Funding social insurance through “soak the rich” taxes? It’s a dead end.
A monthly child benefit has interest from the Left and the Right. But it won’t be a game-changer for birthrates.
When the experts can’t agree on — and even inflate — the amount of money needed for an adequate standard of living, that’s a real barrier to Social Security reform.
Codetermination sounds great – but could do more harm than good.
So let’s start with an article in yesterday’s Chicago Tribune, a wire report from AP, that took me by surprise:
The article described a new form of employer healthcare provision, the Individual Coverage Health Reimbursement Arrangement or ICHRA. This approach takes the well-established Healthcare Reimbursement Account, which combines a high-deductible healthcare plan and a reimbursement account, money provided by the employer which can be used to offset some healthcare costs while meeting the deductible, and adds a twist: the employer can provide money which individuals can use to purchase health insurance — and they can do so with the same tax advantages as if they were providing the insurance coverage directly.
To be sure, there are limitations that mean that the government’s forecast is that only 11 million employees will benefit: the employer must not offer group health insurance already (that is, employees can’t select this as an alternative to group health insurance), or can only offer the ICHRA to categories of employees to whom it doesn’t otherwise offer insurance (like part-time employees). Also, an employee buying insurance through the Obamacare “exchange” can’t “stack” the employer benefit and the premium credits, and can’t pay for the additional costs in a pre-tax manner, but that is possible if an employee purchases insurance outside of the ACA exchange. And, of course, a “regular” employer-sponsored healthcare plan is still preferable for employees when they benefit from group rates and don’t have to wade through a potentially overwhelming number of plan choices.
(For lots of detail, see “New Final Rule Lets Employees Use HRAs to Buy Health Insurance” at SHRM.)
Now, it turns out, this isn’t new. This was a rule issued by the departments of HHS, Labor, and the Treasury issued the rule enabling this on June 13 of 2019. And, yes, this is a “rule” — an administration interpretation/implementation of existing legislation, so in principle Biden could simply issue a new rule which overrules this (with the applicable comment period and other bureaucracy). It seems likely that two other Trump “rules” — one allowing “association health plans” and the other allowing low-cost short-term insurance — will be sent to the circular file, but I have a hard time imagining that Biden will oppose this one (though perhaps my imagination is faulty).
But I do believe that this small regulation, over time, could have a very outsized impact on the healthcare system.
Bear with me for a minute here:
Remember the staff model HMO?
That was supposed to fix our healthcare system. Rather than the existing expectation of “consumer-driven healthcare plans” that we healthcare customers will work with our healthcare providers to ensure that our medications are the lowest-cost options possible, that no unnecessary procedures and tests are performed, and that such tests and procedures as are necessary, are done by the most cost-effective provider (e.g., through look-up tools at insurer websites), the staff model HMO’s providers did all that as professionals.
And back in the day — well, not only is my own family’s current health plan a high-deductible one, but our choices are high deductible, or very high deductible. You likely have the same (unless you’re a public sector employee). When my first son was born, we paid a $10 copay. That was it. Oh, and a $300 upcharge for a private room. Later, when he needed speech therapy, we paid copays, then were issued a refund check, because, it turned out, there was a no copay, it was first-dollar coverage.
But let me backtrack: the original HMO concept was staff-model. Its name, Health Maintenance Organization, was adopted because of the focus on preventive care, in a manner that wasn’t the norm in traditional insurance, which, at the time, did not necessarily cover ordinary annual check-ups and the like. HMOs came about in the 1970s as doctor practices which were affiliated with particular hospitals; they were also called “prepaid healthcare” and the idea was that they were not an “insurance” product but you simply paid in advance for all your healthcare from that particular healthcare system.
What happened to them? Some time ago, I tried to figure out the story and there is no good book on the matter. Perhaps that’s now changed.
