Month: January 2020

Part 1: Quotes directly from Elizabeth Warren’s official website about her healthcare plan, from which I am drawing all of my information for subsequent posts

Part 2: Reviewing her plans for dealing with pharmaceutical prices

Part 3: How she will “improve the ACA” to get her transition to M4A started

Part 4: All the other things she’ll do before starting the transition to M4A, including some Medicaid changes, increasing access for rural and underserved patients, making antitrust enforcement stricter, and a variety of other incremental changes

Combine all the details from parts 2, 3, and 4, and you have the most likely scenario of how the healthcare system will end up with a Warren administration!

Part 5: How she will transition to M4A, which is mainly by lowering Medicare eligibility to age 50 and then offering a Medicare “public option” for people ages 0-49 that pretty much anyone can opt into

I categorized everything Elizabeth Warren has written on her website (at least as of late 2019 when I read through it all) about healthcare into the following groups:

1. General details that will apply regardless of how close she gets to achieving Medicare for All (M4A)
2. Her plan to transition to M4A
3. Her vision of what M4A would look like if it is achieved

Last post, we talked about number 2. So now let’s look at number 3: Elizabeth Warren’s vision for the future American healthcare system, which she plans to achieve by the end of her first term in office.

First, we’re already clear that she plans on covering everyone with a single publicly run health insurance company we lovingly refer to as Medicare. What would this coverage include? Everything Medicare already covers, plus more mental health and substance use services, contraceptives, vision, expanded dental coverage, audiology, physical therapy, and long-term care. So, very comprehensive.

How much would Medicare enrollees pay? Initially, there would be premiums of unspecified amounts, and everyone would have an annual out-of-pocket max of $1,500 (the premiums you pay don’t apply to that $1,500), but that’s all-inclusive of parts A, B, and D. Over time, all premiums, copays, and deductibles would be phased down to $0. She doesn’t specifically mention coinsurance, but I think she intends to get rid of all out-of-pocket costs completely.

How will she pay providers? She says initially they will get 110% of current Medicare prices, which is higher than 100% because presumably she has to make up for the fact that they will no longer be getting payments from private insurers, which tend to be higher than what Medicare pays. And then she says something I find interesting. Some hospitals will initially get more than 110% (rural hospitals, teaching hospitals, and the ambiguous “others with challenging cost structures”), and some will get less than 110% (those hospitals that are “doing fine with current Medicare rates”). I guess she wants to directly control profitability–hospitals that make more money will get paid lower prices!

The “geographic base rate adjustments”–a multiplier that adjusts prices up or down depending on the cost of doing business in that region–will remain in place, which makes perfect sense.

She doesn’t want to pay providers 110% forever. Over time, she will decrease that number as providers adjust their administrative staff down to adjust to the new simplified life of only dealing with one insurer. But she also says these decreases will be provider specific according to the “overall plan size and the progress of provider adjustments to new, lower rates.” Again, there’s a lot of administrative latitude going into setting provider-specific prices.

She’ll also start paying primary care doctors more and will decrease pay for “overpaid specialists.”

But what if all of this isn’t enough to reign in runaway healthcare spending? What will she do then? She will enforce further global rate reductions, plain and simple.

Elizabeth Warren also makes a point to explain how employers fit into all of this. Since they no longer have to pay for private insurance for their employees, they will be expected to pay Medicare directly for covering their employees. She doesn’t mention whether this requirement will go away once all premiums are phased to $0, but I find it unlikely that she would willingly give up such a reliable stream of income. Regardless, this requirement would not apply to businesses with fewer than 50 employees, and it would slowly phase in as the number of employees increases. Self-employed folk don’t have to pay the Medicare premium either unless they exceed a certain amount of income. And if any employer out there that gets a killer deal on healthcare insurance from a private company, they can go ahead and use that private company as long as they pass on whatever savings they are getting directly to their employees.

There you have it. A M4A system in the United States. I’ll save my assessment and recommendations for next time.

