Tag Archive: cost sharing subsidies

Anthem’s exit from Ohio non-group is a shot across the bow of official Washington

The Anthem exit in Ohio is especially worrying, however, given the massive swath of the country in which it is the sole insurer in the exchanges, according to Cynthia Cox, associate director at nonpartisan health policy think tank The Kaiser Family Foundation.”Anthem’s exit from Ohio could be the tip of the iceberg,” Cox told Business Insider on Tuesday. “Their reasons for leaving don’t appear to be specific to Ohio, rather about political and regulatory uncertainty coming from the White House and Congress. If Anthem leaves the market nationally, there could be hundreds of thousands of people without any exchange insurer.” In a statement to Business Insider, Anthem cited a number of uncertainties that could impact the market coming from the Trump administration and Congress. “The individual market remains volatile and the lack of certainty of funding for cost sharing reduction subsidies, the restoration of taxes on fully insured coverage and, an increasing lack of overall predictability simply does not provide a sustainable path forward to provide affordable plan choices for consumers,” said the statement.

Source: Anthem Obamacare exchange exit from Ohio – Business Insider

Cox raises an excellent point that suggests Anthem’s withdrawal from the Ohio non-group market is less about Ohio than national policy. Anthem is likely firing a shot across the bow of Washington, warning it to quickly provide a degree of certainty going forward — or all bets are off nationwide.

That’s bound to get attention given Anthem’s major presence in the non-group medical insurance market. In late April, Anthem tentatively indicated it would sell coverage in state health benefit exchanges for plan year 2018, but reserved the right to reverse course lacking clear federal policy direction, particularly with regard to reduced cost sharing subsidies offered to low income households and the Affordable Care Act’s tax on health plan issuers.

As some observers have noted, Anthem could simply raise premium rates by 20 percent on its silver level plans to make up for the potential loss of cost sharing reduction subsidies for income qualifying households as Anthem indicated in April. However, that would potentially accelerate adverse selection among households that don’t qualify for significant advance premium tax credits to offset higher premiums, particularly coming after steep increases for 2017 plans.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Trump Promises On Health Insurance Appealed To Family Struggling With Cost : Shots – Health News : NPR

Source: Trump Promises On Health Insurance Appealed To Family Struggling With Cost : Shots – Health News : NPR

Pocketbook issues can determine the outcome of elections. In this case, National Public Radio did a piece today profiling a young Pennsylvania family that perceives it is getting poor value in the individual health insurance market. They are among what I dubbed a few years back as the 401 percenters, households who earn more than 400 percent of federal poverty levels and thus ineligible for premium and cost sharing subsidies under the Patient Protection and Affordable Care Act.

Premiums for catastrophic coverage with high deductibles appear to this family more in line with those one might expect for a very generous plan with little or no out pocket costs. That’s the economic disconnect and sense of unfairness that Trump tapped into and was likely a major issue in his victory over Hillary Clinton. In 2013, I predicted the 401 percenters could seek political redress, feeling the Affordable Care Act has left them worse off than before. In 2016, at least a sizeable portion of that voter cohort did just that, donning red Trump hats and voting for what they hope will be a better deal under a Trump administration. It remains to be seen whether Trump and the new Congress can deliver one.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Killing the ACA individual health insurance market reforms softly

If they so choose, the incoming Trump administration and new Congress could begin quickly unwinding the Patient Protection and Affordable Care Act’s individual health insurance market reforms without taking any affirmative action to do so. The reason is the House of Representatives prevailed earlier this year in United States House of Representatives v. Burwell in which the House challenged the outgoing Obama administration’s funding of out of pocket cost sharing subsidies under Section 1402 of the Affordable Care Act. That section provides for supplemental subsidies in addition to advance premium tax credits for households earning between 100 and 250 percent of federal poverty levels. The additional subsidies limit out of pocket costs for households at that income level enrolling in silver level qualified health plans offered on state health benefit exchanges. In House of Representatives, plaintiffs argue funding of the cost sharing subsidies is not a continuing appropriation and thus requires an annual appropriation as part of the federal budget.

In a ruling issued May 12, U.S. District Court Judge Rosemary M. Collyer agreed, finding the supplemental cost sharing subsidies must be annually appropriated, but leaving them in place pending the Obama administration’s appeal. If the Trump administration opts not to move forward with the Obama administration’s appeal of Collyer’s decision, the ruling stands with immediate effect.

