Examining the Continuum of Coverage Proposals

12:00 p.m. – 12:05 p.m.     Welcome and Introductions

• Sarah J. Dash, MPH, President and Chief Executive Officer, Alliance for Health Policy
  @AllHealthPolicy

12:05 p.m. – 12:50 p.m.     Panelist Opening Remarks

• Sara R. Collins, Ph.D., Vice President for Health Care Coverage and Access,The Commonwealth Fund
  @commonwealthfnd

• Linda J. Blumberg, Ph.D., Institute Fellow, Health Policy Center, Urban Institute

• Avik S. A. Roy, M.D., President, The Foundation for Research on Equal Opportunity
  @Avik
• Cori Uccello, MAAA, FSA, MPP, Senior Health Fellow, American Academy of Actuaries
  @actuary_dot_org
• Philip Ellis, Ph.D., President, Ellis Health Policy, Inc.

12:50 p.m. – 1:30 p.m.       Question and Answer Session

(This is an unedited transcript. For accurate quotes and presentations, please refer to the full-event video.) SARAH DASH:  Well, good afternoon.  It seems like everyone is ready to get started.  So why don’t we go ahead.  Welcome.  I’m Sarah Dash, I’m President of the Alliance for Health Policy and we’re very pleased, along with our partners at the Commonwealth Fund to welcome you to today’s briefing on Examining the Continuum of Coverage Proposals.  The Alliance is a non-partisan organization dedicated to advancing knowledge and understanding of health policy.  I would like to thank again, the Commonwealth Fund for their partnership on today’s briefing. So it will come to a surprise to no one that nearly ten years after the passage of the Affordable Care Act, there are still a lot of different ideas and opinions about how to promote access to care and affordability of care.  But there is no question that while coverage rates increased following the implementation of the ACA, there is still significant gaps in who is covered and the cost of care remains a significant concern for the American public.  So today, this briefing will orient you to a continuum of reform ideas that aim to increase healthcare coverage in the United States from incremental approaches to much more sweeping reforms.  We’re not here to advocate for one approach or another, but we do seek to present you with a factual basis for considering the many design elements and downstream effects of these ideas for coverage, health spending and the health system as a whole. Before I introduce our panelists, I just want to review a couple of quick housekeeping notes.  You can join today’s conversation on Twitter using the hashtag #allhealthlive and in your packet of handouts, you will see a blue evaluation form, we really hope that you’ll take the time to fill that out before you head out into the afternoon today.  You also have on your tables green question cards and we hope you’ll take the time to write a question down as you think of it, so that during the Q&A period, we can get to as many of your questions as we can. So with that, I’d like to introduce our expert panel today.  Their accomplishments are considerable and impressive and you can find their full bios in your packets.  First, we will hear from Sara Collins who is Vice President for Healthcare Coverage and Access at the Commonwealth Fund.  Since joining the Fund, Sara has led national surveys on health insurance and authored numerous reports, issue briefs and journal articles on health insurance coverage and policy. Next, I am pleased to introduce Linda Blumberg who was a fellow in the Health Policy Center at the Urban Institute.  Linda is an expert in private health insurance, healthcare financing, and health system reform.  She’s been modeling health reform proposals for over 25 years. Next, we’ll hear from Avik Roy.  Avik is the President of the Foundation for Research on Equal Opportunity, a non-partisan, non-profit think tank that conducts research on expanding opportunity to those who least have it.  He is a policy editor at Forbes and manages the Apothecary, a blog on healthcare policy and entitlement reform. Next, I am pleased to introduce Cori Uccello, Senior Health Fellow at the American Academy of Actuaries.  She’s currently a member of the CBO, Congressional Budget Office panel of health advisors and serves on the CBO Health Insurance Simulation Model Technical Review Panel.  She also served two terms as a MedPAC commissioner. Finally, and certainly last but not least, we will hear from Phil Ellis, an independent health policy consultant who spent most of his career at the CBO as a leader of the health team.  He worked extensively on the Affordable Care Act, specifically with regard to estimating the effects of provisions governing insurance coverage.  So with that, I am pleased to turn it over to Sara Collins. SARA COLLINS:  Thank you, Sarah, and thank you to the Alliance for holding this really important briefing today.  I’m just going to review the current state of health insurance coverage in the United States and also provide kind of a bird’s eye high level overview of where the health policy landscape is right now, and what the current policy proposals are under consideration. After declining significantly following the ACAs or the Affordable Care Act’s coverage expansions, the uninsured rate has largely flattened or even up ticked in certain surveys depending on the survey that you look at.  About 27 to 30 million people are currently uninsured.  Seventeen states have not yet expanded eligibility for Medicaid, leaving those states with much higher uninsured rates, in most cases, than states that have expanded.  