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Medigap Enrollment and Consumer Protections Vary Across States

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Medigap Enrollment and Consumer Protections Vary Across States

One in four people in traditional Medicare (25 percent) had private, supplemental health insurance in 2015—also known as Medigap—to help cover their Medicare deductibles and cost-sharing requirements, as well as protect themselves against catastrophic expenses for Medicare-covered services. This issue brief provides an overview of Medigap enrollment and analyzes consumer protections under federal law and state regulations that can affect beneficiaries’ access to Medigap. In particular, this brief examines implications for older adults with pre-existing medical conditions who may be unable to purchase a Medigap policy or change their supplemental coverage after their initial open enrollment period.

Key Findings

  • The share of beneficiaries with Medigap varies widely by state—from 3 percent in Hawaii to 51 percent in Kansas.
  • Federal law provides limited consumer protections for adults ages 65 and older who want to purchase a supplemental Medigap policy—including, a one-time, 6-month open enrollment period that begins when they first enroll in Medicare Part B.
  • States have the flexibility to institute consumer protections for Medigap that go beyond the minimum federal standards. For example, 28 states require Medigap insurers to issue policies to eligible Medicare beneficiaries whose employer has changed their retiree health coverage benefits.
  • Only four states (CT, MA, ME, NY) require either continuous or annual guaranteed issue protections for Medigap for all beneficiaries in traditional Medicare ages 65 and older, regardless of medical history (Figure 1). Guaranteed issue protections prohibit insurers from denying a Medigap policy to eligible applicants, including people with pre-existing conditions, such as diabetes and heart disease.
  • In all other states and D.C., people who switch from a Medicare Advantage plan to traditional Medicare may be denied a Medigap policy due to a pre-existing condition, with few exceptions, such as if they move to a new area or are in a Medicare Advantage trial period.

Medigap is a key source of supplemental coverage for people in traditional Medicare

Medicare beneficiaries can choose to get their Medicare benefits (Parts A and B) through the traditional Medicare program or a Medicare Advantage plan, such as a Medicare HMO or PPO. Roughly two-thirds of Medicare beneficiaries are in traditional Medicare, and most have some form of supplemental health insurance coverage because Medicare’s benefit design includes substantial cost-sharing requirements, with no limit on out-of-pocket spending. Medicare requires a Part A deductible for hospitalizations ($1,340 in 2018), a separate deductible for most Part B services ($183), 20 percent coinsurance for many Part B (physician and outpatient) services, daily copayments for hospital stays that are longer than 60 days, and daily copays for extended stays in skilled nursing facilities.

To help with these expenses and limit their exposure to catastrophic out-of-pocket costs for Medicare-covered services, a quarter of beneficiaries in traditional Medicare (25 percent) had a private, supplemental insurance policy, known as Medigap in 2015 (Figure 2). Medigap serves as a key source of supplemental coverage for people in traditional Medicare who do not have supplemental employer- or union-sponsored retiree coverage or Medicaid, because their incomes and assets are too high to qualify. Medicare beneficiaries also purchase Medigap policies to make health care costs more predictable by spreading costs over the course of the year through monthly premium payments, and to reduce the paperwork burden associated with medical bills.1

Medigap policy benefits were standardized through the Omnibus Budget Reconciliation Act of 1990, which also included additional consumer protections discussed later in this issue brief.2 Of the 10 standard Medigap policies available to beneficiaries, Plan F is the most popular, accounting for over half of all policyholders in 2016, because it covers the Part A and B deductibles (as does Plan C), and all cost-sharing for Part A and B covered services.3

The share of all Medicare beneficiaries with Medigap coverage varies widely by state—from 3 percent in Hawaii to 51 percent in Kansas in 2016 (Figure 3, Appendix Table). In 20 states, at least one-quarter of all Medicare beneficiaries have a Medigap policy. States with higher Medigap enrollment tend to be in the Midwest and plains states, where relatively fewer beneficiaries are enrolled in Medicare Advantage plans.4

Medigap coverage is substantially more common for Medicare beneficiaries ages 65 and older than it is for younger Medicare beneficiaries, many of whom qualify for Medicare because of a long-term disability. Only 5 percent of traditional Medicare beneficiaries under age 65 had Medigap in 2015—considerably lower than the shares in older age brackets (Figure 4). The low enrollment in Medigap by beneficiaries under age 65 is likely due to the absence of federal guarantee issue requirements for younger Medicare beneficiaries with disabilities (discussed later in this brief) and higher rates of Medicaid coverage for people on Medicare with disabilities who tend to have relatively low incomes.

Federal law provides limited consumer protections for Medigap policies

In general, Medigap insurance is state regulated, but also subject to certain federal minimum requirements and consumer protections. For example, federal law requires Medigap plans to be standardized to make it easier for consumers to compare benefits and premiums across plans. Federal law also requires Medigap insurers to offer “guaranteed issue” policies to Medicare beneficiaries age 65 and older during the first six months of their enrollment in Medicare Part B and during other qualifying events (listed later in this brief). During these defined periods, Medigap insurers cannot deny a Medigap policy to any applicant based on factors such as age, gender, or health status. Further, during these periods, Medigap insurers cannot vary premiums based on an applicant’s pre-existing medical conditions (i.e., medical underwriting). However, under federal law, Medigap insurers may impose a waiting period of up to six months to cover services related to pre-existing conditions, only if the applicant did not have at least six months of prior continuous creditable coverage.5 As described later in this brief, states have the flexibility to institute Medigap consumer protections that go further than the minimum federal standards.

Federal law also imposes other consumer protections for Medigap policies. These include “guaranteed renewability” (with few exceptions), minimum medical loss ratios, limits on agent commissions to discourage “churning” of policies, and rules prohibiting Medigap policies to be sold to applicants with duplicate health coverage.6 (For further details on these requirements and a history of federal involvement in the Medigap market, see Medigap: Spotlight on Enrollment, Premiums, and Recent Trends, April 2013.)

When does federal law require guaranteed issue protections for Medigap?

Federal law provides guaranteed issue protections for Medigap policies during a one-time, six-month Medigap open enrollment period for beneficiaries ages 65 and older when enrolling in Medicare Part B, and for certain qualifying events. These limited circumstances include instances when Medicare beneficiaries involuntarily lose supplemental coverage, such as when their Medicare Advantage plan discontinues coverage in their area, or when their employers cancel their retiree coverage. Beneficiaries who are in a Medicare Advantage plan also have federal guaranteed issue rights when they move to a new area and can no longer access coverage from their Medicare Advantage plan. In these qualifying events, people ages 65 and older in Medicare generally have 63 days to apply for a supplemental Medigap policy under these federal guaranteed issue protections.

Federal law also requires that Medigap polices be sold with guaranteed issue rights during specified “trial” periods for Medicare Advantage plans. One of these trial periods is during the first year older adults enroll in Medicare. During that time, older adults can try a Medicare Advantage plan, but if they disenroll within the first year, they have guaranteed issue rights to purchase a Medigap policy under federal law. Another trial period applies to Medicare beneficiaries who cancel their Medigap policy to enroll in a Medicare Advantage plan. These beneficiaries have time-limited guaranteed issue rights to purchase their same Medigap policy if, within a year of signing up for a Medicare Advantage plan, they decide to disenroll to obtain coverage under traditional Medicare.

States have the flexibility to institute Medigap consumer protections that go further than the minimum federal standards, such as extending guaranteed issue requirements beyond the open enrollment period or adding other qualifying events that would require insurers to issue policies, as discussed later in this brief.

