Critiquing Project 2025: Private Health Insurance

July 7, 2024

Project 2025 Mandate for Leadership: The Conservative Promise
April 2024
The Heritage Foundation & partner organizations
Chapter 14: Department of Health and Human Services

AFFORDABLE CARE ACT AND PRIVATE HEALTH INSURANCE (p. 469-470)

Remove barriers to direct primary care.
Direct primary care (DPC) is an innovative health care delivery model in which doctors contract directly with patients for their care on a subscription basis regardless of how or where the care is provided. The DPC model is improving patient access, driving higher quality and lower cost, and strengthening the doctor–patient relationship. DPC has faced many challenges from government policymakers, including overly exuberant attempts at regulation and misclassification. Changes should clarify that DPC’s fixed fee for care does not constitute insurance in the context of health savings accounts.
          HJM comment: IMO, DPC has some genuine pluses – it facilitates clinical focus for physicians by cutting payment-related paperwork, and fosters continuity of care. However, the “health savings accounts” promoted in the last sentence are expensive to administer (far more than single payer) and are regressive, shifting scarce health insurance resources to tax free retirement accounts of the healthy and wealthy. Under single payer, DPC will be easy to implement.

Revisit the No Surprises Act on surprise medical billing.
The No Surprises Act protected consumers against balance bills, but it also established a deeply flawed system for resolving payment disputes between insurers and providers. This government-mandated dispute resolution process has sown confusion among arbiters and regulators as judges have sought to ascertain its meaning. The No Surprises Act should scrap the dispute resolution process in favor of a truth-in-advertising approach that will protect consumers and free doctors, insurers, and arbiters from confused and conflicting standards for resolving disputes that the disputing parties can best resolve themselves.
HJM Comment: Once again, partly true but misses the big picture. The “No Surprises Act” payment resolution process has too much ambiguity, argument, and therefore wasted resources. However, “truth-in-advertising” is a nonsensical solution: patients in emergency and high stakes medical situations won’t be able to consider or act on complex price disclosures. Not to mention that such disclosures will often be incorrect or misleading. What we need is a system where all care is covered by the same insurance. You know, single payer.

Facilitate the development of shared savings and reference pricing plan options.
Under traditional insurance, patients who choose lower cost care do not benefit financially from that choice. Barriers to rewarding patients for cost-saving decisions should be removed. CMS should ensure that shared savings and reference pricing models that reward consumers are permitted.
HJM Comment: Only a little true: insurance often shields patients from the most severe cost consequences of higher prices. However, studies show that even then the patient is responsible for the price difference, the system doesn’t work – providers can’t or won’t provide prices in advance, and higher prices are seen (incorrectly) as a marker of higher quality, which everyone demands when it comes to medical care. “Skin in the game” strategies don’t control health care costs. In general, medical care does not work as a “free market” (Ken Arrow, Nobel Prize)

Separate the subsidized ACA exchange market from the nonsubsidized insurance market.
The Affordable Care Act has made insurance more expensive and less competitive, and the ACA subsidy scheme simply masks these impacts. To make health insurance coverage more affordable for those who are without government subsidies, CMS should develop a plan to separate the non-subsidized insurance market from the subsidized market, giving the non-subsidized market regulatory relief from the costly ACA regulatory mandates.
HJM comment: Ooh, this one is so nasty it hurts. The “costly ACA regulatory mandates” are protections for patients, e.g., community rating (premiums based on demographics and location, not history of prior illness, which costs the sick out of insurance); standard insurance coverage categories and transparent disclosure of benefits; and prohibition on “recission” (retroactively revoking insurance based on even trivial errors in the application). I’m no fan of a system built on private insurance, but as long as we have it, let’s keep it fair.

Strengthen hospital price transparency.
In 2020, CMS completed its rule to require hospitals to post the prices of common hospital procedures. Future updates of these rules should focus on including quality measures. Combined with the shared savings models and other consumer tools, these efforts could deliver considerable savings for consumers.
HJM comment: Dreaming. The posting of prices has not worked, with most hospitals not complying and the posted lists so complicated as to be unusable by consumers – too many procedures, in too many configurations, for too many health plans. Quality measures are highly contentious (poor-performing hospitals claim, often legitimately, that their stats are skewed by high risk cases) and are widely manipulated by playing to the metric or lying. There is no evidence that shared savings and consumer tools save money. The way to save money is to cover everybody with the same insurance, and slash administrative costs – like single payer, and health insurance in every other wealthy nation.

End restrictions on benefits and types of health plans that can participate in the exchanges
Congress should build on the Trump Administration’s efforts to expand choices for small businesses and workers, both in and out of the exchanges, by codifying an expansion of association health plans, short-term health plans, and health reimbursement arrangements (including individual coverage HRAs). [The government should] give consumers more flexibility with their health care dollars through expanded access to health savings accounts.
HJM comment: These “restrictions” assure that insurance doesn’t abuse subscribers. With the major exception of high deductibles, ACA exchange plans are far fairer than unregulated insurance. See my critiques of HSAs above.

 

Comment by: Jim Kahn

Read my comments above, integrated with the excerpts.

Once again, a deep dive into Project 2025 health insurance reform proposals reveals a complete disregard for the welfare of beneficiaries / subscribers. It’s presented in the guise of innovation and regulatory relief, but it’s really a way to remove consumer protections, most harming the sick and middle class.

See my intro to the Project 2025 critique series here, and my discussion of Medicaid issues here. Next up – Medicare.

(Apologies for a slow week. I found the Supreme Court news terribly distracting.)