Category Archives: 2020 Election Issues

Hospital CEO says more price disclosure won’t bring down healthcare costs

Posted on by • Posted in 2020 Election Issues, American Hospital Association (AHA), Center for Medicare and Medicaid Services (CMS), Health Insurance Industry, Health Policy, Hospital Industry, Out of Pocket Expenses, Price Transparency, Pricing • Leave a comment

https://finance.yahoo.com/news/mount-sinai-hospital-ceo-more-price-disclosure-wont-bring-down-health-care-costs-161029331.html

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The Trump administration is pushing ahead with a new rule that could require hospitals to reveal the prices they negotiated with insurance companies. The White House says the move could help bring the free market into the murky world of health care.

The Trump administration is pushing ahead with a new rule that could require hospitals to reveal the prices they negotiated with insurance companies. The White House says the move could help bring the free market into the murky world of health care.

But the CEO of one of the nation’s largest hospital systems says the rule will just lead to more confusion for consumers.

“You won’t still know what your cost will be even when you look at our prices,” Dr. Kenneth Davis, CEO of the Mount Sinai Health System, told Yahoo Finance’s The First Trade. He says insurers like Cigna (CI), UnitedHealth (UNH), Anthem (ANTM) and Aetna parent CVS Health (CVS) should be the ones to house that information and help customers make sense of it.

“There are so many nuances in the insurance policies that going on our site isn’t going to tell you what you’re really going to pay,” he said. “You need the insurance information, and that’s the information that’s available from the insurance company. They know negotiated prices. So you’re really asking the wrong people to disclose the information.”

The rule could show how widely prices vary between regions and even at hospitals and clinics in the same city. In an interview with the Wall Street Journal, Centers for Medicare and Medicaid Services Administrator Seema Verma called it a “turning point in health care and a turning point to the free market in health care.”

But the hospital industry’s main lobbying group, the American Hospital Association, said in a statement that move could “seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry.”

Hospitals and insurance companies are notoriously secretive about their contract deals, something Dr. Davis attributes to competition between care providers and the insurance companies. Insurers are looking for the best deal, he said, while providers want the highest payment.

“Everyone’s worried about what they will then negotiate with the insurance company,” he said. “The insurance companies are worried, in turn, that other health networks like ours might ask for higher prices.”

Dr. Davis says regulators should be pushing the insurance companies and not the hospitals to disclose pricing.

“We have thousands of items that we would list items on,” he told Yahoo Finance’s Alexis Christoforous and Brian Sozzi. “If I have an insurance policy and I go online, I don’t know — still — what my co-pays and deductibles are going to be. Where that information should be is on the insurance company website.”

“I don’t have a problem disclosing that information,” he said. “I just think it’s important that people be able to use that information validly.

Without knowing what their insurance policy covers, he said, “they won’t know what they’re going to pay anyway.”

 

 

Trump to Sign Medicare Order as Part of Attack on Democrats’ Health-Care Message

Posted on by • Posted in 2020 Election Issues, ACA, Essential Health Benefits, Executive Orders, Health Insurance Coverage Adequacy, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Out of Pocket Expenses, Preexisting Conditions • Leave a comment

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Administration moves ahead to bolster Medicare Advantage plans and authorize lower-cost drug imports from Canada, as it takes on Medicare for All.

President Trump is preparing to sign an executive order next week on Medicare and moving ahead with allowing some drug imports from Canada, part of the administration’s effort to engineer a response to Democratic proposals that candidates say would expand health coverage to all Americans.

The executive order would aim to strengthen Medicare for 44 million Americans and portray the president as defending it against Democrats who want to expand it nationwide under their Medicare for All strategy, a White House official said Wednesday.

The administration on Wednesday also said it would allow the imports of some drugs from Canada, backing an idea most Democratic candidates have also said they support. More executive orders, including one on drug prices, are possible, according to a person familiar with the plans.

Mr. Trump is taking a two-pronged approach to his 2020 campaign message on health care, attacking Medicare for All as socialism and rolling out a blitz of health-care initiatives intended to position him as the person who can drive down costs and protect health care.

The president is expected to contrast the Democrats’ plans with his in a speech set for Aug. 6. “He’s going to indict and impugn the idea of Medicare for All,” a White House official said of the speech. Senior White House aides and agency officials are holding meetings several times a week on health care plans, the official said.

Democratic challengers say Mr. Trump has endangered coverage by backing cuts to Medicare and a lawsuit that could dismantle the Affordable Care Act.

“We are not about trying to take away health care from anyone,” Massachusetts Democratic Sen. Elizabeth Warren said during the candidates’ debate Tuesday. “That’s what the Republicans are trying to do.”

This week, the administration proposed a rule that would compel hospitals to disclose discounted rates with insurers. The president signed an executive order to overhaul kidney-disease care, and the White House relaxed restrictions on pretax health savings accounts so the money can be used on treatment to prevent disease.

Mr. Trump is expected to sign the Medicare executive order next week at The Villages, a Florida retirement community with 120,000 residents that is majority Republican.

Mr. Trump may call for agency action to bolster Medicare Advantage plans, which private insurers offer under contract with Medicare and cover about 22 million people, according to two people familiar with the executive order. The president is likely to focus on curbing waste and abuse in Medicare that can add to the program’s cost. In addition, the order may aim to let Medicare Advantage plans offer a wider array of supplemental benefits. The administration has already taken steps in this direction by letting home health-care providers become partners in the Medicare Advantage contracts.

Mr. Trump also is expected to push for changes that could lower the price of patient visits to hospital outpatient clinics, two of the people said. Those visits can cost more than visits to clinics operated by doctors. “This is part of the president’s broader vision to put American patients first,” one person familiar with the executive order said.

A White House spokesman declined to confirm the details or comment on the executive order.

House Republicans and Health and Human Services Secretary Alex Azar have criticized the plans from Democrats, saying they would end Medicare Advantage and imperil the Medicare program, which covers 44 million Americans.

“Our administration wants to strengthen the program, protect the program, make sure it’s sustainable over the long term,” Seema Verma, administrator at the Centers for Medicare and Medicaid Services, said Wednesday at a press event. “We need to work toward that instead of forcing so many more people onto the program.”

 

 

 

In Wednesday’s second Democratic debate, 7 of 10 candidates support Medicare for All

Posted on by • Posted in 2020 Election Issues, ACA, Essential Health Benefits, Health Insurance Coverage Adequacy, Health Policy, Medicare, Medicare Buy-In, Medicare for All, Out of Pocket Expenses, Preexisting Conditions, Public Good, Single Payer Health System, Single Payer Healthcare System, Underinsured, Uninsured, Universal Healthcare System • Leave a comment

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Democratic candidates take the stage during first debate in June.

Expanding coverage, lowering healthcare costs, central to Democratic agenda.

Tonight, Joe Biden, Kamala Harris, Cory Booker, Andrew Yang, Julián Castro, Tulsi Gabbard, Michael Bennet, Jay Inslee, Kirsten Gillibrand, Bill de Blasio take the stage for round two of the Democratic presidential debates.

Seven support Medicare for All. The others – Biden, Bennett and Inslee have come out in favor of a public option. Here, in no particular order, is a look at where each candidate stands on healthcare coverage.

Joe Biden

As vice president to President Barack Obama, former Senator Joe Biden carries into this election the legacy of the Affordable Care Act. As president, Biden said he would protect the ACA and prevent further Republican attempts to dismantle it.

Unlike many of his Democratic rivals, Biden does not support full Medicare for All. Instead of getting rid of private insurance, Biden said he would build on the ACA through the Biden Plan to create a public health insurance option. As in Medicare, costs would be reduced through negotiating for lower prices from hospitals and other providers.

