Hospitals are investing in housing — Here’s why

https://www.beckershospitalreview.com/finance/hospitals-are-investing-in-housing-here-s-why.html

Image result for population health management

 

Several factors, including changes in reimbursement, have motivated some hospitals to invest in community housing projects, according to NPR.

In the 1990s, 50 percent of the children in Southern Orchards — near Columbus, Ohio-based Nationwide Children’s Hospital — lived in poverty. Through a partnership called the Healthy Neighborhoods Healthy Families initiative, Columbus, community groups like United Way, and Nationwide Children’s began to invest in the neighborhood’s homes. In 2008, the organizations started renovating vacant homes for resale, building affordable housing and funding renovations for homeowners.

With a $6.6 million infusion from Nationwide Children’s, the $22 million project led to the construction of 58 affordable housing units, 71 renovated homes and 15 new homes. The organizations also gave out 149 home improvement grants from 2008 to 2018, according to the report, which cites Pediatrics.

Kelly Kelleher, MD, director of the Center for Innovation in Pediatric Practice at Nationwide Children’s, writes in Pediatrics that Nationwide Children’s is treating “the neighborhood as a patient.” The hospital is attempting to mend harmful socio-economic and physical environments in the hope it will lower the prevalence of health issues caused by those conditions. The investment could pay for itself if the number of hospital visits from Southern Orchards neighborhood falls, said Dr. Kelleher.

Hospitals across the country are taking similar approaches, though not as direct as owning and operating housing in a certain neighborhood, according to Megan Sandel, MD, who helps direct Boston Medical Center’s housing initiative. Dr. Sandel said Boston Medical Center’s projects are owned and operated by other community organizations. Similar projects are off the ground in Seattle, Boston, Atlanta and New York, among other places.

A potential motivator for these projects is a shift from fee-for-service medicine to reimbursement based on improving quality of care, according to the report. Some states are even starting to give healthcare organizations funding to manage populations.

 

The Large Hidden Costs of Medicare’s Prescription Drug Program

https://theincidentaleconomist.com/wordpress/the-large-hidden-costs-of-medicares-prescription-drug-program/

Image result for medicare part d

At a glance, Medicare’s prescription drug program — also called Medicare Part D — looks like the perfect example of a successful public-private partnership.

Drug benefits are entirely provided by private insurance plans, with generous government subsidies. There are lots of plans to choose from. It’s a wildly popular voluntary program, with 73 percent of Medicare beneficiaries participating. Premiums have exhibited little to no growth since the program’s inception in 2006.

But the stability in the premiums belies much larger growth in the cost for taxpayers. In 2007, Part D cost taxpayers $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase. It’s a surprising statistic for a program that is often praised for establishing a competitive insurance market that keeps costs low, and that is singled out as an example of the good that can come from strong competition in a private market.

Much of this increase is a result of growing enrollment — it has doubled in the past decade to 43 million — and higher drug prices. But there is also a subtle way in which the program’s structure promotes cost growth.

When enrollees’ drug costs are relatively low, plans pay a large share, typically about 75 percent. But when enrollees’ drug spending surpasses a certain catastrophic threshold — set at $5,000 in out-of-pocket spending in 2018 — 80 percent of drug costs shifts to a government program called reinsurance. This gives people in charge of private insurance plans an incentive to find ways to push enrollees into the catastrophic range, shifting the vast majority of drug costs off their books. For example, they could be less motivated to negotiate for lower drug prices for certain types of drugs if doing so would tend to keep more enrollees out of the catastrophic range.

Reinsurance spending, which is not reflected in premiums, has been rising rapidly.

“This harms the very competition that Part D was supposed to establish,” said Roger Feldman, an economist at the University of Minnesota. Consumers are naturally attracted to lower-premium plans, but choosing them increasingly shifts higher costs onto taxpayers if plans achieve those lower premiums in part by shifting more drug expenses onto the government’s books.

Documenting this is a recent study by Mr. Feldman and Jeah Jung of Penn State University that was published in Health Services Research. The study found that the disconnect between premiums and reinsurance costs has increased over time. Additionally, insurance company plans exhibiting less of an effort to manage the use of high-cost drugs had higher reinsurance costs. This is consistent with incentives to encourage enrollees into the catastrophic range of spending.

