Topic: Health Care

Failed ACA Reinsurance Program Shows: Government Subsidies Don’t Reduce Premiums

ObamaCare turns eight years old today. Some opponents had hoped to mark the occasion by giving supporters the birthday gift they’ve always wanted: a GOP-sponsored bailout of ObamaCare-participating private insurance companies. Fortunately, a dispute over subsidies for abortion providers killed what could have been the first of many GOP ObamaCare bailouts.

ObamaCare premiums have been skyrocketing. All indications are this will continue in 2019, with insurers announcing premium increases up to 32 percent or more just before this year’s mid-term elections. Some Republicans fear voters will punish them for the effects of a law every Republican opposed and most still want to repeal.

Senate health committee chairman Lamar Alexander (R-TN), Sen. Susan Collins (R-ME), and House Energy & Commerce Committee chairman Greg Walden (R-OR) hope to avert calamity by expanding on a proven failure. For months, they have been pushing legislation that would resurrect ObamaCare’s expired “reinsurance” program with $30 billion of new funding.

ObamaCare’s architects knew the law’s preexisting-conditions provisions would effectively destroy the individual health insurance market. They added the reinsurance program in an attempt to put Humpty Dumpty back together again.

ObamaCare’s preexisting-conditions provisions both increase health-insurance premiums and reduce health-insurance quality. They achieve the former, first, by requiring insurers to cover patients with uninsurable preexisting conditions, and again by unleashing adverse selection. Those factors in turn reduce quality by literally punishing insurers who offer high-quality coverage for the sick.

From 2014 until it expired at the end of 2016, ObamaCare’s reinsurance program gave participating insurers extra taxpayer subsidies to cover the claims of high-cost patients whom its preexisting-conditions provisions require them to cover at a loss. The extra subsidies were supposed to reduce premiums, and prevent a race to the bottom fueled by ObamaCare’s penalties on quality coverage.

If ObamaCare’s reinsurance program was supposed to keep premiums from skyrocketing, it was an utter failure. Premiums increased 18-25 percent per year from 2013 through 2016, well above the trend of 3-4 percent from 2008 to 2013. By 2017, premiums had doubled—a cumulative increase of 99 percent or 105 percent, depending on the source—from pre-ObamaCare levels. ObamaCare’s preexisting-conditions provisions were the driving force behind these premium increases.

CDC Researchers State Overdose Death Rates From Prescription Opioids Are Inaccurately High

In an article in the April 2018 issue of the American Journal of Public Health, four researchers at the Centers for Disease Control and Prevention’s Division of Unintentional Injury Prevention report that the CDC’s methods for tracking opioid overdose deaths have over-estimated the number of those deaths due to prescription opioids, as opposed to heroin, illicitly manufactured fentanyl, and other illicit variants of fentanyl. They called the prescription opioid overdose rate “significantly inflated.”

Fentanyl is a synthetic opioid categorized as a prescription opioid. But, in the outpatient setting, it is predominantly prescribed as a time-release transdermal patch, not suitable for nonmedical users. Occasionally, it is prescribed as a lozenge, a nasal spray, or a small film that can be placed within the corner of one’s mouth, usually to cancer patients in extreme pain. These forms of the drug don’t lend themselves to being converted into a form suitable for nonmedical users wishing to snort or inject the drug. The injectable form of fentanyl is almost exclusively used in the hospital setting, both as an anesthetic agent and to control severe pain in patients who are critically ill or in the postoperative recovery room. Over the past several years, the underground market has been flooded by illicitly manufactured fentanyl and its variants, often moved into the country in a powdered form through the mail.

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Study: Medical Expenses Cause Close to 4% of Personal Bankruptcies—not 60%

A new study by economists Carlos Dobkin, Amy Finkelstein, Raymond Kluender, and Matthew J. Notowidigdo – “Myth and Measurement — The Case of Medical Bankruptcies” [subscription required] – challenges the conventional wisdom on the effect of medical bills on the rate of personal bankruptcy. From the study:

Policymakers’ beliefs about the frequency of medical bankruptcies are based primarily on two high-profile articles that claim that medical events cause approximately 60 percent of all bankruptcies in the United States. In these studies, people who had gone bankrupt were asked whether they’d experienced health-related financial stress such as substantial medical bills or income loss due to illness. People were also asked whether they went bankrupt because of medical bills. People who reported any of these events were described as having experienced a medical bankruptcy…

[But] the existing, widely cited evidence on medical bankruptcy is built on the fallacy that when two things occur together there is necessarily a causal relationship between them.

