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Tag Archives: Health Policy
Middle-income Americans paying more for health insurance
https://www.healthcaredive.com/news/middle-income-americans-paying-more-for-health-insurance/543903/
Dive Brief:
- Middle-income families are spending more of their incomes on health insurance as average premiums skyrocketed in 2017 after modest rate increases earlier this decade, The Commonwealth Fund found in a new report.
- Average employee contributions rose to nearly 7% of median income for single and family plans compared to 5.1% a decade ago. Premium contributions were 8% of median income or more in 11 states, including Louisiana, which had the highest percentage (10.2%).
- The contributions and potential out-of-pocket spending for single and family policies was $7,240 in 2017. That was 11.7% of median income and an increase from 7.8% a decade ago.
Dive Insight:
Cost and price variations between areas aren’t anything new. A recent Network for Regional Healthcare Improvement found healthcare usage and pricing drive variation between states’ total healthcare costs. The report also found vast differences in costs between five states studied.
Overall, national health spending has slowed in recent years. The CMS Office of the Actuary reported this month that national health spending grew 3.9% ($10,739 per person) in 2017. It was the second consecutive year of slower healthcare spending growth. The slower cost growth is connected to fewer people receiving care.
The Commonwealth Fund found large differences between states. For instance, the average annual premium contributions for single-person plans ranged from $675 in Hawaii to $1,747 in Massachusetts. Michigan saw the cheapest premiums in family plans at $3,646 while Delaware had the highest at $6,533.
The average annual deductible for single-person policies increased to more than $1,800 in 2017. The gap was between $863 (Hawaii) and about $2,300 (Maine and New Hampshire). Three states (Florida, Mississippi and Tennessee) had average deductibles more than 6% of median income.
Premiums for employer health plans, which is how most Americans get coverage, increased 4.4% for single plans and 5.5% for family plans in 2017. All but five states saw higher single-person premiums with eight states averaging more than $7,000 (Alaska, Connecticut, Delaware, Massachusetts, New Jersey, New York, Rhode Island and Wyoming).
Meanwhile, family premiums increased in 44 states and were $20,000 or more in seven states (Alaska, Connecticut, Massachusetts, New Jersey, New York, West Virginia and Wyoming) and the District of Columbia.
The cost of health insurance is increasing faster than wage growth — and the Commonwealth Fund found that the added cost isn’t leading to higher-quality health insurance. The issue is especially a problem in southern states with lower median incomes, such as Mississippi.
The group suggested policymakers could tackle the problem of rising healthcare costs in a couple of ways.
Congress could provide more tax credits to people with employer-sponsored insurance, require businesses to improve plan benefit design to cover more services before employees reach their deductibles and offer refundable tax credits to offset out-of-pocket costs.
Other potential efforts include connecting provider payments to value and outcomes, addressing the concentration of payer and provider markets and slowing prescription drug cost growth. “Policymakers will need to recognize that the increasing economic strain of healthcare costs facing middle-income and poor Americans is driven by multiple interrelated factors and will require a comprehensive solution,” according to the report.
The Cost of Employer Insurance Is a Growing Burden for Middle-Income Families
Recent national surveys show health care costs are a top concern in U.S. households.1 While the Affordable Care Act’s marketplaces receive a lot of media and political attention, the truth is that far more Americans get their coverage through employers. In 2017, more than half (56%) of people under age 65 — about 152 million people — had insurance through an employer, either their own or a family member’s.2 In contrast, only 9 percent had a plan purchased on the individual market, including the marketplaces.
In this brief, we use the latest data from the federal Medical Expenditure Panel Survey–Insurance Component (MEPS–IC) to examine trends in employer premiums at the state level to see how much workers and their families are paying for their employer coverage in terms of premium contributions and deductibles. We examine the size of these costs relative to income for those at the midrange of income distribution. The MEPS–IC is the most comprehensive national survey of U.S. employer health plans. It surveyed more than 40,000 business establishments in 2017, with an overall response rate of 65.8 percent.
Highlights
- After climbing modestly between 2011 and 2016, average premiums for employer health plans rose sharply in 2017. Annual single-person premiums climbed above $7,000 in eight states; family premiums were $20,000 or higher in seven states and D.C.
