Cooperating for better care.

Timothy Jost

Tag Archives

If Trump tries to repeal the ACA…


Timothy Jost, a healthcare-law expert and a professor at Washington & Lee University, gives his take in Health Affairs on the implications of Donald Trump being elected president and of the Republicans maintaining their control of Congress.

First, he notes the obvious:

“President Trump will be able to appoint at least one Supreme Court justice almost immediately and possibly more during his term in office. He will also appoint dozens of district and appellate court judges. Finally, he will presumably replace the cabinet secretaries and most of the political appointees in the Departments of Health and Human Services, Labor, and Treasury — that administer the Affordable Care Act. The Republicans  {will} own the national government, and many state governments.”

He goes on:

“Donald Trump states at his website, ‘On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.’ If by Obamacare Trump means the Affordable Care Act in its entirety, this will not happen. First, any repeal proposal would be subject to a filibuster in the Senate and the Democrats retain more than enough votes to stop a repeal bill. Second, the Affordable Care Act contains hundreds of provisions affecting Medicare, program integrity, the health care workforce, biosimilars, prevention, and other issues unrelated to what most Americans think of as ‘Obamacare.’ Immediate repeal of the ACA and presumably restoring the law that preceded it would likely bring the Medicare program, for example, to a halt until new rules could be written. The ACA is inextricably interwoven into our health care system and is not going away immediately.”

“Congress and the President, can, however, repeal many of the provisions that are identified by the public as ‘Obamacare’ using the budget reconciliation process. A budget reconciliation bill can be passed by a simple majority and cannot be stopped by a filibuster. The final ACA in 2010 contained provisions passed through the budget reconciliation process after the Democrats lost their filibuster-proof majority.”

“Importantly, reconciliation legislation could probably not change the insurance reform provisions of the ACA—the ban on preexisting condition exclusions and health status underwriting, caps on annual and lifetime dollar limits, actuarial value requirements, age underwriting restrictions, as they do not affect revenues and outlays. The continued imposition of these requirements without the financing provided by the ACA could cause serious distortions and damage in insurance markets. …”

“Repeal would, moreover, raise the question of what would replace the ACA. The Congressional Budget Office estimated that enacting the 2015 reconciliation legislation would increase the number of uninsured Americans by 22 million. The legislation would have delayed the end of the premium tax credits until 2018 to allow time for replacement legislation, which was not part of the bill.”

To read Mr. Jost’s very useful piece,  please hit this link.

Alaska reinsurance plan a model for ACA reform?



An Alaskan grizzly at work.

Timothy Jost, writing in HealthAffairs, suggests that Alaska’s reinsurance plan could be a model for reform of the Affordable Care Act. Alaska has America’s highest healthcare costs.

Mr. Jost reports that on June 4,  the Alaska legislature passed a bill, expected to be signed into law, to rescue the  state health-insurance market. “The statute recreates Alaska’s high-risk pool ‘comprehensive health insurance fund,’ as a reinsurance fund to be financed through an appropriation of $55 million of the $64 million collected (for 2015) through an existing broad-based 2.7 percent premium tax on Alaskan insurers. Under the final bill, unlike earlier versions, the tax will not be collected only from health insurers, but will be collected from insurers generally.

“Although the statute does not specify how the money will be allocated, it is intended to reinsure high-cost cases covered by insurers. The specific conditions to be covered will be defined by regulation, but actuarial projections that identify likely cases were considered by the legislature. ”


He concludes: “As marketplace insurance premiums seem to be rising sharply in many states, Congress should consider extending the marketplace reinsurance program. Heavily subsidized reinsurance has worked well at keeping premium growth down in the universally popular Part D program and holds promise for stabilizing insurance rates in Alaska as well. It could work for marketplace plans generally.”

To read all of Mr. Jost’s  article, please hit this link.

Deconstructing the slowdown in healthcare costs


Timothy Jost, writing in HealthAffairs about the sixth anniversary of the Affordable Care Act, writes:

A report {by the U.S. Department of Health and Human Services} “does not claim that the ACA was responsible for all of the decrease in spending growth over the past half decade. It recognizes that the slowdown in spending since 2009 has been driven by a number of factors unrelated to the ACA: the slow recovery from the recession, expiring prescription drug patents and a corresponding increase in the use of generic drugs, ongoing shifts in the site of care from inpatient to outpatient settings and to prescription drugs, and a greater emphasis on enrollee cost sharing in private insurance plans. But the report asserts that some credit must be given to the ACA for reductions in Medicare provider payment updates and Medicare Advantage payment rates, purchasing reforms, increase program integrity efforts, state Medicaid cost containment, and shifts in coverage to public programs which have also contributed to slowed expenditure growth.”






