Tag Archives: Health Insurance Market Uncertainty

Repealing the Individual Health Insurance Mandate Restricts Freedom

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http://www.commonwealthfund.org/publications/blog/2017/dec/repealing-the-individual-health-insurance-mandate-restricts-freedom

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Two short months after they appeared to move past their campaign to dismantle the Affordable Care Act (ACA), Senate Republicans passed a tax reform package that includes a repeal of the law’s individual health insurance mandate. House Republicans have indicated they will follow suit.

The mandate is an easy target. Since before the ACA was passed, it has been portrayed as un-American. President Trump articulated this criticism during his inaugural address to Congress, when he argued that “mandating that every American buy government-approved health care was never the right solution for our country.” It has also been labeled anti–free market, and it has been called an affront to personal freedom.

It is none of these things.

An individual mandate to purchase health insurance was first proposed in the U.S. by the conservative Heritage Foundation, which in 1989 saw it as a way of creating healthy insurance pools, a solution to what they saw as the “free-rider” problem in health care, and as an alternative to a single-payer system. It was first passed into law by Mitt Romney, the Republican governor of Massachusetts, who promoted it as a market-based idea grounded in the principle of individual responsibility.

Does the individual mandate restrict freedom? Yes, but not unreasonably, and it isn’t unique in this regard. The 49 state laws requiring drivers to carry auto insurance also restrict individual freedoms, as do fishing licenses and nearly all taxes. In the case of compulsory auto insurance, every state except New Hampshire has made the calculation that the harm of curtailing freedom is outweighed by associated goods — for compulsory auto insurance this is the sense of security one gets from knowing that if a faulty driver hits you he or she will have the means to pay your medical bills or repair your car. When one turns to health insurance, the associated goods are much more profound.

The benefit of the individual insurance mandate derives from the collective goods we all receive from increased participation in insurance markets — these include lower rates of uncompensated care, healthier insurance markets, and ultimately lower premiums and better access to health care.. It helps makes the ACA marketplaces sustainable, thereby giving millions a source of comprehensive health insurance, and millions more the peace of mind knowing that they have a place to go if they ever need to buy it.  For these last reasons, the individual mandate actually enhances freedom. Having universally available, high-quality health insurance frees us from the fear of being one illness away from financial ruin, from being tethered to a job (or relationship) because it is the only means of coverage, and frees us and our loved ones from the physically or financially disabling effects of an unmanaged illness.

Repealing the individual mandate and the destabilizing of health insurance markets that will follow will harm a lot of Americans. The Congressional Budget Office projects that 13 million people will lose their health insurance because of the repeal.

Nonetheless, Republicans appear poised to move ahead. Crippling the marketplaces hasn’t garnered the ire of key Republican governors who weighed in strongly on the large Medicaid cuts proposed as part of earlier repeal bills. And senators who may have been concerned about the consequences of repeal cared more about passing tax reform — a must-have political victory for Republicans.

The other reason why this newest attack on the ACA may be more successful than earlier ones is that, from the outset, the individual mandate has never had strong public support; it polls lower than other key provisions and has been the target of a disproportionate share of the harsh rhetoric aimed at the law. The Obama administration was never able to sell the public on the connection between a strong mandate and high-quality, affordable health insurance, so for some it has felt like pointless government intrusion.

Regardless of how people feel about the mandate, the facts are clear: millions of Americans have benefited from it and live more freely because of it. Congress should remove the individual mandate repeal from the tax bill to help ensure that 13 million people don’t lose the freedoms it has given them.

Outlook Darkens for Not-for-Profit Hospitals

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http://www.healthleadersmedia.com/finance/outlook-darkens-not-profit-hospitals?spMailingID=12500545&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1300449776&spReportId=MTMwMDQ0OTc3NgS2

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The revised outlook from Moody’s comes amid a larger-than-expected drop in cash flow this year and the ongoing uncertainty regarding federal healthcare policy for public and not-for-profit hospitals.

Moody’s Investors Service has downgraded from stable to negative its 2018 outlook for the not-for-profit hospital sector based on an expected drop in operating cash flow.

“Operating cash flow declined at a more rapid pace than expected in 2017, and we expect continued contraction of 2%-4% through 2018,” said Eva Bogaty, a Moody’s vice president.

“The cash flow spike from insurance expansion under the Affordable Care Act in 2014 and 2015 has largely worn off, but cash flow has not stabilized as expected because of a low revenue and high expense growth environment,” Bogaty said.

In a briefing released Monday, Moody’s said hospital revenue growth is slowing and is expected to remain slightly above medical inflation, which declined to a low of 1.6% in September. Hospitals can’t translate volume growth into stronger revenue growth because of the lower reimbursement rate increases across all insurance providers and higher expense growth.

In addition, rising exposure to governmental payers will dampen revenue growth for the foreseeable future due to a rapidly aging population and low reimbursement rates. Medicare and Medicaid, represent 60% of gross patient revenue in 2017, Moody’s said.