- Rising overall employer premiums increased the amount that workers and their families contribute. Average annual premium contributions for single-person plans ranged from $675 in Hawaii to $1,747 in Massachusetts; family plans ranged from $3,646 in Michigan to $6,533 in Delaware.
- Average employee premium contributions across single and family plans amounted to 6.9 percent of U.S. median income in 2017, up from 5.1 percent in 2008. In 11 states, premium contributions were 8 percent of median income or more, with a high of 10.2 percent in Louisiana.
- The average annual deductible for single-person policies rose to $1,808 in 2017, ranging from a low of $863 in Hawaii to a high of about $2,300 in Maine and New Hampshire. Average deductibles across single and family plans amounted to 4.8 percent of median income in 2017, up from 2.7 percent in 2008. In three states (Florida, Mississippi, and Tennessee), average deductibles comprised more than 6 percent of median income.
- Combined, average employee premium contributions and potential out-of-pocket spending to meet deductibles across single and family policies rose to $7,240 in 2017 and was $8,000 or more in eight states. Nationally, this potential spending amounted to 11.7 percent of median income in 2017, up from 7.8 percent a decade earlier. In Louisiana and Mississippi, these combined costs rose to 15 percent or more of median income.
Risk-Adjustment Fix Finalized for 2018 After Bout of Uncertainty
https://www.healthleadersmedia.com/finance/risk-adjustment-fix-finalized-2018-after-bout-uncertainty
Officials have made no secret of their disdain for the ACA, so some accused them of making an excuse to destabilize the market. Not so, says the CMS administrator.
KEY TAKEAWAYS
The fix follows a brief freeze last summer, when the Trump administration said it was just following a judge’s order.
The payments are a permanent fixture of the ACA designed to compensate insurers who cover sicker groups.
Five months after the Centers for Medicare & Medicaid Services sent a wave of uncertainty across the health insurance industry by freezing risk-adjustment payments, the agency has finalized a fix for the 2018 benefit year.
The move seeks to appease a federal judge in New Mexico who ruled last February that the government had failed to justify its methodology for calculating the payments for benefit years 2014-2018. That ruling was the basis, CMS said, for the administration’s decision to freeze payments suddenly last July.
The freeze lasted only two-and-a-half weeks until CMS announced a final rule to resume the payments for the 2017 benefit year. That final rule re-adopted the existing methodology, with an added explanation regarding the program’s budget neutrality and use of statewide average premiums. A similar fix for the 2018 benefit year was proposed two weeks later.
Risk-adjustment payment policies for the 2019 benefit year, which weren’t subject to the judge’s ruling, were finalized in April.
The risk-adjustment payments are a permanent feature of the Affordable Care Act designed to offset the law’s requirement that insurers offer coverage without regard to a consumer’s health status. Since some insurers will inevitably attract sicker patient populations than others, the ACA redirects money from insurers with healthier populations to those with higher utilization.
Trump administration officials have made no secret of their disdain for the ACA, so some accused them of using the February ruling as an excuse to inject uncertainty into the market, one exhibit in the menagerie of alleged “sabotage.” Even the nonprofit health plan that filed the lawsuit that prompted the freeze accused the government of making “a purely self-inflicted wound” when it could have instead promulgated a new rule all along.
Conservative critics, meanwhile, accused the administration of capitulating to political and industry pressure by ending the freeze, when it should have instead “ended its micromanagement of the insurance market.”
CMS Administrator Seema Verma said in a statement Friday that the final rule “continues our commitment to provide certainty regarding this important program, to give insurers the confidence they need to continue participating in the markets, and, ultimately, to guarantee that consumers have access to better coverage options.”
Kris Haltmeyer, vice president of legislative and regulatory policy for the Blue Cross Blue Shield Association, lauded the fix.
“We are pleased to see CMS issue this final rule to keep the risk adjustment program in place for the 2018 benefit year, ensuring stability in health care coverage for millions of Americans,” Haltmeyer said in a statement. “This important program has worked for years to balance the cost of care between healthy Americans and those with significant medical needs and, as CMS has stated, is working as intended.”
