Some 30 insurers are entering the individual market, and an additional 61 are expanding their service area within states, a KFF report says.
Insurer participation in the Affordable Care Act marketplace in 2021 is seeing a third straight year of growth as several insurers are entering the market or expanding their service area, according to a recent Kaiser Family Foundationreport.
For instance, in 2020, UnitedHealthcare, the nation’s largest insurer, became a new entrant in five states, according to the report: Arizona, Maryland, North Carolina, Tennessee and Virginia. Twenty states had new entrants to the market.
For 2021, 30 insurers are entering the individual market, and an additional 61 are expanding their service area within states.
There will be an average of five insurers per state in 2021, up from a low of 3.5 in 2018, but still below the peak of six in 2015. Only 10% of counties will have a single insurer offering in 2021, down from 52% of counties in 2018, the report said. Rural areas tend to have fewer insurers in the ACA market.
Often, when there is only one insurer participating on the exchange, that company is a Blue Cross Blue Shield or Anthem plan, the report said. Before the ACA, state individual markets were often dominated by a single Blue Cross Blue Shield plan.
WHY THIS MATTERS
Despite uncertainties surrounding the ongoing pandemic, the end of the individual mandate and the question of whether the Supreme Court will rule next year to invalidate the entire ACA, the numbers show that insurers appear bullish on participation.
Insurers remained profitable during the pandemic due to decreases in healthcare utilization and claims costs. They are on track yet again to owe substantial rebates to consumers based on low medical loss ratios in 2021.
Even with the lack of a mandate, individuals continue to enroll in ACA plans, with enrollment this year more than keeping pace with last year’s figures. Premiums for 2021 are 1-4% below the average.
THE LARGER TREND
The enrollment numbers continue a trend of rising insurer participation in the ACA going into the 2020 market, and lower premiums.
Insurer participation next year equals the average participation levels at the outset of the marketplaces in 2014, according to the KFF report.
Since 2014, the number of insurers participating on the exchanges has been in flux. Going into the 2018 plan year, many insurers left the market or reduced their footprint due to losses in the market.
Millions of Americans are in danger of losing their homes when federal and local limits on evictions expire at the end of the year, a growing body of research shows.
A report issued this month from the National Low Income Housing Coalition (NLIHC) and the University of Arizona estimates that 6.7 million households could be evicted in the coming months. That amounts to 19 million people potentially losing their homes, rivaling the dislocation that foreclosures caused after the subprime housing bust.
Apart from being a humanitarian disaster, the crisis threatens to exacerbate the coronavirus pandemic, according to a forthcoming study in the Journal of Urban Health.
“Our concern is we’re going to see a huge increase in evictions after the CDC moratorium is lifted,” said Andrew Aurand, vice president of research at the NLIHC and a co-author of the report.
The number of Americans struggling to pay rent has steadily risen since this summer, according to the Census Bureau’s Household Pulse Survey. In the latest survey, from early November, 11.6 million people indicated they wouldn’t be able to pay the rent or mortgage next month.
Meanwhile, some renters who are still paying rent are relying on “unsustainable” income to make ends meet. Among those who report trouble making rent, “More than half are borrowing from family and friends to meet their spending needs, one-third are using credit cards, and one-third are spending down savings,” the NLIHC report found.
Approaching a “payment cliff”
In early September, the U.S. Centers for Disease Control and Prevention barred evictions through year-end, describing the move as a public health measure to reduce spread of the coronavirus. The CDC order protects renters earning less than $99,000 if they have lost income during the pandemic and are likely to become homeless if they’re evicted.
Many states and cities also imposed renter protections during the spring and summer, and others established rental assistance programs to help tenants make ends meet. However, both types of programs are quickly expiring.
Once the CDC moratorium expires,Aurand said, “We expect to see a jump in [eviction] filings, and we know that even now, filings are already occurring. Come January, sadly, for a number of tenants, the next step is the landlord will evict them.”
The situation could reach crisis levels in the new year. With Congress yet to pass another coronavirus relief package, about 12 million Americans are set to lose their unemployment benefits the day after Christmas, a sharp fall in income that would make it harder for many people to pay rent. An abrupt cutoff would slash income by about $19 billion per month, Nancy Vanden Houten, lead economist at Oxford Economics, said in a research note.
Although the Trump Administration has restricted evictions for most households through the end of the year, it did not relieve renters of the need to pay rent. That means many renters may face a “payment cliff” at year’s end, when they must pay several months’ worth of back rent or face eviction.
