I recently wrote about how ideology and confirmation bias has infiltrated research into the opioid overdose issue. I spoke about how researchers can “spin” their findings to comport with the prevailing narrative and improve the likelihood of getting published in peer-reviewed journals.

An example occurred yesterday, when the University of Michigan’s Institute for Healthcare Policy and Innovation announced, with the headline “Unwise opioids for wisdom teeth: Study shows link to long-term use in teens and young adults,” the publication of a research letter in JAMA that day by a team of its researchers.

The study of over 70,000 dental patients, ranging from 13 to 30 years in age, who had wisdom teeth extracted between 2009 and 2015 found, 

In all, 1.3 percent of 56,686 wisdom tooth patients who filled their opioid prescription between 2009 and 2015 went on to persistent opioid use, defined as two or more prescriptions filled in the next year written by any provider for any reason. That’s compared with 0.5 percent of the 14,256 wisdom tooth patients who didn’t fill a prescription.” 

Set aside the fact this study shows prolonged use is very low. Is there something inherently bad about refilling opioid prescriptions and staying on opioids longer than the average person if one is not addicted? Since we know that opioids have very few harmful effects on organs compared to alcohol, acetaminophen, or NSAIDs (with prolonged use), and since the addiction and misuse rate is somewhere around 1 percent, why are the authors so upset if some people stay on the drug longer than others. The lead author calls this a “long term ill effect.” Really?

Meanwhile, on the same day, another research letter was also published in JAMA by researchers at Brigham and Women’s Hospital in Boston that looked at 1.3 million patients who received 22 types of surgical procedures between the years 2004 and 2015. The study found a 30-day post-discharge overdose rate of 10.3 per 100,000 patients (0.01 percent), dropping to 3.2 overdoses per 100,000 patients (0.0032 percent) for those 61 to 90 days post-discharge. The authors found overdoses within 30 days post-discharge were very low in patients who were “opioid naïve”—2.8 per 100,000 patients (0.0028 percent)—as opposed to patients who were receiving opioids prior to surgery. In patients who were chronically receiving high-dose opioids prior to the operation (defined by the authors as greater than the equivalent of 100mg of morphine per day) that rate jumped to 142.5 per 100,000 patients (0.14 percent).

The authors stated in their concluding discussion:

This study demonstrated that opioid overdose after surgical discharge was rare. Patients were at risk of experiencing an overdose after leaving the hospital, especially in the first month. Furthermore, patients using high quantities of opioids preoperatively were at a heightened risk compared with those not receiving high-dose opioid therapy prior to the operation.”

The big takeaway from this study is that overdose rates in patients discharged on opioids postoperatively are extremely low—even in those who had been chronically receiving high-dose opioids preoperatively. But the authors of the study spent most of the time discussing the fact that overdoses can and do occur in patients discharged from surgery on opioids and occur more frequently in patients who had been on opioids preoperatively.

Give credit to the medical news service MedPage Today for providing dispassionate, no-spin coverage to both studies by covering them together in a story on August 7 entitled: “Post-Surgery Overdoses Are Rare—but higher odds of persistent use seen following some procedures.”

This post co-authored with Rafael Fonseca, MD, Chairman of the Department of Medicine, Mayo Clinic, Phoenix, AZ

Much has been written about how politics and ideology influence research funding, suppress research in certain areas, and lead to the cherry-picking and misrepresentation of evidence in support of a narrative or agenda. Science journalist John Tierney explored “The Real War on Science” in an excellent essay in City Journal in 2016. Reflecting on this phenomenon in 2011, Patrick J. Michaels stated:

The process is synergistic and self-fulfilling. Periodicals like Science are what academia uses to define the current truth. But the monolithic leftward inclination of the reviewing community clearly permits one interpretation (even if not supported by the results) and not another. This type of blatant politicized science is becoming the norm in the environmental arena, and probably has infiltrated most every other discipline, too.

It certainly has infiltrated research into the emotionally charged opioid overdose problem afflicting the US and many other western nations. Policy decisions have been rooted in a narrative seemingly immune to the facts: that the problem is largely the result of greedy pharmaceutical companies manipulating careless and poorly-trained doctors into “hooking” patients on highly addictive opioids and condemning them to a nightmarish life of drug addiction.

Tierney writes of confirmation bias—the tendency of people to seek out and accept information that confirms their beliefs and prejudices. He bemoans the “groupthink” that allows confirmation bias to infiltrate the peer review process. He cites a well-known study that demonstrated reviewers were more likely to find problems with a study’s methodology if the findings were contrary to their prejudices yet overlook methodological shortcomings if the findings were confirmatory.

