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Archive for June 2015

Win-Win Medicaid Reform

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In my recent post on a way forward after a ruling for the plaintiffs in King vs Burwell, I suggested Republicans use the opportunity to do a sort of Medicaid privatization along the lines that Arkansas has done. While my post was just obsoleted by the fact that the Supreme Court ruled the other way, I now think that the case for states to do their own reforms is even stronger.

In order to make the ACA Medicaid expansion politically palatable for Republicans, Arkansas did a sort of privatization of Medicaid- using Medicaid funds as “premium assistance” to allow recipients to choose a private plan from the ACA exchanges.

While the Obama administration wasn’t crazy about this idea, they (and some progressives) decided it was better than no Medicaid expansion, and so granted a waiver from the usual Medicaid rules to allow this to proceed.

There are some real potential problems with the Arkansas full privatization approach.

First, Arkansas hopes to save money- or at least not lose it- by privatizing.  This is actually a condition of the federal waivers allowing their experiment. This may or may not work out- private plans might operate more efficiently and reduce costs through cost-sharing, but they also make higher payments to providers.

Second, while Medicaid is in some ways bad insurance (because many providers do not accept it), in one way it is better for recipients than just about any private plan- it requires little to no cost-sharing. In many states, Medicaid plans have a $0 deductible and $0 co-pays for all covered services. Federal Medicaid rules prevent deductibles and co-pays from getting anywhere near as high as normal plans, the thought being that Medicaid recipients are too poor to afford them.

These costs, of course, are offset by benefits- especially the greater access to providers through private plans. Do the benefits outweigh the costs? After years of studying what happens in Arkansas, we will get some idea of whether privatization is more or less expensive than traditional Medicaid, and of whether the provider-acceptibility benefits outweigh the poor-people-paying-deductibles costs. But we don’t have to wait to see what the average person thinks- we can just let each individual choose.

Tell each Medicaid recipient that they can either get traditional Medicaid, or choose a plan from the ACA exchange. If you are worried about how much this will cost the state budget, estimate how much traditional Medicaid spends per enrollee and limit the choice of exchange plans to those that cost less than that.

This is a win-win-win: taxpayers save money, Medicaid recipients that value traditional Medicaid’s low cost-sharing can keep their plans, and Medicaid recipients that are willing to put up with some cost-sharing in order to get providers to actually see them can do so.

This should have been bloody obvious. It took me months after hearing about Arkansas to think of it. But apparently people in Iowa are ahead of the curve, and seem to be doing exactly this.

After the King vs Burwell ruling, it is clear that the ACA exchanges are here to stay. It is time to stop trying to fight them and start seeing the incredible pro-poor, pro-market possibilities for reform they create.

Written by James Bailey

June 28, 2015 at 5:35 pm

How should Republicans respond to King v Burwell? The Judo solution for the ACA.

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Any time now the Supreme Court will rule on the legality of Affordable Care Act subsidies through federal health insurance marketplaces.

A ruling for the administration means we keep the status quo (barring some weird saving construction), so there is nothing for Republicans to respond to.

But what should they do if the court rules for the plaintiffs, and 37 states lose their ACA subsidies?

Cave

The caving option is to do a straight renewal of the subsidies; some Congressmen are discussing doing this at least temporarily. But this means giving up a great bargaining position.

Kick Over The Stool

The die-hard conservative option is to do nothing, and hope the ensuing chaos reflects worse on the Democrats. As Jon Gruber has said, the key components of the ACA stand together like a three-legged stool. Without the subsidies, the individual mandate becomes a cruel tax on the poor, and without the mandate (or if people choose to ignore it and pay the fine, as many will without the subsidies) guaranteed issue and community rating mean people can game the system (wait to sign up for insurance until you get sick), creating the mother of all adverse selection problems. If Democrats get more of the blame for the wreck that the health insurance system will become with ACA-minus-subsidies, then Republicans might get the votes to repeal the ACA entirely. But I doubt this would be the case.

One-for-One Trade

The more responsible solution is a compromise- reinstate the subsidies legislatively in return for getting rid of a different part of the ACA they find more offensive. But what would this be? Gruber is right that the major parts of the ACA hang together, and removing one major part by itself is worse than either repealing or keeping the whole thing. Removing only the individual mandate, or only guaranteed issue, or only community rating would be very bad ideas.

I think the employer mandate is the best candidate for one big piece that could be safely removed- and it is the one Democrats are unlikely to go to bat to fight (indeed, we’ve seen the absurd spectacle of the Obama administration trying to delay this part of their own health bill while Republicans sue them to implement it). But would this be such a big victory? It would help business and labor markets, but the employer-based system is still by far the largest alternative to government insurance, and politically it may be unwise for Republicans to weaken it- especially if they continue to attack the parts of the ACA that support the market for individual insurance.