He also has a plan to increase the value of the ACA tax credits by eliminating the 400% income cap on tax credit eligibility and lowering the limit on the cost of coverage from 9.86% of income to 8.5%. This means that no one would spend more than 8.5% of their income on health insurance. Additionally,  Biden would base the size of tax credits on the cost of the higher-tiered gold plan, rather than silver plan.

Biden also supports premium-free access to the public option for individuals in the 14 states that have not expanded Medicaid under the ACA. States that have already expanded Medicaid would have the choice of moving the expansion population to the premium-free public option, as long as the states continue to pay their current share of the cost of covering those individuals.

Biden also promises to stop surprise billing, tackle market concentration, repeal the exception allowing drug companies to avoid negotiating with Medicare over drug prices and limiting the launch price for drugs that face no competition, among other actions.

In his words: “When we passed the Affordable Care Act, I told President Obama it was a big deal – or something to that effect.”

Kamala Harris

California Senator Kamala Harris often refers to her mother’s diagnosis of colon cancer and her Medicare coverage for treatment as an example of why all Americans should have Medicare for All.

Harris is looking to eliminate premiums and out-of-pocket costs through government insurance that guarantees comprehensive care including dental and vision and coverage. Harris gives no estimate of the cost of universal healthcare, but says taking profit out of America’s healthcare system would save money.

Her Medicare for All plan, which is similar to Senator Bernie Sanders – would cover all medically necessary services, including emergency room visits, doctor visits, vision, dental, hearing aids, mental health and substance use disorder treatment, telehealth and comprehensive reproductive care services. It would allow the Secretary of Health and Human Services to negotiate for lower prescription drug prices.

As former Attorney General of California who won a $320 million settlment from insurers, Harris said she wants to take on Big Pharma and private insurers to lower the cost of prescription drugs.

She also has strong views on prosecuting opioid makers and for preserving women’s right to healthcare and protecting Planned Parenthood from the financial cuts and policies of the Trump Administration.

She would institute an audit of prescription drug costs to ensure pharmaceutical companies are not charging more than other comparable countries, a comprehensive maternal child health program to reduce deaths among women and infants of color, and rural healthcare reforms, such as increasing residency slots for rural areas with workforce shortages and loan forgiveness for rural healthcare professionals.

In her words on the ACA: “As someone who fought tooth and nail as Attorney General and as Senator to prevent repeal, that’s exactly what I will continue to do.”

Cory Booker

Senator Cory Anthony Booker, first African-American Senator from New Jersey, and former mayor of Newark, is also a Medicare for All proponent.

He also wants to implement universal paid family and medical leave.

He supports lowering costs for prescription drugs by allowing Medicare to negotiate prices and by importing drugs from Canada and other countries, the latter a policy announced today by Health and Human Services Secretary Alex Azar.

He would also invest in ending the maternal mortality rate and work to reduce racial disparities in maternal mortality rates.

One of his big issues is expanding eligibility for long-term services and support for low and middle-income Americans needing care at home. He wants long-term care workers to be paid a minimum of $15 an hour.To limit the impact of the program on state budgets, the new costs associated with the expansion of Medicaid long-term care services and workforce standards would be financed entirely by the federal government in, effectively, a 100% match. The cost would be financed by making the tax code more progressive by reforming the capital gains, estate, and income taxes.

In his words: “Healthcare is a human right.”

Kirsten Gillebrand

Kirsten Gillebrand, U.S. Senator from New York, originally ran for a House seat in that state on a platform that supported the expansion of Medicare, a view she still holds, and in 2017 expressed support for Senator Bernie Sanders’ Medicare for All bill.

In May, Gillebrand reiterated her support, saying the best way to achieve a single-payer system is to let people buy-in over a transition period of about four to five years. She favors allowing a public option to create competition with insurance companies. Medicare needs to be fixed first so that reimbursement rates better reflect costs, she said.

In 2011 she helped pass the James Zadroga 9/11 Health and Compensation Act, which provides treatment to the first responders of the Sept. 11, 2001 terrorist attacks. The law provides health monitoring and services for 9/11-related health issues among those exposed to the debris and tainted air of the attack’s aftermath.

In her words: “Under the healthcare system we have now, too many insurance companies continue to value their profits more than they value the people they are supposed to be helping.”

Bill de Blasio

New York Mayor Bill de Blasio believes everyone, including undocumented immigrants, has a right to receive healthcare, and has repeatedly voiced his support for a national single-payer health plan.

He and rival Elizabeth Warren raised their hands during the first debate when asked if they supported Medicare for All.

One of his accomplishments as mayor was signing a bill into law that established a paid sick leave and safe leave plan for the city.

First unveiled in January, the program NYC Care, guarantees healthcare for the roughly 600,000 New Yorkers who aren’t currently insured, which de Blasio touted as the “most comprehensive health system in the nation.” He has indicated that NYC Care could become a model nationwide.

The plan encompasses primary and specialty care, pediatric and maternity care and mental health services. The idea is that NYC Care works on what de Blasio said was a “sliding scale,” in which people can essentially pay what they can for care. While the city already has a public option for healthcare, de Blasio said NYC Care will pay for direct comprehensive care for people who can’t afford insurance or who aren’t covered by Medicaid.

The program costs $100 million per year for the city — an investment the mayor expects will yield returns.

In his words: “If we don’t help people get their healthcare, we’re going to pay plenty on the back end when people get really sick,” he said recently on MSNBC’s “Morning Joe” broadcast.

Jay Inslee

Washington Governor Jay Inslee has planted a flag as “the climate change candidate” and in many ways he’s all in on that single issue, reasoning that things like healthcare policy “become relatively moot if the entire ecosystem collapses on which human life depends.”

That said, he has a strong case to make on healthcare by virtue of having just recently put his state’s money where his fellow candidates’ mouths are: in May he signed the country’s first public option into law in Washington.

Expect him to bring up that accomplishment — in which the state will contract with private insurers to create a public option that pays at Medicare plus 60 percent — in any conversation about healthcare, as he did in the first debate.

In his words: “We hope this will be a smashing success. We hope that it will give a shot of courage to other governors to move forward toward universal access. We were willing to take the leap and we’re gonna learn as we go along, I’m sure, and there will be some modifications. But we had to get started.”

Michael Bennet

Colorado Senator Michael Bennet supports a public option he calls Medicare-X. But where his plan stands apart from others is a strong focus on the rural-urban divide on access to care. He intends to create a healthcare policy that will ensure that all regions of the country are covered by available health plans, addressing what he calls a failure of the ACA exchanges.

His plan is unusually detailed and includes lowering prescription drug prices, closing existing gaps in care, and, yes, promoting telemedicine and other technology that can bolster rural healthcare. He also has provisions for combatting substance abuse, improving maternal and mental health, and bringing more support to senior caregivers.

In his words: “As president, I would build on the Affordable Care Act to cover everyone, rather than doing away with our current system. My Medicare-X plan gives every family the choice to buy an affordable public option or keep the plan they have today. It starts in rural areas, where there is very little competition and requires the federal government to negotiate drug prices. I have fought for this approach for almost a decade, because it is the most effective and fastest way to cover everyone and drive down costs.”

Julián Castro

The former U.S. Secretary of Housing and Urban Development and San Antonio Mayor favors a Medicare for All, single-payer system.

To pay for the system, Castro has said he would raise taxes on corporations and on the wealthiest Americans — the “0.05, 0.5 or 1%,” he said.

While he favors a single-payer system, Castro said he would allow private insurance, saying that anyone who wants their own private insurance plan should be able to have one.

In his words: Castro said at an event in Iowa that, “The U.S. should be the healthiest nation in the world.”

