Trump Poised to Take Action On Medicaid Work Requirements

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Source: The Hill

The Trump administration is preparing to release guidelines soon for requiring Medicaid recipients to work, according to sources familiar with the plans, a major shift in the 50-year-old program.

The guidelines will set the conditions for allowing states to add work requirements to their Medicaid programs for the first time, putting a conservative twist on the health insurance program for the poor.

Democrats are gearing up for a fight, likely including lawsuits, arguing the administration is trying to undermine ObamaCare’s Medicaid expansion on its own after Congress failed to repeal the health-care law.

The changes represent the vision of Seema Verma, the administrator of the Centers for Medicare and Medicaid Services (CMS), who has long worked on conservative Medicaid changes.

In a speech in November hinting at the coming changes, Verma criticized ObamaCare for expanding Medicaid to “able-bodied” adults and said that group of people should be expected to work.

“Believing that community engagement requirements do not support or promote the objectives of Medicaid is a tragic example of the soft bigotry of low expectations consistently espoused by the prior administration,” Verma said. “Those days are over.”

The work requirements would only take effect if a state chose to pursue them and applied for a waiver from the federal government. The Obama administration always rejected state applications that included work requirements, but the new guidelines from the Trump administration would set conditions where those applications would be approved for the first time.

There are currently nine states applying to impose work requirements.

Democrats argue the changes would result in people losing health coverage if they cannot meet the new requirements or simply if the new bureaucratic hurdles discourage people from enrolling. They say many Medicaid enrollees already work, and those that don’t often can’t because they are disabled or caring for family members or other reasons.

“If they put out guidance, that would be a watershed moment I think,” said Hannah Katch, senior policy analyst at the left-leaning Center for Budget and Policy Priorities. It would be a “fundamental change in the way that people are covered by Medicaid,” she added.

“States know better than the federal government how to address the unique needs of their people,” a CMS spokesperson wrote in an email Thursday. “That is why we support innovative efforts at the state level to enhance the lives of Medicaid recipients and help them achieve self-sufficiency.”

The details of the guidance remain unclear, but it will allow states to have work requirements approved if they meet certain conditions, sources say. The release is expected within weeks, though the exact timing is unclear.

Eliot Fishman, who was a top Medicaid official under President Obama until last January, said that he expects the guidance to be issued “imminently,” though he said he has heard it is coming soon for two months.

“The hold-up is the Administration’s correct concern that waiver approvals will be challenged legally,” Fishman wrote in an email.

Liberal groups are preparing to sue the administration over the changes, arguing that work requirements are not allowed under current law and would require congressional action. Waivers must promote the “objectives” of Medicaid to be approved under the law, and Democrats argue a change that could cause people to lose coverage fails that standard.

“The guidance is an attempt to put the administration’s preferred legal framing around the waiver approvals, in anticipation of likely legal challenge in the federal courts,” Fishman, who now works for Families USA, a liberal advocacy group, wrote in the email. “Given that the legal standard is whether the waivers ‘promote the objectives’ of the Medicaid program, that the basic objective of the program is to cover low-income people, and that these waivers will take coverage away from low-income people, they will have a tough legal case to make.”

In addition to the guidance, the administration could also announce the approvals of the work requirement applications from some states, either at the same time or shortly after.

Many experts expect Kentucky will be the first state approved.

Other states have proposed additional conservative changes to Medicaid beyond work requirements. Wisconsin, for example, is applying to require drug testing of Medicaid recipients.

Of the 9.8 million non-elderly Medicaid enrollees not working in 2016, 36 percent said illness or disability was their main reason for not working, according to the Kaiser Family Foundation. Thirty percent said they were caring for a family member, while 15 percent said they were going to school.

Experts at the Georgetown Center for Children and Families say that a significant number of people would lose coverage if a state imposed work requirements, in part simply due to red tape.

The center points out that Kentucky’s own estimates say 100,000 fewer people would have coverage by the fifth year of its proposal.

Verma, though, argues that working helps improve people’s lives.

“For people living with disabilities, CMS has long believed that meaningful work is essential to their economic self-sufficiency, self-esteem, well-being and improving their health,” she said in the November speech. “Why would we not believe that the same is true for working age, able-bodied Medicaid enrollees?”

In States That Didn’t Expand Medicaid, Hospital Closures Have Spiked

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Source: STAT

In recent years Obamacare’s Medicaid expansion has created a financial fault line in American health care. Hospitals in states that enacted the expansion got a wave of newly insured patients, while those in states that rejected it were left with large numbers of uninsured individuals.

A new study released Monday reports a crucial consequence of that divide: Nonexpansion states have suffered a significant increase in hospital closures. States that expanded benefits, on the other hand, saw their rate of closures decline. 

The study, published in Health Affairs, is the first to clearly document the extent of that divergence across the country.

Using nearly a decade’s worth of data, researchers found that hospitals in Medicaid expansion states were 84 percent less likely to shutter than facilities in nonexpansion states. Rural hospitals were particularly vulnerable to closure, but kept their doors open in places that extended coverage to more patients, the study found.

Various forces are driving hospitals to shut down, including industry consolidation and a long-term shift toward outpatient care. But this data indicates that Medicaid coverage is a ballast against those forces for many facilities, especially those that serve high levels of uninsured patients who cannot pay their bills.

