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Thursday, April 10, 2014

The Morally Backward and Unrealistic Obamacare “Death Spiral”

Hundreds of health care advocates huddled, sheltered from a January snowstorm in the underground ballroom of the Capitol Hill Hyatt, to hear Vice President Joe Biden speak. Ezra Klein took the stage immediately afterwards. Klein slammed the media for its obsession with the doomsday consequences of “young invincibles” not signing up on the new health insurance marketplaces, also known as the “death spiral.”

“I’m not the person that American politics needs to be most concerned about,” Klein said. “That’s morally backward. It’s not a win in healthcare if we enroll all the healthy 30-year-olds but don’t enroll all the people who need care right now.”

The phenomenon, popularly referred to as the “death spiral,” has roused fear into the media and American people for four years now. The theory goes like this: Step one: young, healthy people don’t get health insurance because they don’t think they’ll need it or can afford it. Step two: the lack of young, healthy people in the system creates an unhealthy risk pool, forcing companies to raise premiums to compensate for their expensive clients. Step three: the rise in premiums makes insurance even less appealing to young people. Step four: repeat step one—hence the “spiral."

With the original sign-up target for the ACA now met, I had hoped this topic would be long gone, but the media is still warning us about the lack of young people who’ve signed up. Klein’s simple moral argument puts this threat into perspective. The sick need health insurance, not the healthy. A successful health care system provides health care to those who need it. Yes, consumers who are most in need of health care are more likely to buy it. That’s basic supply and demand economics. With the ACA, you can no longer be denied health insurance because of a pre-existing condition, making supply meet demand. The ACA makes health care a right, not a privilege. Of course our old health care system wasn’t designed to handle such ambition. The new health reform is. It’s ambitious. It also ensures that that the marketplaces will function properly. Here’s how:

1. A limited open enrollment period makes it difficult for people to wait until they get sick to purchase health insurance.

2. Compared to older individuals, health insurance is much less expensive for young people—in some cases, by a factor of three. This is not a single payer system. While young people pay the least, old people pay the most, compensating for the cost to cover them.

3. The gradual increase in penalties for not having insurance (the individual mandate) will eventually be too expensive to ignore. This will ensure that all, if not most, healthy people will pay into the system.

4. Three ACA risk mitigation provisions—risk adjustment, risk corridors and reinsurance—limit losses and gains for insurance companies, allowing them to keep premiums down. Companies that gain large profits from having a healthy risk pool give money to companies with an unhealthy risk pool. These mechanisms are designed to be budget neutral. In fact, a recent CBO report projected that the programs will result in an $8 billion surplus for the federal government over the next decade.

Any reasonable observer can see that this is a carefully constructed law, designed to mitigate uncertainty while reforming a $3 trillion industry that so desperately needs it. Given the tremendous extent to which the ACA protects the insurance marketplace (as listed above), rousing fear over the issue of “young invincibles” is yesterday’s news and unproductive. The CEO of Aetna has even indicated that they are more than happy with the age distribution of enrollments so far.

The time for judging the ACA’s merits is over. And like Jonathan Cohn of the New Republic said, “I haven’t seen any doctors on welfare.” Instead of predicting failure, highlight successes and contribute new methods of improvement.  "There are uncertainties ahead," says Larry Levitt of the Kaiser Family Foundation, "but it's hard to deny at this point that the law can work and that many people are benefiting from it, both those who were uninsured before and those that already had coverage."

In my opinion the ACA is a very modest law, with close to 3,000 pages meant to improve and preserve an American health care system that ranks thirty-sixth in the world. It moves us in the right direction, making health care a right and not a privilege.

We have a right to be protected from violence and crime. We have a right to be protected from environmental dangers like fire and disasters. The police come to save us. The firemen come to save us. But when ambulances comes to save us, many worry about how they we will pay for it. The ACA promotes a right to health care. Now all of us will have the peace of mind and dignity to deal with an already difficult situation when ambulances come to save us.

Friday, January 10, 2014

Anti-Medicaid States Disproportionately Harm People of Color.

More than half of all uninsured people of color nationwide could get health care coverage if an additional 25 states stopped playing anti-Obamacare politics and expanded Medicaid. Yet, is this just about politics? Could it also be about race? At the very worst, it’s rooted in racist politics. At the very best, it leaves that impression by justifying racial inequality in access to health care. One thing is certain—anti-expansion state policies disproportionately harm people of color.

A December report by Kaiser Family Foundation found that 53 percent of uninsured people of color have incomes that qualify them for expanded Medicaid. Uninsured African Americans have the most to gain, or lose, with 59 percent qualifying for expanded Medicaid. 42 percent of uninsured whites would qualify for expanded Medicaid.  The implications of these findings are clear: minorities benefit more from expansion, and anti-expansion states perpetuate, if not, increase racial disparities in health coverage.