The Medicare Payment Advisory Commission has been warning about this problem for several years in its annual reports to Congress. According to MedPAC, between 2010 and 2015, the number of enrollees entering the catastrophic drug cost range grew 50 percent, from 2.4 million to 3.6 million, now accounting for 8 percent of enrollees.

“It’s ironic for a program supposedly built on market principles,” said Mark Miller, a former MedPAC director. “You wouldn’t see this kind of thing in the commercial market.” For commercial market insurance products — such as those offered by employers or in the health insurance marketplaces — only about 1 percent of policyholders reach a catastrophic level of expenditures at which reinsurance kicks in. (Mr. Miller and I are co-authors of an editorial about Ms. Jung’s and Mr. Feldman’s study, which also appears in Health Services Research.)

Reinsurance is the fastest-growing component of Medicare’s drug program, expanding at an 18 percent annual rate between 2007 and 2016. In 2007, it accounted for 17 percent of government spending for Part D. In 2016 it was 44 percent.

The Affordable Care Act hastened this growth. The law requires pharmaceutical manufacturers to pay some of the cost of the drug benefit. (The Bipartisan Budget Act of 2018 further increased how much manufacturers must contribute.) For the purposes of reaching the catastrophic threshold and triggering reinsurance, these industry contributions count as out-of-pocket payments for enrollees, even though they are not.

That means enrollees don’t have to spend as much as they otherwise would to trigger the reinsurance program. Although this is of great benefit to enrollees, it also pushes up taxpayer liability for the program.

Changing the extent to which manufacturer’s contributions count as enrollee out-of-pocket spending is one potential reform of the program. Other solutions include increasing the liability of insurance company plans in the catastrophic range and decreasing the liability of taxpayers.

This would have the effect of bringing premiums more in line with program spending. Doing so would “return Part D to the market-based program it was intended to be,” Ms. Jung said. As it stands, there is a substantial divide between what Part D was billed as and what it actually is.

 

 

Health Insurance Premiums Are Stabilizing

http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2018/08/16/health-insurance-premiums-are-stabilizing-despite-gop-attacks

Stateline Aug16

 

Despite Republican efforts to undermine the Affordable Care Act, insurance premiums will go up only slightly in most states where carriers have submitted proposed prices for next year. And insurance carriers are entering markets rather than fleeing them.

The improvements stem from less political uncertainty over health policy, steeper than necessary increases this year, better understanding of the markets, improvements in care and a host of actions taken by individual states.

Average proposed premiums for all levels of plans in California, Colorado, Delaware, Florida, Indiana, Nevada, Ohio and Pennsylvania will increase less than 9 percent in 2019, according to the Kaiser Family Foundation.

By contrast, this year’s mid-priced plans increased an average of 37 percent nationally compared to 2017.

In some states, 2019 premiums are projected to decrease. Prices also are expected to drop for people in a number of metropolitan areas, including Atlanta, Baltimore, Denver, New York and Washington, D.C.

And unless the Trump administration launches new attacks on the Affordable Care Act in the coming months, analysts believe the average increase across the United States will hold to the single digits.

To be sure, not all areas will fare as well. Some can still expect to see big increases next year, according to the Kaiser Family Foundation. For instance, proposed premium increases in Maryland average 30 percent for 2019.

(In some states, carriers have not yet had to file their rate proposals for 2019, but will in the coming weeks.)

But after a couple years in which carriers fled many markets around the country, insurers are planning to enter exchanges in many states, including Arizona, Florida, Michigan, New Mexico and Wisconsin. In some states, existing insurers are pushing into new areas.

“That they are entering markets is a sign that the insurers are pretty confident about those markets,” said Rabah Kamal, who analyzes health reform and health insurance for Kaiser.

“After several years of big losses, insurers are actually turning a profit,” said Kamal. “They’re doing well, so overall, there’s no justification for big increases.”

