ACA rally, Harrisburg 2017
It’s an overused metaphor, but it’s so apt I can’t help but use it. The Republican zombie of an effort to kill the Affordable Care Act is back. This time the attack is coming from the direction of our own Justice Department led by Attorney General Jeff Sessions. What’s different is, unlike the typical mute, mindless creature depicted in horror films, this zombie is devious and is taking a different tack to achieve its end goal of dismantling President Obama’s signature legislation.
On Thursday, the Justice Department decided not to defend the constitutionality of two key provisions of the Affordable Care Act, namely “guaranteed issue” which requires insurance companies to cover those with preexisting conditions and “community rating” which has to do with charging higher premiums based on medical history. Neither will DOJ defend the Affordable Care Act against state law suits.
Last time I checked, the job of the Justice Department was to uphold the laws of this land. But in a letter to Congress, Sessions wrote, “The Executive Branch has a longstanding tradition of defending the constitutionality of duly enacted statutes if reasonable arguments can be made in their defense… this is a rare case where the proper course is to forgo defense.” And just like that, rule of law was thrown out the window.
And here’s the cost: millions of Americans who suffer from pre-existing conditions are at risk of being denied health care coverage. “How?” you may ask. In order for the ACA to work as designed-to provide coverage for pre-existing conditions-a certain number of people have to participate in the system, because it helps to expand the risk pools. This is where the Individual Mandate came in. Most people were required to obtain health insurance under the ACA. If they failed to do so they were penalized, with this penalty being levied by the Internal Revenue Service. When this specific provision was legally challenged, it was upheld by the Supreme Court on the grounds that even though it exceeded Congress’ powers under the Commerce Clause, Congress does have the power to levy taxes. Remember the right’s mantra that Obamacare was just another big government tax? This is where the idea originated. In the recent GOP tax bill, the mandate was repealed by setting the penalty at zero. Therefore, according to a lawsuit brought by twenty Republican state attorneys general, the ACA is unconstitutional because now no tax is being collected, and Congress has overstepped its bounds. So now AG Sessions believes he has no obligation to defend the law.
Let’s talk about pre-existing conditions for a bit. Although Republicans in Congress and Jeff Sessions act as though they’re far removed, I guarantee everyone reading this knows someone with arthritis or diabetes or heart disease or suffers from one of those ailments themselves. In fact, one can argue that merely being born a woman is a pre-existing condition in itself. Now think of someone diagnosed with cancer. With that diagnosis, cancer survivors are immediately labeled as have a pre-existing condition. Under the ACA, those people were guaranteed that coverage couldn’t be denied. That provision of the ACA literally saves lives. Kathy Kolb of Breast Cancer Support Services of Berks County points out, “People without health insurance are more likely to be diagnosed with cancer at a late stage, when the disease is harder to treat, more costly and more difficult to survive.” Kathy should know. She’s a two-time breast cancer survivor herself. She shared some of her experience with the Affordable Care Act:
“In 2000 I had a lumpectomy. After a recurrence in 2005, I decided on double mastectomies so that cancer would be behind me. I changed jobs in 2006 – and became Executive Director of Breast Cancer Support Services (BCSS) of Berks County in Reading. This is a non-profit organization to help people affected by breast cancer. Unfortunately, my employer didn’t offer health insurance. Everything worked well until my husband lost his job in 2014. We then needed to access health insurance through the Affordable Care Act.
Thank goodness! In my position at BCSS, I have seen firsthand the impact of the ACA. Before 2010, women come into my office at the end of their rope looking for access to the treatments they needed to live. Pre-existing conditions just were not covered by insurance. High –risk pools were failures: High premiums, limited availability and high deductibles made them a disaster.
The ACA has changed the face of healthcare for those of us with pre-existing conditions. While it’s not perfect, I do not want to lose the coverage I have. We can’t go back to the days of worrying a job change will jeopardize your health.”
What does all this mean for you?
In an article for Kaiser Health News, Julie Rovner and Julie Appleby lay out five key things to watch for as this argument goes forward:
It’s bad enough the administration’s change in strategy puts the lives of millions of Americans in jeopardy. But its new approach is scarier than any zombie movie could be. It takes a huge swipe at the rule of law and therefore democracy. Like the Washington Post’s Ruth Marcus said, “This is not a slippery slope. It is a ski jump into lawlessness.”
posted by Amy Levengood
As you can see, statistics on gun ownership and gun violence are abundant and come in many forms. The point is not to show you that we have a gun problem in America. I think you already know that. What I want you to see is that little of the information above is coming from the very agency designed to study public health, the CDC. (Even in the video above, you’ll note that only one chart was taken from the CDC.)
