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The GOP’s “solution” to the high cost of health insurance is to make health insurance worthless.

Short-term plans can turn away people with preexisting conditions, including asthma and acne. They can charge older or sicker people prohibitively expensive premiums.

Or they can enroll such people at what looks like a bargain-basement price and then refuse to pay for any care related to preexisting illnesses — including illnesses that enrollees didn’t even know they had when they enrolled, such as cancer or heart disease. Some plans have dropped consumers as soon as they got an expensive diagnosis, sticking them with hundreds of thousands of dollars in unexpected medical bills.

Unlike Obamacare plans, short-term plans also are not required to cover any particular benefits, even for the relatively healthy.

A Kaiser Family Foundation review of short-term plans offered around the country found that most did not cover prescription drugs, and none covered maternity care. Preventive and mental-health care are also frequently excluded.

Catherine Rampell, The Washington Post, 8/3/2018

Worse yet, they can throw the markets for real health insurance into chaos.

This parallel system of insurance will siphon off healthier, younger, less expensive people from the exchanges. That will leave behind a pool of sicker, older, more expensive people, which will drive up premiums on the exchanges.

Between this and repealing the individual mandate, Republicans are actively sabotaging Obamacare to make it seem like a failure.

Health insurance can literally be a life-or-death issue

Health insurance is not health care (and just because health insurance premiums rise does not necessarily mean health care is more expensive), but health insurance is a crucial mechanism that we use to finance and access health care.

And, in some cases, not having health insurance can be the difference between life and death. Just take a look at the results of two studies  published in the August issue of the journal Cancer comparing survival rates for men with two forms of cancer based on insurance status.

From the first study, regarding glioblastoma multiforme, an aggressive type of brain cancer:

Among the 13,665 adult patients in the study cohort, 558 (4.1%) were uninsured, 1516 (11.1%) had Medicaid coverage, and 11,591 (84.8%) had non-Medicaid insurance. Compared with patients who were uninsured, insured patients were more likely to be older, female, white, married, and with a smaller tumor size at diagnosis. Accelerated failure time analysis demonstrated that older age (hazard ratio [HR], 1.04; P<.001), male sex (HR, 1.08; P<.001), large tumor size at the time of diagnosis (HR, 1.26; P<.001), uninsured status (HR, 1.14; P =.018), and Medicaid insurance (HR, 1.10; P =.006) were independent risk factors for shorter survival among patients with GBM, whereas radiotherapy (HR, 0.40; P<.001) and married status (HR, 0.86; P<.001) indicated a better outcome. The authors discovered an overall yearly progressive improvement in survival in patients with non-Medicaid insurance who were diagnosed from 2007 through 2011 (P =.015), but not in uninsured or Medicaid-insured patients.

Rong, X., Yang, W., Garzon-Muvdi, T., Caplan, J. M., Hui, X., Lim, M. and Huang, J. (2016), Influence of insurance status on survival of adults with glioblastoma multiforme: A population-based study. Cancer. doi:10.1002/cncr.30160

Translation: patients with private insurance lived the longest with this form of brain cancer. In terms of surviving glioblastoma multiforme, Medicaid did not seem to make a difference compared to being uninsured.

And the second study, regarding germ cell testicular cancer:

Uninsured patients had an increased risk of metastatic disease at diagnosis (relative risk [RR], 1.26; 95% confidence interval [CI], 1.15-1.38) in comparison with insured patients, as did Medicaid patients (RR, 1.62; 95% CI, 1.51-1.74). Among men with metastatic disease, uninsured and Medicaid patients were more likely to be diagnosed with intermediate/poor-risk disease (RR for uninsured patients, 1.22; 95% CI, 1.04-1.44; RR for Medicaid patients, 1.39; 95% CI, 1.23-1.57) and were less likely to undergo lymph node dissection (RR for uninsured patients, 0.74; 95% CI, 0.57-0.94; RR for Medicaid patients, 0.76; 95% CI, 0.63-0.92) in comparison with insured patients. Men without insurance were more likely to die of their disease (hazard ratio [HR], 1.88; 95% CI, 1.29-2.75) in comparison with insured men, as were those with Medicaid (HR, 1.58; 95% CI, 1.16-2.15).

Markt, S. C., Lago-Hernandez, C. A., Miller, R. E., Mahal, B. A., Bernard, B., Albiges, L., Frazier, L. A., Beard, C. J., Wright, A. A. and Sweeney, C. J. (2016), Insurance status and disparities in disease presentation, treatment, and outcomes for men with germ cell tumors. Cancer. doi:10.1002/cncr.30159

Translation: men who had private insurance were 88 percent more likely to survive germ cell testicular cancer than those who were uninsured, and the men who had Medicaid were 58 percent more likely to survive than those who were uninsured.

