Would a public option improve Obamacare?

Adding a government-run plan to Obamacare marketplaces could be less contentious today than it was six years ago. The bigger question is if it will work.

Via Washington Monthly

Aseries of recent developments show Democrats reviving their interest in a government-run “public option” for Obamacare.

In a much-discussed article for the Journal of the American Medical Association (JAMA), President Barack Obama endorsed the addition of a public option to the Affordable Care Act (ACA), while Democratic presidential candidate Hillary Clinton separately stated her support for a widely-available government-run health plan. Clinton also endorsed the idea of letting younger Americans enroll in Medicare starting at age 55, a position echoed in the 2016 Democratic Party platform.

The question of a public option was among the more fractious debates in 2010 when the ACA was first considered – one that almost derailed the entire legislation. While advocates argued a government-run plan would help keep premiums low, critics argued it would kill competition, not enhance it. Ultimately, the opponents won.

A renewed discussion of a public option could be less contentious this time around – particularly if it’s offered as a “fallback” in places where the ACA marketplaces are thin and private plans are struggling. This approach is what Obama suggested in JAMA. “[B]ased on experience with the ACA, I think Congress should revisit a public plan to compete alongside private insurers in areas of the country where competition is limited,” Obama wrote. “Adding a public plan in such areas would strengthen the Marketplace approach, giving consumers more affordable options while also creating savings for the federal government.”  In particular, Obama proposed a public option in places that now have fewer than three private plans for participants to choose from – roughly 12% of the country.

According to the Kaiser Family Foundation (KFF), as many as 664 counties could have just one issuer participating in the ACA marketplaces in 2017, up from 225 counties currently.  “Increasingly, there are regions, particularly in rural areas, where there are only one or two options, which isn’t sufficient for effective competition,” says Larry Levitt, Senior Vice President at KFF. In April, for example, insurance giant UnitedHealth Group announced it was dropping out of Obamacare in all but a handful of places because it was losing money – a projected $650 million this year.

In underserved areas like these, the introduction of a public plan might be less of a threat to private insurers as well as a boon to consumers.  “On the face of it, one benefit of [a public option] is that people will have a choice of plans no matter where you live, which is not the case currently,” says JoAnn Volk, a Senior Research Fellow and Project Director at the Georgetown University Center on Health Insurance Reforms.

A “fallback” public option also already exists under Medicare’s coverage of prescription drugs (“Part D”), which means Congress is no stranger to the concept. Under current law, Medicare has the authority to offer a government-run option where no prescription drug coverage options exist – although it has yet to exercise that power. As Obama noted in JAMA, Republicans supported the idea of a fallback in Medicare Part D, though they bitterly opposed one in the ACA.

But if the potential arguments in favor of a fallback public option are its limited geographical scope; its benefits to areas where choices are currently limited or non-existent; and the precedent set by Medicare Part D, a host of thorny details still remain. In fact, the same issues that defeated the public option the first time – such as the proper use of the government’s market power – are still potential minefields that could derail a public plan:

How would a public option be funded? 

“It’s not cheap to start an insurance company, which in effect is what a public option would be,” says Kaiser’s Levitt. “One of the challenges of a public option – assuming the Treasury would not be there to back it up – is how to create startup money to provide reserves so it can sustain any potential losses.”

The lack of sufficient reserves is what’s currently dooming the nonprofit health insurance “co-ops” authorized under the ACA as a compromise alternative to the public option. Of the 23 co-ops created, two-thirds have already failed, and the rest are in precarious financial condition. Any public option would require a substantial initial investment, plus plenty of reserves for absorbing losses until it can be self-sustaining.

Will doctors and hospitals participate? 

A second concern is how a public option would assemble its networks of doctors and hospitals to provide care – and how much it would pay them. If the plan doesn’t reimburse health care providers enough, they’ll have no incentive to join, and that means trouble attracting customers. “All health insurance is local,” says Georgetown’s Volk. “If I don’t have access to the doctors I want, it’s not going to be a viable plan for me.”

