Tag Archives: ACA

Why Tax Reform Could Be a Serious Threat to Health Care

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http://www.commonwealthfund.org/publications/blog/2017/nov/why-tax-reform-could-be-a-serious-threat-to-health-care

After nine months of unsuccessful efforts to repeal and replace the Affordable Care Act (ACA), Congress has moved on to the challenge of reforming the U.S. tax code. At first glance, it may appear that Congress has shifted priorities: The House tax proposal released last week doesn’t propose to repeal the Affordable Care Act’s individual mandate requiring health insurance, nor does it fund tax reform with cuts to Medicaid.

However, this shift in congressional focus does not mean that Republicans in Washington are done with the ACA. The executive branch continues to undermine the individual health insurance marketplaces. As Sara Collins points out in a recent post on To the Point, two presidential actions last month — the first bypassing ACA consumer protections to allow multistate association health plans, and the second ending payments to insurers for cost-sharing subsidies — are likely to increase premiums on the marketplaces by 2019. Executive branch decisions to cut funding for marketplace outreach are already making it difficult for young, healthy people to explore their insurance options, which could depress enrollment for 2018 and further destabilize the marketplaces.

Moreover, this shift in focus does not mean that the attempts to deeply cut federal health care programs are over, either. Even if congressional leaders lose their appetite for full-scale ACA repeal bills, the futures of tax reform and health care will be intertwined for at least three reasons.

First, some conservatives in the House and Senate remain committed to including ACA repeal provisions in the tax bill. And, while they initially lost in their efforts to attach a repeal of the individual mandate to the current House Bill, conservatives may withhold support unless such a provision is included in the final bill.

Second, the House tax proposal is expensive: the proposed tax cuts total $5 trillion. The budget resolution Congress passed last month allows up to $1.5 trillion of the total cost of the tax cut to be paid for with an increase in the federal deficit. That means the U.S. Treasury will have to borrow money to cover 30 percent of the cost of the House bill — a notable departure from Reagan-era tax cuts that were fully offset. This shortfall will go up over time, because several of the bill’s tax code changes expire in a few years.

While the current House proposal includes $3.5 trillion in revenue-generating provisions to help pay for the remaining 70 percent of the tax cuts, several provisions are unpopular with rank-and-file Republicans. These include a 50 percent cut to the maximum home mortgage deduction and elimination of the current deduction for state and local income taxes. If some Republicans force these provisions out of the bill or modify them to affect fewer taxpayers — changes likely to be sought by Republicans representing districts in large Blue states with high housing costs and high state taxes — then the bill will not raise the revenue required by the budget resolution. Congressional leadership would be forced to pay for tax cuts with other sources of revenue or with cuts in federal spending. Key targets would be cuts to Medicaid and Medicare.

Third, tax reform may ultimately affect access to health care in the not-so-distant future, even if specific health provisions are not included in the bill. Should it pass, the ballooning federal deficit that will follow its implementation will invariably lead to calls to reduce federal spending. Medicaid, Medicare, and ACA coverage will again be in the crosshairs given the portion of federal spending — 28 percent in 2017, growing to 40 percent in 2037 according to the Congressional Budget Office — these health programs represent.

Blue Cross Blue Shield insurers are still doing well

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https://www.axios.com/the-blue-cross-blue-shield-insurers-are-still-doing-well-2507217868.html

 

 Blue Cross Blue Shield health insurance companies have more than quintupled their net profits in the first half of this year compared with the same six months of 2016, according to an analysis of financial records by Fitch Ratings.

The bottom line: We reported over the summer that the Blues, which have the most exposure to the Affordable Care Act marketplaces, are making a lot of money despite the Trump administration’s threats and actions against the ACA. Why are profits still growing for the Blues? They raised premiums a lot, people are not going to the doctor or hospital as much, and the federal government modified some enrollment policies to the benefit of insurers.

The details: Fitch analyzed the first-half financial documents of 34 Blue Cross Blue Shield companies, including the publicly traded Anthem as well as other large Blues brands such as Health Care Service Corp. and Blue Shield of California. Almost every company improved its finances year over year, leading to the following aggregate financial data for the first six months of 2017:

  • $135 billion of revenue (up 7%)
  • $7.7 billion underwriting profit, or the amount of money made after subtracting medical costs from premiums paid (up 194%)
  • $6.5 billion net profit (up 441%)
  • 85.9% medical loss ratio, which reflects how much of the premium dollar is spent on medical care (down 0.8 percentage points)

What was true previously is still true now: Most health insurers are not currently losing their shirts on the ACA’s individual marketplaces, although next year could be different depending on what happens to the law’s cost-sharing subsidies. While the higher premium rates have not harmed people who get federal subsidies, they have caused more financial pain for middle-class people who have to pay the full cost of their health insurance.