In both studies, patients with private insurance tended to be diagnosed earlier on the disease progression than uninsured and Medicaid patients, and this was shown to be important to a patient’s survival.

Arguments for the left and right

There is fodder here for both sides of the political aisle. On the one hand, liberals can point to the 58 percent increase in survival rates among Medicaid patients compared to those who were uninsured. And they can also point to the researchers’ acknowledgement that many of the Medicaid patients were likely to have been uninsured until just after being diagnosed with cancer. Clearly having Medicaid was better for these patients than having no insurance at all.

And yet, on the other side of the aisle, conservatives can point to the results of the first study that, despite all the tax dollars spent on Medicaid, it did not seem to make a difference in survival rates compared to having no insurance at all. Even with the second study, the right can point to the far superior outcomes of patients with private insurance compared to those with Medicaid, even while acknowledging that Medicaid was better for those patients than being uninsured.

Underlying issues

So, what’s an objective observer concerned about health policy supposed to make of these results? I have a few suggestions.

  • Private insurance probably improves access to care because reimbursement rates for physicians and hospitals are much higher than Medicaid. Many physicians will not accept Medicaid patients due to the very low reimbursement rates. Medicaid can also have issues with the timeliness of reimbursement, depending how much funding is left in a given state’s Medicaid budget. Even the physicians who do accept Medicaid might be less inclined to proceed with aggressive cancer treatments for their Medicaid patients than they would be for their patients with private insurance. The germ cell study found that Medicaid and uninsured patients did have a different treatment path from patients with private insurance, but this might be because they were also diagnosed later.
  • Medicaid isn’t as good as private insurance, but it’s better than nothing. Particularly for the germ cell cancers, Medicaid patients had much better outcomes than uninsured patients even though they did not fare as well as the patients with private insurance. Medicaid certainly has its administrative and funding/reimbursement challenges as a government bureaucracy reliant in part on state government sources, but does anyone seriously believe this is causing the cancer patients in their population to die in such large numbers? I’m all for innovations to make Medicaid as efficient as possible so that it can serve these populations as effectively and cost effectively as possible, but the idea that is it a hindrance to care for people who can’t afford private insurance is simply not borne out by the evidence. One learning point from these studies for Medicaid plans is to do more to encourage their populations to get cancer screenings so that these cancers can be caught earlier, but that doesn’t fully explain the insurance disparities.
  • These comparisons don’t represent realistic policy choices. I don’t know of anyone on either side of the aisle who has proposed putting the Medicaid population on private health insurance plans like the ones employers offer to their employees. Republicans would balk at the high cost to taxpayers, and Democrats would balk at the high levels of cost sharing for poor people who can’t afford it as well as the involvement of private insurance companies in general. Sure, some private health insurers have contracts with state governments to administer managed Medicaid plans, but those plans still don’t reimburse physicians and hospitals the way private plans do. They’re not equivalent. Even the private health insurance plans that are available on the exchanges for people a little higher up the economic ladder than Medicaid patients tend to have lower physician and hospital reimbursement rates than most employer-sponsored or individual plans outside of the exchanges. Considering how many Medicaid patients are covered by managed Medicaid plans operated by private insurance companies, one would think these private insurers would be able to close the gap between their regular insured and their Medicaid patients. Given the very real policy implications being debated in state legislatures today, it would be interesting to learn if there are real disparities between managed Medicaid and traditional Medicaid patients, but so far that research is lacking.
  • Medicaid is not Medicare, and it’s especially not single payer. Some on the left, like Senator and former presidential candidate Bernie Sanders, have been calling for a single-payer system that would essentially be “Medicare for all.” Medicare’s reimbursement rates are lower than private insurance but higher than Medicaid, and Medicare have the same payment timeliness issues that Medicaid does because it’s funded entirely by the federal government without involvement of state governments. Unlike Medicaid, physician participation in Medicare is already nearly universal (although I don’t know of too many pediatricians who take Medicare patients today because most Medicare beneficiaries are over 65). Eliminating private health insurance and moving to a “Medicare for all” system regardless of age would bring those pediatricians and the few outliers from other specialties into the Medicare fold because there would literally be no other source of income for them if they intended to continue practicing medicine at all.
  • Achieving equally bad outcomes would be a pyrrhic victory. I’ve seen bumper stickers from conservatives that read, “Liberals want misery spread equally.” It’s a concern worth addressing. If we address these disparities by merely reducing the survival rates of people who currently have private insurance, things will be equal, but no one will be better off. For germ cell testicular cancer, the research tells us that taxpayer dollars spent on Medicaid are quite literally saving lives for people who would otherwise be uninsured. But it’s very important that we understand the complex reasons why the Medicaid population is experiencing these disparities compared to the population with private insurance and address them. My health economics professor from graduate school would say that we need to build a better model.