“The program’s continued smooth operation is vital to ensure access to a broad range of coverage options for millions of individuals and small businesses,” he added.
Verma noted that the litigation is still pending.
NO CASH, NO HEART. TRANSPLANT CENTERS REQUIRE PROOF OF PAYMENT.
More than 114,000 people are waiting for organs in the U.S. and fewer than 35,000 organs were transplanted last year. Transplant centers want to make sure donated organs aren’t wasted.
When Patrick Mannion heard about the Michigan woman denied a heart transplant because she couldn’t afford the anti-rejection drugs, he knew what she was up against.
On social media posts of a letter that went viral last month, Hedda Martin, 60, of Grand Rapids, was informed that she was not a candidate for a heart transplant because of her finances. It recommended “a fundraising effort of $10,000.”
Two years ago, Mannion, of Oxford, Conn., learned he needed a double-lung transplant after contracting idiopathic pulmonary fibrosis, a progressive, fatal disease. From the start, hospital officials told him to set aside $30,000 in a separate bank account to cover the costs.
Mannion, 59, who received his new lungs in May 2017, reflected: “Here you are, you need a heart — that’s a tough road for any person,” he said. “And then for that person to have to be a fundraiser?”
Martin’s case sparked outrage over a transplant system that links access to a lifesaving treatment to finances. But requiring proof of payment for organ transplants and post-operative care is common, transplant experts say.
“It happens every day,” said Arthur Caplan, a bioethicist at the New York University Langone Medical Center. “You get what I call a ‘wallet biopsy.'”
Virtually all of the nation’s more than 250 transplant centers, which refer patients to a single national registry, require patients to verify how they will cover bills that can total $400,000 for a kidney transplant or $1.3 million for a heart, plus monthly costs that average $2,500 for anti-rejection drugs that must be taken for life, Caplan said. Coverage for the drugs is more scattershot than for the operation itself, even though transplanted organs will not last without the medicine.
For Martin, the social media attention helped. Within days, she had raised more than $30,000 through a GoFundMe account, and officials at Spectrum Health confirmed she was added to the transplant waiting list.
In a statement, officials there defended their position, saying that financial resources, along with physical health and social well-being, are among crucial factors to consider.
“The ability to pay for post-transplant care and life-long immunosuppression medications is essential to increase the likelihood of a successful transplant and longevity of the transplant recipient,” officials wrote.
In the most pragmatic light, that makes sense. More than 114,000 people are waiting for organs in the U.S. and fewer than 35,000 organs were transplanted last year, according to the United Network for Organ Sharing, or UNOS. Transplant centers want to make sure donated organs aren’t wasted.
“If you’re receiving a lifesaving organ, you have to be able to afford it,” said Kelly Green, executive director of HelpHopeLive, the Pennsylvania organization that has helped Mannion.
His friends and family have rallied, flocking to fundraisers that ranged from hair salon cut-a-thons to golf tournaments, raising nearly $115,000 so far for transplant-related care.
Allowing financial factors to determine who gets a spot on the waiting list strikes many as unfair, Caplan said.
“It may be a source of anger, because when we’re looking for organs, we don’t like to think that they go to the rich,” he said. “In reality, it’s largely true.”
Nearly half of the patients waiting for organs in the U.S. have private health insurance, UNOS data show. The rest are largely covered by the government, including Medicaid, the federal program for the disabled and poor, and Medicare.
Medicare also covers kidney transplants for all patients with end-stage renal disease. But, there’s a catch. While the cost of a kidney transplant is covered for people younger than 65, the program halts payment for anti-rejection drugs after 36 months. That leaves many patients facing sudden bills, said Tonya Saffer, vice president of health policy for the National Kidney Foundation.
Legislation that would extend Medicare coverage for those drugs has been stalled for years.
For Alex Reed, 28, of Pittsburgh, who received a kidney transplant three years ago, coverage for the dozen medications he takes ended Nov. 30. His mother, Bobbie Reed, 62, has been scrambling for a solution.
“We can’t pick up those costs,” said Reed, whose family runs an independent insurance firm. “It would be at least $3,000 or $4,000 a month.”
Prices for the drugs, which include powerful medications that prevent the body from rejecting the organs, have been falling in recent years as more generic versions have come to market, Saffer said.