“If renters are required to quickly repay past due rent or face eviction, the hardship will fall predominantly on lower-income families who have already been disproportionately affected by the coronavirus crisis,” Vanden Houten wrote.
Said Aurand, “If you were a low-income renter before the pandemic and you were hit financially, even if your income starts to recover, you’re going to have a very hard time paying back that rental debt.”
“What we really need is rental assistance,” he noted. “The underlying problem is renters struggling to pay their rent because we’re in an economic crisis, and the moratorium doesn’t address that.”
Long-term impact
Academics have also pushed for direct aid to renters and homeowners, citing the extreme economic fallout from the coronavirus and related shutdowns. In Los Angeles, where 1 in 5 renters were late on rent at some point this summer, residents are facing “an income crisis layered atop of a housing crisis,” researchers at the University of California – Los Angeles have said.
“Delivering assistance to renters now can not just stave off looming evictions, but also prevent quieter and longer-term problems that are no less serious, such as renters struggling to pay back credit card or other debt, struggling to manage a repayment plan, or emerging from the pandemic with little savings left,” they wrote in August report. “Renter assistance can also help the smaller landlords who are disproportionately seeing tenants unable to pay.”
A groundswell of evictions would cause enormous financial hardship. Losing a home is one of the most traumatic events a family can experience, with research showing that people who have experienced eviction are more likely to lose their jobs, fall ill or suffer from mental-health consequences. Children whose families are evicted are more likely to drop out of school, while evictions also contribute to the spread of COVID-19, according to a forthcoming study from UCLA viewed by “60 Minutes.“
“We’ve got a country that’s about to witness evictions like they’ve never witnessed before,” Laura Tucker, a social worker for Florida’s Hillsborough County School District, told “60 Minutes.”
“An eviction can impact a family’s ability to re-house for more than 10 years,” she said.
For that reason, housing and public health experts have said that rental aid now
“Now is the time for action to provide emergency rental assistance. A failure to do so will result in millions of renters spiraling deeper into debt and housing poverty, while public costs and public health risks of eviction-related homelessness increase,” the NLIHC report says. “These outcomes are preventable.”
26 million now say they don’t have enough to eat, as the pandemic worsens and holidays near.
It was 5 a.m., not a hint of sun in the Houston sky, as Randy Young and his mom pulled into the line for a free Thanksgiving meal. They were three hours early. Hundreds of cars and trucks already idled in front of them outside NRG Stadium. This was where Young worked before the pandemic. He was a stadium cook. Now, after losing his job and struggling to get by, he and his 80-year-old mother hoped to get enough food for a holiday meal.
“It’s a lot of people out here,” said Young, 58. “I was just telling my mom, ‘You look at people pulling up in Mercedes and stuff, come on.’ If a person driving a Mercedes is in need of food, you know it’s bad.”
More Americans are going hungry now than at any point during the deadly coronavirus pandemic, according to a Post analysis of new federal data — a problem created by an economic downturn that has tightened its grip on millions of Americans and compounded by government relief programs that expired or will terminate at the end of the year. Experts say it is likely that there’s more hunger in the United States today than at any point since 1998, when the Census Bureau began collecting comparable data about households’ ability to get enough food.
One in 8 Americans reported they sometimes or often didn’t have enough food to eat in the past week, hitting nearly 26 million American adults, an increase several times greater than the most comparable pre-pandemic figure, according to Census Bureau survey data collected in late October and early November. That number climbed to more than 1 in 6 adults in households with children.
“It’s been driven by the virus and the unpredictable government response,” said Jeremy K. Everett, executive director of the Baylor Collaborative on Hunger and Poverty in Waco, Tex.
Nowhere has there been a hunger surge worse than in Houston, with a metro-area population of 7 million people.Houston was pulverized in summer when the coronavirus overwhelmed hospitals, and the local economy was been particularly hard hit by weak oil prices, making matters worse.
More than 1 in 5 adults in Houston reported going hungry recently, including 3 in 10 adults in households with children. The growth in hunger rates has hit Hispanic and Black households harder than White ones, a devastating consequence of a weak economy that has left so many people trying to secure food even during dangerous conditions.
On Saturday, these statistics manifested themselves in the thousands of cars waiting in multiple lines outside NRG Stadium. The people in these cars represented much of the country. Old. Young. Black. White. Asian. Hispanic. Families. Neighbors. People all alone.
Inside a maroon Hyundai Santa Fe was Neicie Chatman, 68, who had been waiting since 6:20 a.m., listening to recordings of a minister’s sermon piped into large earphones.
“I’ve been feeding my spirit,” she said.
