“Shades” of Single-Payer Update
“Shades” of Single-Player Update
by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
- Dating back to October of last year, I noted: If and when the politics shift in DC, Democrats will surely ramp-up discussions of Medicare-for-All and other “shades” of single-payer. But, the question that I – and others – have continually asked: To what extent will Democrats go to push forward the idea of Medicare-for-All and other “shades” of single-payer? For example, will the House Democrats decide to vote on one, big Medicare-for-All/Single-Payer piece of legislation? Or, will House Democrats schedule votes on multiple pieces of the legislation that call for one “shade” or another of single-payer, introduced by various rank-and-file Democratic House members? Or, will the House Democrats merely hold Congressional hearings examining various Medicare-for-All and other “shades” of single-payer proposals, with the hope that by engaging in a public discussion on these ideas, the media will publicize the debate, which will allow Democratic Presidential Candidates to run on Medicare-for-All and other “shades” of single-payer proposals, and the American public will at least have some idea of what they are talking about?
- Analysis: It appears the last question above is the most relevant one because it appears that House Democrats will NOT be voting on one, big Medicare-for-All/Single-Payer piece of legislation. It also does not look like Speaker Pelosi will bring ANY Medicare-for-All and other “shades” of single-payer proposals to the House floor. Instead, it appears that the House Democratic majority will simply engage is a 2-year discussion of the idea of Medicare-for-All and other “shades” of single-payer proposals. Why? Because Democratic strategists – along with Speaker Pelosi – understand that the Democrats themselves are NOT united on what form Medicare-for-All or other “shades” of single-payer should actually take. Soooo, instead of fragmenting the House Democratic caucus – along with the Democratic base – Democratic strategists and House Democratic Leadership are asking Democratic policymakers to play the “long-game.” That is, Democratic strategists and House Democratic Leadership are warning Democratic policymakers NOT to over-reach. Instead – they are saying – the smart political “play” is to engage in a slow, steady, and sustained discussion of Medicare-for-All and other “shades” of single-payer as a way of slowly turning up the volume on these ideas, essentially setting the table for a full-throated discussion of why these ideas are the best for the American public during the 2020 Presidential campaign. Then – they further say – once there is a more pronounced shift in politics in 2020 – which is their hope – a new Democratic President can come out guns-blazin’ on the pursuit of Medicare-for-All and other “shades” of single-payer proposals. As a way of kicking off this slow, steady, and sustained discussion of Medicare-for-All and other “shades” of single-payer, the Chairman of the House Budget Committee has asked the Congressional Budget Office (CBO) to “analyze” a Medicare-for-All proposal, and produce “recommendations” that Congressional Democrats may consider. My initial reaction to this request was: If there is no concrete Medicare-for-All proposal that House Democrats want to pursue, how can CBO “analyze” the budgetary, economic, and coverage impact of such a proposal, which is primarily what CBO does? A smart friend of mine explained that through this so-called “analysis,” CBO can tell House Democrats the questions that need to be answered for CBO to provide “scores” on the budgetary, economic, and coverage impact of any Medicare-for-All-type proposal. What are some of the most relevant questions CBO may ask? Who will run the Medicare-for-All program – private insurance carriers (somewhat similar to Medicare Advantage) or the government (similar to Medicare)? Will the Medicare-for-All program be free to a large percentage of Americans, or will it be limited to certain cohort of the population? Will there be any cost-sharing under the program? In my opinion, it is advisable for House Democrats to NEVER get an actual “score” of a Medicare-for-All proposal until AFTER the 2020 election. Why? Because – based on the answers Democrats will likely give to CBO – the agency may indicate how much a Medicare-for-All program may cost, which will spark a debate over how to pay for such a program. We already saw – through Kaiser’s recent tracking survey – that political support for a Medicare-for-All program plummets when Americans were informed that taxes would have to go up to pay for the idea. The last thing Democrats want to do during the 2020 Presidential election campaign is to tell the American public that a tax increase is needed if they enact a Medicare-for-All program. Democratic Presidential Candidates will already have to defend the tax increase argument that will no doubt come from Republicans, or possibly even debate-moderators. My guess is that the Democratic Presidential Candidates will argue that taxes should only go up for multi-millionaires. BUT, once the idea that a tax increase is needed to pay for Medicare-for-All, things could go very badly for Democrats. As I said in my last update, political slogans like Medicare-for-All (or a Medicaid-Buy-In) sound great…until the details of how to make the idea(s) work are finally understood. Just ask Republicans about political slogans and actually legislating ideas.
