Trump must decide whether to support or undermine Obamacare

https://www.washingtonpost.com/powerpost/trump-must-decide-whether-to-support-or-undermine-obamacare/2017/04/19/a52193d6-2502-11e7-bb9d-8cd6118e1409_story.html?_hsenc=p2ANqtz–qRGfjVng2ifif04sBWoB8BnXqWE4AiaOdpPtzmNgoRlaZrrLLv_6KRsxf7m-me-xNmGjvXicczyd7NO4Wdur8XJpBzQ&_hsmi=50970117&utm_campaign=KHN%3A%20First%20Edition&utm_content=50970117&utm_medium=email&utm_source=hs_email&utm_term=.4095c5893438

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President Trump is pressuring Congress to sink parts of the Affordable Care Act. But now that the first attempt at a GOP health-care overhaul has failed, he must decide whether to throw the law a line.

The White House and Republican lawmakers are facing key decisions that could either improve the insurance marketplaces established by the ACA next year or prompt insurers to further hike rates or withdraw from those marketplaces entirely. Republicans had hoped to protect those with marketplace coverage while lawmakers replaced Obamacare.

But with that effort hitting a wall, Trump and his health-care decision-makers are in a bind: They can either let the current system fail and risk raising the ire of 11 million Americans who use the marketplaces, or help stabilize Obamacare and potentially make it harder for Republicans in Congress to abandon the law itself.

“It’s an awkward political environment, there’s no question about it,” said Lanhee Chen, a health-policy expert and former adviser to 2012 presidential candidate Mitt Romney.

Republican objections to the ACA naturally lead them away from assisting it, but the party now bears some responsibility for what happens to it, Chen added.

“The reality of this is Republicans will face some political repercussions for what happens to Obamacare,” he said.

Trump and other Republicans have long predicted a so-called death spiral for the state-based marketplaces set up under President Obama’s signature domestic achievement. Trump has often tweeted and said on the campaign trail that the law will “die of its own weight.” He shrugged off the recent failure of the GOP health-care bill by saying the law is “exploding” anyway.

“The best thing we can do, politically speaking, is let Obamacare explode,” Trump said in the Oval Office last month. “It’s exploding right now.”

The dire predictions have partially come true: Although some state marketplaces offered multiple plan options and only modest premium raises last year, many others provided only one plan choice and double-digit premium hikes. Next year’s outlook is still unclear, but it’s unlikely the marketplaces will suddenly attract a better mix of healthy enrollees to help lower costs.

If the marketplaces further deteriorate, Republicans may take the fall, surveys show. A recent Kaiser Family Foundation poll found that a majority of Americans will now blame Republicans, not Democrats, for marketplace problems, because the GOP spent the past seven years promising to fix and replace the system.

That reality is forcing Republicans, including Trump, to seriously consider a half-dozen actions that could help improve — or at least sustain — the marketplaces where Americans without employer-sponsored plans buy coverage.

“Looking at next year, if we imagine that the marketplace right now is, say, a C-minus, there are several things that need to be done to just preserve it at its C-minus level,” said Mike Adelberg, who under Obama directed the Center for Consumer Information and Insurance Oversight established at the Department of Health and Human Services.

There is a list of actions the administration must decide whether to take to keep the marketplaces humming, most of them through regulatory actions at the Health and Human Services Department or through the Internal Revenue Service.

The actions center on three programs: cost-sharing reductions, reinsurance and risk corridors. Cost-sharing refers to government subsidies to low-income Americans to help them pay for insurance. Trump threatened recently to let such subsidies lapse, but Democrats say they will shut down the government as part of the spending negotiations next week if the president follows through.

Administration officials and lawmakers are still deciding how to handle the issue. A White House spokesman said only that “no decisions have been made at this time.”

Reinsurance and risk corridors are two programs set up under the ACA to redistribute funds from insurers with healthier enrollees to insurers with sicker, more expensive customers.

The marketplaces could also be hurt or helped depending on whether the IRS enforces the ACA’s individual mandate to buy coverage and whether the administration enforces new, tighter rules around enrollment.

The CHCF Blog Californians in Individual Market Spent $2,500 Less on Care in 2015 Than Before the ACA

http://www.chcf.org/articles/2017/04/californians-individual-market-spent-less

Average Annual Spending on Health Care by Consumers in Individual Market

Two years into the Affordable Care Act (ACA), Californians who bought health insurance on the individual market spent $2,500 less on health care compared to 2013, the year before the ACA was fully implemented, according to data from the US Census Bureau’s Current Population Survey (CPS) available on ACA 411. This decline was likely driven primarily by the premium tax credits and cost-sharing reductions provided through the ACA’s health insurance marketplaces. This progress toward making health care more affordable is at risk as federal lawmakers debate repealing or radically changing the ACA.

