Judge upholds short-term plan expansion in Trump win against ACA


Dive Brief:

  • A district judge ruled in favor of a controversial Trump administration policy expanding the sale of short-term health insurance Friday, advancing conservative efforts to weaken the Affordable Care Act.
  • Judge Richard Leon of the U.S. District Court for the District of Columbia rejected plaintiffs’ claims that the limited coverage unlawfully undermines the ACA, basing his decision partly on the elimination of the individual mandate tax penalty in 2017.
  • The plaintiffs, including the Association for Community Affiliated Plans, the National Alliance on Mental Illness and AIDS United, plan to appeal the decision, with ACAP CEO Margaret Murray slamming the policy as “arbitrary and capricious” in a statement following the ruling.

Dive Insight:

Originally intended as stopgap coverage while consumers transition between insurance plans, the Obama administration limited short-term health plans to three months. In a rule that took effect Oct. 2, the Trump administration expanded the length of the coverage to 12 months, renewable for up to three years.

Like many other Trump administration healthcare policies, that led to a lawsuit.

The plaintiffs had a hard skeptic in Leon, who seemed unmoved by their arguments in the case in late May. In a position backed up by outside research, the group maintained Trump’s expansion of the short-term health plans could lure healthier Americans away from the ACA exchanges, weakening the risk pool and raising premiums across the board.

Legal representation for the administration countered there was consumer demand for insurance more inexpensive than that offered through the ACA marketplace, and that there was no evidence the plans were attracting healthier people away.

“To be sure, the ACA’s various reforms are interdependent and were designed to work together as features of the individual exchange markets,” Leon wrote in his decision. “However, Congress clearly did not intend for the law to apply to all species of individual health insurance.”

It’s been a busy week for the judge. Leon is also overseeing the beleaguered CVS-Aetna settlement pact and will hear oral arguments on the merger Friday afternoon.

Despite Republican lawmakers’ highly public failure to repeal the ACA in 2017 and GOP attempts to declare the ACA unconstitutional in a case now in front of the Fifth Circuit Court of Appeals, the party is trying to rebrand itself as the party of healthcare going into the 2020 presidential election.

The limited coverage options, often decried as “junk plans” by critics, aren’t required to cover the 10 essential health benefits protected under the ACA or to cover pre-existing conditions. They also don’t have to pay out at least 80% of premium dollars to fund medical and preventive care.

In March, the House Energy and Commerce Committee launched an investigation into the marketing and business practices of the plans. Leading Democrats, led by Frank Pallone, D-N.J., requested documents and information from 12 companies that either sell, market or help consumers in purchasing the limited coverage, including market giants Anthem and UnitedHealth Group.

In many cases, consumers may not be aware they’re being peddled bare-bones coverage. Tampa, Florida-based Health Insurance Innovations is currently being sued by two policyholders that were left with tens of thousands of dollars in medical bills for care they thought was covered under their short-term plans.

Other attempts by the Trump administration to undermine the ACA have hit legal roadblocks.

In March, another federal judge struck down its attempt to allow small businesses to join together to create association health plans exempt from ACA rules, slamming it as an “end run” around the law.

The same month, another judge rejected Medicaid work requirements in Kentucky and Arkansas requiring low-income Americans to meet stringent work or education benchmarks to receive coverage under the program.

Shares of companies that sell short-term plans, including Health Insurance Innovations, spiked following news of the decision Friday.




Rising health insurance deductibles fuel middle-class anger and resentment


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The IRS rolled out new rules yesterday to help people who have chronic diseases, but are also on the hook for thousands of dollars of their medical bills.

How it works: The new rules allow insurers to cover treatment for chronic conditions, like diabetes and high blood pressure, before patients have met their deductibles.

  • This only applies to high-deductible plans that also offer a health savings account — which is an increasingly common arrangement.

My thought bubble: High-deductible plans and chronic disease are both pretty ubiquitous, and this will surely help sick people get the care they need.

  • As the Wall Street Journal notes, there’s a broad base of support for these new rules, including patients, insurers and policymakers from both parties.

But it’s hard to look at this change without asking some more fundamental questions about the rise of deductibles.

  • After all, making people pay for more of their own care is the whole point. High-deductible plans were designed to give people more “skin in the game.”
  • It only stands to reason that when you require people to pay a couple thousand dollars of their own bills before insurance kicks in, that’s primarily going to affect people who have a couple thousand dollars in health care bills.

Deductibles are a large and growing source of frustration for middle-class families, the L.A. Times’ Noam Levey writes.

  • Neither high deductibles nor health savings accounts have put a dent in health care prices, as their advocates thought they would.
  • And families with the highest deductibles are among the least satisfied with their employer coverage.

