Common Misconceptions about the Patient Protection and Affordable Care Act

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Unknown Speaker  0:04
Welcome to the physicians guide to doctoring with me Dr. Bradley Block. Right interview experts and fields in and out of medicine to help physicians and other healthcare practitioners improve in all aspects of their practice to help them serve their patients, their practice their specialty, their community, their family, and most of all themselves. Better. Welcome to the physicians guide to doctoring Episode One common misconceptions about the Affordable Care Act. we’re interviewing Adam Block PhD, and health policy economics about the Affordable Care Act. We talked about the primary purpose and Origin The Affordable Care Act, and why did the cost of care go up after the Affordable Care Act? And did it actually have anything to do with the ACA? We talked about whether or not employers actually did drop coverage after it came out. And how did employee sponsored coverage which is the primary method in which people get healthcare coverage in the United States even come about why are some states turning down the Medicaid expansion, and why ending the individual mandate may not actually be the end of the Affordable Care Act. One thing that we do discuss very briefly are the 10 essential benefits. But I realized after listening to this interview that we never actually went into them. So I’ll just review them right now before our interview with Dr. Block. So the 10 essential benefits which are 10 benefits, which all insurances must have, in order to be considered health insurance and be able to sell their services are ambulatory patient services or outpatient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, prescription drugs, rehabilitative services, lab services, preventative and wellness services and chronic disease management as well as pediatric services including oral envision care. Now, prior to The Affordable Care Act. You didn’t necessarily have to have all of these. And one of the things that we discuss is how much this actually did change the cost of care after the Affordable Care Act came out. So without further ado, Dr. Adam Block positions guide to doctoring Episode One, interviewing Adam Block PhD. This is not a coincidence that we share the same last name, as we also share the same mother and father and father. So he’s my brother, but this does not make him an authority on anything, except possibly had locks and keys. But he happens to be an authority in the Affordable Care Act, which is what we’ll be speaking about today, what each physician should know about the Affordable Care Act given that it has become an integral part of everyone’s practice, it’s critical that physicians be as informed as possible without misinformation. So first Adam, aside from being my brother, what makes you an authority on the Affordable Care Act? So I’ll tell you a little bit about my background. Currently, I’m an assistant professor of Health Policy and Management in New York Medical College. They have a school of public health, a school Health Sciences and practices up in Westchester County, New York. But before that, I’ve done a few things. I received my PhD in health economics from Harvard in 2007. And pretty soon after that, I found that people were looking for health economist right at the start of the Affordable Care Act when right after Barack Obama got elected president on Capitol Hill, and I took a job I had a couple of job offers one with the Congressional Budget Office but took a job with the Joint Committee on Taxation, and I didn’t really think that tax had much to do with how healthcare, but
Unknown Speaker  4:00
Unknown Speaker  4:04
ended up ended up working there drafting legislation. And soon after that, after the formal Care Act passed, I went and worked for CMS where I wrote regulations on the Affordable Care Act. Great. So just give us a summary of the Affordable Care Act. It is an unbelievably complicated piece of legislature. Everyone talks about how many pages long it is, but see what you can do to just summarize it in five minutes or less. Sure. So it’s 25. So it’s 2500 pages long. I have read, I would say about half of them. I’ve contributed to the writing a decent portion of them, certainly not 1200 pages. But what the Affordable Care Act really does is it is legislation that is designed to expand coverage and that is it. That is its primary function. Is that Clint came around in 1992. And what they decided to do, and the primary reason that Clinton care failed, was that they tried to remake the whole healthcare system. They tried to put everybody in a CMOS are going to have these ATMs compete against each other, and they were going to change healthcare for everybody. However, the Affordable Care Act said, well, there’s a reason that this failed. And people were afraid of losing their health care coverage and the coverage that they have that they liked. And so when Obama got elected president, he said, Okay, here’s what we’re going to do, we’re going to do, we’re not going to change the employer sponsored market at all, we’re going to try to fill in the cracks because there are 15% of the overall populace that is without health insurance coverage. And so we’re going to try to cover them. And the way that they tried to cover them was with two primary expansions. One was a large expansion of Medicaid. And so if you live in a blue state, California, New York, the expansion of Medicaid was moderate. But if you live in a red state, and that red state has actually expanded Medicaid, the expansion was very, very large because many of those states did not have expansive Medicaid coverage. And the other thing that it did was it created exchanges, the exchanges or the individual market and it created some market rules around it. And it made healthcare coverage affordable for people like my barber barber makes $45,000 a year independent businessman does not want to go into Medicaid. But he has diabetes and would not be able to afford health care coverage if pre existing conditions were included. Because it would cost him 1500 dollars a month and that’s just impossible for someone that makes $45,000 a year. So for anyone who knows Adam knows that part of the reason is Barbara doesn’t make much is because he doesn’t visit him often enough. My hair looks amazing, especially relative to yours reason this is podcast. OK, so my barber would be able to get how is now able to help get health insurance. coverage through the Affordable Care Act. Because even though he was pre existing conditions, everybody is treated exactly the same. And even though even though he only makes $45,000 a year and coverage with my cost him five or $600 a year, he will get a five or $600 a month, sorry, he will get a coverage, he’ll get a tax credit of a couple of hundred dollars, maybe 100 or $200, to help him subsidize coverage. That’s pretty much it. That was really what the heart of the Affordable Care Act was. There was a