Cartoon – Steaming Pile of Failure
Monthly Archives: February 2018
California confronts the complexities of creating a single-payer healthcare system
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-singlepayer-20180209-story.html
California Assembly Speaker Anthony Rendon may have expected to torpedo the idea of a statewide single-payer healthcare system for the long term last June, when he blocked a Senate bill on the issue from even receiving a hearing in his house.
He was wrong, of course. His shelving of the Senate bill created a political uproar (including the threat of a recall effort), forcing him to create a special committee to examine the possibility of achieving universal health coverage in the state. On Monday and Wednesday, the Select Committee on Health Care Delivery Systems and Universal Coverage held its final hearings.
The panel ended up where it started, with the recognition that the project is hellishly complex and politically daunting but still worthwhile — yet can’t happen overnight. “I’m anxious to see what it is that we can actually be working on this year,” committee Co-Chair Jim Wood (D-Healdsburg) said toward the end of Wednesday’s seven-hour session. “Some of the logistics and the challenges we have to deal with are multiyear challenges.”
The No. 1 experience missing from the American healthcare system is peace of mind.
Little has changed since last year, when a measure sponsored by the California Nurses Assn., SB 562, passed the Senate in June and was killed by Rendon (D-Paramount) in the Assembly. The same bill, aimed at universal coverage for all residents of the state, including undocumented immigrants, is the subject of the select committee’s hearings and the template for statewide reform.
Backers of the Healthy California program envisioned by the bill feel as if they’re in a race with federal officials intent on dismantling healthcare reforms attained with the Affordable Care Act, and even those dating from the 1960s with enactment of Medicare and Medicaid.
In just the last few weeks, the U.S. Department of Health and Human Services has approved adding a work requirement to Medicaid in Kentucky and begun considering a plan to place lifetime limits on Medicaid benefits — profound changes in a program traditionally aimed at bringing healthcare to needy families.
The Republican-controlled Congress effectively repealed the individual mandate in the Affordable Care Act. That is likely to drive up premiums for unsubsidized middle-income insurance buyers and has prompted California and other states to consider implementing such a mandate on their own. (Idaho is moving distinctly in the opposite direction from California, proposing to allow “state-based health plans” that allow insurers to discriminate against applicants with pre-existing conditions.
Healthy California would be the most far-reaching single-state project for universal health coverage in the nation. That’s to be expected, since the state’s nation-leading population (39 million) and gross domestic product ($2.6 trillion) provide the impetus to solve big social and economic issues on its own.
The program would take over responsibility for almost all medical spending in the state, including federal programs such as Medicare and Medicaid, employer-sponsored health plans, and Affordable Care Act plans. It would relieve employers, their workers and buyers in the individual market of premiums, deductibles and co-pays, paying the costs out of a state fund.
All California residents would be eligible to obtain treatment from any licensed doctor in the state. Dental and vision care and prescription drugs would be included. Insurance companies would be barred from replicating any services offered by the program.
Doctors and hospitals would be paid rates roughly analogous to Medicare reimbursements, and the program would be expected to negotiate prices with providers and pharmaceutical companies, presumably by offering them access to more than 39 million potential patients.
Wood stressed that the goal of reform is to lower healthcare prices, or at least to slow the rate of growth. Yet that may mean focusing on the wrong challenge.
The mechanics of cost reduction aren’t much of a mystery. As several witnesses at the latest hearings observed, the key is reducing unit prices — lower prices per dose of drug, lower reimbursements for physicians and hospitals, all of which are higher in the U.S. than the average among industrialized countries. It will also help to remove insurance industry profit and overhead (an estimated 15% of healthcare spending), not to mention the expenses they impose on billing departments at medical offices and hospitals, from the system.
The real challenge, however, lies in the politics of transitioning to a new healthcare system. Advocates of reform often overlook an important aspect of how Americans view the existing system. Although it’s roundly cursed in the abstract, most people are reasonably satisfied with their coverage.
That’s because most people seldom or never experience difficult or costly interactions with the healthcare system. Horror stories of treatments denied and astronomical bills charged are legion. But the truth is that annual healthcare spending is very heavily concentrated among a small number of people.
