Tag Archives: Healthcare

The Future of ACA Coverage Hangs on a Washington Deal

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https://healthcareuncovered.substack.com/p/the-future-of-aca-coverage-hangs?utm_source=post-email-title&publication_id=255152&post_id=173957513&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Lawmakers weigh extending enhanced subsidies that keep plans affordable while grappling with calls to curb hidden costs and insurer abuses.

There’s some real political drama brewing in Washington, and the outcome will determine whether millions of Americans will be able to keep their health insurance. I’m not talking about Medicaid or Medicare but the 24 million Americans who are not eligible for either of those programs or even for coverage through an employer.

As the federal government barrels toward its Sept. 30 shutdown deadline, Democrats say they won’t vote to keep the government open unless Republicans agree to extend the subsidies that make coverage available through the Affordable Care Act (ACA) marketplace more affordable for individuals and families who get their health insurance there. At the heart of the debate are the so-called “enhanced” subsidies that were put in place during the Covid pandemic. Those subsidies are set to expire at the end of this year. If they do, more than 90% of people who buy coverage in the ACA marketplace will have to pay a whole lot more for it next year.

Republicans, who control Congress, are split. Hardliners want the subsidies to disappear, but a growing faction of GOP lawmakers see the political peril staring them in the face: Millions of their constituents will receive marketplace renewal notices with eye-popping premium hikes as open enrollment begins Nov. 1, and they likely will blame Republicans for those hikes.

Virginia Republican Rep. Jen Kiggans has even taken the lead on a one-year extension bill, warning that “people will get a notice that their health care premiums are going to go up by thousands of dollars” if Congress doesn’t act. A July GOP poll found that letting the subsidies lapse could tank Republicans’ midterm prospects.

As Senate Majority Leader Chuck Schumer put it:

“The Republicans have to come to meet with us in a true bipartisan negotiation to satisfy the American people’s needs on health care or they won’t get our votes, plain and simple”.

Why extending the subsidies matters — but why it shouldn’t be a blank check

When I was an insurance executive, I used to champion high deductible health plans and steep out-of-pocket costs, arguing Americans needed to have “more skin in the game.” The industry sold Congress on that logic during the ACA debates – and it worked. Lawmakers not only set the law’s out-of-pocket (OOP) maximum high from the start, they also – at the insurance industry’s insistence – let it rise to new heights every year.

The result? That cap ballooned 67% between 2014 and 2025. And in 2026, the max will reach $10,600 for an individual and $21,200 for a family. That means most ACA plans leave people exposed to thousands of dollars in medical bills even after they’ve paid their premiums. And the people who get burned the most are those with chronic illnesses or sudden serious diagnoses – or even an accident.

If the subsidies vanish, the nonpartisan Congressional Budget Office projects about 4 million people will drop out of ACA plans in the first year. People will get sicker. Some will die sooner.

But let’s not kid ourselves: Simply shoveling more taxpayer money into insurers’ coffers is not a solution. These same companies are already awash in tax dollars through their private Medicare Advantage plans, Medicaid contracts, and even the VA.

The concessions for subsidy extension

Here’s the tradeoff Congress should demand: Insurers can get the subsidies (which go straight to them), but only if they agree to put some of their own skin in the game. And they have plenty of it. Just the seven largest for-profit health insurers reported more than $71 billion in profits last year.

Specifically, lawmakers should:

  • Cap out-of-pocket costs on ACA plans. Apply the same protections Congress just gave to Medicare beneficiaries: a $2,000 cap on prescription drugs AND a $5,000 overall cap on annual out-of-pocket costs. That would be a seismic shift, bringing ACA plans closer to what Americans think they’re buying when they pay for “coverage.”
  • Crack down on prior authorization abuse. Prior authorization delays and denials are rampant in ACA plans, just as they are in Medicare Advantage. If taxpayers are footing the bill, patients should get timely care — not insurer red tape.
  • Fix ghost networks. Insurers routinely list doctors who aren’t actually accepting new patients or aren’t even in-network. Regulators should require accurate, verified networks so people can actually see the providers they’re paying to have access to.

My former Big Insurance colleagues will howl and launch a massive propaganda campaign when these ideas gain traction, claiming they’ll have to jack up premiums even more than they usually do if they have to be even slightly more patient-friendly. I know because I used to plan and execute the industry’s fear-mongering campaigns. Don’t fall for it this time or ever again. Those seven giant insurers took in more than 1.5 trillion dollars and shared more than $71 billion of their windfall with their already rich shareholders last year alone. Yes, the industry’s lobbying will be intense. But if members of Congress do the right thing, they won’t just preserve coverage for millions, they will finally start forcing insurers to compete on value, not just premium retention.

What comes next

If Democrats are going to play hardball by threatening a government shutdown if Republicans don’t extend these ACA subsidies, they should make it count. Americans need relief not just on premiums, but on the crushing costs hidden behind their insurance cards.

Republicans, meanwhile, should recognize the political reality. Roughly 45% of people who buy their own insurance (most through the ACA marketplace) identify as Republican or lean Republican. Letting their premiums spike by more than 75% next year would be political malpractice.

We can extend these subsidies without simply enriching insurers. We can make coverage both affordable and usable.

Medicaid overhaul shifts tough choices to states

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https://www.axios.com/2025/09/19/medicaid-overhaul-states-tough-choices?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Republicans’ sweeping Medicaid overhaul has left a lot of the heavy lifting to governors and state health officials as the program launches the biggest package of changes in its 60-year history.

Why it matters: 

States working with hospitals, clinics and other providers will have to do more with less as they face about $1 trillion in program cuts and the likelihood of 10 million or more newly uninsured people from new work rules and other changes.

  • While the GOP views Medicaid as a waste-riddled program that’s due for a shakeup, the cuts will force painful tradeoffs at the local level as health systems also struggle with inflation, higher labor costs and rising medical costs.
  • “Congress left the dirty work to be done by the governors and state legislators, and that work will start very soon,” said Joan Alker, executive director of Georgetown University’s Center for Children and Families.

