Tuesday, July 18, 2017

Private health insurers admit they will always behave terribly

The group America’s Health Insurance Plans came out strongly against against the Cruz amendment in the Senate Republican health care bill, but the Cruz amendment is terrible only because America’s private health insurers are collectively promising to act terribly every chance they get.

The Cruz amendment would allow insurers to sell policies that don’t cover everything and exclude people who actually need health care. AHIP rightly notes:

As the U.S. Senate considers the Better Care Reconciliation Act, we are writing to urge you to strike the "Consumer Freedom Option" from the bill. It is simply unworkable in any from and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market.

What is important to note, however, is that this scenario only happens if the private insurers make it happen. The Cruz amendment merely allows insurers to offer deceiptive or exclusionary non-compliant plans -- the insurers don’t have to.

If the insurers really care about people with pre-existing conditions and a stable market, the insurers could reach a collective agreement that none of them would offers these plans -- problem solved. Just because the Cruz amendment would allow them to behave badly doesn’t mean they have to. The market only destabilizes if private insurers choose to destabilize it in the pursuit of short term profits.

The fact that no one inside or outside the industry thinks such collective action is even in the realm of possibility means that while condemning the Cruz amendment, the private insurers revealed something telling about their true nature.

AHIP is promising that as an industry, insurers will eventually exploit any legal leeway they are provided to make money, even if it costs people their lives. They are promising to do things they publicly admit are morally wrong if the government doesn’t hold them back at every turn.

They are indirectly admitting they can’t stop themselves from hurting people, like a werewolf begging to be chained up in the basement before the full moon. This who is in control of the country's health care.

Yet Democrats are still wondering why an individual mandate forcing people to be customers of an industry which admits they can’t be trusted was deeply unpopular.

Friday, July 7, 2017

An easy way to solve the Medicare For All tax problem

Polling has consistently shown broad public support for Medicare For All, or single payer health care, but every policy position is vulnerable to attacks. The most common attacks used against Medicare For All revolve the around overall cost and the need to raise new taxes. These issues can be a problem, but one that is easy to solve if supporters are willing to be creative.

Traditionally, single payer plans suffer from the issue of "big, scary numbers." Take, for example, the recent bill in California where headlines about it often focused on its overall cost to the government of $400 billion instead of the net change. Much of that $400 billion sticker price simply added up to the state consolidating the billions it spends on several health programs (Medicaid, state employe benefits) into one program.

It is also easy to scare people over the tax increases needed to pay for a pure single payer system, even though it would mean individuals would pay less in taxes for healthcare than they currently pay in premiums.

Supporters of Medicare For All should engage in a multi-faceted educational effort to inform people about the value of these trade-offs, but they should also realize there is an easy way to avoid some of these political problems

First, allow companies and individuals under 65 to buy into Medicare.

Second, require all companies buy their employees Medicare or private coverage at least as good Medicare from insurers that must pay into a risk adjustment program. This is already how Medicare basically works with Medicare Advantage, except companies would be making the choice.

Most of the cost of our healthcare system is already hidden from individuals by the tax-exempt status of employer-provided insurance; so instead of trying to teach everyone about this, just modify it. This plan would hurt companies that don’t already provide coverage but cause significantly less disruption than eliminating employer-provided insurance and replacing it with a new tax.

This plan mostly eliminates the need for very large new taxes or the "big, scary number" problem. Everyone with a job will technically get coverage via their work and those without jobs could mostly be covered by moving around money already spent on Medicaid, ACA, etc…

The strong employer mandate is not a perfect funding source, but it is good enough. In practical terms it would function much like a payroll tax with a ceiling. It is basically how Germany funds its health care system, and it would effectively get us to where the country needs to be.

Wednesday, June 14, 2017

Maybe health care CEOs are just greedy and don't care about people

Almost every segment of the health care industry technically opposes the new Republican health care bill, but overall the industry's opposition has been rather tepid. David Leonhardt at the New York Times offers this explanation:

Why haven’t the big lobbying groups done more? I think there are two main answers. First, in past campaigns, groups were largely defending their own financial interests. People fight hard when their own money is at stake. Today’s opposition is at least as much about principle as profit, and lobbying groups haven’t been willing to go all-out for principle. 

Second, the groups are wary of attacking the Republican Party, given its current power. “We’re living in a world in which it’s just Republican votes,” one lobbyist told me. Speaking loudly against the bill risks alienating powerful politicians — and risks making the health care groups look partisan.

I think there is a much simpler solution. Health care CEOs are just greedy and really don't care about regular people who might need care.

