For ACA Enrollees, How Much Premiums Rise Next Year is Mostly up to Congress

For ACA Enrollees, How Much Premiums Rise Next Year is Mostly up to Congress  | KFF

Source: Kaiser Family Foundation, by Cynthia Cox and Krutika Amin

Health insurers are now submitting to state regulators proposed 2023 premiums for plans offered on the Affordable Care Act (ACA) Marketplaces. Changes in these unsubsidized premiums attract a lot of attention, but what really matters most to the people buying coverage is how much they pay out of their own pockets. And the amount ACA Marketplace enrollees pay is largely determined by the size of their premium tax credit. Generally speaking, when unsubsidized premiums rise, so do the premium tax credits, meaning out-of-pocket premium payments hold mostly steady for people getting financial assistance.

For just over a year, ACA Marketplace enrollees have benefited from enhanced tax credits under the American Rescue Plan Act (ARPA), which Congress passed as temporary pandemic relief. The enhanced assistance lowers out-of-pocket premiums substantially, and millions of enrollees saw their premium payments cut in half by these extra subsidies. ACA Marketplace signups reached a record high of 14.5 million people in 2022, including nearly 13 million people who received tax credits to lower their premiums.

Soon, the vast majority of these nearly 13 million people will see their premium payments rise if the ARPA subsidies expire, as they are set to at the end of this year.

The ARPA subsidies were enacted temporarily for 2021 and 2022 as pandemic relief, but congressional Democrats are considering extending or making the expanded subsidies permanent as a way of building on the ACA, as President Biden had proposed during his 2020 campaign. If Congress does not extend the subsidies, out-of-pocket premium payments will return to their pre-ARPA levels, which would be seen as a significant premium increase to millions of subsidized enrollees. In the 33 states using HealthCare.gov, premium payments in 2022 would have been 53% higher on average if not for the ARPA extra subsidies. The same is true in the states operating their own exchanges. In New York, for example, premiums for tax credit-eligible consumers would be 58% higher if not for the ARPA. Such an increase in out-of-pocket premium payments would be the largest ever seen by the millions receiving a subsidy. Exactly how much of a premium increase enrollees would see depends on their income, age, the premiums where they live, and how the premiums charged by insurers change for next year.

For states, the timing of Congressional action on ARPA subsidies matters both for rate review and state enrollment systems. State-based exchanges – as well as the federal government, which operates HealthCare.gov – will need to reprogram their enrollment websites and train consumer support staff on policy changes ahead of open enrollment in November. States will start making these changes as soon as this month. Additionally, as insurers submit premiums for review, state insurance commissioners and other regulators must assess the reasonableness of 2023 rates, and some of that determination will depend on the future of ARPA subsidies. The non-partisan National Association of Insurance Commissioners (NAIC) wrote to Congress asking for clarity on the future of ARPA subsidies by July.

For insurers, the timing matters because 2023 premiums get locked in later this summer. Last summer, when insurers were setting their 2022 premiums, some said the ARPA had a slight downward effect on their premiums, based on the risk profile of enrollees. Insurers are now in the process of setting 2023 premiums and some might factor in an upward effect on premiums if they expect ARPA subsidies to expire. Premiums for 2023 are locked in by this August, so if Congress does not act before its August recess, whatever assumptions insurers make about the future of ARPA subsidies will be locked in to their 2023 premiums. Additionally, although this is not necessarily at the same scale of the uncertainty seen in 2017 surrounding the ACA repeal and replace debates (when many insurers explicitly said that uncertainty was driving their premiums up), it is possible that some insurers will price 2023 plans a bit higher than they otherwise would, simply because of uncertainty around the future of the ARPA’s enhanced subsidies. The NAIC letter to Congress warned that “uncertainty may lead to higher than necessary premiums.”

For enrollees, the timing matters both for knowing how much they will pay and for maintaining continuous coverageNearly all of the 13 million subsidized enrollees will see their out-of-pocket premium payments rise if the ARPA subsidies expire. But if the subsidies are renewed by Congress, but not until the end of the year right before subsidies are set to expire, there could still be a disruption if states and the federal government do not have enough lead time to update their enrollment websites to reflect the enhanced subsidies. In this scenario, the millions of enrollees who currently have access to $0 premium Marketplace plans might have to pay a premium in January – putting them at risk of losing coverage due to non-payment. Similarly, middle-income enrollees might temporarily lose access to advanced payments of the tax credit in the month of January, making it unaffordable for them to maintain coverage.