third principle that they went in with, and this is important, maybe not from physicians perspective, but from a government perspective, which was that it was very important to Obama that it’d be budget neutral. And what that basically means is it that the Affordable Care Act would not add to the deficit. So therefore, if you have all of these additional expenditures, more people getting Paid for by Medicaid, that’s additional budget expenditure, more people going on getting tax credits, that’s an additional expenditure. Basically, you have to increase taxes or decrease spending elsewhere in order to pay for that. And I just want to contrast that with the tax cut the tax cut of 20 2017 act. And basically there was no that was a 1.512 $1.5 trillion expenditure where it was not covered. So it was important in the Affordable Care Act for it to be budget neutral. So budget neutral with regard to taxes. Some of the issue that physicians and patients both have with the Affordable Care Act is that the name ends up being rather ironic to many people because after the Affordable Care Act, the cost of their insurance went up considerably. And so
Unknown Speaker  8:57
part of that might be what we used to define insurance. Part of that is that with a pre existing condition, you can now join the insurance rolls. And that needs to get paid for somehow. Part of that is the 10 essential benefits. So I definitely want you to speak to that. And so so what are the some of the reasons that it may have been budget neutral to the taxes but not budget neutral to the, to the insured? Sure. So there are a few people. So for the vast majority of people, your insurance premiums did not go up, right? If you’re in employer sponsored coverage, there was nothing that changed about your coverage to make your premiums go up. Now, premiums go up every year, they go up. That’s why we have the right that that’s why we have medical expenditures that go up by four or 5% every year. So that’s not do just because that continued to happen under the Affordable Care Act is not mean it was as caused by the Affordable Care Act. So employer sponsored coverage did not really go up in terms of premiums. As a result of the Affordable Care Act. There were really no changes to it. There are there was a very small chunk of people for whom tax premiums went up for. And if you were in a in the individual market, and in a good risk pool, all of a sudden those risk pools all got merged together. And so the good preferred rate that you had may have gone away because you now had to cross subsidize sicker people than yourself. If you lived in a state like California, or another state that had a really broad range of premiums where young people paid way less than older people, that amount shrank, so your premiums might have gone up. So for those subsets of the population, and you were wealthy enough that you did not qualify for a tax credit, it’s possible that your premiums get went up. But for the rest of the world, premiums didn’t really change or certainly didn’t change as a result of the Affordable Care Act. Well, you hear stories about people that had insurance beforehand that may not have had the benefits that they have now because of the first Can we talk about the 10 essential benefits What what are they? Sure. So this is an area of my expertise, I wrote the regulation on the 10 essential benefits. And basically what it was is it was geared to be state by state and look very similar to what a small group or individual market plan at the time look like. So the 10 essential benefits were very similar to what was a standard plan being offered on the market at that time. So it was based on what was the standard of most plans at the time, this wasn’t a departure from what was typical for most plans. If you did not have these benefits, then you were the outlier. That’s exactly right. And and it was designed to prevent the outliers from getting way fewer benefits. An example of an essential benefit is maternity coverage. And I know that in Colorado maternity coverage was not mandated benefit. So you could buy a policy without maternity coverage. And so all of a sudden now you had to buy a policy with maternity coverage. But that does that most people are buying those policies anyway, the preponderance of coverage had that benefit attached to it. It just prevented you from basically opting out of that. So it didn’t allow some of the insurances to game the system and make it seem like they were giving a comparable product. Yeah. Whereas they weren’t. That’s That’s exactly right. And, and, you know, and what you’ll see is that the essential health benefits, which, you know, I’m very proud to have done work on, but I think it is a lot, Much Ado About Nothing. And the reason I say that is because the variation in benefits that have to be covered is really pretty narrow. You can identify a couple of points, but I just put out a Health Affairs blog post in January. And basically what that found was that the difference between the current state of the essential health benefits and Trump proposals that many people were crying the skys falling and they’re going to reduce our benefits to nothing. The total person reduction as a result of these proposals was about 1.2%. So if you’re losing 1.2% of premium, that means you’re only losing 1.2% of benefits that is not that much. So I think it’s 1.2%. It’s really much ado about nothing when it comes to the central health benefits. So what about the lifetime limit? Right, previously, healthcare was one of the most, if not the most common reason for someone to go bankrupt in the United States. Right. Do you know where that came from? Do you know that information came from where? So Professor Elizabeth Warren, now Senator Elizabeth Warren, built her career on bankruptcy law. And one of the big things that she found was that 50% of the bankruptcies were related to health care bankruptcies. So that was Professor Elizabeth Warren, that
Unknown Speaker  13:51
statistics. Now there’s this provision in the Affordable Care Act that says that you can’t have a lifetime lifetime limit on the amount that the insurance will pay. So if you end up for months in the intensive care unit, you have some exotic form of cancer and the treatment is exorbitantly expensive. You can’t run out of your limit on how much they will pay, they must continue to pay. The plan must continue to pay. Yeah, so who is really paying for that? anyway? So let’s, I mean, let’s take this. So you’re, you know, as a physician, let’s, let’s walk through how this would really happen. So first of all, if you had and, you know, a common cap, and I worked on this, the common cap was $250,000 on a on a plan. And when I say common, I mean of the crappiest plans that did this horrible thing. It was $250,000. It was not a common thing in the grand scheme of things. But let’s walk through what would happen now number one, and that’s what would you have to have to spend $250,000 on health care
Unknown Speaker  14:49
in how much time?