Her hours at her job as an administrator have been unsteady since the pandemic began. Her sister was laid off. They both live with their mother, who has been sick for the past year. She planned to take the food home to feed her family and share with her older neighbors.
“It’s been hard to survive. Money is low. No jobs. Hard to find work.”
— Randy Young
“I lost my business and I lost my dream.”
— Adriana Contreras
Now, a new wave of coronavirus infections threatens more economic pain.
Yet the hunger crisis seems to have escaped widespread notice in a nation where millions of households have weathered the pandemic relatively untouched. The stock market fell sharply in March before roaring back and has recovered all of its losses. This gave the White House and some lawmakers optimism about the economy’s condition. Congress left for its Thanksgiving break without making any progress on a new pandemic aid deal even as food banks across the country report a crush of demand heading into the holidays.
“The hardship is incredibly widespread. Large parts of America are saying, ‘I couldn’t afford food for my family,’ ” said Stacy Dean, who focuses on food-assistance policy at the Center on Budget and Policy Priorities. “It’s disappointing this hasn’t broken through.”
No place has been spared.In one of the nation’s richest counties, not far from Trump National Golf Club in Virginia, Loudoun Hunger Relief provided food to a record 887 households in a single week recently. That’s three times the Leesburg, Va.-based group’s pre-pandemic normal.
“We are continuing to see people who have never used our services before,” said Jennifer Montgomery, the group’s executive director.
Hunger rates spiked nationwide after shutdowns in late March closed large chunks of the U.S. economy. The situation improved somewhat as businesses reopened and the benefits from a $2.2 trillion federal pandemic aid package flowed into people’s pockets, with beefed-up unemployment benefits, support for food programs and incentives for companies to keep workers on the payroll.
But those effects were short-lived. The bulk of the federal aid had faded by September. And more than 12 million workers stand to lose unemployment benefits before year’s end if Congress doesn’t extend key programs.
“Everything is a disaster,” said Northwestern University economist Diane Whitmore Schanzenbach, a leading expert on the economics of food insecurity. “I’m usually a pleasant person, but this is just crazy.”
Economic conditions are the main driver behind rising rates of hunger, but other factors play a role, Schanzenbach said. In the Great Recession that began in 2008, people received almost two years of unemployment aid — which helped reduce hunger rates. Some long-term unemployed workers qualified for even more help.
But the less-generous benefits from the pandemic unemployment assistance programs passed by Congress in March have already disappeared or soon will for millions of Americans.
Even programs that Congress agreed to extend have stumbled. A program giving families additional cash assistance to replace school meals missed by students learning at home was renewed for a year on Oct. 1. But the payments were delayed because many states still needed to get the U.S. Agriculture Department’s approval for their plans. The benefit works out to only about $6 per student for each missed school day. But experts say the program has been a lifeline for struggling families.
One program that has continued to provide expanded emergency benefits is the Supplemental Nutrition Assistance Program, or SNAP. The Agriculture Department issued an emergency order allowing states to provide more families the maximum benefit and to suspend the time limit on benefits for younger unemployed adults without children.
The sharpest rise in hunger was reported by groups who have long experienced the highest levels of it, particularly Black Americans. Twenty-two percent of Black U.S. households reported going hungry in the past week, nearly twice the rate faced by all American adults and more than two-and-a-half times the rate for White Americans.
The Houston area was posting some of its lowest hunger rates before the pandemic, thanks to a booming economy and a strong energy sector, Everett said. Then, the pandemic hit. Hunger surged, concentrated among the city’s sizable low-income population, in a state that still allows for the federally mandated minimum wage of $7.25 an hour. Houston’s hunger rates — like those nationwide — fell significantly after the $1,200 stimulus checks were mailed out in April and other pandemic aid plans took effect, Everett said.
But most of the effects of that aid are gone.
“Without sustained aid at the federal level, we’ll be hard pressed to keep up,” said Celia Call, chief executive of Feeding Texas, which advocates for 21 food banks in the state. “We’re just bracing for the worst.”
Schools are one of the most important sources of food for low-income families in Houston. The Houston Independent School District has 210,000 students — many of whom qualify for free or reduced-priced meals. But the pandemic closed schools in the spring. They reopened in the fall with less than half of the students choosing a hybrid model of in-school and at-home instruction. That has made feeding these children a difficult task.
“We’ve made an all-out effort to capture these kids and feed them,” said Betti Wiggins, the school district’s nutrition services officer.
The district provided curbside meal pickups outside schools. Anyone could come, not just schoolchildren. School staffers set up neighborhood distribution sites in the areas with the highest need. They started a program to serve meals to children living in apartment buildings. Sometimes the meal program required police escorts.
