Topic: Health Care

Short-Term Plans Would Increase Coverage, Protect Conscience Rights & Improve ObamaCare Risk Pools

Any day now, the Trump administration will release a final rule allowing greater consumer protections in so-called “short-term, limited duration insurance,” a category of health insurance Congress exempts from federal health insurance regulations, including ObamaCare regulations. In comments I filed on the proposed version of the Trump administration’s rule and an accompanying Wall Street Journal oped, I explained some but not all of the benefits of allowing these consumer protections. What follows is updated and new information about the benefits of allowing those consumer protections.

Introduction

In 2016, the Obama administration arbitrarily prohibited certain consumer protections in short-term plans. First, it exposed sick consumers to underwriting and loss of coverage by shortening the maximum duration of short-term plans from 12 months to 3 months. Second, it prohibited “renewal guarantees” that would protect consumers who develop expensive illnesses from ever facing underwriting or losing their coverage.

Last year, President Trump urged the Department of Health and Human Services to allow short-term plans to last 12 months and to allow consumers to bridge together consecutive short-term plans with “renewal guarantees” that protect them from being re-underwritten after they get sick. With ObamaCare premiums soaring and the consulting firm Avalere warning of “substantial increases” in ObamaCare premiums for 2019, these consumer protections would mean “consumers could purchase health-insurance protection for 90% less than the cost of the average ObamaCare plan.“ Renewal guarantees would keep people with expensive conditions out of ObamaCare plans, thereby improving ObamaCare’s pools and reducing the cost of ObamaCare. Along the way, allowing these consumer protections would “increas[e] transparency in government and provid[e] voters and policymakers with better information about the cost of the ACA.”

FDA Commissioner Gottlieb’s Sunday “Tweetorial” Is Both Encouraging and Frustrating

A fair reading of Food and Drug Administration Commissioner Scott Gottlieb’s “Sunday Tweetorial” on the opioid overdose crisis leaves one simultaneously encouraged and frustrated. 

First the encouraging news. The Commissioner admits that the so-called epidemic of opioid overdoses has “evolved” from one “mostly involving [diverted] prescription drugs to one that’s increasingly fueled by illicit substances being purchased online or off the street.” Most encouraging was this passage:

Even as lawful prescribing of opioids is declining, we’re seeing large increases in deaths from accidental drug overdoses as people turn to dangerous street drugs like heroin and synthetic opioids like fentanyl. Illegal online pharmacies, drug dealers and other bad actors are increasingly using the Internet to further their illicit distribution of opioids, where their risk of detection and the likelihood of repercussions are seen by criminals as significantly reduced.

As I have written here and here, the overdose crisis has always been primarily caused by non-medical users accessing drugs in a dangerous black market fueled by drug prohibition. As government interventions have made it more expensive and difficult to obtain diverted prescription opioids for non-medical use, the black market responds efficiently by filling the void with heroin, illicit fentanyl (there is a difference) and fentanyl analogs. So policies aimed at curtailing doctors’ prescriptions of opioids to patients only serve to drive up deaths from these more dangerous substitutes, while causing patients to suffer needlessly, sometimes desperately, in pain. Gottlieb validates my argument in his “tweetorial,” providing data from the Centers for Disease Control and Prevention and the Drug Enforcement Administration.

Now for the frustrating news. Gottlieb next reminds us, “No controlled substances, including opioids, can be lawfully sold or offered to be sold online. There is no gray area here.” He provides evidence of rampant illegal internet marketing of prescription opioids, with 95 percent of internet pharmacy websites selling opioids without a prescription, often conducting transactions with cryptocurrencies, and shipping these orders “virtually anywhere in the US.” This is also the way illicit fentanyl is flooding the market.

No, Babies Are NOT Born Addicted to Opioids

“A crisis is a terrible thing to waste,” is a phrase coined by Stanford economist Paul Romer. Politicians are always in search of new crises to address—new fires to put out—with rapid and decisive action. In their passion to appear heroic to their constituents they often act in haste, not taking the time to develop a deep and nuanced understanding of the issue at hand, insensitive to the notion that their actions might actually exacerbate the crisis.

An example of that lack of understanding was made apparent in a press release by the office of House Majority Whip Steve Scalise (R-LA) on June 22 supporting legislation that packages together over 70 bills (H.R.6) aimed at addressing the opioid (now mostly heroin and fentanyl) overdose crisis. The bills mostly double down on the same feckless—often deleterious—policies that government is already using to address the crisis. The release stated, “Whip Scalise highlighted a Slidell, Louisiana family whose son was born addicted to opioids, a syndrome called NAS, as a result of his mother’s battle with addiction.” 

