Topic: Health Care & Welfare

Early Childhood Summit Don’t Lie?

When I first heard about the White House Summit on Early Education being held today, I worried. “I sure hope this isn’t going to be a PR stunt to cheerlead for government pre-kindergarten programs,” I thought. Then I got the announcement: U.S. Secretary of Education Arne Duncan will be having a Twitter chat with pop sensation Shakira in conjunction with the summit! “Oh, I was just being silly,” I said to myself, relieved that this would be a sober, objective discussion about what we do – and do not – know about the effectiveness of pre-K programs.

Okay, that’s not actually what happened. In fairness to Shakira, she does appear to have a very serious interest in children’s well-being. Unfortunately, the White House does not appear to want to have an objective discussion of early childhood education.

Just look at this, from the official White House blog:

For every dollar we invest in early childhood education, we see a rate of return of $7 or more through a reduced need for spending on other services, such as remedial education, grade repetition, and special education, as well as increased productivity and earnings for these kids as adults.

Early education is one of the best investments our country can make. Participation in high-quality early learning programs—like Head Start, public and private pre-K, and childcare—provide children from all backgrounds with a strong start and a solid foundation for success in school.

Let me count the ways that this is deceptive, or just plain wrong, as largely documented in David Armor’s recent Policy Analysis The Evidence on Universal Preschool:

  • The 7-to-1 ROI figure – for which the White House cites no source – almost certainly comes from work done by James Heckman looking at the rate of return for the Perry Preschool program. It may well be accurate, but Perry was a microscopic, hyperintensive program from the 1960s that cannot be generalized to any modern, large-scale program.
  • If you look at the longitudinal, “gold-standard” research results for Head Start, you see that the modest advantages accrued early on essentially disappear by first grade…as if Head Start never happened. And federal studies released by the Obama administration are what report this.
  • It stretches credulity to call Head Start “high quality,” not just based on its results, but on its long history of waste and paralysis. Throughout the 2000s the federal Government Accountability Office and general media reported on huge waste and failure in the program.
  • Most evaluations of state-level pre-K programs do not randomly assign children to pre-K and compare outcomes with those not chosen, the “gold standard” mentioned above. Instead they often use “regression discontinuity design” which suffers from several shortcomings, arguably the biggest of which is that you can’t do longitudinal comparisons. In other words, you can’t detect the “fade out” that seems to plague early childhood education programs and render them essentially worthless. One large-scale state program that was evaluated using random-assignment – Tennessee’s – appears to be ineffective.
  • The White House says early childhood programs can help “children from all backgrounds.” Not only is that not true if benefits fade to nothing, but a federal, random-assignment evaluation of the Early Head Start program found that it had negative effects on the most at-risk children.

I suspect the vast majority of people behind expanding preschool are well intentioned, and I encourage them to leverage as much private and philanthropic funding as they can to explore different approaches to pre-K and see what might work. But a splashy event intended to proclaim something is true for which we just don’t have good evidence doesn’t help anyone.

Let’s not mislead taxpayers…or kids.

Grubergate, the Mini-Series

Under Proposed Rules, Government Could Choose Insurance Plans for Millions of People

The administration is considering a rule change that would allow the government to automatically change some people’s exchange plans to a cheaper alternative.

HHS recently proposed regulations that would let exchanges offer alternative default options for enrollees. Under current law, most enrollees who did not revisit the exchange website are automatically re-enrolled in their plans (a few states do not allow automatic renewal). The new proposed rules would let exchange enrollees choose whether their default option would be to automatically renew the same plan or to let the government switch them into a cheaper similar plan if theirs becomes more expensive. Under the proposed rules, state exchanges would be given the option to offer these alternatives in 2016, with the federally run exchange offering it in 2017.

For people that chose this option, the government would be effectively choosing their insurance plan, a far cry from the “if you like your plan you can keep it” pledge.

In one sense, it is not surprising that HHS is at least exploring this option. Automatic renewal presents a host of potential problems.

Due to the way the law designed the exchange subsidies, many of these people will end up paying significantly more if they automatically renew. An analysis by the New York Times found that people in the most popular plans would face an average premium increase of 9.5 percent. This could end up affecting millions of people, as a recent Gallup poll found that 68 percent of respondents said they planned to renew their current plan.