The cost sharing subsidies effectively increase the actuarial value of silver plans that cover on average 70 percent of medical care costs up to the annual out of pocket limit to a higher percentage. Without funding for the cost sharing subsidies, health plan issuers in state health benefit exchanges would be forced to take a bath since calculated premiums would not account for the higher actuarial value of silver plans with cost sharing subsidies. Already leery of higher than expected medical costs and concerned over the potential of adverse selection among exchange plans, the loss of federal funding for the cost sharing subsidies would likely send health plan issuers running for the exits and potentially seeking relief from enforcement of Section 1402. To avoid the pandemonium that would roil the exchanges, plans might pressure Congress and the new administration to appropriate stopgap funding to give policymakers time to reassess the options for plan year 2018 as part of an orderly transition to enact the incoming Trump administration’s avowed repeal of some or all of the Affordable Care Act.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Exchange subsidies, narrow managed care networks credited for stabilizing individual market

Before the majority of the individual market reforms of the Patient Protection and Affordable Care Act took effect in 2014, the individual health insurance market was mired in a death spiral of adverse selection and rapidly rising, unsustainable premiums. Now those reforms have brought stability to the market, with little risk of the market segment destabilizing, concludes a McKinsey & Company analysis. (h/t to Liz Osius of Manatt).

Key to achieving that stability are subsidies offered households with incomes not exceeding 400 percent of federal poverty levels and health plans’ use of managed care plans and narrow provider networks. The brief notes that an estimated 69 percent of households in the individual market qualify for premium and out of pocket cost sharing subsidies.

The individual market has little risk of entering a classic insurance ‘death spiral’ as long as the federal government continues to offer subsidies to those with incomes below 400% of the federal poverty level. Given the unique regulatory conditions of this market, the key determinants of its stability are not the traditional factors (risk and cost of care for this segment), but rather the ongoing subsidy payments.

McKinsey & Company’s review of plan issuer profitability correlated narrow networks with comparatively better loss experience and profitability compared to plans with wider networks as well as the ability of these plans to set lower premium rates. “The combination of the improving relative pricing of narrowed networks and their superior financial performance suggests that they may be emerging as one sustainable element of exchange plan design,” the McKinsey issue brief states.

Although the individual market has regained stability, profitability remained elusive in the first two years of the major reforms:

Our initial perspective, based on emerging financial results reported for 2015, is that aggregate losses in the individual market may have doubled from 2014, with post-tax margins between –9% to –11% (Exhibit 6). The larger losses are most likely the result of two primary factors: higher year-over-year medical loss ratios (MLRs) (around 4.5% to 5% margin reduction) and lower reinsurance payments (another 3.5% to 4% margin reduction).

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Exchange plan subsidies face second major legal threat

Subsidies for qualified health plans (QHPs) sold on state health benefit exchanges are facing another significant legal threat, less than one year after the U.S. Supreme Court ruled in King v. Burwell that advance tax credit premium subsidies are available for all state health benefit exchanges, including those states that opted to allow the federal government to operate the exchange. The plaintiffs in that case unsuccessfully argued the language of Section 1311(d)(1) of the Affordable Care Act narrowly defined an exchange as a governmental agency or nonprofit entity that is “established by a State.” In King, the Obama administration argued and the high court agreed that read in the broader context of the law, the tax credit subsidies are intended to apply in all exchanges.

Citing King, the administration similarly contends in United States House of Representatives v. Burwell that context is key relative to Section 1402 of the Affordable Care Act. That section provides for supplemental subsidies in addition to advance premium tax credits for households earning between 100 and 250 percent of federal poverty levels. The additional subsidies limit out of pocket costs for households at that income level enrolling in a silver level QHPs — the most commonly selected metallic plan design. In House of Representatives, plaintiffs argue their funding is not a continuing appropriation and thus requires an annual appropriation as part of the federal budget.

The administration claims taken in the larger context of the Affordable Care Act, Section 1402 is ambiguous and must be read in context with Section 1401 that funds the advance tax credit premium subsidies via Section 36B of the Internal Revenue Code. The two funding mechanisms are intended to work tandem to make individual coverage more affordable to low income households, the administration posits. Disallowing funding for the supplemental cost sharing subsidies as the House seeks while leaving it intact for premium tax credits would produce an absurd outcome, it maintains.

