Tag: Richard Mayhew

Must-Read: Richard Mayhew: Medicare Reimbursement, Public Options and Medicare Buy-In

Posted on by Brad DeLong

Must-Read: Richard Mayhew: Medicare Reimbursement, Public Options and Medicare Buy-In: “There has been a flurry of liberal health wonk reform proposals this week…

…@HuffPostPol: Clinton formally endorses public option and Medicare for under-55s by @citizencohn http://huff.to/29vZ1Td

…I want to see details just exactly what is meant by the Clinton proposal as it can range from aggressive administrative action small ball (as we talked about in February) to another whack at the legislative pinata…. But before I do a long wonk dive, I just want to re-iterate a very simple point. Most liberal health policy goals have a very simple summary: get more people on insurance that pays providers rates that are closer to Medicare rates than commercial large group rates. Large group rates pay providers between 40% and 100% more than Medicare for physical health service. Moving the entire employer sponsored coverage universe to paying Medicare like rates would knock 30% off of the current bill. We see this in Exchange…. Plans that are profitable tend to be paying providers Medicare plus a little bit while offering narrow networks. We see this in the proposal to move the Medicare buy-in age to 55. We see this in the proposal to have a public option…. All of these efforts are just different ways to achieve an underlying goal of reducing provider compensation by lowering the average payment per service by having more people move from high payment to provider coverage to Medicare based pricing. Everything else is details. Those details matter a lot, but the core policy thrust is fairly simple.

Must-read: Richard Mayhew: “A California Earthquake for Narrow Networks”

Posted on by Brad DeLong

Must-Read: Richard Mayhew: A California Earthquake for Narrow Networks: “[The] Covered California… exchange’s five-member board is slated to vote on…

…[whether] insurers would need to identify hospital ‘outliers’ on cost and quality starting in 2018. Medical groups and doctors would be rated after that. Providers who don’t measure up stand to lose insured patients and suffer a black eye that could sully their reputations with employers and other big customers. By 2019, health plans would be expected to expel poor performers from their exchange networks. The goal is to start trimming the inefficient high cost extremes.

In some ways, this is not an unusual move.  Narrow networks have been proliferating under the ACA, and they were around pre-ACA…. My employer’s best-selling commercial network is a narrow network built when Howard Dean was the favorite Vermonter among online liberals.  Narrow networks are usually built to get a better price and value proposition than a broad network… an insurer thinks it can steer thousands or tens of thousands of members to Provider A… so Provider A should give the insurer a volume discount.

When I was building narrow networks for Mayhew Insurance, there were a set of hospitals and provider groups that were in our broad network that we really tried not to use for the narrow products.  One… had good quality but a gold-plated contract that was paying them roughly twice the regional rate for a set of frequently used codes.  Another… tended to have very low HEDIS scores on basic things…. Other[s]… we were stuck using them as they were the only specialist of that type within forty miles, but we actively tried to… get new docs to those regions….

The interesting thing is the threat of en-masse exclusion to trim the outliers…. There are some significant concerns with implementation. The big one is what exactly is quality? Is it risk adjusted and if so, how is it just medical risk adjustment or is it medical and socio-economic risk adjusted? How does a provider appeal?  How does a provider get back in?… Even with those questions, this is an interesting experiment.

Must-read: Richard Mayhew: “The Sovaldi that Wasn’t”

Posted on by Brad DeLong

Must-Read: Richard Mayhew: The Sovaldi that Wasn’t: “Last summer every insurer in the country was rerunning their models on how the next wave of cholesterol drugs…

…were going to blow up the cost structure… inhibitors… priced at over $1,000 per month…. The specific on-label use… were for a… subset… with high cholesterol… genetic markers and clinical indicators…. We got that one wrong…. “A surge in sales of pricey new cholesterol treatments is unlikely to materialize this year, contrary to the previous expectations of Express Scripts Holding, an executive from the largest manager of U.S. drug benefits said on Friday.”…

This is intriguing. It may be a blip or it could be a portent of a significant change in provider behavior.  If it is blip, disregard the rest. There is a possibility that providers are becoming price aware…. The big fear with the new inhibitors was that they would be widely prescribed for a much broader population of people than the clinically significant group…. That is the entire point of the pharmaceutrical advertising industry, to get providers prescribing higher cost medications for marginal cases.

Must-read: Richard Mayhew: “The Hope of [Health Care Cost] Stabilization”

Posted on by Brad DeLong

Must-Read: Richard Mayhew: The Hope of [Health Care Cost] Stabilization: “We knew that there was going to be a massive amount of catch-up [health] care…

…as people who either were uncovered, sporadically covered or had no usable insurance because the cost sharing was atrocious got coverage through either Medicaid expansion or the Exchanges. The big question was always how much catch up care was happening and if/when would it subside as crisis care converted into maitenance care. There is starting to be some evidence that the catch up care wave is subsiding…. This uncertainty about catch-up care was why there were the three R’s of risk adjustment, risk corridors and re-insurance. No one knew how many expensive surprises were out there.