Congress’s action or inaction on ARPA subsidies will have a much greater influence over how much subsidized ACA Marketplace enrollees pay for their premiums than will market-driven factors that affect the unsubsidized premium. Even if unsubsidized premiums hold steady going into 2023, the expiration of ARPA subsidies would result in the steepest increase in out-of-pocket premium payments that most enrollees in this market have seen. This would essentially be a return to pre-pandemic normal, but the millions of new enrollees and others who have received temporary premium relief may not see it that way.

AHIP Presses Congress, White House To Ramp Up Scrutiny Of Private Equity Provider Deals

AHIP presses Congress, White House to ramp up scrutiny of private equity  provider deals | Fierce Healthcare

Source: Fierce Healthcare, by Robert King

Health insurance trade group AHIP is calling for the White House and Congress to increase scrutiny of private equity control of providers, which the group worries could impact quality and costs.

 

The group earlier this week released letters sent to the White House and congressional leaders outlining parts of a new policy road map and priorities (PDF). Chief among them was more transparency surrounding private equity deals, which has grown in popularity across certain parts of the provider industry.

“While improving transparency of health care prices at the federal level has been a major focus, only the recent executive order related to nursing home care has applied to the activities of private equity entities of the health care marketplace, which have vastly different business models than other health care organizations,” the letter to President Joe Biden said.

AHIP wrote that there needs to be more transparency on private equity control of physician specialty groups and how the deals can impact quality and costs for patients.

The group noted in a white paper that back in 2018 private equity made up 45% of all health mergers and acquisitions. While initial deals applied to certain specialties like orthopedics and urology, AHIP said targets have expanded.

AHIP wants Congress to pass legislation that requires the public reporting of all private equity and hedge fund purchases of specialty groups and other providers such as emergency room physicians or ambulance providers. They also want the federal government to study any anticompetitive impact on the acquisition of providers by private equity firms.

 

Other key priorities in AHIP’s road map include:

  • * Advance use of site-neutral payments to ensure payments are the same no matter the site of care. The Centers for Medicare & Medicaid Services has cut Medicare payments in recent years to off-campus hospital clinics to bring the payments in line with those paid to physician clinics. But the effort led to a legal fight with the hospital industry.
  • * Support the expansion of home-based advance care via “value-based care and payment models,” the road map said.
  • * Remove barriers to telehealth access, which exploded in use since the onset of the pandemic; but, now, regulators are figuring out what to make permanent. AHIP wants the federal government to have network adequacy regulations to account for the availability of telehealth and to ban billing of “distant site facility fees for telehealth services.”

AHIP’s push to scrutinize private equity deals comes as the federal government has delivered more scrutiny of hospital merger deals. The Federal Trade Commission also launched a probe into physician practice acquisitions back in January 2021 to examine their impact on market competition.

Payers, Providers And States Likely Have More Time Until COVID-19 Health Emergency Ends

Payers, providers, states have more time until COVID emergency ends

Source: Fierce Healthcare, by Robert King

The healthcare industry likely has until this fall to face the end of the COVID-19 public health emergency (PHE) as a key deadline came and went with no notice Monday.

 

The Department of Health and Human Services (HHS) promised to give states a 60-day notice when the PHE will end, giving a vital heads-up for when a slew of regulatory flexibilities that have been in place for more than two years will go away. The current PHE will run until July 16, and HHS did not provide any notice that it won’t be extended again for another 90 days.

The decision to not give a 60-day notice comes after an intense lobbying effort from healthcare providers that are worried about the flexibilities of the PHE going away amid a potential new surge of COVID-19.

“The risk from COVID-19 variants remains, and case rates are currently rising across the country,” said the letter from 16 health groups to HHS leadership dated May 10. “Throughout the pandemic, we have painfully learned that the rapid global spread of new variants has resulted in significantly increased transmission rates and infections in the U.S.”

