Tag Archives: ACA Repeal

New Medicaid worry emerges for centrists

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New Medicaid worry emerges for centrists

New Medicaid worry emerges for centrists

Some states would likely end their Medicaid expansions earlier than 2024 if the Senate’s healthcare bill becomes law, according to several sources.

That dynamic could deepen concerns among several senators who are undecided about the healthcare bill because of its changes to Medicaid, the federal healthcare program for the poor and disabled.

Sen. Lisa Murkowski (R-Alaska) has been deep in talks with her state, which might have to end Medicaid expansion early if the Senate bill passes.

Murkowski is a key vote that Senate leaders cannot afford to lose. With Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) already opposed to the legislation, one more defection — from Murkowski or anyone else — would stop the bill in its tracks.

The revised healthcare bill that Senate Republican leaders released Thursday contains much of the same Medicaid provisions, such as cuts to Medicaid; converts federal financing to funding per enrollee or a block grant; and phases out the additional federal money for the expansion over three years, beginning in 2021.

In a nod to centrists, the bill does not fully phase out extra federal funding for ObamaCare’s Medicaid expansion until 2024.

But for some states, maintaining expanded eligibility would simply become too costly if the bill became law. Other states have automatic “triggers” that, if left unchanged, would end the expansion.

On Medicaid expansion, “I think it’s highly likely that they will end it sooner than you might think because the money is just not going to be there to maintain it as it starts to drop,” Matt Salo, executive director of the National Association of Medicaid Directors, said. “You can call it a soft landing, but it’s going to mean people are losing coverage.”

Earlier in the legislative debate, moderate senators had pushed for a gradual phase out of extra federal funds for Medicaid expansion, unlike the House bill, which halted the dollars starting in 2020.

As a nod to these senators, GOP leadership released its ObamaCare repeal-and-replace bill in late June that included a three-year phase out. Yet that is shorter than the seven-year glide path pushed by centrist Republicans, such as Sens. Rob Portman (R-Ohio) and Shelley Moore Capito (R-W.Va).

“I think a three-year glide path or a five-year glide path is not going to make a big difference in terms of whether states are able to keep the expansion going,” said Cindy Mann, who served as the federal director of Medicaid during the Affordable Care Act’s administration and is now a partner at Manatt Health.

In 2021, the 31 expansion states and Washington D.C. would, as a whole, be on the hook for a total of $6.6 billion in additional Medicaid funding. That figure would increase to nearly $43 billion more in total state spending, according to an analysis from the left-leaning Center on Budget and Policy Priorities (CBPP).

States would be faced with a tough decision on how to make up for the lost federal money. They’d have several choices, but dropping the expansion would be the most straightforward solution.

“Either you raise taxes, you cut other parts of the budget or you cut other parts of Medicaid or you drop the expansion,” Edwin Park, CBPP vice president for health policy, said. “Those are the choices, and they would have to figure that out. I think the most likely scenario would be that states start dropping the expansion.”

Some states may begin dropping the expansion in 2021 — and possibly even before the funds are reduced — Park said, “because they can’t absorb even the higher increase in spending that will be required, and certainly over time more and more states would start to drop the expansion.”

Throughout the healthcare debate, the changes to Medicaid have bedeviled leadership.

Senators from expansion states don’t want thousands of their residents to lose healthcare coverage. Some of their governors have been urging bipartisan reform rather than passing the GOP bill without a single Democratic vote, which Republicans can do under the fast-track budget maneuver they’re using to repeal and replace ObamaCare.

Less money for Medicaid expansion is a concern to states, some of which enacted guardrails to protect themselves from decreases in dollars they get from the federal government to implement the expansion.

At least nine states have provisions in their Medicaid expansions that would end it automatically or soon after if enhanced federal funds dip below a certain level. Those states are Arizona, Arkansas, Illinois, Indiana, Michigan, Montana, New Hampshire, New Mexico, and Washington, according to CBPP.

Sen. John McCain (R-Ariz.) represents a state where, under the Senate bill, the end of ObamaCare’s Medicaid expansion would be triggered in 2022.

After a closed-door meeting where rank-and-file members were presented with the bill’s revisions, McCain was asked if he supported a motion to proceed to the bill.

“My governor said that we needed three amendments for him to approve of it, and those three amendments were not included,” he replied.

One such amendment would extend the timeline of phasing out Medicaid expansion money, so as to give “states like Arizona the necessary time to adjust their budgets so citizens don’t have the rug pulled out from under them,” McCain said in a statement released Thursday.

Senate Majority Leader Mitch McConnell late late Saturday delayed the healthcare vote while McCain recovers from surgery.

Alaska doesn’t have a trigger in its Medicaid law, but would be at risk of losing the Medicaid expansion before the phase-out even begins.

The reason comes down to how Medicaid was expanded in Alaska. Independent Gov. Bill Walker used an executive order to expand Medicaid and could do so because Alaska is required to cover all groups federal law mandates be covered — even though the Supreme Court ruled it was optional. But the Senate bill makes covering more lower-income people optional instead of mandatory in 2020.

“We think that puts Alaska’s expansion at risk in 2020 because our state legal authority to maintain those services would be in question,” Valerie Davidson, the Alaska Department of Health and Social Services commissioner, said, adding she believes the expansion would end in 2020.

The possible policy change is paramount for Davidson, as the state saw nearly 34,000 adults covered due to the Medicaid expansion. She’s been in “constant communication” with her two state’s senators — Murkowski and Dan Sullivan.

