While Senate Republicans are drafting their healthcare plan behind closed doors, they’ve given reporters a general idea of what might be in it.
The bill is shaping up to have a similar structure as the House’s bill, while more reflecting the principles of centrist Republicans in both chambers.
Senators are still hashing out the specifics, but here’s a look at where they appear to be headed.
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.
The ‘Kimmel test’ could be a good health care yardstick for the GOP
Should the “Kimmel test” help shape the health care bill that the US Senate is now working on behind closed doors? Republican senators could easily use it to vet the bill while staying true to their conservative roots.
Last month, talk show host and comedian Jimmy Kimmel shared with his audience a story about his son, Billy, who had been born a few days earlier with a heart defect called the tetralogy of Fallot and needed open heart surgery at three days old.
“If your baby is going to die, and it doesn’t have to, it shouldn’t matter how much money you make,” pleaded Kimmel in an impassioned take on health insurance that has been viewed by millions.
Not long afterward, Republican Senator Bill Cassidy, a physician who represents Louisiana, said that any Republican health care legislation would need to pass the “Jimmy Kimmel test.” Morally and politically, Cassidy is right.
Every day in my work in a pediatric emergency department, I see firsthand that the Affordable Care Act, the law that the Republican House and Senate are determined to replace, saves lives. Before the ACA, children born with pre-existing conditions were often uninsurable, their families left to struggle with an unmanageable economic burden.
Kimmel thinks the solution is easy: “Don’t give a huge tax cut to millionaires like me and instead leave it [the ACA] how it is.” But the solution is far from easy.
As a physician, a conservative Republican, and a health insurance scholar, I believe that government intrusion into private insurance has had serious consequences. Families across America are paying thousands of dollars a year more in higher health insurance premiums. Insurers, which have been losing money, have started abandoning entire markets. The House of Representatives passed the American Health Care Act in early May, believing it had to do so to stabilize markets and reduce premiums. But the Congressional Budget Office finally reported that the AHCA strips away most protections for pre-existing conditions and pushes an estimated 23 million more Americans into being uninsured.
Can we Republicans pass the Kimmel test, improving on the AHCA while still ensuring the sustainability of American health care? Senate Republicans have expressed skepticism, but I believe we can. The key is to stay true to our roots by adhering to four conservative principles.
First, private markets must remain free. Healthy people will need to help pay for sick people — that’s how health insurance works — but they must be allowed to choose their own insurance. The ACA coerced the healthy into paying above-market rates for insurance, and so it prohibited the lower-premium catastrophic plans that make sense for most families.
Second, the poor should never pay for government benefits to the wealthy. The main way the ACA tries to help families with pre-existing conditions is by regulating insurance premiums, but that means its benefits are indiscriminate. The young and healthy, many of whom are struggling economically, pay more. The elderly, many of whom need help but some of whom are wealthy, pay less. We should use America’s progressive tax system, where the wealthy pay more in taxes, to implement a means-tested health insurance system that specifically helps the needy. Republicans don’t love taxes, but a hidden tax is worse than a visible one, and it is utter anathema that the ACA moves even a single dollar from the poor to the rich.
Third, redistribution must be transparent. The ACA mainly forces higher costs onto private insurance plans, which invisibly pass those costs to healthy consumers. Democrats may prefer this hidden tax politically, but to abide by conservative principles, a subsidy must come with a budget that can be seen, understood, and voted on.
Fourth, health insurance subsidies must be structured to reduce expenditures over time. Just as welfare should be a bridge to independence for individuals, subsidies should be a bridge to sustainability for the health care industry.
The ACA introduced some promising cost-reductions, like financial responsibility provisions for hospitals and limits on luxury plan tax deductions. The Senate needs to continue these efforts. Subsidized care must be adequate and compassionate, but it should insist on using generic drugs (when available) rather than brand-name ones, and it should not cover newly constructed hospitals or low-value services. Medicine must de-intensify, helping patients receive care at home instead of in hospitals when appropriate and using social workers to meet social needs. We also need to help subsidized patients take more responsibility for their health — showing up for appointments, taking prescribed medications, and, if needed, quitting smoking and receiving treatment for addiction.
In my view, the best way to accomplish these four goals would be through either a federally funded expansion of Medicaid or a federally run high-risk pool, which would offer families a means-tested option to buy in once medical bills reach a certain point. Such a plan would intentionally have high deductibles and copays, but it would offer extra assistance to needy families. The private insurance market would be free to compete on price and quality, innovating new ways to deliver value.