To some extent, the proposed rules could help alleviate the initial problem of unforeseen premium increases, but it creates other issues at the same time.  Enrollees might not understand the downsides of letting the government automatically switch them to a cheaper plan. People who chose this option fearing premium increases could find that they have lost their doctor, or a prescription they need is no longer covered by their plan. For even the most sophisticated exchange customers, there is a measure of uncertainty.  When they choose a default option, enrollees won’t know how much their premiums will increase next year or how the provider networks of cheaper alternatives compare.  Each customer’s priorities will be different, as will the variables affecting their decision. Obamacare has inadvertently created a very complex situation for the government to try to navigate.

The problems associated with automatic renewal are serious and could affect millions of people, but they might not have a clear solution. In one sense, the proposed default option could help people avoid unforeseen premium increases. This could be the most important factor for many enrollees, but comes at the risk of losing access to provider networks they might like. At the same time, the proposed rules would significantly increase government authority and decision-making power. No longer would the individual mandate, the controversial requirement to obtain health insurance, be enough. For many people, the government would actually choose and enroll them in a specific health insurance plan. The new rules would extend government reach into health care even farther. This is the same government that oversaw the disastrous rollout of the exchange website and inflated enrollment numbers. Given its performance so far, we should be wary of giving the government an even bigger role.

Ebola: Human Progress Is the Best Medicine

With the media frenzy over Ebola now thankfully fading, let us view the outbreak within the context of humanity’s continually improving ability to solve new problems.

Today, the world is better prepared than it has ever been to respond to an outbreak of an infectious disease. For example, there are more skilled medical professionals available to tend to the sick and conduct research on effective treatment. The number of physicians per person is rising globally.

While there is not yet a cure for Ebola, many people are hard at work coming up with one. Countless maladies that once were death sentences can now be treated. The development of effective antiretroviral drugs for HIV/AIDS, for example, serves as one of the great medical accomplishments of the past two decades.

Today, the tools to prevent transmission of disease are more accessible than ever. Ebola and many other diseases are partly spread through poor access to sanitation. Thankfully, more people are gaining access to improved sanitation facilities.

The Ebola threat should be viewed in the context of human ingenuity. As Princeton University professor and HumanProgress.org advisory board member Angus Deaton writes in his book The Great Escape, “Need, fear, and, in some circumstances, greed are great drivers of discovery and invention.”

Drugs for the Deceased

Medicare fraud is rampant. The Government Accountability Office (GAO) estimates fraud compromises 8 percent of total expenditures, or $44 billion annually. Outside estimates are as high as $120 billion. A recent report from the Department of Health and Human Services Inspector General highlights just one of the many examples of waste, fraud, and abuse within the system: Medicare paying for drug coverage of deceased beneficiaries.

Medicare Part D provides prescription drug coverage to 39 million seniors costing taxpayers $59 billion annually, net of premiums paid by seniors. In 2013 Medicare paid for 1.2 billion prescriptions.

The Inspector General’s report details the fraud: “In 2012, Medicare paid for 348 HIV [human immunodeficiency virus] drugs for 158 deceased beneficiaries. The total cost for these drugs was $292,381.” The report studied HIV drugs as they are targets for abuse since they are so expensive.

These drug claims were not isolated instances. The IG found “each of the 158 beneficiaries had between 1 and 6 drugs dispensed after the date of death; most beneficiaries had at least 2.” Medicare spent $7,160 for three prescriptions for one patient’s drugs in Florida. They were approved on two separate occasions after his death. Medicare approved three prescriptions for a patient in Michigan costing $5,616.

Approvals occur because of a delay in receiving information about a beneficiaries death. This results in a period where the recipient is dead, but Medicare’s system still consider the patient to be alive.

This is not the first time that the Inspector General has criticized Medicare’s handling of deceased beneficiaries. In 2011 the Inspector General found that Medicare Part C and D paid $21 million for claims by deceased beneficiaries.

