Health Insurance Premiums Are Stabilizing

Stateline Aug16


Despite Republican efforts to undermine the Affordable Care Act, insurance premiums will go up only slightly in most states where carriers have submitted proposed prices for next year. And insurance carriers are entering markets rather than fleeing them.

The improvements stem from less political uncertainty over health policy, steeper than necessary increases this year, better understanding of the markets, improvements in care and a host of actions taken by individual states.

Average proposed premiums for all levels of plans in California, Colorado, Delaware, Florida, Indiana, Nevada, Ohio and Pennsylvania will increase less than 9 percent in 2019, according to the Kaiser Family Foundation.

By contrast, this year’s mid-priced plans increased an average of 37 percent nationally compared to 2017.

In some states, 2019 premiums are projected to decrease. Prices also are expected to drop for people in a number of metropolitan areas, including Atlanta, Baltimore, Denver, New York and Washington, D.C.

And unless the Trump administration launches new attacks on the Affordable Care Act in the coming months, analysts believe the average increase across the United States will hold to the single digits.

To be sure, not all areas will fare as well. Some can still expect to see big increases next year, according to the Kaiser Family Foundation. For instance, proposed premium increases in Maryland average 30 percent for 2019.

(In some states, carriers have not yet had to file their rate proposals for 2019, but will in the coming weeks.)

But after a couple years in which carriers fled many markets around the country, insurers are planning to enter exchanges in many states, including Arizona, Florida, Michigan, New Mexico and Wisconsin. In some states, existing insurers are pushing into new areas.

“That they are entering markets is a sign that the insurers are pretty confident about those markets,” said Rabah Kamal, who analyzes health reform and health insurance for Kaiser.

“After several years of big losses, insurers are actually turning a profit,” said Kamal. “They’re doing well, so overall, there’s no justification for big increases.”

To a large extent, premiums in 2019 appear to be moderating because carriers raised rates higher than necessary in 2018 in reaction to the uncertainty over how Congress and the Trump administration might undermine the ACA. “It boils down to the fact that last year’s rates were too high,” said Emily Curran, a research fellow at Georgetown University’s Health Policy Institute.

Carriers also understand the marketplace much better than they did in 2014 when the exchanges were launched across the country, Curran and others say. Carriers have a better sense of who they are covering and how to predict their health risks, Curran said. Insurers and medical providers also have better coordinated care to reduce duplication.

State Roles

States also have had a major hand in stabilizing their markets, seeking to limit the damage the federal government is doing to the ACA.

Massachusetts had its own individual mandate before the ACA, and now New Jersey does as well. Three states, Massachusetts, New Jersey and New York, have passed outright bans on issuing short-term health insurance policies, while 12 others have adopted standards more restrictive than federal policy. Some states, including Alaska, Minnesota and Oregon, have also created state-funded reinsurance pools, which protect carriers from financially crippling individual medical claims.

Finally, a number of states have done their own outreach to publicize their exchanges and promote enrollment in the absence of federal efforts.

Pennsylvania is one of those states. The insurance market has stabilized there, said Jessica Altman, the state’s insurance commissioner. She projects the average state premium increase in 2019 will amount to 0.7 percent, compared to 30.6 percent this year. She said in 31 of 67 Pennsylvania counties, there will be more carriers selling policies next year compared to 2018. And, she said, many carriers are pushing into new territories.

Her agency estimates that the increase this year would have been only 7.6 percent absent the federal government’s elimination of cost-sharing reductions, which were federal payments to insurance carriers to cushion them from exorbitant individual medical claims.

“We had pretty significant increases last year, and we shouldn’t have,” Altman said.

Julie Mix McPeak, commissioner of the Department of Commerce and Insurance in Tennessee, where premiums are expected to fall and more carriers are intending to operate, said the ACA brought more than 200,000 Tennesseans into health plans — many of whom previously had not sought routine health care — which meant higher claims in the first years.

“We had a pretty negative health score in terms of dollars spent on claims because so many people coming into primary care had health issues that needed to be addressed. Now that they’ve been in care for several years now, we aren’t seeing those claims rising any more. They are leveling off.”

Whether the stability that appears to be settling the markets in 2019 will continue beyond that largely depends on what Washington does. “No one,” said Curran, “wants to see more uncertainty.”