Looking ahead: Congress delayed the ACA’s health insurer tax throughout 2017 — another reason why companies have done so much better this year. Insurers have conducted a lobbying blitz to get Congress to repeal or delay that fee again, and legislation that would delay the tax for another two years could be folded into a year-end package.

GOP unlikely to repeal ObamaCare mandate in tax measure

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GOP unlikely to repeal ObamaCare mandate in tax measure

Image result for aca individual mandate

The House is unlikely to repeal the mandate to buy insurance under ObamaCare as part of its tax-reform bill, GOP sources say, though the issue could return down the road.

President Trump and conservative lawmakers are pushing for the individual mandate to be repealed in the bill, but House Ways and Means Committee Chairman Kevin Brady (R-Texas) has expressed worry that the controversial measure would jeopardize the broader tax-reform bill, given the Senate’s failure on health care earlier this year.

“It hasn’t ever been in the [House] bill,” said one Republican on the Ways and Means Committee who has been taking part in the negotiations. “I expect that it will be added somewhere down the sausage-making venture.”

“I agree there is a chance, but I think if it gets included, it would be on the Senate side,” added a second Ways and Means Republican.

Senate GOP leaders said they plan to roll out their own tax bill on Thursday. Sen. Tom Cotton (Ark.) has been the leading GOP senator pushing to include repeal of the mandate in the tax bill.

House leaders emerging from a meeting Monday evening said no final decision has been made on the individual mandate issue, and Brady and Speaker Paul Ryan (R-Wis.) both said in interviews in recent days that they have not ruled out the idea.

“We have an active conversation with our members on a whole host of ideas on things to add to this bill and that’s one of the things being discussed,” Ryan said during an appearance on “Fox News Sunday.”

But Brady expressed concerns about including the mandate’s repeal at an event last week.

“There are pros and cons to this,” Brady said at an event Friday hosted by Politico. “Importing health care into a tax-reform debate has consequences.”

If Congress doesn’t act, Trump has vowed that he will. The president is reportedly considering taking executive action on the insurance mandate if Congress leaves it out of the tax-reform bill.

A lobbyist told The Hill the administration is working on guidance, which might not be in the form of an executive order, that would expand what are known as “hardship exemptions” that allow people to be exempted from the mandate’s requirement to have health insurance or pay a fine.

Brady said Monday that repeal of certain ObamaCare taxes would not be included in tax reform. Instead, he said he is working with Democrats on temporary relief from measures like the medical device tax and health insurance tax.

“We are working on common-sense temporary and targeted relief from many of these taxes to be acted on in the House before the end of the year,” Brady said.

Repealing the mandate could destabilize health insurance markets, experts warn, by removing an incentive for healthy people to enroll. The Congressional Budget Office has previously estimated that repealing the mandate would increase premiums by 20 percent.

Trump has been pushing to repeal the mandate in the tax-reform bill. Brady said last week that Trump had asked for it twice on the phone and once in person. Trump also told a meeting of Republican lawmakers at the White House last week that he wanted to repeal the mandate in tax reform and floated adding it in the Senate, attendees said.

Two conservative leaders, House Freedom Caucus Chairman Mark Meadows (R-N.C.) and Republican Study Committee Chairman Mark Walker (R-N.C.), have been pushing leadership to repeal the mandate in the tax bill. Walker has been slightly more aggressive, calling it a “good move.”

“When given the opportunity to actually address even part of an ObamaCare repeal with a simple majority, our leadership consistently finds excuses to justify their failure,” said a conservative House lawmaker who favors adding repeal to the bill.

“The individual mandate will be repealed by the president while Congress makes excuses.”

A number of lawmakers — both on and off the Ways and Means panel — are predicting the tax legislation Brady unveiled last week would attract the 218 GOP votes needed for passage.

While a handful of vocal New York and New Jersey Republicans are objecting to a provision of the bill that scraps or limits state and local tax deductions, most moderate Republicans have signaled they will go along with the legislation rather than derail one of the GOP’s top campaign promises of the 2016 elections.

So there is a reluctance among GOP vote-counters to add the insurance provision and upset that fragile balance.

“I believe it’s going to be a very strong vote based on my interactions with members and their passion to reform the tax code,” Rep. Jason Smith (R-Mo.), who serves on both the Ways and Means Committee and Ryan’s leadership team, said of the current version of the bill.

200 health, business groups endorse bipartisan ObamaCare bill

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200 health, business groups endorse bipartisan ObamaCare bill

Image result for aca business group support

More than 200 health and business groups have endorsed a bipartisan bill to shore up ObamaCare’s insurance markets.

Senate Health Committee Chairman Lamar Alexander (R-Tenn.) and ranking member Patty Murray (D-Wash.) announced the support Wednesday as part of their latest push to get the bill passed.

Those in support include influential groups such as the American Medical Association and the American Hospital Association.

