“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.

Obamacare under assault from disingenuous people looking for loopholes and political gain

I cannot think of a statute in our nation’s history that has ever been under such constant assault and sabotage after being passed than the Patient Protection and Affordable Care Act of 2010. In attempting to give states more control over their own destinies, Congress might have accidentally created enormous loopholes that undermine the law’s effectiveness. Perhaps they were overestimating conservatives’ sense of decency. In a truly stunning and baffling court decision, a 3-member panel of the D.C. Circuit Court of Appeals ruled 2-1 that subsidies for health insurance could only be granted through exchanges set up by states since that was the letter of the law. And, since most states refused to set up their own exchanges (usually the states run by Republican legislatures and governors), residents of those states had to use the federal exchange. Even the judges themselves knew they were helping people to get off on a technicality.

We reach this conclusion, frankly, with reluctance. District of Columbia Appeals Court judge Thomas Griffith

Fortunately, the 4th Circuit Court of Appeals in Richmond correctly interpreted Congress’s intent (perhaps they were paying attention during the debate over the bill) and ruled differently.

What they may not do is rely on our help to deny to millions of Americans desperately-needed health insurance through a tortured, nonsensical construction of a federal statute whose manifest purpose, as revealed by the wholeness and coherence of its text and structure, could not be more clear. 4th Circuit Senior Circuit Judge Andre Davis

So this seems like an issue destined for the Supreme Court if the 11-member appeals panel in the D.C. Circuit doesn’t overturn it themselves. I wouldn’t overreact to it yet.

What the Burwell v. Hobby Lobby decision really means for women’s health care

Whenever a landmark Supreme Court decision comes out, I try to find the decision itself and read it because I want to understand not only what the justices decided but how they decided it and exactly what it means. If you can get past the legalese, it’s often fascinating reading material no matter how you feel about the decision.

On June 30, 2014, the U.S. Supreme Court issued a decision in the case of Burwell, Secretary of Health and Human Services et al. v. Hobby Lobby Stores, Inc.. The court ruled 5-4 in favor of Hobby Lobby. I’d encourage you to read the decision of the court’s majority, written by Justice Samuel Alito and the concurrence from Justice Anthony Kennedy as well as the minority dissent written by Justice Ruth Bader Ginsburg. Please make up your own mind — don’t take my word for what any of it means.

Background: How we got here

In case you’ve been living under a rock for the past week, I’ll provide a bit of basic background on the case, which can also be found in the court opinion. I apologize if this falls into the category of TL:DR (too long, didn’t read), but the details are important.

A refresher from high school civics class

In case your memory from high school civics class is a little foggy, I’ll review an important concept. The U.S. Constitution is a framework that allows for four different types of laws, and judges might have to take all of them into account when reviewing a case. Deciding the rule of law correctly is a very difficult thing for any judge to do, and this is where good lawyers earn their high hourly rates.

  1. Statutory law. Statutes are the types of laws we normally think of that are passed by both houses of Congress and signed by the president. The framework for this is described in Article I.
  2. Administrative law. Under Article II, the executive branch is given the authority to carry out laws passed by Congress, and that often means writing administrative law. We often describe administrative laws as regulations. Whenever a president issues an executive order, he (or perhaps she in the future) is acting under the authority granted by Article II.
  3. Treaties. Article II also allows the president to make treaties with other nations…with the Senate’s consent. This isn’t really relevant to this case, but it is another type of law.
  4. Case law. Article III created the judicial branch, and when the judicial branch — especially the Supreme Court — makes a ruling, that ruling becomes part of the body of case law that can be cited as precedent in future cases. There is a principle in case law that you might have heard about before called stare decisis, which is Latin for “to stand by things decided.” To illustrate the importance of case law and stare decisis, Planned Parenthood of Southeastern Pennsylvania v. Casey was decided based on the previous precedent of Roe v. Wade in spite of statutes written by the Pennsylvania legislature.

