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U.S. governors urge Trump to make insurance payments
https://www.reuters.com/article/us-usa-healthcare-idUSKBN1AI28L
Democratic and Republican U.S. governors on Wednesday urged the Trump administration, as well as Congress, to continue funding payments to health insurance companies that make Obamacare plans affordable, calling it critical to stabilizing the insurance marketplace.
Republican President Donald Trump, frustrated that Obamacare survived attempts to repeal it, has threatened to cut off about $8 billion in subsidies that help control costs for low-income Americans under the Affordable Care Act, Democratic former President Barack Obama’s signature domestic initiative.
“The Administration has the opportunity to stabilize the health insurance market across our nation and ensure that our residents can continue to access affordable health care coverage,” said a statement by the Health and Human Services Committee of the National Governors Association.
“A first critical step … is to fully fund CSRs (cost-sharing reduction payments) for the remainder of calendar year 2017 through 2018,” the statement said, adding this was needed as Congress and the administration address long-term reform efforts.
The committee is led by Virginia Governor Terry McAuliffe, a Democrat, and Massachusetts Governor Charlie Baker, a Republican. Earlier this year, the governors sent a letter calling on Congress to fully fund the cost-sharing payments.
Some Congressional Republicans have joined Democrats in urging Trump to continue the payments. Republican Senator Lamar Alexander, chairman of the health committee, said Tuesday the president should pay the subsidies through September while lawmakers work on bipartisan legislation to fund the outlays for another year.
But the Senate’s No. 2 Republican John Cornyn hesitated when asked Wednesday if he would support such legislation.
“I’ve said before that I’m not in favor of throwing money at insurance companies without reform, so that’s going to be the nature of the conversation,” Cornyn told reporters outside his office.
Asked what reforms he’d like to see, Cornyn mentioned the “skinny” Obamacare repeal bill the Senate voted down last week. Among other things, it would have repealed the requirement that every American have health insurance or pay a penalty.
Insurers say that the cost-sharing payments are passed onto customers in the form of lower deductibles and co-pays that make care more affordable for low income Americans.
Insurers are finalizing 2018 premium rates for the individual Obamacare market, with many saying their decision hinges on government guarantees for cost-sharing subsidies.
Molina Healthcare Inc said on Wednesday it would stop selling Obamacare plans in Utah and Wisconsin, joining a slew of health insurers that have exited Obamacare markets amid uncertainty over the healthcare law.
Anthem Inc, one of the largest sellers of these plans in 2017, has pared back offerings or mostly exited five states including California and may exit more.
White House budget director Mick Mulvaney told CNN the administration was still considering whether to end cost-sharing subsidies.
Bipartisan drive to pay health insurers faces Senate hurdles
A bipartisan Senate effort to continue federal payments to insurers and avert a costly rattling of health insurance markets faces a dicey future. The uncertainty shows that last week’s wreck of the Republican drive to repeal the Affordable Care Act hasn’t blunted the issue’s sharp-edged politics.
President Donald Trump is threatening to halt the payments in hopes of forcing Democrats to negotiate an end to the Obama-era law. The insurance industry and lawmakers from both parties say blocking the money would lead insurers to raise premiums for people buying individual policies and might induce companies to abandon some markets.
Into the fray has stepped Sen. Lamar Alexander, R-Tenn., chairman of the Senate Health, Education, Labor and Pensions Committee.
He said he will work with the committee’s top Democrat, Sen. Patty Murray of Washington state, on a bill next month that would pay insurers through 2018. In exchange, he wants Democrats to agree to make it easier for states to choose their own health coverage standards that insurers must provide, and not heed consumer-friendly requirements of former President Barack Obama’s law.
While that is an idea Democrats say they will discuss, it’s unclear whether the two parties can reach a deal.
For the GOP’s failed effort to repeal and replace Obama’s overhaul, Senate Republicans used special rules allowing passage by a simple majority. But this developing bill would need 60 votes to succeed. Republicans hold a 52-48 advantage in the Senate, which means Democratic backing will be crucial.