Sometimes investigators try to “spin” their findings to make them comport to the narrative and appear confirmatory, increasing the likelihood that their research gets published. 

Both of us are practicing physicians, and each of us recently experienced reminders that research into the opioid overdose issue is not exempt from politicization and confirmation bias. We would like to present two recent examples where this confirmation bias became self-evident. 

One of us, Rafael Fonseca, recently encountered a peer reviewed publication that asserted, and concluded by conjecture, that opioid manufacturers, by providing meals to physicians at educational presentations, were skewing prescription patterns and increasing the number of opioids being prescribed. A cursory review of the published data suggested that correcting for variables such as specialty was needed to understand such putative association. After undertaking a full data analysis (reported in the Healthcare Blog with Dr. John Tucker), we were able to refute the findings of that publication. In short, we found that the influence of meals provided on prescribing was negligible, and that similar effects were seen when providers attended meals provided by companies that produce other products used for the treatment of pain, but not opioids. We provided a compelling case that increased attendance to these meals, and opioid prescription, was more of a reflection of the practice pattern of such physicians (i.e. they treat pain patients) rather than a heinous quid pro quo. Readers are referred to our analysis and the original paper.

We remain disappointed by the apparent ease with which such publications appear in major medical journals as well as the scarcity of detailed rebuttals. The authors of this paper did not discuss considerations that are relevant such as multivariable analyses. Not only were these missing, but the article concluded by suggesting that policy changes are needed, and that companies should be prevented from supporting such meals. Individuals who served as peer reviewers of this article apparently missed the limitations we presented in our independent review and accepted at face value the conclusions presented. The editors of the journal did not consider confounding covariates, which as we have shown, would make the analysis questionable. Perhaps, most troubling, is that a letter to the editor was submitted with our findings and was rejected as being of “low priority.” This was problematic given that, even though our letter was an abridged version of our full analysis, it directly refuted the conclusion of the paper. We cannot claim ill intention in the process but are surprised that even when pointed out, it seems that a prevailing narrative trumped scientific rigor. The prevailing current narrative is that greedy pharmaceutical companies duped doctors to inappropriately prescribing opioids. If we want to curtail deaths associated with opioid overdoses we must find the correct factual context of the problem. Facts are established with science and can be distorted by heuristics serving ideology.

At the time of this blog post we have requested the primary data from the authors to resolve data inconsistencies. We have not received the data, because the authors claim they intend to make it public at some point in the future pending a publication they have submitted. Through social media channels an Associate Editor of the journal was recently made aware of our analysis and stated it should be submitted as a letter to the editor or as a publication. We offered to write it as a full report and noted that our letter had already been rejected, and we received no further response. We have also contacted the Editor but have yet to get a response.

An example of how researchers “spin” their findings to comport with the prevailing narrative and increase the likelihood of publication occurred on January 17, 2018 when Jeffrey Singer encountered a story in the Los Angeles Times touting a recently published study in the peer-reviewed medical journal BMJ, in which the principal finding was that refilling opioid prescriptions given to patients for acute pain dramatically increased their risk of addiction. The Times reporter wrote:

A study published Wednesday in the BMJ finds that for every additional week a patient takes drugs like oxycodone and hydrocodone, the chance that he or she will wind up abusing the drug increases by 20%. And every time a prescription for opioid painkillers is refilled, the risk of abuse rises by 44%.”

The reporter was accurate. The study by researchers at Harvard and Johns Hopkins looked at 568,000 opioid “naïve” patients in the Aetna health insurance data base given prescription opioids for acute postoperative pain over the period of 2008–2016. It began the conclusion to its abstract with: “Each refill and week of opioid prescription is associated with a large increase in opioid misuse among opioid naïve patients…” But what the Times reporter neglected to mention, and what the study’s authors only mentioned in passing, was the initial finding: the “total misuse rate,” i.e., rate of all opioid misuse diagnostic codes (defined separately as dependence, abuse, and overdose—a broad category within which addiction is only one component) among the 568,000 patients prescribed the opioids, was 0.6 percent. It was only upon reading the actual study as opposed to the press coverage that this rather encouraging news—opioids prescribed for acute pain have a very low misuse rate—became apparent.