To a large extent, premiums in 2019 appear to be moderating because carriers raised rates higher than necessary in 2018 in reaction to the uncertainty over how Congress and the Trump administration might undermine the ACA. “It boils down to the fact that last year’s rates were too high,” said Emily Curran, a research fellow at Georgetown University’s Health Policy Institute.

Carriers also understand the marketplace much better than they did in 2014 when the exchanges were launched across the country, Curran and others say. Carriers have a better sense of who they are covering and how to predict their health risks, Curran said. Insurers and medical providers also have better coordinated care to reduce duplication.

State Roles

States also have had a major hand in stabilizing their markets, seeking to limit the damage the federal government is doing to the ACA.

Massachusetts had its own individual mandate before the ACA, and now New Jersey does as well. Three states, Massachusetts, New Jersey and New York, have passed outright bans on issuing short-term health insurance policies, while 12 others have adopted standards more restrictive than federal policy. Some states, including Alaska, Minnesota and Oregon, have also created state-funded reinsurance pools, which protect carriers from financially crippling individual medical claims.

Finally, a number of states have done their own outreach to publicize their exchanges and promote enrollment in the absence of federal efforts.

Pennsylvania is one of those states. The insurance market has stabilized there, said Jessica Altman, the state’s insurance commissioner. She projects the average state premium increase in 2019 will amount to 0.7 percent, compared to 30.6 percent this year. She said in 31 of 67 Pennsylvania counties, there will be more carriers selling policies next year compared to 2018. And, she said, many carriers are pushing into new territories.

Her agency estimates that the increase this year would have been only 7.6 percent absent the federal government’s elimination of cost-sharing reductions, which were federal payments to insurance carriers to cushion them from exorbitant individual medical claims.

“We had pretty significant increases last year, and we shouldn’t have,” Altman said.

Julie Mix McPeak, commissioner of the Department of Commerce and Insurance in Tennessee, where premiums are expected to fall and more carriers are intending to operate, said the ACA brought more than 200,000 Tennesseans into health plans — many of whom previously had not sought routine health care — which meant higher claims in the first years.

“We had a pretty negative health score in terms of dollars spent on claims because so many people coming into primary care had health issues that needed to be addressed. Now that they’ve been in care for several years now, we aren’t seeing those claims rising any more. They are leveling off.”

Whether the stability that appears to be settling the markets in 2019 will continue beyond that largely depends on what Washington does. “No one,” said Curran, “wants to see more uncertainty.”

Undermining the ACA

A Brookings Institution study released this month estimated that insurers on the health insurance market this year will enjoy an underwriting profit margin of 10.5 percent, up from 1.2 percent last year.

The study estimated that, absent federal policies disrupting the marketplaces, premiums would have dropped 4.3 percent nationwide in 2019.

Many health care analysts agree. “In cases where we are seeing modest increases, we might have seen decreases,” said Myra Simon, executive director of individual market policy for America’s Health Insurance Plans, a lobbying arm of the health insurance industry.

Steps taken by Republicans in Washington to undermine the exchanges include Congress’ repeal starting next year of the individual mandate, which requires all Americans to obtain health insurance, and the Trump administration’s decision to end the Obama-era cost-sharing reduction payments.

The administration also eliminated most funds for outreach to encourage enrollment in the markets and shortened the periods during which people could sign up for plans. In addition, the administration has moved forward with plans to loosen regulation on association and short-term health plans that don’t have to be as comprehensive as plans sold under the Affordable Care Act.

Health insurance analysts of all stripes had said those actions would draw people away from the insurance exchanges, particularly the young and healthy. Their departure, analysts said, could drive up premiums for all those remaining and set the markets on a “death spiral” that would ultimately drive all carriers from the exchanges.

The president has been clear about his intentions. “Essentially, we are getting rid of Obamacare,” he said in April.

But as carriers file their plans with state insurance offices for next year, it appears that warnings of imminent catastrophe were, at the least, premature.

“The administration has done almost everything on its list to destabilize the market or, in their words, ‘create more choice,’” said Chris Sloan, a director at Avalere Health, a Washington-based health policy research and consulting firm. “They’ve done it all and the market is still standing.”

