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Insurers unlikely to recoup much of unpaid risk-corridor payments


Sanford Health Plan,  the insurance unit of Sioux Falls, S.D., Sanford Health, has  sued the U.S. government to recoup unpaid payments under the risk-corridor program set up under the Affordable Care Act. However, they’re unlikely to get their money.
Sanford  is asking that the Feds pay nearly $9 million in overdue risk-corridor payments for 2014 and 2015. A complaint  that it filed in the U.S. Court of Federal Claims says that CMS has so far paid Sanford Health Plan only 15.1 percent of the amount that it owes.

Modern Healthcare reports that “Sanford Health Plan is the only insurer owned by a hospital system that has sued over the missing payments, which were meant to offset major losses during the first few years of ACA implementation. But it’s far from being the only provider-sponsored plan with an unpaid risk-corridor tab. Driven largely by the movement toward value-based care, many health systems entered the insurance space. Several have been successful, but the move has been difficult for many.”

In another disillusioning example, Scott & White Health Plan, run by Dallas-based Baylor Scott & White Health system, left the federal insurance marketplace this year based in part on almost $23 million in unpaid risk-corridor payments, a system spokeswoman told the news service.

Modern Healthcare reported that some insurers participating in the exchanges “never expected to receive the risk-corridor payments. They didn’t budget the payments into pricing and ended up being fine.”

“They look very smart in hindsight,”  Emily Wadhwani, a director at Fitch Ratings, told the news service.

The CMS owes insurers  about $8.3 billion to cover risk-corridor losses in 2014 and 2015.

But, the news service reports, “a victory in February for Moda Health may give insurers some hope. A federal claims judge ruled the Justice Department owes the insurer $214 million in payments as part of its participation in the program, saying the government ‘made a promise’ to insurers.”

It doesn’t look as if the Trump administration will help the insurers.  House Republicans’ 123-page American Health Care Act didn’t even mention the program, which expired at the end of last year.

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Will GOP health bill cut nonprofit hospitals’ outreach to their communities?


For Kaiser Health News

For the past six years, Mardi Chadwick has run a violence prevention program at Boston’s Brigham and Women’s Hospital. The program’s goal is to address broader, community-based health issues and social problems that make people ill or prone to repeated injury from gunshots, stabbings or environmental causes.

In Chadwick’s view, this endeavor — almost from its inception — made a big difference in nearby neighborhoods. But its profile in the eyes of hospital administrators got a boost from an Affordable Care Act provision that required nonprofit hospitals to conduct triennial assessments of local health needs and devise strategies, updated yearly, to address them. Falling short would trigger a financial penalty.

“Everyone, all of a sudden, cares about the social determinants of health,” she said. “Our expertise is being brought in. … We have a bigger seat at the table.”

But will programs like this one continue to get such attention? As the GOP-controlled Congress works to scrap Obamacare, the answer is uncertain.

Requiring this “community health needs assessment” was part of a broader package of rules included in the health law to ensure that nonprofit hospitals justify the tax exemption they receive. Another directive was that these facilities establish public, written policies about financial assistance available for medically necessary and emergency care and that they comply with limits on what patients who qualify for the aid can be charged.

These requirements add to the ongoing controversy about whether all nonprofit hospitals do enough to deserve a tax break. People on one side of the issue view the assessment rule, for instance, as an undue, unfunded burden while others say it doesn’t do enough. So far, though, the community health assessment requirement hasn’t exactly been a hot topic in the repeal-and-replace debate and was not addressed by the House Republicans’ health plan unveiled March 6.

Sen. Chuck Grassley (R.-Iowa), who has long urged that more scrutiny be applied to nonprofit hospitals’ tax status, championed the provision. His spokeswoman said he will continue to advocate that it remains in effect in whatever new health policy plans emerge. Regardless, the financial uncertainty of any overhaul of the health law could undermine some hospitals’ efforts.

