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The great healthcare economic contradiction

By CHAD TERHUNE

For Kaiser Health News

In many ways, the healthcare industry has been a great friend to the U.S. economy. Its plentiful jobs helped lift the country out of the Great Recession and, partly due to the Affordable Care Act (ACA), it now employs 1 in 9 Americans—up from 1 in 12 in 2000.

As President  Trump seeks to fulfill his campaign pledge to create millions more jobs, the industry would seem a promising place to turn. But the business mogul also campaigned to repeal the ACA and lower healthcare costs—a potentially serious job killer. It’s a dilemma: One promise could run headlong into the other.

“The goal of increasing jobs in healthcare is incompatible with the goal of keeping healthcare affordable,” said Harvard University economist Katherine Baicker, who sees advantages in trimming the industry’s growth. “There’s a lot of evidence we can get more bang for our buck in healthcare. We should be aiming for a healthcare system that operates more efficiently and effectively. That might mean better outcomes for patients and fewer jobs.”

But the country has grown increasingly dependent on the health sector to power the economy—and it will be a tough habit to break. Thirty-five percent of the nation’s job growth has come from healthcare since the recession hit in late 2007, the single-biggest sector for job creation.

Hiring rose even more as coverage expanded in 2014 under the health law and new federal dollars flowed in. It gave hospitals, universities and companies even more reason to invest in new facilities and staff.  Training programs sprang up to fill the growing job pool. Cities welcomed the development—and the revenue. Simply put, rising health spending has been good for some economically distressed parts of the country, many of which voted for Trump last year.

In Morgantown, W.Va., the West Virginia University health system just opened a 10-story medical tower and hired 2,000 employees last year. In Danville, Pa., the Geisinger Health System has added more than 2,200 workers since July and is trying to fill 2,000 more jobs across its 12 hospital campuses and a health plan. Out West, the UCHealth system in Colorado expanded its Fort Collins hospital and is building three hospitals in the state.

In cities such as Pittsburgh, Cleveland and St. Louis, healthcare has replaced such  industries as coal and heavy manufacturing as a primary source of new jobs. “The industry accounts for a lot of good middle-class jobs and, in many communities, it’s the single-largest employer,” said Sam Glick, a partner at the Oliver Wyman consulting firm in San Francisco. “One of the hardest decisions for the new Trump administration is how far do they push on healthcare costs at the expense of jobs in healthcare.”

House Republicans, with backing from Trump, took the first swipe. Their American Health Care Act sought to roll back the current health law’s Medicaid expansion and cut federal subsidies for private health insurance. The GOP plan faltered in the House, but Republican lawmakers and the Trump administration are still trying to craft a replacement for the ACA.

Neither the ACA nor the latest Republican attempt at an overhaul tackle what some industry experts and economists see as a serious underlying reason for high healthcare costs: a system bloated by redundancy, inefficiency and a growing number of jobs far removed from patient care.

Labor accounts for more than half of the $3.4 trillion spent on U.S. healthcare, and medical professionals from health aides to nurse practitioners are in high demand. But the sheer complexity of the system also has spawned jobs for legions of data-entry clerks, revenue-cycle analysts and medical billing coders who must decipher arcane rules to mine money from human ills.

For every physician, there are 16 other workers in U.S. healthcare. And half of those 16 are in administrative and other nonclinical roles, said Bob Kocher, a former Obama administration official who worked on the ACA. He’s now a partner at the venture capital firm Venrock, in Palo Alto, Calif.

“I find super-expensive drugs annoying and hospital market power is a big problem,” Kocher said. “But what’s driving our health-insurance premiums is that we are paying the wages of a whole bunch of people who aren’t involved in the delivery of care. Hospitals keep raising their rates to pay for all of this labor.”

Take medical coders. Membership in the American Academy of Professional Coders has swelled to more than 165,000, up 10,000 in the past year alone. The average salary has risen to nearly $50,000, offering a path to the American Dream.

“The coding profession is a great opportunity for individuals seeking their first joband it’s attractive to a lot of medical professionals burned out on patient care,” said Raemarie Jimenez, a vice president at the medical coding group. “There is a lot of opportunity once you’ve got a foot in the door.”

Some of these back-office workers wage battle every day in clinics and hospitals against an army of claims administrators filling up cubicles inside insurance companies. Overseeing it all are hundreds of corporate vice presidents drawing six-figure salaries.

Administrative costs in U.S. healthcare are the highest in the developed world, according to a January report from the Organization for Economic Cooperation and Development. More than 8 percent of U.S. health spending is tied up in administration while the average globally is 3 percent. America spent $631 for every man, woman and child on health-insurance administration for 2012, compared with $54 in Japan.

America’s huge investment in healthcare and related jobs hasn’t always led to better results for patients, data show. But it has provided good-paying jobs, which is why the talk of deep cuts in federal health spending has many people concerned.

