Rate of uninsured people increases for first time since ACA rolled out


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Roughly 27.5 million people, or 8.5% of the U.S. population, had no health insurance at some point in 2018, according to new figures from the Census Bureau.

Why it matters: Last year’s uninsured rate increased from 7.9% in 2017 — the first time the uninsured rate has gone up since the Affordable Care Act has been in effect.

Between the lines: The uninsured population does not include the “underinsured,” or people who have medical coverage but face prohibitively high deductibles and out-of-pocket costs.

  • The figure also does not include people who have short-term plans, association plans and religious-based sharing ministries — policies the Trump administration has promoted, but that have holes in coverage that could leave people on the hook for high costs.

The intrigue: The type of coverage that witnessed the largest decline in 2018 was Medicaid, which fell 0.7 percentage points.

  • 4 states where the uninsured rate had a statistically significant increase were Alabama, Idaho, Tennessee and Texas, all of which have not fully expanded Medicaid under the ACA.

The bottom line: The uninsured rate is still markedly lower before the ACA became law, but it’s an odd paradox to see more people lose health coverage even though the economy created more jobs.



House committee to discuss DSH cut repeal next week


The House Energy and Commerce Committee next week will consider a full repeal of the Medicaid disproportionate share hospital cuts, a sign that hospitals are getting closer to securing the top lobbying priority for safety net providers and academic medical centers.

The committee will hold a hearing next Tuesday on proposed legislation from Rep. Eliot Engel (D-N.Y.), whose home state gets the single largest so-called Medicaid DSH allotment in the country. In fiscal 2018, New York received $1.8 billion of the roughly $12 billion in annual federal payments.

Engel has pitched a full repeal of the cuts mandated by the Affordable Care Act, which are set to take effect Oct. 1. Should those cuts move forward, they would reduce federal DSH payments to states by $4 billion in fiscal 2020 and $8 billion in fiscal 2021. An aide to Engel said that a full repeal “provides the long-term solution.”

Medicaid DSH is the second-largest federal program to boost hospital Medicaid funding, representing about $12 billion in federal spending annually. It has been the subject of a political fight over proposed reforms to the program.

Last week, 300 of the 435 U.S. House of Representatives lawmakers sent a letter to the chamber’s leadership urging a two-year delay to the DSH cuts, and hinted that some in Congress believe the Medicaid DSH formulas need to be reconfigured, calling for a “sustainable, permanent” solution.

“This delay will ensure that hospitals can continue to care for the most vulnerable in our communities,” the lawmakers wrote, led by Engel and Rep. Pete Olson (R-Texas).

The amount the federal government pays out for DSH varies enormously across states and is mostly arbitrary, reflecting the caps set by Congress in 1992 instead of a relevant benchmark.

Florida, where about 3.3 million people are uninsured, gets the exact same federal DSH allotment as Connecticut, where about 245,000 people are uninsured.

Finance Committee Chair Chuck Grassley (R-Iowa) has said he wants to see a reset. Sen. Marco Rubio (R-Fla.), whose state has a strong vested interest in a formula change, has used the Sept. 30 deadline to push a proposal that would base the federal dollar allotment on a particular state’s share of U.S. citizens living below the poverty level.

But the major trade groups representing DSH hospitals continue to push for a simple delay, since their constituents include hospitals in all the states. Dr. Bruce Siegel, CEO of America’s Essential Hospitals, said at a briefing to House staff earlier this month that he’d be open to a formula change as long as hospitals don’t see cuts to existing funding. That means Congress would have to allocate even more money to the program.

House Speaker Nancy Pelosi (D-Calif.) said she backed another delay when she addressed American Hospital Association’s annual meeting in April. She noted that she wouldn’t back a program overhaul.

“We cannot support efforts that will reward states for not expanding Medicaid or simply take DSH money from some other state and give it to others,” she said. “Who thought that was a good idea?”

The DSH debate doesn’t fall along the lines of which states expanded Medicaid or not. Alabama and Missouri haven’t expanded Medicaid but receive high federal DSH allotments, and would likely lose money if Congress decided to redistribute the existing payments.

Although the policy rationale behind the ACA-mandated cuts was that Medicaid expansion would shrink hospitals’ need for DSH money, high-DSH expansion states such as New York and New Jersey aren’t giving an inch.

