‘On A Collision Course’ Recent Cuts to Taxes Meant to Fund Affordable Care Act Have Hospital Officials Concerned

Image result for Taxes Meant to Fund Affordable Care Act Have Hospital Officials Concerned imagesSource: Enid News & Eagle

With recent cuts to taxes meant to fund the Affordable Care Act, rising premiums and no plan to adjust for the cuts, hospital officials warn the health care system is on a collision course that could result in more uninsured patients, rising levels of bad debt for hospitals and even higher costs to people who do have insurance.

The most recent cuts to the Affordable Care Act (ACA), sometimes referred to as Obamacare, came at the end of a three-day federal government shutdown in January.

The stop-gap budget plan signed by the president to reopen the government on Jan. 22 included $31 billion in tax cuts over the next decade, in addition to the $1.5 trillion in revenue cuts approved in the 2017 tax bill.

Those additional tax cuts included a delay in implementing three taxes meant to fund ACA insurance coverage over the next 10 years: the medical device tax; the so-called Cadillac tax, which taxes employers with more expensive health insurance plans; and the health insurance tax.

Hospital officials worry that lost revenue, meant to cover the cost of the ACA, hasn’t been replaced by an alternative — leaving the possibility the system will implode, with expensive consequences to health care providers and customers alike.

“What he (President Trump) did was take away some of the funding sources for the Affordable Care Act, and we have not replaced that or significantly changed the structure of the Affordable Care Act,” said St. Mary’s Regional Medical Center CEO Krista Roberts. “So, we are on a collision course, and the system as it’s designed today is not sustainable long-term. They will have to go back and visit this.”

Unable to afford to keep it or use it

The cuts come on the heels of significant premium increases for ACA plans offered on the state exchange, which has only one provider for Oklahoma: Blue Cross and Blue Shield of Oklahoma.

Insurance plans on the state exchange increased an average of 76 percent in 2017 and another 7.8 percent increase for 2018.

Those cost hikes already have increased the number of uninsured patients showing up at the hospital, Roberts said.

“We did see patients [in 2017] that were unable to continue paying their premiums,” she said, “because their premiums rose so much in 2017 on the state exchange.”

Along with premiums, deductibles also rose in 2017, leaving many who do have insurance unable to pay the cost of using it.

“What we’ve seen is a lot of people come in who used to have a $500 deductible, now have a $1,000 or $5,000 deductible,” said Integris Bass Baptist Health Center President Finny Mathew.

Many of those patients can’t afford the deductibles, he said, making their insurance plan essentially useless to them.

“For a family living around the median household income, they’re effectively uninsured,” Mathew said.

Rising prescription drug costs also have hit patients after a visit to the hospital.

“What happens then is when we discharge patients from the hospital, if they’re not able to pick up their prescription pills, and they don’t take their medications, they go into a cycle where they end up back in our emergency room,” Roberts said.

‘We provide for people’

Roberts said the effects of rising costs, paired with cuts to government subsidies meant to pay for the ACA, are cause for concern across the health care industry.

“The concern is we’re defunding it [the ACA], and we haven’t changed the structure of the plan,” Roberts said, “and the funding is not going to be there for the plan.”

Without funding for the plan, or the implementation of a replacement, it’s likely more people will go uninsured, Mathew said.

“It is very much a concern,” he said, “because the premiums under the ACA were heavily subsidized under the government, and even Medicaid in the state was heavily subsidized under the government, so as those federal funds go away, those plans on the marketplace will be unaffordable and unattainable for a lot of the population.”

If the marketplace plans fail without a workable alternative, Mathew said the numbers of working uninsured Americans likely will significantly increase.

“The working poor will have to go without care,” Mathew said, “unless not-for-profit hospitals like us step up and continue to offer care.”

Hospitals would continue to provide care in that scenario, both Roberts and Mathew said.

“This doesn’t change how we provide for people,” Roberts said. “We continue to provide for the needs of the community, regardless of what’s going on in Washington.”

‘People with insurance end up subsidizing people without insurance’

But, decreases in insurance coverage likely will lead to more uninsured patients coming into emergency rooms for care that otherwise — if covered by insurance — would be provided in less expensive outpatient appointments.

And, that, Roberts said, could add up to increases in hospitals’ bad debt or debt that cannot be recovered.

“I think when patients come to our door, regardless of their ability to pay, we take care of them, and we worry about the money part later,” Mathew said. “But, we still have to find ways to compensate our employees and pay the utility bills, just like everybody else.”

Paying those bills in the face of government cuts means the money to care for the uninsured will have to come from somewhere else. And some of that burden, Mathew said, likely will fall on the rest of the patient population.

“Ultimately, what happens is people with insurance end up subsidizing people without insurance,” Mathew said, “whether it be through higher premiums or higher payments to hospitals.”

Ryan Calls for ‘Incremental’ Health Reforms After Failure of ObamaCare Repeal

Image result for paul ryan incremental health reform images

Source: The Hill

Speaker Paul Ryan (R-Wis.) is calling for “incremental” health-care reform after the Senate failed to pass an ObamaCare replacement bill last year.

Asked on Fox Business on Tuesday if lawmakers will try again to pass an ObamaCare repeal legislation this year, Ryan pointed to incremental changes.

“Well, I think there are a lot of things we can do kind of incrementally,” Ryan said.

The comments are an acknowledgement that there is no apparent path forward for a large-scale ObamaCare replacement or entitlement reform bill this year in the Senate, where Republicans now have a one-seat majority.