In 1990, the Supreme Court ruled in another landmark case called Employment Division, Department of Human Resources of Oregon v. Smith. In this case, a man named Alfred Smith was fired from his job for ingesting peyote, which was both a religious sacrament in the Native American Church where he had membership — and an illegal drug in the state of Oregon. After being fired, Smith sought unemployment insurance benefits but was denied because Oregon law disqualified applicants who had lost their jobs due to “misconduct.” The court found in favor of the state government in Oregon (thus against Smith). An excerpt from that decision:

Although a State would be “prohibiting the free exercise [of religion]” in violation of the Clause if it sought to ban the performance of (or abstention from) physical acts solely because of their religious motivation, the [Free Exercise Clause of the First Amendment to the U.S. Constitution] does not relieve an individual of the obligation to comply with a law that incidentally forbids (or requires) the performance of an act that his religious belief requires (or forbids) if the law is not specifically directed to religious practice and is otherwise constitutional as applied to those who engage in the specified act for nonreligious reasons. Opinion of the Court in Employment Division, Department of Human Resources of Oregon v. Smith

This case prompted Congress to react, passing a statute called the Religious Freedom Restoration Act (RFRA) of 1993. It was signed into law by President Bill Clinton. This is the key excerpt from the statute:

SEC. 3. FREE EXERCISE OF RELIGION PROTECTED.
(a) IN GENERAL.—Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability, except as provided in subsection (b).
(b) EXCEPTION.—Government may substantially burden a person’s exercise of religion only if it demonstrates that application of the burden to the person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.

In plain English, RFRA was written for the express purpose of overturning the precedent set by Employment Division, Department of Human Resources of Oregon v. Smith, even going so far as to mention the case in the background of the statute. Remember this little nugget…we’ll come back to it.

Fast forward to 2012. After Congress passed the Patient Protection and Affordable Care Act of 2010 (aka Obamacare), the work of the executive branch — specifically the Secretary of Health and Human Services — to write regulations to implement the statute began. One of those regulations was called the Women’s Health and Preventive Services Guidelines, which took effect on August 1, 2012.

Essentially, these guidelines required all health insurance plans (except for those that were grandfathered in before the statute was signed by President Obama on March 23, 2010) to cover 20 FDA-approved contraceptives without any copays, deductibles or coinsurance. Under the Patient Protection and Affordable Care Act, organizations with 100 or more full-time employees are required to provide health insurance to them or pay a penalty of $2,000 per employee. So the financial stakes can be high.

After creating a firestorm with these guidelines, the Department of Health and Human Services walked back and exempted “religious employers” from being bound by the Women’s Health and Preventive Services Guidelines. The guidelines were very specific about what constituted a “religious employer,” (essentially a church or house of worship), and a for-profit corporation like Hobby Lobby definitely did not fit the description.

HHS had to strike a delicate balance of making contraceptives available to the women who worked for these “religious employers” while not forcing those religious employers to be the ones to pay for it. So they created a program that allowed the religious employers to notify HHS of their objections and then require the health insurance company to finance the benefit directly…which health insurers are quite willing to do since covering pregnancies is a lot more expensive. (Apparently even that didn’t satisfy some Catholic employers who object even to filling out the exemption form.)

Closely held corporations vs. publicly traded corporations

It’s crucially important, especially in this case, to distinguish a closely held corporation like Hobby Lobby Stores, Inc. from a publicly traded corporation like Walmart Stores, Inc. You can’t call up your broker and buy Hobby Lobby stock on the exchange…it simply isn’t for sale. Even though the Walton family retains majority ownership in Walmart, the remaining common stock is still publicly traded. One of the first steps that many entrepreneurs make when forming a business is to incorporate it — this protects the entrepreneurs from being held personally liable for debts incurred by the business. So when we talk about Hobby Lobby as a corporation, all we really mean is that the business was incorporated like most small businesses are. It just happens to be bigger.

Four of the contraceptives: Plan B (levonorgestrel), Ella (ulipristal acetate) and two types of intrauterine devices (IUDs) are controversial because the Food and Drug Administration wrote that they sometimes prevent the fertilized egg from implanting in the uterus as a failsafe if they can’t prevent ovulation or prevent the sperm from reaching the egg.

Because the Green family, who hold 100% ownership in the incorporated Hobby Lobby chain, believed that being required to pay for these four contraceptive methods violated their religious belief that “human life begins at conception,” Hobby Lobby sued the U.S. Department of Health and Human Services.*

The owners of the businesses have religious objections to
abortion, and according to their religious beliefs the four
contraceptive methods at issue are abortifacients. Opinion of the Court in Burwell v. Hobby Lobby Stores, Inc.

The Hobby Lobby case, which came from the Tenth Circuit Court of Appeals was consolidated with a similar case called Conestoga Wood Specialties Corp. v. Burwell that came to the Supreme Court from the Third Circuit Court of Appeals…essentially, the Supreme Court decided both cases at once since they were so similar.

Hobby Lobby’s legal argument was essentially that the Religious Freedom Restoration Act of 1993 exempted them from having to provide coverage for these contraceptive methods that violated their religious principles, and that since HHS had already set up the exemption program for religious employers, that there was already a less restrictive method in place to meet the governmental interest without burdening their employees. Essentially, Hobby Lobby Stores, Inc. wanted to be treated like a church — something HHS clearly never intended.

