Tag Archives: Out of Pocket Expenses

The Hidden Costs to Patients of Insured Healthcare

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The Hidden Costs to Patients of Insured Healthcare

Providers of healthcare and their families occasionally find themselves consumers of costly medical services and only then realize the complexity of the system that laypersons must deal with on a routine basis. As a physician and father of a medical student who had a traumatic injury on the grounds of the hospital where he worked, I learned only too well the Byzantine nature of the insurance accounting and billing component of our healthcare system.

In the midst of seasonally cold weather in January, my son tripped on an uneven paved surface just outside the hospital where he was reporting for the first day of his assignment and landed with his left arm extended, because his right arm was carrying reference books, absorbing the impact on his left shoulder.  This was a most unexpected accidental event for a long distance runner who also worked out in the weight room regularly. Unable to move, he was carried to the emergency room where the student clerk became the first patient of the shift.  He was seen by the usual array of interns, junior and senior residents, fellows, and attending physicians who were able to establish the diagnosis of shoulder dislocation using an x-ray, achieve anesthesia, and reduce the separation. After a shoulder immobilizer was placed, he was on his way with opioid analgesics.  He later elected to have surgery to repair the structural damage and thereafter needed to sleep in a recliner for several weeks to avoid interference with healing. Regular physical therapy then began with a dozen or more sessions needed to achieve the targeted mobility. Interval follow up with the orthopedic surgeon was of course required as well.

By the end of the range of treatments, he had received a dizzying array of bills from the physicians who saw him, from the ER attending to the radiologist, orthopedist and anesthesiologist, the laboratory, the hospital for facilities usage, the outpatient surgery center, the pharmacy, and of course the physical therapist. Each was neatly submitted by a separate organization, the hospital, professional service corporations, the laboratory, and physical therapy offices. The overall total amount billed was almost $40,000, an amount that would have driven him into financial chaos without dual insurance coverage through his wife and our secondary insurance policy for this 25 year old dependent under one of the new stipulations of the Affordable Care Act.  Dealing with the payments, though greatly reduced from the initial bill, required a phenomenal amount of paperwork and repeated inquiries to providers and insurance companies, especially with respect to the secondary insurer. Under current law, secondary insurance providers cannot obtain the information they request from the primary insurer but require the insured to provide all original bills as well as statements of benefits provided from the primary insurer. This is a particularly time-consuming and unintended consequence of current healthcare law that places an undue documentation burden on care recipients.

A simple retelling of this tale of how a moment’s error was able to change a person’s life for months and incur a remarkable amount of debt should be ample evidence for anyone that insurance coverage for the young is absolutely necessary, despite the presumed invincibility of youth. It also conveys a sense of the enormous effort required in coming to grips with the insurance coverage and billing process.  Without a team approach and support of personnel skilled in these processes, he would never have been able to manage the reams of financial statements generated and the endless requests for additional copies of documents that had already been sent.

The practitioners of medicine in the U.S. are doing a great job of managing challenging problems. The system of healthcare, however, is badly broken. The costs of care are known by most to be consequential and on the rise. The costs in terms of the patient’s time spent addressing a mountain of paperwork submitted by a highly fragmented array of providers are less well understood.  We must not lose sight of either aspect in the process of repairing the system.

68% of Consumers Did Not Pay Patient Financial Responsibility

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https://revcycleintelligence.com/news/68-of-consumers-did-not-pay-patient-financial-responsibility?elqTrackId=f58bd47466634010a6e670a643500477&elq=235b6caa09e94e4eb4db871c5d4f6292&elqaid=2897&elqat=1&elqCampaignId=2683

Two in three individuals did not fully pay their patient financial responsibility to hospitals in 2016, a study revealed

 

The number of consumers failing to pay full patient financial responsibility to hospitals increased 15 percentage points from 2015 to 2016, a study showed.

About 68 percent of patients with medical bills of $500 or less did not fully pay their patient financial responsibility to hospitals in 2016, according to a recent TransUnion Health study.

The proportion of individuals failing to pay off full medical bill balances increased from 53 percent in 2015 and 49 percent in 2014.

“There are many reasons why more patients are struggling to make their healthcare payments in full, the most prominent of which are higher deductibles and the increase in patient responsibility from 10% percent to 30 percent over the last few years,” stated Jonathan Wiik, TransUnion Principal for Healthcare Revenue Cycle Management. “This shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years.”

• 63 percent of hospital medical bills were $500 or less between 2014 and 2016 and 68 percent of these bills were not paid in full by 2016

• 14 percent of hospital medical bills between 2014 and 2016 were $3,000 or more and hospitals did not receive full patient financial responsibility for 99 percent of the bills in 2016

• 10 percent of hospital medical bills were between $500 and $1,000 from 2014 to 2016 and patients did not pay the full balance on 86 percent of them in 2016

The TransUnion Health analysis confirmed that as patient out-of-pocket costs increase, hospital patient financial responsibility collection rates drop. A recent Crowe Horwath study also revealed that patient collection rates for accounts with balances exceeding $5,000 were four times lower than patient collection rates for accounts with low-deductible health plans.