Ryan noted that the opposition of Sen. John McCain (R-Ariz.) is what prevented the Senate from passing a pared-down ObamaCare repeal bill.

“What we tried to do was do it all in the House bill with repeal and replace,” Ryan said. “Like I said, we passed it. And that bill — one guy in the Senate did this instead of that and that went down. That would have been the biggest entitlement reform bill ever passed by Congress.”

“So what are we doing?” Ryan continued. “We’re going back and doing it incrementally. Going back at incremental health-care reform and other entitlement reforms so we can chip away at this problem.”

“I think the best chance we have is going after incremental entitlement reform since the fact the Senate couldn’t pass it,” he said.

Ryan did not say what incremental actions he sees as possible. It appears unlikely that Republicans will set up a fast-track bill on healthcare that allows Republicans to bypass a Democratic filibuster, limiting their options.

As examples of previous incremental steps, Ryan pointed to repealing the ObamaCare individual mandate in the tax bill, as well as charging wealthier seniors higher Medicare premiums and repealing the Medicare cost-cutting board known as the Independent Payment Advisory Board in the budget deal last week.

Pressed on rising deficits, Ryan emphasized the need to reform entitlements like Medicare and Medicaid, even though he acknowledged that incremental action is a more realistic path.

“We’ve got to reform our health-care entitlements,” Ryan said. “That is why we can never give up on reforming health care, because if you reform health care, then you take care of the structural drivers of our debt, like Medicare and Medicaid.”

Spending Deals Signal End of Unpopular Obamacare Cost Checks

Image result for Unpopular Obamacare Cost Checks imagesSource: Politico

Republicans and Democrats finally found something they can agree on about Obamacare: killing unpopular policies that were supposed to pay for the law or reduce health costs.

The recent congressional spending deals repealed or delayed several Obamacare taxes, as well as a Medicare cost-cutting board. Removing those powerful levers, which terrified health providers and unions, is not a good omen for efforts to control health spending, which is expected to surge in the next few years.

“This was a skillful effort by the groups that would have faced the sharp end of these measures,” said John McDonough, a former Senate HELP Committee aide who helped draft the law, who is now a Harvard professor of public health practice. “The reason people got so exercised … is not because they wouldn’t have been effective. They would have been effective.”

What’s left are the expensive pieces of the law that are liked by all Democrats and just enough Republicans — protections for people with pre-existing conditions and an expansion of Medicaid, among many other provisions. Though that’s relieved lawmakers of having to make tough choices and risk antagonizing consumers and business interests, it’s cast doubt on the idea of meaningful cost controls with U.S. health spending on track to soar from about $3 trillion a year to approximately one in every five dollars of total public and private health spending, or $5.7 trillion, by 2026.

Douglas Elmendorf, who led the Congressional Budget Office during the enactment of the health law, said both of the scrubbed policies would have helped Americans get more value out of their health spending.

“The U.S. still spends way more on health care than other countries even adjusting for our higher average income and there is very little evidence that we’re getting that much more value relative to other countries,” Elmendorf said. He chided Congress for not rolling out the policies now that the tough votes are years behind them.

“It’s hard to get things into law,” he said. “It shouldn’t be that hard politically to let things that are already in law take effect.”

Democrats defend their role — and their openness to changing the health law.

“You need to be open to amending the Affordable Care Act and if there were cost controls that were ultimately ineffective or unnecessary, I think you have to be open to getting rid of them,” said Sen. Chris Murphy (D-Conn.), one of the Senate’s most ardent Obamacare supporters. “The cost of the Affordable Care Act is coming in at much less than what was estimated, so that gives you some room to take a look at some of the expected revenue sources.”

The cost controls drew an array of powerful opponents. Trade groups across the health care industry and their allies in Congress railed against the Independent Payment Advisory Board, even though it never actually met, because the panel could have gained significant authority to cut payments to providers to control Medicare spending. The “Cadillac tax” on high-cost health care plans was disparaged by powerful employer groups and unions because it took aim at the popular health care benefits they give their employees.

Congress has twice delayed the Cadillac tax, which is now due to go into effect in 2022. But lawmakers and aides admit those moves are strong signs that Congress will enact more delays or completely repeal the policy.

The only visible support for the cost controls came from economists who were easily drowned out by high-priced lobbyists.

“Aside from the lost tribe of health care economists out in the desert, somewhere in the Mojave Desert, I don’t hear a business organization, I don’t hear a medical professional organization” defending these policies, McDonough said. “I don’t even see consumers or labor or anyone out there.”

The economists take the long view, arguing that a surtax on workers’ gold-plated coverage would gradually prod them to make smarter decisions about pursuing less expensive care. The Medicare cost-cutting board, they say, would have taken the always-dicey task of controlling Medicare costs out of the hands of politicians fearful of facing disgruntled seniors.

Sen. Tim Kaine (D-Va.) said the rollbacks wouldn’t have happened if Democrats controlled even one chamber of Congress.

Striking the cost controls was part of the trade-off needed to get GOP concessions “to get better treatment for opioids or better treatment in the VA or the six years to 10 years for CHIP,” he said, citing provisions of the recent spending bills. “There are some tough aspects of being in the minority.”

Cutting those deals was easier because health spending has slowed since the Affordable Care Act became law, making cost controls appear less critical than in 2009 and 2010. It’s still unclear exactly what drove that trend: Some economists say people are less likely to pursue non-urgent care when the economy is bad. Others believe the law created efficiencies in the health system that reduced costs.