The decades-old nonprofit tax status, granted by the Internal Revenue Service to institutions that meet the “community benefit” standard, spares hospitals from paying federal taxes and is collectively worth billions of dollars. Nonprofit hospitals have generally cited the uncompensated or “charity” care they provide, as well as initiatives they undertake to promote public health, as sufficient proof that they earn their tax exemption. But for-profit hospitals, which do pay taxes, cry foul, saying they make similar contributions.

The new requirements overall were meant to hold nonprofits to a higher standard — and penalize those that didn’t deliver. Under the law, hospitals that fail to complete the assessment and implementation strategy face a $50,000 fine — which can seem small next to their overall operating budgets. But down the line, the penalties can accumulate and ultimately could jeopardize their valuable tax exemption.

Meanwhile, federal data show that as recently as 2011 nonprofit hospitals targeted less than 10 percent of their operating expenses to benefit the community — this includes charity care, unreimbursed costs from Medicaid and other government programs and medical research and education. Less than 1 percent went to community health improvement services like Chadwick’s.

Advocates hoped the health law would change this. The idea was to push nonprofit hospitals to invest more in public health initiatives that do not directly earn them money — giving such programs more value on the balance sheet. But it’s hard to gauge whether that’s happened.

“You can find hospitals that have done this. But … are we seeing a real shift in the hospital community? Or are these a few hospitals that are outliers?” said Gary Young, director of the Center for Health Policy and Healthcare Research at Northeastern University. “We’ve asked them to make a sea change in how they’re doing things. And that can’t happen overnight.”


Part of the problem, analysts say, is that the underlying idea — reaching into the community to help people navigate the social and economic factors that can influence health — goes beyond what hospitals have traditionally viewed as their mission. Despite the potential for long-term payoff, administrators tend to focus on the immediate questions: How many beds are full? What medical services are being provided? How are they doing with their operating budget?

“It’s a new world out there in terms of the hospital not being the center of the universe,” said Lawrence Massa, president of the Minnesota Hospital Association, the state’s hospital trade group, which has been tracking hospital response to the health assessment requirement.

Initially, they found the money nonprofit hospitals put toward “community needs” went up after the assessment requirement: from about $355 million in 2011 to $459 million in 2013, according to an analysis by the association. (The needs assessment requirement took effect in between, for the tax year starting after March 2012.) But the increase leveled off in 2014 — the most recent year for which data are available.

Massa’s conclusion: Caring for the health of people before they come into the hospital is unfamiliar territory. Not everyone took naturally to it. “We saw some communities that embraced this, and did a nice job. … In other communities, there’s been friction between public health and the acute setting — and lack of understanding.”

With continued time and sustained emphasis, that could have changed, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

But now? Even if the community benefit requirements remain intact, she and others fear this accountability effort could take a hit. Repeal of the health care law is likely to create fresh financial challenges for hospitals. For instance, although the House GOP’s American Health Care Act would restore some of the uncompensated-care funding cuts hospitals absorbed under the ACA, the coverage changes proposed in Republicans’ plan could mean tens of millions more uninsured people.

That scenario, policy experts and trade groups say, would increase the amount of free care nonprofit hospitals provide, creating new budget pressures that could lead them to tamp down on efforts to promote community health work.

“We could be right back in a situation where there is a fair amount of charity care, and that could become a large component of how hospitals are justifying their nonprofit status,” said Ken Fawcett, a physician who runs a community health worker initiative at Spectrum Health in Grand Rapids, Mich.

Meanwhile, the health assessment’s impact has been evident at Boston-based Massachusetts General Hospital. There, administrators used it to devise an intervention strategy around drug abuse — partnering, for instance, with local schools and community organizations, and hiring former addicts to help patients navigate recovery.

“There’s no question the Affordable Care Act required us to bump up our game,” said Joan Quinlan, its vice president for community health. If people lose coverage, she added, hospitals will increasingly argue that’s enough reason for a tax break. It could stifle efforts to promote more substantial community benefit.

“If the ranks of the uninsured or underinsured grow, then charity care will increase. And the ability to do some of these more creative downstream efforts will be hampered,” she said. “There might be heightened awareness. But if there aren’t resources to address them, it’s going to be hard.”


