Tag Archives: Cost Sharing Reduction Payments

As Repeal Falters, Insurers Start to Press on Subsidies

Posted on by • Posted in Uncategorized • Tagged , , , • Leave a comment

http://www.reuters.com/article/us-usa-healthcare-insurers-idUSKBN1A32HT?feedType=RSS&feedName=healthNews

Image result for As Repeal Falters, Insurers Start to Press on Subsidies

A failed Republican effort to replace Obamacare raised new concerns on Tuesday for U.S. health insurers over whether the government will continue to fund billions of dollars in medical benefit subsidies.

The healthcare bill under consideration in the U.S. Senate would have settled the funding question, but was scrapped after Republican leaders were unable to rally enough party members to win approval.

Its demise will test the ability of Republicans and Democrats to stabilize an insurance market serving some 10 million Americans in time for 2018.

Republican President Donald Trump has suggested several times that he could eliminate the so-called cost-sharing reduction subsidies, which help pay for consumers’ out-of-pocket healthcare expenses.

The administration could do so as early as August. Insurers have braced for an end to these payments, in many cases raising proposed premium prices for 2018 more than 20 percent to make up for the lost funding.

Insurers said on Tuesday they would like Congress to appropriate the funds for these payments. If that does not happen, and the Trump administration takes further measures to undermine Democratic former President Barack Obama’s healthcare law, more insurers may pull out of markets for next year ahead of a late September deadline.

That could force consumers to change plans or insurers – or leave them with no options at all.

“Our members and all Americans need the certainty and security of knowing coverage will be available and affordable for them,” said Justine Handelman, senior vice president in the Office of Policy and Representation at the Blue Cross Blue Shield Association, which represents insurers nationwide.

“We have consistently urged that there be immediate, certain funding for the cost-sharing reduction program, which helps those most in need with out-of-pocket costs when they access medical care.”

Molina Healthcare Inc (MOH.N), which provides Obamacare health plans to more than 1 million people, said the fate of cost-sharing subsidies is one of its top concerns. The Trump administration could take other steps on its own to undermine Obamacare, including refusing to enforce the individual mandate, which requires Americans to have health insurance or pay a fine.

Trump has repeatedly said Obamacare, formally known as the Affordable Care Act, is collapsing, and on Tuesday suggested letting it “fail” to force Democrats to work on a healthcare fix. Earlier this year, the administration backed off more strictly enforcing the individual mandate and pulled ads that encouraged people to sign up for health insurance.

Uncertainty over the government’s next steps on Obamacare weighed on insurer shares on Tuesday, with Anthem Inc (ANTM.N) down 1.4 percent and Aetna Inc (AET.N) off 1.1 percent. UnitedHealth Group (UNH.N), which pulled out of the Obamacare individual insurance business, rose 0.3 percent after reporting a better-than-expected quarterly profit.

Senate Majority Leader Mitch McConnell said the Senate would vote in the coming days on a full repeal of Obamacare with no replacement, but he did not appear to have the necessary support to push it through.

Some Republicans and Democrats say they should attempt a joint fix, but the deep divisions between the two parties were on display over the subsidies on Tuesday.

Democratic Senator Patty Murray said that bipartisan work can begin by having Congress fund the cost-sharing subsidies.

“We know that’s what needs to be done,” she said in an interview. “It would send a very strong message to the market.”

Several Republican senators were quick to deride the payments.

“Those who will be interested in moving an insurance bailout later this year should be ready to explain how they want to pay for it,” said Republican Senator Orrin Hatch, chairman of the Senate Finance Committee.

Obamacare 101: Is there a smaller fix for the Affordable Care Act?

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

http://www.latimes.com/politics/la-na-pol-obamacare-101-marketplace-fixes-20170712-story.html?utm_campaign=KHN%3A%20First%20Edition&utm_source=hs_email&utm_medium=email&utm_content=54139610&_hsenc=p2ANqtz-_oK9ym4MAYbgjGTqJrtwWnYS7JczHHbl_O85RanUGaeiUnTcx9hvcqv7rFbgtEigUowQiiD8dTN5J0Reyhnc3D456E0Q&_hsmi=54139610

Image result for aca limited fix

With Senate Republicans struggling to find votes for sweeping legislation to roll back the Affordable Care Act, several GOP lawmakers have raised the prospect of a more limited bill — passed with help from Democrats — to stabilize health insurance markets around the country.

That may be heresy for conservative Republicans who’ve spent seven years demanding the full repeal of Obamacare, as the law is often called.