More people of color reside in anti-expansion states, especially the Deep South, than expanded Medicaid states.  Out of the top ten states with the highest percentages of their populations being black, eight have not expanded.  Two of the three states with the largest Latino populations in the United States, Texas and Florida, have also not expanded.  Because these anti-expansion states have more people of color compared to most expansion states, choosing not to expand Medicaid deepens differential access to health care services for people of color. Another way to describe this result is “institutional racism.”  

Today, there are significant racial and ethnic disparities in health insurance coverage—fifteen percent of whites are uninsured versus 33 percent of Hispanics and 25 percent of blacks.  Racial disparities shamefully persist in so many areas, like employment, education, the criminal justice system, economic opportunity and health care. Expanding access to Medicaid offers a rare opportunity to significantly diminish racial disparities in at least one of them. Expansion would also provide those faced with the many challenges associated with not being white (e.g., Empl opportunity and Edu access) something to fall back on in cases of illness or injury. 

Medicaid expansion would also diminish the racial disparities in life expectancy. The Congressional Budget Office released a report in 2008 showing that there is a five year gap in life expectancy between whites and blacks, citing “use of health care” as a contributing factor. By providing more access to health care services, Medicaid expansion could contribute to reducing racial disparities in life expectancy.

Anti-expansion may well just be more anti-Obamacare posturing, but there is no doubt—intentional or not—the consequences clearly disproportionately hurt people of color. As governors and state legislatures continue to opt out of expansion, ignoring a magnitude of financial and public policy benefits, their actions are perpetuating racial disparities in health care. While sacrificing the good of some constituents for the perceived good of one’s party may seem like smart politics, it’s not. It is reckless, short sighted, and exacerbates an untenable system of inequality that ultimately will be political fallout for future campaigns. Even if those refusing to expand don't go around hurling racial epithets, their policy decisions are racist because they have a blatant racial impact. 

Most importantly, however, expanding Medicaid is a rare opportunity for states to act in a judicious and equitable manner by decreasing racial health disparities and providing health care to the 16.3 million people of all colors.

Saturday, December 28, 2013

Recent Attacks on Obamacare: How Big is Halbig v. Sebelius?

In the world of recent attacks on the Affordable Health Care Act (ACA), one federal case–Halbig v. Sebelius–is a last-ditch effort by opponents of the law to prevent affordable, quality health care for all Americans. 

This desperate anti-Obamacare Hail Mary pass by the Cato Institute hasn’t received major media attention, but believe me, any organization with a substantial investment in the health law is keeping a close eye on the Halbig case. Although the plaintiff’s argument is absurd, the courts are too unpredictable to be ignored, as previously witnessed by ACA supporters in the 2012 SCOTUS case.

The skinny: by taking six words from a complex statute and stripping them completely out of context, the plaintiff challenges the ACA’s congressional and textual intent to provide premium tax credits in Federally-Facilitated Exchanges (FFE). In other words, they’re claiming the law doesn’t allow the IRS to provide tax subsidies for qualified low-income individuals in the 34 states that didn’t want to run their own exchange.  

Their only evidence: the text of the ACA defines an exchange that provides subsidies as “an Exchange established by the state.” Of course, this interpretation by the plaintiff is too narrow, disregarding the vast body of evidence contradicting it.  The text of the law is clear–premium tax credits are made available to all (income-eligible) people who seek coverage through an exchange, regardless of at what level a government operates it. 

The disputed provision is being taken so far out of context that it ignores its own title. Title I of the ACA is named “Quality Affordable Care for All Americans,” not “Quality Affordable Care for some Americans,” or “Quality Affordable Care for Americans in state run exchanges.” This is the title of the section where the disputed provision is located. 

The law’s text clearly considers a Federally-Facilitated and state-run exchange to be identical for purposes of making tax credits available. The law designates the term “Exchange,” with a capital “E,” and defines it as an “Exchange established by the state.” The law specifies that these “Exchanges” will provide tax subsidies to qualified low-income individuals. If a state does not establish an “Exchange,” the text of the law directs the federal government to stand in for the state and operate an “Exchange” (with a capitol “E”). The “E,” designating it as an Exchange providing tax subsidies, makes it clear that the law assumes federal Exchanges are identical to state-run exchanges. The government steps into the shoes of a state and operates the Exchange in that state.

Congressional intent when drafting the law is also clear. Pointing out a simple drafting error would do little to undermine the law, so the plaintiff has fabricated a theory that Congress intended to force states into setting up their own exchange by withholding tax subsidies.  This was clearly not the case.  First, there is no legislative history hinting that anyone in Congress believed premium tax credits might not be available in a FFE.  Second, no state official ever mentioned that letting the federal government operate an exchange could jeopardize the availability of premium tax credits to residents of their state. 

Third, the National Journal stated that the “Congressional Budget Office repeatedly estimated the cost of providing subsidies in all 50 states, and the agency has said that no one from either party ever asked it to assume that consumers in some states would not receive the tax credits.” Lastly, if the plaintiff’s theory is true, then why haven’t we seen any members of congress—those who actually voted on the bill—bring this unconstitional change in the law to the attention of the American people? The congressional intent was to provide premium tax credits to all people who qualified in any state.  Clearly, Congress intended federal exchanges to be treated the same as state exchanges.