State of play: 

Medicaid typically accounts for about 30% of a state’s budget each year. Spending goes up during tough economic times, and states are required to cover a set of mandatory benefits.

  • The fallout from the cuts will vary by state based on their reliance on certain funding mechanisms, like taxes on health care providers, and whether they’ve expanded Medicaid coverage under the Affordable Care Act.
  • The new work requirements only apply to people in the expansion group.

The biggest changes from the law will arrive in 2027. But states have already started planning for how they’ll implement work requirements, decide who’s eligible more frequently and cope with new restrictions on how they draw down federal funds.

  • They’ll also be competing for $50 billion in rural health funding that Congress added to the law — a sum that’s been widely criticized as inadequate.
  • “We are working day and night ever since this bill was passed,” New York’s Medicaid director, Amir Bassiri, said while speaking at a conference in Manhattan in July.
  • “Chances are we will not be able to mitigate all of the impacts of these changes, but we’re going to do everything in our power to do that.”

The other side: 

The new dynamic will force states to think more critically about how taxpayer dollars are being spent in Medicaid, said Brian Blase, president of Paragon Health Institute and a White House official during the first Trump administration.

  • “I want there to be a real budget constraint so [states] have to grapple with the actual cost of these programs,” he said.

Zoom in: 

Many states were already preparing austerity moves before President Trump signed the law. States faced with Medicaid budget crunches often cut or limit benefits they aren’t required to offer, like dental care or home- and community-based services.

  • Other strategies to adjust to the new era of Medicaid funding could include reducing Medicaid payment rates for providers or finding new sources of revenue like additional taxes.
  • A big focus is how well states will track whether recipients are either meeting a requirement to complete 80 hours of work, school or community service a month or are exempt from the rules.
  • Illinois, Missouri, Montana, North Dakota, New Mexico, Utah and Wisconsin have the highest risk of improperly kicking many eligible people off of Medicaid due to procedural issues, per a recent Georgetown Center for Children and Families report.
  • The report ranked state performance on eight key metrics, including how long Medicaid centers take to answer calls, how long the states take to process new applications and whether they renew eligibility automatically.

Between the lines: 

Congress authorized $200 million in federal funds to help states modernize their infrastructure for determining whether people are eligible for Medicaid.

  • HHS communications director Andrew Nixon said $100 million of the funds will be allocated equally among states, while the other half will be divvied up based on the share of enrollees in the state that will be subject to work requirements.
  • “All funding decisions will be guided by efficiency and legal compliance,” he said in an email.

States are still waiting for guidance and regulations from Medicaid administrators on some of the policy changes, and what kinds of technology they can use to ease the burden of reporting work hours and verifying who’s eligible.

  • Even timelines for getting systems running are up in the air. The budget law gives the Centers for Medicare and Medicaid Services discretion to let states have up to two more years to get work requirements up and running.

What we’re watching: 

What role health systems and Medicaid advocates have in states’ decision-making processes — and whether they can persuade state lawmakers to make up for some of the federal cuts with state funds.

  • “We’ve always said the cuts to Medicaid are … going to impact so many other parts of state budgets, and so that’s where the fight really is,” said Nicole Jorwic, chief program officer of Caring Across Generations, a nonprofit that advocated against Congress’ health care changes.

Don’t Just Block Ads for Pills – Block Medicare Advantage Ads, Too

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https://healthcareuncovered.substack.com/p/dont-just-block-ads-for-pills-block?utm_source=post-email-title&publication_id=255152&post_id=173693596&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

If Trump and RFK Jr. want to crack down on deceptive health care ads, they should start with the avalanche of misleading Medicare Advantage commercials blanketing seniors every fall.

The Trump administration announced last week it plans to crack down on prescription drug advertising. In reporting on the news, the New York Times quoted former Food and Drug Administrator David Kessler as saying that what the administration is proposing “would in essence remove direct-to-consumer advertising from television.”

In a press release, Health and Human Services Secretary Robert F. Kennedy Jr. said the intent is to “shut down that pipeline of deception and require drug companies to disclose all critical safety facts in their advertising.”

You’ll get no argument from me that companies of any kind, especially those that make money in health care, should not be allowed to deceive the public by withholding critical facts.

What I do argue – and hope this administration and Democrats in Congress will agree on – is that this crackdown should also include so-called Medicare Advantage ads.

As we get close to “open enrollment” season, the period of time every fall when seniors and people with qualifying disabilities can choose between Traditional Medicare and one of many private health insurance plans, we already are beginning to see deceptive ads by Big Insurance to once again lure Medicare beneficiaries into their often deadly money machine.

You’ve seen the ads: happy, smiling seniors playing tennis or pickleball and gabbing about “free” groceries and dental benefits they presumably get because of the generosity of their MA plans. Nowhere – ever – have you seen or heard anything in any of those ads about the potentially lethal side effect of signing up for those plans. But the terrifying truth is that an untold number of MA enrollees have gone to early graves because their insurers delayed or outright denied a test, treatment or medication their doctors said they needed. Or because they couldn’t even find a high-quality doctor, hospital or skilled nursing facility close to their home – or even far away for that matter. Many centers of excellence – hospitals and clinics that are renowned for things like cancer and cardiac care – are not in many MA plans’ “networks.”

Seniors need to be told how limited MA networks can be – and that Traditional Medicare, by contrast, doesn’t even have networks. Traditional Medicare doesn’t restrict you to certain providers. That’s because almost all doctors, labs, clinics and hospitals participate in Traditional Medicare.