But most patient advocates, physician groups, hospitals and even many health insurers say more-targeted fixes to insurance marketplaces make more sense than the kind of far-reaching overhaul of government health programs that Republicans have been discussing.

Why do a more limited Obamacare ‘fix’?

For one thing, it would be politically easier. More-targeted legislation also wouldn’t threaten insurance protections for tens of millions of Americans.

The political debate over the 2010 healthcare law has focused for years on what has been happening to insurance marketplaces like HealthCare.gov, which were created by the law for Americans who don’t get health insurance through work.

For a variety of reasons, the marketplaces’ first several years have been rocky.

Insurers in many states struggled to figure out how much to charge for their plans and then raised premiums substantially when customers turned out to be sicker than they expected.

And as uncertainty over the future of the markets has intensified since President Trump’s election last year, several leading national insurers have decided to stop selling plans in some states, leaving consumers in some places with few if any health plans to choose from. Trump has called Obamacare a “disaster” and “dead.”

But the marketplaces — where about 10 million Americans currently get coverage — represent a very small fraction of the U.S. healthcare system.

By contrast, more than 70 million Americans rely on Medicaid and the related Children’s Health Insurance Plan, the government safety net plans for the poor.

Altering Medicaid, as proposed under the GOP plan, would be far more disruptive. And, as congressional Republicans are learning, it is much more controversial.

But isn’t Medicaid a big problem, too?

Many conservatives have long argued the federal government can’t afford to provide so much healthcare assistance to the poor.

But Medicaid has become a vital lifeline for tens of millions of Americans. Medicaid provides assistance to more than one in three U.S. children, protects millions of Americans with disabilities and is the largest funder of nursing home care for elderly Americans, in large part because Medicare does not cover nursing homes.

Obamacare’s Medicaid expansion, which made coverage available to working-age adults in many states, is credited with driving down the nation’s uninsured rate to the lowest levels ever recorded.

And a growing body of evidence shows it is improving low-income Americans’ access to needed medical care, reducing financial strains on families and improving health.

That is why Medicaid has been fiercely defended by patient groups, doctors, nurses, educators and even some Republican governors.

What would it take to stabilize insurance markets?

Probably not that much, actually.

There is widespread agreement that the federal government must first continue funding assistance through Obamacare to low-income consumers to help offset their co-pays and deductibles.

This aid — known as cost-sharing reduction, or CSR, payments – was included in the original law.

But the payments have become a political football as Republicans argued the aid can’t be provided without an appropriation by Congress. And Trump administration officials keep threatening to cut off the payments.

Many insurers say that would be devastating, forcing them to raise premiums by double digits.

Congress could simply put an end to that uncertainty by voting to appropriate the CSR money.

Secondly, most insurance industry officials and independent experts say the federal government must create a better system to protect insurers from big losses if they are hit with very costly patients.

Such reinsurance systems are used in other insurance marketplaces such as the Medicare Part D prescription drug program and are seen as critical to stabilizing markets.

Thirdly, current and former marketplace officials say, the federal government should aggressively market and advertise to get younger, healthier people to buy health plans on the marketplaces.

This strategy has helped Covered California, that state’s marketplace, which has not been beset by some of the problems in other markets.

Finally, many experts say, federal officials likely will have to come up with additional incentives to convince health insurers to offer plans in remote, rural areas.

Some Republicans have suggested that consumers in these areas could be allowed to buy health plans that don’t meet standards set out in the current law.

Would these steps cost more money?

Yes.

But both the House and Senate GOP bills to roll back Obamacare included billions of dollars to stabilize markets over the next several years.

So could Congress put that aid in a smaller healthcare bill?

That’s still unclear.

Many congressional Republicans are reluctant to spend any more money on healthcare aid, especially for a law that most have sworn to repeal.

But polls indicate that Americans now hold congressional Republicans and the Trump administration responsible for the fate of the nation’s healthcare system, including the insurance marketplaces.

That suggests that there could be a political price to pay for the GOP if the markets are not stabilized.

At the same time, Senate Democrats have signaled a willingness to work with Republicans on marketplaces fixes if GOP lawmakers agree to drop their repeal campaign.

But major hurdles remain, including demands from many GOP lawmakers that at least some of Obamacare’s provisions be repealed, such as the highly unpopular mandate requiring Americans to have health insurance.

Rather than stabilizing markets, however, eliminating the insurance requirement could lead to even more turmoil, experts say.