Undermining the ACA

A Brookings Institution study released this month estimated that insurers on the health insurance market this year will enjoy an underwriting profit margin of 10.5 percent, up from 1.2 percent last year.

The study estimated that, absent federal policies disrupting the marketplaces, premiums would have dropped 4.3 percent nationwide in 2019.

Many health care analysts agree. “In cases where we are seeing modest increases, we might have seen decreases,” said Myra Simon, executive director of individual market policy for America’s Health Insurance Plans, a lobbying arm of the health insurance industry.

Steps taken by Republicans in Washington to undermine the exchanges include Congress’ repeal starting next year of the individual mandate, which requires all Americans to obtain health insurance, and the Trump administration’s decision to end the Obama-era cost-sharing reduction payments.

The administration also eliminated most funds for outreach to encourage enrollment in the markets and shortened the periods during which people could sign up for plans. In addition, the administration has moved forward with plans to loosen regulation on association and short-term health plans that don’t have to be as comprehensive as plans sold under the Affordable Care Act.

Health insurance analysts of all stripes had said those actions would draw people away from the insurance exchanges, particularly the young and healthy. Their departure, analysts said, could drive up premiums for all those remaining and set the markets on a “death spiral” that would ultimately drive all carriers from the exchanges.

The president has been clear about his intentions. “Essentially, we are getting rid of Obamacare,” he said in April.

But as carriers file their plans with state insurance offices for next year, it appears that warnings of imminent catastrophe were, at the least, premature.

“The administration has done almost everything on its list to destabilize the market or, in their words, ‘create more choice,’” said Chris Sloan, a director at Avalere Health, a Washington-based health policy research and consulting firm. “They’ve done it all and the market is still standing.”




Nobody loves the ACA as much as New Jersey

Related image

New Jersey leads the nation in so many important things: rest stops named for historical figures, willingness to wear track suits in public — and now, reconstituting the Affordable Care Act under President Trump.

No state has moved faster or more aggressively to shore up its ACA markets than Jersey.

  • Yesterday, the Trump administration approved the state’s proposal for a new, five-year reinsurance program — essentially a subsidy that helps insurers pay for their most expensive customers, so they don’t have to pass those costs on through higher premiums.
  • That program will be paid for, in part, by New Jersey’s newly enacted individual mandate.
  • New Jersey also bans short-term insurance plans that don’t cover pre-existing conditions. The Trump administration has loosened the rules for those plans, but states are free to enact their own restrictions.

Those three policies — an individual mandate, a reinsurance program and limits on short-term plans — are states’ most muscular options for stabilizing their individual insurance markets, especially if they want to stick to the same core model of the pre-Trump ACA.

  • Right now, Jersey is the only state that has all three.

Meanwhile: The California State Assembly passed a bill yesterday to ban short-term plans.

The big picture: As more states — mostly blue states — restrict short-term plans and win approval for reinsurance programs, expect to see a deepening red-blue divide in state insurance markets and, as a result, in average premiums within the ACA’s exchanges.

Short-term health plans: A junk solution to a real problem

Serious illnesses like cancer often are not covered by short-term health insurance policies.


After failing to overturn most of the Affordable Care Act in a very public fight, President Donald Trump has been steadily working behind the scenes to further destabilize former President Barack Obama’s signature achievement. A major component in this effort has been an activity called rule-making, the administrative implementation of statutes by federal agencies like the Department of Health and Human Services.

Most recently, citing excessive consumer costs, the Trump administration issued regulations to vastly expand the availability of short-term, limited duration insurance plans.

While the cost of health care is one of the overwhelming problems in the American health care system, short-term health plans do nothing to alter the underlying causes. Indeed, these plans may cause great harm to individual consumers while simultaneously threatening the viability of many states’ insurance markets. Having studied the U.S. health care market for years, here is why I think states can and should take quick action to protect consumers.

Comparing crab apples and oranges

Short-term, limited duration insurance plans, by definition, provide insurance coverage for a short, limited period. Since being regulated by the Health Insurance Portability Act of 1996 (HIPAA), this has meant for less than one year. Sold at least since the 1970s, they were offered as an alternative to major medical insurance intended for individuals with temporary and transitional insurance needs such as recent college graduates or those in between jobs.