Democrats will be reluctant to strike an agreement that would pull back far on Obama’s protections, which include a set of services insurers must cover and guarantees that premiums for healthy and seriously ill people are equal.
“It’s going to be hard to get common ground,” said Sen. Chris Murphy, D-Conn., a committee member. “Republicans are going to want some initial flexibility” for coverage requirements, “and that’s not an easy thing to achieve.”
Republicans are divided, too.
Many, including Trump, have called the payments an insurers’ bailout. Conservatives are reluctant to continue payments to help sustain a law the GOP has pledged for years to toss out.
“I was a total repeal guy,” said Sen. Richard Shelby, R-Ala. “I don’t know if I want to prop it up.”
Added GOP Sen. Ted Cruz of Texas: “I think it’s a mistake to bail out insurance companies.”
Obama’s law requires insurers to reduce out-of-pocket costs such as deductibles and copayments for millions of low- and middle-income customers. It also requires the government to reimburse insurers for those costs.
But a federal court found that Congress hasn’t properly approved money to do that. Both Obama and Trump have continued making the payments as the case has dragged on.
Besides the outright opponents, some Republicans say they would be reluctant to support an Alexander bill unless whatever eased regulations Democrats agree to are worthwhile. It’s unclear what Alexander or other Republicans are willing to accept.
“We certainly should get some structural change to bring down premiums in exchange for that,” said Sen. Ron Johnson, R-Wis. “We can’t just throw money at the problem.”
That echoes what Senate Majority Leader Mitch McConnell, R-Ky., said last Friday after the Senate rejected the third health proposal he advanced, effectively sinking the repeal effort.
“Bailing out insurance companies with no thought of any kind of reform is not something I want to be part of,” McConnell said.
Alexander said Wednesday that he has kept McConnell apprised of his effort. Asked if he had received a commitment that McConnell would bring such legislation to the full Senate, Alexander said, “Well, he doesn’t know what bill we’re going to have.”
But Alexander does have allies.
“We’ll eventually repeal Obamacare and put something in its place,” said Sen. John Kennedy, R-La. “In the meantime, I think it’s very important not to see any Americans get hurt.”
If the GOP divisions persist, McConnell and House Speaker Paul Ryan, R-Wis., might have to decide whether to have votes on legislation opposed by substantial numbers of Republicans. That’s always an uncomfortable proposition for party leaders.
“That’s a question for McConnell,” said the second-ranking Democratic senator, Illinois’ Dick Durbin, said asked whether he thought the GOP leader would allow a vote on a bill opposed by many Republicans.
Durbin said if Republicans are truly concerned about keeping insurance markets stable, “they have to do something.”
Would Ryan support a measure like Alexander’s?
The speaker “believes repeal and replace is the best course of action and that the Senate needs to act,” spokeswoman AshLee Strong said.
Court complicates Trump’s threat to cut ‘Obamacare’ funds
President Donald Trump’s bold threat to push “Obamacare” into collapse may get harder to carry out after a new court ruling.
The procedural decision late Tuesday by a federal appeals panel in Washington has implications for millions of consumers. The judges said that a group of states can defend the legality of government “cost-sharing” subsidies for copays and deductibles under the Affordable Care Act if the Trump administration decides to stop paying the money.
Trump has been threatening to do just that for months, and he amped up his warnings after the GOP’s drive to repeal and replace “Obamacare” fell apart in the Senate last week. The subsidies help keep premiums in check, but they are under a legal cloud because of a dispute over the wording of the ACA. Trump has speculated that he could force Democrats to make a deal on health care by stopping the payments.
The court’s decision is “a check on the ability of the president to sabotage the Affordable Care Act in one very important way,” said Tim Jost, professor emeritus at Washington and Lee University School of Law in Virginia, a supporter of the ACA who has followed the issue closely.
Because of the ruling, legal experts said, states can now sue if the administration cuts off the subsidies. Also, they said, the president won’t be able to claim he’s merely following the will of a lower court that found Congress had not properly approved the money.
