Tag Archives: ACA

McCain to miss week, likely delaying healthcare vote

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http://thehill.com/homenews/senate/342197-mccain-recovery-from-medical-procedure-could-doom-healthcare-repeal-vote

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Sen. John McCain (R-Ariz.) will miss this week’s votes in the Senate after undergoing surgery on Friday, depriving Republicans of a key vote on healthcare.

McCain’s absence means Senate Republicans almost certainly will not have the 50 votes they’d need to win a procedural vote.

Sens. Rand Paul (R-Ky.) and Susan Collins (R-Maine) have already said they would oppose the procedural vote. With all Democrats voting no, that would leave Republicans with just 49 votes, given McCain’s absence.A further delay in the schedule is bad news for Senate Republicans, as it will allow opponents of the legislation more time to pressure wavering GOP centrists to vote against it.

Even with McCain, it is uncertain whether Senate Majority Leader Mitch McConnell (R-Ky.) could put the 50 votes together for the bill.

An analysis and score of the Senate GOP’s new healthcare bill from the Congressional Budget Office is expected on Monday.

Centrist GOP Sens. Rob Portman (Ohio), Shelly Moore Capito (W.Va.), Lisa Murkowski (Alaska) and Dean Heller (Nev.) are among the swing votes.

Portman and Heller also face pressure from Republican governors in their states who are worried the Senate bill’s curtailing of federal support for ObamaCare’s Medicaid expansion could hurt their constituents.

McCain’s office in a statement said he is doing well after undergoing surgery to remove a blood clot from his eye on Friday.

“Senator McCain received excellent treatment at Mayo Clinic Hospital in Phoenix, and appreciates the tremendous professionalism and care by its doctors and staff. He is in good spirits and recovering comfortably at home with his family. On the advice of his doctors, Senator McCain will be recovering in Arizona next week,” the statement said.

Senate Majority Leader Mitch McConnell (R-Ky.) announced this week he was extending the Senate’s sessions for two weeks, cutting the August recess short. That could give his conference more time to get healthcare done.

McCain, 80, had the procedure done at the Mayo Clinic Hospital in Phoenix following an annual physical.

“Surgeons successfully removed the 5-cm blood clot during a minimally invasive craniotomy with an eyebrow incision. Tissue pathology reports are pending within the next several days,” the statement from the Mayo Clinic read.

“The Senator is resting comfortably at home and is in good condition. His Mayo Clinic doctors report that the surgery went ‘very well’ and he is in good spirits. Once the pathology information is available, further care will be discussed between doctors and the family,” the statement said.

Medicaid And The Latest Version Of The BCRA: Massive Federal Funding Losses Remain

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http://healthaffairs.org/blog/2017/07/14/medicaid-and-the-latest-version-of-the-bcra-massive-federal-funding-losses-remain/

Washington, DC at the Capitol Building

Where Medicaid is concerned, the most notable thing about the latest version of the Better Care Reconciliation Act (BCRA) is that despite the drama of the past two weeks—the flood of news coverage regarding the potential impact of the losses; mounting concerns raised by Senators from expansion and non-expansion states alike; and the massive outcry from hospitals, physicians, insurers, and health care organizations—the new iteration leaves untouched the fundamental Medicaid contours of the earlier version.

The new draft retains the federal funding bar for Planned Parenthood (§ 123) as well as the earlier version’s limit on states’ ability to fund their programs through lawful, broad-based provider taxes (§ 131). The new bill does virtually nothing to lessen the financial losses to states that will flow from the prior iteration. According to the Congressional Budget Office (CBO), these losses would surpass $770 billion over 10 years as a result of provisions that eliminate the enhanced funding for the adult expansion population and superimpose flat annual growth restrictions on Medicaid’s historic federal funding formula (§124 and §132).

By 2036, CBO reports, federal Medicaid funding would be about 35 percent below current law, a catastrophe of epic proportions. According to one study that sought to translate BCRA’s Medicaid provisions into state-by-state loss estimates, California alone would lose between $37 and $52 billionbetween 2020 and 2027, depending on how the cap’s arbitrary growth limits play out over time. Indeed, depending on how the cap, which is tied to a general economic inflation rate that cannot be known with certainty, plays out against actual state spending needs—triggered by everything from new vaccines to long-term services and supports to address the opioid crisis or the consequences of Zika—the federal funding losses could grow from catastrophic to unimaginable.