Vt., of all places, may try some healthcare reforms pushed by GOP, too


Looking toward Mt. Mansfield, the summit of Vermont.

— Photo by K. Kemerait

Paradoxically, generally Democratic Vermont  (but now with new Republican Gov. Phil Scott) could be setting the pace for some of the healthcare reforms touted by by the Trump administration and the Republican Congress.

The Green Mountain State won got a broad federal waiver last October to redesign how its healthcare is provided and paid for. This includes  new payment systems,  a stepped-up effort to prevent unneeded treatments, cutting overall growth in the cost of services and drugs, and  more effectively dealing with such public-health problems  as opioid abuse.

The six-year initiative  follows  a failed effort under former Democratic Gov. Peter Shumlin to adopt a single-payer plan for all residents.

The hope is that the program eventually will   involve 70 percent of the state’s population, almost all of its 16 hospitals and 1,933 physicians and would include patients covered through their employment as well as those in Medicare and Medicaid.


Med City News noted that while the Obama administration approved the experiment it “fits the Republican mold for one way the Affordable Care Act could be replaced or significantly modified. The Trump administration and lawmakers in Congress have signaled that they want to allow states more flexibility to test ways to do what Vermont is doing — possibly even in the short-term before Republicans come to an agreement about the future of the ACA.”

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Support for ACA growing — putting GOP in bind


For Kaiser Health News

Republican members of Congress are at home this week, with many of them getting an earful from anxious constituents about their plans to “repeal and replace” the Affordable Care Act. A poll out Friday gives those lawmakers something to be anxious about, too.

The monthly tracking poll from the Kaiser Family Foundation finds overall support for the health law ticked up to 48 percent in February, the highest point since shortly after it was enacted, in 2010. That was a 5-point increase since the last poll in December. (Kaiser Health News is an editorially independent project of the foundation.)

In addition, 6 in 10 people said they did not favor current GOP proposals for turning control of Medicaid, the federal-state program for low-income residents, over to the states or changing the federal funding method. More than half said Medicaid is important to them or family members.


The increase in the law’s popularity is almost entirely due to a spike in support among independents, whose approval of the law has risen to 50 percent, compared with 39 percent unfavorable. Continuing a trend that dates to the passage of the law, the vast majority of Democrats approve of it (73 percent), while the vast majority of Republicans disapprove (74 percent).

Poll respondents are also concerned about the way Republicans say they will overhaul the measure. While they are almost evenly divided between wanting to see the law repealed (47 percent) or not repealed (48 percent), very few (18 percent) of those favoring repeal support the idea of working out replacement details later. More than half of the repeal supporters (28 percent of the sample) say the repeal and the ACA’s replacement should come simultaneously.

Interestingly, even among Republicans, fewer than a third (31 percent) favor an immediate repeal, while 48 percent support simultaneous repeal and replacement, and 16 percent don’t want the law repealed at all.

Simultaneous repeal and replacement, which is what President Trump has promised, could prove difficult since Republicans have not agreed to a plan. They are using a special budget procedure, called reconciliation, that allows them to move legislation with only a simple majority in the Senate, but that bill is limited in what it can remove from the law and what can be added to it. Other bills would likely have to overcome a filibuster by Democrats in the Senate, which requires 60 votes. Republicans currently have a 52-48 majority in that chamber.

When asked about the Republican plans to overhaul the Medicaid program, nearly two-thirds of those polled prefer the current Medicaid program to either a “block grant” that gives states more flexibility but would limit Medicaid’s currently unlimited budget, or a “per capita cap,” which would also limit spending to states but would allow federal funding to rise with enrollment increases.

Respondents also strongly favor letting states that expanded Medicaid under the Affordable Care Act continue to receive federal funding. The Supreme Court in 2012 made that expansion optional; 31 states (plus Washington, D.C.) adopted it. Eighty-four percent said letting the federal funds continue was very or somewhat important, including 69 percent of Republicans, and 80 percent of respondents in states that did not expand the program.