Part 1: Quotes directly from Elizabeth Warren’s official website about her healthcare plan, from which I am drawing all of my information for subsequent posts

Part 2: Reviewing her plans for dealing with pharmaceutical prices

Part 3: How she will “improve the ACA” to get her transition to M4A started

Part 4: All the other things she’ll do before starting the transition to M4A, including some Medicaid changes, increasing access for rural and underserved patients, making antitrust enforcement stricter, and a variety of other incremental changes

Combine all the details from parts 2, 3, and 4 and you have the most likely scenario of how the healthcare system will end up with a Warren administration

Ok, now we’re to the more interesting stuff. As a reminder, this is how I’ve categorized all of Elizabeth Warren’s plans:

1. General details that will apply regardless of how close she gets to achieving Medicare for All (M4A)
2. Her plan to transition to M4A
3. Her vision of what M4A would look like if it is achieved

Let’s talk about her transition to M4A! I think I could sum it up by calling it her “Medicare for 50+ and a public option” plan.

Just as a reminder, the current non-Veterans Administration health insurance market in the USA is divided into a lot of different segments, here are the main ones: Private insurance through an employer (AKA employer-sponsored insurance), private insurance not through an employer, Medicaid (for the poor), Medicare (for age 65+).

In Elizabeth Warren’s transition to M4A, she’s going to impact all four of those segments. She will first lower the Medicare age to 50. So anyone age 50+ who doesn’t already have insurance will be auto-enrolled, and anyone 50+ who is already paying for insurance will probably switch since Medicare will be free for them.

So what about the people ages 0-49? She’s going to create a Medicare “public option.” Let me define that term. It basically means that Medicare (a publicly run insurance plan) will be listed as an option alongside all the other private plan options.

So, for example, if someone is getting private insurance on the open market (usually on healthcare.gov), Medicare will be listed there as an option they could choose. This will probably be the cheapest plan for many since the premium will be $0 for anyone <200% of the FPL, and it will be capped at 5% of income for anyone between 200% and 400% of the FPL.

For people who already have employer-sponsored insurance, they can choose to decline their employer’s insurance and get on the Medicare option instead. Employees looking for better coverage, a broader network, and/or less cost sharing would probably go for that. If an employee does that, the employer would be responsible to pay Medicare directly for that employee’s premium.

And as for Medicaid, each state will have the option of continuing their Medicaid program as is, or they can dissolve their Medicaid program altogether and instead use that money to pay Medicare to cover all those people.

What about the benefits and network of this Medicare public option? They would be the same as traditional Medicare. So any provider that already takes Medicare or Medicaid would be required to also take Medicare public option patients.

My assessment: Given that her goal is to get as many people onto Medicare as possible in this transition, she’s found a way to make it easier and cheaper for people in every segment to do that. Think about it from the perspective of a state. Continue putting so much effort and expense into running Medicaid, or just pay Medicare to cover all those people instead? I don’t know if it would end up being cheaper for states to do that, but if it is (and I’d guess she’s planning on designing it to be so), it would be a no-brainer for most states that aren’t morally opposed to turning more power over to the federal government.

Now think about it from the perspective of an employer. Continue dealing with the complexity and frustration of negotiating good insurance for your employees, or just get a guaranteed great network and cheap premiums (since Medicare doesn’t have to negotiate prices with providers!)? Again, a no-brainer for most.

The only group of people I can think of that might continue to have a large percentage on private insurance is people ages 0-49 who make more than 400% of the FPL and work for a large employer that has leveraged their size to negotiate a better health insurance deal than Medicare.

With regards to designing a transition to M4A that gets more people on a public plan, this is an elegant way to do it. Instead of “taking away” people’s private insurance, it induces people to willingly leave their private insurance for something that will be cheaper and probably also have a broader network, more comprehensive coverage, and lower cost sharing.

My recommendation: If you are thinking solely about getting to M4A, I can’t see anything wrong with this method of doing it. Remember I’m ignoring political feasibility and considerations of how it will be paid for.

I’ll end this post with the same caveat as the last one. People need to remember that getting everyone covered with insurance is not the only thing to worry about in a healthcare system. The other big issue long term for our country is the continuously rising cost of healthcare, which will become even more the government’s problem once it has the full responsibility for paying for it. Elizabeth Warren does talk about some cost savings that will come along with achieving M4A, and I’ll wait to address those more after I’ve discussed her vision for what M4A would look like. More to come!