Instead of emphasizing this encouraging finding, the bulk of the study investigates the effect the duration of time a patient is on opioids—expressed principally by numbers of refills—has on the misuse rate. The authors indeed found that each refill and additional week of opioid use was “associated with an adjusted increase in the rate of misuse of 44%.”

However, looking at the actual numbers behind those percentages finds the incidence of opioid misuse rose from 145 cases per 100,000 person years, or 0.15 percent per year, in patients who had no refills, to 293 cases per 100,000 person years, or 0.29 percent per year, for persons who had one refill. Indeed, that is nearly double. But if you nearly double a very low number, you still get a low number. Also, the correlation of prescription refills with an increase in misuse does not prove causation. Possible causes are debatable, with many confounding possibilities. The study lacks any discussion or exploration into matters of cause and effect.

Rather than point out that the incidence of misuse is extremely low in patients given opioids for acute postsurgical pain, even after multiple refills, the authors chose to pass over the low overall incidence of misuse and instead focus on the “large increase in opioid misuse” seen with each refill and week of opioid use.

These are just two examples of how scientific research is susceptible to the biases of the researchers and influenced by political exigencies. They both fed into the prevailing narrative animating policy toward opioid use, abuse, and overdose. Both provide good examples of how researchers as well as peer reviewers fall easy prey to confirmation bias.

Readers should approach every new “study” reported in the peer-reviewed science literature with a modicum of skepticism.

The usual narrative is that Democrats support consumer protections and Republicans oppose them. Today’s short-term plans final rule flips that narrative: Republicans are expanding consumer protections, and Democrats are opposing them.

Today’s rule reverses a 2016 Obama rule. The Obama rule reduced consumer protections in short-term plans by exposing sick patients to medical underwriting. Before that rule, consumers could purchase short-term plans that lasted 12 months. If they developed a serious illness, their plan could cover them until the next ObamaCare open enrollment period, when they could purchase coverage without medical underwriting. The Obama rule restricted short-term plans to 3 months. It prohibited “renewal guarantees” that protect enrollees who fall ill from medical underwriting when they purchased a new short-term plan. As a result, the Obama rule left short-term plan enrollees who got sick with no coverage for up to 9 months: those who purchased a plan in January, and developed a serious illness in February, would lose their coverage at the end of March, and have no coverage until the following January. (Source: NAIC) This was by design: the Obama administration wanted to expose sick people in short-term plans to medical underwriting and lost coverage as a way of forcing consumers to buy ObamaCare coverage instead. That’s at least a little messed up.

Today’s rule allows short-term plans to last 12 months and offer renewal guarantees. It therefore allows short-term plans to protect the sick from medical underwriting for an additional 9 months—indeed, “issuers may offer coverage under a short-term, limited-duration insurance policy for up to a total of 36 months, without any medical underwriting or experience rating beyond that completed upon the initial sale of the policy”—and allows renewal guarantees to protect them from medical underwriting indefinitely. Protecting the sick from medical underwriting has long been a goal of Congress.

So, to recap, Republicans are expanding consumer protections, and Democrats are opposing an expansion of consumer protections.

Weird, isn’t it?

I have written here and here about how patients have become the civilian casualties of the misguided policies addressing the opioid (now predominantly fentanyl and heroin) crisis. The policies have dramatically reduced opioid prescribing by health care practitioners and have pressured them into rapidly tapering or cutting off their chronic pain patients from the opioids that have allowed them to function. More and more reports appear in the press about patients becoming desperate because their doctors, often fearing they may lose their livelihoods if they are seen as “outliers” by surveillance agencies, under-treat their pain or abruptly cut them off of their pain treatment regimen.

A story in the July 23, Louisville (KY) Courier Journal illustrates the harm this is causing in Kentucky. “Doctors say the federal raids on medical clinics lead to unintended consequences — patients thrust into painful withdrawals and left vulnerable to suicide or dangerous street drugs,” states the article. Dr. Wayne Tuckerson, President of the Greater Louisville Medical Society, said, “[When investigators] go in with a sledgehammer and shut down a practice without consulting community physicians, suddenly we have patients thrown loose.” He went on to say, “Docs are very much afraid when it comes to writing pain medications…We don’t want patients to become addicted. And we don’t want to have our licenses — and therefore our livelihoods — at stake.” And if pharmacists in the area learn of a police raid or investigation of a medical practice—regardless of the outcome of that investigation—many of them refuse to fill legal prescriptions presented by patients of those practitioners.

