Presidential Politics Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

Medicare-for-All and the Democratic Presidential Candidates

Back in July, I said the following: “After the most recent Democratic Presidential Primary debate, I couldn’t help but think that Former Vice President Biden will win the Democratic Presidential nomination. Why? 3 words: The Labor Unions. Why? Because – for right-or-wrong – Former Vice President Biden is the only leading Democratic Presidential Candidate that does NOT fully support Medicare-for-All.”
- Analysis: I didn’t make this statement because I think Candidate Biden is going to win the Democratic nomination. I made it because – similar to Candidate Biden – The Labor Unions are NOT fans of Medicare-for-All, considering Medicare-for-All will result in the elimination of private insurance, and thus, call into question the generous health benefits Unions have fought so hard to obtain for their members. So what are The Labor Unions saying about Medicare-for-All? Well, there was a BIG kerfuffle in advance of the Nevada caucus when the largest Union for casino workers (the Nevada Culinary Workers Union) handed out flyers to their members informing them that: “Medicare-for-All would adversely affect the health benefits that the Union worked so hard to get at the bargaining table.” This led many in the media – and some policy analysts – to question whether Unions were going to start to back away from Candidate Sanders because of Candidate Sanders’s full-throated support of Medicare-for-All. Well did they? Not really. For example, some local affiliates of the same Union that the Nevada Culinary Workers Union is affiliated with – Unite HERE – are on record supporting Candidate Sanders. HOWEVER, this support does NOT necessarily mean that these local affiliates support Medicare-for-All. BUT, it certainly shows that some Unions are NOT backing away from Candidate Sanders because of his full-throated support for Medicare-for-All. In addition, it has been reported that a majority of the Nevada Culinary Workers supported Candidate Sanders instead of the other Candidates, despite warnings from Union leaders that Medicare-for-All could jeopardize the Union members’ hard-fought, negotiated health benefits. HOWEVER, I do NOT believe that a majority of the Nevada Culinary Workers supported Candidate Sanders because they liked Medicare-for-All. I believe they supported Candidate Sanders for other reasons (e.g., Candidate Sanders’s proposals for free college tuition, student debt forgiveness, free child care, clean energy, etc.), although some of the Nevada Culinary Workers that were exit polled did say they supported Medicare-for-All. I think the bottom-line is this: While Medicare-for-All is going to be a defining issue for the remainder of the Democratic Presidential Primaries, it appears that it is NOT going to be “THE ISSUE” that leads to one Candidate getting the nomination over another Candidate. Take Candidate Biden for a moment. I have suggested that Candidate Biden could potentially get the nomination because he OPPOSES Medicare-for-All. Well, Candidate Biden may NOT get the nomination for reasons OTHER than his position on health care (e.g., electability questions, gaffes, etc.). Similarly, many have suggested – including me – that Candidate Sanders may NOT get the nomination due to his full-throated support of Medicare-for-All. BUT, Candidate Sanders MAY get the nomination for OTHER reasons (e.g., his proposals for free college tuition, student debt forgiveness, free child care, clean energy, etc.). Last comment: If Candidate Sanders does indeed get the Democratic nomination, The Labor Unions are going to have some soul-searching when it comes to the staying-power of the generous health benefits the majority of Union members currently enjoy. I wouldn’t be surprised if we started hearing about a “Union Exception” to Medicare-for-All, something I discussed in a prior update (which I am re-posting at the end of this update if you are interested in reading it).

Could Medicare-for-All Prevent Candidate Sanders from Getting the Nomination?