The decision

The court ruled in favor of Hobby Lobby — in large part because HHS had already made the exemption for religious employers by setting up an alternative means of financing contraception, and expanding that exemption to a for-profit corporation that objected passed the “least restrictive means” test as described in RFRA. And, considering the penalty for not complying with the large employer health insurance mandate in the Affordable Care Act (which was the only way the Greens of Hobby Lobby and the Hahns of Conestoga Wood Specialties Corp. could not violate their beliefs) created a “substantial burden.”

The effect of the HHS-created accommodation on the women employed by Hobby Lobby and the other companies involved in these cases would be precisely zero. Under that accommodation, these women would still be entitled to all FDA-approved contraceptives without cost sharing. Opinion of the Court, Burwell v. Hobby Lobby Stores, Inc.

The court rejected HHS’s claim that for-profit corporations cannot themselves have religious beliefs and cannot assert RFRA rights, at least as it pertained to the petitioners in this case.

Corporations, “separate and apart from” the human beings who own, run, and are employed by them cannot do anything at all…HHS would draw a sharp line between nonprofit corporations (which HHS concedes are protected by RFRA) and for-profit corporations (which HHS would leave unprotected), but the actual picture is less clear-cut…The companies in the cases before us are closely held corporations, each owned and controlled by members of a single family, and no one has disputed the sincerity of their religious beliefs. Opinion of the Court, Burwell v. Hobby Lobby Stores, Inc.

Justice Anthony Kennedy concurred with the court decision written by Justice Alito. He wanted to emphasize that this decision shouldn’t be interpreted broadly to mean that any for-profit corporation can claim RFRA protection to any law based on religious objections…and that this case was confined to a very specific set of circumstances.

RFRA requires the Government to use this less restrictive means. As the Court explains, this existing model, designed precisely for this problem, might well suffice to distinguish the instant cases from many others in which it is more difficult and expensive to accommodate a governmental program to countless religious claims based on an alleged statutory right of free exercise. Concurrence opinion by Justice Anthony Kennedy

Analysis

Prior to the HHS regulation being announced, Hobby Lobby Stores, Inc. was already covering all 20 of these contraceptive methods. The Green family said they didn’t realize until recently that their health plan included the four methods they found objectionable.

Given the long history of the Green family’s support of Republican Party causes and their willingness to invest in mutual funds that included the companies that manufactured the very methods of contraception they objected to (even when there are other mutual funds like The Timothy Fund and the Ave Maria Fund that expressly avoid these sorts of ethical dilemmas), it’s easy to suspect that they dropped these methods of contraception just because it would enable them to file a lawsuit to undermine Obamacare for political purposes. If a company owned 100% by people who express such strong religious beliefs did not realize they were violating them for years — in multiple ways — until the issue became a political firestorm, they were at the very least negligent in practicing those beliefs. But it’s not the court’s job to discern a petitioner’s motives, so we have to assume (maybe naively) that everyone involved in this case was sincere.

The court went a long way to explain how their ruling in this case had a very narrow scope, something Justice Ginsburg disputed in her dissent.

The Court’s determination that RFRA extends to for-profit corporations is bound to have untoward effects. Although the Court attempts to cabin its language to closely held corporations, its logic extends to corporations of any size, public or private. Little doubt that RFRA claims will proliferate, for the Court’s expansive notion of personhood–combined with its other errors in construing RFRA–invites for-profit entities to seek religion-based exemptions from regulations they deem offensive to their faith. Dissent opinion by Justice Ruth Bader Ginsburg

It will be interesting to see if Justice Ginsburg’s predictions will come true…my sense is that they will if for no other reason than as an excuse for these corporations to sidestep paying for these products as mandated by the Affordable Care Act. But I can only speculate about what will happen.

The real irony of this case was that HHS dug its own grave by exempting “religious employers” from the mandate and creating a workable program to accommodate them. It’s an important reminder for policymakers that there’s often a price to pay for political expediency in the face of controversy: court challenges.

What the Court seemed to ignore (and perhaps HHS never raised it) was that the exemption for “religious employers” did not include many religious non-profit organizations either…like Catholic hospitals and universities. It was essentially limited to churches and houses of worship…organizations that were not only non-profits but also were organized for the specific purpose of exercising and practicing religion.