But the bill still faces an uphill battle to becoming law. While it appears to have the support needed to pass the Senate, Majority Leader Mitch McConnell (R-Ky.) has said he won’t call it for a vote without approval from President Trump.

The bill would fund ObamaCare’s insurer subsidy payments for two years and give states additional flexibility to change their ObamaCare requirements.

Trump has called the bill a bailout for insurance companies and is pushing for more conservative changes.

But Murray said Tuesday she hasn’t had any discussions with the White House about making changes to the legislation, calling for it to be brought up as is.

The bill thus appears to be at a standstill. Many observers think its only real chance is to be included in a larger deal on spending in December.

Maine Medicaid expansion vote seen as ‘Obamacare’ referendum

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https://www.apnews.com/59f70b01af374560baccce244cca0b3d/Maine-Medicaid-expansion-vote-seen-as-‘Obamacare’-referendum

Image result for maine

The roiling national debate over the government’s proper role in health care is coming to a head in a state more commonly known for moose, lobster and L.L. Bean.

On Nov. 7, voters in Maine will decide whether to join 31 other states and expand Medicaid under former President Barack Obama’s Affordable Care Act. It is the first time since the law took effect nearly four years ago that the expansion question has been put to voters.

The ballot measure comes after Maine’s Republican governor vetoed five attempts by the politically divided Legislature to expand the program and take advantage of the federal government picking up most of the cost.

It also acts as a bookend to a year in which President Donald Trump and congressional Republicans tried and failed repeatedly to repeal Obama’s law.

Activists on both sides of the issue are looking at the initiative, Maine Question 2, as a sort of national referendum on one of the key pillars of the law, commonly known as Obamacare. Roughly 11 million people nationwide have gained coverage through the expansion of Medicaid, the state-federal health insurance program for lower-income Americans.

Republican consultant Lance Dutson called Maine’s initiative a national bellwether in which the needs of the people could trump political ideology.

A pillar of former President Barack Obama’s health care law faces a test in Maine, where voters will decide whether to expand Medicaid. If voters pass the initiative, Maine would become the 32nd state to accept the expansion. (Oct. 31)

“People believe there are good parts to Obamacare and bad parts to Obamacare. And without taking Medicaid expansion, we are leaving one of the good parts on the table while still suffering from the bad parts of it,” said Dutson, who supports Question 2.

Maine may not be the last state to put the Medicaid question before voters. Expansion proponents in Idaho and Utah have launched similar efforts in those states aimed at the 2018 ballot.

If the initiative passes, an estimated 70,000 people in Maine would gain health coverage. The issue is personal to many in an aging, economically struggling state with a population that is smaller than the city of San Diego.

Nature painter Laura Tasheiko got dropped from Medicaid three years ago after successfully battling breast cancer. Since then, she has relied on the charitable services of a hospital near her home in Northport, a seaside village of less than 2,000 people about 100 miles northeast of Portland.

She worries about having another serious health problem before she is eligible for Medicare when she turns 65 next year.

“Some of the after-effects of the chemo can be severe, like heart failure,” she said. “Having no insurance is really scary.”

Maine’s hospitals support the Medicaid expansion and say charity care costs them over $100 million annually. The initiative’s supporters have reported spending about $2 million on their campaign, with hundreds of thousands of dollars coming from out-of-state groups. By comparison, the lead political action committee established to oppose the measure has spent a bit less than $300,000.

Among those who say Maine will benefit from the expansion is Bethany Miller. She said her adult son, Kyle, needed Medicaid because he couldn’t afford subsidized monthly insurance premiums even though he was working.

She remembers watching as her son’s eyes went hollow and his body turned skeletal in the weeks before he died, at age 25, from a diabetic coma a year ago.

“He had a job, but he didn’t make enough money to pay for his basic needs and his insulin, and he couldn’t live without his insulin,” said Miller, who lives in Jay, a small paper mill town about 70 miles north of Portland.

LePage, a Trump supporter, is lobbying furiously against the initiative. He and other critics warn that the expansion will be too costly for Maine, even with the federal government picking up most of the tab. After 2020, the state’s share of paying for the expansion population would be 10 percent.

LePage warns that he would have to divert $54 million from other programs — for the elderly, disabled and children — to pay for Medicaid expansion.

“It’s going to kill this state,” he said.

LePage said he considers Medicaid another form of welfare and wants to require recipients to work and pay premiums.

Maine currently serves about 268,000 Medicaid recipients, down from 354,000 in 2011. LePage credits the drop to his administration’s tightened eligibility restrictions.

If Question 2 passes, the Medicaid expansion would cover adults under age 65 with incomes at or below 138 percent of the federal poverty level. That’s $16,643 for a single person or $22,412 for a family of two.

State Rep. Deborah Sanderson, a Republican, said Maine is already struggling to serve its rapidly aging population as nursing homes shutter and rural hospitals struggle.