About four and a half million people are uninsured in those states who would otherwise be eligible for Medicaid.  At the same time, the number of working age adults who are insured all year, but who are underinsured, has risen to about 44 million people.  These are people who have high out-of-pocket costs or high deductibles relative to their incomes.  As you can see from the orange bar on the chart, the highest rates of underinsurance are among people in an individual market, but over the last few years, the largest growth that we’ve seen in this measure has occurred in employer-based plans and is largely driven by the increase in both the proliferation and the size of deductibles in those plans. Across the country, in employer plans, we’ve seen an increase over time in the amount of premiums and deductibles that people are paying, relative to median income in those states. These costs were as high as 12 to 15 percent of median income in 18 states in 2017.  Most families don’t actually spend that much out-of-pocket every year.  People are largely healthy on average and don’t really interface with a health system that often, but I think what we’re seeing in terms of the anxiety that Sarah mentioned about voters and their healthcare costs, is the fact of their increasing risk of out-of-pocket exposures through their deductibles and uncertainty about the future. In the individual market, premium tax credits have reduced costs substantially for families with incomes that are under 400 percent of poverty, so about $100,000 for a family of four.  But if your income is over the threshold, it makes you eligible for those subsidies.  The cost of your premiums can command as much as 10 percent of your income in many states, even for bronze level plans. Several Democratic members of Congress and presidential candidates have proposed health reform plans that would both expand coverage and improve the affordability of healthcare and health insurance.  And as you’re thinking about these proposals, as you’re thinking about what they mean, it’s really important to remember that the U.S. healthcare insurance system is comprised of both public and private sources of insurance coverage.  So you think about employer coverage, individual coverage, Medicaid, and Medicare.  And all of those coverage sources are financed by a mix of both private and public spending.  So think about employer coverage.  People pay premiums, but the Federal government also has a hefty amount of money in employer coverage.  It is the tax exclusion is the largest Federal tax expenditure in the Federal budget.  On the flip side, Medicaid and Medicare are public programs, but those benefits are often provided by private insurers like the Medicare Advantage program. The bills that have been introduced in Congress over the past year would build out the public side of our health insurance system largely, from adding more public features to private insurance like increasing subsidies for the marketplaces, adding a re-insurance program, to providing a choice of a public plan alongside private plans and even in the case of some bills, proposing that people in employer-based plans could actually buy coverage through a public plan and then at the far end of the spectrum, making a public plan like Medicare the primary source of coverage for most Americans. The proposals that we’re hearing from the 2020 Democratic presidential candidates follow a similar continuum of coverage.  They are all seeking to reach universal coverage.  They just really differ in the paths to how they would get there.  Vice President Biden and Mayor Buttigieg really have the most extensive proposals at this point at least and they build on the ACA, building out this public part of the system, enhanced marketplace subsidies, filling this Medicaid coverage gap, adding a public plan option, allowing people in employer plans to buy into a public plan option, and having some kind of auto enrollment mechanism to really get everybody in and enrolled in coverage.  Among those plans, it would transition away from the current law to a nearly completely public system.  Single payer or Medicare for all type approach.  Senator Sanders has the most developed bill at this point.  But Senators Booker, Harris, and Warren also support this approach to varying degrees of similarity.  In general, the Sanders bill would eliminate private coverage, no premiums or cost sharing, enhanced benefits — and I think it’s important to distinguish one of those, which is adding a long-term care benefit, which is very expensive to a lot of people right now — long-term care, but it would also be expensive to the Federal government.  And then importantly, everyone is included in the proposal, including undocumented immigrants. One of the challenges facing policymakers who are wanting to expand health insurance coverage is the fact that we have extremely complicated healthcare system.  I mentioned the public/private mix and trying to explain their proposals in universally understood terms is a major issue.  Just recently the Commonwealth Fund published some survey findings where we asked people if they would be in favor of a Medicare for all approach and only about 27 percent said they would be in favor of such an approach, but 40 percent told us they didn’t have enough information to form an opinion about that.  If we were to ask people about other proposals, like Vice President Biden’s approach, you might also see a similar level of confusion in terms of understanding what it means for them, the healthcare system, and the trade-offs that are involved.  