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Can States Fill the Gap if the Federal Government Overturns Preexisting-Condition Protections?
https://www.commonwealthfund.org/blog/2019/can-states-fill-gap-preexisting-condition-protections
Once again, the Affordable Care Act (ACA) is under threat, this time in the form of Texas v. Azar, a federal lawsuit challenging its constitutionality. This litigation, now under consideration by the Fifth Circuit Court of Appeals, took an unexpected turn in March when the U.S. Department of Justice (DOJ) sided with the plaintiffs, urging the Court to strike the ACA down in its entirety.
On May 1, the administration filed a brief in support of this action. But even before this suit, DOJ had refused to defend key provisions that guarantee coverage of preexisting conditions. If the courts agree with the DOJ, it would invalidate every provision of the 2010 law.
As many as 20 million people nationwide would lose their coverage, while millions more could face insurance company denials, premium surcharges, or high out-of-pocket costs because of their health status.
ACA Protections for People with Preexisting Conditions
- Guaranteed issue. Health insurers are prohibited from denying an individual or employer group a policy based on their health status.
- Community rating. Health insurers may not use an individual or small employer group’s health status to set premiums.
- Preexisting condition exclusions. Health insurers and employer group plans are prohibited from refusing to cover services needed to treat a preexisting condition.
- Essential health benefits. Health insurers selling to individuals and small employers must cover a minimum set of 10 “essential” benefits: ambulatory services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; and pediatric services, including oral and vision care.
- Cost-sharing protections. Health insurers and employer group plans must cap the amount enrollees pay out-of-pocket for health care services each year.
- Annual and lifetime limits. Health insurers and employer group plans are prohibited from imposing annual or lifetime dollar limits on essential health benefits.
- Preventive services. Health insurers and employer group plans are required to cover evidence-based preventive services without any enrollee cost-sharing.
- Nondiscrimination. Health insurers must implement benefit designs for individuals and small employers that do not discriminate based on age, disability, or expected length of life.
To help blunt potential fallout and prevent adverse effects for millions of individuals, several states are enacting bills to ensure that federal ACA protections become part of state law (see box). However, before the ACA, state efforts to require insurers to cover people with preexisting conditions resulted in large premium spikes and, in some cases, caused insurers to exit the market.
The ACA’s premium subsidies have had a critical stabilizing effect. If those subsidies are invalidated, states will have a hard time restoring them with state dollars. In addition, state regulation of self-funded employer plans is preempted under the federal Employee Retirement Income Security Act (ERISA), meaning the 61 percent of people with this type of job-based coverage can regain their protections under the ACA only if Congress steps in to restore them.
States Are Stepping Up, but Power to Fully Protect Consumers Is Limited
In a previous post, we found that at least four states (Colorado, Massachusetts, New York, and Virginia) had laws that would preserve key ACA preexisting-condition protections if the federal law is overturned. Since that time, seven more states (Connecticut, Hawaii, Indiana, Maine, Maryland,1 New Mexico, and Washington) have acted to preserve the ACA’s protections for their residents.
These bills take different approaches. Maine, New Mexico, and Washington passed comprehensive bills that would preserve all the protections listed above. The Connecticut, Hawaii, and Indiana laws are more narrowly focused. Hawaii and Indiana prohibit insurers from imposing preexisting condition exclusions; Connecticut aligns its benefit standards with the ACA. Maryland took a different approach, creating a workgroup to recommend ways to protect residents if the ACA is struck down. The governors of New Jersey and Rhode Island have issued executive orders directing their state agencies to uphold the ACA’s principles, by guarding against discrimination based on preexisting conditions and strengthening consumer protections to ensure access to affordable coverage.
Looking Forward
The Fifth Circuit Court of Appeals is expected to hear arguments in Texas v. Azar in July. Whatever that court decides, the losing party is likely to ask the Supreme Court to hear the case, and a ruling could come as soon as June 2020. With the future of the ACA hanging in the balance, at least 14 other states are considering legislation codifying some of the federal consumer protections during their 2019 sessions.