The CDC or Centers for Disease Control and Prevention, as its name suggests, is known for fighting disease. Here’s the mission statement of the organization:
CDC works 24/7 to protect America from health, safety and security threats, both foreign and in the U.S. Whether diseases start at home or abroad, are chronic or acute, curable or preventable, human error or deliberate attack, CDC fights disease and supports communities and citizens to do the same.
CDC increases the health security of our nation. As the nation’s health protection agency, CDC saves lives and protects people from health threats. To accomplish our mission, CDC conducts critical science and provides health information that protects our nation against expensive and dangerous health threats, and responds when these arise.
So yes, the CDC focuses on health topics from arthritis to the Zika virus, but its purview is actually much broader. Accidental falls, car crashes, traumatic brain injuries, and drawings are all things studied by the agency. It would therefore be logical that gun violence and gun deaths would also be part of the CDC’s research, and at one time they were. Then along came the deep pockets of the NRA and its cohorts in the gun lobby. These groups pressured (some would say bribed) politicians on the Hill to deny that gun violence is a public health issue from which we need to be protected. The NRA then created the perfect Catch 22. It goes something like this. A shooting occurs. One side argues for stricter gun control measures. The other side argues that there’s no evidence that those measures make a difference. The problem is there is little evidence to be had. The gun lobby made sure of that.
In the 1990’s several studies published by public health researchers showed that having a gun in the house was directly related to increased rates of homicide and suicide. But what really put the CDC in the gun advocates’ sights (pardon the pun) was a 1994 statement by then director of the CDC’s National Center for Inquiry and Prevention Control Mark Rosenberg, who said, “We need to revolutionize the way we look at guns, like what we did with cigarettes ... It used to be that smoking was a glamour symbol—cool, sexy, macho. Now it is dirty, deadly—and banned.” Rosenberg’s statement threw the NRA into overdrive. In 1996 the group pushed Congress to amend a spending bill which mandated that "none of the funds made available for injury prevention and control at the Centers for Disease Control and Prevention (CDC) may be used to advocate or promote gun control." The amendment was authored by Republican Congressman Jay Dickey of Arkansas. In that same bill, Congress removed $2.6 million from the CDC budget-the very amount that the agency was allocated the previous year for firearms research.
The CDC has struggled with the gun issue ever since because of the Dickey Amendment. In 2013, President Obama directed the agency to research gun violence, but funds were limited. In October of 2015, 110 members of Congress (all Democrats) signed a letter asking for the Dickey Amendment to be rejected. In December of that same year, Nancy Pelosi lobbied hard to have the amendment removed from the 2016 spending bill, but to no avail.
After the 2015 massacre at the Emanuel A.M.E. Church in Charleston, SC, an amendment was proposed in the House Appropriations Committee that would have provided funding for the Centers for Disease Control and Prevention to study the underlying causes of gun violence. Then Speaker of the House, John Boehner explained his opposition to the legislation in this way:
“The CDC is there to look at diseases that need to be dealt with to protect public health,” Boehner said. "I’m sorry, but a gun is not a disease. Guns don’t kill people — people do. And when people use weapons in a horrible way, we should condemn the actions of the individual and not blame the action on some weapon.” (By the way, John Boehner came in second only to Paul Ryan for the amount of campaign contributions from gun lobbyists over the span of his career.)
John Boehner may not have thought the problem was research worthy, but medical and public health professionals disagree. Both the American Medical Association and the American Public Health Association have called gun violence a public health issue, and in 2016 over 100 medical organizations signed a letter asking Congress to lift the Dickey Amendment. “We in public health count dead people. It’s one of the things we do. And we count them in order to understand how to prevent preventable deaths,” said Nancy Krieger, an epidemiologist at the Harvard T.H. Chan School of Public Health.
Congressman Dickey passed away in April. In recent years he expressed regret over the amendment. In 2012, he coauthored a Washington Post op-ed with Mark Rosenberg, in which both men argued for more gun-violence research. Dickey later said, “I wish I had not been so reactionary.”
So do we.
posted by Amy Levengood
courtesy of Equality Pennsylvania
You know our system of government is broken when children are being used as ideological pawns, and that is exactly what seems to be happening with the Children’s Health Insurance Program or CHIP.