Key drivers of expense growth include rising labor costs, driven by an acute nursing shortage and ongoing physician and medical specialist hiring. Technology costs are also rising as systems are upgraded and IT staff is needed for training and maintenance. While the ACA’s arrival heralded a drop in bad debt from 2014-16, bad debt rebounded in 2017 and will continue to grow at a rate of 6%-7% in 2018, Bogaty said.

“Rising copays and use of high deductible plans will increase bad debt for both expansion and non-expansion states,” she said.

In the near-term, uncertainty regarding federal healthcare policy will have a marginal fiscal impact on NFP hospitals. Bogaty said ambiguity surrounding the ACA does affect the planning and modelling of long-term strategies, while recent federal tax proposals will add to rising costs for hospitals.

The outlook could be revised to stable if operating cash flow resumes growth of 0%-4%. A change to positive could result from expectations of accelerated operating cash flow growth of more than 4% after inflation, Moody’s said.

GOP may have no choice but to try health care again after taxes

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https://www.axios.com/gop-may-have-no-choice-but-to-try-health-care-again-after-taxes-2513940879.html

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Republicans have been asking themselves what they’ll turn to next, after their tax overhaul wraps up. If they repeal the Affordable Care Act’s individual mandate, there’s a good chance the answer will be health care — whether they like it or not.

What they’re saying: President Trump has said several times that he wants to take another crack at repeal-and-replace after the tax bill. GOP leaders in the House and Senate have not echoed that plan. But if Republicans do end up repealing the individual mandate, Insurance markets will begin to feel the effects quickly, leading to almost immediate nationwide upheaval that will be impossible to ignore — especially in an election year.

  • This year saw a lot of chaos — insurers pulling out of markets, coming back in, changing their premiums at the last minute — due in large part to changes that would pale in comparison to something on the scale of repealing the individual mandate.
  • “I think next year will be even crazier” if the coverage requirement goes away, the Kaiser Family Foundation’s Larry Levitt says.

The timing: The disruption caused by repealing the individual mandate would start early next year and intensify again just before next year’s midterm elections.

  • The Senate’s tax bill would eliminate the ACA’s penalty for being uninsured, starting on Jan. 1, 2019. That might seem like a long way away, but it’s not.
  • Insurers will start deciding this coming spring whether they want to participate in the exchanges in 2019 — and if so, where. Without the mandate, insurers would likely begin to pull back from state marketplaces early next year, likely leaving many parts of the country with no insurance plans to choose from.
  • Insurers will then have to finalize their 2019 premiums next fall. Those rates would likely be substantially higher (10% higher, on average, according to the Congressional Budget Office) without the mandate in place — and that news would hit just before next year’s midterms.

The bottom line: All this fallout would be impossible to ignore, putting more pressure on Congress to return to health policy whether it wants to or not — and reopening all the same internal divisions that have stymied every other health care bill.

Flashback: “You can make an argument that Obamacare is falling of its own weight — until we repeal the individual mandate,” Sen. Lindsey Graham said two weeks ago. “Then there is absolutely no excuse for us not to replace Obamacare because we changed a fundamental principle of Obamacare. So I hope every Republican knows that when you pass repeal of the individual mandate, it’s no longer their problem, it becomes your problem.”

Marketplace Confusion Opens Door To Questions About Skinny Plans

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Marketplace Confusion Opens Door To Questions About Skinny Plans

Consumers coping with the high cost of health insurance are the target market for new plans claiming to be lower-cost alternatives to the Affordable Care Act that fulfill the law’s requirement for health coverage.

But experts and regulators warn consumers to be cautious and are raising red flags about one set of limited benefit plans marketed to individuals for as little as $93 a month. Offered through brokers and online ads, the plans promise to be an “ACA compliant, affordable, integrated solution that help … individuals avoid the penalties under [the health law].”

Legal and policy experts have raised concerns that the new plans could leave buyers incorrectly thinking they are exempt from paying a penalty for not having coverage. Additionally, they say, plans sold to individuals must be state-licensed.

Apex Management Group of Oak Brook, Ill., and Pennsylvania-based Xpress Healthcare have teamed up to offer the plans, and executives from both companies say they don’t need state approval to sell them.

In California, Insurance Commissioner Dave Jones has already asked for an investigation.

“Generally speaking, any entity selling health insurance in the state of California has to have a license,” Jones said earlier this month. “I have asked the Department of Insurance staff to open an investigation with regard to this company to ascertain whether it is in violation of California law if they are selling it in California.”

Asked about a possible investigation, Apex owner Jeffrey Bemoras recently emailed a statement saying the firm is not offering the plans to individuals in California.

Bruce Benton, spokesman for the California Association of Health Underwriters, which represents the state’s health insurance agents, said his organization has not heard of Apex or Xpress and does not know of anybody who is selling their skinny plans in California.

These skinny plans — sold for the first time to individuals in other states across the country — come amid uncertainty over the fate of the ACA and whether President Donald Trump’s administration will ease rules on plans in the individual market. Dozens of brokers are offering the plans.

“The Trump administration is injecting a significant amount of confusion into the implementation of the ACA,” said Kevin Lucia, project director at Georgetown University’s Health Policy Institute. “So it doesn’t surprise me that we would have arrangements popping up that might be trying to take advantage of that confusion.”