“I’m doing everything but serving in the gas station when they’re pumping the gas,” Wiggins said.
Wiggins said the normal school meals program she ran before the pandemic has been transformed into providing food for entire families far beyond a school’s walls. She has noticed unfamiliar faces in her meal lines. The “new poor,” she calls them, parents who might have worked in the airline or energy industries crushed by the pandemic.
“I’m seeing folks who don’t know how to handle the poverty thing,” she said, adding that it became her mission to make sure they had food.
The Houston Food Bank is the nation’s largest, serving 18 counties in Southeast Texas with help from 1,500 partner agencies. Last month, the food bank distributed 20.6 million pounds of food — down from the 27.8 million pounds handed out in May, but still 45 percent more than what it distributed in October 2019, with no end in sight.
The biggest worry for food banks right now is finding enough food, said Brian Greene, president of the Houston Food Bank. Food banks buy bulk food with donations. They take in donated food items, too. Food banks also benefited from an Agriculture Department program that purchased excess food from U.S. farmers hurt by the ongoing trade war with China, typically apples, milk and pork products. But funding for that program ended in September. Other federal pandemic programs are still buying hundreds of millions of dollars in food and donating it to food banks. But Greene said he worries about facing “a commodity cliff” even as demand grows.
Teresa Croft, who volunteers at a food distribution site at a church in the Houston suburb of Manvel, said the need is still overwhelming. She handles the paperwork for people visiting the food bank for the first time. They’re often embarrassed, she said. They never expected to be there. Sometimes, Croft tries to make them feel better by telling her own story — how she started at the food bank as a client, but got back on her feet financially more than a decade ago and is now a food bank volunteer.
“They feel so bad they’re having to ask for help. I tell them they shouldn’t feel bad. We’re all in this together,” Croft said. “If you need it, you need it.”
The pandemic changed how the Houston Food Bank runs. Everything is drive-through and walk-up. Items are preselected and bagged. The food bank has held several food distribution events in the parking lots outside NRG Stadium — a $325 million, retractable-roof temple to sports and home to the National Football League’s Houston Texans.
Last weekend, instead of holding the 71st annual Thanksgiving Day Parade in Houston, the city and H-E-B supermarkets decided to sponsor the food bank’s distribution event at NRG Stadium. The plan was to feed 5,000 families.
The first cars arrived at the stadium around 1 a.m. Saturday, long before the gates opened for the 8 a.m. event. By the time Young and his mother drove up, the line of vehicles stretched into the distance. Organizers opened the gates early. The cars and trucks began to slowly snake through the stadium’s parking lot toward a series of white tents, where the food was loaded into trunks by volunteers. The boxes contained enough food for multiple meals during the holiday week, with canned vegetables such as corn and sweet potatoes, a package of rolls, cranberry sauce and a box of masks. People picking up food were also given a bag of cereal and some resealable bags, a ham, a gallon of milk, and finally a turkey and pumpkin pie.
The food for 5,000 families ran out. The Houston Food Bank — knowing that would not be enough — was able to assemble more.
It provided food to 7,160 vehicles and 261 people who walked up to the event.
Troy Coakley, 56, came to the event looking for food to feed his family for the week. He still had his job breaking apart molds at a plant that makes parts for oil field and water companies. But his hours were cut when the economy took a hit in March. Coakley went from working overtime to three days a week.
He was struggling. Behind on rent. Unsure what was to come.
But for the moment, his trunk filled with food, he had one less thing to worry about.
“Other than [the pandemic], we were doing just fine,” Coakley said. “But now it’s getting worse and worse.”
Of his many plans to expand insurance coverage, President-elect Joe Biden’s simplest strategy is lowering the eligibility age for Medicare from 65 to 60.
But the plan is sure to face long odds, even if the Democrats can snag control of the Senate in January by winning two runoff elections in Georgia.
Republicans, who fought the creation of Medicare in the 1960s and typically oppose expanding government entitlement programs, are not the biggest obstacle.Instead, the nation’s hospitals — a powerful political force — are poised to derail any effort. Hospitals fear adding millions of people to Medicare will cost them billions of dollars in revenue.
“Hospitals certainly are not going to be happy with it,” said Jonathan Oberlander, professor of health policy and management at the University of North Carolina at Chapel Hill.
Medicare reimbursement rates for patients admitted to hospitals are on average half what commercial or employer-sponsored insurance plans pay.
“It will be a huge lift [in Congress] as the realities of lower Medicare reimbursement rates will activate some powerful interests against this,” said Josh Archambault, a senior fellow with the conservative Foundation for Government Accountability.
