Health Policy after the Mid-Terms: NCPA’S Early Take
Republican candidates won a decisive victory at the voting booth on Tuesday, in all races: House, Senate, governorships and state legislatures. The future of Obamacare has never looked worse.
The next battle is more daunting: the Republican Party needs to avoid shooting itself in the foot, govern in a way that achieves results rather than perpetuates partisan bickering and continue to develop patient-centered health reform for the post-Obamacare future. Although Obamacare itself will not be repealed until January 2017, Republican success yesterday gives depth, resilience and energy to the post-Obamacare health reform movement.
Here is a list of some priorities for the new Congress:
- Repeal the excise tax on medical devices. This enjoys broad, bipartisan support — even from Democrats who voted for it when they imposed Obamacare on the nation. The tax is grabbing far less revenue than expected. Nevertheless, an important question stands out: How to pay for the lost revenue under Congress’ scoring rules? Some argue that repeal needs no offset; the industry would prefer that repeal be paid for via corporate tax reform; but grassroots conservatives will be skeptical unless the lost tax revenues are offset by Obamacare spending cuts.
- Shore up Medicare Part D Drug Plans by allowing them to better control fraud, which many Democrats support. Who could be against that?
- Obamacare discourages patient-focused innovation in health insurance plan design. Some Democrats have voiced support for the health insurers’ proposed “copper plan.” This is a point of leverage to open discussions on a wide variety of plan designs that suit patients’ needs, not politicians’ preferences.
- Improve risk adjustment in Obamacare plans. Republicans have been full-throated in their opposition to Obamacare’s “bailout” of insurers that lose money in exchanges. However, there is a bigger problem with Obamacare plans: They encourage insurers to seek out healthy subscribers and shun sick ones. Congress should reform the risk-mitigation mechanisms in Obamacare so that they are more like those of Medicare Advantage.
- Put Obamacare’s exchanges out of their misery! The exchanges’ failures were obvious to every American, and they are unlikely to improve. Stop the hundreds of millions of dollars surging to IT firms and navigators, and allow people to buy their plans from agents, whether online or in-person, without going through an exchange.
- Shrink the Medicaid expansion as much as possible. Medicaid has entered a fiscal death spiral into which the federal and state governments are pulling each other. By identifying opportunities to cut back the Federal Matching Assistance Percentage (FMAP) or the income eligibility for the expansion, Congress can further reduce Medicaid dependency from Obamacare’s original vision.
- Greater flexibility in state Medicaid programs to allow states to tailor their Medicaid programs to meet each state’s unique needs. Wisconsin provides a recent example of success.
- Reduce the power of the Food and Drug Administration to prevent patients from using experimental new therapies. The FDA’s bureaucratic burden has increased dramatically, and it needs to be reined in.
For the last three items, Congress will have eager collaborators in the states. Rather than caving in to Medicaid expansion, increased Republican majorities in state houses indicate that states will increase their opposition to making more people dependent on this type of charity care. They will also be looking to follow Wisconsin and Rhode Island and some other states in implementing successful waivers that allow them to contain costs and improve patient care. Finally, an increasing number will likely consider passing the “Right to Try” Act, which asserts state independence from FDA over-regulation.
Real health reform is just over the horizon. We look forward to continuing to inform the nation’s debate over what shape that will take.
Now that the political landscape has shifted somewhat, I wonder if the Department of Health and Human services will be more accommodating when states ask for flexibility to tailor their Medicaid programs? Some states have expressed interest in partially expansion of Medicaid rather than commit to cookie-cutter Medicaid expansion prescribed in the PPACA. Wisconsin did this. However, HHS have been discouraging states by arguing they cannot get an enhanced federal matching rate unless they commit to the whole expansion.
Democrats who favor repealing the tax on medical devices come mainly from MA and MN both states where the device industry has a strong presence. In other words tax those other guys but not me. If you repeal the device tax, it’s not right to leave it in place for drug companies, hospitals and insurers. Why should device manufacturers be singled out for special treatment? It’s not even a matter of whether or not we need that money to help pay for the ACA. We probably don’t. It’s a matter of basic fairness.
That is definitely true. As for the tax on health insurance, I’d want to combine tax repeal with repeal of other regulations and subsidies. With respect to drug companies, it makes sense to also include FDA reform.
Add voluntary choice, enhanced HSA with HDHP for whomever wishes to control their own healthcare $$
Repeal the section of the law that establishes the Independent Payment Advisory Board, aka the “death panels”. According to David Rivkin and Elizabeth Foley:
The power given by Congress to the Independent Payment Advisory Board is breathtaking. Congress has willingly abandoned its power to make tough spending
decisions (how and where to cut) to an unaccountable board that neither the legislative branch nor the president can control.
Thank you. I think that is off our radar screen because the President has not and likely will not nominate members to IPAB. It is too politically toxic.
Nevertheless, if IPAB does not act, its powers fall to the Secretary. So, it should be repealed.
It might be useful to divide this list into revenue-positive and revenue-negative.
The best scenario would be for the parties to agree on budgetary tax reform and go from there.
However, there is a bigger problem with Obamacare plans: they encourage insurers to seek out healthy subscribers and shun sick ones.
Could someone provide details as to how insurers can wield such power when they have to take on all comers.
Don Levit
Don,
One way insurers try to minimize the number of sicker people who sign up for their plans is to offer narrow network policies that deliberately don’t contract with the best academic medical centers and cancer centers. Another way is to hold marketing sessions on the second floor of buildings with no elevators or in places a considerable distance from public transportation.