David Shull, Apex’s director of business development, said “this is not insurance” and the plans are designed to meet the “bulk of someone’s day-to-day needs.”

In his email, Bemoras wrote that “Apex Management group adheres closely to all state and federal rules and regulations surrounding offering a self-insured MEC [minimal essential coverage] program.” He added: “We are test marketing our product in the individual environment, [and] if at some point it doesn’t make sense to continue that investment we will not invest or focus in on that market.”

Price-Tag Appeal, But What About Coverage?

The new plans promise to be a solution for individuals who say that conventional health insurance is too expensive. Those looking for alternatives to the ACA often earn too much to qualify for tax subsidies under the federal law.

Donna Harper, an insurance agent who runs a two-person brokerage in Crystal Lake, Ill., found herself in that situation. She sells the Xpress plans — and decided to buy one herself.

Harper says she canceled her BlueCross BlueShield plan, which did meet the ACA’s requirements, after it rose to nearly $11,000 in premiums this year, with a $6,000 annual deductible.

“Self-employed people are being priced out of the market,” she said, noting the new Xpress plan will save her more than $500 a month.

The Xpress Minimum Essential Coverage plans come in three levels, costing as little as $93 a month for individuals to as much as $516 for a family. They cover preventive care — including certain cancer screenings and vaccinations — while providing limited benefits for doctor visits, lab tests and lower-cost prescription drugs.

There is little or no coverage for hospital, emergency room care and expensive prescription drugs, such as chemotherapy.

Harper said she generally recommends that her clients who sign up for an Xpress plan also buy a hospital-only policy offered by other insurers. That extra policy would pay a set amount toward in-patient care — often ranging from $1,500 to $5,000 or so a day.

Still, experts caution that hospital bills are generally much higher than those amounts. A three-day stay averages $30,000, according to the federal government’s insurance website. And hospital plans can have tougher requirements. Unlike the Xpress programs, which don’t reject applicants who have preexisting medical conditions, most hospital-only plans often do. Harper says she personally was rejected for one.

“I haven’t been in the hospital for 40 years, so I’m going to roll the dice,” she said.  And if she winds up in the hospital? “I’ll just pay the bill.”

About 100 brokers nationwide are selling the plans, and interest “is picking up quick,” said Edward Pettola, co-owner and founder of Xpress, which for years has sold programs that offer discounts on dental, vision and prescription services.

Caveat Emptor

Experts question whether the plans exempt policyholders from the ACA’s tax penalty for not having “qualified” coverage, defined as a policy from an employer, a government program or a licensed product purchased on the individual market.

The penalty for tax year 2017 is the greater of a flat fee or a percentage of income. The annual total could range from as little as $695 for an individual to as much as $3,264 for a family.

Trump issued an executive order in October designed to loosen insurance restrictions on lower-cost, alternative forms of coverage, but the administration has not signaled its view on what would be deemed qualified coverage.

Responding to questions from KHN, officials from Apex and Xpress said their plans are designed to be affordable, not to mimic ACA health plans.

“If that is what we are expected to do, just deliver what every Marketplace plan or carriers do, provide a Bronze, Silver Plan, etc. it would not solve the problem in addressing a benefit plan that is affordable,” the companies said in a joint email on Nov. 14. “Individuals are not required to have an insurance plan, but a plan that meets minimum essential coverage, the required preventive care services.”

Bemoras, in a separate interview, said his company has been selling a version of the plan to employers since 2015.

“As we see the political environment moving and wavering and not understanding what needs to be done, the individual market became extremely attractive to us,” Bemoras said.

Still, experts who reviewed the plans for KHN said policies sold to individuals must cover 10 broad categories of health care to qualify as ACA-compliant, including hospitalization and emergency room care, and cannot set annual or lifetime limits.

The Xpress/Apex programs do set limits, paying zero to $2,500 annually toward hospital care. Doctor visits are covered for a $20 copayment, but coverage is limited to three per year. Lab tests are limited to five services annually. To get those prices, patients have to use a physician or facility in the PHCS network, which says it has 900,000 providers nationwide. Low-cost generics are covered for as little as a $1 copay, but the amount patients pay rises sharply for more expensive drugs.

“I’m very skeptical,” said attorney Alden J. Bianchi of Mintz Levin, who advises firms on employee benefits. “That would be hard [to do] because in the individual market, you have to cover all the essential health benefits.”

The details can be confusing, partly because federal law allows group health plans — generally those offered by large employers — to provide workers with self-funded, minimal coverage plans like those offered by Apex, Bianchi said.

Apex’s Shull said in a recent email that the firm simply wants to offer coverage to people who otherwise could not afford an ACA plan.

“There will be states that want to halt this. Why, I do not understand,” he wrote. “Would an individual be better off going without anything? If they need prescriptions, lab or imaging services subject to a small copay, would you want to be the one to deny them?”

Some consumers might find the price attractive, but also find themselves vulnerable to unexpected costs, including the tax liability of not having ACA-compliant coverage.

Harper, the broker who signed up for one of the plans, remains confident: “As long as Xpress satisfies the [mandate], which I’m told it does, my clients are in good hands. Even if it doesn’t, I don’t think it’s a big deal. You are saving that [the tax penalty amount] a month.”