Unknown Speaker  14:51
Well, I mean, a lot of these were related to annual limits. I’ve heard lifetime limits, but not for plan lifetime limits for specific tools. A disease state. But let’s say let’s talk about it, you know, just just for as a thought experiment, let’s talk about it as as a year. So 200 What would you have to have to now what happens? $250,000? It absolutely happens. I’ve seen tons of data on this, but what would you have to have? I would think anything that lands you in the intensive care unit for a considerable period of time? Sure. So extremely severe trauma, maybe cancer, Nick, you any anything else that that might come to my come to mind. I’m an ear, nose and throat doctor. So there’s not much with us that that ends up unless the patients in palliative care. Most of the time if you have some uncle logic problem, you end up with a surgery in the surgical ICU and then hopefully from there, you’re improving. You’re out of the ICU and you’re always at your medical school graduation, something outside of ENT, I know it’s not going to be something related to NT. So, oncology, Nick, you maybe transplant Right. So yeah. So So those are a couple of the things. So let’s say you’ve got, right, let’s say you are have 100,000 $200,000
Unknown Speaker  16:11
transplants a great example.
Unknown Speaker  16:12
Yeah. Okay with that. So yeah, so let’s go with transplant. So you have a transplant a liver transplant, and it costs $300,000. Now, are you working? You’re not working? Right? So you don’t have commercial insurance. You stopped working and you somehow retained your individual market plan. Right. So your individual market plan says, I’m not paying anymore, you hit your cap. So then what happens? Well, you probably don’t have that much money. So maybe they drain your Well, maybe maybe they does the hospital kick you out? No, no, right. No, no hospital that you’ve worked in would kick you out if you know right now, and and i think that’s pretty standard. I don’t think hospitals kick you out, you know, in the United States. So as a result, there must be a law against that. You’d be surprised how recent some of these laws against that stuff happened. But yes, there’s there’s a lot against it. Plus, there’s the liability that they do something like that they end up in the newspapers, you end up with bad press, and nobody’s PR department wants anything to do with that. So either way, they keep you in the hospital, nobody’s kicking you out, right? At the same time. They’re not bankrolling you, right? So they, and they don’t want to be bankrolling you. So what do they do? Well, they try to drain your right. So maybe they’ll bill you until you run out of money. And maybe, but in reality, you’re probably going to get put on to Medicaid relatively quickly. And so the plan, so the hospital is then going to be building Medicaid. So the government is paying for it anyway, is the point. Right? But from the individual perspective, right, you’ve spent a considerable time working, accumulating savings, and then only to get a devastating illness and have a lifetime of savings wiped out. Sure. And so from a government perspective, from their entire budget, this one individuals problem, you know, whether they pay for it or not, but but to the individual, if you have To have your lifetime savings get wiped out in order to qualify for Medicaid and then to have it continue to be paid for that. Obviously devastating. Right. But I’m not saying that it’s a I’m not saying that’s a bad thing to have this provision in any way. I certainly don’t believe that. I think it’s a great thing to have. But what I’m saying is that the plans were basically jumped being a living off of the back of Medicaid. Yeah. So we were what you’re saying is that was whether we pay for it in terms of our individual plans having the lifetime limits, or we pay for it in terms of those patients, eventually getting on to Medicaid, and then Medicaid paying for the rest of it. We’re either paying for it in terms of our premiums, or paying for it in terms of our taxes, but either way, we’re paying for it. It just feels different when we’re paying for it in terms of our monthly premiums than if we pay for it in terms of this nebulous tax money that could be going to repair a road or could be paying for somebody Nikki stay
Unknown Speaker  18:59
Yes. That’s exactly right.
Unknown Speaker  19:00
So it just feels different. It’s kind of like giving someone $5 and then taking it back versus never giving them anything to begin with. It feels different, but it’s ultimately a zero sum game fest. It’s ultimately getting paid for by Medicaid, and in the vast majority of those cases where people hit upon the lifetime limit. Yeah. Okay. And so the amount that we’re talking about how much you have to drain from that individuals wealth, versus what the cost ultimately ends up being to Medicaid to begin with, is ends up not being that different just because of the cost of these days versus what people tend to have in their savings, right.