Maybe. Take Candidate Warren as a case study. As you may recall, Candidate Warren was the front-runner at one point. And, as the front-runner, Candidate Warren was forced to release a plan to “pay for” her version of Medicare-for-All. Well, this plan went-over-like-a-ton-of-bricks. And, while this plan was NOT the sole reason why Candidate Warren is no longer the front-runner, it is a HUGE reason why Candidate Warren is NO longer the front-runner.
- Analysis: Could this happen to Candidate Sanders? Maybe. Why? Well, Candidate Sanders recently released a bullet-point list of revenue-raising provisions that he says will pay not only for Medicare-for-All, but for all of Candidate Sanders’s other campaign promises (e.g., free college tuition, student debt forgiveness, free child care, clean energy, etc.). While many of these revenue-raising provisions are similar to what we saw in Candidate Warren’s “pay for” proposal (e.g., a tax on the wealthy and a tax on financial transactions), Candidate Sanders would levy a payroll tax on employers and increase taxes on middle-income families. Now admittedly, I did NOT watch the most recent Democratic debate. BUT, after reading some of the “take-aways” from the debate, I was shocked to see that NO Candidate hit Candidate Sanders on the issue of increasing taxes on middle-income families and/or increasing payroll taxes on employers (which is a tax that even left-leaning economists say will get passed through to employees). Maybe that’s because Candidate Sanders has what the other Democratic Candidates think is a reasonable response to increasing taxes on middle-income families and employers. Take – for example – increasing taxes on middle-income families: Candidate Sanders argues that because middle-income families will NO longer be paying premiums and money for out-of-pocket medical expenses, middle-income families will SAVE thousands of dollars. And, in exchange for saving all of this money, middle-income families will be required to “give back” at least some money to the Federal government in the form of taxes that would be on top of the taxes they already pay. Candidate Sanders further argues that the amount of money middle-income families would “give back” to the Federal government would be LESS than the amount of money they currently pay on premiums and out-of-pocket health care expenses. As a result – Candidate Sanders argues – middle-income families would be BETTER OFF. Candidate Sanders also argues that because employers will NO longer be paying for health benefits for their employees, employers will SAVE hundreds of thousands of dollars. So, it’s only fair – Candidate Sanders argues – that employers “give back” to the Federal government in the form of payroll taxes to fund health benefits the employers are NO longer providing. Interestingly, the other Democratic Candidates DID try to hit Candidate Sanders on the overall cost of Medicare-for-All. But – at least in my opinion – this argument is NOT going turn-off Candidate Sanders’s dedicated base of supporters. Nor is it likely going to convince voters who have a greater interest in student loan debt forgiveness, or free college tuition, or free child care, or the Green Deal to vote AGAINST Candidate Sanders.

The Cost of Medicare-for-All and the Democratic Presidential Primaries

When it comes to the cost of Medicare-for-All, this issue – is itself – a moving target.
- Analysis: What I mean is: The cost of Medicare-for-All will be driven by how much doctors and hospitals will be paid under the program. For example, if doctors and hospitals are paid at the same rate Medicare currently pays them, the cost of Medicare-for-All will NOT be as great as some studies have suggested. BUT, if payment rates are somewhere in between private insurance rates and Medicare rates, well then, the cost of Medicare-for-All will be much higher. For-right-or-wrong, the other Candidates vying for the Democratic Presidential nomination are NOT going to start questioning how much doctors and hospitals are going to be paid under Medicare-for-All. Why? Well for one, these Candidates ALSO want to reduce the payment rates for doctors and hospitals. What else do you think happens under a “Public Option”?!? In addition, Democratic voters want these payment rates to go down too, because they think health care costs are waaayyyy too high to begin with. Soooo, it almost feels to me that Candidate Sanders is virtually bullet-proof on the cost of Medicare-for-All – as well as proposals to “pay for” Medicare-for-All – at least in the Democratic Primaries…

“Value-Based Care” Update

A Government-Run System/Price Controls OR A Private-Market/Value-Based Health Care System