And seniors need to be told explicitly in ads what prior-authorization is and how it can affect them. And they need to be told about how much money they’ll have to pay out of their own pockets if they knowingly or unknowingly get care from an out-of-network provider. They also need to be told that their MA plans can and do drop doctors and hospitals from their networks during the course of a given year and that more and more physician practices and hospitals – including world-class facilities like Johns Hopkins and M.D. Anderson and the Cleveland Clinic – have dropped out of many MA networks. And they need to be told that their MA plan could very well dump them next year by “exiting” the community they live in, as Humana, Aetna, UnitedHealth and other plans did this year and plan to do next year.

Why, Mr. Trump and Mr. Kennedy, are MA insurers not held to the same standards as pharmaceutical companies? And how fast can you put standards in place to assure us that MA ads don’t omit “critical facts?” You know as well as anyone that between October 15 and December 7 (the open enrollment period) you won’t be able to turn on your TV or scroll through your social media feeds without seeing multiple MA ads that blatantly lie by omission.

Researchers at the nonpartisan KFF found TV ads hawking MA plans ran 650,000 times during the 2022 open enrollment period. You can expect that number will be surpassed this year because Medicare Advantage has become such a cash cow for Big Insurance. As just one example, UnitedHealthcare, a division of the biggest health care conglomerate in the world, got more than 75% of its revenue last year from Medicare and other taxpayer-supported programs. Now you know why those deceptive ads are so ubiquitous, and why private insurers lie with impunity.

Speaking of UnitedHealthcare, it co-brands its MA plans with AARP, which gives that corporation a kind of good seal of approval. AARP has received billions of dollars from UnitedHealthcare over the years as part of the relationship. To its credit, AARP called attention to that KFF study on its website just before the 2023 open enrollment season started. That’s notable, but AARP needs to do much more. So I am hereby calling on AARP to join us in demanding that both the Trump administration and Congress take immediate action to make sure MA ads cannot leave out essential information. Truthful MA ads are just as important as drug company ads. Maybe even more so when you consider all the potential harms MA plans inflict on seniors and people with disabilities every single year.

The Future of Medicare Advantage—Assessing Current Debates and the Likelihood of Near-Term Reforms

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https://jamanetwork.com/journals/jama-health-forum/fullarticle/2837518

Privately administered Medicare Advantage (MA) has long been the subject of policy debate. To some, the once-nascent source of Medicare coverage is an important mechanism for injecting competition and innovation into the government-sponsored insurance program. To others, it represents an expensive and unnecessary alternative to directly administered traditional Medicare (TM).

After years of rapid growth, MA accounted for most program enrollments (33.6 million) and federal spending ($494 billion) in 2024.1 This has intensified some existing debates but also spurned increasing bipartisan agreements and interest in reforms. Politicians and policy experts who have historically supported MA, including some Republicans, have articulated greater openness to reforming the now-entrenched program.2 In effect, the debate has shifted from whether the MA program should be reformed to how it should be reformed and, critically, what the government should do with any savings. This Viewpoint discusses notable areas of consensus (and lack thereof) and the prospect of reforms from the Trump administration.

Areas of Growing Consensus

Several observations about MA are generally agreed upon. First, MA plans can use utilization management tools, like prior authorization, to constrain costs in ways that TM generally cannot. This reduces MA plans’ costs of covering Part A (hospital) and B (physician) benefits compared with a scenario where they imposed few constraints on utilization, like in TM. Policymakers also increasingly recognize the administrative burdens imposed on clinicians and restraints on patient access due to these tools, which have generated growing interest in reforms.

Second, and perhaps paradoxically, the federal government would spend less if all MA enrollees instead chose TM. This reflects several factors. MA plans are paid benchmark rates that are set above the fee-for-service spending in many counties. Plan payments can increase further due to the quality-bonus program. MA plans also have higher coding intensity, meaning the same beneficiary has more diagnoses recorded if they are enrolled in MA rather than TM. This increases risk scores and payments from the government (whether this reflects more accurate coding vs fraudulent behavior remains a source of debate). In addition, MA plans experience advantageous selection, meaning they attract enrollees who are relatively cheaper to cover conditional on their observable characteristics.3 All told, the Medicare Payment Advisory Commission estimates that the federal government spends 20% more (or an estimated $84 billion in 2025) than if all enrollees chose TM.1 While the exact magnitude of difference is subject to debate, the basic conclusion is not.

Third, MA plans offer more generous benefits to enrollees, including lower out-of-pocket costs and coverage of additional benefits such as vision and dental services. This occurs because plans keep a portion of the difference between their bid and the benchmark rate. These rebates average $2255 annually per enrollee, which represents 17% of all spending on MA.1

Where Disagreements Remain

While there is growing acknowledgment of the fiscal costs of the MA program, there is disagreement or uncertainty about several questions that inform an appropriate policy response. First, there is debate about how valuable some supplemental benefits are to enrollees. While it is relatively straightforward to value reductions in premiums or cost sharing in MA plans, there is limited information about how often enrollees use many of the supplemental benefits. Some research suggests that use of certain extra benefits may not be much higher in MA plans.4

Partly because of this, it is uncertain how much payment reductions to MA plans will reduce benefits and, in turn, how much that reduces enrollee welfare. Some research suggests the last dollar spent on MA plans results in much less than a dollar’s worth of additional benefits, particularly in markets with limited competition between plans.5 This suggests that reducing payments would initially lower plan profits but result in minimal welfare loss for enrollees. Even if true, it is not obvious when this tradeoff becomes more pronounced. Other research indicates the aggregate value of reduced cost sharing represents a large share of excess payments, suggesting reducing spending may quickly trigger benefit reductions.6 These effects may further depend on how policymakers chose to alter payments.

Finally, there remains significant disagreement about how to use any savings generated by program reforms. Democratic lawmakers often argue that savings should be used to increase TM benefits (eg, by adding dental benefits or imposing an out-of-pocket cap). Republicans are much more likely to pair spending reduction with policies that boost MA (eg, allowing MA plans to keep more of the savings if they bid below benchmarks). This predominantly reflects different preferences over the optimal structure of Medicare rather than empirical uncertainty.