 

 

 

Trying to Survive: Community Responses to Uncertainties About Federal Funding for Medicaid and Public Health Programs

https://www.commonwealthfund.org/blog/2018/community-responses-federal-funding?omnicid=EALERT1457501&mid=henrykotula@yahoo.com

Mother and baby at a Federally Qualified Health Center

“We are just trying to survive.”

So says the director of an Ohio federally qualified health center (FQHC) that, like many such clinics nationwide, struggles to meet the demand for a wide range of services, from prenatal and other preventive care to addiction treatment and oral health care.

Along with community hospitals and public health departments, FQHCs — critical providers of health services in many low-income communities — are funded through state and local taxes, federal and state government programs, and private philanthropy. But some FQHCs are experiencing shortfalls in trying to meet their clients’ needs. Threats from Congress to reduce federal Medicaid funding, scale back Medicaid expansion, and decrease funding for public health programs have further compounded the financial uncertainties.

To learn how funding shortfalls are being experienced on the ground, my colleagues and I spoke with hospital administrators, chiefs of emergency departments, directors of county public health departments, and heads of FQHCs and behavioral health clinics. We also interviewed community leaders connected to businesses, law enforcement, local media, religious organizations, and political groups in eight North Carolina, Ohio, Pennsylvania, and Wisconsin counties.

Local Health Funding Inadequate

Nearly all of these community leaders described increasing access to health care as just one of three priorities for their communities. Improving local schools and attracting businesses with good-paying jobs are the other top concerns. As one school superintendent said, “We need to focus on all of these if we are to attract employers and people and remain a desirable place to live.”

But local health needs keep growing. The list is daunting: the decontamination of public water supplies; prenatal and infant care; immunizations; reductions in smoking and obesity; better nutrition; dental care for children and adults; and addressing mental illness, suicide risks, and substance use disorders. “We don’t have the capacity to deal with all who [need help],” says a Wisconsin county public health director. “We need to build infrastructure” — clinics and treatment centers — “and provider network capacity.”

Health departments and community clinics report that local funding has been inadequate for some time. As state and county governments have resisted raising taxes and increasing funds for public health needs and community clinics, grants from local organizations and foundations have helped fill the breach. But private philanthropy only goes so far. “Local foundations do not want to fund long-term staff needs,” one public health director said.

Medicaid Funding Is Critical for FQHCs and Emergency Departments

Threats to Medicaid funding have community providers worried. Medicaid generally provides about half the revenues for FQHCs, enabling them to provide care to all, regardless of ability to pay. FQHC directors fear that changes to eligibility — including requirements that beneficiaries work or volunteer, as proposed under various waivers — could mean that some patients will lose coverage, along with their access to counseling and medications for mental illness or chronic conditions like diabetes. Medicaid cutbacks also could make it harder for FQHCs to find specialists willing to see their uninsured or underinsured patients.

Hospital emergency departments (EDs) also would suffer from cuts to Medicaid. “Medicaid and self-pay [patients are] now 40 percent of our revenue, compared to 20 percent before Medicaid was expanded,” one ED chief told us. While more patients are covered thanks to the expansion, ED revenue from private insurance in these communities is down over the past two years, making hospitals more dependent on public insurance. ED chiefs also say that people with mental illnesses or substance use disorders experiencing crises are already crowding EDs, in part because it’s often easier for Medicaid beneficiaries to get to the hospital than to find primary care providers willing to treat them in a timely manner. If Medicaid funding is cut or eligibility requirements are changed, such problems could become much worse.

Medicaid Changes Already Impacting Providers

Complicating matters is a 2016 rule issued by the Centers for Medicare and Medicaid Services that was intended to improve quality of care and oversight for the growing number of Medicaid beneficiaries enrolled in managed care. Some states are responding to the rule by requiring that FQHCs and other safety-net clinics use more complex coding to file their claims for reimbursement, adding to the administrative burden on clinics. “We used to use just 15 codes to bill for services,” the director of a behavioral health clinic said. “Now there are about 250, and I’ve had to hire more administrative staff.”

