Drew Altman, Kaiser Family Foundation
Featured

The ACA stability "crisis" in perspective

The big questions about the stability of the Affordable Care Act marketplaces have focused on how fast premiums will rise, and how many plans will participate. But an equally important question, and the heart of the matter politically, is: How many people will be affected by the sharp premium increases?


Data: Kaiser Family Foundation analysis of data from Mark Farrah Associates, Healthcare.gov, and KFF Survey of Nongroup Health Insurance Enrollees; Chart: Andrew Witherspoon / Axios

The bottom line: The answer is about 6.7 million Americans who buy coverage in the non-group market in and out of the exchanges, and do not receive premium subsidies. That is a significant number of people, and an urgent policy problem requiring congressional attention and action by the administration, but it's not a system-wide health insurance crisis. The non-group market has always been the most troubled part of the insurance system, and it was far worse before the ACA.

The breakdown:

  • 17.5 million in the non-group insurance market, including:
  • 10.3 million enrolled in the ACA exchanges
  • Approximately 7.2 million buying insurance off the exchanges
    • Most of this group buys ACA-compliant plans
    • About 1.2 million in "grandfathered" plans purchased before the ACA's market reforms took effect

Yes, 17.5 million is a sizeable number, and what happens to their health insurance coverage and costs is important. But, to put it in perspective:

  • 156 million get their primary coverage through an employer, where premiums rose a modest 3% last year for family coverage
  • More than 74 million are covered by Medicaid and CHIP.

According to our new analysis of proposed 2018 premium changes in the exchanges, double-digit increases for benchmark silver plans are quite common, though the range across major cities is large, from a 5% decrease in Providence, R.I. to a 49% increase in Wilmington, Del.

A big reason for these increases is the uncertainty in the market surrounding Trump administration policies, especially whether they will let the $7 billion in cost-sharing reduction (CSR) subsidies flow and whether the individual mandate will be enforced.

Who's getting hit: 84% of the enrollees in the marketplaces – about 8.7 million people – receive premium subsidies under the ACA and are insulated from these premium hikes.

However, roughly 6.7 million people — the ones who buy ACA-compliant plans inside or outside the marketplace and aren't subsidized — will feel the full brunt of premium increases. They'll be hit if the uncertainty is not resolved and the rates do not come down before they are finalized.

In many cases, there is as much as a 20 percentage point swing or more in rates depending on whether the CSRs are paid.

The big picture: Dealing with this uncertainty is an urgent situation, particularly since it may result in some counties having no insurers at all, as well as coverage that is unaffordable for millions of Americans. But it is far from a crisis affecting most Americans and their health insurance.

The media needs to take great care to put this problem in perspective — otherwise they could unduly alarm the public and drive people to support the wrong policy solutions. Already, most Americans wrongly believe that premium increases in the relatively small non-group market affect them. So the headline should be: "Premiums Spike for SOME Americans."

The danger in Congress is that discussion will spread too far beyond the immediate need to stabilize the non-group market, opening up all the old wounds surrounding the ACA and producing stalemate.

Featured

GOP may not be punished if it can't pass repeal

The GOP base will punish Republicans in upcoming elections if they fail to deliver on their promise to repeal the Affordable Care Act, or at least make an all -out effort to do so. That's the conventional wisdom, right? It was the political motivation behind Republican efforts to pass a widely unpopular repeal-and-replace plan, and then to consider a risky repeal-and-delay plan in the Senate.

Except for one problem: When you look at the polling, the idea that the base will rise up and punish Republicans if they don't repeal the ACA appears to be exaggerated, and possibly even a political fiction.

