Biden Administration Wants To Make Medical Debt Less Of A Threat To Consumers’ Financial Health: ‘People Who Get Sick Feel Like The System Is Out To Get Them’

Biden administration wants to make medical debt less of a threat to  consumers' financial health: 'People who get sick feel like the system is  out to get them' - MarketWatch

Source: MarketWatch, by Andrew Keshner

Medical debt can be a serious drag on consumers’ financial health, but the Biden administration hopes it has a dose of strong medicine coming.

The administration is asking federal agencies to erase medical debt as an underwriting factor in credit programs for certain consumer and small businesses whenever possible, the White House said Monday.

For example, the rural housing loans that run through the U.S. Department of Agriculture are going to stop incorporating medical debt loads when devising borrower repayment plans, the White House said.

Meanwhile, the Department of Veteran Affairs is looking at its guidelines after taking other steps to curb medical debt reporting. The Small Business Administration is reviewing its lending programs to spot ways to pull medical debt out of the equation when it comes to accessing capital, the White House said.

“Credit scores essentially are supposed to measure how responsible you are with your money,” Vice President Kamala Harris said Monday afternoon. “Having medical debt because you were sick or injured should not lower your credit score and make it more difficult to secure the help you need to get out of debt. It’s not logical.”

Alexander Sentayhu, a 25-year-old Washington D.C. resident who served in the U.S. Coast Guard, spoke at a Monday afternoon White House press conference about his family getting hounded by debt collectors while he recovered from multiple open heart surgeries and complications. It was a “crushing weight,” he said. Through a GoFundMe page, Sentayhu was able to raise more than $100,000, but he said that shouldn’t be the solution.

The White House announcement comes weeks after Equifax EFX, -0.25%, Experian EXPN, -1.61% and TransUnion TRU, -1.02% — the three major credit reporting companies — said they would overhaul how medical debt affects people’s credit scores. The change will remove nearly 70% of medical debt from credit reports, and paid medical bills sent to a collections department will not be included in reports, effective July 1.

The moves by the credit reporting companies are “important steps,” the White House announcement said Monday. But there’s more to do because medical debts amassed from health procedures and emergencies are not a reliable indicator of a person’s creditworthiness, the administration said.

That echoes consumer advocates who hailed the credit reporting companies’ announcements as a good first start to address the side effects of medical debt.

Approximately 43 million people had amassed $88 billion in medical debt on their credit reports as of June 2021, according to a recent Consumer Financial Protection Bureau estimate, which noted that the pandemic is only going to make a bad situation worse. Some 11 million people have at least $2,000 in medical debt, while 3 million people owe more than $10,000, the White House said Monday.

Medical debt isn’t shared equally, studies suggest. Black households, adults in the 35-64 year-old demographic (who aren’t yet eligible for Medicare), people making less money and households in the South tend to shoulder larger shares of medical debt, according to researchers at the Peterson Center on Healthcare and Kaiser Family Foundation.

While the Biden administration has government agencies looking at what they can do, it’s also reviewing what others are doing beyond the Washington D.C. beltway.

The Department of Health and Human Services is asking over 2,000 healthcare providers for information including bill collection approaches, lawsuits against patients owing money and financial aid, Monday’s announcement said.

“We look forward to learning more about this new initiative from the Administration. Hospitals and health systems are committed to treating all people equitably, with dignity, respect and compassion,” said Stacey Hughes, executive vice president of the American Hospital Association.

Collections are a “last resort,” Hughes said, noting that hospitals have given nearly $745 billion in uncompensated care to patients over the past two decades. ” The reality, however, is that the health care system must be adequately financed to ensure that hospitals and health systems are able to stay open and be there for their communities in times of need,” she said.

The CFPB is also investigating whether credit reporting and debt collection that’s tied to medical debt ever violates patients’ and consumers’ legal protections.

The agency’s director, Rohit Chopra, has previously said his agency is weighing whether medical debts should be included on credit reports. “In theory, credit reports are supposed to be an accurate repository of data about whether you have met your obligations on loans you have taken out. This theory is far from reality,” he said at a press conference tied to his agency’s look at medical debt.

On Monday, Chopra said the current consequences of medical debt make too many people feel like they are getting kicked while they’re down. “One of the things that many people who get sick feel like is that the system is out to get them,” he said.

Biden Admin Plots To Fix Obamacare’s ‘Family Glitch,’ Expand Coverage

About That ObamaCare 'Glitch' - WSJ

Source: Politico, by Adam Cancryn

The Biden administration is planning on Tuesday to propose a long-sought change to the Affordable Care Act aimed at lowering health insurance costs for millions of Americans, four people with knowledge of the matter told POLITICO.

