Health Policy Updates: August 6 2017

The Vox.com policy podcast The Weeds gives a great recap on last week’s demise of GOP efforts to repeal the ACA. Link on Player.FM.

With GOP efforts to repeal the ACA currently stalled, a bipartisan group has begun meeting in order to improve on the ACA framework and stabilize its insurance markets.

“The roll out of their stabilization agenda follows months of private meetings between various members involved in the House’s centrist caucuses about ways to stabilize Obamacare if the GOP’s repeal effort sputtered.”

These efforts put lawmakers at odds with the President, who continued to suggest allowing (and causing) the ACA markets’ collapse.

“These problems have been exacerbated by a president who has publicly predicted that the Affordable Care Act will ‘implode’ and appears determined to help fulfill that prophecy. Mr. Trump has repeatedly threatened to cut off the subsidies, known as cost-sharing reduction payments, which reimburse insurers for cutting deductibles and other out-of-pocket costs for millions of low-income people. Without them, insurers would almost certainly raise premiums…”

 


Conservative health policy expert Avik Roy comments on the efforts underway in the Senate to stabilize the Obamacare markets, arguing that this short-term fix is indeed needed in order to protect Obamacare recipients from coverage loss, but that further reforms to the individual market are needed.

“Those higher premiums will harm taxpayers, who will have to fund higher premium subsidies for everyone else. They’ll also harm those who buy coverage on their own and are ineligible for subsidies, because their incomes are above 400 percent of the Federal Poverty Level.

But simply bailing out Obamacare—without doing anything to tackle the manifold ways the law traps people in high-cost plans—would compound the irresponsibility of Obamacare’s authors with further irresponsibility.”


Economist Greg Mankiw wrote to explain what health care different from other industries, and why this makes health policy hard. How can you expect free markets to hold down prices – as they do for most other goods and services – when patients aren’t able to decide what care they do or do not need, and they don’t actually pay for the health care they receive?

“In most markets, producers decide how much to offer for sale as they try to maximize profit, and consumers decide how much to buy as they try to achieve the best standard of living they can. Prices adjust to bring supply and demand into balance…Yet the magic of the free market sometimes fails us when it comes to health care. There are several reasons.”


Health Economist Austin Frank has written extensively on how insurance policy affects consumer health choices, and therefore health outcomes as well.

First: when consumers face greater cost-sharing (higher copayments and co-insurance), they tend to skimp on health care. This can be seen in selection of Medicare Advantage drugs plans.

Studies show that insurers, many of which are for-profit companies after all, are using such incentives to dissuade high-cost patients from enrolling or using the benefit. There’s evidence this occurs for Medicare’s drug benefit, as well as in the Affordable Care Act’s marketplaces.”

Additionally, the opacity and complexity of insurance plans often result in consumers making sub-optimal selections for their health needs.

“Already, the lack of price transparency is enough to make a health economist despair. But it gets worse…a crucial feature of health plans is not as easily or widely accessible: the extent to which each covers services provided by one’s favorite doctors and hospitals.”


 

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