Affordable Care Act premium rates projected to increase by 10 percent
An estimated 2 percent of the increase will be due to the return on the health insurance tax.
Insurers are projected to submit rate increases in the Affordable Care Act market of about 10 percent, which is higher than the roughly 6 percent increase for 2019, according to Dave Dillon, a fellow of the Society of Actuaries and senior vice president of Lewis & Ellis, Actuaries and Consultants.
An estimated 2 percent of the increase will be due to the return on the health insurance tax. Medical inflation will account for 4-8 percent of the increase, which Dillon called a normal annual trend reflecting the underlying growth in healthcare costs.
Another 1 to 2 percent will be due to the decrease in the level of the premium tax credits. A reduction in the exchange user fee for federal and state-based exchanges will allow for a .5 to 1 percent decrease in rates.
Many factors play a role in rate setting, making predictions somewhat of an educated guess. But Dillon believes one issue that won’t be a factor, unless the court hands up a decision very soon, is the question of the constitutionality of the ACA being weighed in the Fifth Circuit Court of Appeals in Texas.
The Department of Justice recently said the ACA in its entirety should be struck down, now that the individual mandate is gone.
“While there’s a lot of topics going on, they’re not necessary ones that affect 2020 rates,” Dillon said. “The Texas case hangs over everybody but not as an actionable item right now.”
Neither is the Medicare for All debate likely to influence premiums for 2020, he said.
WHY THIS MATTERS
Insurers are getting ready to file their 2020 premium rates for the on-exchange market of the ACA.
Depending on the state, such as Vermont and the District of Columbia, which have deadlines this month, the filing season kicks into high gear during the first and second weeks of June. Other states, such as Arkansas, have a deadline in July, said Dillon, who works with about 10 states on rates.
Off-exchange rates are due later in summer.
Rates will vary by state and would be influenced by a state’s implementation of 1332 waivers to allow for less expansive plans. So far, no state has taken advantage of the waivers that the Centers for Medicare and Medicaid Services began offering last fall, according to The Washington Post.
TREND
ACA premium rates stabilized for 2019 and insurers returned to the market or expanded their coverage areas.
In making his prediction for rates for 2020, Dillon looked at medical loss ratios and profit margins from the 2018 season. These were stable compared to 2017 when insurers were filing two sets of rates depending on whether cost-sharing reduction payments would be continued under the Trump Administration.
President Trump did end the CSRs. However, to make up for the loss to insurers and to lower premium increases, the Department of Health and Human Services allowed insurers in the 2019 season and again for 2020, to silver load premium increases onto silver level plans. Since most beneficiaries get the benefit of federal subsidies for health insurance through the ACA, the federal government is still bearing the cost of allowing insurers to offer lower rates.
Unlike other years, Dillon said he’s not hearing a lot about the market, which he interprets as a stabilizing trend. Insurers aren’t coming in and out of the markets as much. Regional companies may be expanding into other states, but there’s been no talk of another large insurer getting in, he said.
“I think we’re on the path to gaining some traction and stability,” Dillon said. “Obviously the ACA has put us at lowest uninsured rate ever.”
ON THE RECORD
“Consistent with previous years, insurance rates will vary widely across individual states and marketplaces,” Dillon said.
SSM Health is offering $25 virtual visits to all Wisconsin, Missouri residents
St. Louis-based SSM Health is upping the ante for providers in Wisconsin and Missouri by offering all residents — established patients or not, health insurance or not — $25 virtual visits within an hour of requesting an appointment.
The service will be available Monday through Friday 9 a.m. to 7:30 p.m., and Saturday and Sunday from 10 a.m. to 4:30 p.m. Residents who wish to use the service log onto SSM’s virtual visit platform, complete a questionnaire and within 15 minutes to an hour, will receive a video or phone call from an SSM Health clinician.