Moreover, some clinics have seen longer gaps between the time claims are submitted and reimbursement is received from the state. The resulting cash flow problems hit smaller clinics, which have narrow operating margins, particularly hard. “This [delay] is causing smaller clinics to live in their ‘line of [bank] credit’,” one clinic director said. “Does the state want to deal only with large provider agencies?”

Paralyzed by Unease About the Future

These ongoing changes to Medicaid payment, along with proposed eligibility changes and fears of funding cutbacks, are causing grave concerns among community health leaders. With needs for care growing, they are understandably focused on the present. Otherwise, as one clinic director said, “[we] would be paralyzed by unease about the future.”

In the counties we visited, local independent political groups that have sprung up in response to these and other concerns see the federal government as out of touch with local needs for better health care, better schools, and higher-paying jobs — and with communities’ inability to dig deeper into their pockets to address these needs. For the clinics and hospitals that serve Medicaid patients and their communities, stable Medicaid funding will be critical to meeting their missions.

 

 

Nobody loves the ACA as much as New Jersey

Related image

New Jersey leads the nation in so many important things: rest stops named for historical figures, willingness to wear track suits in public — and now, reconstituting the Affordable Care Act under President Trump.

No state has moved faster or more aggressively to shore up its ACA markets than Jersey.

  • Yesterday, the Trump administration approved the state’s proposal for a new, five-year reinsurance program — essentially a subsidy that helps insurers pay for their most expensive customers, so they don’t have to pass those costs on through higher premiums.
  • That program will be paid for, in part, by New Jersey’s newly enacted individual mandate.
  • New Jersey also bans short-term insurance plans that don’t cover pre-existing conditions. The Trump administration has loosened the rules for those plans, but states are free to enact their own restrictions.

Those three policies — an individual mandate, a reinsurance program and limits on short-term plans — are states’ most muscular options for stabilizing their individual insurance markets, especially if they want to stick to the same core model of the pre-Trump ACA.

  • Right now, Jersey is the only state that has all three.

Meanwhile: The California State Assembly passed a bill yesterday to ban short-term plans.

The big picture: As more states — mostly blue states — restrict short-term plans and win approval for reinsurance programs, expect to see a deepening red-blue divide in state insurance markets and, as a result, in average premiums within the ACA’s exchanges.

Healthcare Is The No. 1 Issue For Voters; A New Poll Reveals Which Healthcare Issue Matters Most

https://www.forbes.com/sites/robertpearl/2018/08/13/midterms/#5b6ac3453667

Depending on which news outlet, politician or pundit you ask, American voters will soon participate in the most important midterm election “in many years,” “in our lifetime” or even “in our country’s history.”

The stakes of the November 2018 elections are high for many reasons, but no issue is more important to voters than healthcare. In fact, NBC News and The Wall Street Journal found that healthcare was the No. 1 issue in a poll of potential voters.

What’s curious about that survey, however, is that the pollsters didn’t ask the next, most-logical question.

What Healthcare Issue, Specifically, Matters Most To Voters?

To answer this question, I surveyed readers of my monthly newsletter. Will the opioid crisis sway voters at the polls? What about abortion rights? The price of drugs? The cost of insurance?

To understand the significance of these results, look closely at the top four:

  1. Prescription drug pricing (58%)
  2. Universal/single-payer coverage (57%)
  3. Medicare funding (50%)
  4. Medicaid funding (40%)

Notice a pattern here? All of these healthcare issues come down to one thing: money.

Healthcare Affordability: The New American Anxiety

Because the majority of my newsletter readers operate in the field of healthcare, they’re well informed about the industry’s macroeconomics. They understand healthcare consumes 18% of the gross domestic product (GDP) and that national healthcare spending now exceeds $3.4 trillion annually. The readers also know that Americans aren’t getting what they pay for. The United States has the lowest life expectancy and highest childhood mortality rate among the 11 wealthiest nations, according to the Commonwealth Fund Report. But these macroeconomic issues and global metrics are not what keeps healthcare professionals or their patients up at night.

