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A Simple Explanation of High Risk Pools

Yesterday, the House of Representatives voted by a margin of 217-213 to pass the American Health Care Act (AHCA). Not surprisingly, their was jubilation from conservatives–who threw a celebration in the White House Rose Garden–and outrage from liberals–who immediately began making donations to support Democratic candidates in the 2018 midterm elections. As a supporter of Obamacare (albeit one who readily acknowledges its limitations and the need to make fixes to the law), I was not thrilled to see the AHCA passed, given both the content of the bill and the manner in which it was passed. However, this post is not about all of that. Instead, I just want to focus on one aspect in particular–high-risk pools.

In an attempt to lower the costs of insurance, the AHCA creates high-risk pools for individuals with health conditions that are costly to treat. Of course, this is not a new concept. States have operated their own high-risk pools for years, with little to no success. Leaving aside for a moment the fact that the AHCA does not provide enough federal subsidies for the high-risk pools to be functional, I’d like to explain the concept of risk pools altogether. That is, I am going to explain to you how insurance works. Because that’s all the insurance function does–it pools risk.

Think of it like this: As you may or may not know, I developed Guillain-Barré Syndrome in January. That’s an extremely rare condition, but it is also very expensive to treat. Six months ago, I had no idea that this would happen to me. However, I can tell you that this year there will be between 3,000 and 6,000 Americans who develop the condition. I can also tell you that there will probably be 30 to 60 cases in the state of Iowa (where I live) this year. Insurance works by pooling risk. No insurance company would want to cover just me in the event that I developed Guillain-Barré (or any other illness). However, if they were to enroll the entire state of Iowa, they would be very comfortable assuming that 30 to 60 individuals would develop the condition, and they would build this into the pricing of their product. The science behind crunching these numbers is what actuaries do for a living. As you can probably see, the law of large numbers is at work here: Namely, it is difficult to know with much certainty whether or not a given person will contract a particular illness, but it is relatively easy to know with certainty how many people in a given population will contract a particular illness–and the certainty increases as the population gets larger. The idea of insurance, then, is to spread this risk around evenly such that the people who do get sick are not bankrupted by their illness, and the people who don’t get sick are happy to have paid for the peace of mind that they would have been protected financially had they happened to have gotten sick. Make sense? Now go out and start an insurance company. Just kidding.

Historically, insurers have sought to offer coverage to low-risk individuals while avoiding high-risk individuals. Doing so meant that insurers could maximize their profits by collecting premiums while minimizing their medical losses (which is what they call it when they have to pay for someone’s health care claim). When Obamacare forced insurers to cover everyone (called “guaranteed issue”), it meant that insurers could no longer avoid the high-risk individuals. And, if you’re tracking with me, that meant that the high health care costs of these individuals got added into everybody’s premiums, which made them go up in some cases.

The rationale invoked by the AHCA is that we want to remove these high-risk individuals from the general risk pool and place them in their own high-risk pool. It follows that the general risk pool would then have generally healthier people in it, with lower costs to spread around, and the price of the insurance would come down for these people. Meanwhile, in the high-risk pool, there would be nothing but extremely sick people with high health care costs. Insuring them would be very expensive, because after all, it’s not a question of whether you might get sick, the insurers know that you are sick to begin with. Coverage in these high-risk pools would be so expensive in fact that people couldn’t afford it unless the federal government propped it up with enormous subsidies. And that’s where the AHCA falls woefully short.

But the point I want to leave you with is that, even if the AHCA provided adequate subsidies, high-risk pools would remain an awful idea in principle, because insurance is all about pooling risk, and it works best when you get everyone in the pool. To help that notion sink in, I want to use an actual pool as a metaphor. Well, two pools, actually. An olympic-sized swimming pool and a kiddie pool. We’ll use chlorine to represent high-risk individuals, and water to represent healthy individuals. As you know, chlorine is used to sanitize pool water, but direct contact with chlorine can cause chemical burns. So, in the swimming pool, we want to have lots of water, with just the unavoidably necessary amount of chlorine. Everything works out great for the most part. Still, some individuals may complain about the chlorine. They may suggest that all the chlorine from the olympic-sized pool should be isolated and placed in the kiddie pool, which has much less water in it. That creates all sorts of problems, because the concentration of chlorine is far too high in the kiddie pool. Granted, this is not a perfect analogy, but I’m sure you understand my point. And hopefully you now have a better understanding of why a high-risk pool is not the solution to dealing with sick individuals. The solution is to get everyone–the healthy and the sick–into the same pool. The healthy might not like paying a little bit more, but if they were being honest with themselves, they never know when they might become ill. Trust me, I’ve learned firsthand that expensive illness can be a sudden and unexpected guest in anyone’s home. It’s time we acknowledged that we’re all in this together, and share the burden, rather than ostracizing the sick so we can save a buck while they suffer.