“Hospitals in states that did not expand Medicaid continued roughly along a previous trend where it’s increasingly difficult to stay in business,” said the study’s lead author, Richard Lindrooth, a professor in the department of health systems management at the University of Colorado.

The study’s findings are particularly relevant amid the current policy debate in Washington. Despite last year’s failures to repeal Obamacare, Republicans are still pressing to undo its Medicaid expansion, which allowed states to extend eligibility to people with incomes up to 138 percent of the federal poverty level. The 32 states that enacted the expansion have added millions of Americans to Medicaid rolls, improving access to health care but increasing costs.

The GOP-sponsored Graham-Cassidy bill, which would end Medicaid coverage for childless adults and implement a block grant formula, remains in play this year. While its prospects are unclear, the Trump administration has signaled a willingness to grant state Medicaid waivers that would require beneficiaries to hold jobs and pay premiums, measures likely to pare enrollments.

A lifeline for rural hospitals

The stakes are particularly high for rural hospitals. The University of Colorado study found that the financial performance of rural facilities improved more than the performance of suburban or urban ones in states that expanded Medicaid. They were much less likely to close and experienced improvements in their operating margins.

On a county-by-county basis, the study found that hospitals’ financial improvements were greatest in counties that had the highest numbers of uninsured residents before expansion, suggesting that the better performance resulted from the substitution of Medicaid coverage for patients whose hospital bills would have otherwise gone unpaid.

“It underscores how important the expansion has been for rural communities,” said Andrea Callow, associate director of Medicaid initiatives at Families USA, which advocates for expanded coverage. “Rural hospitals rely on Medicaid and Medicare as primary payers.”

In absolute terms, hospital closures remain a rare event. The study found that the expansion was associated with a reduction of about 11 hospital closures per year nationwide, with about half of them occurring in rural areas.

The authors tracked closures using data on hospital operations from the Centers for Medicare and Medicaid Services between 2008 and 2016. In analyzing data, they controlled for differences in median income, unemployment rates, and eligibility criteria that might have impacted underlying financial circumstances and closures.

A ripple effect

In North Carolina, five rural hospitals have closed since 2010, when the Affordable Care Act was passed, according to the Rural Health Research Program at the University of North Carolina. The program has identified a total of 83 rural closures across the country in that time period, most of which have occurred in non-expansion states.

Mark Holmes, director of the program, said each closure has its own health care ripple effect, often resulting in impaired access to lifesaving services, care for chronic conditions, and fundamental health procedures such as labor and delivery care. Patients generally have to travel farther, sometimes across difficult terrain, making it harder and less convenient to get the services they need.

Beyond that, Holmes said, there are also economic consequences, as hospital closures often result in the loss of scores of high-paying jobs. In many cases, hospitals are one of the few sources of such jobs in outlying communities.

“Losing an employer of 150 people with good jobs is like losing a manufacturing plant,” Holmes said “Hospitals are usually the largest, or the second-largest, employer in a community. That’s something that’s easy to lose sight of because we think of this from a health standpoint. But the effects are wide-ranging when a hospital closes.”

Democrats Move to Offense on Health Care; Seek ‘Big Ideas’

Image result for democrats health care imagesSource: ABC News

Democrats are shifting to offense on health care, emboldened by successes in defending the Affordable Care Act. They say their ultimate goal is a government guarantee of affordable coverage for all.

With Republicans unable to agree on their vision, Democrats are debating ideas that range from single-payer, government-run care for all, to new insurance options anchored in popular programs like Medicare or Medicaid. There’s also widespread support for authorizing Medicare to negotiate prescription drug prices, an idea once advocated by candidate Donald Trump, which has languished since he was elected president.

Democrats are hoping to winnow down options during the 2018 campaign season, providing clarity for their 2020 presidential candidate. In polls, health care remains a top priority, particularly for Democrats and independents.

“We’re tired of just playing defense,” said Sen. Tim Kaine, D-Va., the party’s 2016 vice presidential candidate. “It is now time to talk about the next big idea. It is a good time for everybody to put their big ideas on the table.” His offering: “Medicare-X,” a new public insurance plan using the government’s marquee health care brand.

Rising Democratic ambitions come as a cloud of uncertainty lingers over former President Barack Obama’s health law. While major provisions have survived the GOP onslaught, some Republicans are vowing to go for repeal again. Congress has ended the health law’s requirement that most people get coverage, and that’s expected to lead to higher premiums in 2019. But bipartisan legislation to stabilize insurance markets doesn’t seem to be getting traction.

Obama’s former health secretary, Kathleen Sebelius, says she sees Democrats reclaiming a core belief that health care should be a right guaranteed under law.

“Coverage for all is as much of an organizing principle for Democrats as eliminating Obamacare is for Republicans,” said Sebelius. “But it turned out that (Republicans) didn’t have any idea what that meant. I think Democrats have a much clearer vision.”