For patient balances between $1,451 and $5,000, hospitals reported a 25.5 percent collection rate. In contrast, hospitals saw collection rates drop to just 10.2 percent for patient balances between $5,001 and $7,500.

Consequently, patients are more likely to partially pay hospitals for their financial responsibility. The TransUnion Health analysis showed that the proportion of individuals making partial payments toward their hospital medical bills rose from about 89 percent in 2015 to 77 percent in 2016.

Hospitals may see these patient collection trends continue, researchers stated. They projected the percentage of individuals neglecting to fully pay their patient financial responsibility to grow to 95 percent by 2020.

Researchers pointed to the popularity of high-deductible health plans as the primary driver of increased hospital patient collection challenges. In 2015, almost one-quarter of all workers belonged to a high-deductible health plan with a savings options versus just 8 percent in 2009, a 2016 Health Affairs blogpost stated.

The number of employees enrolled in high-deductible health plans is likely to increase, the blogpost continued. More than four of ten employers are considering offering only high-deductible health plans over the next three years.

Provider organizations continue to feel the pressure from increased patient financial responsibility under high-deductible health plans. About 72 percent of providers in a recent InstaMed survey cited patient financial responsibility and collection as their top healthcare revenue cycle management concerns in 2016.

The greatest challenge impacting healthcare revenue cycle management was the growth of patient financial responsibility with 29 percent of respondents, followed by cash flow issues with 21 percent, longer days in accounts receivable with 14 percent, and rise in bad medical debt due to insufficient patient collections with 8 percent.

With unpaid patient financial responsibility reducing hospital revenue, TransUnion Health researchers reported that hospitals wrote off about $35.7 billion as bad medical debt or charity care in 2015. Although overall uncompensated care costs declined in 2015, they added.

“Higher deductibles and the increase in patient responsibility are causing a decrease in patient payments to providers for patient care services rendered,” stated John Yount, TransUnion Vice President for Healthcare Products. “While uncompensated care has declined, it appears to be primarily due to the increased number of individuals with Medicaid and commercial insurance coverage.”

Why the Senate’s health-care plan wouldn’t work in the real world

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https://www.washingtonpost.com/opinions/the-senates-stingy-health-care-plan-is-completely-divorced-from-reality/2017/06/27/d50fa164-5aae-11e7-a9f6-7c3296387341_story.html?_hsenc=p2ANqtz-9M5TlH1CkHMS9b8NuaAZIr70MtnByP5VmFyCRl2GE12CC9rpCkE66FP8pFIQJvugV2CytbTixxMp7Q9JTFfA8qxd1GpQ&_hsmi=53644856&hsCtaTracking=5f450823-63e0-4d25-b2ce-70533ca2b9d4%7C3f79eca7-20b3-466d-96aa-8cbac1d74e55&utm_campaign=KFF-2017-Drew-WPost-6.27.17-Senatereality&utm_content=53644856&utm_medium=email&utm_source=hs_email&utm_term=.b0a9f1bf75df

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Drew Altman is president and chief executive of the Henry J. Kaiser Family Foundation.

Monday’s report on the Senate health-care bill from the Congressional Budget Office said that 22 million people would lose coverage under the plan and that coverage in the non-group market would become far stingier than it is today. By Tuesday the bill had been pulled back for revision. The quick sequence was revealing: Senators clearly could use some extra time to figure out how to bridge a giant gap between policy theory and reality.

The CBO report illustrates how policymaking can become divorced from the reality of people’s lives. Here are three big examples of how the Senate health-care bill, as currently configured, may sound one way in theory (and in talking points) but would work out quite another way in practice.

First, the bill phases out the Affordable Care Act’s 90 percent federal match for expanded Medicaid eligibility over four years, reducing it to each state’s regular matching rate. The theory is that this phase-down period would provide time for states to decide whether they want to replace the lost federal funds and continue their Medicaid expansions.

But consider these estimates of how much it would cost states to replace those federal funds: California would have to come up with $12.5 billion when the phase-down is fully implemented in 2024, a 400 percent increase; Ohio would need $1.6 billion, a 272 percent increase; Nevada, $343 million, a 243 percent increase; and West Virginia, $178 million, a 168 percent increase. The impact on the other expansion states would be similar.

There is no way states can replace funds of this magnitude. If the expansion states try to replace even a significant share of the money, they will be forced to increase taxes or make significant cuts to other parts of their budgets, including for public schools, higher education, environmental protection and corrections. And because the federal match would be phased out incrementally beginning in the first year, states would have every incentive to end or freeze their expansions quickly. The idea that a phaseout would give states time to plan and adjust is driven by a belief that states can operate Medicaid with far less money if they have greater flexibility. In this case, with funding cuts this large, it’s simply wishful thinking.

That leads to reality gap No. 2: the theory that the 14 million people who are covered under the ACA’s Medicaid expansion could buy private coverage with the tax credits offered under the Republican plan, in effect privatizing the Medicaid expansion. This is the biggest reality check in the Senate bill.