Either way, the spending slowdown may not last long.

The CMS actuary said this week that American health care spending will grow from 4.3 percent in 2016 to 5.3 percent this year and 5.7 percent by 2021. Much of that increase will be driven by aging baby boomers in need of more medical care.

The CBO said in 2010 that both the IPAB and Cadillac tax would have saved the government money, had either been activated. The Cadillac tax would have raised $12 billion this year and another $20 billion next year. IPAB would have saved $15.5 billion between 2015 and 2019.

But in 2010, even Elmendorf and the staid CBO scorekeepers — accustomed to the reluctance of Congress to cut health spending — foreshadowed congressional ambivalence over letting the controls take effect.

“The long-term budgetary impact could be quite different if key provisions of the legislation were ultimately changed or not fully implemented,” the agency warned.

In An Effort To Curb Drug Costs, States Advance Bills To Prod Feds On Importation

Image result for state bills import Canadian drugs imagesSource: Kaiser Health News

Norm Thurston is a “free-market guy” — a conservative health economist in Republican-run Utah who rarely sees the government’s involvement in anything as beneficial.

But in a twist, the state lawmaker is now pushing for Utah to flex its muscle to spur federal action on ever-climbing prescription drug prices.

“This is something that a red state like Utah could do. I don’t think this is a partisan issue,” Thurston said. “Those outrageous cost increases are not the result of the free market.”

The approach: Let the state contract with wholesalers in Canada, importing cheaper prescriptions from up north and distributing them to the state’s health care system.

Other states — Vermont, West Virginia and Oklahoma, among them — are following similar paths, pushing legislation that would seek permission from the Trump administration to launch their own plans to import drugs from Canada.

For years, American consumers have tried to buy cheaper drugs from their northern neighbor, sometimes packing into buses for day trips to Canadian pharmacies, or patronizing American stores that help them order drugs from abroad. But the practice is illegal.

The states want to change that, and set up a formal process that nets broader savings. The idea is for the state health department to set up a wholesale program that buys drugs from Canada and resells them to local pharmacies and hospitals. Individual states would be responsible for ensuring that the medications are safe and that importing them does save money.

“This statute is putting pressure on the federal government to take a harder look at these questions,” said Rachel Sachs, an associate law professor at Washington University of St. Louis, who researches drug price regulations. “The state legislatures can say, ‘Look, we’re doing everything we can, but we do need the federal government to help us out on this.’”

The federal government has been slow to act on this issue, and skeptics say a 30-page Trump administration memo on drug pricing released late last week would likely have only limited impact.

But states, whose budgets for Medicaid and state employee health programs are squeezed by these costs, are moving forward.

In Vermont alone, drug spending has gone up by 35 percent from 2010 to 2015, the most recent year for which data are available.

Backers of the state plans say the strategy is a no-brainer that could save hundreds of millions of dollars. They discount concerns about drug safety, arguing that drugs from Canada are made by reputable companies, often in the same facilities and by the same firms that sell them in the U.S. — but at much higher prices.

“We would be bringing in drugs intended for the Canadian market, and therefore at Canadian pricing,” Thurston said. “One would assume if we could come up with a program that meets the recommendations of federal law, what justification would the [Health and Human Services] secretary have for saying no?”

The state measures follow model legislation developed by the National Academy for State Health Policy that uses a framework put in place by the 2003 federal law that created the Medicare Part D program. That law says the U.S. Department of Health and Human Services can approve drug importation plans if it is convinced the plans will save money and will not create any public health concerns.

Once passed, these laws task state health departments with overseeing the development of these programs. After the health department settles on the specifics, state officials must negotiate implementation with HHS. That could take years.

It is also likely to be an uphill battle.

In 15 years, HHS has never acted upon the 2003 law by approving any drug importation program.

Last spring, when members of Congress pushed a national bill, a bipartisan group of former Food and Drug Administration commissioners came out in opposition, arguing it would be impossible to verify drug safety absolutely. That bill ultimately failed to garner a majority vote.

It’s unclear where the current administration stands on this issue.

Alex Azar, the newly confirmed HHS secretary, has been coy on the subject — though in a confirmation hearing last fall, he said importing drugs from Canada could create safety concerns. Despite multiple requests, HHS did not provide comment for this story by the publication deadline.

The pharmaceutical industry echoed the cautions about safety.

“The proposals we are seeing in states across the country threaten the safety of patients and families and will not deliver the savings they promise,” said Priscilla VanderVeer, a spokeswoman for the trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

In the states, though, backers say their bills address that concern.

And other analysts argued that, regardless, safety of Canadian drugs isn’t a real issue.

“A lot of the drugs used in the United States and in Canada are made in the same plants, in countries like India or Europe,” said Michael Law, a pharmaceutical policy expert and associate professor at the University of British Columbia’s Center for Health Services and Policy Research. “The U.S. FDA and other regulatory agencies rely on other agencies’ inspections — the idea that Canadian drugs are these dangerous drugs is a red herring.”

A bigger question, he said, is the amount of savings these bills would generate.

Thurston pointed to Utah state analyses that suggest the state could save $70 million in the private sector, and another $20 million to $30 million in state-funded insurance programs. If approved, he said, the state would target 15 to 20 drugs to import — insulin, for instance, because it is bought in large quantities, or expensive drugs that treat hepatitis C or HIV.

Others expressed skepticism.