Time will tell. Here’s a sample of ideas under debate by Democrats and others on the political left:

—Medicare for All: Vermont Sen. Bernie Sanders made single-payer, government-run health care the cornerstone of his campaign for the 2016 Democratic presidential nomination. It remains the most talked-about health care idea on the left. Financing would be funneled through the tax system. Individuals wouldn’t have to worry about deductibles, copays or narrow provider networks. Although state-level attempts to enact single-payer care have foundered because of the large tax increases needed, about one-third of Sanders’ Democratic colleagues in the Senate are co-sponsoring his latest bill.

—Medicare-X: The legislation from Sens. Kaine, and Michael Bennet, D-Col., would allow individuals in communities lacking insurer competition to buy into a new public plan built on Medicare’s provider network and reimbursement rates. Medicare would be empowered to negotiate prescription drug prices. Medicare-X would be available as an option through and state health insurance markets. Enrollees could receive financial assistance for premiums and copays through the Obama health law. Eventually, Medicare-X would be offered everywhere for individuals and small businesses.

—Medicare Part E: Yale University political scientist Jacob Hacker has proposed a new public health insurance plan based on Medicare, for people who don’t have access to job-based coverage meeting certain standards. It would be financed partly with taxes on companies that don’t provide insurance. Consumers would pay income-based premiums. Hospitals and doctors would be reimbursed based on Medicare rates, generally lower than what private insurance pays. “The crucial part of this is that you have guaranteed health insurance, just like you have guaranteed Medicare or Social Security,” said Hacker. He’s working with Democrats in Congress to turn the concept into legislation.

—Medicare at 55: Sen. Debbie Stabenow, D-Mich., has introduced a bill that would let older adults buy into Medicare starting at age 55. Enrollees would be eligible for subsidies under Obama’s law. They’d also have the option of picking a plan through Medicare Advantage, which offers private insurance options.

—Medicaid Buy-In: Sen. Brian Schatz, D-Hawaii, and Rep. Ben Ray Lujan, D-N.M., have introduced legislation that would allow states to open their Medicaid programs up to people willing to pay premiums. Although Medicaid started out as insurance for the poor, it has grown to cover about 75 million people, making it the largest government health program.

Expect more ideas as the year unfolds, said Neera Tanden, president of the Center for American Progress and a former top aide to Obama as well as Hillary Clinton. “Almost every Democrat is talking about truly universal health care,” said Tanden.

Some Republicans are taking note. In a recent floor speech, Sen. John Barrasso, R-Wyo., said Democrats “think they have good ideas and they’re just proven wrong by the facts.”

Barrasso aimed his criticism at Sanders’ single-payer plan. “Democrats who are pushing for a Washington takeover of America’s health care are still not coming clean about the rationing of care that it would cause,” he said.

But in Sanders’ home state of Vermont, primary care physician Dr. Deborah Richter says she believes it’s only a matter of time before the Unites States adopts single-payer. Activists who failed in an earlier attempt in the state are now focused on passing a plan that would cover just primary care.

“I think the next election will be a move to the left,” said Richter. “I feel it might be possible for us to do it in phases.”

HHS Nominee Azar Signals New Line of Attack on Drug Prices

Image result for attack on drug prices imagesSource: STAT

Alex Azar, Trump’s pick to lead the Health and Human Services Department, doubled down on his commitment to bringing down prescription drug prices Tuesday — and even added a new target for future policymaking: drug makers’ list prices.

Lawmakers at Azar’s confirmation hearing Tuesday before the Senate Finance Committee, like those at an earlier hearing before a separate panel, grilled him repeatedly about his plans to bring down drug prices and his role in pricing decisions in his last job, as president of Eli Lilly’s U.S. business.

In that first hearing, Azar stuck to traditionally conservative policy ideas like encouraging the development of more generic drugs, including “a viable and robust biosimilar market,” and limiting abuses of the patent system. This time, however, he hinted that he is open to other policies that might go further to address the list prices that drug makers charge.

“There’s no silver bullet here, though, I want to be very clear. There’s not one action that all of a sudden fixes this,” he said. “The most important thing we have to figure out is, can we reverse the incentive on list prices? There’s a lot that we all know we can do on the net, the discounted prices. But I want to work with this committee and anyone who is smart and thoughtful about it. Can we create incentives that actually pull down those list prices so that when the patient walks in needing to pay out of pocket at the pharmacy, that they’re not hit with those kind of costs. That’s one of the harder issues to solve.”

Azar stuttered to respond to a series of questions from Sen. Ron Wyden of Oregon, the panel’s top Democrat, who highlighted splashy charts that showed plainly that the prices for an osteoporosis drug, Forteo, and an attention deficit hyperactivity disorder drug, Strattera, had doubled during Azar’s tenure at Lilly.

Wyden pressed Azar to say whether, as chairman of Lilly’s U.S. pricing committee, he had ever lowered a drug’s price. Azar dodged.

“I don’t know that there is any drug price of a branded product that has ever gone down from any company on any drug in the United States, because every incentive in this system is toward higher prices,” he said. “No one company is going to fix that system. That’s why I want to be here working with you.”

Wyden said Azar had earlier told committee staff that he had never lowered the price of a Lilly drug.

Later, in an exchange with Sen. Debbie Stabenow (D-Mich.), Azar seemed to blame the price increases on drug rebates.