Let’s look at a typical adult covered by the Medicaid expansion. He is a 35-year-old man who lives in, say, Minden, Nev., makes $15,000 a year and may even have voted for President Trump. Under the Senate plan, he could buy a policy costing him about $400 per year after using his tax credit, but his plan would come with a deductible of more than $6,000 a year. (The Senate plan’s policies are calibrated to cover just 58 percent of costs.) On a $15,000 income, he cannot afford to get sick with a policy like that. Assuming he has a car to get to work, pays rent, eats food and otherwise has the same basic expenses as any other human being, such a policy would be far from affordable for him. In fact, this is why this hypothetical Trump voter was uninsured before Medicaid was expanded in his state; like millions of his counterparts across the country, he could not afford private coverage.

The Senate plan also trims back the pool of people in the non-group market who will be eligible for tax credits, by reducing the threshold from four to 3½ times the federal poverty line. That leads to reality gap No. 3. Consider a 60-year-old woman in the town of Strong, Maine, making just less than $45,000 a year. She has high blood pressure, takes daily medication and needs regular monitoring because of her previous thyroid cancer. Under the ACA, she is eligible for a premium tax credit of about $7,000 and a comprehensive policy with a premium cost to her of about $4,500 in 2020, when the Senate health-care bill would take effect. Under the Senate plan, she would not be eligible for a tax credit. A similar plan under the Senate bill would cost her more than $15,000, or one-third of her income.

Gaps between the theory and practice of policy are not some Republican creation. Under the ACA, many people have struggled with costs or were forced to change plans and provider networks annually to keep their premiums down. But the current Senate bill takes this divergence to a new level. Private insurance cannot be better than Medicaid if it is unaffordable; states do not have some magic way to cover millions of people with far less money.

The bill may now be altered, and senators will certainly hear from constituents over the holiday recess. They should listen carefully to what they have to say. As it’s written, the Senate health-care plan would substantially widen the gap between policy theory and the real world — making coverage unaffordable for millions more Americans.

H.R. 1628, Better Care Reconciliation Act of 2017

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https://www.cbo.gov/publication/52849

Click to access 52849-hr1628senate.pdf

The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) have completed an estimate of the direct spending and revenue effects of the Better Care Reconciliation Act of 2017, a Senate amendment in the nature of a substitute to H.R. 1628. CBO and JCT estimate that enacting this legislation would reduce the cumulative federal deficit over the 2017-2026 period by $321 billion. That amount is $202 billion more than the estimated net savings for the version of H.R. 1628 that was passed by the House of Representatives.

The Senate bill would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, slightly fewer than the increase in the number of uninsured estimated for the House-passed legislation. By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.

Following the overview, this document provides details about the major provisions of this legislation, the estimated costs to the federal government, the basis for the estimate, and other related information, including a comparison with CBO’s estimate for the House-passed act.

Effects on the Federal Budget

CBO and JCT estimate that, over the 2017-2026 period, enacting this legislation would reduce direct spending by $1,022 billion and reduce revenues by $701 billion, for a net reduction of $321 billion in the deficit over that period (see Table 1, at the end of this document):

  • The largest savings would come from reductions in outlays for Medicaid—spending on the program would decline in 2026 by 26 percent in comparison with what CBO projects under current law—and from changes to the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance (see Figure 1). Those savings would be partially offset by the effects of other changes to the ACA’s provisions dealing with insurance coverage: additional spending designed to reduce premiums and a reduction in revenues from repealing penalties on employers who do not offer insurance and on people who do not purchase insurance.
  • The largest increases in deficits would come from repealing or modifying tax provisions in the ACA that are not directly related to health insurance coverage, including repealing a surtax on net investment income and repealing annual fees imposed on health insurers.

Pay-as-you-go procedures apply because enacting this legislation would affect direct spending and revenues. CBO and JCT estimate that enactment would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027. The agencies expect that savings, particularly from Medicaid, would continue to grow, while the costs would be smaller because a rescinded tax on employees’ health insurance premiums and health plan benefits would be reinstated in 2026. CBO has not completed an estimate of the potential impact of this legislation on discretionary spending, which would be subject to future appropriation action.

Effects on Health Insurance Coverage

CBO and JCT estimate that, in 2018, 15 million more people would be uninsured under this legislation than under current law—primarily because the penalty for not having insurance would be eliminated. The increase in the number of uninsured people relative to the number projected under current law would reach 19 million in 2020 and 22 million in 2026. In later years, other changes in the legislation—lower spending on Medicaid and substantially smaller average subsidies for coverage in the nongroup market—would also lead to increases in the number of people without health insurance. By 2026, among people under age 65, enrollment in Medicaid would fall by about 16 percent and an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.

Stability of the Health Insurance Market

Decisions about offering and purchasing health insurance depend on the stability of the health insurance market—that is, on the proportion of people living in areas with participating insurers and on the likelihood of premiums’ not rising in an unsustainable spiral. The market for insurance purchased individually with premiums not based on one’s health status would be unstable if, for example, the people who wanted to buy coverage at any offered price would have average health care expenditures so high that offering the insurance would be unprofitable.