Part 1: Quotes directly from Elizabeth Warren’s official website about her healthcare plan, from which I am drawing all of my information for subsequent posts

Part 2: Reviewing her plans for dealing with pharmaceutical prices

Part 3: How she will “improve the ACA” to get her transition to M4A started

I’ve been saying that Elizabeth Warren’s healthcare plans fall into 3 categories:

1. General details that will apply regardless of how close she gets to achieving Medicare for All (M4A)
2. Her plan to transition to M4A
3. Her vision of what M4A would look like if it is achieved

This week I’ll round out the many other general details she mentions that don’t apply to category 2 or 3. I think, given the somewhat low likelihood that M4A will actually be achieved, we could consider this and the two prior posts in this series as the most likely scenario of what our healthcare system will look like with a Warren presidency.

She’s given us quite a variety of details, so let’s just run though them.

She’s going to make some changes to Medicaid (which, as a reminder, is a program run by each state using some government funds), including eliminating some state Medicaid programs’ policies of dropping coverage for silly administrative reasons, having stricter standards for the adequacy of provider networks in Medicaid managed care plans, and she’ll allow more states to do creative Medicaid expansions (using 1115 waivers) even if it increases federal spending.

She wants to improve access to care for rural and underserved patients, so she will reimburse rural hospitals at a higher rate, increase funding for Community Health Centers, increase apprenticeship programs to train up more of the healthcare workforce from those communities, lift the cap on residency spots in rural and underserved areas, and she will increase loan repayment programs for caregivers who work in underserved areas or who work for the Indian Health Service.

On the topic of antitrust, she wants to be stricter. She will appoint stricter enforcers of antitrust laws, block all future mergers unless they can prove that the newly merged entity will maintain or improve care (doesn’t seem like a very high standard, actually), repeal a law (called COPA) that allows for laxer enforcement of antitrust laws for some parties, and she will even go so far as to break up mergers that she thinks never should have happened.

She seems to talk specifically about unions quite often, so she must really want their support (or maybe want to avoid their resistance). Much of it applies to her M4A plans, like allowing them to negotiate moving to M4A earlier and requiring employers to pass along any savings obtained from that directly to the employees, but she will also lower taxes on union-negotiated health plans.

And then there are a bunch of things in the “other” category. I won’t list all of them, but the main ones that stuck out to me reading through all her stuff are as follows:

• Prevent hospital systems and EMR companies from blocking sharing of medical information
• Lower post-acute care reimbursement
• Establish site-neutral reimbursements (this means that a specific service will be reimbursed the same regardless of whether it was provided in a hospital versus an outpatient clinic)
• Expand bundled payments
• Establish some standardization for the insurance industry’s paperwork (e.g., prior auths, appeals) and billing processes
• Create a nationwide all-payer claims database (so we can see what providers are actually getting paid for delivering services all over the country)
• Ban non-compete and no-poach agreements
• Lift the cap on residency spots
• Give grants to states that want to expand scope-of-practice laws so more non-physicians can practice primary care

My assessment: Having now looked at the most likely scenario for our healthcare system under Elizabeth Warren in Parts 2-4 of this series, I would consider it a collection of incremental changes. A few more people will be insured via Medicaid, a few more people will get subsidies to buy ACA plans, a few hospital mergers will be prevented, medications will be a little cheaper, and underserved areas will have a few more caregivers with a little more funding at their disposal.

Don’t get me wrong, these will make a lot of people happier, and that is fantastic. But they won’t make a huge dent in the number of uninsured (unless she re-implements the tax penalty for going uninsured, which I don’t think she’s admitted to yet), and they’ll do even less to affect the other primary driver of recurring efforts to reform healthcare over the last several decades–its cost. High costs are what push budgetary constraints and get politicians riled out about how to reform so that they can spend less on healthcare. High costs of care are what drive insurance prices to such heights that few can buy it without government subsidies, which then causes the uninsured ranks to swell even more.

My recommendation: Have a back-up plan. If the transition to M4A gets stalled, then this is what we’ll be left with, and it’s not going to win any awards. Changes need to be made that enable the cost of care to go down. I have explained those changes in my Building a Healthcare System from Scratch series.