Small Crumbs Of Money

Perhaps Congressional leaders have sought to convince their colleagues to disregard the CBO estimates and these studies, arguing that Congress, in fact, will never allow the bottom to fall out on states and will come through with additional funding. But the newest version of the bill underscores the fundamentally meaningless nature of such assurances.

Small crumbs of Medicaid give-backs can be found at various places in the new version. One that might be thought of as the Louisiana Purchase is designed to help one state cope with massive loss; over the long term, however, the adjustment washes out in the far larger picture of declining federal funding for an exceptionally poor state.

For purposes of setting the arbitrary growth limits over time, the original bill relied on per capita spending data from the 2014-2015 time period. The new draft would allow a late-expanding state (i.e., Louisiana) to use 2016 as its base period (§ 132). But regardless of whether it is tied to 2014-2015 or 2016, nothing can mask the fact that the base period is part of a growth formula unrelated to the real world of Medicaid spending. All state programs will be tied to the distant past where federal Medicaid funding is concerned.

Furthermore, the new version does not exempt the state from the bill’s exceptionally clumsy rate-setting procedures, which lack adjustments for volume and intensity or new technology and that allow the Health and Human Services (HHS) Secretary’s power to unilaterally alter what he considers to be unreliable state data. The measure continues to permit the Secretary to claw back what he determines to be “excessive” funding by reducing later payments without a prior hearing; in the event of state evidence of underpayment, the Secretary can withhold federal funds owed until a lengthy appeals system is exhausted.

As was the case with the prior version, the new draft tips its hat toward non-expansion states, further sweetening the pot by tweaking the disproportionate share hospital payment formula in ways that favor payments to states with the highest uninsured populations (§ 126, Restoring Fairness in DSH Allotments). Like its predecessor, the new version thus rewards states that have refused to insure their poorest residents and harshly penalizes struggling hospitals serving the remaining uninsured in those that have.

As an additional lure, the new version expands the block grant option in the earlier measure to enable states to use block grants for the ACA expansion population as well as for traditional low-income adults (§ 133). Like the earlier version, state block grant funding would remain virtually frozen, leaving states increasingly on the hook for care for millions of grievously under-funded adults.

The Illusion Of A Public Health Emergency Exemption To The Per Capita Cap

One of Medicaid’s most important dimensions is its irreplaceable role in addressing the immediate and long-term effects of public health crises. Medicaid is by far the nation’s biggest single source of health care financing for dealing with critical public health threats. These threats may begin with an initial, recognized period of a formally declared emergency. They then can morph into events with very long-term effects felt for years or decades after. This was the case with the World Trade Center attacks, which led to an immediate surge in health care spending, followed by years of elevated spending to address the long-term health fallout triggered by the emergency itself. One need think only about Zika or the opioid crisis now gripping the nation to understand the near-term/long-term nature of public health threats.

Medicaid enrollees are disproportionately likely to live in poor communities, and poor communities are disproportionately likely to face public health threats ranging from environmental hazards to infectious disease. These communities also are inherently less likely to have fewer resources to cope with the effects of an emergency. Thus, a program such as Medicaid is crucial in its ability to deploy health care financing resources to the hardest-hit populations. Indeed, two thirds of all Louisiana Medicaid beneficiaries lived in the parishes affected by Hurricane Katrina.

Section 319 of the Public Health Service Act authorizes the HHS Secretary to declare the existence of a public health emergency arising from events such as a “disease or disorder,” “significant outbreaks of infectious diseases or bioterrorist attacks,” or other events identified as public health emergencies by the HHS Secretary. Whether to declare an emergency is entrusted to the Secretary’s judgment, and during the immediate emergency period, the Secretary enjoys expanded powers to deploy resources to designated populations or geographic areas. These special powers end when the declared emergency period ends. In the aftermath, states and local communities effectively are on their own, relying on the resources they have.

In and of itself, a loss of federal health funding as large as that imposed by BCRA elevates the threat risk. This risk grows exponentially when a true crisis hits, if Medicaid is crippled in its ability to provide a large-scale surge in public health care spending both during the emergency and thereafter. To understand how little the revised bill does to mitigate the crippling impact of the initial draft one need only look carefully at what the revisions would do when a true emergency strikes.