It also will be the case for many proposals that are likely to come from Republicans. So the Commonwealth Fund, in our support of the Urban Institute’s really superb work that Linda Blumberg is going to present today, really believe that it was important that voters and policymakers understood the facts about what the range of current health reform proposals might mean for voters and the healthcare system and what the financing tradeoffs might be in terms of cost.  Thank you. LINDA BLUMBERG:  Good afternoon and thank you to the Alliance for including us in the panel today and the event and we’re very appreciative of the Commonwealth Fund for the support that they’ve provided for us to do this research. Before I get into the details, I do want to note that there were ten authors on this study.  A number of them are in the room with me today, thankfully, and so if there is going to be questions and details later, they can certainly help answer those questions.  There’s a lot of information in these reports. With that, we simulated eight different reform packages.  The first four of them add incrementally upon each other in steps.  Each one adding to the previous one.  And these reforms include improvements to the premium and cost-sharing assistance that’s available in the marketplace, including expanding assistance to some higher income people, and some lower income people who are currently ineligible for that.  We also have components there that bring healthier people back into the insurance pool and some cost containment provided through the introduction of a public option. In the next two reform packages, five and six, they build on reform four, but they add in an auto enrollment component, which is a backup to lead to universal coverage for people who don’t voluntarily enroll in coverage on their own.  For all of those who are legally present in the U.S. and it also adds some further improvements to affordability including for more workers.  Reform seven and eight are our two single payer options.  Seven is single payer light, as we call it.  Eight is the enhanced version.  These both include provisions to prohibit all private health insurance coverage.  Everyone would be enrolled in a single government health insurance plan.  The two approaches different from each other in the level of benefits, the levels of cost sharing, and whether or not there’s coverage for undocumented immigrants. So as we go through some of the results here, we’re going to highlight today our comparisons between each reform and what the situation would be under current law.  We’re going to focus on the number of uninsured, the changes in federal spending, which  you can think of as impacts on the federal budget, and also changes in national health spending.  So that’s the sum of health spending by households, employers, state government and the Federal government.  And there’s an enormous amount of information in the full report that’s available online, so I encourage you to look at that for other information and details if you’re interested.  In these sets of reforms, we include a number of ways to achieve universal coverage.  What we’re trying to do here is to highlight the tradeoffs across different reform options and some of the big ones there include that the more savings that you create for households, the more you reduce their spending, the greater the increase in federal spending is going to be.  That you can get to universal coverage, but that’s going to require that some people do something that they don’t otherwise want to do.  Whether that’s paying premiums into a system or paying additional taxes.  And that the greater the savings in national health spending, the greater there’s going to be a need for regulation of provider prices if you’re trying to increase coverage and household affordability at the same time. I also want to note — I don’t have a lot of time to go into methodological details with you today, but I want to note that all of the reforms have been estimated as if they are fully phased in an in a steady state equilibrium, as economists say, in 2020.  Obviously that’s not an accurate assumption, but it allows us to compare things apples to apples, which is very useful.  And we have estimated the government revenues that would be needed in order to pay for each of these reforms, but we did not pick specific revenue sources to fund them.  But the tax side, how these dollars would be raised, is not in the current set of work.  Just the benefits and that overall cost. Due to the time constraints, I’m going to give highlights on a subset of the reforms.  Obviously we can talk about any of them afterwards if you like.  So in the first four reforms and four steps, we show how spending and coverage would be affected by a set of reforms including making marketplace premiums and cost sharing subsidies more generous for those that are currently eligible and also for extending them to higher income people.  We added a permanent reinsurance program, we restored the individual mandate penalties.  We reversed the expansion of substandard or short term plans.  We filled in the Medicaid coverage gap in the 17 states that have not expanded eligibility for Medicaid under the ACA.  We added a limited auto enrollment policy that pulls in all folks eligible for Medicaid who are most of the folks that are eligible for Medicaid and are enrolled in either SNAP or TANF.  