Under Current Law. Although premiums have been rising under current law, most subsidized enrollees purchasing health insurance coverage in the nongroup market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income; the government pays the difference between that percentage and the premiums for a reference plan (which is the second-lowest-cost plan in their area providing specified benefits). The subsidies to purchase coverage, combined with the effects of the individual mandate, which requires most individuals to obtain insurance or pay a penalty, are anticipated to cause sufficient demand for insurance by enough people, including people with low health care expenditures, for the market to be stable in most areas.

Nevertheless, a small number of people live in areas of the country that have limited participation by insurers in the nongroup market under current law. Several factors may lead insurers to withdraw from the market—including lack of profitability and substantial uncertainty about enforcement of the individual mandate and about future payments of the cost-sharing subsidies to reduce out-of-pocket payments for people who enroll in nongroup coverage through the marketplaces established by the ACA.

Under This Legislation. CBO and JCT anticipate that, under this legislation, nongroup insurance markets would continue to be stable in most parts of the country. Although substantial uncertainty about the effects of the new law could lead some insurers to withdraw from or not enter the nongroup market in some states, several factors would bring about market stability in most states before 2020. In the agencies’ view, those key factors include the following: subsidies to purchase insurance, which would maintain sufficient demand for insurance by people with low health care expenditures; the appropriation of funds for cost-sharing subsidies, which would provide certainty about the availability of those funds; and additional federal funding provided to states and insurers, which would lower premiums by reducing the costs to insurers of people with high health care expenditures.

The agencies expect that the nongroup market in most areas of the country would continue to be stable in 2020 and later years as well, including in some states that obtain waivers that would not have otherwise done so. (Under current law and this legislation, states can apply for Section 1332 waivers to change the structure of subsidies for nongroup coverage; the specifications for essential health benefits [EHBs], which set the minimum standards for the benefits that insurance in the nongroup and small-group markets must cover; and other related provisions of law.) Substantial federal funding to directly reduce premiums would be available through 2021. Premium tax credits would continue to provide insulation from changes in premiums through 2021 and in later years. Those factors would help attract enough relatively healthy people for the market in most areas of the country to be stable, CBO and JCT anticipate. That stability in most areas would occur even though the premium tax credits would be smaller in most cases than under current law and subsidies to reduce cost sharing—the amount that consumers are required to pay out of pocket when they use health care services—would be eliminated starting in 2020.

In the agencies’ assessment, a small fraction of the population resides in areas in which—because of this legislation, at least for some of the years after 2019—no insurers would participate in the nongroup market or insurance would be offered only with very high premiums. Some sparsely populated areas might have no nongroup insurance offered because the reductions in subsidies would lead fewer people to decide to purchase insurance—and markets with few purchasers are less profitable for insurers. Insurance covering certain services would become more expensive—in some cases, extremely expensive—in some areas because the scope of the EHBs would be narrowed through waivers affecting close to half the population, CBO and JCT expect. In addition, the agencies anticipate that all insurance in the nongroup market would become very expensive for at least a short period of time for a small fraction of the population residing in areas in which states’ implementation of waivers with major changes caused market disruption.

Effects on Premiums and Out-of-Pocket Payments

The legislation would increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter, relative to projections under current law, CBO and JCT estimate. To arrive at those estimates, the agencies examined how the legislation would affect the premiums charged if people purchased a benchmark plan in the nongroup market.

In 2018 and 2019, under current law and under the legislation, the benchmark plan has an actuarial value of 70 percent—that is, the insurance pays about 70 percent of the total cost of covered benefits, on average. In the marketplaces, such coverage is known as a silver plan.

Under the Senate bill, average premiums for benchmark plans for single individuals would be about 20 percent higher in 2018 than under current law, mainly because the penalty for not having insurance would be eliminated, inducing fewer comparatively healthy people to sign up. Those premiums would be about 10 percent higher than under current law in 2019—less than in 2018 in part because funding provided by the bill to reduce premiums would affect pricing and because changes in the limits on how premiums can vary by age would result in a larger number of younger people paying lower premiums to purchase policies.

In 2020, average premiums for benchmark plans for single individuals would be about 30 percent lower than under current law. A combination of factors would lead to that decrease—most important, the smaller share of benefits paid for by the benchmark plans and federal funds provided to directly reduce premiums.

That share of services covered by insurance would be smaller because the benchmark plan under this legislation would have an actuarial value of 58 percent beginning in 2020. That value is slightly below the actuarial value of 60 percent for “bronze” plans currently offered in the marketplaces. Because of the ACA’s limits on out-of-pocket spending and prohibitions on annual and lifetime limits on payments for services within the EHBs, all plans must pay for most of the cost of high-cost services. To design a plan with an actuarial value of 60 percent or less and pay for those high-cost services, insurers must set high deductibles—that is, the amounts that people pay out of pocket for most types of health care services before insurance makes any contribution. Under current law for a single policyholder in 2017, the average deductible (for medical and drug expenses combined) is about $6,000 for a bronze plan and $3,600 for a silver plan. CBO and JCT expect that the benchmark plans under this legislation would have high deductibles similar to those for the bronze plans offered under current law. Premiums for a plan with an actuarial value of 58 percent are lower than they are for a plan with an actuarial value of 70 percent (the value for the reference plan under current law) largely because the insurance pays for a smaller average share of health care costs.