Biden, who turns 78 this month, said his plan will help Americans who retire early and those who are unemployed or can’t find jobs with health benefits.
“It reflects the reality that, even after the current crisis ends, older Americans are likely to find it difficult to secure jobs,” Biden wrote in April.
Lowering the Medicare eligibility age is popular. About 85% of Democrats and 69% of Republicans favor allowing those as young as 50 to buy into Medicare, according to a Kaiser Family Foundation tracking poll from January 2019. (Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.)
Although opposition from the hospital industry is expected to be fierce, it is not the only obstacle to Biden’s plan.
Critics, especially Republicans on Capitol Hill, will point to the nation’s $3 trillion budget deficit as well as the dim outlook for the Medicare Hospital Insurance Trust Fund. That fund is on track to reach insolvency in 2024. That means there won’t be enough money to pay hospitals and nursing homes fully for inpatient care for Medicare beneficiaries.
It’s also unclear whether expanding Medicare will fit on the Democrats’ crowded health agenda, which includes dealing with the COVID-19 pandemic, possibly rescuing the Affordable Care Act (if the Supreme Court strikes down part or all of the law in a current case), expanding Obamacare subsidies and lowering drug costs.
Biden’s proposal is a nod to the liberal wing of the Democratic Party, which has advocated for Sen. Bernie Sanders’ government-run “Medicare for All” health system that would provide universal coverage. Biden opposed that effort, saying the nation could not afford it. He wanted to retain the private health insurance system, which covers 180 million people.
To expand coverage, Biden has proposed two major initiatives. In addition to the Medicare eligibility change, he wants Congress to approve a government-run health plan that people could buy into instead of purchasing coverage from insurance companies on their own or through the Obamacare marketplaces. Insurers helped beat back this “public option” initiative in 2009 during the congressional debate over the ACA.
The appeal of lowering Medicare eligibility to help those without insurance lies with leveraging a popular government program that has low administrative costs.
“It is hard to find a reform idea that is more popular than opening up Medicare” to people as young as 60, Oberlander said. He said early retirees would like the concept, as would employers, who could save on their health costs as workers gravitate to Medicare.
The eligibility age has been set at 65 since Medicare was created in 1965 as part of President Lyndon Johnson’s Great Society reform package. It was designed to coincide with the age when people at that time qualified for Social Security. Today, people generally qualify for early, reduced Social Security benefits at age 62, but full benefits depend on the year you were born, ranging from age 66 to 67.
While people can qualify on the basis of other criteria, such as having a disability or end-stage renal disease, 85% of the 57 million Medicare enrollees are in the program simply because they’re old enough.
Lowering the age to 60 could add as many as 23 million people to Medicare, according to an analysis by the consulting firm Avalere Health. It’s unclear, however, if everyone who would be eligible would sign up or if Biden would limit the expansion to the 1.7 million people in that age range who are uninsured and the 3.2 million who buy coverage on their own.
Avalere says 3.2 million people in that age group buy coverage on the individual market.
While the 60-to-65 group has the lowest uninsured rate (8%) among adults, it has the highest health costs and pays the highest rates for individual coverage, said Cristina Boccuti, director of health policy at West Health, a nonpartisan research group.
About 13 million of those between 60 and 65 have coverage through their employer, according to Avalere. While they would not have to drop coverage to join Medicare, they could possibly opt to pay to join the federal program and use it as a wraparound for their existing coverage. Medicare might then pick up costs for some services that the consumers would have to shoulder out of pocket.
Some 4 million people between 60 and 65 are enrolled in Medicaid, the state-federal health insurance program for low-income people. Shifting them to Medicare would make that their primary health insurer, a move that would save states money since they split Medicaid costs with the federal government.
Chris Pope, a senior fellow with the conservative Manhattan Institute, said getting health industry support, particularly from hospitals, will be vital for any health coverage expansion. “Hospitals are very aware about generous commercial rates being replaced by lower Medicare rates,” he said.
“Members of Congress, a lot of them are close to their hospitals and do not want to see them with a revenue hole,” he said.
President Barack Obama made a deal with the industry on the way to passing the ACA. In exchange for gaining millions of paying customers and lowering their uncompensated care by billions of dollars, the hospital industry agreed to give up future Medicare funds designed to help them cope with the uninsured. Showing the industry’s prowess on Capitol Hill, Congress has delayed those funding cuts for more than six years.