Andrew Yang

Entrepreneur Andrew Yang of New York is founder of Venture for America, a two-year fellowship program for recent grads who want to work at a startup and create jobs in American cities.

He supports Medicare for All and has called the Affordable Care Act a step in the right direction that didn’t go far enough because access to medicine isn’t guaranteed and the incentives for healthcare providers don’t align with providing quality, efficient care.

Doctors are incentivized to act as factory workers, he has said, churning through patients and prescribing redundant tests, rather than doing what they’d prefer–spending extra time with each patient to ensure overall health.

Medicare for All will increase access to preventive care, bringing overall healthcare costs down. Cost can also be controlled directly by setting prices provided for medical services.

He cites the Cleveland Clinic, where doctors are paid a flat salary instead of by a price-for-service model. Redundant tests are at a minimum, and physician turnover is much lower than at comparable hospitals, he said.

And the Southcentral Foundation which uses a holistic approach to treat native Alaskans with mental and physical problems by referring patients to psychologists during routine physicals.

Also, the current system of employer-sponsored insurance prevents employees from having economic mobility.

In his words: “New technologies – robots, software, artificial intelligence – have already destroyed more than 4 million U.S. jobs, and in the next 5-10 years, they will eliminate millions more.”

Tulsi Gabbard

Rep. Tulsi Gabbard of Hawaii is a military veteran who supports Medicare for All as a cosponsor of H.R.676, the Expanded & Improved Medicare for All Act.

But she is currently getting press for her lawsuit against Google claiming alleged election interference.

Following the first Democratic primary debate on June 26, many people searched her name, but “without any explanation, Google suspended Tulsi’s Google Ads account,” her office said in a statement, according to The Verge.

Tulsi claims the tech giant suspended her campaign’s Google Ads account just after that first debate.

Congress must act to prevent the tech giant from exerting too much influence, she claimed Monday on “Tucker Carlson Tonight.”
In her words: “This is really about the unchecked power these big tech monopolies have over our public discourse and how this is a real threat to our freedom of speech and to our fair elections.”

 

Democratic Debate Turns Ferocious Over Health Care

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Medicare, Medicare Buy-In, Medicare for All, Out of Pocket Expenses, Public Option, Single Payer Health System, Single Payer Healthcare System, Underinsured, Uninsured, Universal Healthcare System • Leave a comment

Candidates in the first night of this week’s Democratic presidential debates sparred over health care coverage.

It took only one question — the very first — in Tuesday night’s Democratic presidential primary debate to make it clear that the issue that united the party in last year’s congressional elections in many ways now divides it.

When Jake Tapper of CNN asked Senator Bernie Sanders whether his Medicare for All health care plan was “bad policy” and “political suicide,” it set off a half-hour brawl that drew in almost every one of the 10 candidates on the stage. Suddenly, members of the party that had been all about protecting and expanding health care coverage were leveling accusations before a national audience at some of their own — in particular, that they wanted to take it away.

“It used to be Republicans that wanted to repeal and replace,” Gov. Steve Bullock of Montana said in one of the more jolting statements on the subject. “Now many Democrats do as well.”

Those disagreements set a combative tone that continued for the next 90 minutes. The health care arguments underscored the powerful shift the Democratic Party is undergoing, and that was illustrated in a substantive debate that also included trade, race, reparations, border security and the war in Afghanistan.

In the end, it was a battle between aspiration and pragmatism, a crystallization of the struggle between the party’s left and moderate factions.

It is likely to repeat itself during Wednesday night’s debate, whose lineup includes former Vice President Joseph R. Biden Jr. and Senator Kamala Harris of California. He supports building on the Affordable Care Act by adding an option to buy into a public health plan. She released a proposal this week that would go further, eventually having everyone choose either Medicare or private plans that she said would be tightly regulated by the government.

Democrats know all too well that the issue of choice in health care is a potent one. When President Barack Obama’s promise that people who liked their health plans could keep them under the Affordable Care Act proved to be untrue, Republicans seized on the fallout so effectively that it then propelled them to majorities in both the House and Senate.

On Tuesday night, Representative Tim Ryan of Ohio evoked those Republican attacks of years ago on the Affordable Care Act, saying the Sanders plan “will tell the union members that give away wages in order to get good health care that they will lose their health care because Washington is going to come in and tell them they have a better plan.”

Republicans watching the debate may well have been smiling; the infighting about taking away people’s ability to choose their health care plan and spending too much on a pipe-dream plan played into some of President Trump’s favorite talking points. Mr. Trump is focusing on health proposals that do not involve coverage — lowering drug prices, for example — as his administration sides with the plaintiffs in a court case seeking to invalidate the entire Affordable Care Act, putting millions of people’s coverage at risk.

It was easy to imagine House Democrats who campaigned on health care, helping their party retake control of the chamber, being aghast at the fact that not a single candidate mentioned the case.

Mr. Sanders’s plan would eliminate private health care coverage and set up a universal government-run health system that would provide free coverage for everyone, financed by taxes, including on the middle class. John Delaney, the former congressman from Maryland, repeatedly took swings at the Sanders plan, suggesting that it was reckless and too radical for the majority of voters and could deliver a second term to Mr. Trump.

Mr. Sanders held firm, looking ready to boil over at time — “I wrote the damn bill,” he fumed after Mr. Ryan questioned whether benefits in his plan would prove as comprehensive as he was promising. Senator Elizabeth Warren of Massachusetts, the only other candidate in favor of a complete overhaul of the health insurance system that would include getting rid of private coverage, chimed in to back him up.

At one point she seemed to almost plead. “We are not about trying to take away health care from anyone,” she interjected. “That’s what the Republicans are trying to do.”

Mr. Delaney has been making a signature issue of his opposition to Medicare for all, instead holding up his own plan, which would automatically enroll every American under 65 in a new public health care plan or let them choose to receive a credit to buy private insurance instead. He repeatedly disparaged what he called “impossible promises.”

He was one of a number of candidates — including Beto O’Rourke, the former congressman from Texas; Senator Amy Klobuchar of Minnesota and Mayor Pete Buttigieg of South Bend, Ind. — who sought to stake out a middle ground by portraying themselves as defenders of free choice with plans that would allow, but not force, people to join Medicare or a new government health plan, or public option. (Some candidates would require people to pay into those plans, while others would not.)

The debate moderators also pressed Mr. Sanders and Ms. Warren on whether the middle class would have to help pay for a Sanders-style plan, which would provide a generous set of benefits — beyond what Medicare covers — to every American without charging them premiums or deductibles. One of the revenue options Mr. Sanders has suggested is a 4 percent tax on the income of families earning more than $29,000.

In defending his plan, Mr. Sanders repeatedly pointed out how many Americans are uninsured or underinsured, unable to pay high deductibles and other out-of-pocket costs and thus unable to seek care.

Analysts often point out that the focus on raising taxes to pay for universal health care leaves out the fact that in exchange, personal health care costs would drop or disappear.

“A health reform plan might involve tax increases, but it’s important to quantify the savings in out-of-pocket health costs as well,” Larry Levitt, executive vice president for health policy at the nonpartisan Kaiser Family Foundation, tweeted during the debate. “Political attacks don’t play by the same rules.”

A Kaiser poll released Tuesday found that two-thirds of the public supports a public option, though most Republicans oppose it. The poll also found about half the public supports a Medicare for all plan, down from 56 percent in April. The vast majority of respondents with employer coverage — which more than 150 million Americans have — rated it as excellent or good.

In truth, Mr. Delaney’s own universal health care plan could also face political obstacles, not least because it, too, would cost a lot. He has proposed paying for it by, among other steps, letting the government negotiate drug prices with pharmaceutical companies and requiring wealthy Americans to cover part of the cost of their health care.