CHIP or State Children’s Health Insurance Program (SCHIP), as it was initially known, was born out of the failed comprehensive healthcare reform plan proposed by President Clinton 1993. In the late 90’s there was renewed effort on the legislation, leading to SCHIP, a bipartisan bill sponsored by Senator Ted Kennedy with support from Senator Orin Hatch and then First Lady, Hillary Clinton. Its purpose was to provide healthcare access to children of families whose income was modest but too high to qualify for Medicaid. CHIP is administered by Health and Human Services and provides matching funds to states for children who qualify.
About 9 million children nationwide rely on CHIP for their healthcare, yet in their fight over repealing the Affordable Care Act, Congress missed the September 30th deadline to reauthorize CHIP and let the program lapse amidst a partisan fisticuffs.
Click here to read what the fighting is all about.
Nevertheless, on Friday November 3 the House reauthorized CHIP in a 242-174 vote. It remains to be seen what will happen in the Senate. Many states, including Pennsylvania, have enough funds to keep the program solvent through the end of 2017 and even beyond. But many states do not, meaning significant numbers of children could be in danger of losing their healthcare if Congress doesn’t act.
That’s what’s happening at the federal level. Now let’s zoom in on Pennsylvania. On the surface, it seems like our friends in Harrisburg are trying to emulate the chess game they’re playing in Washington. Like their counterparts in D.C., PA legislators have been haggling over the reauthorization of CHIP. But in Harrisburg it has taken a sinister turn.
Let me introduce you to HB 1388, otherwise known as the Pennsylvania Children’s Health Insurance (CHIP) Reauthorization bill. You can read for yourself the long and sordid history of HB 1388 and see how your rep voted (if they were members of the pertinent committees). Click here.
Here’s a brief summary of the evolution of HB 1388:
In August of 2016 in accordance with new federal rules spelled out in the Affordable Care Act, Governor Wolf expanded CHIP to include coverage of gender reassignment surgeries for transgender individuals. (Unsurprisingly the Trump administration is not enforcing the federal rules.) CHIP coverage includes children up to the age of 19, and according to the Kaiser Family Foundation, over 342,000 children participated in CHIP in Pennsylvania (in 2016). But more importantly, the PA State Department of Human Services has noted that only 34 CHIP enrollees have sought coverage for counseling and/or surgery related to gender issues or gender reassignment. 34!
A vote was required this year in the PA Legislature to reauthorize the state part of the program until 2019. In June 2017, it passed unanimously out of the PA House and into the Senate, where it was referred to the Banking and Insurance Committee. Here’s where the trouble starts.
Once HB 1388 hit the Banking and Insurance Committee, despite the fact that it had passed unanimously in the House, it was suddenly amended by Sen. Don White, R-Indiana County. Here’s his rationale: "It is completely inappropriate to use state funds to pay for sex change operations for children. I believe that is a position that is strongly endorsed by a vast majority of Pennsylvanians." I’m not sure where Sen. White is getting his information, but it’s been one of the right-wing talking points to say that children as young as 5 are having surgeries, which is completely unfounded.
On October 23 with lawmakers having to choose between voting against reauthorizing CHIP or supporting discrimination, HB 1388 passed through the Senate Appropriations Committee as amended. The “dirty” version of the CHIP reauthorization was now making its way back to the House.
Karen Showalter of MomsRising and the Tuesdays With Toomey crew.
Jane Palmer and Jason Landau Goodman, Executive Director of the PA Youth Congress, getting organized in the rotunda of the State House on October 24th.
Enter your Indivisible Team. On October 24, Jane Palmer and I joined up with our Tuesday With Toomey friends to storm the State House. In a collaborative effort with Karen Showalter of MomsRising and Jason Landau Goodman of the PA Youth Congress, we delivered petitions with hundreds of signatures to 50 senators all over the capital, asking them to pass a “clean” reauthorization of CHIP without the discriminatory amendment.
That same day there was another vote on the bill with an amended version of the White Amendment. Transgender CHIP recipients would now have coverage on services such as counseling but surgery would still be off the table. The next day HB 1388 was sent to the House where it now sits in the Rules Committee. Again its fate is in the hands of our state reps.
“The amendment effectively segregates transgendered children from how other children in the program are treated,” wrote Gov. Wolf to Senate leaders after Wednesday’s vote. “Plain and simple, this is wrong, and all health decisions for these kids should be made with their parents, counselors, and doctors – not by politicians.”
Omar Gonzalez-Pagan, staff attorney with Lambda Legal, a national LGBTQ civil rights advocacy organization, said the Senate’s move could put the state in violation of federal law.