Some health groups and state Medicaid officials have asked HHS Secretary Xavier Becerra to give them more than a 60-day notice of the PHE going away. A key reason is that states agreed to get a 6.2% increase in federal Medicaid matching funds in exchange for not dropping anyone off Medicaid for the duration of the PHE. Once the PHE ends, states will have up to 14 months to fully redetermine whether Medicaid beneficiaries are still eligible.

Becerra has shot down giving more notice, previously saying the PHE can only be extended for 90 days at a time. Becerra has also said that any decision on the PHE will be made via the science.

 

The PHE brought a series of major regulatory flexibilities that could go away once it expires, chief among them in telehealth. The Centers for Medicare & Medicaid Services temporarily removed barriers that include originating site requirements and audio-only restrictions for telehealth services, enabling providers to get reimbursement from Medicare for the new technology.

The flexibilities, however, only last through the PHE. Several bills introduced this session aim to offer to extend the telehealth flexibilities for several months past the PHE to determine what should be made permanent.

Income Impacts How Employees Use HDHPs

Income impacts how employees use HDHPs | BenefitsPRO

Source: BenefitsPRO, by Willa Hart

One of the biggest benefits a company can offer its employees is health insurance. But that health insurance isn’t necessarily used by all employees in the same way. A new study released earlier this month in the American Journal of Managed Care suggests that low-salary employees on high-deductible health plans tend to have lower utilization of primary care services than higher-salary employees, while also having a higher utilization of acute care services.

High-deductible health plans, or HDHPs, have become popular in recent years as a replacement for traditional health plans. HDHPs are thought by some to be beneficial as they offer lower premiums to employees. However, some have cautioned that HDHPs can discourage patients to seek out preventive care, and can lead to worse outcomes for patients as a result.

The new study, “Disparities in Health Care Use Among Low-Salary and High-Salary Employees,” analyzed administrative and medical claims data from employees at a large corporation to determine how low-salary versus high-salary employees utilized their HDHPs. It found that low-salary employees, defined as those making less than $75,000 a year, were significantly less likely to use outpatient services than higher-salary workers. However, low-salary employees were much more likely to require inpatient or ED services, resulting in a 40% increase in spending on ED care by employees making less than $50,000. Study authors speculate that the higher utilization of ED care might indicate that low-salary patients’ health conditions are not as well managed as their higher-salary counterparts’.

Other findings of the study include:

  • * High-salary employees are more likely to seek outpatient care. The highest salary earners the study tracked, who made more than $100,000 a year, were more likely to utilize primary care services than employees of the middle salary group making $75,000-$100,000 per year.
  • * Low-salary employees are less likely to fill prescriptions. Employees making less than $75,000 a year were less likely to utilize pharmacy services than employees with higher salaries.
  • * Low-salary employees see higher rates of preventable inpatient stays. Employees who made less than $50,000 per year were more likely to utilize inpatient services for a preventable issue.

The study authors note that avoiding primary care services can be concerning. “This pattern of health care utilization may lead to delayed diagnosis of health conditions and potentially miss the window and benefits of early diagnosis or prevention,” the authors write.

Past research has suggested that some patients, including low-salary patients, prefer health care plans with spending that is more evenly distributed over time, such as traditional health care plans with lower deductibles. When plans have higher deductibles, patients may have lower costs overall but will have less predictable month-to-month spending, a pattern that can be difficult for low-salary workers without substantial savings, the study says.

Newsom Signs Compromise Law Raising The Limit On Medical Malpractice Damages

Governor Newsom Signs Historic Legislation to Restore Patient Access to  Justice, Update 47-Year-Old Medical Malpractice Damage CapSource: San Francisco Chronicle, by Bob Egelko

California’s $250,000 limit on damages for pain and suffering caused by medical malpractice, a ceiling enacted by lawmakers in 1975 at the insistence of doctors and insurers, will be lifted next year. Gov Gavin Newsom signed compromise legislation Monday, sponsored by consumer advocates and supported by medical groups, that will not remove all limits on malpractice damages but will raise them to account for some of the inflation in the past 47 years.

Under AB35 by Assembly Majority Leader Eloise Gómez Reyes, D-Colton (San Bernardino County), the new limits for noneconomic damages in 2023 will be $350,000 for nonfatal medical malpractice by a physician and $500,000 for malpractice causing death. The maximum will rise gradually over the next decade, to $750,000 for non-death cases and $1 million for fatal cases, and increase by 2% a year thereafter for inflation.