On the flip side, higher reimbursement rates could also mean higher premiums – also unattractive to potential consumers.  “The challenge of putting together a network is sort of a chicken and egg problem,” Volk says. “You want to be able to show providers that if they negotiate a certain rate with you, you’ll be able to steer a lot of patients to them to make it worth their while in volume. On the other hand, if you’re starting a plan and don’t have the patients, it’s a little hard to get a contract.”

The issues around creating provider networks and setting reimbursement rates could be especially acute in rural areas – the same places where private insurers are now struggling to survive. “The underlying health care market isn’t very competitive in rural areas,” says Kaiser’s Levitt. “There just aren’t very many doctors or hospitals. It’s very hard for insurers to create a narrower low-cost network of providers and be able to translate that into low premiums.”

Would a public option win over consumers? 

A third concern is whether enough Americans would find a public option appealing to sustain it financially.

One advantage a public option could have in comparison to a private plan is lower premiums. An analysis by the Congressional Budget Office estimates that a public option could potentially charge premiums that are 7% to 8% lower than that of private insurers, largely due to lower administrative costs. But this estimate also assumes that a public option wouldn’t have to spend much money marketing to find and woo consumers. Many private plans, for example, pay insurance brokers to help them recruit enrollees. If a public option needs to do the same, its expenses will also rise. Moreover, premiums might not be the only thing that matters to consumers in choosing a health plan.

“We don’t have a lot of analogies to a government competing head to head with a private company delivering the same product,” says Levitt. “I don’t think we know how consumers would behave. Would they see the government plan as somehow lower quality because it’s not a private sector product? Or would people feel better, safer, being insured by a government plan that’s not driven by profits?”

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Details such as these become especially salient – and far more controversial – if Congress were to consider a broadly available public option in every marketplace, rather than only as a fallback. On the one hand, too weak a plan could be ineffectual. “[I]f a public option is simply another health insurer, albeit run by the government… we shouldn’t expect such an option to have much impact,” said Michael Morrisey, who heads the department of health policy and management at Texas A&M University, in an email.

Morrissey, who also authored a report published by RAND and the Brookings Institution on the current state of ACA marketplace competition, said that unless a public option has some “comparative advantage” over private competitors, “it would probably be unsuccessful.”

That comparative advantage, for example, could take the form of subsidies from the Treasury to keep it solvent if it faces heavy claims, or the power to compel providers to join its network or accept its rates. “You could get very heavy-handed with the rules,” says Georgetown’s Volk.

But the exercise of governmental power to compel networks or set rates could also end up disrupting the markets where competition among private insurers is already currently robust. While some markets are seeing fewer choices, the Department of Health and Human Services (HHS) says the average consumer still sees an average of 10 insurers in their state, up from 8 in 2014. Moreover, roughly 20 million people have gained coverage since the launch of Obamacare, lowering the uninsured rate from 16% in 2010 to 9.1% in 2015.

“For most Americans in most places, the Marketplaces are working,” wrote Obama in JAMA.  In markets like these, a public plan that’s too aggressive could drive out private insurers and reduce the choices consumers currently have – thereby undermining a central achievement of Obamacare.

Proponents of a public option disappointed by its initial exclusion from the ACA may cheer the new progressive consensus in its favor. Nevertheless, advocates face a host of crucial decisions. Chief among these: How to design a public option that won’t also jeopardize what’s already the most significant health reform the country has seen.

Continue reading at Washington Monthly

Could at-large districts solve Washington’s gridlock?

An institution beset by partisan polarization might benefit from an influx of moderates.

Via the Atlantic and Democracy Journal

By sheer strength of numbers, ideologically moderate Americans should be the most potent force in politics. Since at least 1980, self-identified moderates have outnumbered both liberals and conservatives in presidential exit polls, comprising 41 percent of voters in 2012. Moderates are also a plurality in 25 states, according to 2014 data from Gallup.

Yet this moderate strength seems nowhere evident in Congress. Among House Democrats, the moderate Blue Dog and New Democratic coalitions have shrunk by nearly half since 2010. And among Republicans, the Tea Party’s ascendance has purged most of the GOP’s few remaining moderates. Congressional polarization today, say political scientists Christopher Hare, Keith Poole, and Howard Rosenthal, is at its worst since Reconstruction.

