Friday, February 25, 2011

Senator Burr on Reform, Etc.

Senator Richard Burr (R-NC) interviewed on NBC-17 on a variety of topics. He talks health from around 1:40-3:30.

Most notably, he says that he plans to introduce a replace bill along with Senator Tom Coburn, as well as with Paul Ryan and Devin Nunes from the House. This is the same group that co-sponsored the Patients' Choice Act in the last Congress. Some past things I have written about the Patients' Choice Act:
  • General overview.
  • Detailed discussion of the inclusion in the Patients' Choice Act of a Health Services Commission to apply cost effectiveness research. The Health Services Commission proposed by the Patients' Choice Act on May 20, 2009--a full month before the first House Committee reported HR3200--was a far more aggressive use of cost effectiveness research than what actually was included in the ACA (The Independent Payment Advisory Board). The IPAB is a classic example of a policy idea that was once bipartisan becoming politically toxic once in the ACA.
  • Here is a link to a discussion of some private scoring of the PCA from July, 2009 (it was never scored by CBO).
The big idea of the Patients' Choice Act was to end the tax exclusion of employer paid insurance, and instead give everyone a tax credit with which to purchase health insurance. Ending the tax preference of employer paid premiums is something I am in favor of (it is the simplest policy to address cost inflation that exists), and the PCA would end the upside down subsidy that now exists and equalize (give everyone the same amount) of federal subsidy with which to purchase private health insurance. The amount of the tax credit (<$6,000 for a family) was less than half of what a typical family policy cost, so it was really providing a subsidy on the order of a catastrophic policy. Nothing wrong with this approach necessarily, they just didn't communicate that policy reality.

The plan then envisioned setting up state based insurance markets (that should sound familiar), and envisioned auto-enroll procedures whereby people would be put into the lowest cost plan when they did things like renew a drivers license; they could opt out, but the plan would depend on soft mandates to work. The biggest flaw with the plan was that the tax credit could be used in the exchange or outside, but pre-existing condition exclusions would only apply inside the exchanges. I wrote in July, 2009:

"Because the tax credits can be used to buy plans both inside and outside of the state-based exchange, there is a danger that only the sickest patients will seek coverage via the exchange, since coverage cannot be denied. If this happened systematically, it could result in death spiral whereby only poor risks are included in exchange-based plans. However, the Plan notes that exchanges "shall develop mechanisms to protect enrollees from the imposition of excessive premiums, reduce adverse selection, and share risk."

The short sentence "shall develop mechanisms to protect enrollees from the imposition of excessive premiums, reduce adverse selection, and share risk" is quite a policy mouthful and I hope Senator Burr and co-sponsors will be clear on how this will be achieved this time around. They have certainly had enough time to think about it.

We of course don't know how different a new Patients' Choice Act may be from the original one. The original bill had a great deal in common in policy terms with the ACA, but the rhetoric used by Senator Burr (and others) to describe the ACA never matched the policy reality. I have written about what a compromise might look like. I would be happy to implement the ACA and move ahead, but I increasingly think that we need a compromise on how to expand coverage so that we can move ahead on getting serious about costs. The level of political turmoil around the law is going to make it hard for us to truly deal with costs, which will be very very hard. If the reintroduction of the Patients' Choice Act or a modified bill helps move us toward that then I am glad for it.

Update: I fixed some layout problems.

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