The American Health Care Act would cut government spending on health care by cutting poor people off from insurance. This would marginally cut health care companies' profits, so you would think health care companies would strongly oppose it. But the law would also be a big tax cut for the rich

Leonhardt acknowledges as much in his column: "Virtually every big health care group views the Republican plan as a disaster, one that would harm many Americans largely in the service of cutting taxes for the wealthy."

The simple fact is, lobbying by large health care companies is directed by industry CEOs and other top corporate officers. All of these people will see their taxes cut by the law. Even if the law makes their companies slightly less profitable on net, most will likely be personally better off. The fact that the law would hurt a lot of poor people simply doesn't bother them that much.

There is plenty of evidence to suggest health care industry leaders are willing to put personal and corporate gain above the public good. During the negotiation with President Obama over the Affordable Care Act, the industry's top demand wasn't "make sure everyone has coverage." Instead, PhRMA pressed Obama to oppose drug re-importation and to keep Medicare from negotiating drug prices; this kept drug profits high. Similarly, hospitals wanted the ACA to omit a public option that would reduce their profits. The hospitals made this demand knowing full well that the absence of a public option would increase costs, resulting in the law covering fewer people.

For many rich people, greed is more motivating than principle. In many cases, greed is what drove them to become rich in the first place. Leonhardt writes, "I feel a pang of discomfort every time I describe the radicalism of today’s Republican Party." It can also be uncomfortable to acknowledge that many people are simply greedy.

Friday, June 2, 2017

A party's platform is about succeeding after the election

Since the national Republican and Democratic parties divide themselves along ideological lines, American politics has followed a very predictable pattern. It is defined by a punctuated equilibrium.

One party wins total control of Washington and has a brief moment to make a big impact. Inevitably, the party in power messes up and loses control of Congress. This is followed by a period where little happens until the opposition also wins the White House. The other party now has their tiny moment to make their mark-- until they mess up.

The Republicans didn’t win in 1994 -- the Democrats lost. The same is true for the Democrats' 2006 victory and the GOP's 2010 victory.

Each time, the party in power screwed up badly and could have been beaten by a group of monkeys in clown suits. Bill Clinton's job approval rating was terrible heading into the 1994 election, due to failed health care and energy tax plans. In 2006, George W. Bush owned the failed Iraq war and the aftermath of Hurricane Katrina. By 2010, Barack Obama had failed to respond to the massive housing crisis or go after anyone who caused it. People spend a lot of time studying winners to divine the secret to their success, but often the answer is they were just facing super easy opponents.

This is why an opposition party shouldn’t focus on simply winning again at all costs: that is mostly determined by the party in power stumbling. They should focus on what they want to do once they do win. These brief moments when a party has total control are the rare times anything big happens, but it only happens if the party is united behind a set of ideas.

Taking advantage of these moments of total control is also critical because of one other major characteristic of American politics: we almost never reverse legislation. Once a policy is enacted, it tends to stick. No matter how much the opposition rallies against it and promises to repeal, they almost never do.

Democrats in 2008 rallied against the corrupt Medicare Part D law, the Bush tax cuts, and Guantanamo Bay. Yet after they gained power, Obama pushed to keep the corrupt Medicare Part D deals intact, backed a law to save almost all the Bush tax cuts, and never closed Guantanamo. Similarly, the Republican party ran on the promise to “repeal and replace” Obamacare for years, and now their effort is bogged down in the Senate.

Trump has become the poster child for why a party shouldn't do anything to win, just for the sake of winning. With a lack of cohesion and discipline, the GOP is possibly squandering their moment for the next decade.

Democrats have become very focused on beating Trump, but Trump is going to do most of the work defeating Trump. The real focus should be on what they will do in that moment after.

Monday, May 22, 2017

How I would design a state single payer law

After providing an analysis of all the issues facing the pushing for single payer health care this country, I thought it was important to provide details for how I would personally design a state-based health care effort. Several states are talking about moving towards a single payer system but for any plan to work it needs to deal with the unique legal and financial hurdles a state would face. I don’t feel the need to do this at the federal level, since a federal single payer system would legally be much easier to implement.

