The fight over preexisting conditions is back. Here’s why the Obamacare battle won’t end.


There is a persistent divide in the US: Is insurance a privilege to be earned through hard work? Or is it a right?

President Trump and Republicans are so committed to killing Obamacare they’ve decided, just months before the midterm elections, to take aim at the most popular part of the law: coverage for preexisting conditions.

The Trump administration signed on to a long-shot lawsuit this week that would overturn the parts of the law that require insurers to cover preexisting conditions and not charge more for them.

The lawsuit, which you can read more about from Vox’s Dylan Scott, is, in some ways, a perplexing move mere months before midterm elections. Polling finds that both Democrats and Republicans think it’s a good idea to ensure that sick people have access to health insurance.

Politically, though, Republicans spent eight years campaigning on a promise to repeal Obamacare. They believe they have a responsibility to do something, even if the something doesn’t poll well.

But after eight years of covering the Affordable Care Act, I think there is a much deeper tension that keeps the fight over Obamacare alive. It is a persistent, unresolved split in how we think about who deserves health insurance in the United States: Is insurance a privilege to be earned through hard work? Or is it a right?

The United States hasn’t decided who deserves health insurance

Since World War II, the United States has had a unique health insurance system that tethers access to medical care to employment. Changes to the tax code created strong incentives for companies to provide health coverage as a benefit to workers. Now most Americans get their insurance through their employer, and, culturally, health insurance is thought of as a benefit that comes with a job.

Over time, the government did carve out exceptions for certain categories of people. Older Americans, after all, wouldn’t be expected to work forever, so they got Medicare coverage in 1965. Medicaid launched the same year, extending benefits to those who were low-income and had some other condition that might make it difficult to work, such as blindness, a disability, or parenting responsibilities.

Then the Affordable Care Act came along with a new approach. The law aimed to open up the insurance market to anybody who wanted coverage, regardless of whether he or she had a job.

It created a marketplace where middle-income individuals could shop on their own for private health coverage without the help of a large company. It expanded Medicaid to millions of low-income Americans. Suddenly, a job became a lot less necessary as a prerequisite for gaining health insurance.

This, I think, is the divide over health insurance in America. It’s about whether we see coverage as part of work. In my reporting and others’, I’ve seen significant swaths of the country where people push back against this. They see health as something you ought to work for, a benefit you get because of the contribution you make by getting up and going to a job each day.

This came out pretty clearly in an interview I did in late 2016 with a woman I met on a reporting trip to Kentucky whom I’ll call Susan Allen. (She asked me not to use her real name because she didn’t want people to know that she uses the Affordable Care Act for coverage.)

Allen used to do administrative work in an elementary school but now is a caregiver to her elderly mother. Her husband has mostly worked in manual labor jobs, including the coal industry.

Allen told me a story about when she worked in the school. At Christmas, there would be a drive to collect present for the poorest families, presents she sometimes couldn’t afford for her own kids. It made her upset.

”These kids that get on the list every year, I’d hear them saying, ‘My mom is going to buy me a TV for Christmas,’” Allen says. “And I can’t afford to buy my kid a TV, and he’s in the exact same grade with her.”

Allen saw her health insurance as the same story: She works really hard and ends up with a health insurance plan that has a $6,000 deductible. Then there are people on Medicaid who don’t work and seem to have easier access to the health care system than she does.

”The ones that have full Medicaid, they can go to the emergency room for a headache,” she says. “They’re going to the doctor for pills, and that’s what they’re on.”

Is health insurance a right or a privilege?

More recently, Atul Gawande wrote a piece for the New Yorker exploring whether Americans view health care as a right or a privilege.

He reported the story in his hometown in Appalachian Ohio, where he kept running into this same idea: that health insurance is something that belongs to those who work for it.

One woman he interviewed, a librarian named Monna, told him, “If you’re disabled, if you’re mentally ill, fine, I get it. But I know so many folks on Medicaid that just don’t work. They’re lazy.”

Another man, Joe, put it this way: “I see people on the same road I live on who have never worked a lick in their life. They’re living on disability incomes, and they’re healthier than I am.”

As Gawande noted in his piece, “A right makes no distinction between the deserving and undeserving.” But he often found this to be the key dividing line when he asked people whether everyone should have health coverage. Often, it came down to whether that person was the type who merited such help.