Jacob Hacker, a Yale University political scientist, noted that expanding Medicare would reduce the number of Americans who rely on employer-sponsored coverage. The pitfalls of the employer system were highlighted in 2020 as millions lost their jobs and their workplace health coverage.
Even if they can win the two Georgia seats and take control of the Senate with the vice president breaking any ties, Democrats would be unlikely to pass major legislation without GOP support — unless they are willing to jettison the long-standing filibuster rule so they can pass most legislation with a simple 51-vote majority instead of 60 votes.
Hacker said that slim margin would make it difficult for Democrats to deal with many health issues all at once.
“Congress is not good at parallel processing,” Hacker said, referring to handling multiple priorities at the same time. “And the window is relatively short.”
Two conservative justices on the Supreme Court appeared prepared to preserve at least some of the major components of ObamaCare, including its protections for people with preexisting conditions, as they heard arguments Tuesday in a suit challenging the law.
Chief Justice John Roberts and Justice Brett Kavanaugh seemed to express the view that if the court were to strike down the provision of the law mandating the purchase of health insurance, the rest of the law should be allowed to survive.
“Looking at our severability precedents, it does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the act in place, the provisions regarding preexisting conditions and the rest,” Kavanaugh said.
The U.S. Supreme Court is set to hear a case questioning the legality of the ACA on Nov. 10.
Five things to know:
1. At the center of the case is whether the health law should be struck down. In a brief filed June 25 in Texas v. United States, the Trump administration argues the entire ACA is invalid because in December 2017, Congress eliminated the ACA’s tax penalty for failing to purchase health insurance. The administration argues the individual mandate is inseverable from the rest of the law and became unconstitutional when the tax penalty was eliminated; therefore, the entire health law should be struck down.
2. The administration’s brief was filed in support of a group of Republican-led states seeking to undo the ACA. Meanwhile, California Attorney General Xavier Becerra is leading a coalition of more Democratic states to defend the ACA before the Supreme Court.
3. The case goes before the Supreme Court days after media outlets projected Joe Biden as the next president of the U.S. President-elect Biden has said he seeks to expand government-subsidized insurance coverage and wants to the bring back the ACA’s tax penalty for failing to purchase health insurance, according to The Wall Street Journal. If a change regarding the tax penalty did occur, the publication notes that Republicans’ argument on severability would no longer apply.
4. The case also goes before the Supreme Court about two weeks after the Senate voted Oct. 26 to confirm Amy Coney Barrett to the Supreme Court. Ms. Barrett previously criticized Chief Justice John Roberts’ 2012 opinion sustaining the law’s individual mandate, The New York Times reported, but she said during her confirmation hearings in October that “the issue in the case is this doctrine of severability, and that’s not something that I have ever talked about with respect to the Affordable Care Act.”
5. According to the Journal, the Supreme Court is not expected to make a decision in the case until the end of June.
President-elect Joe Biden’s healthcare agenda: building on the ACA, value-based care, and bringing down drug prices.
In many ways, Joe Biden is promising a return to the Obama administration’s approach to healthcare:
Building on the Affordable Care Act (ACA) through incremental expansions in government-subsidized coverage
Continuing CMS’ progress toward value-based care
Bringing down drug prices
Supporting modernization of the FDA
Bolder ideas, such as developing a public option, resolving “surprise billing,” allowing for negotiation of drug prices by Medicare, handing power to a third party to help set prices for some life sciences products, and raising the corporate tax rate, could be more challenging to achieve without overwhelming majorities in both the House and the Senate.
Biden is likely to mount an intensified federal response to the COVID-19 pandemic, enlisting the Defense Production Act to compel companies to produce large quantities of tests and personal protective equipment as well as supporting ongoing deregulation around telehealth. The Biden administration also will likely return to global partnerships and groups such as the World Health Organization, especially in the area of vaccine development, production and distribution.
What can health industry executives expect from Biden’s healthcare proposals?
Broadly, healthcare executives can expect an administration with an expansionary agenda, looking to patch gaps in coverage for Americans, scrutinize proposed healthcare mergers and acquisitions more aggressively and use more of the government’s power to address the pandemic. Executives also can expect, in the event the ACA is struck down, moves by the Biden administration and Democratic lawmakers to develop a replacement. Healthcare executives should scenario plan for this unlikely yet potentially highly disruptive event, and plan for an administration marked by more certainty and continuity with the Obama years.
All healthcare organizations should prepare for the possibility that millions more Americans could gain insurance under Biden. His proposals, if enacted, would mean coverage for 97% of Americans, according to his campaign website. This could mean millions of new ACA customers for payers selling plans on the exchanges, millions of new Medicaid beneficiaries for managed care organizations, millions of newly insured patients for providers, and millions of covered customers for pharmaceutical and life sciences companies. The surge in insured consumers could mirror the swift uptake in the years following the passage of the ACA.