Reform Possibilities From the Trump Administration

Many observers expect that the current administration will be relatively generous toward MA, as is typical of a Republican administration. This is particularly true given that the Centers for Medicare & Medicaid Services (CMS) administrator, Mehmet Oz, MD, has historically expressed support for MA plans. While major spending reductions may remain unlikely, early actions suggest the administration supports targeted reforms and is likely to test changes to the program’s design.

In his Senate confirmation, Oz was explicitly critical of strategic upcoding by insurers. Early policy decisions have been consistent with this view. The 2026 final payment notice for MA continues implementation of several policies that reduce MA payments. Notably, the Trump administration finalized implementation of an updated risk adjustment model that is designed to partly address coding intensity. For example, it eliminates approximately 2000 diagnosis codes that were judged to be most prone to upcoding. In conjunction with related changes, this is expected to decrease plan payment by 3.01%.7 CMS also announced the expansion of audits aimed at verifying the accuracy of diagnoses recorded by MA plans.8 This suggests the administration is willing to address strategic behavior by insurers, which they characterize as addressing waste, fraud, and abuse.8

However, the final payment notice also included higher payment increases for MA plans than was initially proposed by the Biden administration (5.06% vs 2.23%). After accounting for coding trends, realized payments are expected to increase by 7.16%. While consistent with an effort to boost MA enrollment, CMS noted that this change predominantly reflected the effects of higher-than-expected growth in per capita costs in TM, which mechanically increased payment updates. While CMS has some flexibility in payment updates, observers should use caution when using these upward revisions to infer the administration’s level of support for MA.

If the current administration is open to more novel and consequential reforms, they are likely to emerge from the Centers for Medicare & Medicaid Innovation (CMMI). While CMMI demonstration projects have historically focused on TM, the office can test changes to key features of MA that would significantly alter spending and incentives. Notably, Abe Sutton, JD, the director of the CMMI, recently highlighted the possibility of testing changes to risk scores, benchmarks, and quality measures, suggesting they are interested in taking advantage of this authority.9

With its place in the Medicare program now firmly established, MA has begun to attract more consistent interest in reform, even among Republican policymakers. This may reflect political considerations, as an unwillingness to act may provide an opportunity (and a source of budgetary savings) for future lawmakers to pursue alternative policy goals. Early signals from the Trump administration suggest they support program reforms, especially those targeting strategic behavior by insurers. Given the slim margins in Congress, it will be interesting to see if and how the administration uses CMMI’s authority to pursue substantive program changes.

Help! Do I have to pay for the hospital’s $47,000 mistake?

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https://firstaidkit.substack.com/p/help-do-i-have-to-pay-for-the-hospitals?utm_source=post-email-title&publication_id=507834&post_id=173287984&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

They were late filing a claim. Now I’m in collections.

Hey there —

I get a lot of questions from An Arm and a Leg listeners. Sometimes I write back with advice. So: Why not share? Welcome to an experiment: Our occasional advice column!

Maybe let’s call it: Can they freaking DO that?!?

Disclaimer: I don’t know everything, I’m not a lawyer, and I haven’t done new reporting for this. It’s the kind of advice I’d give a friend.

Or, in this case, a listener named Chris.

Q: Can they charge me $47,000 for their mistake?

I had an emergency appendectomy. The hospital rang me up for about $47,000 — but, insurance denied the claim because they say the hospital didn’t submit it to them until eight months after the fact — beyond their 60-day “timely filing” limit in the contract [between the hospital and the insurance company].

After that, the hospital started billing me.

I have spent hours and hours on the phone over the last two months with various people in their billing department. I followed their recommendation to send a letter, and an email, requesting that they write off these charges since it was their billing error — and nothing has been fixed.

Now they’ve sent me to collections.

What do I do now? Do I sue? How can I sue? Help!

Chris

A: Don’t run for a lawyer (yet)

Chris, thanks so much for writing in — and YIKES.

I think you’re zeroing in on the right question, which is: How can you demand redress?

Put another way: Where’s your leverage? How can you get them to see they’re better off dealing with you in good faith, versus… getting themselves in actual trouble?

I don’t think you need to run out and hire a lawyer. But there’s a bunch of homework to do.

Start with your insurance

Because it’s their job to protect you from getting unfairly harassed like this.

Sounds like the hospital promised the insurance company — in a contract — to submit bills within 60 days.

That contract probably does not say, “and if we’re late on that, we’ll just go after Chris.”

No. I’m thinking it says, “If we don’t get you that bill on time, that’s just too bad for us.”

So: the insurance company has a right — and an obligation to you — to tell the hospital where to stick that bill.

So ask your insurance company: What’s *supposed* to happen if a hospital doesn’t submit a bill on time? What’s their process for getting things fixed? Can they tell the hospital to just knock it off, already?

And while you’ve got them, you may as well ask: If the hospital had submitted the bill on time, what would you have been on the hook for?

…because when this gets fixed, you’ll probably owe that amount.

If your insurance won’t cough up the info and won’t go to bat for you, get help. If you get your insurance through work, call HR. Otherwise, ring up your state insurance regulator.

Dispute the bill in collections

Meanwhile, you’ve got the hospital siccing a collection agent on you. That’s not right.

Notify the collection agency that you’re disputing this debt, as described in this recent First Aid Kit — which includes a dispute-letter template. (While you’re at it, send a copy to the hospital billing office.)

Document your efforts to get the hospital to see the light on this. If you’ve written to them, attach copies of previous correspondence. If it’s been all phone calls, document them: You called them on this day, at that time, etc.

If you haven’t been logging calls — keeping a set of notes with times, dates, who you spoke to, and where things stood at the end of the call — start now.

Let the hospital know: They could get in trouble

Your state’s consumer-protection office might take a dim view of what the hospital is doing here.

I mean, I’m not a lawyer, but I’m pretty sure there are laws against chasing you for money you don’t actually owe.