I wonder as well why no one raised the stare decisis argument against RFRA. If stare decisis allowed the Court to overturn a statute in Planned Parenthood v. Casey, why shouldn’t the Court have adhered to the precedent in Employment Division, Department of Human Resources of Oregon v. Smith as well?

In any event, the easily forgotten people here are the female employees of Hobby Lobby and Conestoga who were directly impacted by this ruling — sort of. The Court’s opinion reminds us that HHS set up an alternative financing scheme for women employed by organizations that objected to covering contraception to get these drugs with no out-of-pocket cost, and that these women would have that method available to them. A different means to the same end. So it’s important that we don’t overreact to this decision because it does not take away women’s access to emergency contraception — it merely removes their employer from the equation. And it does not require the women to pay for it out of pocket, so cost is still not a barrier.

It’s worth repeating this excerpt from the Court decision:

The owners of the businesses have religious objections to
abortion, and according to their religious beliefs the four
contraceptive methods at issue are abortifacients. OPINION OF THE COURT IN BURWELL V. HOBBY LOBBY STORES, INC.

So, are these four contraceptive methods really abortifacients? As we were reminded in this case, scientific realities don’t seem to matter when it comes to faith…the Greens could have said whatever they wanted, and who could have questioned it as a legitimate religious objection? There’s no sanity check in religion.

There’s a great deal of scientific evidence against this claim of emergency contraceptives acting as abortifacients. There is only one abortifacient drug on the market, and that is RU486. And even if emergency contraceptives do prevent implantation in rare cases, that still does not terminate a pregnancy as it is defined by the American College of Obstetricians and Gynecologists — a group that knows a thing or two about reproduction. (“A pregnancy is considered to be established only after implantation is complete.”) I’ve said it before, and I’ll say it again: Words mean things.

None of these definitions mattered to the Court, which is unfortunate considering the Court’s use of another statute called the Dictionary Act to define corporations as people. I have a feeling we’re all in for a bumpy ride as a result of this ruling.

*At the time the lawsuit was initially filed, Kathleen Sebelius was the Secretary of Health and Human Services. She has since been replaced by Sylvia Burwell. That’s why you might have seen this case previously called Sebelius v. Hobby Lobby Stores, Inc. It’s the same case.

The Healthy Indiana Plan 2.0 as a form of Medicaid expansion: Part 2 – Policy Analysis

In a previous post, I provided some background on the politics of Indiana Governor Mike Pence’s proposal to use a modified version of the Healthy Indiana Plan as a substitute for the expansion of traditional Medicaid under the Patient Protection and Affordable Care Act (Obamacare). In this post, I will explore in more detail how the original and modified versions of HIP were designed and the implications of this idea in terms of public policy.

When it comes to the issue of health care, I believe that people in my party need to be solutions conservatives. We must never forget that we’re talking about real people, working people, who deserve a better way. Indiana Governor Mike Pence, address to American Enterprise Institute, 5/16/2014

Nuts and bolts

The gist of the original Healthy Indiana Plan program was a health plan with an $1,100 deductible. Beneficiaries had to make regular financial contributions to a savings account known as a POWER account based on a percentage of their income (between 2% and 5%). State and federal Medicaid funds would fill in the difference between those contributions and the deductible and then finance the traditional coverage after the deductible. Then the beneficiaries spent down that account when they got care — so they were supposed to be more price-sensitive.

At first glance, this would seem like a bad deal for beneficiaries when compared with traditional Medicaid that required no financial contributions at all, but HIP did provide some unique advantages. The most important advantage to beneficiaries was this: HIP provided much better access to physicians than traditional Medicaid due to its higher reimbursement rates.

One problem that Medicaid beneficiaries often face, despite having health coverage, is the ability to actually use that coverage to get access to health care because physicians are reluctant to accept Medicaid patients since it’s often a money-losing proposition for them. So even though they are given the means to pay for medical services, they are still often left with little choice but to go to emergency rooms for non-emergent care — which costs everyone more money.

So, despite conventional wisdom about expanding health coverage, an expansion of traditional Medicaid in Oregon actually increased trips to the emergency room instead of decreasing them, and the beneficiaries did not experience much in the way of improved health. Without a requirement to make any financial contributions, beneficiaries did not feel the pinch of using a higher level of care than they really needed. These results were not lost on Governor Pence when he announced HIP 2.0 as a better way forward.

The low reimbursement rates in traditional Medicaid create very real access problems for beneficiaries, and I’m all for bringing those rates in closer alignment with Medicare and private insurance, but that comes at a cost.