The press release accompanying the new draft states that “if a public health emergency is declared, state medical assistance expenditures in a particular part of the state will not be counted toward the per capita caps or block grant allocations for the declared period of the emergency.” But a close read of the actual bill text reveals its fundamental inadequacy.

First, the period of exemption lasts only five years, from January 1, 2020 through December 31, 2024. Emergencies happening after this date won’t qualify for the spending adjustment. Second, the bill provides no additional federal spending during the period of a declared emergency. The draft simply allows states to eventually qualify for additional federal funding in the years following the emergency if they can prove to the Secretary that their spending on the affected population went up compared to prior years and then only for immediate emergency costs. What state will have the money in advance? And what state will be able to take a chance on spending more given the purely speculative nature of whether an emergency will be declared and emergency expenditures recognized?

Third, states would receive no additional funding ever unless the HHS Secretary actually declares an emergency in the affected portion of the state or for the state’s affected populations. Many public health threats may not rise to a level that triggers a formal Secretarial determination, and the Secretary may be inclined not to make such a determination because of other, spillover effects that come with such a determination, such as the elevated demand for other types of resources.

Fourth, the additional amount of federal funding made available would be limited to the difference between what the state spent on the population in connection with the emergency and the state’s previous expenditures for the same population. Expenditures to cope with the emergency aftermath would not count, and of course these expenditures likely would not occur simultaneously with the emergency expenditures. For example, Zika has triggered emergency expenditures aimed at preventing the spread of the virus, but the true costs of Zika will roll out slowly in the form of babies left permanently and severely disabled by the virus.

And here is where the public health implications of BCRA become clear: other than exempting state expenditures on children classified as disabled from the caps, the revised bill, like its predecessor, makes no adjustment for long-term consequences. To be sure, as just mentioned, BCRA does exempt state expenditures on severely disabled children from the federal cap. But because the vast majority of children qualify for Medicaid based on poverty, this type of cramped classification system for measuring exemptions is sure to exclude spending for millions of children in severely compromised health from the exemption process.

Fifth, the bill allows only $5 billion in the aggregate for all additional federal funding over the five-year time period covered by the emergency exemption. In other words, the bill essentially creates a five-year, $5 billion mini-block grant to help all states address Medicaid spending for all emergencies occurring during this time period. The incredibly small size of the block grant alone would be likely to incentivize the HHS Secretary to avoid declaring emergencies out of concern that the money won’t be there to cover them.

In the end, the newest iteration of BCRA does nothing to alleviate the catastrophic effects of its predecessor: the difference in magnitude between what Medicaid can do today and what it will be capable of doing in the future is incalculable.

ACA Round-Up: Medicare Trustees Report Does Not Trigger IPAB, And More

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http://healthaffairs.org/blog/2017/07/14/aca-round-up-medicare-trustees-report-does-not-trigger-ipab-and-more/

Click to access TR2017.pdf

All eyes yesterday were focused on the Senate, which released significant new amendments to the Better Care Reconciliation Act. But the Senate was not the only game in town.

On July 13 the Medicare Trustees released their 2017 Medicare Trust Fund report. One of the most controversial creations of the ACA was the Independent Payment Advisory Board (IPAB). The ACA established specific target growth rates for Medicare and charged the IPAB with ensuring that Medicare expenditures stayed within these limits.

Each year the CMS Chief Actuary must make a determination as to whether the projected average Medicare growth rate for the 5-year period ending 2 years later will exceed the target growth rate. For each year since the provision went into effect in 2013, the CMS Chief Actuary has determined that the projected growth rates will not exceed these limits. It was thought that this year might be different, but for 2017 the Chief Actuary again concluded that the growth rate will not be exceeded, and said so in a letter to CMS.

The IPAB was supposed to be a 15-member board of experts that would, for years when Medicare growth rates were projected to exceed the threshold, make recommendations for cutting costs. These would be implemented unless Congress enacted an alternate approach that would achieve the same savings or waived the requirement to cut costs by a three-fifths majority. The IPAB has never been created, but under the ACA, in the absence of an IPAB its power to make program cuts devolves to the HHS Secretary.