Although the average benchmark premium directly affects the amount of premium tax credits and is a key element in CBO’s analysis of the budgetary effects of the bill, it does not represent the effect of this legislation on the average premiums for all plans purchased. The differences in the actuarial value of plans purchased under this legislation and under current law would be greater starting in 2020—when, for example, under this bill, some people would pay more than the benchmark premium to purchase a silver plan, whereas, under current law, others would pay less than the benchmark premium to purchase a bronze plan.

Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income—also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.

By 2026, average premiums for benchmark plans for single individuals in most of the country under this legislation would be about 20 percent lower than under current law, CBO and JCT estimate—a smaller decrease than in 2020 largely because federal funding to reduce premiums would have lessened. The estimates for both of those years encompass effects in different areas of the country that would be substantially higher and substantially lower than the average effect nationally, in part because of the effects of state waivers. Some small fraction of the population is not included in those estimates. CBO and JCT expect that those people would be in states using waivers in such a way that no benchmark plan would be defined. Hence, a comparison of benchmark premiums is not possible in such areas.

Some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care even though benchmark premiums would decline, on average, in 2020 and later years. Because nongroup insurance would pay for a smaller average share of benefits under this legislation, most people purchasing it would have higher out-of-pocket spending on health care than under current law. Out-of-pocket spending would also be affected for the people—close to half the population, CBO and JCT expect—living in states modifying the EHBs using waivers. People who used services or benefits no longer included in the EHBs would experience substantial increases in supplemental premiums or out-of-pocket spending on health care, or would choose to forgo the services. Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state’s definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed.

Uncertainty Surrounding the Estimates

CBO and JCT have endeavored to develop budgetary estimates that are in the middle of the distribution of potential outcomes. Such estimates are inherently inexact because the ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by this legislation are all difficult to predict. In particular, predicting the overall effects of the myriad ways that states could implement waivers is especially difficult.

CBO and JCT’s projections under current law itself are also uncertain. For example, enrollment in the marketplaces under current law will probably be lower than was projected under the March 2016 baseline used in this analysis, which would tend to decrease the budgetary savings from this legislation. However, the average subsidy per enrollee under current law will probably be higher than was projected in March 2016, which would tend to increase the budgetary savings from this legislation. (For a related discussion, see the section on “Use of the March 2016 Baseline” on page 15.)

Despite the uncertainty, the direction of certain effects of this legislation is clear. For example, the amount of federal revenues collected and the amount of spending on Medicaid would almost surely both be lower than under current law. And the number of uninsured people under this legislation would almost surely be greater than under current law.

Intergovernmental and Private-Sector Mandates

CBO has reviewed the nontax provisions of the legislation and determined that they would impose intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) by preempting state laws. Although the preemptions would limit the application of state laws, they would impose no duty on states that would result in additional spending or a loss of revenues. JCT has determined that the tax provisions of the legislation contain no intergovernmental mandates.

JCT and CBO have determined that the legislation would impose private-sector mandates as defined in UMRA. On the basis of information from JCT, CBO estimates that the aggregate cost of the mandates would exceed the annual threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted annually for inflation).

How Medicaid Works, and Who It Covers

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One of the biggest flash points in the debate over Republican legislation to repeal and replace the Affordable Care Act is the future of Medicaid. Here are some basic facts about the 52-year-old program.

What is Medicaid?

It’s a public health insurance program largely for low-income people, though some middle-class disabled and elderly people also qualify. States and the federal government share the cost.

Whom does Medicaid cover?

■ Nearly one in five Americans, 74 million people, are on Medicaid.

■ Federal law guarantees Medicaid coverage to pregnant women, children, elderly and disabled people under certain income levels.

■ It covers more than a third of the nation’s children and pays for half of all births.

■ It also covers almost two-thirds of nursing home residents, including many who are middle class and spent of all their savings on care before becoming eligible.

States also have the option of covering other groups, like children and pregnant women whose household incomes are higher than the federal thresholds, or young adults up to age 26 who were once in foster care.

■ The Affordable Care Act allowed a new optional group: any adults with income up to 138 percent of the poverty level, which would be $16,643 for an individual this year. Thirty-one states now offer Medicaid to this group.

When was it created?

■ In 1965, as part of President Lyndon B. Johnson’s “Great Society.”

■ There was little political debate; the bigger fight was over creating Medicare, the program to cover the elderly, which Medicaid is often confused with.

Is Medicaid an entitlement
program?

Yes. Anyone who meets the eligibility rules has a right to Medicaid coverage, and for now, states are guaranteed open-ended financial support from the federal government.

How much does it cost?

■ Medicaid cost $553 billion in fiscal year 2016. Of that amount, $348.9 billion came from the federal government; the states paid $204.5 billion.

■ Medicaid accounts for 9 percent of federal domestic spending. For states, it is the biggest source of federal funding and the second-largest budget item, behind education.