The press release quoted Representative Scalise:

I highlight Kemper, a young boy from my district in Slidell, Louisiana. He was born addicted to opioids because his mother, while she was pregnant, was addicted to opioids herself…this example highlights something the Centers for Disease Control has noted. That is once every 25 minutes in America a baby is born addicted to opioids. Once every 25 minutes. That’s how widespread it is, just for babies that are born.

Before crowing that the “House Takes Action to Combat the Opioid Crisis,” as the press release was titled, Representative Scalise should get his science right. No baby is ever born addicted to opioids. As medical science has known for years, there is a difference between addiction and physical dependence—on a molecular level. Drs. Nora Volkow and Thomas McLellan of the National Institute on Drug Abuse pointed out in a 2016 article in the New England Journal of Medicine that addiction is a disease, and “genetic vulnerability accounts for at least 35 to 40% of the risk associated with addiction.” Addiction features compulsive drug use in spite of harmful, self-destructive consequences.

Physical dependence, on the other hand, is very different. As with many other classes of drugs, including antidepressants like Prozac or Lexapro, long-term use of opioids is associated with the development of a physical dependence on the drug. Abruptly stopping the drug can lead to severe withdrawal symptoms. A physically dependent patient needs the drug in order to function while avoiding withdrawal. Dependence is addressed by gradually reducing the dosage of the drug over a safe time frame. Once the dependence is overcome, such a patient will not have a compulsion to resume the drug.

Trump’s AHPs Rule: a Generally Lousy Idea that Would Reduce Premiums for Some and Make ObamaCare’s Costs More Transparent

The Trump administration has released its final rule expanding so-called association health plans. The rule would allow many consumers to avoid some of ObamaCare’s unwanted regulatory costs. But the rule also highlights both the destructive power of ObamaCare and Republicans’ utter lack of imagination when it comes to health care.

As originally proposed, the idea behind association health plans was to allow small businesses that purchased health insurance through a member-organization (i.e., an association) to enjoy the same federal exemption from insurance regulation that large businesses have traditionally (if unwisely) enjoyed. Small businesses have long wanted that exemption so they could escape oppressive state regulation. Now, small businesses are clamoring for association health plans because they want to escape oppressive federal regulation.

ObamaCare exempts large-employer health plans from many of the regulations it imposes on small-employer plans. The new rule treats association health plans like large-employer plans for purposes of ObamaCare, which allows small employers who purchase health insurance through a member organization to avoid those costly regulations. The consulting firm Avalere estimates the ability to avoid some of ObamaCare’s unwanted regulatory costs would induce 3.2 million people to enroll in association health plans and reduce their premiums:

Premiums in the new AHPs are projected to be approximately $2,900 a year lower compared to the small group market and $9,700 a year less compared to the individual market.

By Grabthar’s hammer, what a savings!

Traditionally, association health plans have always been a terrible idea that violates Republicans’ federalist principles, because they would move health-insurance regulation from the state level to the federal level. But since ObamaCare went ahead and federalized regulation of small-business health plans, and the association-health-plans rule merely allows small businesses to opt for lighter versus heavier federal regulation, association health plans no longer violate federalism. Credit ObamaCare with making a bad idea good.

Even in this iteration, however, association health plans still aren’t much of a good an idea. Trump’s association health plans rule builds on the broken model of employer-sponsored health insurance. Employer-sponsored coverage is lousy coverage. It deprives workers of control of their health-insurance dollars and decisions. It sticks millions of workers with health plans they would never choose themselves. It leaves millions of workers with uninsurable preexisting conditions, because it disappears for no good reason after workers get sick. It increases prices for health care and health insurance. The failures of our government-created system of employer-sponsored coverage are what created the demand for ObamaCare in the first place. Rather than offer an agenda to make health care better, more affordable, and more secure, Trump’s association health plans rule works entirely within that framework. It does nothing to move Americans toward a better system of providing health insurance.

Still, it would allow some workers to avoid some unwanted regulatory costs. So there’s that.