Here’s What a Bipartisan Health Care Deal Might Look Like

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , • Leave a comment

https://www.thefiscaltimes.com/2017/07/08/Here-s-What-Bipartisan-Health-Care-Deal-Might-Look

Image result for bipartisanship

Practically overnight, Senate Majority Leader Mitch McConnell (R-KY) placed the once-unthinkable notion of a bipartisan deal with the Democrats to salvage the Affordable Care Act well within the realm of possibility.

For months, McConnell, House Speaker Paul Ryan (R-WI) and President Trump vowed to move with alacrity to repeal and replace Obamacare with a far superior GOP health insurance plan that would bring down premium costs , provide tax relief for wealthier Americans and the health care industry, and phase out expanded Medicaid coverage for millions of poor and disabled people.

But with the Senate’s 52 Republicans still badly divided over how best to proceed and time running out before a long August recess, McConnell said Thursday during a speech in Kentucky that if his party cannot muster at least 50 votes to rewrite the Obamacare law, it would have no choice but to work with the Democrats to produce a more modest bill to support the law’s existing insurance market.

“No action is not an alternative ,” McConnell said during a speech at a Rotary Club lunch in Glasgow, Kentucky. “We’ve got the insurance markets imploding all over the country, including in this state.”

The Republicans have long argued that Obamacare is in a “death spiral,” with premiums going through the roof and more and more major health care insurers pulling out of the market after incurring huge losses on the ACA exchanges. The Trump White House, the Department of Health and Human Services (HHS) and the Internal Revenue Service have also taken executive actions that have undercut enrollment and insurer participation.

But the veteran Senate majority leader has begun facing up to the harsh political reality that as many as a dozen conservative and moderate Republicans currently oppose a bill that McConnell almost single-handedly drafted behind closed door. Now it will take a herculean effort to muster a minimum of 50 votes needed to pass the bill under expedited budget reconciliation rules that were designed to avert a filibuster.

Douglas Holtz-Eakin, a former Congressional Budget Office director and Republican economic adviser, said on Friday that McConnell “has done the [political] arithmetic right” and that there may be no choice but to cut a deal with Senate Minority Leader Chuck Schumer (D-NY).

“We know that the exchanges are melting down under current law,” Holtz-Eakin, president of the American Action Forum, said in an interview. “We know that the cost-sharing money [to subsidize insurers] has to come from somewhere or they will continue to melt down, and insurers will leave, and premiums will continue to skyrocket.”

However, he warned that such an agreement would have serious political ramifications for the GOP and could touch off a conservative backlash, especially in the House. “It’s going to be a really bad deal for Republicans, and House Republicans are going to have to eat it.”

Michael F. Cannon, director of health policy at the libertarian Cato Institute, said McConnell might have raised the idea of working with Democrats to force recalcitrant Republicans into line. However, he said it was high risk for a party that for the past seven years has promised to repeal and replace Obamacare.

“If he does pursue a bill with Democrats to bail out the exchanges, then it will cause a rift in his own party much bigger than the rift he sees right now,” Cannon cautioned.

Schumer on Thursday called McConnell’s comments encouraging, and that his caucus is “eager to work with Republicans to stabilize the markets and improve the law.” The minority leaders have said for weeks that the Democrats were ready to bargain with the GOP and the White House on virtually any issue provided the Republicans abandoned their effort to repeal former President Barack Obama’s signature program.

According to several policy experts, here are five areas where a bipartisan health care compromise might be struck:

  1. Cost sharing — One of the pillars of the Obamacare markets is the $7 billion a year in federal cost-sharing subsidies to insurance companies that allow them to help offset the cost of the monthly premiums and copayments of low and moderate income Americans who make between $12,000 and $48,000 a year. House Republicans challenged the constitutionality of those subsidies in court, and Congress and the Trump administration have agreed to continue the payments pending a final outcome of the case.
    But without more certainty of the future of those subsidies, many major insurance companies have begun pulling out of markets throughout the country. If both parties are concerned about stabilizing the Obamacare insurance markets and making sure they don’t go under, making the cost-sharing subsidies permanent would be a good place to start.
  2. Reviving Risk Corridors –Before the Republicans succeeded in turning off the spigot, an Obamacare reinsurance program or so-called “risk corridors” funneled billions of dollars to insurers to offset the unforeseen costs of their most expensive enrollee.
    Republicans led by Sen. Marco Rubio (R-FL) led an effort to kill off the program, arguing that it constituted an unjustifiable “bailout” of the insurance industry. But Republican and Democratic negotiators would likely have to reconsider reviving the program – and tax revenue to pay for it – to further stabilize the insurance market.
  3. Tax Repeal – The Senate GOP plan includes a tax cut of $700 billion over the coming decade, which would be achieved by repealing all the tax hikes in Obamacare passed to help finance the health insurance program. The cost of that massive tax relief for mainly wealthy Americans and the pharmaceutical, health care and insurance industries, would be offset by deep cuts in Medicaid for millions of poor and disabled Americans.
    Democrats are adamant about blocking wholesale cuts in Medicaid. However, they might be open to some horse trading to repeal some of the Obamacare taxes while preserving others, in order to prevent massive cuts in Medicaid.
  4. Medicaid Spending– The Senate GOP bill would allow 31 states that expanded Medicaid to millions of childless, able-bodied, low-income adults to continue receiving bonus federal funding through 2013, before beginning to reduce it between 2021 and 2024.
    Democrats would be insistent on preserving expanded Medicaid even longer and would have considerable leverage in order to achieve that goal. Moreover, there is virtually no interest on their part in transforming Medicaid from an open-ended entitlement to a per-capita-cap block grant to the states. But amid growing concern about the long-term impact of growing entitlements on the debt, Democratic negotiators might be open to reforms to slow the rate of growth of Medicaid.
  5. Lowering premiums – There is little disagreement between the two parties on the need to bring down premiums and copayments that have literally priced many families out of the market, even with tax subsidies. Yet finding a compromise that satisfies the Democrats demands to preserve Obamacare levels of benefits – including a ban on insurers discriminating against people with preexisting medical conditions — and GOP insistence on allowing skimpier, less expensive policies for younger and healthier people – will be hard to do.
    “All of this adds up to huge new spending, but the Democrats would be in charge, and McConnell knows it,” Joe Antos, a health care expert with the conservative-leaning American Enterprise Institute, said. “They won’t get everything, but I don’t expect any compromise to look like a Republican bill. Nonetheless, if the Democrats aren’t too greedy, such a bill could pass in the Senate, but would be rejected in the House.”

The Senate health bill is out. Here’s your speed read

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , • Leave a comment

https://www.axios.com/the-senate-bill-is-out-heres-your-speed-read-2446201141.html

Image result for aca repeal bill

You can read it here, and a summary here. The highlights:

  • Ends the Affordable Care Act’s mandates and most of its taxes.
  • Phases out its Medicaid expansion over three years, ending in 2024.
  • Limits Medicaid spending with per capita caps, or block grants for states that choose them. The spending growth rate would become stricter in 2025.
  • States could apply for waivers from many of the insurance regulations.
  • The ACA’s tax credits would be kept in place, unlike the House bill — but their value would be reduced.
  • Funds the ACA’s cost-sharing subsidies through 2019, but then repeals them.

Want more? Keep reading.

  • There’s a stabilization fund to help states strengthen their individual health insurance markets.
    • $15 billion a year in 2018 and 2019, $10 billion a year in 2020 and 2021.
    • There’s also a long-term state innovation fund, $62 billion over eight years, to help high-cost and low-income people buy health insurance.
  • The ACA tax credits continue in 2018 and 2019.
  • After that, they’d only be available for people with incomes up to 350 percent of the poverty line.
  • The “actuarial value” — the amount of the medical costs that insurance would have to cover — would be lowered to 58 percent, down from 70 percent for the ACA’s benchmark plans. That’s likely to reduce the value of the tax credits.
  • All ACA taxes would be repealed except for the “Cadillac tax” for generous plans, which would be delayed.
  • Medicaid spending growth rate under per capita caps would be same as House bill until 2025. Then it switches to the general inflation rate, which is lower than House bill.
  • States would be able to impose work requirements for people on Medicaid, except for the elderly, pregnant women and people with disabilities.
  • Children with complex medical needs would be exempt from the per capita caps.

States Seek to Join Appeal of House Obamacare Lawsuit

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

https://morningconsult.com/2017/05/18/states-seek-join-appeal-house-obamacare-lawsuit/

Image result for aca cost sharing reduction payments

More than a dozen states and the District of Columbia filed a motion on Thursday to intervene in the appeal of a lawsuit targeting the Affordable Care Act’s cost-sharing reduction payments, which have become a focal point for how President Donald Trump plans to treat the 2010 health care law.

The 15 states argue that the executive branch is not adequately defending its authority to make the CSR payments and does not represent their interests. They also said that if the appeals court agrees with the previous ruling that the Obama administration unconstitutionally paid the subsidies, states and their residents would be harmed and there would be significantly higher costs for health care.

The subsidies are at the center of a lawsuit brought by the U.S. House of Representatives against the Obama administration, which the Trump administration must now deal with.