This isn’t a debate that happens in most other industrialized countries. If you asked a Canadian who deserves health care, you’d probably get a baffled look in return. Our northern neighbors decided decades ago that health insurance is something you get just by the merit of living in Canada. It’s not something you earn; it’s something you’re entitled to.

But in the United States, we’ve never resolved this debate. Our employer-sponsored health care system seems to have left us with some really deep divides over the fundamental questions that define any health care systems.

Those are the questions we’ll need to resolve before the debate over Obamacare ever ends.



CBO’s Revised View Of Individual Mandate Reflected In Latest Forecast

On May 23, the Congressional Budget Office (CBO) released updated projections of federal spending and tax expenditures related to supporting enrollment in health insurance, along with a new forecast of the number of Americans younger than age 65 who will have coverage or will be uninsured in the coming years.

The bottom line: The CBO continues to expect that the Affordable Care Act’s (ACA’s) markets will have relatively stable enrollment, more states will expand their Medicaid programs, and per-person health costs will rise at rates that exceed economic growth. Federal spending on subsidies for health insurance enrollment, along with tax breaks for employer coverage, will continue to grow at a rapid rate, thus intensifying pressure within the overall federal budget.

While the CBO’s new forecast looks in many ways quite similar to previous projections, the agency has revised its views on one very important aspect of its forecast—the effectiveness of the individual mandate—and also updated its forecast to reflect the effects of relevant executive decisions and proposed regulations by the Trump administration. These revisions and updates to the forecast are the primary reasons the current baseline does not differ more than it does from those issued by the CBO previously.

CBO’s Revised View Of The Individual Mandate

The most notable change in the CBO’s new forecast is the agency’s revised view of the effectiveness of the ACA’s individual mandate. During 2017, as Republicans in Congress attempted to pass legislation substantially rolling back and replacing the ACA, the CBO estimated that these efforts would dramatically increase the number of Americans going without insurance coverage. For instance, in July 2017, the CBO estimated that the version of repeal and replace assembled by Senate Majority Leader Mitch McConnell (R-KY) would have increased the number of uninsured from 28 million in 2017 to 41 million in 2018 and 50 million in 2026. There were several reasons that the McConnell proposal would have led to more people going without coverage, but the CBO specifically cited the planned repeal of the individual mandate as the most important factor.

In December, Congress repealed the penalty associated with the individual mandate as part of the sweeping individual and corporate tax reform law. At the time of enactment, the CBO estimated that the repeal would eventually lead to an increase in the number of people going without health insurance by 13 million people annually.

The CBO’s new forecast, however, places less weight on the importance of the mandate. The agency states that, for a number of reasons, it now believes that the mandate’s role in expanding coverage after 2013 is only about two-thirds of what it previously assumed. So instead of repeal adding 13 million more people to the ranks of the uninsured, the CBO now estimates the effect at slightly more than 8 million people.

The CBO cites a number of considerations for making this important revision to its forecast. Among other things, the agency is placing more emphasis on the financial reasons for expanded enrollment into coverage after 2013, such as the ACA’s subsidy structure, instead of nonfinancial factors, such as the expectation, or social norm, of insurance enrollment that the mandate was intended to create.

Summing Up 

In the aggregate, the CBO’s updated projections of health insurance enrollment and federal subsidies for coverage do not differ all that much from previous projections. What’s different are some of the assumptions. The CBO expects there will be more uninsured in the future than is the case today, but the agency does not expect a reversion back to the uninsured levels of the pre-ACA era. Furthermore, because of changes in policies set in motion by the Trump administration, there are likely to be more people enrolled in non-ACA compliant insurance plans than is the case today, and that coverage, while different, will still provide a reasonable level of financial protection to enrollees.



States Take the Lead on Reinsurance to Stabilize the ACA Marketplaces


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Recent actions by Congress and the Trump administration are likely to disrupt Affordable Care Act (ACA) marketplaces in 2019, leading to higher premiums for individuals and families. These actions include Congress’ termination of financial penalties for failing to obtain health insurance and the administration’s resistance to paying cost-sharing reductions for low-income purchasers of marketplace coverage, its encouragement of the sale of short-term policies and association health plans, and its defunding of advertising and outreach in federally facilitated marketplaces. Recent estimates suggest that there have already been small but significant declines in coverage.

