Aetna CEO: How about Managed Single Payer?
Over the past year or so, Andrew Sprung of Xpostfactoid, Michael Hiltzik of the L.A. Times and I have repeatedly noted that as much as most insurance carriers may be griping about the individual market, their bread and butter is generally in other divisions, including the large group market but especially Managed Medicaid and Medicare Advantage:
The expansion of Medicaid benefits, thanks largely to the Affordable Care Act, helped increase enrollment in private health plans by 3.4 million in the last year,according to a new report from consulting firm PwC.
...PwC said 73% of Medicaid beneficiaries — or 54.7 million of the 75.2 million Americans covered by the health benefit program for the poor – are enrolled in private plans that contract with the Medicaid program.
...But the growth in the last year wasn’t as fast as 2015 when health plans added more than 8 million Medicaid beneficiaries as more states agreed to expand such coverage under the ACA.
It’s been a boon for health insurance companies like including Aetna, Anthem, Centene, Molina and UnitedHealth Group, which are benefitting from the ACA’s expansion as well as an increasing number of states shifting management of Medicaid benefits to private companies.
OK, so that's managed Medicaid. What about the other Fat Government Contract shoe, Medicare Advantage? I don't write about Medicare much, but according to this story from last week...
Each day, 10,000 Americans turn 65. The baby boomers are reaching Medicare eligibility at a rapid rate, and many are choosing Medicare Advantage to help them manage their health.
Medicare Advantage is an alternative to original Medicare offered through private insurers, and in the last five years, enrollment has surged by nearly 50 percent across the country to approximately 18 million. Not even the "age wave" of baby boomers accounts for this explosive growth, as the Medicare-eligible population has increased 18 percent over the same period.
It's worth noting, as HHS spokesman Aaron Albright did just yesterday, that...
2010 Heritage prediction: "Enrollment in [MA] by 2017 is estimated to be cut roughly in 1/2, from a projected 14.8 m...to 7.4 million"
— Aaron Albright (@AaronKAlbright) September 22, 2016
Yup...the right-wing Heritage Foundation, which opposes the ACA (even though they helped write it 25 years ago) boldly predicted that Obamacare would cause a collapse in Medicare Advantage enrollment. Instead of dropping in half since then, it's increased by half. Oh, and while we're on the subject...
CMS estimates that average Medicare Advantage monthly premium will decrease by $1.19 (~4%) in 2017, from $32.59 on average in 2016 to $31.40
— Scott Gottlieb, MD (@ScottGottliebMD) September 22, 2016
Now, I took this ball and have been running with the reasoning that if carriers are making fat profits on managed public plans, it might be a good idea to tie those managed Medicare/Medicaid contracts to participation in the ACA exchanges...at an actuarially reasonable pricing. In other words, I'm not saying that they should have to do so as a loss leader, but they should at least have to offer policies through the exchanges.
Sprung, meanwhile, proposed taking that one step further over a year ago:
It seems that insurers are perfectly happy and prosperous competing in the markets where the government is the payer -- Medicaid managed care and Medicare Advantage. What if the ACA had offered all adults under age 65 who lacked access to employer-sponsored insurance a program something like the Basic Health Plans (BHPs) that the law allowed states to establish for people with incomes in the 139-200% FPL range? That is, a program rather like Medicaid, paying perhaps somewhat higher rates, and offering enrollees a choice of plans from among a handful of MCOs? (So far, New York and Minnesota are the only states that have established BHPs.)
That is, what if instead of a single public option, all the options were public, in the sense that they were paid by the government as MCOs -- but administered by private insurers?
Higher income enrollees could buy in on a sliding scale. Because payment rates would be more like those of our current public programs than like private ones, premiums and copays would be lower. Networks would be narrow, at least at first, as payment rates might be somewhere between those of Medicare and Medicaid.
The losers, as far as I can see, would be not insurers, and not enrollees, but healthcare providers, for whom one more segment of the overall market would be paying government rates. But the individual health insurance market is relatively small -- probably a bit under 20 million lives at present, potentially perhaps 30 million if plans were affordable enough to bring in those who are holding back at present. That's as compared to about 147 million in the employer sponsored market.
Aetna CEO in private meeting: “Single-payer, I think we should have that debate”
A top insurance executive signals openness to government-financed health care.
Single-payer, I think we should have that debate as a nation. But let me remind everybody that Aetna was the first financial intermediary for Medicare. We cut the first check for Medicare in 1965 to Hartford Hospital for $517.57.
The government doesn’t administer anything. the first thing they’ve ever tried to administer in social programs was the ACA, and that didn’t go so well. So the industry has always been the back room for government. If the government wants to pay all the bills, and employers want to stop offering coverage, and we can be there in a public private partnership to do the work we do today with Medicare, and with Medicaid at every state level, we run the Medicaid programs for them, then let’s have that conversation.
But if we want to turn it all over to the government to run, is the government really the right place to run all this stuff? And that’s the debate that needs to be had. They could finance it, and if there is one financer, and you could call that single-payer. ...
We’re going to pay for it one way or another. What we have to do is we have to get the costs right. We have to get people healthy. It’s not about who is paying the bill. It’s about what we’re doing to get the costs down. The Democrats are now saying that with the new Republican bill, wait there is nothing in here about getting costs down. That’s the point. And so that’s the place we’re headed as a company. It’s not just about paying the bills.
I've bashed Aetna here before and stand by those criticisms...but this is an important milestone, for a private, profit-based insurance company CEO to openly state the obvious: Insurance companies don't really care where their money comes from as long as they make a profit in the process.
This is also, by the way, one of the reasons why people screaming "SINGLE PAYER NOW!!" need to be more careful about what exactly they're proposing, and what they're willing to accept. Personally, depending on how it's actually done and the details, this strikes me as a pretty reasonable (and far more politically viable) route to take. Again, roughly 73 million Americans currently get their healthcare coverage via either Managed Medicaid (55M) or Medicaid Advantage (18M). That's over 22% of the population. You can argue that this isn't the best or most cost-efficient method, but you can't argue that it doesn't work, because it has been for years.
Anyway, add this to the healthcare debate.