“Because of an intervening presidential election, the current parties appear ready to agree to allow the injunction to stand, without giving this Court the opportunity to determine whether the district court had either jurisdiction to enter it or a legal basis to enjoin the permanent appropriation that Congress intended to provide,” the motion reads.

House Republicans argued the Obama administration paid the subsidies — which help lower-income people afford out-of-pocket costs under the ACA — without an appropriation from Congress. A district court judge ruled in favor of the House last year, and the Obama administration appealed the ruling.

The payments have been made while the lawsuit is pending, but the Trump administration has wavered on whether it will continue to make them in the future, worrying insurers as they prepare to set their premium rates for 2018. Insurers say they need to know the payments’ status before filing their requests by the June 21 deadline.

The states in the lawsuit say their “concerns are concrete and immediate,” due to the urgency insurers face. If the payments are not made, insurance premiums would likely rise and insurers could abandon the individual market, which could trigger a “death spiral” and cause people to lose health coverage, the states warned.

Trump is using the payments as “political bargaining chips,” meaning states and their residents can’t rely on the administration to represent their position, they said.

“The public record makes clear that the current Administration does not represent the States’ interests,” according to the motion jointly filed by California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, Pennsylvania, Vermont, Washington state and the District of Columbia.

The Kaiser Family Foundation has estimated that the average premiums for silver plans sold on the ACA exchanges would increase by about 19 percent to compensate for insurers’ lack of funding without the CSR payments.

The Trump administration and the House are set to update the court on Monday on how they plan to proceed with the case. In February, an appeals court agreed to keep the case on hold while both sides continued to work toward a resolution.

Obamacare 101 — What’s the big debate over health insurance cost-sharing subsidies?

Posted on by • Posted in Uncategorized • Tagged , , , , • Leave a comment

http://www.latimes.com/politics/la-na-pol-obamacare-101-cost-sharing-reductions-20170425-story.html

USC patient

As President Trump and congressional leaders scrambled to put together a spending bill to keep the government from shutting down at the end of this week, negotiations almost collapsed over an arcane, but critical part of the Affordable Care Act: cost-sharing reduction payments, or CSRs.

If you’ve never heard of this piece of the Obamacare puzzle, here’s a rundown of what they are, why they were pulled into Trump’s first budget fight and what their fate may be in the future.

What are the cost-sharing reduction payments?

One of the pillars of Obamacare are the insurance marketplaces that allow Americans who don’t get coverage through an employer to shop among health plans that must all cover a basic set of benefit.

Low- and moderate-income shoppers with annual incomes between 100% and 400% of the federal poverty level — between about $12,000 and $48,000 — qualify for subsidies that offset the cost of their monthly insurance premiums.

Less well-known are the so-called cost-sharing reductions. Consumers who make between 100% and 250% of the poverty line can get this additional assistance to cover co-pays and deductibles if they select certain health plans on the Obamacare marketplaces.

These cost-sharing reductions mean that someone who might otherwise face an annual deductible of $2,000 or more would potentially have no deductible at all. This additional assistance can be especially important as many low-priced health plans force consumers to pay high deductibles before their medical care is covered.

This year, the CSR payments will cost the federal government about $7 billion, according to the nonpartisan Congressional Budget Office.

Why are they an issue now?

Most spending in Obamacare is mandatory, which means that it does not require Congress to appropriate it every year in a spending bill. But there has been some debate about whether the CSR payments fall into this category.

The Obama administration initially sought congressional approval for CSR payments but later maintained this was not necessary. And since 2014, Obama administration has made CSR payments to lower deductibles for millions of low-income consumers.

Republicans have argued this usurped Congress’ authority over spending. Last year, a federal judge agreed with them, though she suspended her order while the case was being appealed.

What would happen if the CSR payments are stopped?

Health insurers and other experts have been warning for months that eliminating the payments could destabilize the Obamacare marketplaces and cause some insurers to stop offering health plans.

That is because the payments currently go to insurers, who use them to offset the losses they incur from covering medical expenses that consumers would normally have to pay until they reach their deductibles.

If the payments are stopped, insurers would still be barred from charging low-income consumers for deductibles. But insurers would no longer be able to get financial aid for the costs they are bearing.

Some insurance companies would likely decide that it was no longer worth selling health plans on the marketplaces. Others might conclude that they have to raise premiums to cover the additional losses.

That could cost some consumers more, particularly those who don’t qualify for government assistance.

It could also cost the federal government more as higher premiums would mean higher subsidies for those who qualify (because the value of subsidies is tied to the cost of insurance premiums).

