A bipartisan governor duo is urging Congress to retain the federal health care law’s unpopular individual mandate while seeking to stabilize individual insurance markets as lawmakers work on a long-term replacement.
The recommendation is part of a compromise plan that’s designed to be palatable to both parties. It was endorsed by six other governors.
Ohio Gov. John Kasich, a Republican, and Colorado Gov. John Hickenlooper, a Democrat, shared their plan in a letter to congressional leaders Thursday. They acknowledge that retaining the mandate may be a difficult sell for Congress, which has failed so far to pass a replacement health care bill.
“The current mandate is unpopular, but for the time being it is perhaps the most important incentive for healthy people to enroll in coverage,” they wrote to House and Senate leaders of both parties.
Experts concur that keeping younger, healthier people in the insurance pool protects against costs ballooning out of control.
The penalty and coverage requirement, or individual mandates, were intended to nudge healthy people into the insurance market. They have consistently polled negatively with Americans. In an Associated Press-NORC Center for Public Affairs Research poll conducted in July, 48 percent of those surveyed favored repealing the mandate, while 35 percent opposed repeal.
Kasich and Hickenlooper’s letter was signed by Republican Gov. Brian Sandoval of Nevada; Democratic Govs. Tom Wolf of Pennsylvania, John Bel Edwards of Louisiana, Steve Bullock of Montana and Terry McAuliffe of Virginia; and Alaska Gov. Bill Walker, a one-time Republican no longer affiliated with a political party.
After Republicans’ failure to pass a replacement of President Barack Obama’s health care law, Kasich and Hickenlooper teamed up to push for health care exchanges that would stabilize the market and assure affordability. Both took pains to quash speculation that their collaboration and public appearances suggested a bipartisan presidential ticket was in the making for 2020.
Hickenlooper emphasized Thursday that steadying individual markets is a top — and time-driven — priority. Addressing Medicaid expansion costs and other health care elements can follow, he told reporters in Denver.
“Is this going to fix all that is broken with our health care system? No,” he said. “If we can demonstrate success at stabilizing the individual markets, then we can move to the other parts of health care as well.”
Kasich and Hickenlooper also recommended that President Donald Trump commit to cost-sharing reduction payments to insurers and that Congress fund those offsets at least through 2019. Those payments reimburse insurers for providing low-income people with legally required reductions on copays and deductibles. If Trump follows through on threats to pull the plug, premiums would jump about 20 percent.
Kasich said the proposal satisfies the concerns of all parties studying the health care law.
“If you want to keep what you have, you can,” the Ohio governor said Thursday. “We’ve stabilized everything up front, but then over time, we open up the doors to innovation and individual plans, within guardrails.”
The governors support creating a temporary stability fund that states could tap to reduce premiums and limit losses; continuing to fund educational outreach and enrollment efforts under the Affordable Care Act; exempting insurers that agree to cover underserved counties from the federal health insurance tax; and supporting states’ efforts to find creative solutions for covering the uninsured.
The governors said states can pursue lots of options without federal assistance, but in some cases they are “constrained by federal law and regulation from being truly innovative.”
Kasich and Hickenlooper are expected to be in Washington next week to testify on their proposal. But congressional action on even a modest compromise is expected to be difficult following years of harsh partisan battling over the Republican drive to dismantle the health care law.
Retiree Leslie Robinson-Stone and her husband enjoyed a weeklong, all-expenses-paid trip to a luxury resort — all thanks to the county she worked for.
The couple also received more than a thousand dollars in spending money and a personal concierge, who attended to their every need. For Santa Barbara County, it was money well spent: Sending Robinson-Stone 250 miles away for knee replacement surgery near San Diego saved the government $30,000.
“The only difference between our two hospitals is one is expensive and the other is exorbitant,” said Andreas Pyper, assistant director of human resources for Santa Barbara County, referring to the local options.
Frustration with sky-high hospital bills and a lack of local competition is common to many employers and consumers across the country after years of industry consolidation. Fed up with wildly different price tags for routine operations, some private employers are steering patients they insure to top-performing providers who offer bargain prices. Santa Barbara County, with about 4,000 employees, is among a handful of public entities to join them.
The county has saved nearly 50 percent on four surgery cases since starting its out-of-town program last year, officials said. The program is voluntary for covered employees.