In the 70s and 80s, they became popular — not mainstream, necessarily, but popular. In some cases, they became too popular — doctors filed lawsuits in areas (e.g., small towns) where an HMO dominated medical practice, and pushed for “any willing provider” laws as their medical practice was limited to the portion of the population not a part of that HMO. I vaguely recall that that it wasn’t just about losing clients to the competition but that they ended up with the less-desirable customer base.
At the same time, major insurance companies established their own version of “HMOs” which promised customers (and employers) that they could have their cake and eat it too — medical care with the low cost-share requirements of a staff-model HMO, but with thick booklets of participating providers rather than specific medical clinics to visit. We were for a number of years in the late 90s and early 2000s enrolled (via our employer) with HMO Illinois, a Blue Cross Blue Shield of Illinois “product.” We had to choose a primary care physician and women choose an OB/GYN, and an “Independent Practice Association,” a collection of doctors and one or more affiliated hospitals. (In-between my first and second child, the doctor’s practice I was at, switched from an IPA associated with the hospital down the street to one a half-hour away, which was a nuisance; later, they left the HMO entirely as the networks shrank and, in our last year in the HMO, I had an annual exam with a doctor whom I had picked somewhat randomly from the provider listings.) This worked on the basis of “capitation” — the IPA was paid a fixed fee per patient, but rather than resulting in a focus on preventive care and health maintenance, each visit consisted largely of handing out referrals to specialists to churn patients out. This wasn’t sustainable. (Why didn’t it work? These weren’t groups of doctors who had come together to provide managed care, but were purely financial arrangements — and specialists and hospitals were not a part of this system in any case so shunting a patient to a specialist was a financial gain, not a loss.)
The end point of this pathway was the movement from HMO to what was called HMO-POS, where the POS was “point of service” and it referred to the creation of an out-of-network reimbursement level, and to the PPO, what we’re now generally used to today, with networks but with the requirement for referrals having been abandoned. Was it planned, or foreseen, when BCBS and other providers set up their HMO competitors, that this would be the outcome? Surely not.
And traditional HMOs have not entirely disappeared — Kaiser still remains, having built itself up during the 70s and 80s to such a point that laments about “the provider list is too narrow” are not relevant. I, again, tried to dig into their story more as well at some point, to understand why there are not dozens of other competitors with their business model, but concluded that it’s just not possible for a plan to become a truly-integrated staff-model HMO in this environment.
in the meantime, we are witnessing the ever-increasing consolidation of hospitals and doctors’ practices. Locally, my nearby hospital has a growing list of urgent care centers, sites for lab work, and affiliated doctors’ practices. They had been a wholly-independent hospital but are now themselves merging with a large hospital chain in the area. There are many similar networks, and growing numbers of them. As I had watched this trend, I had thought that this would make it possible for a new type of staff-model HMO, one in which alongside their usual roles in the community as medical care providers to anyone who showed up, with any sort of insurance or none at all, the entire network could offer a prepaid/self-insured “medical care product” in which care within that system would be coordinated, with doctors and hospitals alike sharing the objective of providing the best and most cost-effective care — with care while travelling or for rare circumstances requiring even greater levels of specialization being managed through a re-insurance product. Over time, if coordinated care produced the best outcomes for patients, more patients would switch.
But there was a missing piece. Employers want to offer their employees medical care that’s reasonably one-size-fits-all. If you have employees scattered across the country, or even across a wide metropolitan area, it adds one more layer of complexity to your process of providing employee benefits. In order for the way health insurance works to change, the relationship between employers and health insurance has to change.
And yes, finally, I get to why I think that the ICHRA has the power to reinvigorate health insurance — if increasing numbers of workers are “shopping” themselves, and without the constraints of Obamacare plans which are obliged to use a very small number of tools in their toolbox (high deductibles, narrow networks based on doctors willing to accept low reimbursements), then we might eventually get to the point where a hospital network might find it financially feasible to offer a coordinated care product.
Yes, that’s a big if. I’m not an expert, and I suspect that, even if somewhere, someone is looking at taking that step, there are likely too many regulatory hurdles in the way. But it’s a start.