The ACLU was another advocacy group which opposed the "dirty" version of the reauthorization. “Writing discrimination against transgender youth into law is offensive and wrong. Senators used CHIP, an effective program to cover the healthcare needs of children, as a vehicle to advance their anti-trans agenda. Have they no shame? If this bill becomes law, we will consider any and all potential legal avenues to challenge it,” says Reggie Shuford, executive director of the ACLU of Pennsylvania
Transgender kids are already at risk. All one needs to do is look at the instances of bullying and rates of suicide in this segment of the population. Why make it more difficult for them to access a physician's care and psychological counseling, the same rights granted to every other child in the CHIP program? One can't turn it into it a fiscal argument either. Just like Trump’s attempt to ban transgenders in the military, the number of people using the funds is minuscule. Remember what I said earlier-only 34, count them- 34 CHIP recipients sought coverage for counseling and/OR surgery! So this leaves me with one conclusion and one conclusion only, that this dirty bill is a blatant example of discrimination against transgender youth! There can be no other explanation for denying healthcare to underprivileged kids.
The bottom line is kids should not be used like pawns in a game of chess to pursue intolerant personal agendas, and we need to send that message express to Harrisburg!
They’re back and this time it’s with a vengeance! After having rejected four different Affordable Care Act (ACA) repeal plans this summer, Senate Republicans are at it again. What makes this most recent iteration so frightening is that their desperation to undo President Obama’s signature accomplishment is almost palpable. The current monster Republicans are trying to unleash on the American people is the eponymous Graham-Cassidy-Heller-Johnson. (It should be noted that former PA Senator Rick Santorum has unofficially attached his name to the bill with extensive lobbying efforts on its behalf.)
Work on the bill began in July. (Didn’t they have over 7 years to come up with a replacement plan? Talk about procrastination!) This last ditch effort is being touted by Lindsey Graham as a compromise that will return power to the states. “Instead of a Washington-knows-best approach like Obamacare, our legislation empowers those closest to the health care needs of their communities to provide solutions,” Graham said in a statement on Wednesday. I wonder if the “those closest to the health care needs of their communities” he’s referring to includes the 16 patient and provider groups, such as the American Heart Association, the American Lung Association, the March of Dimes, to name a few, who oppose his bill.
What's in the bill:
While we could go point by point analyzing the inherent problems in each of these, here's an overview of some of the items the bill purports to address:
On Monday Senator Chris Murphy (D-CT) tweeted this out:
Here's what Graham-Cassidy will actually do :
Most significantly, the biggest departure from the ACA is that funds will no longer be focused on the lowest-income populations. Funding disparities overall get larger over time, because Graham-Cassidy has set a slower growth rate in costs than is realistically expected.
One last but important thing to mention. The Congressional Budget Office will only release a preliminary assessment of the bill without analysis of coverage or premiums. A full, complete score will not be available for weeks. There’s a September 30th deadline for enacting the budgetary process of reconciliation that Republicans hope to use to avoid a Democratic filibuster, so Republicans are working overtime to push the bill through. All of this means that our Senate is heading toward a blind vote on a piece of legislation that effects 1/5 of the nation's economy and our most vulnerable citizens.
I could go on, but this beast is scary enough. It's time to exorcise some demons. Maybe with some prodding from their constituents, Republicans will find their way to "the light".
posted by Amy Levengood
There are currently 9 State Representatives in Berks County; 7 Republicans and 2 Democrats. Indivisible has them conveniently listed here under "Meet Our State Reps". Take a look. You won’t want to forget these names and faces.
Last Tuesday afternoon in a last minute 102 – 91 vote divided mostly along party lines, the PA House passed on to the Senate a bill that would drastically change PA’s Medicaid program. 7 of our state reps voted in favor of the bill; 2 voted against it. I’ll leave it to you to divine the breakdown.
The vote came less than 24 hours after Republicans in the House Rules Committee amended the bill to include drastic alterations such as requiring the Pennsylvania Department of Human Services to pursue a federal waiver of Medicaid rules to impose work requirements on the program.
The Pennsylvania Health Access Network, which strongly opposes House Bill 59, called it “a sneak attack on our healthcare” and a “bad deal for Pennsylvania.” PHAN said in a statement, “This bill makes hard-working people jump through additional layers of red tape. People will get stuck in paper chases or processing errors that will negate all their hard work by cutting them off from the care they need. Working Pennsylvanians deserve better.”