Medicare-Buy-In and the ACA Exchanges
- Democrats oppose “association health plans” (AHPs) because Democrats think AHPs will adversely impact the ACA Exchanges. Democrats, on the other hand, support a Medicare-Buy-In program that would allow people age 50 to 64 to buy-into the Medicare. To me, this is inconsistent. Why? Because if the Democrats successfully enact a Medicare-Buy-In program for people age 50 to 64, the impact on the ACA Exchanges would be far greater than any impact AHPs could ever have. In my opinion, a Medicare-Buy-In program 45would KILL the ACA Exchanges.
- Analysis: I make the above point because members of the Democratic establishment are suggesting that if Congressional hearings on Medicare-for-All are going to lead to a vote on any “shade” of single-payer, House Democrats should consider voting on a Medicare-Buy-In program for people age 50 to 64, and then dare Senate Republicans to vote NO. I also make the above point because one of the reasons House Democrats are NOT pursuing Medicare-for-All in the early days of 2019 is because House Democratic Leadership has decided to spend the first 3 to 4 months of the year trying to “improve” the ACA (e.g., by enacting an ACA “improvement” bill with provisions that include, but are not limited to, fixing the “family glitch” and Federal funding for State reinsurance programs). Again, it seems a bit inconsistent. That is, the Democrats actually won back the House by defending the ACA, and arguing that the Trump Administration “sabotaged” the markets. And, Democrats are now saying they want to “improve” the ACA. But if a Medicare-Buy-In program is enacted (or even a Medicaid-Buy-In), I believe that these programs will royally screw-up that ACA’s “individual” market so much so that the Trump Administration’s so-called “sabotage” – and its purported effect on the markets – will look like a tack-hammer compared to the sledge-hammer a Medicare-Buy-In (or a Medicaid-Buy-In) program will take to the “individual” market. This all leads me to say this: It appears that the Democrats do not only have a problem within their own ranks on what “shade” of single-payer they should enact, Democrats are also going to have to fight over whether the ACA should stay or whether the ACA should go. Because again – at least to me – some form of Medicare-for-All (like a Medicare-Buy-In program) CANNOT co-exist with the ACA’s “individual” market. Yes, maybe if the Democrats scrapped the idea of a Medicare-Buy-In program, and instead, they enacted a “public option” for the ACA’s “individual” market, this “shade” of single-payer should not impact the ACA or the Exchanges, especially if the “public option” is sold through the Exchanges (and “user fees” are still added to the “public option’s” premiums to pay for the operations of the Exchanges). BUT, if you make available a Medicare-Buy-In program (or, as stated, a Medicaid-Buy-In program), I think these programs are going to devastate the ACA’s “individual” market so much so that it won’t make sense to have an “individual” market, which means that the ACA Exchanges will go away. I have no illusion that supporters of a Medicare-Buy-In, or a Medicaid-Buy-In, or a Medicare-for-All program will NOT care if these programs kill the ACA’s “individual” market and its Exchanges. After all, supporters of these programs want to move away from private insurance to a government-run program. BUT, the fact that Democrats shed a significant amount of blood to enact the ACA, coupled with the fact that the Democrats lost the majority in both Houses of Congress due to enacting the ACA, it is interesting to me that – starting in 2020 – Democrats may actually take steps to get rid of the ACA.
- You have heard me discuss issues relating to “surprise medical bills” in prior updates (see the attached update). You have also heard me – and many others – suggest that if any health care-related legislation could get enacted this year, legislation to curb the “surprise medical billing” problem could very well reach the President’s desk. Why? Because protecting patients from “surprise medical bills” shares bi-partisan support, evidenced by a bi-partisan group of Senators – led by Sen. Cassidy (R-LA) and including the new Chairman of the Senate Finance Committee, Sen. Grassley (R-IA) – who introduced “surprise medical bill” legislation last Congress. Now, the White House is getting involved. Adding to the mix here is Cong. Doggett (D-TX), who is Chairman of the Ways and Means Health Subcommittee, and who introduced his own version of “surprise medical bill” legislation last year.