“I get accused on occasion of trying to pit one population of folks against another,” she said. “It’s a case of only having a certain amount of resources to take care of a large number of needs.”

Finances are a concern in a state marked by factory closures and sluggish wage growth.

But with more people living on the margins, advocates of the expansion say that is all the more reason to extend the benefits of Medicaid. About 8 percent of Maine residents do not have insurance, a little less than the national percentage.

Democratic Sen. Geoffrey Gratwick, a retired rheumatologist, said he has seen many patients throughout his career who did not have health insurance and came to him with a disease already in its late stages. He voted for all five Medicaid expansion attempts.

“They are just as good people as you or I, but their lives will be shorter and they will be sicker,” he said. “Compassion, common sense and our economic interest demand that we get them the health care they need.”

Nathalie Arruda and her husband, Michael, are in that group that is sometimes without insurance. They live in the farming community of Orland, halfway between New Hampshire and the state’s eastern border with New Brunswick, Canada.

The couple run a computer business and rely on herbal teas and locally grown greens to stay healthy as they fall in and out of Medicaid eligibility. LePage restricted Medicaid eligibility for adults with dependents, like the Arrudas.

“There have absolutely been times when my husband or I have put off getting something looked at that we probably should have because we didn’t have coverage,” Arruda said.

In Miller’s view, her son would still be alive if LePage had signed one of the Medicaid expansion bills sent to him by the Legislature.

When Kyle turned 21, he was one of thousands who lost MaineCare coverage under the governor’s reforms. She said he juggled construction jobs but couldn’t afford his $80 subsidized monthly premium for private insurance.

He struggled to pay medical bills from emergency room visits, Miller said.

Before Kyle died last November, he had landed a steady job at a plastics factory that promised health insurance. He didn’t live long enough to get the coverage, falling into a diabetic coma.

“He started rationing his insulin so he could buy food,” his mother said. “And it cost him his life.”

House votes to repeal ObamaCare’s Medicare cost-cutting board

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House votes to repeal ObamaCare’s Medicare cost-cutting board

Image result for independent payment advisory board (ipab)

The House on Thursday voted to repeal a controversial Medicare cost-cutting board that has drawn the ire of both parties.

Lawmakers voted 307-111 to abolish what is known as the Independent Payment Advisory Board (IPAB). The board is tasked with coming up with Medicare cuts if spending rises above a certain threshold but has been criticized as outsourcing the work of Congress.

It has also been the target of the false attacks from ObamaCare opponents that the board enables unelected bureaucrats to helm “death panels.”

The bill now moves to the Senate, but it’s not likely the upper chamber will act before the end of the year. Even then, Republicans may not get the 60 votes needed to pass it as a stand-alone bill.

Nobody has been appointed to the panel and budget experts have estimated they don’t expect IPAB to be triggered until 2021 or 2022. Democrats say Congress has the authority to overrule any recommendations the panel could make.

This was not the first time the House has tried to get rid of the panel; they’ve been trying since 2012, but it is the first attempt with a Republican in the White House. It’s also the first vote since congressional Republicans failed to abolish IPAB as part of a larger ObamaCare repeal earlier this year.

The White House on Wednesday signaled support for the bill, noting in a statement that IPAB repeal was part of President Trump’s budget request.

The bill has bipartisan co-sponsors, but Democrats said during the bill’s committee markup that they wished Republicans were focusing on other priorities.

Democrats are also angry that Republicans are not seeking to offset the repeal, which is estimated to cost $17 billion but are requiring offsets to fund the Children’s Health Insurance Program.

Still, 76 Democrats backed abolishing the board despite the objections of leadership.

The panel’s proponents say the board is necessary to address Medicare’s runaway spending and keep the program fiscally solvent for future enrollees.

 

Voters Soured on Key GOP Senators During Height of ACA Repeal Push

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https://morningconsult.com/2017/11/02/voters-soured-on-key-gop-senators-during-height-of-aca-repeal-push/

Image result for aca

 

Three Republican senators who cast deciding votes against repealing the Affordable Care Act in July saw a decline in support among GOP voters in the third quarter, according to Morning Consult’s latest Senator Approval Rankings.

But the health care vote is likely just one piece of a broader trend that is driving negative swings against GOP Sens. Susan Collins (Maine), Lisa Murkowski (Alaska) and John McCain (Ariz.), according to several Republican political experts.

At the heart of the downturn, they say, is growing dissatisfaction with elected Republicans’ failure to fulfill their campaign promises this year, despite the party being in control of the White House and both chambers of Congress.

“You had Republicans and conservatives that were upset that the Senate wasn’t able to follow through on its promise,” Brian Walsh, a GOP political strategist at public affairs firm Rokk Solutions, said in a Tuesday phone interview. “I definitely think that Obamacare is part of it, but to me there’s just a broader voter unhappiness with the state of affairs in Washington.”

