Cooperating for better care.

Georgetown University’s Center on Health Insurance Reforms

Tag Archives

Blue states might have to slash ACA protections

May 8, 2017by Robert Whitcomb in Uncategorized tagged , , , ,

By CHAD TERHUNE and BARBARA FEDER OSTROV

For Kaiser Health News

Under the Republican health bill, it’s up to states whether to dismantle key parts of the Affordable Care Act.

Red, or GOP-leaning, states are sure to be interested in rolling back the law’s coverage requirements and freeing insurers to charge people more when they have preexisting conditions.

As strange as it sounds, deep-blue, heavily Democratic states supportive of Obamacare, including California and New York, may be forced to do the same, according to experts, regulators and consumer advocates.

The American Health Care Act, which narrowly passed the House on Thursday and now heads to the Senate, would significantly cut the federal subsidies on which many Americans rely to buy coverage. Unless the legislation fails or changes substantially, many consumers across the country could see the amount they pay every year for premiums increase by thousands of dollars, making coverage effectively unaffordable.

Few, if any, states would be able to fund subsidies on their own. To keep insurers in the market and bring costs down, state leaders might feel compelled to seek exemptions from rules that require health plans to provide 10 “essential health benefits” and prohibit them from charging higher rates for sicker consumers. The new GOP health care bill would allow such waivers.

“With the skimpier subsidies, states are going to be under enormous pressure to apply for these waivers,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.

These opt-out provisions could accelerate the unraveling of Obamacare, even in places that fully embraced the landmark law.

“Certainly the Californias and New Yorks of the world will do what they can to hold onto the ACA protections. But when confronted with insurer exits and big price hikes, many states with the best of intentions may feel they have little choice but to get a waiver,” Corlette said.

The idea of opting out is unfathomable to many liberals who fought so hard to win the consumer protections in the . They’re hoping that the Senate will dump the bill or, in its quest for more moderate votes, at least make the premium tax credits more generous or eliminate the waivers.

Republican leaders insist the current health law isn’t worth saving because it has left consumers with double-digit rate hikes, onerous deductibles and little or no competition in some states, as insurers exit the marketplaces.

Rep. Kevin Brady (R.-Texas), chairman of the House Ways and Means Committee, said the GOP health bill grants states the flexibility they need to remove the “crushing mandates” that have led to “Obamacare plans you don’t want and can’t afford.”

House Speaker Paul Ryan (R.-Wis.) struck a similar note in urging his colleagues to pass the bill. “Let’s make it easier for people to afford their insurance. … Let’s return power from Washington to the states,” he said on the House floor Thursday.

Consumer advocates in North Carolina, Colorado and other states are taking the threat of waivers seriously.

“No state is safe from such a waiver,” said Brendan Riley, a health-policy analyst at the North Carolina Justice Center, an advocacy group focused on economic and social issues.

North Carolina would be one of the states hit hardest by the House bill, according to an analysis by the left-leaning Center on Budget and Policy Priorities. The state’s average premiums and out-of-pocket costs would rise by $7,549 annually.

Nationally, the average tax credit for enrollees in the online marketplaces would be 41 percent lower under the American Health Care Act by 2022, according to a study by the Kaiser Family Foundation. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)

The GOP bill also ends the penalty for not having coverage, which experts say might increase premiums as fewer healthy people sign up, leaving health plans with a higher proportion of  sick patients.

All this could put the focus back on which benefits are deemed essential in health insurance — an all-too-familiar battle in statehouses before the ACA set a nationwide standard.

The health law now requires all plans sold on the individual and small-group markets to cover the 10 essential health benefits, including hospitalization, prescription drugs and mental-health treatment. It has made coverage more comprehensive and prevented insurers from selling bare-bones plans that had cheaper premiums but often exposed consumers to huge medical bills after they sought care.

Before the ACA, coverage for maternity care, prescription drugs and substance abuse treatment often wasn’t available. State lawmakers were hesitant to approve new benefit mandates for fear of raising premiums.

Washington state Insurance Commissioner Mike Kreidler, a Democrat, said he sees a political fight over benefits on the horizon if the GOP bill advances.

“I certainly think there’s going to be political pressure applied to make adjustments [in essential health benefits],” he said. “I’d be vociferously and violently opposed to those changes.”

Adela Flores-Brennan, executive director of the Colorado Consumer Health Initiative, said she too has faith that her state’s Democratic governor and insurance commissioner would uphold essential benefits and protections for people with preexisting conditions.

