Three Downsides to Commercial Health Insurer Consolidation

Writing in The Wall Street Journal, Scott Gottlieb argues that the Aetna-Humana and the Anthem-Cigna combinations are evidence of waning insurer competition that is the direct result of Obamacare.  Not only are ACOs not a panacea, but the Affordable Care Act's insurance mandate to limit administrative costs is forcing Aetna et al to spread their costs over a larger base.  Dr. Gottlieb fears that the oligopolies won't be able to deliver on innovation and will limit consumer choice   

Too bad The WSJ didn't give him more print space.  If they did, Dr. Gottlieb may have also pointed to three other potential downsides to commercial insurer consolidation:

1) The concentration of risk: While having a small regional health insurer go bust is a big problem for hundreds of thousands of insurance enrollees, having a for-profit national insurer with tens of millions of enrollees go bust would be a national catastrophe. Think Lehman Brothers, Black Swans and Too Big To Fail.

2) Cronyism: Politicians and C-Suite executives no longer blush at the prevalence of the revolving door between government and all industry.  Health insurance will likewise be too regulated and complicated to leave to anyone other than insiders, who will naturally be unable to discern the line that separates their interests from the patients'.
 
3) Political Power: Will Washington DC and 50 states really be able to stand up to a handful of companies that dominate a fifth of the national economy?  Years ago, the commercial insurers remained silent while they were called "Fat Cats." The Population Health Blog bets that the next time a While House blames the insurers for rising costs, they won't remain so deferential.

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Maintenance of Certification (MOC) Update: A Health Reform Lesson

The 1967 Corvair. A non-PHB version

Long ago, when the Population Health Blog was courting the future PHB spouse, our unspoken understanding was that if the PHB liked its unsafe-at-any-speed 1967 Corvair, it could keep its unsafe-at-any-speed Corvair.

The sweet perfume of our relationship more than made up for the odor of car exhaust, unsightly blemishes, noisy rattles and rusted floorboards.

Cracking the windows, touches of spray paint, the AM radio volume knob and care where you placed your feet also helped.

It wasn't until courtship turned to relationship that the spouse's true thinking began to manifest itself.

That's why, years later, the PHB was unsurprised by President Obama's disavowal of his you-can-keep-your-health-plan assurances. Substitute Federal minimal essential benefit requirements, narrow networks and unaffordable premiums for spousal safety demands, mocking eye-rolling and intrusive hints about the merits of a new car, and readers should understand the PHB's acquiescence.

So the PHB shrugged off the notification that its life-long American Board of Internal Medicine (ABIM) specialty credential wasn't really a life-long credential.  

Enter maintenance of certification or "MOC."

More background can be found here, but, briefly, the sweet perfume of accomplishment was overcome by the MOC stink of intrusive, unproven as well as expensive documentation, education and testing renewal requirements.

Thousands of the PHB's physician colleagues were less submissive about the matter in print and on-line. There were also competitive threats, lawsuits, online petitions, and websites. The American Medical Association weighed in. And then state medical societies, which have a vital interest in serving their membership, began to sound the alarm.

And it paid off. 

While the PHB would have predicted that the academics populating the ABIM leadership were about as likely as Mr. Obama or the PHB spouse to change their minds, they've issued a "we got it wrong and sincerely apologize" announcement. 

As a result, many of their documentation requirements are on hold, the test is being revamped, fees are being reduced and the education options are being broadened.

Good for the ABIM and good for the practice of internal medicine.

This kind of mea culpa is a good first step in engaging the opposition and is likely to turn many critics into allies. More importantly, this is a great example of the impact of grass roots activism and the advocacy of organized medicine.

If this can happen in this corner health care, perhaps there are other areas of health reform where a well placed apology might be a good first step.

The magnanimous PHB is also happy to admit that, in retrospect, the spouse was right about the Corvair. At one point, highway snow was blowing up into the passenger compartment.  At 60 miles an hour.  Seriously.

Since then, it has gotten to like and keep lots of other stuff.  It makes having to pay so much for its own heath insurance a little more tolerable.

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Rising Healthcare Costs: Delayed or Defeated?

Ready, set......

According to this just-published New England Journal article, analysts are still waiting for the twin forces of 1) an improving U.S. economy and 2) higher numbers of newly insured Americans to reignite healthcare inflation.  While the latest data from the Bureau of Economic Analysis (BEA) are conflicting, data from the early part of 2014 suggests that health costs are remaining tame.

What gives?
 
While many Obamacare supporters say this is more evidence of Washington's central-planning genius, author Charles Roehrig notes other factors be at play, namely:

1. The 9 million of 2014's newly insured amounts to 3% of the U.S. population. Their baseline spending was probably half of normal, so the resulting increase would expand the nation's spending by a modest additional 1.5%.  Since this group is younger, it'll likely be less than that.  Their contribution to increasing costs will be harder to detect.

2. What's more, insurance enrollments were finalized relatively late in the year, so these newly insured haven't had much of a chance to give their new benefits an early test-drive.

3. The first quarter of 2014 was an unusually cold winter. The Population Health Blog recalls how freezing temps, wind and snow made for a relaxed day at the clinic. Multiply that across millions of newly as well as long-term insured people, and it adds up.

4. Yes, stupid, it is the economy, which has a strong correlation with healthcare spending. Loss of health insurance thanks to unemployment, declining tax revenues that pressure government insurance programs to limit eligibility as well as benefits, employers' unwillingness to go along with otherwise automatic benefit increases and a general unwillingness of consumers to open their wallets in recessionary times has also added up.

5. Thanks to the expiration of some patents, prescription drug spending moderated.

Bottom line: all of the above are one-time impacts.  The economy's impact and new access to insurance are lasting fundamentals that will not go away. It's too soon to tell what is really going on.
 