Eight in 10 Americans live paycheck to paycheck. Most don’t have the savings to cover out-of-pocket expenses should they experience a serious or prolonged illness. In fact, half of U.S. adults say that one large medical bill would force them to borrow money. The reality is that a cancer diagnosis or an expensive, lifelong prescription could spell financial disaster for the majority of Americans. Today, 62% of bankruptcy filings are due to medical bills.

To understand how we’ve arrived at this healthcare affordability crisis, we need to examine the evolution of healthcare financing and accountability over the past decade.

The Recent History Of Healthcare’s Money Problems

Until the 21st century, the only Americans who worried about whether they could afford medical care were classified as poor or uninsured. Today, the middle class and insured are worried, too.

How we got here is a story of evolving policies, poor financial planning and, ultimately, buck passing.

A big part of the problem was the rate of healthcare cost inflation, which has averaged nearly twice the annual rate of GDP growth. But there are other contributing factors, as well.

Take the evolution of Medicare, for example, the federal insurance program for seniors. For most of the program’s history, the government reimbursed doctors and hospitals at (approximately) the same rate as commercial insurers. That started to change after a series of federal budget cuts (19972011) and sequestration (2013) reduced provider payments. Today, Medicare reimburses only 90% of the costs its enrollees incur and commercial insurers are forced to make up the difference. As a result, businesses see their premiums rise each year, not only to offset the growth in their employee’s medical expenses, but also to compensate hospitals and physicians for the unreimbursed portion of the cost of caring for Medicare patients.

Combine two high-cost factors: general health care inflation and price constraints imposed by Medicare and what you get are insurance premiums rising much faster than business revenues.

To compensate, companies are shifting much of the added expense to their employees. The most effective way to do so: Raise deductibles. By increasing the maximum deductible annually, the company reduces the magnitude of its expenses the following year, at least until that limit is reached. A decade ago, only 5% of workers were enrolled in a high-deductible health plan. That number soared to 39.4% by 2016, and jumped again to 43.2% the following year.

High-deductible coverage holds individual patients and their families responsible for a major portion of annual healthcare costs, anywhere from $1,350 to $6,650 per person or $2,700 to $13,3000 per family. This exceeds what the average available savings for most American families and helps to explain the growing financial angst in this country.

And it’s not just employees under the age of 65 who are anxious. Medicare enrollees also fear that the cost of care will drain their savings. As drug prices continue to soar, Medicare enrollees are hitting what has been labeled “the donut hole,” which means that once the cost of their “Part D” prescriptions reaches a certain threshold, patients are on the hook for a significant part of the cost. Now, more and more seniors find themselves having to pay thousands of dollars a year for essential medications.

When it comes to paying for healthcare, the United States is an anxious nation in search of relief. The fear of not being able to afford out-of-pocket requirements is the reason so many voters have made healthcare their No. 1 priority as they head to the polls this November. And it’s why both parties are scrambling to deliver the right campaign message.

On Healthcare, Each Party Is A House Divided

In the last presidential election, the Democratic Party chose a traditional candidate, Hilary Clinton, whose views on healthcare were closer to the center than her leading challenger, Bernie Sanders. Two years later, the party is divided by those who believe that (a) the only way to regain control of Congress is by fronting centrist candidates who support and want to strengthen the Affordable Care Act as the best way to attract undecided and independent voters, and (b) those who will accept nothing less than a government-run single payer system: Medicare for all. The primary election of New York congressional candidate Alexandria Ocasio-Cortez, a Sanders supporter, over long-time incumbent Joseph Crowley, represents this growing rift within the party.

The Republicans also face two competing ideologies on healthcare. Since his election in 2016, President Donald Trump has sought to dismantle the ACA. In addition, he and his political allies want to shift control of Medicaid (the insurance program for low-income Americans) from the federal government to the states—a move that would lower healthcare spending while eroding coverage protection. There are others in the Republican Party who worry that shrinking Medicaid or undermining the health exchanges will come back to bite them. Most of them live and campaign in states where voters support the ACA.

Do The Parties Agree On Anything?