But “the cost can still be hard on the budget,” she added.
It’s been a struggle for decades to get transplants and associated expenses covered by insurance, said Dr. Maryl Johnson, a heart failure and transplant cardiologist at the University of Wisconsin School of Medicine and Public Health.
“It’s unusual that there’s 100 percent coverage for everything,” said Johnson, a leader in the field for 30 years.
GoFundMe efforts have become a popular way for sick people to raise money. About a third of the campaigns on the site target medical needs, the company said.
But when patients need to raise money, they should use fundraising organizations specifically aimed at those costs, transplant experts say, including HelpHopeLive, the National Foundation for Transplants and the American Transplant Foundation.
There’s no guarantee funds generated through such general sites such as GoFundMe will be used for the intended purpose. In addition, the money likely will be regarded as taxable income that could jeopardize other resources, said Michelle Gilchrist, president and chief executive for the National Foundation for Transplants.
Her group, which helps about 4,000 patients a year, has raised $82 million for transplant costs since 1983, she said. Such efforts usually involve a huge public-relations push. Still, 20 percent of the patients who turn to NFT each year fail to raise the needed funds, Gilchrist said.
In those cases, the patients don’t get the organs they need. “My concern is that health care should be accessible for everyone,” she said, adding: “Ten thousand dollars is a lot to someone who doesn’t have it.”
Every transplant center in the U.S. has a team of social workers and financial coordinators who help patients negotiate the gaps in their care. Lara Tushla, a licensed clinical social worker with the Rush University transplant program in Chicago, monitors about 2,000 transplant patients. She urges potential patients to think realistically about the costs they’ll face.
“The pharmacy will not hand over a bag full of pills without a bag full of money,” she said. “They will not bill you. They want the copays before they give you the medication.”
Hospitals sue over Medicare cuts
The nation’s primary hospital lobbying groups are suing the federal government to stop a new regulation that will cut Medicare payments for routine checkups in doctors’ offices that are owned by hospitals, Axios’ Bob Herman reports.
The big picture: This lawsuit was expected after the Centers for Medicare & Medicaid Services finalized the rule in November.
- CMS said the policy, which would cut payments by $760 million in 2019, “will control unnecessary volume increases,” but hospitals are arguing the government overstepped its legal authority by “making draconian payment reductions targeting only specific services.”
Why it matters: This suit is another reminder of just how hard any sort of aggressive cost control is.
- Any number of experts will tell you that hospitals’ acquisitions of doctors’ practices is driving costs upward, and Medicare isn’t even proposing to stop those acquisitions — the rule would only affect less than 1% of Medicare’s outpatient spending.
- Hospitals very well may lose this lawsuit, of course, but it’s still a reminder of how hard industry will fight any threat to its bottom line.
- Don’t be surprised to see similar lawsuits from the pharmaceutical industry once the Trump administration finalizes some of its plans to cut drug costs (unless industry can kill them before it gets that far).
Federal Subsidies Could Expand to Health Programs That Violate Obamacare
The Trump administration said Thursday that states could bypass major requirements of the Affordable Care Act by using federal funds for a wide range of health insurance programs that do not comply with the law.
Federal officials encouraged states to seek waivers from provisions of the law that specify who is eligible for premium subsidies, how much they get and what medical benefits they receive.
It was “a mistake to federalize so much of health care policy under the Affordable Care Act,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, told state officials at a conference in Washington.
The new policy outlined by the administration on Thursday upends a premise of the Affordable Care Act: that federal subsidies can be used only for insurance that meets federal standards and is purchased through public marketplaces, also known as insurance exchanges.
Under the new policy, states could use federal subsidies to help people pay for employer-sponsored insurance. Consumers could combine federal funds with employer contributions to buy other types of insurance.
Under the Affordable Care Act, premium tax credits are available to people with incomes up to four times the poverty level, roughly $83,000 a year for a family of three. With a waiver, states could provide assistance to higher-income families.
The Trump administration laid out templates for state programs — waiver concepts — that could significantly depart from the model enacted by Congress in 2010.
Alex M. Azar II, the secretary of health and human services, said states could use the suggestions to “create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care.”