And we added a public option and we also have — are alternatively capping provider payment rates for insurers that offer health insurance coverage in the individual market. The combined effects of their reforms are what’s shown in the chart here as reform four, and what we found is that these reforms taken together would lead to an increase in insurance coverage, a decrease in the uninsured of almost 11 million people.  Filling the Medicaid gap is actually critical in getting this level of increase as are the enhanced subsidies in the marketplaces and the limited auto enrollment approach that we include here.  We show that the expansion of coverage to 11 million more people can be done by keeping total national health spending basically constant.  However, the only way that that’s accomplished is by the introduction of the public option or capping the private payment rates of the insurers in the non-group market.  Under the set of reforms, spending by the federal government increases to pay for the higher enrollment in Medicaid and in subsidized insurance coverage and we estimate that the federal spending would increase by $46.7 billion in 2020 or $590 billion over ten years. Now, reform five builds on reform four, but it also eliminates the employer-sponsored insurance firewall, which keeps those who are deemed to have an affordable employer-based insurance offer from getting a subsidized coverage through the marketplaces.  We lift that.  And we also add a component that we call CARE which is basically an auto enrollment backup for any people who are legally present in the U.S. who have not enrolled in insurance coverage during the course of the year that gets them enrolled in coverage.  Now this set of reforms reduces the uninsured by about 80 percent or 25.6 million people.  Employer coverage does fall at the same time by about 10 percent however, as more mostly modest income people leave employer coverage to get the subsidized insurance that they are now allowed to get in the marketplaces.  And the additional coverage and subsidization of more people increases federal spending by $122 billion in 2020 or $1.5 trillion over ten years.  National spending would fall here by just a little bit, less than one percent, and this overall system savings comes from more people coming into the individual market to get lower priced health insurance coverage. I’m going to skip over reform six, which is identical to reform five, but increases the subsidies even further than we have in the first five reforms.  So that is available in the materials that you have. So the next slide here is — takes us to reform seven, which is our single payer light option.  Again, this is coverage for all legally present U.S. residents.  It covers standard ACA essential health benefits and the insurance package.  It does have some income related cost sharing.  The standard coverage is like an ACA gold package, so 80 percent actuarial value, but lower income people have higher actuarial value coverage.  Again, we prohibit here private health insurance coverage, so everybody is in the same plan.  And what we find here is that like under reforms five and six, 25.6 million legal residents gain insurance coverage.  However, unlike reforms five and six, an additional 4.2 million people who are here as undocumented immigrants would lose their health insurance coverage because we are eliminating private health insurance under this approach and they are prohibited from entering into the single payer plan under this configuration.  And so as a consequence, the number of uninsured on net goes down by 21.4 million people, leaving 10.8 million people all undocumented residents uninsured.  Federal spending under this reform would increase by 1.5 trillion dollars in 2020 or 17.6 trillion over ten years.  Now this is over 11 times the increase in federal spending under reform five, that I just talked about.  And the reason is because under this reform, we’re taking almost all of the spending by households, employers, state governments, under reform five, and moving it onto the federal bill under reform seven.  Direct household spending on healthcare would drop dramatically though, by about 72 percent overall, and national spending would decrease by over 210 billion in 2020 or about six percent.  This savings comes from moving all legal residents into a lower cost plan in the government approach. So reform eight is our last reform package, it’s another single payer approach, which we call singer payer enhanced.  That one covers all U.S. residents whether here legally or not, it adds additional benefits beyond those included in the ACA, essential heath benefit package, for example; adult dental, vision, hearing, and a new community-based long term services and supports benefit.  It eliminates all out-of-pocket costs for households, again, eliminating all private health insurance.  And here the U.S. would have no remaining uninsured, although there’s some additional uncertainty around the undocumented population; we could talk about later if you’re interested.  But all household healthcare spending and state healthcare spending is eliminated, except for a small fraction that goes towards institutional long-term services and supports care which remains in the Medicaid program and still maintains that structure.  Federal spending would increase, however, under this approach by $2.8 trillion in 2020 and 34 trillion over ten years.  This is about 87 percent more than under single payer light. In addition, nation health spending would increase instead of decreasing as it did in the other universal coverage approaches by $720 billion, about 20 percent in 2020.  