The service is available for patients ages 2 to 75 for nonurgent health conditions like flu, pink eye or bladder infections. Parents or guardians must complete visits for minors.
SSM Health will charge a $25 flat fee for a virtual visit. However, if the issue cannot be resolved online and a follow-up visit in person is necessary, the virtual visit is free.
The health system plans to roll the program out in Illinois and Oklahoma later this year.
Washington health system files for bankruptcy, cites issues with revenue cycle vendor
Astria Health, a three-hospital health system based in Sunnyside, Wash., filed for Chapter 11 bankruptcy protection on May 6.
Astria plans to use the bankruptcy process to restructure its finances, enter into a plan of reorganization with its creditors and replace its billing company, according to TV station KIMA.
In a press release issued May 6, the health system said it is facing a significant shortfall in cash flow due to issues with the company it contracted with to manage its billing in August 2018. Astria said the unidentified company failed to process a significant number of accounts receivable, leading to a backlog of unpaid claims, according to the Yakima Herald-Republic.
“Although hospital leadership has actively managed the supply chain to ensure necessary supplies for patient care, this delay in cash collections has now become severe enough to potentially disrupt the organization’s ability to pay for crucial items in a timely matter,” Astria Health wrote in its news release, according to the Yakima Herald-Republic.
Astria said it has secured debtor in possession financing and the bankruptcy filing will not affect operations at its hospitals or clinics. They will remain open as the health system moves through the bankruptcy process.
“As one of the largest healthcare providers and employers in the Yakima Valley, we believe this step was necessary in order to protect the Valley’s hospitals and its local economies,” Astria Health President CEO John Gallagher told KIMA. “We believe it will protect and sustain the three hospitals for the future.”
Astria aims to emerge from bankruptcy by the end of 2019.
How to save $80 billion a year on prescription drugs
Medicare could have saved almost $80 billion, just in 2018, by matching the U.K.’s prices for prescription drugs that don’t have any competition, according to a new study released in Health Affairs yesterday.
Why it matters: Medicare’s drug benefit was designed to keep prices in check through competition. But competition doesn’t always exist, and the U.S. doesn’t have many options to keep prices down in those cases.
- Unlike the other three countries examined in the study, the U.S. doesn’t regulate drug prices.
Details: This study focuses on a group of single-source brand-name drugs in Medicare Part D that have been on the market for at least 3 years. Researchers compared U.S. prices for those drugs to prices in the U.K., Japan and Ontario.
- On average, after accounting for rebates, Medicare paid 3.6 times more than the U.K., 3.2 times more than Japan, and 4.1 times more than Ontario.
- The longer a drug was on the U.S. market, the larger that gap grew.
- If Medicare Part D had adopted the average price from those countries, it would have saved an estimated $72.9 billion on sole-source drugs in 2018 alone.
Between the lines: The Trump administration wants to rely on international prices for Medicare Part B, which covers drugs administered in a doctor’s office. But this study shows that there are also a lot of savings to be had in Medicare Part D, which covers drugs you pick up at a pharmacy.
The other side: “An international reference pricing system could result in American seniors losing access to their choice of medicine, and waiting years longer for new breakthrough treatments,” the trade group PhRMA said in a statement.
The bottom line: The political interest in cutting drug prices is real, but we’re still a very long way from President Trump’s stated goal of matching other countries’ prices.
Healthcare Triage: Doctors’ White Coats Can Host a Lot of Bacteria
Healthcare Triage: Doctors’ White Coats Can Host a Lot of Bacteria
For a lot of doctors and patients, the physician’s traditional white coat is a big part of a doctor’s identity, and contributes to their authority. Those white coats can also spread disease! It turns out, fabrics in doctors coats can be a breeding ground for bacteria, and they probably don’t get cleaned often enough.
Lifting the Veil of Secrecy in Health Care Prices
Stories that caught our attention this week
The late, great Princeton economist Uwe Reinhardt once said that the system for determining prices in the US health care system was “chaos behind a veil of secrecy.” That was in 2006, and clearly, the chaos persists today: In San Francisco, the price for a basic blood test ranges from $80 to $564; in Los Angeles, $12 to $413; and in Portland, $15 to $44.