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Posted by on May 5, 2017 in Uncategorized

 

My Thoughts on the AHCA

Ladies and gentlemen, may I have your attention please: Do you hate Obamacare? Do you remember how people made fun of Pelosi saying “we have to pass it to find out what’s in it?” Well guess what? None of that was true. But this, speaking of the AHCA, the Republicans’ bill to repeal Obamacare absolutely is:
“The final bill text has not yet been released to the public, and there has been no independent analysis of the cost of the bill or its impact on health coverage. Yet the House plans to forge ahead with a markup in the Rules Committee late Wednesday night and a floor vote on Thursday.”
I really hope it doesn’t pass. Really and truly. But if it does, I don’t ever want to hear another word from anyone when their premiums go up, or they lose their coverage, or their insurance doesn’t cover this or that procedure. They won’t be able to blame Obama anymore. They will have swallowed every single lie that they were spoonfed for the last 8 years or so. And they will get to experience the results.
Aw, who am I kidding? I care about people. I got into this field to make a difference for the better. I will never stop fighting, never stop listening, and never stop caring about people and their access to high quality health care. I just hope the GOP doesn’t make my job any harder than it already is.

 
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Posted by on May 3, 2017 in Uncategorized

 

Health Wonk Review: Who’s On First? Edition

These days, it seems we are awash in what Kellyanne Conway calls “Alternative Facts.” I’ve heard or seen more than one commentary questioning whether we are living in a post-truth age. As these opinion pieces typically lament: We were once entitled to our own opinions, but not our own facts. Now, it seems that we are all entitled to our own facts as well. The most recent example might be President Trump’s recent tweet proclaiming the Republicans’ “big win” in the special election for House district 6 in Georgia. In fact, the Democratic candidate, Jon Ossoff, captured 48.1% of the vote, while the leading Republican, Karen Handel, captured just 19.8% of the vote. In no rational world is that a GOP victory. Indeed, Ossoff and Handel now face a run-off election.

But this is the crazy state of things in America–and around the world–these days. And the irony is that the actual facts are confusing enough in their own right. As many of the posts in this edition of the Health Wonk Review make clear, there is little need to spin alternative facts, or move to a post-truth world (as if that’s even possible), when so much of what we are dealing with is hard enough to understand or solve as it is. In the spirit of things as they actually are coming across in ways that perplex even the wonkiest among us–and an homage to the return of baseball season–I offer the “Who’s On First?” edition of the Health Wonk Review.

As usual, the elephant in the room is the ACA. In fact, Joe Paduda wonders at the Managed Care Matters blog why the Republicans in Congress are still trying to repeal and replace the ACA after they missed their chance with the AHCA legislation that was pulled from the floor last month. For him, not even Abbott and Costello are enough–only Monty Python provides the lens to make sense of the GOP’s determination to fail again and harm itself further in the process.

Of course, if repealing and replacing doesn’t work, there’s always the administrative approach to destroying the ACA. And one way to do that is to stop paying for cost-sharing reduction (CSR) subsidies. At xpostfactoid, newcomer to HWR, Andrew Sprung writes: “Without CSR, the marketplace wouldn’t be even marginally serviceable for prospective customers with incomes below 200% of the Federal Poverty Level.” As he explains, over half of current marketplace enrollees fall below that level. He reviews how CSR enhances a silver plan, how CSR-enhanced silver compares to employer-sponsored insurance, and what the marketplace would look like without it.

At the healthinsurance.org blog, Louise Norris writes about the alternative facts being promoted by the GOP that the ACA marketplaces are in a death spiral. Not true, she says, but also not entirely false. Taking a closer look, Norris points to evidence that Obamacare is not “collapsing of its own weight,” but does find that a handful of state marketplaces appear to be on thin ice.

Beyond the health of the state Marketplaces, one of the real worries, if repeal and replace is ever passed, is what might happen to you if you have a pre-existing condition and are unable to obtain coverage in the absence of guaranteed issue. Charles Gaba of the ACA Signups blog has the numbers that members of Congress (and others) will care about. Namely, how many people in each Congressional district have a pre-existing condition and risk losing their insurance coverage.

