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Tax Bill Threatens Our Health and Our Democracy

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http://www.chcf.org/articles/2017/12/tax-bill-threatens-our-democracy

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Earlier this month, the Senate passed legislation that would overhaul the tax code, make dramatic changes to federal health care policy, and undermine the budgets of Medicaid and Medicare, two pillars of the American health care system. The House and Senate are now trying to reconcile their two tax bills. Each passed the legislation on a party-line vote, with one Republican voting against the bill in the Senate.

Congress is now one step away from passing a tax bill that will have a profound effect on the health and well-being of Americans for a generation. No one should forget that, to get this close, the Senate rushed to approve a deeply unpopular proposal with little transparency and due diligence — and no bipartisanship. Left unchecked, these actions will harm millions of Americans — and American democracy itself.

Even though the legislation has been framed as a tax bill, it is very much a health care bill. The Senate bill would eliminate the Affordable Care Act’s individual health insurance mandate, which would lead to the destabilization of the individual health insurance market. The Congressional Budget Office (CBO) projects that this change alone would increase individual premiums by 10% a year and cause as many as 13 million Americans to join the ranks of the uninsured by the end of the next decade. In California, the uninsured population would grow by 1.7 million people. Congress may still pass separate legislation to restore some stability to the individual market, but the leading proposals are too modest to prevent much damage.

Seismic Impact

On its own, the language in the tax bills would trigger a major earthquake in the health care system, and the aftershocks of this tax bill would be just as dangerous. By eliminating more than $1 trillion of federal revenue, the administration and congressional leaders are manufacturing a budget crisis that would likely lead to automatic cuts to Medicare under federal rules. The CBO, which examined the House bill, has estimated that those cuts could be around $25 billion a year. Republican leaders have also indicated they intend to use the revenue shortfall that they are engineering with this tax bill to seek deep cuts in safety-net programs, starting with Medicaid.

This isn’t merely about what the legislation will do to health care, because it also would exacerbate inequality and worsen health disparities in this country. Under both the House and Senate bills, low- and middle-income families would pay more in taxes and have a harder time paying not just for health care, but also for food, housing, child care, education, and other basic needs. When people struggle so much to make ends meet, they suffer more from illness and die younger. And if inequality keeps getting worse, it will undermine the economic, social, and political stability upon which our nation depends.

The burden on Californians would be particularly heavy. Our families would no longer be able to deduct what they pay in state and local taxes on their federal tax returns. This change alone would take more than $112 billion a year out of the pockets of hardworking Californians — more than any other state. The fact that Californians would be paying more in federal taxes would inevitably put new pressure on our state and municipal governments to reduce their taxes. Under that scenario, it is not hard to imagine a new wave of painful state and local budget cuts.

The irony is that California actually has the power to stop this runaway train. If the entire California congressional delegation worked together to protect their constituents, and if they were united and strong, they could prevent many — if not all — of the worst provisions in the tax bills from becoming law.

This moment is a test of leadership. Nothing less than the health of our people — and our democracy — are at stake.

Hospital Distress to Grow If Congress Closes Door to Muni Market

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https://www.bloomberg.com/news/articles/2017-12-08/hospital-distress-to-grow-if-congress-closes-door-to-muni-market

  • Small, lower-rated facilites could see costs rise 1-2 percent
  • At least 26 non-profit hospitals already in default, distress

As Congress moves to assemble the final version of its tax plan, projects like Spooner, Wisconsin’s 20-bed hospital hang in the balance.

The rural community, about 110 miles (177 kilometers) northeast of Minneapolis, sold tax-exempt bonds to build the $26 million facility it opened last May. The hospital’s chief executive officer said that if its access to such low cost financing had been cut off it would have paid over $6 million more in interest.

That may soon be an expense that other hospitals across the country will have to shoulder. The House’s tax legislation revokes non-profit hospitals’ ability to raise money in the municipal market, where investors are willing to accept lower interest rates because the income is exempt from federal taxes. That’s threatening to saddle health-care providers with higher borrowing costs at a time when their finances are already under pressure.

“Should tax-exempt financing not be available in the future, it may really harm our ability to build affordable senior housing and assisting living facilities,” said Michael Schafer, Spooner Health’s CEO.

For small, rural hospitals across the country, labor, drug, and technology costs are increasing faster than the revenue and patients’ unpaid debts are on the rise. Higher financing costs would be one more challenge.

David Hammer, head of municipal bond portfolio management for Pacific Investment Management Co., said the loss of the tax-exemption could raise borrowing costs by 1 to 2 percentage points at small facilities with a BBB rating or below. That “could have a meaningful impact on their balance sheets,” he said.

At least 26 non-profit hospitals are already either in default or distress, meaning they’ve notified bondholders of financial troubles that make bankruptcy more likely, according to data compiled by Bloomberg. That includes falling short of financial terms set by their debt agreements and having too little cash on hand.

Many of them are based in rural communities where the populations tend to be “older, poorer and sicker,” according to Margaret Elehwany, the vice president of government affairs and policy at the National Rural Health Association. She estimates that about 44 percent of rural hospitals operate at a loss. There have been at least seven municipal bankruptcy filings by hospitals since last year, the most of any municipal sector excluding Puerto Rico.

