Another Obamacare Architect Recognizes Its Unintended Consequences

 

KocherDr. Bob Kocher, an Obamacare architect turned venture capitalist, has admitted the law has had a significantly negative unintended consequence:

When I joined the Obama White House to advise the president on health-care policy as the only physician on the National Economic Council, I was deeply committed to developing the best health-care reform we could to expand coverage, improve quality and bring down costs.

What I got wrong about ObamaCare was how the change in the delivery of health care would, and should, happen. I believed then that the consolidation of doctors into larger physician groups was inevitable and desirable under the ACA.

Well, the consolidation we predicted has happened: Last year saw 112 hospital mergers (up 18% from 2014). Now I think we were wrong to favor it.

(Bob Kocher, “How I Was Wrong About Obamacare,” Wall Street Journal, July 31, 2016.)

What was Hillary Thinking When She Hatched Her Plan to Lower Drug Costs?

 

Newsflash! Hillary Clinton is concerned about your drug costs. Unfortunately, her plan could actually raise drug prices and force you to pay more, albeit indirectly. She proposes to accomplish both feats simultaneously by capping your prescription drug co-pays at no more than $250 per month. This reckless proposal is central planning of the ilk you would find in Cuba or Venezuela. But I’m getting ahead of myself.

Arkansas’ “Private” Medicaid Expansion Improved Access to Care (At A Very High Price)

 

doctor-mom-and-sonArkansas has a love-hate relationship with Obamacare. The previous (Democratic) governor, Mike Beebe, made a deal to accept Obamacare’s Medicaid expansion but with an interesting twist. Obamacare significantly increased the number of Americans who could become dependent on Medicaid by increasing the income cut-off for eligibility. Many governors rejected the federal funds offered to expand this welfare dependency.

Governor Beebe took the money, but instead of using it to expand Medicaid for the newly eligible, he used it to subsidize beneficiaries’ purchase of private plans in Obamacare’s health insurance exchange. His successor, Republican Asa Hutchinson, and the Republican-majority legislature, decided to continue the program.

According to new research published by the University of Pennsylvania, this “private option” yielded dramatically improved access to care. In a “secret shopper” survey, callers identifying themselves as dependents on traditional Medicaid were able to make appointments with primary-care physicians in 55.5 percent of attempts. Medicaid dependents enrolled in exchange plans got appointments 83.2 percent of the time.

Health Services Jobs Grew 75 Percent Faster Than Non-Health Jobs

 

BLSThis morning’s jobs report was the second month in a row of good news on the employment front. However, like last month’s report, jobs in health services grew much faster than non-health jobs. Health services added 43,000 jobs in July comprising 17 percent of the 255,000 civilian non-health, non-farm jobs added (Table I). The monthly rate of growth in health services jobs was 75 percent more than for other jobs. The shifting of jobs towards the government-controlled health sector continues.

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Double-Digit Premium Hike Debunks California’s “Active Purchaser” Claim

 

Covered California(A version of this Health Alert was published by Orange County Register.)

With some embarrassment, Covered California (the state’s Obamacare exchange where people can purchase health coverage) has announced the average premium hike next year will be 13.2 percent. For many subscribers, the hike will be much greater because of the way federal tax credits discount premiums.

This year, a 40-year-old single person making between $17,820 and $23,760, can buy a Blue Shield Silver level plan with a monthly premium of $318. However, the subscriber only pays $122 while the federal government chips in $196. Next year, the premium will go up 20 percent to $381, of which the subscriber will pay $170, while the government will chip in $211. The total premium will increase by 20 percent ($63), while the subscriber’s net premium will increase 39 percent ($48).

Next year’s premium hikes debunk Covered California’s claim that its power to act as an “active purchaser” gives it an advantage in holding down rate increases. California is one of only four states in which the Obamacare exchange has the statutory authority to act as an “active purchaser,” substituting its own judgement about benefits consumers value for their own. Covered California dictates, for example, a primary-care visit has a $45 co-pay for those with Silver plans; or that a family deductible is $4,500.