An often floated alternative is to allow the sale of health insurance across state lines. This is a very common Republican idea, while Democrats are quick to highlight why such an approach will never work. At the InsureBlog, Mike Feehan debunks some of the myths surrounding the idea of purchasing health insurance “across state lines.” While I’m not personally sold on the idea, do be sure to check out the lively discussion in the comments section!

Before we leave the topic of health reform, Roy Poses has something for us to consider at the Health Care Renewal blog. Maybe, he suggests, we need to listen to providers for ideas about why our health care system doesn’t work as well as it could, and how to improve it. In his usual watchdog role, Poses finds that the authors of a recent National Academy of Medicine position paper are physicians, but they are also physicians who serve on the board of directors of health care corporations. Other authors were health care executives and lobbyists. Most of these major conflicts of interest were not disclosed, says Poses. In short, “The health care reform discussion in the US continues to be dominated by big corporate interests, even though they are often thinly disguised. We will not get far with true health care reform unless we can have an honest discussion which included voices of patients, and of health care professionals free of influence of big health care organizations, particularly big health care corporations.”

Turning away from health reform and to a couple of posts focused on medical treatment, we have entries from Jason Shafrin of the Healthcare Economist and David Williams of the Health Business Blog. Jason asks “Why aren’t there more cures?” He investigates why there are a lot a treatments that address diseases over time but fewer cures developed. Where testing and treatment–including curative treatment–does exist, it’s not always clear whether it’s beneficial. Nothing is without risk. But perhaps there is some middle ground. David writes about this in the context of PSA screening for prostate cancer. As he says “I oppose over-testing and over-treatment, so I really had to think hard five years ago when I turned 45 and my doctor offered PSA screening for prostate caner. The US Preventive Services Task Force (USPSTF) had just come out against PSA screening. I opted for the test at the time anyway. Now the USPSTF’s thinking is swinging around to my logic.” He explains in more detail in his thought-provoking post.

Finally, at Workers Comp Insider, Julie Ferguson–who also hosts our next edition on May 4–reminds us that Workers’ Memorial Day is coming up and explains why it is so important to remember the health and safety of the worker, especially in a time of regulation slashing and program defunding.

Well, that’s it for this edition. Get outside and enjoy the Spring–but maybe take a Claritin first!

 
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Posted by on April 19, 2017 in Uncategorized

 

Latest Health Wonk Review

A special Passover edition from one of the friendliest wonks I know, Hank Stern. Check it out here.

 
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Posted by on April 6, 2017 in Uncategorized

 

An Unnerving Experience

The day after Christmas I came down with a cold. Ten days later, I returned to work, but noticed that my right hand seemed weak. Walking to my car at the end of the day, my right leg felt heavy. That night, I realized that I couldn’t raise the toes on my right foot. When things hadn’t improved by the next morning, I drove myself to the emergency department. After a neurology consult and an unremarkable MRI of my brain and cervical spine, I was discharged with a diagnosis of “weakness” and told to return if my symptoms worsened. The following day, I awoke to find that the weakness had spread to my left arm, and every so often I was slurring my speech. My wife drove me back to the emergency department where I received  a lumbar puncture (aka “spinal tap”) and was admitted to the hospital.

After a sleepless night on a general neurology floor, I ordered a strawberry yogurt and an applesauce for breakfast. My hands were so weak that I had to use my teeth to peel off the foil lids. The doctors suspected a condition called myasthenia gravis. They told me that because of my muscle weakness, my breathing might become compromised, and they moved me to the medical intensive care unit.

Doctors visited my room in droves—the blessing and curse of being at an academic medical center—and frequently remarked that my presentation wasn’t textbook for anything. They ordered an electromyogram—in which small needles are inserted to study muscle function—and a nerve conduction study—in which current is sent through electrodes to test nerve function. Both procedures were moderately uncomfortable, but after dozens of shocks on my arms, legs, and face, my doctors ruled out myasthenia gravis. I lost count of the number of other tests they ordered, but I know they included Lyme disease and West Nile virus, among others.

Finally, they settled on a diagnosis: Guillain-Barré syndrome, or GBS. GBS is an extremely rare condition—there are fewer than 6,000 cases in the United States annually—in which the immune system attacks the peripheral nervous system, often following an infection (e.g., my cold). As the nerves are damaged, the result is an inability to control the muscles, leading to weakness, and even paralysis. Because the diaphragm—the muscle that helps us breathe—can also be affected, between 25-35% of patients require mechanical ventilation.