Data: Kaiser Family Foundation Health Tracking Poll (Nov. 15-21, 2016); Chart: Andrew Witherspoon / Axios

Consider:

  • As the chart shows, health care was not the top concern for Trump voters and Republican voters in the 2016 presidential election. It ranked far behind their general concerns about the direction the country is headed in, jobs and the economy, and their feelings about Hillary Clinton. Just 7% of Trump voters and a paltry 5% of Republican voters picked health care as the biggest factor in their vote.
  • Focus groups with Trump voters reinforce this picture; they are focused much more on making ends meet and, when health comes up, getting help with paying their premiums and deductibles. They hoped candidate Trump would find a way to help them pay their health care bills. Just like Democratic voters, and all voters, they care more about their health care costs than the partisan Washington debate about the ACA.
  • Republicans also don't show high levels of intensity on the issue. For example, in July, just 25% of Republicans said they had a "very favorable" view of the Republican ACA replacement plans, while 52% of Democrats said that about the ACA.
  • About half (52%) of Republicans have supported the idea of repealing the ACA now and replacing it later, but that is hardly an overwhelming mandate. (Just 26% of the public overall supported the idea.) Still, most Republicans do want to keep trying. In July, 80% said they don't want to give up on efforts to repeal and replace the ACA.
  • The most conservative Republicans who advocate repeal come from safe districts. They have little to worry about, whether the ACA is repealed or not.

Republicans don't like the ACA, and there is no doubt voting for repeal would be a real plus with the Republican base as well as with big campaign contributors. But the assumption that Republicans will be punished if they fail to repeal the law is a different thing altogether; it has become unexamined conventional wisdom. Republican voters have other things on their minds that matter to them more than health care.

The next election is not until 2018, and the agenda could switch to taxes or a foreign conflict or the Trump administration's continuing problems. In fact, the one thing most likely to keep the ACA on the agenda now would be an effort by the administration to undermine it, and it's far from clear who benefits and loses politically from that.

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Public wants GOP to work with Dems on health care

Senate Majority Leader McConnell has given his fellow Republicans a warning: if they do not pass a bill to repeal and replace the Affordable Care Act, they will be forced to work with Democrats on more modest legislation to address challenges in the ACA's marketplaces. A new Kaiser Family Foundation poll to be released Friday suggests that's actually what the American people would like to see happen.

The bottom line: It looks like Republicans could neutralize a backlash from the base if they give up on repeal and work with Democrats.

Data: Kaiser Family Foundation Health Tracking Poll, July 5-10 2017; Note: Something else, Don't know, Refused responses not shown; Chart: Andrew Witherspoon / Axios

As the chart shows…

  • 71% of the public, including nearly all Democrats and 72% of Independents, favor a bipartisan effort to improve the ACA, rather than Republicans continuing their efforts to repeal it.
  • 46% of Trump supporters say they want to see Republicans work with Democrats to improve the Affordable Care Act — statistically tied with the 47% who would rather see Republicans continue working on their own plan to repeal and replace it.
  • 54% of Republicans want Congress to keep working on a repeal and replace plan, but 41% want Republicans to work across the aisle on fixes to the ACA.

What it means: A poll finding like this probably says more about current views of Washington than the ACA; the public is generally frustrated with partisanship and wants elected officials to work together. There is still plenty of support in the Republican base for repeal, even as support for the Senate health care bill has been slipping and intensity of support in the base is modest.

But this new poll finding suggests that even if Republicans lose ground with some in the base by failing to repeal the ACA, they could make up for it with Trump supporters, Republicans and independents who want to see them work across the aisle on ACA fixes.

Working on repairs rather than repeal could be more of a short-term problem with anti-ACA Republican political contributors, but they will likely come back to incumbents they can rely on for other issues once the health care debate dies down. Still, whether Republicans and Democrats could actually bridge their differences and work together to improve the ACA is a very open question.

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GOP health plan losing support among Trump voters

Senate Republicans have an urgent reason not to give up on repealing and replacing the Affordable Care Act: They don't want to break their promise to the GOP base. But the most recent polls suggest the base may not care as much as Republicans think.

The bottom line: A majority still supports the plan, but support has slipped, and there is some evidence that base Trump voters do not view repeal as a top priority — and many may not punish their representatives if they vote no.