At a Scripps Health hospital in the San Diego area, the county paid $61,600 for a spinal fusion surgery that would have cost more than twice as much locally. It avoided two other operations altogether after patients went outside the area for second opinions.
Typically, employers are seeking deals through “bundled payments” — in which one fixed price covers tests, physician fees and hospital charges. And if complications arise, providers are on the hook financially. Medicare began experimenting with this method during the Obama administration.
Santa Barbara County is among about 400 employers on the West Coast working with Carrum Health, a South San Francisco start-up that negotiates bundled prices and chooses surgeons based on data on complications and readmissions.
“Not all surgeons are equal. We don’t want to give Scripps a blank check. That defeats the whole purpose,” said Sachin Jain, Carrum’s chief executive.
Santa Barbara officials try to persuade workers and their family members to participate in its program by waiving copays and deductibles. The county pays about $2,700 in travel costs and still comes out way ahead.
“If that doesn’t speak to the inefficiencies in our health care system, I don’t know what does,” Pyper said. “It’s almost like buying a Toyota Corolla for $50,000 and then going to San Diego to buy the same Corolla for $16,000. How long would the more expensive Toyota dealership last?”
Even as more employers and insurers embrace bundled payments, the Trump administration is applying the brakes. In August, Medicare officials proposed cancelingmandatory bundled payments for certain surgeries and scaling back the program for knee and hip replacements. Health and Human Services Secretary Tom Price, when he was still a member of Congress, accused Medicare of overstepping federal authority and interfering in the doctor-patient relationship. Hospital trade groups have voiced similar objections.
That leaves some health-policy experts dismayed.
“These bundled payments put pressure on medical providers … and the savings are astonishing,” said Bob Kocher, a former health official in the Obama administration and now a partner in the venture capital firm Venrock.
Santa Barbara County officials said they had no choice after seeing their medical costs soar by 15 percent in each of the past two years. Like many local governments, it has an older workforce prone to chronic illness, blocked arteries and bum knees.
But health costs run higher than the state average in this scenic coastal county of about 450,000 people, according to data from Oakland-based Integrated Healthcare Association. By one measure, the average health insurance premium in the individual market runs $660 a month in Santa Barbara, 27 percent higher than in Los Angeles.
Still, Maya Barraza, the county’s manager for employee benefits and rewards, knew the program would be a hard sell to workers. “You don’t want to be away from your family and what’s familiar,” she said.
Cottage Health, the county’s largest health system, says it wants to keep patients in town for treatment and follow-up care.
Established in 1891, it’s grown from a single hospital to more than 500 beds across three hospitals, and annual revenue hit $746 million last year.
Valet attendants greet visitors at two entrances outside the group’s white, Spanish-style hospital in the city of Santa Barbara. In the main lobby, the names of wealthy donors are splashed across one wall, including billionaire investor and Donald Trump confidant Thomas Barrack.
“We are continually looking at reducing costs and improving quality,” said Cottage Health spokeswoman Maria Zate. “Cottage Health has some of the top surgeons in California.”
Sixty miles north in Santa Maria, the state’s largest hospital chain, Dignity Health, offers another option: Marian Regional Medical Center.
Both Cottage and Dignity hospitals in Santa Barbara County have quality scores of fair to excellent for joint replacements, spinal procedures and coronary bypass surgeries, according to three years of Medicare data analyzed by research firm Mpirica Health.
Dignity Health didn’t respond to requests for comment.
Carrum tries to help employers like Santa Barbara County find more affordable options. It has struck bundled price deals for various procedures with Scripps hospitals in the San Diego area, Stanford Health Care in the Bay Area and Swedish Medical Center in Seattle, part of the Providence Health chain.
Several other companies, such as Health Design Plus, are also assisting employers, insurers and patients with the logistics of surgery shopping. Boeing and other large employers are the most aggressive at pursuing bundled pricing and sending workers across the country for care.
Since 2014, more than 2,000 joint replacement and spinal surgeries have been performed for fixed prices through the Pacific Business Group on Health’s “centers of excellence” program, which includes employers such as JetBlue and Lowe’s. It added gastric bypass and other bariatric surgeries last year, and the employer group is working on bundled prices for cancer treatment.
Some companies have gone so far as to send patients overseas for cheaper care, but most employers favor a more regional approach, experts say. Workers still rely on local physicians for follow-up care.
Municipalities, school districts and other public employers have been slower to adopt some of these strategies, perhaps to avoid the political risk of antagonizing local providers, some researchers suggest.