Siegel framed the debate over expansion states’ need as being “a little more complicated now” than in the early years of the ACA.

“I think the market has changed in the last eight years or nine years when we started down the road of Medicaid expansion,” he said at the Capitol Hill staff briefing.

He pointed to the slight rise in the uninsured rate recently, as well as the increase of high-deductible plans that put more fiscal burden on enrollees.

“We are frankly concerned about any moves to move us toward skinny health plans,” he added.

Enrollment in more bare-bones commercial plans doesn’t really affect the Medicaid enrollment, but he argued that expansion still brings Medicaid shortfall — which is the difference between Medicaid and Medicare reimbursement.

“If you have 70% Medicaid patients which some of our hospitals do, you are in a terrible disadvantage in terms of payment streams, with the shortfall becoming enormous for you,” he said.

There is another Medicaid program that can help hospitals with shortfall: the “upper payment limit” supplement for Medicaid fee-for-service. States can deploy UPL payments to hospitals in order to increase their reimbursement based on rates Medicare would have paid for the same treatment.

UPL is the largest Medicaid supplemental funding program, with about $13 billion in annual spending according to the Medicaid and CHIP Payment and Access Commission data from fiscal 2017.

The UPL program is also under scrutiny by MACPAC, whose analysts found that 17 states have overspent billions of these payments.




White House runs into health-care industry hostility as it plans executive order


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President Trump is preparing to issue an executive order to foster greater price transparency across a broad swath of the health-care industry as consumer concerns about medical costs emerge as a major issue in the lead-up to next year’s presidential election.

The most far-reaching element favored by the White House aides developing the order would require insurers and hospitals to disclose for the first time the discounted rates they negotiate for services, according to health-care lobbyists and policy experts familiar with the deliberations.

The idea has stirred such intense industry opposition, however, that it may be dropped from the final version, the sources said.

Compelling disclosure of negotiated rates “would have the ultimate anti-competitive effect,” said Tom Nickels, the American Hospital Association’s executive vice president for government relations and public policy. “I know they are aware of the concerns.”

Other parts of the order are expected to make it easier for people on Medicare, the federal insurance program for older and disabled Americans, to find out what they would pay for treatment at various hospitals by widening the range of services for which hospitals must post their prices.

The order also may include an effort to promote more competition among hospitals by slowing a trend toward consolidation, according to an administration official who spoke on the condition of anonymity about details that continue to take shape.

“We’re still ironing it out,” the official said.

The executive order, likely to be announced by mid-June and first reported by the Wall Street Journal, would carry the force of law but not bring about immediate change. Such orders essentially direct federal agencies to rewrite rules to advance their goals — in this instance, the departments of Health and Human Services, Labor, and Justice, according to people familiar with the White House’s plans.

The order’s moving parts reflect a conservative conception of how to tame rising health-care costs, relying on competition — the idea that consumers will make prudent, price-minded choices if they are given enough information and options about where to get their care. Critics say that patients are seldom in a position to comparison-shop, following their doctors’ recommendations or confronting medical emergencies.

With surveys showing that voters trust Democrats significantly more than Republicans to solve problems in the health-care system, the order is, in part, a strategy by the White House to portray Trump as an ally of consumers for his reelection campaign.

“My understanding is they are trying to figure out what is going to have high splash value,” said Dan Mendelson, founder of Avalere Health, a Washington-based consulting firm.

The executive order would be Trump’s third relating to health care. Hours after his inauguration, he signed an order giving agencies broad powers to undo regulations the Obama administration had created under the Affordable Care Act. In October 2017, Trump signed another order intended to bypass rules under that law, by making it easier for individuals and small businesses to buy alternative insurance with lower prices, less coverage and fewer consumer protections.

Unlike the first two, the upcoming order would be the first on a theme embraced by both political parties.

Republicans and Democrats alike have introduced nearly two dozen bills related to transparency so far this year, and two major bills are in draft form. Most are focused on curbing the price of prescription drugs, and others are designed to protect patients from what have been termed “surprise” hospital bills involving treatment by physicians outside their insurance networks.

The administration official said the executive order would focus on urging hospitals to increase price transparency for consumers, but the official did not specify how far the policy will go.

The work is being directed by Joe Grogan, director of the White House’s Domestic Policy Council, although senior HHS officials are heavily involved, according to several people who have had conversations with those engaged in the process.