The top 5% of spenders account for half of all spending, the top 20% of spenders for about 80%. According to the National Institute for Health Care Management, the bottom 50% of spenders account for only about 3% of all spending.
These are annual figures, so over a lifetime any person may have more contacts with the system. But that may explain why it’s hard to persuade Americans to abandon a system many consider to be just good enough for something entirely new, replete with possibilities that it could turn out to be worse.
The nurses association is pegging its reform campaign to the uncertainties built into the existing system. “The experience of most Americans is that they’re satisfied with what they’re getting, but there’s a great deal of anxiety,” says Michael Lighty, the group’s director of public policy. “The No. 1 experience missing from the American healthcare system is peace of mind. People are not afraid that what they have will be taken away, but that what they have will not be adequate for what they need.”
In terms of funding, the idea is for the state to take over the $370 billion to $400 billion a year already spent on healthcare in California. (The higher estimate is from the state Legislative Analyst’s Office, the lower from the nurses association.) That includes $200 billion in federal funds, chiefly Medicare, Medicaid, and Obamacare subsidies; and an additional $150 billion to $200 billion in premiums for employer insurance and private plans and out-of-pocket spending by families.
University of Massachusetts economist Robert Pollin, the nurses’ program consultant, estimates that the program will be about 18% cheaper than existing health plans, thanks to administrative savings, lower fees for drugs, physicians, and hospitals, and a step up in preventive services and a step down in unnecessary treatments.
That would leave about $106 billion a year, as of 2017, needed to replace the employer and private spending that would be eliminated. Pollin suggests doing so through an increase of 2.3% in the sales tax and the addition of a 2.3% gross receipts tax on businesses (or a 3.3% payroll tax, shared by employers and workers), instead of the gross receipts tax. Each levy would include exemptions for small businesses and low-income families.
Anyone with experience in California tax politics knows this is a potential brick wall. Taxes of this magnitude will generate intense opposition, despite the nurses’ argument that relief from premiums and other charges means that families and business will come out ahead.
But that’s not the only obstacle. A workaround would have to be found for California Constitution requirements that a portion of tax revenues be devoted to education. A California universal coverage plan would require “a high degree of collaboration between the federal government and the state,” Juliette Cubanski of the Kaiser Family Foundation told the committee Monday. Waivers from Medicare and Medicaid rules would have to be secured from the Department of Health and Human Services; redirecting Medicare funds to the state might require congressional approval.
A federal law that preempts state regulations of employee health benefits might limit how much California could do to force employer plans into a state system.
Obtaining the legal waivers needed from the federal government to give the state access to federal funds would take two to three years “with a friendly administration,” Wood said. “We don’t have a friendly administration now.”
Advocates of change are understandably impatient in the face of rising healthcare costs and the federal government’s hostility to reform. Shocked gasps went up from the hearing audience Wednesday when Wood casually remarked, “It is absolutely imperative that we slow this down.” Startled by the reaction, he quickly specified that he meant “slow the costs down.”
The desire to pursue the goal of universal coverage, whether through a single-payer model or a hybrid, plainly remains strong in Sacramento, in the face of the vacuum created by the Republican Congress and Trump White House.
As Betsy Estudillo, a senior policy manager for the California Immigrant Policy Center put it at Wednesday’s hearing, “The nation needs California’s leadership, now more than ever.”
Interpreting National Health Expenditure Projections: Issues And Challenges
https://www.healthaffairs.org/do/10.1377/hblog20180214.597384/full/
Health Affairs today published the projections for health spending over the next decade from the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary. The top line estimate is that health spending will grow at 5.5 percent per year through 2026. This rate is about halfway between the pre-recession rate of 7.3 percent and the exceptionally low rate (3.8 percent) experienced during the recession and immediate aftermath. This projected spending growth is 1 percentage point above expected gross domestic product (GDP) growth, a smaller gap than for almost any 10-year period since 1990. These non-partisan, thorough projections are a valuable benchmark for all stakeholders anticipating the fiscal footprint of the health care system on the economy, but there are several important issues to keep in mind.