 

Podcast: ‘What The Health?’ Tax Bill Or Health Bill?

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https://khn.org/news/podcast-what-the-health-tax-bill-or-health-bill/?utm_campaign=KFF-2017-The-Latest&utm_source=hs_email&utm_medium=email&utm_content=58570997&_hsenc=p2ANqtz-90FnDooDrGIdtTTHP8VfZovw1vS_Y_js4RdDwCCIwslKGDgrqu1yZ6bbcLJ5AbWfyJaM2B3HhQ9fR9txLD5dY-TnO3HA&_hsmi=58570997

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Republican efforts to alter the health law, left for dead in September, came roaring back to life this week as the Senate Finance Committee added a repeal of the “individual mandate” fines for not maintaining health insurance to their tax bill.

In this episode of “What the Health?” Julie Rovner of Kaiser Health News, Sarah Kliff of Vox.com, Joanne Kenen of Politico and Alice Ollstein of Talking Points Memo discuss the other health implications of the tax bill, as well as the current state of the Affordable Care Act.

Among the takeaways from this week’s podcast:

  • The tax bill debate proves that Republicans’ zeal to repeal the Affordable Care Act is never dead. The new congressional efforts to kill the penalties for the health law’s individual mandate could seriously wound the ACA since the mandate helps drive healthy people to buy insurance.
  • One of the most overlooked consequences of the tax debate is that it could trigger a substantial cut in federal spending on Medicare.
  • A $25,000 MRI? That’s what one family paid to go out of their plan’s network to get the hospital they wanted for the procedure for their 3-year-old. Such choices are again drawing complaints about narrow networks of doctors and hospitals available in some health plans.
  • Although they don’t likely say it in front of cameras, many Democrats are relieved at President Donald Trump’s choice to head the Department of Health and Human Services, former HHS official Alex Azar.
  • Federal officials have given 10 states and four territories extra money to keep their Children’s Health Insurance Programs running but it’s not clear what couch they found the money hidden in.
  • And in remembrance of Uwe Reinhardt, a reminder that he always stressed that a health care debate was about more than money — it was about real people.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.

The Senate Tax Bill Threatens Access to Health Care

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https://www.americanprogress.org/issues/healthcare/news/2017/11/16/442906/senate-tax-bill-threatens-access-health-care/

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This week, Senate Republicans announced that they plan to pay for their tax cuts for large corporations and millionaires not only by imposing tax increases on the middle-class but also by undermining people’s access to health care. Specifically, they have proposed eliminating the Affordable Care Act’s (ACA) individual mandate, which helps keep premium costs affordable by ensuring that both healthy and sick people have health insurance.

Repealing the mandate would drive up premiums by 10 percent in 2019 and lead to 13 million fewer people having health insurance by 2025. A Congressional Budget Office (CBO) report also revealed that the similar House version of the tax bill would result in $25 billion in cuts to Medicare in fiscal year 2018 and hundreds of billions of dollars of cuts to the program overall. Taken as a whole, the tax bill would not only increase taxes for millions of middle-class families but would also have disastrous effects on people’s health care.

A typical middle-class family buying individual market insurance would see premiums increase nearly $2,000

The Senate tax bill would substantially increase premiums in the individual market for health insurance, and middle-class families would bear the brunt of the price hike. The bill would eliminate the individual mandate—the requirement that people maintain health coverage or pay a penalty. Without the mandate, people would only purchase coverage when they needed it, resulting in adverse selection that would drive up premiums. The CBO estimates that premiums would increase about 10 percent as a result of this adverse selection.

The Center for American Progress estimates that this premium increase translates to an extra $1,990 for benchmark plan coverage for an unsubsidized middle-class family of four. Families with incomes above 400 percent of the federal poverty level (FPL)—more than $98,400 for a family of four in the lower 48 states—are not eligible for premium tax creditsto reduce the cost of marketplace coverage. The 10 percent increase would be an even greater financial burden for families in states with higher premium levels, increasing costs by $2,900 in Alaska, $2,350 in Maine, and $2,060 in Arizona.

13 million more people would be uninsured by 2025

The CBO estimates that repeal of the mandate would result in 4 million fewer people having coverage in 2019 and 13 million fewer with coverage by 2025. As a result, about 16 percent of the nonelderly population would not have health insurance by 2025, compared with about 10 percent currently.

The individual mandate is necessary because of the consumer protections put in place by the ACA. The ACA banned discrimination by insurance companies against people with pre-existing conditions, required that people be charged the same amount regardless of health status, and eliminated annual and lifetime limits on coverage. But these protections would also make it easy for people to game the system by only buying health insurance once they needed it. To address this concern, the ACA coupled these reforms with an individual shared responsibility provision, also known as the individual mandate, which requires that everyone maintain health insurance coverage so that the overall insurance risk pool is healthy and premium rates are kept in check.

