More About Edwin Park

Edwin Park

Park is Vice President for Health Policy at the Center on Budget and Policy Priorities, where he focuses on Medicaid, the Children’s Health Insurance Program, and issues related to federal health reform.

Full bio and recent public appearances | Research archive at CBPP.org


GAO: Administration Can Make Health Reform’s “Risk Corridor” Payments

October 10, 2014 at 1:16 pm

Health reform’s opponents are renewing efforts to kill its temporary “risk corridor” program, through which the federal government will help cover any higher-than-expected costs for insurers that offer plans in the new marketplaces while sharing in the savings if costs prove lower than expected.  But the Government Accountability Office (GAO) legal opinion on which they’re basing this latest attack says the opposite of what they claim.

Citing the GAO opinion, opponents claim that the Administration lacks the legal authority to provide risk corridor payments and that legislation is needed to prevent it from making unlawful payments.  But GAO actually concludes that the Centers for Medicare and Medicaid Services (CMS), which administers the risk corridors, has the authority to use contributions from insurers with lower-than-expected costs to finance payments to insurers with higher-than-expected costs.

GAO finds that CMS has the authority to use its regular operating funds to finance risk corridor payments as well.  But the Administration has made clear that the risk corridor program, which will exist for three years (2014-2016), will be budget neutral over that period — that is, payments won’t exceed contributions.

CMS would only lack authority to make risk corridor payments, GAO finds, if Congress specifically blocked it as part of legislation funding the government for the rest of fiscal year 2015 (when the payments associated with health coverage in 2014 are scheduled to be made).  The GAO opinion thus offers no basis for repealing the risk corridor program or stopping it from taking effect.

Moreover, repealing or blocking the program would result in higher premiums for marketplace plans.  That’s because the program helps keep premiums affordable by reducing uncertainty for insurers.  Health reform’s major reforms to the poorly functioning individual insurance market (like prohibiting insurers from charging higher premiums to people in poorer health or excluding them entirely) and the launch of its new marketplaces have temporarily raised insurers’ uncertainty in pricing their premiums during the marketplaces’ first few years.

If Congress blocked the risk corridors now, insurers would build a bigger “risk premium” into their premiums for 2016, making coverage less affordable.  (Insurers have already finalized their 2015 rates in many states.)  And some insurers might decide not to participate in the marketplaces in 2016.

Once insurers have had several years of actual claims experience with their marketplace plans, they’ll be able to price their premiums with more confidence and accuracy.  At that point, the risk corridors will no longer be needed and will expire as scheduled.

Damaging House Bill Would Undo Health Reform Protections and Raise Small Business Premiums

September 9, 2014 at 2:02 pm

The House this week is scheduled to consider a bill sponsored by Rep. William Cassidy (R-LA) that would allow insurance companies, through 2018, to continue to offer to any small employer the health insurance plans in the small group market that the insurers were selling in 2013.

In short, the bill is another attempt to undermine health reform and try to ensure it doesn’t succeed, as we explain in a new analysis:

Under the bill, such plans would not have to comply with the Affordable Care Act’s (ACA) market reforms and consumer protections that otherwise apply to all health insurance plans offered in the small group market, starting in 2014.

The bill would go well beyond the existing Administration transition policy that permits states to allow insurers to continue — through 2016 — to offer non-ACA-compliant plans in the individual and/or small group market to individuals and employers who were previously enrolled in such plans. . . [T]he Cassidy bill would likely have serious adverse effects both on premiums in the small group market — causing them to rise substantially for many small firms — and on health reform’s consumer protections, such as the reform that prevents insurance companies from charging higher premiums to firms with older, less healthy workforces.

Click here to read the full paper.

CBO Findings Refute the Medicare Part D Myth

August 6, 2014 at 2:37 pm

The Medicare drug benefit’s lower-than-expected costs do not reflect efficiencies produced by competition among private insurers, as we’ve repeatedly explained.  The main factors were the slowdown in per-capita drug spending throughout the U.S. health care system and lower-than-expected Medicare Part D enrollment — and the Congressional Budget Office (CBO) concurred with our analysis in a recent report, finding:

  • National drug spending growth fell unexpectedly because many drugs went off-patent, the use of lower-cost generic drugs increased substantially, and fewer new drugs, which tend to be more costly, came to market.  National drug spending in 2012 was therefore much lower than what the Centers for Medicare and Medicaid Services’ actuaries projected in 2003 when the Medicare drug benefit was enacted.  CBO states that “spending per beneficiary in Part D has been lower than CBO projected in part because of those developments affecting nationwide drug spending.”
  • Part D enrollment was also lower than CBO projected — by 12 percent, in 2012.  CBO originally assumed that participation in the drug benefit would be similar to enrollment rates in Medicare Part B.  But CBO now believes that Part D participation is lower than in Part B likely because Medicare beneficiaries must actively enroll in the drug benefit — which can reduce participation — while eligible individuals are automatically enrolled in Part B and must actively opt-out.
  • CBO thus concludes: “Taken together, the unexpected slowdown in national drug spending per person and smaller-than-expected enrollment in Part D can account for nearly all of the difference between CBO’s original estimate and actual Part D spending” (italics added).

