Tag Archives: Out of Pocket Expenses

AARP to Congress: Don’t Cut Medicare

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https://www.aarp.org/politics-society/advocacy/info-2017/medicaid-medicare-tax-reform-fd.html?cmp=EMC-DSO-NLC-WBLTR—MCTRL-120817-F1-2613065&ET_CID=2613065&ET_RID=33152417&mi_u=33152417&mi_ecmp=20171208_WEBLETTER_Member_Control_Winner_251100_391403&encparam=rGtTYC48LtlDepUYFPD2E6KmzkAw6WgcgwvDlv37DZs%3D

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The tax bill would trigger an automatic funding cut in the vital program.

AARP Chief Executive Officer Jo Ann Jenkins called on congressional leaders Thursday to keep their promise to America’s seniors and prevent a large cut to Medicare that the tax bill now being debated on Capitol Hill would trigger.

The tax measure would result in a $1.5 trillion increase in the federal deficit over the next decade, according to the nonpartisan Congressional Budget Office (CBO). Such a deficit would prompt an automatic $25 billion cut to Medicare as soon as January because of the “pay-as-you-go” law, commonly referred to as PAYGO.

The law was designed to keep the deficit in check by requiring the administration to reduce spending in many mandatory federal programs if Congress enacts a law that increases the deficit but doesn’t provide offsetting revenue.

In a letter to Senate Majority Leader Mitch McConnell, Minority Leader Charles Schumer, House Speaker Paul Ryan and Minority Leader Nancy Pelosi, Jenkins reminded McConnell and Ryan that they had recently issued a statement promising that “we will work to ensure these spending cuts are prevented.”

In their statement, the Republican leaders pointed out that the PAYGO law has never been enforced since it was passed in 2010 and “we have no reason to believe that Congress would not act again” to forestall the cuts PAYGO would require.

Medicaid, Social Security, food stamps and some other social safety net programs are exempt from the PAYGO law. But Medicare and programs like federal student loans, agricultural subsidies and the operations of U.S. Customs and Border Protection are not exempt.

The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to CBO. The amount could be higher in subsequent years, depending on the size of the deficit and Medicare’s budget.

The reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not be directly cut, but the reduction could have implications for the care beneficiaries receive.

“The sudden cut to Medicare provider funding in 2018 would have an immediate and lasting impact, including fewer providers participating in Medicare and reduced access to care for Medicare beneficiaries,” Jenkins wrote. Health care providers might stop taking Medicare patients, she added, even as 10,000 older adults are enrolling in the health program each day.

In addition, Medicare Advantage plans and Part D prescription drug plans may compensate for the cuts by charging higher premiums or shifting more costs to beneficiaries in future years.

“Our members and other older Americans are counting on you to preserve their access to Medicare services, including their doctors and hospitals,” Jenkins wrote.

Collins’ Obamacare deal faces moment of truth

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https://www.politico.com/story/2017/12/08/susan-collins-obamacare-deal-213254

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House conservatives thumb their nose at the Maine moderate’s bid to slow the demise of the health law.

Sen. Susan Collins is barreling toward yet another health care showdown with her own party. But this time, she might not have the leverage to get what she wants.

Republicans who watched Collins lead the rebellion over the GOP’s Obamacare repeal effort just three months ago are playing tough on yet another high-stakes bill, wagering they can do without the Maine moderate’s swing vote and still claim a narrow year-end legislative win on tax reform.

Collins went along with the tax bill that repeals Obamacare’s individual mandate after Senate Majority Leader Mitch McConnell pledged to pass a pair of bills propping up Obamacare’s shaky insurance markets, including a bipartisan deal resuming payments on key subsidies that President Donald Trump halted in October.

But Speaker Paul Ryan has made clear he’s not bound by the deal, and there’s little urgency among House Republicans to do much of anything on health care before the end of the year. On Thursday, Republican Study Committee Chairman Mark Walker said conservatives received assurances that talks on a spending package to keep the government open won’t address Obamacare.