Had Mr. Sanders not responded so forcefully to the attacks, it would have felt like piling on, though some who criticized his goals sounded more earnest than harsh.

“I think how we win an election is to bring everyone with us,” Ms. Klobuchar said, adding later in the debate that a public option would be “the easiest way to move forward quickly, and I want to get things done.”

 

 

White House races to come up with health-care wins for Trump’s campaign

Posted on by • Posted in 2020 Election Issues, ACA, Health Policy, Hospital Industry, Pharmaceutical Industry • Leave a comment

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White House advisers, scrambling to create a health-care agenda for President Trump to promote on the campaign trail, are meeting at least daily with the aim of rolling out a measure every two to three weeks until the 2020 election.

One of the initiatives would allow states to import lower-priced drugs from Canada and other countries and another would bar Medicare from paying more than any other country for prescription drugs, according to two senior administration officials and lobbyists — controversial ideas in line with Democratic proposals. Yet it remains unclear the administration has the legal authority to execute some of these policies without Congress.

The White House is already facing fierce pushback on some proposals from Republicans on Capitol Hill and the pharmaceutical industry, which will likely go to court to challenge any measure it opposes.

The furious push reflects the administration’s sense of vulnerability on an issue that Democrats successfully used in 2018 to win control of the House of Representatives. White House officials are eager to inoculate the president against a repeat of that strategy in 2020 — and reduce the GOP disadvantage on an issue that pollsters say plays to Democratic strengths. Most of the Democratic presidential candidates have made health-care proposals, including Medicare-for-all plans, key to their campaigns. Health care is already playing a starring role in the debates and Democrats are sure to assail Trump for his attempts to eliminate coverage for millions of people by challenging the Affordable Care Act in court.

“President Trump has said we will protect people with preexisting conditions, lower drug prices, end surprise medical bills, and make sure Americans get the highest quality of care they deserve,” said White House spokesman Judd Deere. “While the radical left has sweeping proposals for a total government takeover of the health system that will hurt seniors and eliminate private insurance for 180 million Americans, the Trump administration is working on real solutions.”

Some, however, are doubtful a flurry of executive orders and new regulations would have an immediate effect on consumers’ pocketbooks. What is clear is that the approach, which includes White House support for a bipartisan Senate bill to cap Medicare drug price increases to the rate of inflation, is putting congressional Republicans in a tough spot: Embrace Trump’s agenda and abandon conservative precepts about interference in the marketplace, or buck the president on one of his top priorities.

While Republicans have largely fallen in line with Trump on free trade and immigration even when he has blown up GOP orthodoxy, many rely heavily on donations from the pharmaceutical industry and are reluctant to sour those relationships.

One lobbyist, who spoke on the condition of anonymity, described being stunned at a recent White House meeting when Domestic Policy Council Director Joe Grogan said the administration would not let Democrats run to the president’s left on lowering the prices of prescription medicines.

In another tense meeting, top pharmaceutical executives were told bluntly “it wasn’t in the industry’s best interests” to block the bipartisan Senate bill backed by Trump. If it failed, they were told, they’d see “the president of the United States negotiating with Nancy Pelosi [on allowing the government to negotiate drug prices in Medicare],” said a person familiar with the meeting.

On Wednesday, Health and Human Services Secretary Alex Azar announced the outlines of a plan to eventually allow Americans to import certain lower-cost drugs from Canada and other countries. White House officials are also weighing an Obamacare replacement that Congress would take up after the election, a Medicare plan to contrast with Democratic Medicare-for-all proposals, help for beleaguered rural hospitals and steps to reduce maternal death rates, according to two senior administration officials.

The health-care effort is being driven by the White House’s Domestic Policy Council Director Joe Grogan, Chief of Staff Mick Mulvaney and the White House Office of Management and Budget acting director Russ Vought. Other participants in the sometimes contentious daily meetings include Azar, the president’s son-in-law and senior adviser Jared Kushner, White House counselor Kellyanne Conway and representatives from the vice president’s office.

One senior administration official, who spoke on the condition of anonymity to discuss internal deliberations, said the White House believes it has “tremendous authority” to write executive orders under food, drug and cosmetic laws, as well as through the ACA, which gives the government broad power to test ways to improve health care and reduce costs in government programs.

“We think the [ACA] authority is pretty tremendous,” the official said. The administration is currently arguing in federal court to overturn the law, however, with a decision expected late summer or fall.

But many health policy and legal experts disagree and are also skeptical the steps the administration is talking about would have a tangible effect on consumers before the election.

“It’s unlikely the administration is going to be able to use an executive order that Americans are going to be able to notice before the election,” said Benedic Ippolito, a health economist at the American Enterprise Institute. “It’s an incredibly ambitious timeline.”

Others see court challenges as inevitable, noting the drug industry has already shown a willingness to sue the administration over policies it opposes; it recently won a lower court victory against an Health and Human Servies regulation that would have required drugmakers to include the list prices of their medications in television ads.

“I’m not sure they can get anything done and survive a court challenge before the election,” said Chris Meekins, a former HHS official who is now a health care policy research analyst at Raymond James, a financial services firm.

The White House is also attempting to build support for the Senate bill authored by Finance Committee Chairman Charles E. Grassley (R-Iowa) and ranking Democrat Sen. Ron Wyden (Ore.), that for the first time would require drugmakers to pay back the federal government if they raised the prices of medications in the Medicare program in excess of the rate of inflation. It would also limit out-of-pocket costs for beneficiaries.

The pharmaceutical industry opposes the bill, and some Republicans have already derided the legislation as tantamount to negotiating drug prices or imposing “price controls” — a line in the sand for many who oppose what they see as government interference in the market. Senate Majority Leader Mitch McConnell (R-Ky.) has not said whether he will bring a drug-pricing legislative package up for a vote, but he is generally opposed to voting on health-care legislation ahead of the election.

Against the advice of many congressional Republicans, White House advisers are also working to craft an Obamacare replacement plan that Trump could campaign on, especially if the Fifth Circuit should declare the law unconstitutional this fall and catapult the issue to the forefront of the 2020 races.

Some GOP lawmakers and strategists worry about rolling out a plan that has no chance of passage in the current Congress and that Democrats could pick to pieces during a long campaign. Many also have little appetite to return to the debate over repealing Obamacare.

Nonetheless, the White House is considering a plan, put together by conservative think tanks, that would eliminate the ACA’s subsidies for low-income consumers and replace the open-ended federal commitment to Medicaid with a lump-sum payment for each state in the form of a block grant, according to a copy posted online. The proposal largely follows the outlines of a 2017 Republican bill, which the Senate never voted on because it did not garner enough support.

“We don’t have a lot of buy in on the Hill,” acknowledged the senior administration official, “but we’re figuring it out.”

Some of the other health-care proposals under review also appear largely aspirational, for instance, a draft executive order that instructs agencies to speed development of a universal flu vaccine, first reported by Politico, that proposes no new funding. Other efforts, such as the initiatives to reduce HIV infections, reduce end-stage kidney disease and double the number of transplants, contain new funding and have been widely heralded.

“Every chance we have to set or tweak a rule we are doing it.” said the senior official. “This administration has been more creative and accomplished more when it comes to health care and health than anybody has given us credit for.”

How a Medicare Buy-In or Public Option Could Threaten Obamacare

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Medicare, Medicare Buy-In, Medicare for All, Pharmaceutical Industry, Public Option • Leave a comment
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Some Democrats are proposing a government alternative to private insurance. But allowing people to choose such a plan may destabilize the A.C.A., some experts say.