Last week Oregon regulators announced plans for a “forced taper” of chronic pain patients in its Medicaid system. This contradicts and is much more draconian than the recommendations of the 2016 guidelines issued by the Centers for Disease Control and Prevention, which in turn have been criticized as not evidence-based. The Oregon Health Evidence Review Commission announced: 

The changes include a forced taper for all chronic pain patients on opioids (within a year), no exceptions. Opioids will be replaced with alternative treatments (cognitive behavior therapy (CBT), acupuncture, mindfulness, pain acceptance, aqua therapy, chiropractic adjustments, and treatment with non-opioid medications, such as NSAIDS, Acetaminophen).

This proposal has sparked an outcry from patients and patient advocacy groups in Oregon. While this policy proposal only applies to Medicaid patients, they fear it will soon become the standard adopted by all third-party payers in the state.

University of Alabama Medical School Associate Professor Stefan Kertesz, an addiction medicine specialist at the Birmingham VA Medical Center, tweeted in reaction to this proposal:

I cannot imagine a more violent rejection of the CDC Guideline on Prescribing Opioids of 2016 than the plan current before Oregon Medicaid : forced taper to 0 mg of all opioid receiving pain patients.

These policies are based on the false narrative that the overdose problem is primarily the result of doctors prescribing opioids to their patients in pain and getting them hooked. In fact, the problem has always been a product of drug prohibition—non-medical users accessing opioids on the black market. To illustrate, an often-overlooked study published in the American Journal of Psychiatry in 2009 followed more than 27,000 OxyContin addicts entering rehab programs from 2001–2004. It found 78 percent said they never had obtained a prescription of OxyContin for any medical reason, 86 percent said they used the drug because they liked the “buzz” or “high,” and 78 percent reported prior treatment for substance abuse disorder.

There have been well-documented cases of unscrupulous doctors teaming up with dishonest pharmacists to operate “pill mills”—gaming the third-party payment system to receive compensation for running drug-dealing operations. But these bad apples have largely been rolled up by law enforcement and represented an exception to the rule of how doctors treat pain. Nevertheless, these stories continue to feed the narrative.

Dr. Charles Argoff, a professor of neurology at Albany Medical College and Director of its Comprehensive Pain Center recently surveyed colleagues in a report for the medical education website Med​scape​.com entitled “Readers Respond: Stop Stigmatizing Opioids.” The majority of clinicians dealing with pain bemoan the hysteria driving the governments’ response to the overdose problem. One clinician emphasized, “Dependence is the rule, addiction is the exception.” Another complained about the “misinformation, distortion of evidence-based research, political influence, and even mainstream media sensationalism-style reporting, which together has deteriorated to such an extent that it is beyond belief…A person should review all available information that is opposing the arrogantly forgotten patient.”

Dr. Argoff concluded his survey with the following comment:

In summary, I hope these comments further epitomize and suggest how complicated opioid therapy is. But what I am struck by is how much these comments point to identifying that subset of individuals for whom these medications are successful and also outlining the risk of so many other medical treatments, both interventional and noninterventional, that we consider for our patients with chronic pain.

Meanwhile the civilian casualties mount. Dr. Thomas Kline, a physician in North Carolina, is maintaining a growing list of patients who commit suicide after being cut off from their pain medication. Expect the deaths—of patients as well as non-medical users—to continue until policymakers come to the realization that the root cause of the problem is drug prohibition.

As a physician licensed to prescribe narcotics, I am legally permitted to prescribe the powerful opioid methadone (also known by the brand name Dolophine ) to my patients suffering from severe, intractable pain that hasn’t been adequately controlled by other, less powerful pain killers. Most patients I encounter who might fall into that category are likely to be terminal cancer patients. I’ve often wondered why I am approved to prescribe methadone to my patients as a treatment for pain, but I am not allowed to prescribe methadone to taper my patients off of a physical dependence they may have developed from long-term opioid use, so as to help them avoid the horrible acute withdrawal syndrome. I am also not permitted to prescribe methadone as a medication-assisted treatment for addiction. These last two uses of the drug require special licensing and permits and must comply with strict federal guidelines. 