That’s all consistent with our analysis as well as that of the Kaiser Family Foundation, which found that there “is compelling evidence that factors other than competition offer the best explanations for the lower-than-expected spending trend” in Part D.

Today’s Conflicting Court Decisions Won’t Affect Federal Marketplace Subsidies

July 22, 2014 at 3:35 pm

Two federal appellate courts issued rulings today that relate to the health reform law.  In a unanimous decision, a panel of the U.S. Circuit Court of Appeals for the Fourth Circuit upheld a lower court decision finding that individuals are eligible for premium subsidies to purchase health insurance through the federal marketplace, just as they can in state-based marketplaces.

In a 2-1 decision that has received considerably more media attention, the D.C. Circuit Court of Appeals overturned a lower court ruling and ruled that premium subsidies can be used to purchase coverage only through state-run marketplaces, and not through the federal marketplace.

What do these decisions really mean?

  • Premium subsidies for the millions of federal marketplace enrollees will continue to be available, as the Administration confirmed today.
  • The Administration will appeal the D.C. Circuit court decision to the entire D.C. Circuit, where it will likely be reversed, as Washington and Lee University School of Law professor Timothy Jost explained earlier this month.
  • That’s because, as we first noted two years ago, the merits of the legal theory challenging subsidies for federal marketplace enrollees are extraordinarily weak, relying on a distorted, incorrect reading of the Affordable Care Act and ignoring legislative intent and history.

MedPAC: Medicare Advantage Overpayments Not the Right Way to Aid Low-Income Beneficiaries

July 8, 2014 at 1:41 pm

Overpaying the insurance companies that serve some Medicare beneficiaries through the Medicare Advantage (MA) program is not a targeted, effective way to help low-income beneficiaries with their out-of-pocket costs, the Medicare Payment Advisory Commission’s (MedPAC) latest report to Congress explains.

Insurers have long defended the overpayments as helping low-income beneficiaries and have claimed that repealing or scaling back health reform’s MA savings is necessary to protect such beneficiaries from benefit cuts.  But as we’ve explained, recent research shows that before health reform, insurers didn’t pass on most of the overpayments to enrollees in the form of better benefits.  And MedPAC’s report reiterates its longstanding position that higher MA “payments are not a direct or efficient way to target assistance to low-income beneficiaries.”

That’s because, as MedPAC puts it, “higher MA payments and extra benefits financed by those payments do not go only to low-income beneficiaries.  Rather, all enrollees in a given MA plan receive the same extra benefits, low-income or not.”  Insurers’ own data show that 59 percent of MA enrollees had incomes over $20,000 in 2011.

The Government Accountability Office similarly concluded in 2008 that “if the policy objective is to subsidize health care costs of low-income Medicare beneficiaries, it may be more efficient to directly target subsidies to a defined low-income population than to subsidize premiums and cost-sharing for all [Medicare Advantage] beneficiaries, including those who are well off.”

A direct and efficient way to help Medicare beneficiaries with limited incomes, according to MedPAC, is to expand the Medicare Savings Programs, through which Medicaid helps low-income beneficiaries cover their premiums and/or cost-sharing charges.

RSC Health Plan: More Uninsured and Underinsured, Fewer Consumer Protections

July 2, 2014 at 11:58 am

With House supporters planning a new push for the Republican Study Committee (RSC) health plan (H.R. 3121), aided by RSC chairman Steve Scalise (R-LA)’s election as House majority whip, it’s worth looking at the plan’s likely impact.  Unfortunately, it would substantially expand the ranks of the uninsured and end various important consumer protections.

Impact on the Number of Uninsured

The RSC plan would repeal health reform, including its Medicaid expansion, under which the federal government will pick up nearly the full cost of covering individuals up to 138 percent of the poverty line.  The 13 million people whom the Congressional Budget Office (CBO) now estimates will gain Medicaid coverage in states that adopt the expansion would lose out.

It also would eliminate the new marketplaces through which millions of people are buying private coverage, as well as the premium tax credits and cost-sharing reductions that make marketplace coverage much more affordable for low- and moderate-income people.  The loss of these subsidies would cause millions of new marketplace enrollees to lose their health coverage.