But she and other patient advocates said that resolve may be tested by the lack of competition in some areas, which insurers could use as a bargaining chip for more leeway on regulations.

For instance, Flores-Brennan noted that industry giant Anthem is the sole company on the state’s insurance exchange in 14 Colorado counties. She said she worries the company could threaten to pull out if the state doesn’t opt for weaker standards.

Even in California, a liberal bastion that enthusiastically implemented Obamacare, the law’s supporters are bracing for a fight over the waivers.

“As premiums go higher, it will create pressure on us to undercut the standards we have,” said Beth Capell, a lobbyist for the consumer advocacy group Health Access California.

In California, premiums and out-of-pocket costs would rise by $2,779, on average, under the House bill, according to the analysis by the Center on Budget and Policy Priorities.

“California policymakers will once again hear what we heard year after year before the ACA: ‘Some coverage is better than no coverage. More limited benefits are better than nothing,’” Capell said.

John Baackes, the chief executive of L.A. Care Health Plan, with about 26,000 enrollees in the California exchange, said state leaders would exhaust every other option before slashing coverage.

“California would be loath to cut benefits,” Baackes said. “If you’re selling a policy to a young adult without maternity care, that’s nuts.”

No matter the state, red or blue, experts anticipate vigorous debate over these waivers because consumer protections under Obamacare have become more popular.

Wisconsin Gov. Scott Walker, a Republican, experienced that firsthand last week when he suggested his state may opt out of the ACA’s preexisting condition rules — and then immediately backtracked amid strong opposition.

Michael Miller, director of strategic policy for Community Catalyst, a Boston-based national consumer group, said waiver requests won’t necessarily proceed “quietly even in the red states. … People have heart disease and cancer and asthma in those states, too.”

Julie Rovner: Replacing the ACA: Where there’s a will there’s a way

April 5, 2017by Robert Whitcomb in Uncategorized tagged , , , , , , , , , ,

 

By JULIE ROVNER

Kaiser Health News

Now that the GOP effort to repeal and replace the Affordable Care Act is in limbo, is there a way to make it work better?

Democrats and Republicans don’t agree on much when it comes to the controversial federal health law, but some party leaders from each side of the aisle agree it needs repairs.

“No one ever said the Affordable Care Act was perfect,” said Senate Minority Leader Chuck Schumer (D.-N.Y.) on the Senate floor March 27. “We have ideas to improve it. Hopefully our colleagues on the Republican side do as well.”

A day later, Speaker Paul Ryan (R-Wis.) said, “We all want a system in healthcare where everybody can have access to affordable coverage, where we have more choice and competition.” And several GOP senators have moved away from the party’s long-held call for a total repeal and are offering bills that would amend the measure.

Health-policy analysts say that some of the health law’s marketplace problems could be improved with a bipartisan spirit. Here are some of the possibilities:

Stabilize the Insurance Market

Insurance companies have only a matter of weeks before they must tell the federal government and/or individual states whether they plan to offer coverage in 2018 on the health law’s online marketplaces, which serve customers who don’t get job-based or government insurance.

As of now, many companies say the uncertainty of what the market will look like — or the rules under which they will operate — is making that decision difficult. At least one insurer, Humana, has already said it would not offer coverage.

Two key moves that insurers are looking for from the administration are a promise to continue providing certain subsidies for those with lower incomes and enforcing the requirement for most people to either have insurance or pay a tax penalty.

The subsidies — known as “cost-sharing reductions” — are different than the tax-credit subsidies that many marketplace customers get to help pay their premiums. The cost-sharing subsidies help those with incomes between the poverty line ($20,420 for a family of three) and nearly 2½ times that ($50,400 for that same family) pay their deductibles and other out-of-pocket costs. The House  sued the Obama administration in 2014 for providing the subsidies without a formal congressional appropriation for the money, and a federal judge sided with the lawmakers.

The Obama administration appealed the decision, but if the Trump administration were to drop that appeal, the subsidies would disappear. At a House hearing March 29, Health and Human Services Secretary Tom Price, M.D. would not say what the administration plans to do about the lawsuit or the subsidies.

“I’m a party to that lawsuit and I’m not able to comment,” he said. But Ryan, who is also a party to the suit, said March 30 that he believes the administration should continue paying the subsidies until the lawsuit is resolved.

The administration has been similarly quiet about how strictly it will enforce the “individual mandate” that requires most people to have health insurance or pay a fine. On his first day in office, President Donald Trump issued an executive order directing federal agencies to “minimize the unwarranted economic and regulatory burdens” of the health law. But other than the IRS backtracking on a plan to enforce the mandate more strongly, little has happened on that front.