It seems a simple enough proposition: Give people the choice to buy into Medicare, the popular federal insurance program for those over 65.

Former Vice President Joseph R. Biden Jr. is one of the Democratic presidential contenders who favor this kind of buy-in, often called the public option. They view it as a more gradual, politically pragmatic alternative to the Medicare-for-all proposal championed by Senator Bernie Sanders, which would abolish private health insurance altogether.

A public option, supporters say, is the logical next step in the expansion of access begun under the Affordable Care Act, passed while Mr. Biden was in office. “We have to protect and build on Obamacare,” he said.

But depending on its design, a public option may well threaten the A.C.A. in unexpected ways.

A government plan, even a Medicare buy-in, could shrink the number of customers buying policies on the Obamacare markets, making them less appealing for leading insurers, according to many health insurers, policy analysts and even some Democrats.

In urban markets, “a public option could come in and soak up all of the demand of the A.C.A. market,” said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University.

And in rural markets, insurers that are now profitable because they are often the only choices may find it difficult to make money if they faced competition from the federal government.

Some insurers could decide that a smaller and uncertain market is not worth their effort.

If the public option program also matched the rates Medicare paid to hospitals and doctors, “I think it would be really hard to compete,” Mr. Garthwaite said. Even leading insurers do not have the leverage to demand lower prices from hospitals and other providers that the government has.

Whether to implement a public option or Medicare buy-in has become a defining question among Democratic presidential candidates and is likely to be a contentious topic at this week’s debates.

On Monday, Senator Kamala Harris took an alternate route, unveiling a plan that would allow private insurers to participate in a Medicare-for-all scheme, akin to their role currently offering private plans under Medicare Advantage.

The recent spate of proposals reprises some of the most difficult questions leading up to the passage of the A.C.A., in many ways a compromise over widely divergent views of the role of the government in ensuring access to care.

After a shaky start, the federal and state Obamacare marketplaces are surprisingly robust, despite repeated attempts by Republicans to weaken them. They provide insurance to 11 million customers, many of whom receive generous federal subsidies to help pay for coverage.

The A.C.A. is now a solidly profitable business for insurers, with several expanding options after earlier threats to leave. For example, Centene, a for-profit insurer, controls about a fifth of the market, offering plans in 20 states. It is expected to bring in roughly $10 billion in revenues this year by selling Obamacare policies.

In spite of stock drops because of investors’ concerns over Medicare-for-all proposals, for-profit health insurers have generally thrived since the law’s passage.

But a buy-in shift in insurance coverage could profoundly unsettle the nation’s private health sector, which makes up almost a fifth of the United States economy. Depending on who is allowed to sign up for the plan, it could also rock the employer-based system that now covers some 160 million Americans.

In a recent ad, Mr. Biden features a woman who wants to keep her current coverage. “I have my own private insurance — I don’t want to lose it,” she said.

A spokesman for Mr. Biden argued that a public option can extend the success of the Affordable Care Act.

“Joe Biden thinks it would be an egregious mistake to undo the A.C.A., and he will stand against anyone — regardless of their party — who tries to do so,” said Andrew Bates, a spokesman for Mr. Biden, in an email.

Major insurers and hospital chains, pharmaceutical companies and the American Medical Association have joined forces to try to derail efforts like Medicare-for-all and the public option. Mr. Sanders denounced these powerful interests in a recent speech.

“The debate we are currently having in this campaign and all over this country has nothing to do with health care, but it has everything to do with the greed and profits of the health care industry,” he said.

Other critics of the public option, including Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, argue Democrats’ programs will lead to a “complete government takeover.”

“These proposals are the largest threats to the American health care system,” she said in a speech earlier this month.

Some experts predict that private insurers will adapt, while others warn that the government could wind up taking on the sickest customers with high medical bills, leaving the healthier, profitable ones to private insurers.

It’s uncertain whether hospitals, on the other hand, could thrive under some versions of the public option. If the nation’s 5,300 hospitals were paid at much lower rates by a government plan — rates resembling those of Medicare — they might lose tens of billions of dollars, the industry claims. Some would close.

One variant of the public option — letting people over 50 or 55 buy into Medicare — is often depicted as less drastic than a universal, single-payer program. But this option would also be problematic, experts said.

This consumer demographic is quite valuable to insurers, hospitals and doctors.

Middle-aged and older Americans have become the bedrock of the Obamacare market. Some insurers say this demographic makes up about half of the people enrolled in their A.C.A. plans and, unlike younger people who come and go, is a reliable and profitable source of business for the insurance companies.

The aging-related health issues of people in this group guarantee regular doctor visits for everything from rising blood pressure to diabetes, and they account for a steady stream of lucrative joint replacements and cardiac stent procedures.

The 55-to-64 age group, for example, accounts for 13 percent of the nation’s population, but generates 20 percent of all health care spending, according to the Kaiser Family Foundation.

Health Spending

People age 55–64 are responsible for one fifth of total health spending and account for a sizable share of the private insurance market. People 65 and older are eligible for Medicare and account for one third of total spending.

Several experts said that designing a buy-in program that is compatible with the existing public and private plans could be daunting.

“You’d have to do it carefully,” said Representative Donna Shalala, a Florida Democrat who served as the secretary of health and human services under President Bill Clinton.

Linda Blumberg, a health policy expert at the Urban Institute, a nonpartisan think tank, agreed. “The idea of Medicare buy-ins was taken very seriously before there was an Affordable Care Act,” she said. “In the context of the A.C.A., it’s a lot more complicated to do that.”

Many dismiss concerns about whether insurers can compete.

“Any time a market shrinks in America, insurers don’t like it,” said Andy Slavitt, the former acting Medicare administrator under President Obama and a former insurance executive. Mr. Slavitt noted that insurers raised similar concerns about the federal law when it was introduced. “They’ll figure it out,” he said.

In Los Angeles County, five private insurers that sell insurance in the A.C.A. market already compete with L.A. Care Health Plan, which views itself as a kind of public option, said John Baackes, the plan’s chief executive.

The insurer offers the least expensive H.M.O. plan in the county by paying roughly Medicare rates. “We’ve proved that the public option can be healthy competition,” he said.

But the major insurance companies, which were instrumental in defeating the public option when Congress first considered making it a feature of the A.C.A., are already flexing their lobbying muscle and waging public campaigns.

In Connecticut, fierce lobbying by health insurers helped kill a state version of the public option this spring. Cigna resisted passage of the bill, threatening to leave the state. “The proposal design was ill-conceived and simply did not work,” the company said in a statement.

Blue Cross plans could lose 60 percent of their revenues from the individual market if people over 50 are shifted to Medicare, said Kris Haltmeyer, an executive with the Blue Cross Blue Shield Association, citing an analysis the company conducted. He said it might not make sense for plans to stay in the A.C.A. markets.

Siphoning off such a large group of customers could also lead to a 10 percent increase in premiums for the remaining pool of insured people, according to the Blue Cross analysis. More younger people with expensive medical conditions have enrolled than insurers expected, and insurers would have to increase premiums to cover their costs, Mr. Haltmeyer said.

Tricia Neuman, a senior vice president at the Kaiser Family Foundation, which studies insurance markets, said a government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs.

But some experts countered that prognosis, predicting that premiums could go down if older Americans, whose health care costs are generally expensive, moved into a Medicare-like program.

“The insurance companies are wrong about opposing the public option,” Ms. Shalala said.

Dr. David Blumenthal, the president of the Commonwealth Fund, a foundation that funds health care research, said a government plan that attracted people with expensive conditions could prove costly.

“You might, as a taxpayer, become concerned that they would be more like high-risk pools,” he said.