However, after passage of the Affordable Care Act further concerns emerged over the misuse and mismarketing of these kinds of plans. As a result, the Obama administration restricted their duration to three months.

In addition to being shorter in duration, these policies’ benefits tend to also be much skimpier than for those plans sold on the Affordable Care Act’s marketplaces. For example, plans often do not cover crucial services such as prescription drugs, maternity care, or major emergencies like cancer. Equally problematic, even those benefits covered come with high deductibles, strict limitations, and annual and lifetime coverage limits.

It is important to note that short-term health plans are also not subject to any of the consumer protections established by the Affordable Care Act. This means, for example, that insurers can set premiums, or even refuse to sell to an individual, based on a person’s medical history. Moreover, consumers must update their health status every time they seek to purchase coverage.

Crucially, short-term health plans have shown to be particularly discriminatory against women. For one, women are charged higher premiums. Moreover, they are likely to be disproportionately affected by medical underwriting for pre-existing conditions like domestic and sexual abuse and pre- and postnatal treatment.

Because plans are so limited in benefits, and because insurers are able to deny coverage to sicker individuals, short-term health plans come with much lower premiums than standard insurance plans with their more expansive benefits and vastly superior consumer protections. Indeed on average, premiums amount to only one-fourth of ACA-compliant plans.

Too good to be true

While short-term insurance plans are more affordable in terms of premiums, they come with a slew of problems for consumers.

For one, consumers have a tremendously hard time understanding the American health care system and health insurance. Predatory insurance companies have been known to take advantage of this shortcoming by camouflaging covered benefits, something the Affordable Care Act sought to ameliorate. Mis- and underinformed consumers often find themselves surprised when they actually try to use their insurance.

Even for those who are aware of the limitations, problems may arise. Unable to predict major medical emergencies, consumers may be confronted with tens of thousands of dollars of medical bills if they fall sick or face injury.

Moreover, insurers are also able to rescind policies after major medical expenses have been incurred if consumers failed to fully disclose any underlying health conditions. This even applies to health conditions that consumers had not been aware of prior to getting sick.

While some may argue that this is the fault of the those who purchase short-term insurance, it causes problems for all of us.

For one, these individuals may refuse to seek care. This could result in severe consequence for their and their family’s well-being and ability to earn a living.

At the same time, medical providers will shift the costs of the resulting bad debts to other individuals with insurance or the general taxpayer.

Bad for the individual, worse for all of us

Short-term insurance plans are perhaps even more problematic for the health of the overall insurance market than they are for individual consumers.

With a very short implementation time frame, insurance regulators in the states only have until October to prepare for the potentially significant disruptions to their markets. This leaves little time for analysis and regulatory preparation.

Yet long-term consequences are even more concerning. Healthier and younger consumers are naturally drawn to the low premiums offered by these plans. At the same time, older and sicker individuals will value the comprehensive benefits and protections offered by the Affordable Care Act. The result is the continuing segregation of insurance markets and risk pools into a cheaper, healthier one and a sicker, more expensive one. As premiums rise in the latter, its healthiest individuals will begin to drop their coverage, leading to ever more premium increases and larger coverage losses. If left unchecked, eventually the entire insurance market may collapse in this process.

This could be particularly problematic in states with relatively small insurance markets like Wyoming or West Virginia where even one truly sick individual can drive up premiums tremendously.

States have options

The expansion of short-term health plans is one action by the Trump administration that states can counteract relatively simply. Currently, states serve as the primary regulator of their insurance markets. As such, they have the power to make decisions about what insurance products can be sold within their boundaries.

Action can be taken by insurance regulators and legislature to create relatively simple solutions. While the vast majority of states have failed to create consumer and market protections, a small number of states have done just that.

New York, for example, has banned the sale of these plans.

Others, like Maryland, have strictly limited their sale and renewability.

Treating the symptoms, not the cause

Many Americans struggle to access insurance and services despite the Affordable Care Act. While the Affordable Care Act has unquestionably improved access to insurance for Americans, cost control and affordability are truly its Achilles heels. Indeed, some Americans lost their limited benefits, lower cost plans when the Affordable Care Act did not recognize them as viable coverage.

The Trump administration has rightfully highlighted to high costs of the American health care system. However, offering consumers the opportunity to purchase bare-bones insurance at lower costs does nothing to solve America’s health care cost problems.