And national health spending increases here because of the broader benefits provided, the higher use of care resulting from elimination of almost all out-of-pocket costs, and the additional coverage for about 11 million undocumented residents. So I’m going to wrap up here with just highlighting a number of issues that I feel like could take another full conversation, but I just want to make sure that people are thinking about this because they are really important in terms of thinking about designs and moving forward with additional reforms.  First of all, reforms including a public option are reforms one through six, and single payer options are seven through eight.  All rely on price regulated insurance markets.  Four through six are the ones with the public option and then seven and eight.  In all of these cases, in the case of the public option reforms, we are talking about a regulated price market for all of those in the public option under single payers for the entire population.  However, the optimal level of prices for all providers and all services and getting the right balance between access and quality and cost savings is really unknown at this point, but it has huge implications for cost.  I want to put that out there.  In addition, phase-in periods become much more important the larger the reforms and the bigger the changes there are to the health system.  We didn’t simulate phase-in periods here for ease of comparability, but that can have very big implications for the ten-year budget window.  As employer health spending goes down, it doesn’t mean that as health spending goes down, doesn’t mean that employer’s total spending goes down.  As the economic research indicates, that at least over time, the vast majority of dollars going to health spending now by employers would be transferred into higher wages for workers.  And I also want to remind people that we haven’t simulated the distributional implications of the way in which these reforms would be financed and how that would be distributed would be on the revenue side, is likely to be very different than it is on the benefit side.  And so that’s important to consider. And finally, you know, we just want to make sure that we’re highlighting some of the important trade-offs here again in terms of household costs versus government costs, voluntary reforms versus universal coverage, and that the more national cost savings that are achieved through lowering prices paid to providers, the greater the potential is that there will be disruptions to the health insurance system — the health delivery system, that need to be taken into account.  So I will stop there. AVIK ROY:   Thanks everyone, it’s great to be here and it’s great to follow Sara and Linda, whose work with greatly respect in many ways.  A build off with our own reform ideas.  I’m going to give you a high level description of our reform proposal to expand coverage, and if you want details, there’s a lot of wiring under the hood, you could email me.  You also have some handouts at your tables that describe some of these ideas in more detail. I’ll tell you a little bit about the Foundation for Research on Equal Opportunity.  Our mission, we are a non-profit think tank that focuses on expanding economic opportunity to those who least have it.  We exclusively focus on policy ideas that improve the lives of Americans whose incomes or wealth are below the U.S. median.  We’re trying to break the polarization curve that we’re on and try to find ideas that can get 60 votes in the Senate.  Well, how do you do that?  You find ideas that both conservatives and progressives can champion.  And how do you do that?  Well, by focusing on social mobility from a market-based perspective.  Thereby, you can attract progressives who care about social mobility and conservatives who care about market-based ideas, are views that it’s not necessarily about splitting the difference, it’s about finding ideas that both progressives and conservatives can champion as advancing their values. When it comes to healthcare, we’re hearing a lot on the Democratic side about the unaffordability of healthcare for so many Americans, but the important thing to remember is that the reason why tens of millions of Americans are uninsured and why tens of millions more struggle to afford the insurance they actually have, is not because insurance is public or private or because it isn’t subsidized enough.  It’s because the underlying prices that healthcare services and suppliers, drug companies, hospitals, doctors, are charging, are unaffordable in the United States.  So the debate — Linda was very careful in her presentation to say well, we don’t know what cost controls will be in a Democratic plan, because the Democrats haven’t specified how they will try to reduce costs.  In fact, it’s just been a debate about how much we can tolerate private insurance or how much we might subsidize more the coverage that’s already out there.  But very little specific discussion about how to actual tackle the problem of the high underlying cost of healthcare and that’s obviously incredibly important because whether you have private insurance or not, we can’t afford the system we have unless we get at those underlying costs. Here is a chart that really describes or drives away we think about this problem, which is, you’re all familiar with the fact that America spends more on healthcare than any other country, but you may not be as familiar with the fact that America spends more on public subsidies for healthcare per capita than almost every other country.  