The additional cost of the subsidies might even outstrip the savings that would be generated by stopping the CSR payments, according to a new analysis from the nonprofit Kaiser Family Foundation, which estimates that stopping the CSR payments would save $10 billion in 2018 but lead to $12 billion in additional subsidy payments, assuming insurers did not abandon the Obamacare markets next year.

How did the CSR payments get dragged into the current budget debate?

To prevent an insurance market meltdown, insurers industry officials and many Democrats urged congressional leaders to include funding for the CSR payments in the spending bill that Congress must pass this week to keep the government open.

That would make the fate of the payments less dependent on the ongoing lawsuit and prevent Trump from using them as a bargaining chip down the road, risking the collapse of insurance markets. At one point, Trump and GOP leaders had floated the idea of using the payments as a way to pressure Democrats to support funding for a border wall with Mexico or to increase military spending.

The White House and GOP leaders ultimately decided against including the payments in the spending bill. But the administration said Wednesday that it would agree to keep funding the CSRs administratively, at least for now.

What could happen further down the road?

Assuming the CSR payments are not included in a future spending bill, the Trump administration could threaten to cut them off again in the future.

That means that insurance markets will likely remain unsettled for some time, even if a collapse is not imminent.

Essential Facts About Health Reform Alternatives: Eliminating Cost-Sharing Reductions

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

http://www.commonwealthfund.org/publications/explainers/2017/apr/cost-sharing-reductions?omnicid=EALERT1202020&mid=henrykotula@yahoo.com

How do cost-sharing reductions work?

Americans with low or moderate incomes can get their out-of-pocket health care expenses reduced if they have purchased a silver plan in the Affordable Care Act’s (ACA) health insurance marketplaces. The ACA’s cost-sharing reductions (CSRs) mean lower copayments and deductibles for people in households earning between 100 percent and 250 percent of the federal poverty level (about $12,000 to $30,000 for an individual, and about $24,000 to $60,750 for a family of four).1 The federal government reimburses insurers for providing the subsidies, which in 2016 totaled $7 billion.2

Those who use health care the most see the largest savings. A 2016 Commonwealth Fund analysis of marketplace plans in 38 big-city markets found that without CSRs, a 40-year-old man with a silver plan who is a high health care user and earns $35,000 a year—too much to qualify—might face up to $6,500 in out-of-pocket expenses.3 But for someone earning $17,000 who is also a high user of care, projected out-of-pocket spending would be no higher than $650—a savings of nearly $6,000 compared to the average silver plan. In other words, instead of potentially spending more than a third of his income on health care expenses, he spends no more than 3.8 percent of his income with CSRs.

What’s the backstory?

In 2017, 7 million people qualified for CSRs—58 percent of all marketplace enrollees.4 But the subsidies face challenges on several fronts. In 2014, Republicans in the U.S. House of Representatives sued the Obama administration, alleging that the U.S. Department of Health and Human Services’ payments to insurers were unlawful because Congress had not appropriated funds to pay for them.5 A May 2016 ruling by a federal judge in favor of the GOP would have stopped payment of the subsidies, but the Obama administration appealed. The case, now known as House v. Price, has been paused since the November election.

The Trump administration has indicated that, at least for now, it will continue making payments to insurers.6 And some congressional Republicans, wishing to preserve the subsidies, are willing to appropriate the necessary funds.7 However, the GOP’s recent health care reform proposal—the American Health Care Act—would eliminate cost-sharing reductions entirely.

How would eliminating cost-sharing reductions affect consumers?

If the Trump administration decides at some point to stop defending the lawsuit to end cost-sharing reductions and Congress fails to appropriate funds for them, payments to insurers would end. While insurers have signed contracts with federal and state regulators to offer health coverage, some might seek to terminate them early because of the loss of payments. Doing so would throw consumers off their coverage midyear.8

Insurance costs would rise as well, as companies opting to remain in the market would be forced to increase premiums to make up for the lost government payments. Analysts say that marketplace insurers across the country would likely raise premiums for silver plans by anywhere from 9 percent to 27 percent.9 This also would increase federal spending above what the CSRs cost, since higher premiums mean larger premium tax credits.10

How would eliminating cost-sharing reductions affect insurance markets?