“This is what is so bizarre about the way the system is organized. Those price increases happen — and my former employer has said this publicly — during that same period, the net realized price by the company stayed flat … just to cover for increased rebates,” he said. “The patient who walks into the pharmacy, whose insurance may not be paying for that, is absorbing that cost, and that’s what I want to work with you to solve.”

At Azar’s earlier hearing before the Senate Health, Education, Labor, and Pensions Committee, Sen. Tammy Baldwin (D-Wis.) had blasted him for not offering more solutions that took aim at drug makers.

“You pushed the blame on everybody else but pharmaceutical companies that set list prices,” Baldwin said then.

Azar on Tuesday also repeated an earlier suggestion that he is open to more government drug price negotiations, modeled after the way private Medicare drug plans negotiate prices for their beneficiaries. He pushed back, however, on broader drug price negotiations within Medicare, suggesting that policies that relied on a national formulary would significantly restrict seniors’ access to drugs.

In his opening testimony, Azar also repeated his earlier pledge that tackling drug prices would be his top priority if he is confirmed as health and human services secretary.

“The president has made this clear, so have I,” Azar repeated, an exact echo of his earlier testimony.

Profit Outlook Brightens For ObamaCare Insurers

Image result for health insurance profits imagesSource: The Hill

The ObamaCare doomsday scenario that many Republicans and Democrats predicted for 2018 is unlikely to come to pass, with insurers having adapted to the uncertainty that marked President Trump’s first year in office.

Insurers who decided to stick with ObamaCare after a tumultuous 2017 are likely to have a relatively profitable year, analysts and experts predict, for reasons including higher-than-expected enrollment.

“I think the fact that enrollment is better than expected is good for insurers that really concentrate on the subsidized population,” said Katherine Hempstead, who directs the Robert Wood Johnson Foundation’s work on health insurance coverage.

“I would think those insurers are feeling good. … It’s good for all the carriers that stayed in the market, but especially good for carriers that focus on subsidized people in the market,” she said.

Democrats and Republicans had starkly different reasons for predicting an ObamaCare collapse in 2018.

Trump canceled key ObamaCare payments to insurers called cost-sharing reduction subsidies, which reimburse them for giving discounted deductibles and co-pays to low-income customers.

The administration also slashed ObamaCare’s marketing budget for open enrollment by 80 percent and cut funding to local and state groups responsible for helping people sign up for coverage.

Democrats accused Trump of purposely sabotaging ObamaCare and predicted that enrollment would drop substantially.

Republicans also predicted the collapse of ObamaCare, but on the grounds that the Affordable Care Act (ACA) as a whole is a failure.

So far, both parties look to be wrong. 8.7 million people signed up for ObamaCare plans for 2018, half a million fewer than the previous year.

Insurers adapted to changes, raising premiums to make up for the expected loss of the   payments.

And because ObamaCare’s subsidies are designed to increase with premiums, the federal government actually ended up spending more on subsidies for canceling the payments.

Now, analysts at Goldman Sachs, S&P Global Ratings and A.M. Best are predicting a profitable and stable 2018 for insurers.

“We expect more insurers to see positive margins in 2018,” S&P concluded in a recent report.

A.M. Best revised its outlook on the insurance industry to stable from negative, noting that insurers have adapted to recent challenges and improved earnings.

The insurers most likely to see gains are Centene, CareSource and Blue Cross Blue Shield, which stepped in to offer ObamaCare coverage in counties that would have otherwise been bare of an option.

“The ones that are in the market after a lot of exits are more comfortable, more stable and understand, and [they] are not as easily shaken,” Hempstead said.  “You’re getting down to a more experienced, committed group of insurers. … If there’s an individual market, they’re going to serve it. They’re going to figure out how to make it work.”

A profitable and stable 2018 would continue a trend seen since early 2016.

A Kaiser Family Foundation analysis of recently released third-quarter data found insurers were regaining profitability and the markets were continuing to stabilize. While that analysis was conducted before Trump canceled the subsidies, it’s likely that insurers had, overall, a profitable 2017.

“It’s likely [canceling subsidies] would diminish their profits, but that insurers will still end up with a more favorable year in 2017 than they had in any of the previous years of the ACA marketplaces,” said Cynthia Cox, director for the Program for the Study of Health Reform and Private Insurance at Kaiser.

“We’re still expecting 2017 to end up being a profitable year for many insurers in the individual market despite the loss of cost-sharing payments,” she said.

Insurers could also stand to benefit from an effort in the Senate to include cost-sharing reductions in an upcoming spending deal. The effort, led by Sens. Susan Collins (R-Maine) and Lamar Alexander (R-Tenn.), would fund ObamaCare’s cost-sharing reductions for two years and provide billions of dollars to states to help establish reinsurance programs, which help insurers with the costs of covering high-risk individuals.

While analysts predict a positive year for ObamaCare’s insurers, some warn of the potentially negative effects recent and future action could have on the markets.

The tax law Trump signed at the end of last year eliminated ObamaCare’s mandate for everyone to have insurance, which could cause problems in the marketplaces.

Insurers could decide they don’t want to participate in ObamaCare’s exchanges in 2019 without the mandate, which was intended to lower costs and prevent people from waiting until they are sick to buy coverage.

Still, some experts doubt the repeal of the mandate will have much impact on the marketplaces or the number of people who enroll.