Biden’s plan to address the COVID-19 pandemic
Biden is expected to draw on his experience from H1N1 and the Ebola outbreaks to address the COVID-19 pandemic with a more active role for the federal government, which many Americans support. These actions could shore up the nation’s response in which the federal government largely served in a support role to local, state and private efforts.
Three notable exceptions have been the substantial federal funding for development of vaccines against the SARS-CoV-2 virus, Congress’ aid packages and the rapid deregulatory actions taken by the FDA and CMS to clear a path for medical products to be enlisted for the pandemic and for providers, in particular, to be able to respond to it.
Implications of Biden’s 2020 health agenda on healthcare payers, providers and pharmaceutical and life sciences companies
The US health system has been slowly transforming for years into a New Health Economy that is more consumer-oriented, digital, virtual, open to new players from outside the industry and focused on wellness and prevention. The COVID-19 pandemic has accelerated some of those trends. Once the dust from the election settles, companies that have invested in capabilities for growth and are moving forcefully toward the New Health Economy stand to gain disproportionately.
Shortages of clinicians and foreign medical students may continue to be an issue for a while
The Trump administration made limiting the flow of immigrants to the US a priority. The associated policy changes have the potential to exacerbate shortages of physicians, nurses and other healthcare workers, including medical students. These consequences have been aggravated by the pandemic, which dramatically curtailed travel into the US.
Healthcare organizations, especially rural ones heavily dependent on foreign-born employees, may find themselves competing fiercely for workers, paying higher salaries and having to rethink the structure of their workforces.
Providers should consider reengineering primary care teams to reflect the patients’ health status and preferences, along with the realities of the workforce on the ground and new opportunities in remote care.
Focus on modernizing the supply chain
Biden and lawmakers from both parties have been raising questions about life sciences’ supply chains. This focus has only intensified because of the pandemic and resulting shortages of personal protective equipment (PPE), pharmaceuticals, diagnostic tests and other medical products.
Investment in advanced analytics and cybersecurity could allow manufacturers to avoid disruptive stockouts and shortages, and deliver on the promise of the right treatment to the right patient at the right time in the right place.
Drug pricing needs a long-term strategy
Presidents and lawmakers have been talking about drug prices for decades; few truly meaningful actions have been implemented. Biden has made drug pricing reform a priority.
Drug manufacturers may need to start looking past the next quarter to create a new pricing strategy that maximizes access in local markets through the use of data and analytics to engage in more value-based pricing arrangements.
New financing models may help patients get access to drugs, such as subscription models that provide unlimited access to a therapy at a flat rate.
Companies that prepare now to establish performance metrics and data analytics tools to track patient outcomes will be well prepared to offer payers more sustainable payment models, such as mortgage or payment over time contracts, avoiding the sticker shock that comes with these treatments and improving uptake at launch.
Pharmaceutical and life sciences companies will likely have to continue to offer tools for consumers like co-pay calculators and use the contracting process where possible to minimize out-of-pocket costs, which can improve adherence rates and health outcomes.
View interoperability as an opportunity to embrace, not a threat to avoid or ignore
While the pandemic delayed many of the federal interoperability rule deadlines, payers and providers should use the extra time to plan strategically for an interoperable future.
Payers should review business partnerships in this new regulatory environment.
Digital health companies and new entrants may help organizations take advantage of the opportunities that achieving interoperability may present.
Companies should consider the legal risks and take steps to protect their reputations and relationships with customers by thinking through issues of consent and data privacy.
Health organizations should review their policies and consider whether they offer protections for customers under the new processes and what data security risks may emerge. They should also consider whether business associate agreements are due in more situations.
Plan for revitalized ACA exchanges and a booming Medicare Advantage market
The pandemic has thrown millions out of work, generating many new customers for ACA plans just as the incoming Biden administration plans to enrich subsidies, making more generous plans within reach of more Americans.
Payers in this market should consider how and where to expand their membership and appeal to those newly eligible for Medicare. Payers not in this market should consider partnerships or acquisitions as a quick way to enter the market, with the creation of a new Medicare Advantage plan as a slower but possibly less capital-intensive entry into this market.
Payers and health systems should use this opportunity to design more tailored plan options and consumer experiences to enhance margins and improve health outcomes.
Payers with cash from deferred care and low utilization due to the pandemic could turn to vertical integration with providers as a means of investing that cash in a manner that helps struggling providers in the short term while positioning payers to improve care and reduce its cost in the long term.