“The three things we were told are not gonna happen as part of our agreement: no CSRs, no DACA, no debt limit,” he said, referring to efforts to fund Obamacare’s cost-sharing subsidies.

That could cost Collins’ support after she signaled that her vote on the final bill may hinge on the fate of the health care measures.

She told a Maine CBS affiliate Thursday night that she’d wait to see the final language from the conference committee working on the tax bill before committing her vote.

“I won’t make a final decision until I see what that package is,” Collins told CBS WABI 5.

One bill, known as Alexander-Murray, would temporarily restore subsidies to insurers. The second would fund a two-year reinsurance program helping health plans cover particularly expensive patients.

Senate Republicans can only afford two defections and still pass the tax bill using a fast-track procedure that requires a simple majority, with Vice President Mike Pence ready to cast the tie-breaking vote. The margin would become razor thin if Collins holds out, and Sen. Bob Corker maintains his opposition over concerns about the bill’s impact on the deficit.

Yet House Republicans still chafing over the Senate’s failure to repeal Obamacare insist they won’t bend to Collins’ demands. And while Senate Republicans are trying to keep Collins in the fold, there’s little apparent worry so far that her opposition would sink the tax effort.

“I think you guys have to find something else to be concerned about,” said Sen. Tim Scott, one of the 17 GOP lawmakers assigned to merge the House and Senate versions of the tax plan.

Sen. Lamar Alexander, who coauthored Alexander-Murray and has championed its inclusion in a year-end agreement, also waved off the need to pressure House Republicans on the issue.

“The House knows our position,” he said. “When they see that they can lower premiums 18 percent … reduce the debt, reduce the amount of money going to Obamacare subsidies, I think it’ll be a Christmas present they’ll want to give to their constituents.”

One of the few moderates in a Republican conference that narrowly controls the Senate, Collins has regularly used her voice and vote to extract concessions from GOP leaders and ensure she’s a central figure in negotiations.

During the health care debate, she urged the GOP to protect Medicaid and preserve more subsidies for people to buy insurance. When they stuck with their blueprint, Collins joined fellow Republicans Lisa Murkowski and John McCain in a dramatic vote that killed the months-long repeal bid.

And in the run-up to the Senate’s late-night tax vote, she secured three late changes to the bill, including the expansion of a provision allowing people to deduct hefty medical bills that House Republicans had voted to eliminate entirely.

That was on top of McConnell’s “ironclad commitment” to tackle the two health care bills at year’s end — measures that Collins claims will help offset premium increases stemming from the bill’s repeal of Obamacare’s mandate that most Americans be insured.

Collins said Thursday she considers House passage of those Obamacare bills part of that commitment, even though McConnell has only publicly agreed to “supporting passage” of them and can’t singlehandedly force the House to take up legislation.

Ryan hasn’t officially ruled out the possibility, but declined to commit to rolling either of the bills into upcoming spending agreements. Conservatives have loudly opposed any aid for Obamacare, and even moderates who support stabilizing the health law have shrugged at the exact timing.

“What the vehicle is to get it through the system, in the House and the Senate to the president’s desk, I’ll leave that to our leadership,” said Rep. Tom Reed, who co-chairs the bipartisan Problem Solvers Caucus.

Collins insists she’s taking the long view, claiming progress Thursday on trying to win over House Republicans during rounds of private negotiations.

“I remain confident, despite your skepticism, that we will eventually get that,” she said.

And as the GOP learned during the repeal debate, the whip count could shift suddenly. Sens. Jeff Flake and Ron Johnson remain wild cards, and either could conceivably join Corker and Collins in torpedoing the tax bill if they dislike the final version.

For now though, Republican leaders are signaling once again that Collins may not get everything she wants on health care — and gambling it won’t cost them a second time.

“I think that these are separate issues,” said Sen. David Perdue. “I’m hopeful that that won’t derail this [tax bill]. We’ve got to get it this done and get it on the president’s desk.”