Californians’ Spending Decline Beats National Trends

In 2013, Californians with individual coverage spent, on average, $7,300 out of pocket on health care (defined as spending on health insurance premiums, copays, deductibles, coinsurance for services and prescription drugs). That amount fell to $4,900 in 2014, the first year the ACA health insurance marketplaces (called Covered California in California) were open for business. In 2015 average spending for those covered through the individual market continued declining to $4,800 for a total drop of $2,500 over the two-year period.

Nationally, the amount spent on health care by consumers with individual coverage dropped from $6,800 in 2013 to $5,500 in 2015, a $1,300 decline.

Average Annual Spending on Health Care by Consumers in Individual Market

Similarly, the percentage of consumers with individual coverage reporting “high-burden spending” (defined as spending more than 10% of total income on health care) fell nationally, with California seeing a steeper decline, from 42.9% in 2013 to 33.8% in 2015. Nationally, it dropped from 44.7% to 38.8% during the same period.

Percentage of Consumers in Individual Market Spending More Than 10% of Income on Health Care

For more information on national trends in high-burden spending, read this new analysis of the CPS data by the State Health Access Data Assistance Center (SHADAC). There was a small but statistically significant decline in the overall US rate of high-burden spending, with improvements also among those on Medicare and those earning less than 400% of the federal poverty level (about $47,000 a year for a single person). The brief also highlights which states saw statistically significant changes in high-burden spending among various coverage types and income levels.

 

Obamacare’s Insurers Struggle for Stability Amid Trump Threats

https://www.bloomberg.com/politics/articles/2017-04-17/obamacare-s-insurers-struggle-for-stability-amid-trump-threats

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Obamacare is stuck in limbo, and insurers and state regulators are struggling to set their plans for what’s increasingly shaping up as a chaotic year for the health-care program.

After the failure of Republicans’ first attempt to repeal and replace the Affordable Care Act and President Donald Trump’s subsequent threats to let the program “explode,” more health insurers are threatening to pull out next year, while others may sharply raise the premiums they charge. They’ll start to declare in the next few weeks whether they’re in or out.

Marguerite Salazar, Colorado’s insurance regulator, said that her state’s carriers, which include Anthem Inc. and Cigna Corp., haven’t said they’re leaving, though they don’t want to commit either.

“That’s my biggest fear, is that we would lose carriers in the individual market,” Salazar said. “We don’t want to set up an environment that would tell them, well, maybe we don’t need to be here.”

In Washington, Insurance Commissioner Mike Kreidler pushed back by a month the date when insurers have to say what they’ll offer. He’s urging them to stay and thinks most will, but “they’re not making commitments right now.”

“They’ve got those cards and they’re holding them close,” said Kreidler, a Democrat. “Right now, there’s so much uncertainty.” The fear is that they’ll follow the lead of Aetna Inc. and Wellmark Inc., which pulled out of Iowa’s Obamacare markets this month.

Trump’s Uncertainty

Much of the uncertainty is thanks to the Trump administration, which will play a key role in deciding whether the health law’s markets collapse or survive. Industry representatives — including company executives and insurance lobby CEO Marilyn Tavenner — are scheduled to meet Tuesday with Seema Verma, the head of the Centers for Medicare and Medicaid Services, the U.S. agency that oversees the law.

Trump’s latest threat has been to stop payments that subsidize co-pays and other upfront costs for lower-income people. Without them, insurers would likely boost their premiums or drop out entirely. The administration has refused to commit to keeping the payments going.

Health insurers see April 30 as a key deadline for a decision on the cost-sharing payments. They’ll start filing with some state regulators in May to say whether or not they’ll stay in the markets.

“Everybody is still in a wait-and-see mode,” said Kristine Grow, a spokeswoman for the industry group America’s Health Insurance Plans. AHIP and other industry groups are pushing the administration to commit to making the cost-sharing payments that Trump has threatened to halt. “Plans really need certainty,” she said.

 

A critical priority is to stabilize the individual health insurance market

Click to access Joint-CSR-Letter-to-President-Trump-04.12.2017.pdf

April 17, 2017

Quote

“We urge the Administration and Congress to take quick action to ensure cost-sharing reductions are funded. We are committed to working with you to deliver the short-term stability we all want and the affordable coverage and high-quality care that every American deserves. But time is short and action is needed. By working together, we can create effective, market-based solutions that best serve the American people.”