If access to insurance is truly a concern for the Trump administration, I believe it should seek to convince the remaining hold-outs to expand their Medicaid programs. Also, I think discontinuing its actions to destabilize insurance markets would also go a long way to reducing premiums.

Yet when it comes to altering the underlying cost calculus, there are no simple solutionsAdministrative costs are too highMedical quality is too lowResources constantly get wasted. Consumers could do more to be healthier.

Ultimately, I see it coming down to one crucial problem: Providers, pharmaceutical companies, device makers and insurers are making too much money. And it is these vested interests that make structural reform of the U.S. health care system a truly herculean endeavor.

But unless Americans and policymakers of both parties are willing to address this root cause, any reform effort amounts to nothing more than rearranging the deck chairs on the Titanic.


Six Things Health Execs Should Know about Association Health Plans

Image result for skinny health plans

Association Health Plans (AHPs) permit small businesses to band together and buy health insurance. “By allowing them to join together in associations, small companies can have the same buying power as a large employer,” says Diane Wolfenden, director, Sales and Client Services, East Region, Priority Health, Michigan’s second largest health plan.

In June, when the final rule governing AHPs was released, the Trump Administration emphasized that AHPs will provide small businesses with more choices, access, and coverage options.

Here are six things MCOs should know about AHPs.

1. Critics say AHPs may undermine ACA plans. The most commonly cited concern with new AHP regulations is that they may undermine the ACA marketplace because association plans aren’t required to comply with all ACA regulations. “The fear is that AHPs will siphon off younger, healthier individuals, and leave those with greater health risks and pre-existing conditions in ACA risk pools,” Wolfenden says. “Critics have stated that allowing AHPs will weaken some of the ACA’s protections for consumers and make coverage on the exchanges and through ACA markets more expensive.”

2. The regulation seeks to prevent the forming of associations solely to provide health benefits. Under the new regulations finalized by the Department of Labor, an association must have a substantial purpose for existing in addition to offering health benefits. “Offering health benefits may be the primary reason for forming an association, but the secondary reason must be substantive enough that even without offering health benefits the association could continue to exist,” Wolfenden says.

Businesses can form AHPs in a specific city, county, state, or multi-state metropolitan area. “Therefore, chambers of commerce, trade groups, or businesses in the same geographic area can form or join an AHP,” says Sally C. Pipes, president, CEO, and Thomas W. Smith Fellow in Healthcare Policy, Pacific Research Institute, a free-market think tank. “Alternatively, cross-border AHPs can form for businesses or sole proprietors that occupy the same industry.”

The association needs to have an organized structure with a governing body and policies and procedures in place indicating governance, as well as legalization behind it, says Bryan Komornik, director of West Monroe’s healthcare practice, a business technology consulting firm. Like the ACA, individuals can’t be discriminated against if they have pre-existing conditions.

In addition, association members must be able to demonstrate the income they derive from their business is sufficient to cover the cost of their premium or that they work at least 80 hours per month at the business, Wolfenden says.

3. They could expand the number of insured patients. AHPs will not only give small employers more options for their employees, but they could also encourage some individuals to buy insurance when they may have gone without it otherwise. The Congressional Budget Office (CBO) estimates that 4 million current ACA enrollees in the individual and small group markets could shift their coverage to these new policies, Wolfenden says. Further, the CBO stated that about 10% of those 4 million people buying plans in 2023 and beyond would have been uninsured otherwise.

Individuals who join a coalition can obtain health insurance coverage for themselves, their spouse, and their children, or they can opt to only get coverage for themselves, Komornik says. If an individual’s spouse has an employer-sponsored health plan, the individual can still get coverage through the association if they qualify otherwise.

4. They might offer fewer benefits. AHPs are likely to offer lower premiums through skinnier plan design, sacrificing benefits for lower costs. “This means that consumers will need to have a better understanding of what will, and will not, be covered by their AHP policy,” Wolfenden says. Because AHP policies aren’t required to comply with ACA regulations, they may not cover prescription drugs or certain types of surgeries.