For one thing, the true price of prescription drugs isn’t always clear. There’s the list price — and generally, those are much higher in the United States. But insurance plans often negotiate rebates, or discounts, from the drug company — meaning they can end up paying far less than what’s advertised. Those discounts aren’t public, making it much harder to compare prices between the two countries.

The drug industry would also likely employ strategies to counter importation.

Pharmaceutical companies, Law noted, stand to lose if American states are importing cheaper drugs. That could motivate them to tamp down how many prescriptions they sell in Canada, or find other ways to discourage Canadian wholesalers from participating.

“My guess is any Canadian distributor to engage in that would find their [medication] supply dwindle quickly, because the drug companies would stop supplying,” he said. “The supplier systems in the United States would probably find it hard to get a [Canadian drug] supply in the long term.”

That’s certainly a real concern, said Claire Ayer, a Vermont state senator and Democrat who chairs her legislature’s Health and Welfare Committee.

“We can’t tell drug companies or wholesalers what to do in Canada,” she added.

VanderVeer said PhRMA could not speculate on how individual drug companies may react to importation.

Still, these state efforts could spur the federal government to take action, Sachs suggested — even if it’s unclear how large an impact importation would have.

“Importation will not solve all the problems — and I don’t think states see it as such,” she said. “But it could be a useful way to put pressure on a federal government and White House that has thus far largely been inactive on this topic.”

FDA Head Vows To Tackle High Drug Prices And Drugmakers ‘Gaming The System’

Image result for Scott Gottlieb imagesSource: Kaiser Health News

Food and Drug Administration Commissioner Scott Gottlieb said he will do everything “within my lane” to combat high drug prices and that he sees drug companies “gaming the system to try to block competition” in a multitude of ways in the marketplace.

In a wide-ranging interview with Kaiser Health News on Thursday, Gottlieb also said that he wants to speed up the U.S. approval process for generic and “biosimilar” versions of biologic drugs, which are drugs comprised of living organisms, such as plant or animal cells.

“Where we see things that we can address, we’re going to take action,” Gottlieb said, adding that he is most bothered when brand-name companies use tactics to block makers of generics and biosimilars from developing drugs. He deflected questions about whether the FDA approves drugs of questionable value that carry exorbitant prices.

“I think we should have a free market for how products are priced,” Gottlieb said. A free market “provides proper incentives for entrepreneurs who are going to make the big investments needed to innovate. But that system is predicated on a premise that when patents have lapsed you’ll have vigorous competition from generic drugs.”

The FDA, Gottlieb said, worked with the White House on a proposal to bring generics to market faster by ensuring that a 180-day exclusivity period isn’t used by drugmakers to block competition. He said there are “situations where you see deals cut” in which a drugmaker will get the 180-day exclusivity and then be persuaded to sit on it without ever selling the drug — essentially delaying the brand drug from facing generic competition.

Currently, generics makers must buy large quantities of the brand-name product in the U.S. to run their own clinical trials. But the companies that make brand-name medicines, in some cases, are making it very difficult for makers of generics to purchase their drugs, he said.

“They are adopting all kinds of commercial restrictions with specialty pharma distributors and wholesalers” to prevent sales to generic companies, Gottlieb said, adding that not every branded company is using the tactic, but it is “going on across the board.”

To come up with a generic, a drugmaker needs 2,000 to 5,000 doses for testing, Gottlieb said. He said the companies were willing to pay sticker price but are being blocked in other ways.

The FDA is now exploring whether generics makers could buy the drugs they need in the less-expensive European market without having to do additional work to prove the biologics from Europe are the same — even though the American and European versions are often manufactured in the same plants. Gottlieb wants to get rid of such tests, known as “bridging” studies.

“I have lawyers now looking at this,” Gottlieb said. The FDA has been exploring the issue for a couple of months, he said, and he thinks it may be “hard for us to get there without legislation, but we’re not done yet looking at this; we’re still pressing on this.”

Last fall, Gottlieb said that he wanted to “end the shenanigans” that interfere with competition in the marketplace. Since then, the FDA has released a steady stream of action plans and new guidance that tinkers with the drug development system.

“All of these steps are going to have an impact, and I don’t think there’s one silver bullet,” Gottlieb said. “If anyone [thinks] there is one thing you can do with policy intervention that is going to dramatically change drug prices, that’s not true.”

Instead, he said, there are “layers of things that we can do to try to make sure the system is working.”

The agency has been approving drugs at a fast clip: The FDA’s Center for Drug Evaluation and Research approved a record 46 new drugs in 2017, including treatments for sickle cell disease and Batten disease and new cancer therapies. The list doesn’t include landmark gene and cellular therapies and vaccines that are regulated as biologics.

That rate of approvals has raised concerns about the value and quality of drugs being approved. Specifically, criticism of the FDA’s handling of cancer drugs has increased in recent years.

Although some patient advocates want the FDA to approve new drugs more quickly, others charge that the agency greenlights mediocre cancer drugs that do little to prolong survival or improve quality of life. A 2014 study found that the cancer drugs approved from 2002 to 2014 extended survival by an average of just 2.1 months. For many cancer drugs, there is no evidence showing they prolong life.

Once drugs are on the market, companies can charge whatever the market will bear; prices for cancer therapies now routinely top $100,000 a year.

But Gottlieb said it’s not his job to help insurance companies or government programs decide which drugs to cover. Health systems and insurers “have a difficult time saying no,” Gottlieb said, “so they want to put the regulator in the position of saying no.”

