AHCA has failed – what’s the next step?

AHCA has failed, and with it the Republicans’ efforts to repeal ACA.

Despite President Trump’s threats, cajolery, and bribing the Freedom Caucus, the attempt to repeal ACA is, for now and probably for the long term, dead.

(Please allow me this opportunity to point out that I predicted three months ago that ACA would NOT be repealed)…OK, chest pounding interlude is over…

What does the future hold?  While we all wish Congress would adopt sensible solutions to fix ACA, that’s highly unlikely. Steps such as

  • increasing the penalty for not carrying insurance to levels originally recommended by the Heritage Foundation,
  • fully funding the risk corridors and co-op support measures
  • fixing the “family glitch”
  • require insurers to operate in broad areas so they don’t cherry-pick only the most profitable locations, and
  • requiring full transparency from all medical providers

would help a lot, and that’s not even adding a Medicare-for-all option. As I noted in a previous post, Democrats helped fix G W Bush and the GOP’s Medicare Part D plan when it was cratering.

Unfortunately, it’s more likely the administration will do everything it can to hamstring ACA – refuse to enforce the mandate, end premium support, defund the federal Exchanges, you name it.  In the process, they’ll likely blame the prior president, or Democrats, or whatever. And in so doing, they will hurt businesses, taxpayers, individuals, patients.

What’s most likely is a concerted and persistent effort to defund Medicaid.  This will be described as allowing states more flexibility, as refusing to use federal funds for abortions, as reducing the federal deficit, but make no mistake, the real priority is to shrink funding for the poor, elderly, kids, and disabled.

Lest you think that’s harsh, recall that those are precisely the people Medicaid helps.  It remains to be seen if Republicans will be successful, or if they will come together and heal the fractures so visible within the party.  If they do, they will likely find Democrats willing to work with them, perhaps using the Cassidy Collins bill as a starting point.

There’s been a lot of energy focused on blocking or passing AHCA.  Let’s take a few days to let the smoke clear, and then try to get Congress to work together to fix ACA.

Because it isn’t going to be repealed.

Friday catch-up

I can’t remember a busier and more portentous week in healthcare in the last thirty years.

Last few weeks, in fact.  A lot happened in the rest of the world while we (at least us wonks) were obsessing over the latest news from Capitol Hill. Here are some of the highlights

When hospitals are going thru inspections by their accrediting agency, fewer patients die. That’s the finding of a study published in JAMA.  (thanks Steve Feinberg MD!) While the percentage reduction was small, the impact was not – if the lower rate prevailed for an entire year across all hospitals, 3,500 fewer Medicare beneficiaries would die – and likely thousands more younger folk. Why?

I’d suggest the Hawthorne Effect is at play: A researcher hypothesized the decrease may be more diligence.

“when docs are being monitored, the focus and attention placed on clinical care goes up. I’d say it was figuring out the diagnosis and matching the treatment correctly, because you’ve been a little more thoughtful.”

Telemedicine prices are going up – from less than $35 per consult in 2009 to around $43 these days.  That’s one of the findings from a research report authored by IBISWorld’s Anna Son.  More details on this in a future post.

The American Chronic Pain Association has just published the updated 2017 ACPA Resource Guide to Chronic Pain Management: An Integrated Guide to Medical, Interventional, Behavioral, Pharmacologic and Rehabilitation Therapies. Another shout-out to Dr Feinberg, Lead Author.

A piece I missed a few weeks back had this striking datapoint – fully 10 percent of claims at the Hartford had at least one psychosocial issue – those claims accounted for 60 percent of claims costs – and claims processes aren’t set up to identify these early on. This from friend and colleague Tom Lynch:

“It takes way too long for adjusters, nurses, and case managers to come to the conclusion that something is going on there. It has been the last thing they look at, and by the time they see it, it’s an iceberg straight ahead and they are about to hit it.”