The major problem with the bill is that it is based on a fallacy-that those receiving Medicaid aren’t working and are abusing the system. In fact, according to the non-profit Kaiser Family Foundation, 72 percent of non-elderly Pennsylvania adults in Medicaid are in working families, and 55 percent are working themselves, with common reasons for not working being illness or disability, going to school, taking care of home or family or inability to find work. Furthermore, of the Medicaid expansion population, 43 percent were working either full time or part time, as indicated in a report from the PA's Department of Human Services. That same report showed that in the first year of the expansion, about 45 percent used it to receive at least one preventive service, about 5 percent had a diagnosis of Type 2 diabetes, and about 11 percent had a substance abuse disorder.
What are the objections to work requirements or premiums for Medicaid? Marc Stier of Third and State outlines four of them:
Beyond the work requirements, the bill, sponsored by Republican Rep. Dan Moul of Adams County, would also establish a “lock-in” program. Such programs enable states to restrict some patients to a single designated provider, pharmacy or both in effort to “rein in a Medicaid patient’s overuse, and possible abuse, of physician services and prescription drugs,” according to the Centers for Disease Control and Prevention. The legislation would add a premium for disabled children whose families receive income 1,000 percent above the federal poverty level.
It’s important to note that no other states have a work requirement for Medicaid. “The federal government has never allowed a state to condition Medicaid eligibility on work,” said Mary Beth Musumeci, associate director at the Kaiser Family Foundation’s program on Medicaid and the Uninsured. “The rationale was that Medicaid is a health program as opposed to a work program,” Musumeci added. But there are rumblings at the federal level, and it’s possible the current administration would allow such work stipulations in the future.
Governor Wolf opposes the legislation. This statement was released by his spokesperson on July 11th:
“Governor Wolf strongly opposes these backdoor changes to Medicaid that could have widespread and potentially life-changing effects on the health and well-being of millions of Pennsylvanians. Seniors, people with disabilities and low-income working families don’t need their lives to be made even more difficult by politicians in Harrisburg.
Beyond the substance of these changes, the process flies in the face of good government and these changes would cost millions of taxpayer dollars just to implement. There was no input from stakeholders or families that would be affected and no formal fiscal analysis. Medicaid is not a handout — it is a lifeline. We need to support these families, not create more hoops for them to jump through.”
Remember those State Reps? They're all up for re-election in 2018. As for this bill, it now moves to the State Senate. Conveniently, Indivisible also has this page: "Meet Our State Senators". Now might be a good time to update your phone’s contact list!
posted by Amy Levengood
David Franklin/Getty Images
In a guest blog post for Third and State, Det Ansinn, owner of BrickSimple, a software development company in Doylestown, PA, warns that repealing the ACA will leave his employees without the “awesome and amazing” healthcare plan he now provides them. Read Ansinn’s post on how the Republican plan will hurt small businesses like his.
Why Businesses Need the ACA
1 in5 Marketplace consumers was a small business owner or entrepreneur in 2014
A Treasury Department report released in January 2017 showed that "the Affordable Care Act (ACA's) Health Insurance Marketplaces are playing an especially crucial role in providing health coverage to entrepreneurs and other independent workers". In fact, Pennsylvania is one of ten states with the largest number of small business owners having Marketplace coverage in 2014.
Read two assessments of the Treasury Department's report.
One in Five... and
Small Business Owners...
posted by Amy Levengood
Hubert H. Humphrey Building, Washington, D.C. photo © Chimay Bleue
On November 1, 1977 the first federal building to be dedicated to a living person was named after former vice president, Hubert H. Humphrey. That building currently serves as the headquarters for the U.S. Department of Health and Human Services. In his dedication speech, Humphrey, who was terminally ill with cancer stated, “It was once said that the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life -- the sick, the needy, and the handicapped.” 75 days later Hubert H. Humphrey succumbed to bladder cancer.
I’m old enough to remember Hubert Humphrey. I’m also old enough to remember that approximately a month ago due to a shortage of votes, Paul Ryan pulled the AHCA bill, a disastrous attempt to repeal and replace Obamacare. Well, it appears the Republicans are back at it and this time with a vengeance. Determined to dismantle the Affordable Care Act brick by brick, Republicans in the house are now looking to undermine one of the act’s keystone components, namely protections for pre-existing conditions, as early as next week. Congress wants to include an amendment that would allow insurers to charge higher rates based on a person’s health status. It’s being reported that under the new plan, “states would be able to waive protections for pre-existing conditions for any reason, as long as they set up a high-risk pool or participated in a federal risk-sharing program”. The result? For those who need it most, healthcare would become virtually out of reach monetarily. Under current law (the ACA), insurers can use standard age rating curves to vary premiums but cannot do so based on health status. The Centers for Medicare & Medicaid Services or CMS has done detailed analysis of projected premium surcharges if pre-existing condition protections are removed. I should warn you-it’s not a pretty picture.