For some hospitals, there are advantages in offering deep discounts: They get patients they otherwise would never see and are paid in full right after the patient is discharged, avoiding the onerous billing and collections process.
They also have the financial capacity to offer such sharply reduced prices.
Michael Bark, assistant vice president of payer relations at Scripps Health, said most hospitals significantly mark up their commercial rates for orthopedic procedures and cardiac surgeries to compensate for lower government reimbursements.
Robinson-Stone, a Santa Barbara County retiree, sits on her front step at her home in Lompoc, Calif. Her former employer sent her 250 miles away for knee replacement surgery at a hospital near San Diego and saved $30,000. (Heidi de Marco/California Healthline)
“There are immense profit margins built into those cases,” Bark said.
Robinson-Stone, a former county sheriff’s deputy and a computer support specialist, was initially wary of traveling for her surgery. But the 62-year-old Lompoc resident had ongoing pain that kept her from biking, walking her dogs and tending to her fruit trees. Medication and cortisone shots didn’t work, and she had no ties to local surgeons. So she signed up online and was given a choice of six orthopedic surgeons at Scripps Green Hospital in La Jolla.
In June 2016, she and her husband, Frank Stone, checked in at the Estancia La Jolla Hotel and Spa.
Robinson-Stone met the surgeon on a Wednesday, had the operation the next day and returned to her hotel room by Saturday. She continued physical therapy at the hotel and returned to the hospital a few days later to have the staples removed.
She was back on her bike within two months and eventually lost about 20 pounds.
“I just celebrated one year from surgery,” she said, “and I’m a happy camper.”
Structural improvements over the last decade to Houston hospitals have helped them so far to avoid devastation like Hurricane Katrina in New Orleans in 2005, but the pounding it is receiving from Tropical Storm Harvey is expected to financially hobble many already strained Texas medical centers.
The storm has forced hospitals to cancel surgeries, evacuate patients and contend with food and supply shortages. Even bigger challenges are expected in coming months when people who have lost homes and jobs avoid medical treatment or seek charitable care.
“A lot of hospitals already were burdened by uncompensated care…they were already struggling, and this will make things much harder,” said Vivian Ho, a healthcare economist at Rice University.
Rice has been temporarily closed because of the slow-moving storm that has killed at least 11 people since Friday and paralyzed Houston, the fourth most-populous city in the United States with a U.S.-census estimated 2.3 million.
Houston’s healthcare industry includes some of the most prestigious institutions in the country and has grown to accommodate a rising population in recent years.
But uncertainty about changes to U.S. health insurance policy, the region’s shrinking energy sector and Texas’ high percentage of uninsured have forced several Houston hospitals to cut thousands of jobs this year and post millions of dollars in losses, even before the storm.
Investment bank Jefferies warned in an Aug. 28 note that Harvey could have a significant impact on Texas healthcare providers, especially HCA Healthcare Inc, which has “11 percent of its beds in the areas impacted by severe weather.”
Texas Hospital Association spokesman Lance Lunsford said medical centers made significant improvements after buildings were damaged by Tropical Storm Allison in 2001.
Harvey broke rainfall records for the continental United States, with one site south of Houston recording 49.2 inches (1.25 meters) of precipitation.
Flooding prompted MD Anderson on Monday to cancel appointments and surgeries until Wednesday at the earliest, St. Luke’s Hospital closed one of its branches, and flooding at Ben Taub Hospital shut its food service.
MD Anderson on Monday told employees not part of its storm “ride out” team to stay home.
Roads around the cancer center’s main hospital were impassible, and a doctor posted photos of flooding that reached into the hospital lobby.
MD Anderson’s economic impact to the area is about $35 billion, according to its web site. Its 21 hospitals and affiliated institutions employ more than 106,000 people.
Why would a health foundation create a public policy research center?
The Healing Trust, in Nashville, Tennessee, has funded a wide variety of health-related service and advocacy organizations in Middle Tennessee. But in 2014, we asked them what additional support we could give to these organizations engaged in policy and advocacy work. One priority quickly rose to the top: timely, high-quality, and nonpartisan research and analysis on public policy issues critical to our community.
Tennessee has several prominent academic institutions with respected researchers in this field, but an independent and nonpartisan public policy research center simply did not exist. We began to explore this idea, using research to vet different business models for similar centers in other states. Ultimately, we decided to incubate this new policy center inside our foundation before spinning it off into a separate and independent nonprofit organization.