“If you like your plan, you can keep it” and other half truths

If you like your plan and you like your doctor, you won’t have to do a thing. You keep your plan. You keep your doctor.

President Barack Obama, press conference, June 23, 2009

It’s one of those statements that will live on political infamy — like when George H.W. Bush said, “Read my lips. No new taxes” during his 1988 campaign and then later decided to raise taxes. And, in Obama’s case, he kept repeating it or at least a version of it as late as 2012.

So did former Health and Human Services secretary Kathleen Sebelius.

The bottom line is that under the Affordable Care Act, if you like your doctor and plan, you can keep them.

HHS Secretary Kathleen Sebelius, June 14, 2010

Obviously there are millions of people who were unable to keep their old plans, and some people have had to switch doctors. And conservative opponents of the Patient Protection and Affordable Care Act of 2010 (a.k.a. PPACA or Obamacare) have gleefully pounced.

Millions of people have lost their health insurance. Millions of people can’t see their own doctors.

Americans for Prosperity ad

The Administration is recognizing the grim reality that more Americans have lost health insurance than gained it under Obamacare.

Senator Marco Rubio (R-FL), press release, December 19, 2013

Cutting through the rhetoric — what really happened

All of the quotes above are misleading and confuse the issues at hand. (They are, after all, from politicians and political groups, so no one should be surprised at the sleight of hand.) They are all half truths. So I will try to parse them out and get to the whole truth.

The PPACA includes a provision for grandfathering plans that were already in place as of the date the law was signed (March 23, 2010).

SEC. 1251. PRESERVATION <<NOTE: 42 USC 18011.>> OF RIGHT TO MAINTAIN EXISTING COVERAGE.

(a) No Changes to Existing Coverage.–
(1) In general.–Nothing in this Act (or an amendment made by this Act) shall be construed to require that an individual terminate coverage under a group health plan or health insurance coverage in which such individual was enrolled on the date of enactment of this Act.

Patient Protection and Affordable Care Act of 2010 (emphasis added)

Based on that, it certainly sounds like what Obama and Sebelius said was completely true. So, with this very clear provision in place, how did so many people end up “losing health insurance?”

Insurers misleading the public

Private health insurance companies have been running afoul of state insurance commissioners for how they have communicated to their subscribers about changes related to the Affordable Care Act. Health insurer Humana was fined by the Kentucky Department of Insurance in 2013 for sending out misleading policy amendment letters to 6,543 subscribers. The penalty was $65,430 — $10 per subscriber who received the misleading letter.

While nothing in the law requires insurers to discontinue plans that were in place before the law was enacted, there’s also nothing in the law that prohibits them from discontinuing these plans. And private insurers were discontinuing plans long before Obamacare.

Even the conservative Heritage Foundation acknowledges that is what happened in this case.

But since the enactment of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), insurers have been broadly prohibited from canceling or refusing to renew coverage. One of the few exceptions to that prohibition is if an insurer discontinues a particular plan or type of coverage. In such cases, the insurer must provide the affected individuals the option to enroll in any other applicable coverage that the insurer offers.

That is largely what happened with the 4.7 million plan cancellations that were reported at the end of 2013. The insurers were discontinuing their pre-Obamacare plans and offering policyholders replacement coverage that complied with Obamacare’s wide variety of new mandates and regulations.

The Heritage Foundation, “‘Junk’ Health Plans and Other Obamacare Insurance Myths,” February 11, 2014 (emphasis added)

This was no surprise

In June 2010, Obama administration officials from the Department of Health and Human Services predicted that exactly this would happen while writing the interim regulations for grandfathered plans.

Using these turnover estimates, a reasonable range for the percentage of individual policies that would terminate, and therefore relinquish their grandfather status, is 40 percent to 67 percent. These estimates assume that the policies that terminate are replaced by new individual policies, and that these new policies are not, by definition, grandfathered.

U.S. Department of Health and Human Services. “45 CFR Part 147: Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act.” Federal Register, Vol. 75 No. 116, June 17, 2010.

So, Obama and Sebelius should have known better than to over-promise, especially in a situation where the thing that they promised would not happen would happen in such a clear and obvious way. Experts were even predicting this scenario long before the interim rules were written.

In October 2013, the White House was forced to clarify — saying what they should have said all along.

Nothing in the Affordable Care Act forces people out of their health plans: The law allows plans that covered people at the time the law was enacted to continue to offer that same coverage to the same enrollees – nothing has changed and that coverage can continue into 2014.