Image: http://www.dodlive.mil/2017/10/03/usns-comfort-how-the-hospital-ship-helps-during-disasters/(U.S. Air Force photo by Staff Sgt. Courtney Richardson)
Yesterday, the state of Illinois announced that suburban Cook County is now subject to covid mitigations, in which, as of tomorrow, indoor dining and bar service will be prohibited and groups at any one gathering will be capped at 25 people. As the Chicago Tribune reported,
By Wednesday, more than half of Illinois residents will be living under stricter measures meant to slow the latest surge of the coronavirus as suburban Cook County and the Metro East region outside St. Louis join four other regions where the state has shut down indoor dining and bar service and lowered the cap on crowds to 25.
A week ago, only one of the 11 regions in Gov. J.B. Pritzker’s reopening plan was subject to those rules. . . .
Suburban Cook County has had eight consecutive days of test positivity rate increases and seven days of increased hospital admissions. It is the first region to surpass the state-set thresholds for those two metrics at the same time. The other region have triggered tougher rules by reaching an 8% positivity rate threshold for three consecutive days. As of Friday, the rolling seven-day positivity rate for the Cook County suburbs was 7.7%.
With that context, I wanted to write down some of my recent thoughts on developments.
First, why did contact tracing fail?
Contact tracing was, after all, the subject of my May 15 Tribune commentary, in which I observed that the state’s reopening metrics required that for Phase 3, contact tracing would be fully-rolled out, and for Phase 4, contact tracing would be fully scaled up, so that tracing would begin within 24 hours for 90% of new diagnoses in a region. Turns out, Phase 3 began according to the timeline for all the other metrics, at the end of May, and Phase 4 began at the end of June. But according to the organization TestAndTrace, as reported at Patch, Illinois has a failing grade in their assessment of Illinois’ contact tracing, due to their very low number of tracers and lack of transparency about their progress.
With respect to Cook County, the Cook County Department of Health announced on June 11 the receipt of a $41 million grant to scale up contact tracing. But even just last week, Daily Line reporter Alex Nitkin had this to say:
Meanwhile, Cook County public health chief Dr. Kiran Joshi tells commissioners the county/city's joint contact tracing effort is deep in the recruiting process and expects "offers to go out in the next week or so."
— Alex Nitkin (@AlexNitkin) October 21, 2020
Now, the question above is, I admit, partly rhetorical. I have my own suppositions as to why, when it really would have made a difference in the late spring/early summer, when cases were down and when Illinoisans were relatively more hunkered down — that is, when a contact tracing effort would have uncovered fewer contacts for any given individual — the state, and Cook County and the city of Chicago as well, fumbled this: the desire to create union jobs, for one, and the focus on “equity” even when a focus on “low-hanging fruit” might have been more effective. Various reports in the meantime have described the suspicion with which immigrants and low-income Chicagoans treat contact tracer outreach; focusing resources on parts of the state which would have a greater success rate, as well as more rural areas where there would have been fewer contacts to trace in the first place, would surely have found more success.
In any event, at this point, it is far less effective to contact-trace when cases are becoming increasingly prevalent, as is the case now.
And, in addition, it would appear that the state is misinterpreting the data that it does garner from contact tracing, in any case.
Earlier in the month, Capitol Fax provided a graph produced by the state which was used as justification for its focus on bars and restaurants. The graph is appallingly difficult to read (and is shown only as a picture, with no data accessible), but claims that, statewide, when contact tracees were asked where they had “visited or worked” within the past 14 days, the second-largest category of response was “restaurant/bar,” with 2300 responses. The top response was “other,” which includes “vacations, family gatherings, weddings, college parties.”
But this graph is exceedingly unhelpful. Respondents could give multiple answers, and the graph’s “n” is given as 17,939, but that’s the total number of boxes checked; a true “n” from such a survey would be the number of people surveyed. We don’t know what percent of tracees visited bars or restaurants, and, more importantly, we don’t know whether people who went to bars/restaurants were disproportionately likely to have been diagnosed with covid. In other words, to tell us something meaningful, this graph would need to be paired with another one, in which a random sampling of people who matched the demographic characteristics of covid-diagnosed tracing respondents.