In a ruling issued May 12, U.S. District Court judge Rosemary M. Collyer agreed with the House, finding the supplemental cost sharing subsidies must be annually appropriated. “Far from absurd, that is a perfectly valid means of appropriation” Collyer wrote, finding paying them for qualified silver QHP enrollees violates the Constitution’s allocation of spending power to Congress without a proper appropriation approved by Congress and the president.

The administration is expected to appeal Collyer’s ruling to the First U.S. District Court of Appeal. Because the unusual case involves a dispute between the legislative and executive branches over the power of Congress to appropriate funding under the Constitution, it’s possible it could go directly to the Supreme Court. In any case, Collyer’s ruling won’t likely have an impact on QHPs offered on the exchanges in 2017 given Collyer stayed the House’s requested injunction against further administration spending for the cost sharing subsidies pending appeals. The change in administrations in 2017 will also blunt the impact of the ruling given the next administration and Congress could opt amend or repeal the Affordable Care Act such as to moot the case.

According to this Urban Institute analysis, if Collyer’s ruling ultimately becomes the law of the land and the Affordable Care Act remains intact, it would force health plans to substantially increase premiums for silver plans in order to recover the lost federal funding for cost sharing subsidies since they would remain under the ACA’s requirement to offer silver QHPs with reduced cost sharing to eligible households. That premium increase would in turn boost advance premium tax credit subsidies that are pegged to the premium rate for the second lowest cost silver QHP offered on exchanges, according to the analysis.

States could also reassess their options under the ACA if the cost sharing subsidies remain unfunded given that a significant percentage of exchange enrollees rely upon them. They could opt to cover most of this population under “basic health plans” per ACA Section 1331 for low income households earning up to 200 percent of federal poverty and not eligible for Medicaid. They also have the option to waive the cost sharing subsidies under Section 1332 of the law affording states wide latitude to fashion their own state health plans provided they meet certain conditions of coverage and don’t entail additional federal funding.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Hospitals Begin Subsidizing Exchange Premiums via Third Parties

Hospitals are concerned the carrot of advance premium tax credit subsidies for individual coverage offered in the state health benefit exchange marketplace and the stick of a tax penalty for being medically uninsured may not be enough incentive to ensure every patient coming through their doors is insured. Particularly for households earning between 100 and 150 percent of federal poverty, even though they pay no more than 2 to 4 percent of their incomes for an exchange qualified health plan and are eligible for cost sharing subsidies for plans with 70 percent actuarial value.

Cheryl Clark of Health Leaders Media reports hospitals in Wisconsin and Florida are teaming up with charities to supplement the exchange premium subsidies and have received approval from the federal Health and Human Services Department to do so. Click here for the story.

Apparently the hospitals’ economic calculation is it’s a better deal to get a tax write off to contribute to the charities to help cover premiums for exchange coverage than to run the risk some patients will allow their exchange coverage to lapse. That in turn increases the risk hospitals will have to retain collection agencies to dun patients for charges arising from uninsured care or write them off.

While it’s still early going with the Patient Protection and Affordable Care Act’s individual market reforms, this development shows hospitals — a primary beneficiary of expanding coverage to reduce those lacking health coverage — aren’t completely confident in the law’s ability to achieve this goal. Some observers note that while the Affordable Care Act provides low income people access to health insurance, many have never had coverage and have habitually sought care in hospital emergency rooms where federal law requires their medical condition be assessed and stabilized if necessary regardless of ability to pay for services.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Debt deal tightens oversight of state health benefit exchange marketplace subsidy eligibility

The continuing appropriation measure to reopen the partially shuttered U.S. federal government and extend the federal debt ceiling approved by Congress today and expected to be approved by President Barack Obama contains provisions aimed at better ensuring state health benefit exchange enrollee eligibility for premium and cost sharing subsidies.  They require the federal Department of Health and Human Services (HHS) to do the following:

  • Require state health benefit exchanges pre-verify the eligibility of individuals applying for premium tax credits and cost sharing reductions and certify it has done so to Congress
  • By January 1, 2014, detail the procedures used by the exchanges verify eligibility for premium tax credits and cost-sharing reductions in a report to Congress
  • Report to Congress by July 1, 2014 on the effectiveness of the procedures and safeguards provided for preventing the submission of inaccurate or fraudulent information by applicants for enrollment in a qualified health plans offered through the exchange marketplace.
 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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