During the week before July 4th recess, Davidson was in Washington, D.C., where her team essentially “camped out in [Murkowski’s] office, except that she was very welcoming.”

The issue has been on Murkowski’s radar screen, the senator said, and that “we would basically kick it back to our legislature who could vote to discontinue the expansion so we would not be part of that glide path that many of us have been trying to put in place.”

“It’s yet one more thing in the bucket of things that makes Alaska somewhat distinguishable,” Murkowski said.

Even if Alaska opted to find a way to keep the expansion, Davidson said it isn’t realistic due to the state’s budget deficit.

“Our state right now is looking to cut programs and cut our general fund, not add to it,” Davidson said, “and so I think for anybody to make the assumption that, well, the state will just take on more of that responsibility is not very realistic.”

High-Risk Pools for People with Preexisting Conditions: A Refresher Course

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http://www.commonwealthfund.org/publications/blog/2017/mar/high-risk-pools-preexisting-conditions

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During the recent effort to repeal and replace the Affordable Care Act (ACA), some members of Congress and the Trump administration seemed to be experiencing a certain nostalgia for high-risk pools, which operated in 35 states before the ACA was enacted. At a CNN Town Hall Meeting in January, Speaker of the House Paul Ryan responded to a question about coverage for people with preexisting conditions by saying:

We believe that state high-risk pools are a smart way of guaranteeing coverage for people with preexisting conditions. We had a really good one in Wisconsin. Utah had a great one . . . . What I mean when I say this is, about 8 percent of all the people under 65 have that kind of preexisting condition . . . . So, by financing state high-risk pools to guarantee people get affordable coverage when they have a preexisting condition, what you’re doing is, you’re dramatically lowering the price of insurance for everybody else. So, if we say let’s just, as taxpayers—and I agree with this—finance the coverage for those 8 percent of Americans under 65 in a condition like yours, they don’t have to be covered or paid for by their small business or their insurer who is buying the rates for the rest of the people in their insured pool, and you’d dramatically lower the price for the other 92 percent of Americans.

As high-risk pools and other changes to the ACA continue to be debated, it is critical to deconstruct statements such as these and remind ourselves of how high-risk pools really worked and how unaffordable they were. It is important to remember that high rates of uninsurance and lack of affordability for all buyers in the individual market existed before the ACA, even in states with high-risk pools. In addition, policymakers seem to substantially underestimate the number of Americans with preexisting conditions who might be forced to purchase coverage through a high-risk pool if insurers are allowed to deny coverage in the marketplace.

Affordability and Costs of State High-Risk Pool Coverage Pre-ACA

High-risk pools were expensive because they concentrated people with health conditions into a single pool, with no healthy members to offset their costs. As a result, out-of-pocket costs for enrollees were very high and coverage was often quite limited, as administrators sought to limit losses and lower premiums by imposing high deductibles and cost-sharing, as well as annual and lifetime coverage caps. In state high-risk pools operating before the ACA:

  • Premiums ranged from 125 percent to 200 percent of average premiums in the individual market, yet covered only about 53 percent of claims and administrative costs nationally (Wisconsin allowed premiums up to 200 percent of average).
  • Fourteen states had plans with deductibles of $10,000 per year or higher, substantially greater than the current maximum $7,150 deductible for catastrophic plans in the marketplaces.
  • Thirty states imposed maximum lifetime limits; others had annual coverage limits as low as $75,000 per year (Utah had both a lifetime and an annual limit).
  • In 2010, the 35 state high-risk pools incurred about $2.4 billion in total costs—to cover just 221,879 people.

The U.S. Department of Health and Human Services (HHS) recently estimated that up to 17,875,000 people with preexisting conditions were uninsured in 2010. Had all of them been covered by high-risk pools, the cost would have been $194.8 billion in 2010 dollars, with premiums covering only $103.3 billion. Thus, states and the federal government would have needed to find $91.5 billion in additional funding to cover them all—much more than the up to $10 billion per year in federal assistance to states recently proposed by congressional Republicans.

Uninsured Rates When High-Risk Pools Were in Operation

In 2010, 32,939,000 people were uninsured in the 35 states that operated high-risk pools, and more than 47 million were uninsured nationally. In those states with high-risk pools, less than half of 1 percent of the total population was enrolled in them, and less than 1 percent of the uninsured population. That same year, The Commonwealth Fund found that 60 percent of people who shopped for health insurance in the individual market found it difficult or impossible to find a plan they could afford. This fact belies the claim that state high-risk pools made coverage for other people more affordable.

Percentage of Americans Under Age 65 with Preexisting Conditions

In the same Commonwealth Fund survey, more than one-third (35 percent) of those who sought insurance on the individual market reported being denied coverage or being charged a higher price because of a preexisting condition—certainly more than the 8 percent of people Speaker Ryan suggested would need to turn to high-risk pools for coverage. Indeed, based on federal survey data, HHS estimated that up to 51 percent of nonelderly Americans have preexisting conditions for which they could be denied coverage in the individual market.

Reality Check

The reality is that high-risk pool coverage was prohibitively expensive and there is little evidence to suggest that the existence of such pools made coverage less costly for others in the individual insurance market. Without substantially more federal funding than currently proposed, these facts are not likely to change. People with preexisting conditions may have “access” to coverage, but most will not be able to afford it and those who can will face limited benefits and extremely high deductibles and out-of-pocket payments.