Repeal of the mandate would have two effects on the individual market. First, people who expect to be healthy would avoid purchasing coverage until they need it. As a result, the remaining enrollees in the individual market would be sicker on average, and insurance companies would need to raise rates to cover the increased average cost. Second, the resulting higher premiums would discourage additional people from purchasing coverage through the individual market. Those who become uninsured would no longer have financial protection against catastrophic medical costs, and hospitals and other providers would be forced to provide more uncompensated care.

Medicare would be cut by $25 billion in 2018

In addition to its frontal assault on health care for the middle class, the Senate bill would also secretly cut Medicare. Because the tax cuts for the wealthy in the proposed bill are not fully paid for, they would increase the deficit by more than $1.4 trillion over 10 years. But the little-known Statutory Pay-As-You-Go Act of 2010 requires that any deficit-increasing legislation be offset with cuts to other mandatory programs, including Medicare. The CBO has estimated that the offsetting spending reductions for the similar House version of the tax bill would cut Medicare by about $25 billion in fiscal year 2018. Given that similar cuts would be required in subsequent years, the total cost imposed on the Medicare program would be hundreds of billions of dollars over the next decade. This would have a particularly harmful effect on rural hospitals with thin margins, which could be at risk of closure as a result.

Asking millions of middle-class families to pay more in taxes so that corporations and the wealthy few can pay less in bad enough. But to use those cuts to also undermine health care for middle-class families is unconscionable. Once again, the congressional majority seems to be doing everything in its power to make life harder for everyday Americans, just so it can provide giveaways to the wealthy few.

Methodology

Our estimated reduction in coverage in 2025 due to repeal of the mandate is based on national projections by the CBO. The CBO estimates that 13 million fewer people will have coverage in 2025, including 5 million fewer people with Medicaid, 5 million fewer people with individual market coverage, and 3 million fewer people with employer-sponsored insurance. We used data from the 2016 American Community Survey Public Use Microdata Sample (ACS PUMS), available from the IPUMS-USA to tabulate the number of nonelderly people in each state by primary coverage type using a coverage hierarchy. We then assumed that each state’s reduction in coverage was proportional to its share of the national total for each of those three coverage types. For more on the IPUMS-USA data set, see Steven Ruggles and others, “Integrated Public Use Microdata Series: Version 5.0” (Minneapolis: Minnesota Population Center, 2010).

We made two adjustments to our ACS PUMS tabulations to account for potential effects of Medicaid expansion in Maine, given voters’ recent approval of expansion. We increased the number of Medicaid enrollees in Maine by 51,000 based on projections by the Urban Institute. We also decreased the number of people with coverage through Maine’s individual market by 20 percent to account for the fact that some enrollees will lose access to marketplace premium subsidies when they become Medicaid eligible under expansion. Enrollment data from the Centers for Medicare and Medicaid Services (CMS) show that 27 percent of 2017 marketplace plan selections were by people with family incomes between 100 and 150 percent of the federal poverty level.

Our estimates of 2019 premium increases are based on the CBO projection that mandate repeal will increase individual market premiums 10 percent. We used the HealthCare.govplan information to calculate the 2018 average marketplace benchmark—second-lowest cost silver—plan in each state, weighting by the geographic distribution of current marketplace enrollment. We then inflated that premium to 2019 levels according to National Health Expenditure projections for per-enrollee cost growth. To calculate the 2019 average benchmark premium specific to a typical family of four, we borrowed the example family composition that the U.S. Department of Health and Human Services uses in its reports: 40-year-old and 38-year-old parents and two children. We estimated that the family would pay an additional 10 percent of that 2019 benchmark due to mandate repeal. Premium data were not available for all states.

Finally, our estimates of state-level cuts to Medicare in fiscal year 2018 divided the $25 billion total Medicare funding reduction projected by the CBO proportional to each state’s share of national Medicare spending as of 2014, the most recent year for which CMS National Health Expenditure data is available, using data published by the Kaiser Family Foundation.

Health Care for Millions at Risk as Tax Writers Look for Revenue

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https://www.bloomberg.com/news/articles/2017-11-16/health-care-for-millions-at-risk-as-tax-writers-look-for-revenue

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The Republican tax plans are suddenly looking a lot more like health-care bills, with provisions that may affect coverage and increase medical expenses for millions of families.

The House version of the tax bill, which President Donald Trump endorsed on Tuesday, would end a deduction that allows families of disabled children and elderly people to write off large medical expenses. The Senate plan would repeal the Obamacare requirement that most Americans carry insurance, a move that insurers promise would raise premiums in the nationwide individual insurance market.

The provisions would help offset the cost of large tax cuts for corporations and individuals. But the move has sparked a new wave of opposition from the health-care industry and others who are concerned about its impact — the same political headwinds that tanked Republican efforts to repeal the Affordable Care Act earlier this year.

Either proposal, if signed into law, “could be devastating for some families with disabilities,” said Kim Musheno, vice president of public policy at the Autism Society, a Bethesda, Maryland, organization that advocates for people with autism. “Families depend on that deduction. And if they deal with the individual mandate, that’s going to cut 13 million people from their health care,” she said, citing a Congressional Budget Office estimate.