The synthetic opioid methadone was invented in Germany in 1937. By the 1960s, methadone was found to be effective as medication-assisted treatment for heroin addiction, and by the 1970s methadone treatment centers were established throughout the US, providing specialized and highly structured care for patients suffering from Substance Abuse Disorder. The Narcotic Addict Treatment Act of 1974 codified the methadone clinic structure. Today, methadone clinics are strictly regulated by the Drug Enforcement Administration, the National Institute on Drug Abuse, the Substance and Mental Health Services Administration, and the Food and Drug Administration. These regulations establish guidelines for the establishment, structure, and operation of methadone clinics, in most cases requiring patients to obtain their methadone in person at one fixed site. After a period of time, some of these patients are allowed to take methadone home from the facility to self-administer while they remain closely monitored. This onerous regulatory system has led to an undersupply in methadone treatment facilities for patients in need. Furthermore, the need for patients to travel, often long distances, each day to the clinic to receive their daily dose has been an obstacle to their obtaining and complying with the treatment program.

Earlier this month addiction specialists from the Boston University School of Medicine and Public Health and the Massachusetts Department of Public Health argued in the New England Journal of Medicine that community physicians interested in the treatment of Substance Abuse Disorder should be allowed to prescribe methadone to their patients seeing them in their offices and clinics. Doctors have been allowed to prescribe the opioid buprenorphine for medication-assisted treatment of addiction for years, and in recent years nurse practitioners and physicians’ assistants have been able to obtain waivers that allow them to engage in medication-assisted treatment as well.

The authors noted that methadone has been legally prescribed by primary care providers to treat opioid addiction in other countries for many years— in Canada since 1963, in the UK since 1968, and in Australia since 1970, for example. They state, 

Methadone prescribing in primary care is standard practice and not controversial in these places because it benefits the patient, the care team, and the community and is viewed as a way of expanding the delivery of an effective medication to an at-risk population.

Policymakers serious about addressing the ever-increasing overdose rate from (mostly) heroin and fentanyl afflicting our population should take a serious look at reforming the antiquated regulations that hamstring the use of methadone to treat addiction.

The Trump administration has announced it is suspending so-called “risk adjustment” payments to insurers who participate in ObamaCare’s Exchanges, and cutting spending on so-called “navigators,” who help (few) people enroll in ObamaCare plans. 

The Washington Post’s Catherine Rampell and other ObamaCare supporters are calling these steps sabotage. In fact, what these steps will do is make the costs of ObamaCare’s supposedly popular preexisting-conditions provisions more transparent.

Risk-Adjustment (Bailout) Payments to Insurers

ObamaCare’s so-called “risk adjustment” program exists to funnel money to insurers who enroll lots of sick people who cost more in claims than they pay in premiums. Without it, insurers probably wouldn’t participate in ObamaCare. We may therefore confidently describe the risk-adjustment program as a bailout designed to rescue insurers from the costs of ObamaCare’s preexisting-conditions provisions. 

The risk-adjustment program does a better job of protecting insurance companies than sick patients. Those preexisting-conditions provisions literally punish insurers for offering coverage that the sick find attractive. They therefore create powerful financial incentives for insurers to make their offerings unattractive to the sick.

The risk-adjustment program is supposed to counteract those incentives. Anecdotal evidence and empirical research both show it’s not working. The risk-adjustment program is failing to counteract the perverse incentives that ObamaCare itself creates. ObamaCare coverage is therefore getting worse for many sick patients. Don’t worry, the insurance companies come out okay. Insurers can mitigate whatever losses the bailouts don’t cover with even more restrictive benefit designs to keep the sick away. Sick patients fare less well.

Reducing or eliminating spending on the risk-adjustment program would reveal more of the harms of the preexisting-conditions provisions. More of the cost would fall on insurers, who would respond by offering even more restrictive coverage, or exiting the market. More such transparency might finally push Congress to repeal those provisions and put health care for the sick on a more stable footing. 

In February, a federal district court in New Mexico ordered the Centers for Medicare & Medicaid Services to cease using its methodology for making risk-adjustment payments until the agency adequately explains that methodology. On July 7, the agency announced it will not make any risk-adjustment payments until the issue is resolved.

The insurers will eventually get their bailouts. But the delay will cost them money and add uncertainty to the process. Those effects in turn may lead insurers to take even greater steps to protect themselves from the costs of the preexisting-conditions provisions—thereby making those costs more transparent.

Cutting Navigator Spending

ObamaCare authorizes CMS to make grants to “navigators”—i.e., groups who are supposed to help people enroll in ObamaCare plans. They are a waste of taxpayer money, and likewise hide the costs of ObamaCare’s preexisting-conditions provisions.