Twenty-two of the 52 GOP senators saw double-digit declines among Republican voters between the second and third quarters of this year. That compares to five of 48 Democratic senators who dropped 10 percentage points or more among Democratic voters.

Many Republican voters prioritize repealing or reforming the ACA, according to recent Morning Consult/Politico polls. Sixty-seven percent of GOP voters said passing a health care reform bill should be a top priority for the Republican-controlled Congress, according to an Oct. 26-30 poll, compared to 44 percent of Democratic voters who said the same. And 78 percent of Republican voters said Obamacare should be partially or completely repealed, according to a survey conducted from Oct. 19-23.

Of the three senators to buck their party on health care in July, Collins’ approval among Republican voters declined the most, from 65 percent in the second quarter to 46 percent by the end of September, and her disapproval numbers increased — a negative swing in net approval of 40 points.

Murkowski’s approval among GOP voters also declined, from 63 percent in the second quarter to 45 percent in the third quarter. Murkowski’s disapproval among Alaska Republicans also rose from 30 percent to 43 percent during that time period.

McCain’s disapproval among Arizona Republicans, already at 49 percent in the second quarter, rose to 51 percent in the third quarter, just above the 1 percentage point margin of error. His approval rating declined 1 percentage point to 44 percent.

One Maine political expert – former state Sen. Phil Harriman – said Collins’ opposition to several GOP plans to repeal Obamacare reflects conservatives’ longtime frustration with her moderate voting record.

“It’s the icing on the cake of why support by Republicans has dropped so significantly,” Harriman said in a Thursday phone interview.

Another factor in Collins’ case could be negative rhetoric against her from the state’s Gov. Paul LePage (R), a hard-liner and ally of President Donald Trump. LePage’s attacks came while Collins considered — but ultimately opted against — running for governor. LePage, who is term-limited, is the nation’s seventh-most unpopular governor — but is more popular than Collins among Maine Republicans, with 73 percent approval.

Michael Leavitt, former executive director of the Maine Republican Party, said Collins’ approval among Republicans will recover. He noted Maine Republicans have long backed the senator, despite her voting record. Collins has also never faced a serious primary challenge from the right since first being elected to the Senate in 1996.

Particular issues like health care “may momentarily affect polling up or down, but overall I think that Susan Collins is extremely well-respected by Republicans, Democrats and independents alike,” Leavitt, a co-founder of campaign firm Red Maverick Media, said in a phone interview Wednesday.

While Collins, Murkwoski and McCain’s votes against Obamacare may have cost them GOP support, they did play well with other parts of the electorate.

For instance, Collins has the fourth-highest approval rating in the Senate, and the 16th-highest approval rating among Democratic voters (75 percent). McCain’s overall net approval rating increased by 6 percentage points between the second and third quarters. And Murkowski’s overall approval rating of 49 percent is tied with that of her Alaska colleague Sen. Dan Sullivan (R), who supported the repeal bills.

Researchers suggest delusion may be at the heart of Obamacare Critics

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http://www.latimes.com/business/lazarus/la-fi-lazarus-healthcare-republican-delusion-20171103-story.html

Image result for delusion

This week’s open enrollment for Obamacare once again made me wonder: How can conservatives be so convinced of the healthcare law’s failure when the opposite is demonstrably clear? Obamacare is far from perfect, but it’s in no way a “disaster,” a “catastrophe” or “imploding.”

In 2010, the year the Affordable Care Act was signed into law, nearly 50 million people in this country were uninsured. As of 2016, that number had dropped to about 29 million, according to the National Center for Health Statistics.

People with preexisting conditions could no longer be charged more or denied coverage by insurers. Young people could remain on their parents’ plans up to age 26.

Yet Republican politicians and voters remain determined to do away with Obamacare, regardless of the shortcomings of their proposed replacements.

Those are fancy ways of saying conservatives are more willing than liberals to accept what their leaders say as true and have little appetite for rocking the boat.

“This underlying difference helps to explain why conservatives resist new consumer offerings that represent dramatic change — for example, Obamacare,” he said.

The Australian academics delved into complaint databases run by America’s Consumer Financial Protection Bureau, National Highway Traffic Safety Administration and Federal Communications Commission. They inferred political leanings with county-level data from the 2012 U.S. presidential election.

According to the paper, research on right-wing authoritarianism “shows that conservatives are more likely than liberals to yield to authority figures.”

At the same time, it says, conservatives are more willing to “justify potential failings of the existing social system and its institutions.” Such system justification aims to legitimize the status quo, “seeing it as ‘good, fair, natural, desirable and even inevitable.’”

This reflects conservatives’ belief that people should act “in ways to preserve either societal orderliness or its illusion.”

Note that last bit: societal orderliness or its illusion.