Back in July, I also said this: “I truly believe that the only way to reduce (or at least control) the ever-increasing cost of health care is through (1) a “government-run system/price controls” OR (2) a “private-market/value-based health care system.” I really think it is that black and white. Now, I do think that – in the end – we will see “shades” of single-payer OR “shades” of value-based care, so I am realistic enough to know that there are no absolutes. BUT, we as a country have to decide: Which direction do we want to go in? And which “shades” do we think are best for our own health care, as well as our own economic security? Depending on your ideology, and depending on your financial situation, only you – personally – can decide which direction you want our country to go in.”
- Analysis: When it comes to the Democratic Presidential Primaries, all of the discussion has centered around some form of “a government run system/price controls.” As a result, discussing whether we should have (1) a “government-run system/price controls” OR (2) a “private-market/value-based health care system” is more appropriately discussed during the General Election. BUT, in advance of that discussion, let me say this: Can we find any similarities between these 2 health care systems?? I mean, increased transparency of medical prices is typically labeled a “value-based care” strategy. BUT, if we have a government-run system with price controls, there would – by definition – be increased transparency of medical prices because the government would set a specific rate for a particular medical item or service. Soooo, patients would know EXACTLY what the price of the medical item or service they are consuming. That’s a good thing, right?!? I mean, that is what advocates of increased transparency have been calling for lo these many years (they want patients to “know” the price of the medical item or service they are consuming). More specifically, advocates of increased transparency have argued that if patients actually “know” the cost of medical items and services, they will become better consumers of health care, which should help in reducing utilization, resulting in a reduction of health care costs overall. These advocates also argue that increased transparency will help employers (both public- and private-sector employers), along with The Labor Unions, to encourage patients to seek low-cost, high-value services, which saves money for these employers and Unions, as well as the patient. Importantly, there is actual data that backs up this claim. Interestingly, we do NOT have this same dynamic under a government-run system with price controls, do we?? For example, although a government-run system with price controls will arguably save money, any such savings are produced by reducing the payment rates to doctors and hospitals. There is really NO savings that is produced by changing behavior, is there?? Which leads to this question: Will utilization be the same as it is under our current health care system if we have a government-run program?? I mean if utilization is the same – yet payment rates to doctors and hospitals are lower – you are DEFINITELY going to save money relative to the current system. BUT, what happens if utilization increases? I mean, if patients have free-access to health care, won’t they run (not walk) to their closest medical provider to obtain medical services? Also, won’t patients not think twice about going to the doctor if they have a minor health issue? Also, won’t doctors and hospitals – as a way to make up for the reductions in their payment rates – drive patients to consume MORE health care services (so they can make up the difference on volume)? In my opinion, you do NOT get these types of questions if you have a private-market/value-based health care system. After all, value-based care strategies are intended to REDUCE utilization, especially utilization of lower-value, higher-cost medical services.