Look up that consumer-protection office here. If you can talk with someone there, great. If your state’s consumer-protection laws are easy to find online (and understand), also great.

(If not, consider calling your local public library. Seriously, librarians are amazing at helping dig up useful information.)

Once you’ve got some sense of your legal rights — from the hospital’s contract with the insurance company, from your state’s consumer-protection laws…

Start writing letters. To the hospital, to the collection agency — saying: Let’s get this settled before I have to complain to regulators about this. (When you write to the hospital, maybe cc the General Counsel’s office.)

Let them know how you expect things to go, and indicate — subtly but clearly —that you know what kind of trouble they could be in and why.

And make it all as confident and calm as possible. I’m thinking of something the legal expert Jacqueline Fox told me once:

The person who gets the letter has to make the decision: “Do I ignore this, or do I bring it to my manager?”

And if I was that person and [the letter-writer] was very calm — just saying, “this is happening, and it’s starting to look like this [legal issue] and I want this to be handled according to your processes,” that’s the part I’d find alarming.

If I was that person, I would either make sure it’s handled according to my processes, or give my manager a heads up: that there’s a grownup who seems somewhat irritated.

Somehow, we never actually used that tape, even though I think about it all the time — until now. Thanks for the chance to bring it back.

Surging health costs bode ill for workers next year

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https://www.axios.com/2025/09/12/surging-health-costs-bode-ill-for-workers-next-year?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Health care inflation hit a three-year high last month, in the latest sign that workers could soon be juggling big premium increases with higher prices for groceries, clothing and other items subject to President Trump’s tariffs.

WHY IT MATTERS: 

Medical prices have been steadily rising, but corporations projecting increases of 9% or more next year are no longer willing to insulate their employees from the pain.

DRIVING THE NEWS: 

Medical care costs rose 4.2%, compared with an overall inflation rate of 2.9%, the Bureau of Labor Statistics said Thursday.

THE BIG PICTURE: 

Consulting firms are forecasting that the trend will carry over into next year, even without sector-specific tariffs on drugs.

  • Mercer recently forecast that employers are facing their highest health benefit cost increase in 15 years. Beyond higher demand for health services, other factors include rising wages in the medical sector.
  • On Wednesday, professional services firm Aon reported that U.S. employer health care costs are projected to rise 9.5% in 2026, or more than $17,000 per employee. It blamed rising prescription drug costs and higher health care utilization.
  • “The overlooked reality is that employers continue to act as a stabilizing force,” Farheen Dam, head of Health Solutions for North America at Aon, said in a statement. “They absorb the bulk of the increase while making smart, targeted adjustments that protect employees and preserve plan value.”

BETWEEN THE LINES: 

The rising costs are being felt beyond workplace insurance; Affordable Care Act marketplace plans are seeking median 18% premium hikes for next year, according to KFF. That’s the largest rate change insurers have requested since 2018, they said.

  • The insurers cite high-priced drugs, increasing labor costs and general inflation, as well as concern about the expiration of enhanced subsidies that could hike out-of-pocket premiums an average of 75% for over 20 million enrollees.

THE BOTTOM LINE: 

Inflation is hitting health care harder than the broader economy, setting up a painful year ahead for both patients and employers.

  • It’s unclear whether the biggest health insurance price hikes in years could lead to deferred care, or more people opting to go uncovered.

Junk Plans Are Bad. Sadly, POTUS is Bringing Them Back.

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https://healthcareuncovered.substack.com/p/junk-plans-are-bad-sadly-potus-is?utm_source=post-email-title&publication_id=255152&post_id=171482130&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

The Trump administration has confirmed it will once again expand access to so-called short-term health insurance — which all too often fall into the category of  “junk” insurance. They’re usually skimpy policies that do not meet the coverage requirements of the Affordable Care Act and that were largely reined in (again) by the Biden administration because of how devastating they can be for families with pre-existing conditions – or anyone who gets badly injured or sick.

Calling many of these plans junk insurance isn’t hyperbole. They’re called that because they are not designed to protect policyholders from financially crippling medical expenses. They’re built to look affordable upfront but in many cases leave people dangerously exposed when they need care most. Leslie Dach of Protect Our Care summed it up plainly: 

“Short-term junk plans are allowed to deny coverage, drop people when they get sick, and exclude life-saving coverage such as prescription drugs and hospital care, leaving families with sky-high bills and nowhere else to turn”

Short-term, limited-duration insurance (STLDI) plans were originally designed as a stop-gap for people who needed catastrophic-protection between jobs. But starting in 2018, the ACA rules were loosened to allow these plans to last for a year and be renewed for up to three years, which inspired health insurers to jump in and begin heavily marketing them online as if they were real alternatives to traditional, comprehensive insurance.

Before the ACA, junk plans were not just short term, they were everywhere. The ACA outlawed much of what these STLDI plans do including refusing to cover basic medical services, excluding people with preexisting conditions, and spending only a fraction of policyholders’ premium dollars on care. There is a reason that the provisions preventing those abuses were some of the most popular in the ACA: They led to better care and lower costs for millions. These STLDI plans don’t cover needed care and only spend an average of 65% of the money patients pay in premiums on medical care, with some plans spending as little as 34% on care and keeping the other 66%. Expanding plans that do not adhere to patient protections in the ACA  is not the way to fix our health care system. 

As American Lung Association explains, most of these plans keep premiums low by cutting out what most of us think of as essential care: prescription drugs, hospital stays, mental health treatment, maternity care and more. They often cap how much they’ll pay in benefits, leaving families on the hook for huge bills if someone gets sick or injured. Unlike plans that comply with patient protections under the Affordable Care Act, they can deny coverage to people with asthma, diabetes, cancer or any other pre-existing condition.