Modeling What Spending Would Be Under Current Law, Not What It Will Most Likely Be
First, these projections are predicated on “current law”. The authors are not trying to predict what spending will most likely be. Such a prediction exercise would require assessments of how policy may change. For example, will the low-fee trajectories called for by the Medicare Access and CHIP Reauthorization Act (MACRA) and the Affordable Care Act (ACA) productivity adjustments be realized? What will be the future of the ACA? The authors here don’t attempt to incorporate the answers to these questions. They assume that the current law will persist. Last week’s budget legislation, which included the repeal of the Medicare Independent Payment Advisory Board and other health care changes, illustrates this point because it came too late to be included in these projections. This highlights how quickly and unpredictably law and policy can change.
An Uncertain Environment
Second, as the authors recognize, there is considerable uncertainty around these projections. During the recession, we experienced a dramatic slowdown in the rate of growth in “use and intensity” of care, a catch-all phrase capturing more physician visits, hospital stays, lab tests, etc. As the ACA was implemented, use and intensity rebounded, capturing both a return to a more common rate of growth and an increase attributable to coverage expansion. (If there is one thing we know well it is that greater coverage generates greater utilization.)
The assumption moving forward is that use and intensity will revert to historical patterns, affected a bit by benefit design changes. The impact of payment reforms, in both the public and private sector, is largely not reflected in these projections. That assumption is certainly reasonable given the modest impact of such changes to date, but payment systems continue to change and their impacts may grow, suggesting that perhaps use and intensity growth will be lower than projected.
Of course, uncertainty is not one sided. Other hypotheses, such as greater introduction of new technologies or weakening commitment to controlling utilization, would yield higher spending projections.
The Policies We Choose Matter
Third, and perhaps most importantly, the actual rate of health spending growth that we experience over the next decade, and beyond, depends on what we do. Health spending is not a natural phenomenon to be predicted like the tides. Our fate is not sealed. Our actions matter. We should not ask whether health spending growth will accelerate (or not). Instead we should ask if we will let it accelerate (or not). This requires complex choices.
It is tempting to read the projections such as those by Gigi Cuckler and her CMS colleagues with alarm. The notion that health care will consume almost 20 percent of the economy in 2026 is legitimately concerning because of the implications for future taxation or borrowing to maintain publicly financed health insurance programs. In fact, Kate Baicker and Jon Skinner predicted back in 2011 that if public health spending growth consistently exceeded national income growth by 1 percentage point and was financed by taxes (increased proportionately on all income groups), the tax rate for the upper income bracket in 2060 would need to rise to 70 percent. This is unlikely to happen, but we must act to make sure it does not.
The Dual Nature Of Health Spending: Consumption And Investment
The challenge, of course, is that health spending, on average, improves health. Therefore, actions to restrain resources devoted to health—including restricting access to health care or health insurance—run the risk of slowing or reversing improvements in health. Moreover, apart from the obvious benefit associated with access to health care services, many people rely on the health care sector for jobs. Heath care is in many ways both a tapeworm on the American economy and a Keynesian stimulus— cutting health spending will have economic consequences. Moreover, while creating jobs is not a justification for waste, lower spending growth can imply lower revenue growth for health care stakeholders, which presents a significant political problem.
These two perspectives are not as hard to balance as one may think. We do not need to cut heath care spending below current levels, just slow the rate of its growth. Moreover, resources not absorbed into the health care sector can be put to valued activities. (If there are not more valued activities for these incremental resources, then more spending on health care is justified).
Beyond How Much We Spend: Does It Bring Value And How Will We Finance It?
Finally, all of this highlights the heterogeneity in value associated with greater health spending. We currently pay higher prices in the United States than in other countries. While health care price inflation slowed between 2014 and 2016, the projections assume that price growth in health care will exceed general inflation. While we cannot conclude that prices in the United States should match those in other countries (there are many differences in our economies), much of the reason for high and growing prices in the United States is a lack of competition associated with consolidation in the health care sector (largely in the commercial sector) and other institutional features. Paying too much for care or other services not only distorts behavior, but also represents a transfer from the broad population to the health care sector. Policy actions to address this issue should be high on the agenda.