Unknown Speaker  19:39
The first time I’ve ever convince you of anything, yeah.
Unknown Speaker  19:44
Well, the rest of this is going to take a little more convincing. So. So there are I think part of what you do in some of your talks is you dispel misconceptions about the Affordable Care Act. So when you’re speaking to people about the Affordable Care Act,
Unknown Speaker  19:58
what are some of the more common mistakes perceptions about?
Unknown Speaker  20:00
Sure. So some of the more common misconceptions, the first is want to talk about death panels.
Unknown Speaker  20:07
And, yeah, that is that is a hot button issue.
Unknown Speaker  20:10
So I could tell you the true source of where death panels came from. So I think I know, I think I know the answer to this. And I think what it is, is incentivizing primary care physicians to have a conversation with the patients about end of life care. If you want to talk to your patient about end of life care, you’re not actually diagnosing a condition, you’re not actually treating a condition. So there’s no CPT code. So there’s no ICD nine code. So there’s no way as a primary care physician to get paid for this very difficult conversation. Is it? This is so phenomenal is that is that no that’s exactly right. That’s exactly right. Not as I don’t think it’s particularly smart guy you bend and well read and well informed might be from sitting at at the dinner table with someone who was involved in this I, I don’t I don’t want to give you too much credit. But But how far how far off the mark is that? That was 100%. Correct. And the only thing that I’ll add is that the person that sponsored the amendment was republican chuck grassley. So you know, it became political, it became a political football that people were saying, you know, there are these death panels in it, but nobody really knew what the death panels was. So it turns out with the death panels are his payment of a CPT code for an end of life care visit for, for primary care physicians as soon as you enter into Medicare, so very far from what a death panel actually is. So a couple of the myths versus facts. You know, first is, you know, on the democrat side, Obamacare is a panacea. It’s going to lower the cost of care for everybody. Not true. Not the goal was not targeted to be the goal and succeeded in not lowering the cost of care, meaning that Obamacare did not lower the cost of care. It was not meant to and it did not do that. Well, what Wasn’t there one part of it where there was a limit on the amount that health insurances could make? Like they couldn’t they couldn’t earn over a certain percent. And so if you cap their ability to make money and they have to give that back to their patients, then if they’re making less of a profit, then it costs less money. Isn’t that part of the affordable care? Yeah, so there was a cap on the medical loss ratio of 80% in the individual market and 85% in this small group market with the medical loss ratio is if you don’t find it too boring is the portion of the premium if you pay $1,000 a premium if you have an 80% medical loss ratio, what that means is that $800 if it has to go to doctors, and $200 of that thousand dollar premium, stays with the insurance company, let’s just be clear. 80% does not go to doctors 80% goes to care. That’s true. 80% goes to care. I think the and the breakdown that I see is something like about of that dollars, maybe $40 will go to hospitals, maybe 25 will go to doctors, maybe 15 will go to some combination of long term care, pharmaceuticals and medical devices. All right? Well, this is actually, we’ve talked about this before, this is going to be a different conversation that we have for another episode. So stay tuned, this is going to be the economics of health care in America. So that’s a good segue into a later talk. Okay. So did that actually did that provision, change things? Was that already the case in some states? Or did that actually lead to some savings for patients didn’t change things wasn’t the car wasn’t there in any states before this, to my knowledge, however, and the interesting thing is, and some of you may receive this is a check from your insurance company in the year 2014. When it when it first went into effect. People actually got checks back from their companies. Now, I don’t know anybody that’s gotten a check recently, and I actually just Article on this, why don’t people have checks anymore basically insurance either got a little better at pricing, or more likely they were able to cover up any sort of profits that they had that were in excess of this. Because in reality, what happened was they had some lines of business, some HMO, that we’re doing really well, that they might be right. And they had a year where nobody went to the doctor, there were no transplants. And they might be taking a huge profit in that year from that one. And others were they were doing really badly, right where they were losing money. And basically, that couldn’t happen anymore. So everybody, everyone they had to increase the premiums on everybody a little bit so that they would prevent themselves from giving the money back. So one of the other myths versus facts are.