Gottlieb acknowledged that it can be difficult for insurance plans to decide which drugs they should include on their drug list. But insurance plans “ought to have the confidence to make [such decisions] and not say, ‘Well, it’s the job of the federal government to make those decisions for us.’”

Gottlieb defended his agency’s approval of drugs that help the average cancer patient live just two or three extra months, noting that some patients do much better than average on cancer drugs — perhaps living months or even years longer than expected. He also said it would be wrong to make cancer patients wait years to try a drug that has a chance to help them.

“We’re ultimately going to learn why some patients respond really well and some don’t,” he said. If you “try to have all that information upfront when you approve a drug, [you’ll] end up having a development process that is very long and very costly and a lot fewer products will be developed.”

Gottlieb maintains that the FDA sets a high standard for approving drugs.

“It is important that we have a rigorous bar” for approval, he said, “but a bar that doesn’t impede these products from coming to the market.”

Single-Payer Health Care in California Dormant, But Not For Long

Image result for single payer imagesSource: San Francisco Chronicle

By many measures, the rambunctious campaign for a single-payer health care system in California appears to be floundering.

A bill that would replace the existing health care system with a new one run by a single payer — specifically, the state government — and paid for with taxpayer money remains parked in the Assembly, with no sign of moving ahead. An effort by activists to recall Assembly Speaker Anthony Rendon, D-Los Angeles, for shelving the bill has gone dormant. And an initiative that would lay the financial groundwork for a future single-payer system has little funding, undercutting its chances to qualify for the ballot.

But even if single-payer is a lost cause in the short term, advocates are playing a long game. For now, it may well be less a realistic policy blueprint than an organizing tool.

And by that metric, advocates are making gains. Riding a wave of enthusiasm from progressive Democrats, supporters of single-payer have effectively made it a front-and-center issue in California’s 2018 elections. It’s been discussed in virtually every forum with the candidates running for governor, emerged as a point of contention in some legislative races, and probably will be a rallying cry at the upcoming California Democratic Party convention.

“This issue is not going away,” said Garry South, a Democratic political consultant who has worked with the California Nurses Association, which sponsored the stalled single-payer bill.

“The progressive elements who are supportive of the single-payer concept know that it’s not going to happen now, it’s not going to happen tomorrow,” South said. “It’s a long-term process, and Jerry Brown is gone as of January 2019.”

The governor has not had to stake out a position on the bill, because it skidded to a stop in the Assembly last summer without reaching his desk.

But state Sen. Toni Atkins, a San Diego Democrat who co-wrote SB562, said Brown was not receptive. Analyses peg the cost of a statewide single-payer system at between $330 billion and $400 billion — far exceeding the state’s entire budget.

“When the governor saw that we introduced that bill … all he could look at me and do is shake his head and say, ‘$400 billion.’ And I kept trying to say, ‘Can we back up and talk about what you’ve got to do’” to get there? Atkins said. “He wasn’t letting it go.”

Atkins, who will take over as Senate leader next month, said she’s not giving up on the goal of single-payer but does not expect it to happen this year.

“People are polarized on this issue in a way that’s not good for coming together to get it done,” she said.

Led by the nurses association — a union that embraces activism — supporters of single-payer have targeted Rendon after he shelved the bill last summer because it didn’t specify how the overhaul would be funded. They peppered social media with images that not only portrayed the bill fight as a boxing match between Rendon and the nurses, but also depicted a knife labeled “Rendon” back-stabbing the bear symbol of California.

The nurses were not involved in the effort to recall Rendon, said campaign organizer Stephen Elzie. He has abandoned the attempt and is now helping Democrat Maria Estrada challenge Rendon’s re-election bid.

But the nurses union leaped into the governor’s race as one of the first unions to endorse Lt. Gov. Gavin Newsom. Single-payer has emerged as one of few issues on which the Democratic candidates disagree.

Newsom and Delaine Eastin, the former state superintendent of schools, have both said they support the nurses’ single-payer bill. Fellow Democrats Antonio Villaraigosa, former mayor of Los Angeles, and John Chiang, the state treasurer, say they want to expand health care so that everyone is covered, but not necessarily with the single-payer model that would abolish private health insurers and replace them with a government-run system.

A coalition of medical groups is lobbying against the single-payer bill, arguing that it makes more sense to expand the federal Affordable Care Act, which has increased the number of Californians who have health insurance.

The Assembly just wrapped up a series of hearings on what it would take to create a health care system that covers all Californians. It exposed many obstacles — in both federal and state law — to swiftly enacting single-payer. For one, the state would need permission from the federal government — and perhaps an act of Congress — to shift billions of dollars from Medi-Cal and Medicare into a state-run single-payer plan.

Assemblyman Jim Wood, a Healdsburg Democrat who led the hearings, called the single-payer bill “aspirational” and said he’s instead considering legislation that could help more Californians get health care without requiring permission from the federal government. One idea: extending subsidized health plans to adults who are undocumented immigrants.

“I believe we can actually get to single-payer, once we go through a lot of study and a lot of work,” Wood said. “But this feels, at times, more like a litmus test.”

Trump Administration Proposes Rule To Loosen Curbs On Short-Term Health Plans

Image result for short term insurance imagesSource: Kaiser Health News

(From the editors of the John & Rusty Report: California Senate Bill 910, S.B.910, Hernandez, would prohibit short term plans in California. It is unclear at this time whether the final federal rules would pre-empt state law if S.B. 910, passes and is signed into law.)