Regardless of party, everyone, from the president to the most fervent single-payer advocate, understands that voters are angry about the cost of their medications and the associated out-of-pocket expenses. And, not surprisingly, each party blames the other for our current situation. Last week, the president gave the Medicare program greater ability to reign in costs for medications administered in a physician’s office. In addition, Trump has promised a major announcement this week to achieve other reductions in drug costs. Of course, generous campaign contributions may dim the enthusiasm either party has for change once the voting is over.

Playing “What If” With Healthcare’s Future

If both chambers remain Republican controlled, we can expect further erosion of the ACA with more exceptions to coverage mandates and progressively less enforcement of its provisions. For Republicans, a loss of either the Senate (a long-shot) or the House (more likely), would slow this process.

But regardless of what happens in the midterms, no one should expect Congress to solve healthcare’s cost challenge soon. Instead, patient anxiety will continue to escalate for three reasons.

First, none of the espoused legislative options will do much to address the inefficiencies in the current delivery system. Therefore, prices will continue to rise and businesses will have little choice but to shift more of the cost on to their workers.

Second, the Fed will persist in limiting Medicare reimbursement to doctors and hospitals, further aggravating the economic problems of American businesses. whose premium rates will rise faster than overall healthcare inflation.

Finally, compromise will prove even more elusive since so many leading candidates represent the extremes of the political spectrum.

Politics, the economy and healthcare will all be deeply entangled this November and for years to come. I believe the safest path, relative to improving the nation’s health, is toward the center. Amending the more problematic parts of the ACA is better than either of the two extreme positions. If our nation progressively undermines the current coverage provisions, millions of Americans will see their access to care erode. And on the other end, a Medicare-for-all healthcare system will produce large increases in utilization and cost.

It’s anyone’s guess what will happen in three months. But, whatever the outcome, I can guarantee that two years from now healthcare will remain top-of-mind for voters.

 

 

Short-term health plans: A junk solution to a real problem

https://theconversation.com/short-term-health-plans-a-junk-solution-to-a-real-problem-101447

Serious illnesses like cancer often are not covered by short-term health insurance policies.

 

After failing to overturn most of the Affordable Care Act in a very public fight, President Donald Trump has been steadily working behind the scenes to further destabilize former President Barack Obama’s signature achievement. A major component in this effort has been an activity called rule-making, the administrative implementation of statutes by federal agencies like the Department of Health and Human Services.

Most recently, citing excessive consumer costs, the Trump administration issued regulations to vastly expand the availability of short-term, limited duration insurance plans.

While the cost of health care is one of the overwhelming problems in the American health care system, short-term health plans do nothing to alter the underlying causes. Indeed, these plans may cause great harm to individual consumers while simultaneously threatening the viability of many states’ insurance markets. Having studied the U.S. health care market for years, here is why I think states can and should take quick action to protect consumers.

Comparing crab apples and oranges

Short-term, limited duration insurance plans, by definition, provide insurance coverage for a short, limited period. Since being regulated by the Health Insurance Portability Act of 1996 (HIPAA), this has meant for less than one year. Sold at least since the 1970s, they were offered as an alternative to major medical insurance intended for individuals with temporary and transitional insurance needs such as recent college graduates or those in between jobs.

However, after passage of the Affordable Care Act further concerns emerged over the misuse and mismarketing of these kinds of plans. As a result, the Obama administration restricted their duration to three months.

In addition to being shorter in duration, these policies’ benefits tend to also be much skimpier than for those plans sold on the Affordable Care Act’s marketplaces. For example, plans often do not cover crucial services such as prescription drugs, maternity care, or major emergencies like cancer. Equally problematic, even those benefits covered come with high deductibles, strict limitations, and annual and lifetime coverage limits.

It is important to note that short-term health plans are also not subject to any of the consumer protections established by the Affordable Care Act. This means, for example, that insurers can set premiums, or even refuse to sell to an individual, based on a person’s medical history. Moreover, consumers must update their health status every time they seek to purchase coverage.

Crucially, short-term health plans have shown to be particularly discriminatory against women. For one, women are charged higher premiums. Moreover, they are likely to be disproportionately affected by medical underwriting for pre-existing conditions like domestic and sexual abuse and pre- and postnatal treatment.