Unknown Speaker  24:50
One concern that economists had is that Obamacare would cause employers to drop coverage and by dropping coverage. What that means is that all of a sudden, if there’s this big benefit, right? You get these tax credits to people earning families for earning less than $100,000 a year, they could potentially, employers could say, you know, what, why am I offering you coverage, if you can just get it in the exchanges, I’m going to drop coverage. And you’re going to be better off, I’ll give you a little bit of a raise, and you’ll get those big tax credits. This is what economists that worked for the Obama administration were terrified of. However, the data shows that there were the basically the same number, the same portion of the population that was employed, had employer sponsored coverage before the Affordable Care Act. And after the Affordable Care Act, there was really no change. So what economists were afraid of, which is that employers would just drop coverage and dump everybody into the exchanges and then the government would have to pay these tax credits. That didn’t happen. Was there a minimum number of employees that you had to have in order to be required, and then some people are some Companies ended up taking on more people as freelance and then not as full time employees didn’t have to pay for their health benefits. Wasn’t there some or there’s some complicating factors in there? I remember it being in the news. I don’t know the statistical significance of it. Because if you hear the story of something terrible happening, it tends to stick in your mind. But it might only be one person one time, but you know, what was the significance of maneuvers like that? So yeah, there’s an employer mandate, and the employer with the employer mandate says is that if you are an employer with 50 or more employees, that you have to offer coverage, and if you don’t offer coverage, you have to pay $2,000 fine for every one of your employees, for every one of your employees. Now, it’s a little more complicated than that. So I’m over generalizing it a little bit. But that was basically to make sure that employers didn’t drop coverage, but still, even if they had to pay that they might be better off because I know what you You know what your you pay in health insurance coverage for all of your employees. And I know what, you know, a standard premium rate for a family of four is here, it’s something like $12,000 and can range up as high to $20,000 in New York City. So $2,000, all of a sudden seems like a drop in the bucket compared to that they still may have made that same economic decision. But they did. The point is that they didn’t we have tons of economic evidence now that employers did not drop coverages or as a result of the Affordable Care Act. And there was a big concern that they would that this would fundamentally change what healthcare in America look like, from being an employer sponsored coverage country to being an individual market country, and they did not do that. But you said earlier that that was the goal of Clinton care. So that’s not necessarily a bad thing. Why were they so terrified of it? I think that that’s not what the objective of the Affordable Care Act was just because it was the goal of Clinton care. And now a lot of the same people that worked on Clinton care in their 30s then worked on the Affordable Care Act in there. 50s so a lot of these people were, you know, were the same people. But I think they learned from the experience and they wanted to make something that worked. And they recognize that people had a legitimate concern about moving into the about moving away from employer sponsored coverage. And there are a lot of benefits of being on employer sponsored coverage a ton. The most important is the tax benefit. Right? Anything that you pay in premium through your employer, basically is tax protected, you don’t pay tax on it. And whereas wages you do pay, and if you buy in the individual market, you do pay tax on it. So if I were to get, right if I’m in a 30% tax bracket, I get $100 in wages. If I buy health insurance through my employer, I get $100 worth of health insurance. If I take that in wages, I get $70 because I’m losing 30% and if I go by on the individual I have to get taxed on it. I get $70. And I go spend that $70 on individual market healthcare. And the reason that this was done is because otherwise it wouldn’t be budget neutral. No, no, it has always been like that. And nothing has changed that. And then why? It seems to me fundamentally unfair if when I pay for my own health insurance and my employees health insurance, that is paid by the business with pre tax dollars, but an individual Freelancer has to pay with post tax dollar tax dollars. That seems to me fundamentally unfair,
Unknown Speaker  29:34
and it is so
Unknown Speaker  29:36
yes, so that is, I would is going to segue into another question, which is one of the more controversial parts of the Affordable Care Act. This and it’s been, I think, discussed in this administration, the tax ability of of health insurance versus non taxable, so why why is that the case? So that’s historic. So what happened in World War too, was that there were not all the all of our boys went off to like our grandfather went off to fight and World War Two. And there were not enough. And not only that all of the factories in Europe had been bombed out. So there was no place to get guns or any sort of manufactured products. So the US was just turning it out and turning it on and turning it out. And so what did they do? They hired basically, the wage rate, right? If you’re an economics, well, the wage rate went up and up and up and up and up. And then the wage rate got so high that the federal government said nope, you can’t increase the wage rate anymore. So what employers do employers are savvy, they said, Okay, we’re going to offer some pretty sweet benefits on the side that are the equivalent of wages. And so that’s where health insurance really took off in the employer sponsored coverage. It didn’t really exist. An employer sponsored coverage didn’t really exist before the 40s and then and then the IRS in order to enhance it Basically passed a regulation that said that employer sponsored benefits like this would be tax deductible rather than a tax exempt. And if you look at it now, the biggest deductions in I’m getting to my tax committee experience. They’re two enormous what we call tax expenditures, basically giant deductions. One is mortgage interest, right? Everybody can deduct the interest that they take on their mortgage, which basically subsidized people to buy bigger houses and subsidizes housing prices. And the other is the exemption of health insurance expenditures. There’s the two biggest things. Now as a part of the Affordable Care Act, what they talked about was capping the tax expenditure on health insurance, saying, Okay, if you buy $10,000 without health insurance, that’s okay. But if you buy 15,000, you’re paying tax on the last 5000 of it. That was a big discussion. And the people that were opposed to that were the people that had high Premium states, like New York State. In fact, Chuck Schumer was the biggest opponent in the world of this along with john kerry, because they live in states where premiums are incredibly expensive. And so their guys, their constituents us would have had to be the ones that were paying tax on part of our healthcare. You mean for the employers? That I mean, the employers, but we were the individuals were always paying taxes on all of it. Sure. I mean, yes, yes, individuals are always paying taxes. But remember, individuals in the individual market only pay a very small, like, only make up a very small part of the very small part of the market, even today. I think it’s something like 25 billion, the 25 to 35 million people, it’s really not very much of the overall market. Right? So I think we’re, we’re running a little short on time. So just give me one more misconception about the Affordable Care Act something something exciting,
Unknown Speaker  32:59
something exciting.