The hospital industry has been consulted by the White House, according to one industry lobbyist. But an insurance industry official said the White House has not reached out to health insurers and has “declined to discuss its thinking on an executive order when asked by industry representatives.”

Both hospitals and insurers are vehemently opposed to being told they need to disclose the rates that they negotiate with one another.

“There is good transparency and bad transparency,” said Kristine Grow, spokeswoman for America’s Health Insurance Plans, a main industry trade group. “Good transparency provides consumers with information they can use to make their own smart decision, and causes health-care prices to go down for everyone

“This is bad transparency, because it is highly likely to cause prices to go up for everyone,” Grow said. If all the parties need to expose what rates they were willing to accept, she said, “it creates a floor for negotiations, not a ceiling.”

Nickels of the American Hospital Association said, “In order for entities in any sector of the economy — health care included — to be able to create a situation where there is give and take, there has to be some privacy.”

ACA Litigation Round-Up: Risk Corridors, CSRs, AHPs, Short-Term Plans, And More


Litigation over various parts of the Affordable Care Act (ACA) and related regulations continues. ACA challenges are now under consideration by the Supreme Court and federal appellate and district courts across the country. This post provides a status update on ongoing litigation over the risk corridors program, cost-sharing reductions, the risk adjustment program, association health plans, and short-term plans. A previous post discussed the status of litigation over the contraceptive mandate.

Risk Corridors

As regular readers know, insurers sued the Department of Health and Human Services (HHS) for failure to make more than $12 billion in outstanding risk corridors payments. Lower court rulings were mixed. In June 2018, a three-judge panel of the Federal Circuit held that the government did not have to pay insurers the full amount owed to them in risk corridors payments. By a 2-1 majority, the court concluded that the ACA required the government to make risk corridors payments, but this obligation was suspended by subsequent appropriations riders that required these payments to be budget neutral.

The insurers’ request for en banc review by the Federal Circuit (meaning the case would be reheard by the entire Federal Circuit bench) was denied in November 2018. The insurers then petitioned the Supreme Court to hear their appeal in early February 2019. The petitions from the four insurers can be found here: Moda Health PlanBlue Cross and Blue Shield of North CarolinaLand of Lincoln, and Maine Community Health Options. The case is focused on whether Congress can use the appropriations process to amend or repeal substantive statutory payment obligations and whether these changes can be applied retroactively.

In early March, an array of stakeholders filed nine amici briefs, all in support of the Supreme Court hearing the cases. Briefs were filed by the U.S. Chamber of CommerceAmerica’s Health Insurance Plans, the Blue Cross Blue Shield Association, the National Association of Insurance Commissioners, the Association for Community Affiliated Plans19 state attorneys general led by Oregonsix insurers led by Highmark, and economists and professors.

The federal government’s response was initially due on February 4 but the Trump administration requested and received two extensions to file its response on May 8, 2019. In its opposition brief, the federal government asks the Supreme Court not to accept the appeal. The brief includes many of the same arguments made in the lower courts. In the government’s view, it was not required to make full risk corridor payments under the ACA because there was no appropriation to make such payments. Even if there was an obligation to do so, this obligation was subsequently eliminated by appropriation riders added by Congress. The federal government asks the court to look at the congressional history and context of the appropriations riders in precluding HHS from making full risk corridor payments.

The insurers have one more opportunity to respond before the Supreme Court considers whether to accept the appeal or not. If the Supreme Court does not agree to hear the case, the ruling by the Federal Circuit will stand, and insurers will not receive the more than $12 billion they are seeking.

Cost-Sharing Reduction Payments

In a related challenge, insurers have sued HHS for at least $2.3 billion in unpaid cost-sharing reduction payments (CSRs) since the Trump administration decided to stop making the payments in October 2017. To date, six insurers—in front of three different judges at the Court of Federal Claims—have succeeded in their challenges over unpaid CSRs. One of these lawsuits, brought by Common Ground Healthcare Cooperative, is a class action that includes more than 90 insurers. More insurers are being added to the class action on a regular basis, including four March, four in April, and one in May.