According to CMS, navigators received $63 million for plan year 2017 and $36 million for plan year 2018. In both years, they signed up less than 1 percent of ObamaCare enrollees. “During grant year 2016–2017,” CMS reports, “seventeen of those Navigators enrolled fewer than 100 people at an average cost of $5,000 per enrollee.” That’s more than the cost of the health insurance, in many cases. The Wall Street Journal reports, “One grantee took in $200,000 to enroll a grand total of one person. The top 10 most expensive navigators collected $2.77 million to sign up 314 people.” The Las Vegas Review-Journal editorializes, accurately, “the navigator scheme is a make-work government jobs program rife with corruption and highly susceptible to scam artists. It’s a slush fund for progressive constituent groups.”

The navigator program also hides the cost of ObamaCare’s preexisting-conditions provisions. Since the sick will reliably enroll in ObamaCare even without navigators, those whom navigators end up enrolling are going to be disproportionately healthy. Thus navigators are also helping to hide the costs of those provisions by spreading the costs across more (healthy) people. Cutting spending on navigators will likewise reveal more of the costs of those provisions.

The Trump administration announced it is cutting spending on navigators to $10 million for plan year 2019. It should eliminate the program entirely. The less the federal government spends on navigators, the more transparent ObamaCare’s costs will be.

* * * 

When ObamaCare supporters complain about such steps, they are describing transparency as sabotage. Think about what that means.

Any day now, the Trump administration will release a final rule allowing greater consumer protections in so-called “short-term, limited duration insurance,” a category of health insurance Congress exempts from federal health insurance regulations, including ObamaCare regulations. In comments I filed on the proposed version of the Trump administration’s rule and an accompanying Wall Street Journal oped, I explained some but not all of the benefits of allowing these consumer protections. What follows is updated and new information about the benefits of allowing those consumer protections.

Introduction

In 2016, the Obama administration arbitrarily prohibited certain consumer protections in short-term plans. First, it exposed sick consumers to underwriting and loss of coverage by shortening the maximum duration of short-term plans from 12 months to 3 months. Second, it prohibited “renewal guarantees” that would protect consumers who develop expensive illnesses from ever facing underwriting or losing their coverage.

Last year, President Trump urged the Department of Health and Human Services to allow short-term plans to last 12 months and to allow consumers to bridge together consecutive short-term plans with “renewal guarantees” that protect them from being re-underwritten after they get sick. With ObamaCare premiums soaring and the consulting firm Avalere warning of “substantial increases” in ObamaCare premiums for 2019, these consumer protections would mean “consumers could purchase health-insurance protection for 90% less than the cost of the average ObamaCare plan.” Renewal guarantees would keep people with expensive conditions out of ObamaCare plans, thereby improving ObamaCare’s pools and reducing the cost of ObamaCare. Along the way, allowing these consumer protections would “increas[e] transparency in government and provid[e] voters and policymakers with better information about the cost of the ACA.”

Thirty-five senators sent a letter to the Trump administration citing my regulatory comments and urging the administration to implement both changes. But there’s more.

Critics Agree: Expanding Short-Term Plans Would Cover More Americans

The American Action Forum has a roundup of economic projections of the impact of allowing these consumer protections. Every organization that has modeled these changes, including those that oppose them, has found they would increase the number of Americans with health insurance.

• Congressional Budget Office: 1 million additional insured by 2023
• Urban Institute: 1.7 million additional insured in 2019
• Commonwealth Fund: as many as 2.2 million additional insured by 2020
• Center for Health and Economy: 2.3 million additional insured by 2020

These projections indicate that expanding short-term plans would produce significant social-welfare gains. The Urban Institute, for example, projects 2.2 million consumers would leave ObamaCare plans for short-term plans because they would “prefer STLD to ACA-compliant plans.” This suggests a large increase in consumer welfare. Similar welfare gains would result from as many as 1.7 million previously uninsured Americans enrolling in short-term plans with the proposed consumer protections.

Protecting Conscience Rights

An often-overlooked benefit of allowing these consumer protections in short-term plans is that they would free consumers to avoid coverage they do not want, including coverage that may violate their religious convictions.

ObamaCare requires all health insurance plans to cover all FDA-approved forms of birth control. This requirement forces devout Catholics and others to choose between going without health insurance or paying to support a practice they believe is an offense against God. The Trump administration has taken steps that protect conscience rights for some employers. But these changes do not protect all employers, much less all consumers.

Since short-term plans are exempt from ObamaCare’s contraceptives mandate, allowing them to offer 12-month terms and renewal guarantees would give Catholics and others full freedom to purchase secure health insurance without violating their religious beliefs. 