I’ve been talking about the huge problem of opioids combined with benzos aka sedative hypnotics for some time now.  Mitchell Pharmacy Solutions’ Mitch Freeman PharmD. sent me the latest FDA blackbox warning – and reminded me that this is a much bigger issue than that involving combinations of opioids and certain antidepressants.

Finally, good friend and colleague Sandy Blunt of Medata did his usual incredibly competent assessment of a report, and drew some startling – and terrifying – conclusions.

I am still stuck on the math from an article early this year (“A Charleston Gazette-Mail investigation found drug wholesalers shipped 780 million hydrocodone and oxycodone pills to West Virginia in six years, a period when 1,728 people statewide fatally overdosed.”). The math is staggering on averages. How can anyone with a straight face say they could only recommend a 0.001% suspicion rate to the DEA. 

If the WV state avg pop from Census data during this time was about 1.84m and 780m pills were consumed over six years then each and every man, woman, and child in WV statistically consumed 1.36 pills a week –every citizen, every week of the year, for six years without ceasing. If we consider that 20% of the population was under 18 and adjust our data to exclude this group, then each and every man and woman 18 and up in WV had 1.7 pills a week. 

Even more disturbing is that this was just (“JUST”) for hydrocodone and oxycodone pills and did not include drugs such as codeine, fentanyl, hydromorphone, meperidine, methadone, or morphine …

This from the Gazette-Mail article:

Between 2007 and 2012 — when McKesson, Cardinal Health and AmerisourceBergen collectively shipped 423 million pain pills to West Virginia, according to DEA data analyzed by the Gazette-Mail — the companies earned a combined $17 billion in net income.

Over the past four years, the CEOs of McKesson, Cardinal Health and AmerisourceBergen collectively received salaries and other compensation of more than $450 million.

In 2015, McKesson’s CEO collected compensation worth $89 million — more money than what 2,000 West Virginia families combined earned on average. [emphasis added]

McKesson Corp CEO John Hammergren tees off on the 17th hole during the first round of the Pebble Beach National Pro-Am golf tournament in Pebble Beach, California, February 12, 2015. REUTERS/Michael Fiala (UNITED STATES – Tags: BUSINESS SPORT GOLF)

Thank you, for-profit healthcare system!

ACA Deathwatch: Damned if they do…or don’t

GOP Representatives are being strong-armed by President Trump and wooed by House leadership, and nowhere is the stress more intense then where I live – upstate New York.

While Trump blusters and leadership cajoles, wheedles, and bribes, Katko, Tenney, Faso et al (upstate GOP Congresspeople) are facing furious constituencies livid at the possibility that they and their neighbors will lose coverage – and that their state is being held hostage.

photo credit WSKG News

New York is the only state that requires counties to pay a chunk of Medicaid expense – 13% to be precise.  In my home county, Onondaga, that amounts to just over $100 million, and costs the average  homeowner about $600 annually in property taxes. In an effort to bribe/force upstate’s Republican Representatives to support AHCA, the bill was modified to specifically force New York to eliminate counties’ financial requirement and shift it to the state.

In Onondaga, 80,000 people, one out of six residents, is covered by Medicaid.  There are 26,000 healthcare jobs in the county paying $58,000 each.  If the AHCA passes and Medicaid expansion funding disappears, we’re going to lose over a thousand jobs – and $60 million in wages. Sure property taxes will go down, but state taxes will have to increase.

Syracuse – the biggest part of the county – has the highest minority poverty rate in the nation, and the lowest economic opportunity of any municipality as well.  Other upstate communities are better off – but not much.

If AHCA passes, an already desperate economic and health situation will get immeasurably worse.  That’s why Katko won’t hold town halls and is avoiding any and all public appearances; he knows that a NO vote on AHCA will cause a tweetstorm while a YES vote will likely cost him his seat.

That’s the dilemma facing all House Republicans, even those in “safe” seats. While Freedom Caucus members don’t know it yet, passing AHCA would cost many their seats. Voters HATE losing things they already have, and now that they have health coverage, and were promised the replacement will be better/cheaper/with lower deductibles and more access, when that proves to be false they are going to be really pissed off.