The IPAB is deeply disliked in Congress and proposals to abolish it have wide support. But the IPAB statute seems to say that the IPAB can only be abolished by a joint resolution of Congress which must be introduced into Congress by February 1, 2017 and be enacted, following very specific procedures, by August 15, 2017.  In fact, one bill to abolish the IPAB was introduced into the Senate by February 1 with 36 Republican co-sponsors, and another with 12 Democratic co-sponsors, while a House bill was introduced on February 3 with 233 Democratic and Republican cosponsors. But August 15 is coming up quickly and Congress seems to have its hands full with other issues. Moreover, the CBO would likely view elimination of the IPAB as coming with a high price tag.

It may not matter much. The IPAB provision recognizes that Congress can always change its mind.  It could presumably change its rules to allow it to abolish the IPAB whenever it chose to do so. In fact, the rules that the House adopted for the 115th session provide that any IPAB submittals are not to be considered during the 2017-2018 session. But if Congress chose to proceed according to the ACA’s provisions, the IPAB would find few defenders.

Federal Exchange Eligibility Redeterminations And Re-Enrollment

CMS released on July 13 a guidance describing how it intends to handle eligibility redeterminations and re-enrollment for federal exchange enrollees for 2018. Basically, CMS intends to use the same procedures it used for redeterminations and reenrollment for 2017, which in turn were similar to those used for 2016.  The exchange will continue to auto-reenroll enrollees who fail to select a plan, and to terminate enrollees who have been auto-reenrolled more than once without contact with the exchange.

There is one change for 2018: CMS will discontinue advance premium tax credits (APTC) and cost-sharing reduction (CSR) payments not just for enrollees who received APTC or CSRs and did not file a tax return in a prior year in which they received ATPC or CSRs, as CMS did in 2016, but additionally for enrollees who failed to file form 8962 to reconcile the APTC they received and the premium tax credits to which they were entitled, and failed to contact the exchange and obtain an updated eligibility determination for 2018. Filing a tax return and reconciling APTC with premium tax credits is an eligibility requirement for receiving APTC and CSRs in subsequent years, but federal regulations prohibit termination of coverage for this reason unless direct notice is sent to the enrollee that coverage will be terminated for failure to file. Until now, CMS has not been able to provide the required notice for those who fail to reconcile.

GAO Finds Tax Credit Verification Procedures Wanting

Finally, on July 13, 2017, the Government Accountability Office released a report on Improvements Needed in CMS and IRS Controls over Health Insurance Premium Tax Credits. The report is long and detailed and reviews comprehensively the controls that CMS and the IRS have in place—or, more often, do not have in place—for ensuring that improper premium tax credits are not made.

The GAO scored both agencies for failing to provide accurate assessments of improper payments. It also criticized each agency for failing to have procedures in place for verifying most eligibility requirements for premium tax credits and for identifying and correcting errors in premium tax credit reporting and collecting overpayments. The agencies responded that they are working on improving verification and processing procedures, but that that they have limited resources and verification is not always possible.

In the end, a tax-based system for paying for health insurance that depends on accurate reporting and verification of citizenship or lawful alien status, incarceration status, income, residence, health insurance premiums, household composition, availability of alternative forms of coverage, and tax filing status of applicants and enrollees—and requires coordination of two independent federal agencies—is very difficult to administer. If the Senate’s BCRA is adopted, administration of the program will only become more complicated, as all of these factors remain relevant and to them will be added age and the possibility of new forms of coverage that do not qualify for premium tax credits, but can be paid for using tax-subsidized health savings accounts. The GAO has its future work cut out for it in any event.

In Senate Health Care Bill, A Few Hidden Surprises

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http://healthaffairs.org/blog/2017/07/13/in-senate-health-care-bill-a-few-hidden-surprises/

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A low-income person, eligible for Medicaid but not enrolled, is hit by a car or a bullet. Gravely injured, she arrives at the hospital unconscious. Thanks to expert, intensive care that lasts for days or weeks, she gradually recovers. Eventually, her health improves to the point where she can complete the paperwork needed to apply for Medicaid.

Such a hospital can be paid today, thanks to Medicaid’s “retroactive eligibility.” Even if the combination of medical problems and bureaucratic delays prevents an application from being filed and completed for several months, Medicaid will cover the care if the patient was eligible when services were provided.

The newest version of the Senate health bill—the Better Care and Reconciliation Act, or BCRA—would end this longstanding feature of the Medicaid program for beneficiaries who are neither elderly nor people with disabilities. If services are received in one calendar month and the application is completed the following month, the hospital would be denied all payment, even if the patient was eligible and the services were both essential and costly.