That series also explains that even if M4A is achieved and also succeeds at lowering total healthcare spending (not a guarantee), it will only temporarily bring down the level of spending, but the trend will be largely unchanged, so we’ll be right back to where we were before M4A within a decade or two. Therefore, with or without M4A, her plan is missing the key components that will enable the cost of care to start going down. But I’ll get into that more when I talk about her vision for M4A.

Part 1: Quotes directly from Elizabeth Warren’s official website about her healthcare plan, from which I am drawing all of my information for subsequent posts

Part 2: Reviewing her plans for dealing with pharmaceutical prices

Elizabeth Warren’s plans for the healthcare system fall into 3 categories:

1. General details that will apply regardless of how close she gets to achieving Medicare for All (M4A)
2. Her plan to transition to M4A
3. Her vision of what M4A would look like if it is achieved

So let’s continue where we left off in Part 2 and finish looking at the other things she plans that fall into the first category . . .

Improving the Affordable Care Act

Just as a little review, as the health insurance market stands today, people who don’t get their insurance through their employer have to go to the private market to get it. (There was originally a tax penalty if you weren’t insured, but President Trump got rid of that.) The best place to shop for plans on the private market is healthcare.gov, for a couple reasons. First, it shows you your insurance plan options in an easy side-by-side comparison format to make shopping easier. Second, for anyone who might have to pay approximately 10% or more of their income on insurance, that website will connect with the IRS website to pull your income information and then allow you to buy the plan at a reduced rate (and sometimes lower the deductible on that insurance plan too), and the government covers the rest and sends its portion directly to the insurer for you.

These plans on healthcare.gov are referred to as “ACA plans” because the ACA is the law that established that website and those subsidies. Elizabeth Warren plans to improve access to ACA plans in a few ways. First, she will re-fund programs that help people get signed up for coverage on healthcare.gov. She will also make those ACA subsidies apply to lots more people by lowering the income cap to 5%. And it looks like she will also try to cover all out-of-pocket costs for people who earn less than 200% of the federal poverty level. She will also outlaw “junk plans” that are currently allowed as alternatives to ACA plans but have fewer things covered.

My assessment: I guess by “improve the ACA” she mostly means “get more people covered with ACA plans.” And it seems pretty straightforward that those policies listed will work. This does nothing to accomplish her other goal–of making healthcare cheaper–but this is just a short-term effort to get more people insurance until she can bring about her bigger goal of M4A. And she’s doing it in a clever way by starting to have the government shoulder more of the burden of paying for healthcare insurance, which will ease us into her eventual transition to M4A.

But did you notice the glaring omission? She says nothing about the tax penalty for being uninsured. I’m guessing she’s also going to re-implement that, which will help her accomplish her immediate goal of getting more people covered with ACA plans by bringing healthy people back into the insurance pool. I guess talking about plans to make people choose between buying an expensive product they think they might not need or else pay a big tax penalty is not a strategically smart thing to bring up when you’re running for president.

My recommendation: Her plans here make sense given her goal of transitioning to M4A. In the short term, use what we’ve got (“improve the ACA”) in a way that helps start to transition more of the responsibility of paying for healthcare to the government. In other words, get more people into the current system and cover more of their premiums with government funds. I wish she’d be up front about planning on re-implementing the uninsured tax penalty. If she wants to make that tax penalty effective, it has to apply to everyone and be large enough that the vast majority of people will choose insurance rather than choose to pay the penalty and get nothing in return.

I’ve said nothing of my concern that she doesn’t adequately address how to make the actual cost of care cheaper, but I also understand why. This is only a short-term plan to ease us into her transition to M4A–she’s not looking at it as a long-term thing. So I’ll save my comments about that topic for a later post in the series when I describe her vision of what M4A could look like.

And maybe this is a good time to remind readers that I’m making no judgments on the moral aspects of her plan. I’m not trying to argue whether government intervention in healthcare is good or bad. You can decide that for yourself. I’m just trying to evaluate how effective her plan would be at addressing the current issues in our healthcare system.