Anti-junk plan history

Simply put, junk plans are the snake oil of the health insurance business, and advocates, including myself, have been sounding the alarm for years. On June 24, 2009, I testified before the Senate Committee on Commerce, Science, and Transportation and, for the first time, blew the whistle on how my old industry confuses their customers and dumps the sick. But I wasn’t alone on the dias. Nancy Metcalf, then senior program editor at Consumer Reports, sat to my left. Metcalf had much to say about junk insurance plans. In her written testimony, she wrote:

“As consumers, we are trained to look for a bargain. Buying a car or a flat-screen TV, we’re proud if we can get it for less than our friend paid. People think insurance works the same way. They never consider that if they are 55 years old, and have diabetes and heart disease, that no insurer could possibly stay in business selling them a comprehensive policy for $150 a month. That’s why so many of the junk policies we’ve looked at are marketed as “affordable.”

In my book, Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans, I wrote an entire section titled “Selling the Illusion of Coverage” which focuses on junk plans and highlights how Cigna, Aetna and UnitedHealth made boatloads of money off buying companies that specialized in so-called junk insurance.

“Yet another scheme to shift costs to consumers and away from insurers and employers is to enroll them in limited-benefit plans. The big insurers have spent millions of dollars acquiring companies that specialize in these plans, often providing such skimpy coverage that some insurance brokers refuse to sell them.”

“There are so many restrictions built into limited-benefit contracts that there is always reduced risk to insurers, who appear only too happy to sell these policies to people who don’t realize they could be ill served.”

“Limited-benefit plans, coupled with high deductibles, represent the ultimate in cost shifting and are among the fastest growing health insurance products. They’re the future that insurers had in mind as they fought bitterly against reform that could jeopardize their profits.”

This isn’t the right move

The Biden administration tried to put an end to this dangerous bait-and-switch. In March 2024, the Centers for Medicare & Medicaid Services (CMS) issued rules to once again limit short-term plans to a maximum of four months and require clearer disclosures so people would know what they were buying. As CMS Administrator Chiquita Brooks-LaSure put it:

“By making short-term plans truly short term, people will be more informed about the risks associated with these types of coverage and their options for comprehensive coverage.”

The Trump administration’s move to undo that rule means these plans can proliferate again and, as Protect Our Care noted in a statement, more than 100 million Americans with pre-existing conditions could be put at risk as insurers are once more allowed to deny coverage or drop people when they get sick.

This isn’t about politics. No matter who is in office, promoting junk plans is a bad idea. Families can get ruined when they think they’re covered — only to find out in the middle of a crisis that what they thought was a real insurance plan won’t pay for what they need. Short-term, limited benefit plans are the riskiest bet you can place in the U.S. health insurance casino. The house will always win.

Cigna’s $3.5 Billion Bet Tightens Its Grip on Specialty Drugs

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Evernorth’s new latest investment in Shields Health Solutions ties its parent company, Cigna, even closer to hospitals and the fast-growing specialty drug market.

Regular readers will know that we’ve harped on UnitedHealth Group’s vertical integration into care delivery, pharmacy benefits and nearly every other corner of the health care landscape. But UnitedHealth isn’t the only company guilty of vertical integration: Cigna is playing the same game.

This week, Cigna’s health services arm, Evernorth, announced a $3.5 billion investment into Shields Health Solutions, a fast-growing specialty pharmacy company.

Shields partners with more than 80 health systems and over 1,000 hospitals and clinics across nearly all 50 states. That reach gives Cigna another way to weave itself into the daily operations of hospitals – and the lives of millions of patients.

From insurer to health services conglomerate

When I was an executive at Cigna, the company was primarily what’s known as a third-party administrator. We sold some health and group life policies as an insurer, but our bread-and-butter was administering health benefits for large employers. Our “value proposition” back then was keeping costs under control — at least as we defined them. Evernorth didn’t exist. At the time, to me, the idea that Cigna would one day be pouring billions into specialty pharmacies and drug distributors would have seemed far-fetched.    

In 2018, though, Cigna bought the huge pharmacy benefit manager Express Scripts. And soon after that, it created Evernorth to oversee its non-insurance health services operations, not only its PBM but also specialty pharmacies, and now investments like Shields. Cigna is no longer just deciding what care to cover, but it’s increasingly involved in how drugs are dispensed and priced. In fact, the company now gets the great majority of its revenues from the pharmacy business. Of the $195 billion in revenues Cigna took in last year, $154 billion came from Evernorth. 

The same old consolidation story

According to Reuters, Evernorth’s investment in Shields was structured as preferred stock and, according to the company, won’t affect its 2025 profit forecast. But make no mistake: This is part of the same playbook we’ve seen before from companies Americans have been led to believe are primarily insurers.

UnitedHealth buys physician practices, rehab centers, and home health companies. CVS Health owns Aetna, the PBM Caremark, and a sprawling pharmacy business. Cigna, for its part, is also planting stakes across the drug supply chain. In addition to Express Scripts, it also owns Accredo, one of the nation’s largest specialty pharmacies, and now Shields.

Cigna CEO David Cordani, who I once worked with during my time at Cigna, framed the deal as a way to “deliver exceptional care across healthcare settings – from home to physician’s office or clinic, to hospital”. In a statement on Evernoth’s website, Cordani said: 

“Demand for specialty medications continues to grow at an accelerated pace, and Evernorth is uniquely positioned to serve the rapidly expanding number of individuals living with complex and chronic conditions and the doctors who care for them.”

Specialty medications, as Cordani mentioned, are among the fastest-growing and most expensive parts of the pharmaceutical market and include medications for cancer, multiple sclerosis, rheumatoid arthritis and other complex and chronic conditions. Research indicates that spending on specialty drugs will make up more than half of all U.S. drug spending in the coming years.

That’s why Evernorth already owns Accredo. Now, by getting into bed with Shields, Evernorth is tying itself even closer to the hospitals and health systems that rely on specialty pharmacies to serve patients.

What can be done about it?