There are two treatments for GBS: plasmapheresis and high-dose intravenous immunoglobulin (IVIG), both of which are assumed to work by “rebooting” the immune system to stop the attack on the nerves. Both treatments have been shown to reduce the severity of symptoms and shorten the length of recovery. Fortunately, most individuals with Guillain-Barré fully recover, but it takes time. While some people recover in a matter of weeks, others take years, and the average is between 6 and 9 months.

My symptoms stabilized, and I was discharged after 5 days. The next day, my wife was admitted for a C-section. Both my mother and mother-in-law flew out to help us. I was able to be present for the birth of my second daughter, but the day my wife came home from the hospital, my symptoms worsened. I lost almost all control of my facial muscles, which affected my ability to speak, eat, and drink. This time my mother took me to the emergency department, and they readmitted me, in part because I was already scheduled for a repeat electromyogram and nerve conduction study at the hospital the next morning. The study showed changes consistent with acute motor axonal neuropathy (a GBS variant common in Asia, but rare in North America), but found no evidence of permanent nerve damage, meaning my chances for full recovery are good. I was discharged the next day.

I’ve been recovering for about a month now. The nerves in my face healed rapidly and I can once again speak, eat, and drink without problems. I remain very weak in my arms and legs, but can walk over 1/2 a mile unassisted. Fatigue is still a factor. Overexertion leads to days of exhaustion. I’m working from home part-time and go to occupational and physical therapy three days a week. Still, I find myself with plenty of time to contemplate my experience. As an assistant professor of health management and policy in a school of public health, I can’t help but think of how fortunate I am, and how different my experience could have been.

First, I live just 10 minutes away from an academic medical center. I have access to neuromuscular neurologists and received prompt treatment. What if I lived in a rural area, or only had access to a smaller community hospital? Would I have delayed seeking care? Would the physicians have diagnosed me as quickly? Many doctors will never see a case of GBS. This might have meant delayed (and less effective) treatment with IVIG. Moreover, having to travel long distances three days per week might make me noncompliant with my therapy regimen, slowing my recovery.

Second, my care has been extremely expensive—over $80,000 so far. Because I have good insurance through my employer, I will comfortably pay just $1700 using my savings. But what if I didn’t have insurance? Or what if I didn’t have adequate resources to cover my share of costs? While my illness was not my fault, I would be expected to pay the full amount on my own, forcing me to negotiate a lower rate, set up a payment plan, or face medical bankruptcy. Should America allow anyone who is unfortunate enough to be dealt such circumstances to have them further compounded by economic hardship or financial ruin? Unfortunately, many Americans face that situation, and if the GOP manages to repeal Obamacare, millions more will find themselves at risk.

Finally, this is a long and trying illness. Understandably, many people become prone to anxiety and depression. While I am a Christ-follower and my faith has been a tremendous source of strength and comfort for me, obviously not everyone shares my faith. Still, I believe that everyone needs some outlet for their spiritual and/or emotional — as well as physical — concerns. My wife and I have experienced an overwhelming outpouring of love and support from family and friends who have prayed for us, provided meals, helped with work-related matters, and served as informal caregivers. What if I didn’t have a social support system through church, work, friends, and family? Chances are I wouldn’t be recovering at home, but would be alone in a rehabilitation hospital, while my wife stayed home to care for our children while recuperating from major surgery.

As I hope you can see, I consider myself very blessed to have such easy access to top-notch healthcare, the ability to pay for that care with a comprehensive insurance product and adequate savings, and a robust system of support for my spiritual, emotional, and physical needs. The road I’m on is not an easy one, but it could certainly be much harder. For millions of Americans, whether they have a rare condition like GBS or a much more common malady, we have a healthcare system that all too often makes the road impassable. We must do better.

___________________________

Note: This post first appeared at Public Health Post, where I am an occasional contributor.

 
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Posted by on April 3, 2017 in Uncategorized

 

A Tale of Two Penalties

As I write this, I have C-SPAN on in the background for two reasons: First, all of the paint had already dried. Second, I wanted to listen to the House of Representatives debate and then vote on the American Health Care Act (AHCA). We now know that there will NOT be a vote on Thursday, and while the chatter seems to suggest that the vote will come Friday morning, my own sources on the Hill are indicating that the legislation is likely to be pulled altogether because it lacks the votes to pass the House. While that certainly puts a dent in the prospects of Obamacare repeal, it doesn’t mean that it’s a done deal. For starters, the Senate might introduce its own bill, and there’s nothing to preclude the House–and Speaker Ryan–from going back to their own drawing board. That said, it seems a safe bet that repealing the individual mandate will remain a central focus of any such efforts. In this post, I want to comment briefly on the individual mandate as it exists under Obamacare and the alternative that is being proposed by the GOP through AHCA.