Medicaid cuts will result in their parents losing coverage for nursing home stays, neighbors’ disabled kids losing medical care, friends losing jobs in healthcare, and hospitals in rural America closing.

Fortunately, it’s extremely unlikely AHCA will pass, as several Republican Senators are strongly opposed to AHCA and will not be intimidated by Trump tweets.

What does this mean?

Elections have consequences – and so do votes.

If upstate Republicans vote to overturn ACA and the bill doesn’t pass the Senate, they are going to pay a very heavy price from voters on both ends of the political spectrum.  

Telemedicine – a primer

It’s among the hottest topics in work comp these days.

Telemedicine will be one of – if not the – most disruptive force in workers’ compensation medical care. Companies such as CHC Telehealth, Go2Care, and AmericanWell are moving rapidly, adopting different business models in an effort to gain first mover advantage.

Looking for a broader perspective, I recently had the chance to interview Jonathan Linkous, CEO of the American Telemedicine Association. Here’s what he had to say…

MCM – What service types/specialties are embracing telemedicine most rapidly?  Why those?

JL – It covers the gamut from primary care to urgent care, but there are some popular specialties – mental health, behavioral health, neurology – stroke care, ICU/CCU. Dermatology is one of the earlier adopters and radiology via remote reading of images has become a standard in the industry

The greatest increase in the number of services has been via consultations with online providers, Intensive Care monitoring either continuously or in evening hours (30% of ICU beds are hooked up to remote monitoring) and remote monitoring of chronic care.

Slower adopters include surgery, although that is changing with some robotics and oversight/proctoring from specialists from a distance

[Telemedicine is now being used for] Initial or follow-up visits with providers. Online consults are growing quite significantly with 1.2 million services delivered to 750,000 members in 2016. Possible stroke victims are being assessed by neurologists remotely today.

In terms of the largest number of people served, the top specialty is radiology where 7 – 10 million pictures are read remotely followed by cardiology with remote monitoring.

MCM – Which payer types are currently involved in telemedicine?

JL – The fastest adoption is by employers and private payers, then Medicaid, then Medicare. [Reimbursement is a driver, as value-based organizations aren’t concerned with billing per service but rather with delivering optimal outcome they see telemedicine as a way to deliver care faster to key patient populations]. The easiest way for providers using telemedicine to get reimbursed is by value-based care and not FFS; it is harder to get it paid for by FFS as need to justify the usage.

MCM – What states or regions appear to be early adopters?  Why those?

JL – Telemedicine started out in rural healthcare [and was] funded by the federal government; today it is urban as that’s where people are. California, AZ, MD have all been early adopters and enablers; in general states are more supportive than Medicare. The VA has been very supportive, as have other governmental payer programs [excluding Medicare].

MCM – What obstacles exist and how are they being addressed?

JL – Resistance by provider community and HC in general as this is typically a slow adopting industry; that’s dissipating of late. Providers need CMS to move more quickly with this for Medicare. Some state medical boards have been slow in developing practice guidelines. There are licensure issues, and crossing state lines is a complex issue; we need to get that addressed. Regulatory complexity is a burden. The ATA is working on pathways for communities and state medical boards which will get resolved before licensure.

Ancillary professions eg psych, nursing, and physical therapy, are moving faster to resolve licensure issues than medical societies. PT groups are working on interstate compacts now to enable state-to-state reciprocity. [This is likely due in large part to the nature of ancillary practice, as these providers] practice under guidance of a physician. Of course, it is easier to do telemedicine within a state but payment is another issue due to FFS and other requirements. Telemedicine is [as much about] expanding relationships with patients and not just reducing office visits. Telemedicine providers can document findings and notes in a chart and have a record of that as opposed to some of the issues inherent in an office visit such as a “white coat” issue. Parkinsons groups have embraced TM as its hard to get out and see a doc. Specialists are far away and telemedicine can improve access, so patient groups are advocating for TM.