The biggest costs in Medicaid are for the elderly and the disabled, often because of long-term care in nursing homes.

■ Washington pays 50 to 75 percent of Medicaid costs for most eligible groups, with poor states receiving more money.

■ Under the Affordable Care Act, the federal government initially covered all of the costs for the roughly 11 million people insured under the law’s expansion of Medicaid, who are largely adults without disabilities.

■ Under the law, Washington picks up 95 percent of state costs for the expansion of Medicaid this year, whittling down to 90 percent in 2020.

What changes are in store?

■ Both the House and Senate health bills would fundamentally change the way the federal government pays its share of Medicaid costs, setting a per-person limit on spending that would adjust annually for inflation.

■ The bills would also effectively end the Medicaid expansion, by sharply reducing how much the federal government pays for that population starting in 2020.

■ The result of these changes, according to independent analyses, would be major reductions in federal Medicaid spending over time.

■ Enrollment would drop, too, according to the nonpartisan Congressional Budget Office, with states making it harder to qualify for the program and getting rid of certain benefits to make up for tightened federal spending.

The doctor is out: PCP availability beyond 2020

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The doctor is out: PCP availability beyond 2020

In 2020 and beyond, under the Senate’s BCRA, the working poor will have a very hard time finding primary care providers (PCP) who will schedule appointments with them. Providers, rightly, fear bad debt from high deductible plans. They will discriminate on the ability to pay upfront.

In the NEJM, Karin Rhodes, Genevieve Kenney, and Ari Friedman† looked at PCP appointment availability in the from the end of 2012 to Spring 2013. They found that appointments were usually quickly available if the person had insurance and unavailable if they were cash paying patients who could not afford the median price of services.**

The overall rate of new patient appointments for the uninsured was 78.8% with full cash payment at the time of the appointment (Figure 2). The median cost of a new patient primary care visit was $120, but costs varied across the states, as indicated in the figure legend. Only 15.4% of uninsured callers received an appointment that required payment of $75 or less at the time of the visit, because few offices had low-cost appointments and only one-fifth of practices allowed flexible payment arrangements for uninsured patients.

Why does this matter in the BCRA environment?

The baseline plan will be a plan with a $7,500 deductible for a single person. For people with means, paying $120 for a PCP visit is unpleasant but not onerous. If I had to do that this afternoon, I would grumble as I pull out a credit card. I would pay that credit card off tomorrow after I got the transaction points. Not everyone can do that.

Craig Garthwaite raises a good point this morning:

Primary care providers will seek to minimize their net bad debt.

Michael Chernew and Jonathan Bush looked at how bad debt accumulates as a function of out of pocket expenses at professional offices.

The median PCP cash visit price is a large payment in the Chernew/Bush schema. Most of it will be paid as people with means take out their credit card, their HRA debit card, or their HSA card and swipe it through the machine. But a simple PCP visit will produce significant chasing and write-downs. The study is limited as it only looked at people who were commercially insured. It excludes most low income people who are in the Medicaid gap on an income qualification basis by design. The average income in the study group is highly likely to be higher than the income of people who would move from Medicaid to benchmark plans. Even so, there is significant chasing and write downs. I would predict that applying 100% first dollar obligations on people with even less income than the study population will lead to more provider bad debt. This is because these programs are income qualified and if a person income qualifies for these programs, they probably don’t have a spare $120 floating around or easy access to cheap, revolving credit.

If we assume that some normal PCP visits will include some extra services that increase the contracted payment rate to $200 or more (very large obligations in Chernew/Bush) significant sums will be written down and off. For provider practice viability concerns, providers will very aggressively screen against people with very high deductible insurance who can’t pay the entire amount of the contracted rate price up front at the receptionist desk. This is a very patient unfriendly system.

Most payment reform models focus on delivering more primary care. The objective is to substitute cheap primary care for expensive specialist, inpatient hospital stays and post-acute rehabilitation. This is the concept behind value based insurance design. VBID is supposed to encourage the routine, low cost, regular maintenance of chronic conditions in outpatient or community settings instead of having people end up in the hospital for preventable admissions.

Yet, under the very understandable incentives of primary care physicians wanting to stay in business, access to primary care for the working poor who would have several thousand dollar deductibles that apply to all services, will be greatly restricted because of the cost barrier. If we want all members of our shared society to have decent health and decent lives, should want people to have easy and ready access to primary care. This bill creates strong business incentives to create barriers to primary care access.

Like the AHCA, the Senate’s health care bill could weaken ACA protections against catastrophic costs

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https://www.brookings.edu/blog/up-front/2017/06/23/like-the-ahca-the-senates-health-care-bill-could-weaken-aca-protections-against-catastrophic-costs/?utm_campaign=Brookings%20Brief&utm_source=hs_email&utm_medium=email&utm_content=53522663

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Editor’s Note:This analysis is part of USC-Brookings Schaeffer Initiative on Health Policy, which is a partnership between the Center for Health Policy at Brookings and the USC Schaeffer Center for Health Policy & Economics. The Initiative aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.