My state plan for affordable universal health care is not what I think would be the absolute “best” policy possible, but the best I’ve been able to piece together that would have a reasonable chance of success given the political and legal hurdles. This strategy is based on four criteria that should be used to judge any proposal:

  1. It needs to, on net, make most people better off.
  2. Any step forward should weaken or at least not strengthen those institutions opposed to real reform. This is what I consider to be a major failing of the Affordable Care Act. Forcing people to buy subsidized insurance from poorly regulated private insurance companies only increases their power.
  3. It should still create a clear path for better improvements even if part of it is struck down by the courts or denied by the federal government. You don’t want a plan that would completely fall apart if one federal waiver is denied or if a court ruling goes the wrong way. If there is a single weak point, that is where it will be attacked.
  4. It should keep direct disruption to a minimum. Any real reform is going to need to take on the health care industry, and given the industry’s size there is no way to make this omelette without breaking eggs. That said, there is a big political reason to try to minimize the negative disruption it would cause to regular people.

The plan should be insulated as much as possible from potential political, financial, legal and federal attacks. I think it is important to start with the assumption that any state health care plan for real reform will face a hostile federal government and federal courts. First, history shows it likely will. Second, it is easier to add to a plan that's designed to be built on than it is to take away from a plan where all the pieces were crafted to fit together.

If facing a hostile president and federal courts: A state run public insurer that directly covers many and is open to most everyone

Even if the state can’t get any waiver from federal law or new federal funds, it should be able to build a Medicare-like public insurer, according to a Rand analysis. In addition, the state could automatically sign up most people or give them the option to join this new public insurer.

The state would first set up some type of insurance company. It could be a direct government program, like Medicare, or a corporation owned by the government, like the North Dakota Mill and Elevator.

This public insurer would operate as much like Medicare as possible, to reduce administrative work for providers. This state-based public insurer would offer three plan tiers. Tier one would have benefits, co-pays and out-of-pocket costs equal to roughly what the state currently provides state employees. Tier two would have benefits roughly equivalent to the average plan provided by middle-size private employers. Finally, tier three would be an ACA silver plan for legal reasons.

Auto-enroll state and local employees in tier one

To make this public insurance plan work well, the state would then leverage the health care dollars it does control. The public insurer would handle the state’s Medicaid program. It would also start by gradually transferring basically all state and local employees to the public insurer's tier one plans. This would minimize disruption in coverage for public employees. This large pool would give the public insurer the significant market power necessary to negotiate rates with providers. I would peg provider reimbursement rates to the Medicare rate plus 5-10%. This would allow it to offer insurance at a very good price.

Open it to all employers and add a modest employer mandate

That state would allow all companies regardless of size to buy tier one or tier two coverage from the public insurer. The public insurer should be able to offer a price that would be very attractive to companies, possibly costing more than 10% less than private insurers. It is likely within a few years a significant share of companies would switch. By making the policies similar to what people already have and putting the decision to switch on employers, this also minimizes disruption.

This would be combined with as large of an employer mandate or “pay-to-play” requirement as would likely serve as an ERISA challenge. What exact amount that would be is difficult to guess.

ACA exchange work around

The public insurer would have the tier three plan for one simple reason: To get all the federal ACA subsidies low-income individuals without employer coverage need to sign up for a silver plan on the exchanges.

The state would take action to ensure that the public insurer was basically the only option on the exchange and to make sure everyone qualified signed up. I would create an automatic enrollment and premium collection system for all individuals not covered by their employer.

Since an ACA silver plan is pretty terrible coverage and the subsidies are insufficient, the state would need to provide some extra money to make care truly affordable. The state could create its own cost-sharing subsidies to make tier three coverage the equivalent of tier two.

The money needed for these subsidies would be relatively modest. Some could come from savings in state employee health care spending. Some would come from the employer mandate fine. Some could come from the public insurer adding a small surcharge to the premiums it charges private companies. Some could come from general revenue.

The result

This would not create a true single payer system, but it would get us a lot closer within the constraints we face. Medicare would technically still be separate. Some companies would still give their employers private insurance, but within a few years it is easy to see how 80% of people are directly covered by Medicare or the new state Medicare-like public insurer. It should provide affordable care to almost everyone.

Compared to the other alternatives, it would need minimal new taxes and minimal direct disruption to people’s current coverage. For people with employer provided coverage, the government won’t “make you lose your current coverage.” If your coverage changes, it will be because employers realize it is so much better.

Most importantly, this foundation is easy to build off of if/when the federal government and federal courts are less hostile. The following elements can be added from the beginning if the federal government is willing to provide the waivers or later when a new president is elected.

If the state can get an Obamacare 1332 waiver

The Affordable Care Act does allow the HHS to grant State Innovation Waivers. States can use all of the money that would have been spent on ACA provisions for their own plan if their program will “provide access to quality health care that is at least as comprehensive and affordable as would be provided absent the waiver.”

If a state gets a waiver, this plan could be amended to eliminate the ACA exchange work around mentioned above. Instead, the state could automatically enroll anyone without qualified employer provided coverage in the tier two plan. This would be paid for with the waiver money, the other revenues discussed above and charging these people a “mandatory premium” or new income tax.