Challenges Abound For 26-Year-Olds Falling Off Parental Insurance Cliff

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https://khn.org/news/challenges-abound-for-26-year-olds-falling-off-parental-insurance-cliff/

Marguerite Moniot felt frustrated and flummoxed, despite the many hours she spent in front of the computer this year reading consumer reviews of health insurance plans offered on the individual market in Virginia. Moniot was preparing to buy a policy of her own, knowing she would age out of her parent’s plan when she turned 26 in October.

Marguerite Moniot recently purchased health insurance on the open market with the help of a health navigator. She and her parents began searching for a policy several months ago, but the details of each plan became too complicated for the family. (Courtesy of Marguerite Moniot)

She asked her parents for help and advice. But they, too, ran into trouble trying to decipher which policy would work best for their daughter. The family had relied on her father’s employer-sponsored plan through his work as an architect for years, so no one had spent much time sifting through policies.

“Honestly, my parents were just as confused as I was,” said Moniot, a restaurant server in Roanoke.

In defeat, just before Thanksgiving, she went with her mother to meet a certified health insurance navigator, buying a policy that allowed her to keep her current doctors.

A new crop of young people like Moniot are falling off their parents’ insurance plans when they turn 26 — the age when the Affordable Care Act stipulates that children must leave family policies.

They were then expected to be able to shop relatively easily for their own insurance on Obamacare marketplaces. But with Trump administration revisions to the law and congressional bills injecting uncertainty into state insurance markets, that task of buying insurance for the first time this year is anything but simple.

The shortened sign-up period, which started Nov. 1, runs through Dec. 15. That window is half as long as last year’s, hampering those who wait until the last minute to obtain insurance.

Reminders and help are scarcer than before: The federal government cut marketing and outreach funds by $90 million, and federal funding to groups providing in-person assistance was whacked by 40 percent.

“I think it’s definitely going to be difficult. There’s just additional barriers with [less] in-person help, just fewer resources going around,” said Erin Hemlin, director of training and consumer education for Young Invincibles, an advocacy group for young adults.

Emily Curran, a research fellow at Georgetown University’s Health Policy Institute, said those actions combined with the Trump administration’s vigorous criticism of the health law could further handicap the uphill battle to entice young people to enroll. As of Dec. 2, more than 3.6 million people had enrolled through the federal marketplace, according to the Centers for Medicare & Medicaid Services. The data were not sorted by age.

“There’s already a barrier where young adults are having difficulty understanding what the value of insurance is,” she said. “Coming out … and saying prices are going up, choice is going down and this law is a mess doesn’t really get at the young adult population.”

Trouble Attracting Young Adults 

Before the Affordable Care Act, young adults had the highest uninsured rate of any age group.

The ACA made coverage more affordable and accessible. It allowed states to expand Medicaid to cover single, childless adults. Tax credits to help pay for premiums made plans on the individual market more affordable for people whose incomes fell between 100 and 400 percent of the federal poverty level (between $12,060 and $48,240 for an individual). And young adults were allowed to stay on their parents’ plan until their 26th birthday.

If the Trump administration’s moves dampen enrollment, insurers could face additional challenges in attracting healthy adults to balance those with illnesses, who drive up costs.In all, the uninsured rate dropped to roughly 15 percent among 19- to 34-year-olds in 2016. Still, young adults have not joined the individual market in the numbers as expected. About a quarter of marketplace customers in 2016 were ages 18-34, according to the Department of Health and Human Services. But that age group makes up about 40 percent of the exchanges’ potential market, according to researchers and federal officials.

“When you’re relatively healthy, it’s not something that you’re thinking about,” said Sandy Ahn, associate research professor at Georgetown University’s Health Policy Institute.

But illness does not recognize age. Dominique Ridley, who turned 26 on Dec. 6, knows this all too well.

Ridley has asthma. She always carries an inhaler and sees a doctor when she feels her chest tighten. The student at Radford University in Virginia relies on her mother’s employer-sponsored plan for coverage.