When does federal law not provide guaranteed issue protections for Medigap?

Broadly speaking, after 6 months of enrolling in Medicare Part B, older adults do not have federal guaranteed issue protections when applying for Medigap, except for specified qualifying events described earlier (Table 2). Therefore, older adults in traditional Medicare who miss the open enrollment period may, in most states, be subject to medical underwriting, and potentially denied a Medigap policy due to pre-existing conditions, or charged higher premiums due to their health status.

Medical Underwriting. Insurance companies that sell Medigap policies may refuse to sell a policy to an applicant with medical conditions, except under circumstances described above. The Text Box on this page provides examples of health conditions that may lead to the denial of Medigap policies, derived from underwriting manuals/guides from multiple insurance companies selling Medigap policies. Examples of conditions listed by insurers as reasons for policy denials include diabetes, heart disease, cancer, and being advised by a physician to have surgery, medical tests, treatments, or therapies.

Barriers for Beneficiaries Under Age 65 with Disabilities. Under federal law, Medigap insurers are not required to sell Medigap policies to the over 9 million Medicare beneficiaries who are under age of 65, many of whom qualify for Medicare based on a long-term disability. (However, when these beneficiaries turn age 65, federal law requires that they be eligible for the same six-month open enrollment period for Medigap that is available to new beneficiaries age 65 and older.)

Beneficiaries Choosing to Switch from Medicare Advantage to Traditional Medicare. There are no federal guarantee issue protections for individuals who choose to switch from a Medicare Advantage plan to traditional Medicare and apply for a Medigap policy, except under limited circumstances described in Table 2. In most states, therefore, beneficiaries who want to switch from their Medicare Advantage plan to traditional Medicare may be subject to medical underwriting and denied coverage when they apply for a Medigap policy because they do not have guaranteed issue rights, with some exceptions (e.g., if they have moved or if they are in a limited trial period). In states that allow medical underwriting for Medigap, Medicare Advantage enrollees with pre-existing conditions may find it too financially risky to switch to traditional Medicare if they are unable to purchase a Medigap policy. Without Medigap, they could be exposed to high cost-sharing requirements, mainly because traditional Medicare does not have a limit on out-of-pocket spending (in contrast to Medicare Advantage plans).7

Some states require guaranteed issue and other consumer protections for Medigap beyond the federal minimum requirements

States have the flexibility to institute Medigap consumer protections that go further than the minimum federal standards. While many states have used this flexibility to expand guarantee issue rights for Medigap under certain circumstances, 15 states and the District of Columbia have not, relying only the minimum guarantee issue requirements under federal law (Table 3).

Only four states require Medigap insurers to offer policies to Medicare beneficiaries age 65 and older (Figure 5). Three of these states (Connecticut, Massachusetts, and New York) have continuous open enrollment, with guaranteed issue rights throughout the year, and one state (Maine) requires insurers to issue Medigap Plan A (the least generous Medigap plan shown earlier in Table 1) during an annual one-month open enrollment period. Consistent with federal law, Medigap insurers in New York, Connecticut, and Maine may impose up to a six-month “waiting period” to cover services related to pre-existing conditions if the applicant did not have six months of continuous creditable coverage prior to purchasing a policy during the initial Medigap open enrollment period.8 Massachusetts prohibits pre-existing condition waiting periods for its Medicare supplement policies.

Many other states have expanded on the federal minimum standards in more narrow ways by requiring Medigap insurers to offer policies to eligible applicants during additional qualifying events (Table 3). For example, 28 states require Medigap insurers to issue policies when an applicant has an involuntary change in their employer (retiree) coverage. (This qualifying event is more expansive than federal law, which applies only when retiree coverage is completely eliminated.) Nine states provide guaranteed issue rights for applicants who lose their Medicaid eligibility.9

As noted above, federal law does not require Medigap insurers to issue policies to Medicare beneficiaries under the age of 65, most of whom qualify for Medicare because of a long-term disability. However, 31 states require insurers to provide at least one kind of Medigap policy to beneficiaries younger than age 65 (typically through an initial open enrollment period).10

Some states provide stronger consumer protections for Medigap premiums than others

States also have the flexibility to establish rules on whether or not Medigap premiums may be affected by factors such as a policyholder’s age, smoking status, gender, and residential area. Federal law allows states to alter premiums based on these factors, even during guaranteed issue open enrollment periods.

There are three different rating systems that can affect how Medigap insurers determine premiums: community rating, issue-age rating, or attained-age rating (defined in the Text box below). States can impose regulations on which of these rating systems are permitted or required for Medigap policies sold in their state. Of the three, community rating provides the strongest consumer protection for Medigap policies because it does not allow premiums to be based on the applicant or policyholder’s age or health status. However, insurers in states that require community rating may charge different premiums based on other factors, such as smoking status and residential area. In states that allow attained age rating, older applicants and policyholders have considerably less protection from higher premiums because premiums may increase at unpredictable rates as policyholders age.

Premium rating systems

Community rating: Insurers must charge all policyholders within a given plan type the same premium without regard to age (among people age 65 and older) or health status. Insurers can raise premiums only if they do so for all policyholders of the given plan type. Insurers may still adjust premiums based on other factors, including smoking status, gender, and residential area.

Issue-age rating: Insurers may vary premiums based on the age of the policyholder at the time of purchase, but cannot increase the policyholder’s premium automatically in later years based on his/her age. Additionally, insurers may charge different premiums based on other factors, including health status, smoking status, and residential area.

Attained-age rating: Insurers may vary premiums based on the age of the policyholder at the time of purchase and increase premiums for policyholders as they age. Additionally, insurers may charge different premiums based on other factors, including health status, smoking status, and residential area.

Currently, eight states (AR, CT, MA, ME, MN, NY, VT, and WA) require premiums to be community rated among policyholders ages 65 and older. This means that Medigap insurers cannot charge higher premiums to people because they are older or sicker, and therefore, must charge an 80-year old policyholder the same as a 70-year old policyholder regardless of health status (Table 4). Insurers may still adjust premiums based on other factors, including smoking status, gender, and residential area. A state’s community rating requirement does not, in itself, guarantee that applicants will be issued a policy in the state. However, as described earlier, four of the states that have community rating (CT, MA, ME, NY), have guarantee issue protections and require insurers to issue Medigap policies to eligible applicants either continuously during the year, or during an annual enrollment period.

The remaining 38 states and the District of Columbia do not require premiums to be community rated; therefore, Medigap premiums in these states may be subject to issue-age and attained-age rating systems, depending on state regulation. Medigap insurers are permitted to offer community rated policies in these states, but most do not.11 Additionally, Medigap insurers may increase premiums due to inflation, regardless of the premium rating system.12

Discussion

Medigap plays a major role in providing supplemental coverage for people in traditional Medicare, particularly among those who do not have an employer-sponsored retiree plan or do not qualify for cost-sharing assistance under Medicaid. Medigap helps beneficiaries budget for out-of-pocket expenses under traditional Medicare. Medigap also limits the financial exposure that beneficiaries would otherwise face due to the absence of an out-of-pocket limit under traditional Medicare.

Nonetheless, Medigap is not subject to the same federal guaranteed issue protections that apply to Medicare Advantage and Part D plans, with an annual open enrollment period. As a result, in most states, medical underwriting is permitted which means that beneficiaries with pre-existing conditions may be denied a Medigap policy due to their health status, except under limited circumstances.