The new policy is designed to close a loophole in the ACA known as the “family glitch” that’s prevented an estimated 5 million people from qualifying for subsidized health plans — even when they can’t find affordable coverage elsewhere.

Biden administration officials are expected to unveil the proposed regulation ahead of a celebration of the landmark 2010 health law that will also mark former President Barack Obama’s return to the White House for the first time since he left office.

Obama, alongside President Joe Biden and Vice President Kamala Harris, is slated to tout the ACA’s coverage gains and the administration’s broader efforts to slash health costs.

In its rollout on Tuesday, the administration will highlight its new bid to fix the family glitch as the largest administrative action to expand ACA coverage since the law’s enactment, one person with knowledge of the matter said. Still, the proposed regulation could take months to finalize.

Democrats last year also expanded ACA subsidy eligibility as part of the passage of the American Rescue Plan, and enrollment through the law’s insurance exchanges reached 14.5 million last year, a record high. Those expanded subsidies are due to expire later this year, raising concerns within the party about the potential for millions of people to get hit with higher health costs right around the midterm elections.

The White House declined to comment.

Democrats and health advocacy groups have long pushed for a fix to the family glitch, which locked certain Americans out of subsidized coverage due to the complex way the federal government determines eligibility for family members of workers who have access to employer-based health plans.

Under the ACA, people can qualify for subsidized health insurance if the cost of their employer-based coverage rises above a set percentage of their household income.

But the Obama administration originally interpreted that provision as applying to the premium charged to one individual — even if that person’s spouse and children would be covered under the plan, driving up its overall cost.

Health law experts have since argued that the statute could be reinterpreted to incorporate the added cost of additional family members. The administration began work last year on changes to the law, resulting in the proposed rule that cleared OMB’s regulatory review in late March.

The vast majority of people affected by the glitch would pay less for ACA coverage than their employer-based plan if the loophole were closed, the Kaiser Family Foundation estimates.

“Fixing the family glitch is the most consequential thing they can do without Congress to improve the affordability of ACA coverage,” said Larry Levitt, KFF’s executive vice president for health policy.

How the ACA Is Shaping Benefit Plans

The Affordable Care Act (ACA) is driving three trends in the workplace: increased outsourcing; reliance on private exchanges; and consideration of self-insurance. The study by the Guardian also finds that 60% of employers need guidance on managing their responsibilities under the Affordable Care Act (ACA).

Employers need help with new administrative and compliance requirements. They also need help with offering employees benefit choices and enhancing the enrollment experience while controlling costs and funding. Sixty-one percent of employers say that preparing for a post-healthcare reform era is a highly important benefit objective, but only 40% say they are prepared to meet this objective. Ray Marra of the Guardian said, “Brokers and carriers are needed to play a strategic role in helping employers navigate the ACA and in identifying the best options for how they can move forward in a changed benefit landscape. As employers adapt to the ACA, we’re seeing greater adoption of private exchanges and self-funded medical plans paired with stop loss insurance.”

One in three employers expects to outsource more aspects of their benefit program as a result of the ACA. Nearly 70% of employers expect compliance and administrative burdens to grow. About 20% of employers expect to offer benefits on a private exchange in the next year. Top reasons are to increase employee choice and to improve the employee experience. Fifty-eight percent those who are thinking of self-insuring say that the ACA is the impetus. Half of those planning to self-insure expect to carry stop-loss insurance. Self-insuring medical plans is a less common funding option for smaller firms, but it’s getting more attention due to the ACA. Seventy-eight percent of employers expect benefit cost increases, due to the ACA

Administration reverses proposed MA cuts

The CMS announced Monday that it would raise payments to insurers providing Medicare Advantage plans by 0.4%, ending plans for a 1.9% average planned reduction. The cuts “would have been disproportionate, hurting seniors who would lose doctors or pay more. We’re glad the administration heeded our call and reversed the policy,” Sen. Charles Schumer, D-N.Y., said. Reuters (4/7), The Hill/Healthwatch blog (4/7), Modern Healthcare (subscription required) (4/7)

Administration delays health coverage parity provision

The Internal Revenue Service will delay enforcing a provision of the Affordable Care Act that penalizes employers that provide more extensive health care coverage to executives than to other employees. The agency has not issued regulations for that portion of the law. The New York Times (tiered subscription model) (1/18)

States, feds brace for choppy opening of ACA exchanges

The computer systems on which the Affordable Care Act’s health insurance marketplaces are based must communicate with a data hub that pulls information from the Department of Homeland Security and the Internal Revenue Service to confirm income, employment status and citizenship. Developers facing tight deadlines have not been able to test the systems, leading some states to delay certain features, and the Obama administration has warned about bugs and glitches when the exchanges go online. The Washington Post (tiered subscription model) (8/24)

Administration Releases New Rules To Implement Health Law’s Individual Mandate

by Mary Agnes Carey

Reprinted with permission from Kaiser Health News (kaiserhealthnews.org.)