- Analysis: While the President’s comments about stopping the practice of “surprise medical billing” were limited, the President’s comments do indicate that the White House is interested in engaging on the issue. Which begs the question: If the White House is engaging on the “surprise medical bill” issue, how – and in what form – will the White House advance a proposal? Will the President issue an Executive Order? Could we see a proposal on “surprise medical bills” show up in the President’s Budget, which is due out in a few months? Or, will the White House get behind specific legislation that is formally introduced in this Congress (e.g., maybe the President gets behind Sen. Cassidy et. al., or maybe the President asks one of his confidants in the Senate to introduce a bill that he messages as his own proposal)? Only time will tell. But I do believe we will have an answer at some point. At this point, I see 2 separate instances where the problem of “surprise medical bills” arise: (1) In cases where a patient is treated at an in-network hospital by an out-of-network provider and (2) In cases where, for no fault of the patient or the medical provider, the patient is treated in an emergency situation at an out-of-network hospital.
- Out-Of-Network Hospital Emergency Situation: Let me start talking about this situation with the following example: Let’s say my neighbor has a heart attack, and I rush my neighbor to the closest hospital for treatment. My neighbor gets the necessary emergency services, and is fine. BUT, there is a problem. The hospital I rushed my neighbor to is not in their health plan’s network. It wasn’t my neighbor’s fault that they had a heart attack. It also wasn’t the hospital’s fault for being out of my neighbor’s network. In this situation, my neighbor’s health plan will typically pay this out-of-network hospital amounts equal to the plan’s in-network rates for the medical services rendered. BUT, this out-of-network hospital will typically charge much more than the in-network rates, thereby producing a “balance bill” that must be paid by my neighbor. Both Democrats and Republicans believe that my neighbor – the patient – should NOT be required to pay this “surprise medical bill.” BUT, most policymakers will tell you that “someone has to pay” the bill, which – BTW – is a position that I can’t quite disagree with. BUT, who is this “someone” who has to pay the bill? Answer: I believe it will be the employer sponsoring a self-insured plan and the insurance carrier in the case of a fully-insured plan. In my opinion, however, neither the employer nor the carrier should be required to pay the FULL “balance bill.” Instead – in my opinion – this out-of-network hospital should only be paid “reasonable compensation” for the medical services rendered. BUT, what is “reasonable compensation”? I would suggest that “reasonable compensation” should be based on various Federally-developed “benchmarks.” One “benchmark” that could be considered is a percentage of Medicare prices (e.g., 150% – or maybe even 180% – of Medicare). After all, Medicare-based payment standards are widely used among self-insured and fully-insured plans in setting in-network rates or settling payment disputes. In addition, the national nature of Medicare pricing – and its geographic and provider-specific applicability – provides uniformity, while also reflecting geographic differences in the cost of medical services. However, some stakeholders have argued that if you use Medicare as a “benchmark,” this is a slippery-slope, where you are one-step closer to “single-payer” and price controls. I do not disagree with this argument. I can see how using a percentage of government-approved rates could creep into pricing practices in the future, especially if the politics shift in 2020 and we truly see a concerted effort to enact some “shade” of single-payer. BUT, if we were to use other benchmarks – like say FAIR Health’s national database – I believe you are going to unnecessarily over-pay providers. From what I believe I know, I believe FAIR Health prices are artificially inflated, and I believe they can be manipulated by the amount providers in a particular geographic area may charge for the same medical services. In lieu of a Medicare “benchmark” – or in cases where Medicare rates are not reliable (e.g., in cases where a medical service rendered is not covered by Medicare) – could “reasonable compensation” be determined by looking to an appropriate benchmark widely available and consistently used within the industry (e.g., a percentage of cost-to-charge ratio for a particular medical service)? Maybe not, because I know that other stakeholders do NOT like using a cost-to-charge ratio as a “benchmark.” The bottom-line is that employers and the carriers should NOT be required to pay more than “reasonable compensation.” And sooooo, the big fight is going to be over what is the right “benchmark” for determining “reasonable compensation.” Many say it cannot be a percentage of Medicare. Others say it cannot be a percentage of cost-to-charge ratio. And others – like me – say it cannot be FAIR Health. It will be interesting to see how this all shakes out.