And, in fact, here’s my transcript of Dr. Ngozi Ezike’s comments at the press briefing last Friday, upon being asked why bars and restaurants are being singled out for closure despite being linked to only 6% of outbreaks (about the 28 minute mark):
Ezike: An outbreak would be something if somebody works like say at a manufacturing plant and a lot of people work in close proximity and 50 people develop covid in that setting we would have that as a documented outbreak where this person knows that I was working next to this person, this person contracted the virus, a week later so did I, a week later this person did, three days later, so that is like a clearly documented outbreak. In most cases of covid, the person who has it cannot tell you exactly who they got it from, they cannot say, “oh, I was working in this setting and all these people got it and I got similar symptoms, so in the absence of a documented outbreak all those individuals that did contract the virus the way that you look at where they may have gotten it from is to look at the time at which, the time frame from when you catch the virus to when you show symptoms or to whey you’re diagnosed, in those preceding two weeks, we ask the cases, where have you been, and all of those places that they list, that they have been in the preceding two weeks are exposure sites. Any of those places could have been where they contracted the virus. And time after time, bars and restaurants come up as the number two or the number three place of all of these places frequented, so that’s why we put it as a high because it consistently comes up as a place where people who are infected listed as one of their exposure sites.
What’s remarkable is that Pritzker appears to recognized that this is a poor rationale for closing bars and restaurants, and he jumps in:
Pritzker: And I would just add that there are literally a dozen studies, many many articles about these bars and restaurants being exposure sites, and the effect of bars and restaurants on the spread of the virus and that is why there is a focus on bars and restaurants.
Ezike’s specialty is pediatrics and her expertise within public health comes from working on health care within juvenile detention centers. Is it possible that she just doesn’t have the grounding in statistics that’s necessary to grasp these concepts?
Second, why are hospitalizations level in suburban Cook County?
Wirepoints has been tracking key covid data for Illinois as a whole since early on. When cases rose starting in July, in a way that did not appear to be clearly linked to the ramping up of testing (because at that point the state had already increased testing substantially), I followed their tracking of hospitalizations and deaths and observed that these numbers were holding steady, in a manner that fit the theory that the rise in cases were due to increasing numbers of low-risk young adults becoming diagnosed, or that masks were having the effect of reducing the viral load and thus the severity of the infection.
But that’s no longer the case. On September 19, hospitalizations stood at 1,417. They rose gradually, to reach 1,575 on Oct. 3; since then they’ve risen steadily, to 2,605 on October 24.
What’s more, deaths have been increasing during the same time period. Ranging from the upper teens to the low 20s all summer and early fall, the 7 day average stood at 42 on Oct. 26. It’s also difficult to make a visual judgement, but there is no apparent lag, as you’d expect there should be, from the start of the increase in hospitalizations to the start of the increase in deaths; these are occurring simultaneously.
Frustratingly, it is not easy, from the information available at the Illinois Department of Health’s website, to look at hospitalizations by region or county. With a little bit of patience, we can look at admissions for Covid-like illnesses region-by-region:
Region 1, northwest Illinois: hospitalizations level over the summer, then steadily increase from 4 on September 20 to 14 on October 21.
Region 2, north-central-west: steady increase in hospitalizations over July (4 on July 3) to early August (12 on August 4), then another small increase in recent weeks (14 on Oct 22).
Region 3, central-west: again, small incease in mid-July, level to mid-October, then increase from 8 on Oct. 12 to 12 on Oct. 18.
Region 4, south- west (St. Louis area): relative peaks in late July and again in late August; decline since then to match the level of June.
Region 5, south: level/very gradual increase through September; then increase from 4 on Oct. 1 to 8 on Oct. 21.
