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


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.

Ryan Budget Again Proposes a Medicaid Block Grant, Adding Millions to the Ranks of the Uninsured and Underinsured

April 1, 2014 at 3:41 pm

House Budget Committee Chairman Paul Ryan’s new budget again proposes to radically restructure Medicaid by converting it into a block grant, and it would cut federal Medicaid funding steeply, by $732 billion over the next decade.  It would also repeal health reform’s Medicaid expansion.  The combined total cut to Medicaid would exceed more than $1.5 trillion over ten years, relative to current law.  All told, it would add tens of millions of Americans to the ranks of the uninsured and underinsured.

Repealing the Affordable Care Act’s Medicaid expansion means that 13 million people would lose their new coverage or no longer gain coverage in the future; 13 million is the Congressional Budget Office’s (CBO) current estimate of the number of people who would eventually gain coverage under the Medicaid expansion, though the number could rise as high as 17 million if all states adopt the expansion.  In addition, the large and growing cut in federal Medicaid funding from the block grant would almost certainly force states to sharply scale back or eliminate Medicaid coverage for millions of low-income people who rely on it today.  (More than 40 million people would likely become uninsured as a result of the Ryan budget overall after also taking into account the repeal of health reform’s exchange subsidies.)

Under the Ryan plan, the federal government would no longer pay a fixed share of states’ Medicaid costs starting in 2016.  Instead, states would get a fixed dollar amount that would rise annually only with inflation and population growth.

  • The block grant funding would fall further and further behind state needs each year.  The annual increase in the block grant would average about 3.5 percentage points less than Medicaid’s currently projected growth rate over the next ten years, which accounts for factors like rising health care costs and the aging of the population.  Federal Medicaid and Children’s Health Insurance Program (CHIP) spending in 2024 would be $124 billion less — or 26 percent less — than what states would receive under current law, according to the Ryan budget (see chart).  And the cuts would keep growing after that.
  • Altogether, the block grant would cut federal Medicaid spending by $732 billion from 2015-2024, according to the Ryan budget plan.  (It is conceivable that a small share of these cuts could come from CHIP, which the Ryan budget would merge into its new Medicaid block grant.)  This would be an estimated cut to federal Medicaid and CHIP funding of more than 19 percent over the ten years as a whole, compared to current law — and doesn’t count the loss of the large additional funding that states would receive to expand Medicaid under health reform.
  • The loss of federal funding would be even greater in years when enrollment or per-beneficiary health care costs rose faster than expected, such as during a recession or after the introduction of a new, breakthrough health care technology or treatment that improved patients’ health but increased cost.  Currently, the federal government and the states share in those unanticipated costs; under the Ryan plan, states alone would bear them.

As CBO concluded when analyzing the similar Medicaid block grant proposal from the Ryan budget plan from two years ago, “the magnitude of the reduction in spending . . . means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both.  Cutbacks might involve reduced eligibility . . . coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries — all of which would reduce access to care.”

In making these cuts, states would likely use the expansive additional flexibility that the Ryan plan would give them.  For example, the plan would likely let states cap Medicaid enrollment and turn eligible people away from the program; under current law, states must accept all eligible individuals who apply.  It also would likely let states drop certain benefits that people with disabilities or other special health problems need.

The Urban Institute estimated that Chairman Ryan’s similar block grant proposal in 2012 would lead states to drop between 14.3 million and 20.5 million people from Medicaid by the tenth year (outside of the effects of repealing health reform’s Medicaid expansion).  That would result in a reduction in enrollment of between 25 percent and 35 percent.  The Urban Institute also estimated that the block grant likely would have resulted in cuts in reimbursements to health care providers of more than 30 percent by the tenth year.  This year’s proposal likely would result in cuts that are similarly draconian.

CBO: Five-Year Individual Mandate Delay Means 13 Million More Uninsured, Higher Premiums

March 12, 2014 at 1:19 pm

Delaying health reform’s individual mandate for five years, as a House bill would do to offset the cost of permanently cancelling scheduled cuts in Medicare payments to physicians, would mean about 13 million more uninsured Americans in 2018 compared to current law, with similar increases in most years that the mandate isn’t in effect, a new Congressional Budget Office (CBO) analysis reveals.

Consistent with earlier CBO and outside analyses of the effects of repealing the mandate entirely, the new CBO figures show that the bill — which the House is expected to vote on Friday — would undermine health reform’s implementation and produce serious harm.

Without the individual mandate, many fewer uninsured people would enroll in job-based coverage, Medicaid and the Children’s Health Insurance Program (CHIP), subsidized private coverage through health reform’s new marketplaces, and other sources of health coverage.

Outside experts examining permanent repeal of the mandate have produced similar estimates:

  • Urban Institute: 13.4 million to 15.8 million more uninsured without a mandate.
  • Massachusetts Institute of Technology (MIT) health economist Jonathan Gruber: 24 million more uninsured without a mandate.
  • RAND Corporation: 12.5 million more uninsured without a mandate.
  • Lewin Group: 7.8 million more uninsured without a mandate.

Along with the sizable coverage losses, CBO estimates that a five-year mandate delay would raise premiums in the individual market (both inside and outside the marketplaces) by 10 to 20 percent in 2018 compared to current law (with similar increases in most years the mandate isn’t in effect).

Consistent with its previous estimates, CBO likely assumes that without the individual mandate, healthier and younger individuals would be more likely to remain uninsured, leaving the pool of people enrolled in individual-market coverage less healthy and hence more costly to cover.  That drives up premiums.

Again, CBO’s estimates are similar to independent estimates of the impact of permanently repealing the individual mandate:

  • Urban Institute: roughly 10-25 percent increase in average premiums without a mandate.
  • MIT’s Gruber: 27 percent increase in average premiums without a mandate.
  • RAND: 9.3 percent increase in average premiums without a mandate.
  • Lewin: 12.6 percent increase in average premiums without a mandate.