Health Construction Shrinks Twice As Fast As Other Construction in June

 

Census2The see-saw in health facilities construction continues. Health construction starts dropped 1.4 percent in June, versus a drop of 0.6 percent for other construction (Table I). However, there was a significant difference between the private and public segments.

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GDP: Health Services Spending Dominates “Close To Zero” Economic Growth

 

BEAAs the U.S. economy continues to flirt with recession, this morning’s “flash” Dross Domestic Product release for the second quarter indicates “close to zero” growth. Business investment has collapsed, leaving personal consumption expenditures to drive what little growth there is.

As a large component of personal consumption expenditures, spending on health services continues to outpace GDP growth. Growth in health services spending of $28.4 billion (annualized) comprised 18 percent of GDP growth. However, personal expenditures on services grew much more than GDP overall. Growth in spending on health services amounted to 15 percent of growth in personal consumption expenditures and 25 percent of spending on services. Spending on health services grew by 5.3 percent, versus only 3.2 percent growth in non-health services GDP (Table I).

First, Do No Digital Harm: Regulating Telemedicine

 

Laptop and Stethoscope(A version of this Health Alert was published by Forbes.)

Telemedicine, whereby physicians use email, phone, text, or video for prescribing and consultations, is growing rapidly. Seeking to encourage faster uptake of telemedicine, many well-intentioned parties are prodding Congress to take actions which will likely have harmful unintended consequences.

So far, Congress has done well. With respect to regulating actual devices, the 21st Century Cures Act, passed by the House in 2015 with overwhelming bipartisan support, is forward thinking. If passed into law, the policies it would implement would lead to a responsible and responsive regulatory environment for mobile health apps.

However, there are other areas in which a Congressional take-over would do more harm than good. In recent testimony to the House Energy & Commerce Committee’s Subcomittee on Commerce, Manufacturing and Trade, I encouraged Congress to First, Do No Digital Harm. Two of the most important areas of risk are federal interference in the practice of medicine and how Medicare pays for telemedicine.

Brookings: The Unaffordable Care Act Lowered Individual Premiums

 

Significant premium hikes in the Obamacare exchanges have been in the news lately. A Dallas Morning News article recently proclaimed, ‘When your health insurance is bigger than the mortgage, something’s wrong’. Indeed, insurers are charging premiums that about the size of a car payment on a late model used car. For a family the premiums are sometimes as high as a mortgage payment. Yet, insurers are hemorrhaging money – suffering losses to the tune of billions since Obamacare went into effect.

But apparently my perception is dead wrong. A pair of Brookings scholars argue individual premiums are actually lower than they would have been absent the Affordable Care Act. What???

Medical Marijuana Saves Taxpayers Money

 

ReeferIn a fascinating article in Health Affairs, Ashley Bradford and David Bradford of the University of Georgia have estimated that medical marijuana has benefited taxpayers:

Using data on all prescriptions filled by Medicare Part D enrollees from 2010 to 2013, we found that the use of prescription drugs for which marijuana could serve as a clinical alternative fell significantly, once a medical marijuana law was implemented. National overall reductions in Medicare program and enrollee spending when states implemented medical marijuana laws were estimated to be $165.2 million per year in 2013. The availability of medical marijuana has a significant effect on prescribing patterns and spending in Medicare Part D.

(Ashley C. Bradford and W. David Bradford, “Medical Marijuana Laws Reduce Prescription Medication Use in Medicare Part D,” Health Affairs, 35 (7) July 2016, pp. 1230-1236.)

Let’s not get carried away, here. The Medicare Part D prescription drug program spent $69 billion on benefits in 2013, of which $59 was funded by taxpayers (not premiums). So, medical marijuana is making an insignificant dent in the burden of this entitlement.