Two administrative rules are also expected this year that some argue would draw healthy people from the markets, potentially resulting in higher premiums and insurer exits.

“I don’t think [2018] will be as chaotic as last year, with the constant repeal-and-replace legislation and major policy changes, like the elimination of the individual mandate and end of cost-sharing reductions,” said Chris Sloan, a senior manager at Avalere, a health-care consulting firm in D.C.

“But continued reductions in the market and substantial premium increases year after year is not sustainable. The market has weathered it, but given the trajectory that we’re on, it’s not a healthy trajectory for the exchange,” Sloan said.

Budget Office Cuts Cost Estimate of Children’s Insurance

Image result for childrens health insurance imagesSource: U.S. News

Congress’ official budget analysts have eased one stumbling block to lawmakers’ fight over renewing a program that provides health insurance for nearly 9 million low-income children.

The Congressional Budget Office says a Senate bill adding five years of financing to the program would cost $800 million. Previously, the analysts estimated it would cost $8.2 billion.

That means lawmakers should find it much easier to agree to a way to pay for extending the program.

The lower cost projection doesn’t resolve the main barrier the bill faces. Extending the children’s health program has become enmeshed in a battle among President Donald Trump and lawmakers over how to protect hundreds of thousands of younger immigrants from deportation, and how much added money should be spent on defense and domestic programs.

Once those more heated disputes are resolved, the conflict over children’s health should end quickly.

Financing for the program expired last fall. Congress has temporarily extended its funding, but growing numbers of states have moved closer to exhausting their money. Members of both parties are eager to extend the health insurance program and avoid being blamed for causing millions of children to be uninsured.

Counterintuitively, the bill’s budget impact has shrunk because the Republican tax bill enacted last month eliminated the penalty President Barack Obama’s health care law imposes on people who don’t buy insurance. That move is expected to drive up the government’s costs of subsidizing people buying policies on insurance marketplaces.

That’s because ending those penalties is projected to result in fewer healthy people buying coverage on marketplaces, driving premiums higher for remaining consumers. Since government subsidies for people buying policies are linked to premiums, higher premiums mean higher federal costs.

The budget analysts say extending the children’s insurance program will encourage some parents to use that program and not the marketplaces. That would save the government money.

The new estimate was included in a letter the budget office sent Friday to Sen. Orrin Hatch, R-Utah.

What Employers Need to Know About the Association Health Plan Proposal

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Source: Employee Benefits

Since the Affordable Care Act went into effect, employers in the small group health insurance market (generally, employers with 50 employees or less) have faced rising costs and limited coverage options. This is because, under the ACA, the small group and individual markets require plans to include essential health benefits and community rating.

One strategy utilized by employers to get around the ACA’s small group market rules is to band together in an employer group or association in order to collectively be treated as one employer sponsor of a health plan — known as association health plans. Doing so gives them a higher employee count, and therefore access to large group market health plan options with less regulatory restrictions. However, qualifying as an association that can form an AHP is difficult under current law.

But a proposed regulation from the Department of Labor issued Jan. 4 makes it easier for small employers to join AHPs.

Here are some questions and answers for employers about what the proposal means, how it works and how it will affect businesses.

How does the proposed rule work? How will it change things?

This proposed regulation, consistent with the directions of the executive order, would make several technical changes to ERISA designed to allow more businesses and individuals to join associations, and as a result, free themselves from the burdensome requirements of the ACA’s small group and individual market rules.

Association membership would not be limited in the way that it currently is under ERISA. Under current law, most AHPs are not considered to be single ERISA-covered health and welfare plans. This means that when it comes to determining if they are subject to the small or large group market rules, the association is typically disregarded, and each employer within an association is typically considered on their own to make this determination. Under this proposed rule, it will be easier for an association to be considered a single ERISA-covered health and welfare plan.

The proposed rule would allow businesses in the same industry, but in different states, or in the same state, but different industries, to band together to form associations. In some cases, the associations could have members nationwide.

All of these proposed changes would help to make health insurance coverage more readily available across state lines. And without having to comply with the ACA’s EHB or community rating rules, these new associations could offer more “bare-bones” benefit plans than what individual employers used to offer. This may come as a surprise for some of the workers in these new associations.

The proposed rule would also change ERISA to allow sole proprietors or other working owners of trades or businesses with no employees to join AHPs if they work at least 30 hours a week, 120 hours a month or work enough to at least earn enough money to equal the cost of coverage in the AHP. This would allow individuals like Uber drivers for, example, to band together to buy coverage as a large group instead of having to purchase coverage through the ACA’s exchanges.

This change could mean that younger, healthier people working in the gig economy will leave their state’s exchange to join associations and leave an older and sicker pool of people in the exchanges, which could drive up premiums for exchange plans.

How will these changes affect employers?

This proposed rule essentially creates new loopholes to current laws under ERISA and the ACA that have raised costs for employers in the small group and individual market. By changing these rules, and allowing for more employers to have large group health plans, these employers should see lower costs, assuming that they want to deal with the administrative burdens that come with forming or joining an association. Even with the new, easier rules, many employers may still decide that they don’t want to deal with the “everyday” hassles of joining an association.

It’s also important to understand that the proposed rule is not law yet, and it could change before it’s finalized. The new rules are currently subject to a 60-day comment period.