Federal law requires Medigap guaranteed issue protections for people age 65 and older during the first six months of their Medicare Part B enrollment and during a “trial” Medicare Advantage enrollment period. Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life if their needs or priorities change.13 This constraint potentially affects the nearly 9 million beneficiaries in traditional Medicare with no supplemental coverage; it may also affect millions of Medicare Advantage plan enrollees who may incorrectly assume they will be able to purchase supplemental coverage if they choose to switch to traditional Medicare at some point during their many years on Medicare.

Only four states (CT, MA, NY, ME) require Medigap policies to be issued, either continuously or for one month per year for all Medicare beneficiaries age 65 and older. Policymakers could consider a number of other policy options to broaden access to Medigap. One approach could be to require annual Medigap open enrollment periods, as is the case with Medicare Advantage and Part D plans, making Medigap available to all applicants without regard to medical history during this period. Another option would be to make voluntary disenrollment from a Medicare Advantage plan a qualifying event with guaranteed issue rights for Medigap, recognizing the presence of beneficiaries’ previous “creditable” coverage. For Medicare beneficiaries younger than age 65, policymakers could consider adopting federal guaranteed issue protections, building on rules already established by the majority of states.

On the one hand, these expanded guaranteed issue protections would increase beneficiaries’ access to Medigap, especially for people with pre-existing medical conditions. They would also treat Medigap similarly to Medicare Advantage in this regard, and make it easier for older adults to switch between Medicare Advantage and traditional Medicare if their Medicare Advantage plan is not serving their needs in later life. On the other hand, broader guaranteed issue policies could result in some beneficiaries waiting until they have a serious health problem before purchasing Medigap coverage, which would likely increase premiums for all Medigap policyholders. A different approach altogether would be to minimize the need for supplemental coverage in Medicare by adding an out-of-pocket limit to traditional Medicare.14

Ongoing policy discussions affecting Medicare and its benefit design could provide an opportunity to consider various ways to enhance federal consumer protections for supplemental coverage or manage beneficiary exposure to high out-of-pocket costs. As older adults age on to Medicare, they would be well-advised to understand the Medigap rules where they live, and the trade-offs involved when making coverage decisions.

 

 

 

 

 

 

Kavanaugh Supreme Court Fight Will Be All About Health Care

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https://www.thefiscaltimes.com/2018/07/10/Kavanaugh-Supreme-Court-Fight-Will-Be-All-About-Health-Care

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he fight over President Trump’s pick of Appeals Court Judge Brett Kavanaugh to the Supreme Court is on, with Democrats launching what The Washington Post called “an all-out blitz” to defeat the nomination.

So get ready to hear a lot about health care in the coming days.

The Washington Post’s Dana Milbank notes that former Republican senator Jon Kyl, now a lobbyist for the pharmaceuticals industry, has been tapped to guide Kavanaugh’s path through the Senate. Why? Because by picking Kavanaugh, “Trump has guaranteed that health care will be at the center of the confirmation fight,” Milbank says.

Democrats welcome that fight, even if they have little chance of actually blocking the nomination. “The liberal base is fired up about abortion rights, but Senate Democratic Leader Charles Schumer (N.Y.) will seek to emphasize access to affordable health care as much as Roe v. Wade in the battle over the Supreme Court,” The Hill’s Alexander Bolton reports.

Focusing on health care might make sense for Democrats in a number of ways:

  • It reinforces the party’s preferred midterm election messaging in an area where voters say they trust Democrats more than Republicans.
  • Framing women’s reproductive rights as a matter of access to health care will be less polarizing in red states where seats are at stake in November, Bolton writes.
  • Playing up access to affordable health care may also put more pressure on Republican Sens. Susan Collins of Maine and Lisa Murkowski of Alaska, both of whom voted against Obamacare repeal last year.

If confirmed, Kavanaugh may get to weigh in on any of a number of cases with the potential to reshape health policy well beyond abortion rights. Despite his long legal record, “many of his health-related decisions are open to parsing from either side of the aisle and don’t actually provide a clear insight into where he’d stand on the Supreme Court,” The Washington Post’s Colby Itkowitz says.

Here are some key issues and cases that could be decided by the Supreme Court and Kavanaugh:

Obamacare’s protections for people with pre-existing medical conditions: Americans overwhelmingly support keeping these protections in place, according to a Kaiser Family Foundation poll from last month, but Trump’s Justice Department has asked a federal court to rule that those provisions of Obamacare are invalid. The case will soon be heard in a district court in Texas and could make its way to the Supreme Court before long. Sen. Joe Manchin of West Virginia, one of the few Democrats who might back Kavanaugh, said in a statement that he wants to hear where the judge stands on the ACA protections for those with pre-existing conditions before deciding whether to confirm him.

Medicaid: A federal court late last month blocked Kentucky’s plan to introduce work requirements for Medicaid recipients. The Trump administration is likely to appeal the ruling. Other states are also implementing work requirements. “As more states experiment with these programs and the cases wind their way through the courts, the Supreme Court may weigh in and shape how low-income Americans access Medicaid across the country,” Arielle Kane, director of health care at the Progressive Policy Institute, writes at the New York Daily News. The high court could also be asked to consider whether private health care providers can sue over Medicaid reimbursement rates, a question that could open the door to state funding cuts.

Risk adjustment payments to insurers: The Trump administration just froze billions of dollars of payments to insurers who enroll costlier-than-expected patients. The payments come from money collected from other insurers in the individual market. Legal challenges involving these payments are making their way through the courts. In the meantime, “the insurers in the individual market must manage uncertainty and constant change — resulting in higher prices for health care consumers,” Kane writes.

Industry consolidation: “Last year, four of the largest insurers tried, and failed, to merge into two. This year, CVS has proposed merging with Aetna, Amazon has acquired PillPack, and Walmart is seeking to combine with Humana,” Kane writes. “This so called ‘vertical integration’ raises questions about monopolies, competition and health-care pricing. It is likely that at some point courts will weigh in.”

 

 

Five Worrisome Trends in Healthcare

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https://www.medpagetoday.com/publichealthpolicy/healthpolicy/72001?pop=0&ba=1&xid=fb-md-pcp&trw=no

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A reckoning is coming, outgoing BlueCross executive says.

A reckoning is coming to American healthcare, said Chester Burrell, outgoing CEO of the CareFirst BlueCross BlueShield health plan, here at the annual meeting of the National Hispanic Medical Association.

Burrell, speaking on Friday, told the audience there are five things physicians should worry about, “because they worry me”:

1. The effects of the recently passed tax bill. “If the full effect of this tax cut is experienced, then the federal debt will go above 100% of GDP [gross domestic product] and will become the highest it’s been since World War II,” said Burrell. That may be OK while the economy is strong, “but we’ve got a huge problem if it ever turns and goes back into recession mode,” he said. “This will stimulate higher interest rates, and higher interest rates will crowd out funding in the federal government for initiatives that are needed,” including those in healthcare.

Burrell noted that 74 million people are currently covered by Medicaid, 60 million by Medicare, and 10 million by the Children’s Health Insurance Program (CHIP), while another 10 million people are getting federally subsidized health insurance through the Affordable Care Act’s (ACA’s) insurance exchanges. “What happens when interest’s demand on federal revenue starts to crowd out future investment in these government programs that provide healthcare for tens of millions of Americans?”