“We’re not going to wait to find out what Donald Trump wants to do,” said California Attorney General Xavier Becerra, who is helping steer the states’ involvement. “My team is ready to defend these subsidies in court.”
The Justice Department had no comment. The White House re-issued an earlier statement saying, “the president is working with his staff and his Cabinet to consider the issues raised by the … payments.”
Trump has made his feelings clear on Twitter. “If ObamaCare is hurting people, & it is, why shouldn’t it hurt the insurance companies,” he tweeted early Monday.
He elaborated in an earlier tweet, “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies…will end very soon!”
In a twist, the appeals court panel seemed to take such statements into account in granting 17 states and the District of Columbia the ability to intervene on behalf of consumers.
The judges’ decision said states’ doubts that the administration could adequately defend their interests in court were fanned by “accumulating public statements by high-level officials…about a potential change in position.”
“He’s really a terrible client, President Trump is,” University of Michigan law professor Nicholas Bagley said. “The states point to his public statements and say, ‘Are you kidding me? We know the president is poised to throw us under the bus and we know because he said so.’”
The health law requires insurers to help low-income consumers with their copays and deductibles. Nearly 3 in 5 HealthCare.gov customers qualify for the assistance, which can reduce a deductible of $3,500 to several hundred dollars. The annual cost to the government is about $7 billion.
The law also specifies that the government shall reimburse insurers for the cost-sharing assistance that they provide.
Nonetheless, the payments remain under a cloud because of a disagreement over whether they were properly approved in the health law, by providing a congressional “appropriation.”
House Republicans trying to thwart the ACA sued the Obama administration, arguing that the law lacked specific language appropriating the cost-sharing subsidies.
A district court judge agreed with House Republicans, and now the case is before the U.S. appeals court in Washington
If Trump makes good on his threat, experts estimate that premiums for a standard “silver” plan would increase by about 19 percent. And more insurers might decide to leave already shaky markets.
In Congress, some prominent lawmakers in both parties are saying they hope to provide at least a temporary guarantee for the subsidies before open enrollment season for 2018 starts Nov. 1.
California, 16 other states pledge to defend Obamacare subsidies if Trump drops out of lawsuit
http://www.sacbee.com/news/local/health-and-medicine/article165045532.html
Now that California, 16 other states and the District of Columbia have been given legal standing in a critical court appeal, California Attorney General Xavier Becerra said Wednesday they will fight to preserve the federal funds that underpin their Obamacare health exchanges if the Trump administration bows out of the lawsuit.
“My team is ready to defend these (federal) subsidies in court,” Becerra said. “We’re going to do everything we can to work with whoever is interested, whether it’s the Trump administration or Congress, to make sure that we continue to provide people with affordable health care. … We’re not going to go back to the days when health care was for the healthy or the wealthy.”
In this legal case, Republicans in the U.S. House of Representatives filed suit in 2014 against then-Secretary of Health and Human Services Sylvia Burwell, asserting that she had overstepped her authority by appropriating billions of dollars to cover discounts that insurers were mandated to give low-income consumers under the Patient Protection and Affordable Care Act, commonly called Obamacare.
While the Affordable Care Act promised reimbursement for the discounts, it provided no mechanism to pay the so-called cost-sharing reductions. Last year, U.S. District Judge Rosemary M. Collyer ruled that, while Congress clearly authorized the program, it had not appropriated funds and thus it was unconstitutional to pay the subsidies. However, she put her decision on hold, pending appeal to the U.S. Court of Appeals for the District of Columbia Circuit.
The dean of the UC Davis School of Law, Kevin R. Johnson, said the states could argue that since Congress mandated the cost-sharing program, that body should be compelled to provide the funding that states and insurers need to make it work.
Becerra, a Democrat who represented the 34th congressional district from 2013 to 2017, said the states would argue that Congress did contemplate the cost-sharing subsidies. “I say that, not only as someone who will argue that in court, I say that as a former member of Congress who helped draft the legislation,” Becerra said.