One way the original Healthy Indiana Plan controlled costs to taxpayers in spite of the higher reimbursement rates was to set a numeric cap on enrollment, meaning that people who met the income guidelines could still be turned away if the program was “full,” so people not only needed to be poor, they needed to be fast. And turned away they were: as of December 2012, HIP had 36,500 enrollees and 46,388 eligible people on the waiting list.

Changes in HIP 2.0

Pence’s proposal for HIP 2.0 includes some significant changes from the original version of HIP. Here are the most significant:

  • Removal of the enrollment cap: Now anyone earning up to 138 percent of the federal poverty level can participate without being waitlisted. This is perhaps the most significant change to HIP — making it an entitlement program instead of a block grant program.
  • Employer Benefit Link: For participants who are employed but cannot afford to participate in the plans offered by their employers, there is an option to redirect the HIP funding to help pay for their plan at work.
  • Tiered plans: If participants don’t make regular contributions toward their POWER accounts, they will be shifted from the HIP+ plan to the HIP Basic plan. (They can also opt into the HIP Basic plan if they want to.) In the basic plan, participants will not have to make contributions, but they will have copays when they receive services. Because the required contributions to the POWER account are small and on a sliding scale based on income, the HIP Basic plan could lead to higher out-of-pocket costs for participants.
  • Higher deductible: The deductible is increased from $1,100 to $2,500, but participants in the HIP+ plan will only need to make required contributions based on income…the state still funds the remainder of the POWER account up to the deductible.
  • Workforce development: Anyone who applies for HIP will be connected to employment and job training programs.
  • Dental and vision coverage: HIP 2.0 is designed to include dental and vision coverage in additional to health coverage.

Bending the cost curve?

Reforming traditional Medicaid through this kind of market-based, consumer-driven approach is essential to creating better health outcomes and curbing the dramatic growth in Medicaid spending. Indiana Governor Mike Pence, quoted in The Indianapolis Star, 5/16/2014

Despite Pence’s claims about using contributions from HIP beneficiaries to control costs, Indiana’s state actuary reported that expanding Medicaid via the HIP program would actually cost taxpayers more than expanding traditional Medicaid, presumably because the contributions from beneficiaries would not be enough to offset the much higher reimbursement rates to physicians and hospitals. (Note: The Indiana Family and Social Services Administration disputes that, saying that the actuary determined that HIP will cost less than traditional Medicaid.)

I think it’s a great thing. The only thing I’ve asked this governor to do was provide more health-care coverage. It’s better late than never. Indiana Democratic Representative Ed DeLaney, quoted in The Indianapolis Star, 5/16/2014

Democratic Representative Ed DeLaney, often one of Pence’s harshest critics in the Statehouse, has applauded Pence’s move to expand the Healthy Indiana Plan. And so do I.

As long as the financial contributions from beneficiaries don’t become prohibitively high, it’s good to give them a little skin in the game so that they access care wisely. It’s hard to argue with the fact that traditional Medicaid is severely broken, mostly because it’s so difficult to access physicians and hospitals.

My biggest objection to HIP in the past was the enrollment cap that cruelly excluded tens of thousands of people who met the income guidelines just because they didn’t get in line first. That cap has been eliminated in HIP 2.0 so anyone meeting the income guidelines will get coverage…no more waitlists.

Whether this will benefit Pence in a general election for a possible presidential run in 2016 or 2020 (which is quite likely) or hurt him in a GOP primary remains to be seen.

I’m about the last person who wants to say anything nice about Mike Pence (except maybe Ed DeLaney), but I applaud him for trying to come up with a solution. I hope he and the federal government can work it out for the benefit of Hoosiers below or slightly above the poverty line who so desperately need medical coverage.

The U.S. health care system: leading the world in all the wrong ways

The U.S. health care system: leading the world in all the wrong ways

For as much as the United States spends on health care, you would think that we would have the best care in the world. But we don’t. In fact, the United States health care system leads the world in medical errors, according to a 2005 survey by the Commonwealth Fund.

In fact, medical errors contribute to the deaths of 210,000 to 440,000 U.S. patients each year, making medical errors the third leading causing of death for Americans, behind cancer and heart disease. A more conservative 2010 estimate from the Office of the Inspector General for Health and Human Services put the number at around 180,000.

It’s time to get angry, and it’s time to take action to fix this problem.