The current occupant of the Hubert H. Humphrey Building, HHS Secretary Tom Price, said in an interview on Tuesday, that states, rather than the federal government, should have power over our healthcare. "States are much more flexible, much more nimble to be able to create and modify a system that would work best for their constituents," he said. What Price omitted to mention was that with the Trump Administration’s plan to slash billions from HHS, states will be hard pressed for funds. Perhaps it’s time for Secretary Price and his friends in Washington to remember something - the words of his building’s namesake.
Click here to read the CMS analysis and to view a breakdown of pre-existing condition surcharges by state.
Premium surcharges if pre-existing condition protections are repealed
Estimates for a 40-year-old individual with selected health conditions in 2026, including effect of federal invisible risk-sharing program
posted by Amy Levengood
Please see article below about the fallacy of a death spiral. Hint: it's states and taxpayers who are in for it, not the insurance companies. The ACA does need improvement, and Alaska has gotten creative. Click to read the full Vox article by Sarah Kliff.
Last year, Alaska’s Obamacare marketplaces seemed on the verge of implosion. Premiums for individual health insurance plans were set to rise 42 percent. State officials worried that they were on the verge of a “death spiral,” where only the sickest people buy coverage and cause rates to skyrocket year after year.
So the state tried something new and different — and it worked. Lori Wing-Heier, Alaska’s insurance commissioner, put together a plan that had the state pay back insurers for especially high medical claims submitted to Obamacare plans. This lowered premiums for everyone. In the end, the premium increase was a mere 7 percent...
Click to read the full Vox article by Sarah Kliff.
There are rampant concerns about the future of Obamacare right now. We don’t know whether its marketplaces will remain stable in 2018 or, as the president has predicted, explode as premiums rise and insurers drop out. But Alaska’s experiment is a reminder that the future of Obamacare isn’t entirely up to Republicans in Washington. The work happening 3,000 miles away in Alaska shows that states have the ability to fix Obamacare too — and that the Trump administration might even support those policies.
Jeff Sommer writes Strategies, a New York Times column on markets, finance and the economy. We're reprinting his March 18th column here in full -- with emphasis added -- to enrich your conversations with legislators. Many of our elected officials genuinely believe that health insurance companies are suffering under the ACA. Nothing could be further from the truth.
Gripes About Obamacare Aside, Health Insurers Are in a Profit Spiral
Jeff Sommer, March 18, 2017
Over the last few years, big managed care companies like UnitedHealth Group have contributed to the furor over the fate of the Affordable Care Act by saying that important parts of it are fundamentally flawed.
But Obamacare hasn’t been a curse for the managed care companies. Over all, based on their share performance, it has been something of a blessing.
Since March 2010, when the Affordable Care Act was signed into law, the managed care companies within the Standard & Poor’s 500-stock index — UnitedHealth, Aetna, Anthem, Cigna, Humana and Centene — have risen far more than the overall stock index. This is no small matter: The stock market soared during that period.
The numbers are astonishing. The Standard & Poor’s stock index returned 135.6 percent in those seven years through Thursday, a performance that we may not see again in our lifetimes. But the managed care stocks, as a whole, have gained nearly 300 percent including dividends, according to calculations by Bespoke Investment Group.
“If Obamacare has been bad for the managed care stocks, why have they performed so well under it?” asked Paul Hickey, a founder of Bespoke Investment Group. “And do they really need to be rescued by Congress?”
The answers are complex but boil down to this: Basically, several analysts on Wall Street and in Washington said, the underlying businesses of the big managed care companies have actually done extremely well under Obamacare. They have run into some problems but are hardly in need of a rescue.
The companies have notched profits — from expansion of Medicaid, for example, and from services aimed at cutting medical costs — while learning how to insulate themselves from parts of the law that have crimped their income. They have diversified, earning money from businesses that include data management, outpatient clinics and surgical services, as well as traditional health insurance.
“The successful managed care companies, and UnitedHealth in particular, have figured out how to prosper in almost any environment — and to insulate themselves from issues that become a problem,” said Gary Claxton, director of the health care marketplace project for the Kaiser Family Foundation, a nonprofit dedicated to health care policy. “They are making a lot of money from government programs like Medicaid and Medicare — and they are likely to keep doing so,” he said, regardless of what happens in Washington.
