insurance in the individual health insurance market and make too much money to qualify for a subsidy––40% of American households make more than 400% of the federal poverty level, which is the cutoff point for subsidies.
  2. Republicans will have to admit that most American households not eligible for Medicare, employer-based health insurance, or the pre-2014 Medicaid program, cannot afford to buy health insurance on their own—even if we had 2013 premium rate levels.
Will Trump make things worse in the Obamacare insurance exchanges?

Probably:


Wednesday, July 26, 2017

Strike Two––The Republican Obamacare "Repeal and Replace" Fiasco

Three strikes and you're out.

On Monday, Senate Republicans approved proceeding to debate on "repealing and replacing" Obamacare by a vote of 50-50-1, with Vice President Mike Pence casting the deciding vote.

Strike One
Yesterday, Senate Republicans failed to approve the bill they had been working on for over a month, which included the Cruz amendment that would have bifurcated the individual health market into separate healthy and sick pools. The vote was 43-57. Of course, all Democrats voted no. The nine Republicans voting against the leadership bill included Collins (ME), Corker (TN), Cotton (AR), Graham (SC), Heller (NV), Lee (UT), Moran (KS), Murkowski (AK), and Paul (KY).

Interestingly, West Virginia’s Capito, who had expressed lots of reservations about the Senate bill, did not vote against it.

The list of those voting no included both the most conservative and the most moderate. Both Maine and Kansas have not expanded Medicaid. Yet, Collins and Moran both voted no, at least in part, because of the impact the long-range caps on Medicaid would have on the large senior populations (nursing home payments) benefiting from the baseline Medicaid program in their states.

Lee and Paul voted no because the Senate bill didn’t go far enough to reduce the cost of insurance. Paul’s objective is complete repeal generally wanting to go back to 2013. Lee also wants a wide-open market.

The rest, in one way or another, just saw the Senate bill as leaving too much trauma in its wake, with the CBO estimating that 22 million fewer would ultimately be covered, and are generally are calling for a return to the "regular order" committee process and bipartisan negotiations with Democrats. The problem with that approach is that most of the 43 Republican Senators that voted for the bill want nothing to do with an agreement that makes Senate Democratic Leader Chuck Schumer happy.

All of this was made more complicated this week when the Senate parliamentarian ruled key provisions in the Senate bill out of order under budget reconciliation rules. These included the six-month lockout substitute for the individual mandate, association health plans, and going from 3:1 age rating to 5:1 age rating.

Strike Two
Repeal, with a two-year period within which to create a replacement, also failed, on a 45 to 55 vote. This time the Republican no votes included Alexander (TN), Capito (WV), Collins (ME), Heller (NV), McCain (AZ), Murkowski (AK), and Portman (OH).

The Last Attempt:
Now, McConnell will likely proceed to pass a “skinny” bill that only repeals provisions that arguably have unanimous support among Republicans: Repealing the medical device tax, the employer mandate, and the individual mandate.

His purpose is to just pass something that would keep this alive by having a bill to take back to the House for a conference. His hope is that he can ultimately hash out an agreement with the House. But that is nuts. The House bill is arguably even more conservative than the Senate bill. What makes McConnell think by bringing the Freedom Caucus back into these discussions that he can find a way to keep his moderate Republicans onside?

No one knows if this “skinny” strategy has 50 votes and won’t until the vote is taken.

Even if McConnell can pass the "skinny" option, I just can’t see a viable end game here for Republicans on their own.

There is also a zero chance of any kind of bipartisan agreement so long as a substantial majority of Republicans––as well as the Twitter in Chief––find a “bailout” of Obamacare unacceptable.

Let me also suggest that the Jeff Sessions fiasco has relevance here.

President Trump has said repeatedly that Obamacare is imploding. Any attempts now by the Secretary of HHS to administratively shore it up would likely put Secretary Price in the same boat that Attorney General Sessions is sitting in right now.

And, if we needed any more complications, the Anthem CEO’s comments this morning won’t help. He said, “We don’t believe we have been heard,” when referring to the largest Blue Cross carrier’s warnings to Congress and the administration about the precarious state of the individual health insurance market. He also said uncertainty over whether the $7 billion in low-income cost sharing subsidies would be paid by the Trump administration would lead to 20 points more in rate increases on top of the average 20% rate increases Anthem has already applied for. He also said that Anthem would consider getting out of more states if the Obamacare insurance exchanges aren't quickly stabilized.

The Anthem comments just underscore that the only thing a successful "skinny" strategy on the part of Republicans could lead to is a 2018 individual market fiasco, particularly for the individual market participants who don't get a subsidy.