When a doctor and other medical institutions, such as hospitals, commit acts of malpractice on the same victim, the limits will rise to as much as $1.05 million next year and $2.25 million in 10 years in non-death cases, with higher caps for fatal cases.

The current $250,000 damage limit would have been worth about $50,000 in 1975. The 1975 law, the Medical Injury Compensation Reform Act, or MICRA, does not restrict damages for a patient’s economic losses, such as wages and medical expenses.

“For decades, medically injured patients suffered from both the pain of being wrongfully injured and the unfairness of a system that severely restricted their access to justice,” said Craig M. Peters, president of Consumer Attorneys of California. “This historic agreement will ensure patients are more fairly compensated when their rights have been violated.”

“After decades of negotiations, legislators, patient groups, and medical professionals have reached a consensus that protects patients and the stability of our health care system,” Newsom said in a statement.

AB35 was also endorsed by the California Medical Association and the California Hospital Association as an alternative to a proposed November ballot initiative that would have increased the damage limit to $1.25 million, and removed all limits on damages for malpractice causing catastrophic injury or death. The sponsors of the initiative dropped it after lawmakers reached their agreement.

MICRA, signed by then-Gov. Jerry Brown, was sponsored by medical groups that said it was needed to keep doctors from leaving the state for fear of being bankrupted by unlimited damage awards.

Consumer groups contended the law rewarded incompetent doctors and their insurers at the expense of their patients. But previous efforts to modify or repeal MICRA failed in the Legislature, and in 2014 two-thirds of state voters rejected Proposition 46, which would have substantially increased the damage limits and required physicians to undergo drug and alcohol testing.

The law can have a drastic impact on individual cases. Two-year-old Steven Olsen of Chula Vista (San Diego County) slipped and fell on a walk in the woods with his family in 1992 and was treated for a sinus injury by doctors who failed to conduct a scan that would have detected brain injuries, a consumer group said. He wound up with lifelong blindness and brain damage and was awarded $7 million by a jury for pain and suffering — an amount slashed to $250,000 under MICRA.

“Although it is too late for my family to benefit from this change, at least others won’t have to endure the same suffering ours did three decades ago,” said Steven’s father, Scott Olsen, a board member of the nonprofit Consumer Watchdog and a sponsor of the now-shelved November ballot measure.

Dr. Robert Wailes, president of the California Medical Association, said the agreement was reached “because the two sides of the ballot measure campaign put differences aside, found common ground and recognized a rare opportunity to protect both our health care delivery system and the rights of injured patients.”

Employers Pay 224% Of Medicare Prices For Hospital Services

Employers pay 224% of Medicare prices for hospital services | BenefitsPRO

Source: BenefitsPRO, by Scott Wooldridge

Employer-sponsored health plans paid on average 224% of what Medicare paid to hospitals for the same services at the same facilities, according to a new study from RAND Corporation. The report covers billing for hospital inpatient and outpatient services in 2020.

The study said that there were significant variances in prices across states or geographic areas and added that the difference in cost seemed to be linked to hospital market share rather than hospitals’ share of Medicare and Medicaid patients.

The researchers found that in Hawaii, Arkansas, and Washington, relative prices were under 175% of Medicare, while other in states, such as Florida, West Virginia, and South Carolina, relative prices were at or above 310% of Medicare.

In addition, the study found that prices for COVID-19 hospitalization were similar to prices for overall inpatient admissions and averaged 241% of what was paid for Medicare patients.

“Employers can use this report to become better-informed purchasers of health benefits,” said Christopher Whaley, the study’s lead author and a policy researcher at RAND, a nonprofit research organization. “This work also highlights the levels and variation in hospital prices paid by employers and private insurers, and thus may help policymakers who may be looking for strategies to curb health care spending.”

Cost variation: a “defining characteristic” of US health care

The researchers described the wide variation in prices paid for medical services as “a defining characteristic of the U.S. health care system.”

In 2019, the study said, spending on hospital services accounted for 37% of total health care spending for privately insured Americans and came to approximately $434 billion. “Hospital price increases are key drivers of growth in per capita spending among the privately insured,” the study added.