It does not matter if the state is led by a governor who understands the devastating impact of this change on hospital infrastructure, especially in rural areas where many hospitals are hanging on by a thread. Today, states have the flexibility to seek waivers that limit retroactive eligibility. Under the BCRA, that flexibility would disappear, as states are forced to end retroactive coverage, whether they like it or not.

Almost certainly, this provision would come as a surprise to most senators who are being asked to support the BCRA. It is only one of many unpleasant surprises lurking largely undiscovered throughout the bill. Following are other selected examples.

A Massive Expansion In Federal Power Over State Budgets

The BCRA grants the federal government startling new power over state Medicaid programs and state budgets. Federal dollars per person would be capped, based on state data about prior spending. But in setting the initial cap for each state, the secretary of Health and Human Services (HHS) could change the amount to rectify what the secretary views as problems in the “quality” of state data. In later years, many states could have their caps adjusted up or down by as much as 2 percent per year. That may sound like a small number, but when applied to billions of federal Medicaid dollars going to a state, it could make or break a state’s entire budget. Medicaid costs triggered by a public health emergency are exempt from the cap, but only if “the Secretary determines that such an exemption would be appropriate.” No statutory limits bound the Secretary’s use of this decision-making authority, which can have an extraordinary fiscal impact on states experiencing an epidemic or other public health crisis.

These provisions would give HHS remarkable new leverage over states, which current or future administrations could use to compel state policy changes in any desired direction. The aggressive use of available leverage has been an unfortunate feature of past administrations’ relationships to state Medicaid programs, but it could become substantially more pronounced with the increased federal authority granted by the Senate bill.

Adding To Uncertainties Surrounding State Expenditures

One recurring theme in Medicaid’s history involves state efforts to claim federal matching funds without spending the requisite state dollars. The Senate bill appears to increase this risk. Under Section 207 in the Senate bill, new opportunities emerge for states desperate to counteract the loss of billions of federal dollars. The bill authorizes unprecedented waivers involving federal funding for tax credits that help consumers buy private health insurance. So long as officials complete a form explaining how the waiver’s replacement of federal safeguards would provide an “alternative means” of increasing “access to comprehensive coverage, reducing average premiums, and increasing enrollment,” a state arguably could convert some or all of this federal money into so-called “pass-through” funds that can be used for purposes unrelated to health care. Unlike the Senate bill’s new public health emergency provisions, which require federal audits of state expenditures, states’ use of pass-through dollars has no statutory audit requirement. A state could convert subsidies meant for health insurance to other uses, or simply use the money to close a budget shortfall. As the Congressional Budget Office (CBO) explained about the virtually identical prior version of this section, the Senate health care bill would “substantially reduce the number of people insured” if states “reduced subsidies, received pass-through funds, and used those funds for purposes other than health insurance coverage.”

Medicaid Treatment For Mental Health And Substance Use Disorders

The bill repeals the current requirement that Medicaid programs must cover all “essential health benefits,” including treatment of mental health and substance use disorders. CBO found that, as the per capita limits in the Senate bill grow progressively tighter, federal Medicaid funding would eventually decline by more than a third, compared to current law. States facing such an enormous drop in federal support may see themselves as having no alternative but to cut services classified as optional, which the Senate bill redefines to include mental health and substance abuse treatment.

A Disordered Process

These problems could have been averted had the legislative process followed regular order, with hearings, legislative staff explaining the bill’s provisions, expert testimony, a public markup, and opportunities to address policy and drafting anomalies. Embedded in a measure with underlying policy goals that the authors of this blog post find fundamentally questionable, the picture that emerges is extraordinarily troubling—a legislative effort to divert more than a trillion dollars away from health care for people who are sicker, poorer, older, and indigent, while leaving states with such massive funding deficits and federal leverage that some states may attempt to stem their losses in ways that harm their vulnerable residents even more.

Even people sympathetic to the bill’s core aims, however, have good reason to oppose the Senate making such consequential decisions without taking the elementary legislative steps needed to detect and avoid terrible mistakes. Continuing to shun all the protections of regular order, the Senate appears poised to act on a bill that almost certainly includes additional unpleasant surprises going beyond those discussed here. With legislation that governs one-sixth of the US economy and that directly affects the health and economic security of millions of constituents, Senators are being asked to vote largely in the dark.

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.