Unknown Speaker  33:00
Okay, give you x LA for a little bit. All right, I’m going to give you my favorite one. So my favorite one is that members of Congress and their staff must be covered by the exchanges. So they made this special provision. And this this is a part of the fun political game that happens in Washington DC, where the Republicans who are opposed to the Affordable Care Act say if this, if these exchanges are so great, why don’t you get in them? So we’re going to propose that every member of congress and their staff needs to be in it. And normally would the democrats would do is oppose this they say, oh, everybody should be a Medicaid you should all be a Medicare, whatever it is, they say, you know, if it’s good enough for if you think this is such a good policy, then you should be in it. And instead what happened was the the majority leader basically said, Okay, we’ll be in it. I take your I call your bluff. And so now as a result and never change, and as a result, all the members of Congress that get health insurance through Congress are now a part of the DC exchange. I think it’s 11,000 people.
Unknown Speaker  34:07
What type of plans were they on prior to this?
Unknown Speaker  34:10
They were on FEHBP. So they were on the standard federal government plan, which is known for being a very generous, well subsidized plan. There’s tons of options. There’s maybe six or seven options in every region. So there might be a regional HMO, depending on where you live. There’s a Blue Cross Blue Shield option. It’s it’s a well known to be very generous. So we were talking about how individual plans are paid for with your taxed income and are not tax deductible. And that was something that could certainly use some improvement. Are there any other aspects? Having worked from the inside that you think either were lost due to maybe not enough political capital, or just some other aspects of it that could benefit from some improvement So, I mean, I think I think there’s a lot of complexity in there. The whole cost sharing reduction is cost reductions with the thing that Trump said we are no longer funding and, and, and legitimately stopped funding. And what these are his little bonus payments that you get if you are between, let’s say 200%, or 150% and 250% of the poverty level. Just to put that in perspective, 100% of the poverty level for a family of four is about $25,000. So these are families of four that are making something like 40 $50,000 a year and what that does is it reduces the cost reductions or roundabout way to reduce your deductibles and things like that. And that is a super roundabout way of doing something where they just should have said okay, if you want to give people in this tax bracket more money, just give them more money, give them better premium, don’t don’t make them is a two tiered system where you have multiple types of plans, it adds a whole lot of complexity in there. I also think they could have done a little more standardization of benefits. Because what we found is that there’s lots of behavioral economics research on this is that it’s really hard to make choices. It’s really hard to make choices. Plans are really complicated. And so if you standardize benefits, people have an easier time of understanding what, what they’re buying and making a better decision for themselves rather than just getting mired in complexity. So I think that’s a difference between maybe a libertarian and Democrat and Republican Some people think that if you have the complexity that people should be informed enough to make their own decisions. And at some point, these decisions that get too complicated for people to really be able to do enough research to understand the complexity of the decisions and at one point, it should just be made. Not completely for them but but just simplified. Yeah, I said certainly have patients that have signed up for the Block bronze plan, where they have low premiums and high deductibles. And then every time they go to the doctor, what they thought was a standard visit suddenly becomes a couple of hundred dollars. And and it’s not something that they were expecting. And so so I think Yeah, absolutely. I agree that that standardizing them somehow and making them simpler would benefit. A lot of people that that I’ve encountered in these situations, and this is where the they become disgruntled with the Affordable Care Act. And they say, again, the irony of the term, this isn’t this isn’t affordable. I don’t get any of my healthcare paid for until I meet this $5,000 deductible.
Unknown Speaker  37:44
How is this affordable?
Unknown Speaker  37:45
Yeah, well, they I mean, the irony of that is those people were uninsured before this. The right like that, that that’s the problem is that they want the world you know, like that a person that isn’t a bronze plan was mostly Likely uninsured prior to the Affordable Care Act. It’s not like they the as a result of the Affordable Care Act now they have a $5,000 deductible if they’re probably in a bronze plan, what was the situation that they were in, in 2013 likely they were uninsured and they were never getting coverage. And the reality, people should be budgeting for health care expenses that they are likely going to have, like, you know, potentially an EMT visit or primary care visits. It’s really the catastrophic coverage that you can’t possibly you can’t possibly budget for $100,000 that you get that you need to pay because you get cancer, right. Nobody can budget for that. And that’s what health insurance is for health insurance is less for the everyday visits. I don’t mean to diminish the fact that you know, it can cost you know, a couple hundred dollars to get a visit or to go to the to the ER this year 1500 dollars to the visit right now. I don’t mean to diminish that fact. That’s that’s real money, but those are real. Those are expenses that a reasonable person can expect to Have over the course of a year or five years, where as health insurance is really designed to reduce the catastrophic risk that you have, if you have a baby that happens to have to go to the NYCLU and you know, cost $500,000 or you have a heart attack, and you need, you need bypass surgery, and that’s going to cost $50,000. So then do you think the Affordable Care Act also has a bit of a PR problem? Because speaking of barbers, I went to a barber who complained that he went to the doctor and it cost him $200. And he has health insurance. So what’s the point of having health insurance if it cost him $200 out of his deductible, his eye then went into the details of actually exactly what you said, this is if he was thrilled if you have a catastrophe, this is going to cover that, but from his perspective also, because you can enter the roles now with a pre existing condition. He can just go without insurance until he gets sick, and so he doesn’t have as much of an incentive. He can’t, he can’t You can’t buy insurance in the middle of the year. So you can only buy insurance during open enrollment. And you basically have to be you can only buy insurance during open enrollment. So there’s ways to game the system a little bit, but he can’t game it like that. So then what happens to someone if they don’t have insurance, and they have some catastrophic event? catastrophic event? And it is just after the open roles closed? Now you have an entire year to wait before you can get insurance. Yeah, all those bad things that used to happen to you when you were uninsured before the Affordable Care Act. They still happening. Okay. Interesting. So they’re there. There are two things that were in the news, one more recently than the other that I want to get to.