RAND researchers found the difference between employer prices and Medicare prices was actually a bit lower since a previous study in 2018, when employers paid 247% of Medicare costs. The researchers said the change was because of an increase in claims among states that generally pay lower rates for hospital costs.

Transparency in pricing has been a challenge for the health care industry. Despite efforts by both providers and government regulators to create more transparency, both employers and consumers lack useful information on pricing. And the public data that does exist has gaps, due in part to the fact that many hospitals have not yet complied with recent regulatory requirements.

An Indiana case study: employer pressure lowered prices

The study concludes by looking at efforts in some states to address relatively high hospital prices. In Indiana, employers in the Fort Wayne area were able to prompt price changes at the Parkview Health System in that community, which the RAND study had identified as having some of the highest prices in the country.

“Equipped with information on negotiated prices, employers were able to place pressure on a large hospital system and TPAs to achieve lower prices for their workforce,” the study said. “Other employer and policymaker pressures in Indiana led the Indiana University Health system to announce plans to reduce prices to the national average rate.”

Hospital association response: “Unfounded conclusions”

The American Hospital Association (AHA), however, quickly released a statement saying the RAND conclusions were an over-reach and unfounded.

“The report looks at claims for just 2.2% of overall hospital spending, which, no matter how you slice it, represents a small share of what actually happens in hospitals and health systems in the real world,” said AHA President and CEO Rick Pollack. “Researchers should expect variation in the cost of delivering services across the wide range of U.S. hospitals – from rural critical access hospitals to large academic medical centers. Tellingly, when RAND added more claims as compared to previous versions of this report, the average price for hospital services declined.”

Lowering Medicare Age Comes With Big Price Tag

Democrats push bill to lower Medicare eligibility age to 60 - CNNPoliticsSource: Axios, by Adriel Bettelheim

Giving Americans over 60 access to Medicare would add about 7.3 million people to the program’s rolls and swell the budget deficit by $155 billion over a five-year period, the Congressional Budget Office and Joint Committee on Taxation project said in a new analysis.

Why it matters: While it’s a popular idea with voters, the big price tag illustrates why Medicare expansion isn’t gaining centrist support and remains a legislative long shot.

What they’re saying: Lowering the eligibility age would result in about 3.2 million fewer people having employer-sponsored health coverage, with most transferring to Medicare.

  • * That would put the federal government on the hook for a larger share of medical spending while lowering per-person spending for work-based health plans.
  • * The policy would halve the uninsured rate for the newly eligible group, from 8% to 4%.

Flashback: While President Biden didn’t initially run on expanding access to Medicare, he agreed to support lowering the age from 65 to 60 in April 2020, when his campaign worked on a unity platform with Sen. Bernie Sanders (I-Vt.).

  • * The idea lost traction as centrists led by Sen. Joe Manchin (D-W.Va.) scaled back Biden’s social spending ambitions and the Build Back Better agenda.

NAHU CEO: ‘Medicare For All’ Moves From Congress To The States

NAHU CEO: 'Medicare For All' Moves From Congress To The States –  InsuranceNewsNet

Source: InsuranceNewsNet

Congress has backed off “Medicare for All” for the time being. But legislators in several states are now taking up the charge.

In California, Democrats call for “a universal, single-payer health care system” as part of their party platform. A bid to install such a system failed in the California Assembly at the end of January, but the Golden State’s leaders have promised to make another run at it.

At least a dozen other states are considering bills that would ban private health insurance and establish single-payer health care. That’s bad news for ordinary Americans. It makes little sense to force nine in 10 Americans off their current health plans as part of a drive to bring about universal coverage.

About two-thirds of insured Americans currently depend on private health insurance plans. About 177 million people receive coverage through an employer, and about 34 million people purchase private coverage directly.

A single-payer system could do away with all those plans.

Moreover, Americans like their private plans. In a recent study of people with employer-sponsored coverage, more than two-thirds said they were satisfied with their insurance. More than three-quarters felt confident it would protect them during a medical emergency.

Research by the Kaiser Family Foundation found that what support there is for single-payer declines when people consider its attendant consequences like higher taxes and treatment delays.

Analyses of specific state single-payer plans suggest the downsides would be severe.

