Tag Archive: Patient Protection and Affordable Care Act

Honoring basic insurance principles proves challenging in state individual health insurance markets

A growing number of Minnesotans are tapping tax credits through the health law that discount premium costs on the policies. But eligibility for subsidies depends on income, and there’s growing evidence that those who don’t qualify for tax credits or have other affordability problems are fleeing the market. On Thursday, the Minnesota Council of Health Plans released numbers that show 80,000 fewer residents covered in the individual market now than a year ago, a decline of 30 percent. The current tally of 190,000 will likely drop further, insurers say.A shrinking market is a bigger problem for insurers than a drop in revenue. People with costly health problems tend to maintain even expensive coverage, knowing it’s a better deal than paying the full cost of health care. So, a shrinking market at a time of skyrocketing premiums leads insurers to conclude that healthy people are leaving the mix.

Source: Health insurers say they need insurance protection from big claims – StarTribune.com

The Patient Protection and Affordable Care Act aims to improve the spread of risk and honor the law of large numbers — bedrock principles that underpin all forms of insurance — by pooling most everyone not covered in the three main pillars of health coverage (Medicare, Medicaid, employer-sponsored coverage) into a single risk pool in each state. But even putting everyone in a given state into a single, statewide risk pool may not be enough in states with fewer residents as this account illustrates. When there are too few “covered lives” in the pool in insurance industry lingo, the risk spreading mechanism of insurance gets stressed and the pool threatened by adverse selection. That occurs when a relatively small number of people incur large claims costs as the case here in Minnesota.

Since the individual market is comprised of only a relatively small segment of the population nationwide given the dominance of the big three pillars of health coverage, honoring fundamental insurance axioms may only be possible in states with large populations such as California, New York, Texas and Pennsylvania.

 


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. 

What Trumpcare will likely look like

Donald Trump is following the path of every president elected before him from at least the Truman administration forward, proclaiming a public policy goal of providing medical insurance to all Americans. “We’re going to have insurance for everybody,” the soon to be president told The Washington Post last week. “It will be in a much simplified form,” he said. “Much less expensive and much better” than what’s available under the Affordable Care Act.

How will Trump bring that about? Wryly playing off then-House Speaker Nancy Pelosi’s famous statement in early 2010 that opponents of the Affordable Care Act would have to first vote for it in order to see all of its provisions, Trump similarly wants to see his Health and Human Services Secretary nominee Tom Price confirmed by the Senate before he reveals his plan.

I’ll go out on a limb and make some predictions on the rough outlines. This prediction assumes Trump will forge his own policy in this area and not necessarily conform to longstanding Republican principles that were posted to his transition website but have since been taken down. Trump’s reform plan won’t be a wholesale repeal of the Affordable Care Act. It will at least initially keep much of the omnibus reform statute intact and concentrate on scrapping Titles I and II dealing with the individual market reforms and expanded Medicaid eligibility to single adults given these components of the law have dominated the Republican reform agenda.

The Trump administration’s plan will give up on trying to make the problematic and inherently unstable individual market as it’s currently structured work with a mix of incentives and disincentives like those of the Affordable Care Act. The Trump plan will likely largely replace the nongroup market with something ironically along the lines of what Affordable Care Act designer Ezekiel Emanuel suggested last week: automatic enrollment in a catastrophic plan. Trump’s plan could offer a level of basic coverage for all working age Americans, starting when the reach their 18th birthday and lasting until they go onto Medicare at age 65 or older. As per Emanuel’s concept, there would be an option to enroll in supplemental plans for those who need or desire more generous coverage, similar to Medicare advantage plans. Most of the funding would come from new payroll and self-employment taxes. These supplemental plans could conceivably comport with Trump’s statement that his plan would offer low deductibles.

This reform of the nongroup market would also pave the way for a gradual transition away from employer-sponsored group plans. Employers would fund the aforementioned supplemental plans as an employee benefit. Or not. Either way, the dominance of employer-sponsored all inclusive medical coverage – which also dates to the Truman administration – would begin to go into decline.

As Trump stated previously, his plan will end the Title II Medicaid reforms and turn Medicaid into a state block grant program. Health savings accounts contribution limits will be increased and contributions permitted to cover supplemental plan premiums and any uncovered medical or dental expenses.

Finally, look for Trump’s plan to focus strongly on prescription drug costs to bend the medical care cost curve, creating a bidding entity or even a federal monopsony that will effectively set the prices of medications for all government programs, including the new basic health plan. Trump indicated in a news conference last week he will play hardball with the pharmaceutical industry.

 


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. 

ACA architect Ezekiel Emanuel’s post-ACA alternative to individual market reforms: auto enrollment in catastrophic coverage

The Patient Protection and Affordable Care Act retains the current system in which those not covered by employer-sponsored and government plans purchase their own medical coverage from insurance companies. The individual or non-group market as it’s termed is like buying life insurance. A policy is issued and the covered party pays a monthly premium to keep the coverage in force.