Use and intensity also varies in value. While innovation and delivery of appropriate care is the centerpiece of a high-value health care system, our system too often provides care that offers little or no health benefit. Great strides have been made to quantify low value care, through initiatives such as Choosing Wisely, but a lot remains unmeasured. Eliminating such care is hard because the value of care depends on patient traits and delivery system reform requires motivation of influential and invested stakeholders, which does not occur rapidly. Nevertheless, efforts to move in this direction are important.
Ultimately, the question we should ask when we ponder projections of higher health spending is this: Will we get enough value for the added spending? We should also ask how we should finance this spending: Any way we do so—through taxation, higher premiums or cost sharing at the point of service—has dramatic distributional and moral implications.
There are no simple answers to these questions, politically or operationally. One thing is clear: We cannot continue to publicly finance health spending if it grows 1 percentage point faster than GDP. We are not in crisis yet, but at this rate, eventually we will be. Yet, changing health care takes time. Many innovations in both payment and benefit design show promise, but success is uncertain. With luck (or more importantly dedication and hard work) we will be able to spend less than these projections suggest and maintain, or even improve, the care delivered to Americans. Unless we keep trying, however, we will fail.
Will Federal Courts Uphold Trump Administration Medicaid Waiver Approvals?
https://www.healthaffairs.org/do/10.1377/hblog20180213.18720/full/
Court decisions are likely to have an enormous impact on the future of the Medicaid program. On January 12, the Centers for Medicare and Medicaid Services (CMS) announced approval of a Medicaid demonstration waiver in Kentucky incorporating unprecedented restrictions on Medicaid eligibility for adults. These restrictions have been summarized by Sara Rosenbaum on Health Affairs Blog in the context of a powerful review of Medicaid demonstration law and policy. Kentucky’s new waiver includes not only a highly publicized “work/community engagement” requirement, but additional elements new to Medicaid including lockouts for beneficiaries who do not complete the annual renewal process or who fail to report changes in income.
Twelve days after the CMS approval announcement, the Kentucky Equal Justice Center, the Southern Poverty Law Center, and the National Health Law Program filed suit to stop the waiver in U.S. District Court for the District of Columbia, representing 15 Medicaid beneficiaries in Kentucky. Similar lawsuits are virtually certain as Medicaid waivers imposing new coverage and benefits restrictions on adults are approved in Indiana and likely other states.
Why The Current Round Of 1115 Waivers Are Different
As noted by Sara Rosenbaum, Nicholas Bagley, and others, there is a limited history of federal lawsuits challenging Medicaid section 1115 demonstrations. But it is important to note the reason there have been few of these legal challenges: until 2018, over its 50-plus year history, Medicaid waiver authority was almost exclusively used to expand Medicaid eligibility and benefits rather than to restrict them, or to try a different approach to delivering existing benefits. When I oversaw Medicaid 1115 waiver review from 2013 to early 2017, the Obama administration agreed to try a variety of conservative ideas under Medicaid waiver authority for the Affordable Care Act (ACA) adult expansion population. But each of these ideas was tied into a good faith hypothesis about potential improved access or benefits within the Medicaid program. Premiums were to be tested as an alternative to cost-sharing in some states or in combined premium/cost-sharing approaches that sought to encourage and incentivize healthy behaviors; private marketplace plan networks were to be tested and evaluated as an alternative to traditional Medicaid providers; the impact of the Non-Emergency Medical Transportation benefit on unmet need would be measured closely to see if eliminating the benefit helped or hurt self-reported access to care.
The approvals in Kentucky and Indiana, and possible pending approvals in other states, base their legal claim to be promoting the objectives of the Medicaid program on a far more brazen and cynical premise. The waiver approvals assert that taking away Medicaid from statutorily eligible individuals can act as an incentive that ultimately improves health: either by forcing the beneficiary to get a job to stay insured in the case of work requirements, or by “educating beneficiaries on enrollment requirements” in the case of lockouts from eligibility for beneficiaries who fail to complete an annual renewal or inform the state of income changes.