One-for-Many Trade

Rather than killing one other big piece of the ACA in return for reinstating subsidies, Republicans could find more success by making many marginal changes to the ACA. Make the subsidies a bit less generous (it is kind of absurd that they currently go up to 400% of the poverty level), cut back a bit on the Medicaid expansion (as most Republicans at the state level have been doing anyway)- reduce Federal contributions a bit, and cut eligibility a bit. Allow a bit more rating in health insurance, especially for health behaviors that are partly in peoples control (like weight).

Add Instead of Subtract

Even better, in the unlikely event that Republicans are willing to spend this chance to do something constructive rather than go after a partial repeal, would be to move forward a new health policy proposal. This could be one of the oldie-but-goodie conservative health reform proposals, like making it easier to sell insurance across state lines, or equalizing the tax treatment of individual and employer insurance. It could be a random new proposal, like getting rid of innovation-hampering Certificate of Need laws. But, if I can be allowed to dream for a moment, they could take this chance to move forward the free-market elements of the ACA.

Judo Flip

The fact that many of the ACA ideas were first advanced by the conservative Heritage Foundation and enacted by Mitt Romney has become a political talking point for the left, but it wasn’t simply a coincidence or a big mistake. Before the ACA, the market for individual insurance was largely broken. It is a tough economic question how to apportion the blame for this across markets vs misguided government regulations- but the judgement of voters was clear, and the flaws of the market for individual insurance were a consistent impetus for left-wing solutions up to and including single-payer.

Despite the ACA’s many flaws, it has succeeded in making the market for individual insurance functional enough. Individual insurance could be more convenient, it could certainly be cheaper, but now it basically works. And this changes everything.

Why should the government operate a Medicaid program directly, providing insurance that many doctors refuse to take and that recipients hardly value, when for a similar cost they could give away vouchers for gold-level private insurance plans that doctors will actually accept? Arkansas realized this early on, and got permission from the feds to let Medicaid recipients choose real private plans, freeing them from a low-quality government monopoly.

Republicans should support this privatizing potential of the ACA, and change federal Medicaid rules to allow all states to do this. Or if they really want to push the envelope- and I’d want to study the Arkansas experience much more before supporting this- they could make vouchers for individual plans the new default for Medicaid, and require states to get waivers to do anything else. This would judo flip the ACA into a tool for a huge reduction in the role of government in health insurance.

Written by James Bailey

June 23, 2015 at 10:49 am

The Real Media Bias

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The most common accusation I hear about media bias is of “the liberal media”. It is true that every poll shows an overwhelming majority of the US media to be liberal Democrats, and I think they would have to be superhuman to completely prevent this from biasing their reporting.

But there is an even stronger institutional imperative for the media- keeping their jobs. This means selling papers, or keeping ratings high, which in turn means telling readers what they want to hear. One of the most powerful biases coming out of this is “if it bleeds, it leads”. This bias is widely recognized, but people have not recognized the extent to which it counteracts liberal bias.
The classic “it bleeds” stories are about crime, terrorism, and dangerous foreign leaders. With a few exceptions, the more worried or scared people are about crime and terrorism, the more conservative they get.
A truly liberal media would conspire not to cover these things- but it is hard for me to think of local outlets that don’t focus on crime (the weekly paper that is all about music?), or national ones that never mention ISIS. I conclude that “if it bleeds it leads” is the stronger bias.

Written by James Bailey

June 20, 2015 at 12:10 pm

Wolf in White Van

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People were always saying how ugly Southern California was, especially when they came back from their summer vacations. They said it looked plastic or fake or whatever, and talked about all the cool things they saw in Ohio, where their grandparents lived. Or in Pennsylvania. The wall behind the arcade was made of giant sparkling white bricks, just like all the other buildings connected to it. There was graffiti on it, indecipherable gang writing. It was dark now and getting a little cold and then the super-bright lights they have behind stores to keep bums from sleeping by the dumpsters came on, and I thought, people who don’t think Southern California is the most beautiful place in the world are idiots and I hope they choke on their tongues.

John Darnielle, lead singer of The Mountain Goats, has successfully made the rare transition from songwriter to novelist with his new book, “Wolf in White Van.” The book’s protagonist has halfway grown up from being a misfit teen with troubled relationships and an obsession with the dark and fantastic. Pushing through mental illness, seeking solace in things like satanic rock and hitting the arcade with a girl also fleeing her family- it is not hard to draw connections between the world of the novel and songs like This Year, Amy AKA Spent Gladiator, and The Best Ever Death Metal Band in Denton.

As you might expect from one of the best lyricists around, the book is strongest at the level of sentences and paragraphs, which are often beautiful and revealing. But the larger structure of the story, which jumps back and forth through time while largely flowing backward, does work. Darnielle sets up mysteries and gradually, slowly reveals answers, with a few still left to work out by the end.

Recommended.

Written by James Bailey

June 6, 2015 at 4:25 pm