2. The increasing obesity problem. “Thirty percent of the U.S. population is obese; 70% of the total population are either obese or overweight,” said Burrell. “There is an epidemic of diabetes, heart disease, and coronary artery disease coming from those demographics, and Baby Boomers will see these things in full flower in the next 10 years as they move fully into Medicare.”

3. The “congealing” of the U.S. healthcare system. This is occurring in two ways, Burrell said. First, “you’ll see large integrated delivery systems [being] built around academic medical centers — very good quality care [but] 50%-100% more expensive than the community average.”

To see how this affects patients, take a family of four — a 40-year-old dad, 33-year-old mom, and two teenage kids — who are buying a health insurance policy from CareFirst via the ACA exchange, with no subsidy. “The cost for their premium and deductibles, copays, and coinsurance [would be] $33,000,” he said. But if all of the care were provided by academic medical centers? “$60,000,” he said. “What these big systems are doing is consolidating community hospitals and independent physician groups, and creating oligopolies.”

Another way the system is “congealing” is the emergence of specialty practices that are backed by private equity companies, said Burrell. “The largest urology group in our area was bought by a private equity firm. How do they make money? They increase fees. There is not an issue on quality but there is a profound issue on costs.”

4. The undermining of the private healthcare market. “Just recently, we have gotten rid of the individual mandate, and the [cost-sharing reduction] subsidies that were [expected to be] in the omnibus bill … were taken out of the bill,” he said. And state governments are now developing alternatives to the ACA such as short-term duration insurance policies — originally designed to last only 3 months but now being pushed up to a year, with the possibility of renewal — that don’t have to adhere to ACA coverage requirements, said Burrell.

5. The lackluster performance of new payment models. “Despite the innovation fostering under [Center for Medicare & Medicaid Innovation] programs — the whole idea was to create a series of initiatives that might show the wave of the future — ACOs [accountable care organizations] and the like don’t show the promise intended for them, and there is no new model one could say is demonstrably more successful,” he said.

“So beware — there’s a reckoning coming,” Burrell said. “Maybe change occurs only when there is a rip-roaring crisis; we’re coming to it.” Part of the issue is cost: “As carbon dioxide is to global warming, cost is to healthcare. We deal with it every day … We face a future where cutbacks in funding could dramatically affect accessibility of care.”

“Does that mean we move to move single-payer, some major repositioning?” he said. “I don’t know, but in 35 years in this field, I’ve never experienced a time quite like this … Be vigilant, be involved, be committed to serving these populations.”

 

 

Preexisting Conditions Can Define Your Future

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http://www.philly.com/philly/health/health-costs/pre-existing-condition-protections-aca-lawsuit-20180628.html

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How Policy, Business Decisions in Iowa Led to Higher Premiums

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https://www.commonwealthfund.org/blog/2018/policy-decisions-iowa?omnicid=EALERT%%jobid%%&mid=%%emailaddr%%

Map of Iowa where premiums are higher due to policy decisions

This year, Iowa’s legislature took the extraordinary step of abdicating the state’s authority to regulate health insurance products. The bill, enacted in April, exempts health plans offered by the state’s Farm Bureau from state and federal insurance regulation, including Affordable Care Act (ACA) provisions designed to protect people with preexisting conditions and provide a minimum standard of benefits.

Proponents argue that such a law is needed to provide individual market consumers with cheaper health plan options than available under the ACA. Critics point out that younger, healthier consumers are most likely to benefit from these plans. And while details haven’t been provided yet, the Farm Bureau plans are expected to be medically underwritten, and not cover the ACA’s minimum set of benefits. As a result, older Iowans, those with preexisting conditions, and those who need comprehensive coverage are unlikely to find these plans affordable or attractive. And many could be denied enrollment outright. As enrollment in the ACA-compliant individual market becomes older and sicker, marketplace consumers who do not qualify for the ACA’s income-related premium subsidies will face increasingly higher premiums.

Iowa’s Farm Bureau statute is making a bad situation worse for the state’s individual market. Thanks to a number of decisions by state policymakers and the dominant insurance company – Wellmark Blue Cross Blue Shield – premiums in the state’s individual market are already among the highest in the country, with an average annual marketplace plan premium in excess of $10,000 in 2018.

A Study of Market Failure: Iowa’s Individual Health Insurance Market

The current dismal state of the ACA individual market in Iowa was not a foregone conclusion. In 2014, when the marketplaces launched, Iowa had four insurers competing in the ACA’s marketplace. In 2018, only one insurer is selling ACA-compliant health plans; it agreed to do so only after implementing an average 50 percent increase to unsubsidized premiums.

Iowa’s marketplace enrollment has also lagged that of other states. As of 2016, only 20 percent of eligible Iowans had enrolled (by comparison, that number was 40 percent in Illinois, 43 percent in Missouri, and 57 percent in Maine). Iowa is an outlier for a critical reason. Wellmark BlueCross BlueShield declined to participate in the marketplace for the first three years, entered only briefly in 2017 and then declined to participate in 2018, but is returning to the market in 2019. The insurer also maintained a large block of pre-ACA grandfathered and transitional, or “grandmothered,” health plans (see table).

Because the enrollees in these plans must pass a health screen before being allowed to enroll, they are relatively healthy. Because Wellmark was able to hang on to these healthy enrollees, the pool of people available for the ACA-compliant market was much smaller and sicker than it otherwise would have been.

Affordable Care Act Grandfathered and Grandmothered Health Plans
Grandfathered health plans Policies in effect before the March 2010  enactment of the ACA;  not subject to ACA standards and protections. Although these policies can be renewed indefinitely as long as they do not undergo substantial changes, they can’t be newly issued.
Grandmothered (transitional) health plans Policies issued after the ACA’s 2010 enactment but before 2014. Policies are not required to meet critical ACA protections.

Grandfathered and Grandmothered Policies: Policy and Business Choices with Long-Term Consequences

Due to the transitional nature of the individual market and the high administrative costs of maintaining grandfathered health plans, many insurers — other than Wellmark — discontinued these products over time. And unlike several states that prohibited these policies in order to ensure a healthier, more stable individual market, Iowa’s leadership embraced the Obama administration’s decision to allow the renewal of grandmothered health plans. Iowa stands out even among states that did not ban such plans:  an estimated 38,000 people remained in grandmothered policies as late as 2018. Indeed, approximately 60 percent of Iowans buying insurance on their own stayed with pre-ACA grandfathered or grandmothered health plans.

Left with a smaller and sicker pool of enrollees than they had projected, it is therefore not surprising that the insurers remaining in the market needed significant premium increases. The premium hike implemented in 2018 likely drove as many as 26,000 Iowans to drop their coverage this year.

Enrollment and Premiums Had Iowa Taken a Different Path

What if Iowa had taken a different path? If Wellmark had, like many other insurers, discontinued its grandfathered policies, and if the state had prohibited grandmothered plans, the individual market would be a lot healthier than it is today. In fact, doing so would have added up to 85,000 people to Iowa’s ACA-compliant market, according to a new estimate by Wakely Consulting Group. Those added enrollees, because they are relatively healthy, would have reduced average premiums for ACA-compliant plans by up to 18 percent (see table).1

Enrollment and Premiums in ACA-Compliant Market Due to Improved Risk Pool
  Without Grandfathered Plans Without Grandmothered Plans Without Grandfathered or Grandmothered Plans
Total change in ACA-compliant enrollment +25,000 to 40,000 +30,000 to 45,000 +55,000 to 85,000
Change in premiums -5% to -12% -5% to -12% -8% to -18%

Analysis by Wakely Consulting Group. Numbers have been rounded.