Aiming to create a true community resource, The Healing Trust worked with the Nelson Andrews Leadership Center to engage eighty stakeholders in an intense, three-day, co-design process. A core group of participants then spent another three months hammering out the details. This collaborative process established community buy-in and developed the road map for everything from staffing needs and board composition to the policy center’s mission, name, and brand.
Inspired and encouraged by the community’s engagement, The Healing Trust board committed $2.5 million over five years as seed funding to launch the Sycamore Institute.
Lessons Learned Through Launching The Center
What has the foundation learned through launching the Sycamore Institute, and why should philanthropy think about supporting policy research?
Ability to respond quickly in a rapidly changing policy environment: The Sycamore Institute has only been fully staffed for about six months—a period that includes one full legislative session in Tennessee and months of head-spinning debate in Congress over health reform. Yet, in that short time, our foundation’s investment has shown a solid return in the form of more than thirty reports, policy briefs, and blog posts about health policy and budget issues affecting Tennessee. As an independent public policy research center, the Sycamore Institute has the ability and agility to weigh in on rapidly evolving topics like how health reform efforts in Congress could affect our state.
Educating policy makers, the public, the media, and nonprofit partners: No matter where one stands on the political spectrum, we can all agree on the value of helping public officials make better-informed decisions. “Public Policy 101s” like how health insurance markets work and the nuts and bolts of Medicaid are just as important as analysis of specific legislation like the American Health Care Act. Our governor, administrative agencies, and legislators at the state and federal levels have already used the Sycamore Institute’s work to better understand key issues and communicate with their constituents.
These resources are equally valued by our foundation’s other grantees, who have become (1) even more knowledgeable about policy issues that affect their missions and (2) better equipped to engage with policy makers, the public, and other potential funders.
And in an era of shrinking newsrooms, the Sycamore Institute also provides important context and unbiased information to journalists covering health and fiscal policy. In very short order, the institute has become a trusted source for media outlets across Tennessee.
Unexpected Challenges
What were some of the unexpected challenges faced in launching a nonpartisan policy center?
Hiring the right leader: Hiring the right person to lead the Sycamore Institute proved more challenging than expected. The Healing Trust initially focused on candidates with backgrounds in policy research, but the collaborative design process we used shifted our focus to people with leadership experience who could launch a start-up and cultivate a diverse board. (Political, professional, geographic, and cultural diversity were all important criteria for the board.) Going back to the drawing board, our hiring committee interviewed new candidates and ultimately hired an experienced nonprofit executive director with an advanced degree in public policy.
Hiring the right staff: Building a staff with the ability to conduct high-quality research and analysis in-house and communicate about it to interested stakeholders was another challenge. Fully staffing the Sycamore Institute with an executive director, policy director, research analyst, and communications director took fourteen months—just in time to hit the ground running for the 2017 session of the Tennessee state legislature.
Recruiting a bipartisan board: To maximize and broaden the Sycamore Institute’s impact, the design shop showed we needed a bipartisan board committed to supporting nonpartisan work. The board’s balance of Republicans, Democrats, and political independents has been critical to building relationships with policy makers on both sides of the aisle. A balance of skill sets, diversity, and leadership potential is also key. With both the Sycamore Institute and its original board members based in the state capital, Nashville, recruiting additional board members from other regions of Tennessee remains a top priority.
Advocacy or analysis? Another question we wrestled with early on was where to draw the line. The primary goal of founding the Sycamore Institute was to fill a void of credible, independent, and nonpartisan analysis of policy issues in Tennessee. But should the organization go a step further to offer conclusions and recommend specific policies? Ultimately, the board and executive director decided that the Sycamore Institute would not advocate for specific policies, reasoning that doing so could hurt its credibility as a trustworthy source of politically neutral information.
Concluding Words
Building and maintaining health and well-being, which are complex issues, demand significant public and private resources. In Tennessee, as in most states, health care and education are the state’s top two budget priorities. The Sycamore Institute is dedicated to understanding and explaining the state budget and existing and proposed laws that affect the health and well-being of Tennesseans. Its information has already enabled citizens, policy makers, nonprofit agencies, foundations, media outlets, service providers, and others to understand better the fiscal and human impact of pending policies, giving stakeholders a nonpartisan and informed stake in the process and the outcomes.
HENRY KOTULA 