Who Would Gain Under the Proposal to Expand Health Savings Accounts?

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http://www.commonwealthfund.org/publications/blog/2017/apr/gains-under-proposal-to-expand-health-savings-accounts

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The U.S. House of Representatives leadership’s bill to repeal and replace the Affordable Care Act (ACA) would have significantly expanded the use of health savings accounts (HSAs), which people can use to save tax-free money to pay for certain medical expenses. This effort isn’t new and it’s not likely to go away just because a vote on the House bill, the American Health Care Act (AHCA), has been tabled. Amendments to the tax code to encourage HSAs have been a staple of Republican health care proposals, and the HSA provisions in the House legislation were introduced as a standalone bill last year.

Why all the interest? HSA proponents suggest the accounts offer cost savings and give consumers freedom to spend their money how they see fit. An HSA must be paired with a high-deductible health plan (HDHP), and there is evidence that the combination of an HDHP and HSA does reduce health care spending—by leading consumers to skip care, both needed and unneeded. Yet there is little basis to conclude that HSAs expand access to care, or that the tax benefits these accounts promise reach most Americans. In practice, most financial advantages have accrued to the top 5 percent of earners, who can afford to contribute to the accounts during the year and reap larger gains at tax time.

HSAs: The Basics

HSAs were created in 2003 in legislation establishing a Medicare prescription drug benefit. They are tax-preferred savings accounts funded by consumers and sometimes their employers. Consumers can contribute to an HSA only if they are enrolled in an HDHP, which in 2017 is an individual or group health plan that has a deductible of at least $1,300 ($2,600 for a family plan). Unlike other savings vehicles established under federal law, HSAs provide what amounts to triple tax benefits: contributions are tax-deductible; account funds are invested and grow tax-free; and withdrawals are tax-exempt (if they are used for qualified medical expenses).

HSAs are far more attractive to higher-income individuals, who are more likely to have sufficient income to fund the accounts and gain a greater tax benefit than are lower-income individuals subject to lower tax rates. In 2013, tax filers with income above $200,000 were 10 times more likely to claim a tax deduction for HSA contributions than those with incomes below $50,000, and the tax-advantaged contributions these high earners made were, on average, more than twice as large. A study of HSA take-up in the group market from 2005 to 2012 found similar results and observed, perhaps unsurprisingly, that high-income households were substantially more likely to fund their HSAs fully (with their own dollars and contributions from employers) than were middle- and lower-income filers.

Enhanced HSAs on the Horizon?

The AHCA would have expanded use of HSAs by authorizing higher tax-free contributions (increasing the amount from $3,400 to $6,550 for an individual plan) and more tax-free uses for funds. The AHCA also would have cut in half the penalty for withdrawals for nonmedical expenses.

Other proposals would provide similar and sometimes greater benefits to account holders. Legislation previously authored by Health and Human Services Secretary Tom Price would increase HSA contribution limits while also making it easier to shelter those funds and other retirement savings from taxes when they are transferred to heirs. Senator Rand Paul’s (R–Ky.) ACA replacement bill would go still further, erasing the requirement that HSAs be linked to a high-deductible plan and eliminating contribution limits altogether.

There is little doubt these expansions would encourage HSA take-up. Likewise, the proposals would make HSAs even more attractive as savings and estate planning vehicles for high-income households—particularly those who earn too much to contribute to other tax-advantaged retirement accounts and those who have maxed out such contributions. At the same time, the financial services companies that manage these accounts would reap substantial benefits, too.

Looking Ahead

HSAs are already growing under current law: by 2017, nearly 21 million accounts held more than $41 billion in assets, while the cost of the program to taxpayers has steadily increased and will nearly double by 2020. The AHCA would have dramatically accelerated this trend, causing federal spending to shoot up nearly 50 percent over the first three years following enactment and by a total of more than $19 billion by 2026.

The Congressional Budget Office estimated that the AHCA would have reduced insurance coverage dramatically, especially among Americans with low incomes. Moreover, the people most likely to need assistance paying for coverage and out-of-pocket costs—those with incomes under 200 percent of poverty, or around $24,000 for a single person—are the least likely to benefit from the bill’s approach to making coverage more affordable: HSAs. Given an ACA replacement’s potential impact on federal spending and coverage, spending billions of dollars on a program that primarily helps those least likely to need assistance purchasing coverage and paying out-of-pocket costs warrants scrutiny.

How the American Health Care Act’s Changes to Medicaid Will Affect Hospital Finances in Every State

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http://www.commonwealthfund.org/publications/blog/2017/jun/how-changes-to-medicaid-will-affect-hospital-finances-in-every-state

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The American Health Care Act (AHCA), as passed by the U.S. House of Representatives, will reduce federal spending on Medicaid by more than $834 billion over the next 10 years. And the recently released Senate bill appears to cut Medicaid even more deeply. In addition to repealing the Medicaid expansion, the bills place caps on the federal dollars that states receive to provide health insurance to millions of low-income Americans, including the elderly, disabled, and people with opioid addiction.

We modeled the impact of this loss of Medicaid funding on U.S. hospitals and found that, over the next 10 years, hospitals in all states, but especially hospitals in Medicaid expansion states, will see an increase in uncompensated care—a treatment or service not paid for by an insurer or patient. We also saw declines in hospitals’ operating margins, particularly among hospitals in expansion states. Rural hospitals in nonexpansion states also would face marked operating margin decreases.