Federal Circuit

Three of the cases—brought by Montana Health CO-OP, Sanford Health Plan, and Community Health Choice—have already been appealed to the Federal Circuit and were consolidated. This means the three cases will be heard and decided together by the same panel of judges. The federal government filed its opening brief on March 22. Montana Health CO-OP and Sanford Health Plan filed their brief on May 1. Other insurers with pending lawsuits for unpaid CSRs filed amicus briefs in support of the insurers. Amicus briefs were filed by Blue Cross Blue Shield of North Dakota, L.A. Health Care Plan, Molina, and Common Ground.

Rulings for Montana Health CO-OP and Sanford Health Plan were limited to unpaid CSRs for 2017. However, Judge Elaine D. Kaplan of the Court of Federal Claims suggested that insurers could recover for 2018 and beyond even if insurers had used silver loading to insulate themselves from losses. (In mid-April, both insurers filed new complaints before Judge Kaplan for unpaid CSRs for 2018. Montana Health CO-OP sued for an additional $27 million, and Sanford Health Plan sued for an additional $11 million. Judge Kaplan stayed both cases pending a decision in the Federal Circuit.) The third case, for Community Health Choice, includes unpaid CSRs for 2017 and 2018. The amount of unpaid CSRs for 2018 was agreed to by the federal government and estimated based on 2017 costs.

Lower Courts

At least nine cases for unpaid CSRs, including the class action lawsuit, remain pending in the Court of Federal Claims. Two additional cases, brought by Maine Community Health Options and Common Ground, remain before Judge Margaret M. Sweeney. Judge Sweeney previously held that the insurers were owed unpaid CSRs for 2017 and 2018 and recently allowed Maine Community Health Options to amend its complaint to include nearly $36 million in unpaid CSRs for 2018. Common Ground separately estimated that its class is owed more than $2.3 billion for 2017 and 2018.

These estimates notwithstanding, the final amount owed will be determined through the CSR reconciliation process. In theory, insurers will complete this process in May 2019 and then the court can enter a final judgment reflecting actual 2018 CSR amounts by June. Judge Sweeney directed the parties to file a status report proposing the amount due to the class for 2018 within seven days of when HHS notifies all of the CSR class members of actual 2018 payments.

In mid-April, the plaintiffs asked for an extension of HHS’s deadline for the CSR reconciliation process, arguing that some class members would not have sufficient time to complete the submission process by the May 3 deadline. Judge Sweeney denied this request but noted that the government assured the court that all class members who ask for an extension to May 31 will be granted one. If a class member cannot meet the extended May 31 deadline and the government refuses to provide an additional extension, the plaintiffs can refile their motion.

In a separate challenge, Judge Thomas C. Wheeler held that L.A. Health Care Plan was entitled to unpaid CSRs for 2017. While the parties disagreed on the amount owed, L.A. Care filed an amended complaint on March 29 to reflect unpaid CSRs for 2018 and 2019 in the amount of about $83.5 million. L.A. Care will no longer seek unpaid CSRs for 2017 because it received more in advance CSR payments in 2017 than it ultimately paid out.

Most other CSR lawsuits—with a few exceptions like the lawsuits brought by Blue Cross Blue Shield insurers in North Dakota and Vermont—have now been stayed pending a decision by the Federal Circuit. The lawsuit brought by Guidewell Mutual Holding Corporation (which includes Blue Cross and Blue Shield of Florida, Florida Health Care Plan, and Health Options) was recently stayed as was a lawsuit brought by Health Alliance Medical Plans. The lawsuit brought by Harvard Pilgrim Health Care was separately stayed , but the insurer received permission to file an amended complaint to include about $21.5 million in unpaid CSRs for 2018. Molina’s $160 million challenge remains stayed until after a final, non-appealable judgment is issued in Moda Health Plan.

Risk Adjustment Program

Litigation continues over the methodology used in the risk adjustment program. A lawsuit brought by New Mexico Health Connections (NMHC) resulted in the brief suspension of about $10.4 billion in 2017 risk adjustment payments. The suspension occurred after Judge James O. Browning set aside the part of the risk adjustment methodology that uses a statewide average premium from 2014 to 2018. He later denied a request from the federal government to reconsider and overturn this ruling.

The federal government then appealed the decision to the Tenth Circuit. In mid-February, the Tenth Circuit directed the parties to address whether the court has jurisdiction to review Judge Browning’s order and judgment. The court is interested in whether the judgment is ripe for review since Judge Browning vacated part of the risk adjustment methodology and remanded the case to HHS. The cases cited by the Tenth Circuit’s clerk suggest that courts have answered this question differently: some have treated remand to an agency as a final decision (meaning it is appealable) while others have not.