To ensure the market functions well with large numbers of people in the risk pool and a good spread of risk among those who use little medical care and those who use a lot, the Affordable Care Act compels health plan issuers to make coverage widely available to anyone wanting to buy it. Similarly, it stimulates buyer demand by requiring everyone to have some form of medical coverage or pay an income tax penalty.

The problem is while Americans like the idea of being able to purchase coverage and not be turned down for underwriting reasons as they can when applying for life insurance, they don’t support being forced to purchase individual coverage and want the option to go without. That gives health plan issuers concern because with too many people “going bare,” they will be nakedly exposed to too many high utilizers who aren’t inclined to forgo coverage because they suffer from costly-to-treat medical conditions. Summed up, what the buy and sell sides of the market feels the other side must do to make it work, the other side dislikes. Sellers and buyers are forced into an uneasy relationship, one that needs many years to determine if can sustainably work after a somewhat rocky start. Four years isn’t likely to be long enough, but political exigencies are now requiring policymakers to reexamine the relationship.

One alternative is coming from none other than one of the Affordable Care Act’s primary architects, Ezekiel Emanuel. In remarks delivered at the Commonwealth Club of San Francisco this week, Emanuel suggested moving away from the market-based model of the law and toward making the individual market more like a government insurance program and specifically Medicare. Those eligible – presumably those not covered by an employer-sponsored or government plan – would be automatically enrolled in basic, catastrophic coverage. There would be an option to pay a premium for more generous coverage. Emanuel predicted that approach could garner bipartisan support. While he didn’t specifically raise the point, such as scheme could conceivably be funded at least in part by payroll and self employment taxes. It also wouldn’t be incompatible with conservative ideas such as providing a tax credit to help households offset the cost of medical insurance. Emanuel’s comments on this topic start at 13 minutes into this audio recording of his remarks.

 


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. 

Fate of individual market hangs in balance

An immutable truth of any market is sellers and buyers must be able to get together on mutually agreeable terms and conditions and do so on a sustainable basis. If that doesn’t occur, markets grow weak and eventually fail. Sellers withdraw and buyers don’t buy. That has certainly been happening in the individual medical insurance market. Some health plan issuers have pulled back their offerings in many states for the current plan year. Many consumers are reluctant buyers, accustomed for decades to all inclusive, low co-pay managed care plan model. They naturally see individual plans that come with both high premiums and high out of pocket costs as a poor value, expecting a greater inverse relationship between the two. Particularly if they don’t benefit from premium and cost sharing subsidies.

That’s not a prescription for long term buy side support. The Patient Protection and Affordable Care Act forces sellers and buyers of individual plans together by requiring sellers to sell regardless of an individual’s medical history and buyers to buy under pain of paying an income tax penalty for not having some form of continuous, credible coverage. But even those efforts to prop up the market appear less than certain to achieve a robust, well-functioning market. The big questions for the incoming administration and new Congress are:

  • Whether the individual medical insurance segment that covers a sizable and growing portion of the working age population can sustainably function as a market?
  • To what extent government policy should support the market and does the political will exist to do so?
  • If the market should be left intact, what must be done to make it actuarially viable over the long term and avoid its tendency toward adverse selection?
 


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. 

Pence calls for “market-based” medical insurance system. Problem is it already is.

President-elect Donald Trump has made repealing President Barack Obama’s signature healthcare law the “first order of business” and intends a smooth transition to a “market-based” medical insurance system, Vice President-elect Mike Pence on Wednesday.

Source: Pence Calls Obamacare Repeal ‘First Order of Business’

The Patient Protection and Affordable Care Act specifically kept intact the nation’s private medical insurance system that covers the bulk of Americans under age 65. The Affordable Care Act intervened in the private market with its managed competition-based approach, but by no means replaced it. It strongly intervened on both the sell and buy sides of the individual health insurance market in an attempt to rescue the segment from an adverse selection death spiral and restore it to healthy functioning. Doubts have been raised as to whether the rescue effort would have succeeded as premium rates rose and fewer plans were offered for plan year 2017. By the same token, rescinding the individual market reforms aren’t likely to restore it to health either given its deeply problematic nature.

 


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. 

ACA provisions to restore individual health insurance market may have missed target

One of the major reforms of the individual health insurance market segment put in place by the Patient Protection and Affordable Care Act is pooling people into statewide risk pools to achieve greater spread of risk. In addition, the law reinforces the fundamental insurance principle of risk spreading by creating incentives for people to get into the pool. Those include advance tax credit premium and reduced cost sharing subsidies for individual plans offered on state health benefit exchanges and tax penalties applied to everyone not covered under some minimum form of coverage for hospital and physician care. Also, requiring health plans to accept all applicants for coverage regardless of medical history.

The goal is to restore what was a struggling market segment circling the drain of runaway adverse selection prior to the reforms going into effect in 2014. Few might have thought such a sweeping overhaul of the market wouldn’t restore it to a healthy, viable segment of the health insurance market. But as the reforms are about to enter their fourth year, it’s unclear whether they will achieve the goal of improved spread of risk. Health plan issuers complain the risk pool is imbalanced with too few young people and too many older and higher utilizing folks. They’ve openly expressed concern that’s driving adverse selection – the very problem the reforms intended to remedy.

