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On the Third Hand: Moses

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The provisions in the Patient Protection and Affordable Care Act (PPACA) that affect the commercial health insurance market are now five years old.

On the law’s fifth birthday anniversary, I was in Colorado Springs, Colo., for the fifteenth annual Intercompany Long-Term Care Insurance Conference. One of the attendees was Stephen Moses, director of the Center for Long-Term Care Reform. He was there to promote the message that, it doesn’t matter if people are looking at long-term care (LTC) finance from the left or the right. Either way, they need to stop encouraging people who can afford to save for their own care to count on Medicaid to pay their nursing home bills.

“We have to give up the illusion that the government can print money and take care of everybody,” Moses said in an interview.

Even at the long-term care insurance (LTCI) conference, support for Moses’ center seemed muted, possibly, partly because the private LTCI community has gone through hard times. In 2011, the community helped block implementation of a major PPACA voluntary LTC benefits program, the Community Living Assistance Services and Support Act (CLASS) program. Now, some companies connected with the LTCI community have, or are seeking, contracts to manage or support Medicaid nursing home programs, Medicare home health care programs, and LTC programs for “dual eligibles” — people who are eligible for both Medicare and Medicaid.

Some people in the private LTCI community are talking about developing new types of “public-private partnerships,” such as government-backed reinsurance programs for private LTCI operations.

Private LTCI people may be a little less likely to promote private-sector solutions because, frankly, they’re bidding for public health program contracts.

Moses said that, in many cases, a government makes a market attractive to attract private companies; responds to success by tightening rules and adding costs; then plays favorites and ends up with a “crony capitalism” relationship with the private players that survive the tightening. The private players that could police the government instead become the government’s best friends forever.

I think Moses’ analysis could apply about as well to the PPACA public health insurance exchange market as it could to the LTCI market, and that’s one reason why the lack of transparency at the U.S. Department of Health and Human Service (HHS) exchange program and some state-based exchange programs is so worrisome.

On the one hand, the current exchange system glitches are more entertaining than worrisome. Many new programs have glitches at first.

On the other hand, whether insurers, insurance regulators and exchange managers have the risk-management tools they need to keep antiselection from drowning health insurers is a serious concern. But other insurance exchange systems have survived for years. Maybe the PPACA public exchange system can, too.

On the third hand, crony capitalism is a terrible threat. Crony capitalism could involve favoritism in contracting; favoritism in the setting, amending and enforcement of rules; and pressure for the people at the in-crowd companies to bite their tongues when they see problems.

In the health insurance market, for example, Assurant Inc. (NYSE:AIZ) has hinted about the existence of PPACA World problems. How PPACA World works is as mysterious today as it was Jan. 1, 2014.

Today, HHS seems to be jiggling exchange system rules in favor of patients. In the long run, however, doctors, hospitals and drug companies will have an edge. They are as big as insurers, and far more appealing than insurance company claim administrators who say, “We can’t afford that.”

And HHS is doing nothing to show that it’s resisting crony capitalism. To the casual observer, the department looks as if it is quietly setting up a crony capitalism organization (CCO) incubator program. Maybe the most successful creations of the PPACA era will be not be CO-OPs or accountable care organizations (ACOs), but CCOs…