The RSC plan would also end the tax exclusion for employer-based coverage, replacing it with a standard income and payroll tax deduction of $7,500 for individuals (and $20,000 for families) who buy coverage on their own or through their employer.  As CBO, the Joint Committee on Taxation, and others have previously estimated, this type of proposal would likely cause many people to lose their job-based coverage by encouraging employers to drop it on the assumption that their workers could use the deduction to purchase health insurance in the individual market.  (Unlike current law, the plan would not require larger employers to either offer affordable, comprehensive coverage or pay a penalty.)  But many workers in poorer health who lost employer-based insurance likely would be unable to find coverage in the individual market.

Moreover, the tax deduction would do very little to help most uninsured people gain coverage.  Most uninsured people either don’t earn enough to owe income tax or are in the 10 or 15 percent tax bracket, so they would receive an income tax benefit of no more than 15 cents for every $1 they can deduct, along with a payroll tax benefit of 7.65 cents per dollar earned.

People who lose their jobs and have no earned income would receive no benefit, while a single poor adult earning $10,000 would receive no income tax benefit and a payroll tax benefit of about $574 a year, far below the cost of insurance.  And, assuming the plan’s deduction was in place in tax year 2014, a single 64-year-old with income equal to twice the poverty line — $23,340 — would likely receive a total tax benefit of no more than about $1,530.  That’s only about one-quarter of the tax credit that health reform provides, because health reform’s tax credit is refundable, more generous at lower incomes, and adjusted for age (as older people face higher premiums).  Moreover, unlike under health reform, the RSC plan gives people with modest income no help with their deductibles and other cost-sharing charges.

The deduction would primarily benefit people in the top income tax brackets, who least need help in affording insurance and are the most likely already to have coverage.  (Also, it’s unclear whether the payroll tax deduction would effectively result in lower Social Security benefits for individuals taking it, as well as lower contributions to the Social Security and Medicare trust funds that would hasten their insolvency.)

Impact on Consumer Protections 

Health reform prohibits insurers in the individual market from refusing to cover people with pre-existing medical conditions.  In contrast, the RSC plan would allow insurers to deny coverage in such cases, except for people who have had continuous coverage (through an employer or in the individual market) for at least 18 months.  That’s only a modest improvement over the deeply flawed situation before health reform.

Thus, someone without job-based coverage who was denied coverage in the individual market because of cancer or diabetes would likely remain uninsured.

Moreover, people with pre-existing conditions who have had continuous coverage could qualify for individual-market coverage only through a high-risk pool.  Such coverage likely wouldn’t be affordable.  The high-risk pools could charge premiums twice as high as the standard premium, and standard premiums could vary based on age, with no upper limit.

More broadly, relying on high-risk pools to provide coverage would be “extremely expensive and likely unsustainable,” as the Commonwealth Fund has explained.  That’s because they pool sick individuals not with healthy individuals — as regular insurance pools do to keep premiums stable and affordable — but with even sicker individuals who cost even more to insure.

Indeed, experience with state high-risk pools shows that unless government financial support for them rises significantly over time, the pools eventually have to sharply restrict enrollment, set premiums further above what many families can afford, and/or scale back coverage by reducing benefits or increasing deductibles and other cost-sharing, in order to keep costs from spiraling out of control.  Yet the RSC plan provides no actual federal high-risk-pool funding.  (It authorizes Congress to appropriate money for this purpose, but Congress may never do so, given the caps on funding for appropriated programs and the automatic “sequestration” cuts.)

Finally, the RSC plan would eliminate all of health reform’s consumer protections and market reforms.  It would allow insurers to once again:

  • set annual and lifetime dollar limits on the coverage they provide;
  • require cost-sharing charges for preventive care;
  • have no annual limit on out-of-pocket costs;
  • limit the children whom parents can include on their plans to those 21 and younger, rather than those up to age 26;
  • charge people higher premiums in the individual and small-group markets based on their health status;
  • charge older people premiums that are more than three times what they charge younger people in the individual and small-group markets (the limit under health reform is 3 to 1); and
  • charge women higher premiums than men in the individual and small-group markets.  

In another reversal, the RSC plan would allow insurers to leave big coverage gaps in the individual and small-group markets by omitting critical benefits such as prescription drug coverage or maternity care, as they could do before health reform.  And by allowing out-of-state insurers to sell insurance within a state without complying with the state’s consumer protections, the plan also would undermine the insurance market reforms and protections that a number of states had put in place before health reform.