MCM – What is an example of a successful workflow – patient identification, enrollment, delivery, reporting/documentation, billing ?

JL – Key to success is integration. [Originally telemedicine was televideo, now on a desktop or laptop or even phone. He has seen conferences where docs show up and see patients during a meeting.] There has also been an improvement in workflow as electronic records integration is key. This hasn’t been a requirement but can be a huge help if you have robust EMR system that is portable and interoperable – we are a ways from that.

MCM – Does telemedicine support vertically-integrated health systems or is it more an independent practice driver?

JL – Both. Mayo uses e-Consult where for some patients considering a procedure or with a diagnosis, Mayo sends their records go to another Mayo provider perhaps in a different state to do second opinion remotely. Local hospitals can tie into Mayo to differentiate, to take advantage of Mayo providers’ expertise and brand strength. Private practices can use this to expand their practice if they have strong capabilities via patient portal with video consults etc. Some alliances are forming among independent practices in cities to enable providers in different groups to work together.

MCM – What is happening with reimbursement and what does the future hold?

JL – The market sees value. At the federal level it is just a matter of time. [I see a] 5 year timeframe where we are past tipping point to value based care, lots of healthcare systems are looking at these care systems and when the value-based:FFS balance shifts to 50:50 it will flip their business plans which will drive more TM. DoD, Prisons, IHS, others are embracing this – Medicare is last of holdouts.

Anyone interested in diving deep into telehealth can attend the association’s conference…

Some work comp payers are committing suicide

The work comp meme is our industry is always 20 years behind the rest of the world.

Of late, that’s been overly optimistic, as insurers actually turn the clock back even further as they adopt tried-and-failed methods of buying medical services. Methods that healthplans, Medicare, and Medicaid have found counter-productive at best and disastrous at worst.

I’m referring to the recent expansion of the role of purchasing and procurement. Several large workers’ comp payers appear to be giving up on medical management by experts, and have ceded responsibility for medical management to procurement/purchasing.

This isn’t just involving procurement/purchasing in the buying decision, but rather giving the P/P department authority over contracting with vendors that provide medical management services, networks, bill review et al.

This makes zero sense, for multiple reasons.

  1.  Work comp medical costs are flat to declining.  That isn’t due to anything P/P has done, but a combination of
    1. Impact of ACA
    2. A dramatic reduction in drug spending over the last six years driven by a lot of work on the part of payers’ medical management staffs and their PBMs
    3. More and tighter focus on directing to effective providers
  2. Premiums are lower, while profits are solid, primarily because of 1. above, and despite pretty low investment returns.
  3. As I noted a year ago; “I’ll add that given the rapid evolution in health care delivery; provider consolidation; major changes in reimbursement; the growing impact of ACOs, medical homes, and alternate delivery systems; a deep understanding of health care delivery is critical to long-term success in workers’ comp.”

So, since things are going so well, some carriers have decided that the best way to keep the gravy train rolling is to squeeze prices for medical services. Because that’s really what P/P departments do best.

And, as every other purchaser of healthcare has learned, it categorically DOES NOT WORK IN HEALTH CARE.

The value equation in health care is Value = Cost (price per service x volume of services x type of services) divided by Outcomes.

Price-driven decisions address one tiny part of that equation and do nothing to address volume or type of service or outcomes.

If controlling price was the answer, we wouldn’t have cost inflation in Medicare, or Medicaid, or work comp PT in many jurisdictions. Because providers are really smart folks, and when they see the price go down, they adapt – instantly.  Here’s how this works.

John comes into the office with a sore ankle.  Doctor wants to do an X-ray.  Payer reimburses $22 for an X-ray.  Doctor does several X-rays when one or two would be sufficient.

Worse, Doctor orders an MRI.  Or two.

Price controls = higher utilization = higher cost and longer time out of work.