Republicans are counting on savings from capping Medicaid to pay for other healthcare options they are advocating.

The national telephone poll was conducted Feb. 13-19 with a sample of 1,160 adults. The margin of error is plus or minus 3 percentage points for the full sample.

Why and where the ACA succeeded in some states


For Kaiser Health News

Ask anyone about their healthcare and you are likely to hear about ailments, physicians, maybe costs and insurance hassles. Most people don’t go straight from “my health” to a political debate, and yet that is what our country has been embroiled in for almost a decade.

Authors of a study out  Feb. 9 tried to set aside the politics to examine how the insurance markets function and what makes or breaks them in five specific states.

Researchers from The Brookings Institution were exploring a basic idea: If the goal is to replace or repair the Affordable Care Act, then it would be good to know what worked and what failed.

“The political process at the moment is not generating a conversation about how do we create a better replacement for the Affordable Care Act,” said Alice Rivlin, senior fellow at The Brookings Institution, who spearheaded the project. “It’s a really hard problem and people with different points of view about it have got to sit down together and say, ‘How do we make it work?’”

The researchers focused on CaliforniaFloridaMichiganNorth Carolina and Texas, interviewing state regulators, health providers, insurers, consumer organizations, brokers and others to understand why insurance companies chose to enter or leave markets, how state regulations affected decision making and how insurers built provider networks.

“Both parties miss what makes insurance exchanges successful,” said Micah Weinberg, president of Bay Area Council Economic Institute who led the California research team. “And it doesn’t have anything to do with red and blue states and it doesn’t have anything to do with total government control or free markets.”

Despite the political diversity of the five states, some common lessons emerged. Among them:

Health Insurance Markets Are Local

Insurer competition varied widely within states, with the most dramatic differences between urban and rural areas. The more populated regions tended to have more insurance competition and better-priced plans than rural areas.

Fewer people live in rural areas, which means there are fewer hospitals, doctors and other health professionals. As a result, insurance companies that do business in those regions have less power to negotiate prices with local providers, who are more likely to be the only game in town.

“Insurance companies don’t make money [in many rural areas] because they can’t cut a deal with the providers that will be attractive to the customers,” Rivlin said. “And there just aren’t very many customers, so it’s not obvious what to do about that.”

Republicans, including the Trump administration, have suggested that the sale of insurance policies across state lines as one way to boost competition.

But that may be easier said than done, Rivlin said.

“The insurance companies would still have to have local providers,” she said. “So a company in New York can’t easily sell in Wyoming unless it has providers lined up in Wyoming.”

Consolidation Kills Competition

Consolidation includes hospitals buying physician practices and large medical centers buying up smaller hospitals. California offers a prime example of this phenomenon. In the San Francisco Bay Area, where consolidation has reduced competition among hospitals and physician groups, consumers have fewer choices and higher premiums than those in Los Angeles, where consolidation hasn’t yet gobbled up so many providers.

More Sick People Signed Up Than Expected

Insurance companies did not have any idea who would buy policies through the exchanges in the early years. And as it turned out, a lot of those previously uninsured sick people — more than insurers and policymakers had expected —raced to get coverage.

As a result, researchers found, many plans incurred losses, with some companies reporting claims that were 50 to 100 percent greater than the premiums they collected. Making matters worse, a mechanism in the health law to reimburse companies for such losses in the early years proved inadequate. That caused a lot of them leave the marketplaces.

Under Obamacare, insurance companies could no longer deny coverage or charge higher rates to those with preexisting medical conditions. And during the first two years of the exchanges, insurers simply didn’t know how to price their policies because they’d rarely dealt with people who hadn’t been insured before, the researchers found.

In Michigan, six of 16 insurers withdrew. And in regions of Texas and North Carolina, which had between five and nine insurers, only three remained.