Go deeper: Workers’ health care costs just keep rising



Family of four faces $25,000 in average annual unsubsidized ACA costs in 2019


Costs for two- and four-person families rose despite overall premiums being relatively flat compared to last year.

Average 2019 health insurance premiums are $1,403 per month for families of four who don’t qualify for subsidies under the Affordable Care Act, according to a report released today by eHealth.

The 2019 Health Insurance Index Report analyzes costs and trends among unsubsidized consumers who purchased individual and family coverage for the 2019 plan year at eHealth during the ACA’s most recent open enrollment period. eHealth, Inc. dba as eHealthInsurance, is a private online marketplace for health insurance.

The data and research is focused on ACA market consumers who earn too much per year to qualify for government subsidies that help to reduce what they spend on insurance premiums and out-of-pocket costs. The new report is based on individual and family health insurance applications submitted by unsubsidized eHealth consumers between November 1 and December 15, 2018.


While overall premiums were relatively flat compared to the 2018 open enrollment period, costs for two- and four-person families hit a couple of new milestones.

The first is that total combined annual premiums plus deductibles for a four-person family topped $25,000 for 2019. The second is that average premiums for two-person families broke $1,000 per month for the first time this year.

Deductibles marked their first significant decline since 2014, when the ACA took effect. he average individual deductible decreased 6% for 2019, while the average family deductible decreased 8%.

Plan selection trends for 2019 show that HMO plans continue to dominate the market, representing 56% of all plan selections, the same as in 2018.

Meanwhile, exclusive provider organization, or EPO plans reach 26% of all plan selections, up from 20% in 2018; and silver plans reach 35% of all plan selections, up from 30% over last year.


An estimated 87% of Healthcare.gov customers received subsidies. Their premium cost after subsidies is $87 a month, according to the report. But costs borne by the unsubsidized are significantly greater. At eHealth during the fourth quarter of 2018, which included the ACA’s 2019 open enrollment period, 64% of applications were for consumers purchasing ACA-compliant plans not eligible for use with subsidies.

Premiums for those with employer-sponsored health insurance plans have also been on the rise.

Between 2008 and 2018, such premiums increased 55 percent — twice as fast as workers’ earnings, according to a June report from Kaiser Family Foundation. And since 2006, the average health insurance deductible for covered workers soared by more than 200 percent — from an inflation-adjusted average of $379 to more than $1,300 today.


One State’s Big Leap to Reduce Medicare and Medicaid’s Out-of-Pocket Costs


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Washington state is going further than any other to cover aging Americans’ medical bills.

More than 15 percent of Americans have already reached the age of 65, and by 2030 that number will have risen to one in five as the last of the baby boomers reach retirement age. Despite these numbers, insurance options to cover the long-term health-care needs that many aging Americans will need are elusive. While Medicare pays for medical services in a nursing facility, it covers the cost of the stay itself only for short stints. And Medicaid typically covers long-term care only for those Americans with virtually no assets.

It’s an issue that state legislatures are continually revisiting, but overall there’s been little progress toward meeting the full health-care costs of the elderly. This year, however, the state of Washington passed legislation that will go further than any other state in closing coverage gaps for a large proportion of its residents.

The program will be funded by a wage tax of about 0.6 percent, which kicks in in 2022. Beginning in 2025, the state will offer a maximum lifetime benefit of $36,500 for a person to use for long-term care needs, with the benefit indexed to rise annually with inflation. The coverage isn’t universal: To use the money — up to $100 a day — a resident will need to have worked and paid into the program for at least three years in the past six or for a total of 10 years with five years of uninterrupted work. In addition to the standard stay in a nursing home, the benefit will cover items such as installing wheelchair ramps at home and providing services such as those offered at an assisted living facility or by in-home care.

A challenge for the state will be to make sure that as residents’ paychecks reflect the new wage tax, they understand where their money is going. “We need a backstock of resources, and that’s what this does,” says Jason McGill, health policy adviser to Gov. Jay Inslee. “They might not know what they’re paying into, and it’s our next step to communicate what that is and why it’s important.”

While Washington’s approach is broader than most, advocates say there are plenty of other ways to chip away at the unaffordability of health care for the elderly. “It’s not one thing or the other. It’s a series of policy changes that will change the landscape,” says Elaine Ryan, vice president for state advocacy and strategy integration at AARP.

Ryan lists helping with caregiver expenses as a good place to start, given that the average out-of-pocket cost for a caregiver is $7,000 a year. Hawaii took such a step in 2017 with legislation providing $70 a day for up to a year for caregiver expenses. A couple of other states are weighing tax credits for caregiving costs, and a bipartisan federal bill taking that approach is pending.