In addition, this change does not preempt state regulation, which means that individual states could still take steps to try to make it more difficult for associations to form within their boundaries in order to reduce any adverse impact on their exchanges and health insurance markets.

What should employers do next?

Employers and sole proprietors in the small group and individual market that have been burdened by higher costs as a result of the ACA should review these new rules and discuss with their trusted advisers how they may be able to use them to their advantage.

Trump Administration Proposes Rules for Association Health Plans

Image result for association health plan imagesSource: The Washington Post

The Trump administration proposed new rules on Thursday to make it easier for small businesses and individuals to buy a type of health plan long favored by conservatives that could bypass some of the insurance protections built into the Affordable Care Act.

The proposal, issued by the Labor Department, would carry out the most significant part of an executive order that President Trump signed in October, directing the government to foster alternative types of insurance. Proponents say the association health plans would be less expensive and enhance consumer choice, while critics — including the insurance industry — fear they would promote substandard coverage and weaken the ACA’s already fragile insurance marketplaces.

Specifically, the rules would allow such health plans to be reclassified so they no longer would have to include a set of 10 essential health benefits — including maternity care, prescription drugs and mental health services — that the ACA requires of insurance sold to individuals and small companies.

Through this and other changes, the administration essentially is attempting via executive powers something that congressional Republicans have tried and failed to write into law for the past quarter-century. Some health-law experts on Thursday questioned whether the draft regulation is an overreach that, if it becomes final, could be vulnerable to court challenges.

The Labor Department predicted that up to 11 million uninsured Americans who work for small businesses or are self-employed could benefit from the expansion of association health plans.

Such plans have existed for several decades under limited circumstances in which small businesses band together to buy insurance. Just 6 percent of relatively small U.S. companies used this approach last year, according to the Kaiser Family Foundation.

The administration’s proposal would expand the availability of association health plans in a variety of ways. For the first time, it would allow individuals to buy them. It also would broaden the circumstances under which association health plans could be created, eliminating a long-standing requirement that any association must already have existed for a purpose unrelated to health insurance.

The proposal would preserve the ACA’s rule that bars insurers from charging certain customers more based on their health status or from refusing to cover those with conditions that are expensive to treat. Insurers had feared that dropping this prohibition would be particularly damaging to the ACA’s marketplaces because it might encourage healthier people to turn toward these alternative plans while leaving the marketplaces with expensive coverage purchased by people who are sick.

However, unlike those marketplace plans, the association plans could charge customers different prices depending on their age, gender and location. “The potential is that it creates an uneven playing field,” said Kevin Lucia, a research professor at Georgetown University’s Center on Health Insurance Reforms, who worked on early stages of the 2010 health-care law within the Obama administration.

The draft rules make clear that association health plans may be sold across state lines. They do not go as far as some conservatives have wanted — freeing the plans from state regulation. Instead, the rules invite public input “about the relative merits of possible exemption.”

State regulation of association health plans and related insurance called multi-employer welfare arrangements are a significant issue because both have a long history of fraud and insolvency, sometimes stranding patients. Congress first directed in the early 1980s that states have a role in their regulation. One industry official, who was not authorized to speak on the record, said of the administration’s new proposal: “It’s very hazy how anything would be enforced.”

Sen. Rand Paul (R-Ky.), who has championed association health plans and stood with Trump in October when the president signed the executive order, praised the draft rule. “I applaud the administration for its action today . . . Conservative health care reform is alive and well.”

But William Schiffbauer, a longtime Washington attorney specializing in health insurance and employee benefits, predicted legal challenges, including from state regulators. He said congressional Republicans have always understood that a change in law is needed to promote association health plans. And in stretching the definition of an employer to encompass association health plans, the administration is deviating from the terms of a seminal 1974 health insurance law and agency interpretations down through the years, he added.

The rules, made available on the Office of Management and Budget website Thursday morning, are open to 60 days of public comment starting Friday. They do not address a second change that was part of Trump’s executive order — an expansion of the use of skimpy, short-term insurance that has been meant as a bridge for consumers between jobs.

In their 83-page proposal, Labor officials write that they considered “the potential susceptibilities” that health customers flocking to alternative health plans would create for the ACA marketplaces. They reasoned that “the ACA’s requirement that essentially all individuals acquire coverage and the provision of subsidies in exchanges” would blunt the effect.

A footnote mentions that the GOP tax bill Trump signed into law shortly before Christmas will end enforcement of the law’s individual insurance mandate next year.

Medicaid is GOP Target in 2018

Image result for medicaid imagesSource: The Hill

Medicaid could face crucial tests in 2018 at both the federal and state levels.

Republicans in Congress failed in their attempts earlier this year to impose drastic cuts to the program as part of ObamaCare repeal, but GOP lawmakers could try again next year.

The tax bill that President Trump recently signed into law is projected to add $1 trillion to the federal deficit, making cuts to Medicaid an even more tempting target for some conservatives.

“Medicaid is front and center in any budget exercises, and now that deficits have increased, it puts Medicaid squarely in the bull’s-eye,” said Joan Alker, the executive director of the Georgetown University Center for Children and Families.