A total collapse of ACA marketplaces is unlikely because of continuing federal subsidies for the purchase of insurance by individuals with incomes below 400 percent of the federal poverty level. But those not eligible for subsidies may face higher premiums in some states, and some may be forced to forgo coverage. Those who remain in the market may be sicker than average, leading to a higher-risk pool and fueling premium increases.

A key way to mitigate the adverse effects of these recent policies is by offering reinsurance, a policy that is garnering bipartisan support at the federal and state levels.

What Is Reinsurance?

Reinsurance was a critical feature of ACA marketplaces in their first three years. The marketplaces were new, and insurers faced considerable uncertainty about the health status of enrollees. The law thus offered insurers some protection against unexpectedly high claims through a reinsurance program. Reinsurance protects insurers by limiting their exposure to very high, unpredictable medical expenses incurred by their members by covering some of those expenses when they exceed a certain threshold. For example, the ACA stipulated that insurers with claims costs that exceeded a threshold amount for a particular individual — $45,000 in 2014 — qualified for reinsurance payments for 100 percent of the excess up to $250,000. The program was financed by fees on both individual and employer plans, including self-insured employers, and was thus deficit neutral. It is estimated that reinsurance reduced average premiums in the marketplaces by as much as 14 percent.

The ACA legislation phased down the reinsurance program over 2014–2016 since it was assumed that as insurers gained more familiarity with enrollees, they could price their products with greater certainty. After the program ended in 2016, premiums rose in 2017 more sharply than they had in prior years, an increase that was partly attributed to the loss of reinsurance.

Industry stakeholders and health policy experts have suggested that reinsurance could stabilize the individual market. Researchers Chrissy Eibner and Jody Liu of RAND estimated that reinstating the reinsurance program could reduce premiums in the marketplaces by 3.9 percent to 19.3 percent in 2020, depending on the generosity of the program. Because lower premiums also reduce what the federal government spends on tax credits, the researchers projected federal deficit savings of $2.9 billion to $13.1 billion. However, the researchers also assume that some of those fees ultimately would be passed on to people enrolled in private plans.

Federal reinsurance programs have appeared in a number of recent Congressional bills. Last year, ACA repeal-and-replace bills included reinsurance programs for the individual market that would be financed directly by the federal government. Senators Susan Collins (R–Maine) and Bill Nelson (D–Fla.) introduced a bill with a similarly structured reinsurance program at the end of 2017. And a recently introduced bill from Senators Jeff Merkley (D–Ore.) and Chris Murphy (D–Conn.) proposing that a Medicare plan be offered through the marketplaces and by employers also includes a reinsurance program.

Some of these proposals would fund reinsurance through upfront federal expenditures, rather than charging fees to insurers. Deficit reductions could be lower under this scenario, but may still be possible because the federal expenditures on reinsurance would be offset by savings on lower tax credit expenditures as premiums fall. However, the RAND researchers find that the cost to taxpayers would be about the same under both approaches, since insurers would likely pass on fees to their customers in the form of higher premiums.

States Take the Lead

In the absence of consensus in Congress on how to strengthen the marketplaces, several states have secured, or are seeking, approval from the federal government to establish state-based reinsurance programs through the ACA’s innovation waiver program. Under the waiver program, states can make changes to their marketplaces as long as they cover at least the same number of people and maintain the same levels of affordability. Reinsurance has been the most common innovation pursued by states.

Alaska, Minnesota, and Oregon have received federal approval to establish reinsurance programs. There are notable differences in their approaches:

  • In Alaska, medical claims for individuals with at least one of 33 high-cost conditions are covered by the Alaska Reinsurance Program. The program was responsible for preventing the state’s last remaining insurer from leaving the individual market in 2017.
  • In Minnesota, the reinsurance program covers 80 percent of claims for individuals up to $250,000 once a $50,000 threshold is passed. For the 2018 plan year, insurers submitted two sets of premiums, one assuming reinsurance and one without it. The rates accounting for reinsurance were approximately 20 percent lower.
  • Oregon’s waiver application sought approval for a program that would reimburse 50 percent of claims between a yet-to-be-established threshold up to $1 million. The U.S. Department of Health and Human Services approved the proposal in October 2017.