Eliminating cost-sharing reductions could destabilize insurance markets. The insurers relying most heavily on cost-sharing reduction payments could see their current 7 percent profit margins turn into 25 percent losses, on average.11 Since marketplace insurers would need to substantially raise premiums, there is a risk of further market instability as healthy individuals earning too much to be eligible for the ACA’s tax credits decide to drop out of the market entirely.12

Given the magnitude of their prospective losses, many insurance companies may opt to exit the ACA marketplaces altogether. Ending the cost-sharing reductions also would discourage insurers from participating in future years. Carriers must decide before June 21, 2017, whether they will sell plans on the marketplaces in 2018. Uncertainty surrounding the payment of cost-sharing reductions is already dissuading some insurers from participating.13

Ultimately, insurers might sue the federal government to recover cost-sharing reduction payments promised under the ACA. Such litigation would be expensive and time-consuming, with the legal costs likely passed on to consumers in the form of higher premiums and out-of-pocket costs.14

The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments

Controversy has emerged recently over federal payments to insurers under the Affordable Care Act (ACA) related to cost-sharing reductions for low-income enrollees in the ACA’s marketplaces.

The ACA requires insurers to offer plans with reduced patient cost-sharing (e.g., deductibles and copays) to marketplace enrollees with incomes 100-250% of the poverty level. The reduced cost-sharing is only available in silver-level plans, and the premiums are the same as standard silver plans.

To compensate for the added cost to insurers of the reduced cost-sharing, the federal governments makes payments directly to insurance companies. The Congressional Budget Office (CBO) estimates the cost of these payments at $7 billion in fiscal year 2017, rising to $10 billion in 2018 and $16 billion by 2027.

The U.S. House of Representatives sued the Secretary of the U.S. Department of Health and Human Services under the Obama Administration, challenging the legality of making the cost-sharing reduction (CSR) payments without an explicit appropriation. A district court judge has ruled in favor of the House, but the ruling was appealed by the Secretary and the payments were permitted to continue pending the appeal. The case is currently in abeyance, with status reports required every three months, starting May 22, 2017.

If the CSR payments end – either through a court order or through a unilateral decision by the Trump Administration, assuming the payments are not explicitly authorized in an appropriation by Congress – insurers would face significant revenue shortfalls this year and next.

Many insurers might react to the end of subsidy payments by exiting the ACA marketplaces. If insurers choose to remain in the marketplaces, they would need to raise premiums to offset the loss of the payments.

We have previously estimated that insurers would need to raise silver premiums by about 19% on average to compensate for the loss of CSR payments. Our assumption is that insurers would only increase silver premiums (if allowed to do so by regulators), since those are the only plans where cost-sharing reductions are available. The premium increases would be higher in states that have not expanded Medicaid (and lower in states that have), since there are a large number of marketplace enrollees in those states with incomes 100-138% of poverty who qualify for the largest cost-sharing reductions.

There would be a significant amount of uncertainty for insurers in setting premiums to offset the cost of cost-sharing reductions. For example, they would need to anticipate what share of enrollees in silver plans would be receiving reduced cost-sharing and at what level. Under a worst case scenario – where only people eligible for sharing reductions enrolled in silver plans – the required premium increase would be higher than 19%, and many insurers might request bigger rate hikes.

 

 

S&P report: ACA individual market is fragile, but not in a ‘death spiral’

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

http://www.fiercehealthcare.com/aca/s-p-report-aca-individual-market-fragile-but-no-death-spiral

Wall Street

Based on 2016 results and enrollment so far in 2017, the Affordable Care Act’s individual market is not in a “death spiral” as some have claimed—but it also isn’t on very stable footing, according to a new report from Wall Street analysts.

The report, from the ratings agency Standard & Poor’s, noted that 2016 brought the first signs that the ACA’s marketplaces could be manageable for insurers after a rough 2014 and 2015.

For example, the weighted average of the medical loss ratios of Blue Cross Blue Shield plans included in the analysts’ study dipped below 100% for the first time last year. That’s a positive sign, but insurers with MLRs above 90% still generally face an underwriting loss after factoring in administrative costs, suggesting more room for improvement.

This year, the analysts believe that meaningful premium increases, product and network changes, as well as “regulatory fine-tuning” of ACA rules, will get insurers closer to breaking even. But it will take another year or two of improvements for most to get to their target profitability levels.

Notably, the premium hikes insurers put in place didn’t result in a major drop in enrollment—and potential death spiral—the analysts wrote. In fact, open-enrollment signups dropped only slightly from 2016 to 2017, in part because the ACA’s subsidies increase along with premiums.

Looking ahead, the analysts expect premiums to rise in 2018, but “at a far lower clip” than they did this year. If the ACA’s rules stay largely intact, they predict low-single-digit growth in individual market membership next year, with most counties continuing to have at least one insurer. Recent insurer exits, however, might leave certain counties with no options on the exchanges.