Region 6, east: same pattern as south, very gradual increase through end of September, then jump: 8 on Oct. 2 to 19 on Oct. 22.
Region 7, far southern suburbs/exurbs: lots of bouncing around: peak in mid-August, decline, then increase from the beginning of October to now (6 to 16).
Region 8, western/far western suburbs: increase in mid-June, level through the end of September, then steep increase since then: 14 on Oct. 5 to 27 on Oct. 23.
Region 9, northeast Illinois (Lake and McHenry counties/far north suburban Chicago): increase in June, level through August, drop through mid-Sept. and level to the end of September, then increasing from 7 on Oct. 5, to 13 on Oct. 23.
Region 10, suburban Cook County: level-ish through the end of August, a small drop through the end of September, then a jump from Oct. 2, at 23 to Oct, 22, at 49.
and Region 11, Chicago: level through July and August, drop in September to a low of 21 on Oct. 3, then up to 41 on Oct. 23.
(Note that the Wirepoints numbers are total hospitalizations; these are admissions on any given day.)
But, again, here’s suburban Cook County according to the IDPH dashboard:
But at the same time, the Cook County Department of Public Health‘s own website’s reported hospitalizations have been level, showing no change other than a drop-off for the past week due presumably to lags in data reporting. (Note: as of today, they have removed the data on hospitalizations; I have requested an explanation.)
What’s going on? You’ll have to trust me that the CCDPH data was level, because it’s been removed, but is the fact that the state includes “covid-like illnesses” regardless of whether a patient has covid, causing an increase in the numbers? I can well understand using this broader definition back when testing was difficult, but covid tests are no routine for anyone who enters a hospital even for unrelated reasons.
What’s more, here’s the equivalent graph for region 11, Chicago:
— and this, despite rising case numbers:
Again, are hospitalizations due to covid really on the uptick? Or is it due to “covid-like illnesses”? Or — benefit of the doubt here — is there something faulty about the “covid hospitalizations” figure even after tests have become available without practical limits in terms of hospital access?
Third, what about Europe?
Biden, and Trump opponents generally speaking, are willing to say that a considerable number of America’s covid infections and deaths can be blamed on Trump’s poor management of the pandemic, and it’s easy to point to countries which have had extremely low infection rates — Japan, Taiwan, South Korea. It’s also easy to point to stunningly foolish things Trump has done and said, and the whole mask debacle, well, it’s been a debacle — insisting in March that masks were useless only to later on conclude they weren’t, but stoking substantial suspicion due to that prior insistence.
But claims that the US has been singularly incompetent in managing the pandemic are falling apart.
According to the Financial Times‘ website, measured on a cases-per-million basis, averaged over 7 days, the European Union’s rate equaled that of the US on October 11 or thereabouts. Now it’s rate is substantially higher, at 284.2 cases per million, compared to 200.7 in the US (as of Oct. 22 and 23, respectively). In fact, very few countries within Europe are lower than the US, and many of those which are, are seeing steady increases. Even Germany, lauded for its successful handling of the pandemic early on, is now seeing a surge in cases, with a 14 day change of 191% for new cases and 198% for deaths, compared to an increase of 40% and 14% for cases and deaths, respectively, for the US, according to the New York Times. (Remember, to increase by 191% is not to double, but to triple, that is, for the new case rate to be 3 times that of the original rate.) That means that seems quite likely indeed for Germany to reach our level of cases relative to the population by Election Day, which would be ironic when Joe Biden claims that he would have had German-levels of success in avoiding infections in the U.S.
Why are cases spiking in Europe?
Does that mean that there’s nothing, really, that can be done but hope that a vaccine and/or an antibody treatment is approved, manufactured, and distributed? What does an observation of the case increases in Europe mean for our decision-making about whether to shut down restaurants or merely restrict their capacity, or even to re-institute lockdowns?
This is where I end, as I don’t have answers to these questions, and I’ve achieved my short-term goal of writing now new information I’ve learned and issues I wanted to share.