 

Insurers will again be able to sell short-term health insurance good for up to 12 months under a proposed rule released Tuesday by the Trump administration that could further roil the marketplace.

“We want to open up affordable alternatives to unaffordable Affordable Care Act policies,” said Health and Human Sservices Secretary Alex Azar. “This is one step in the direction of providing Americans health insurance options that are more affordable and more suitable to individual and family circumstances.”

The proposed rule said short-term plans could add more choices to the market at lower cost and may offer broader provider networks than Affordable Care Act plans in rural areas.

But most short-term coverage requires answering a string of medical questions, and insurers can reject applicants with preexisting medical problems, which ACA plans cannot do. As a result, the proposed rule also noted that some people who switch to them from ACA coverage may see “reduced access to some services,” and “increased out of pocket costs, possibly leading to financial hardship.”

The directive follows an executive order issued in October to roll back restrictions put in place during the Obama administration that limited these plans to three months. The rule comes on the heels of Congress’ approval of tax legislation that in 2019 will end the penalty for people who opt not to carry insurance coverage.

The administration also issued separate regulations Jan. 4 that would make it easier to form “association health plans,” which are offered to small businesses through membership organizations.

Together, the proposed regulations and the elimination of the so-called individual mandate by Congress could further undermine the Affordable Care Act marketplace, critics say.

Seema Verma, who now heads the Centers for Medicare & Medicaid Services, which oversees the marketplaces, told reporters Tuesday that federal officials believe that between 100,000 and 200,000 “healthy people” now buying insurance through those federal exchanges would switch to the short-term plans, as well as others who are now uninsured.

The new rule is expected to entice younger and healthier people from the general insurance pool by allowing a range of lower-cost options that don’t include all the benefits required by the federal law — including plans that can reject people with preexisting medical conditions. Most short-term coverage excludes benefits for maternity care, preventive care, mental health services or substance abuse treatment.

“It’s deeply concerning to me, considering the tragedy in Florida and national opioid crisis, that the administration would be encouraging the sale of policies that don’t have to cover mental health and substance abuse,” said Kevin Lucia, a research professor and project director at Georgetown University’s Health Policy Institute.

Over time, those remaining in ACA plans will increasingly be those who qualify for premium tax credit subsidies and the sick, who can’t get an alternative like a short-term plan, predicts Lucia and other experts. That, in turn, would drive up ACA premiums further.

“If consumers think Obamacare premiums are high today, wait until people flood into these short-term and association health plans,” said industry consultant Robert Laszewski. “The Trump administration will bring rates down substantially for healthy people, but woe unto those who get a condition and have to go back into Obamacare.”

If 100,000 to 200,000 people shift from ACA-compliant plans in 2019, this would cause “average monthly individual market premiums … to  increase,” the proposed rule states. That, in turn, would cause subsidies for eligible policyholders in the ACA market to rise, costing the government $96 million to $168 million.

Supporters said the rules are needed because the ACA plans have already become too costly for people who don’t receive a government subsidy to help them purchase the coverage. “The current system is failing too many,” said Verma.

And, many supporters don’t think the change is as significant as skeptics fear.

“It simply reverts back to where the short-term plan rules were prior to Obama limiting those plans,” said Christopher Condeluci, a benefits attorney who also served as tax counsel to the U.S. Senate Finance Committee. “While these plans might not be the best answer, people do need a choice, and this new proposal provides needed choice to a certain subsection of the population.”

But, in their call with reporters, CMS officials said the proposed rule seeks comment on whether there are ways to guarantee renewability of the plans, which currently cannot be renewed. Instead, policyholders must reapply and answer medical questions again.  The proposal also seeks comments on whether the plans should be allowed for longer than 12-month periods.

The comment period for the proposed rule runs for 60 days. Verma said CMS hopes to get final rules out “as quickly as possible,” so insurers could start offering the longer duration plans.

Short-term plans had been designed as temporary coverage, lasting for a few months while, for instance, a worker is between jobs and employer-sponsored insurance. They provide some protection to those who enroll, generally paying a percentage of hospital and doctor bills after the policyholder meets a deductible.

They are generally less expensive than ACA plans, because they cover less. For example, they set annual and lifetime caps on benefits, and few cover prescription drugs.

Most require applicants to pass a medical questionnaire — and they can also exclude coverage for preexisting medical conditions.

The plans are appealing to consumers because they are cheaper than Obamacare plans. They are also attractive to brokers, because they often pay higher commissions than ACA plans. Insurers like them because their profit margins are relatively high — and are not held to the ACA requirement that they spend at least 80 percent of premium revenue on plan members’ medical care.

Extending short-term plans to a full year could be a benefit to consumers because they must pass the health questionnaire only once. Still, if a consumer develops a health condition during the contract’s term, that person would likely be rejected if he or she tried to renew.

Both supporters and critics of short-term plans say consumers who do develop health problems could then sign up for an ACA plan during the next open enrollment because the ACA bars insurers from rejecting people with preexisting conditions.

“We’re going to have two different markets, a Wild West frontier called short-term medical … and a high-risk pool called Obamacare,” said Laszewski.

Insurers Signal Medicare Advantage Buyouts Ahead

Image result for insurance mergers images

Source: Forbes

Anthem, Humana and WellCare Health Plans are signaling plans to aggressively grow their Medicare Advantage businesses with the help of mergers and acquisitions.

The three health insurers are in a competitive battle with Aetna, Cigna, UnitedHealth Group and the nation’s Blue Cross and Blue Shield plans to capture bigger shares of a fast-growing market of aging baby boomers turning 65 years old and becoming eligible for Medicare coverage. Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs.