But the analysts note that their predictions for the rest of this year and 2018 won’t hold if there is a major legislative overhaul of the marketplaces, like an ACA repeal. In addition, much depends on whether insurers will get clarification about cost-sharing subsidies, and whether the Trump administration will continue to conduct enrollment outreach and enforce the individual mandate.

The market still needs time to mature, the report argues, and “every time something new (and potentially disruptive) is thrown into the works, it impedes the individual market’s path to stability.”

Can Obamacare Survive Another Round in the Congressional Boxing Ring?

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

http://www.realclearhealth.com/articles/2017/04/25/can_obamacare_survive_another_round_in_the_congressional_boxing_ring_110564.html?utm_source=RC+Health+Morning+Scan&utm_campaign=2fcc8f4477-EMAIL_CAMPAIGN_2017_04_25&utm_medium=email&utm_term=0_b4baf6b587-2fcc8f4477-84752421

Can Obamacare Survive Another Round in the Congressional Boxing Ring?

The Affordable Care Act (ACA) has survived its biggest challenge to date with the failed attempt to repeal and replace by the GOP. But will it survive in the long run? Republican comments and President Trump’s many tweets would suggest the law is still doomed. It is hard to predict what will happen, but let’s examine some themes we are seeing so far to try to gain some insight:

One of the first things the GOP Congress wanted was to retract the cost sharing payments to insurers for low-income exchange plan members. Without these payments, insurers would lose even more money, driving many of them to not offer plans in the state exchanges. The jury is still out on whether the replacement bill’s failure will move the budget reconciliation process forward, but insurers have only two months to decide if they will provide a plan in the exchanges for 2018. If insurers do decide to stay in the exchanges, significant premium increases are very likely to help cover their costs. This will force many people who cannot afford the monthly cost to drop out of coverage. Either of these situations would push people back into the uninsured ranks where providers would lose that reimbursement revenue and drive up uncompensated care.

Loosening the individual mandate’s enforcement is another theme being discussed. New HHS Secretary Price has stated he plans to allow states to loosen the restrictions on waivers for the individual mandate. Combined with premium increases, this would allow people to opt out of coverage much more easily. The CBO report has stated 7 million people would have opted out of coverage if the American Health Care Act (AHCA) had been passed, since many people do not think they need it. Most of these people would be younger and healthier, creating higher costs for insurers, while driving up premiums and/or driving insurers to exit the exchange.

Secretary Price has also mentioned giving states the ability to set requirements to individuals to maintain Medicaid coverage, like applying for work. Studies have shown in the past this activity causes people to fall out of coverage. It is expected that this move would cause many to fall off the Medicaid roles and drive them to the uninsured ranks as well.

The federal deficit is upwards of $540 billion for 2017. And If the ACA does not change at all, then the federal government is expected to spend $1.2 trillion on Medicaid coverage alone through 2026. Previous CBO estimates indicate this would drive our yearly national deficit to over a trillion dollars in 10 years. The U.S. economy survives today because financial institutions buy treasury bonds to fund that deficit each year. But when deficits reach the heights predicted if the ACA remains entirely intact, and the national debt reaches a significant portion of our yearly GDP, bond sales could and likely will slow down. That means damage to the U.S. economy as it continues to stabilize post-recession.

A federal budget has been submitted that makes some spending cuts, but without the AHCA’s passage they pale when faced with the real problem of balancing our budget. This is not an indictment of policy to cover people with insurance, but simply a fact that our nation must find a way to balance our finances. There are many ways to cut cost, but the GOP seems fixated on cutting Medicaid spending as the key to accomplishing this.

We can only theorize what might become of the ACA, but looking at some of the themes and recent comments by the current administration, it would appear some things will change if not a complete revisit of the repeal and replace bill. Will those changes effectively kill the law since it will lack the ability to function as planned? Quite possibly, but only time will tell.

Change will happen. It will result in some sort of reimbursement cuts and very likely push more people back to the uninsured roles. Providers need to ready themselves, and start thinking about ways to improve productivity and reduce the cost to collect while increasing cash collections.

Shawn Yates serves as Director of Product Management for Ontario Systems, defining the company’s strategy for product and service offerings in the health care market. With over 20 years of experience managing self-pay receivables and collection operations for a top 20 health care system, Shawn’s background also includes working for a national outsourcing company helping clients manage their insurance and self-pay receivables, and Experian Health, the largest data and analytics company in the country.

The views above belong solely to the author.