Linda Gonzalez, a 31-year-old mother of two, was among the thousands of enrollment counselors hired to help sign up Americans for health insurance as the ACA rolled out in 2014. The college graduate makes more than $40,000 a year working at an AltaMed enrollment center, tucked between a Verizon Wireless store and a nail salon on a busy street in Los Angeles.

In her cramped cubicle, families pull up chairs and sort through pay stubs and tax returns, often relying on her to sort out enrollment glitches with Medicaid. As the sole breadwinner for her two children, ages 9 and 10, she counts on this job but isn’t sure how long it will last.

“A lot of people depend on this,” she said one recent weekday. “It’s something I do worry about.”


ACA could suffer death by a thousand cuts

By JAY HANCOCK

For Kaiser Health News

The Affordable Care Act’s worst enemies are now in charge of the vast range of health coverage it created. They’re also discussing changes that could affect a wider net of employment-based policies and Medicare coverage for seniors.

Republicans failed last month in their first attempt to repeal and replace the ACA. But President Trump vows that the effort will continue. Even if Congress does nothing, Trump has suggested he might sit by and “let Obamacare explode.”

Health insurance for the 20 million who benefited from the ACA’s expanded coverage is especially at risk. But they’re not the only ones potentially affected. Here’s how what’s going on in Washington might touch you.

A three-year-old lawsuit threatens many plans.

A suit by the Republican-led House challenges some subsidies supporting private plans sold to individuals and families through the ACA’s online marketplaces, also called exchanges. It has already gained one court victory. By many accounts, it would wreck the market if successful, stranding up to 12 million without coverage.

“It’s the single-biggest problem facing the exchanges,” said Rachel Sachs, a health-law professor at Washington University in St. Louis. “That would make insurers not only exit tomorrow but also not want to offer plans in 2018.”

The litigation involves lesser-known ACA subsidies that reduce such out-of-pocket costs as copayments and deductibles for lower-income consumers. These are different from the law’s income-linked tax credits, which help pay for premiums.

Filed in 2014, when Barack Obama was president, the suit could backfire by politically harming the Republicans now in charge. House leaders have delayed the litigation and said they won’t drop the lawsuit but will continue the subsidies while it gets considered. The administration has not said how it plans to handle the lawsuit.

Policy confusion undermines coverage.

Even if Congress doesn’t repeal the ACA, the continuing battle makes insurance companies think twice about offering marketplace policies for next year. The less clarity carriers have about subsidies and whether the administration will promote 2018 enrollment, the likelier they are to bail or jack up premiums to cover themselves.

Preserving the subsidies, which limit out-of-pocket costs for lower-income consumers, “is essential,” said Kevin Lewis, CEO of Community Health Options, a nonprofit Maine insurer. “Markets don’t like uncertainty. The ‘sword of Damocles’ hanging over our collective heads is unsettling, to say the least.”

Democrats say Republicans are sabotaging Obamacare.

Shortly after taking power, Trump officials yanked advertising designed to maximize enrollment in marketplace plans just before a Jan. 31 deadline. It was partly restored after an outcry.

Then the administration said it would scrap an Obama-regime plan of rejecting tax returns from individuals who decline to say whether they had health insurance — weakening the requirement to be covered.

Trump aide Kellyanne Conway suggested in January  that the administration might entirely stop enforcing that requirement — the part of the law most hated by Republicans. If officials persist with that message, plans could attract even fewer of the young and healthy members whose premiums are needed to support the ill. That would cause more rising premiums and insurer exits.

“More mischief can be done,” said Dr. Peter Kongstvedt, a health industry consultant and senior faculty member at George Mason University. “It is absolutely possible that some markets will end up with no carriers unless a combination of state and federal government act to preserve the market” with taxpayer money.

Trump officials will move to roll back ACA coverage even if Congress doesn’t repeal.

Tom Price, M.D., secretary of the Department of Health and Human Services, has signaled his intent to reverse parts of the ACA through regulation even if Congress doesn’t repeal the law.

For example, Price couldn’t unilaterally eliminate coverage for birth control or maternity care, both of which many Republicans object to on moral grounds or because of cost. But birth control might no longer be free as a preventive benefit. Maybe the administration would let states limit the number of prenatal visits in maternity coverage. Perhaps more employers could gain religious exemption from providing birth control.

Medicaid coverage for low-income people could shrink.

Obamacare’s coverage expansion included government Medicaid coverage for folks with lower incomes. Thirty-one states and the District of Columbia expanded Medicaid to most adults with incomes below about $16,000 for singles and $28,000 for a family of three — although eligibility varies.

Republicans want to reduce the growth of Medicaid spending and give more control over the program to states. Discussions for a Medicaid overhaul focus on replacing ACA provisions with fixed, less-generous federal grants to states.