Some work-based insurance excludes outpatient surgeries



For Kaiser Health News


Libbi Stovall couldn’t believe it last month when she looked at the fine print in her company’s 2016 health plan, which supposedly meets the strictest standard for employer obligations under federal rules.

The insurance paid for inpatient hospital care, office visits and diagnostic imaging. But it provided no coverage for outpatient surgery, which accounts for two out of every three operations in the nation, according to hospital industry data.

After reviewing the plan, she realized “their policy would not give my family the coverage we need,” said Stovall, 52, who lives in Carrollton, Texas, and has a history of back problems, including outpatient surgery in 2014 to remove a cyst. Her doctor, she added, said that “I absolutely have to be on an insurance plan that covers both outpatient and inpatient hospitalization.”

Worse for her, being offered such a plan through her workplace, an international staffing firm called Open Systems Technologies, barred Stovall from federal subsidies to buy more comprehensive coverage in the online insurance marketplaces.

Her experience illustrates the latest chapter in the story of employers and insurance designers pushing the limits of the Affordable Care Act.

Last year regulators blocked companies with millions of lower-wage workers from claiming that coverage with no inpatient hospital benefits met Obamacare’s strictest standard for large employers.

Now that those so-called “skinny plans” aren’t allowed, insurance administrators and many cost-conscious employers are purporting to meet the rules with a new version that excludes another major category: outpatient surgery. The new plans may not survive regulatory scrutiny any more than the old ones did, some experts believe.

“I really wonder whether they can do that,” said Timothy Jost, a law professor at Washington and Lee University in Virginia who is an authority on the health law. “Refusing to cover any outpatient physician surgical services is arguably a violation.”

Outpatient surgeries — those without an overnight hospital stay — happen in a hospital or a freestanding surgery center. Hernia repairs, knee arthroscopies and repairing bone fractures are typical. They generally cost less than an inpatient operation but can still come to tens of thousands of dollars.

Leaving such procedures out of a plan can save money for employers but leave workers with crippling bills.

Unlike insurance sold to individuals and small businesses through online marketplaces, large employers are not required to offer a list of “essential health benefits.” Instead, they must offer minimum value — roughly comparable to that of a high-deductible, “bronze” marketplace plan — as determined by an online calculator and regulatory guidance, or face a penalty. There is also a lesser standard for large employers — “minimum essential coverage” — that triggers different fines for noncompliance. But nearly all workplace-based plans that offer some types of preventive care meet this requirement.

“It was clear that hospitalization had to be covered” by large employers after regulators ruled in February that skinny plans lacking inpatient benefits did not meet minimum value, said Anne Lennan, president of the Society of Professional Benefit Administrators, a trade group for claims processors. “But then the question was, ‘How much?’”

Depending on how regulators respond, new skinny plans lacking outpatient surgery benefits will help answer that question.

For 2016, such insurance has been marketed primarily to staffing companies, home health agencies, hoteliers and other lower-wage employers that had historically never provided major medical coverage. Those are the same firms that were sponsoring skinny coverage a year ago, industry consultants say.

It’s unclear how many companies said yes for this year, although last year about half the 1,600 corporate members of the American Staffing Association were interested in the plans with no inpatient coverage. The trade group didn’t conduct a similar study for the latest skinny plans, said senior counsel Edward Lenz.

More than 30 employers working with EBSO Inc., a Minnesota-based benefits company, have implemented 2016 minimum-value plans that cover inpatient hospitalization but not outpatient surgery, said EBSO’s president Bruce Flunker. He did not identify them.

JFC Staffing, based in Camp Hill, Pennsylvania, offered a skinny plan lacking outpatient surgery benefits to nearly 700 eligible employees this year, said Cathy Reichelderfer, the company’s chief financial officer.

JFC struggled with simultaneously conforming to Obamacare rules, offering coverage that wouldn’t break the budget and giving workers insurance they wanted, she said.

“As an employer, we want to do the right thing,” she said. On one hand, offering a minimum-value plan means “potentially somebody losing their subsidy” to buy alternative coverage in the marketplaces, she said. On the other hand, overpaying for insurance or offering no insurance — and subjecting JFC to expensive Obamacare fines — could wipe out hundreds of jobs “because we can’t stay in business,” she said.

Because workers offered minimum-value coverage are presumed to have adequate insurance, they’re not eligible for tax credits to buy marketplace policies.

This is the second year under the health law in which large employers must offer affordable, minimum-value coverage or face penalties of up to $3,000 per worker.