Ridley started peppering her parents with questions about health insurance as soon as she started seeing ads for this year’s open enrollment.

“I don’t want to just go out there and apply for health insurance, and it be all kinds of wrong and I can’t afford it,” she said.

Her parents didn’t have the answers, but her mother linked up Ridley with a friend that runs a marketing company tailored to promoting the Affordable Care Act. Ridley then connected with a broker who signed her up for a silver plan that will cost her less than $4 per month, after receiving a premium subsidy of more than $500 a month.

“If you don’t have health insurance, you don’t have anything,” Ridley said.

A Digital Campaign 

The Obama administration relied in part on partnerships to attract young enrollees to sign up. Last year, it collaborated with national organizations like Planned Parenthood Federation of America and Young Invincibles on a social media campaign called #HealthyAdulting. Emails, according to Joshua Peck, former chief marketing officer for healthcare.gov, were particularly effective for recruitment.

The Centers for Medicare & Medicaid Services, which oversees the marketplaces, said it will focus this year’s resources on “digital media, email and text messages.”

“But obviously we can’t make up for $90 million in advertising” that’s been cut, said Hemlin.Hemlin said the government has not asked Young Invincibles to assist in marketing. Her group will use its own resources to pay for targeted ads on social media to reach the target demographic, she said.

One factor that might compensate is that 20-somethings are facile at shopping online, said Jill Hanken, director of Enroll! Virginia, a statewide navigator program.

“Our job is to make sure they understand to look at provider networks and drug formularies if they have health concerns. But they’re able to do the mechanics of enrollment on their own very often.”

James Rowley, a 26-year-old entrepreneur from Fairfax, Va., is among those who signed up without help. He started his own company two years ago while covered under his father’s health plan. When he turned 26, he signed up for health insurance on his own through a special enrollment period this year. After general enrollment opened this fall, he once again picked a plan.

“I might not 100 percent need it now, but there will come a time where health insurance is important,” said Rowley.

 

 

Tax Reform Hurts Hospital Financing, Patients Will Bear The Cost

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https://www.forbes.com/sites/investor/2017/12/07/tax-reform-hurts-hospital-bond-financings-with-you-bearing-the-cost/#1ec402147b9e

There are 450 dense pages in the legislation recently passed by the U.S. House of Representatives to change the tax code and another 467 in the Senate version. It is sweeping and complex. Most people understandably focus on the new individual rates: will it save or cost them money?

But with both 30-plus years of public finance experience and as a former Congressional aide, I approach this tax code legislation differently. I ask, how might some of the other proposed changes affect the lives of the average American?

While I found many parts of the proposed law are likely to have a pronounced impact, there was one I focused on in particular. Buried deep — on Page 288, Subtitle G, Section 3601, starting on Line 13 to be exact — was a provision eliminating the ability of local community hospitals to borrow money at favorable tax-exempt rates.

It is technical financial stuff; even my eyes glaze over a bit.

But let me break it down for you: Did you spend any time in a hospital this year? Or maybe a family member, friend, or loved one did?

You probably answered yes. I know I did. Almost everyone knows someone who was recently in a hospital. Some are big, internationally known institutions like the Mayo Clinic. Others, such as Baylor University Medical Center, are teaching facilities. Some have religious affiliations — Catholic Health Initiatives is a good example. But most likely the hospital you were thinking about was your local community hospital. There are more than 4,800 community hospitals around the nation. While there are some large ones, most are just small hospitals, like the 25-bed Pawnee Valley Community Hospital in Larned, Kansas, with doctors and nurses working hard to serve rural communities across America.

Nearly 80% of these community hospitals are not-for-profits. That means they operate to provide essential public services — no shareholders, no private owners. Any money they make goes back into the facility and the community.

To keep their facilities and medical services up to date, most not-for-profit hospitals need millions of dollars. To get that kind of money, they need to borrow. Providing this money is a large but surprisingly little known part of Wall Street.  It is called the municipal bond market.