Data: Kaiser Family Foundation; Chart: Chris Canipe / Axios

The repeal push is motivated by several factors. Many Republicans in Congress want to undo whatever former President Barack Obama did. Some want to cap Medicaid spending. Others want to deliver a tax cut.

But the chief motivating factor is the desire to deliver on their campaign promise to the base to repeal "Obamacare," despite the problems with the legislation documented so thoroughly by the Congressional Budget Office. So it seems highly relevant to know where the base actually stands on the Republican replacement plan.

Consider these findings from our most recent June Kaiser Tracking Poll:

  • 55% of President Trump's supporters still support the Republican replacement plan, but, as the chart shows, that number is down a notable 14 percentage points from May.
  • Trump supporters still want Trump and Republicans to keep working on a plan to repeal and replace the ACA (75%). But only 8% cite it as the most important priority for them, similar to the share of the public at large.
  • Less than half of Trump supporters — 44% — say they'd be less likely to support a member of Congress who votes against the bill.

Why it matters: Republicans have been single mindedly focused on their base because they know that only the most dedicated slivers of the electorate come out to vote in midterm elections. These data show that Trump voter intensity on the replacement plan has fallen. The polling data are similar if you look at Republican voters overall, rather than Trump voters.

If the intensity continues to fall, it could diminish this expected turnout. At a minimum, it could make repeal a less effective tool to whip up turnout in the base.

What we don't know: The vote, whenever it happens, could significantly affect the base in directions that are difficult to predict. So could the impact of the law itself if it passes. The CBO predicts that premiums and deductibles in the non-group market will begin to rise sharply and quickly, and Trump voters will be among the groups affected.

It is possible, therefore, that the immediate Republican victory lap that would come from passing repeal could end as Trump voters start to pay their health care bills.

Featured

Republicans see Medicaid as welfare. Most Americans don't

Republicans want to roll back the Medicaid expansion, cap federal Medicaid spending increases, and add work requirements, drug testing, time limits, copays and premiums to some state Medicaid programs. But almost no one else wants to do these things. One poll finding goes a long way toward explaining why: Republicans view Medicaid as a form of welfare, and pretty much everyone else views it as a government insurance program.


Data: Kaiser Family Foundation Health Tracking Poll, May 16-22, 2017; Chart: Andrew Witherspoon / Axios

Why it matters: Welfare remains unpopular in our country; it's always popular to limit or cut "welfare". Whether it should be, and what this says about us, is a different question.

What the poll found: As the chart shows, Democrats (73%) and independents (62%) view Medicaid as an insurance program similar to others that help people pay for health care. But a slight majority of Republicans (52%), see it as more similar to welfare programs like food stamps.

Between the lines: One reason Medicaid limits are no slam dunk for Republicans in the Senate may be that not all Republicans view it as welfare: 46% see it as insurance, just as most Democrats and Independents do. Republicans who are more moderate are worried about the practical effects on citizens and states of rolling back the expansion or cutting federal Medicaid spending. One assumes they wouldn't worry as much unless they viewed Medicaid as valuable health insurance coverage.

Perceptions of Medicaid as welfare don't seem bothered much by facts, such as, for example, that two thirds of Medicaid spending goes for the low income elderly and disabled who don't fit the Ronald Reagan era image of the welfare king or queen. But it's not the majority view in any case. A little less than a third of voters identify as Republicans today, and about half of them see Medicaid as welfare.

It's this group and their perceptions of the program, and elected officials who share their views, that seem to be driving debate about Medicaid today.

Featured

What's really at stake in the Medicaid spending debate

The $834 billion cut in federal Medicaid spending in the American Health Care Act would kick off budget battles in the states that go way beyond Medicaid. We could see cuts to higher education, school funding, corrections, environmental protection or other state priorities — or new taxes, depending on the state.

Data: HMA, based on CMS 2017 projections, CBO Medicaid Baseline and CBO letter to House Speaker Ryan; Chart: Andrew Witherspoon / Axios

The bottom line: What began as a Medicaid spending reduction in Congress will end up as a battle of budget priorities.