Republicans and some conservative groups, though, argue that removing the penalty for uninsured individuals would represent a tax cut for many low-income people who pay it now. Americans for Tax Reform, the group led by anti-tax crusader Grover Norquist, said that Internal Revenue Service data from tax year 2015 show that 79 percent of households that paid the penalty earned less than $50,000 a year.

Most Americans already think the tax legislation is designed to benefit the rich and oppose the bill by a two-to-one margin, according to a Quinnipiac University poll released on Wednesday. The survey was conducted between Nov. 7 and Nov. 13 — before the repeal of the Obamacare mandate was introduced — and has a margin of error of 3 percentage points. Some of the details in both tax plans have changed since the survey, and the Senate tax-writing committee is still working on its draft.

Republican Concerns

Few Republicans have spoken out about the House bill’s repeal of the medical-expense break. The bill faces a vote on the House floor Thursday. But some criticism has begun to surface as advocacy groups including the AARP and the American Cancer Society have highlighted the harm the House bill could have on families battling diseases and on the elderly. People with tens of thousands of dollars in annual medical expenses often rely on the tax deduction to make ends meet.

Representative Walter Jones, a North Carolina Republican, said Wednesday he’ll vote against the House bill in part because it eliminates the deduction for out-of-pocket medical expenses.

“There are a lot of seniors in my district and this is life and death for them,” he said.

The deduction is allowed under current law if medical expenses exceed 10 percent of a taxpayer’s adjusted gross income. Almost 9 million taxpayers deducted about $87 billion in medical expenses for the 2015 tax year, according to the IRS.

Representative Greg Walden, an Oregon Republican who chairs the Energy and Commerce Committee, said some of his constituents who live in expensive elder-care facilities could be harmed if the deduction is scrapped.

“I think it’s one we have to continue to massage a bit,” he said. “There’s a lot of things out there and there’s maybe going to be an opportunity to adjust some of them.”

He declined to elaborate.

Obamacare Repeal

On the other side of the Capitol, Senate Republican leaders’ sudden decision to add a partial Obamacare repeal to their bill has energized Democratic opposition.

“You don’t fix the health insurance system by throwing it into a tax bill and causing premiums to go up 10 percent,” Senator Sherrod Brown, an Ohio Democrat, told reporters Wednesday.

Were the ACA’s insurance mandate repealed absent a new policy to compel the purchase of coverage, the CBO projects that premiums would rise 10 percent for people who buy insurance on their own and more than 13 million Americans would lose or drop their coverage.

But a reduction in the number of people with insurance also translates to less taxpayer money spent to provide subsidies for premiums under the ACA. Ending the requirement as of 2019 would save the government an estimated $318 billion, helping to offset the cost of lowering the corporate tax rate.

In addition, the Senate’s tax plan could trigger sharp cuts to Medicare and other programs in order to meet budget deficit rules, according to CBO.

Easy Ads

The move to target Obamacare comes after Republicans lost elections in Virginia and other states earlier this month. Health care was a significant factor in those races and Republicans will face punishing campaign ads if they try to chip away at Obamacare or end the medical-expense deduction while cutting taxes, said political analyst David Axelrod, a former top adviser to President Barack Obama.

“The thing that makes it more of a potent issue is that it’s all being done to facilitate what essentially is a massive corporate tax cut and an individual tax cut that’s skewed to wealthy Americans,” he said in an interview. “You don’t have to work very hard to make those ads.”

The White House argues that the ACA’s insurance mandate isn’t popular and disproportionately affects low- and middle-income Americans who are forced to buy insurance that may be more expensive than they can afford.

“The President’s priorities for tax reform have been clear from the beginning: make our businesses globally competitive, and deliver tax cuts to the middle class,” White House spokesman Raj Shah said in a statement. “He is glad to see the Senate is considering including the repeal of the onerous mandates of Obamacare in its tax reform legislation and hopes that those savings will be used to further reduce the burden it has placed on middle-class families.”

‘Cut Top Rate’

Trump, though, has said proceeds from repealing the insurance mandate should be used to cut taxes even further for wealthy people.

“How about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further?” Trump said Monday in a tweet. “Cut top rate to 35% w/all of the rest going to middle income cuts?”

Like Republicans’ failed attempts to repeal the ACA, the tax plan is amassing a growing list of opponents from the world of medicine.

Insurers, hospital groups and disability advocates have spoken out forcefully against the health-care proposals in the bill. Hospitals and insurance groups wrote a letter to Congressional leaders on Tuesday warning of dire health-care outcomes if the tax measure becomes law.

“Repealing the individual mandate without a workable alternative will reduce enrollment, further destabilizing an already fragile individual and small group health insurance market on which more than 10 million Americans rely,” said the letter, signed by six health-care groups, including the American Hospital Association and America’s Health Insurance Plans.

 

Why Tax Reform Could Be a Serious Threat to Health Care

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http://www.commonwealthfund.org/publications/blog/2017/nov/why-tax-reform-could-be-a-serious-threat-to-health-care

After nine months of unsuccessful efforts to repeal and replace the Affordable Care Act (ACA), Congress has moved on to the challenge of reforming the U.S. tax code. At first glance, it may appear that Congress has shifted priorities: The House tax proposal released last week doesn’t propose to repeal the Affordable Care Act’s individual mandate requiring health insurance, nor does it fund tax reform with cuts to Medicaid.