The municipal bond market, all $3.7 trillion of it, is where Wall Street meets Main Street. State and local governments, not-for-profits, and other public-service governmental authorities use this market to borrow money to build bridges, maintain roads, keep tap water flowing, toilets flushing, and a host of other public services we use every day and usually take for granted.

When a municipality, agency or hospital borrows, it sells bonds to investors. A bond is like when you go to the bank to get a mortgage. Just like you promise to repay the mortgage at a certain interest rate, a hospital promises to pay investors both their initial investment (principal) and interest (coupon).

Both investors and borrowers like the municipal bond market for several reasons, but the two main ones are that the municipal bond market is tax-exempt and it lends money for 30 years. Investors buying the bonds don’t pay taxes on the interest they receive. Because tax-exempt interest rates are usually lower than, say, the taxable interest rates that corporations borrow at, not-for-profits like your local community hospital get to borrow at lower rates, saving money that can be used to provide care, buy new technology, or to keep charges down. Savings can total in the millions of dollars.

The implications of this borrowing tax-status change are substantial. Big, well-known companies such as Microsoft or Apple have no problem issuing their taxable bonds to investors around the world. But a small community hospital? It doesn’t have that kind of size or name recognition to attract investors at interest rates that would be as low as the previous tax exempt rates.

With higher rates, potentially at less favorable terms and shorter repayment schedules, many hospitals might find themselves facing budget problems. Increased borrowing costs might mean having to increase charges for services or not having money for necessary medical equipment upgrades. Not only might patients end up paying more, but also it is equally possible insurance coverage, be it private, Medicare, or Medicaid, won’t reimburse for the higher charges. Patients might have to pay a lot more out-of-pocket.

So while others may think they are pocketing more money with the new individual tax rates, keep in mind the implications of other parts of the proposed tax changes.  They may cost you more than you’re saving.

 

With House conservatives’ resistance, ACA stabilization bills’ prospects get dimmer

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https://www.fiercehealthcare.com/aca/house-gop-alexander-murray-collins-nelson-bills?mkt_tok=eyJpIjoiT0RnMFkySXdPV0psWldSaCIsInQiOiJQSllQNlpcL2RhTzBDZFwvZXh5M1ZUSDJyUU5JTGw3dnh1QTVac01rZUFcL2pNUUhhMXBaQjBxK29ScHRrOHhsT3d6aE5pcFRJUWd4Sm0rYXA4S0RYVGE2N0czN2hhc2hsXC9EZk9mSGVLR0V1UFlwVDZpQmdkcll0eTBMNDUzTHlIZDIifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

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Senate GOP leaders won a key swing vote for their tax bill by pledging to pass bipartisan legislation to shore up the Affordable Care Act. But now it looks like those measures’ chances of becoming law are getting dimmer.

Sen. Susan Collins, R-Maine, wants two bills to pass that she hopes will mitigate the effects of a provision in the tax bill that repeals the individual mandate: the Alexander-Murray bill, which would fund cost-sharing reduction payments for two years, and a bill she co-authored with Democrat Bill Nelson, which provides funding for states to establish invisible high-risk pool or reinsurance programs.

Collins voted for the Senate’s version of the tax bill—a critical win for GOP leaders, as they could only lose two votes and it failed to gain her support for previous ACA repeal bills. But she only did so after Senate Majority Leader Mitch McConnell assured her the two ACA stabilization measures would pass.

Yet while some lawmakers previously said those measures could be tacked on to the short-term spending bill Congress aims to pass this week, congressional aides now say it isn’t likely to be included, according to The Wall Street Journal. Further, while House conservatives have indicated strong support for repealing the individual mandate in the final version of the GOP tax bill, they are far from on board with the two ACA stabilization bills.

For example, Ohio Rep. Warren Davidson said he’s a “hard, hard, very hard no,” on the Alexander-Murray bill, per the WSJ article.