Speaker Paul Ryan (R-Wis.) has said he wants to bring down entitlement spending, saying in December that “health-care entitlements such as Medicare and Medicaid are the big drivers of debt.”

Any entitlement cuts from Ryan will likely face pushback from members of his own party, including Senate Majority Leader Mitch McConnell (R-Ky.). McConnell has said he doesn’t expect to see entitlement reform on the agenda next year ahead of the midterms.

“The sensitivity of entitlements is such that you almost have to have a bipartisan agreement in order to achieve a result,” McConnell told reporters in late December.

Medicaid covers nearly 75 million people, and the program has proven resilient in the face of conservative opposition.

Cindy Mann, a consultant at Manatt Health who ran Medicaid under former President Obama, said attacks on Medicaid have made it more popular.

“Medicaid has always been supported by the people closest to it,” Mann said.

Some Republican senators have recognized the political risks of Medicaid cuts, too. The GOP’s ObamaCare repeal push failed in part because of senators opposed to the Medicaid cuts.

“The Medicaid program is starting to get a politically powerful status,” said Eliot Fishman, the senior director of health policy at Families USA, an advocacy group.

Fishman noted that Maine, Arizona and Alaska are all Medicaid expansion states represented by Republican senators who have shown a willingness to protect the expansion funding.

Over 16 million people have enrolled in Medicaid since states began expanding coverage under ObamaCare. The program could continue to grow in the near future, as more states could seek to take advantage of the additional federal money offered by the health law.

Future Medicaid expansions could be especially likely if a Democratic wave in November’s midterms gives Democrats control in more statehouses.

In Virginia, Gov.-elect Ralph Northam (D) has promised to expand Medicaid, something Democrats in the state have been unable to accomplish in the last four years in the face of a GOP-controlled legislature. But with a 50-50 split in the House or even a 51-49 Democratic minority, depending on the results of a recount, Northam has much better odds than current Gov. Terry McAuliffe (D).

In Maine, voters approved a ballot initiative allowing the state to expand Medicaid. Gov. Paul LePage (R) has refused to implement it, but a new governor replacing LePage after he leaves office in the face of term limits could be more willing to accept the results.

If even a few more states choose to expand Medicaid, “it starts to get to be enough critical mass nationwide that I would hope it just makes it a permanent part of the Medicaid program,” Fishman said.

But advocates worry that unprecedented flexibilities offered by the Trump administration will allow states to completely change the nature of Medicaid.

Administration officials have said they will allow governors to add work requirements, time limits and lockout periods for people who can’t pay their premiums on time.

Advocates say adding such provisions would further the Republican case that Medicaid is a welfare program, instead of health insurance.

“Whether you support them or not, those activities are not the function of a Medicaid program,” Mann said. “People can differ as to the efficacy of those efforts, but few people can accurately say that’s what health insurance ought to be doing.”

In the coming months, the Trump administration could approve waivers allowing states like Arkansas, Arizona, Indiana and Kentucky to impose work requirements on Medicaid beneficiaries.

Arizona also wants to impose a five-year limit on Medicaid eligibility for the “able-bodied.”

States that want work requirements have acknowledged that tens or even hundreds of thousands of people would lose Medicaid coverage under the proposals.

Prior to ObamaCare, Medicaid mainly covered children, the disabled and pregnant women. The law’s optional expansion allowed many more low-income people to become eligible, leading to criticisms from conservatives that “able-bodied” beneficiaries were essentially freeloading off the government.

Alker said that’s the wrong way to look at it.

“[Medicaid is] predominantly run by managed care insurance companies, so that kind of rhetoric is a gross oversimplification,” Alker said. “But people who want to cut it, they tend to focus on one population.”

How Big Tech Is Going After Your Health Care

Image result for Big Tech imagesSource: The New York Times

When Daniel Poston, a second-year medical student in Manhattan, opened the App Store on his iPhone a couple of weeks ago, he was astonished to see an app for a new heart study prominently featured.

People often learn about new research studies through in-person conversations with their doctors. But not only did this study, run by Stanford University, use a smartphone to recruit consumers, it was financed by Apple. And it involved using an app on the Apple Watch to try to identify irregular heart rhythms.

Intrigued, Mr. Poston, who already owned an Apple Watch, registered for the heart study right away. Then he took to Twitter to encourage others to do likewise — suggesting that it was part of a breakthrough in health care.

“It’s not inconceivable, by the time I graduate from medical school,” Mr. Poston said, “that the entire practice of medicine can be revolutionized by technology.”

Apple, Google, Microsoft and other tech giants have transformed the way billions of us communicate, shop, socialize and work. Now, as consumers, medical centers and insurers increasingly embrace health-tracking apps, tech companies want a bigger share of the more than $3 trillion spent annually on health care in the United States, too. The Apple Heart Study reflects that intensified effort.

The companies are accelerating their efforts to remake health care by developing or collaborating on new tools for consumers, patients, doctors, insurers and medical researchers. And they are increasingly investing in health start-ups.

In the first 11 months of this year, 10 of the largest tech companies in the United States were involved in health care equity deals worth $2.7 billion, up from just $277 million for all of 2012, according to data from CB Insights, a research firm that tracks venture capital and start-ups.