Some Consumers May Be “Gaming” The System

Three of the states — Florida, North Carolina and Texas — reported that generous special-enrollment rules allowed many consumers to delay enrollment into a plan until they needed healthcare. And in Michigan and North Carolina, researchers found that some people signed up for a policy, used it, then dumped it when they had received the care they needed. That ends up leaving insurers stuck with more of the tab than they’d anticipated.

“The challenge is some of the rules that were set up around the ACA made it easy to game the system, frankly,” said Lanhee Chen, a research fellow at the Hoover Institution, who was not involved in the study.

Along with tightening the rules around special enrollment periods, Chen said he’d like to see a return to high-risk pools for the sickest Americans. The idea being that removing the most costly consumers from the general risk pool will allow carriers to lower premiums for everyone else. But high-risk pools, which a majority of states operated before the ACA, are hugely expensive and don’t always work as intended, Rivlin said.

“The states have had quite a lot of experience with high-risk pools and it has not been encouraging,” she said.

A more workable solution, she said, might be found by making sure that a strong reinsurance mechanism provides payments to insurers that take on more costly customers.

Narrow Networks Appear To Be The New Normal

By the third year of the exchanges, insurers in all five states have opted to offer more narrow networks on the exchange than the plans that give access to more doctors and hospitals. These smaller networks of providers allow insurers to give more patients to participating providers in exchange for lower prices. It’s a trend that started before the Affordable Care Act became law and one that appears to be taking hold in nearly every market as insurers search for ways to keep premiums down.

The Sky May Be Falling, But Many Carriers Are Nevertheless Doing Well

Indeed, one lesser-known chapter in the Obamacare story involves those carriers that are making enough of a profit to reduce 2017 premiums.

“About half the insurers are making a ton of money on [the exchanges] and that’s how markets work,” Weinberg said. “The idea that there should be winners and losers in a particular marketplace is something that Republicans should certainly feel comfortable with.”

Medicaid Managed Care Plans Come Out Winners

Researchers found that regional insurers that originally went into business to care for those with Medicaid — the health insurance for the poor and disabled — are filling gaps after insurers fled in many markets. Molina Health in California, WellCare in Florida, Community Health Choice in Texas, “appear to have thrived in the ACA marketplace environment,” the study said.

Rivlin said the success of these plans is likely due to their experience caring for a low-income, often very sick population. They already had well-established networks of local providers that allow them to provide care at a lower cost. As 2017 premiums skyrocketed, consumers became more willing to enroll in these more affordable, lesser-known plans.

California Leads The Pack

In the Golden State, which fully embraced all things Affordable Care Act, competition remained stable with 11 insurers offering coverage and only one — UnitedHealth — dropped out completely. And 2017’s average premium increases, while about 13 percent, were about half of the national average.

Part of California’s success, Weinberg said, is due to its hands-on approach in deciding which insurers may join the market. And it got involved in negotiating the price of plans, which helped keep a lid on premiums, compared to other states.

This story is part of a partnership that includes NPR and Kaiser Health News.

GOP said to mull 4 ACA replacement provisions


Politico reports that congressional Republicans Republicans and  Trump administration officials  “are scrambling to get Obamacare repeal efforts back on track by stuffing as much of a replacement policy as possible into a repeal bill.”

Four Affordable Care Act replacement measures are reportedly being considered.

The changes would include expanding Health Savings Accounts, enacting high-risk health-insurance pools, revising Medicaid and authorizing tax credits to help people buy insurance policies.

The idea is to  win over Republicans who have been insisting that repeal and replace be taken up simultaneously. Their ambivalence has been fueled in part by fear of voter anger if the GOP kills some popular parts of the ACA.

Politico reported that “replacement policies would be rolled into a measure repealing the 2010 healthcare law, which will be taken up and passed under an expedited process only requiring 51 votes for passage in the Senate. It’s still unclear whether the Senate parliamentarian will allow the replacement pieces to be inserted into the bill. But if she signs off, the policies could provide reassurance to GOP lawmakers eager to make good on longstanding vows to scrap the health law who want to vote on some replacement policy at the same time.”