House Speaker Paul Ryan could also be a barrier to passing the two bills. His office told a meeting of congressional leadership offices on Monday that he wasn’t part of any deal between Collins and McConnell, The Hill reported. But his office didn’t say outright that it opposed the bills.

For her part, Collins said it will be “very problematic” if the ACA stabilization bills don’t pass, according to the WSJ. She also won’t commit to voting for the final version of the tax bill until she sees what comes out of a conference committee between the House and Senate.

Even if those measures do pass, there have been questions about whether they would do enough to soften the blow of repealing the individual mandate. The Congressional Budget Office has advised that the Alexander-Murray bill would do little to change its prediction that repealing the mandate would increase the uninsured rate and raise premiums.

A new analysis from Avalere found that Collins’ bill could help stabilize the individual market by increasing enrollment and reducing premiums in 2019, but the consulting firm’s experts cautioned that those effects could be overshadowed by repealing the individual mandate.

 

ACA mandate repeal may be less popular than GOP thinks

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https://www.axios.com/individual-mandate-repeal-may-be-less-popular-than-republicans-think-2514871844.html

Reproduced from Kaiser Family Foundation Health Tracking Poll, Nov. 8-13, 2017; Note: Question wording abbreviated, “Don’t know”/”refused” responses not shown; Chart: Axios Visuals

The tax bill that just passed the Senate eliminates the Affordable Care Act’s individual mandate, and the House is likely to go along when Congress writes the final version. With the tax legislation moving so quickly and the mandate lost in the maze of so many other consequential provisions, we are not likely to have much public debate about this big change in health policy.

Why it matters: If we did, even though the mandate has never been popular, our polling shows that the public does not necessarily want to eliminate it as part of tax reform legislation, once they understand how it works and what the consequences of eliminating it might be.

The back story: Republicans have targeted the ACA mandate because they want the $318 billion in savings the Congressional Budget Office says they would get to help them pay for their tax cuts. (The change would save money because fewer people would get federal subsidies on the ACA marketplaces or apply for Medicaid coverage.)

They have also targeted the mandate because they think it’s so unpopular. Our polls have consistently shown that the mandate is the least popular element of the ACA and in the abstract, more Americans (55%) would eliminate the mandate than keep it (42%).

Yes, but: When people know how the mandate actually works, and are told what experts believe is likely to happen if it’s eliminated, most Americans oppose repealing it in the tax plan.

  • When people learn that they will not be affected by the mandate if they already get insurance from their employer or from Medicare or Medicaid, 62% oppose eliminating it.
  • When people are told that eliminating the mandate would increase premiums for people who buy their own coverage, as the CBO says it will, they also flip, with 60% opposing eliminating the mandate.
  • And when they’re told that 13 million fewer people will have health coverage – another CBO projection – 59% oppose eliminating the mandate.

The bottom line: Many people change their minds when they learn more about facts and consequences, which happens as the lights shine brighter on them in legislative debates. This happened to the “skinny repeal” proposal, and it would happen to single payer.

But as the tax legislation rushes through Congress and heads to the final negotiations, there is almost no chance for the public to grasp the tradeoffs that would come from eliminating the mandate and who is affected and who is not. If they did, the polling suggests, eliminating the mandate might prove far less popular than Republicans seem to think it is.

​Let’s see what the ACA’s subsidies can do

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It sure looks like Congress is about to repeal the Affordable Care Act’s individual mandate, which will put a lot of pressure on the law’s premium subsidies. What was once a “three-legged stool” — consumer protections, the mandate and premium subsidies — is down to two legs, and subsidies are the only remaining tool to try to attract the people who weren’t already inclined to seek health insurance.

What’s happening: When President Trump cut off federal payments for the ACA’s cost-sharing subsidies, insurers responded by increasing their premiums in a way that also bumped up the law’s premium subsidies — a bit of gamesmanship that few experts had fully anticipated, and which leveraged the structure of the premium subsidies to make up for the effects of political chaos.

The big question: Would something like that work again? Can subsidies make up the difference if the mandate goes away?