A new analysis from long time state Medicaid expert Vern Smith at HMA suggests why. To offset the $834 billion in reductions in federal Medicaid spending in the AHCA, states would need to increase their own general fund spending by an average of one third beginning in 2022, and 37% in 2026. States will have to decide whether to eat the reductions and cut their Medicaid programs, raise taxes, or cut spending for other state priorities, or to do some combination of these things.

In the short term, most of the reductions come from curtailing the ACA's Medicaid expansion, and the 31 states plus the District of Columbia that have expanded will be the most affected.

The problem: It's possible that with more flexibility, states could absorb some of the reductions by operating their Medicaid programs more efficiently, but only at the margins.

Medicaid spending is already growing more slowly than Medicare and private insurance on a per capita basis. Virtually all states have already picked the low hanging fruit to rein in their Medicaid costs, and most have already deployed the full spectrum of delivery and payment reforms currently in the arsenal to control spending growth.

Cutting payments to providers is always the Medicaid cut of first resort, but payments to providers are already too low in many states to cut them further.

What to watch: The need to absorb large reductions in Medicaid will pit cabinet agencies, legislative committees and interest groups against one another in some states. Nothing receives more attention from governors, legislators and interest groups than the size of the annual increase in the state general fund and how the increase is divided each year.

The amount of the annual increase that goes to Medicaid is already a sore point in state budgets. Now the annual budget dance will start with a big hole to fill in Medicaid.

It does not seem to have dawned on folks with an interest in state funding for higher education, or corrections, or schools, or environmental protection that the debate about Medicaid could soon become a debate about their issues. But Medicaid is the largest source of federal revenues states receive, and once the proposed reductions trickle down to state budgets, it won't only be a Medicaid debate any longer.

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The other implication of the CBO report: Election-year pain

Rick Bowmer / AP

The new Congressional Budget Office score for the American Health Care Act showed who the winners and losers will be, and how quickly its negative consequences will take effect if the House bill is enacted into law without major changes. What it doesn't do is assess the politics. But the implications are clear: The negative effects of the AHCA, and the juicy news stories about them, will play out over each of the next two election cycles. It's the political equivalent of tearing off a bandage slowly.

Probably the biggest effect before the 2018 mid-terms will be the rise in premiums across the non-group market which the CBO predicts after the repeal of the individual mandate. Older workers who buy their own coverage will also begin to pay more, as five-to-one age rating replaces the three-to-one age rating under Obamacare.

Then, before the presidential election in 2020, the new AHCA tax credit will kick in. There will be winners who get can get a better deal, mostly younger, higher-income people in low cost areas who may be happy with "skinnier" limited benefit plans that states may allow. But there will be losers too: mainly older and lower-income people who live in high cost, often rural areas.

Budget fights: As the Medicaid expansion begins to unravel, states that expanded Medicaid will have fights over whether to fill the federal funding gap with state funds. Medicaid will have to compete with school spending, higher education, corrections, environmental protection and other state priorities.

Sick people could face "extremely high" premiums in states that choose to waive Obamacare insurance protections, according to CBO, creating more media stories and political problems.

Each negatively affected voter has a family and friends who know about their experiences, creating a multiplier effect. Media coverage focusing on their stories will add to the narrative. The negative anecdotes are always louder than the positive ones.

What to watch: The next election is the mid-term in 2018, and mid-terms are all about turnout of slivers of the electorate; the most motivated voters. If the CBO's analysis of winners and losers under the AHCA is even close to right, it will morph quickly from the storyline Republicans want — they kept their promise to repeal "Obamacare" — to a reality with winners and losers.

It's hard to see how it will stoke turnout on the right once the reality painted by CBO sets in, and it could diminish it. And it may add energy to voters on the left and in swing districts that could decide control of the House.

Here's a look at how it could play out.