Third highest in the world before the ACA went into effect and this doesn’t even account for the subsidies in the employer-based system, the tax good.  If you add that in, we’re by far number one in how much we subsidize health coverage.  So whether it’s a single payer system or a market based system, a true market based system or a true single payer system could actually spend a lot less than we spent on subsidies for healthcare.  And yet, cover everyone. But most of the approaches we see proposed by the Democrats and the presidential campaign are about subsidizing coverage more, not trying to find ways to cover people by subsidizing it less, by getting at the cost problem. Here is one way to think about the urgency of the cost problems:  So after the passage of the Tax Cut and Jobs Act in 2017, the median household in America gets about $62,000 in income.  Their tax rate, both payroll and income tax, is about 13.5 percent of their income this year.  That’s what they send to the IRS.  Here is their share of national hospital spending.  The average household in America is sending more of their income through out-of-pocket costs, insurance premiums, and the part of their taxes that pay for other people’s hospital care.  More of the share of their income has gone to that, the hospital industry, than the IRS.  That’s how bad this problem is getting and it’s getting worse every year.  It doesn’t matter how much you cut household’s taxes, if we do not solve the problem of rising unit prices for hospital care in the United States — and by the way, this is just hospital care, this does not include physician care, this does not include drugs, medical devices and the rest.  This is how urgent the problem of attacking the problem upon cost has become. So we’ve developed a proposal that we call Affordable Healthcare for Every Generation.  And what’s the basic idea?  The basic idea is we want to make health insurance affordable for every American living today.  But if we do so in a way that makes health insurance unaffordable for future generations, we have not made healthcare actually affordable.  Because at the end of the day, if it’s unaffordable in in the future, we are only solving today’s problem and creating a bigger problem for tomorrow.  So we have to solve both at the same time and not every proposal that’s been presented in the Democratic presidential campaign I would argue, achieves that goal. A second principle that we’re trying to advocate in our proposal or advance in our proposal is personalized options.  You’ve heard of the public option, which would in a sense provide a government-run public insurance option as an alternative to your employer-based insurance or maybe the insurance in the usual market in the exchanges.  Our argument is, you shouldn’t just have one additional choice, you should have dozens of additional choices and all those different suppliers of coverage options should be competing for your business as a worker or as an individual.  And that’s how you will have a much better and more patient-centered health insurance system.  We should have a system that’s fair to taxpayers.  I mentioned that we subsidize health coverage more than any other country in the world.  The big part of why is because we spend an enormous amount of money subsidizing health coverage for the wealthy and not enough arguably subsidizing coverage for the working poor.  So we need to do a lot more to reallocate our subsidies in a way that’s more progressive and not as universal as it is today.  The other thing we have to do is we have to really take on the problem of healthcare monopolies, particularly in the hospital and pharmaceuticals sectors where monopoly pricing power is the biggest driver of the rising cost of healthcare. So how do we do this?  Again, a lot of wiring under the hood here.  Going to boil it down to four basic steps.  The first is you really have to make the individual market for health insurance work.  The only way you’re going to have a market-based system that’s affordable is if more people can successfully buy affordable coverage for themselves instead of having it bought for them by either their employer or the government.  So how do we do that?  First, we make regulatory changes to the ACA so that healthier people can have affordable premiums and younger people can have affordable premiums.  Those are two big problems in the ACA.  It basically forces young and healthy people to pay much higher premiums — young, healthy, and uninsured, by the way, so that sicker and older uninsured people can get affordable coverage.  We want sicker and older people to get affordable coverage, so through reinsurance and adjustments to the age subsidies, we achieve that, but also reduce premiums for younger and healthier people.  We also expand the size of the individual market by building on the Trump administration’s health reimbursement arrangement rule to require that start-ups, new companies founded after 2021, if they want to sponsor health coverage for their employees, they have to do so by funding health reimbursement accounts, arrangements that allow the individual to buy insurance on their own, instead of getting it from their employer.  And we merged the federal employee health benefits program, which serves eight to nine million people today, into that individual market.  So all of a sudden the individual market is three to four X the size that it