I am not writing to advocate for any specific plan. Instead, I offer conservative principles as a yardstick: Does the program provide compassionate, adequate coverage to the sick? Is it transparent, fair, and sustainable? Are the healthy still free to choose their own insurance?
Republicans can craft sensible, conservative subsidies to protect our most vulnerable citizens while also preventing hidden taxes and blank checks. Kimmel is right: No parents should have to choose between bankruptcy and saving their child’s life. Nor does our nation have to choose between fiscal irresponsibility and compassion for our most vulnerable.
A prominent rating agency, Moody’s Investors Service, said Thursday the proposed Trump administration budget could form an even darker financial cloud over the nation’s not-for-profit health-care systems and state legislatures.
Moody’s said the White House budget, if approved in its current form by Congress, would represent a “credit negative” for both groups.
The White House budget calls for $610 billion in Medicaid cuts over 10 years as well as eliminating $250 billion dedicated to state Medicaid expansion programs.
A projected $834 billion in lower Medicaid spending over 10 years was scored by the Congressional Budget Office if the American Health Care Act (AHCA) is enacted. The bill also would lead to 23 million Americans losing their health insurance by 2026, the office projected.
Moody’s wrote that the White House budget, if enacted, “would pressure state governments to take various actions to balance their budgets, including adjusting Medicaid eligibility rules, increasing their own funding of Medicaid, or cutting payments to hospitals and other providers,” Moody’s said.
“Although the budget would give states limited new flexibility to adjust their Medicaid programs, the measure overall reflects a significant cost shift away from federal funding to states,” Moody’s said. “It would force states to make difficult decisions about safety-net spending for hospitals that serve large numbers of indigent patients.”
The warning comes 10 weeks after Moody’s and S&P Global Ratings cautioned that the proposed AHCA could put increased pressure on health-care systems’ operating revenue and bottom lines.
The ratings groups expressed concern that the ACHA would change funding for Medicaid from an open-ended entitlement to a system based on payments that will be made to the states based on a capped per-capita amount.
The bill passed the U.S. House, but is likely to face significant changes in the U.S. Senate.
Another factor Moody’s cited in the credit negative rating is a White House budget proposal “that forces” states to share the costs of the federal Supplemental Nutrition Assistance Program, also known as food stamps.
The federal government covers all benefit costs of the program, while states pay to administer it. The White House budget proposes to shift 25 percent of the benefit costs to states, totaling $190 billion by fiscal 2027.
“We expect action to vary among states, with some taking more action to limit the loss of insurance coverage or benefit changes,” Moody’s said.
“Material reductions of insurance coverage would be credit negative for not-for-profit hospitals because they would increase their bad debt and uncompensated care costs.”
In the most recent quarterly reports for the Triad’s three main health-care systems, each reported an increase in bad debt.
According to the American Hospital Association, bad debt is defined as services for which hospitals anticipate, but do not receive, payment from patients who have the financial means to pay.
Wake Forest Baptist Medical Center reported that through the first three quarters of fiscal 2016-17, it had $166.1 million in bad debt, compared with $38.2 million the year before.
http://www.latimes.com/politics/la-na-pol-gop-healthcare-cbo-20170524-story.html
The Republican healthcare bill that passed the House earlier this month would nearly double the number of people in the U.S. without health insurance over the next decade, according to a new analysis by the nonpartisan Congressional Budget Office.
The much-anticipated report cast a new shadow over the controversial legislation and is expected to complicate Republican efforts to get the bill through the Senate, where it already faces difficult prospects.
According to the budget office, which both parties in Congress look to for estimates on the impact of complex legislation, the bill would cause 23 million fewer people to have health insurance by 2026. Many additional consumers would see skimpier health coverage and higher deductibles, the budget office projected.
The report further undermines claims by President Trump and House Republicans that their campaign to repeal and replace the current healthcare law — often called Obamacare — will protect all Americans’ access to healthcare.
The House bill would be particularly harmful to older, sicker residents of states that waive key consumer protections in the current law, including the ban on insurers charging sick consumers more. The budget office estimates that about one-sixth of the U.S. population live in states that would seek such waivers, which would be allowed under the House bill.
Senate Republicans are showing early divisions over what to do about ObamaCare’s protections for people with pre-existing conditions.
Some conservatives, including Sen. Mike Lee (R-Utah), want to simply repeal those provisions and other ObamaCare regulations and leave them up to the states.