Because the hypothesized Medicaid objectives are so dubious, a lot more than these specific waiver requests rests on the plaintiffs’ case in these states. At risk are not only specific Medicaid eligibility principles, but the entire statutory enterprise of congressional legislation of mandatory Medicaid eligibility or benefits of any kind. Consider what it would mean for Medicaid law were the justifications upheld: if waivers can overturn congressional Medicaid eligibility guarantees and claim to promote Medicaid objectives because Medicaid itself is a barrier to health, or because cutting off eligibility is a way to teach people about private insurance or enforce compliance with new extra-statutory eligibility requirements, then there is no meaningful legal limit on state waivers of federal Medicaid eligibility law. Congress’s ability—in place since 1965 and upheld in hundreds of federal court decisions—to mandate that state Medicaid agencies cover specific categories of individuals for specific periods of time and with specific benefits will be subject to an extra-statutory waiver process in toto.
Will courts allow it anyway? After all, section 1115(a) defining the scope of the demonstration authority specifically references “the judgment of the Secretary”, suggesting executive branch latitude.
Will Courts Overturn Work Requirements?
But there are a number of important legal and contextual factors that point to court action to overturn these waiver approvals. First, the work requirement component of these waivers is a particularly blatant attempt to achieve under waiver authority what could not be achieved via statutory change. Both the House and primary Senate version of “repeal and replace” 2017 included state options to impose work requirements in Medicaid. These efforts—in a rather high-profile manner—failed to pass Congress. Courts will be considering the tactic of the executive branch trying to change the Medicaid program via demonstration waivers when it failed to change the law.
Second, the primary federal court precedent for judicial review of Medicaid section 1115 demonstrations sets a high bar for legal scrutiny. Although (as summarized by Nicholas Bagley) the courts historically authorized some restrictive state section 1115 waivers with regard to Aid to Families with Dependent Children (AFDC) cash welfare in the name of supporting transitions to independence, these decisions were tied to a statutory framework for the AFDC program that itself supported transitions to work as an explicit goal beginning in the 1960s. This is not true when it comes to Medicaid: Medicaid’s statutory framework is as an ongoing health insurance program, and it now covers 70 million people, many times the enrollment level in AFDC/Temporary Assistance for Needy Families (TANF) over its history. And the limited court challenges to Medicaid section 1115 waivers have had a high success rate, with courts insisting that not only meet the “promote Medicaid objectives” standard but that they meet an additional level of scrutiny regarding research or experimental value relative to the health policy literature. Strikingly, the court in Newton-Nations v. Betlach—the primary precedent for Medicaid waiver judicial review—approvingly cited expert testimony on the health policy literature as evidence for why further research on cost-sharing was not needed. If judges are citing literature reviews to question whether waiver hypotheses involve groundbreaking experiments, that does not indicate a high degree of judicial deference.
Third, we have had strong indications in the last year that federal courts are not working with an assumption of good faith in stated agency rationales, particularly when significant published information from Trump administration leaders contradicts those ostensible public rationales. Judicial skepticism has extended from presidential tweets cited as evidence of discriminatory intent in immigration cases, to asserting “invidious partisan intent” in drawing of voting districts. And the Trump administration has made abundantly clear that its reasons for supporting restrictions on adult Medicaid enrollment have nothing to do with health: CMS Administrator Seema Verma has repeatedly stated her broad opposition to Medicaid coverage of low-income non-disabled adults as such, and the Trump administration worked vigorously to undo the Medicaid expansion during the ACA repeal effort in Congress.
Fourth, the fact that states are pairing work requirement waivers with other extra-statutory restrictions on Medicaid eligibility undermines whatever health claims they are making regarding the work requirement. With the exception of Mississippi—a state with Medicaid income eligibility levels for adults that are so low virtually no employed adults qualify—every state that has proposed a work requirement has also proposed to waive Medicaid law in other ways to take away coverage. Kentucky’s and Indiana’s new “lockout” provisions that will bar people from Medicaid for six months if they fail to report a change in income or if they fail to submit an annual redetermination of eligibility will likely lead to dramatic reductions in Medicaid coverage, given the high rates of enrollment churn associated with Medicaid’s unique annual redetermination requirements. States that are trying to cut Medicaid coverage for adults in multiple ways and a federal Administration that opposes Medicaid coverage of non-disabled adults would appear to be attacking Medicaid coverage of adults any way they can. They will not make for persuasive exponents of the health benefits of work requirements.