The answer: Probably not, policy analysts told my colleague Caitlin Owens and me.

  • “Mandate repeal could quite likely be the last straw for some insurers, and we are likely to see more bare counties for 2019, possibly bare states, as well as higher premiums as remaining insurers take advantage of their market power to raise premiums,” says Washington & Lee University professor Tim Jost, a vocal ACA supporter.

The bottom line: As premiums go up, subsidies go up. So subsidies would help shield the lowest-income consumers from the cost increases caused by the loss of the individual mandate.

Yes, but: The people who don’t receive subsidies will just have to bear the brunt of those costs. And it won’t be easy to concentrate premium hikes onto a specific set of plans, with the goal of increasing subsidies as much as possible, the way insurers did when Trump cut off cost-sharing payments.

  • “I don’t think there’s the same opportunity to play arithmetic games. Insurers will have to raise premiums across the board,” Kaiser Family Foundation’s Larry Levitt says.

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

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

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

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

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

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

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

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

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

Healthcare Triage News: Lots of Children Are About to Lose Their Health Coverage

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Healthcare Triage News: Lots of Children Are About to Lose Their Health Coverage

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Budget authorization for the Children’s Health Insurance Program in the US ran out a couple of months ago, and there’s no reauthorization in sight. A LOT of kids are insured through this program.

Patients With Rare Diseases And Congress Square Off Over Orphan Drug Tax Credits

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Patients With Rare Diseases And Congress Square Off Over Orphan Drug Tax Credits

As President Donald Trump talked tax reform on Capitol Hill Tuesday, Arkansas patient advocate Andrea Taylor was also meeting with lawmakers and asking them to save a corporate tax credit for rare-disease drug companies.

Taking the credit away, Taylor said, “eliminates the possibility for my child to have a bright and happy future.”

Taylor, whose 9-year-old son, Aiden, has a rare connective tissue disorder, spoke as part of a small rally thrown together this week by the National Organization for Rare Disorders (NORD) — the nation’s largest advocacy group for patients with rare diseases.

NORD advocate Andrea Taylor holds a picture of her sons, Aiden, 9, and Aaron, 11. Aiden has the rare connective-tissue disorder arterial tortuosity syndrome, which causes symptoms such as aneurysms and congestive heart failure. The syndrome has no treatment. Taylor says Congress is sending a message “that my child’s life does not matter” if the orphan drug tax credit is eliminated or reduced. (Sarah Jane Tribble/KHN)

Earlier this month, House Republicans proposed eliminating the orphan drug tax credits, which Congress passed as part of a basket of financial incentives for drugmakers in the 1983 Orphan Drug Act. The law, intended to spur development of medicines for rare diseases, also gives seven years of market exclusivity for drugs that treat a specific condition that affects fewer than 200,000 people.

The Senate Finance Committee, led by Sen. Orrin Hatch (R-Utah), put the tax credit back into the tax legislation. After some negotiations, the committee settled on reducing the credit to 27.5 percent of the costs of preapproved clinical research, compared with the current 50 percent. The committee also restored a provision that would have eliminated any credits for drugmakers who repurpose a mass-market drug as an orphan.

“As with any major reform, tough choices have to be made,” a Hatch spokesperson wrote in an emailed statement, adding that the senator will continue to work “to make the appropriate policy decisions” to deliver a comprehensive tax overhaul.

Hatch, a member of a rare-disease congressional caucus, received $102,600 in campaign contributions from pharmaceutical and related trade group political action committees in the first half of 2017, making him the top recipient of pharmaceutical cash in the Senate.

If the Senate provision remains untouched, reducing the tax credit would save the federal government nearly $30 billion over a decade, according to a markup of the bill released late last week.

Orphan drug development has become big business in recent years and advocates as well as critics of the industry say tax credits have been an important motivation for companies. Orphan drugs accounted for 7.9 percent of total U.S. drug sales last year, according to a report released by QuintilesIMS and NORD.