Self-Insured Health Plans, Savings, and Value-Based Care Strategies

Axios recently ran an article written by Drew Altman, CEO of the Kaiser Family Foundation, where Dr. Altman explained that “self-insured health plans don’t really save as much as advocates of self-insurance say they are saving.” Dr. Altman estimated that the premiums for a self-insured family plan actually cost a touch more than a fully-insured family plan ($20,739 vs. $20,627). Interestingly though, Modern Health Care recently ran 2 articles that explained how self-insured plans are adopting innovative cost-containment strategies, and thus, saving money for both the self-insured employer and its employee-participants.
- Analysis: Hmmmm, so self-insured plans are saving money for employers and their employees, yet self-insured plans really don’t save money?!? I am NOT sure how to reconcile these 2 statements, but what I can do is talk about how I think self-insured employers – both public- and private-sector employers – are saving money. Modern Health Care reports that – both public- and private-sector employers – are “considering or they are already launching group purchasing initiatives with narrow- or tiered-network plans, direct-contracting with the providers such as referring employees to designated Centers of Excellence for certain medical procedures, entering into bundled-payment agreements, contracting with on-site primary-care clinics, and contracting with advanced primary-care providers.” As I have explained in prior updates, these types of value-based care strategies reduce the self-insured employer’s and employee-participants’ health care spending, which translates into savings for both the employer and employee. As an example, data from certain Centers of Excellence programs show that employees saved thousands of dollars in out-of-pocket spending by going to “certified” providers for specific medical episodes. In addition, certain “chronic care management programs” launched by self-insured employers improved patient outcomes (like reduced hospital re-admissions and missed workdays) and reduced health claims (in some cases by 20% for certain medical services). There is also ample data showing that reference-based pricing programs – which are designed to encourage participants to seek out high-value, lower costing services – produce savings for employers and employees. Then why is Dr. Altman’s estimate telling a different story?? My answer: I am NOT sure. It’s kind of hard to tell from the data-set that is leading Dr. Altman to make his claim. One thing that may be behind Dr. Altman’s estimates is this: A large majority of small-, mid-sized, and large-employers that self-insure their health plans “rent” an insurance carrier’s provider network. In this case, the self-insured plan typically pays the same rates that the insurance carrier negotiated for the medical items and services the carrier’s policyholders pay. So in this case, if self-insured plan participants are paying the SAME rates for the SAME medical providers as fully-insured plan participants, it seems that the premium rates for BOTH the self-insured AND fully-insured plans are going to be the SAME. If this is indeed the case, it would appear that Dr. Altman’s data-set was full of self-insured plans that are “renting” an insurance carrier’s provider network. If this is indeed the case, it seems to beg this question: Does this mean that self-insured employers that are “renting” an insurance company’s provider network are NOT engaging in – or adopting – the value-based care strategies discussed above (e.g., participating in Centers of Excellence programs, or chronic care management programs, or reference-based pricing programs)?? My answer: YES, I think it means that not ALL self-insured employers are engaging in – or adopting – these value-based care strategies. Soooo, if this is indeed the case, I suppose I CANNOT disagree with Dr. Altman’s findings that self-insured plan premiums are about the same as fully-insured plan premiums. BUT, I will say this: There is ample data and evidence that shows that self-insured employers – both public- and private-sector employers – are indeed SAVING money. Soooo, why didn’t Dr. Altman make this point in his Axios article?? I will leave it up to you to answer that question. Here is the last thing I will say: We all know that health care costs are continuing to increase un-abated, and some health plans (fully-insured and self-insured) are NOT managing health care costs equally, or the entity underwriting the plan (an insurance carrier in the fully-insured context and an employer in the self-insured context) is NOT focused on cost-containment. BUT, they SHOULD. Why? Because – again – there is ample data and evidence that shows that IF these entities engage in – or adopt – certain value-based care strategies (regardless of whether the entity is an insurance carrier or a self-insured employer) savings will indeed be produced, which should translate into not only lower out-of-pocket spending, but also lower premiums for the coverage.

Value-Based Insurance Designs and ACA Exchange Plans

Well, maybe insurance carriers CAN engage in – or adopt – certain value-based care strategies.
- Analysis: In HHS’s recently released proposed 2021 Notice of Benefit and Payment Parameters (NBPP), the Department announced that insurance carriers selling an “individual” market plan through an ACA Exchange can incorporate a value-based insurance design into the plan. Specifically, insurance carriers can encourage these Exchange plan-holders to seek out lower-cost, higher-value services (including prescription drugs) by LOWERING the cost-sharing for these lower-cost, higher-value services and drugs. At the same time, the carrier can discourage plan-holders from consuming higher-cost, lower-value services and drugs by INCREASING the cost-sharing for these services and drugs. HHS explained this proposal this way: “We previously noted our interest in value-based insurance designs that focus on cost effective drug tiering structures; address overused, higher cost health services; provide innovative network design that incentivizes enrollees to use higher quality care; and promote use of preventive care and wellness services. We are now pursuing strategies that will assist in the uptake and offering of value-based insurance design by insurance carriers selling Exchange plans. Specifically, we are outlining a ‘value-based’ model Exchange plan that contains consumer cost-sharing levels aimed at driving utilization of high-value services and lowering utilization of low-value services when medically appropriate.” Sound familiar? (see above). In the preamble of the proposed NBPP, HHS – borrowing information from the Center for Value-Based Insurance Design at the University of Michigan – set forth a list of (1) high-value services and drugs that carriers may consider offering with REDUCED cost-sharing and (2) low-value and over-used services that carriers should consider covering at HIGHER cost-sharing levels. HHS goes on to explain that “high-value services” are those that most people will benefit from and have a strong clinical evidence-base demonstrating appropriate care. HHS also asks for comments on developing principles that the Department could adopt that will help in further determining what constitutes a “value-based plan.” To me, this goes back to the points I raised above. From a health care policy perspective, we have a choice: (1) a “government-run system/price controls” OR (2) a “private-market/value-based health care system.” The current Administration apparently prefers a private-market/value-based health care system. It appears that the Democratic Presidential Candidates prefer a government-run system/price controls, or a derivation thereof (i.e., various “shades” of single-payer). This all means that the upcoming election will ultimately decide which path we take. And I think most would agree when I say that these paths could not be more different.