Temp companies, restaurants and other businesses that never offered major medical coverage before are “certainly keen to minimize this cost,” said Kevin Schlotman, vice president of employee benefits at Benovation, an Ohio consulting firm.

For many workers at such employers, even plans lacking inpatient benefits or outpatient surgery — but paying for office visits, emergency room care and prescriptions — are a significant improvement, say consultants selling those plans and companies offering them.

“We’re not trying to provide a program that doesn’t have good coverage,” Flunker said. “We’re trying to provide a program that is meeting the current regulation and is affordable” for employers as well as workers.

OST, Stovall’s employer, offered a minimum-value plan for 2016 without outpatient surgery benefits that is designed and administered by Key Benefit Administrators, one of the country’s largest independent claims-processing firms. KBA was one of the leading promoters of last year’s minimum-value coverage with no inpatient benefits.

After Kaiser Health News and The Washington Post wrote about those policies in 2014, federal regulators issued clarifying rules saying that large-employer plans must provide “substantial coverage of inpatient hospital and physician services” to qualify as minimum value. The debate now is whether “substantial coverage” of “physician services” should include outpatient surgery.

Not surprisingly, the American Hospital Association “is deeply concerned” about plans that exclude it, a spokeswoman said.

New York-based OST, which says it is one of the largest privately held staffing firms in the world, declined to comment, as did KBA’s general counsel Wallace Gray. Aaron Albright, a spokesman for the Department of Health and Human Services, referred a reporter to the regulatory language requiring “substantial coverage,” without referring to specific plans.

Libbi Stovall turned down OST’s minimum-value plan. Even without tax credits to help pay for it, she bought insurance on for 2016 that covers both inpatient care and outpatient surgery.

“I fear that other contracting companies are giving their employees the same substandard insurance coverage and figure that these employees are too afraid to say anything for fear of retaliation,” she said. “I am standing up for these people because I don’t want to see anyone go bankrupt” from uncovered medical bills.

Small-group insurance market expansion in play

The National Journal reports that Republicans might get a chance this fall  to overturn the Affordable Care Act’s expansion of the small-group insurance market — and  that President Obama might go along with the change.

A deadline looms:  The ACA mandate that states  widen the definition of their small-group markets from employers with 50 or fewer employees to 100 or fewer is supposed to start to take effect in some states on Jan. 1. But legislation, The National Journal says, “would end that requirement,  leaving the definition at the historical norm of 50 while letting states set it higher….”

Timothy Jost, a healthcare expert at Washington and Lee University, noted  to the magazine some potential problems if the change  were made. The magazine paraphrased him as saying that “While prices might go down for the 50-and-under businesses as their market grew, the 51-to-100 businesses would almost certainly see their prices go up. They would be moving from the more stable and typically less expensive large-group plans to the small-group setting. The small-group market is also subject to some Obamacare rules, such as covering certain essential health benefits, that the large-group market is not. Some estimates have projected that costs would actually increase for everybody.”

Still, “{o]f all the {ACA} ‘fix’ bills floating around the Capitol, the small-group provision might have the most working in its favor: It has bipartisan support, costs little to nothing to change, and even some Obamacare supporters say the law could function fine with the alteration,” the magazine reported.

What does King ruling mean down the road?


By JAY HANCOCK, for Kaiser Health News

In a victory for the White House, the Affordable Care Act survived its second Supreme Court test in three years, raising odds for its survival but by no means ending the legal and political assaults on it five years after it became law.

The 6-3 ruling stopped a challenge that would have erased subsidies in at least 34 states for individuals and families buying insurance through the federal government’s online marketplace. Such a result would have made coverage unaffordable for millions and created price spirals for those who kept their policies, many experts predicted.

Chief Justice John Roberts wrote the opinion for the court, joined by frequent swing vote Anthony Kennedy and the liberal justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan.

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” wrote Roberts. “The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner.”

Consumer advocates were hopeful for this outcome.

“The first thing going on for a huge swath of people is relief that we didn’t blow up the system,” said Lynn Quincy, a health-policy specialist at Consumers Union. “The law was never meant to work without this pillar in there,” she said of the subsidies.

But even a victory for the law closely identified with President  Obama leaves the health system with incomplete insurance coverage, rising costs and other uncertainties. The ACA itself still faces several lawsuits, although some believe today’s (June 25) decision will discourage judges from advancing the cases.

“It sends a message to the lower courts that they need to take a good, hard look at all the ACA litigation that’s out there and probably clean up and get rid of most of it,” said Timothy Jost, a law professor at Washington and Lee University and an expert on the health law.

Kaiser Health News interviewed Jost and other authorities before decision in  King v. Burwell asking them to explain the implications of upholding the law.