That goes a long way in explaining why so many Republicans are willing to accept a party line that U.S. healthcare was much better before former President Obama tinkered with things, despite the Affordable Care Act’s obvious improvements.

“Obamacare is a total and complete disaster,” President Trump said at a campaign rally in February 2016.

He tweeted in March: “Obamacare is imploding. It is a disaster and 2017 will be the worst year yet, by far!”

In June he said that “we’re going to come out with a real bill, not Obamacare. And the results are going to be fantastic … and everybody is going to be happy.”

Republicans never passed such a bill. In October, Trump resorted to an executive order slashing subsidies for Obamacare, which most experts said would, yes, cause the program to implode.

Marketers have long understood that political ideology can shape consumer behavior.

“Messages appealing to individuality were more effective for liberal than conservative consumers, while those appealing to a sense of duty to the group were more effective for conservative than liberal consumers,” the Australian researchers found.

Obviously there are pitfalls in generalizing people’s attitudes. So I contacted Joseph Antos, a resident scholar at the conservative American Enterprise Institute who focuses on health policy.

He laughed when I described the Australian study’s conclusions and said it was “quite comical” that conservatives would be characterized as having a knee-jerk aversion to change.

“Any normal human being is going to be concerned about changes where the impact is unclear,” Antos said. “Ordinary people don’t care about the Affordable Care Act. They care about their insurance and the cost of healthcare.”

Fair point. And, yes, premiums on the Obamacare exchanges have climbed much more than expected.

However, that’s not the disaster Trump makes it out to be. It’s primarily a factor of insurers failing to anticipate a surge in claims as millions obtained coverage, as well as a too-weak mandate that allowed healthier people to avoid buying insurance, thus raising costs for everyone else.

These are problems awaiting solutions from reasonable people capable of having grown-up discussions.

I find the Aussie researchers’ work reassuring. The dysfunction of our pre-Obamacare health system was so profound that it’s hard to imagine anyone thinking those were the good old days. Again: 50 million uninsured, coverage denied to people with preexisting conditions.

Not to mention annual and lifetime caps on insurance payouts, women paying more than men, premiums in the individual market rising by 10% annually, skimpy coverage for many plans, a very real fear of being uninsured if you lose your job.

If Republicans can build on Obamacare’s advances, they should do so — there’s certainly room for improvement. What we’ve gotten instead has been dozens of votes to repeal the law without a viable alternative to replace it.

The party’s most recent healthcare bill, known as Graham-Cassidy, would have slashed Medicaid spending by $1 trillion, stripped insurance from millions of people and eliminated consumer protections for many with preexisting conditions.

“Graham-Cassidy Bill is GREAT!” Trump said in a tweet.

As the Aussie researchers found, conservatives “act in ways to preserve either societal orderliness or its illusion.”

That’s a polite way of saying these people are deluding themselves.

 

Clean Up on Aisle 12! The Obamacare Pop-Up Store is Open but Stocks are Limited

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Clean Up on Aisle 12! The Obamacare Pop-Up Store is Open but Stocks are Limited

Image result for ACA

The fifth Open Enrollment period under the Affordable Care Act (ACA) started on November 1st, and will continue for a scant 45 days ending on December 15, 2017. This year, not only has the Open Enrollment been cut in half, but obstacles abound – obstacles that were not part of the 2016 Open Enrollment Period. For example:

  • Healthcare.gov is undergoing maintenance that could interfere with access during the Open Enrollment Period;
  • Federal support for Open Enrollment outreach and advertising is substantially lower this year than it has been in prior Open Enrollment periods; and
  • The number of health insurers participating in the exchanges has dropped significantly from last year (prompted in part by well-founded concerns regarding the future of federal cost-sharing reduction (CSR) payments), and in some counties, only one plan is available to individuals and families seeking coverage through the exchanges.

Plan Departure: A Continuing Trend from Prior Years

In 2016, a significant number of large, national insurance companies announced that they were withdrawing from the exchanges and would no longer offer health insurance coverage during 2017. As for 2018, the following chart identifies, as of October 12, 2017, both (1) those national insurance companies that will fully withdraw from one or more exchanges effective January 1, 2018, and (2) those national insurance companies that will continue to offer plans on the state exchanges in 2018 as they did in 2017.

Insurance Company: Insurance Exchange Exits for 2018: Insurance Exchange Participation in 2018:
Aetna Delaware, Iowa, Nebraska, Virginia None
Anthem Indiana, Maine, Missouri, Nevada, Ohio, Wisconsin California, Colorado, Connecticut, Georgia, Kentucky, Missouri, New Hampshire, New York, Virginia
Centene None Arizona, Arkansas, California, Florida, Georgia, Indiana, Kansas, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Texas, Washington
Cigna Maryland Colorado, Illinois, Missouri, North Carolina, Tennessee, Virginia
Molina Wisconsin, Utah California, Florida, Michigan, New Mexico, Ohio, Texas, Washington
Humana Florida, Georgia, Illinois, Louisiana, Kentucky, Michigan, Missouri, Mississippi, Ohio, Tennessee, Texas None
UnitedHealthcare Virginia Nevada, New York

Who Ordered the Retreat?