Want to save babies? Focus on improving women’s health, not picketing Planned Parenthood

Family planning is an important part of women’s health. And reproductive health includes access to abortion that I believe should be safe, legal, and rare. I’ve spent a lot of my time trying to bring down the rate of abortions. And it has been my experience that good family planning and good medical care brings down the rate of abortion. Keeping women and men in ignorance and denied the access to services actually increases the rate of abortion. — Secretary of State Hillary Clinton, Testimony before House Foreign Affairs Committee, 2009

It wasn’t too long ago that I stumbled upon an anti-abortion protest outside of a Planned Parenthood clinic that was across the street from my shopping destination. Even though I adamantly disagree with the protesters and doubt that they understand all of the non-abortion services that Planned Parenthood provides, I think their hearts were in the right place. They want to protect fetuses that they consider to be babies.

To further their efforts, pro-life groups have fought to pass anti-abortion laws (which are frequently overturned in court as unconstitutional, most famously in Planned Parenthood v. Casey) and opened crisis pregnancy centers that show ultrasound images to pregnant women (a tactic proven to be ineffective at reducing induced abortions).

I’d like to suggest that if their real goal is to save the lives of babies in the USA — both born and unborn — they might want to focus their energies elsewhere.

Good news/bad news from the USA

First, the good news from the USA. In 2011, induced abortion rates in the United States fell to their lowest since the landmark Roe v. Wade decision. Another good sign is a declining infant mortality rate…reported at 6.05 deaths before the first birthday per 1,000 live births in 2011, which was a 12 percent drop from 2005. So we’re getting a little better at this. The bad news is that better is still not very good by international standards.

In 2008, the United States ranked 27th in infant mortality rate among Organization for Economic Cooperation and Development countries, and a previous report linked the United States’ relatively unfavorable infant mortality ranking to its higher percentage of preterm births. Despite the recent infant mortality decline, comparing the 2011 U.S. infant mortality rate with the 2008 international rankings would still have the United States ranked 27th. — U.S. Centers for Disease Control and prevention, NCHS Data Brief, April 2013 (emphasis added)

 

Not getting much value

US not getting much value

Despite spending more than any other nation on earth for health care per capita, the United States (depicted on the far righthand side of the chart) still lags behind many other countries in terms of infant mortality and abortion rates. Although the United States is not the worst performer on the list in terms of abortion and infant mortality, countries like Mexico and Estonia spend far less on health care per person. Please note that lower numbers for all variables always indicate better performance in this chart.

But is more health spending the answer? A quick glance at the data would suggest not, since the United States has the highest health care spending on earth, both in real dollars and as a percentage of gross domestic product.

In terms of the unborn, even though the U.S. abortion rate is dropping, it’s still too high. In 2008, the United States reported a rate of 20 induced abortions per 1,000 women ages 15-44. Germany, the top performing country, reported only 7.

What’s interesting is the inverse correlation between restrictive abortion laws and the number of abortions…especially the number of unsafe abortions. That is, the more restrictive a country’s abortion laws are, the more abortions occur. And they are of the unsafe, back-alley variety that endangers women’s lives.

Although the legal status of abortion and risk associated with the procedure are not perfectly correlated, it is well documented that morbidity and mortality resulting from abortion tend to be high in countries and regions characterized by restrictive abortion laws, and is very low when these are liberal…We found that the proportion of women living under liberal abortion laws is inversely associated with the abortion rate in the subregions of the world. — Sedgh, G. et al. “Induced abortion: incidence and trends worldwide from 1995 to 2008,” from The Lancet, 2012

It’s worth pointing out that the study classifies the U.S. as having liberal abortion laws, but obviously the people picketing outside of Planned Parenthood are hoping to change that.

So what’s a country to do?

Just because the United States spends more on health care by far than any other nation in the world doesn’t mean we’ve been spending the money very wisely. Indeed 31 percent of U.S. healthcare spending is on administrative costs.

But Sedgh, G. and colleagues offer an idea.

Other studies have found that abortion incidence is inversely associated with the level of contraceptive use, especially where fertility rates are holding steady, and there is a positive correlation between unmet need for contraception and abortion levels. — Sedgh, G. et al. “Induced abortion: incidence and trends worldwide from 1995 to 2008,” from The Lancet, 2012

And if you don’t believe that, there’s this:

The United Nations Population Fund (UNFPA) has calculated that funding which provides modern contraceptive services in developing countries ($7.1 billion in 2003) prevents 187 million unintended pregnancies, 60 million unplanned births, 105 million induced abortions, 22 million spontaneous abortions, and 215,000 pregnancy-related deaths each year. — John Lomoy, Organization for Economic Cooperation and Development

Fortunately, the Patient Protection and Affordable Care Act (that is, Obamacare) goes a long way in improving access to contraception and other women’s preventive health programs that can also reduce infant mortality rates.