One key step toward reversing this polarization is to replenish the stable of moderates in Congress. Moderates can bridge divides, encourage bipartisanship, and check ideological excesses. And given the vast pools of moderate voters, Congress should have more moderates than it does now to reflect the share of moderates in the electorate. The current political system, however, effectively disenfranchises moderate voters.

There’s one solution that can help reverse that dismal trend: creating more at-large seats in the House of Representatives. If every state with more than two representatives allocated just one seat to an at-large member (while also redrawing its remaining seats), moderates in those states could better exercise their plurality strength as they do in other statewide elections, such as those for the Senate and the White House. And while the remaining geographically determined districts would become somewhat larger as a result, this system would also grant each voter two representatives in the House: one from the voter’s district, and one from the voter’s state.

 

Continue reading at the Atlantic

Lettuce Pray

A consolidated food industry brings you salad and chicken nuggets cheaper—and spreads deadly food-borne pathogens farther.

Via Washington Monthly

In the summer of 2006, consumers across the country began falling sick from a particularly nasty strain of Escherichia coli bacteria, known as 0157:H7. Not all E. coli bacteria are dangerous, but 0157:H7 belongs to the Shiga toxin-producing group of pathogens (known as STEC), which can cause severe, and sometimes fatal, illness. By early October, 199 people in twenty-six states had fallen ill, resulting in 102 hospitalizations and thirty-one cases of kidney failure. Three people died, including a two-year-old boy in Utah.

Government investigators eventually traced the bacteria to fresh spinach harvested from four fields in California’s Monterey and San Benito counties and processed by Natural Selection Foods, one of the nation’s biggest producers of bagged mixed salad. Though a relatively small amount of greens was involved—just one day’s worth of production—the tainted spinach made its way into seven different packing lines and thousands of bags of salad mix processed at one of the company’s two central facilities. It was sold under such well-known brands as Trader Joe’s, Earthbound Farm, and Natural Selection; 15,660 pounds were sold under the label Dole Baby Spinach. The spinach even made it overseas to Taiwan, Hong Kong, and Iceland, as well as to Canada and Mexico.

Apart from the irony—a quintessential health food causes a deadly national outbreak of illness—the 2006 spinach scare was something of a watershed moment for so-called multistate food outbreaks, which began to pick up in tempo around that time.

That same year, seventy-one people in five states were sickened by food from Taco Bell, and 183 people in twenty-one states suffered infections from Salmonella bacteria on tomatoes. Over the next five years, the number of multistate outbreaks per year more than doubled, from thirteen in 2006 to twenty-nine in 2010, according to the federal Centers for Disease Control and Prevention (CDC).

Many of these outbreaks were headline-grabbing national food scares involving trusted brands and popular foods: Veggie Booty (salmonella, 2007); Kroger’s ground beef (E. coli, 2008); Nestlé Toll House Cookie Dough (E. coli, 2009); eggs (salmonella, 2010); cantaloupes (involving the Listeria bacteria, 2011); sprouts (E. coli, 2012); Foster Farms frozen chicken (salmonella, 2013); caramel apples (listeria, 2014); Blue Bell ice cream (listeria, 2015); and cucumbers (salmonella, 2013, 2014, and 2015). In the fall of 2015, at least fifty-two people in nine states fell ill after eating at Chipotle restaurants, the paragon of “healthful” fast-casual food. From 2010 to 2014, the CDC reported 120 total multistate outbreaks, or an average of twenty-four per year. By comparison, from 1973 to 1980, the median annual number of multistate outbreaks was just 2.5.

While some of the rise in reported outbreaks is due to better detection—the CDC now uses sophisticated DNA fingerprinting of pathogens and a national system called PulseNet to identify outbreaks—a growing coterie of researchers, as well as the CDC, say that modern industrial food processing is also to blame. According to the CDC’s website, “Changing patterns in global food production … combined with increasing integration and consolidation of agriculture and food production can result in a contaminated food rapidly causing a geographically widespread outbreak.”

