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Revisions To 'Transcending Obamacare' Based On Reader Feedback

August 21, 2014

By Avik Roy

Last week, I released a new health-reform plan, entitled “Transcending Obamacare: A Patient-Centered Plan for Near-Universal Coverage and Permanent Fiscal Solvency.” The plan gradually replaces Obamacare and our other health-care entitlements with a set of reformed, consumer-driven health insurance exchanges. Since then, I've received some smart feedback from health policy commentators, which I've incorporated into the plan's online version. This article will serve as the repository for those revisions.

Are exchanges a Trojan horse for single payer? No

Philip Klein of the Washington Examiner reviewed the plan for his blog, and later expressed his concern on Twitter that the reformed exchanges could be co-opted by the left. “I just think if you have more and more [people] moving to universal [exchanges, you] risk future Dems adding [a] public option” to the exchanges, thereby bringing us closer to a true single-payer system.

I think the likelihood of Philip's scenario playing out is low. First of all, the Democrats tried to include a government-run “public option” insurer on the exchanges in 2009, and failed to do so, even with 60 Democratic senators. Secondly, the Universal Exchange Plan gradually moves nearly 100 million Americans off of single-payer health care—Medicaid, Medicare, and the VA—and so a concern that these individuals might return to single-payer health care, at a later date, seems a bit circular.

Finally, we have real world data on this topic. In 2007, an overwhelming majority of Swiss voters—71 percent—rejected a referendum to replace their universal exchange system with a single-payer model. Here in the U.S., private insurer-oriented Medicare Advantage has been around for decades, and despite the left's best efforts, the program continues to take market share away from traditional, public-option Medicare.

Nonetheless, in order to address Phil's concerns, I added some language to the plan prohibiting a hostile administration from introducing public-option insurers into the exchanges:

“Section 1334(a) of the ACA instructs the U.S. Office of Personnel Management to offer “multi-State qualified health plans through each Exchange in each State.” Many observers are concerned that this provision encourages the creation of government-sponsored “public option” insurers, insurers whose underlying objective would be to drive private insurers out of business and move to a single-payer model.

The Universal Exchange Plan would prohibit the creation of “public option” insurers, and specify that neither the Secretary of Health and Human Services nor the Office of Personnel Management are authorized to introduce government-run insurers into the exchanges.

No health-reform plan can singlehandedly prevent Democrats from doing whatever they want if they ever again have 2009-size, filibuster-proof majorities. But if that's the standard for constructive GOP reform plans, well, let's just call it a day.

HSAs are a better deal for low-income enrollees

Some readers were confused by the different treatment of metal tiers on the reformed exchanges, and the benchmark plan for subsidized enrollees. To clarify, under Obamacare, these two provisions are tied together; on the Universal Exchange Plan, they are independent variables:

“In order to provide consumers with more affordable choices, the Universal Exchange Plan actuarial value tiers are 40, 55, 70, and 85 percent, respectively, for Bronze, Silver, Gold, and Platinum. Those eligible for subsidized coverage would be eligible for a benchmark plan with an average effective actuarial value comparable to the Gold tier in the reformed framework (Silver under the ACA framework).

There isn't a straightforward way to account for the actuarial value of health savings account subsidies, because HSAs can be used to pay for first-dollar expenses, and they can also roll over into successive years. But the cumulative effect of the HSA, for the vast majority of individuals, is a higher actuarial value than a conventional Obamacare plan:

“The differences are that the HSA subsidy can be used for first-dollar health care expenses, and that an individual who stays healthy can roll over the HSA savings into successive years. As a result, the effective average actuarial value of an HSA-driven plan, over time, is significantly higher than that under an ACA benchmark plan.

Note also that those with incomes below 250 percent of the Federal Poverty Level will receive additional HSA subsidies at a level equivalent to the cost-sharing subsidies offered to that population under Obamacare.

As to the exchange plans that unsubsidized customers would use, Avalere Health just released a study indicating that adding an actuarial value tier of 50 percent to the ACA exchanges could “lower federal spending by $5.8 billion over 10 years; reduce taxes by $5.5 billion over the same period…and reduce premiums by 18 percent from the average Bronze plan premium in 2016. The lower premium would result in a slight increase in estimated enrollment in the new marketplace.”

Congressional statutes are more binding than executive regulations

The Obama administration has done an effective job of undermining its own law by unilaterally imposing regulations that run contrary to the implicit and explicit intent of the ACA. The last year has made clear the importance of ensuring that any new reform effort be as specific as possible in Congressional statute, so as to minimize the room for executive branch mischief:

“The Obama administration has frequently introduced regulations that violate both the implicit intent and the explicit specifications of the ACA. For example, the administration has unilaterally delayed the imposition of the law's employer and individual mandates, and expanded the authority of federally-run insurance exchanges, without congressional authorization.

In order to minimize the ability of future administrations to undermine exchange reforms through regulatory action, it is important that as many of these reforms as is feasible are enacted by Congress, rather than by the executive branch.

Expand access to private exchanges for small employers

Self-insured employers—typically large, Fortune 500-type companies—can avoid many of Obamacare's cost-increasing regulations. Increasingly, these large employers are turning to private, consumer-driven exchanges to offer health-benefit choices to their workers. Small employers should be able to take advantage of the same opportunity, by voluntarily combining their workforces into larger risk pools:

“The Universal Exchange Plan would expand the ability of small employers to amalgamate their workers into larger insurance pools, for the purpose of utilizing the consumer-driven private insurance exchanges that are growing in popularity among self-insured ERISA employers.

Long-term care reform will improve beneficiaries' quality of life

By moving management of Medicaid's long-term care program over to the states, with the same amount of funding, beneficiaries stand to make significant gains. Stuart Butler, late of the Heritage Foundation, has noted that this approach could dramatically improve the ability of states to refocus their long-term care programs on helping enrollees stay in their own homes, instead of being dependent upon costly and inhospitable nursing homes for care.

“Medicaid and Medicare will pay for knee replacements for someone living on the third floor of a Brooklyn walk-up,” Stuart writes in JAMA, “but not for building or reconfiguring apartments in ways that would save the state and federal government thousands of dollars in medical costs.” I add some language to this effect in the revised version of the Plan:

“By requiring states to fund their long-term care programs at existing levels, but increasing their administrative flexibility, states could do much more than Medicaid currently allows. For example, they could assist beneficiaries with capital expenditures, such as increasing the accessibility of their homes to wheelchairs. Giving beneficiaries the tools they need to remain in their homes, instead of in long-term care facilities, will improve the quality of their lives while also optimizing program expenditures.

More can be done to improve provider competition

Ben Domenech, in his newsletter The Transom, noted that the Plan could do more to increase competition among health care providers. “You could add to [Avik's] prescriptions a liberalization of barriers to international trade in medical services (beyond visas, which he mentions), empowerment of nurse practitioners, and additional reforms to professional licensing,” Ben wrote. “Cost was always the priority for most Americans prior to reform and polling evidence suggests it remains their top priority going forward.”

Ben is right, and I've incorporated his points into the Plan's revisions:

“An important part of this effort would be to encourage states to liberalize scope of practice regulations, in order to allow nurse practitioners, physician assistants, pharmacists, and community health workers to provide care, appropriate to their training, at a lower cost than physicians can.

We could also do more to encourage international medical tourism, by liberalizing barriers that prevent American health insurers from paying for health care services received abroad.

There will be opportunity for further revisions as additional comments come in. Bookmark this page to keep track of them.

Original Source: http://www.forbes.com/sites/theapothecary/2014/08/21/revisions-to-transcending-obamacare-based-on-reader-feedback/

 

 
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