Cutting through the clutter

Unfortunately for a lot of born and unborn babies, the pro-life crowd has spread a lot of misinformation about the impact of the Affordable Care Act’s women’s preventive health provisions.

To be clear, Obamacare does not provide any funding for abortions, nor does any other federal program due to the Hyde Amendment. Even the Medicaid funds that Planned Parenthood receives are specifically for the non-abortion services it provides…just like any other health provider that provides these services.

The Supreme Court recently heard arguments in the Sebelius v. Hobby Lobby Inc. case in which Hobby Lobby argued that the law’s required coverage of emergency contraception (Plan B and Ella) violated their religious beliefs, and they should not be required to include it in their employees’ insurance plans. Pro-life groups have inaccurately referred to Plan B and Ella as abortifacients, probably for political reasons. In reality, even traditional birth control pills can prevent implantation in the uterus (not just conception), so the distinction is totally made up.

What’s the real story?

It is hard to say precisely what is prompting the pro-life movement to back policies that are so counterproductive to reducing the number of abortions, infant mortality and deaths among pregnant women. I have a few hypotheses:

  1. An overly simplistic view of policy. If you tell someone that something they abhor is legal, the intuitive response would be to say, “We should try to change that law” because they don’t want it to happen anymore. Of course, sometimes reality is counterintuitive. When abortion is not legal, desperate women still get abortions…it’s just that they are of the unsafe, back-alley variety. Conservatives who oppose gun control measures should understand this line of reasoning: if you make performing an abortion a crime, then only criminals will perform abortions.
  2. Unspoken motivations. Access to contraception and abortion has been a major step forward for the rights of women, and conservatives tend to be uncomfortable with that. Sure, the early feminists like Elizabeth Cady Stanton and Susan B. Anthony opposed abortion, but the abortions they opposed were unsafe and coerced by men. They had no concept of abortion in the way we think of it today as a safe medical procedure initiated by the woman.
  3. Political wedge issues. Politics is a very ugly business sometimes, and if you can portray your opponents are murderers, that’s pretty effective. That’s precisely what the GOP has done with the abortion issue, and religious conservatives have overwhelmingly rewarded them for it, often voting against their economic interests to vote for pro-life candidates.

Don’t fall for it. The data shows overwhelmingly the pro-life crowd is (perhaps unintentionally) harming the babies they claim to cherish.

Never underestimate procrastination

With only a few days left to go before the March 31 deadline, there was real cause for concern that enrollment on the health insurance exchanges would not come anywhere close to the goal of 7 million enrollees. After all, between October 1 and March 21, fewer than 6 million Americans had enrolled. Some had revised the goals down to 6 million…a major blow. But more than 1 million Americans jumped on, as they often do, at the last minute, enabling the exchanges to exceed the original goal of 7 million. It just goes to show that it’s human nature to procrastinate.

The adverse selection death spiral

Earlier I wrote about how the Obamacare exchanges have failed to attract many young, healthy people — and how the early technical glitches have made the problem worse.

Of course, the older and sicker people who really needed health insurance coverage would have enrolled by hook or by crook — but in order to make all of this work economically, we need as many young, healthy adults as possible in order to prevent the adverse selection death spiral from making the exchanges unworkable.

In order to explain the problem of adverse selection in health insurance, it may be useful to use a different, simpler kind of insurance: homeowner’s insurance.

Suppose you haven’t had homeowner’s insurance for a number of years. Then all of a sudden your house catches on fire, and you have $100,000 in damage. If you walk into an insurance agent’s office the day after the fire and try to buy a policy that will pay for the repairs to your property after they have already occurred the agent will probably have a good laugh and explain why the insurance company would never, ever want to do that.

If there were a law, however, that said homeowner’s insurance companies have to accept all new applications, regardless of the condition of the home at the time of the application, restore the home to its original condition and charge these people the same premiums as everyone else, what do you suppose people might do?

Well, first of all, people whose homes were in good condition would naturally drop their insurance coverage since there would be no incentive whatsoever to keep paying premiums. If the insurer were required by law to accept any application, then people would wait until their houses caught on fire and then apply right after calling the fire department. Why not? And, of course, in order for the homeowner’s insurance company to stay afloat, the premiums would go up — dramatically.

Even if this were somehow workable, which it isn’t, if the fire damage were too extensive, the homeowner’s insurance company could declare the house a total loss and write the policyholder a check to buy a new house.