In the interactive state-by-state maps below, we present the estimated impact of the Medicaid provisions in the House-passed AHCA on the finances of all U.S. hospitals. The hospitals in the District of Columbia and the 31 states that expanded Medicaid are projected to see a 78 percent increase in uncompensated care costs between 2017 and 2026. Eleven of these states will see uncompensated care costs at least double between 2017 and 2026. For example, Nevada hospitals will see a 98 percent increase, West Virginia a 122 percent increase, and Kentucky a 165 percent increase.

In addition to growing uncompensated care, our projections indicate that under the AHCA, hospitals in most states will experience a decline in Medicaid revenues, even though the law restores Medicaid disproportionate share hospital (DSH) payments. Hospitals in Medicaid expansion states may experience a 14 percent drop in Medicaid revenues between 2017 and 2026, compared to a 3 percent anticipated reduction among hospitals in the 19 states that did not expand. Some states may see more dramatic drops. Arkansas hospitals, for example, are estimated to see a 31 percent decline in Medicaid revenue over the next 10 years.

 

Why and How to Avoid High-Risk Pools for Americans with Preexisting Conditions

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http://www.commonwealthfund.org/publications/blog/2017/jun/how-and-why-to-avoid-high-risk-pools

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The American Health Care Act (AHCA)—the U.S. House of Representatives’ bill to repeal and replace the Affordable Care Act (ACA)—would allow states to apply for waivers to reduce existing consumer protections and provide funding for states to set up high-risk pools or other mechanisms for people with preexisting conditions who have lapses in their coverage. In previous posts, I have talked about the high costs and meager coverage associated with high-risk pools that operated before the ACA and the fact that their use did not significantly reduce costs for other people who buy their own health plans in the individual market. Moreover, the Congressional Budget Office analysis of the AHCA finds that the funding it makes available to states for the high-risk pools is inadequate.

In a recent commentary for Annals of Internal Medicine on high-risk pools, I note that people with preexisting conditions constitute roughly 51 percent of Americans. Here, let’s explore who might end up in a high-risk pool, what their experiences might be, and policymakers’ alternative options for stabilizing the marketplaces.

The U.S. Department of Health and Human Services (HHS) estimated that 23 percent of Americans with preexisting conditions had a period of uninsurance in 2014, often because of job changes or periods of financial instability. Young people reaching age 26 who transition off their parents’ coverage also sometimes experienced gaps in coverage—and some of them have preexisting conditions. Should the AHCA become law, individuals with preexisting conditions and lapses in coverage who live in states that obtain waivers to allow insurers to charge people based on their health would likely end up in high-risk pools.

Research has shown that the greater out-of-pocket costs and limited coverage associated with high-risk pools led to enrollees forgoing needed care and experiencing worse outcomes. In fact, before the ACA, high-risk pool enrollees in Kansas were eight times more likely to transition to federal disability programs than members of the general population with these conditions.

Current Medicaid beneficiaries also would be affected. The Congressional Budget Office analysis of the AHCA estimated that 14 million fewer people would have Medicaid coverage as a result of the federal funding cuts. Many of them would be forced to look to the individual insurance market to gain coverage, yet half of these former Medicaid beneficiaries would have serious preexisting conditions. Given the historically very high costs for consumers associated with high-risk pools, the majority of these individuals would likely go uninsured instead. Many would end up using the emergency room to access care once their needs become urgent, and their uncompensated health care costs would be borne by others with insurance. Some would likely suffer serious health consequences, even preventable deaths.

Supporters of the AHCA suggest that the legislation gives states more options to design coverage for their citizens, thereby better meeting their needs. Section 1332 of the ACA, however, already gives states a great deal of flexibility in designing their marketplaces while still providing comprehensive and affordable coverage. Indeed, both Alaska and Minnesota are pursuing 1332 waiver programs to specifically address concerns about high-risk individuals by implementing reinsurance programs, rather than segregating people with preexisting conditions into high-risk pools. These programs would maintain the overall larger pool of insured people in the state while protecting insurers against catastrophic costs. Reinsurance programs, such as the one temporarily instituted under the ACA for its first three years, have historically been proven to bring down premium costs for everyone. Given that reinsurance programs are a more effective and evidence-based mechanism for stabilizing the individual insurance market, state policymakers should strongly consider pursuing these programs under the existing ACA rules instead of establishing high-risk pools. And, federal policymakers should acknowledge and support this mechanism to strengthen the marketplace, bring down costs, and encourage participation by insurers.

 

Senate’s Updated ACA Repeal-and-Replace Bill Will Still Leave Millions Uninsured

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http://www.commonwealthfund.org/publications/blog/2017/jul/senate-updated-aca-repeal-and-replace-bill?omnicid=EALERT1242189&mid=henrykotula@yahoo.com

Yesterday, Senate Republicans introduced an updated version of the Better Care Reconciliation Act (BCRA), their proposed repeal and replacement of the Affordable Care Act (ACA). The revised bill makes changes aimed at winning over Republicans who oppose the bill.

The Congressional Budget Office (CBO) projections of the updated bill’s effects on coverage and the federal budget are not available yet, but it is still likely to significantly increase the number of uninsured Americans — and raise health care spending for low- and moderate-income people. While the updated bill would leave the ACA’s taxes on higher-income people in place, providing an estimated $231 billion in additional revenue over the original bill, Senate Republicans do not propose using the funds to significantly increase the affordability of coverage for low- and moderate-income Americans. And the new version of the BCRA still dramatically cuts and reconfigures the Medicaid program.