But advocates of a more centrist approach, like Sen. Bill Cassidy (R-La.), are speaking out in favor of pre-existing condition protections and endorsing a “Jimmy Kimmel test” for the bill, where no one can be denied coverage.
Other senators are exploring a middle ground where states would have to automatically enroll people in health insurance before they could get a waiver for the regulations, though conservatives object to that idea as Washington overreach.
The disagreements over what to do about preexisting conditions point to the larger difficulty facing Senate Republicans as they seek to find consensus on a host of contentious issues in the healthcare bill.
Pre-existing Conditions and Medical Underwriting in the Individual Insurance Market Prior to the ACA
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Before private insurance market rules in the Affordable Care Act (ACA) took effect in 2014, health insurance sold in the individual market in most states was medically underwritten.1 That means insurers evaluated the health status, health history, and other risk factors of applicants to determine whether and under what terms to issue coverage. To what extent people with pre-existing health conditions are protected is likely to be a central issue in the debate over repealing and replacing the ACA.
This brief reviews medical underwriting practices by private insurers in the individual health insurance market prior to 2014, and estimates how many American adults could face difficulty obtaining private individual market insurance if the ACA were repealed or amended and such practices resumed. We examine data from two large government surveys: The National Health Interview Survey (NHIS) and the Behavioral Risk Factor Surveillance System (BRFSS), both of which can be used to estimate rates of various health conditions (NHIS at the national level and BRFSS at the state level). We consulted field underwriting manuals used in the individual market prior to passage of the ACA as a reference for commonly declinable conditions.
Pre-ACA Market Practices Provide Lessons for ACA Replacement Approaches
Significant changes to the Affordable Care Act (ACA) are being considered by lawmakers who have been critical of its general approach to providing coverage and to some of its key provisions. An important area where changes will be considered has to do with how people with health problems would be able to gain and keep access to coverage and how much they may have to pay for it. People’s health is dynamic. At any given time, an estimated 27% of non-elderly adults have health conditions that would make them ineligible for coverage under traditional non-group underwriting standards that existed prior to the ACA. Over their lifetimes, everyone is at risk of having these periods, some short and some that last for the rest of their lives.
One of the biggest changes that the ACA made to the non-group insurance market was to eliminate consideration by insurers of a person’s health or health history in enrollment and rating decisions. This assured that people who had or who developed health problems would have the same plan choices and pay the same premiums as others, essentially pooling their expected costs together to determine the premiums that all would pay.
Proposals for replacing the ACA such as Rep. Tom Price’s Empowering Patients First Act and Speaker Paul Ryan’s “A Better Way” policy paper would repeal these insurance market rules, moving back towards pre-ACA standards where insurers generally had more leeway to use individual health in enrollment and rating for non-group coverage.1 Under these proposals, people without pre-existing conditions would generally be able to purchase coverage anytime from private insurers. For people with health problems, several approaches have been proposed: (1) requiring insurers to accept people transitioning from previous coverage without a gap (“continuously covered”); (2) allowing insurers to charge higher premiums (within limits) to people with pre-existing conditions who have had a gap in coverage; and (3) establishing high-risk pools, which are public programs that provide coverage to people declined by private insurers.
The idea of assuring access to coverage for people with health problems is a popular one, but doing so is a challenge within a market framework where insurers have considerable flexibility over enrollment, rating and benefits. People with health conditions have much higher expected health costs than people without them (Table 1 illustrates average costs of individuals with and without “deniable” health conditions). Insurers naturally will decline applicants with health issues and will adjust rates for new and existing enrollees to reflect their health when they can. Assuring access for people with pre-existing conditions with limits on their premiums means that someone has to pay the difference between their premiums and their costs. For people enrolling in high-risk pools, some ACA replacement proposals provide for federal grants to states, though the amounts may not be sufficient. For people gaining access through continuous coverage provisions, these costs would likely be paid by pooling their costs with (i.e., charging more to) other enrollees. Maintaining this pooling is difficult, however, when insurers have significant flexibility over rates and benefits. Experience from the pre-ACA market shows how insurers were able to use a variety of strategies to charge higher premiums to people with health problems, even when those problems began after the person enrolled in their plan. These practices can make getting or keeping coverage unaffordable.
The discussion below focuses on some of the issues faced by people with health issues in the pre-ACA non-group insurance market. These pre-ACA insurance practices highlight some of the challenges in providing access and stable coverage for people and some of the issues that any ACA replacement plan will need to address. Many ACA replacement proposals have not yet been developed in sufficient detail to fully deal with these questions, or in some cases may defer them to the states.