Unknown Speaker  40:44
And, and one of them is
Unknown Speaker  40:47
that you had these conservative states that were offered the ability to expand their Medicaid rolls, right, they could get a bunch of their constituents on Medicaid with these Federal funds. Yeah. And they declined. Yeah. And he’s getting sued right now. I’m sorry. Main is getting sued right now, because they declined to put their well, because they the governor declined to put it on. Then they had a referendum vote in November of 2017. The referendum one, meaning they said that the referendum said that they had to expand Medicaid, and the governor did not has not done it yet, or is not intending to do it. I think it’s basically defining the referendum. So yes, this continues to be a big issue. Now, when the Affordable Care Act was written, none of this was conceived of at all, not even a little bit. The way that this happened was basically that when the Supreme Court case came around the Supreme Court case, and if I be versus rebellious of 2012, when Chief Justice Roberts who is a appointee of George W. Bush, right, a Republican appointee side of the four liberal justices, and said that the Affordable Care Act should stand and that is Shouldn’t be struck out of law. And that was because the individual mandate correct. So that was the individual mandate, two things came out of it. One is the individual mandate is constitutional. And two is that the state should not be compelled to expand Medicaid. So in the Affordable Care Act, what they said is, if you don’t expand Medicaid, we’re cutting off all of your federal funding for all of your Medicaid. And basically what the justices said was that no, you can’t do that the states have the option to do this, if they want to or not. And then all of a sudden, it became a political football instead of every state having to now it’s not exactly aligned with red and blue states. Because if you’re a hospital CEO, you know what, what do you want? You want all of you want all of the money? Yeah, you want all the Medicaid dollars that you can possibly get. So right now in the red states that have not expanded it, this hospital CEOs are saying the governor, please expand it. Because if I have, you know, if I have 20% uninsured or 15% uninsured, and I’m paying for that in my hospital with charity, care. And all of a sudden there’s something that can reduce that. And now Medicaid underpays the hospitals frequently. They don’t, you know, they pay them at cost or a little bit below costs. But it’s way better than getting nothing better than nothing understood. So why, aside from it just being a political incentive, right. This was this was the spent a lot of Obama’s political capital. Right. It was. They made it very controversial. They being both sides, really and
Unknown Speaker  43:34
you know, there was a lot of spin in both directions.
Unknown Speaker  43:37
I would argue that the spin was primarily on the on the right. And you know, and the evidence of that is pretty clear, which is that right, Governor Romney of Massachusetts, this is basically like, Governor Romney of Massachusetts is I you know, not his idea. He took it from, you know, american enterprise institute a republican Think Tank from like 20 years before. So this is this is these are you You know, right side ideas that, you know, because Obama came, and he, you know, he was Obama and the Democrats espouse them that they became offensive, but, you know, they were relatively, you know, right leaning ideas on how to expand coverage. Okay, I can appreciate that being left leaning myself, I wanted to try to stay as down the middle as I could. So but I understand that the, for the Republican governors to turn down what is essentially free money. Why would they do that? Was there something that they were going to be on the hook for later on, if they took this money over this basically turning down free money? It’s both. So they took that so they did turn down free money, but they would be on the hook for a portion of the Medicaid expansion payments. So from the year’s 2014 to 2017. The federal government was going to pay for 100% of the Medicaid expansion population, then starting in 2018. This year, the states were going to have to pay a portion of it, and then that amount was going to increase up until it was 10% of the of the amount of those those expenses going to cash it 10%. So ultimately 90% of expanding the Medicaid rolls would be paid for by the federal government, initially 100% eventually 90% but that’s it. It would end there. Yes, but that’s not being completely fed. So the answer is yes, that is absolutely true. But it’s not being completely fair. Because at the end of the day, the states don’t pay 100% of their Medicaid. They only pay New York pays 50%. And it varies state by state. The states with the lowest per capita income, maybe pay 25% of their state Medicaid. So the States did the federal government does not pay for 100% of Medicaid, the state it is a it is a mix of state and federal money. That goes into it. So in New York, it’s 5050. The Unexpected Medicaid. Yes, referring to standard standard Medicaid is a 5050 split in New York. And in some of the, like, Alabama, I think is 25% state money and 75% federal money. Okay. And the other issue that’s been in the news recently is with the new tax law, right with the new tax law, they got rid of the individual mandate they did. So that was a big coup. That was going to be the end of the Affordable Care Act,
Unknown Speaker  46:29
we say everything’s going to be the end of the Affordable Care Act.