Democrats assailed the initiative as an audacious effort to undermine the Affordable Care Act. And they said the administration was ignoring the midterm election success of Democrats who had promised to defend health care that they said was threatened by President Trump and Republicans in Congress.
“The American people just delivered an overwhelming verdict against Republicans’ cruel assault on families’ health care,” said the House Democratic leader, Nancy Pelosi of California. “But instead of heeding the will of the people or the requirements of the law, the Trump administration is still cynically working to make health insurance more expensive and to leave more Americans without dependable coverage.”
Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, said the administration was creating a fast lane for swift approval of “junk insurance.”
The Affordable Care Act prohibits insurers from denying coverage or charging higher premiums to people with pre-existing medical conditions. At campaign rallies this fall, Mr. Trump repeatedly promised: “We will always protect Americans with pre-existing conditions. Always.”
Ms. Verma said Thursday that “the A.C.A.’s pre-existing condition protections cannot be waived.”
But states could use federal funds to subsidize short-term plans and “association health plans,” in which employers band together to provide coverage for employees. Such plans are free to limit or omit coverage of benefits required by the Affordable Care Act, such as mental health care, emergency services and prescription drugs.
A provision of the Affordable Care Act allows waivers for innovations in state health policy. The federal law stipulates that state programs must provide coverage that is “at least as comprehensive” as that available under the Affordable Care Act and must cover “at least a comparable number” of people.
Two powerful House Democrats said the new guidance issued by the Trump administration was illegal because it did not meet the standards for waivers set forth in the Affordable Care Act.
“It is contrary to the plain language of the statute, and it appears to be part of the administration’s ideologically motivated efforts to sabotage the Affordable Care Act,” said a letter sent to Mr. Azar by Representatives Frank Pallone Jr. of New Jersey and Richard E. Neal of Massachusetts.
In issuing the guidance, they said, Mr. Azar also violated the Administrative Procedure Act, which generally requires agencies to provide an opportunity for public comment before adopting new rules.
Republican governors have been pleading with federal officials to give states more authority to regulate health insurance.
Paul Edwards, a deputy chief of staff to Gov. Gary Herbert of Utah, a Republican, said, “Utah welcomes all efforts that give us maximum flexibility to structure our health care programs to the unique needs of our citizens.” State officials “will look closely at how these new rules could benefit Utahns,” he said.
Brenna Smith, a spokeswoman for Gov. Kim Reynolds of Iowa, a Republican, said the governor “has a proven track record of expanding health care options for Iowans and is eager to see the new opportunities this proposal might open up.”
Iowa tried last year to get a waiver under Obama-era guidance, seeking essentially to opt out of the Affordable Care Act marketplace by offering customers a single plan with lower premiums and a high deductible.
Ms. Reynolds ultimately withdrew the request in frustration, saying at the time that “Obamacare’s waiver rules are as inflexible as the law itself.”
One option for states is to take federal funds and put the money into accounts that consumers could use to pay insurance premiums or medical expenses.
Likewise, Ms. Verma said: “States can develop a new state premium subsidy structure and decide how premium subsidies should be targeted. States can set the rules for what type of health plan is eligible for state premium subsidies.”
She was speaking Thursday at a conference of the American Legislative Exchange Council, a conservative group that promotes limited government and drafts model legislation.
Calls for trying again on bipartisan ObamaCare fix
Dem senator Murray calls for trying again on bipartisan ObamaCare fix
Sen. Patty Murray (D-Wash.) on Wednesday called for reviving bipartisan efforts to reach a deal to fix ObamaCare after an agreement she was part of collapsed last year.
“Mr. Chairman, I’m really hopeful that we can revive discussions in the new Congress and find a way past the ideological standoffs of the past,” Murray said to Sen. Lamar Alexander (R-Tenn.), her Republican partner in forging last year’s deal, at a hearing on health care costs.
The deal last year, which came to be known as Alexander-Murray, sought to lower premiums and stabilize the ObamaCare markets, but was stalled for months amid the bitter partisan divide over the health law and a dispute about including abortion restrictions on the funding in the bill.
Alexander on Wednesday expressed skepticism about the ability to reach a new agreement, but said he is willing to try if Murray wants to.