As Susan Marquis and colleagues noted prior to the creation of ObamaCare, “Purchasers derive value from having the range of choices that the individual market offers.” The range of health insurance choices would expand, and consumer welfare would increase not captured by premium reductions, if the Trump administration allows short-term plans to offer consumers a wider range of secure coverage options.

Improving ObamaCare’s Risk Pools

Finally, renewal guarantees would improve ObamaCare’s risk pools by keeping potentially millions of expensive patients out of ObamaCare plans.

There is a sizeable if underappreciated literature showing that renewal guarantees keep premiums low, and therefore provide secure coverage, to patients after they develop expensive medical conditions. In “Incentive-Compatible Guaranteed Renewable Health Insurance Premiums” (Journal of Health Economics, 2006), Bradley Herring and Mark Pauly explain the concept of renewal guarantees: 

A person initially in good health who develops a chronic illness may expect to have above-average expenses in subsequent years. If the annual insurance premium is set proportional to expected expense in each year, someone who contracts a multi-year condition would face a substantial and unexpected jump in premiums—something public policy finds undesirable and something which a risk-averse person would prefer to avoid. A potential solution to this problem is for the insurance policy purchased when the individual is still in good health to contain a guaranteed renewability (GR) provision which stipulates that no insured’s future premium for the given policy will increase more than any other insured’s premium increases. Thus, people who unexpectedly become high-risk will pay the same premium as those who remain low-risk.

In “Guaranteed Renewability in Insurance” (Journal of Risk and Uncertainty, 1995), Mark Pauly, Howard Kunreuther, and Richard Hirth explain, “Effectively, [with a renewal guarantee,] the consumers initially prepay enough premiums to cover the excess losses of everyone who becomes a high risk.” See also John Cochrane, “Time-Consistent Health Insurance” (Journal of Political Economy, 1995).

Researchers have found considerable evidence that, prior to ObamaCare, widespread renewal guarantees in the individual market worked as theory predicts: they provided secure, long-term insurance for those who develop expensive illnesses. In “Pooling Health Insurance Risks” (American Enterprise Institute, 1999), Pauly and Herring found that renewal guarantees make premiums affordable for high-cost patients: 

The overarching message from these data is that nongroup premiums do vary with risk, but not nearly as strongly as would be consistent with vigorous risk rating. Perhaps more important, they do not vary at all with risk as measured by chronic conditions…This is not to deny that some people pay very high premiums for their coverage, and that some of the people who do so are high risks. Apparently, however, many high risks do not pay higher-than-average nongroup premiums.

In “Individual Versus Job-Based Health Insurance: Weighing The Pros And Cons” (Health Affairs, 1999), Mark Pauly, Allison Percy, and Bradley Herring write:

In other words, there was substantial cross-subsidization of high-risk by low-risk persons in the individual insurance market in a period in which there was only minimal state regulation. Premiums do rise with risk, but the increase in premiums is only about 15 percent of the increase in risk. Premiums for individual insurance vary widely, but that variation is not very strongly related to the level of risk.

From an economic viewpoint, the main problem with risk rating is…that the occurrence of an extended illness may subject buyers to the risk that their premium may jump, potentially by several multiples. While a thousand-dollar jump in one’s annual premium may seem trivial compared with the high medical bills the insurance will cover, risk-averse persons would prefer to avoid it. There is a simple way to do so: Buy insurance when healthy but pay extra for guaranteed renewability or protection from cancellation.

The evidence indicates that even before the Health Insurance Portability and Accountability Act (HIPAA) became effective in 1997, the majority of individual policies contained this feature. The intent of guaranteed renewability can be circumvented (for example, by canceling all policies in a class), but it usually is not, for the obvious reason that sale of this feature requires that it be effective most of the time…In recent years some states have required guaranteed renewability, but it is apparent that this was a common feature of individual (not small-group) policies even before it was required. The presence of guaranteed renewability may account in part for the moderate increase in paid premiums with risk, noted earlier.

In “How Private Health Insurance Pools Risk” (NBER Reporter, 2005), Pauly writes:

Although there have been some anecdotes about insurers slipping out of their policy provision to renew coverage at group average premiums for high risks by canceling the coverage entirely, we conclude that on average guaranteed renewability works in practice as it should in theory and provides a substantial amount of protection against high premiums to those high risk individuals who bought insurance before their risk levels changed. The implication is that, although there are some anecdotes about individual insurers trying to avoid covering people who become high risk (for example, by canceling coverage for a whole class of purchasers), the data on actual premium-risk relationships strongly suggest that such attempts to limit risk pooling are the exception rather than the rule.