Six more states have passed legislation or submitted applications to establish reinsurance programs.

  • On May 9, Maine became the latest state to submit a waiver application to the federal government seeking funding for a state-based reinsurance program. Earlier this year on April 18, Wisconsin also submitted a waiver application for a reinsurance program.
  • New Hampshire and Louisiana are developing similar applications, and New Jersey and Maryland passed legislation in April to establish state-operated reinsurance programs.

Experience with reinsurance programs clearly demonstrates their efficacy in reducing health insurance premiums in the private individual market. Implemented at the federal level, such programs also reduce federal spending and deficits. Though enterprising states are moving forward with these initiatives, a more comprehensive national effort to help private insurers manage unpredictable risks in individual health insurance markets has enduring appeal.



How The Farm Bill Could Erode Part Of The ACA

How The Farm Bill Could Erode Part Of The ACA

Some Republican lawmakers continue to try to work around the federal health law’s requirements. That strategy can crop up in surprising places. Like the farm bill.

Tucked deep in the House version of the massive bill — amid crop subsidies and food assistance programs — is a provision that supporters say could help provide farmers with cheaper, but likely less comprehensive, health insurance than plans offered through the Affordable Care Act.

It calls for $65 million in loans and grants administered by the Department of Agriculture to help organizations establish agricultural-related “association” type health plans.

But the idea is not without skeptics.

“I don’t know that anyone at the Department of Agriculture, with all due respect, knows a darn thing about starting and maintaining a successful insurance company,” said Sabrina Corlette, a professor and project director at the Georgetown University Health Policy Institute.

Association health plans are offered through organizations whose members usually share a professional, employment, trade or other relationship, although the Trump administration is soon to finalize new rules widely expected to broaden eligibility while loosening the rules on benefits these plans must include.

Under that proposal, association plans would not have to offer coverage across 10 broad “essential” categories of care, including hospitalization, prescription drugs and emergency care. They could also spend less premium revenue on medical care.

Under the farm bill, the secretary of Agriculture could grant up to 10 loans of no more than $15 million each, starting next year, to existing associations whose members are ranchers, farmers or other agribusinesses.

The language is strikingly similar to a bill introduced April 12 by Rep. Jeff Fortenberry (R-Neb.), a supporter of association health plans. He did not respond to calls for comment.

Although the farm bill is usually considered “must-pass” by many lawmakers, it is currently facing pushback because of controversy surrounding other parts of the measure, mainly language that would add additional work requirements to the food stamp program.

Still, the focus on association health plans won’t go away.

The plans — coupled with another Trump administration move to make short-term insurance more widely available — could draw healthier people out of the ACA markets, leaving the pool of beneficiaries with higher percentages of people who need medical care. And that, some say, could drive up premiums for those who remain.

The National Association of Insurance Commissioners, for example, has warned that association plans “threaten the stability of the small group market” and “provide inadequate benefits and insufficient protection to consumers.”

Actuaries have made similar arguments.

Others are concerned about the idea of the government providing funding for such plans.

“We have reams of experience with AHPs that have gone belly up … and the notion that we should put taxpayer money into them is irresponsible,” said Georgetown University’s Corlette.

She was referring to the industry’s mixed track record with plans. Some have served members well, but other plans have been marked by solvency problems that left consumers on the hook with unpaid medical bills or were investigated for providing little or no coverage for such things as chemotherapy or doctor office visits.

It’s not fair to simply focus on the failures, countered attorney Christopher Condeluci, who served as tax and benefits counsel to the Senate Finance Committee and now advises private clients, some of whom are interested in association plans.

“Some AHPs were not successful,” he agreed. “But there’s arguably more examples of AHPs that work. The trouble is everyone focuses on the negative.”

Although the GOP generally supports association plans, using taxpayer funds to help start them could prove problematic for some conservatives in Congress.

Many Republican lawmakers expressed concerns about the use of tens of millions of taxpayer dollars to start insurance co-ops that were part of the ACA, most of which failed.

“The hard-earned tax dollars collected from working Americans, sitting at Treasury right now, are not venture capital, said Rep. Kevin Brady (R-Texas) at a subcommittee hearing in November 2015. Currently, Brady is chairman of the powerful House Ways and Means Committee.