The revised bill leaves the original BCRA’s provisions intact, including a phase-out of the ACA Medicaid expansion starting in 2020 and smaller premium tax credits compared to the ACA that make coverage less affordable for low-income people. (For a more complete overview of provisions, see our original post on the CBO score for the bill.)

The CBO estimated in June that the combined effects of these provisions would increase the number of people without health insurance by 22 million by 2026. The coverage losses would be borne disproportionately by people with low and moderate incomes and particularly older adults who purchase their own coverage. The revised bill is unlikely to change those fundamental outcomes.

One of the biggest criticisms of the BCRA is that it would roll back the coverage expansions under the ACA aimed at lower- and moderate-income Americans and give the savings to higher-income people by repealing two taxes that helped fund the expansions. The bill responds to that criticism only by keeping those taxes in place; it doesn’t use the proceeds to make coverage more affordable for less economically privileged Americans.

New Tax Revenue Used for Small Changes

Instead, the bill uses some of that extra revenue to allow people to use health savings accounts (HSAs) to buy health insurance. But HSAs are pre-tax savings accounts whose tax benefits increase with income. Moreover, people with low and moderate incomes are unlikely to have the excess income required to finance an HSA in the first place. This means the tax benefits from this change would flow to higher-income Americans.

The bill provides about $70 billion in new funds for states to reduce premiums through mechanisms like reinsurance. And while this money would certainly help stabilize markets, it’s not enough to make coverage sufficiently affordable for the 22 million people projected to lose health insurance under the BCRA. Moreover, the full amount of the increase appears to be transferred for use in an amendment to the bill, described below.

Similarly the $45 billion proposed in the revised bill for opioid treatment wouldn’t come close to meeting the full health care needs of an estimated 220,000 people with opioid use disorder who are at risk of losing their coverage through the ACA’s Medicaid expansion and the marketplaces.

More Underinsured and Damage to the Individual Market

Another major criticism of the BCRA is that it would significantly increase deductibles and copayments in the individual market. But rather than improving cost-protection, the new bill doubles down by making it possible for people to use premium tax credits to buy even skimpier, catastrophic coverage. While this will result in cheaper plans for healthy people, it would only serve to increase the number of Americans who are underinsured. Yet, because the bill doesn’t make the BCRA’s premium tax credits more generous, it is hard to see how insurance with deductibles that could consume the majority of a low-income family’s income will entice more people to buy it.

But even if there are small gains in coverage under the revised bill, they would likely be more than offset by the damage inflicted on the individual market through an amendment modeled on one by Senator Cruz. By letting states allow insurers to sell ACA-noncompliant policies, the amendment would split the individual market into two pools — one with healthy risks and one with sicker risks. As the insurance industry has already pointed out, this would create the conditions necessary for a true premium death spiral in the individual market, and widespread losses of insurance. To combat this, the amendment appears to borrow the $70 billion in new funds for market stabilization in the revised bill to help states that opted to do this reduce premiums. But based on the U.S. experience with high-risk pools, the funds would likely fall well short of what would be required.

Looking Forward

The ACA has led to millions of people gaining health insurance, many for the first time in their lives. National survey data indicate that this expanded coverage has triggered population-wide declines in cost-related problems getting needed care and reports of problems paying medical bills. But the nation is nowhere near achieving high-quality health care that is affordable for all Americans. In proposing bills that would reverse the small but significant improvements realized so far under the ACA, Senate and House Republicans will only push a better health care system further beyond our reach.

Fixing Our Most Pressing Health Insurance Problems: A Bipartisan Path Forward

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http://www.commonwealthfund.org/publications/blog/2017/jul/fixing-health-insurance-problems-bipartisan-approach?omnicid=EALERT1241668&mid=henrykotula@yahoo.com

With Senate Republicans mired in seemingly intractable disagreements about how to proceed with health reform—which may very well not be resolved by the latest Senate draft bill, Majority Leader Mitch McConnell suggested on July 6 that a bipartisan short-term fix may be needed for the problems of the individual health insurance market. In fact, opinion polling reveals wide public support for bipartisan health reform. And bipartisanship in health policy is not a fantasy—both the 2015 Medicare Access and CHIP Reauthorization Act (MACRA) and the 2016 21st Century Cures Act passed with wide bipartisan majorities.

How could a bipartisan solution happen? First, it must focus on the individual market, where we face an immediate crisis. Long-term changes to the employer-sponsored coverage market and the Medicare and Medicaid programs, which together cover the vast majority of Americans, can be debated, but nothing needs to change right now. Moreover, sharp ideological divisions between Republicans and Democrats (and within both parties) as to the path forward with respect to public programs and the employer market make short-term consensus unlikely.

Second, we need solutions that can be implemented immediately through existing programs. We do not have time to extensively rewrite federal regulations or implement state-based systems for providing premium and cost-sharing assistance to address pressing problems facing us now.

And third, we may need to accept short-term increases in federal spending to get us through the immediate difficulties, as we have when our country has faced other crises. In the long term, we must cut health care spending growth generally. But in the short term, simply shifting the burdens to individuals who will lose insurance coverage or face much higher deductibles and premiums is not acceptable.