From My Aug. 29, 2019 Update

Self-Insured Union Health Plans, “Private Insurance,” and Medicare-for-All

Most Union health plans are self-insured “employer plans.” Meaning, the Labor Union does NOT contract with an insurance company, rather, the Labor Union sets up a Trust and acts as the plan’s third-party administrator (TPA). The Labor Union then manages the health risks of the Union workers covered under the plan by, among other things, incorporating value-based care strategies into their benefits offering that range from reference-based pricing to entering into a negotiated agreement with primary care health clinics.
- Analysis: When you hear Medicare-for-All supporters say they want to “eliminate private insurance,” you think of commercial insurance companies and fully-insured plans. After all, Medicare-for-All supporters often times say that health care costs are so high because of the “big-bad insurance companies.” They also contend that “commercial insurance companies don’t care about you…all they care about is their profits and the premiums you pay them.” In the case of private fully-insured “individual” market plans, maybe I would agree. There is evidence that “individual” market insurance carriers do NOT actively manage the health risks of their insured population. Instead, the insurance carriers simply raise their premiums if their insured population has a lot of “health claims” in a particular year. Soooo, over the course of a few years, the insurance carrier gets out of the red and into the black through premium increases. BUT, Union self-insured health plans are NOT the same as fully-insured health plans. For example, Unions – and the employers contributing toward the health plan – take a fairly active role in ensuring that all of the Union workers participating in the plan remain relatively healthy. The Unions and the employers attempt to do this through wellness programs and other value-based care strategies. In other words, the Unions and their contributing employers care about the worker-participants, and they are NOT in the health care game to make a profit. Actually, a Union self-insured health plan is a non-profit entity. Despite the differences between fully-insured health plans and self-insured Union health plans, it appears that Medicare-for-All supporters STILL want to eliminate “private insurance,” which would eliminate self-insured Union plans. HOWEVER, I would venture to guess that – if given the opportunity – Medicare-for-All supporters would like to characterize a Union self-insured health plan as something OTHER than “private insurance” (so these plans would NOT be eliminated). What if I told you there is a way that they can? Back in the day when the previous Administration was developing the rules for the ACA’s temporary “transitional reinsurance program,” the Administration came up with a way to carve out certain Union self-insured health plans from the “fee” that Congress imposed on ALL self-insured health plans to pay for the reinsurance program. This “carve-out” exempted self-insured health plans that were “self-administered.” As stated previously, many Union health plans are “self-administered” by the Union itself (i.e., the Union serves as its own TPA). Non-Union employers, however, NEVER “self-administer” their own self-insured plan, rather they contract with an independent TPA or an insurance carrier to serve as the TPA. As a result, non-Union self-insured employers were required to pay the reinsurance “fee,” while those Union self-insured plans that were “self-administered” were exempted out. Why not say that self-insured health plans that are “self-administered” are NOT “private insurance”? Here, Medicare-for-All supporters could carve out those Union self-insured plans that are “self-administered,” thereby allowing these Union plans to continue alongside Medicare-for-All (where Medicare-for-All would cover everyone else, including people covered under any type of fully-insured plan, as well as employees covered under a non-Union self-insured plan). Maybe if I see this idea floated by Candidate Sanders, or any of the other Democratic Presidential Candidates, I will know where they got it