On Thursday, Senate Republicans unveiled the Better Care Reconciliation Act (BCRA), its Affordable Care Act (ACA) repeal bill. One provision of that legislation would greatly expand states’ ability to waive a range of provisions of federal law that affect health insurance. As both my Brookings colleague Jason Levitis and Nicholas Bagley have explained in pieces published earlier today, states would need to meet only very weak standards in order to obtain a waiver under the Senate bill, and waivers could have wide-ranging implications for the extent and affordability of insurance coverage.

One potential effect of these state waivers is weakening a pair of protections against catastrophic costs included in the ACA. In particular, states can directly use this expanded waiver authority to eliminate the requirement that individual and small group plans cap annual out-of-pocket spending. States can also indirectly weaken or effectively eliminate both the ACA’s requirement that plans limit out-of-pocket spending and its ban on individual and lifetime limits by setting a definition of “essential health benefits” that is weaker than the definition under current law. Both of these protections against catastrophic costs apply only with respect to care that is considered essential health benefits, so as the definition of essential health benefits narrows, the scope of these protections narrows as well.

Allowing states to change the definition of essential health benefits unavoidably weakens these protections against catastrophic costs in waiver states’ individual and small group markets. But waivers’ effects could also cross state lines and weaken these protections for people covered by large employer plans in every state.[1]  Under current regulations, large employer plans are allowed to choose the definition of essential health benefits in effect in any state in the country for the purposes of determining the scope of these protections against catastrophic costs. If the Trump Administration maintains that approach as it implements the BCRA and even one state uses the waiver process under the BCRA to set a lax definition of essential health benefits, then these protections against catastrophic costs could be weakened or effectively eliminated for people working for large employers nationwide.

The potential effects of the the BCRA waiver provisions on the ACA’s protections against catastrophic costs are essentially identical to those of a waiver provision included in the House-passed American Health Care Act (AHCA), which I have written about previously. The only substantive difference is that the Senate version would allow states to directly waive the out-of-pocket maximum requirement for some plans; under the House-passed bill, states could only affect this requirement indirectly by changing the definition of essential health benefits.

The remainder of this blog post examines these issues in greater detail.

Democrats to slow-walk Senate business over health care bill

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https://www.usatoday.com/story/news/politics/2017/06/19/democrats-halt-senate-business-over-health-care-bill/103012262/?utm_campaign=KHN%3A%20First%20Edition&utm_source=hs_email&utm_medium=email&utm_content=53324518&_hsenc=p2ANqtz-8NpDGDFUkQIuhKz8d8GWAlDDWC2mqcN0hJfp_LlAcTnc81nyyDtb3Ah782Ee3PptGo5xWZ8yPbj1T7bkeh-DIp55enpQ&_hsmi=53324518

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Democrats will begin slow-walking Senate business on Monday as part of their opposition to Republican attempts to overturn the Affordable Care Act.

Senate Minority Leader Chuck Schumer of New York said Democrats will object to requests for “unanimous consent” to set aside rules and expedite proceedings. The procedural move is a tactic the minority party can use to draw out the legislative process for days, forcing Republicans to jump through procedural hurdles to get anything done.

The goal, he said, is to refer the GOP health care bill to a committee where it can be debated and amended publicly. Republicans are writing their bill “under the cover of darkness because they’re ashamed of it,” he said.

“This is a bill that would likely reorder one-sixth of the American economy and have life-and-death consequences for millions of Americans, and it’s being discussed in secret with no committee hearings, no debate, no amendments, no input from the minority,” he said. “This is the most glaring departure from normal legislative procedure that I have ever seen.”

The move coincides with a new #AmericaSpeaksOut campaign Senate Democrats launched Monday urging Americans to “speak out against Trumpcare and share their stories.” They also plan to hold the Senate floor tonight with speeches about health care.

The House passed its Obamacare repeal bill in May, but Senate Republicans have been drafting their own bill behind closed doors.

In a letter, Democrats provided some Senate Republican leaders with a list of all 31 potential Senate rooms “to assist” Republicans in scheduling a hearing.

They wrote that Democrats, by comparison, held about 100 hearings and meetings, accepted more than 150 amendments sponsored or cosponsored by GOP senators and spent 25 days in floor debate during the drafting of the Affordable Care Act.

The move by Democrats to slow Senate business will not impact consideration of President Trump’s nominee to lead the Federal Emergency Management Agency, Brock Long, who is expected to be confirmed Tuesday, according to a Senate Democratic aide. Schumer said Democrats would not object to requests for unanimous consent on honorary resolutions, either.

The greater impact likely will be the interruption of the legislative process and routine Senate business.

Speaking on the Senate floor, Schumer asked Senate Majority Leader Mitch McConnell of Kentucky to hold an all-senators meeting to discuss a bipartisan way forward on lowering the cost of health care, raising the quality of care and stabilizing the insurance marketplaces.

McConnell responded that senators would meet on the Senate floor with an unlimited amendment process. He said there would be “ample opportunity” to read and amend the bill when Schumer asked whether Democrats would have more than 10 hours to review it.

“I rest my case,” Schumer said.