The immediate problem that needs to be addressed is that it appears that individual market coverage will not be available in 40 counties in Nevada, Ohio, and Indiana for 2018. An additional 1,300 counties, representing about one-quarter of marketplace enrollees, may have only one insurer next year. The number of “bare” or single-insurer counties changes from week to week, and these numbers may improve, but it is also possible that more counties will lose insurers by 2018. Moreover, some individual market insurers are requesting double-digit premium increases for 2018 for the second year in a row.

The cause of this crisis is no secret. Insurers and insurance regulators have repeatedly pointed to the regulatory uncertainty driving insurer withdrawals and premium increases. In particular, confusing signals from the administration as to whether it will reimburse insurers for the cost-sharing reductions they are required to offer low-income consumers under the Affordable Care Act (ACA) and enforce the individual mandate has left insurers very nervous about the individual market’s future. Decreased exchange enrollment and a fear of a less healthy risk pool also have insurers feeling insecure.

What can be done? First, Congress should immediately enact a mandatory appropriation to cover the cost-sharing reduction reimbursements through 2020. Not only the major insurer trade organizations, but also the National Association of Insurance Commissioners, the National Governors Association, and the United States Chamber of Commerce have identified this as an urgent necessity. Because the cost of this initiative is already included in the budget baseline, the appropriation would not even have budget consequences.

Second, Congress should ensure coverage for bare counties. The Federal Employees Health Benefits Program (FEHBP) offers private insurance coverage from multiple insurers in every county in the nation. For 2018 and 2019 only, the largest two FEHBP insurers in any county should be required as a condition of continued participation in the program to offer at least one silver-level plan though the federal exchange in all counties that would otherwise be without coverage. These plans should be eligible for premium tax credits and could otherwise charge actuarially appropriate premiums.

Third, Congress should appropriate the short-term premium stabilization funding included in the Senate’s Better Care Reconciliation Act (BCRA), providing $50 billion in reinsurance funds directly to insurers over the next four years. Reinsurance payments of $15 billion for 2018 and 2019 could significantly reduce individual market premiums for those years, as reinsurance did in the first three years of the ACA.

Fourth, Congress should reinstitute the ACA’s risk corridor program for 2018 and 2019 for any county with fewer than two insurers. The Republican’s 2003 Medicare Modernization Act included a risk corridor program to share risk with insurers that experienced unanticipated losses. It remains in place today. Congress essentially defunded the ACA’s risk corridor program in 2015, causing insurers to experience huge losses and driving some to insolvency. The program should be reinstated and funded for 2018 and 2019. Congress should also suspend the ACA’s health insurer tax for insurers that offer individual market coverage in bare and single-insurer counties.

Fifth, Congress should leave the individual mandate in place until it can devise a credible replacement. The House-passed American Health Care Act would impose a 30 percent premium surcharge on people who failed to maintain continuous coverage or allow states to permit insurers to charge higher premiums to such enrollees with preexisting conditions. The Congressional Budget Office (CBO) determined that these penalties would discourage healthy consumers from enrolling, and that allowing health status underwriting would destabilize the market. The CBO also concluded that the Senate’s solution of a six-month lockout period for consumers who lacked continuous coverage would be ineffective. The ACA’s individual mandate penalty is too small, was phased in too slowly, and has not been adequately enforced, but for the time being it is all we have to encourage healthy people to enroll in coverage. Until someone comes up with a better solution, it should be left in place.

Sixth, Congress should rework the premium tax credit formula for 2018 through 2020 to allow younger enrollees to claim more generous tax credits. The BCRA would do this, but would reduce tax credits for older people, discouraging healthy boomers from enrolling. In the short term at least, insurers need all the healthy enrollees they can get, regardless of age.

Finally, every consumer should be able to fully deduct the payments they make to purchase individual market premiums (i.e., not the costs covered by premium tax credits). Self-employed individuals are already allowed to do this. Senate Republicans are reportedly considering legislation that would allow individuals to pay premiums through tax-subsidized health savings accounts, but why require a consumer to go to the trouble of establishing an account and paying associated fees when they could simply pay premiums tax free?

As Senator McConnell has acknowledged, bipartisan action may be needed to address our most pressing problems in the health insurance market. Practical solutions are available. Congress should adopt them immediately and by consensus, and then debate the longer-term future of our health care system.

 

Five takeaways from the GOP’s healthcare reboot

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Five takeaways from the GOP’s healthcare reboot

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Senate Republican leaders are pushing ahead with their plan to vote next week on an ObamaCare repeal bill after releasing a revised version of the legislation Thursday to mixed reaction.

For three weeks, leadership has been pulling concerned members into their offices to discuss changes to the legislation. The tweaks released Thursday were aimed at shoring up support within a Republican conference that has been deeply divided over what to do.

Just a few hours after the new bill was released, two senators said they wouldn’t vote for a motion to let the Senate debate the Republican healthcare bill; that means Senate Majority Leader Mitch McConnell (R-Ky.) can only afford to lose one more vote.

Other moderates held their fire on the bill, giving McConnell a chance to win them over in the coming days. And in a big win for GOP leadership, Sen. Ted Cruz (R-Texas) said he would vote for a motion to proceed to the bill, likely neutralizing conservative opposition.

Here are five takeaways from the big unveiling.