—Letter to the President from America’s Health Insurance Plans; American Academy of Family Physicians; American Benefits Council; American Hospital Association; American Medical Association; Blue Cross Blue Shield Association; Federation of American Hospitals and the U.S. Chamber of Commerce

No ‘Death Spiral’: Insurers May Soon Profit From Obamacare Plans, Analysis Finds

In contrast to the dire pronouncements from President Trump and other Republicans, the demise of the individual insurance market seems greatly exaggerated, according to a new financial analysis released Friday.

The analysis, by Standard & Poor’s, looked at the performance of many Blue Cross plans in nearly three dozen states since President Barack Obama’s health care law took effect three years ago. It shows the insurers significantly reduced their losses last year, are likely to break even this year and that most could profit — albeit some in the single-digits — in 2018. The insurers cover more than five million people in the individual market.

After years in which many insurers lost money, then lost even more in 2015, “we are seeing the first signs in 2016 that this market could be manageable for most health insurers,” the Standard & Poor’s analysts said. The “market is not in a ‘death spiral,’ ” they said.

It is the latest evidence that the existing law has not crippled the market where individuals can buy health coverage, although several insurers have pulled out of some markets, including two in Iowa just this week. They and other industry specialists have cited the uncertainty surrounding the Congressional debate over the law, and the failed effort two weeks ago by House Republicans to bring a bill to the floor for a vote.

The House G.O.P. leadership went home for a two-week recess on Thursday, unable to reach a compromise between conservative and moderate members over the extent of coverage that should be required for the very sick.

If the markets were to falter without a resolution in Congress, the risk of eroding public opinion before the midterm elections next year is bound to increase. The latest monthly Kaiser Health Tracking Poll by the Kaiser Family Foundation showed that more than half of Americans now believe that the president and Republicans own the health care issue and may shoulder the blame for any failings. The survey reported that more than half now support the Obama health care law.

The S.&P. report also buttresses the analysis of the Republican bill by the Congressional Budget Office, which said the markets were relatively stable under the current law, contradicting some Republican assessments of volatility.

“Things are getting better,” Gary Claxton, a vice president at the Kaiser Family Foundation, said of the insurance markets. The foundation has been closely tracking the insurers’ progress.

Although it took longer than expected, the insurers appear to be starting to understand how the new individual market works, said Deep Banerjee, an S.&P. credit analyst who helped write the report. The companies have aggressively increased their prices, so they are now largely covering their medical costs, Mr. Banerjee said. They have also significantly narrowed their networks to include fewer doctors and hospitals as a way to lower those costs.

 

 

How will the House GOP health care bill affect individual market premiums?

https://www.brookings.edu/blog/up-front/2017/03/16/how-will-the-house-gop-health-care-bill-affect-individual-market-premiums/?utm_campaign=Economic%20Studies&utm_source=hs_email&utm_medium=email&utm_content=46659383

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Earlier this week, the Congressional Budget Office (CBO) published a comprehensive analysis of the American Health Care Act, which is currently being considered by the House of Representatives. While many reactions to the CBO analysis focused on how the AHCA would affect insurance coverage, the bill’s effects on individual market insurance premiums have also received considerable attention.

In its report, CBO estimated that average individual market premiums under the AHCA would be 10 percent lower in 2026 than they would be under current law (before considering subsidies). However, as some observers have noted, this estimated change incorporates changes in the generosity of the plans being offered on the individual market, as well as a shift in the composition of individual market enrollment toward younger individuals, who pay lower premiums. The CBO estimate does not, therefore, answer the question of greatest interest, which is how CBO expects the AHCA to affect average premiums for a given generosity of coverage and a fixed population of individual market enrollees.

However, other information provided in CBO’s analysis can be used to answer this question. Using that information, we estimate that premiums would be around 13 percent higher under the AHCA than they are under current law, holding plan generosity and the individual market age distribution fixed at their current law levels. As illustrated in Figure 1, around three-fifths of the difference between this estimate and the CBO estimate of a 10 percent premium decline reflects the adjustment to hold the individual market age distribution constant. The remainder reflects the adjustment to hold plan generosity constant.

It is important to note that all of the premium changes reported in this analysis reflect premiums before accounting for subsidies available to people purchasing individual market coverage. They therefore do not reflect the effects of the AHCA’s changes to those subsidies. The AHCA would cut spending on such subsidies by around half on average, with lower-income people, older people, and people in high-cost areas seeing particularly large reductions. Thus, the increase in average premiums under the AHCA would be much larger if subsidies were incorporated into the analysis.

The remainder of this analysis presents these results in greater detail and briefly discusses the reasons that the AHCA increases individual market premiums when measured on an apples-to-apples basis.