CBO: House Obamacare repeal will increase uninsured by 23 million

Senate Republicans draft Obamacare repeal bill behind closed doors

Republicans blame Democrats for refusing to negotiate on a health care bill.

“Democrats for MONTHS have stated they have no interest in working with Republicans on fixing Obamacare,” Michael Reed, the Republican National Committee’s research director and deputy communications director, wrote in a statement. “Now, Democrat efforts to feign outrage over health care negotiations should be seen for what it is — a pure partisan game aimed at placating the far-left.”

McConnell, in a Senate floor speech, said Obamacare has increased costs and reduced choice, causing Americans to drop coverage. He said the entire Senate Republican conference has been “active and engaged” for months on legislation that would stabilize insurance markets, remove mandates to buy insurance, and preserve access to care for those with pre-existing conditions.

“We believe we can and must do better than Obamacare’s status quo,” he said.

The House-passed health care bill, called the American Health Care Act, would lead to 23 million fewer people having health insurance by 2026, according to the Congressional Budget Office. If the Senate is able to pass health care legislation, the two chambers will have to come to a compromise to get a final bill to Trump’s desk.

As Democrats prepared for battle over the Senate bill, conservative House Republicans planned to send a letter to McConnell warning against letting the legislation get too moderate if he wants to keep support from the House after it passed the Senate.

The letter from the Republican Study Committee, which has more than 150 members, states that its members have “serious concerns regarding recent reports suggesting that the Senate’s efforts to produce a reconciliation bill repealing the Affordable Care Act are headed in a direction that may jeopardize final passage in the House of Representatives,” according to a copy of the draft obtained by USA TODAY.

Editorial: It’s now or never to fix next year’s insurance exchange rates

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http://www.modernhealthcare.com/article/20170603/MAGAZINE/170609997/editorial-its-now-or-never-to-fix-next-years-insurance-exchange-rates

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As the ad hoc committee of 13 Republican senators rethinks the increasingly unpopular American Health Care Act, Congress and the administration face a more pressing question. Will they stabilize the individual insurance market for 2018?

Preliminary rate filings for next year suggest that some states are entering the first phases of the much-dreaded death spiral, where rising rates and declining enrollments feed on each other to climax in a collapsed market. Where last year it was mostly rural areas that suffered from a dearth of carriers offering exchange plans, major urban areas like Kansas City and Knoxville, Tenn., are now among the regions reporting no insurers interested in offering coverage.

Meanwhile, carriers are requesting double-digit rate hikes in many areas of the country. Increase requests as high as 50% have been reported.

Republicans blame the Affordable Care Act. But, in fact, blame rests squarely with the Trump administration and the Republican-controlled Congress, who’ve created tremendous uncertainty around the policies that make the ACA’s individual market work.

The biggest single problem is Congress’ failure to appropriate the $7 billion owed insurers for underwriting cost-sharing reductions for low-income plan purchasers. That affects about 7 million of the 13 million people who signed up for individual plans.

Last year, Congress also put a one-year hold on the surcharge on health insurance premiums that supports ACA subsidies. Without further action, the tax, which was slated to raise about $100 billion over the next decade, will go into effect in 2018.

From a budgetary perspective, the move is a wash. The increased tax collection will be offset by the increased subsidies given low-income people who buy plans. People who are unsubsidized—those most likely to be bitter opponents of Obamacare—will be hit dollar-for-dollar with the rate hike.

President Donald Trump​ also contributed to uncertainty over next year’s enrollment period. First, he halted media promotion of the 2017 open enrollment. Then, in February, he issued an executive order waiving the individual mandate, which is key to getting millions of younger, relatively healthy people into the individual market pool.

While Politico reported last month that the Internal Revenue Service didn’t carry out the president’s order this year, the atmospherics around these pronouncements will ensure that fewer people sign up for individual plans in 2018. Insurers are assuming they will be covering an older, sicker population, a surefire path to higher rates.

Last week, Bradley Wilson, CEO of Blue Cross and Blue Shield of North Carolina, dissected how these compounding uncertainties contributed to its request for a 22.9% rate hike. About half the increase came from the missing cost-sharing reduction subsidies; about a third from an expected increase in medical losses, driven by rising costs and a sicker pool; and the rest from the expected tax.

This Republican Congress and the administration could quickly solve these problems without sacrificing their political principles. The administration could signal it will enforce the mandate since it is still the law. Congress could appropriate the money for the cost-reduction subsidies. This would preserve the House’s lower court victory in its suit challenging the Obama administration’s lacking an appropriation.

And, in a nod to their goal of protecting people with pre-existing medical conditions, Congress could create a reinsurance program to cover the extraordinary expenses of high-cost patients in the individual market. Unlike state-run high-risk pools, which have never worked, a federally funded reinsurance program would preserve everyone’s access to health insurance in the individual market at affordable rates.

It’s up to Congress now. Insurers face a June 21 deadline for notifying HHS about participation in the exchanges, and final rates are due from states by Aug. 16; there’s not much time to act. We’ll soon find out if Trump and this Congress intend to deny millions of people access to affordable health insurance next year.