Another step that would lessen the burden of long-term health care costs would be to implement more flexible sick-leave policies that would make it easier for employees to care for aging relatives. “It’s hard to believe you don’t have that for anything other than your own health,” says Ryan.

Whatever approaches a state considers must be framed around the need for options across the continuum of a person’s life, in Ryan’s view. “We need these systems to be more contemporary,” she says. “That’s why when we communicate the need for these policies at the state level, we refer to them as a whole-family caregiving journey.”


The Battle for Health Care


The Battle for Health Care

The latest Republican effort to destroy the Affordable Care Act appears likely to reach the Supreme Court in the heat of the 2020 Presidential race.

One of the central questions of the 2020 Presidential campaign was posed last week before the Court of Appeals for the Fifth Circuit, in New Orleans, to a lawyer for the Trump Administration, who didn’t even pretend to have an answer. A three-judge panel was hearing the appeal of a ruling by Reed O’Connor, a Texas district-court judge, that the Affordable Care Act, or Obamacare, was unconstitutional in its entirety—an opinion that the Administration has endorsed. O’Connor had ordered that the government cease implementing or enforcing all aspects of the A.C.A., including its protections for people with preëxisting conditions, its ban on lifetime caps, its expansion of Medicaid and coverage for young adults on their parents’ plan, and its support for the treatment of addiction. The order could cost tens of millions of people all or much of their coverage, and throw the health-care system, which accounts for a fifth of the economy, into chaos. But O’Connor, in what Judge Jennifer Elrod, of the Fifth Circuit, described with no apparent irony as a “modest” act, had stayed his own order, pending appeals. Here, now, was the first appeal. So, if the stay is lifted, Elrod asked, “What’s the government planning to do?”

As the lawyer, August Flentje, struggled to answer (“This is a very complicated program—multifaceted, obviously”), it became clear that Republican opposition to the A.C.A. remains a project of blind destruction. One of President Trump’s few health-care initiatives, on drug prices, fell into disarray last week, with one measure defeated in court and another abandoned. Otherwise, he has mostly complained that Democrats want to extend care to, among others, undocumented people. His almost pathological need to undo President Obama’s legacy can be added to the mix; the restraint sometimes said to characterize conservatism can be subtracted. And there is a growing conviction among the A.C.A.’s opponents that the current Supreme Court, given the addition of Neil Gorsuch and Brett Kavanaugh, will back them up.

They may be right; the threat that this case, Texas et al. v. United States, presents to Obamacare should not be underestimated, especially as it is likely to reach the Court in the heat of the 2020 campaign. The case was brought by twenty states whose most distinct common quality is their redness. Maine and Wisconsin dropped out of the suit after the 2018 midterm elections, when their Republican governors were replaced by Democrats. When the Trump Administration declined to defend the law, a group of mostly blue states—currently twenty-one—got permission from the district court to do so. They were joined by a lawyer for the Democratic-controlled House of Representatives. When Kurt Engelhardt, another of the appeals judges, pointedly asked that lawyer why the Senate hadn’t sent someone to defend the law, he replied that the Senate “operates differently.” It is, after all, led by Mitch McConnell, not Nancy Pelosi.

The complaint concerns the so-called “individual mandate.” When the A.C.A. was enacted, in 2010, it directed every American to get insurance or face a penalty, which was calculated on a sliding scale (and dropped altogether for low-income people; other groups, such as prisoners, were exempt). The constitutionality of the mandate was the subject of an earlier challenge to the A.C.A., but Chief Justice John Roberts wrote an opinion classifying the penalty as a tax, which Congress has the power to levy. Trump’s 2017 tax package, however, reduced the penalty to zero. For the A.C.A.’s opponents, this led to a wild surmise: if the mandate had survived because the penalty was a tax, the absence of a tax might make the mandate unconstitutional. That point might seem academic—constitutional or not, the mandate is, for all practical purposes, already gone, now that there is no penalty for ignoring it. But Texas et al. makes a far more radical claim: The phantom mandate is not only unconstitutional but “inseverable” from the rest of the law. If it is invalid, then all nine hundred and six pages of Obamacare are also invalid.

This argument is as senseless as it is ruinous. It’s like saying that the 2017 tax bill was a stealth total repeal of the A.C.A., something that even leading Republicans denied at the time. And yet at least two of the judges, Elrod and Engelhardt, appeared inclined to accept it. The main issue for them seemed to be just how much of Obamacare to trash.