Unknown Speaker  46:32
Right. And so just explain what that was. And then what has happened so far. So nothing’s happened so far, but know what what like so they got rid of the individual mandate. Explain that. Sure. So the individual mandate is a basically a tax law that says that if you do not have health insurance coverage, or you’re missing health insurance coverage for more than three months during the year that you have to pay a tax, and the amount of that tax is I believe, it’s $695 or the greater have $695 or 2.5% of your income. Now, if you make $100,000 2.5% of your income is 20 $500 a year, right? That’s the amount of the individual mandate rip. That is actually still in effect, it was in effect 20 1415 1617 and is still in effect for 2018. But is not in effect for 2019. And the purpose of it was to prove to keep young healthy people in the population to give them a stick to hit them with a stick to say you better be in otherwise we’re going to tax you. And so the question is what’s going to happen to the risk pools what’s going to happen to premiums for the people that stay in, because the guests of actuaries and economists is if you’re young and healthy, you’re 22 years old, and you’re facing a decision of I could pay $400 a month for premiums, or I could not pay $400 a month from framers and roll the dice. Most of them are going to win that dice roll and so they’re not many of them are not going to pick $400 a month for premiums. Now, if you add attack on, oh, if you don’t pay $400 a month for premiums, I’m going to get a tax. And you know what you get for that tax, you get nothing, you get nothing for that tax, right? Do you pay the tax, you don’t get health insurance, then a lot, it’s going to push a lot of people into the insurance market. Now the question is whether people are going to flock out of the of the insurance market, whether you’re going to flock out of the exchanges as a result of the Affordable Care Act, no longer requiring you to have coverage. Now, I don’t think it will. Congressional Budget Office would disagree with me. They think there’s going to be 4 million people, fewer people insured next year, all the way up to 10 or 12 million people 10 years out. So what was the tax for those people? Right now? Right, those people that are going to fall off the rules, potentially they’d pay 2.5% of their income right now. They’re up to $25. Right now. They’re at two Point 5% Yeah, okay, so escalated to that point. And that was it. Yeah. First year, it was like 1%, I went to 2%, then I went to 2.5% of their of their income. Okay, so the question is whether these people were just not going to buy insurance. Anyway, you know how many of those people just never bought insurance to begin with, and we’re just paying the tax, maybe not even realizing that it was going to happen to them, maybe not even realizing that that was something that they needed to do. And what percent of people are just people who want to have health insurance, because they want to do the responsible thing. And then there’s all those people in between that are going to make the informed, calculated decision. And I tend to think that there are not that many people that are going to sit there and calculate how much it costs, the risk, the benefits, they’re just going to be the type of person to buy health insurance, or they’re not going to be the person the type of person and it depends in large part and how much their mother yells at them, to be honest. You hear that tons is like, Oh, my mom reminded me that I have to go buy health insurance, right? Because a lot of these people are 20 to 30. You know, the in the 20 to 30 group, and more and more of them are living at home for longer periods of time. Yeah. Although, you know, one thing that the Affordable Care Act did the single most popular provision of the Affordable Care Act was the expansion of coverage till you’re that you can stand your parents planet to 26. Yeah, cost the plans. Very little. Parents are happy because we’re happy. It was like a win win for everybody. Well, wonderful. Is there. Maybe one more point that you want to add before we wrap this up something that we didn’t cover that you think it’s important for people to know or a common thing that people misunderstand?
Unknown Speaker  50:37
Yeah. Mom and Dad love me more.
Unknown Speaker  50:41
It’s, it’s true.
Unknown Speaker  50:44
I’m hoping this podcast wins the moment.
Unknown Speaker  50:49
Well, thanks a lot for coming and taking the time to talk to me.
Unknown Speaker  50:53
He is going to be back on the show because I know where he lives. And if you do have questions, please post any comments on the Facebook page so that the next time he is available, we can circle back and clarify anything, either regarding the Affordable Care Act or
Unknown Speaker  51:11
health economics in general.
Unknown Speaker  51:13
Well, Adam, this has been very informative. Thanks a lot for your
Unknown Speaker  51:15
time. It’s been a pleasure.
Unknown Speaker  51:18
This was Dr. Bradley Block at the physicians guide to doctoring. Find all previous episodes on iTunes, Stitcher or wherever you get your podcasts and register review if you have something nice to say. You can also visit us on Facebook. Search for physicians guide to doctor
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