How to Increase Health Coverage, Lower Per Capita Costs

Congressman Bruce Westerman recently joined FREOPP President Avik Roy for a discussion previewing the forthcoming second version of Westerman’s health care bill, the Fair Care Act. Westerman’s comprehensive legislation reforms both public and private payers, incentivizes medical innovation, and tackles high drug prices and hospital consolidation.

Westerman recognizes that health care reform will require bipartisan support. “Nobody has the market cornered on good ideas on health care,” he says. “So, our objective was to find the best ideas for health care, and implement those ideas. We didn’t screen them to see if they’re Republican ideas or Democratic ideas, but [to see] what are reasonable, logical ideas that will make health care better in this country.”

The Fair Care Act, he says, is a set of proposals that seeks to provide solutions to today’s problems without remaking the whole health care system from scratch. He hopes that it will serve as a framework to be built upon by both Republicans and Democrats in Congress.

Read an excerpt from the discussion below (edited for clarity):

Avik Roy: I want to spend some time on the policy of your bill. What you’ve tried to do is expand coverage and reduce federal spending at the same time — something that a lot of people have either given up on, or think is impossible. What led you to decide that that was the course you wanted to take?

Rep. Westerman: I mentioned earlier that both parties have tried to do this down partisan lines and it hasn’t worked. So, if you think about the two issues that seem to kill health care policy: one, a CBO scores something and says it’s going to cover fewer people, it’s a death knell for it. That was one of the big problems with the AHCA. Whether CBO’s right or not, if that’s the way the score comes out, it makes it tough to get policy moved forward.

We also know about the rising cost of health care. If CBO puts a score out that says a bill is going to increase the cost of health care, that’s pretty much a nonstarter for a lot of people on Capitol Hill.

Why can’t we have better health care that covers more people that covers preexisting conditions and lowers the cost? I’m convinced, 100 percent convinced, that we can do that. Because when you get into the details and you start looking at the different systems we have in place and the way they’re being taken advantage of — if we can make health care fair, we can also make health care lower in cost and make it available to more people.

. . .

Avik Roy: Do you find when you talk to voters back in your district that people are excited about the opportunity to have more choices in their health insurance, or is their attitude more, “just get the costs down, I don’t care if I have a choice or not?”

Rep. Westerman: I think people want the choices. They want value for what they’re paying for. That’s why we call it the Fair Care Act. You pay for a service and you’re going to get the fair services back that you paid for. We want consumers to feel like they’re getting good value.

Right now, people are just paying enormous amounts of their disposable income for health care. I know this personally. I’m now a participant on the individual marketplace as a member of Congress, and instead of a group plan like I had previously, I have to analyze individual plans for my whole family. When my kids went to college, we found it was always less expensive to buy whatever plan the university had for students and not participate on the exchange with the whole family.

But it doesn’t have to be that way. The exchanges are a good idea, they just need to have more people participating on them and more options on the exchanges.

Avik Roy: One key element of your plan, in Title I, is about repairing the individual market so it works both for people with preexisting conditions, and for healthy people whose premiums have risen up.

You mentioned on the podium the idea of reinsurance — a high risk pool — to directly cover the costs of sicker people, so that premiums go down for healthy people and more people can enroll; widening the age bands; and some of these other reforms to make the individual market stronger.

One thing that plays into that is the reforms on the employer-sponsored side. You mentioned how in Congress, you now shop for coverage on the Affordable Care Act’s exchanges. One provision in the Fair Care Act is to transfer allfederal employees onto the exchanges, where they would use health reimbursement accounts funded by the government to shop for individual market coverage.

You also have a related provision in the bill that would take advantage of a new rule that’s come out from the Trump administration to not only enable existing employers to optionally fund health reimbursement accounts or health reimbursement arrangements so people can buy coverage on their own — but starting in 2021, every new startup, every newly incorporated business, would adopt that model going forward.

New businesses that were founded after 2021 would be required to fund, if they wanted to take advantage of the tax break for health insurance, health reimbursement accounts so the workers could control those dollars and shop for coverage.

So a lot of really interesting and subtle — but significant — policy tweaks that, over time, will lead the individual market to be a lot larger than it is today. One could see it actually tripling or quadrupling in terms of the cumulative effect of all those reforms.

Tell me about that thinking. You’re really making a bet that the individual market can be a lot better than it is today, and that it can serve a lot more people than it does today.

Rep. Westerman: You can almost think of the individual marketplace as a massive group plan. The more people you can get into that plan and the more insurance providers you get offering plans on the exchange, then you’re going to have more competition and more options.

I think it’s just a great approach to lowering the cost for individual consumers. That’s the main thinking behind increasing the size of that pool. You mentioned the Federal Employee Health Benefits plan. That’s around 8 million people, give or take, that would automatically make the individual market larger.

If you look at the people who are now covered under the Affordable Care Act who weren’t covered before, most of that took place under the Medicaid expansion. We would also like to…take that population and use a premium assistance program to help them get onto the exchanges as well.

Finally, the option for new businesses that start up after 2021 — they would be able to participate in the individual marketplace as well. So, the idea is to grow the individual marketplace and make it what that marketplace was originally intended to do.

Avik Roy: I should also mention that one of the ideas you’re considering for the new version of the Fair Care Act is to incorporate a version of competitive bidding into Medicare and Medicare Advantage. We talk about the individual market a lot, but we forget that Medicare Advantage is the largest and most robust market in the United States.

Tens of millions of Americans are enrolled in Medicare Advantage and shop for coverage every year through robust competition for private plans. You’re thinking about expanding the role of competition in the Medicare program to bring those costs down for seniors and for taxpayers. Maybe mention that a little bit. Jim Capretta is the one who is really the originator of a lot of this work.

Rep. Westerman: We want the taxpayer to share in those savings and not just to have a set cap. It goes back to the conversation I had with the independent pharmacist on the DIR fees. There’s an average amount that the federal government expects to pay for a prescription, part of that goes to the pharmaceutical company or the pharmacist, part of it goes to the PBM, and the government gets to save money but all the cost savings have been squeezed out of the individual pharmacist.

We want to be able to competitively bid and let the markets work so that we can get the cost even lower for Medicare Advantage plans.