And that part gives rise to the only other good part of this rule, which is also the part that ObamaCare supporters hate the most: the rule will make ObamaCare’s costs more transparent. ObamaCare imposes its highest hidden taxes, in the form of higher premiums, on the healthy. The association-health-plans rule will free an estimated 1 million disproportionately healthy people to escape those unwanted regulatory costs. When those folks drop out of the Exchanges, the average risk in ObamaCare’s risk pools will rise. Correspondingly, ObamaCare premiums will rise, perhaps even faster than they have to date

ObamaCare supporters decry this as “sabotage,” but that is a subterfuge. When ObamaCare premiums rise to reflect the cost of ObamaCare’s regulations, it is what the world calls transparency. ObamaCare supporters fear such transparency because, as ObamaCare architect Jonathan Gruber admitted, the public would have rejected the law (and still might!) if they could actually see what it does. “[If] you made explicit that healthy people pay in and sick people get money,” Gruber admitted, “it would not have passed.”

And if you reach a point where you decry transparency as sabotage, it may be time to reevaluate your life. 

I Will Bet Drew Altman $100 that ObamaCare’s Preexisting Conditions Are Unpopular

The Trump administration announced it will argue in federal court that ObamaCare’s preexisting-conditions provisions are unconstitutional. Supporters of the law, including many reporters, are beside themselves with glee. Republican fools! Everyone knows ObamaCare’s preexisting-conditions provisions are the most popular part of the law! (Democrats, crush them!!)

ObamaCare’s supporters have this one exactly backward. The law’s preexisting-conditions provisions are not popular. They are wildly unpopular. Supporters of the law believe they are popular – and have fooled even Republicans into believing the same – because they have been drinking a strong brew of economic ignorance, shoddy polling, and bad journalism.

In response to the Trump administration’s announcement, Kaiser Family Foundation president Drew Altman wrote:

Protections for people with pre-existing conditions are hugely popular, and the administration may have handed Democrats their strongest health care weapon yet — because now they can make the case that the administration has gone to court to take away protections for people with pre-existing medical conditions.

The case is also likely to drag on, so it could be the political gift that keeps on giving through 2020, even if it is eventually thrown out.

The Washington Post’s Paige Winfield Cunningham wrote:

The Trump administration has given Democrats a generous political gift
Preexisting conditions health coverage is very popular.

President Trump has given Democrats the political gift that Capitol Hill Republicans were too smart to grant them last year. And Republicans know all too well it could be disastrous…

Dismayed, top Republicans have been moving quickly to put space between themselves and the administration on the matter, anxious to distance themselves from such popular consumer protections…

Politicians and policymakers are well aware that preexisting protections [sic] poll extremely well with Americans. Seventy percent of respondents to a Kaiser Family Foundation poll last year — including 59 percent of Republicans — said the federal government should continue prohibiting insurers from charging these folks more for coverage.

Less smart than Capitol Hill Republicans? Them’s fightin’ words.

The reason Altman, Cunningham, and almost everyone else in Washington believe ObamaCare’s preexisting-conditions provisions are popular is because they conduct (in the case of Altman) and rely on (in the case of Cunningham) poll questions that ask only about the presumed benefits of those provisions–as if those provisions have only benefits, and no costs. Here is the Kaiser Family Foundation poll question both of them cite.

Bad Polling

The question basically asks whether respondents want the federal government to guarantee that sick people will pay no more for health insurance than healthy people pay. It asks only about the intended benefits of ObamaCare’s preexisting-conditions provisions: lower premiums for the sick.

Kaiser Family Foundation scholars from Altman all the way down to the lowliest research assistant, as well as seasoned health-policy journalists like Cunningham, know full well that requiring insurers to charge healthy and sick enrollees the same entails significant costs as well as benefits. And they know what those costs are. But while I have seen Kaiser Family Foundation polls ask respondents to offer opinions informed by both the benefits and the costs of a certain policy, I have never seen them do so with regard to ObamaCare’s preexisting-conditions provisions.

Fortunately, we at the Cato Institute have done so. The results may shock you! 

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Vermont Creates Its Own Individual Mandate (Penalties to Be Set Later by Bureaucrats)

From the St. Johnsbury, Vermont Caledonian Record:

On May 28 Gov. Phil Scott signed a bill to impose an individual mandate on all Vermonters to have state-approved health insurance. The mandate takes effect in 2020. A working group will recommend the necessary penalties for non-compliance by November.

The United States Congress eliminated the penalty tax for not having government–approved ObamaCare health insurance. So the governor and legislative leaders believe they must impose some kind of state penalty to prevent healthy people from departing the individual market insurance pool.