The federal government filed a revised opening brief on March 22, with a request for oral argument. The government reiterates the reasons why it adopted a statewide average premium and a budget-neutral risk adjustment program and argues that NMHC waived its objections because these issues were not raised during the rulemaking process. The government also takes issue with the district court’s decision to vacate parts of the rule entirely (as opposed to limiting its ruling to NMHC or New Mexico). The government believes vacatur was inappropriate, did not reflect a balance of equities or the public interest, and was nationally disruptive to the risk adjustment program.

This point was echoed in an amicus brief from America’s Health Insurance Plans and the Blue Cross Blue Shield Association, noting that vacating the entire rule was “not only inequitable, but also unworkable” and “needlessly and retrospectively pull[ed] the rug out from under health plans that have relied on the final risk adjustment rules.” The brief highlights the impracticalities of adjusting the risk adjustment methodology (and thus the billions of dollars in risk adjustment transfers and medical loss ratios) for 2014 to 2016. They encourage the court to remand the risk adjustment regulations to HHS, without vacating them, to allow the agency to provide an additional explanation for its methodology for the 2014 to 2016 benefit years. These organizations filed a similar statement with the district court after HHS unexpectedly froze risk adjustment payments for 2017.

NMHC filed its opening brief on April 22, taking issue again with HHS’ use of a statewide average premium and arguing that the district court’s remedy—to vacate part of the risk adjustment methodology—was appropriate. The federal government’s reply brief was due on May 13 but it requested and received an extension to June 3.

Second Challenge

Separately, HHS issued new final rules to justify its risk adjustment methodology for 2017 and 2018. In August 2018, NMHC filed a new lawsuit challenging the final rule on the 2017 risk adjustment methodology. This means there are currently two lawsuits pending against the federal government brought by NMHC over the risk adjustment program. In late January, the parties asked Judge Browning to stay the second lawsuit while the original lawsuit is on appeal to the Tenth Circuit.

Association Health Plans

In July 2018, a coalition of 12 Democratic attorneys general filed a lawsuit challenging the final rule to expand access to association health plans (AHPs). Judge John D. Bates of the District of Columbia ruled in March 2019 that the rule violated federal law and was “clearly an end-run around the ACA.” The court set aside the rule’s provisions related to working owners and commonality of interest and remanded the rule back to the Department of Labor (DOL) to determine how the regulation’s severability provision affected the remainder of the rule.

The Trump administration appealed the ruling to the Court of Appeals for the District of Columbia (D.C. Circuit) where a panel of judges will consider the legal questions anew. The DOL also issued guidance that lays out its enforcement stance for already-in-existence AHPs, directs AHPs to pay claims, and prohibits AHPs from marketing to or enrolling new members.

On May 9, the federal government asked the D.C. Circuit for an expedited appeal in light of the fact that some consumers have already enrolled in AHPs. The DOL estimates that there are tens of thousands of enrollees in AHPs, many of whose plans will end between September and December 2019. Although the guidance and enforcement stance noted above are designed to mitigate disruption for enrollees, the administration urged a swift appeal. The D.C. Circuit granted this request. The government’s opening brief is due on May 31; the plaintiffs will file their opening brief on July 15. Final briefs will be due August 8. Oral argument has not yet been scheduled.

Short-Term Plans

Litigation continues over a separate final rule that expanded access to short-term plans. In September 2018, a coalition of consumer advocates and safety-net health plans sued over the new rule, arguing that it is contrary to Congress’s intent in adopting the ACA and should be invalidated. In November 2018, the plaintiffs withdrew their request for a preliminary injunction, and the case proceeded to the merits. The parties traded briefs throughout February and March, and amicus briefs were filed in support of the plaintiffs by patient advocates, AARP, and a range of medical associations.

Judge Richard J. Leon of federal district court in D.C. held oral argument on May 21. Media reports suggest that Judge Leon expressed continued skepticism of the plaintiffs’ arguments and whether (and the degree to which) they are harmed by the final rule. The court questioned enrollment data presented by the safety net health insurers and suggested that more time is needed to assess the impact of the new rule. Judge Leon also focused on why Congress had not acted to curb enrollment in short-term plans after the ACA if they were so harmful. He hopes to issue his decision this summer.