In other words, the same hyperefficient distribution system that brings you convenient and affordable salad greens and all the chicken nuggets you can eat can just as efficiently deliver E. coli, salmonella, and other dangerous bugs to your plate. Moreover, today’s industrialized food production processes carry other public health risks. Antibiotic use, for example, which is still endemic in so-called factory farming, is contributing to the rise of drug-resistant super-germs. And the reliance on monoculture—the cultivation of a single species to help standardize production—is leading to a potentially dangerous lack of biodiversity. “Consolidation has eliminated redundancies in the food system in the name of efficiency,” says Mary Hendrickson, assistant professor of rural sociology at the University of Missouri-Columbia. “But redundancies help protect us.” Today’s industrial food system has brought American consumers a wealth of affordable and convenient foods, but this benefit may come with a price that’s not listed on our grocery bills: food that’s not only the blandly uniform product of a few mega-sized producers, processors, and retailers but also isn’t as safe as we think it is.

Continue reading at Washington Monthly

Why You Can’t Afford to Retire

Expanding Social Security isn’t enough to ensure middle-class retirement security.

Surveys find that barely 1 in 5 Americans are confident of their ability to support a comfortable retirement – and unfortunately for good reason.

In 2014, according to the Federal Reserve, 31 percent of working Americans reported having “no retirement savings or pension whatsoever.”

Many Americans think of savings as a matter of willpower and personal behavior – much like dieting and exercise. It’s one reason why the worsening state of Americans’ retirement security – now approaching crisis proportions – has yet to emerge as an issue that demands extensive government intervention.

In truth, the nation’s retirement savings crisis is as much a problem of public policy as it is about how Americans manage money. Families face massive structural barriers that no amount of personal financial discipline can overcome. Among the reasons retirement is increasingly unaffordable:

1. One in three Americans lacks access to an employer-sponsored retirement savings plan. 

Research finds that people are more likely to save for retirement if they’re enrolled in an employer-sponsored retirement plan (and especially if enrollment is by default). Yet in March 2015, just 49 percent of Americans working in private-sector jobs were participating in an employer-provided retirement plan such as a 401(k), according to the Bureau of Labor Statistics (BLS).

One major problem is lack of access. The workers most likely to be offered an employer-sponsored plan work for large firms (those employing 500 people or more). But the majority of Americans work in smaller companies, including more than a third who work in firms with 100 or fewer employees. Because of administrative burdens and other costs, far fewer of these smaller firms offer retirement benefits to their workers.

 

Continued at the Washington Monthly…

Which States Have the Most Guns?

Nationally, guns outnumber both cars and people.

Kentucky, California and Texas currently top the nation in the number of people getting federal background checks in the process of acquiring a gun.

From January 1 to September 30, 2015, the Federal Bureau of Investigation (FBI) conducted more than 2.3 million background checks on Kentuckians buying guns, along with nearly 1.2 million checks in California and roughly 1.1 million in Texas. Kentucky’s population currently numbers 4.4 million, which means the FBI carried out one firearms background check for roughly every two Kentucky residents.

Under the Brady Handgun Violence Protection Act, passed in 1993, anyone seeking to buy a gun from a licensed dealer must complete a background check, typically conducted through the FBI’s National Instant Criminal Background Check System. So far this year, the FBI has completed more than 15.6 million background checks on Americans looking to get a gun.

Continued at the Washington Monthly…

Why cities need smart water

The next frontier in sustainability: reducing water loss.

Americans waste nearly six billion gallons of fresh water a day – and that’s before it even reaches their homes.

The Center for Neighborhood Technology estimates that between 14 to 18 percentof our nation’s water supply is lost through leaks, breaks, faulty meters and generally inefficient, aging infrastructure. Drought-stricken California, for example, loses as much as 228 billion gallons a year this way, according to the Los Angeles Daily News, and sometimes in spectacular fashion. In July 2014, 20 million gallons of water gushed through the UCLA campus after a nearly century-old water main burst under Sunset Boulevard. According to news reports, it took city officials nearly four hours to fix the break while buildings and garages flooded and at least five people needed rescue.

Replacing the nation’s water infrastructure is both unlikely and unaffordable, but the world of big data might have a better answer: “smart water.” By using information technology to make water utilities more efficient, cities can stop leaks, save water and better target their investments in infrastructure.

Continued at the Washington Monthly…

How to Save a High School Dropout

New research shows the key role of relationships in preventing dropout.