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Minn. reforms could presage ACA repeal and replacement


Via Kaiser Health News

What’s going to happen to the federal health law? The quick answer is no one knows. But in the midst of the uncertainty about the Affordable Care Act, states still must govern their insurance markets. Most have been muddling through with the 2017 status quo, but Minnesota is a special case, taking three unusual actions that are worth a closer look.

Last month, Minnesota:

  • Passed a one-time bailout for some consumers in the individual insurance market dealing with skyrocketing premiums.
  • Rejected an attempt to let insurers offer cheaper, bare-bones coverage.
  • Laid the groundwork for a sort of homegrown “public option” insurance plan.

Here’s more on each item.

The Bailout

Faced with some of the country’s highest hikes on premiums in the individual market — 50 to 67 percent, on average — Minnesota lawmakers passed a bailout for people who earn too much to qualify for the Affordable Care Act’s federal tax credit. The $300 million law will cut monthly 2017 premiums by 25 percent for about 125,000 Minnesotans.

Democratic Gov. Mark Dayton backed the measure since October when he called the ACA “no longer affordable to increasing numbers of people.” But passage wasn’t assured as both houses of Minnesota’s legislature are controlled by Republicans.

It is thought to be the second time a state has offered up state tax dollars to stabilize an insurance marketplace created by the ACA. (Alaska came up with a $55 million bailout for insurers in 2016.)

Bare-Bones Coverage

A failed amendment to the Minnesota legislation sought to strip dozens of so-called “essential benefits” from health plans with the expectation that slimmed-down coverage would cost less.

Republican State Rep. Steve Drazkowski, who offered the amendment, said he was trying to eliminate the current, “government-controlled, one-size-fits-all, dictating set of mandates.

“What we’re doing is trying to create an environment that, if and when the ACA goes away, that Minnesotans will have the freedoms they need in order to start to bring some free-market competition, some free-market ingenuity and innovation into the health insurance market,” he said.

The laundry list of benefits that consumers could choose to have covered or not under Drazkowski’s amendment included maternity care, diabetes treatment and mental health care among many others. Some items on the list are very specific: Lyme disease, prostate cancer screenings, outpatient surgery.

Dayton and other Democrats opposed the amendment and it dropped out of the final legislation.

Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic


Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic plans that cover little or no basic care.

Democratic Gov. Mark Dayton backed the measure since October when he called the ACA “no longer affordable to increasing numbers of people.” But passage wasn’t assured as both houses of Minnesota’s legislature are controlled by Republicans.

It is thought to be the second time a state has offered up state tax dollars to stabilize an insurance marketplace created by the ACA. (Alaska came up with a $55 million bailout for insurers in 2016.)

Bare-Bones Coverage

A failed amendment to the Minnesota legislation sought to strip dozens of so-called “essential benefits” from health plans with the expectation that slimmed-down coverage would cost less.

Republican State Rep. Steve Drazkowski, who offered the amendment, said he was trying to eliminate the current, “government-controlled, one-size-fits-all, dictating set of mandates.

“What we’re doing is trying to create an environment that, if and when the ACA goes away, that Minnesotans will have the freedoms they need in order to start to bring some free-market competition, some free-market ingenuity and innovation into the health insurance market,” he said.

The laundry list of benefits that consumers could choose to have covered or not under Drazkowski’s amendment included maternity care, diabetes treatment and mental health care among many others. Some items on the list are very specific: Lyme disease, prostate cancer screenings, outpatient surgery.

Dayton and other Democrats opposed the amendment and it dropped out of the final legislation.

Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic plans that cover little or no basic care.

ACA repeal could kill innovative programs at hospitals


The Republicans’ promise to repeal the Affordable Care Act not only threatens to deprive millions of people of their health insurance; it could drive many hospitals deep into debt and destroy innovative programs created by the ACA aimed at  improving patient care.

Timothy Ferris, M.D., an internist and medical director of the Mass General Physicians Organization, told FierceHealthcare that he worries that the “progress we’ve made over the past five years would be threatened.”