- In-Network Hospital and an Out-Of-Network Provider: The second situation where a “surprise medical bill” is generated is in cases where a patient is treated at an in-network hospital by an out-of-network provider. In short, it is well-understood that some medical professionals choose to remain outside a particular health plan’s network. This decision is primarily driven by the understanding that the medical professional can charge more than a plan’s in-network rates, “balance bill” the patient, and ultimately receive higher payments than they would have otherwise received as an in-network provider. A strong argument can be made that those medical professionals that choose to remain outside a particular health plan’s network should not be rewarded for choosing to be an out-of-network provider. Instead – it is argued – these out-of-network providers should be required to accept in-network payment rates. Personally, I do not disagree with the above stated argument (i.e., I agree that out-of-network providers in these instances should be required to accept in-network payment rates). However, provider groups have pushed back hard on this idea. They argue that at a minimum, they too should be paid “reasonable compensation” based on the Federally-developed benchmarks used to pay out-of-network providers in an emergency situation (discussed above). My response: Requiring an employer sponsoring a self-insured plan or an insurance carrier in the case of a fully-insured plan to pay out-of-network providers who choose to stay outside a health plan’s network anything more than the in-network rates is incentivizing bad behavior. Behavior that is simply increasing health care spending. Congress and the Administration (regardless of political party) are continually trying to find ways to reduce health care spending. Yet, requiring an employer or a carrier to pay more than in-network rates in this situation will – at least in my opinion – continue to lead our health care system down the path of unnecessary, excess spending.
Association Health Plan update
- On Thursday, Jan. 24th, the DC District Court held oral arguments in the lawsuit challenging the final AHP regulations. I attended the oral arguments, and my reaction is the following:
- Analysis: The DC District Court judge appears to be leaning toward invalidating the AHP regulations. This observation is derived from the judge’s questions, and the judge’s own impression that the “intent” of the AHP regulations is to dismantle the ACA. Supporters of AHPs, however, do NOT view the AHP regulations as an assault on the ACA. Rather, these supporters view the regs as an opportunity to provide quality and affordable coverage to their employer and self-employed individual members. However, the judge focused on the President’s October 2017 Executive Order – and he even read an Op-Ed from DOL Secretary Acosta – as evidence that this Administration wants to “dismantle Obamacare,” and that this Administration wants to allow small businesses and self-employed individuals to “avoid Obamacare’s requirements” (the judge’s words). Personally, I was dismayed by the judge’s continued focus on the “intent” of the AHP regulations. I say dismayed because the case here involves a legal question. And if the law instructs the judge to uphold the regulations, the judge must do so, even if he disagrees with the “intent.” BUT, I believe that if the judge were to rule based on his questions and comments last Thursday, I believe that judge will be ruling against the regs because he apparently disagrees with what they are trying to accomplish. BUT, I would argue that the judge is over-looking – or mis-understanding – the fact that the AHP regulations are NOT an assault on the ACA, rather the AHP regs are “intended” to provide another option – and a choice – to small employers and individuals who have been struggling to afford health insurance in the existing “small group” and “individual” markets. My hope is that the judge will now go back and deliberate with his law clerks, and they will focus back on the law, as opposed to the focusing on the political rhetoric around AHPs (coming from both the right and the left). Another take-away from the oral arguments is this: In the event the AHP regs are actually upheld by judge, the “working owner” piece (i.e., allowing self-employed individuals with no employees to participate in an AHP) may be struck down. Again, this observation is derived from the judge questioning whether the DOL exceeded its authority and directly changed the statute through the regs to allow “working owners” into AHPs. This actually is a legal question, and the judge could very well rule that the DOL changed the statute here, which is not permissible. It is important to point out that even though the judge seemed to show his cards during oral arguments, it does NOT guarantee that the judge will strike down the “working owner” portion of the regulations, or the entire AHP regs themselves. If, however, the judge does strike down the “working owner” portion of the regs – or the entire regs – the Trump Administration will no doubt appeal the ruling to the DC Circuit Court of Appeals. The question will then be: What is the overall effect of the District Court ruling? For example, will the ruling have nationwide effect? In my opinion, NO, I do not believe that a DC District Court ruling will have a nationwide effect. I believe the ruling will only be effective in DC’s jurisdiction, or the ruling may be effective in each State who are party to the litigation (e.g., CA, CT, DC, DE, KY, MA, MD, NJ, OR, PA, VA, and WA). Even if the ruling is effective in these States, does it really matter? These States are already saying NO to AHPs even before any court ruling. So – in my opinion – even if the District Court invalidates all or a portion of the AHP regulations, all of the other States who are friendly toward AHPs can – and I believe will – continue to conform to the Federal AHP regulations and allow fully-insured “large group” and self-insured AHPs to form (and to also allow “working owners” to participate in AHPs). Stay tuned on this, as we may see a final District Court ruling as early as mid-February.