Becerra said he and other attorneys general filed a motion to join the appeal in May because they thought the president wasn’t going to protect health insurance marketplaces such as Covered California. Before and after the U.S. Senate failed to pass legislation to repeal the Affordable Care Act, Trump has tweeted that he and the Republican leadership should “let Obamacare implode” and then broker a deal.
“You could smell it. You could read it in tweets,” Becerra said. “When we intervened in May, we saw no one was really standing up for the millions of American families that rely upon the Affordable Care Act insurance plans to be able to send their kids to doctors and believe that they could afford to have their child in a hospital. The record is replete with evidence that the Trump administration is not willing to defend the Affordable Care Act.”
The appeals court ruled Tuesday that the states had standing in the lawsuit. Becerra said his office will work in concert with attorneys general in New York, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Pennsylvania, Vermont, Virginia, and Washington, and the District of Columbia. Ten of the states are led by Democratic governors and seven by Republicans.
Because of ongoing uncertainty about the availability of federal funds, Covered California announced Tuesday that it was planning to impose a surcharge on premiums for those consumers whose copayments and deductibles qualified for the insurer discounts.
While the action sounds ominous for the 650,000 silver-tier policy holders it affects, it is actually a bit of creative accounting that protects them from seeing sharp increases in payments and ensures financial stability for insurers. The health law imposes a cap on out-of-pocket costs for those consumers, whose incomes cannot exceed 250 percent of the federal poverty level. Under the Affordable Care Act, the federal government must pick up costs once consumer spending hits that out-of-pocket ceiling.
The insurers still discount copayments and deductibles on a sliding scale linked to income, and the premiums provide enough funding to cover those discounts on the front end rather than after care is provided.
Peter Lee, executive director of Covered California, has said California will move forward with the plan if an annual appropriation is not made for cost-sharing reductions. All rate changes are subject to state regulatory approval.
“We hope that we do not need to implement this work-around that would cause unnecessary confusion and ultimately cost the federal government more than it would to continue to make the payments directly,” Lee said.
It’s not Obamacare anymore. It’s our national health-care system.
Drew Altman is president and chief executive of the Henry J. Kaiser Family Foundation. Larry Levitt is senior vice president of the Kaiser Foundation.
Republicans failed to repeal and replace the Affordable Care Act early Friday because of divisions within their own ranks, and because they tried not only to repeal and replace the ACA but also to cut and cap the Medicaid program, generating opposition from many red-state governors and their senators.
But most of all, they failed because they built their various plans on the false claim — busted by the Congressional Budget Office — that they could maintain the same coverage levels as the ACA and lower premiums and deductibles, while at the same time slashing about a trillion dollars from Medicaid and ACA subsidies and softening the ACA’s consumer protection regulations. Had they succeeded, they would have won a big short-term victory with their base, which strongly supports repeal, but suffered the consequences in subsequent elections as the same voters lost coverage or were hit with higher premiums and deductibles.
The challenge now is to stabilize the ACA’s insurance marketplaces. They are not in free fall or imploding, as President Trump suggests, and in most markets insurer profits have been improving. But these are fragile markets, especially in rural areas, and there are 38 “bare counties” where no insurer currently intends to participate in 2018. About 20 percent of marketplace enrollees have access to only one insurer, with the biggest problems in rural areas.
Senate Republicans failed to pass their ‘skinny bill’ that would repeal parts of the Affordable Care Act on July 28. Three republicans, including Sen. John McCain (R-Ariz.), voted against the bill. (Video: Amber Ferguson/Photo: Melina Mara/The Washington Post)
Insurers have submitted their initial rates to state regulators for 2018, and in some areas, the increases are steep. These companies are hedging their bets in the face of uncertainty emanating from Washington, and who can blame them? Now, with ambiguity over legislative action to repeal and replace the law lifted, the remaining uncertainty is whether Congress and the administration will take steps to stabilize markets or instead undermine them.
The immediate question is whether the administration will implement the law as intended or, in a sense, enact “skinny repeal” through administrative action. To stabilize the marketplaces, the administration would need to enforce the individual mandate as intended, commit to providing payments to insurers that compensate for reducing cost-sharing for low-income enrollees, and continue to provide outreach funds to support enrollment and consumer education activities.