Looking Ahead

Iowa’s experience offers important lessons. The more the individual market is segmented between healthy and the less-healthy consumers, the more likely unsubsidized enrollees are to face unaffordable premiums. Federal proposals such as those to expand the availability of short-term and association health plans, to the extent they are not limited by state policies, could result in more state individual markets resembling Iowa’s. The primary losers in such a scenario are the working middle-class consumers: entrepreneurs who run their own businesses, freelancers and consultants, farmers and ranchers, and early retirees who earn too much to qualify for the ACA’s premium subsidies.

State leaders can protect these families by adopting policies that will expand the risk pool and maintain a balance between healthy and less-healthy enrollees. A number of states have already done so, through state-level reinsurance programs, expanded annual enrollment opportunities, and limits on short-term and association health plans. It’s not too late for other states to follow their lead.

 

 

Getting Ready for Health Reform 2020: What Past Presidential Campaigns Can Teach Us

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https://www.commonwealthfund.org/publications/fund-reports/2018/jun/getting-ready-health-reform-2020-presidential?omnicid=EALERT%%jobid%%&mid=%%emailaddr%%

Getting Ready for Health Reform 2020

Abstract

  • Issue: The candidates for the 2020 presidential election are likely to emerge within a year, along with their campaign plans. Such plans will include, if not feature, health policy proposals, given this issue’s general significance as well as the ongoing debate over the Affordable Care Act.
  • Goal: To explain why campaign plans matter, review the health policy components of past presidential campaign platforms, and discuss the likely 2020 campaign health reform plans.
  • Methods: Review of relevant reports, data, party platforms, and policy documents.
  • Findings and Conclusions: Proposals related to health care have grown in scope in both parties’ presidential platforms over the past century and affect both agendas and assessments of a president’s success. Continued controversy over the Affordable Care Act, potential reversals in gains in coverage and affordability, and voters’ concern suggest a central role for health policy in the 2020 election. Republicans will most likely continue to advance devolution, deregulation, and capped federal financing, while Democrats will likely overlay their support of the Affordable Care Act with some type of Medicare-based public plan option. The plans’ contours and specifics will be developed in the months ahead.

This report is the first in a series on health reform in the 2020 election campaign. Future papers will delve into key reform design questions that candidates will face, focusing on such topics as: ways to maximize health care affordability and value; how to structure health plan choices for individuals in ways that improve system outcomes; and how the experience of other nations’ health systems can inform state block-grant and public-plan proposals.

Introduction

During the 2020 presidential campaign, which begins in earnest at the end of 2018, we are sure to hear competing visions for the U.S. health system. Since 1988, health care has been among the most important issues in presidential elections.1 This is due, in part, to the size of the health system. In 2018, federal health spending comprises a larger share of the economy (5.3%) than Social Security payments (4.9%) or the defense budget (3.1%).2 Moreover, for the past decade, partisan disagreement over the Affordable Care Act (ACA) has dominated the health policy debate. If health care plays a significant role in the 2018 midterm elections, as some early polls suggest it will,3 the topic is more likely to play a central role in the 2020 election.

This report on health reform plans focuses on policies related to health insurance coverage, private insurance regulation, Medicare and Medicaid, supply, and tax policy. It explains why campaign plans are relevant, their history since 1940, the landscape for the 2020 election, and probable Republican and Democratic reform plans. The Republican campaign platform is likely to feature policies like those in the Graham-Cassidy-Heller-Johnson amendment: a state block grant with few insurance rules, replacing the ACA’s coverage expansion. The Democratic platform will probably defend, improve, and supplement the ACA with some type of public (Medicare-like) health plan. The exact contours and details of these plans have yet to be set.

Importance of Campaign Plans

Campaign promises, contrary to conventional wisdom, matter.4 During elections, they tell voters each party’s direction on major topics (e.g., health coverage as a choice or a right in 1992). In some cases, candidates or party platforms include detailed policies (reinsurance in Republicans’ 1956 platform, prospective payment in Democrats’ 1976 platform). Campaign plans tend to be used to solidify party unity, especially in the wake of divisive primaries (2016, e.g.).5 Election outcomes are affected by such factors as the state of the economy, incumbency, and political competition rather than specific issues.6 That said, some exit polls suggest that candidates’ views on health policy can affect election outcomes.7

Campaign plans also help set the agenda for a president, especially in the year after an election. Lyndon B. Johnson told his health advisers, “Every day while I’m in office, I’m gonna lose votes. . . . We need . . . [Medicare] fast.”8 Legislation supported by his administration was introduced before his inauguration and signed into law 191 days after it (Exhibit 1). Bill Clinton, having learned from his failure to advance health reform in his first term, signed the bill that created the Children’s Health Insurance Program (CHIP) 197 days after his second inauguration. Barack Obama sought to sign health reform into law in the first year of his first term, but the effort spilled into his second year; he signed the ACA into law on his 427th day in office. These presidents, along with Harry Truman, initiated their attempts at health reform shortly after taking office.

In addition, campaign plans are used by supporters and the press to hold presidents accountable. For instance, candidate Obama’s promises were the yardstick against which his first 100 days,9 first year,10 reelection prospects,11 and presidency were measured.12 Though only 4 percent of likely voters believe that most politicians keep their promises, analyses suggest that roughly two-thirds of campaign promises were kept by presidents from 1968 through the Obama years.13

Health as a Campaign Issue (1912–2016)

The United States has had public health policies since the country’s founding, with its policy on health coverage, quality, and affordability emerging in the twentieth century. Teddy Roosevelt supported national health insurance as part of his 1912 Bull Moose Party presidential bid.14 Franklin Delano Roosevelt included “the right to adequate medical care and the opportunity to achieve and enjoy good health” in his 1944 State of the Union address, although it was not mentioned in the 1944 Democratic platform.15 Harry Truman is generally credited with being the first president to embrace comprehensive reform. He proposed national health insurance in 1945, seven months after F.D.R.’s death, and campaigned on it in 1948 as part of a program that would become known as the Fair Deal, even though it was not a plank in the Democratic platform. Legislation was blocked, however, primarily by the American Medical Association (AMA), which claimed that government sponsoring or supporting expanded health coverage would create “socialized medicine.”16 Health policy became a regular part of presidential candidates’ party platforms beginning about this time (Exhibit 2).

After Truman’s failure, the next set of presidential candidates supported expanding capacity (e.g., workforce training, construction of hospitals and clinics) and making targeted coverage improvements. In 1960, John F. Kennedy campaigned on a version of Medicare legislation: extending Social Security to include hospital coverage for seniors. It was opposed by the AMA as well, whose spokesman, the actor Ronald Reagan, claimed socialized medicine would eventually limit freedom and democracy.17 It took the death of Kennedy, the landslide Democratic victory in 1964, and persistence by Lyndon B. Johnson to enact Medicare and Medicaid, in 1965. This was about 20 years after Truman introduced his proposal; President Johnson issued the first Medicare card to former President Truman.