However, this shift in congressional focus does not mean that Republicans in Washington are done with the ACA. The executive branch continues to undermine the individual health insurance marketplaces. As Sara Collins points out in a recent post on To the Point, two presidential actions last month — the first bypassing ACA consumer protections to allow multistate association health plans, and the second ending payments to insurers for cost-sharing subsidies — are likely to increase premiums on the marketplaces by 2019. Executive branch decisions to cut funding for marketplace outreach are already making it difficult for young, healthy people to explore their insurance options, which could depress enrollment for 2018 and further destabilize the marketplaces.

Moreover, this shift in focus does not mean that the attempts to deeply cut federal health care programs are over, either. Even if congressional leaders lose their appetite for full-scale ACA repeal bills, the futures of tax reform and health care will be intertwined for at least three reasons.

First, some conservatives in the House and Senate remain committed to including ACA repeal provisions in the tax bill. And, while they initially lost in their efforts to attach a repeal of the individual mandate to the current House Bill, conservatives may withhold support unless such a provision is included in the final bill.

Second, the House tax proposal is expensive: the proposed tax cuts total $5 trillion. The budget resolution Congress passed last month allows up to $1.5 trillion of the total cost of the tax cut to be paid for with an increase in the federal deficit. That means the U.S. Treasury will have to borrow money to cover 30 percent of the cost of the House bill — a notable departure from Reagan-era tax cuts that were fully offset. This shortfall will go up over time, because several of the bill’s tax code changes expire in a few years.

While the current House proposal includes $3.5 trillion in revenue-generating provisions to help pay for the remaining 70 percent of the tax cuts, several provisions are unpopular with rank-and-file Republicans. These include a 50 percent cut to the maximum home mortgage deduction and elimination of the current deduction for state and local income taxes. If some Republicans force these provisions out of the bill or modify them to affect fewer taxpayers — changes likely to be sought by Republicans representing districts in large Blue states with high housing costs and high state taxes — then the bill will not raise the revenue required by the budget resolution. Congressional leadership would be forced to pay for tax cuts with other sources of revenue or with cuts in federal spending. Key targets would be cuts to Medicaid and Medicare.

Third, tax reform may ultimately affect access to health care in the not-so-distant future, even if specific health provisions are not included in the bill. Should it pass, the ballooning federal deficit that will follow its implementation will invariably lead to calls to reduce federal spending. Medicaid, Medicare, and ACA coverage will again be in the crosshairs given the portion of federal spending — 28 percent in 2017, growing to 40 percent in 2037 according to the Congressional Budget Office — these health programs represent.

200 health, business groups endorse bipartisan ObamaCare bill

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200 health, business groups endorse bipartisan ObamaCare bill

Image result for aca business group support

More than 200 health and business groups have endorsed a bipartisan bill to shore up ObamaCare’s insurance markets.

Senate Health Committee Chairman Lamar Alexander (R-Tenn.) and ranking member Patty Murray (D-Wash.) announced the support Wednesday as part of their latest push to get the bill passed.

Those in support include influential groups such as the American Medical Association and the American Hospital Association.

But the bill still faces an uphill battle to becoming law. While it appears to have the support needed to pass the Senate, Majority Leader Mitch McConnell (R-Ky.) has said he won’t call it for a vote without approval from President Trump.

The bill would fund ObamaCare’s insurer subsidy payments for two years and give states additional flexibility to change their ObamaCare requirements.

Trump has called the bill a bailout for insurance companies and is pushing for more conservative changes.

But Murray said Tuesday she hasn’t had any discussions with the White House about making changes to the legislation, calling for it to be brought up as is.

The bill thus appears to be at a standstill. Many observers think its only real chance is to be included in a larger deal on spending in December.

Clean Up on Aisle 12! The Obamacare Pop-Up Store is Open but Stocks are Limited

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Clean Up on Aisle 12! The Obamacare Pop-Up Store is Open but Stocks are Limited

Image result for ACA

The fifth Open Enrollment period under the Affordable Care Act (ACA) started on November 1st, and will continue for a scant 45 days ending on December 15, 2017. This year, not only has the Open Enrollment been cut in half, but obstacles abound – obstacles that were not part of the 2016 Open Enrollment Period. For example:

  • Healthcare.gov is undergoing maintenance that could interfere with access during the Open Enrollment Period;
  • Federal support for Open Enrollment outreach and advertising is substantially lower this year than it has been in prior Open Enrollment periods; and
  • The number of health insurers participating in the exchanges has dropped significantly from last year (prompted in part by well-founded concerns regarding the future of federal cost-sharing reduction (CSR) payments), and in some counties, only one plan is available to individuals and families seeking coverage through the exchanges.

Plan Departure: A Continuing Trend from Prior Years

In 2016, a significant number of large, national insurance companies announced that they were withdrawing from the exchanges and would no longer offer health insurance coverage during 2017. As for 2018, the following chart identifies, as of October 12, 2017, both (1) those national insurance companies that will fully withdraw from one or more exchanges effective January 1, 2018, and (2) those national insurance companies that will continue to offer plans on the state exchanges in 2018 as they did in 2017.