It includes a provision key to earning conservative support

An amendment pushed for weeks by Sen. Ted Cruz (R-Texas) could go a long way toward gaining conservative support for the legislation.

A version of the Cruz proposal that was included in the bill would let insurers offer health plans that don’t comply with ObamaCare regulations, as long as they also sell plans that do.

“I think this new bill represents a substantial improvement over the previous version,” Cruz told reporters after leaving a briefing on the draft Thursday.

“If this is the bill, I will support this bill. If it’s amendment, and we lose the protections that lower premiums, my view could well change.”

Another conservative holdout on the bill, Sen. Mike Lee (Utah), worked with Cruz on the amendment, but has not yet said if he supports the bill overall.

“The new Senate health care bill is substantially different from the version released last month and it is unclear to me whether it has improved,” Lee said in a statement.

“I will need time to study the new version and speak with experts about whether it does enough to lower health insurance premiums for middle class families.

Several centrist Republicans have expressed concerns about how this provision would impact people with pre-existing conditions, however, and it’s unclear whether they will accept its inclusion.

The bill would also create a fund to help insurers cover people with expensive medical costs, but it’s unclear if that will be enough to appease moderates.

Medicaid cuts are largely kept in place.

The updated legislation left the deep Medicaid cuts from the first version of the bill essentially unchanged, which could be a big problem for moderate GOP senators like Rob Portman (Ohio), Shelley Moore Capito(W.Va.) and Lisa Murkowski (Alaska).

The legislation would put a cap on federal Medicaid reimbursement for states, dramatically changing the program from an open-ended entitlement. It would end ObamaCare’s increased funding for states to expand Medicaid by 2024, and cut the rate of inflation.

Taken together, the bill would cut $772 billion from Medicaid funding over a decade and result in 15 million fewer people enrolled, according to the Congressional Budget Office.

Medicaid has always been one of the thorniest issues for Republicans to navigate during ObamaCare repeal. Twenty GOP senators represent states that expanded Medicaid. Since the original legislation was released in June, some of those senators have said the Medicaid cuts are their top reason for opposing the bill.

Murkowski as recently as Wednesday had argued that Medicaid reforms should be handled separately from the legislation repealing and replacing ObamaCare.

The lack of major revisions to the Medicaid provisions has already cost GOP leaders the support of Sen. Susan Collins (Maine), who announced she wouldn’t support a procedural motion to allow debate on the bill.

By keeping the cuts in place, McConnell is banking on moderates flipping to “yes” without their No. 1 priority being addressed.

Sen. Dean Heller (R-Nev.) previously said he wouldn’t vote for the bill in its current form, citing the phase-out of extra federal funds for Medicaid expansion as a main concern. Heller on Thursday said he was undecided about moving to proceed. Portman also said he was undecided on the motion to proceed.

The bill includes more money to combat the opioid crisis.  

Originally, the Senate healthcare bill included $2 billion to help combat the opioid crisis, a far cry from the $45 billion Sens. Portman (R-Ohio) and Capito were pushing for.

The new version has exactly that: $45 billion.

But that doesn’t mean the funding will be enough money to win their support. On Thursday, neither senator would say whether they would support a motion to proceed to the bill.

In a statement, Portman said, “I opposed the last draft of the Senate health proposal because I had concerns about the measure’s Medicaid policies, especially those that impact drug treatment for those suffering from addiction.”

Ohio Gov. John Kasich (R) has called for a bipartisan compromise on healthcare and has also urged Portman not to be won over by minor concessions.

“I told him, ‘If they hand you a few billion dollars on opioids … that’s like spitting in the ocean,’ ” compared with the billions the bill would cut from Medicaid, Kasich told reporters last month.

Previously, Capito indicated bolstering the opioid fund probably wouldn’t be enough to garner her support.

“More opioid funding would be very good and very beneficial, but the core for me is the Medicaid provision,” Capito said.

She added: “If you can’t access the treatment, it’s not going to do you any good.”

The bill keeps ObamaCare taxes on high earners.

Republicans reversed from their initial draft and decided to keep ObamaCare’s taxes on high earners.

The bill will keep ObamaCare’s 3.8 percent net tax on investment income and a 0.9 percent payroll tax on individuals making more than $200,000.

The legislation also keeps an ObamaCare rule that prevents insurance companies from writing off compensation that they pay their executives.

The initial draft scrapped all ObamaCare taxes, including those on high earners.

Sen. Bob Corker (R-Tenn.), who pushed McConnell to keep the taxes on high earners, said many senators had an issue with giving rich people a tax break while reducing subsidies for low-income people.

“I think that was something that was felt by many, many, many people in our caucus,” Corker told reporters Thursday.

The measure still repeals other ObamaCare taxes that Republicans say directly impact consumers and drive up premiums, including taxes on the medical device and prescription-drug industries.

Much of ObamaCare would remain.

The bill probably can’t escape the “ObamaCare lite” moniker.

It keeps the structure of ObamaCare’s tax credits to help lower income Americans afford insurance in place, though they would be less generous. A tax on high earners would remain. In short, it’s not a straight repeal of the law.

This means getting Sen. Rand Paul’s (R-Ky.) vote is likely out of the question. Previously, he’s suggested changes that haven’t made it into the bill, such as eliminating a stability fund, repealing more ObamaCare taxes and dropping the continuous coverage provision.