We start by briefly summarizing key differences between the ACA and pre-ACA insurance market rules for non-group coverage that affect access and continuity of coverage. We then focus on pre-ACA access and continuity issues for three different groups: (1) people transitioning from employer coverage or Medicaid to the non-group market; (2) people with non-group coverage who develop a health problem; and (3) people who are uninsured (are not considered to have continuous coverage) who want to buy non-group coverage. After that, we discuss how medical underwriting and rating practices can segment a risk pool, initially and over time, and challenges that this poses for assuring continuous coverage. We end by reviewing some of the policy choices for addressing the challenges that have been raised.
Ten Ways That the House American Health Care Act Could Affect Women
Women have much at stake as the nation debates the future of coverage in the United States. Because the Affordable Care Act (ACA) made fundamental changes to women’s health coverage and benefits, changes to the law and the regulations that stem from it would have a direct impact on millions of women with private insurance and Medicaid. On May 4, 2017, the House of Representatives passed the American Health Care Act (AHCA), to repeal and replace elements of the ACA (Appendix Table 1). It would eliminate individual and employer insurance mandates, effectively end the ACA Medicaid expansion, cap federal funds for the Medicaid program, make major changes to the federal tax subsidies available to assist individuals who purchase private insurance, and ban federal Medicaid funds from going to Planned Parenthood. It would also allow states to waive the ACA’s Essential Health Benefits requirements and permit health status as a factor in insurance rating for individuals who do not maintain continuous coverage with the goal of reducing insurance costs.1 The Senate will now take up legislation to repeal and replace the ACA and may consider several elements that the House has approved in the AHCA. This brief reviews the implications of the AHCA for women’s access to care and coverage.
For those with pre-existing medical conditions, the House-passed health bill became notorious for a last-minute addition that would let insurers once again charge them higher premiums in the individual market based on their health status. But the focus on this single provision distracts from a troubling fact: even without it, the bill would threaten health care for those with pre-existing conditions in four broader ways.
A per capita cap would set annual limits on federal funding per beneficiary that would grow more slowly than actual health care costs. A block grant would cap the amount of overall federal Medicaid funding the state could receive. Either way, states would receive significantly less federal funding compared to current law, under which the federal government pays a fixed share of state Medicaid costs, and the funding cuts would grow deeper each year.
Faced with large cuts in federal funding, states would have no choice but to sharply cut their programs. Consequently, tens of millions of people with pre-existing conditions – including millions of children with disabilities and special health care needs – would face the threat of Medicaid cuts. They could lose coverage entirely or go without needed care as states scaled back covered benefits and payments to medical providers.
Home- and community-based services, an optional Medicaid benefit that most states already limit based on available funds, would be at particular risk. These services, which include nursing and home health care and help with chores, meals, transportation, and other services, let seniors and other low-income people with serious health problems remain in their homes instead of having to go to a nursing home.
That would force states to pay three to five times more for the ACA’s Medicaid expansion. Most or all of the 31 states and Washington, D.C. that have adopted it would have no choice but to drop it because they could no longer afford it.
The Medicaid expansion now covers 11 million people, including many who have pre-existing conditions. For example, almost 30 percent of those benefitting from the Medicaid expansion have a mental illness or substance use disorder. By effectively ending the Medicaid expansion starting in 2020, the House bill would leave millions of low-income people with pre-existing conditions without coverage.
For example, a 60-year-old woman with $22,000 of annual income who faced the national average benchmark premium would pay $8,200 more in premiums after accounting for federal tax credits than she does now. The Congressional Budget Office projects that uninsured rates for people age 50-64 would double due to the House bill. Some 84 percent of people age 55-64 have pre-existing health conditions.
Plans would no longer need to offer a comprehensive set of benefits and could exclude even core benefits such as maternity services and mental health care. Nor would they have to limit the amount that people with expensive health care must pay out-of-pocket for deductibles and other cost-sharing each year. Insurers could again place annual and lifetime limits not only on individual and small-group plans but also on coverage that people get from large employers, leaving millions with costly pre-existing conditions to once again worry about exhausting their benefits.
All told, then, the House bill would bring back the highly-flawed, pre-ACA individual insurance market that made it impossible for millions with pre-existing conditions to get adequate, affordable health coverage. Additionally, it would threaten the coverage of millions of Medicaid recipients with pre-existing conditions.
That’s not a health care system that should make us proud.
HENRY KOTULA 