Because patient populations for rare-disease drugs are relatively small, companies often charge premium prices for the medicines. EvaluatePharma, a company that analyzes the drug industry, estimates that among the top 100 drugs in the U.S. the average annual cost per patient for an orphan drug last year was $140,443. Giant pharmaceutical companies such as Celgene, Roche, Novartis, AbbVie and Johnson & Johnson have led worldwide sales in the orphan market, according to EvaluatePharma’s 2017 Orphan Drug Report.

Jonathan Gardner, the U.S. news editor for EvaluatePharma, said the orphan drug tax credit is “probably the most important incentive for developing an orphan drug.” Cutting the credit will force even the large companies to question development of drugs for rare diseases, Gardner said.

Dr. Aaron Kesselheim, an associate professor of medicine at Harvard Medical School, has been critical of the Orphan Drug Act’s incentives and of companies taking advantage of the law’s financial incentives for profit. But he warned against rushing to eliminate the tax credit.

“We need to think about ways we can improve the Orphan Drug Act and stop people from gaming the system and exploiting it,” Kesselheim said. But there “are a lot of rare diseases that don’t have treatments. So, we need to be careful in making changes.”

The battle over the tax credit is the latest controversy for the Food and Drug Administration’s orphan drug program. FDA Commissioner Scott Gottlieb announced a “modernization” plan for the agency this summer, closing a pediatric testing loophole and eliminating a backlog of corporate applications for orphan drug status. And, this week, the agency confirmed that Dr. Gayatri Rao, director for the Office of Orphan Products Development, is leaving.

Meanwhile, the Government Accountability Office confirmed this month that it recently launched an investigation of the orphan drug program. The GAO’s review was sparked by a letter from top Republican Sens. Hatch, Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.), asking the agency to investigate whether drugmakers “might be taking advantage” of the drug approval process.

When the 1983 Orphan Drug Act was passed, the law described an orphan drug as one that affects so few people that drugmakers might lose money after covering the cost of developing a drug. Congress added the 200,000-patient limit in 1984.

Today, many orphan medicines treat more than one condition and often come with astronomical prices. Many of the medicines aren’t entirely new, either. A Kaiser Health News investigation, which was also aired and published by NPR, found that more than 70 of the roughly 450 individual drugs given orphan status were first approved for mass-market use, including cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin and rheumatoid arthritis drug Humira, which for years was the best-selling medicine in the world.

More than 80 other orphans won FDA approval for more than one rare disease and, in some cases, multiple rare diseases, the KHN investigation showed.

The pharmaceutical industry has had a muted response to the tax bill, which includes a corporate tax cut. The powerful industry lobbying group PhRMA said it is pleased Congress is looking at overhauling the tax code but “encourages policymakers to maintain incentives” for rare diseases. BIO, the Biotechnology Innovation Organization that represents biomedical companies, said it was “gratified” the Senate committee chose to partially retain the credit but would prefer to keep the existing incentive.

The group that rallied Tuesday — wearing bright-orange shirts that read “Save the Orphan Drug Tax Credit” — planned to meet with a couple of dozen lawmakers, including Grassley, who is a member of the Senate Finance Committee.

NORD, like many patient advocacy groups, receives funding from pharmaceutical companies, but the organization’s leaders say the industry does not have members on the board and does not dictate how general donations are spent.

On Tuesday, NORD leaders said they are open to discussions about the tax credit and whether the overall law is working as intended.

“We’re here to have that conversation, we’re ready to have that conversation,” said Paul Melmeyer, director of federal policy for NORD. “Sadly, that’s not the conversation we are having today.”

Abbey Meyers, a founder of NORD and the leading advocate behind passing the initial 1983 law, said she fears the high cost of the drugs will make it impossible to sustain the orphan drug program. Now retired, Meyers said she has followed the law’s success over the years and believes the tax credit should not be changed.

“There are other things that have happened since the law was passed where there wasn’t any logic to what they did,” Meyers said, adding “because somebody went to a senator and they put into the law.”