He said that  includes programs through the Accountable Care Organization (ACO) at Massachusetts General Hospital, including experiments with video consultations and home hospitalization.

Dennis Keefe, head of Care New England, in Rhode Island, told NPR that he is concerned about the future for Integra, an ACO that includes primary- care physicians, specialists, urgent-care and after-hour providers, clinics, laboratories and inpatient facilities.

Hospitals and healthcare systems that have spent the last six years trying to create new value-based, patient-centered models as part of the ACA.  And so 120 organizations sent a letter to President  Trump and Vice President Pence urging them to not roll back progress they have made.

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2 GOP senators propose letting individual states keep versions of the ACA



For Kaiser Health News

In a sign of how much easier it was to complain about the Affordable Care Act than to deal with angry patients who would lose their coverage if the Republicans repeal it,  two GOP senators have proposed letting states  keep their federally funded ACA insurance exchange with ACA consumer protections intact.

Senators Bill Cassidy, R-La., and Susan Collins, R-Maine, said their proposed legislation would allow states that embraced the Affordable Care Act to keep operating under many of the current federal rules.

Another option is for states to pursue a less regulated alternative to the ACA under the Patient Freedom Act. Or they could reject federal dollars completely in favor of a new state solution for health coverage.

“We give states the option,” Cassidy said at press conference Monday. “California and New York — you love Obamacare, you can keep it.”

Some health-law supporters say that the Cassidy-Collins proposal, one of several in the GOP-controlled Congress, could represent a lifeline for states such as California that have invested heavily in expanding coverage under the Affordable Care Act.

But many Democrats at the state and national level criticized the plan as potentially harmful to millions of Americans who rely on the health law because it does not promise sufficient funding and consumer protections.

“It provides a somewhat illusory option to stay in the ACA without the guarantee of federal assistance necessary to allow states to maintain the level of coverage they are currently providing,” California Insurance Commissioner Dave Jones, an elected Democrat, said in an interview.

The Golden State fully implemented the health law by expanding Medicaid coverage to millions of low-income people and creating its own insurance exchange, which ultimately covered 1.3 million enrollees. Supporters have held California up as proof that the health law can work as intended — and as a counterpoint to Republican contentions that Obamacare is collapsing nationally.

Cassidy said his legislation promotes the Republican doctrine of states’ rights while avoiding the one-size-fits-all approach from Washington.

Collins echoed that sentiment, saying she favors letting states that had success with the health law maintain the status quo. She described it as “reimplementation of the ACA” in those states.

“If a state chooses to remain covered by the ACA, exchange policies will continue to be eligible for cost-sharing subsidies and advance premium tax credits,” Collins said in a speech on the Senate floor Monday. “The insurance market will still be subject to ACA requirements, and the individual mandate and employer mandate will also remain in place in that state.”

Cassidy and Collins acknowledged that details of their bill haven’t been worked out, nor is it clear how it will mesh with other proposals. Competing plans in Congress don’t envision these state options, and it’s unclear what approach President Trump and his nascent administration will take in crafting a replacement plan.

Still, some industry experts and analysts say the Cassidy-Collins proposal is intriguing.

“The advantage to a state like California is we could protect what we have accomplished already,” said Howard Kahn, former chief executive of L.A. Care Health Plan, an insurer on the Covered California exchange. The large managed-care plan serves patients in Medi-Cal, the state’s Medicaid program.

“Cassidy’s proposal could work for California better than other alternatives in the short term. The question is whether they maintain federal funding for the longer term,” Kahn said. “My feeling is you do have to engage with the rational Republicans who are trying to find something that doesn’t tear it all apart.”

Some key state lawmakers are more skeptical. “I’ll be surprised if it really happens,” said state Sen. Ed Hernandez, D-West Covina, chairman of the Senate Health Committee. “This is just one of many proposals.”

State Sen. Richard Pan, D-Sacramento, a pediatrician and former Assembly Health Committee chairman, said he was relieved to hear of a Republican proposal that backs federal subsidies, but was concerned about potential loss of funding at current levels. “It looks good on the surface” Pan said, but it’s important “to look at the details.”