We sort of inherently understand and accept this in homeowner’s insurance because our home (or our car, boat, motorcycle, etc.) is a piece of property that has a dollar value on it and can be replaced. Plus, a fire at your home is largely an unpredictable event — the kind of event where an insurance market can function well. (Of course, there are some cases where people try to turn unpredictable events like fires into predictable events by deliberately causing them in order to cash in on a claim payout, but this can land them in prison for insurance fraud.)

Pre-existing conditions

But now let’s adapt that analogy back to health insurance. (Disclaimer: I’ve said for a long time that insurance is a really inappropriate paradigm for financing health care…but it’s the one we have in the United States.)

In health care, there are certainly unpredictable events like an accidental injury from playing basketball, but there are also a lot of predictable events. And these are the ones that can really add up like the house fire. If you’re recently diagnosed with cancer, you know in advance that you’re going to need a lot of expensive treatment in the near future. And if you’ve gone without insurance for a while, you might suddenly start to rethink that decision.

But for the insurance company, they don’t want anything to do with you at that point just like the homeowner’s insurance company doesn’t want anything to do with you after you’ve had a massive fire that needs to be repaired. So, just like the homeowner’s insurance agent denying the applicant whose house caught fire, the health insurer would deny that application on the basis of pre-existing conditions.

I wrote earlier that we understand and accept this in terms of homeowner’s insurance, but we feel quite differently when it comes to our health. Obviously for the person with cancer, financing their treatment could be a matter of life and death — and there’s no way to declare a person to be a total loss and just cash out their bodies. (At least not yet.)

On the surface, it may seem like the health insurer is just being greedy by denying this person’s application, but in reality the health insurer is trying to keep its premium rates down for all of the healthy people it has in the pool. If health insurers no longer had this option, then you would see the same kind of dramatic premium increases that you would see if homeowner’s insurance companies had to accept everyone who applied, even if their house had burned.

Finding a counterweight

And yet, we still don’t accept this from an ethical point of view. I know I don’t.

So if we require health insurers to accept everyone at the same premium rate regardless of health status — even someone just diagnosed with cancer — then we need a counterweight to make sure people don’t game the system and buy insurance even when they don’t need it. Along with the requirements for guaranteed issue (no denials for pre-existing conditions) and community rating (no rate increases based on pre-existing conditions), the Affordable Care Act has three counterweights.

First is the individual mandate. This is the part of the law that everybody hates because it’s basically the part of the law where we pay the price for all of the things we want — there is no free lunch. The second, and related counterweight, is an open enrollment deadline — the deadline for this year to avoid the tax penalty is March 31. Finally, there is 3:1 age banding that allows insurers to charge older people up to three times as much for premiums as younger people. (Insurers might prefer something closer to 10:1 age banding, but 3:1 is a lot less of a market distortion than no age banding at all.)

Check HealthCare.gov or your state exchange (where applicable) for yourself. If you compare the price of an unsubsidized health insurance policy with the tax penalty — especially this year — you will see that the penalty is much cheaper. Of course the price of a health insurance policy offered on the exchanges could be reduced dramatically if you qualify for income-based subsidies, but even then the penalty amount for not buying insurance is still relatively small. So many young, healthy people will opt to take their chances and pay the penalty instead of purchasing a policy…if they even realize that they have to make this decision.

If enrollment in the exchanges continues to skew older and sicker, then next year the premiums will inevitably rise higher…maybe much higher whereas the penalties are prescribed in the law without accounting for these actuarial changes. This may even accelerate the death spiral and render the law totally unworkable.

How this all plays out still remains to be seen, but if you’re a young, healthy adult without insurance, I’d like to ask you to at least shop around and see what you qualify for. You may be pleasantly surprised.

Obamacare exchanges: The number of people who enroll is less important than who enrolls

An underwhelming five million Americans have signed up for coverage in the new health insurance exchanges so far. That’s far short of the Obama administration’s goal of seven million enrollments by the March 31 deadline. It’s human nature to wait until the last possible minute, so there’s a good chance that the number will rise significantly in the remaining 10 days. In fact, the Congressional Budget Office projects another one million enrollments before the deadline.

But six million is still one million short of the goal. That gap is disappointing, and Republicans are almost certain to pounce on it as another failure of the Affordable Care Act.

When the exchanges first opened on October 1, 2013, the federal exchange site (www.healthcare.gov) was beseeched with glitches that made it nearly impossible for anyone to sign up. To make matters worse, these hassles disproportionately dissuaded younger, healthier people from enrolling. After all, younger adults tend to be more technically savvy as a group than older adults and have less patience for more traditional forms of enrollment like paper or telephone.