Other factors that jeopardize the sustained actuarial viability of the individual market:

  • Poor overall population health status and low health education levels (i.e. how to stay healthy, minimize need for medical care), generally increasing utilization and cost trend.
  • Inadequate market forces exerting downward pressure on medical costs. The Affordable Care Act includes provisions to shift to value-based medical provider reimbursement reform for Medicare, but not the individual or small group market segments.
  • A high level of churn as people’s life situations change, moving them into and out of the individual health insurance market.
 


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. 

New Washington regime seeks to move from managed competition to more unfettered health care markets

Republicans take the reins of the federal government next month and are generally expected to repeal or at least revamp the Patient Protection and Affordable Care Act to harness market forces and competition to achieve the triple aim of better health care outcomes and patient satisfaction while lowering costs. Instead of the managed competition of the Affordable Care Act that put in place rules on the sell and buy sides of the health insurance market to promote competition and established government run markets for small group and individual coverage, the incoming Trump administration and new Congress will favor less managed competition with fewer market rules and constraints.

Achieving such a market environment is an enormous challenge given the heavily siloed health care system, with each silo having its own complex microeconomics. Cast as a market, health care has the essential element of many sellers and many consumers. Buyers ultimately drive the economics of all markets and determine their long term viability. But consumers generally don’t deal directly with health care providers given the large role of public and commercial health plans and employers. For the most part, people don’t plan to use health care, only doing so when accident or illness strikes. That precludes time for deliberate, considered comparison of providers and costs to determine the best value. Instead, consumers must deal with difficult to decipher bills filled with multiple, incremental charges after they consume health care services.

True market competition cannot function ex post facto transaction without some intermediary to negotiate terms and conditions on behalf of consumers. It remains to be seen how the new administration and Congress will finesse the complex microeconomics of health care as they seek to harness competitive forces to lower costs without resorting to even more extensive reforms than under 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. 

November elections increase likelihood of California revisiting single payer

Various media accounts report that California of all states stands to lose the most federal funding for health care coverage under the Patient Protection and Affordable Care Act – 20 to 25 billion dollars annually – if the law’s health insurance reforms are repealed as expected next year. The large majority of that sum comes from enhanced federal cost sharing under the law’s Medicaid eligibility expansion, representing more than $18 billion this year, according to this issue brief by the State Health Reform Assistance Network. Accounting for the balance are advance premium tax credits and cost sharing subsidies to offset the cost of qualified health plans purchased on the state’s health benefit exchange, Covered California.

Other media accounts portray California’s state policymakers as circling the wagons to fight this substantial loss of federal dollars given the potential for many low and moderate income households not covered by employer group plans to lose health coverage as well as extensive fiscal damage the state budget. But they are unlikely to prevail against the political will of Washington under the new administration and Congress and will have to consider alternatives. One likely candidate would be some form of single payer coverage, perhaps utilizing an all payer Accountable Care Organization (ACO) structure to hold down rising health care costs and financed by income, payroll and self-employment taxes.

In the previous two decades, single payer failed to gain voter approval when proposed as a ballot measure or as legislation. This time, however, with a supermajority vote margin gained in the November elections, legislative Democrats along with incumbent Democratic Gov. Jerry Brown could enact a single payer measure with — or without — support from Republican lawmakers. It would represent a far more radical reform than the Affordable Care Act. However, among the states, California has a sufficiently large population base and economy to go single payer if it chooses. The Golden State may well have to if it wants to carve out its own health reform destiny in the post Affordable Care Act era.

 


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. 

Democrats open to replacing Obamacare – POLITICO

Senate Democrats will never vote to repeal Obamacare. But once the deed is done, a surprising number of them say they’re open to helping Republicans replace it.“If it makes sense, I think there’ll be a lot of Democrats who would be for it,” said Sen. Claire McCaskill (D-Mo.).As Republicans aim to make good on their years-long vow to quash Obamacare and replace it with their own health care vision, they’ll have to do something Democrats were never able to: Bring members of the opposing party on board. Enacting any substantive alternative will take at least eight Democratic votes in the Senate.

Source: Democrats open to replacing Obamacare – POLITICO

This item points up the political reality that while one party — the GOP — can defund the Patient Protection and Affordable Care Act via budget resolution, it will take members of both parties to replace it in order to get the necessary 60 yes votes in the Senate to head off a long filibuster. That gives minority Democrats a large degree of influence over the law’s successor.

The pressure for a deal on that legislation during the first quarter of 2017 will be intense. Both parties will hear plenty from constituents concerned they will lose their health coverage. They will also hear from health plan issuers who fear a meltdown of the individual market segment and may demand a bailout to remain in the market. Health care providers and especially hospitals will also weigh in with urgency, concerned a loss of the individual market as well as more expansive Medicaid coverage in most states under the ACA will lead to a jump in uncompensated care.

 


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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