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Trump’s (overlooked) plans for employer coverage
https://www.axios.com/vitals-2495705081.html
Trump’s executive order will likely include a provision making it easier for employers to set aside some money, tax-free, to help their workers pay insurance premiums. This one hasn’t gotten as much attention yet as some of the other policies Trump is expected to pursue, but it’s a big deal — one insurers fear could push more people into a shaky market.
The details: Employers already can set aside some pre-tax dollars to help cover employees’ health care costs. Trump’s executive order will likely expand those programs so that they can be used to help employees cover the premiums for an individual insurance policy, an insurance industry official told me.
The reactions:
- Insurers are afraid this will give employers an incentive to stop offering traditional health benefits: Why go to all the trouble of finding and offering a health care plan if you can just offer your workers some money to go buy their own?
- “That would be survivable, I think,” if the individual market were more stable, the official said. But because that market is shaky, insurers are nervous.
- Another fear: Employers might be able to offer coverage to their younger employees, while using these new funds to shift older workers, who tend to have higher health care costs, into the individual market.
The unknowns: Dumping workers into the individual market, even with help paying their premiums, would likely trigger penalties under the Affordable Care Act’s employer mandate, the insurance official said. That might be a disincentive to use these new options — if the Trump administration were planning tough enforcement of the employer mandate.
The bottom line: Other sections of Trump’s executive order will likely pull healthy people out of the individual market; this one could push unhealthy people into it. Insurers are uneasy about both sides of that equation, and say they haven’t had a chance to offer the policy feedback previous administrations would have sought out.
What else to expect from Trump’s executive order
Here’s a quick rundown of what else to expect from today’s executive order:
- The order itself probably won’t fill in the details of how its policy changes would work. Look for broad outlines, with the nitty-gritty coming separately — probably in the form of a proposed rule from the Labor Department.
- Although the public will technically have an opportunity to comment on that proposed rule, the insurance industry official told me the final version is largely already written.
The policy:
- Association health plans: Trump will likely make it easier for individuals (for example, a group of freelancers) to band together and buy insurance like a large employer would.
- New associations will likely need some form of approval before they can start buying insurance, but insurers don’t expect that process to be much more than a rubber stamp.
- Short-term plans: Trump is expected to let people hang onto short-term, stopgap policies for a full year; they’re currently limited to three months. Those plans don’t cover much and don’t have to comply with many of the ACA’s consumer protections.
- Total impact: Insurers and independent policy experts fear that both of those measures would weaken the individual market by pulling healthy people out of it and into skimpier, cheaper coverage.
Altarum’s Center For Sustainable Health Spending – Health Sector Economic Indicators (Spending Brief)
Click to access CSHS-Spending-Brief_Sept_2017.pdf
Hospital spending growth is lowest in more than 25 years.
Altarum: Hospital spending growth rate lowest in 28 years
http://www.healthcaredive.com/news/altarum-hospital-spending-growth-rate-lowest-in-28-years/504580/
Dive Brief:
- Altarum’s Center for Sustainable Health Spending’s latest Health Sector Economic Indicators reported overall national health spending growth decreased in the second quarter. Spending increased by 4% in the quarter, which was less than the 4.6% that Altarum predicted for the quarter.
- A major reason for the slower spending growth was connected to hospital second-quarter spending growth, which was only 1.3% rather than the expected 4% growth rate.
- Overall, year-over-year hospital spending increased by 1.1% in July. Hospital spending increased in June by 0.8%, which was the slowest growth rate year-over-year since January 1989.
Dive Insight:
A growth in the number of insured individuals and less hospital utilization are slowing hospital spending growth, according to Altarum. Overall, the researchers found health spending growth between May and July was slower than GDP growth; health spending accounted for 18% of the GDP.
The news of slowed hospital spending growth will please payers, who for years have created policies and designed plans to nudge members toward lower cost services rather than hospitals. These plans charge less for services at a primary care physician, urgent care center or standalone imaging center rather than a hospital. Plus, services that once required hospitalizations are now being performed as outpatient procedures.
In recent months, health insurance companies have looked to go further to reduce hospital utilization. Anthem, a major Blues insurer in 14 states, has led the way recently in creating policies to push members into getting care at less expensive locations rather than hospitals. Anthem said it will no longer pay for MRIs and CT scans at hospitals in 13 states unless Anthem deems it’s an emergency. Instead, the payer wants members to go less to expensive freestanding imaging centers.
Anthem also recently announced it would no longer cover emergency department (ED) visits that it deems unnecessary in Missouri. Anthem has the same policy in Kentucky and Georgia which it may expand to more states. Anthem said the Kentucky policy has been in place since 2015 and has only denied a small percentage of ED claims.
Also, the CMS is proposing to make costs more site neutral by paying services at off-campus hospital outpatient departments at 25% of regular outpatients rates. The same proposal also includes a small increase (1.75%) for outpatient payments.
All of these changes hope to further reduce hospital spending growth, while forcing hospitals to find ways to improve margins despite less utilization. Altarum’s report shows payers’ efforts are working as hospital spending growth was the slowest major healthcare category over the past year.