The risk that Congress will prevent hospitals from accessing the municipal market worries Dennis Reilly, the executive director of the Wisconsin Health & Educational Facilities Authority, an agency that issues debt for non-profits such as Spooner Health.

“All of us in the industry were completely blindsided by the House proposal,” Reilly said in an interview from Washington, where he was meeting with members of Congress about the proposed bill.

“Without tax-exempt financing, not-for-profits across the country will have increased borrowing costs of 25 to 35 percent because they’ll have to access the taxable market,” he said. “For many of the rural providers like Spooner, much of their project they would not have been able to do with the higher cost of capital.”

A Rush to Beat the Clock

Hospitals are among those rushing to issue tax-exempt debt while they still can. Mercy Health, a Catholic health-care system that operates in Ohio and Kentucky, is scheduled to sell $585 million tax-exempt bonds next week. The deal, originally planned for early next year, was moved up after the release of the House proposal.

Spending more on debt would cut into the funds available for facilities, equipment and charitable outreach, like programs for opioid addiction, according to Jerome Judd, Mercy’s senior vice president and treasurer. “Things like that are impacted,” he said.

At least some members of Congress share the hospital executives’ concerns. Last month, some Republican lawmakers sent a letter to leadership pushing for the final plan to preserve the ability of hospitals and other entities, like affordable housing agencies and universities, to issue tax-exempt bonds.

“Private activity bonds finance exactly the sort of private public partnerships of which we need more of, not less,” they wrote. “These changes are incompatible with President Trump’s priority for infrastructure investment in the United States.”

It’s Tough to be Small

Some hospitals already opt to sell their bonds in the taxable municipal market to avoid disclosures and restrictions over how the proceeds are used, though they are typically larger entities that can secure advantageous rates because of the size of their deals. Patrick Luby, a municipal analyst at CreditSights, said smaller clinics with only a few million of bonds to sell would have a hard time accessing that market, which attracts corporate debt investors accustomed to big issues.

“Even what we would consider a large deal in the muni market is almost an odd lot in corporate bonds,” he said. “Very large hospital chains, large household name universities — global investors will buy those names, but they’re not going to buy a $15, $25, $50 million local hospital.”

If the House plan is enacted, hospitals “will have a really difficult time accessing the market,” he said.

 

Will Getting Bigger Make Hospitals Get Better?

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https://tincture.io/will-getting-bigger-make-hospitals-get-better-d3c565223670

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This month, two hospital mega-mergers were announced between Ascension and Providence, two of the nation’s largest hospital groups; and, between CHI and Dignity Health.

In terms of size, the CHI and Dignity combination would create a larger company than McDonald’s or Macy’s in terms of projected $28 bn of revenue. (Use the chart of America’s top systems to do the math).

For context, other hospital stories this week discuss layoffs at Virtua Health System in southern New Jersey. And this week, the New Jersey Hospital Association annual report called the hospital industry the “$23.4 billion economic bedrock” of the state.

Add a third important item to paint the state-of-the-U.S. hospital-industry picture: Moody’s negative ratings outlook for non-profit hospital finances for 2018.

So will getting bigger through merger and consolidation make the hospital business better?

In the wake of the CVS-Aetna plan to join together, the rationale to go big seems rational. Scale matters when it comes to contracting with health insurance plans at the front-end of pricing and financial planning for the CFO’s office, and to managing population health by controlling more of provider elements of care from several lenses: influencing physician care; crafting inpatient hospital care; doing smarter, cheaper supply purchasing; and leaning out overhead budgets for things like marketing and general management.

But the Wall Street Journal warned today the “serious condition” of U.S. hospitals, despite these big system mergers.

Health Populi’s Hot Points: In the past two years, I’ve had the amazing opportunity of speaking about new consumers and patients growing into healthcare payors with leadership from hospitals in over 20 states, some more rural, some more urban, and all in some level of financial crisis mode.

After describing the state of this consumer in health and healthcare, and how she/he got here, I have challenged hospital leadership to think more like marketers with a fierce lens on consumer experience and values. That equal proportions of U.S. consumers trust large retail and digital companies to help them manage their health is a jarring statistic to these hospital executives. The tie-up between CVS and Aetna marries the retail health/healthcare segments and responds to this consumer trust issue.

But then, I remind them that nurses, pharmacists, and doctors are the three most-trusted professions in America.

These three professional clinicians are the human capital that comprise the heart of a hospital in a community.

Hospitals should be mindful that trust is necessary for patient/health engagement. And the trust is with hospitals if the organization chooses to leverage that goodwill for a value-exchange. Hospitals are economic engines in their local communities — often, the largest employer in town. “Everyone” in most communities knows someone who works in a hospital.

And hospital employees spend money in communities, bolstering local employment and tax bases.

Partnering with patients means empathizing with them as both clinical subjects and consumers. For the latter, refer to the sage column from JAMA which recommends that Value-Based Healthcare Means Valuing What Matters to Patients. This means thinking about the value-chain of the patient journey, from keeping people well in their communities through to managing sticker-shock in the financial office. The financial toxicity of healthcare is one risk factor threatening the hospital-patient relationship with the patient-as-payor.