The PHB will stay tuned.

Credble Numbers on Obamacare: And Why is the 16.3% Prevalence of Persons Without Health Insurance Good News?

The signed Affordable Care Act

We finally have some credible numbers on what's happened to insurance enrollment under Obamacare. The paper can be found here.

The authors used the ongoing Gallup-Healthways survey that questions representative samples of the U.S. population about their health insurance status. Since it began, this repeat survey has assessed changes in the coverage of adults 18 to 64 years of age. The authors used these data to assess the trends in insurance status that were associated with the roll-out of Obamacare between January 2012 to June 2014.

For all of 2012 and the first part of 2013, the nation's uninsured rate was 20% to 21%.  Following the star-crossed open enrollment period that began in the fall of 2013, the uninsured rate began to drop.  By April of 2014, it fell to 16.3%. 

Depending on the underlying statistical assumptions, the absolute percent increase in Americans with insurance ranged between 4.2% to 7.1%. States that took the Feds up on their offer to underwrite Medicaid expansion saw a absolute decline of 6%  of low-income Americans having no insurance.

The Population Health Blog predicted that the 2014 outcomes from Obamacare would have something for everyone.  For the news outlets (like this and this) with a reputation of being sympathetic to the Administration, positive spin abounded. In the meantime, more skeptical reporters tried to poke some holes in the data, saying the increase in insurance coverage was really thanks to gains in employment or was in reality a lousy deal thanks to narrow networks.

The PHB's take?

It's struck by the relatively modest decline in the percent of uninsured Americans. Considering the heavy price we've paid, that lingering 16.3% rate is a lot.

That price?  It includes not only the hit to our national fisc, but paralyzing partisan rancor, endless and unpredictable litigation and the precedents of White House 'pen and phone' fiat by regulation. The latter will almost certainly be used by a future Presidents on both sides of the aisle.

And so it goes.

A Path Toward Further Health Reform Is Lined With the IRS?

As attention has shifted to phantom IRS emails, misbehaving Iraqis and our newfound national awareness of soccer's off-side rule, it's only natural for the Population Health Blog to wonder about the status of health reform.

Enter The New England Journal with a pair of perspectives on the coming prospects for the Affordable Care Act.

Over on the left, the Brooking Institution's Henry Aaron believes that, notwithstanding ascendant Republican hopes for the 2014 elections, Mr. Obama's veto power virtually guarantees the law's survival.  The only question is whether politics will get in the way of any adjustments.  Once we're into 2015 and beyond, these could include the mandate (weaken any penalties?), Medicaid (spending caps?), the states' roles (allow for local modifications?) and changing affordability standards (increasing income-based premium support for families).

Over on the right, the American Enterprise Institute's Joe Antos agrees there is no going back.  He offers up some potential conservative modifications for 2015 and beyond, such as shifting the insurance premium support to a defined contribution basis (versus a defined benefit), shielding mainstream health insurance by moving catastrophically ill persons to "high-risk" pools and requiring insurers (including Medicare) to leverage consumer education and incentives along with provider teaming to help steer beneficiaries toward lower-cost care options.

Drs. Aaron and Antos both agree that IRS-based enforcement rules may force significant changes.  Under current law, poor persons who underestimated future income for today's premium support calculations may be subject to claw-backs. According to Dr. Aaron, the IRS is responsible for administering that, and any payment would ultimately go to the insurer long after the fact.  Dr. Antos points out that the IRS's enforcement of the mandate could lead to the spectacle of tax refunds being withheld from low-income individuals and families.

The PHB is less sanguine.  While the PHB is no political pundit, the likely increase in the number of Republicans in Congress after 2013 combined with the kick-off of the 2016 Presidential race portends more of the same health reform gridlock. 

The only good news from Aaron and Antos is that growing antipathy toward the IRS may lead Congress to uncouple the IRS and it's enforcement mechanisms from the ACA. It may not be an example of pristine bipartisanship, but if it leads to necessary modifications of the ACA, that's not necessarily a bad thing.

Stay tuned!

Image from Wikipedia

Looking Ahead to the Second Enrollment Wave of Obamacare This Fall

Big or small?

The latest just-published edition of Health Affairs has a sobering reminder written by Tricia Brooks ("Open Enrollment, Take Two") that the healthcare marketplace wars will recommence on November 15.

That's when open enrollment starts all over again. While the good news is that more than 7 million people got health insurance through the on-line marketplaces, the bad news is that there are now 7 million people who will have to use the process again to get their insurance renewed.

While Dr. Brooks is generally upbeat and hopes our politicians will put their constituents first, the Population Health Blog asks.... what could possibly go wrong?

What the PHB learned.....

Development work isn't finished yet.  The back-room and behind-the-scenes web machinery dealing with application questions, required consumer notifications and eligibility issues are continuing to get tweaked. In addition, the Feds are working to upgrade the electronic and other processes that are necessary to verify identity and immigration status. Plus, it has yet to be fully integrated with the commercial marketplaces, Medicaid and the CHIP agencies.

It is also possible that during the renewal process, persons who underestimated their income in the process of applying for tax credits may be subject to claw back, and the individual mandate's tax penalty will rear its ugly head.  We don't know how consumers will react.

It also remains to be seen how many consumers will understand the financial assistance or miss the deadline. Look to the Administration launch reprise of a marketing campaign that encourages "tell your friends and family" word-of-mouth.

And then there is no guarantee that many states will want to - or be able to - fully cooperate.

What went unmentioned is the "wild card" of the fall political campaign.  All of the members of the House of Representatives, a third of the Senate and many Governors will be spinning Obamacare.  Thanks to the fog of political war played out our TV screens, individuals may be entering the open enrollment period with a whole new set of opinions and apprehensions.

Stay tuned!