In the real world, healthcare buyers have moved to Value-based purchasing. Make no mistake, this is fundamentally different from what we’re seeing in workers’ comp. Work comp purchasing is almost always price-per-service based, while VBP is:

Value-based purchasing is a demand side strategy to measure, report, and reward excellence in health care delivery… making decisions that take into consideration access, price, quality, efficiency, and alignment of incentives.  Effective health care services and high performing health care providers are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements, and increased market share through purchaser, payer, and/or consumer selection.

This is NOT what we’re seeing in work comp, instead P/P is forcing vendors to cut prices. Of course, these vendors then have to get their medical providers to cut their prices.  And those vendors no longer have the resources to do things like, say, focus on opioid over-utilization or over-use of PT services.

What does this mean for you?

P/P-driven medical management decisions will increase costs for payers and employers; smarter payers will eat their lunch.

Three-legged horses can’t run

If you cut a leg off your horse, it’s not going to run far or fast.  If you cut two legs off, it’s going to fall over.  And if someone else cut your horse’s legs off, you wouldn’t help them fix their horse.

Common sense, right?

So why is Paul Ryan et al complaining about ACA?

He and his fellow Republicans chopped not one, but two legs off that horse, and now they scream loud and long that that horse won’t run, so they need to shoot it and replace it with…what?

I bring this to your attention because it explains why there’s so much reluctance on the part of Democrats to work with their Republican colleagues on an ACA replacement. Put bluntly, Congressional Dems believe they got screwed and are really pissed off about that. So pissed off that they are more than happy to let the Republicans shoot themselves in the head all by themselves.

Here’s a quick summary of steps Republicans took that harmed ACA. (more here; a LOT more here)

  • Removed funding for risk corridors which kept co-ops and other plans alive
  • Didn’t expand Medicaid in 17 states
  • Hobbled ACA marketing efforts in multiple states
  • Sued the Obama Administration to block premium supports

I’ll leave aside the things the GOP could have done to help fix ACA, common sense stuff such as:

  • increasing the penalty for not carrying insurance to levels originally recommended by the Heritage Foundation,
  • fixing the “family glitch”
  • require insurers to operate in broad areas so they don’t cherry-pick only the most profitable locations, and
  • requiring full transparency from all medical providers.

If they had, ACA would be operating a lot better today, but Sen McConnell, Speaker Ryan et al weren’t interested in fixing ACA.  (In contrast, Democrats helped fix G W Bush and the GOP’s Medicare Part D plan when it was cratering)

The result of the Republicans’ successful efforts to hamstring ACA were made public earlier this week when President Trump did a photo op with several “Obamacare victims” including a Colorado woman who claimed her health insurance costs had tripled under ACA (note there’s no independent corroboration of her claim). Ms Couey said she’d had to switch insurers multiple times – while there’s no detail on this, it is likely more than one of her previous insurers went belly-up for one of several reasons.

(Warning, this gets pretty wonky) A big reason for Ms Couey’s issues – ACA had provisions specifically designed to help new insurers develop, grow, and become viable competitors – in local markets – in an industry dominated by behemoths. These provisions included “risk corridors”; financial vehicles designed to help health insurers entering markets by offsetting initial losses by transferring profits from their wealthier competitors.

The idea was to force competition into and help sustain that competition in a market where size is all that matters, where it is all but impossible for new, entrepreneurial competitors to start, much less succeed.

Those provisions disappeared, killed off by a Congress ostensibly interested in the competition and the free market.  Specifically, Sen Marco Rubio inserted the clause in the Cromnibus bill that prevented the Feds from moving money around to cover the Co-Ops’ losses in 2014.

Let’s remember that the risk corridor payments were to be budget neutral over the three year lifespan of the program.  The Rubio amendment (Section 227) forced CMS to shift that to a “pay as you go” model.

What does this mean for you?

If someone had chopped the legs off your horse, would you be eager to help them fix their’s? 