UnitedHealth, the industry bellwether, has reduced its exposure to what was its biggest problem in Obamacare: money-losing insurance that it sold in public exchanges to individuals, who often received government subsidies.
Last April, it announced that in the face of mounting losses from individual policies sold in public exchanges under Obamacare, it would radically cut its participation in those markets. It disclosed in its annual report in January that in 2017 the company “will participate in individual public exchanges in three states, a reduction from 34 states in 2016.” It also said that it would shed more than $4 billion in revenue from them, in an effort to cut its losses.
With those kinds of problems, you might think that the stock market has looked with disfavor at UnitedHealth and its competitors, and that investors have been counting on Congress to repeal Obamacare and replace it within something more palatable for the insurers.
But that assumption, which I made before looking at the performance of the companies’ shares, couldn’t be further from the truth.
But a second maneuver, an accounting one, helped its standing in financial markets immensely, said Sheryl Skolnick, director of United States equity research for Mizuho Securities. In November 2015, UnitedHealth made an adjustment on its balance sheet, setting aside an initial “premium deficiency reserve” of $200 million for expected losses in those marketplaces.
Those losses have cumulatively swelled to more than $1 billion, Ms. Skolnick said, but because they have been segregated in the company’s accounting, and because the company has been leaving those markets, investors have been able to easily assess the company’s value “entirely separately from the problems it’s had with the exchanges,” she said. Other managed care companies have made similar provisions.
Wall Street has rewarded companies like UnitedHealth for steadily increasing profits in other businesses, and generally hasn’t penalized them much for the public exchange losses, Ms. Skolnick said.
UnitedHealth’s share price, in other words, has been relatively unscathed by its problems with Obamacare public exchanges, even as its statements about the unprofitability of the exchanges made headlines and contributed to public perceptions that Obamacare is in deep trouble. (The Congressional Budget Office indicated Monday that some of these fears are overblown: The public exchange markets, it said, “would probably be stable in most areas under either current law or the legislation” to replace Obamacare in the House of Representatives.)
In Ms. Skolnick’s view, the Affordable Care Act could indeed use some modifications, but the fundamental problem with the public exchanges is one of “adverse selection,” in which relatively sick people have occupied an outsize part of those markets, making it difficult for insurance companies to come up with profitable pricing. But the root cause is that the “mandate,” the requirement that everyone buy health insurance, is too weak, she said, not too strong. The House legislation would make matters worse by imposing a surcharge for people who have let their insurance lapse. “I think that’s weaker,” she said.
There are plenty of good things in Obamacare for these companies. The expansion of Medicaid has been a boon for them, said Lance Wilkes, an analyst with Sanford C. Bernstein. “It’s not a high-margin business for the managed care companies, but it’s a steady one and it has been a growing one,” he said. The companies offer insurance to low-income residents in various states under Medicaid, he said, while Medicare plans for older people have also been a growth area.
Mr. Claxton of the Kaiser Family Foundation said, “As the baby boom population ages, people are leaving their workplace health care plans, which have been steady and profitable for the managed care companies but aren’t growing, and going on Medicare in big numbers, and companies like UnitedHealth see this as an opportunity.”
Direct government premiums from Medicaid and Medicare amount to 25 percent of UnitedHealth’s revenue, and the company is moving rapidly into other areas: In January, it announced the $2.3 billion purchase of Surgical Care Affiliates, an outpatient surgery chain, as part of an aggressive move to provide direct medical services.
Expanding portfolios of businesses and deft moves to stanch losses may be why the managed care companies have, for the most part, been favored by the stock market. (The industry has endured some thwarted mergers — between Aetna and Humana, and Anthem and Cigna — and continuing headaches from public exchanges.)
Paul D. Ryan, the speaker of the House of Representatives, has said repeatedly that Obamacare is in a “death spiral.” That’s a debatable proposition. But it seems irrefutable that the big managed care stocks are in a different kind of spiral — a profit spiral — that is twirling upward.
"What will Paul Ryan and the Trump administration do now that they have failed to repeal Obamacare," asks Donald M. Berwick in an April 1st article in the New York Times called Obamacare Can Survive Trump. Answer: they'll try to sabotage it. The article continues (emphasis added) --
After their legislative debacle, they said they would let Obamacare explode on its own, after which, they hope, the Democrats will come crawling to them, pleading for a new plan.
“I’m open to that,” President Trump announced.
But Republicans, who have tried for years to stop the government from expanding health care coverage, will not wait passively for a disaster to happen.