“The thing is that I thought we were pretty clear,” Paul said after the closed-door GOP meeting. “We promised to repeal ObamaCare, this frankly doesn’t repeal ObamaCare. It keeps the subsidies, it keeps the taxes, it keeps the regulations. I think we’re going back on a promise.”

When asked if this bill was worse than ObamaCare, Paul replied, “yes.”

 

Senate Republicans unveil revised healthcare bill

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Senate Republicans unveil revised healthcare bill

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Senate Republican leaders on Thursday unveiled a revised version of their bill to repeal and replace ObamaCare as they race toward a high-stakes vote next week.

The measure includes changes intended to win over additional votes, with leadership making concessions aimed at bringing both conservatives and moderates on board. (READ THE BILL HERE.)

But Senate Majority Leader Mitch McConnell (R-Ky.) is facing a tough task in finding enough votes to pass the bill. Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) appear to be firmly against the measure, and one other defection would kill the bill.

Overall, McConnell appears to have shifted the revised bill more toward the conservatives than the moderates.

Importantly, the bill largely keeps the Medicaid sections the same, meaning that deeper cuts to the program will still begin in 2025, and the funds for ObamaCare’s expansion of Medicaid will still end in 2024.

The changes to Medicaid have emerged as a top concern for moderates such as Sens. Rob Portman (R-Ohio), Shelley Moore Capito (R-W.Va.) and Lisa Murkowski (R-Alaska).

The Congressional Budget Office (CBO) found that those Medicaid changes in the original bill would result in 15 million fewer people being enrolled in the program and cut spending by $772 billion over 10 years.

Collins said she still plans to vote against a motion to proceed to the bill, adding that the legislation should move through the normal committee process.

“My strong inclination and current intention is to vote no on the motion to proceed,” Collins told reporters after leaving a briefing on the legislation.

“The only way I’d change my mind is if there’s something in the new bill that wasn’t discussed or that I didn’t fully understand or the CBO estimate comes out and says they fixed the Medicaid cuts, which I don’t think that’s going to happen.”

For the conservatives, the measure includes a version of an amendment from Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah) aimed at allowing insurers to offer plans that do not meet all of ObamaCare’s regulations, including those protecting people with pre-existing conditions and mandating that plans cover certain services, such as maternity care and mental healthcare.

Conservatives argue the change would allow healthier people to buy cheaper plans, but moderates and many healthcare experts warn that premiums would spike for the sick people remaining in the more generous insurance plans.

Cruz said he will support the bill so long as the provisions he sees as a priority are not changed in amendment votes on the floor.

“If this is the bill, I will support this bill,” Cruz told reporters after a meeting of GOP senators. “Now, if it’s amended and we lose the protections that lower premiums, my view could well change.”

Senate Republicans had vowed to not change the ObamaCare protections for people from being charged more based on their health in their bill, which is why the debate over the Cruz-Lee amendment has been heated.

A Senate GOP aide said Thursday it is possible that the Cruz amendment would not be analyzed by the CBO in time for the vote next week. It is possible the Department of Health and Human Services could provide an alternative analysis.

Lee cautioned that he was not involved in the changes to the proposal, including the amendment, and would have to review the new language before deciding whether to support it.

The bill does include new funding, $70 billion over seven years, aimed at easing costs for those sick people remaining in the ObamaCare plans.

However, the new measure does not boost the generosity of the tax credits, as some moderates wanted. It still replaces ObamaCare’s tax credits to help people afford insurance with a smaller, scaled-down tax credit that provides less assistance.

The Kaiser Family Foundation found premium costs would increase an average of 74 percent for the most popular healthcare plan, given the reduced assistance in the GOP bill.

The new measure will leave in place two ObamaCare taxes on the wealthy, in a departure from the initial bill.

That original measure lacked the support to pass, as more moderate members pointed to the CBO’s finding that 22 million fewer people would have insurance over a decade.

Senate Republicans are now awaiting a new score of the revised legislation from the CBO, which could come early next week.

The new bill does include $45 billion to fight opioid addiction, but moderates such as Capito and Portman who hail from states where the problem is rampant have said they also want changes to the Medicaid portion of the legislation.

Portman said his position on the bill had not changed, but he did not give a clear answer on whether he’d back his party on the procedural vote.

“I’m the same position I’ve been in. I’m looking at the language,” he said.

Capito also said she doesn’t know whether she’ll vote to proceed to the bill.

“We have another meeting this afternoon on the Medicaid cuts,” she told reporters. “I need to really look at it, look at the score; I still have concerns.”

Asked if she would vote for the motion to proceed next week, she said, “Wait and see.”

In a change that could appeal to Murkowski, the bill sets aside 1 percent of the stability funds for states with costs that are 75 percent above the national average, which would benefit high-cost states like Alaska.

 

The updated Senate health care bill: What you need to know

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http://www.politico.com/interactives/2017/senate-vote-gop-health-care-bill-details/?utm_source=State+of+Reform&utm_campaign=f0d394f1bc-5+Things+June+%2802%29&utm_medium=email&utm_term=0_37897a186e-f0d394f1bc-272256165

What the latest Senate health care bill does to Obamacare

Slimmed-down benefit requirements new
Opioid funding new
Taxes new
Catastrophic health plans new
Health savings accounts new
Market stabilization new
Traditional Medicaid changed
Pre-existing conditions changed
Medicaid expansion changed
Insurance subsidies changed
Individual mandate eliminated
Cost-sharing subsidies eliminated
Planned Parenthood funding eliminated