The study’s authors looked instead at people who had a hospitalization to see whether that expensive episode of care increased the probability of filing for bankruptcy. They write, “we estimate that hospitalizations cause only 4 percent of personal bankruptcies among nonelderly U.S. adults.” Even among uninsured adults, “hospitalizations are responsible for only 6 percent of personal bankruptcies.” While medical bills can still drive someone to bankruptcy even if they don’t experience a hospitalization, the authors conclude, “focusing on hospitalized people probably does not lead to vast underestimation of the effect of all illness and injury on bankruptcy rates.”

Takeaways:

  1. Always be skeptical of everything you read. (Up to and including this blog!)
  2. Keep in mind this study does not show the overall personal bankruptcy rate is lower than believed. It shows only that the share attributable to medical expenses is lower than believed. It therefore follows that, to the extent your support for single-payer springs from a desire to reduce bankruptcies, you should shift your energies toward combating whatever is actually causing the 56 percent of bankruptcies you incorrectly believed to be attributable to medical expenses.
  3. Health care reform should be able to get the medical-bankruptcy rate down even more.

States & HHS Can Provide Relief from ObamaCare while Congress Dithers

Congress appears unwilling to provide any sort of ObamaCare relief. 

But did you know states can exempt their residents from ObamaCare’s costliest regulations simply by letting them purchase insurance licensed by U.S. territories—i.e., across state lines? 

Or that the Trump administration has the authority to provide even more relief from ObamaCare than last year’s Cruz Compromise would have, just by reversing HHS’ administrative ban on renewal guarantees in short-term plans? 

Well, now you do. From my latest oped in The Hill:

States and the Trump administration each have the power to deliver relief from ObamaCare while Congress dithers.

In 2014, the Obama administration reversed its interpretation of ObamaCare and found the law’s costliest regulations do not apply in U.S. territories. As a result, states can provide relief from ObamaCare by freeing individuals and employers to purchase health insurance licensed by American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands.

The Obama administration’s reversal also provides a model for the Trump administration. HHS has the authority to and should reverse its administrative ban on short-term health plans offering “renewal guarantees.” Ending that ban would dramatically reduce premiums for the vast majority of consumers in the individual market, even as ObamaCare premiums continue to skyrocket. Conservative states and states with vulnerable GOP members like Florida, Illinois, and Pennsylvania would see the largest premium reductions. 

Read the whole thing.

Hospitalized Patients Are Civilian Casualties in the Government’s War on Opioids

A recent story by Pauline Bartolone in the Los Angeles Times draws attention to some under-reported civilian casualties in the government’s war on opioids: hospitalized patients in severe pain, in need of painkillers. Hospitals across the country are facing shortages of injectable morphine, fentanyl, and Dilaudid (hydromorphone). As a result, trauma patients, post-surgical patients, and hospitalized cancer patients frequently go undertreated for excruciating pain.

Hospitals, including the ones in which I practice general surgery, are working hard to ameliorate the situation by asking medical staff to use prescription opioid pills such as oxycodone and OxyContin instead of injectables, when possible. But many patients are unable to take oral medication due to their acute illness or post-operative condition. In those cases, we are often asked to use injectable acetaminophen, muscle relaxants, or non-steroidal anti-inflammatory agents. But many times those drugs fail to give adequate relief to these patients—which is why they are not the first line of drugs we use.

The shortage is uneven across the country. Some hospitals are feeling the shortage worse than others. According to the American Society of Anesthesiologists, the shortage is so severe in some hospitals that elective surgeries—such as gallbladder and hernia operations—have been postponed.

Some hospitals have resorted to asking nursing staff to manually combine smaller-dose vials of morphine or other injectable opioids that remain in-stock as a replacement for the out-of-stock larger dose vials. Dose-equivalents of different IV opioids vary and are difficult to accurately calculate. This increases the risk of human error and places patients at risk for overdose, as was explained in a letter to the U.S. Drug Enforcement Administration by representatives of the American Hospital Association, American Society of Anesthesiologists, American Society of Clinical Oncology, American Society of Health-System Pharmacists, and the Institute for Safe Medication Practices. The letter asked the DEA to adjust its quota on the manufacture of opioids to help mitigate the shortage.

As part of the effort to address the opioid overdose crisis—which is really a fentanyl and heroin overdose crisis—the DEA, which sets national manufacturing quotas for opioids, ordered a 25 percent reduction in 2017 and another 20 percent reduction this year.

National shortages of drugs are not confined to injectable opioids. Over the years, various drugs in common use have gone on national “back-order” and health care practitioners have had to develop workarounds. The causes of these recurring shortages, not unique to the US, are complex and multifactorial.