On that question, too, the Administration has been erratic. Initially, it argued that the court should invalidate only certain provisions, such as preëxisting-condition protections—a major feature that Trump has elsewhere claimed to like. Then, in March, the Administration said that it agreed with the Texas ruling: burn it all. Two months later, though, it argued that, while every word of the law was invalid, any relief that the lower court granted should be limited to damages suffered by Texas and the other states, without defining what those damages might be. This led to utter confusion in the oral arguments: Would there be different versions of the law for different states? Which provisions might the government want to keep? (“You would leave in place the calorie guides?” Judge Elrod asked.) Flentje, the Justice Department’s lawyer, told Elrod that, really, “things don’t need to get sorted out until there’s a final ruling”—that is, from the Supreme Court.

Obamacare has reduced the number of uninsured Americans by twenty million and, while the system is imperfect, premiums are more manageable than is often reported. But, as the Texas case suggests, it can still all be undone. And there is much more to do; the United States has not achieved universal coverage. All the Democratic Presidential front-runners share that goal, but they have what are sometimes sharply diverging proposals for getting there. Vice-President Joseph Biden, Mayor Pete Buttigieg, of South Bend, and former Representative Beto O’Rourke, of El Paso, want to build on the A.C.A. and make Medicare available to all as a public option, alongside private insurance. Senator Bernie Sanders, of Vermont, has a Medicare for All bill that aims to displace private insurance, and in most cases make it unlawful, leaving a public option as the only real option. Senators Elizabeth Warren and Kamala Harris have signed on to Sanders’s plan, although Harris has at times tried to downplay the impact on private insurance.

The next Democratic debates, which will be held on July 30th and 31st, may sharpen the candidates’ positions or further polarize them. The Democrats need a plan to protect Americans’ health coverage. And they need a plan to win in 2020. Those might even be the same thing. ♦

Trump craves big action on drug prices to take to the campaign trail


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There may be a modest slowdown this year in the growth of drug prices, but it’s nowhere near the seismic shift President Trump has called for. And that seems to be irking the president to no end.

Much of the president’s frustration has been borne by Health and Human Services Secretary Alex Azar, a former drug executive who until very recently pushed back on proposals to allow the importation of lower-cost drugs from Canada and give the government the tools to directly negotiate lower drug prices in the Medicare program, my Washington Post colleagues Yasmeen Abutaleb, Josh Dawsey and Laurie McGinley report.

But now, under intense pressure, Azar has reversed his long-standing opposition to at least one of those ideas: drug importation, an idea typically embraced by Democrats and dismissed by Republicans and the drug industry.

“Inspired by the president’s passion, Secretary Azar has been pushing FDA to go even bigger and broader on importation,” a senior administration official told my colleagues, although the official declined to detail specific policy changes.

It’s been a little more than a year since Trump promised Americans, in a speech from the Rose Garden, he would slash the price of prescription drugs in the United States. In that time, his administration has proposed some bold new regulations that could help move the needle, but only one has so far been finalized — a new requirement that went into effect this month for drugmakers to list prices in television ads.

While Azar has championed a proposal to eliminate the secretive rebates drug manufacturers pay to insurers, opposition to the idea from Domestic Policy Council head Joe Grogan is hamstringing the effort, my colleagues report. Grogan dislikes its estimated $180 billion price tag and doesn’t view the measure as central to the administration’s drug-pricing effort, they write.

There’s another proposal under review at the Office of Management and Budget to tie some Medicare drug prices to those paid by other countries, but it’s opposed by key Senate Republicans and the drug industry.

A senior administration official downplayed talk of tension between Azar and Grogan, saying the two, along with White House legislative affairs director Eric Ueland, speak three times a week about what is happening on Capitol Hill.

And on Monday, the New York Post published a joint op-ed by Azar and Grogan praising a recent executive order from Trump aimed at more transparency around the prices negotiated between hospitals and insurers.

“President Trump has promised a better vision: a health care system that treats you like a person, not a number,” Azar and Grogan write. “He wants to hold providers and Big Pharma accountable to transparency and reasonable prices.”

Meanwhile, drugmakers have continued hiking prices, albeit a bit more slowly on average. List prices for branded drugs grew 3.3 percent in this year’s first quarter, compared with 6.3 percent in the first quarter of 2018, according to SSR Health pharmaceutical analysts. Bernstein analysts told Politico that drug prices jumped 10.5 percent over the past six months, less than over the same period last year but still four times the rate of inflation.

Trump has frequently referenced some encouraging data from the consumer price index, where the index for prescription drugs fell by 0.6 percent for the 12 months ending in December, according to the Bureau of Labor Statistics. The index also dropped in January, February, March and May — a string of monthly declines not seen since 1973, my Post fact-checking colleagues recently noted.