But even if the ACA survives, it’s likely the administration will give states more say in who gets Medicaid coverage and how much. Many Republicans favor work requirements for Medicaid recipients and raising out-of-pocket payments for patients.

Under the failed House replacement bill, the American Health Care Act, 9 million people in those states would have lost Medicaid coverage in 2020, estimated the nonpartisan Congressional Budget Office.

At the same time, however, Republican support for the ACA’s Medicaid expansion is growing, which might mean overall cutbacks would be less severe or Medicaid coverage could increase among the 19 states that didn’t expand the program under the ACA.

Some Republicans want to overhaul Medicare for seniors.

House Speaker Paul Ryan wants to restrain Medicare growth by giving members fixed, “premium support” payments to buy plans and possibly raise the age of eligibility. Both could lead to less coverage or greater out-of-pocket expense.

But the proposal wasn’t part of the Republicans’ replacement bill. Changing Medicare likely would trigger loud objections from AARP and other powerful lobbies. And Trump doesn’t seem inclined to back a change.

“I don’t think … Trump wants to meddle with Medicare or Social Security,” White House chief of staff Reince Priebus said in January.

Job-based coverage could become less generous.

Although ditching Obamacare would end the requirement for large employers to offer health insurance, most companies would keep their plans as a way to attract workers, analysts say.

But that coverage could become less generous. The ACA limits employer-plan members’ annual out-of-pocket cost and also prohibits caps on annual and lifetime benefits. At the same time, it prohibits waiting periods for covering a new worker’s preexisting illness.

Any replacement law signed by Trump might not include those protections.


What might happen next in healthcare war

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Kent Bottles, M.D., a lecturer at the Thomas Jefferson University School of Population Health and chief medical officer of PYA Analytics, speculates on what could happen next in the healthcare debate in Washington.

Among his observations:

“Even though a bipartisan approach {to replacing or revising the Affordable Care Act} seems highly unlikely given the political climate, there are some obvious improvements that could be implemented’’:

  • “Republicans could drop the pending lawsuit that threatens the legality of cost-sharing reduction payments that the federal government sends to insurers to ensure that lower income Americans can have smaller deductibles.
  • “The Republicans could enforce the individual mandate so that more younger Americans buy health insurance.
  • “The administration could grant states more flexibility to increase competition and decrease costs. (Alaska has already used such an approach to create a reinsurance pool.)
  • “The CMS could continue to experiment with value-based payment models, implement MACRA, and expand the bundled payment programs.’’

“The Trump administration can undermine the ACA without Congress passing any new laws. Existing and possible examples include:

  • “The administration did not air already-paid-for television ads encouraging young people to sign up for insurance in 2017.
  • “The administration can cut the budgets of agencies that are charged with administering the law.
  • “The CMS administrator can give state waivers to avoid some of the ACA’s provisions.
  • “Department of Health and Human Services Secretary Tom Price, M.D., has criticized the Center for Medicare & Medicaid Innovation—which supports new models of care and payment—and he has delayed the expansion of bundled payments for hip and knee replacement surgery.
  • “Decisions by HHS can reassure or disappoint insurers that have to decide by this spring if they will participate in the ACA exchanges. ‘’

“Hospital and physician leaders should plan for the ACA to continue to be the law of the land, and they should recognize that the Republican administration will continue to oppose it.’’

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Collapse of GOP bill may presage more Medicaid expansion

 

The collapse, for now anyway, of the Republican health-insurance bill may lead  some states where Republicans have been blocking Medicaid expansion under the Affordable Care Act for years to finally join the expansion, reports Governing Magazine.

Consider that in Kansas the legislature has voted to expand Medicaid, although hard-right Gov. Sam Brownback is expected to veto it. In Georgia, Governing reports, GOP Gov. Nathan Deal “announced that he is now open to applying for a federal waiver that would let the state expand Medicaid but with more flexibility. And in Virginia, where the Republican-dominated legislature has crushed Democratic Gov. Terry McAuliffe’s attempts to expand Medicaid, he is renewing his push.”

“The failure of Congress to replace Obamacare — at least so far — may boost long-shot bids to expand Medicaid in other states,” too, Governing reports.

“Idaho and South Dakota, for example, both toyed around with the idea of expansion but ultimately abandoned it once Trump, who promised to repeal Obamacare ‘on Day One,’ was elected. Both governors had been hopeful that something could be worked out but faced opposition from the legislature. Those efforts could be revived now that repeal isn’t on the immediate horizon.

”In Maine, the legislature had passed Medicaid expansion five times — only to be vetoed by GOP Gov. Paul LePage. This prompted residents to take matters in their own hands, and voters are set to decide the issue in November. But advocates of expansion hope the legislature will act sooner now that the ACA replacement plan collapsed.”