2018 ELECTIONS

Summer 2017:

  • Individual mandate eliminated. Insurers may raise premiums.

Nov. 1, 2017:

  • Open enrollment under the AHCA begins. Consumers in the individual market may find much higher premiums.

Nov. 1, 2018:

  • People with preexisting conditions, gap in insurance may start to face higher premiums in states waiving community rating.
  • Healthy people may see lower premiums.

2020 ELECTIONS

Spring/Summer 2019:

  • States may begin to close their Medicaid expansions to new enrollees.
  • Or they may raise taxes/make cuts elsewhere in budgets.
  • With new federal Medicaid spending limits, states may tighten eligibility and reduce benefits and provider payments.

Nov. 1, 2019:

  • ACA tax credits are replaced with less generous ones. Cost-sharing subsidies are repealed.
  • Winners: The young and higher income in low-cost areas..
  • Losers: Older and poorer in high-cost areas.

Jan. 1, 2020:

  • More states close Medicaid expansion to new enrollees.
  • States can waive essential benefits. Many insurers sell "skinny plans," and many healthy people buy them.

BEYOND 2020

  • Number of uninsured Americans continues to rise. CBO says reaching 51 million in 2026.
Featured

No, Medicaid isn't broken

One reason the architects of the American Health Care Act want to cut Medicaid spending and give more responsibility to the states is that they believe that the current program is "broken," with inadequate access to physicians and out-of-control costs. This is one of those canards that is repeated so often that many people just accept it as true. Mostly, it is not true.

Data: Kaiser Commission on Medicaid and the Uninsured analysis of 2015 NHIS data; Chart: Andrew Witherspoon / Axios

Like any big messy public program, Medicaid is very far from perfect, as I learned when I oversaw a Medicaid program for a Republican governor in New Jersey. But on basic measures of access and satisfaction with care, Medicaid beneficiaries look very much like people with private employer coverage despite the fact that they are sicker and poorer. And they're doing better than the uninsured.

The bottom line: Medicaid isn't broken — at least, not any more than private insurance is.

Finding doctors: The biggest problem that's usually cited with Medicaid is that people have trouble finding doctors who will take them. And there are troubles with low Medicaid provider reimbursement rates and physician access, but they vary around the country. It's not hard to find a state, or more typically a region within a state, where physician access is a real problem.

But overall:

  • 74% of Medicaid beneficiaries see a doctor each year
  • 69% for people with employer based private coverage see a doctor each year.
  • People on Medicaid are also nearly just as satisfied with their health care as people with employer coverage.

Costs aren't out of control: Medicaid spending did jump to 10.5% in 2015 with the Affordable Care Act coverage expansion, but it dropped to 5.9% in 2016 and is projected to grow by 4.5% this year.

And per capita Medicaid costs are not rising faster than costs for private insurance. In fact, they're projected to grow more slowly.

Some would say that's because Medicaid underpays providers, and it does pay substantially less than Medicare in many states. Others would say, good for Medicaid; it drives a tougher bargain with providers while getting results comparable to other payers.

The AHCA would take more than 800 billion dollars out of Medicaid over the next decade by reducing funding for the Medicaid expansion and capping federal Medicaid spending. The architects of the AHCA may believe Medicaid dollars are better spent elsewhere or not spent at all, or that somehow states can make Medicaid work better with far less money.

There are many principled conservative arguments for smaller government. But the argument that Medicaid is "broken" is not one of them; it is more urban legend than fact.

Column / Kaiser Family Foundation Featured

Prescription drug costs break through the partisan logjam

Americans are divided along party lines in terms of the presidents they like, the news networks they watch, and even where they live. They disagree sharply on the Affordable Care Act and almost everything else in health care. But there is one issue Republicans and Democrats agree on: They want to lower the costs of prescription drugs.

We just surveyed Americans on the issue as part of our latest Kaiser Family Foundation poll. As this chart shows, Republicans are almost as likely as Democrats, and more likely than independents, to pick lowering the costs of prescription drugs as a priority for President Trump and the Congress. It's the number two priority in health for all Americans, just behind reducing out of pocket costs in general.