5. They could lead to more uncompensated care. Because AHP plans may offer leaner benefits, some patient advocacy groups are concerned that patients will end up with healthcare expenses that their insurance company won’t cover and the patient can’t pay. “These bills may end up going unpaid, leading to an increase in uncompensated care,” Wolfenden says. Uncompensated care has fallen in nearly every state since the ACA’s implementation based on the expanded coverage. “Increases in uncompensated care make it harder for providers to invest in new technologies and equipment and maintain enough capacity to care for patients. Transparency will become even more critical as providers will need to work closely with patients to ensure they understand what their insurance policy covers and what their share of the costs will be upfront.”

6. The new rule will have a staggered implementation schedule. The new rule will be phased in in three stages. It will first take effect for associations with fully-insured AHPs on September 1, 2018. It will become applicable for associations with existing self-insured AHPs on January 1, 2019. Finally, the rule will take effect for new self-insured AHPs on April 1, 2019, Pipes says.


Do States Know the Status of Their Short-Term Health Plan Markets?

Short term plans

The Trump administration this week issued a final rule reversing federal limits on short-term health coverage, allowing such plans to become a long-term alternative to individual market coverage. Starting in October, insurers will be allowed to sell short-term plans for just under 12 months, up from the current federal limit of three months. And in a sharp break from prior regulations, insurers can renew short-term plans for up to 36 months. The rule does strengthen a consumer notice required in application materials, but the notice does not need to inform consumers of all limitations and “fine print.” Importantly, the rule does not preempt state regulation that includes shorter limits on coverage.

Short-term plans are not required to comply with the Affordable Care Act’s (ACA) consumer protections, meaning insurers that sell these policies can deny coverage to individuals with preexisting conditions and are not required to cover essential health benefits. These plans are typically marketed to healthy consumers, for whom coverage with limited benefits and a low premium may appear attractive.

In the past, many state insurance departments have had to warn residents about deceptive marketing practices sometimes undertaken by short-term plan sellers, which can lead consumers to believe they are buying a comprehensive policy when they are not. During the fall open-enrollment seasons for ACA marketplaces, these plans will be competing for consumers’ premium dollars with comprehensive coverage, introducing the possibility of still greater consumer confusion.

We surveyed the Departments of Insurance (DOIs) in the 17 state-based ACA marketplace states to understand how the market for short-term coverage is working on the eve of this policy shift. We found that most states have little information about the status of their current short-term plan markets. Additionally, inconsistencies in how states have collected and reviewed the premium rates and contracts for short-term plans will make it difficult to assess how the market is responding to the new federal rules.

Most States Do Not Have a Complete Picture of the Current Short-Term Market

With the exception of New York, which doesn’t permit short-term plans, 16 states in our survey require insurers to file for approval in order to sell short-term policies. However, once these policies are approved, few states require annual reapproval unless policies undergo significant rate or benefit design changes. Most DOIs acknowledged that insurers with short-term policies that were approved decades ago could potentially market them to consumers this fall without any additional regulatory approval.

As a first step to prepare for the Trump administration’s rulemaking, some states started to identify their approved short-term sellers and which ones are actively marketing. For example, in Maryland, the legislature directed the DOI to contact every approved short-term plan insurer to determine whether they are actively marketing. Similarly, Oregon is now reviewing advertisements for short-term products, and insurers marketing products that are at least five years old have been asked to refile with the state. However, overall, few states are aware of which short-term insurers are actively marketing. A few DOI officials also explained that with the new rule, more short-term plan insurers are likely to market within their state.

Insurers Marketing Short-Term Plans Are Generally Different Than Those Marketing Individual Plans

We compared the list of 2018 marketplace insurers to those who have been approved to sell short-term policies. Four of the 17 states (Massachusetts, New York, Rhode Island, and Vermont) in our survey have no approved short-term sellers because they require such plans to play by some or all of the same rules as traditional coverage. While the data are limited,1 it appears that 11 of the 17 states have more insurers approved to sell short-term plans than individual plans. There tends to be little overlap among the companies, although there are a few approved to sell in both the individual and short-term markets.

This separation poses a risk to individual market stability, as short-term sellers may target healthy marketplace consumers, undercutting ACA-compliant insurers. In return, ACA-compliant insurers may be incentivized to start selling short-term policies in order to shift and maintain their healthy enrollees in those plans. Indeed, the Trump administration expects that as many as 500,000 individual market enrollees will migrate to short-term plans in 2019. Because they will be relatively healthy, their departure will cause premiums in the individual market to increase by a projected 5 percent. This increase will come on top of other projected increases resulting from the repeal of the ACA’s individual mandate penalty and the expansion of association health plans.