Shortly after implementation of Medicare and Medicaid, how best to address rising health care costs became a staple subject in presidential campaigns. Between 1960 and 1990, the share of the economy (gross domestic product) spent on health care rose by about 30 percent each decade, with the public share of spending growing as well (Exhibit 3). In his 1968 campaign, Richard Nixon raised concerns about medical inflation, and subsequently proposed his own health reform, which included, among other policies, a requirement for employers to offer coverage (i.e., an employer mandate).18 Nixon’s proposal was eclipsed by Watergate, as Jimmy Carter’s health reform promises were tabled by economic concerns. Presidents and candidates in the 1980s set their sights on incremental health reforms.19

In 1991, comprehensive health reform helped Harris Wofford unexpectedly win a Pennsylvania Senate race. In 1992, it ranked as the second most important issue to voters.20 Democratic candidates vied over health reform in the 1992 primaries, with Bill Clinton embracing an employer “pay or play” mandate. George H. W. Bush developed his own plan, which included premium tax credits and health insurance reforms. Five days after his inauguration, President Clinton tasked the first lady, Hillary Clinton, with helping to develop health care legislation in the first 100 days. Yet, mostly because he prioritized economic and trade policy, Clinton did not address a joint session of Congress until September and did not send his bill to Congress until November of 1993. Key stakeholders (including the AMA and the Health Insurance Association of America) initially supported but ultimately opposed the legislation. In September 1994, the Senate Democratic leadership declared it could not pass a bill.21 Less than two months later, Democrats lost their majorities in the House and the Senate, and did not regain them for over a decade. This created a view that comprehensive reform of the complex health system was politically impossible.22 Indeed, presidential candidates in 1996, 2000, and 2004 did not emphasize major health policies. That said, by 2004, health system problems had escalated and, at least on paper, the candidates’ plans addressing them had expanded.23

In 2008, health reform was a dominant issue in the Democratic primaries and platform. Hillary Clinton supported a requirement for people who could afford it to have coverage (i.e., the individual mandate). Barack Obama limited his support to a requirement that all children be insured. Both candidates supported an employer mandate.24 John McCain countered with a plan whose scope exceeded those of many Republican predecessors: it would cap the tax break for employer health benefits and use the savings to fund premium tax credits for the individual market.25 Attention to health reform waned during the general election, as the economy faltered. Even so, the stage was set for a legislative battle. President Obama opened the door to his rivals’ ideas at a White House summit in March 2009.26 After more than a year of effort, he signed the Affordable Care Act into law.27 Obama said that he did so “for all the leaders who took up this cause through the generations — from Teddy Roosevelt to Franklin Roosevelt, from Harry Truman, to Lyndon Johnson, from Bill and Hillary Clinton, to one of the deans who’s been fighting this so long, John Dingell, to Senator Ted Kennedy.”28

Nonetheless, the partisan fight over the ACA extended into the 2012 and 2016 presidential elections. Despite the ACA’s resemblance to his own 2006 reform plan for Massachusetts, Mitt Romney, as the 2012 Republican presidential candidate, vowed to repeal the ACA before its major provisions were implemented; Republicans would subsequently replace it with conservative ideas (mostly to be developed). Four years later, even though the health system landscape had dramatically changed following the ACA’s implementation, the Republicans’ position had not altered.29 Candidate Donald Trump joined his primary rivals in pledging to “repeal and replace Obamacare” (he also embraced unorthodox ideas such as Medicare negotiation for drug prices). Democratic candidate Hillary Clinton proposed a wide array of improvements to the ACA rather than a wholesale replacement of it with a “Medicare for All” single-payer proposal, as did her Democratic primary rival, Bernie Sanders.30 The intra-party differences among primary candidates in 2016 increased attention to the party platforms relative to previous elections.31 But despite continued voter interest (Exhibit 4), differences in health policy were not credited with determining the outcome of the 2016 election.

Setting the Stage for 2020

President Trump’s attempt to fulfill his campaign promise to repeal and replace the ACA dominated the 2017 congressional agenda. In January 2017, the Republican Congress authorized special voting rules toward this effort, while President Obama was still in office. On the day of his inauguration, Trump signed an executive order to reduce the burden of the law as his administration sought its prompt repeal.32 Yet among other factors,33 the lack of a hammered-out, vetted, and agreed-upon replacement plan crippled the Republicans’ progress.34 Speaker Paul Ryan had to take his bill off the House floor on March 24, 2017, because it lacked the necessary votes; the House passed a modified bill on May 4. Senator Mitch McConnell’s multiple attempts in June and July to secure a majority in favor of his version of a health care bill failed on July 26, when Senator John McCain cast the deciding vote against it. In September, Senators Lindsey Graham, Bill Cassidy, Dean Heller, and Ron Johnson failed to get 50 cosponsors for their amendment, the prerequisite for its being brought to the Senate floor.35 The Republicans subsequently turned to tax legislation and, in it, zeroed out the tax assessment associated with the ACA’s individual mandate. At the bill’s signing on December 22, Trump claimed that “Obamacare has been repealed,”36 despite evidence to the contrary.37

A different type of legislative effort began in mid-2017: bipartisan attempts to improve the short-run stability of the ACA’s individual market. This was in part necessitated by the Trump administration’s actions pursuant to the Inauguration Day executive order: reductions in education efforts, marketing funding, and premium tax credits, among others.38 On October 12, 2017, the president signed a second ACA executive order, directing agencies to authorize the sale of health plans subject to fewer regulatory requirements.39 On the same day, his administration halted federal funding for cost-sharing reductions, a form of subsidy, claiming the ACA lacked an appropriation to make such payments. Concerns that these actions would increase premiums, reduce insurer participation, and discourage enrollment prompted coalitions of bipartisan lawmakers to introduce bills. Most notable was a bill by Senators Lamar Alexander and Patty Murray; their proposal, released October 18, 2017, had 12 Republican cosponsors and implicit support from all Democrats, giving it the 60 votes needed in the Senate to overcome a filibuster.40 Yet the version that Senator McConnell ultimately brought to the floor for a vote, in March 2018, included changes that repelled Democrats, preventing its passage.41 Partisans on both sides have blamed this failure, in part, for emerging increases in health insurance premiums.

Indeed, benchmark premiums in the health insurance marketplaces rose by an average of over 30 percent in 2018 and are projected to increase by 15 percent in 2019, largely because of policy changes.42 Some data suggest that the growth in health care costs may be accelerating as well.43 This may have contributed to an increase in the number of uninsured Americans. One survey found that the number of uninsured adults, after falling to a record low in 2016, had risen by about 4 million by early 2018.44 These statistics could heighten candidates’ interest in health policy in 2020.

Public opinion, too, could help health reform gain traction. Tracking polls suggest that concerns about health care persist, with 55 percent of Americans worrying a great deal about the availability and affordability of health care, according to a poll from March 2018.45 Interestingly, while the partisan differences of opinion on the ACA continue, overall support for the ACA has risen, reaching a record high in February 2018 (Exhibit 5).

This concern about health care has entered the 2018 midterm election debate. It is currently a top midterm issue among registered voters, a close second to jobs and the economy.46 Some House Republicans who formerly highlighted their promise to repeal and replace the ACA no longer do so in light of the failed effort of 2017.47 Democrats, in contrast to previous elections, have embraced the ACA, unifying around its defense in the face of Republican “sabotage.”48 The debate also has been rekindled by Trump’s decision to abandon legal defense of key parts of the ACA.49 Regardless of what happens in the courts, this signifies his antipathy toward the law. Barring a midterm surprise, the next Congress is unlikely to succeed where the last one failed. As such, “repeal and replace” would be a repeat promise in Trump’s reelection campaign.