 

Health reform and Work Comp – more data is coming in

The evidence is piling up; ACA is strongly associated with lower work comp premiums. Almost a year ago I attributed improvements in work comp’s medical expense trend to ACA; now, the impact is being seen in improving combined ratios particularly in states that fully adopted ACA’s reforms. (here’s a map of Medicaid-expansion states)

That view is now getting traction outside our little world, with the LA Times covering the issue earlier this week.

Premium decreases are now being seen in Medicaid-expansion states; here are a few examples.

  • Arkansas – 8.4% decrease
  • Michigan – 9.3% decrease in advisory rate
  • Montana – 7.8% decrease in loss costs
  • Nevada – 10.7% decrease in loss costs
  • Oregon – 5.3 % decrease
  • Vermont – 7.9% decrease

(I’ve purposely left out California, which has seen significant rate decreases however other factors beyond ACA are also affecting rates)

Of course, other factors are also in play here, including expanding employment and state-specific reforms. However, when you compare “ACA adopting states” with other states, the overall picture is compelling.

Bill Wilt of Assured Research kindly offered the following observations (more information is available here):

Assured Comment: American Health Care Act (AHCA) Likely Bad for WC Insurers

New 2016 data shows states maximally affected by ObamaCare outperformed WC industry

Newswires are on fire with analysis of the AHCA and its impact on the nation’s medically insured. Advocates point to the CBO’s estimate that it could reduce federal deficits by $337 billion over the ten years 2017-2026. Detractors, and there are many, focus on the CBO’s estimate that some 14 million Americans could lose healthcare coverage by 2021; climbing to 24 million by 2026.

New, 2016 industry data shows that the workers’ compensation loss ratio in states maximally affected by the rollout of the ACA (aka ObamaCare) have begun to outperform states minimally impacted by the ACA (see nearby figure). Our delineation stems from a recent New England Journal study which found that states expanding Medicaid and those introducing state-based exchanges saw the largest increase in the medically insured. In 2016, the WC loss ratios in those 18 states outperformed the 15 minimally impacted states by 440 basis points. The maximally-affected states also outperformed nationwide averages in 2016.

This new data comports with intuition and, increasingly, the anecdotes we pick up from industry sources. The ACA has likely been a contributing factor to the favorable trend in WC loss ratios. The evidence is significant: steadily declining WC loss ratios during the ACA-years, historically low medical inflation and favorable WC loss-reserve development. Most industry experts believe the expansion of the medically insured has resulted in less case shifting and less cost shifting (e.g., fewer fraudulent claims and comorbidities treated under WC).

The AHCA, in its current form, should have the opposite affect; it seems likely to lead to more WC claims and cost shifting – rising loss ratios. The nearly complete unwinding of the expansion in medically insured could accelerate cost-shifting, in turn putting pressure on WC loss trends and reserve margins. The initial wave of newly uninsured (14 million by 2018 according to the CBO) would result from the repeal of the individual mandate. We don’t have an estimate of the working population in that cohort but presume it’s meaningful. The second wave of newly uninsured (another 10 million) would result from changes in Medicaid enrollment. According to WC experts (link here to one prominent blog) some 81% of Medicaid families have at least one member of their family working. That presents plenty of cost-shifting opportunities.

We’d expect the negative impacts of the AHCA, if rolled out in its current form, would first appear in the states benefitting the most from the Affordable Care Act. Large states including California and New York are among the 18 included in our figure above – contact us for a complete listing.

WC rates across the nation have begun to decline – evidence that WC insurers discount favorable trends into their ratemaking. Regulators will probably have little tolerance for preemptive rate increases based on this evidence, but it will be interesting to see if the pace of rate decreases slow. If not, WC loss ratios will have almost surely found their bottom in 2016.

What does this mean for you?

Repealing ACA will be bad news for work comp premium payers, good news for service entities.

It’s about healthcare costs, NOT insurance premiums

What’s missing from the debate about AHCA and ACA is any discussion about what’s making premiums so damn expensive.  We are arguing over what we pay, not what we’re paying for.

That makes zero sense.