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The War on Opioids Has Become a War on Patients

As Anne Fuqua recently pointed out in the Washington Post, non-medical drug users accessing heroin and fentanyl in the underground drug market are not the only victims in the opioid crisis. Many patients for whom prescriptions opioids are the only relief from a life sentence of torturing pain are also victims. That is because policymakers continue to base their strategies on the misguided and simplistic notion that the opioid overdose crisis impacting the US, Canada, and Europe, is tied to doctors prescribing opioids to their patients in pain.

Unfortunately, political leaders and the media operate in an echo chamber, reinforcing the notion that cutting back on doctors prescribing opioids is the key to reducing overdose deaths. As a result, all 50 states operate Prescription Drug Monitoring Programs that track the prescribing habits of doctors and intimidate them into curtailing the prescription of opioids. Yet multiple studies suggest that PDMPs have no effect on the opioid overdose rate and may be contributing to its increase by driving desperate pain patients to the dangers that await them in the black market.

Last month Arizona joined the list of 24 states that had put in place limits on the amount and dosage of opioids doctors may prescribe acute and postoperative pain patients. These actions are based on the amateur misinterpretation of the 2016 opioid guidelines put out by the Centers for Disease Control and Prevention and are not evidence-based.

And the Food and Drug Administration continues to promote the replacement of prescription opioids with abuse-deterrent formulations, despite an abundance of evidence showing this policy only serves to drive non-medical users to heroin and fentanyl while raising health care costs to health systems and patients.

As prescriptions continue to decrease, overdose deaths continue to increase. This is because as non-medical users get reduced access to usable diverted prescription opioids, they migrate to more dangerous fentanyl and heroin.

It is simplistic—and thus provides an easy target—for politicians and the media to latch on to the false narrative that greedy pharmaceutical companies teamed up with lazy, poorly-trained doctors, to hook innocent patients on opioids and condemn them to a life of drug addiction. But this has never been the case.

As Patrick Michaels pointed out about recrudescent opiophobia back in 2004, prescription opioids actually have a low addictive potential and when taken by patients under the guidance of a physician, have a very low overdose potential. Cochrane systematic studies in 2010 and 2012 both found an addiction rate of roughly 1 percent in chronic non-cancer pain patients. And a January 2018 study in BMJ by researchers at Harvard and Johns Hopkins examined 568,000 opioid naïve patients prescribed opioids for acute and postoperative pain from 2008 to 2016 and found a total “misuse” rate (all “misuse” diagnostic codes) of just 0.6 percent. And researchers at the University of North Carolina reported in 2016 on 2.2 million residents of the state who were prescribed opioids, where they found an overdose rate of 0.022 percent.

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Lessons for the Opioid Epidemic from Meth

As the nation remains fixated on the opioid epidemic, methamphetamine is making a resurgence. Meth is less expensive than heroin, and it is gaining users who fear opioid overdoses.

Meth is not new; it burst onto the scene in the early 1990, as the crack epidemic waned.  Synthesized from readily available chemicals, meth provided a cheaper, homemade alternative to other drugs. As use increased, legislators and law enforcement officials took note.

The first major legislation targeting meth was the 1996 Comprehensive Methamphetamine Control Act. Passed unanimously by the Senate and by 386-34 in the House, the legislation required that individuals buying and selling chemicals used in meth production register with the federal government, which sought to track such chemicals and reduce their supply to manufactures.

Despite this legislation, meth use – and fatal overdoses – increased. In response, Congress passed the Combat Methamphetamine Epidemic Act of 2005 (officially enacted in March 2006), which limited over-the-counter sales of ephedrine and pseudoephedrine, and required retailers to log customer purchase of such drugs. Simultaneously, federal and state authorities were instituting restrictions on pharmaceutical amphetamines including Ritalin and Adderall. And many states instituted prescription drug monitoring programs to reduce the availability of prescription amphetamines acquired legally and resold on the black market.

While well-intentioned, these policies may have induced users to substitute from expensive prescription drugs to cheap, readily available meth. And this switch had the usual impact of restrictions on access.

Overdose deaths related to methamphetamine initially declined after the crackdown on prescription access, but by 2016, the meth overdose rate had reached four times its level a decade ago. The likely explanation is that restrictions pushed users from prescription versions to black market meth, where uncertainty about purity generated increasing overdoses.

 Methamphetamine Overdose Death Rates

As the opioid crisis worsens and calls for supply restrictions increase, policymakers should consider how the same approach failed to halt – indeed exacerbated – the meth epidemic.

 

Research assistant Erin Partin contributed to this blogpost.