There are a variety of reasons that large national insurers are retreating from the federal and state exchanges, but as a general rule, they stem from uncertainty regarding the profitability of state exchange participation.

CSR Funding Uncertainty

President Trump’s inauguration spurred speculation that the ACA’s CSR subsidy payments could be discontinued, and insurance companies priced exchange plans accordingly. The Congressional Budget Office estimated that the cessation of CSR payments for the 2018 calendar year – which has since come to pass – would result in a 25% increase in premiums by 2020 and at least a temporary increase in the number of areas with zero individual exchange offerings (as a result of further insurer exits and stifled entry / expansion).

The Individual Mandate

One year-over-year driver of the insurance company exodus from the exchanges is the weakness of the individual mandate.

The individual mandate is critical to whether the health insurance companies can turn a profit on the exchange plans. In an ideal world, the individual mandate would successfully induce all eligible citizens to obtain health coverage. Under such circumstances, health insurers would have a much easier time estimating enrollment, risk pools and, ultimately, profits from participation on the insurance exchanges. In practice, however, many of the “young invincibles” whose participation in the health insurance market could offset the costs of insuring older and sicker populations elect to incur the relatively modest tax penalty resulting from a failure to obtain coverage.

Even if the penalty were tougher (and as a consequence, presumably more effective), enforcement is rather lax, and the Trump administration has signaled in 2017 it may instruct the Internal Revenue Service to deprioritize enforcement of the individual mandate.

Enrollee Fraud and Gaming the System

The large national insurance companies have also complained about enrollee fraud that increases the actuarial unpredictability of the performance of a particular risk pool. For example, insurers have complained that enrollees in an exchange plan may have an expensive procedure early in the year, and then stop paying premiums after the insurance plan has paid for the procedure.

The Importance of the Big Players in the ACA Exchanges

Because they have greater resources to understand, and hedge, the actuarial risks of the exchange plans – including balancing the prospects of fraud, unhealthy patient mix and less then desirable compliance with the individual mandate – large national health insurers are better positioned than their smaller counterparts to succeed in the ACA exchanges.

As such national insurers have migrated away from exchange participation, they have in many instances been replaced by regional players, such as health plans associated with regional hospital systems, physician groups and faith-based organizations. Such entities generally do not have the same financial wherewithal as the large national insurance companies to successfully diversify risk or endure greater potential losses with respect to the exchange risk pools. As a result, many healthcare analysts and commentators have concluded that regional plans are ill-equipped to fully replace the large national insurance plans if the large national insurance plans continue to leave the state exchanges.

Notwithstanding the foregoing concerns regarding regional plan participation on the exchanges, Centene Corporation, a publicly-traded healthcare company that is the parent corporation of multiple state-based plans that participate in the state exchanges, has elected to expand its participation in 2018. Whether Centene Corporation succeeds with its expansion into more state ACA exchanges, and whether it chooses to further expand in future years, will be an important indicator of the health of the ACA health insurance exchanges in years to come.

“Repair and Encourage”

The remedy for stabilizing the exchanges is not overly complicated, and realizable, if the political will existed to accomplish what needs to be done.

A strong first step would be changing the conversation in Washington D.C. about the ACA – get rid of the “repeal and replace” mantra and instead make the conversation about “repair and encourage.” The point is that the manner in which the political class is addressing healthcare and the ACA is toxic, and the result is driving the insurance companies away from participation. A change in tone from our elected leaders would probably do remarkable good in stabilizing the state insurance exchanges over time.

In addition to calming the political dialogue regarding the ACA, for 2018 (ahead of the 2019 open enrollment period), we propose some specific policies that we think would help encourage participation by the large, national insurance companies in the exchanges in 2019 and beyond:

  • The judicial branch needs to resolve, ideally favorably, whether CSRs will continue.
  • The individual mandate needs to be strengthened by increasing the applicable tax penalty and more vigorously pursuing enforcement.
  • Congress should consider incentives, whether tax-based or otherwise, to specifically encourage the large, national insurance companies to increase participation on the exchanges.

In the current political climate, such dedicated action seems unlikely, but the political winds may yet shift and blow the health insurers safely home to the exchanges.

Trump and the Essential Health Benefits

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Trump and the Essential Health Benefits

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On Friday, HHS released a proposed rule that would make a number of adjustments to the rules governing insurance exchanges for 2019. The rule is long and detailed; there’s a lot to digest. Among the most noteworthy changes, however, are those relating to the essential health benefits. They’re significant, and I’m not convinced they’re legal.