Republicans controlling Congress are likely to advance new legislation amending or repealing the law, although it is even more likely to be vetoed by President  Obama if it gets to his desk.

The high court decision sets up the 2016 presidential election as the health law’s next big test, although by then it could be difficult to fully uproot even if Republicans take the White House.

“With another year and a half of business as usual under the ACA, if it’s a Republican as the next president, it’ll be that much more difficult to make changes,” said Joseph Antos, a healthcare economist at the American Enterprise Institute.

The case hinged on tax credits created by Congress to help middle-income consumers buy insurance through online marketplaces, also known as exchanges.

The subsidies are available through an exchange “established by the state,” according to the law.
Justice Antonin Scalia agreed. Writing the dissenting opinon, he asserted: “Today’s interpretation is not merely unnatural; it is unheard of. Who would ever have dreamt that ‘Exchange established by the State’ means ‘Exchange established by the State or the Federal Government’?” Thirty-four states did not set up their own exchanges and rely instead on, run by the federal government. Lawyers for the plaintiffs argued that, as a result, millions of consumers in those states should not receive tax credits to pay premiums.

Pulling the subsidies would have undermined the insurance market in those states to the point of likely failure, experts said. Unable to afford the coverage, many consumers would have dropped out. Those remaining would probably have been older and sicker, driving up premiums to unsustainable levels.

Eighty-five percent of those who bought insurance through qualified for subsidies averaging $272 per month. The Department of Health and Human Services predicted 6.4 million people would have lost subsidies if the court ruled for the plaintiffs.

Those subsidies are effectively revenue for hospitals and health insurers, financing premiums and the cost of care. Both industries are relieved they were upheld.

“Providers will feel better,” said Peter Strack, a consultant with the Altarum Institute, which works closely with hospitals. “They don’t have to worry about this back and forth of, ‘Will I have the appropriate population covered?’”

A loss for the administration would have affected employer-based coverage as well, although not nearly as much, benefits lawyers said.

For large employers not offering health insurance, penalties are triggered when workers obtain subsidies in the marketplaces. No subsidies, no penalties, so employers could have dropped coverage without fearing fines.

Although employers are focused on complicated, health-law reporting requirements that take effect this year, their situation changes little in the wake of the decision, said Edward Fensholt, a benefits lawyer with brokers Lockton Companies.

“The working assumption has been, ‘We need to offer this coverage to our full-time employees or we’re going to risk these penalties,’” he said. “And that’s not going to change.”

ACA supporters said the lack of a reference to tax credits for the federal exchange was a drafting error and that Congress intended for subsidies to be available regardless of the platform. Lawyers for the plaintiffs said the government must follow the letter of the law.

The health law faces other legal cases, including objections from religious institutions to their role in providing birth control coverage and a suit by the House  contending that Obama’s delay in requiring employers to offer coverage was illegal.

But even if legal challenges to the law disappear, health insurers, doctors and hospitals face broad uncertainty.

Signups for 2015 exchange coverage were lackluster. At the end of March, a little more than 10 million people had enrolled and paid for insurance, less than the 13 million the nonpartisan Congressional Budget Office was projecting last year.

Health costs seem to be creeping up again in a system that is already the most expensive in the world.

In recent years large, self-insured employers have seen health-spending increases of 4 or 5 percent a year, said Dale Yamamoto, an independent actuary who works closely with such companies. So far this year those companies are seeing 6 or 8 percent, he said.

“Everyone I’m talking to — it sounds like they’ve started to go up this year,” he said. “If it’s going up for them, it’s probably going up on the individual side as well.”

If the GOP and court kill the ACA, then what?


Timothy Jost speculates on what might happen if the U.S. Supreme Court and the Republican-run Congress upend the Affordable Care Act:

“Republican plans cannot ‘replace’ the ACA, in the sense of achieving its goals through a different means. They may achieve different goals—reducing federal expenditures on healthcare, freeing insurers from requirements that limit their ability to discriminate on the basis of health status or provide skimpy coverage, allowing individuals who wish to remain uninsured—but millions of Americans who have found health security under the ACA will lose it if the ACA is repealed and replaced by Republican proposals.

”If the Supreme Court rules that the federally facilitated exchanges cannot issue premium tax credits, the results will be devastating. Congress could easily avoid this devastation through simply adopting a statute reaffirming its obvious original intent that federal exchanges have the same powers as state-operated exchanges. It will not do this. Indeed, at this point it is hard to see Congress doing anything, in the sense of coalescing around a single policy that would rescue our healthcare system.”

Contact Info

(617) 230-4965

Wellesley, Mass