Because plans are so limited in benefits, and because insurers are able to deny coverage to sicker individuals, short-term health plans come with much lower premiums than standard insurance plans with their more expansive benefits and vastly superior consumer protections. Indeed on average, premiums amount to only one-fourth of ACA-compliant plans.

Too good to be true

While short-term insurance plans are more affordable in terms of premiums, they come with a slew of problems for consumers.

For one, consumers have a tremendously hard time understanding the American health care system and health insurance. Predatory insurance companies have been known to take advantage of this shortcoming by camouflaging covered benefits, something the Affordable Care Act sought to ameliorate. Mis- and underinformed consumers often find themselves surprised when they actually try to use their insurance.

Even for those who are aware of the limitations, problems may arise. Unable to predict major medical emergencies, consumers may be confronted with tens of thousands of dollars of medical bills if they fall sick or face injury.

Moreover, insurers are also able to rescind policies after major medical expenses have been incurred if consumers failed to fully disclose any underlying health conditions. This even applies to health conditions that consumers had not been aware of prior to getting sick.

While some may argue that this is the fault of the those who purchase short-term insurance, it causes problems for all of us.

For one, these individuals may refuse to seek care. This could result in severe consequence for their and their family’s well-being and ability to earn a living.

At the same time, medical providers will shift the costs of the resulting bad debts to other individuals with insurance or the general taxpayer.

Bad for the individual, worse for all of us

Short-term insurance plans are perhaps even more problematic for the health of the overall insurance market than they are for individual consumers.

With a very short implementation time frame, insurance regulators in the states only have until October to prepare for the potentially significant disruptions to their markets. This leaves little time for analysis and regulatory preparation.

Yet long-term consequences are even more concerning. Healthier and younger consumers are naturally drawn to the low premiums offered by these plans. At the same time, older and sicker individuals will value the comprehensive benefits and protections offered by the Affordable Care Act. The result is the continuing segregation of insurance markets and risk pools into a cheaper, healthier one and a sicker, more expensive one. As premiums rise in the latter, its healthiest individuals will begin to drop their coverage, leading to ever more premium increases and larger coverage losses. If left unchecked, eventually the entire insurance market may collapse in this process.

This could be particularly problematic in states with relatively small insurance markets like Wyoming or West Virginia where even one truly sick individual can drive up premiums tremendously.

States have options

The expansion of short-term health plans is one action by the Trump administration that states can counteract relatively simply. Currently, states serve as the primary regulator of their insurance markets. As such, they have the power to make decisions about what insurance products can be sold within their boundaries.

Action can be taken by insurance regulators and legislature to create relatively simple solutions. While the vast majority of states have failed to create consumer and market protections, a small number of states have done just that.

New York, for example, has banned the sale of these plans.

Others, like Maryland, have strictly limited their sale and renewability.

Treating the symptoms, not the cause

Many Americans struggle to access insurance and services despite the Affordable Care Act. While the Affordable Care Act has unquestionably improved access to insurance for Americans, cost control and affordability are truly its Achilles heels. Indeed, some Americans lost their limited benefits, lower cost plans when the Affordable Care Act did not recognize them as viable coverage.

The Trump administration has rightfully highlighted to high costs of the American health care system. However, offering consumers the opportunity to purchase bare-bones insurance at lower costs does nothing to solve America’s health care cost problems.

If access to insurance is truly a concern for the Trump administration, I believe it should seek to convince the remaining hold-outs to expand their Medicaid programs. Also, I think discontinuing its actions to destabilize insurance markets would also go a long way to reducing premiums.

Yet when it comes to altering the underlying cost calculus, there are no simple solutionsAdministrative costs are too highMedical quality is too lowResources constantly get wasted. Consumers could do more to be healthier.

Ultimately, I see it coming down to one crucial problem: Providers, pharmaceutical companies, device makers and insurers are making too much money. And it is these vested interests that make structural reform of the U.S. health care system a truly herculean endeavor.

But unless Americans and policymakers of both parties are willing to address this root cause, any reform effort amounts to nothing more than rearranging the deck chairs on the Titanic.