The AHCA’s mandate replacement doesn’t make sense to me

The AHCA’s mandate replacement doesn’t make sense to me

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I’m having a really hard time with this. I’m going to try and walk through my dilemma in the hope that someone will be able to make me understand.

The Republicans hate the individual mandate. I get that. I don’t necessarily understand their rationale, but I accept it. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it.

We have discussed this before. There are many ways to solve this adverse selection problem without a mandate. Open enrollment periods, penalties for not signing up, loss of protections, inducements for keeping coverage, etc. We have written about this again and again and again and again and again and again. So I’m not saying that you can’t replace the individual mandate.

Many wonks believe that too few healthy people are joining the exchanges. This is leaving the risk pool too expensive and leading to higher premiums. To fix that, we could increase the size of the mandate penalty (stick), increase the size of the subsidies to make insurance cheaper (carrot), or both (carrot and stick).

The AHCA plan, though, goes at this sideways. It eliminates the stick. It reduces the carrot. And it then puts in a new plan – the 30% insurance markup if people lose continuous coverage.

In theory, making people pay a lot more if they don’t buy insurance as soon as they need to will make healthy people join the market. If they know it will cost a lot more if they wait until they are sick, or if they know it will mean they won’t have community ratings if they don’t purchase plans early, they should buy in – reducing adverse selection.

But this plan doesn’t really do that. It’s a one-time, one year, 30% markup on insurance. That’s a tiny, tiny penalty in the scheme of things.

 

Drowning In A ‘High-Risk Insurance Pool’ — At $18,000 A Year

http://khn.org/news/drowning-in-a-high-risk-insurance-pool-at-18000-a-year/

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Some Republicans looking to scrap the Affordable Care Act say monthly health insurance premiums need to be lower for the individuals who have to buy insurance on their own. One way to do that, GOP leaders say, would be to return to the use of what are called high-risk insurance pools, for people who have health problems.

But critics say even some of the most successful high-risk pools that operated before the advent of Obamacare were very expensive for patients enrolled in the plans, and for the people who subsidized them — which included state taxpayers and people with employer-based health insurance.

Craig Britton of Plymouth, Minn., once had a plan through Minnesota’s high-risk pool. It cost him $18,000 a year in premiums.

Britton was forced to buy the expensive coverage because of a pancreatitis diagnosis. He called the idea that high-risk pools are good for consumers “a lot of baloney.”

“That is catastrophic cost,” Britton said. “You have to have a good living just to pay for insurance.”

A Deep Dive Into 4 GOP Talking Points On Health Care

http://khn.org/news/a-deep-dive-into-4-gop-talking-points-on-health-care/

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Republican leaders have a lengthy list of talking points about the shortcomings of the health law. Shortly before his inauguration last month, President Donald Trump said that it “is a complete and total disaster. It’s imploding as we sit.” And they can point to a host of issues, including premium increases averaging more than 20 percent this year, a drop in the number of insurers competing on the Affordable Care Act marketplaces and rising consumer discontent with high deductibles and limited doctor networks.

Yet a careful analysis of some of the GOP’s talking points show a much more nuanced situation and suggest that the political fights over the law may have contributed to some of its problems. Here is an annotated guide to four of the most common talking points Republicans have been using. 

 

Trump, GOP Lawmakers Back Off From Immediate Obamacare Repeal

http://www.npr.org/sections/health-shots/2017/02/06/513718166/trump-congressional-gop-back-off-from-immediate-obamacare-repeal

There’s a moment in the Broadway musical Hamilton where George Washington says to an exasperated Alexander Hamilton: “Winning is easy, young man. Governing’s harder.”

When it comes to health care, it seems that President Trump is learning that same lesson. Trump and Republicans in Congress are struggling with how to keep their double-edged campaign promise — to repeal Obamacare without leaving millions of people without health insurance.

But on Sunday, he dialed back those expectations in an interview with Fox News.

“It’s in the process and maybe it will take till sometime into next year, but we are certainly going to be in the process. It’s very complicated,” Trump said.

He repeated his claim that Obamacare has been “a disaster” and said his replacement would be a “wonderful plan” that would take time “statutorily” to put in place. And then he hedged the timing again.

“I would like to say by the end of the year, at least the rudiments,” he said.

Trump’s recent hesitation comes as Republicans in Congress tame their rhetoric surrounding the health care law.

Sen. Lamar Alexander, R-Tenn., chairman of the Senate health committee, said he’d like to see lawmakers make fixes to the current individual market before repealing parts of the law.

“We can repair the individual market, which is a good place to start,” Alexander said on Feb. 1.