The provision could also be popular in rural areas.

“We think it’s a good idea,” said Rob Robertson, chief administrator for the Nebraska Farm Bureau Federation, whose group is considering sponsoring one.

About half of his members, Robertson said, have a spouse working a non-farm job, mainly for insurance coverage. Of those who buy their own plan, some are facing astronomical premiums and are looking for relief.

“I can’t think of any sector that is affected more by the huge premium increases under Obamacare than farmers and ranchers,” he said.

The farm bill — including the AHP provision — was approved by the House Committee on Agriculture in mid-April, and is currently awaiting floor consideration. Meanwhile, a final rule on the Trump AHP rule, which has drawn more than 900 comments from supporters and opponents, could be issued as early as this summer.



Payer trade groups slam short-term health plan proposal


More organizations, including Aetna and the American Medical Association, submitted comments on the proposed rule Monday.

Dive Brief:

  • The Alliance of Community Health Plans (ACHP) and America’s Health Insurance Plans (AHIP) both slammed CMS’ proposal to expand short-term, limited duration (STLD) insurance plans, saying the proposed rule would undermine key consumer protections, lead to higher premiums in the individual market and jeopardize market stability.
  • The proposed rule, pushed by the Trump administration as a way to increase access to cheaper plan alternatives and sidestep the Affordable Care Act, would allow consumers to purchase plans for up to 12 months that do not adhere to federal rules for individual health insurance. STLD plans can charge those with pre-existing conditions more and may not cover ACA essential health benefits such as prescription drug coverage.
  • The insurance lobbies argued that other policy mechanisms would be more effective at improving the individual health insurance market. AHIP pointed to increasing 1332 state waiver flexibility and the adoption of regulations aimed at preventing improper steering of Medicare and Medicaid consumers into the individual market, and ACHP advocated for the creation of a federal reinsurance program as more effective ways to promote affordable coverage.

Dive Insight:

The comments are indicative that many insurers are hesitant to back health plans that lack the consumer protections the ACA put into place due to a fear such plans would destabilize the individual market. Monday is the last day to submit comments on the rule.

new Kaiser Family Foundation brief notes that many middle-income people not shielded by premium subsidies in the individual market would likely see premium costs increase. Combined with the individual mandate penalty being zeroed out, the effort to increase STLD plans could result in fewer individuals enrolled in the ACA market, adversely impacting its stability.

“Short-term plans were designed for consumers to use as temporary, stop-gap measures when moving between plans – not as long-term replacements for health insurance,” ACHP CEO Ceci Connolly said in a statement. “A broad, stable risk pool is crucial for providing affordable coverage and care. ACHP believes that other policy options, such as reinsurance, would be far more effective at promoting high-quality, affordable coverage and care for all Americans.”

ACHP argued the proposed rule should not be finalized, saying the current status-quo limit of 90 days should be maintained.

AHIP called for any final rule to limit the duration of STLD plans to six months, adding that the plans should be required to have a plain-language disclosure that the plans should not be considered comprehensive health insurance. The group argued that the effective date of any final rule should come no sooner than Jan. 1, 2020.

“As the Departments advance policies to expand access to lower-cost coverage choices for a subgroup of consumers, it is critical to improve the affordability of comprehensive coverage options for all Americans, regardless of health status,” Matthew Eyles, AHIP COO, wrote in the group’s comment.

But major insurer Aetna, which left AHIP in 2016, said in its comment STLD plans “can be a valuable option for many consumers.”

The insurer argued that such plans must be transparent with disclosure language, limit any look-back period for pre-existing conditions to 12 months and define a minimum floor of benefits including inpatient hospital services, physician services, mental health and substance abuse services and one annual physical and annual well-woman visit before the deductible.

A group of Senate Democrats were among those asking for the rule to not be finalized, arguing it “could increase costs and reduce access to quality coverage for millions of Americans, harm people with pre-existing conditions, and force premium increases on older Americans.”

The American Medical Association also echoed the insurance lobby’s concern, saying STLD plans would endanger the coverage gains of the past decade and destabilize the market. AMA argued the administration should withdraw the proposed rule, saying it is “a step in the wrong direction and will lead to a proliferation of inadequate health insurance policies in the market.”

A joint comment of 21 consumer advocates, including March of Dimes and the American Cancer Society Cancer Action Network, also called for withdrawing the proposal.