Jonathan Gruber, an M.I.T. economist who advised the Obama administration during the development of the A.C.A., likes Mr. Biden’s plan and argues there is a way to design a public option that does not shut out the private insurers.

“It’s all about threading the needle of making a public option that helps the failing system and not making the doctors and insurers go to the mat,” he said.

Many experts point to private Medicare Advantage plans, which now cover one-third of those eligible for Medicare, as proof that private insurers can coexist with the government.

But the real value of a public option, some say, would stem from the pressure to lower prices for medical care as insurers were forced to compete with the lower-paying government plans, like Medicare.

Washington State recently passed the country’s first public option, capping prices as part of its plan to provide a public alternative to all residents by 2021.

“It’s couched in this language in expanding coverage, but it does it by regulating prices,” said Sabrina Corlette, a health policy researcher at Georgetown University.

The hospital industry would most likely fight just as hard to defeat any proposal that would convert a profitable group of customers, Americans who are privately covered at present, into Medicare beneficiaries.

Private insurers often pay hospitals double or triple what Medicare pays them, according to a recent study from the nonprofit Rand Corporation.

While Ms. Shalala supports a public option as an alternative to “Medicare for All,” she is clear about how challenging it will be to preserve both Obamacare and the private insurance market. “You can’t do it off the top of your head,” she said.

 

No partial Medicaid expansions

Posted on by • Posted in 2020 Election Issues, ACA, Health Policy, Medicaid, Medicaid Block Grants, Medicaid Expansion • Leave a comment

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The Trump administration made a very big decision over the weekend: It won’t approve full federal funding for a partial Medicaid expansion.

Why it matters: The partial expansion had looked like a key weapon in red states’ continued resistance to the ACA. Without it, Medicaid enrollment likely will keep growing.

Between the lines: Although the reasoning is different, the Trump administration is now adopting the same policy as the Obama administration — a decision many experts believe the law compels.

Details: Utah voters approved the full ACA expansion last year, but the state legislature overruled them to pass a more limited version.

  • Utah believed that the federal Centers for Medicare & Medicaid Services would approve full federal funding even for the partial expansion, which prompted other red states to explore the same idea.

The intrigue: While the Obama administration rejected these requests on the grounds that federal law dictates the terms of a Medicaid expansion, the Trump administration went a different route, per the Washington Post.

  • “White House advisers argued that it did not make sense to approve generous federal funding under the ACA while the administration is arguing that the entire law should be overturned,” the Post reports.

The bottom line: Utah has a backup plan in place — the full Medicaid expansion that Utah residents voted for in the first place.

  • Partial expansion was mainly attractive to red states facing pressure to expand but had leaders who didn’t want to. With that option off the table, don’t be surprised if more states end up just going along with the expansion.

 

 

 

 

Red states’ Medicaid gamble: Paying more to cover fewer people

Posted on by • Posted in 2020 Election Issues, ACA, Block Grants, Center for Medicare and Medicaid Services (CMS), Health Policy, Medicaid, Medicaid Block Grants, Medicaid Expansion • Leave a comment

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Illustration of a price tag hanging from an IV stand

Red states are getting creative as they look for new ways to limit the growth of Medicaid. But in the process those states are taking legal, political and practical risks that could ultimately leave them paying far more, to cover far fewer people.

Why it matters: Medicaid and the Children’s Health Insurance Program cover more than 72 million Americans, thanks in part to the Affordable Care Act’s Medicaid expansion. Rolling back the program is a high priority for the Trump administration, and it needs states’ help to get there.

The big picture: The Centers for Medicare & Medicaid Services, under the leadership of Administrator Seema Verma, has made clear that it wants to say “yes” to new limits on Medicaid eligibility, and has invited states to ask for those limits.

  • But CMS hasn’t actually said “yes” yet to some of the most significant limits states have asked for.
  • In the meantime, states are left either with vague ambitions they’re not sure how to implement, or with risky plans that put their own budgets on the line.

What we’re watching: State-level Republicans are waiting for CMS to resolve two related issues: how much federal funding their versions of Medicaid can receive, and the extent to which they’re able to cap enrollment in the program.

  • “These issues are going to continue to be intertwined,” said Joan Alker, the executive director of Georgetown University’s Center for Children and Families.

Verma has reportedly told state officials that she wants to use her regulatory power to convert Medicaid funding into a system of block grants — which would be an enormous rightward shift and probably a big cut in total funding.

  • CMS probably cannot do that on its own, experts said, but it could achieve something similar by approving caps on either enrollment or spending.

Where it stands: GOP lawmakers in a handful of states are looking to Utah, which has bet big on Verma’s authority, for signals about what’s possible.

  • Utah voters approved the full ACA expansion last year, but the state legislature overruled them to pass a more limited version.
  • By foregoing the full expansion, Utah passed up enhanced federal funding. It’s still asking for that extra money — a request CMS has never previously approved.
  • Utah will also ask CMS to impose a per-person cap on Medicaid spending — a steep cut that was part of congressional Republicans’ failed repeal-and-replace bill, and which may strain CMS’ legal authority.
  • If Utah doesn’t get those two requests, its backup plan is simply to adopt the full expansion.

What’s next: Utah is not the only red state leaning into Verma’s agenda, but it’s further out on a limb than any other.

  • Idaho, like Utah, overruled its voters to pass a narrower Medicaid bill. But it preserved an option for people to buy into the ACA’s expansion.
  • Alaska Gov. Mike Dunleavy has said he wants to take Verma up on her offer of block grants; so have legislators in Tennessee and Georgia. But in the absence of any detail about what that means, or what CMS will approve, that’s all pretty vague right now.

If CMS does move forward on any of this, it could face the same threat of lawsuits that have stymied its first big Medicaid overhaul — work requirements.

  • Those rules are on ice in two states because a judge said they contravene Medicaid’s statutory structure and goals. The same argument could await a partial expansion or tough spending caps.

“There’s a clear agenda here to get a handful of states to take up these waivers, which fundamentally undermine the central tenets of the Medicaid program — which [are] that it is a guarantee of coverage, and a guarantee of federal funding,” Alker said.

 

 

 

 

The Problematic Law And Policy Of Medicaid Block Grants

Posted on by • Posted in 2020 Election Issues, Center for Medicare and Medicaid Services (CMS), Medicaid, Medicaid Block Grants, Office of Management and Budget (OMB) • Leave a comment

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Recent news reports indicate that the Trump administration is seeking to authorize states to convert open-ended federal Medicaid funds into a block grant system, and a formal proposal to do so landed at the Office of Management and Budget on June 4. House Democrats have written to Health and Human Services (HHS) secretary Alex Azar to express their concerns about the legal and policy implications of a block grant system. 

Not only are there strong legal arguments against efforts to implement a block grant policy, but block grants would also create challenges for states that chose to implement such a program. These legal and policy concerns are foreseeable. The Centers for Medicare and Medicaid Services (CMS) is not only courting yet another legal battle but also threatening access to important health care services—such as prescription drugs, as discussed below—for many of the most vulnerable patients.

Understanding Capped Spending Proposals

The Medicaid Act provides for unlimited federal matching funds for all state spending under Medicaid’s federal rules. This federal match is required by law and encourages states to implement both Medicaid’s mandatory benefits and its optional benefits, such as prescription drugs. This unlimited federal funding also has been central in helping states respond to economic shocks such as recessions and natural disasters and to unplanned programmatic demands such as public health emergencies or expensive new treatments. Switching Medicaid to a block grant program has been proposed by prior administrations and most recently appeared in different bills during the Affordable Care Act repeal-and-replace debates in 2017, but such proposals have been rejected by Congress.