Indeed, Pauly concludes, guaranteed renewability does such a good job at protecting the sick from higher premiums, regulations that prohibit charging higher premiums to the sick (i.e., community rating) don’t change much:

We find that regulation modestly tempers the (already-small) relationship of premium to risk, and leads to a slight increase in the relative probability that high-risk people will obtain individual coverage. However, we also find that the increase in overall premiums from community rating slightly reduces the total number of people buying insurance. All of the effects of regulation are quite small, though. We conjecture that the reason for the minimal impact is that guaranteed renewability already accomplishes a large part of effective risk averaging (without the regulatory burden), so additional regulation has little left to change.

In “Consumer Decision Making in the Individual Health Insurance Market” (Health Affairs, 2006), Susan Marquis et al. find the lower premiums that renewal guarantees make available to the sick made the individual market “a source of long-term coverage for a large share of subscribers.” This occurs because enrollees who purchase coverage and then later become sick “are not placed in a new underwriting class.” The authors attribute this to renewal guarantees: “We also find that there is substantial pooling in the individual market and that it increases over time because people who become sick can continue coverage without new underwriting.” The authors also found that, despite underwriting, “a large number of people with health problems d[id] obtain coverage” in the individual market pre-ObamaCare. The authors conclude:

Our analysis confirms earlier studies’ findings that there is considerable risk pooling in the individual market and that high risks are not charged premiums that fully reflect their higher risk. Moreover, guaranteed renewal and underwriting only at initial enrollment appear to help promote pooling to some extent, and they protect subscribers from financial consequences associated with changes in their health status.

In “Risk Pooling and Regulation: Policy And Reality in Today’s Individual Health Insurance Market” (Health Affairs, 2007), Pauly and Herring found that as a result of renewal guarantees:

Analysis of new data on the relationship between and premiums and coverage in the individual insurance market and health risk shows that actual premiums paid for individual insurance are much less than proportional to risk, and risk levels have a small effect on obtaining coverage. States limiting risk rating in individual insurance display lower premiums for high risks than other states, but such rate regulation leads to an increase in the total number of uninsured people. The effect on risk pooling is small because of the large amount of risk pooling in unregulated [i.e., guaranteed-renewable] individual insurance…

As the MEPS data show, the predicted high risks (above the median) had both high expected expenses (before the fact) and high actual expenses (after the fact); they were roughly four times higher compared with the bottom half. But the premiums that higher-risk people actually paid were only, on average, about 1.6 times those of lower-risk people…At least half of their higher expected expense appears to be pooled, even in the individual market…

Premiums were definitely far from proportional to risk, so there was a substantial amount of risk pooling present…Although in these data people of a given age and sex with chronic health conditions paid higher premiums than people without such conditions, individual insurance, through guaranteed renewability or some other device, pooled 84.5–88.5 percent of the risk…

Yet again in “Incentive-Compatible Guaranteed Renewable Health Insurance Premiums” (Journal of Health Economics, 2006), Herring and Pauly find “evidence that guaranteed renewability provisions appear to be effective in providing protection against reclassification risks in individual health insurance markets.”

Perhaps the strongest evidence that renewal guarantees will keep high-cost patients out of ObamaCare’s risk pools comes from “How Risky Is Individual Health Insurance?” (Health Affairs, 2008), in which Mark Pauly and Robert Lieberthal find that guaranteed-renewable, individual-market insurance often does a better job than employer-sponsored insurance of providing secure coverage to patients with high-cost illnesses. As the below graph shows, high-cost patients with guaranteed-renewable coverage are roughly half as likely to end up uninsured as high-cost patients with small-group coverage, and unlike employer-sponsored coverage, the risk of losing guaranteed-renewable coverage does not rise with health risk.

The more high-cost patients that renewal guarantees can keep from losing their non-ObamaCare plans–including, as I discuss in my regulatory comments and Wall Street Journal oped, those enrolled in employer plans–the fewer high-cost patients will enroll in ObamaCare plans and the more stable and less costly ObamaCare will be.

Conclusion 

Giving consumers the choice of purchasing renewal guarantees, either in conjunction with a short-term plan or as a standalone product protecting enrollees from re-underwriting in that market, would produce significant benefits well in excess of any costs. It would increase the number of Americans with health insurance, allow Americans to purchase insurance that respects their religious beliefs, and improve ObamaCare’s risk pools.