“We can revisit the so-called Alexander-Murray proposal if you would like,” Alexander said, but added that Democrats opposed the previous version, in his view, because they would not support restrictions on abortion funding known as the Hyde Amendment. Democrats countered that the measure actually would have expanded the scope of the abortion restrictions in an unacceptable way.
“I regretted that that didn’t work and maybe we can find a way to make it work in the new session,” Alexander added. “Certainly we’ll try on the issue of health care costs, which are the larger issue.”
There is still no clear path beyond the abortion dispute, making a new agreement difficult.
The ground has also shifted since last year, making many Democrats call for bolder action, like expanding the generosity of ObamaCare’s financial assistance and overruling actions President Trump has taken that Democrats say undermine the market.
Both of those proposals would be hard for many Republicans to support.
Still, Alexander and Murray have not sat down to reopen negotiations and it is unclear what each side would be pushing for in these early stages.
One change is that Democrats will control the House next year, which could add new pressures. Many Democrats saw House Republicans as the main obstacle to a deal last year, so it could change the dynamic that House Republicans will have less power next year in the minority.
The Curious Case of Reinsurance
https://www.thinkrevivehealth.com/blog/curious-case-reinsurance
Although much of the Affordable Care Act has been contentious, one provision that has bipartisan support as well as proven efficacy is reinsurance. Simply put, reinsurance is insurance for health insurance companies. It essentially provides individual and small-group insurers “coverage” purchased from the federal government to protect against risk of high cost enrollees. Importantly, reinsurance is a market stabilization mechanism. It protects against risk, keeps premiums increases at bay, and encourages market competition in the individual insurance market.
Unfortunately, it’s also a temporary solution. In the ACA, the “innovation” waiver was only designed to be active for three years, 2014 through 2016. In March 2017, former Secretary Price issued a letter to states reiterating the law’s key requirements for “innovation” waivers and offered states assistance in the development and implementation of innovation programs. It’s still up in the air how the waiver will be interpreted, but for now states should take the waiver on its face and consider ways in which the waiver can make improvements to their healthcare markets.
It’s no secret that the individual market is not thriving. Although few states have signaled an interest in using reinsurance programs, recent exits from the individual insurance market like Aetna and Humana may encourage more states to consider waivers to stabilize these markets.
Below are a few states that decided to enact reinsurance programs:
Alaska was the first state to try on the program. With a small population and massive size, it’s no surprise the state has the highest premiums in the country. Adopting the reinsurance program kept premium hikes at bay, a 7% increase versus the expected 42%. In 2018, the federal government will fund $48M in reinsurance and the state will pay $11M.
Minnesota also approved a reinsurance program of $600M through shifting funds that would otherwise come from its MinnesotaCare program for low-income residents. The hope is the program will have an immediate effect on premium affordability for consumers in 2018, but it has been widely hailed as a semi-bipartisan solution.
Iowa is seeking to alter multiple ACA requirements, with the threat of having no insurers participate in the marketplace in 2018. Despite a large and dominant Blue Cross plan, Iowa is proposing several changes to the insurance marketplace. Their Iowa PSM plan would cost around $304M, $220M of tax credits and the remaining to pay for reinsurance.
Other states are considering the possibility but their buy-in will likely depend on how health reform policy changes shake out. And the latest news out of Washington, D.C. indicates a quick resolution or a clean solution isn’t likely.
So, what does all of this mean? A few things:
- The rising cost of health insurance premiums directly affects the ability of small businesses and self-employed workers to provide or obtain healthcare coverage.
- State-sponsored reinsurance programs that target health insurance markets for small groups and individuals make insurance more affordable and accessible.
- If reinsurance continues to expand to other states, new (or returning entrants) to the individual and small-group market can be expected to expand as well.
Whether you’re a health system, a health plan, or a health services organization, the opportunity for reinsurance to drive down premium costs and increase market competition directly impact your business. The revitalization of the individual market has direct impact on managed care, hospital operations, and access to care for patients. Keep an ear to the ground and watch this trend closely, especially as the open enrollment period approaches.
Cartoon – Everyone Unhappy with their Health System is here
HENRY KOTULA 