For starters, the individual mandate was deemed necessary because of other provisions of Obamacare. Namely, since the law allows anyone to purchase insurance regardless of preexisting conditions, it is essential to incentivize individuals to purchase coverage when they are well, rather than waiting until they get sick. Otherwise, the cost of health insurance would increase in unbelievably dramatic fashion–perhaps even leading to a collapse of the insurance market altogether. Think of it this way: You don’t purchase homeowner’s insurance after your house catches fire. If everyone did that, it would be prohibitively expensive. In fact, it wouldn’t even be fair to consider it insurance, because it wouldn’t be about risk at all, it would be based on shielding oneself from an unfortunate reality. That is why Obamacare created the individual mandate. Now, one criticism, and I believe it is a fair one, is that the penalty associated with mandate non-compliance was too low. In 2017, the penalty is the higher of $2,085 per family or 2.5% of modified adjusted gross income. That’s it. Under Obamacare, if you don’t obtain health insurance, and aren’t exempt from the mandate, that’s the penalty you owe. The clock starts over the next year, and you are still able to access Medicaid or subsidized plans through the health insurance marketplace (depending on your income, employer-based options, and state of residence). Of course, plenty of people don’t like being forced to buy an expensive product they don’t want, or pay thousands of dollars for not having coverage. That said, what exactly are Congressional Republicans proposing as a replacement?

In AHCA, no one is required to purchase health insurance–even though the ban on preexisting conditions would remain law. If the GOP doesn’t do something to incentivize healthy people to purchase health insurance, you can expect the same sorts of problems I described in the previous paragraph: Prices will go up, the market will destabilize, and a death spiral would likely become inevitable. So the GOP concocted a solution: A 30% premium surcharge on people who purchase insurance after experiencing a gap in coverage for two months or more. The surcharge would only last for 1 year. On the one hand, that seems like a strategy for having their cake and eating it too. They give people the “freedom” to go without health insurance, but they also provide–through the surcharge–an incentive for people to purchase coverage. In fact, the surcharge is arguably as stiff–if not stiffer than the Obamacare penalty. There’s just one catch, and it’s a big one. It has to do with the timing of the penalty vis-a-vis the decision to purchase insurance.

The individuals who are not currently covered fall broadly into two categories: low-income people without truly affordable coverage options who are not exempt from the mandate, and young healthy people who do not feel the need for insurance. In either case, these individuals are deciding that they do not want to purchase insurance, because it is too expensive, and they opt to pay the penalty–or hope the IRS doesn’t enforce it, which seems to be the case currently. In short, the Obamacare penalty is not sufficient to incentivize these people to buy coverage. Now consider the GOP proposal. It doesn’t make the cost of coverage for a comparable plan any cheaper. On the contrary, it is likely to raise it. If costs do go down, it will be because the insurance is less robust (e.g., it does not cover essential health benefits). This means that people would have insurance, but that the insurance wouldn’t be very good. While this may convince some people to purchase insurance, I’m not convinced that many people–especially the young healthy folks–will be compelled to do so. Instead, they’ll just remain uninsured. Then, if they ever do start to seriously consider purchasing health insurance, the GOP plan will make them pay a 30% surcharge for a year. Think of it in concrete terms: If the person does the math and decides not to buy a plan for $300 a month, why will they think it’s a good idea to buy that plan for $390 a month the following year?

In short, the Republican solution to the individual mandate does not incentivize people to purchase health insurance so much as it creates a barrier to entering the insurance market for individuals who have failed to purchase coverage in the past or happen to lose their coverage for more than 63 days for any reason–like moving, changing jobs, getting fired, etc. The bottom line is that this is a poorly conceived piece of policy nested within a much larger disaster of a bill. The AHCA itself may not survive the week, but efforts to repeal the individual mandate are likely to persist, and I thought you should know that not all ways to skin a cat are equal.

 
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Posted by on March 23, 2017 in Uncategorized

 

Latest Health Wonk Review

David Williams hosts a Presidents’ Day Edition of the Health Wonk Review. Lots of great stuff in there, folks. Go check it out here.

 
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Posted by on February 23, 2017 in Uncategorized

 
 
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