Data: Kaiser Family Foundation Health Tracking Poll, April 17-23, 2017; Chart: Andrew Witherspoon / Axios

In fact, Republicans are substantially more likely to pick lowering prescription drug costs as a priority than traditional conservative goals such as decreasing the role of the federal government in health or decreasing federal health spending. (It could be a sign that drug prices have a more direct impact on their lives.)

President Trump has also talked up the need to take on drug costs, at times favoring both Medicare price negotiation and importing cheaper drugs from other countries. Drug prices, it seems, stands on a pedestal by itself as a bipartisan priority.

Reflecting this bipartisan support, the public favors pretty much any action to lower drug prices you can throw at them in a poll. Topping the list in public support:

  • Allow the federal government to lower drug prices: 92%
  • Make it easier to bring generic drugs to market: 87%
  • Require drug companies to disclose how they set their prices: 86%
  • Limit prices for high cost drugs: 78%

One policy that is receiving attention — allowing Americans to buy prescription drugs from Canada — is supported by 72% of the public. And although some former FDA commissioners think that could undermine safety, the public isn't worried: 76% think that will make drugs cheaper without sacrificing quality, while just 35% agree that it could expose Americans to unsafe drugs.

Often support for ideas in the abstract dissipates when there is a debate about the pros and cons of legislation and winners and losers emerge. That is what happened in the first go-around in the House on the GOP health care bill, which has not been popular with the public. The strength and breadth of the support for dealing with out-of-pocket drug costs suggests that public support is much less likely to wane for those proposals.

Of course, the fact that policies are popular does not necessarily mean they are wise, nor does it mean that the drug companies will not be able to defeat them, working their magic in the halls of Congress as health care's powerful interest groups always have done.

Still, if partisan division has become the single most powerful force in health policy, this may be one issue that breaks the pattern.

Column / Kaiser Family Foundation Featured

Trump's dealmaking model doesn't fit health care policy

Kiichiro Sato / AP

President Trump's threat to withhold Affordable Care Act payments to insurers shows how he thinks of health care: Everything is negotiable, like it is in a real estate deal. In this case, it's his bargaining chip to get Democrats to negotiate on an ACA replacement plan. But in reality, it could panic insurers and crash the marketplaces.

The president doesn't have strong convictions himself about future directions for health care. But health policy is not like real estate. The partisan divide in health policy is grounded in deeply felt differences on both sides over policy and principle. It's hard to see Trump's approach to deal making working very often in health.

This was why Trump couldn't force a deal with the Freedom Caucus to pass the American Health Care Act in the House; the bill was not conservative enough for the caucus, and in their eyes, it violated their principles and political promises they had made. It is also why using Obamacare's marketplace cost sharing subsidies as a bargaining chip to try to force the Democrats to the table is unlikely to work.

Play that one out for a moment:

  • The subsidies are withheld, or a decision is delayed to the point where insurance companies withdraw.
  • The marketplaces collapse or falter in many states.
  • Some moderate Democrats want to come to the table to rescue the millions who would lose coverage, most likely in the Senate.
  • The right adds their demands as a condition of coming to the table. So does the left.
  • Negotiations quickly snowball, and the entire ACA is opened up for debate once again.
  • Stalemate follows.

There are other reasons why Democrats may not accede to Trump's threat on marketplace subsidies. They may calculate, for example, that the administration will own the fallout for a collapse in the marketplaces, as polls are starting to suggest they will.

Lawmakers are also hard to threaten because most come from safe political districts, as a recent Cook report featured in Axios showed, and they have been getting safer and more polarized.

So, Art of the Deal, meet health care. Whether it's bringing moderate Republicans together with conservatives ones, or Democrats together with Republicans, dealmaking in health care requires the hard, roll-up-your-sleeves work of developing policies that will bridge the partisan and ideological divide.