Pan also said, however, that the bill could further the fragmentation of the health-care system if some states keep Obamacare while others do not.

Covered California officials may weigh in on this Republican proposal and others at a board meeting Thursday. Executive Director Peter Lee didn’t respond to a request for comment Monday. After the November election, Lee emphasized that Covered California can show policymakers in Washington how to build a competitive insurance market.

California went beyond what other exchanges did. It chose to actively negotiate rates with insurers and didn’t allow every company to sell in its marketplace. It also simplified consumer shopping by requiring insurers to have standard copays and deductibles for each level of coverage.

Those moves pushed health insurers to compete more directly on price, and annual rate increases were a modest 4 percent in the first two years. Covered California’s rates are rising 13.2 percent, on average, this year. Still, that’s better than the 22 percent average rate hike in exchanges nationwide.

Walter Zelman, chairman of the public health department at California State University, Los Angeles, said it will be interesting to see whether state leaders try to negotiate with Republicans in Washington over funding levels.

“It’s not that Republicans don’t want people to have health insurance. They just don’t want to pay for it,” Zelman said. “It would be good for California to keep what it has and it would be much less disruption.”

Federal funding is a key issue for states. In a summary of the bill posted by Collins, it said states choosing to retain Obamacare or pick the Republican alternative could receive “funding equal to 95% of federal premium tax credits and cost-sharing subsidies, as well as the federal match for Medicaid expansion.”

Dylan Roby, an assistant professor at the University of Maryland School of Public Health, said “California would still have to absorb a 5 percent cut, at least, in the premium tax credits and cost-sharing subsidies.”

Republicans will need 60 votes in the U.S. Senate to pass a full replacement for the Affordable Care Act. At his press briefing Monday, Cassidy said his compromise approach is designed to win over some Democrats and reach that 60-vote majority.

In her speech on the Senate floor, Collins said children could still stay on their parents’ health plans until they are 26. There would be no discrimination against preexisting conditions and no caps on annual or lifetime coverage, she said.

Other key features of the legislation include a provision allowing states to automatically enroll eligible people in health plans unless they opt out. The plan also promotes health savings accounts and price transparency requiring hospitals and other providers to disclose costs so consumers can shop around for the best price.

After the ACA repeal….


Timothy Jost, writing in Health Affairs, comments on the possible effects of the Republicans repealing the Affordable Care Act. Among his remarks:

“The CBO  {Congressional Budget Office} projects that the repeal legislation would not have an immediate dramatic effect in 2017 because premium increases would already be established and enrollment set for 2017. In 2018, however, 18 million people would become uninsured, including 10 million fewer enrollees in the nongroup (or individual) insurance market, 5 million fewer with Medicaid coverage, and 3 million fewer with employment coverage. ”

“In the year following the repeal of the Medicaid expansions and premium tax credits, the number of people without health insurance would grow to 27 million, further increasing to 32 million by 2026. If Congress repealed the insurance reforms as well, the number of uninsured people would only grow to 21 million in the year following repeal and to 23 million by 2026 (although coverage would be less comprehensive and individuals with pre-existing conditions may be unable to find coverage). The increase in the uninsured of 32 million would be the net result of 23 million fewer nongroup market enrollees, 19 million fewer covered by Medicaid, and 11 million more enrolled in employer coverage. In total, 59 million would be uninsured; 21 percent of the population.’’

“CBO projects that the repeal of the individual mandate, premium tax credits, and Medicaid expansions would destabilize the nongroup market and that the destabilizing effects would worsen over time. In the first year after the repeal of the marketplace subsidies took place, nongroup market premiums would increase by 50 percent relative to current law projections and about half of the population would live in states with no insurer participation in the nongroup market. By 2026, nongroup market premiums would double and three-quarters of the population would live in states with no insurers in the nongroup market. Fewer than 2 million people would have nongroup market coverage.’’

To read his entire article, please hit this link.


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