Above all, the plaintiff’s argument is simply incoherent. Assuming the plaintiff’s interpretation of the law is true, a FFE could not offer qualified health plans with premium tax credits. This would render a FFE virtually useless. These nonsensical results prove that the opponents’ argument is completely contrary to the text of the law and to Congress’s intent. 

The court will decide on the law’s intent by looking at its coherent and logical entirety. This isn’t an argument about statutory interpretation or Congressional intent…this is about politics. There is no question Judge Paul L. Friedman of the U.S. District Court for the District of Columbia will see right through the plaintiff’s arbitrary argument and political motives to prevent affordable, quality health care to all Americans.  

Friday, December 20, 2013

A Proper Perspective on Health Coverage Terminations

Thousands of Americans, undeterred by computer glitches, have signed up for affordable, quality health insurance through and the state exchange websites. And thanks to the Affordable Care Act (ACA), people with pre-existing conditions, will no longer be denied the health care they so desperately need. The administration is also working with some of the country’s leading tech experts to improve so that even more people can sign up.

Despite these successes, there has been an abundance of media attention on the recent terminations of individual health insurance policies, and to some extent, these concerns have been blown out of proportion.  Like any other challenge made to a major piece of legislation, it’s critical to keep the debate in proper perspective. A new report by Families USA, entitle “How Does the Affordable Care Act Affect People Who Buy Health Insurance in the IndividualMarket?,” sheds light on the recent health coverage terminations.

Cancellations are occurring in the private, individual (non-group) market.  Only 5 percent of Americans get coverage in this market, and the majority of them are in this volatile market for less than a year. Slightly more than one-third of people with individual coverage have retained it for more than one year. The median duration in such plan coverage is eight months. It’s also important to remember terminated plans don’t comply with the ACA’s protections.

For the 5 percent of Americans in the individual market, more than two-thirds (71 percent) are eligible for substantial premium subsidies or expanded Medicaid, according to a recent Families USA report. This is good news for those who receive cancellation notices, they’ll potentially find a better plan, at a better price, at and state marketplace websites.

Although president Obama was right to express his concern about—and to propose interim corrective action for—the people at risk of losing health coverage due to the ACA, it’s important to keep perspective about the small portion of the population that might be adversely affected. That number is a tiny fraction of the 65 million non-elderly people with pre-existing health conditions, who will gain new protections through the affordable care act. It’s also a small fraction of the tens of millions of uninsured Americans, who can get help through new health coverage assistance. This perspective should be kept in mind as efforts continue to be made to mitigate any harm arising from plan terminations.

The overwhelming majority of people with private individual insurance today will soon be able to receive better coverage and pay lower premiums due to the Affordable Care Act. As a result, their improved health coverage will become much more affordable.

By Jon-Michael Basile

Thursday, November 7, 2013

Medicare Part D Points to a Popular Future for Affordable Care Act - Stand Up for Health Care

Medicare Part D Points to a Popular Future for Affordable Care Act - Stand Up for Health Care

When President George W. Bush passed the Medicare Part D act in 2003, its launch raised some technological problems that left consumers frustrated. Now, most American seniors view their prescription drug coverage as invaluable and support this once-controversial legislation.

Enacted to subsidize increasingly high out-of-pocket costs, Medicare Part D makes prescription drug coverage affordable for its beneficiaries. But in the months following its inception, the media criticized virtually every aspect of the federal program.

In November 2005, The Washington Post referred to its three-week delayed launch as “anything but smooth.” Two weeks after the delayed launch, a Minneapolis Star Tribune article with the headline, “A Rocky Rollout for Medicare Part D,” offered its insight and reported that “elderly consumers [were] fuming over its complexity and federal websites [were] crashing under heavy traffic.”

Not surprisingly, few people signed up for Part D before coverage began in January 2006. But as the technical problems were resolved, enrollment numbers surged. Today, enrolling for Medicare Part D runs smoothly and is an integral part of our health care system. While there’s always room for improvement, 97 percent of Part D beneficiaries say their coverage works well, according to a study KRC Researched conducted in September 2013.

Similar to a less-than-perfect start for Medicare Part D, the Affordable Care Act’s enrollment process faces challenges. But we look forward to seeing the great strides it will make in our country and how it will positively affect millions of Americans. 

The Affordable Care Act is more than a website—it’s a piece of legislation signed in 2010 that promises great benefits to Americans at any age or health status.

It allows young adults to stay on their parents’ insurance until they turn 26.

It prohibits insurers from discriminating against women and those with 
   pre-existing conditions.

It requires health insurance companies to spend at least 80 percent   of 
   premiums on health care services (and give out rebates if they don’t).

Some people are worried about the technological glitches, but it’s important to remember that this is just the beginning. Americans can still buy health insurance until December 15 to have coverage that starts on January 1, and even after that, people can still sign up through March 31

As the President stated last week, “If one thing is worth the wait, it’s the safety and security of health care that you can afford … by buying health insurance through the marketplaces.”

By Jon-Michael Basile

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