The bottom line?  The RSC’s proposal would be a very large step backward that would drive millions of Americans, especially people of limited means, into the ranks of the uninsured and the underinsured.

Senate GOP Plan Would Cause Millions to Lose Health Coverage or Block Them From Gaining It in the Future

May 13, 2014 at 3:08 pm

Health reform opponents like Senator Richard Burr (R – NC) have repeatedly attacked the Affordable Care Act (ACA) over the past year by pointing to insurers that cancelled existing, non-ACA-compliant individual market health plans.  Yet, a health plan that Senator Burr and fellow Senate Republicans Tom Coburn (OK) and Orrin Hatch (UT) outlined in January would disrupt existing coverage far more.

As we explain in a new paper, their plan would likely cause millions who now have coverage through Medicaid, the new insurance marketplaces, and their jobs to lose it, while blocking millions more who are expected to obtain health insurance under health reform from gaining it in the future.

The Burr-Coburn-Hatch plan would repeal all of health reform except for certain Medicare provisions.  In its place, it would convert much of Medicaid into block grants and create a new tax credit for people to buy health insurance primarily in the individual market.  The plan has large gaps and lacks many essential details but, based on the public information available, it likely would:

  • Add substantially to the ranks of the uninsured and the underinsured by causing millions of people to lose their existing coverage and by making (or leaving) coverage unaffordable for many people of limited means through changes that would cause their premiums, co-payments, and other out-of-pocket charges to climb significantly;
  • Lead to states facing large shortfalls in federal Medicaid funding that could cause many low-income beneficiaries to become uninsured and go without needed care; and
  • Eliminate or significantly weaken health reform’s consumer protections and market reforms, especially for people with pre-existing conditions.

The Burr-Coburn-Hatch plan claims to ensure affordable health care for patients as an alternative to, and replacement for, the ACA.  In reality, it would make coverage less affordable, add substantially to the ranks of the uninsured, and move the United States backward, toward the poorly functioning individual market that existed before health reform.

Click here to read the full paper.

Flawed Analysis Exaggerates How Health Reform’s Medicare Advantage Savings Will Affect Enrollees

April 24, 2014 at 10:56 am

Insurers and others who oppose the health reform provisions that scale back Medicare Advantage overpayments often imply that the payment reductions will mean a dollar-for-dollar benefit cut for Medicare Advantage enrollees.  That’s exactly what the American Action Forum (AAF) did last week when it issued a flawed analysis substantially overstating health reform’s impact on Medicare Advantage enrollees.

But as we have previously explained, recent research challenges this claim, finding that before health reform, most of the Medicare Advantage overpayments were not passed through to enrollees.  Insurers thus can still provide additional benefits to attract enrollees if they trim profits and become more efficient.

Moreover, by curbing overpayments to Medicare Advantage plans, the Affordable Care Act lowers premiums for all Medicare beneficiaries and extends the solvency of Medicare’s trust fund.

States’ Very Good Deal on Expanding Medicaid Gets Even Better

April 22, 2014 at 3:51 pm

In a little-noticed finding in last week’s Congressional Budget Office (CBO) report on health reform, CBO sharply lowered its estimates of how much the Medicaid expansion will cost states.  We’ve noted repeatedly that the federal government will cover the large bulk of the expansion’s cost.  As our new report explains, these new figures make it even clearer that the expansion is a great deal for states.

  • CBO now estimates that the federal government will, on average, pick up more than 95 percent of the total cost of the Medicaid expansion and other health reform-related costs in Medicaid and the Children’s Health Insurance Program (CHIP) over the next ten years (2015-2024).
  • States will spend only 1.6 percent more on Medicaid and CHIP due to health reform than they would have spent without health reform (see chart).  That’s about one-third less than CBO projected in February.

Moreover, the 1.6 percent figure doesn’t reflect states’ savings in providing health care for the uninsured, many of whom will now have Medicaid coverage.  The Urban Institute has estimated that if all states took the Medicaid expansion, states would save between $26 billion and $52 billion from 2014 through 2019 in reduced spending on hospital care and other services provided to the uninsured.

Medicare Advantage Overpayments Help Insurers More Than Beneficiaries

April 9, 2014 at 2:29 pm

I noted yesterday that health reform scales back overpayments to private Medicare Advantage plans, thereby lowering premiums for all Medicare beneficiaries and extending the solvency of Medicare’s trust fund.  Insurers, arguing that curbing the overpayments results in direct benefit cuts for enrollees, often imply that they have used the overpayments solely to provide increased benefits.  But findings from a recent National Bureau of Economic Research study challenge this argument.