“Medicaid expansion has been a highly partisan issue. But the debate at the federal level has revealed that there’s more bipartisan support — among voters and policymakers — for expanding Medicaid than previously thought. Republican governors arguably scored the biggest win with the demise of {House Speaker} Paul Ryan’s plan because now they will likely take less political heat for expanding Medicaid and can claim credit for insuring more of their residents.”

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5 takeaways from the AHCA collapse

 

Billy Wynne, writing in Health Affairs, presents five lessons from the failed launch of the American Health Care Act:

They are:

“Nothing is inevitable”

“There’s a difference between making a political statement and enacting real policy. The latter is invariably complex and time-consuming, creating vulnerabilities and pitfalls both known and unknown at the outset. While a cornerstone of tried and true policymaking is to leverage the ‘strategy of inevitability’—more than seven years ago, the ACA campaign itself vigorously deployed just such a strategy—the underlying premise of that strategy is always inherently false.’’

“Stakeholders matter’’

“Virtually every hospital and hospital group, every physician group, nurses, patient groups representing the young, old, disease-stricken, and disabled, and many others fervently opposed AHCA. They added analysis of AHCA’s impact on them, as governors did regarding its impact on their states. At the end of the day, this was simply a bad bill. Stakeholders figured it out and acted when it counted.’’

‘’Ultimately, on the day AHCA was originally supposed to get its final House vote, a Quinnipiac University poll came out showing only 17 percent of the public supported the bill, while 56 percent opposed it, a startling gap rarely seen in any bona fide political polling.’’

“The ACA stole most of  the good conservative ideas’’

‘’While it was lambasted by Republicans as the manifestation of a Marxist dystopia, the truth of the ACA is that it is a very moderate law. …As Health Policy Counsel to then-Finance Committee Chairman Max Baucus in the prelude to President Obama’s election, I know the pains he took to build bipartisan consensus. In 2008, he negotiated with Republican counterparts on reforming the market for small businesses, in what became the SHOP Act component of the ACA (drawing from legislation originally co-led by Republican Olympia Snowe). He convened an all-day, fully bipartisan Prepare to Launch summit to query experts and debate ideas. He released a series of white papers that laid out detailed policies he believed could gain bipartisan support (welcomed by the conservative Heritage Foundation as ‘a starting point for serious discussion’). And all of that was before President Obama was elected.”

‘’The centerpiece of the ACA became tax credits for the purchase of commercial—not government—health insurance, with a tax-driven mandate that everyone take responsibility for buying in. This had been the linchpin of numerous Republican health reform proposals prior to that time. While Medicaid expansion was also included, it took on a greater role only because that is a less costly way to expand coverage, and Democrats were utterly committed to ensuring the bill did not increase the deficit.”

‘’Other key conservative ideas were embedded in the law as well. Numerous new payment reforms were instituted to drive efficiency and lower costs; states were allowed to pool their markets (though notably none have yet); price and value transparency was instituted so consumers could compare their coverage options side-by-side; emphasis was placed on prevention and community health centers; states were free to run their own exchanges and establish their own essential health benefits; dozens of new program integrity and oversight protections were instituted.’’

“Tom Price is now the most important person in healthcare”

“While the Trump Administration has some more thinking to do before it commits to letting our health care system crash and burn, via sabotage or neglect, it certainly has that power. The locus of that power is the Department of Health and Human Services and its Secretary, former Republican Congressman Tom Price, M.D., a former orthopedic surgeon.

‘’As we have already seen, simple maneuvers like pulling publicity for HealthCare.gov and creating an aura of uncertainty can adversely impact insurance enrollment. Payment and delivery system reforms, intended to lower costs and improve quality, have been halted in their tracks. Governors have been informed that they are now freer to impose premiums and increase cost-sharing for Medicaid enrollees.

“As destabilizing as these changes are, they pale in comparison to some of the more nuclear options Secretary Price has at his disposal to wreak havoc on health care. Perhaps the foremost of these, and the one readily accessible at any moment, is the option to refrain from defending the cost-sharing subsidies.”

.

“Bipartisanship is still possible’’

“While not as expedient or gratifying to the inner ideologue inside us all, the long, frustrating work of compromise is the only viable path forward.

‘’There is a lot of lower-hanging fruit and we should give AHCA credit for bringing some of those to people’s attention. Insurers have now made clear what they think will help stabilize markets and perhaps make them more competitive, including funding risk corridor and reinsurance programs. Meanwhile, several start-up health plans are eyeing a wide array of markets where competition is limited and ripe for a lower-cost competitor. Some have faced obstacles at the state-level, undoubtedly due in part to the objections of entrenched interests. Can a Price-led HHS help open up these markets?’’

 


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?

By SHAFALI LUTHRA

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

mansfield

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

By JULIE ROVNER

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.

kff-022417-medicaid_small

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

By STEPHANIE O’NEILL

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.


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