Insurers need to finalize their 2018 rates soon and sign contracts with the federal marketplace by the end of September, so clarity on the $7 billion in cost-sharing payments to insurers is key. If they’re not made, insurers will need to raise premiums by about 19 percent, or they might just decide to exit the market entirely. These payments are subject to a lawsuit filed the House, so Congress might need to step in and assure that the payments will continue.
It is unclear whether Republicans and Democrats can work together on narrow legislation to stabilize the marketplaces without once again opening up a broader debate about the ACA. Republican bills included significant federal funds to help insurers cover the cost of high-risk patients, an idea that was also part of the ACA for its first three years of implementation. These reinsurance or risk-sharing pools would bring premiums down, especially for middle-class consumers not eligible for tax credits in the marketplaces, a primary goal for both parties.
Conservatives may be resistant to such spending, so Congress might also consider ideas they advocated in the recent debate, such as allowing premiums to be paid from health savings accounts. This, too, would provide premium relief to middle-class people buying their own insurance.
Still, only 7 percent of the American people get their insurance through the individual market. Finding consensus on the narrow issue of stabilizing this slice of the health insurance system should be possible if the larger, partisan debate about Obamacare is truly over.
It is also possible as the smoke clears on the health-care battlefield that more states will want to move forward with Medicaid expansions, now that federal funding for those expansions appears secure. Red states will likely seek a conservative stamp on their expansions, adding elements such as work requirements, drug testing, premium payments, time limits or testing private insurance models. Some of these policies will be controversial, and others may stretch what’s allowed under federal law too far. But some wrinkles will no doubt be necessary if Medicaid is to be expanded to the millions of people in the 19 holdout states.
But one thing is clear: 59 percent of the public says President Trump and the Republicans are now in control of government and are responsible for making the ACA work, and 74 percent says they should “do what they can to make the law work.”
It’s apparent what needs to be done to stabilize the marketplaces and who owns the ACA going forward. It’s no longer Obamacare; it’s now just the nation’s health insurance system.
CHS expects $137M net loss in Q2, says divestitures will continue
Franklin, Tenn.-based Community Health Systems ended the second quarter of 2017 with a net loss of $137 million, marking the fifth consecutive quarter the company has posted a loss, according to a preliminary earnings statement released Wednesday.
CHS recorded revenues of $4.14 billion in the second quarter of this year, down 9.7 percent from revenues of $4.59 billion in the same period of 2016. The drop was attributable, in part, to lower patient volumes. Total admissions were down 10.8 percent in the second quarter of 2017 compared to the same quarter of last year. On a same-facility basis, admissions were down 2.5 percent year over year.
In addition to a drop in patient volume, CHS said the lower than anticipated results in the second quarter were attributable to higher expenses related to purchased services, medical specialist fees and information systems. The company’s financial results also included one-time expenses related to its hospital divestitures.
The company ended the period with an operating loss of $131 million. That’s compared to the $1.43 billion operating loss CHS reported in the second quarter of 2016, when it recorded a noncash impairment charge of $1.4 billion.
To improve its finances and reduce its nearly $15 billion debt load, CHS put a turnaround plan into place last year. As part of the plan, the company announced earlier this year that it intended to sell off 30 hospitals.
CHS completed the sale of nine hospitals on June 30 and July 1, bringing its total completed divestitures to 20 out of the 30 it intends to sell off. The company said it expects to complete the divestiture of the remaining 10 hospitals by Sept. 30.
In its preliminary earnings release, CHS said it plans to continue to unload more hospitals.
“In addition to the previously announced divestiture of 30 hospitals, the company continues to receive interest from acquirers for certain of its hospitals. The company is pursuing this interest for sale transactions involving hospitals with a combined total of at least $1.5 billion in annual net revenue and combined mid-single digit adjusted EBITDA margins,” CHS said.
CHS will release its formal numbers for the second quarter and the first half of 2017 on Aug. 1.
HENRY KOTULA 