Insurance Company: Insurance Exchange Exits for 2018: Insurance Exchange Participation in 2018:
Aetna Delaware, Iowa, Nebraska, Virginia None
Anthem Indiana, Maine, Missouri, Nevada, Ohio, Wisconsin California, Colorado, Connecticut, Georgia, Kentucky, Missouri, New Hampshire, New York, Virginia
Centene None Arizona, Arkansas, California, Florida, Georgia, Indiana, Kansas, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Texas, Washington
Cigna Maryland Colorado, Illinois, Missouri, North Carolina, Tennessee, Virginia
Molina Wisconsin, Utah California, Florida, Michigan, New Mexico, Ohio, Texas, Washington
Humana Florida, Georgia, Illinois, Louisiana, Kentucky, Michigan, Missouri, Mississippi, Ohio, Tennessee, Texas None
UnitedHealthcare Virginia Nevada, New York

Who Ordered the Retreat?

There are a variety of reasons that large national insurers are retreating from the federal and state exchanges, but as a general rule, they stem from uncertainty regarding the profitability of state exchange participation.

CSR Funding Uncertainty

President Trump’s inauguration spurred speculation that the ACA’s CSR subsidy payments could be discontinued, and insurance companies priced exchange plans accordingly. The Congressional Budget Office estimated that the cessation of CSR payments for the 2018 calendar year – which has since come to pass – would result in a 25% increase in premiums by 2020 and at least a temporary increase in the number of areas with zero individual exchange offerings (as a result of further insurer exits and stifled entry / expansion).

The Individual Mandate

One year-over-year driver of the insurance company exodus from the exchanges is the weakness of the individual mandate.

The individual mandate is critical to whether the health insurance companies can turn a profit on the exchange plans. In an ideal world, the individual mandate would successfully induce all eligible citizens to obtain health coverage. Under such circumstances, health insurers would have a much easier time estimating enrollment, risk pools and, ultimately, profits from participation on the insurance exchanges. In practice, however, many of the “young invincibles” whose participation in the health insurance market could offset the costs of insuring older and sicker populations elect to incur the relatively modest tax penalty resulting from a failure to obtain coverage.

Even if the penalty were tougher (and as a consequence, presumably more effective), enforcement is rather lax, and the Trump administration has signaled in 2017 it may instruct the Internal Revenue Service to deprioritize enforcement of the individual mandate.

Enrollee Fraud and Gaming the System

The large national insurance companies have also complained about enrollee fraud that increases the actuarial unpredictability of the performance of a particular risk pool. For example, insurers have complained that enrollees in an exchange plan may have an expensive procedure early in the year, and then stop paying premiums after the insurance plan has paid for the procedure.

The Importance of the Big Players in the ACA Exchanges

Because they have greater resources to understand, and hedge, the actuarial risks of the exchange plans – including balancing the prospects of fraud, unhealthy patient mix and less then desirable compliance with the individual mandate – large national health insurers are better positioned than their smaller counterparts to succeed in the ACA exchanges.

As such national insurers have migrated away from exchange participation, they have in many instances been replaced by regional players, such as health plans associated with regional hospital systems, physician groups and faith-based organizations. Such entities generally do not have the same financial wherewithal as the large national insurance companies to successfully diversify risk or endure greater potential losses with respect to the exchange risk pools. As a result, many healthcare analysts and commentators have concluded that regional plans are ill-equipped to fully replace the large national insurance plans if the large national insurance plans continue to leave the state exchanges.

Notwithstanding the foregoing concerns regarding regional plan participation on the exchanges, Centene Corporation, a publicly-traded healthcare company that is the parent corporation of multiple state-based plans that participate in the state exchanges, has elected to expand its participation in 2018. Whether Centene Corporation succeeds with its expansion into more state ACA exchanges, and whether it chooses to further expand in future years, will be an important indicator of the health of the ACA health insurance exchanges in years to come.

“Repair and Encourage”

The remedy for stabilizing the exchanges is not overly complicated, and realizable, if the political will existed to accomplish what needs to be done.

A strong first step would be changing the conversation in Washington D.C. about the ACA – get rid of the “repeal and replace” mantra and instead make the conversation about “repair and encourage.” The point is that the manner in which the political class is addressing healthcare and the ACA is toxic, and the result is driving the insurance companies away from participation. A change in tone from our elected leaders would probably do remarkable good in stabilizing the state insurance exchanges over time.

In addition to calming the political dialogue regarding the ACA, for 2018 (ahead of the 2019 open enrollment period), we propose some specific policies that we think would help encourage participation by the large, national insurance companies in the exchanges in 2019 and beyond:

  • The judicial branch needs to resolve, ideally favorably, whether CSRs will continue.
  • The individual mandate needs to be strengthened by increasing the applicable tax penalty and more vigorously pursuing enforcement.
  • Congress should consider incentives, whether tax-based or otherwise, to specifically encourage the large, national insurance companies to increase participation on the exchanges.

In the current political climate, such dedicated action seems unlikely, but the political winds may yet shift and blow the health insurers safely home to the exchanges.