If the state can get a Medicare waiver

It is theoretically possible that HHS could grant a waiver to let a state administer Medicare, but it is untested. If the state could eventually get such a waiver, it could just have the new public insurer also operate Medicare in the state. This should streamline administration and reduce health care overhead costs in the state. It would also allow the state to take a more holistic approach when it comes to deciding reimbursement rates.

If the state can get ERISA amended

Dealing with ERISA issues would take an act of Congress, but if Congress does change the law the next step would be fairly simple. This would make reform much easier and more efficient.

Instead of encouraging employers to use the new public insurer, the state would simply require all companies to give their employees the equivalent of tier two coverage or pay a tax equal to the cost. This technically hides the cost while getting the desired outcome. This is not the “best” way to finance health care policy, but it is by far the least disruptive and most politically tenable option. These steps would move my plan from quasi-single payer to true single-payer.

First lay the groundwork

Of course, before we can get to that point, a lot of groundwork needs to be laid. States need to be made ready. On the one hand, that means pushing for legislative changes that weaken the relative lobbying power of the heath care industry. This includes health care regulations like a higher minimum loss ratio for health insurers, a mandate that only non-profit plans can be sold on the individual market, banning surprise billing, etc… It also includes political reforms like campaign finance rule changes, lobbying restrictions, etc…

At the same time, efforts should be underway to build popular support and elect candidates willing to be cosponsors for a specific legislative plan, not a vague idea. Politicians claiming support for vague principles is not as good as public support for a bill. It is easy for cynical politicians to find an excuse for why a specific bill doesn’t apply to their promise or why a bad bill does. This happened a lot in 2009 with Democrats and is especially evident right now as Republicans scramble to figure out what “repeal and replace” means.

That is why I'm putting forward this plan outline. I’m not claiming it is the best possible plan or even the one progressives need to rally around. But it demonstrates what such a plan needs: a realistic way to deal with the legal and political hurdles to any state-based reform.  

Thursday, May 11, 2017

What if the literacy revolution created the industrial revolution?

https://www1.umassd.edu/ir/resources/laboreducation/literacy.pdfTyler Cowen recently asked if we would have experienced the industrial revolution if something had prevented Britain from jumpstarting it. He points out Song China and the Roman empire seemed to come close to a breakthrough, but they never did.

I think the problem with this interpretation is it looks at the industrial revolution as a distinct technological phenomena, instead of the natural by-product of the literacy revolution.

I believe the most important invention for the industrial revolution was the movable type printing press. This caused an information revolution without which the industrial revolution would have been impossible -- and it made the industrial revolution nearly inevitable.

After Gutenberg invented the printing press in 1439, the idea of publishing information spread like wildfire. It caused the cost of filling a book with content to drop by more than 30,000-fold, and the rate of publishing grew dramatically. This is what put Europe in general on the path to industrialization. Thanks to the printing press more European books were produced in 1550 (3 million) than were produced in all of the entire 14th century. By 1790, 20 million books were produced in Europe. At the start of the industrial revolution the number and variety of books/pamphlets in Europe reached levels truly unimaginable to Song China or the Roman Empire. You likely had more books produced in Europe in 1790 than produced in the three centuries of Song China.

This resulted in not only a dramatic increase in literacy rates before the industrial revolution but more importantly a dramatic increase in the value of being able to read. Thanks to this information revolution, if one person developed a great idea it could spread easily and allow others to build on it. It was not just the elites that could afford to write and share their thoughts -- even the lowly craftsman could have thousands of his specialty technical manuals produced. If you made a better gear, the world could hear about it.

From this perspective, while Song China and the Roman empire developed some prerequisite machinery, they didn't develop the literacy rates and ability to easily spread information that would be necessary to spark an industrial revolution. Neither empire was truly close. By the same logic it is likely if Britain didn't start the industrial revolution, another European or North American country with a massive literate population would have.

Wednesday, April 19, 2017

Everything I learned about health care

I have been following and writing about health care policy for almost a decade, and I feel this new series I've produced for Shadowproof is the summation of everything I learned. It at least touches on everything I have learned about how to make universal policy work.

Most importantly, it addresses the political dynamics that are killing, bankrupting, or creating financial strain for countless Americans. The major problem with health care policy is not figuring out what works. We know what works, by looking around the world. The problem is convincing politicians to do the right thing when the industry is spending millions to convince them to keep our system broken but profitable.  

It should be around five parts in all, with one part published each week here.