Why does the price of one of the most common tests in medicine vary so much? Multiple factors like the bargaining power of insurers, provider consolidation, and underlying economic conditions 
may explain some of the differences, but the veil shrouding these striking price discrepancies has yet to be completely lifted.
Margot Sanger-Katz writes in the New York Times that health care prices are still hard to uncover because hospitals and insurers set them behind closed doors, and some claim those prices are legally protected trade secrets. She looked at a new analysis by the Health Care Cost Institute (HCCI) that found “enormous swings in price for identical services are common in health care.” To compile the pricing data, HCCI had to pool de-identified health insurance claims submitted to three large insurance companies. “Even the institute can’t say which insurers and providers are attached to the different prices, and it has eliminated certain markets with less competition where it might be easy to guess,” Sanger-Katz writes.
Price transparency is slowly becoming more prevalent. A few online tools exist that allow the public to estimate the price of some medical procedures. The FAIR Health consumer tool has a five-step process for looking up in-network and out-of-network prices for procedures based on a patient’s location. Healthcare Bluebook has a consumer search tool for price information. And HCCI runs guroo.com, a national and regional-level tool that provides average prices for bundles of health care services.
Government Efforts to Make Prices More Transparent
Federal and state policies are starting to complement these efforts. On January 1, 2019, a new national health care transparency policy took effect. The federal government now requires hospitals to post their price lists, called chargemasters, online in a format that can be easily processed by a computer. Critics of the regulation say that chargemasters are virtually incomprehensible to patients, and Vox journalist Sarah Kliff points out that they only lay out the list prices that hospitals charge for services, not the negotiated prices that insurers actually pay. However, the policy still takes the health care system one step closer to being transparent about costs.
In California, work continues on the creation of a new statewide Healthcare Payments Database. Once completed, the database could provide policymakers, patients, and the public with greater insight into the prices charged for medical services. A review committee comprised of health care stakeholders and experts is advising California’s Office of Statewide Health Planning and Development (OSHPD) about the creation, implementation, and administration of the database. The office has until July 1, 2020, to deliver its recommendations to the legislature.
Several other state-level efforts to increase price transparency have been proposed or remain pending in the current legislative session. Assembly member Al Muratsuchi (D-Torrance) authored AB 1038, a recently stalled measure that would have required California physicians to provide OSHPD with information on the rates they charge the public as well as the different rates they negotiate with health plans for the same services. OSHPD would be required to aggregate the negotiated prices compared to Medicare rates by geographic region. State Senator Richard Pan (D-Sacramento) introduced SB 343, which would update current transparency and disclosure requirements for the health care industry to include data from Kaiser Permanente.
The Prices Are the Problem
Despite the fact that Americans do not use health care services at a greater rate than their counterparts in other advanced nations, such as the United Kingdom, Canada, and Australia, the US spends much more on health care than those countries. Researchers from Harvard University and the London School of Economics published a study in JAMA showing that “prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the US and other high-income countries.”
In other words, health insurance premiums and out-of-pocket costs are high not because Americans are sicker or go to the hospital too much, but because of soaring individual prices for services.
At a time when Californians are more worried about paying for medical bills than housing, policymakers and patient advocates will need to continue pulling back the veil of secrecy that obscures the true causes of inordinately expensive care.
The Ten Commandments of Logic
Health care giants are dependent on payments Trump wants to end
The 3 big health insurers that control a majority of Medicare’s prescription drug coverage — CVS Health, Humana and UnitedHealth Group — are arguably the most at risk from the Trump administration’s plan to eliminate rebates within Medicare.
The big picture: These companies rely heavily on rebates to offset the costs of covering seniors’ prescriptions. Losing those rebates would shift billions of dollars away from them, and they could lose customers if they raise premiums to make up the difference.
HENRY KOTULA 