The New York Health Act, for instance, would reduce employment in the Empire State by 315,000, according to research published last year by the Foundation for Research on Equal Opportunity. Another report found that if the bill became law, New York residents would have to pay some $250 billion in new taxes.

 

Further, single-payer will lead to lower-quality care. That’s because government payers rely on lower payments to hospitals and doctors to keep costs in check. Look no further than Medicare. The American Hospital Association says hospitals receive just 87 cents for every dollar they spend treating Medicare beneficiaries.

That’s obviously not sustainable. If a single-payer system — and its low payment rates — were adopted widely, doctors and hospitals would respond by reducing the supply of care they’re willing to provide.

That diminution of supply, combined with unlimited demand stoked by making health care free at the point of service, could lead to long waits.

Just ask the Congressional Budget Office. According to a recent CBO analysis, a single-payer system would result in more “unmet demand” for health care services, “greater congestion in the health care system” and “lower payment rates.”

Lawmakers in several states have responded to concerns like these by championing a supposedly more moderate public option — a government-run insurance plan that would supposedly compete against private options.

But any public option would also reimburse providers at lower rates than private plans do. The public plan would use that pricing power to set premiums and deductibles below those of private insurers. As people gravitated toward the cheaper public option, private insurers would gradually leave the market, until only the public plan remained.

A public option is just a slower way of introducing single-payer. And single-payer health care is a cure worse than the disease.

Janet Trautwein is CEO of the National Association of Health Underwriters. This piece originally ran in the Boston Herald.

Medical Malpractice Deal Could Replace Ballot Measure, Still Raise Monetary Awards

California 2022 ballot will be heavy on health careSource: CalMatters, by Ana B. Ibarra and Kristen Hwang

After years of multimillion-dollar battles over medical malpractice awards, California legislators  passed a deal increasing the monetary amount patients could claim in lawsuits while also averting a costly November ballot battle.

The deal, which passed both chambers with near unanimous votes, replaced a ballot measure with legislation raising the cap for a patient’s “non-economic damages,” or pain and suffering, although in a more incremental approach than the initiative would have.

“The legislative resolution we reached ends a decades-long political fight that pitted patients and families against insurance companies,” said Nick Rowley, trial attorney and author of the ballot initiative, in a statement.

It will be sent to the Governor’s desk for his signature.

Medical organizations have long contended that unlimited malpractice awards would drive up the cost of care and reduce the number of providers in the state. Thursday’s vote on gradual increases was hailed as a landmark measure to avert that outcome.

“This bill will help to ensure health care providers can keep their doors open while also balancing the financial needs of patients with health care related injuries,” said Lisa Maas, executive director of Californians Allied for Patient Protection, which represents medical organizations opposed to the ballot initiative, in a statement.

If signed, starting Jan. 1, 2023, cases not involving a patient death will have a new limit of $350,000, with an increase over the next 10 years to $750,000 and a 2% annual adjustment for inflation after that. Meanwhile, cases involving a death will have an increased limit of $500,000 that will grow over the next 10 years to $1 million, with a 2% annual increase thereafter.

Under current law, a $250,000 cap only applies to non-economic damages and Californians who suffer from medical malpractice can recover as much as they need for medical bills and loss of income.

“The two sides of the ballot measure campaign have committed to putting patients first, to prioritizing the stability of affordable access to health care, and to set aside differences to do what’s right for all Californians,” Dr. Robert E. Wailes, president of the California Medical Association, said in a letter sent to members.

In the letter, Wailes said his organization is working with Gov. Gavin Newsom’s administration and the Legislature to turn this new arrangement into law. “Under the agreement, the initiative will be withdrawn from the ballot and this watershed agreement will preclude another costly fight.”

In contrast, the ballot measure, known as the “Fairness for Injured Patients Act,” sought to increase the compensation cap for non-economic damages from $250,000 toabout $1.2 million. The measure was backed by families of injured patients, trial lawyers and the advocacy group Consumer Watchdog.

The ballot measure would have allowed a judge to exceed that cap if a patient died or suffered a “catastrophic injury,” meaning an injury that left them permanently disabled or disfigured.