Each tech company is taking its own approach, betting that its core business strengths could ultimately improve people’s health — or at least make health care more efficient. Apple, for example, has focused on its consumer products, Microsoft on online storage and analytics services, and Alphabet, Google’s parent company, on data.

“The big-picture reason that a lot of these tech companies are getting into health care now is because the market is too big, too important and much too personal to their users for them to ignore,” said John Prendergass, associate director of health care investment at Ben Franklin Technology Partners, a nonprofit organization in Philadelphia.

Physicians and researchers caution that it is too soon to tell whether novel continuous-monitoring tools, like apps for watches and smartphones, will help reduce disease and prolong lives — or just send more people to doctors for unnecessary tests.

“There’s no shortage of hype,” said Dr. Eric Topol, a digital medicine expert who directs the Scripps Translational Science Institute in San Diego. “We’re in the early stages of learning these tools: Who do they help? Who do they not help? Who do they provide just angst, anxiety, false positives?”

The tech industry is certainly no stranger to health. IBMIntel and Microsoft have long provided enterprise services to the health care industry.

But now they, and other companies, are more visibly focused on creating, or investing in, new kinds of technologies for doctors, patients and consumers.

This year, Amazon was one of the investors in a financing round for Grail, a cancer-detection start-up, which raised more than $900 million. Apple acquired Beddit, a maker of sleep-tracking technology, for an undisclosed amount.

And Alphabet, perhaps the most active American consumer tech giant in health and biotech, acquired Senosis Health, a developer of apps that use smartphone sensors to monitor certain health signals, also for an undisclosed amount.

Alphabet also has a research unit, Verily Life Sciences, dedicated to developing new tools to collect and analyze health data.

This year, Verily introduced a health research device, the Verily Study Watch, with sensors that can collect data on heart rate, gait and skin temperature. Now, the watch is to be used in a research study, called Project Baseline and financed by Verily, to follow about 10,000 volunteers.

Participants in the Project Baseline study will also be asked to use sleep sensors in their beds, and to have blood, genetic and mental health tests. Using data analytics and machine learning, researchers hope to get a more detailed picture of the progression of diseases like cancer.

“We are creating devices that collect information, new molecular assays — and all of that is just to try to understand health at a deeper level,” said Dr. Jessica L. Mega, Verily’s chief medical officer.

Apple is taking a different approach — using its popular iPhone and Apple Watch to help consumers better track and manage their health.

“Apple is trying to drag medicine from where it currently takes place — in hospitals and clinics — and move it to the consumer side, to your phone,” said Malay Gandhi, an executive in residence at Greylock Partners, a venture capital firm.

In 2015, Apple introduced new software, called Apple ResearchKit, for health researchers. Stanford used it to develop an app to enroll volunteers in a heart study and track their physical activities, sleeping hours and fitness.

Dr. Lloyd B. Minor, dean of the Stanford University School of Medicine, said the app enabled researchers to smoothly enroll more than 54,000 patients — a large number for a study conducted by one medical center — and collect much more data than they could have otherwise.

“For us, it was an eye-opener,” he said.

Stanford is also conducting the Apple Heart Study. It is intended to determine whether an app for the Apple Watch can accurately detect irregular heart rhythms — particularly those associated with atrial fibrillation, a condition that can lead to blood clots and strokes.

If the app detects irregular heart rhythms, it will send participants a notification and offer them a free video consultation with a doctor. The study is not designed to assess whether people who used the watch app had a reduced incidence of stroke and cardiac death compared with people who did not use the app.

Microsoft, already a major supplier of software and cloud services to medical centers, is also ramping up its health business.

This year, the company announced an initiative, Healthcare NeXT, to create products for medical providers and patients using artificial intelligence and cloud services like speech recognition.

As part of the effort, Microsoft worked with the University of Pittsburgh Medical Center to develop digital services intended to reduce drudgery for physicians and improve patients’ experiences. One project involves a virtual assistant that would take notes on conversations between a doctor and a patient, analyze the conversation and then send a summary to the patient’s electronic medical record. The medical center is also pilot-testing an app that notifies doctors when one of their patients has filled a prescription at a U.P.M.C. pharmacy.

“We’re really focusing on what people in the health care world are doing today and how we can make it better,” said Peter Lee, Microsoft’s corporate vice president for artificial intelligence and research.

Facebook, too, has been expanding its business and research efforts in the health sector.

Last year, Facebook made it more appealing for pharmaceutical companies to advertise their medicines on the platform by introducing a rolling scroll feature where drug makers can list their drug’s side effects in an ad. Such risk disclosures are required by federal drug marketing rules.

And this year, Oculus, the virtual reality gear maker owned by Facebook, teamed up with Children’s Hospital Los Angeles to develop V.R. simulations for doctors and medical students to practice handling high-risk pediatric medical emergencies.

Amazon has been less public about its plans in health. But industry analysts have speculated that Amazon could enter the pharmacy business.

Dr. Topol of Scripps said tech companies had an opportunity to remake longstanding, cumbersome systems — like hospital alarms at a patient’s bedside that go off dozens of times every day — and re-envision how health care is delivered.

“There’s not one tech company that isn’t involved one way or another,” Dr. Topol said. “Many of the companies see this as somewhere between rescue and a great business opportunity.”

Last Updated 01/01/2018

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