Who are the healthy? Primarily our young people.

And why must they be forced, on pain of penalties, to buy what for them is seriously overpriced health insurance? Because our state government doesn’t want to have to raise tax dollars to subsidize the far higher premiums of older and sicker people.

After all, why raise taxes to make a state insurance scheme work, when the government can simply force young healthy people to pay for the subsidies for their grandparents?

It’s not as if twenty-somethings are richer than sixty-somethings. They aren’t. Most of them are starting out in their working life at the lower end of the pay scale, often paying off college debts, maybe starting a family and trying to buy a home.

No matter. Our government will cheerfully hammer them to hold down the premiums for people who are near the top of their earning careers, have already raised their kids, and paid off their mortgages…

A Democratic legislature passed a sweeping Individual Health Effort Tax mandate in 2005. Republican Gov. Jim Douglas vetoed it. Here’s what the penalty menu was: “Individuals who are not otherwise covered, and who refuse to participate in the Plan, will be sanctioned by some combination of denial of motor vehicle registration, drivers’ license, homestead property tax exemption, hunting and fishing licenses, and enrollment in any school or college in the state.”

We can’t wait to see a legislator – or a Governor – try to explain this to a room full of young voters.

HT: Ethan Allan Institute founder and vice president John McClaughry.

Why Is the OECD Trying to Connect Labor Market Conditions and Opioids?

story in today’s Wall Street Journal discusses the latest report from the Organization for Economic Cooperation and Development on ”prime age” (25-54) labor-force participation rates among its 35 member countries through the last quarter of 2017. While the US rate has improved, it remains below the average OECD rate, lagging behind such developed countries as Japan and the UK. What’s puzzling is why the authors of the report decided to weigh in on the opioid overdose issue.

Noting that per capita opioid prescriptions in the US are “significantly higher” than in other OECD countries, the report finds that participation rates for all adults (not limited to prime age) vary from state to state. The rate was lowest in West Virginia at 53 percent, and highest in North Dakota at 71 percent. It mentioned that opioid prescription rates are “generally higher” in those states with lower labor participation rates, leading it to declare that the use of opioid drugs “appears to be connected” to labor market conditions.

The number of opioid prescriptions has been dropping steadily in the US since it peaked in 2010. In fact, high-dose opioid prescriptions are down over 41 percent. An April 2018 report from the American Medical Association trumpeted a 22 percent decrease in opioid prescriptions between 2013 and 2017. 

The false narrative dominating the media and driving opioid policy blames opioid abuse and overdoses on doctors addicting their patients to pain pills. The near quadrupling of the sales of prescription opioids between 1999 and 2014 is often used to help make the case. 

Yet correlation does not imply causation. The AMA made note of this in its April report on the dramatic drop in prescriptions when it stated:

It is notable that every state has experienced a decrease, but this is tempered by the fact that deaths related to heroin and illicit fentanyl are increasing at a staggering rate, and deaths related to prescription opioids also continue to rise. These statistics again prove that simply decreasing prescription opioid supplies will not end the epidemic.

Data from the Centers for Disease Control and Prevention show that overdoses—especially from fentanyl and heroin—continue to soar as prescription rates decline on the state level as well. 

The principle that correlation does not imply causation also applies to the observations in the OECD report.

The OECD report mentions that the overall labor-force participation rate tends to be lower in states where disability rates are higher. And West Virginia is a leader among states with respect to the percentage of its population on Social Security Disability benefits at 3.9 percent. It therefore points to a “possible connection between drug use and disability,” adding “addiction ultimately impairs participation.” It is certainly reasonable to expect that patients disabled by chronic severe pain conditions will be prescribed opioids. But there is no evidence that opioid use increases disability rates. In fact, Cochrane systematic studies in 2010 and 2012 found an addiction rate of approximately 1 percent in chronic non-cancer pain patients on long-term opioids. And many chronic pain patients are gainfully employed but have to stop working when they are cut-off from their opioids and their pain becomes debilitating. 

As I have written here and here, the overdose crisis was never about doctors and patients. It has always been primarily the result of non-medical users accessing drugs in the dangerous black market that results from drug prohibition.

Because correlation does not imply causation the OECD report carefully avoids drawing conclusions by using phrases like “appears to be connected” and “generally higher.” But its allusion to a connection between opioid prescribing and the labor participation rate is intellectually irresponsible and seems a gratuitous attempt to patronize the opioid policy establishment.