White House spokesperson Jessica Santillo, cited by USA Today, October 29, 2013

Yet for the people whose plans were canceled, Santillo’s more accurate explanation is a distinction without a difference.

Americans losing their doctors

A contract dispute close to home

Here in the Greater Indianapolis area where I live, we are home to Anthem Blue Cross and Blue Shield, one of the nation’s largest health plans. (I was employed there from 2008 to 2012.) But we also have some major hospital systems. The two largest are Indiana University Health and St. Vincent Health.

When Anthem began offering its health plans for Indiana in the federal exchange on HealthCare.gov, the company knew it was going to be competing not only with the only other exchange player (a non-profit called MDWise that is partly owned by Indiana University Health) but also with the individual mandate penalty for not buying insurance at all. So, in order to keep premiums on the exchange plans to a minimum, it offered low reimbursement rates to physicians and hospital systems participating in the exchange plans. Although the third- and fourth-largest hospital systems in the area (Community Health Network and Franciscan St. Francis Health Network) accepted the lower reimbursement rates, Indiana University Health and St. Vincent Health balked at the low reimbursement rates, leaving them out of network for anyone choosing an Anthem plan on the exchange. The MDWise plans on the exchange were priced comparably but included Indiana University Health and St. Vincent Health.

Perhaps more disconcerting to many Americans than having their plans discontinued was not always being able to keep their in-network physicians. But can this really be blamed on Obamacare?

Not in the slightest. There is nothing in the law that explicitly addressed this one way or another. The PPACA did not require people to change physicians, but it also did not explicitly require physicians to participate in any particular health plan. And contract disputes between physicians, hospitals, and health plans have been going on forever.

By 2000, many providers were pushing plans for large payment rate increases and more favorable contract terms, such as reimbursement based on a percentage of charges, to recover ground previously lost to health plans. Providers also experimented with more aggressive bargaining tactics, such as contract terminations or threatened terminations, to seek new contracts. Negotiations in a number of cases degenerated into bitter public disputes. Providers’ negotiating success emboldened other providers to push back and contract showdowns became commonplace across the country during 2000-01.

White, et al. “Getting Along or Going Along? Health Plan-Provider Contract Showdowns Subside.” Center for Studying Health System Change, Issue Brief No. 74, January 2004 (emphasis added).

The other side of the coin

Up until this point, I’ve been very critical of the Obama administration’s messaging for being imprecise or perhaps even deliberately misleading. But the opposition was also misleading.

When it came to keeping a current plan or a current doctor, Obama promised something that the law could not deliver. But it would also be misleading to blame the PPACA for a problem that was going on before it was passed and would have continued to happen whether it was passed or not.

When Sen. Rubio said “more Americans have lost health insurance than gained it under Obamacare,” he was making a doubly misleading statement.

First of all, the timing of his statement (December 19, 2013) was a premature assessment of the enrollment period that was still going until March 31, 2014. So it would not be surprising by that point in time that few people had enrolled…especially given the early technical problems with HealthCare.gov. By the time the 2014 enrollment deadline arrived, 7.1 million people had enrolled in private health plans on the exchanges — and, the last time I checked, that’s more than 4.7 million. And that doesn’t include the people who became newly eligible for Medicaid in the states that opted to expand it.

Secondly, those who had their plans cancelled did not lose their health insurance in the sense that they became uninsured. Their existing plans were discontinued, and they were left with many options to choose a new plan in order to remain insured. If a shoe manufacturer stops making your favorite brand of shoes, does that mean that you’ve become shoeless? No, you can just buy a different brand of shoes. That’s how free markets work. In fact, it’s a fairly safe bet that many of the 4.7 million who had their plans discontinued became part of the 7.1 million new enrollees in exchange plans.

If the PPACA had been written in a more explicit way that forced insurers to maintain plans that were in place before March 23, 2010 or forced physicians to participate in plans in which they did not find the contract terms acceptable, then the Republicans could have rightly accused Congress of overreaching and micromanaging these contractual relationships. So there was no realistic solution available to this problem. A single-payer system might have allowed nearly everyone to keep their current doctors (who’s going to go out of network when there’s only one payer?), but it also would have terminated EVERYONE’S health insurance plans. But any policy that addresses the cost drivers in the health care system and reforms the insurance market is bound to be at least a little disruptive. And that’s not a bad thing because some disruption was needed. The Obama administration’s mistake was to over-promise.

What have we learned?

Health policy is complicated, and all politicians have to speak in sound bites to explain themselves to the public by way of the news media. Also, what’s not written into a law may just be as important as what is written.

Politicians of all stripes will always be motivated to spin what a particular bill or law actually does. Those who support it will over-promise its benefits, and those who oppose it will exaggerate its flaws. That goes for any kind of legislation, not just the PPACA.