Looking Forward

The final rule allowing short-term policies to be sold for longer durations puts enrollees at financial risk, as they unknowingly enroll in the skimpier policies that do not meet their health needs. In turn, the shift of large numbers of healthy consumers to the short-term market will increase prices for those remaining in the individual market. As a new market of long-term short-term plans emerges, states need to understand their short-term market in order to protect consumers and maintain a stable individual market. This can begin with an assessment of which insurers are actively marketing in the state. States also may want to ensure that any short-term plan sellers seeking to offer coverage that mimics the 12-month duration of ACA-compliant coverage submit plan designs, rates, and marketing materials for review and approval, as Vermont has done recently. Doing so will allow states to have a firmer understanding of the insurance products being sold to their residents, and will better position them to reduce consumer confusion and monitor for potential fraud.


States sue Trump administration over AHP expansion

Dive Brief:

  • Attorneys general from 11 states and Washington, D.C. are suing the Trump administration in hopes of putting the brakes on association health plan expansion.
  • Expanding AHPs is a key plank in President Donald Trump’s healthcare platform, but critics call the plans “junk insurance” that will sidestep Affordable Care Act regulations.
  • Meanwhile, the House of Representatives passed two bills last week that look to lower restrictions on health savings accounts (HSAs).

Dive Insight:

Trump, who repeatedly calls the ACA a “disaster,” said AHPs and allowing anyone to get catastrophic health insurance will offer flexibility and reduce health insurance costs.

In announcing the final rule last month, the Department of Labor said the regulation included anti-discrimination protections similar to those for large employers. It also allows states to regulate AHPs.

Though supportive of those protections, AHP critics are still concerned about the plans. They charge that AHPs will offer fewer consumer protections, lead to higher premiums in individual and small-group markets and result in fraudulent companies in the AHP market.

Tempting people with lower-cost offerings, AHPs and catastrophic plans could cause millions to flee the ACA exchanges. A recent report from the Society of Actuaries predicted between 3% and 10% of those in ACA marketplace plans will leave for AHPs. Those people are more likely to be young and healthy. Leaving the marketplace plans will result in an unstable risk pool with higher premiums in the exchanges.

A recent report from Avalere predicted individual rates would increase by between 2.7% and 4% and small group by between 0.1% and 1.9% with AHP expansion. Avalere said 130,000 to 140,000 more people will become uninsured because of the premium increases in the individual market by 2022.

Millions of people and small employers once got coverage through AHPs. However, the ACA instituted consumer protections for AHPs and said they should be regulated the same as individual and small-group market plans, such as requiring them to cover people with pre-existing conditions. The consumer protections increased the costs of AHPs, and many of them folded. The Kaiser Family Foundation said only 6% of employers with fewer than 250 employees offered health insurance through AHPs in 2017.

The Trump administration wants to make AHPs a low-cost solution with fewer regulations and consumer protections. However, the lawsuit involving 11 states and Washington, D.C. alleges the Department of Labor’s rule to expand AHPs violates the Administrative Procedures Act. The suit said that allowing for more AHPs “increases the risk of fraud and harm to consumers, requires states to redirect significant enforcement resources to curb those risks and jeopardizes state efforts to protect their residents through stronger regulation. The rule is unlawful and should be vacated.”

Meanwhile, the Republican-led House of Representatives is promoting more use of health savings accounts, which are a crucial part of high-deductible health plans and the drive toward consumerism.

One bill the House passed would allow members more flexibility to use their HSA until meeting their deductible. It also lets spouses contribute to an HSA and loosens restrictions on how members can use the account. The second piece of legislation would let people set aside more money for their HSA. That bill would also reduce the health insurance tax for two years, a change supported by the insurance lobby. The ACA created the tax as a way to pay for coverage improvements, but payers say it increases premiums.



CMS Adminstrator dismisses Affordable Care Act

Image result for 2018 midterm elections


About 1.4 million Californians buy coverage through the state’s Obamacare exchange, Covered California, and nearly 4 million have joined Medicaid as a result of the program’s expansion under the law.