By way of background, the ACA requires all health plans in the individual and small-group markets to cover a baseline roster of services, including services falling into ten broad categories (e.g., maternity care, prescription drugs, mental health services). Taken as a whole, the essential health benefits must be “equal to the scope of benefits provided under a typical employer plan, as determined by the Secretary.”

The ACA’s drafters anticipated that HHS would establish a national, uniform slate of essential health benefits. Instead, the Obama administration opted to allow the states to select a “benchmark plan” from among existing plans in the small group market (or from plans for state employees). The benefits covered under the benchmark were then considered “essential” within the state.

At the time, Helen Levy and I concluded that HHS’s approach brushed up against the limits of what the law allowed. We noted, among other things, that the ACA tells HHS to establish the essential health benefits—not the states. And it’s black-letter administrative law that an agency can’t subdelegate its powers to outside entities, states included.

At the end of the day, however, Helen and I concluded that the Obama-era regulation passed muster. Our rationale bears repeating:

Although a federal agency cannot delegate its powers to the states, it “may turn to an outside entity for advice and policy recommendations, provided the agency makes the final decisions itself.” Here, the secretary gave the states a constrained set of options (e.g., choose a benchmark plan from among the three largest small-group plans in the state) and retained the authority to select a benchmark for any state that either does not pick a benchmark or chooses an inappropriate one. As such, the secretary remains firmly in control. Nothing in the ACA prevents her from deferring to states that select benchmark plans from among the few options she has provided. That choice to defer is itself an exercise of her delegated powers.

The Trump administration’s proposed rule would vastly enlarge this Obama-era subdelegation. For starters, the rule would allow a state to adopt another state’s benchmark, or part of a state’s benchmark, as its own. Michigan, for example, could borrow Alabama’s benchmark plan wholesale, or it could incorporate Alabama’s benchmark for mental health and substance use disorder treatment. More significantly, the rule would allow a state to “selec[t] a set of benefits that would become the State’s EHB-benchmark plan.”

You read that right: if the rule is adopted, each state can pick whatever essential health benefits it likes. No longer will it be choosing from a preselected menu; it’ll be picking the essential benefits out of a hat. In so doing, the proposed rule looks like it would unlawfully cede to the states the power to establish the essential benefits.

This extraordinary subdelegation of regulatory authority is subject only to the loosest of constraints: benefits can’t be “unduly weighted” toward any one benefit category or another, and the benchmark must “[p]rovide benefits for diverse segments of the population, including women, children, persons with disabilities, and other groups.” The selected benefits also can’t be more generous than the state’s 2017 benchmark (or any of the plans the state could have selected as its benchmark), but that’s a ceiling, not a floor, so states have lots of room to pare back.

The only meaningful constraint is that the benefits covered by the state’s benchmark must be “equal to the scope of benefits provided under a typical employer plan.” But another portion of the proposed rule would hollow out that requirement:

[W]e propose to define a typical employer plan as an employer plan within a product (as these terms are defined in §144.103 of this subchapter) with substantial enrollment in the product of at least 5,000 enrollees sold in the small group or large group market, in one or more States, or a self-insured group health plan with substantial enrollment of at least 5,000 enrollees in one or more States.

In other words, HHS is saying it will treat as “typical” any employer plan, in any state, that covers more than 5,000 people.

This looks like an innocuous change. It’s not. If the rule is adopted, it means that a single outlier plan can now count as typical, even if it’s way stingier than any other plan in the market. It also makes me wonder if HHS already has in mind some large employer with an unusually narrow health plan—maybe some hospital-based “administrative services only” plan, as Dave Anderson speculates. If so, voilá, the states can all ratchet down their essential benefits to that plan’s level.

I don’t think that’s legal. To know if a slate of health benefits is typical, you have to know something about how many health plans cover those benefits and how many don’t. The proposed rule eschews that comparative inquiry, and instead defines typicality with reference to the number of people who are covered by a single plan. Some random self-insured plan that excludes appendectomies could be treated as typical, even if it’s the only plan in the nation that does so.

In other words, HHS wants to define a “typical employer plan” to include atypical plans—which the agency emphatically cannot do. Yes, plans that enroll 5,000+ people are less likely to be outliers than smaller ones. But in a country as big and complicated as ours, there are bound to be some idiosyncratic quirks even in large plans. Those quirks would all be considered typical under HHS’s rule.

This definitional change, combined with the choose-your-own-adventure option to devise a benchmark, means that states will have wide authority to water down the essential health benefits requirement. Whether that’s good or bad is hard to say. Requiring plans to cover lots of services assures comprehensive coverage, but it also raises the cost of insurance. Because there’s no single “best” way to strike the balance, I think there’s a lot to be said for giving states the freedom to choose for themselves.

Wise or not, however, I’m skeptical that the Trump administration’s effort to hollow out the rule governing essential health benefits is legal. If HHS presses ahead with the rule, it could face tough sledding in the courts.