While the nation’s high school drop out rate has been steadily declining, young students who face tough times, such as by having a child, becoming homeless or struggling academically, are still at much higher risk of dropping out. Every year, says the America’s Promise Alliance, 485,000 young Americans leave school.

But whether a student drops out – and drops out for good – might depend on this key factor: whether the adults around them can be counted on to help them cope with adversity.

Continued at the Washington Monthly…

Retirement Raidings

Americans are borrowing record amounts from retirement savings. Should 401(k) loans be limited?

In good news for Americans’ retirement security, new data shows Americans might finally be saving more for retirement. But Americans are also borrowing more from their retirement accounts, thereby potentially erasing a big chunk of these gains.

Over the 12 months ending in June 2015, Americans on average socked away a record high of $10,180 into retirement savings, according to recent data from Fidelity Investments. At the same time, more than 1 in 5 Americans – or 21.9 percent -have an outstanding loan against their 401(k). According to Fidelity, the average balance for these loans at the end of June was $9,720 – up from $9,500 a year ago.

Paradoxically, says Doug Fisher, Senior Vice President at Fidelity Investments, larger account balances might be prompting bigger loans. “I call it the ‘false sense of continued prosperity’ effect,” he said. “When 401k balances go up because the stock market rises, people feel like they have more wealth and borrow more.”

The actual result, however, could be significant long-term damage to Americans’ retirement security.

Continued at the Washington Monthly…

Which States Are the Most Small-Business Friendly?

Rhode Island and Illinois are among the worst states for small business owners, says a new survey, while Texas and New Hampshire are at the top.

A new survey of nearly 18,000 small business owners nationwide finds that entrepreneurs really want just one thing from government – simplicity.

Thumbtack.com’s 2015 small business friendliness survey finds that the states ranked highest by small businesses are the ones that offer the easiest-to-navigate licensing and tax regimes, along with proactive help for entrepreneurs. What matters much less: the actual burden of taxes or regulation.

“The tax rate is often talked about, but it’s not a particularly meaningful measure,” says Thumbtack’s chief economist, Jon Lieber. “The amount paid in taxes matters significantly less than the complexity of the tax system and the difficulty people have complying.”

By these standards, the states ranked best in Thumbtack’s survey are Texas, New Hampshire and Utah, while the states ranked worst are Rhode Island, Illinois and Connecticut, along with New York and California.

Continued at the Washington Monthly…

From Garbage to Gas

Landfills and sewage treatment plants are an overlooked source of clean energy – but a boom in bio-methane might be coming.

What was once the I-95 landfill near Lorton, Virginia, is now dozens of acres of rolling green fields – dotted by more than 200 metal pipes emerging from the grass.

The pipes are wellheads for natural gas, and they are collecting the methane generated by more than 10 million tons of decomposing garbage dumped by Washington, D.C.-area residents over the course of 30 years.

A vacuum pump draws the gas from underground, through the wellheads, and connects it to roughly 14 miles of pipeline that run throughout the landfill. Under each wellhead, says Mike Malfitano, an environmental technical specialist for Fairfax County, “there’s a three-foot bore hole that goes 110 feet down into the waste mass.”

Although it closed in 1995, county officials expect the landfill to keep emitting gas for at least the next decade. On its best days, says Fairfax County environmental engineer Chris Meoli, the landfill generates 2,000 cubic feet per minute of gas – enough to create 4.9 megawatts of electricity. It’s more than enough to power the Noman M. Cole wastewater treatment plant three miles down the road, saving the county as much as $500,000 a year in power costs, according to a 2015 county report. What’s left over is sold to the grid.

According to the Environmental Protection Agency (EPA), landfills are among the nation’s largest sources of methane, accounting for nearly one-fifth of all methane emissions generated by human activity in 2012. That’s why advocates of landfill gas projects like the one in Fairfax County say these efforts have enormous environmental benefits – first, by capturing harmful methane emissions that would otherwise contribute to climate change and second, by replacing more carbon-heavy fuels for power and transportation.

Moreover, there’s no shortage of garbage. According to the group Energy Vision, Americans dump about 250 million tons of municipal solid waste per year – including 70 million tons of food and yard waste. It’s a clean energy opportunity the nation is literally throwing away.

Continued at the Washington Monthly…