Stepping into the land of the Trump resistance, Seema Verma flatly rejected California’s pursuit of single-payer health care as unworkable and dismissed the Affordable Care Act as too flawed to ever succeed.

Speaking Wednesday at the Commonwealth Club here, the administrator of the Centers for Medicare & Medicaid Services said she supports granting states flexibility on health care but indicated she would not give California the leeway it would need to spend federal money on a single-payer system.

“I think a lot of the analysis has shown it’s unaffordable,” Verma said during a question-and-answer session following her speech. “It doesn’t make sense for us to waste time on something that’s not going to work.”

During her speech, Verma issued a broader warning to advocates pushing for a Medicare-for-all program nationally. She said that “socialized” approach to medicine would endanger the program and the health care it provides for millions of older Americans.

“We don’t want to divert the purpose and focus away from our seniors,” Verma said in the address before more than 200 people. “In essence, Medicare for all would become Medicare for none.”

Single-payer has emerged as a key issue in the California governor’s race this year. The current front-runner for governor, Gavin Newsom, a Democrat and the current lieutenant governor, has vowed to pursue a state-run, single-payer system for all Californians if elected in November. Many California lawmakers have endorsed that idea as the next step toward achieving universal coverage and to tackling rising costs.

California has enthusiastically embraced the Affordable Care Act, and state leaders have struggled with — and even bucked — the Trump administration on a variety of health-policy fronts. The state stands to lose more than any other if the Trump administration is successful in further dismantling the ACA.

About 1.4 million Californians buy coverage through the state’s Obamacare exchange, Covered California, and nearly 4 million have joined Medicaid as a result of the program’s expansion under the law.

Verma wields enormous power as head of CMS, overseeing a $1 trillion budget. The agency sets policy for Medicare, Medicaid and the federal insurance exchanges under the ACA.

The landmark health law, she said, was so flawed it could not work without further action from Congress.

“It wasn’t working when we came into office and it continues not to work,” Verma said, responding to a question from moderator Mark Zitter, founder of the Zetema Project, a nonprofit organization that promotes debate on health care across partisan lines. “The program is not designed to be successful.”
Zitter billed the event as a rare chance for Californians to hear directly from a top Trump administration official, although Verma’s remarks broke little new ground, he said.

Trump health care policies figure into many of California’s congressional races this fall in which incumbent Republicans are fending off Democratic challengers. And in court, California Attorney General Xavier Becerra is leading a coalition of attorneys general who are defending the constitutionality of the ACA in a Texas case with national implications.

The Trump administration has sided with the officials waging the lawsuit, choosing not to defend the health law’s protections for people with preexisting conditions. Separately, the administration has backed work requirements for many people on Medicaid.

California’s state Senate passed a law in May banning such requirements as a condition for eligibility in Medi-Cal, the state’s Medicaid program. The bill is pending in the state Assembly.

“Making health insurance coverage contingent on work requirements goes against all we’ve worked for here in California,” state Sen. Ed Hernandez (D-West Covina), author of SB 1108, said in May.

State lawmakers also are considering bills that would limit the GOP-backed sale of short-term health policies and prevent people from joining association health plans that don’t have robust consumer protections.

In an interview after the speech, Verma criticized those legislative efforts in California because they would limit consumer choice.
“Any efforts to thwart choice and competition and letting Americans make decisions about their health care is bad health policy,” she said.

Peter Lee, executive director of Covered California, the state’s ACA marketplace, has criticized the Trump administration for promoting those cheaper, skimpier policies as an alternative to ACA-compliant plans. He said he fears consumers will be harmed by “bait-and-switch products” that don’t provide comprehensive benefits.

“There have been a series of policies from Washington that have the effect of raising costs, particularly for middle-class Americans, and pricing them out of coverage,” Lee said in an interview last week. “This is not a failure of the ACA. This is entirely happening since the new administration.”

Most of Verma’s speech in San Francisco focused on Medicare. She outlined a number of initiatives designed to strengthen the program and protect taxpayers from ballooning costs. After the speech, CMS announced proposed changes to Medicare payment policies for outpatient care that could yield savings for the government and patients.

In her remarks, Verma reiterated the Trump administration’s efforts to reduce prescription drug prices, improve patients’ access to their own medical records and eliminate burdensome regulations on doctors and other medical providers.

Verma received a polite round of applause at the beginning and end of her appearance.