The pending litigation will be the first time the courts have thoroughly defined the scope of executive branch section 1115 waiver authority in Medicaid. As a matter of law and policy, one way or another this important part of the Medicaid program and the American health system will likely be changed by the time the federal courts have completed their adjudication. Many thousands of lives will be at stake. But with multiple judicial imperatives at stake as well, there is good reason to expect that the courts will step in.
KHN’s ‘What The Health?’ What Do The Budget, Idaho And FDA Chief Scott Gottlieb Have In Common?
President Donald Trump released his first full budget proposal this week, with many recommended cuts and some major changes to health programs. But Congress has already agreed on most spending levels for next year, so this budget is even more likely to be ignored than a typical presidential budget plan.
Meanwhile, states are trying to cope with last year’s changes to the Affordable Care Act in very different ways. Several states, mostly led by Democrats, are considering whether to set penalties for people who don’t have insurance — a provision of the ACA that Congress repealed in December. Idaho, meanwhile, is offering to let insurers sell plans that don’t cover the ACA’s required set of benefits and discriminate against people with preexisting health conditions.
Plus, Scott Gottlieb, commissioner of the Food and Drug Administration, talks about getting generic drugs to market faster and how the agency is working with Congress on ways to help patients with terminal illnesses get easier access to experimental treatments.
This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Stephanie Armour of The Wall Street Journal, Paige Winfield Cunningham of The Washington Post and Margot Sanger-Katz of The New York Times.
Among the takeaways from this week’s podcast:
- Even though few of the proposals in Trump’s budget are likely to be enacted, it does lay down some important markers for the administration. Those include backing sweeping changes to Medicaid and eliminating many of the ACA’s coverage requirements.
- Blue states considering stepping into the void left by Congress’ repeal of the individual insurance mandate penalties have limited time to act. Insurers start making decisions about whether to participate in the individual market in the spring.
- The FDA’s Gottlieb tells Rovner and KHN’s Sarah Jane Tribble he expects there will be a compromise on Capitol Hill on “right-to-try” legislation that would make it easier for patients with terminal illnesses to gain access to experimental therapies.
- Idaho is moving forward on its plan to allow insurers to offer policies that do not comply with the requirements of the Affordable Care Act. On Capitol Hill this week, Health and Human Services Secretary Alex Azar would not say whether the federal government will step up to stop them.
Idaho Blue Cross Jumps Into Controversial Market For Plans That Bypass ACA Rules
That didn’t take long.
It’s barely been two weeks since Idaho regulators said they would allow the sale of health insurance that does not meet all of the Affordable Care Act’s requirements — a controversial step some experts said would likely draw legal scrutiny and, potentially, federal fines for any insurer that jumped in.
On Wednesday, Blue Cross of Idaho unveiled a menu of new health plans that break with federal health law rules in several ways, including setting premiums based on applicants’ health.
“We’re trying to offer a choice that allows the middle class to get back into insurance coverage,” said Dave Jeppesen, the insurer’s executive vice president for consumer health care.
The firm filed five plans to the state for approval and hopes to start selling them as soon as next month.
The Blue Cross decision ups the ante for Alex Azar, the Trump administration’s new Health and Human Services secretary. Will he use his authority under federal law to compel Idaho to follow the ACA and reject the Blues plans? Or will he allow state regulators to move forward, perhaps prompting other states to take more sweeping actions?
At a congressional hearing Wednesday, even as Blue Cross rolled out its plans, Azar faced such questions.
“There are rules. There is a rule of law that we need to enforce,” Azar said. Observers noted, however, he did not specifically indicate whether the federal government would step in.
Robert Laszewski, a consultant and former insurance industry executive, thinks it should.
