Badger has updated an important paper from last year showing that some states are succeeding in lowering premiums and increasing enrollment in health insurance by doing a better job of targeting existing resources. Obamacare established a regime of subsidies, mandates, regulations, and tax penalties that resulted in substantial increases in premiums for individual insurance coverage. But seven states obtained waivers to target subsidies for high-cost patients, and they saw premiums fall by nearly 7.5%, while premiums in the other states rose by more than 3%. He examines estimated premiums in five additional states that have applied for risk-mitigation waivers for 2020. Premiums for benchmark plans rose in all five states in 2019, but actuarial analyses forecast that premiums will decline in all five states if the federal government approves their waiver applications.
Health insurance enrollment has declined among people who do not qualify for financial help under Obamacare, new federal data show. The data released by the Centers for Medicare and Medicaid Services on Monday show that enrollment declined by 1.2 million people, or 24%, between 2017 and 2018 among people with incomes too high to qualify for Obamacare subsidies and who therefore face the full brunt of premium cost increases. In contrast, in the same period, enrollment ticked up among those with subsidized coverage by 300,000 people.
Obamacare wasn’t supposed to give free health insurance to everybody. The Affordable Care Act’s authors expected the poor would enroll in Medicaid, while those with higher incomes would buy coverage through the new insurance exchanges, with subsidies that decrease as income rises. It isn’t working that way. A study published this week by the National Bureau of Economic Research shows that ObamaCare has turned out to be a giant welfare program, with millions of working- and middle-class Americans improperly receiving Medicaid—a reflection of the unpopularity of the exchange policies and incompetence of government oversight.
Last December, the Trump Administration redesigned and set a new direction for the Shared Savings Program, which is Medicare’s main program for Accountable Care Organizations (ACOs) under “Pathways to Success.” Data on ACO performance in the program the first six performance years showed that, over time, those ACOs taking accountability for cost increases, or “risk,” performed better than those that did not. In fact, ACOs that did not take accountability for cost increases and only shared in savings nominally increased Medicare spending relative to their cost targets. The agency also found that ACOs led by physicians (which tend to be “low revenue” ACOs since they provide mostly outpatient services) performed better than ACOs led by hospital systems (which tend to be “high revenue” ACOs since they provide inpatient and outpatient services).
Hospitals would have to disclose the discounted prices they negotiate with insurance companies under a Trump administration rule that could upend the $1 trillion hospital industry by revealing rates long guarded as trade secrets. Hospitals that fail to share the discounted prices in an online form could be fined up to $300 a day, according to the proposal. The price-disclosure requirements would cover all the more than 6,000 hospitals that accept Medicare, as well as some others, and is likely to face fierce industry opposition.
On Thursday, the Senate passed a bill to increase the federal budget and lift the debt ceiling for the next two years. The Trump administration provided a list of $574 billion in savings options from the president’s 2020 budget to offset some or all of the proposed deal’s domestic and defense spending increases over the next two years. And whenever big numbers in government spending are debated, Medicare is always on the table. Early reports said that a big chunk of the spending offsets were expected to come from “Medicare savings,” including by imposing an inflation cap on Medicare Part D “reinsurance” spending. The issues is complex but the politics aren’t: The deal could have led to charges that Medicare cuts were being used to pay for more government spending.
Sen. Chuck Grassley (R-IA) recently introduced the bipartisan Prescription Drug Pricing Reduction Act of 2019. The bill provides incentives to slow the spending curve in the Medicaid drug program. Grassley says, “When states decide which drugs will be covered and included on their preferred drug lists, taxpayers and Medicaid patients ought to have assurances the system is fair. Transparency is the best guardrail to ensure safety and effectiveness to deliver the best value for taxpayers and the best outcomes for Medicaid patients.”
Politicians are depicting a system in meltdown, but the numbers tell a different story, not as dire and more nuanced. Government surveys show that about 90% of the population has coverage. Independent experts estimate that more than one-half of the roughly 30 million uninsured people in the country are eligible for health insurance through existing programs. The bigger issue than lack of coverage seems to be that many people with insurance are struggling to pay their deductibles and copays.
Health insurance is expensive because spending on hospital and physician services is high. Insurers are unpopular because they bear the main responsibility for controlling this spending—but in doing so, they save consumers money and focus resources toward better care. A comparison of plan options under Medicare can quantify the value added by private insurance management. Private plans reduce costs by about 10%, allowing them to provide more than $1,000 in extra health services to each Medicare enrollee every year.
What Bernie Sanders is proposing is not Medicare for all. It is far more generous—and more expensive. It would be funded much differently. And its relationship with private insurance would be nothing like today’s Medicare. Sanders would, in fact, replace the current Medicare program and it would effectively eliminate private health insurance. You can call it many things—from ambitious to unrealistic. But please don’t call it Medicare.