The Inspector General acknowledged that the total amount of fraud was miniscule compared to total Medicare spending. HIV drugs represent just one-quarter of one percent of Part D prescriptions. But the approval process is the same for all Part D drugs meaning other drugs are also vulnerable to improper payments for deceased individuals. The report says “A change in CMS’s practice would affect all Part D drugs, not just HIV drugs. Considering the enormous number of Part D drugs, a change in practice could result in significant cost savings for the program and for taxpayers.” An estimate of cost savings is not included, but it would likely be in the millions.

Medicare does plan to fix the system for dead beneficiaries, but with billions  wasted on Medicare every year, stopping the tide of improper payments seems unlikely without major structural reform of the program.

Administration Drastically Lowers the Bar for Second Year of Enrollment

Broken promises and lowered expectations littered the first year of the Affordable Care Act. When the law was being debated, Obama promised the law would cut health care premiums for a typical family by $2,500. Instead, premiums everywhere continued to rise, in some places they skyrocketed. Supporters claimed the law would reduce the deficit, citing a score from the Congressional Budget Office. More recent calculations with a full ten years of implementation show that it will increase budget deficits. The now infamous “if you like your health care plan, you can keep it” pledge, which Politifact dubbed its “lie of the year” turned out to be a fabrication as millions of people received cancellation notices. The administration has tried to shift focus from past promises on cost containment and premium savings to the expansion of insurance coverage. Even in this area, the Affordable Care Act looks like it will fail to meet its goals, and the administration is already scrambling to try to temper expectations.

At an event at the Center for American Progress earlier this week, Health and Human Services Secretary Sylvia Burwell revealed that the administration had drastically lowered their exchange enrollment target. She divulged “[t]he number we’re going to aim for this year is 9.1 million.” This is a far cry from the Congressional Budget Office’s April projection of 13 million. The new goal for next year  is only 70 percent of the initial projection, which showed exchange enrollment jumping 7 million in 2015. The new target only anticipates a net increase of 2 million, a drastic reduction.       

In a related brief, HHS cited a slower than expected shift from employer-sponsored insurance and off-exchange enrollment as the reason for the lower projection. The brief suggests that it will take five years instead of three to ramp up to the eventual enrollment level of 25 million. This could mean that exchange enrollment could not reach its peak until 2019 and will likely fall short of initial expectations for years to come.

Secretary Burwell also sought to tamp down expectations for the website, saying that it “will have things that won’t go right. We will have outages, we will have downtime.” While the website will probably function better than last time, the second round of open enrollment faces many serious obstacles.

Most of the people most interested in signing up already did last year. Convincing those still uninsured to sign up could be more of a challenge. The first enrollment period had more outreach and coverage, whereas the Obamacare story potential enrollees are most likely to see now is news that the Supreme Court agreed to hear a case that could invalidate the majority of federal subsidies. Automatic renewal for people already enrolled poses another problem. If they do nothing, many people could keep the same plan but have to pay much more due to the way the law calculates subsidies. On top of that, the second open enrollment is only half as long as the first, so people have less time to visit the website and enroll through the exchange.

The first real indicator for how the second round is going will be how the renewal period goes for people who signed up last year. Last year there was a surge in enrollment at the end of the enrollment period. If people run into problems with automatic renewal or have difficulty using the website that could deter new potential enrollees.

The law’s past failures have led to broken promises and missed goals in areas like cost savings, premium reduction and improving the quality of care people receive. One of the only metrics the administration could point to in the past was that exchange enrollment in the first year actually met stated goals despite the website’s terrible launch. Now it seems that the law will fall short in enrollment too.

Open enrollment begins next week, and the recent efforts by the administration to lower expectations so close to the start date do not inspire much confidence.

Why Transparency Is Important

The benefits of transparency are hard to explain. Bit by bit, we’re improving public oversight of government, I’ve been heard to say, implying more libertarian-friendly outcomes—never quite sure that I’m getting my message through.

Now comes a comment on transparency that articulates its importance better than I ever could. It’s Obamacare architect Jonathan Gruber describing how lacking transparency allowed the president’s signature health care regulation to pass.

A gaffe in Washington is when somebody tells the truth. Thanks to this one, more people may understand how non-transparent government undercuts their freedoms. Insisting on government transparency can protect them.