AHCA makes older folks pay more, and lets younger people pay less for health insurance. But it’s a zero-sum game; all of us are going to pay, we’re just arguing over who pays how much.

That’s not to say ACA was much better at “bending the cost curve”. Most real efforts (excepting Medicare physician reimbursement changes) were taken off the table during the negotiation process, so we were left with ACOs, medical homes, outcomes research, and “death panels” instead of:

  • federal drug price negotiation,
  • re-importation of meds from Canada,
  • requirements that new procedures demonstrate higher efficacy and lower cost,
  • stringent controls on medical devices, and
  • publication of prices and outcomes by provider.

ACA was – and is – an attempt to get insurers to compete for customers by lowering the cost of care. Some – Centene, Molina, Fidelis, and a few others – are succeeding, but the big commercial plans are mostly failing, resorting to hoary old “cost containment” techniques such as higher deductibles and copays instead of real innovation and effective branding and marketing.

This is especially striking as healthcare outcomes in the US are pretty awful, and research clearly proves spending more on physician care does NOT produce better outcomes. In fact, all credible research indicates the US lags well behind other developed countries in terms of health outcomes.

Link between health spending and life expectancy_ US is an outlier – Our World In Data

We pay more – a lot more – for health care than other countries.

So, here’s the solution – but one our politicians won’t pursue because they can’t afford to piss off the healthcare lobbying industry.

Cut what we pay for medical care, drugs, facilities and other services, and reduce the volume of services we pay for.

What does this mean for you?

Medical care drives premiums, and if we don’t deal with medical care, we’ll never control what you and I pay for insurance and taxes.

 

 

AHCA, CBO, and Workers’ Comp

There’s lots of news out there about the Congressional Budget Office’s scoring of the Republican healthcare reform bill known as AHCA; we’ll narrowly focus on what passage of AHCA would mean for workers’ comp – and highlight what’s missing from every other analysis of the CBO report.

Briefly, I’d expect case-shifting and claims-shifting to workers comp to increase significantly, resulting in higher work comp expenses for employers, and more business for the work comp service industry.

Here’s why.

The expansion of Medicaid and the individual mandate covered about 13 million more workers than pre-ACA; 81% of Medicaid recipients’ families have at least one member working. When workers who have health insurance get hurt, they are less motivated to claim it was on the job. And, if they are hurt on the job, work comp doesn’t have to pay for non-occupational medical conditions (e.g. dealing with hypertension before doing surgery).

The newly insureds are also working in jobs with higher claim frequency than average.

Some argue that the high deductibles and copays common in some insurance plans negates my argument; I respectfully disagree.  That’s because the newly insureds are poorer than average, thus they are much more likely to either:

  • get premium support payments from ACA which also cover deductibles and copays or
  • be covered by Medicaid, which has no cost-sharing (except in Indiana).

Since ACA was fully implemented in 2014 we’ve seen historically-low work comp medical trend rates, a strong indication that ACA is a major factor in lower work comp costs.

The CBO has projected:

  • 14 million will lose health insurance next year
  • 7 million more by 2020
  • another 5 million will lose coverage by 2026
  • most of those losing coverage would be older
  • deductibles and copays would be higher than under ACA

(credit Washington Post)

All of these projections are bad for work comp; older workers’ injuries are more expensive, and the higher deductibles and copays, along with a big drop in Medicaid coverage, would financially motivate workers to “claim shift.”

(credit Washington Post)

So, those losing health insurance would be:

  • much older
  • more likely to be employed in higher-risk jobs
  • more likely to be currently covered by Medicaid

What’s missing

…from all of the press reports and analyses of the CBO report is a discussion of how providers would react to passage of AHCA. That’s in part because the CBO report (full copy here) doesn’t address the issue.

Insurance coverage is just part of the story; doctors, hospitals, pharma and other providers are going to be hugely affected by a big decrease in their customer base.

More on that tomorrow.

What does this mean for you?

For work comp payers, higher claims and higher medical bills.