Rowley, principal funder of the measure, told CalMatters taking the legislative route through Assembly Bill 35 secures a cap increase for patients and their families. The legislation would allow for multiple caps — one for a medical institution and another for a provider, for example. That means that in a case not involving a death, a patient could potentially hold multiple parties liable and receive more than $350,000, Rowley said.

“That’s a big change and that number is going to go up,” he said.

Rowley said he is ready to pull the ballot measure as long as the bill is signed as is. Newsom has until the end of June to sign.

The Medical Injury Compensation Reform Act, or MICRA, which first set a cap on malpractice payouts, was signed by Gov. Jerry Brown in 1975 during a special legislative session convened after the California Medical Association raised the alarm on skyrocketing malpractice premiums. At the time, Los Angeles doctors were told by insurers that their costs would increase five fold.

“This has been an issue since before I came to the Legislature,” said state Sen. Tom Umberg, one of the legislators carrying the bill. “I think MICRA needed adjustments some time ago…[but] it’s been difficult to achieve a compromise.”

In opposition to the ballot measure, a coalition of health providers argued that it would essentially have eliminated the cap and significantly increased the number of lawsuits filed in the state. They argued it would result in less resources for patient care and ultimately drive up the cost of health care.

Medical malpractice costs account for approximately 1% of total health care spending in the state, according to a Legislative Analyst’s Office analysis of an early version of the ballot measure. Raising or removing the cap is likely to increase overall health care spending though an exact dollar amount is hard to determine, the analysis states.

What this means for patients and their families

Charles Johnson, chairperson of the campaign in support of the ballot measure, lost his wife, Kira Johnson, in 2016 during a scheduled C-section at Cedars Sinai Medical Center. He sued the hospital and has a pending case.

The new limits, if passed, wouldn’t apply to his case, but he said he took on this role so that other families could seek legal representation and accountability.

“Lawyers told me time and time again that they couldn’t take my case because of these caps,” Johnson said. The $250,000 barely covers legal fees and families are often discouraged from going to court because they can’t afford it, he said.

“Medical malpractice is expensive to try,” he said. “You’re going to spend upwards of $100,000 just to go to trial.” Most families only go to court if they have the resources or if they can get an attorney to take their case pro bono, he said.

If it becomes law, this agreement would grant families the opportunity for justice, he said. “The financial part is just one piece of this…there is no number that will bring my wife back,” he said. “For these families, it’s about justice.”

Johnson said striking a deal with the opposition and enacting changes through legislation is the best solution for families.

Carmen Balber, executive director of Consumer Watchdog, a supporter of the measure, said the bill will fundamentally change patients’ access to justice when they are harmed by medical negligence.

“The reason it was on the ballot is because families are locked out of the courtroom; they have no access to accountability because of how low this cap is,” she said.

A long time coming

In 2014, a similar ballot measure to raise the caps on monetary awards was soundly defeated by a two-thirds vote.

Fighting these measures at the ballot box is an expensive endeavor, particularly when they’re brought before voters time and time again. The proposed compromise would avoid another costly fight. Already, Rowley’s measure has generated $23.2 million in contributions, with a bulk of the funds — $21.9 million — raised by opposition groups.

In recent years, special interest groups have successfully pressured lawmakers into enacting reforms by threatening high-priced ballot battles. Last year, three measures — including a soda tax ban, an internet privacy expansion, and a lead paint liability limit — were pulled from the ballot after similar deals were reached.

The 2014 medical malpractice ballot measure generated more than $70 million in contributions, with opposition industry groups — including insurers and physicians groups — raising the bulk of the funds, while attorneys funded most of the support.

Attempts to reform the original malpractice law in the Legislature have also repeatedly failed, and constitutional challenges to the law have been rejected by the state appellate and supreme courts. Earlier this year, the state Supreme Court ruled that the liability cap also applies to physicians assistants practicing under the supervision of a doctor.