“In Medicare, we continue to see substantial growth opportunities as approximately 11,000 baby boomers age into the Medicare eligible population every day,” Anthem CEO Gail Boudreaux told analysts during the insurer’s quarterly earnings call. “Historically, Anthem has lagged in Medicare Advantage penetration and we have been working to capture more of our fair share of this market.”

And there’s no time to lag when it comes to Medicare Advantage as the policy climate improves in Washington. President Trump’s newly confirmed U.S. Secretary of Health And Human Services, Alex Azar, has spoken favorably about Medicare Advantage and the budget Congress passed last week helps insurers offering such plans to seniors.

Medicare Advantage is one of the few bipartisan areas of agreement in healthcare, supported by Democratic President Barack Obama and the Affordable Care Act he signed into law. The ACA added a star ratings system to rate quality and customer satisfaction for consumers to use in choosing a Medicare Advantage plan. Health plans that score 4 or better on a five-notch scale can get higher payments.

“In an era of uncertainty in other lines of business, the majors are hoping to expand their footprints in Medicare Advantage before it is too late,” says Andrew Kadar, managing director of L.E.K. Consulting’s healthcare services segment said. “(The Centers for Medicare & Medicaid Services’) recent favorable guidance for 2019 reimbursement as well as Alex Azar’s robust support of Medicare Advantage during his confirmation hearings add credence to the notion that Medicare Advantage enrollment will grow at high single-digit rates for the next five years.”

Currently, just under 35% of Medicare beneficiaries, or about 20 million Americans, are enrolled in MA plans. But Medicare Advantage enrollment is projected to rise to 38 million, or 50% market penetration, by the end of 2025 , L.E.K. Consulting projects.

Anthem is finalizing the acquisition of Medicare Advantage plans in Florida that will add 170,000 Medicare Advantage members in the state this year. And the insurer plans to use those deals as a beachhead for expansion in the central and northern part of Florida, which is popular retirement area for seniors and therefore a hot Medicare Advantage market.

Humana, meanwhile, is increasingly focused on integrating physician services and care in the home with its Medicare Advantage plans. Humana in December said it will acquire a 40% stake in Kindred Healthcare’s home care division for about $800 million.

Humana is also looking at merger and acquisition opportunities to grow its Medicare Advantage enrollment. The insurer ended 2017 with nearly 2.9 million Medicare Advantage enrollees.

“From an M&A perspective, we continue to look at strategic acquisitions to build out our capabilities, particularly in the primary care arena, but we also continually look for any other assets that could enhance our healthcare services segments,” Humana chief financial officer Brian Kane told analysts  last week.  “We would also have interest in Medicare Advantage assets that increase our presence in under-penetrated markets.”

The top executive at WellCare, too, said the company is on the hunt for Medicare Advantage opportunities following the successful purchase last year of Universal American Corp. WellCare now has more than 500,000 Medicare Advantage members in 18 states.

Medicare figures prominently in an effort to “double the size of the company by 2021,” WellCare CEO Ken Burdick told analysts on the company’s fourth quarter earnings call last week.

“We expect that growth will occur both in our Medicare and Medicaid lines of business,” Burdick said. “We think that organic growth and acquisitions will both be meaningful contributors to that trajectory.”

IRS Overpaid Nearly $3.5 Billion in ACA Subsidies in 2017, Can’t Recoup Money

Image result for IRS overpaid ACA subsidies imagesSource: Washington Times

The IRS overpaid nearly $3.5 billion in Obamacare tax credits last year that it cannot recoup because of constraints built into the program, frustrating Republicans who have failed to repeal the health care law but say that money could have been spent on programs for veterans or infrastructure.

A Treasury watchdog said the government paid out roughly $24 billion in Obamacare subsidies in the heart of the 2017 tax-filing season, with $5.8 billion in overages. Of that, just $2.3 billion was clawed back, leaving $3.5 billion in outstanding excess payments.

“The overpayments were that much?” said Rep. Phil Roe, Tennessee Republican.

He said he is trying to expand an assistance program for older veterans and their caregivers. “I can think of a lot of things I can use $3.5 billion dollars for,” he said.

Most Obamacare exchange customers receive taxpayer-funded subsidies to help cover their premiums.

The amount they receive is based on their expected earnings. At the end of the year, they are supposed to reconcile what they anticipated with what they actually earned. Because some received higher incomes — through raises, promotions or better jobs — they have to repay the IRS.

But authors of the 2010 law were afraid that the threat of a big tax bill would discourage people from buying Obamacare coverage altogether, so they set limits on the amount of money the government could claw back.

Those limits have been tweaked over the years because Congress feared it was giving away unearned money.

The $3.5 billion figure told lawmakers that they are still leaving a lot of money on the table. The 2017 figure is more than five times the number from 2015, which was the first tax year after Obamacare was fully operational.

Assuming similar overages for the rest of the decade, the $35 billion would be more than enough to pay for President Trump’s border wall trust fund, with money left over to cover an anti-opioid effort.

“That begins to get to be a lot of money,” said Energy and Commerce Committee Chairman Greg Walden, Oregon Republican.

Douglas Holtz-Eakin, a former Congressional Budget Office director, said he is not sure why the amounts spiked in the latest reported year, though it might be because of income growth. In other words, people underestimated their income before their earnings rose in a good economic climate, so they received more taxpayer assistance than they should have.