“If Idaho is able to do this, it will mean other … states will do the same thing,” he said. “If a state can ignore federal law on this, it can ignore federal law on everything.”
Idaho’s move stirs up more issues about individual insurance market stability.
Policy experts say that allowing lower-cost plans that don’t meet the ACA’s standards to become more widespread will pull younger and healthier people out of Obamacare, raising prices for those who remain. Supporters say that is already happening, so this simply provides more choices for people who earn too much to qualify for subsidies to help them purchase ACA coverage.
The state’s move to allow such plans, announced in January, drew harsh and swift criticism.
“Crazypants illegal,” tweeted Nicholas Bagley, a law professor at the University of Michigan and former attorney with the civil division of the U.S. Department of Justice, who said that states can’t pick and choose which parts of federal law to follow. Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, pointed out that health insurers could be liable for sharp fines if they are found to be in violation of the ACA.
But both Idaho regulators and Blue Cross officials say they are not worried.
Jeppesen said the ACA gives states regulatory authority “to make sure the market works and is stable,” and the insurer is simply “following what the state has given us guidance” to do.
Other insurers in Idaho are taking a much more cautious approach, telling The Wall Street Journal they are not stepping up immediately to offer their own plans.
Laszewski said they are likely waiting to see what legal challenges develop.
“If I were running an insurance company, there’s no way I would stick my neck out until the high court has ruled in favor of this — and they’re not going to,” he said.
Jeppesen said his company has consulted with legal experts and is moving ahead with confidence. The aim is to bring people back into the market, particularly the young, the healthy and those who don’t get a tax credit subsidy and can’t afford an ACA plan.
For some people — especially younger or healthier applicants — the new plans, which the insurer has named Freedom Blue, cost less per month than policies that meet all ACA rules.
They accomplish that by limiting coverage. If they are allowed to be sold, consumers will need to weigh the lower premiums against some of the coverage restrictions and variable premiums and deductibles, policy experts say.
The plans, for example, will include a “waiting period” of up to 12 months for any preexisting conditions if the applicant has been without coverage for more than 63 days, Jeppesen said.
Additionally, they cap total medical care coverage at $1 million annually. And premiums are based, in part, on a person’s health: The healthiest consumers get rates 50 percent below standard levels, while those deemed unhealthy would be charged 50 percent more.
All those caveats violate ACA rules, which forbid insurers from rejecting coverage of preexisting conditions or setting dollar caps on benefits or higher premiums for people with health problems.
But the rates may prove attractive to some.
Premiums for a healthy 45-year-old, for example, could be as low as $195 a month, according to a comparison issued by the insurer, while a 45-year-old with health problems could be charged $526. In that case, the 45-year old would find a lower price tag — $343 a month — for an ACA-compliant bronze plan.
While Freedom Blues plans cover many of the “essential health benefits” required under the ACA, such as hospitalization, emergency care and mental health treatment, they do not include pediatric dental or vision coverage. One of the five plans does not include maternity coverage.
When compared with one of the Blues’ ACA-compliant plans — called the Bronze 5500 — the new standard Freedom Blue plan’s annual deductibles are a mixed bag.
That’s because they have two separate deductibles — one for medical care and one for drugs. If a consumer took only generic drugs, the new plan would be less expensive, according to details provided by the plan. But with a $4,000 deductible for brand-name drugs, the Freedom Blue plan requires more upfront money before full coverage kicks in than the ACA-compliant plan it was compared with.
Jeppesen said the insurer hopes to attract many of the “110,000 uninsured state residents who cannot afford [ACA] coverage.”
That’s the total number of uninsured people who earn more than 100 percent of the federal poverty level in the state, he said.
Sarah Lueck, senior policy analyst for the Center on Budget and Policy Priorities, cautioned that some of those residents might actually be eligible for subsidies under the ACA, which are available to people earning up to four times as much.
“Many … could be getting subsidies for more comprehensive coverage through the [ACA-compliant state exchange] and would be better off,” Lueck said.
Importance of Culture
Cartoon – Remember We are all in this Together
Cartoon – All Those Opposed to My Idea
Cartoon – I’m not laughing at your jokes
HENRY KOTULA 