Despite seeing the smallest spending increase, hospitals still account for the highest percentage of health spending. In July, hospitals made up 32% of health spending, which easily outdistanced physicians and clinical services (20%). Home healthcare, which had the biggest rate increase (6.6%), still only accounted for 3% of overall health spending.
Analysis: Is healthcare spending growth past the ACA bump?
http://www.healthcaredive.com/news/analysis-is-healthcare-spending-growth-past-the-aca-bump/507073/
Dive Brief:
- A new Robert Wood Johnson Foundation blog post questions whether healthcare spending growth will return to pre-Affordable Care Act (ACA) levels.
- Katherine Hempstead, who leads the foundation’s health insurance coverage, pointed to a recent Altarum Institute healthcare spending trend report that showed spending growth reached 4% in the second quarter of 2017, which was the lowest quarterly increase since 2014.
- She said recent spending growth has been powered by ambulatory care utilization, which has also had an effect on job growth.
Dive Insight:
Altarum’s Center for Sustainable Health Spending’s Health Sector Economic Indicators released last month said a major reason for the growth slowdown in the second quarter was hospital spending, which grew just 1.3% rather than the expected 4% growth rate. Year-over-year hospital spending only increased by 1.1% in July. June saw the slowest growth rate year-over-year (0.8%) since January 1989.
Payer efforts to reduce hospital spending seem to be working. Insurers continue to look for more ways to reduce hospital utilization. Anthem said recently it will no longer pay for MRIs and CT scans at hospitals in 13 states unless the tests are an emergency, and that it would no longer cover “unnecessary” emergency department visits. The CMS is also proposing to make costs more site neutral by paying services at off-campus hospital outpatient departments at 25% of regular outpatients rates. The same proposal also includes a small increase (1.75%) for outpatient payments.
All of these efforts look to reduce hospital spending growth and utilization further and move that business to outpatient services, which are less expensive. This spending growth slowdown and move to outpatient services are affecting hospitals, which have responded through M&A activity and by cutting services, outsourcing and laying off staff.
In her blog post, Hempstead said ambulatory care has seen both utilization and job growth, as payers push patients to outpatient care rather than hospitals. “It remains to be seen whether there will need to be some recalibration on the ambulatory side as growth in demand levels off, financial pressures potentially intensify, and the delivery system continues to evolve,” she wrote.
Healthcare spending peaked in Q1 2015, as more Americans with insurance increased utilization of services, prescription drug use and the net cost of insurance, wrote Hempstead. However, that spending leveled off last year and continues to slow this year. She questioned whether we will soon return to pre-ACA spending growth levels.
In addition to ambulatory care, Hempstead said urgent care is a sector to watch. There are more than 7,500 urgent care centers and the sector has grown into a $25 billion industry. Plus, providers such as HCA Healthcare, Community Health Systems and Tenet Healthcare are all investing in urgent care centers and freestanding emergency departments.
However, Hempstead raises the questions: Has the urgent care industry grown too quickly? And is telemedicine a less costly and better alternative?
BREAKING: Trump undercuts ACA with new plan options
http://www.healthcaredive.com/news/trump-healthcare-executive-order/507148/
Dive Brief:
- President Donald Trump signed an executive order Thursday that rolls back a number of Affordable Care Act (ACA) provisions that set minimum requirements for health plans.
- The order will allow small businesses and groups of people to band together and buy insurance as an association. The association health plans (AHP) available to them do not have to meet the requirements of the ACA, such as protection for people with pre-existing conditions and essential health benefits.
- In addition, the order expands the use of short-term plans that also have looser requirements and allows plans to be sold across state lines.
Dive Insight:
Broadly, the executive order loosens the requirements health plans must meet and shifts regulation away from federal levels. This could lower out-of-pocket costs for people who don’t use much care, but would likely result in major cost increases for people with pre-existing conditions.
The biggest concern with offering these plans is that it would lead payers to cherry pick young, healthy people who are less expensive for payers. But separating them from people who will need services creates an unbalanced risk pool. That can quickly lead to prohibitive out-of-pocket costs for people who have a pre-existing condition or who unexpectedly need high-cost care.
There are still several steps to be taken before the order could have a real impact. HHS and the Department of Labor have been instructed to write new regulations which will go through the regular notice and comment process. The specifics of those regulations will be important to how the order ultimately plays out. Also, the order will almost certainly see a legal challenge. Still, it signals that Trump’s White House is ready to find ways of undercutting the ACA despite the high-profile legislative failures earlier this year.
It’s far from the first sign, though. HHS has drastically cut back efforts to promote this year’s open enrollment period, which begins Nov. 1. The ACA’s overall advertising budget was slashed by 90%, community groups that receive federal funding to help people enroll have been devastated by cuts and HHS recently barred regional directors from participating in enrollment events.
Short-term plans are inexpensive for people who are healthy, but they can exclude people with pre-existing conditions. They have previously been allowed for a limited stretch, such as three months, but extending that time and allowing these plans to count toward the individual mandate will mean an unstable risk pool.
Allowing plans to be sold across state lines is a staple of conservative health policy, but there is little reason to believe it would actually lower costs. There are also many unanswered questions about how these plans would be relegated.
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HENRY KOTULA 