As congressional Republicans push for a delay in the 2010 health law’s individual mandate, the Obama administration announced final regulations implementing the requirement that most Americans have health insurance coverage by Jan. 1 or pay a fine.

The document from the Treasury Department and the Internal Revenue Service is in addition to regulations the Department of Health and Human Services published in late June.

The regulations specify nine categories of individuals who are exempt from the mandate, including people who can’t afford coverage or taxpayers whose income is so low they don’t have to file a tax return, according to a fact sheet from the agencies. People in jail or who are not in the country lawfully are also exempt, as are individuals who experience a coverage gap of three months or less.

When filing 2014 taxes in 2015, individuals must say on their returns if they have health insurance coverage and, if not, pay a fine. The individual penalty is the greater of $95 or 1% of income, rising to the greater of $695 or 2.5% of income, in 2016. The Congressional Budget Office estimates that less than 2% of Americans who don’t have health insurance will pay the fine.

In July, the Obama Administration delayed for one year a provision in the health law that employers with 50 or more workers offer coverage to employees or pay a fine. Republicans said that if the administration delayed the employer mandate for a year, individuals should also get a reprieve from the health law’s individual mandate set to begin next January. In July, the House of Representatives passed legislation to delay the individual mandate requirement for a year, but the measure is not expected to come to a vote in the Senate.

Tuesday’s announcement from Treasury and the IRS — along with the final individual mandate regulations that HHS issued in June — make it clear that the administration is moving ahead with implementing the individual mandate, which has become one of the law’s most politically explosive elements. House Republicans have tried to repeal or defund the law 40 times on the House floor and more votes are likely this fall.

Supporters of the law and many health care economists say that the requirement that most Americans have coverage or pay a fine is critical to making the law work as intended.

The individual mandate is one of two lynchpins that make the Affordable Care Act work, Washington state Insurance Commissioner Mike Kreidler said in a statement. You simply cannot guarantee everyone coverage — regardless of their health status — without also requiring that everyone participate. The individual mandate guarantees personal responsibility. Without it, there’s nothing to prevent people from only buying health insurance when they need it — which is similar to allowing people to buy homeowners insurance when their house is on fire.

America’s Health Insurance Plans, a trade group representing health insurers, wants the health law’s tax on health insurance plans repealed but supports the individual mandate.

There is broad agreement that requiring health plans to cover everyone, including those with pre-existing conditions, cannot work without an individual mandate, the group said in a statement. By requiring all Americans to get health coverage, the risk pool becomes large enough to account for the sickest Americans, without the adverse effect of skyrocketing premiums.

Administration Issues Proposed Rules Implementing the ACA

The Obama administration issued a proposed rule that, beginning in 2014, prohibits health insurance companies from discriminating against individuals because of a pre-existing or chronic condition. Under the rule, insurance companies would be allowed to vary premiums within limits,  based only on age, tobacco use, family size, and geography. Health insurance companies would be prohibited from denying coverage to any American because of a pre-existing condition or from charging higher premiums to certain enrollees because of their current or past health problems, gender, occupation, and small employer size or industry. The rule would ensure that people for whom coverage would otherwise be unaffordable and young adults have access to a catastrophic coverage plan in the individual market. For more information regarding this rule, visithttp://www.healthcare.gov/news/factsheets/2012/11/market-reforms11202012a.html.

The administration also issued proposed rule outlining policies and standards for coverage of essential health benefits while giving states more flexibility to implement the Affordable Care Act. Essential health benefits make up a core set of benefits that would give consumers a consistent way to compare health plans in the individual and small group markets. A companion letter on the flexibility in implementing the essential health benefits in Medicaid was also sent to states. For more information regarding this rule, visit http://www.healthcare.gov/news/factsheets/2012/11/ehb11202012a.html.

In addition, the administration issued a proposed rule implementing and expanding employment-based wellness programs to promote health and help control health care spending while ensuring that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status. For more information regarding this rule, visithttp://www.healthcare.gov/news/factsheets/2012/11/wellness11202012a.html.

Last Updated 06/29/2022

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