Must-read: Richard Mayhew: “ESI, Stability and Cost”

Posted on by Brad DeLong

Must-Read: Richard Mayhew: ESI, Stability and Cost: “Kevin Drum is highlighting a point I’ve made before…

…One of the big reasons for the slow growth in Exchange enrollment is that employer sponsored insurance (ESI) has not collapsed. The Congressional Budget Office had projected for years that millions of people would lose their ESI and go on Exchange.  That did not happen: “After four years of private coverage hovering around 61 percent of the population, it jumped up to 66 percent within the space of a single year.” Was this due to the economic recovery? Probably a bit of it. But the economy has been puttering along at about the same pace ever since 2012. The only thing that changed in the fourth quarter of 2013 was the introduction of Obamacare….”

It is not always preferable to have someone on ESI rather than on an Exchange policy or Medicare or Medicaid or CHIP…. ESI is seen as part of the background status quo, so when Mid-Size Motors switches coverage from Aetna to Cigna to save $2.32 per covered life per month, that is just HR doing their thing. It is less disruptive but it is not uniformly better.  If it was uniformly better, the ACA would have just been massive subsidies to employers to provider coverage with a hard employer mandate (see 1993 Clintoncare) and some type of safety net for people out of the work force.  We did not go down that route…. ESI… is good insurance for people who are the least likely to need it…. ESI is not an unmitigated success story on any metric is that ESI is expensive…. It is a good in that higher ESI is less disruptive of a change than an ESI dump but it comes at the cost of giving people expensive and potentially not too usable coverage.

Must-read: Richard Mayhew: “CHIPPING Away at Uninsurance”

Posted on by Brad DeLong

Richard Mayhew: CHIPPING Away at Uninsurance: “The Arkansas Times named its person of the year…

…all the Arkansans who are newly insured. There was one vignette that stuck with me:

The average high school senior isn’t too worried about insurance coverage, but for Fairfield Bay native Crystal Bles, it was a priority…. While many young adults now rely on their parents’ insurance to stay covered until age 26–thanks to another change created by the Affordable Care Act–Bles’ parents were uninsured…. She ‘most definitely’ knew she needed coverage, she said, given her chosen area of study. ‘In welding, people tend to get injured.’… For young Arkansans like Bles, the private option has already become a fact of life [my emphasis]— a vital government service, funded by taxpayers and provided for taxpayers, just like public schools and food stamps, highways and Pell grants, law enforcement and libraries.

There have been numerous liberal attempts to slowly build… by proposals to lower Medicare eligibility age. The theory… is that taking the most expensive people off of the private market… will save money systemically and not face significant opposition as employers and private insurers will want to dump their most expensive covered lives to someone else… anything that shifts people from the most expensive part of the covered system (employer sponsored insurance) to a less expensive part (Medicare) is a big win. The final part of the theory… is that the change to Medicare for 60 year old individuals works well and is not too scary so the next slice of the salami….

What if we are trying to cut the salami from the wrong end? Kids are adorable, sympathetic and, after they start crawling, dirt cheap to cover.  Kids use lots of low cost services but they are unlikely to need high cost services. What if  the Childrens’ Health Insurance Program (CHIP) was expanded to be the most probable insurance  to every kid between the ages of birth and nineteen?

Must-read: Richard Mayhew: “The Nitty Gritty of Cost Control”

Posted on by Brad DeLong

Must-Read: Richard Mayhew: The Nitty Gritty of Cost Control: “This is not sexy, this is not lucrative…

…this is not the way political programs are built as the slogan ‘Minor administrative changes to marginally increase competition by redefining scope of service delivery laws when do we want them —NOW’ does not fit on a bumper sticker. However these are the types of gains that need to be made to reduce the guild power of high end medical providers. Most of the people, most of the time, don’t need high end care.  Their basic needs can be met by trained individuals who are not over-trained…. Basic dental services, basic primary care services, basic preventative services can often be performed perfectly adequately at the master or bachelor level clinician level instead of a doctorate level clinician level.  Those rules are overwhelmingly determined at the state level, so that is where the long slow slog of reform needs to come.

Must-read: Richard Mayhew: “School Lunches and Medicaid: a BFD”

Posted on by Brad DeLong

Must-Read: Richard Mayhew: School Lunches and Medicaid: a BFD: “[‘Interested State agencies that administer the National School Lunch Program (NSLP)…

…can now use Medicaid data to certify students for free and reduced priced lunches.’] Kids who have enough to eat and are not worried about having enough to eat have two significant advantages over kids who don’t have enough to eat and have to worry about that. The first is simple, they have more energy to spend on high intensity activities of play and learning (speaking as a dad of a first grader, those two things should be very close to the same a good chunk of the time). Secondly and slightly more subtly, kids who are not worried about their next meal are able to devote high complexity cognitive processes to other things. Kids (and adults) have a finite amount of brain horsepower available at any given time. Not worrying about food frees up capacity for other things. Kids who are worried about food are devoting a limited brain budget to that task and not to other things.

The free and reduced price school lunch program in most districts… has a significant amount of paperwork and potential stigma…. People who… have signed up for Medicaid or CHIP… have routine income verification processes…. Allowing states to use pre-exisiting data to pre-qualify kids for free or reduced price school lunches will help a few more kids get a quality daily meal or two in their stomachs which should their well being in addition to school performance. It is also an example of the government working to actively improve peoples’ lives while streamlining the interaction. If we could only make it mandatory that states use Medicaid or SNAP eligiblity data to drive the full array of income qualified social services instead of silo-ing different categories of assistance, so duplication and administrative burden increases wasted costs without providing qualified individuals the services and assistance that they need.