My experience as President Barack Obama’s administrator of the Centers for Medicare and Medicaid Services should serve as a warning. From Day 1, Republicans did what they could to weaken the Affordable Care Act. While we worked to make it easier for eligible people to apply for Medicaid, Republicans favored rules that made enrollment harder. They cut budgets for implementing Obamacare provisions, like modernized data systems.
They could also stop learning about best practices from different states’ approaches. In Obamacare’s first seven years, some states, like Massachusetts, Arkansas and California, have come up with creative ways to keep premium increases down by encouraging better care and providing incentives for healthy people to sign up. Others, like Arizona, Oklahoma and Tennessee, have been more passive and have seen much higher increases. Significantly, states that expanded Medicaid have, on average, kept premiums down, because many expensive patients were covered by Medicaid instead of having to enter the marketplace’s high-risk pools.And they opposed outreach to educate the public. When we sent beneficiaries a brochure about their new options, Mitch McConnell, then the Senate minority leader, called it “propaganda.” Meanwhile, they spread misinformation, claiming, for example, that premiums were soaring everywhere and that doctors were dropping Medicare, when in fact, overall premium increases were historically low and Medicare patients experienced no discernible change in their access to doctors.
Now that the Republicans are in control of both elected branches of government, they are in a position to undermine the Affordable Care Act from within — and then to blame the law, rather than their own sabotage, for its failure.
Congress, the Trump administration and Tom Price, the secretary of health and human services, could do a lot of damage without overturning the law. This has already begun. Early this year, President Trump stopped advertising aimed at persuading healthy young people to sign up for coverage — a perfect way to cause the “death spiral” Republicans are so fond of predicting.
Now, they can starve the agencies that have to administer the law, making it hard for them to do their jobs. They can make it riskier for insurance companies to participate and can decrease enforcement of requirements that policies cover a basic set of benefits. The new administrator of Medicare and Medicaid, Seema Verma, favors giving states waivers to avoid some of the law’s provisions, weakening coverage and increasing out-of-pocket costs. Under President Obama, my agency carefully reviewed any state-level changes in Medicaid benefits and marketplace policies, but far less diligence is likely now.
The Affordable Care Act established the Center for Medicare and Medicaid Innovation to support trials of “new models” of care and payment, and it gave the secretary of health and human services the authority to spread those models if they were proved effective. But the Trump administration shows little interest in learning from what works. It has already stopped the expansion of a new way of paying for hip and knee replacement surgery that has been shown to keep costs down and quality up.In their charge to repeal and replace, Mr. Ryan and company talked only about states that have not done well, ignoring the lessons from those that have succeeded. We can expect that erosive messaging to continue.
Fortunately for the millions of Americans who get their health coverage through the Affordable Care Act, the Republicans are probably going to fail. The program is much stronger than they’d like us to believe. It is not in a death spiral and, if left alone, will continue to meet patients’ needs for the foreseeable future.
But it does need improvement. The individual and small-group market — for those who lack employer-sponsored insurance, Medicare or Medicaid — has indeed been vulnerable to “adverse selection,” in which healthy people stay out and sick people stay in, causing some premiums to go up. This is a significant but reparable defect, and some states have already fixed it. California used extensive marketing to encourage healthy young adults to get insurance and worked with health plans to provide generous benefits at fair prices. Federal support could help other states follow suit.
The law’s transparency provisions, intended to help insurers and patients learn more easily where prices are lower and quality is higher, also need better enforcement and more support. We need to reduce the price of access to such data (while strictly protecting patient privacy).
Finally, insurers are nervous. Because they had difficulty estimating their risks under the law, there were provisions that protected them from miscalculations in the first three years. This worked, lowering premiums by as much as 14 percent. That protection has now been phased out, but help is still possible. Alaska set up an innovative state reinsurance fund to cushion insurance companies from extremely high-cost cases, keeping them from having to impose whipsawing premiums on customers.
Unfortunately, it’s unlikely that any of these fixes will happen anytime under Republicans, who have already staked their reputation on the prediction that Obamacare will soon “explode.” It is hard to imagine that they won’t try their best to make that dire prediction a reality.
Will they succeed? Probably not. The law does too much good for too many people for doctrine to override evidence. But the Affordable Care Act’s opponents have been undermining it for years, and we, its defenders, drop our guard at our peril.
Donald M. Berwick, a senior fellow at the Institute for Healthcare Improvement, ran the Centers for Medicare and Medicaid Services from July 2010 to December 2011.