Yet those two provisions together — the cost-sharing subsidies and the individual mandate — could result in 25 to 30 percent increases in premiums if they were to disappear, said Andy Slavitt, who oversaw the health law for the final years of the Obama administration. Assuring that the subsidies will remain and the mandate will be enforced “would send a strong signal to (insurance companies) that they should continue to participate in the market,” he added.

Some GOP health policy analysts — including economist Gail Wilensky, who previously ran the Medicare and Medicaid programs — have proposed replacing the individual mandate with penalties for signing up for insurance late, which is what Medicare does. Republicans did that in their proposed replacement bill, by adding a 30 percent premium surcharge to those with a break in coverage longer than two months. But insurance actuaries and the Congressional Budget Office said that might eventually prompt fewer people to enroll because it would encourage healthy people to remain uncovered.

Entice People to Enroll

Getting young and healthy people to sign up for coverage is not just a benefit for them. If there are not enough healthy people in the insurance pool, then premiums rise for everyone, because risk is being spread across a mostly sicker population. And someday even the healthy people will need medical care.

But it takes more than just the requirement for coverage to get people to enroll. Slavitt said it requires a real effort by both federal and state officials to reach people and help them understand that having health insurance is a good thing, even if they are healthy. “What they should be doing is increasing marketing and the outreach budget,” he said. “You’re trying to reach people who are uninsured and are unsure how it all works, and it does take a lot of hand-holding.”

So far, however, the administration’s only move on that front was to cancel ads encouraging people to sign up at the end of the enrollment period that overlapped with Trump’s first days in office. The HHS Inspector General is now investigating the results of this action. Some analysts have estimated canceling the last-minute push lowered enrollment in the exchanges by as much as a half-million people.

Help Offset Insurer Losses

Democratic lawmakers who wrote the Affordable Care Act knew that the market might be hard for insurers to navigate for the first few years, and they built in several programs to help reimburse those who lost money.

Republicans, however, blocked funding for one of the major programs, which was intended to reimburse insurance plans that enrolled sicker-than-average populations for the first three years of the marketplace operations. Republicans called the money “insurer bailouts.” The loss of that money was a major reason for the collapse of many of the nonprofit insurance co-ops created under the law and some other insurance companies said it contributed to their decisions to leave the marketplaces.

Now, however, there are indications that Republicans might support some efforts to provide more funding for insurers.

On March 13, Price sent a letter to governors encouraging them to apply for waivers of the ACA rules in order to make insurance more affordable and available in their states. Among the state innovations singled out in the letter is a “reinsurance” program in Alaska that helps insurers pay for extremely high-cost patients. That plan, said Price, “significantly” offset what was a projected 40 percent premium increase in the state, and might be an option elsewhere under the waivers, which could allow states to get federal funding for such a program.

And the GOP health bill, the American Health Care Act, included $100 billion for a “Patient and State Stability Fund” that states with limited insurer competition could use to lower costs and help encourage insurers to stay in the market.

“They have a potential fix staring them in the face,” said Larry Levitt of the Kaiser Family Foundation of the GOP proposal for a stability fund. “It was a clever mechanism because the states could use it for any of a variety of purposes.” (Kaiser Health News is an editorially independent project of the Foundation.)

Assist Patients With High Out-Of-Pocket Costs

Democrats and Republicans agree that people who buy their own insurance are paying too much out-of-pocket, in premiums as well as deductibles and cost sharing.

Democrats mostly want to increase federal subsidies to help with affordability — something Republicans are not likely to embrace.

But there are other ways to lower consumer spending.

For example, Sabrina Corlette of Georgetown University’s Center on Health Insurance Reforms, calls for “smarter, not skimpier benefit design.” One way to do that is to set federal rules to push insurers that offer coverage with high deductibles to add more benefits that would be available without paying thousands of dollars first, like a few trips to the doctor or urgent care center or a few prescriptions. She writes that could keep people from dropping coverage because they feel they are not getting any value for their premiums. And if those mostly healthy people feel they are getting benefits they might use, they are more likely to continue to purchase coverage, thus reducing premiums for everyone.

Another potential way to lower insurance costs is to lower health care costs. Even if there are multiple competing insurers in an area, if there’s one dominant hospital system, it can pretty much charge whatever it wants.

“There’s no other price in the U.S. economy that’s growing as fast as a hospital price,” said Bob Kocher, a former Obama administration health official now at the venture capital firm Venrock. And in areas with not much hospital competition, “prices are 30 to 50 percent higher for everything.”