Many Workers, Particularly at Small Firms, Face High Premiums to Enroll in Family Coverage, Leaving Many in the ‘Family Glitch’

Many Workers, Particularly at Small Firms, Face High Premiums to Enroll in Family  Coverage, Leaving Many in the 'Family Glitch' | KFFSource: Kaiser Family Foundation, by Gary Claxton, Larry Levitt, and Matthew Rae

The Biden Administration recently issued a proposed rule to make it easier for family members of workers offered health insurance at their jobs to qualify for premium tax credits for Marketplace coverage. The proposal aims to address what has been called the “family glitch”. Under the ACA, an individual enrolling in a Marketplace plan is not eligible for a premium tax credit if they are eligible for job-based coverage that is considered affordable and provides minimum value (i.e., covers at least 60% of health expenses on average). Current regulations provide that job-based coverage is considered affordable to a worker and their dependents if the cost of self-only coverage for the worker is less than 9.6 percent of family income, without regard to the cost of adding family members. The proposal would revise that interpretation by assessing the affordability of job-based coverage available for the family members of a worker by comparing the total cost for the whole family (including the worker) to the 9.6 percent threshold. This assessment would measure affordability for members of the family other than the worker. Affordability for the worker himself or herself would continue to be based on the cost of self-only coverage.

The proposed rule explains that the current interpretation leads to cases where family members are considered to have an affordable offer even when they face very high contribution amounts if they want to enroll in that coverage, which the agencies assert is not consistent with the ACA’s purpose of providing access to affordable coverage for everyone. We previously estimated that 5.1 million people are currently caught in this ‘family glitch’.

In this analysis, we use the KFF Employer Health Benefits Survey (EHBS) to look at the shares of workers that might pay significant amounts to enroll families and how these shares vary across firms. These are the workers most likely to benefit from a fix to the family glitch.

Health insurance is expensive. The average premiums in 2021 were $7,739 for single coverage and $22,221 for a family of four. The average contribution amounts for covered workers were $1,299 for single coverage and $5,969 for a family of four. Importantly, there was considerable variation around these averages: for example, ten percent of covered workers were enrolled in a plan with a premium of more than $29,000 for family coverage; and 12% of covered workers were enrolled in a plan with a contribution of at least $10,000 for family coverage. It is the family members of workers in firms with high contributions that are most likely to benefit from the proposed rule change.

Before looking at some of the characteristics of these firms and workers, we should be clear about what these percentages mean. When we say that 12% of covered workers are in a plan that has a worker contribution of at least $10,000, we are not saying that 12% of covered workers actually enroll in family coverage and pay those amounts. Instead, we are saying that 12% of covered workers work at firms where the contribution for a family of four for their largest health plan (or sometimes an average of several plans) is at least $10,000. Surveys do not collect information about all of the health plans each employer may offer, nor are they able to account for potential adjustments that might affect individual workers or families (smoking surcharges, discounts for filling out a health risk assessment, surcharge if spouse is offered coverage at another job). So, while these surveys cannot give precise results on actual costs, they give a pretty good picture of the magnitude of the costs workers face to enroll in the plans that most workers choose.

Workers in small firms face higher contributions for family coverage. Workers in small firms (3-199 workers) on average face higher contributions to enroll in family coverage and are more likely to face very high contribution amounts. The average contribution for a family of four in 2021 was $7,710 for workers in small firms, compared to $5,269 for workers in larger firms. Twenty-nine percent of covered workers in small firms faced a contribution of at least $10,000 for family coverage, compared to only 5% of covered workers in larger firms.

One reason family contributions may be higher in smaller firms is that some small employers only make a contribution toward the cost of self-only coverage, leaving the worker to pay the entire difference between the premium for self-only coverage and the premium for family coverage. Even in firms selecting less comprehensive coverage, this difference can be many thousands of dollars. We estimate that 19% of small firms offering health benefits make little or no additional contribution towards the cost of family coverage. These firms employ about 17% percent of the covered workers enrolled at small firms (3-199 workers).

Workers in the service industry are more likely to face high contributions for family coverage. Contributions for family coverage vary significantly by industry. Covered workers in certain industries are more likely to face high contributions for family coverage while covered workers in other industries (wholesale, transportation, communications, utilities, state and local government) are less likely.

The proposed rule addresses the eligibility for premium tax credits in situations where workers face unaffordable contribution amounts to enroll their family members in job-based coverage. Data from the KFF Employer Health Benefits Survey demonstrates that some workers face very high contribution amounts for family coverage, with 12% facing a contribution of at least $10,000 for a family of four. Workers with coverage through small firms are particularly at risk of high contributions for family coverage, and would therefore benefit from the family glitch fix.

Last Updated 05/25/2022

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