If you had set out to design the perfect nightmare you couldn’t do it this well.

Tuesday, July 18, 2017

The Post-Republican Obamacare Market Will Be "Stable" and Very Profitable for Health Insurers

Predictions that the individual health insurance market will now implode are misplaced.

First, in the wake of the Republican collapse of efforts to replace Obamacare, Medicaid will continue on unaffected. The Obama Medicaid expansion is fully funded for years to come. The nineteen states that did not take the expansion will continue to be on the outside looking in as their taxpayers continue to fund the expansion in the 31 states that did expand. And, health insurers will continue to enjoy that growth in their business as states continue to benefit from the open-ended federal funding.

The individual health insurance market will not collapse.

With about 3,000 counties in the U.S., I can't give you an absolute guarantee that there won't be a few that will not have an insurance carrier serving the Obamacare market in 2018. But generally, the vast majority of people eligible for subsidies will have at least one carrier to buy from.

The Kaiser Family Foundation is out with a recent study looking at medical loss ratios in the first quarter of 2017. They concluded that "individual market insurers on average are on a path toward regaining profitability in 2017."

I wouldn't go so far as to say that participating health plans will generally make money in 2017––the first quarter medical loss ratio is always better early on as consumers satisfy their ever-growing Obamacare deductibles.

But I do think 2018 could be a decent bottom line year for most Obamacare exchange insurers. And, 2019 should be just fine.

Does this mean the Obamacare insurance exchanges are working well?

No.

Monday, July 17, 2017

Senate Republican Obamacare "Repeal and Replace" Bill Dead––Good Riddance To An Awful Public Policy Proposal

The Senate Republican Obamacare "repeal and replace" legislation––just like the House version––was an awful bill. Individual health insurance costs wouldn't have gone down they would have gone up and both bills would have screwed a lot of low-income people. The latest Cruz amendment bifurcating the market with the sick in one place and the healthy in another was the most cynical kind of public policy.

Thursday, July 13, 2017

What's Really Behind the Cruz Amendment to the Republican Senate Plan to Replace Obamacare?

A Cunning Strategy to Back Door Risk Pools and Market Segmentation 

 

Ted Cruz has offered an amendment—since included in the latest Republican Senate draft—that would enable health insurance plans to offer stripped down coverage outside the current Obamacare compliant individual market. Anytime spent covered by them would be considered a break in service and subject the consumer to the six-month lockout provision should they want to get into the standard market. Carriers offering these plans could not deny pre-existing conditions but could up-rate sicker people.

Critics, including the health insurance industry trade associations, have come out against the idea because it would bifurcate the market into two separate pools—the healthier “Cruz pool” and the standard individual market subject to all of the current Obamacare consumer protections.

Tuesday, June 27, 2017

The Senate Republican Obamacare Repeal and Replace Bill Will Not Reduce the Cost of Health Insurance

At the core of Republican objectives for the "repealing and replacing" of Obamacare is bringing down the cost of health insurance––not just the premiums but the out-of-pocket costs people pay as well.

If implemented, the Senate Republican bill may actually end up increasing costs compared to Obamacare.

Wednesday, May 17, 2017

Here's Who Gets the Blame If Obamacare Fails (Hint It's Not Obama)

With Obamacare's individual health insurance market struggling, the debate has shifted to who takes the blame if it fails.
 
Supporters of the law are willing to admit that it is failing but that it's Trump's fault.
 
Trump's constant undermining of the ACA is giving his opponents ammunition in the blame game. 
 
 
 

Tuesday, May 9, 2017

How ObamaCare Could Become ZombieCare

The individual health insurance market is becoming more unstable as last year's rate increases are beginning to take their toll on the health of the risk pools––particularly among the almost half of the consumers in the market that are not eligible for subsidies.

The Trump administration is making an already bad situation worse.

President Trump is wrong when he says the system will suddenly "explode" forcing Democrats to beg him to fix Obamacare––actually it will be mostly his constituents who will be begging for relief.

See my op-ed at CNBC.com

Thursday, March 30, 2017

Is Anthem Exiting the Obamacare Exchanges? The Trump Administration Needs to Decide if They Are In or Out

Bloomberg is out with a report that Anthem may exit most of their Obamacare exchange markets next year:
Anthem, Inc. is likely to pull back from Obamacare’s individual insurance markets in a big way for next year, according to a report from analysts who said they met with the company, a move that could limit coverage options for consumers at a politically crucial time for the law.
Avoid having to check back. Subscribe to Health Care Policy and Marketplace Review and receive an email each time we post.

Blog Archive