Likely 2020 Campaign Plans

Against this backdrop, presidential primary candidates and the political parties will forge their health care promises, plans, and platforms. Common threads from past elections are likely to be woven into the 2020 debate. The different parties’ views of the balance between markets and government have long defined their health reform proposals.50 Republicans will most likely still be against the ACA as well as uncapped Medicare and Medicaid spending, and for market- and consumer-driven solutions. Democrats will most likely blame Republicans’ deregulation for rising health care costs; defend the ACA, Medicare, and Medicaid; and advocate for a greater role for government in delivering health coverage and setting payment policy. Potential policies for inclusion in candidates’ plans have been introduced in Congress (Exhibit 6). But major questions remain, such as: how will these campaign plans structure choices for individuals and employers, promote efficient and high-quality care, and learn from the experience of local, state, national, and international systems?

Likely Republican Campaign Plan: Replace the ACA with Devolution and Deregulation

President Trump has indicated he will run for reelection in 2020.51 His fiscal year 2019 budget included a proposal “modeled closely after the Graham-Cassidy-Heller-Johnson (GCHJ) bill.” It would repeal federal financing for the ACA’s Medicaid expansion and health insurance marketplaces, using most of the savings for a state block grant for health care services. It would also impose a federal per-enrollee spending cap on the traditional Medicaid program. States could waive the ACA’s insurance reforms.52 The congressional bill also would repeal the employer shared responsibility provision (i.e., the employer mandate) and significantly expand tax breaks for health savings accounts, among other policies.53 The framework for this proposal — repealing parts of the ACA, replacing them with state block grants, reducing regulation, and expanding tax breaks — is similar to the 2016 Republican platform.

Trump may continue to express interest in lowering prescription drug costs. In 2016 and early 2017, he supported letting Medicare negotiate drug prices54 — a policy excluded from the 2016 Republican platform and his proposals as president. His 2019 budget seeks legislation primarily targeting insurers and other intermediaries that often keep a share of negotiated discounts for themselves.55 On May 11, 2018, he released a “blueprint” to tackle drug costs, including additional executive actions and ideas for consideration. Polls suggest that prescription drug costs rank high among health care concerns.56

One policy initiative in the recent Republican platforms but not embraced by the president is Medicare reform. The idea of converting Medicare’s defined benefit into a defined contribution program and raising the eligibility age to 67 was supported by Vice President Mike Pence when he was a member of Congress and by Speaker of the House Paul Ryan.57 Major Medicare changes were excluded from the 2017 ACA repeal and replace proposals. In contrast, versions of Medicaid block grant proposals appeared in various bills, including the GCHJ amendment, as well as numerous Republican presidential platforms.

Historically, presidents running for reelection have limited competition in primaries. Those challengers, by definition, emphasize their differences with the incumbent, which may include policy. It may be that John Kasich will run on maintaining the ACA Medicaid expansion but otherwise reforming the program (his position as governor of Ohio throughout 2017). Or, Rand Paul could campaign on his plan to repeal even more of the ACA than the Republicans’ 2017 bills attempted to do. Incumbents tend to have slimmer campaign platforms than their opponents in general and primary elections, since their budget proposals, other legislative proposals, and executive actions fill the policy space (see Reagan, Clinton, George W. Bush, Obama). Exceptions include George H. W. Bush, who in 1992 developed a plan given voters’ concerns about health; and Nixon, who offered a proposal for health reform at the end of his first term.

Likely Democratic Campaign Plan: Improve the ACA and Add a Public Plan

It is possible and maybe probable that the ultimate Democratic Party platform in 2020 will resemble that of 2016: build on the ACA and include some sort of public plan option. Legislation has been introduced during this congressional session that builds on the law by extending premium tax credits to higher-income marketplace enrollees (e.g., Feinstein, S. 1307), lowering deductibles and copayments for middle-income marketplace enrollees (e.g., Shaheen, S. 1462), providing marketplace insurers with reinsurance (e.g., Carper, S. 1354), and strengthening regulation of private market insurance (e.g., Warren, S. 2582). Some proposals aim to increase enrollment following the effective repeal of the individual mandate, by, for example, raising federal funding for education and outreach, and testing automatic enrollment of potentially eligible uninsured people (e.g., Pallone, H.R. 5155). These proposals would have different effects on health insurance coverage, premiums, and federal budget costs.58

The Democrats will inevitably discuss a public plan in their platform, although the primary contenders will most likely disagree on its scale (e.g., eligibility) and design (e.g., payment rates, benefits).59 In September 2017, Senator Bernie Sanders introduced the Medicare for All Act (S. 1804). It would largely replace private insurance and Medicaid with a Medicare-like program with generous benefits and taxpayer financing. “Medicare for more” proposals have also been introduced: Medicare Part E (Merkley, S. 2708), an option for individuals and small and large businesses; Medicare X (Bennet, S. 1970), which is available starting in areas with little insurance competition or provider shortages; and a Medicare buy-in option, for people ages 50 to 65 (Higgins, H.R. 3748). A Medicaid option (Schatz, S. 2001), similar to Medicare Part E, offers a public plan choice to all privately insured people, aiming to capitalize on the recent popularity of that program. Publicly sponsored insurance plans have long been included in Democratic presidents’ platforms, although the government’s role has ranged from regulating the private plans (Carter, Clinton) to sponsoring them (Truman, Obama). It may be that the candidate who prevails in the primaries will determine whether the Democratic platform becomes “Medicare for all” or “Medicare for more.”

This may be the extent of Medicare policies in the 2020 Democratic platform. Relatively high satisfaction and low cost growth in Medicare have limited Democratic interest in Medicare policy changes in recent years. Similarly, Democrats have not introduced or embraced major reforms of Medicaid. However, the public concern about prescription drug costs has fueled Democratic as well as Republican proposals, some of which target the drug companies (e.g., addressing “predatory pricing,” allowing Medicare rather than prescription drug plans to negotiate the prices for the highest-cost drugs).60

Discussion

Predictions about presidential campaigns have inherent limits, as many experts learned in the 2016 election. Events concerning national security (e.g., conflict), domestic policy (e.g., a recession), or the health system (e.g., a disease outbreak) could alter the policy choices of presidential candidates. New ideas could emerge, or candidates could take unconventional approaches to improving the health system. And, while campaign plans have relevance, the long history of attempts at health reform underscores that by no means are promises preordained.

That said, perennial policies and recent political party differences will likely figure in 2020. Republican presidential candidates, with few exceptions, have adopted a small government approach to health reform: shifting control to states, cutting regulation, preferring tax breaks and block grants over mandatory federal funding, and trusting markets to improve access, affordability, and quality. Democratic presidential candidates have supported a greater government role in the health system, arguing that market solutions are insufficient, and have defended existing programs like Medicare, Medicaid, and, now, the ACA. Some will probably support the government’s taking a primary role in providing coverage given criticism of the efficacy and efficiency of private health insurers. The direction and details of the campaign plans for 2020 will be developed in the coming months and year. Given such plans’ potential to shape the next president’s agenda, now is the time to scrutinize, modify, and generate proposals for health reform.

 

 

Sky-High Deductibles Broke the U.S. Health Insurance System

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https://www.bloomberg.com/news/features/2018-06-26/sky-high-deductibles-broke-the-u-s-health-insurance-system

Image result for Sky-High Deductibles Broke the U.S. Health Insurance System

 

Image result for Sky-High Deductibles Broke the U.S. Health Insurance System

 

 

 

Should States Allow Insurers to Offer Bare-Bones Health Plans With Fewer Mandated Benefits?

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Health insurance is complicated. In many states, it’s about to get worse.

Image result for skinny health plans

 

Health insurance is complicated. In many states, it’s about to get worse.