The study examined certain urban counties in which Medicare Advantage plans received substantial overpayments in the four years before health reform started phasing down the overpayments in 2012.  Here’s what it found:

  • The results of the study suggest that the “additional plan reimbursement for plans in [the counties studied] does not translate into more generous benefits for Medicare Advantage recipients.”
  • Most of the overpayments are not passed through to enrollees: the higher reimbursement “is not accompanied by significant differences in premiums, out-of-pocket costs, or rebates.”
  • The study finds no evidence of improved quality of care as a result of the overpayments.
  • The study suggests that insurers retain about one-fifth of the overpayments as higher profits.   They also use the overpayments to boost advertising spending in order to promote further enrollment in Medicare Advantage.

Despite insurers’ “doom and gloom” warnings that health reform will devastate the program by scaling back the overpayments, Medicare Advantage continues to thrive.  Insurers can still provide additional benefits to attract enrollees by trimming profits and becoming more efficient.

That’s likely why the Congressional Budget Office expects Medicare Advantage enrollment to continue to grow through 2019 and why Wall Street analysts also still have a “positive long-term view of Medicare Advantage.”

Early Data Show Decline in Uninsured Under Health Reform

April 9, 2014 at 11:07 am

How many uninsured people have gained health coverage since the Affordable Care Act’s major coverage expansions took effect January 1?  While 2014 health coverage data from the major federal surveys won’t be available until mid-to-late next year, new data from three independent surveys suggest that health reform’s Medicaid expansion and subsidized marketplace coverage likely are already making substantial progress in reducing the ranks of the uninsured.

  • The latest results from the RAND Health Reform Opinion Study, released yesterday, show that the share of adults aged 18-64 without insurance fell by 4.7 percentage points between September 2013 and March 2014, from 20.5 percent to 15.8 percent.  The number of uninsured adults aged 18-64 fell by 9.3 million over this period, from 40.7 million to 31.4 million.
  • Data from the Urban Institute’s Health Reform Monitoring Survey show that the uninsured rate among adults aged 18-64 fell by 2.7 percentage points between the third quarter of 2013 and the first quarter of 2014, from 17.9 percent to 15.2 percent.  The number of uninsured non-elderly adults fell by 5.4 million.  Moreover, the Urban Institute notes that its results likely understate the coverage gains as they do not include the “enrollment surge that occurred at the end of the open enrollment period”; 80 percent of the survey for the first quarter of 2014 was conducted before March 6.
  • Poll results from the Gallup-Healthways Well-Being Index show that the share of adults (including those aged 65 and above) without health coverage fell by 1.5 percentage points between the fourth quarter of 2013 and the first quarter of 2014, from 17.1 percent to 15.6 percent — the lowest rate since the last quarter of 2008.  (We calculate, based on Census data, that the percentage-point reduction translates to a drop in the number of uninsured adults of roughly 3.6 million.)

Retain Health Reform’s Medicare Advantage Savings

April 8, 2014 at 4:39 pm

The Obama Administration’s announcement yesterday that it will modify some payment policies related to private Medicare Advantage insurers, while implementing health reform’s scheduled reductions in overpayments to Medicare Advantage plans, has prompted critics to demand that it roll back some — or all — of the Medicare Advantage savings that health reform requires.  That would be a mistake.

In issuing its final Medicare Advantage payment policies for 2015, the Centers for Medicare and Medicaid Services (CMS) modified or delayed some planned steps that it periodically takes to improve the accuracy of the Medicare Advantage risk adjustment system, which raises or lowers payments to plans based on their enrollees’ relative health.  Medicare Advantage plans tend to enroll healthier-than-average beneficiaries.  A less accurate risk adjustment system doesn’t do as good a job of accounting for these differences, so the delay in improving the system will result in higher payments to plans in 2015 than would otherwise be the case.

CMS also implemented health reform’s reductions in overpayments to Medicare Advantage plans (as well as other related health reform provisions) scheduled for 2015.  Medicare has historically paid Medicare Advantage plans more per beneficiary than it would cost to cover these beneficiaries in traditional Medicare; health reform curbs (but doesn’t eliminate) these overpayments over time.

In response to yesterday’s announcements, leading Senate and House Republicans immediately called for scaling back or repealing health reform’s Medicare Advantage savings as well, warning of substantial harm to enrollees.  But, as my colleague Paul Van de Water told Congress last month, claims that Medicare enrollees will face much higher costs and lose their choice of plans are highly exaggerated.  Moreover, curbing overpayments is sound policy, lowering premiums for all beneficiaries and extending the solvency of Medicare’s trust fund.

Policymakers should thus reject any attempts to undermine health reform’s Medicare Advantage savings.