PhRMA voiced concern in its comment over the lack of prescription drug coverage in STLD plans, citing an analysis that found than 71% of such plans do not cover outpatient prescription drugs. “If consumers can renew these plans for an extended period, it increases the chances that consumers may find themselves diagnosed with a new condition that can be effectively treated by an innovative drug at a time when they are covered by a short-term plan that does not cover prescriptions drugs,” PhRMA wrote.



Anthem reports flat operating revenues due to exit from Affordable Care Act market

Net income increased 30 percent driven by premium rate increases, the return of the health insurance tax and the acquisition of MA plans.

Anthem reported a 30 percent increase in net income for the first quarter compared to the same three months of 2017, but operating revenues remained relatively flat primarily due to the insurer’s planned exits from the Affordable Care Act marketplace.

On Wednesday, Anthem reported net income for the first quarter of $1.3 billion, versus 1 billion for the first three months in 2017.

First quarter operating revenues were relatively flat at $22.3 billion year-over-year due to a decrease in its individual market business.

In 2017, Anthem announced it would cut back its ACA footprint by about 70 percent.

Revenues were helped by premium rate increases to cover overall cost trends, the return of the health insurance tax and the acquisitions of HealthSun and America’s 1st Choice.

Anthem’s acquisition of HealthSun, completed at the end of 2017, added a Medicare Advantage health plan and delivery network in Florida.

The acquisition of America’s 1st Choice was finalized in February. The privately-held, for-profit Medicare Advantage organization  offers HMO products, including chronic special needs plans and dual-eligible special needs plans under its Freedom Health and Optimum brands in Florida. The deal added 135,000 Medicare Advantage members and included a 5 star plan.

Anthem’s medical enrollment totaled approximately 39.6 million members as of March 31, a decrease of 1 million or 2.5 percent percent, from 40.6 million at March 31, 2017.

The company said it now expects medical enrollment to be between 40.1 – 40.3 million for the full year 2018.

Counteracting the individual market decline, Anthem’s government business grew 10 percent year-over-year through a focus on serving the complex social and medical requirements of the dual special needs population.

Medical enrollment declined by 616,000 during the first quarter reflecting a decrease in the individual and local group fully-insured businesses. Medicare grew by 237,000 members and Medicaid enrollment declined by 120,000 individuals.

“We are pleased with our first quarter 2018 financial performance, which reflects our commitment to strong medical cost performance by effectively leveraging community based innovative and integrated clinical and value based care models across our markets,” said CEO and President Gail Boudreaux. “Throughout 2018, we are prioritizing investments to create a more flexible infrastructure that can quickly respond to the evolving needs of our customers and the changing healthcare environment.”


‘What The Health?’ It’s Nerd Week

Podcast: KHN’s ‘What The Health?’ It’s Nerd Week

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The Trump administration this week issued the rules governing next year’s Affordable Care Act insurance marketplaces, and they make some potentially large changes that could result in higher premiums and fewer benefits.

Meanwhile, states are going different ways in addressing the health insurance markets in their states in response to the federal activity. And House Speaker Paul Ryan announced his retirement — leaving an intellectual void among House Republicans when it comes to health care.

This week’s panelists for KHN’s “What the Health?” are:

  • Julie Rovner of Kaiser Health News
  • Stephanie Armour of The Wall Street Journal
  • Sarah Kliff of
  • Paige Winfield Cunningham of The Washington Post

Among the takeaways from this week’s podcast:

  • The federal rules for the ACA’s marketplaces could dramatically alter how state regulators determine what plan benefits must be covered.
  • Those rules also change some conditions allowing people to qualify for exemptions to the requirement to have coverage — and they make those exemptions retroactive to 2017. So, some people who opted not to buy insurance and paid a penalty for 2017 may be able to file for refunds from the government.
  • Insurance companies are concerned about a number of the new provisions, including those that might drive healthy consumers away from the marketplaces and alter how insurers are compensated for having unusually high numbers of expensive customers.
  • An announcement from the White House this week said the administration is hoping to extend the work requirements that some states are seeking for Medicaid to other safety-net programs.
  • California and Maryland are among the states looking at ways to shore up their individual insurance markets in light of the changes being made at the federal level.