When insurers buy into the businesses that are supposed to compete for contracts (like pharmacies and physician practices) it gives the insurer almost all the cards because they are able to both set the rules of the game and profit from it. Competition suffers, and costs for patients and employers can rise.

Fortunately, Washington is starting to wise up to these tactics. The Patients Over Profits Act, soon to be introduced by Sen. Jeff Merkley (D-Oregon) and Rep. Val Hoyle (D-Oregon), would prevent insurers from owning most doctors offices and medical providers. In addition, The Patients Before Monopolies Act, introduced by Sens. Elizabeth Warren (D-Massachusetts) and Josh Hawley (R-Missouri), prevents pharmacy benefit managers and/or health insurers from owning pharmacies. Given a divided Congress, these bills wont be easy to pass, but seeing strange bedfellows like Warren and Hawley taking the lead brings me great hope. 

I saw firsthand during my years inside Cigna how Wall Street’s pressure for constant growth drives these decisions. Insurers and their shareholders aren’t satisfied with premiums alone. They want to control the entire pipeline — from the doctor’s prescription pad to patients’ wallets.

So the next time you hear about vertical integration in health care, don’t just think about UnitedHealth Group. Remember that Cigna is moving just as aggressively. With this latest $3.5 billion bet, it’s clear that the insurer I once worked for has transformed into something much larger — and far concerning — than the insurance company most folks believe it to be.

Is Health Insurer Criticism Justified?

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, ACA, ACA Premiums, Access & Quality of Healthcare, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Policy, Healthcare Reform, Medicare Advantage, Profit, Profit Margin, Profit Model, Profit Motive, Underinsured, Uninsured • Tagged , , , , • Leave a comment
Is Health Insurer Criticism Justified?

Since the murder of UnitedHealth executive Brian Thompson in New York City December 4, 2024, attention to health insurers has heightened. National media coverage has been brutal. Polls have chronicled the public’s disdain for rising premiums and increased denials. Hospitals and physicians have amped-up campaigns against prior authorization and inadequate reimbursement. For many health insurers, no news is a good news day. Here’s ChatGPT’s reply to how insurers are depicted:

“Media coverage of US health insurers focuses heavily on the challenges consumers face due to high costs, coverage denials, and complicated policies, often portraying insurers as profit-driven entities that hinder care access. Investigations reveal insurers using technology to deny claims and push for denials during prior authorization, while other reports highlight market concentration and the increasing influence of large companies like UnitedHealth Group and Centene. Media also covers the marketing efforts of insurers, particularly for Medicare Advantage plans, and public frustration with the industry. “

In some ways, it’s understandable. Insurance, by definition, is a bet, especially in healthcare. Private policyholders—individuals and employers– bet the premiums they pay pooled with others will cover the cost of a condition or accident that requires medical care. In the 1960’s, federal and state government made the same bet on behalf of seniors (Medicare) and lower-income or disabled kids and adults (Medicaid). But they’re bets.

But the rub is this: what healthcare products and services costs and their prices are hard to predict and closely-guarded secrets in an industry that declares itself the world’s best. Claims data—one source of tracking utilization—is nearly impossible to access even for employers who cover the majority of U.S. population (56%).

Spending for U.S. healthcare is forecast to increase 54% through 2033 from $5.6 trillion to $8.6 trillion— the result of higher costs for prescription drugs and hospital stays, medical inflation, technology, increased utilization (demand) and administrative costs (overhead). Insurers negotiate rates for these, add their margin and pass them thru to their customers—individuals, employers and government agencies. It’s all done behind the scenes.

The public’s working knowledge of how the health system operates, how it performs and what key players in the ecosystem do is negligible. For most, personal experience with the system is their context. We understand our personal healthiness if so inclined or fortunate to have a continuous primary care relationship. We understand our medications if they solve a problem or don’t. We understand our hospitals if we or a family member use them or occasionally visit, and we understand our insurance when we enroll choosing from affordable options that include the doctors and hospitals we like and when we’re denied services or billed for what insurance doesn’t cover.

Today, corporate names like UnitedHealth Group, Humana, Cigna, Elevance, CVS Aetna and Centene are the health insurance industry’s big brands, corralling more than 60% of the industry’s private and government enrollment with the rest divided among 1,149 smaller players. Today, the public’s perception of health insurers is negative: most consider insurance a necessary evil with data showing it’s no guarantee against financial ruin. Today, it’s an expensive employee benefit for employers who are looking for alternative options for workforce stability. And only 56% of enrollees trust their health insurer to do what’s best for them.

Ours is a flawed system that’s not sustainable: insurers are part of that problem.  It’s premised on dependence: patients depend on providers to define their diagnosis and deliver the treatments/therapeutics and enrollees depend on insurers to handle the logistics of how much they get paid and when. At the point of service, patients pay co-pays and after the fact, get an “explanation of benefits” along with additional out of pocket obligations. Hospitals and physicians fight insurers about what’s reasonable and customary compensation, and patients unable to out-of-pocket obligations are handed off to “revenue cycle specialists” for collection. Wow. Great system! Mark it up, pass it thru and let the chips fall where they may—all under the presumed oversight of state insurance commissioners who are tasked to protect the public’s interests.

Do insurers deserve the animosity they’re facing from employers, hospitals, physicians and their enrollees?  Yes, but certainly some more than others. Facts are facts:

  • Since 2020, health insurance premium costs have increased 2-4 times faster than household necessities and wages for the average household. Affordability is an issue.
  • Denials have increased.
  • Enrollee trust and satisfaction with insurers has plummeted.
  • And industry profits since 2023 have taken a hit due to post-pandemic pent-up demand, pricey drugs including in-demand GLP-1’s for obesity and increased negotiation leverage by consolidated health systems.

Most Americans think not having health insurance is a bigger risk than going without. But most also think healthcare is fundamental right and the government should guarantee access through universal coverage.