Despite Congress’s refusal to alter Medicaid in this way, and despite long-standing and clear benefits to states of open-ended entitlement funding, the Trump administration has been inviting states, such as Alaska, to discuss capped spending, and other states are poised to respond to the new policy guidance. For example, Alaska commissioned a study of block grants; Tennessee’s legislature enacted a law commanding the governor to seek a block grant; Utah submitted a waiver application seeking per capita caps for Medicaid spending; and Texas commissioned a block grant study in 2017.

To understand this drastic policy change, a little more background is helpful. Medicaid operates through joint funding by states and the federal government, with the federal government matching states’ spending at a set rate that is informed by the per capita income of a state. A poorer state such as Mississippi has a higher federal match rate (76 percent in 2019) than wealthier states (for example, New York at 50 percent). In either case, for every dollar a state spends on Medicaid, it receives a matching amount of federal funds—without limit—making Medicaid a statutory entitlement for states participating in the program.

The federal match developed out of states’ inability to provide adequate medical support for their poor residents. Although the federal government gave states a kind of block grant (grants in aid) before Medicaid was enacted in 1965, the unlimited federal match that the Medicaid Act provides was designed to increase help for poor people while still allowing states to provide for the needs of their particular populations within a federal statutory baseline.

A block grant scheme would be very different from Medicaid’s statutorily required open-ended funding. Caps on spending could be designed in a number of ways, such as a block grant under which states would receive a limited, pre-budgeted amount of money from the federal government, or a per capita cap, which would pre-determine the amount of money spent per person enrolled in Medicaid. No matter the specific form of spending limitation, the administration’s planned policy is not lawful. 

Legal Barriers To Capped Spending Proposals

More specifically, the administration would have to grant Section 1115 demonstration waivers to states seeking these limits, because the Medicaid Act does not contemplate such spending limitations. Demonstration waivers can be approved under Section 1115 of the Social Security Act, which gives the secretary of HHS authority to waive Section 1902 of the Medicaid Act if a state’s proposed waiver will further the purposes of Medicaid. The goal of these waivers is to allow states to experiment with certain aspects of the Medicaid program to improve beneficiary coverage or care. Section 1115 does not limit federal spending on demonstration waivers, but since the Carter administration, it has been HHS policy to seek federal budget neutrality in 1115 waivers, although states may spend as much as they like.

At least two statutory problems exist for such waivers in this context. First, Medicaid spells out federal payment within Section 1903, which states that the HHS secretary “shall pay to each State…the [federal match] of the total amount expended…as medical assistance under the State plan….” This language is not waivable under Section 1115, which explicitly permits waivers of Section 1902 but not Section 1903. (HHS can approve more spending than Section 1903 contemplates to match a state’s expansion of Medicaid coverage, but it cannot waive Section 1903.) As a result, HHS cannot cap the Medicaid funds it disburses to states, either per person or programmatically, because it must pay the federal match for the “total amount” of a state’s spending. Even if a state wanted to cap its own Medicaid spending, that would necessitate disenrollment and require waiver of many other Medicaid Act requirements such as sufficient state Medicaid funding, equal coverage of beneficiaries across the state, and adequate payment to providers.

Second, block grants are not “likely to assist in promoting the objectives” of Medicaid, the legal standard for HHS to authorize states’ proposals for demonstration waivers. Medicaid’s statutory purpose is to “furnish medical assistance” to eligible beneficiaries, a phrase that recently has been dissected in the context of HHS’s authorization of several 1115 waivers for Medicaid work requirements. The federal court hearing challenges to the legality of work requirements has interpreted “furnish medical assistance” to mean that Medicaid must pay for care, not simply promote a generalized idea of “health” or decrease cost. Spending caps would certainly decrease enrollment (like work requirements already have in Arkansas) and limit care across all kinds of Medicaid coverage, the opposite of furnishing medical assistance.

Any new CMS policy will likely follow the same pattern as the 2018 State Medicaid Director policy letter authorizing work and other conditions of eligibility. That letter promotes waivers for work requirements under the guise of “health” and cost concerns (although, more generally, CMS has been clear that it disagrees with Medicaid expansion). HHS is likely to offer similar reasoning here, allowing new limitations with a predictable impact on the “undeserving” expansion population. 

HHS’s recent losses in the work requirement cases may pose an obstacle to capped spending proposals. A recent US Supreme Court case may also create barriers. In Department of Commerce v. New York, the Court concluded that an agency cannot engage in sham regulatory processes. The Roberts-led majority expressed deep concern about the secretary of commerce’s predetermined goal of adding a citizenship question to the 2020 census, calling the secretary’s reasons for adding the question a “pretext” and “contrived” because the publicly stated reason for adding the question was totally unrelated to the actual rationale.

This kind of mismatch is likely to exist in the block grant context as well. No state would be able to serve the purposes of Medicaid, that is, to furnish medical assistance, through a cap on spending, because no matter the structure, such a cap would foreseeably result in disenrollment. But HHS cannot permit state waiver applications that seek to disenroll beneficiaries, which means that HHS and states may offer pretextual reasons for authorizing block grants.

Policy Harms To Patients From Capped Spending

Even putting aside legal obstacles to a capped spending system, block grants are simply bad policy. Proposals of this kind are predictably harmful to both beneficiaries and to state economic interests. The Congressional Budget Office has recognized that block grants encourage states to take actions that include restricting enrollment for legally eligible beneficiaries, limiting mandatory and optional benefits, decreasing already low reimbursement rates (which may lead providers to abandon the program), a combination of all three, and more. In some cases, states may pursue such restrictions but then face unexpected economic pressures, such as a natural disaster or a recession. For example, Puerto Rico, which already exists under an alternative and limited Medicaid program, has experienced these problems acutely in the wake of terrible hurricane damage to the island.

Take just one example of a foreseeable area in which a state might seek to limit benefits under a capped spending regime: prescription drug coverage. Prescription drugs have always been an optional category of care under the Medicaid program, but all states have chosen to cover them. That choice comes with a set of obligations as well as a set of benefits for states and beneficiaries. States must cover essentially all Food and Drug Administration-approved drugs, so that beneficiaries are able to access medically necessary products. However, because this coverage requirement limits states’ bargaining power with drug manufacturers, state Medicaid programs are legally entitled to preferred pricing benefits. Medicaid programs receive large statutory discounts off the average market prices of the products they purchase, obtain the “best price” among private market payers if that price is lower, and are protected if the price of a drug increases faster than inflation.

Even with these discounts, Medicaid prescription drug spending is projected to grow faster than spending on other health care services, putting steady pressure on limited state budgets. These pressures are likely only to increase, as new drugs are introduced at ever-higher launch prices. Indeed, Novartis has just launched a drug with a list price of $2.1 million, setting a new standard. Even if these drugs represent good value for the price, states will struggle even harder to pay for these products if they are operating within an inherently limited monetary environment.

Capped spending would prompt states to make dangerous choices for patients. Initially, states might try to exclude individual drugs from coverage, if only to increase their bargaining power and obtain greater discounts on particular drugs. Massachusetts recently requested a waiver to do just that, asking CMS to allow it to exclude particular drugs from its Medicaid formulary that have demonstrated little or no evidence of efficacy. Massachusetts was undoubtedly concerned that spending on some of these high-cost, low-value drugs was crowding out valuable spending elsewhere in its Medicaid program.

However, CMS denied Massachusetts’ waiver request. Although CMS did not explain the legal reasoning behind its denial, it did suggest that a state may choose to exclude drugs if it forgoes Medicaid’s statutory discounts. This strategy, though, is unlikely to lead to savings larger than the program was able to obtain already. Only if a state severely restricts the drugs it will cover, and therefore severely restricts patients’ access to care, could cost savings occur.