Under the Trump administration, the FDA has approved historic numbers of generic drugs, with the aim of making more affordable pharmaceuticals available to consumers. Despite increased FDA generics approvals, generics dispensed remain high but flat, according to HRI analysis of FDA data.
Pharmaceutical company stocks, on average, have climbed under the Trump administration, with a few notable dips due to presidential speeches criticizing the industry and the pandemic.
Providers have faced some revenue cuts, particularly in the 340B program, and many entered the pandemic in a relatively weak liquidity position. The pandemic has led to layoffs, pay cuts and even closures. HRI expects consolidation as the pandemic continues to curb the flow of patients seeking care in emergency departments, orthopedic surgeons’ offices, dermatology suites and more.
Lawmakers and politicians often use bold language, and propose bold solutions to problems, but the government and the industry itself resists sudden, dramatic change, even in the face of sudden, dramatic events such as a global pandemic. One notable exception to this would be a decision by the US Supreme Court to strike down the ACA, an event that would generate a great deal of uncertainty and disruption for Americans, the US health industry and employers.
The financial challenges caused by the COVID-19 pandemic have forced hundreds of hospitals across the nation to furlough, lay off or reduce pay for workers, and others have had to scale back services or close.
Lower patient volumes, canceled elective procedures and higher expenses tied to the pandemic have created a cash crunch for hospitals. U.S. hospitals are estimated to lose more than $323 billion this year, according to a report from the American Hospital Association. The total includes $120.5 billion in financial losses the AHA predicts hospitals will see from July to December.
Hospitals are taking a number of steps to offset financial damage. Executives, clinicians and other staff are taking pay cuts, capital projects are being put on hold, and some employees are losing their jobs. More than 260 hospitals and health systems furloughed workers this year and dozens of others have implemented layoffs.
Below are 11 hospitals and health systems that announced layoffs since Sept. 1, most of which were attributed to financial strain caused by the pandemic.
1. NorthBay Healthcare, a nonprofit health system based in Fairfield, Calif., is laying off 31 of its 2,863 employees as part of its pandemic recovery plan, the system announced Nov. 2.
2. Minneapolis-based Children’s Minnesota is laying off 150 employees, or about 3 percent of its workforce. Children’s Minnesota cited several reasons for the layoffs, including the financial hit from the COVID-19 pandemic. Affected employees will end their employment either Dec. 31 or March 31.
3. Brattleboro Retreat, a psychiatric and addiction treatment hospital in Vermont, notified 85 employees in late October that they would be laid off within 60 days.
4. Citing a need to offset financial losses, Minneapolis-basedM Health Fairview said it plans to downsize its hospital and clinic operations. As a result of the changes, 900 employees, about 3 percent of its 34,000-person workforce, will be laid off.
5. Lake Charles (La.) Memorial Health Systemlaid off 205 workers, or about 8 percent of its workforce, as a result of damage sustained from Hurricane Laura. The health system laid off employees at Moss Memorial Health Clinic and the Archer Institute, two facilities in Lake Charles that sustained damage from the hurricane.
6. Burlington, Mass.-based Wellforce laid off 232 employees as a result of operating losses linked to the COVID-19 pandemic. The health system, comprising Tufts Medical Center, Lowell General Hospital and MelroseWakefield Healthcare,experienced a drastic drop in patient volume earlier this year due to the suspension of outpatient visits and elective surgeries. In the nine months ended June 30, the health system reported a $32.2 million operating loss.
7. Baptist Health Floyd in New Albany, Ind., part of Louisville, Ky.-based Baptist Health, eliminated 36 positions. The hospital said the cuts, which primarily affected administrative and nonclinical roles, are due to restructuring that is “necessary to meet financial challenges compounded by COVID-19.”
8. Cincinnati-based UC Health laid off about 100 employees. The job cuts affected both clinical and non-clinical staff. A spokesperson for the health system said no physicians were laid off.
9. Mercy Iowa City(Iowa) announced in September that it will lay off 29 employees to address financial strain tied to the COVID-19 pandemic.
10. Springfield, Ill.-based Memorial Health Systemlaid off 143 employees, or about 1.5 percent of the five-hospital system’s workforce. The health system cited financial pressures tied to the pandemic as the reason for the layoffs.
11. Watertown, N.Y.-based Samaritan Healthannounced Sept. 8 that it laid off 51 employees and will make other cost-cutting moves to offset financial stress tied to the COVID-19 pandemic.
HENRY KOTULA 