As Mufasa told Simba in The Lion King, “You are more than what you have become. Remember who you are.”

 

 

What is CHIP? 7 things to know about the Children’s Health Insurance Program

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Amid efforts to unsuccessfully repeal and replace the Affordable Care Act in the fall, lawmakers let the Children’s Health Insurance Program (or CHIP) to expire on Sept. 30.

And now, doctors and patients are worried that money for the program, which provides 9 million kids across the country with low-cost health insurance, will run out.

In fact, according to the Kaiser Family Foundation, 16 states expect to run out of CHIP reserve funds by the end of January, and three-quarters of the states expect to run out by March.

Here are 7 things to know about CHIP:

What is CHIP?

According to HealthCare.gov, CHIP is a no-cost or low-cost health insurance program that provides coverage to children in families that earn too much money to qualify for Medicaid, but who can’t afford private coverage.

The program is funded by both states and the federal government, but it is state-administered, meaning each state sets their own guidelines on eligibility and services.

In Georgia, the CHIP program is PeachCare for Kids.

CHIP’s history

In 1997, Congress passed Title XXI of the Social Security Act, which enabled states to create programs for the growing number of uninsured children in the country.

The program was created during the Clinton administration by the Balanced Budget Act of 1997. At the time, 10 million children were without health insurance and many of those children were part of working families with incomes slightly above states’ Medicaid eligibility levels, according to the Medicaid and CHIP Payment and Access Commission.

The Children’s Health Insurance Program Reauthorization Act (CHIPRA) reauthorized CHIP in April 2009.

The next year, the Affordable Care Act contained provisions to strengthen the program and later extended CHIP funding until September 30, 2015. It also required states to maintain eligibility standards through 2019.

By 2015, 18 years after its enactment, 3.3 million children in the U.S. were without health insurance.

In October 2017, however, Congress missed a deadline to reauthorize CHIP, which expired on Sept. 30.

“Lawmakers and staffers in Congress say CHIP funding will likely be included in an end-of-year spending bill,” NPR reported Tuesday. “But as of now, there is no CHIP funding bill scheduled for consideration.”

Who is eligible for CHIP?

Eligibility varies by state, but in most states, children up to age 19 with a family income up to $49,200 per year (for a family of four) may qualify for Medicaid or CHIP, according to insurekidsnow.gov.

But even if your family income is higher, children may still qualify.

Some states (Colorado, Missouri, New Jersey, Rhode Island and Virginia) also provide coverage to pregnant women through CHIP.

Coverage is for U.S. citizens and certain lawfully present immigrants.

What does CHIP cover?

State benefits may vary, but all states provide comprehensive coverage for routine check-ups, immunizations, doctor visits, prescriptions, dental/vision care, inpatient /outpatient hospital care, laboratory/X-ray services and emergency services.

How much does CHIP cost?

The cost depends on family income. Many families may get free health insurance coverage for their kids and others may have to pay a modest enrollment fee or premiums, as well as copayments for specific services.

But according to healthcare.gov, you won’t have to pay more than 5 percent of your family’s income for the year.

How do you apply for CHIP?

There are three ways to apply. You can either call 1-800-318-2596 (1-855-889-4325 for TTY), fill out an application through the health insurance marketplace or apply directly with your state’s CHIP agency.

How many children get health insurance from CHIP?

Nine million kids get health insurance under CHIP.

Actuaries warn of premium increases from repealing ObamaCare mandate

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Actuaries warn of premium increases from repealing ObamaCare mandate

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A group of insurance experts is warning Congress against repealing ObamaCare’s individual mandate, saying the move would raise premiums and could cause insurers to drop out of the market.

The American Academy of Actuaries wrote to congressional leaders on Tuesday saying that “eliminating the individual mandate would lead to premium increases.”

The Republican tax-reform bill which is nearing completion in Congress would repeal the ObamaCare mandate that people have health insurance or pay a fine.

Republicans argue the measure included in the Senate-passed bill is tax relief by removing a penalty for low-income people who choose not to buy insurance.

The actuaries warn that repealing the mandate would harm the health insurance market by removing an incentive for healthy people to enroll and balance out the costs of the sick.

The insurance experts also say that a measure pushed by Sen. Susan Collins (R-Maine), intended to help offset the premium increases from repealing the mandate, would not be enough to make up the difference.

That bill, sponsored by Sens. Lamar Alexander (R-Tenn.) and Patty Murray(D-Wash.), would fund key ObamaCare payments known as cost-sharing reductions. The actuaries say the payments “would not offset premium increases due to an elimination of the mandate.”

The letter says additional measures — such as funding to bring down premiums known as “reinsurance,” which Collins has also proposed — could help, though. Some experts say more funding than is currently proposed would be needed.

The instability from repealing the mandate also could lead some insurers to drop out of markets altogether, the actuaries warn, potentially leaving some people with no insurance options.

“Insurers would likely reconsider their future participation in the market,” the actuaries write. “This could lead to severe market disruption and loss of coverage among individual market enrollees.”