Having private insurance is not the issue: having insurance that ensures access to doctors and hospitals when needed reliably and affordably is their unmet need.

In the weeks ahead, employers will update their employee health benefits options for next year while facing 9-15% higher costs for their coverage. States will decide how they’ll implement work requirements in their Medicaid programs and assess the extent of lost coverage for millions. Insurers who sponsor market place plans suspended by the Big Beautiful Bill will raise their individual premiums hikes 20-70% for the 16 million who are losing their subsidies.

Medicare Advantage (Medicare Part C) insurers will skinny-down the supplements in their offerings and raise premiums alongside Part D increases, And, every insurer will inventory markets served and product portfolio profitability to determine investment opportunities or exit strategies. That’s the calculus every insurer applies every year, adjusting as conditions dictate.

Most private insurers pay little attention to the 8% of Americans who have no coverage; those inclined tend to be smaller community-based plans often associated with hospitals or provider organizations.

Most are concerned about continuity of care for their enrollees: they know 12% had a lapse in their coverage last year, 23% are under-insured and 43% missed a scheduled appointment or treatment due to out-of-pocket costs involved.

And all are concerned about the long-term financial viability of the entire health insurance sector: margins have plummeted since 2020 from 3.1% to 0.8%%, medical loss ratio’s have increased from 98.2% in 2023 to 100.1% last year, premiums increase grew 5.9% while hospital and medical expenses grew $8.9% and so on. The bigger players have residual capital to diversify and grow; others don’t.

Criticism of the health insurance industry is justified for the most part but the rest of the story is key. The U.S. system is broken and everyone knows it. But health insurers are not alone in bearing responsibility for its failure though their role is significant.

The urgent need is for a roadmap to a system of health where the healthiness and well-being of the entire population is true north to its ambition. It’s a system that’s comprehensive, connected, cost-effective and affordable. Protecting turf between sectors, blame and shame rhetoric and perpetuation of public ignorance are non-starters.

PS: Two important events last week weigh heavily on U.S. healthcare’s future:

In Verona, WI, the Epic User Group Meeting showcased the company’s plans for AI featuring 3 new generative AI tools — Emmie for patients, Art for clinicians and Penny for revenue cycle management. Per KLAS, the private company grew its market share to 42% of acute care hospitals and 55% of acute care beds at the end of 2024.

In Jackson Hole, WY, the Federal Reserve Bank of Kansas City’s annual economic symposium where Fed Chair Jay Powell signaled a likely interest rate cut in its September 16-17 meeting and changes to how the central bank will assess employment status going forward.

Healthcare is labor intense, capital intense and 26% of federal spending in the FY 2026 proposed budget. The Fed through its monetary policies has the power and obligation to foster economic stability. Epic is one of a handful of companies that has the potential to transform the U.S. health system.  Transformation of the health system is essential to its sustainability and necessary to the U.S. economic stability since healthcare is 18% of the country’s GDP and its biggest private employer.

Medicare Advantage plans pay physicians less than original Medicare

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https://www.healthcarefinancenews.com/news/medicare-advantage-plans-pay-physicians-less-original-medicare

MA pays 10% to 15% less than what is paid by the government in original Medicare, report says.

A new study confirms what the American Medical Association and other medical groups have long been saying about physician pay: Medicare reimbursement is not keeping up with inflation.

In original Medicare, doctors are paid one-third less than a decade ago, the report said. Medicare reimbursement rates for outpatient procedures have decreased every year since 2016, for an overall decline of 10%.

Over the same period, inflation has risen by almost 30%, according to the report.

The report also sheds light on Medicare Advantage reimbursement. Medicare Advantage plans pay physicians an estimated 10% to 15% less than what is paid by the government in traditional Medicare, according to the 2025 Omniscient Health Physician Medicare Income Report. 

This can create negative margins for physicians considering MA plans take roughly twice as long to reimburse providers compared to original Medicare along with factoring in prior authorization and denials, the report said. 

An estimated 54% of Medicare beneficiaries are enrolled in a MA plan.

WHY THIS MATTERS

The MA reimbursement gap is driving shifts in network participation. A 2024 survey by the Healthcare Financial Management Association found that 19% of health systems have stopped accepting at least one MA plan, with another 61% planning to do so or actively considering it, according to the Omniscient report.

“Despite the rising demand for care from an aging U.S. population, the financial strain is forcing physicians to rethink whether they will continue serving Medicare patients,” said Meade Monger, CEO of Omniscient Health, a healthcare data science company. “High-volume Medicare practices, especially those in primary care and rural areas, are increasingly unable to sustain operations under current revenue structures.”

The federal government’s push toward streamlining and speeding up the prior authorization process and requiring an electronic process over paper represents improvement, the report said. Some insurers have announced plans to decrease the number of procedures that require prior auth.

But payment rates need to change, said Omniscient, which recommends policymakers index Medicare reimbursement rates to inflation and set payment standards for MA plans. 

THE LARGER TREND

On Tuesday, the American Medical Association released what it called flawed proposals in the Centers for Medicare and Medicaid Services’ physician payment rule released in July.

Despite getting a 3.6% payment boost after five consecutive years of cuts, physician pay, after adjusting for practice-cost inflation, has plummeted since 2001, the AMA said.

The proposed 2026 Medicare Physician Fee Schedule includes a 2.5% cut in work relative-value units (RVUs, which measure a physician’s time, technical skill, mental effort, decision-making and stress) and physician intraservice time for most services, the AMA said. This reduction would affect 95% of the services that doctors provide. 

The cut is based on an assumption of greater efficiency and less time involved for each service, an assumption that is not grounded in new data or physician input, the AMA said. 

CMS also proposes a reduction in practice-expense RVUs, which are the costs of running a practice, such as staff, equipment, supplies, utilities and overhead.

The bottom line, the AMA said, is that physician payment for services performed in a facility will drop overall by 7%.

CMS is accepting comments on its proposed rule until Sept. 12.