Others explained the big numbers by pointing to subsidy payments that have been rising with soaring premiums on the economically shaky exchanges or by suggesting that some consumers figured out how to game the system.

“There may be some strategic behavior involved, with some people intentionally underestimating their income with the expectation that they will not have to pay back excess credits beyond the cap,” said Timothy Jost, a law professor at Washington and Lee University. “But estimating income for people with seasonal or hourly pay jobs is very difficult, and expecting people to revise their income estimates every month, with corresponding revisions in their premium payments, is not realistic.”

For that reason, Obamacare defenders warn against being too harsh on customers. They say it doesn’t make sense to repeal the caps and demand full repayment of excessive subsidies.

“There are tips people get that are hard to predict, there’s holiday pay — there are many reasons people might have done their best but gotten an overpayment,” said Cheryl Fish-Parcham, director of access initiatives for Families USA, a consumer group that advocates for affordable health care.

Under Obamacare, the subsidy money goes straight to insurers, though the customers are responsible for returning overpayments. Once they hit the repayment cap, however, the extra money amounts to a taxpayer-funded benefit they don’t deserve.

Republicans say allowing people to keep benefits to which they aren’t entitled adds to their case against Obamacare.

“That’s just yet one more absurdity in the Affordable Care Act. It makes no sense,” said Sen. John Kennedy, Louisiana Republican.

He said education, public safety, infrastructure and defense could use the money instead. “Maybe — God forbid, don’t faint dead away — we could actually give some of it back to the taxpayers,” he said.

The House passed an Obamacare replacement that would have recaptured all of the excess subsidy during a multiyear transition period from the current program to a Republican system. But the Senate discarded the bill, and the repeal push faltered amid Democratic opposition and defections from three Republicans.

A White House official said Wednesday that the inability to claw back excess subsidy is outrageous and should be remedied, though analysts say any attempt to scrap the cap would likely run into a Democratic filibuster in the Senate.

Senate Finance Committee spokeswoman Julia Lawless said Chairman Orrin G. Hatch, Utah Republican, “has consistently supported congressional efforts to claw back Obamacare’s overpayments.”

“While past efforts have been blocked by Senate Democrats, the chairman is continuing to talk to members on how this can be best addressed,” she said.

It’s unclear if the forfeited dollars exceed what Congress should have expected or what future years might hold. A spokeswoman for the Congressional Budget Office, which evaluates the likely fiscal impact of legislation, said it hasn’t studied the issue.

As it stands, subsidized customers must pay back no more than $1,275 — $2,500 for families — although repayments among low and midrange earners are capped at $300 and $750 ($600 and $1,500 for families), respectively.

The law was originally far more generous, capping the amount the government could claw back at $250 for individuals and $400 for families.

But Congress has twice passed bills raising the caps, freeing up more money to spend on other bipartisan initiatives: First in 2010, as part of the annual “doc fix” to stave off cuts to Medicare reimbursements for doctors, and then again in 2011 to pay for repeal of Obamacare’s unpopular 1099 provision, which would have required businesses to fill out a tax form every time they paid a vendor $600 or more.

Mr. Jost said the amount forfeited through Obamacare is still a “drop in the bucket” compared with the hundreds of billions of dollars that fall into the “tax gap” created by individuals and business that underpay taxes overall.

“If Congress is serious about making sure people pay their taxes,” he said, “it would dramatically increase funding for IRS audits for people who are currently cheating on their taxes and getting away with it — and they are not primarily poor people.”

What Do Employees Think of Their Health Insurance Plan?

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Source: Benefits Pro

Most Americans who have health insurance through their employer are not only satisfied with their plans, but many also feel their premium and deductible costs are reasonable – though they are concerned about rising costs, according to America’s Health Insurance Plans’ survey, “The Value of Employer-Provided Coverage.”

Luntz Global Partners conducted the survey on behalf of AHIP, querying 1,000 U.S. adults with employer-provided coverage. A majority (71 percent) of respondents are satisfied with their current health insurance plan, while 19 percent are dissatisfied and 9 percent say they have neither favorable nor unfavorable opinions.

More than half (52 percent) say their premiums and deductibles are reasonable, while 41 percent say their premiums are unreasonable and 36 percent say their deductibles are unreasonable. A few (7 percent) say their premiums are neither reasonable nor unreasonable, and 12 percent say that for their deductibles.

Most respondents feel their health plan “has their back,” protecting them when they need them most. When asked if they had a medical emergency and were required to go to the hospital, 75 percent of the respondents say their coverage would protect them from the majority of their medical costs, while 25 percent do not have confidence their plan would adequately protect them.

“Employer-provided coverage is a pillar of Americans’ health and financial security,” says AHIP’s president and CEO Marilyn Tavenner. “The results reaffirm that American workers and their families depend on their coverage to provide them with protection and peace of mind.”

“Employers and workers have good reason to be worried about rising healthcare costs,” writes HRDive, citing an Aon study that predicted health care cost increases will rise by 7.2 percent this year, up from 6.9 percent in 2017.

While the federal government has not been able to bend the cost curve, private companies are now trying to “transform the healthcare industry itself” – most notably Amazon, JPMorgan Chase and Berkshire Hathaway’s plans to form a joint healthcare company, HRDive writes.

“Details on the partnership are scarce at the moment, but the hope among industry leaders is that this and other private sector efforts will move the needle forward toward delivering savings to the average worker,” HRDive writes.

Last Updated 02/21/2018

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