That’s the opening of a piece of mine in the Wall Street Journal (gated, unfortunately) about what states should do in response to the Trump administration’s anticipated relaxation of rules governing short-term plans.

Where states allow short-term plans without restriction, the plans will be a lot cheaper than those sold on the exchanges because they don’t have to comply with the ACA. But that low price comes with big tradeoffs.

Short-term plans don’t have to sell to all comers, nor do they have to cover pre-existing conditions. Sick people will have no real choice but to buy insurance on the exchanges. To cover the medical costs of a relatively sicker group of people, exchange insurers will have to increase their premiums.

People who earn less than four times the poverty level will be shielded from the price increases because the ACA caps premiums at no more than about 10% of income. The federal government, however, has to pick up the rest of the tab-so as prices go up, federal outlays will, too, squandering an estimated $38.7 billion over 10 years.

Hurt worst will be people who earn more than four times the poverty level. Federal actuaries estimate that they’ll pay 6% more on account of the short-term rule by 2022. That will come on top of price increases associated with Congress’s repeal of the individual mandate. In 2019 alone, the Urban Institute predicts that insurance prices will grow, on average, by about 18%.

Beyond that, people who buy short-term plans may be surprised to discover just how stingy they are. Insurance is complicated: people rarely read, much less understand, all the fine print. And there’s a lot of fine print.

Squeeze On Affordable Health Insurance For 50- To 64-Year-Olds

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https://www.forbes.com/sites/howardgleckman/2018/06/21/the-trump-administrations-squeeze-on-affordable-health-insurance-for-50-64-year-olds/#4ea0538b1d94

Image result for high health premiums

In a series of recent decisions, the Trump Administration is taking steps that will sharply raise insurance premiums for people aged 50 to 64, just before they become eligible for Medicare. While these steps are likely to make coverage less expensive for young, healthy consumers, they will inevitably raise costs for middle-aged people with chronic conditions. For many, insurance will become unaffordable. And that lack of coverage will eventually result in higher costs for Medicare.

Trump is taking three major steps that will affect the availability of Affordable Care Act health insurance for middle-aged consumers.  

Repealing but not replacing

First, at the urging of the Trump Administration, Congress last year repealed the tax penalty that has to be paid by those without health insurance, effective for tax year 2019. The penalty is the ACA’s mechanism to push people to buy insurance. The logic: By broadening the pool of those with ACA insurance to include those less likely to incur significant medical costs, the individual mandate would keep premiums relatively low for everyone.

Then, early this month, the Trump Administration refused to defend the remaining provisions of the ACA in federal court. In the case Texas v. the federal Department of Health and Human Services, 20 red states argued that, absent the now-repealed individual mandate, the rest of the ACA will be unconstitutional. Thus, all its other provisions, including several important to those older consumers, also would be thrown out. They include premium limits for those 50-64, minimum benefit requirements,  and the ban on insurance companies rejecting potential purchasers due to pre-existing conditions.

Pre-existing conditions

Prior to the ACA, in a practice known as age-rating, 60-year-olds could pay premiums that were 11 times higher than younger buyers. The ACA capped that ratio at 3:1. AARP estimates that bumping it up to 5:1 would raise annual premiums for a 60-year-old by more than $3,000, or 22%.

Similarly, allowing carriers to underwrite for pre-existing conditions would make insurance widely unavailable for people aged 50 to 64. AARP estimates that 25 million people, or 40% of those 50 to 64, have a condition that could disqualify them from non-group insurance.

The Urban Institute’s Health Policy Center estimates that tossing out the remaining provisions of the ACA would result in 17 million people losing commercial insurance and another 15 million losing Medicaid and children’s health care under the CHIP program.

By Urban colleagues project that even those remaining  in the private individual insurance market “would likely have policies that cover fewer benefits and require more out-of-pocket spending for services.”

Rare agreement

The Texas lawsuit, and the Administration’s refusal to defend the law in court, has generated an outpouring of opposition. It created a rare moment when consumer groups, hospitals, and doctors agreed on a health policy issue.

But the story doesn’t end there. This week, the Trump Administration took one more step towards dismantling the ACA in a way that will likely harm pre-Medicare consumers: The Department of Labor adopted new rules opening the door to low cost, low-benefit health plans.  These will now be widely available to small businesses and, importantly, self-employed individuals.

The Congressional Budget Office estimates that 4 million people will buy these policies, sold by association health plans (AHPs). The consulting firm Avalere Health estimates that individual AHP premiums will be an average of $9,700 cheaper than ACA coverage, and that 1 million people will shift from marketplace plans to AHP policies. But it predicts premiums will rise by 3.5 percent for more comprehensive ACA insurance, largely because the remaining consumers will be older and sicker than AHP buyers.

President Trump promotes these plans as a less costly alternative to ACA coverage. This week he told the National Federation of Independent Business, “You’re going to save massive amounts of money and have much better health care. You’re going to save a fortune and you’re going to be able to give yourselves and your employees tremendous health care.”

Low cost, few benefits

But the plans do not include any minimum benefit requirements. Thus, they can exclude coverage for pregnancies, mental health issues, or drugs or hospital care. Carriers won’t be able to exclude buyers on the basis of pre-existing conditions but can adjust premiums based on age or sex. And, because they often exclude benefits important to those with chronic conditions, such as medications, they don’t need to underwrite: Those consumers simply won’t buy these policies.

Priced out of ACA coverage and uninterested in limited insurance that won’t cover their needs, it is easy to imagine many of those in their early 60s simply going without coverage (and care) until they become eligible for Medicare at age 65. That will not only put their health at risk, it will raise Medicare costs. Medicare spends about one-third more on medical care for those who join the program without having had insurance in the year before enrolling.

The result of all this: Trump is creating two separate individual health insurance markets, one for young and healthy people, and one for older and sick people.  Some young people may buy low-cost policies that will serve them well—until they get sick. Many older people won’t buy insurance at all, risking their health and, very likely, raising costs to government.

 

Perceptions of Affordability Among Individual Market Enrollees in California in 2017

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Perceptions of Affordability Among Individual Market Enrollees in California in 2017

Image result for california healthcare foundation

In 2017 researchers at The Mongan Institute, Massachusetts General Hospital, and Harvard Medical School sought to answer the following questions: How affordable do Californians in the individual health insurance market perceive their insurance to be? How affordable do they perceive their out-of-pocket costs for medical care to be? How frequently do they report delaying or avoiding medical care because of costs? How frequently do they report cutting back on other necessities (like food, rent, other basics) or borrowing money to pay for care?

Researchers surveyed adult (age 18+) individual market enrollees in 2017 who selected qualified health plans through Covered California or outside of the Covered California marketplace (N = 2,912). The survey was conducted in English and Spanish, and respondents could complete the survey by telephone, web, or paper. The survey was fielded between May and October 2017 with a response rate of 42%.

Key Findings

1. On average, 40% of enrollees reported having some difficulty paying their monthly insurance premiums. Sicker enrollees and African American enrollees were more likely to report having difficulty.

2. On average, 31% of enrollees reported difficulty paying out-of-pocket costs when using health care. Similar to premium affordability, sicker enrollees and African American enrollees were more likely to report having difficulty.

3. Almost one in four enrollees (24%) who reported needing care delayed/avoided care due to costs.

4. Close to one in three (32%) enrollees reported some sort of financial stress due to health care costs: They reported cutting necessities, borrowing money, or both. This was more common among lower-income enrollees, African American enrollees, and sicker enrollees.