Yet these data are a far cry from the drastic price reductions Trump would love to tout on the campaign trail as he seeks reelection in 2020.

“By all accounts, drug prices are a fixation for Trump, who frequently sends advisers news clippings and summons them to the White House to rant about the issue,” Yasmeen, Josh and Laurie write. “The guy likes to make money, and he thinks they make too much money,” said one former senior administration official.

A senior administration official told my colleagues there was frustration at a lack of executive branch tools to lower drug prices and that some of Trump’s ideas were ambitious but unworkable.

“Disagreements over how to proceed have created a policy free-for-all as different advisers — and the president himself — pursue what appear to be ad hoc and sometimes dueling approaches,” they write. “Trump entertains proposals usually pushed by progressive Democrats one moment and free-market GOP ideas the next.”


Out-of-pocket costs rising even as patients transition to lower-cost care settings


Patients saw increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and ED care in 2018.

A new TransUnion Healthcare analysis has found that most patients likely felt a bigger pinch to their wallets as out-of-pocket costs across all settings of care increased in 2018. The new findings were made public yesterday at the 2019 Healthcare Financial Management Association Annual Conference in Orlando.

The analysis reveals that patients experienced annual increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and emergency department care last year.

In 2017, the average inpatient cost was $4,068; the average outpatient cost was $990; and the average emergency department cost was $577.

In 2018, the average inpatient cost was $4,659; the average outpatient cost was $1,109; and the average emergency department cost was $617.


There are certain factors that are influencing this trend, according to Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare.

“Patients are becoming more aware that emergency care is expensive and somewhat inefficient,” Wiik said. “No one wants to go to the emergency room unless we have to, because we don’t want to deal with the time there or the expense. They aren’t the best place to get primary or even urgent care.”

Another factor, he said, is that providers realize the emergency department is a care setting of last resort for many. Providers want to make sure that have room in the ED for cases that are real emergencies, so they’re essentially curating their patients, steering patients to the most cost effective settings possible — often primary care, which is the least expensive setting.

Noting that the biggest annual increases were in inpatient and outpatient care, Wiik said that was largely a function of utilization and just a general wariness, in addition to the fact that most EDs have pretty flat contracts. Financial communication with patients is also an issue.

“Most people can’t afford the average out-of-pocket, so providers are really trying to educate patients as early as they can about those costs,” said Wiik. “Emergency care is a really hard place to educate people on finances, let alone collect on them.”


The analysis found that, during a hospital visit, patients are likely experiencing cost increases that continue the trend of higher out-of-pocket costs. About 59% of patients in 2018 had an average out-of-pocket expense between $501 and $1,000 during a healthcare visit. This was a dramatic increase from 39% in 2017. Conversely, the number of patients that had an average out- of-pocket expense of $500 or below decreased from 49% in 2017 to 36% in 2018.

And with out-of-pocket costs increasing, the trend toward consumerism is growing as more patients, payers and providers transition to lower cost settings of care.

One example: Inpatient care, traditionally the most expensive healthcare option, has seen a leveling off with the percentage of price estimates remaining at 8% between 2017 and 2018. The percentage of outpatient services estimates, generally about one-quarter of the cost of inpatient services, rose in that same timeframe from 65% to 73%.

“Patients are likely seeing more providers and payers recommending that they take advantage of cost-effective healthcare options, which brings down costs for all parties,” said Wiik. “This is especially important as costs continue to rise in all areas of healthcare, particularly in inpatient, outpatient and emergency department services.”

This is having an impact on providers, payers and patients, he said.

“Let’s pretend Joanna had an MRI in her head, and that ran $3,200. That might have been paid by Blue Cross Blue Shield, and $100 out of Joanna’s pocket. Now Joanna’s paying $300. Most patients don’t look up how much the MRI’s going to be. They just get the bill later and try to figure it out. I think the patient portion of the bill is going to be in the 35, 40% range very soon. What that means is we’re quickly approaching half of the bill coming from the patient and half from the payer. That’s not insurance anymore, that’s a bank account.”

A recent Kaiser Family Foundation study indicated that 34% of patients are finding it difficult to pay their deductible before insurance kicks in. In addition to patients being challenged to make payments, the trend is that providers are also feeling the pressure of increased denial rates and write-offs, which is increasing bad debt.

Considering these factors together — increased out-of-pocket expenses, a patient’s challenge to make payment, and increased denial rates — collecting payments from all payers is critical for providers. In order for providers to ensure they receive payment for the patient-care services rendered, it is vital that they implement strategies that maximize reimbursements.