States could make other choices that are even more harmful to patients. For example, nearly half of states impose limits on the number of prescriptions Medicaid beneficiaries are able to fill at one time. States that do not have such policies might adopt them, and states that have already implemented such limitations might seek to tighten them—even though recent research suggests that such limits may be harmful to patients. An extreme cost-cutting decision would be to drop prescription drugs from coverage, although this likely would not be states’ first choice for constraining Medicaid expenditures.

States already have significant flexibility within the Medicaid program, which always has been state specific. The administration’s desired policy change attempts to bypass the law, raising serious separation of powers concerns. And capped spending would very likely involve disenrollment and other cost-cutting measures that endanger the lives of the most vulnerable patients. Under a capped spending policy, it is foreseeable that states would face cost-cutting choices that harm the health of Medicaid beneficiaries of all kinds and especially those relying on access to care such as the medications necessary to manage chronic diseases and other life-threatening conditions.

 

 

 

Could States Do Single-Payer Health Care?

Posted on by • Posted in 2020 Election Issues, Health Insurance Coverage Adequacy, Health Policy, Single Payer Health System, Single Payer Healthcare System • Leave a comment

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The Affordable Care Act (ACA) transformed the US health care system by increasing coverage, expanding federal involvement in private health insurance, and changing public expectations for access to affordable coverage. Yet, the ACA did not provide universal coverage and has proven unstable under political and legal attacks since its enactment in 2010. While proposals for replacing the ACA with single-payer health care have attracted national political attention, discussions of a federal single-payer system such as “Medicare for All” remain light on specifics. At the state level, however, state legislators have drafted and introduced dozens of detailed bills to implement single-payer systems. Our study of state single-payer proposals in the ACA era highlights the extent to which states must contort their health reforms to overcome federal legal hurdles—particularly the threat of preemption by the Employee Retirement Income Security Act (ERISA) of 1974—and prompts questions about whether states can actually implement single-payer health care.

State Single-Payer Proposals (2010–19)

We define state single-payer bills as legislative attempts to achieve universal health care coverage for all residents in a state by combining financing for health care services into a single, state-administered payer. Using this definition, we collected and coded bills introduced in state legislatures since 2010, identifying the number of unique proposals by excluding substantially similar legislation introduced in different chambers or with different designations in the same session. From 2010 through 2019, legislators in 20 states have proposed 59 unique single-payer bills (Exhibit 1).

Most, but not all, of the single-payer proposals come from states that expanded Medicaid under the ACA, leaving only a small fraction of the population uninsured. Thus, it appears that beyond achieving universal coverage, state single-payer bills also seek to control health spending through expansive rate-setting authority and streamlined administration, as well as to relieve individuals of their growing out-of-pocket expenses. These state single-payer bills share many common elements: They all provided universal eligibility for state residents, and most also included expansive provider eligibility, rate-setting for health care services and prescription drugs, low or no cost sharing for patients, comprehensive benefits, and limits on the ability of health insurers (but not employers) to offer coverage that duplicates the single-payer benefits.

Legal And Financial Hurdles For State Single-Payer Health Care

To finance these universal and comprehensive benefits, state single-payer bills use several strategies to capture health expenditures from the existing multipayer system, while navigating a number of financial and legal impediments. First, the state bills would consolidate federal funds from Medicare, Medicaid, and the ACA exchanges into the state single-payer plan using waiver provisions in those federal programs. The Department of Health and Human Services has considerable discretion to deny state applications for each of these federal waivers; however, and the state bills generally lack fallback plans for capturing federal funds should the agency deny the waivers. Nor do the state single-payer bills confront financial obstacles from state constitutional prohibitions on deficit spending, which constrain state plans when tax revenues fall during economic recession.

Second, but perhaps more crucially, state single-payer bills must find ways to redirect the employer-sponsored health plans that currently cover 49 percent of Americans—a daunting legal task under ERISA. ERISA preempts all state laws that “relate to” employer-sponsored benefits, so states cannot simply mandate that employers cease offering health benefits. States do retain broad power to regulate health care providers and health insurers, but ERISA preempts the application of state insurance regulations to employers’ self-funded health plans, which now comprise more than 60 percent of all employer-sponsored health benefits. ERISA challenges states’ abilities to capture employer health spending—a source of funding that would be critical to the viability of a single-payer system.

The labyrinth of ERISA preemption has inspired creative drafting of state single-payer bills to do indirectly what ERISA prohibits them from doing directly. Our survey revealed three strategies for state bills to capture employer expenditures and move employees into the state single-payer system: levy payroll taxes on employers and income taxes on employees; restrict providers from accepting private-insurer reimbursement; and allow the single-payer plan to pay for all eligible patients’ care, then recoup those payments from other coverage a patient may have. The taxes fund the single-payer plan’s coverage of resident employees and nudge employers to cease offering private coverage. The provider reimbursement restriction further encourages a shift to single-payer coverage by shrinking provider networks for private insurance. The pay-and-recoup provision enables those employers who wish to continue providing benefits to do so without fully eroding the administrative advantages of the single-payer system.

Nearly all states’ bills include one of these strategies; most include a combination of them. Vermont is the only state that has actually enacted single-payer legislation, before abandoning its implementation largely due to the cost of its payroll and income taxes.

The Unnecessary Uncertainty For State Single-Payer Health Care

To gird against the looming threat of ERISA preemption, state legislatures have resorted to elaborate measures that may dilute their broader aims of achieving universality, solidarity, and efficiency in health care coverage. There are strong legal arguments why provisions to capture employer health spending should survive ERISA preemption. States have wide latitude to levy taxes and regulate health care in general, and providers in particular. The bills’ provisions do not require employers to alter their employee benefit plans, they merely encourage a shift to the state’s health plan. But federal appellate courts have split over the extent to which states may use financial incentives to affect employers’ health benefit decisions. In short, state single-payer plans should survive ERISA preemption, but courts’ unpredictable applications of ERISA cast a pall of uncertainty over the viability of single-payer plans.

State single-payer proposals face formidable legal uncertainties that a federal single-payer plan would not. On the other hand, health reform of this scale presents an experiment well-suited to the laboratories of the states. States’ experimentation with single-payer care could test various models and inform federal health reform debates about the benefits of single-payer over more incremental reforms, or about structuring a single-payer system to minimize disruption for health care providers and patients. The road to reform often starts with the states. This was the path for the ACA, which was first modeled in Massachusetts, and for Canada’s single-payer system, which got its start in Saskatchewan. Significant health reforms tested at the state level may pave the road to better policy at the national level.

While ERISA preemption has bedeviled state health reforms for decades, this wave of state single-payer legislation highlights the depth of the problem. At a time when states are the engines of health policy innovation, ERISA continues to unnecessarily thwart state health reform efforts. Thus, any meaningful health reform should start with ERISA reform. For example, Congress could amend ERISA to narrow its preemption provisions or add a waiver provision similar to other federal health care statutes. While states may successfully contort their health reform efforts to avoid ERISA preemption, they should not have to do so. The time has come to remove ERISA’s obstructions and to unlock states’ capacities as laboratories of health reform.

Most, but not all, of the single-payer proposals come from states that expanded Medicaid under the ACA, leaving only a small fraction of the population uninsured. Thus, it appears that beyond achieving universal coverage, state single-payer bills also seek to control health spending through expansive rate-setting authority and streamlined administration, as well as to relieve individuals of their growing out-of-pocket expenses. These state single-payer bills share many common elements: They all provided universal eligibility for state residents, and most also included expansive provider eligibility, rate-setting for health care services and prescription drugs, low or no cost sharing for patients, comprehensive benefits, and limits on the ability of health insurers (but not employers) to offer coverage that duplicates the single-payer benefits.