Medicare Advantage plans are most attractive to healthier seniors. My understanding is that the average risk score of MA members is between 0.80 and 0.85 with 1.0 defined as average risk.
Barry:
I understand about some of these tricks insurers play.
I also know there are minimum network adequacy laws that could help alleviate your first concern.
Maybe I am naive, but if the Medicare beneficiaries were really determined to sign up for better plans, they would devise a way to defeat these nefarious techniques.
Although I just read the IRS guiodance on minimum in-hospitalization services that must be required in group health plans.
Apparently, some creative actuaries and innovative employers were able to design minimum value plans without hospital coverage to deny the premium tax credit to formerly eligible employees.
I wish all this creativity and innovation could be channeled for more positive purposes.
Don Levit
Hello Friends,
A radical idea would be to recognize that all health care is local and to create policies that would encourage local innovations with the notion that the market will eventually adopt best practices.
Presently the policy seems to be that all health care is loco . . . .
Another radical idea would be to recognize that patients must be incentivized to take care of themselves and others and thereby reduce costs. The present academic thinking is that patients are incentivized by “having skin in the game.” Relying on very dated ideas, the working assumption is that the more the patient pays the more responsible he or she will be in utilizing health care resources. This is a punitive way of thinking works to some degree in curbing relatively small health care expenditures, but it has little or no impact on the big ticket budget-busting costs that are driving the current crisis. So the “skin-in-the-game” philosophy is really only skin deep and can create false barriers to access. Thus it represents a somewhat blunt instrument in the policy tool chest.
Instead, patients need affirmative incentives. All studies have shown, for example, that employer health and wellness programs reduce costs.
why not make such programs universally available? Similar studies show that patients who receive incentives are more likely to follow their doctors’ orders and thus have better, more cost-effective outcomes. These programs succeed by offering patients positive rewards for behavior modification. Accordingly, patients and members of the public should be rewarded for taking individual responsibility for their own health and wellness.
Likewise, we need to mobilize communities and encourage people to take care of one another. Repeated studies show that a system of care buddies can reduce health care costs and those reductions are net of the incentives paid to the care buddies. Involving the public in lowering costs works not only improving the care of the patients but improving the health indicators of the care buddies as well. So there is an unexpected boomerang bonus. At a deeper level, such local care buddy systems can help rebuild our sense of community, something most Americans are yearning deeply for.
The health care bubble is bursting and we are all in it. The public must be awakened to the realization that this is their health care and that this is their 18% of GDP. It does not belong to the politicians or the special interests.
The future of health care policy should be an all-out national initiative to save health care dollars and to reward EVERYONE, especially patients (the public), who participate in changing our health care behaviors. We should never forget that patient behavior is the greatest predictor of outcomes and the greatest driver of costs, so changing our behaviors and health habits must be at the core of future health policy.
We have conclusively proven that fee-for-service does not work. Managed care does not hold the answers for the future. We are therefore left with gainsharing–a system designed to reward savings by sharing those savings with those who create them.
This shift to gainsharing should not be nationally dictated but locally developed, market by market. Notably, gainsharing accountable care organizations or ACO’s have been fostered by CMS–but with mixed financial success. The real success of ACO’s, however, lies int the special ACO regulations that swept away prior regulatory barriers to the reorganization, redesign and reinvention of the delivery of care. The greatest promise of ACO’s lies in the coming innovations in health care delivery made possible by the removal of the mountain of regulation that had built up based on fee-for-service reimbursement–regulations and government interference that has heretofore inhibited the cost-effective redesign of the delivery of health care
In the Nixon administration, Kaiser lent its resident genius, Scott Fleming to HEW to create policies that would foster the local development of HMO’s. We now need similar policies that will foster the development of local ACO’s based on gainsharing–i.e. dividing the savings among all who help create it–including patients. In other words, patients should be allowed to join ACO’s and participate in the gainshare.
As a final point, I should add that the incentives to patients and the public (i.e. their gainshare of the savings) should not be a simple price reduction spread evenly across the market, but the delivery of actual incentives delivered to individuals to reward them for changed behaviors. Furthermore, I am not advocating paying cash incentives to patients, but allowing ACO’s to use a portion of their gainshare to provide meaningful and targeted non-cash rewards to patients who contribute to the ACO’s efforts to lower health care costs. We know such reward works, so let’s incorporate them into a national initiative that involves everyone.
Imagine having accountable care organizations that are accountable to patients and in turn hold patients accountable for their choices! We can reform health care from the grass roots up not the top down, and that is the challenge of our generation. Anyone interested in implementing or investing in such ideas should feel free to contact me directly at cb@patientphysicianalliance.org.
Cheers,
Charlie Bond
Thank you and I could not agree more. Local, local, local. The health-policy world is enamored of finding general theories of health policy that can be applied nationwide.
Because the federal government exerts so much control over health care, I suspect that this is worse in the U.S. versus Canada or the U.K or many other countries.
Three things surprised me about your list of “kills”: (1) one of the worst aspects of ACA is what it does to employers and labor market decisions. Let’s kill the employer mandate stuff. (2) exchanges are one of the more positive aspects of ACA. If run successfully and efficiently they make insurance buying much more rational, consumer friendly, competition enhancing, etc. That’s why private exchanges are growing so fast. Don’t kill them just because they are part of “Obamacare.” (3) the subsidy provisions are badly designed, much too complicated, will result in serious problems for individual consumers. We will always need subsidies for the low income, but there are much simpler approaches to use, such as universal, taxable credits.