But how to get hospital prices down is almost as hard as regulating insurance. Kocher said one way would be for federal regulators to be more discriminating about approving hospital mergers, which tend to give hospitals more negotiating power over insurers.

More controversial would be to require hospitals that dominate their markets “to just accept Medicare prices” from marketplace insurers, Kocher suggested. While that would tend to bring prices down, it’s not likely to fly with free-market Republicans.

The GOP’s ‘individual mandate’

November 15, 2016by Robert Whitcomb in Uncategorized tagged , , , , , , ,

By MICHELLE ANDREWS

For Kaiser Health News

The Affordable Care Act’s requirement that people have health insurance or pay a fine is one of the least popular provisions of the law, and one that Republicans have pledged to eliminate when they repeal and replace Obamacare. But take a look at some of the conservative replacement proposals that are floating around and it becomes clear that the “individual mandate,” as it’s called, could still exist, but in another guise.

The health law’s mandate doesn’t actually require people to have insurance. Instead, it imposes a tax penalty on most people if they don’t have coverage. In 2016, the penalty is the greater of $695 per person or 2.5 percent of household income.

That unpopular tax penalty is what makes possible the very popular provision of the law that prohibits insurers from turning people down for coverage because they have preexisting medical conditions that might make them expensive to insure. The mandate is designed to make sure  that healthy people buy coverage so that insurers are not left with an expensive risk pool full of people who are sick.

President-elect  Trump has signaled that he would like to find a way to keep the ban on preexisting conditions. But requiring insurers to accept all comers means that they need some mechanism to coax people into buying and keeping insurance before they develop expensive conditions like diabetes or cancer. In other words, they need a mandate.

Health-policy wonks point out that the individual mandate was originally a Republican idea, advocated by academics and conservative thinkers as a way to avoid a government-run single-payer system. “The purpose of it was to round up the stragglers who wouldn’t be brought in by subsidies,” Mark Pauly, a University of Pennsylvania economist, said in a 2011 interview. He co-authored a Health Affairs study in 1991 that aimed to persuade then-President George H.W. Bush to adopt a universal healthcare requirement.

The drafters of Obamacare incorporated the individual mandate concept because they hoped to get Republicans on board, said Sara Rosenbaum, a professor of health law and policy at George Washington University in Washington, D.C.

Republicans generally accept that some sort of incentive is necessary to help stabilize the insurance market in whatever system they propose as an alternative to the health law. In a policy paper released last summer, House Speaker Paul Ryan proposed creating a one-time open enrollment period during which people could sign up for coverage regardless of their health. As long they stay enrolled in coverage in the individual or group market, they wouldn’t be charged higher rates if they get sick. If they don’t sign up during that open enrollment period, though, those protections don’t apply, and people could face higher premiums and healthcare costs if they were to buy insurance.

“It’s a soft mandate,” said Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank. “You must get in now to get this treatment.”

But health-policy analysts say that a one-time open enrollment period, whether it’s one month or three months in length, isn’t enough.

“Such stringent limits on open enrollment ignore the complexities of individuals’ lives,” said Linda Blumberg, a senior fellow at the Urban Institute’s Health Policy Center. People lose their jobs, get into car accidents, and they may not understand the implications of dropping coverage for a period of time. “The penalty on these folks would potentially be enormous,” she said.

Another option to nudge people to get insurance is to impose a penalty on the premium price if they don’t sign up at a designated time, for example, when they turn 26 and no longer qualify for their parents’ coverage. This option would be similar to the rules for Medicare Parts B and D that cover outpatient services and prescription drugs, respectively. People who don’t sign up for Medicare Part B when they’re first eligible, for example, are charged an additional 10 percent of the premium for every year that they could have enrolled but didn’t.

But Medicare is different in important ways from the individual insurance market, said Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms. When people sign up for Medicare, they’re generally enrolling for the rest of their lives. In contrast, people may move in and out of the individual market a number of times over their lives as they change jobs or leave the Medicaid program, for example.

“It’s much more difficult to determine what their first opportunity to sign up was,” Corlette said.

There are ways to get people to sign up using a carrot rather than a stick, including increasing the subsidies people receive for coverage, said Corlette.

But Trump has not yet signaled much about his replacement plan, including the extent to which subsidies or other financial assistance would be available under a new health care program.

Calif. exchange threatens to fire hospitals

March 21, 2016by Robert Whitcomb in Uncategorized tagged , , , , , , , ,

fired

By CHAD TERHUNE

For Kaiser Health News

California’s insurance exchange is threatening to cut hospitals from its networks for poor performance or high costs, a novel proposal that is drawing heavy fire from medical providers and insurers.

The goal is to boost the overall quality of patient care and make coverage more affordable, said Peter Lee, executive director of the Covered California exchange.

“The first few years were about getting people in the door for coverage,” said Lee, a key figure in the rollout of the Accountable Care Act. “We are now shifting our attention to changing the underlying delivery system to make it more cost effective and higher quality. We don’t want to throw anyone out, but we don’t want to pay for bad quality care either.”

It appears to be the first proposal of its kind in the country. The exchange’s five-member board is slated to vote on it next month. If approved, insurers would need to identify hospital “outliers” on cost and quality starting in 2018. Medical groups and doctors would be rated after that.

Providers who don’t measure up stand to lose insured patients and suffer a black eye that could sully their reputations with employers and other big customers.

By 2019, health plans would be expected to expel poor performers from their exchange networks.

The idea has already sparked fierce opposition. Doctors and hospitals accuse the exchange of overstepping its authority and failing to spell out the specific measures they would be judged on.

Health insurers, normally at odds with providers, have joined them in the fight. The insurers are balking at the prospect of disclosing their negotiated rates with providers. Health plans have long resisted efforts that would let competitors or the public see the deals they make with doctors and hospitals.

But scrutinizing the negotiated rates would help the exchange identify high-cost providers and allow policyholders with high deductibles to see the differences in price before undergoing a surgery or imaging test.

Lee said it’s time for the exchange to move beyond enrollment and flex its market power on behalf of its 1.5 million members. He said insurers haven’t been tough enough on hospitals and doctors.

Other public exchanges or large employers could try to replicate the idea, putting more pressure on providers and insurers. Lee has shared his proposal with other state marketplaces, government officials and employer groups to promote similar efforts.

Still, there are limits to the strategy. Exceptions would be granted if excluding a hospital or doctor from a network meant an area wouldn’t have a sufficient number of providers. Insurers could appeal and offer other reasons for keeping a provider in the network.

“California is definitely ahead of the pack when it comes to taking an active purchasing role, and exclusion is a pretty big threat,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. “There may be a dominant hospital system that’s charging through the nose, but without them you don’t have an adequate network. It will be interesting to see how Covered California threads that needle.”

The composition of networks has typically been left up to insurers. Until now, most of the discussion has centered on the proliferation of narrow networks, with a limited range of providers, sold under the Affordable Care Act as a way to hold down rates. A study last year found that 75 percent of Covered California plans had narrow physician networks, with more restricted choices than all but three other states.

“I don’t know of anyone even close to trying this,” said Dan Polsky, the study’s author and executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania. “I applaud Covered California for being bold to improve quality and reduce costs, but I worry about the implementation.”

Polsky said measuring quality can be complicated, and steps must be taken to ensure hospitals and doctors aren’t penalized for treating sicker patients or serving lower-income areas. Most quality-boosting efforts use financial bonuses and penalties rather than exclusion.

Under the Covered California plan, hospitals would be judged on a wide range of performance and safety measures, from rates of readmission and hospital-acquired infections to adverse drug events. The exchange said it will draw on existing measures already tracked by Medicare and other groups, and it will work with hospitals, consumer advocates and other experts over the next 18 months to finalize the details.

The California Hospital Association said the exchange is moving too fast and acting too much like a regulator.

“The devil is in the details, and the rapidity of this concerns us,” said Dr. David Perrott, chief medical officer at the state hospital trade group. “We understand value-based purchasing is here in some form and we do not oppose that. But Covered California is charging ahead with this assessment and trying to figure out the answers when it hasn’t been worked out.”

California physicians warn that the exchange’s proposal could further reduce networks that are already too thin for patients.

“Right now, one of the biggest problems in health care is limited access to specialty care. This allows more narrowing of the networks under spurious guidelines,” said Dr. Ted Mazer, a board member of the California Medical Association and a head and neck surgeon in San Diego.

Charles Bacchi, chief executive of the California Association of Health Plans, predicted that Covered California’s idea will backfire, discouraging hospitals and doctors from participating in the exchange and driving up premiums as a result.

“It’s the right goal but the wrong approach,” Bacchi said. “Covered California is proposing a top-down, arbitrary measurement system that carries a big stick. This can make it difficult for health plans and providers to work together constructively.”

Contact Info

info@cmg625.com

(617) 230-4965

Wellesley, Mass