Category Archives: Health Care Costs

Fallout of the End of ACA Subsidies

Joe Paduda today gave a very succinct and clear-minded assessment of the fallout of the ending of the ACA subsidies, also known as Cost-Sharing Reimbursement (CSR) payments.

Here is Joe’s article.

It makes perfect sense that what the Orange man said yesterday will do more damage to health care than his false and misleading pronouncements of the past year that the ACA is failing and doing harm.

It is you, sir, who are doing harm. To the poor, to minorities like those in Puerto Rico despite your morning mea culpa, to African-Americans and Latinos,  to women, to international agreements and organizations,  and to our credibility with our allies and adversaries.

 

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ACA Subsidies to End

Here is the New York Times article tonight which will appear in tomorrow’ paper.

The Orangutan is blowing up the health care law, and with it, the health care system.

Cutting off subsidies to cover low-income individuals and signing an Executive Order that will create chaos and uncertainty is dangerous, reckless, and despicable.

Not even Gru is that mean-spirited and inhumane.

The Roman Senator Cato the Elder ended his speeches by declaring that “Carthago delenda est”. which means Carthage must be destroyed.

We need a modern Senator to declare that “Trump sit remotus”, means Trump must be removed.

The Wisdom of Solomon?

You all know the story of King Solomon in the Bible where he was called upon to settle a dispute between two women, each claiming to be the mother of a baby. Solomon’s “solution” was to order the baby be cut in half, so that each mother would have half a baby. But when she realized what this would mean, the real mother spoke up and spared the child from being split in two.

Well, something posted today on LinkedIn, sort of reminded me of that story. Rather than paraphrasing it, I am posting the item here for you.

Trump plans to split Obamacare in two

President Trump plans to sign an executive order this week that takes aim at the Obama-era Affordable Care Act, according to sources. Among the changes, the order would give individuals and small businesses in association health plans more options to opt in for lower-cost — albeit less comprehensive — plans not allowed under the ACA, leaving older and sicker individuals with fewer options and pricier premiums. It would also provide short-term insurance for up to a year, reversing the three-month deadline put forth by the previous administration. If the order is signed, the market could divide in two, adding more difficulties to traditional markets under the ACA while opening the door to new types of insurance.

It seems the Orangutan now fancies himself with the wisdom of Solomon in regard to dealing with the “problem” of getting rid of the ACA. Like the two women in the story, the two parties in Congress each claim their own view of health reform, and since neither side is getting their way, the Orange King is doing it for them by signing an Executive Order.

And like the proverbial baby, splitting health care in two solves nothing. But don’t let that stop the Orangutan. He’s the wisest person there ever was, or didn’t you know that?

Follow-up to Insurers Jacking Up Premiums Ahead of End of CSR’s

Health Affairs blog posted the following stating that if the Administration terminates cost-sharing reduction payments (CSR’s), the states can use 1332 waivers to fund their own.

Here is the article in full by Steven Chen:

One of the main causes of instability in the Affordable Care Act (ACA) health exchanges, aside from the constant stream of repeal-and-replace efforts, is the uncertainty over the future of the cost-sharing reduction (CSR) payments. CSR and the advanced premium tax credits (APTC) are subsidies created by the ACA to enhance the affordability of the qualified health plans sold on the health exchanges. Whereas the APTC reduces the cost of premiums to beneficiaries with incomes between 100 and 400 percent of the federal poverty level, CSR lowers the out-of-pocket expenses of beneficiaries with incomes between 100 and 250 percent of the federal poverty level.

Unlike the APTC, whose legal status is not in question, the U.S. House of Representatives had challenged the appropriation status of the CSR payments by filing a lawsuit against the Obama administration, thereby creating doubts about CSR’s future. In addition to the said litigation, the current administration has compounded the uncertainty by often withholding the CSR payments until the 11th hour and threatening to terminate the payments completely.

This uncertainty comes at a cost. Some insurers have cited the uncertainty as one of the reasons for their exodus from the health exchanges while others have referenced the uncertainty as a source for their 2018 premium hikes. While the extent of the premium increase is yet to be determined, a study by the Kaiser Family Foundation estimated that without CSR payments, the insurers would need to raise silver plan premiums by about 19 percent.

Can States Step In?

What can States do if the administration follows through on its threat to terminate the CSR payments? A simple solution is for the States to provide the CSR payments themselves. In addition to making health insurance affordable, CSR payments are cost effective: The provision of CSR payments by the Federal government lowers the silver plan premiums offered on the health exchanges because the insurers are compensated for the reduced cost-sharing they are required to provide. Without the CSR payments, insurers will raise silver plan premiums—including the premiums for the benchmark silver plans—to offset their losses, which leads to higher APTC for all eligible beneficiaries, ultimately resulting in greater overall Federal expenditure. The aforementioned Kaiser Family Foundation study quantified this effect by demonstrating that if CSR payments were terminated in 2018, although the Federal government would save $10 billion from not making the CSR payments, it would have to pay an additional $12.3 billion in APTC, thus increasing overall Federal expenditure by $2.3 billion.

Creating a State-administered CSR mechanism will undoubtedly require expenditure from the State. While some will argue that the limited resources available in State budgets would render the idea all but theoretical, it would be beneficial to examine how States can use Section 1332 of the ACA to fund—and potentially profit from—providing CSR.

The California Example

The intricacies of a Section 1332 State Innovation Waiver (1332 Waiver) have been explained in depth elsewhere, but on a fundamental level, Section 1332 of the ACA permits a State to apply for a waiver to modify or waive certain provisions of the ACA, such as the individual mandate and the establishment of health exchanges, among others. The waiver application must satisfy four statutory constraints—comprehensiveness, affordability, scope of coverage, and will not increase the Federal deficit—but should an application meet all the criteria, the State is eligible to receive any APTC or CSR that the State would have otherwise received without the 1332 Waiver. In layman terms, if a State can create a system that meets the Federal standard at a cost that is the same or less than the existing Federal model, the State gets to keep the money the Federal government would have otherwise spent.

Using California as an example, Covered California showed that the termination of CSR payments by the Federal government would cause insurance premiums for silver plans in the individual market to increase by 16.6 percent in 2018. The study also showed an inverse relationship between CSR and APTC: The Federal government paid $750 million in CSR payments in 2016, but if it were to defund CSR payments, not only would it not receive any savings, it would incur an additional $976 million in APTC spending. Using these figures as illustration, if the Federal government had terminated CSR payments in 2016 and if California had provided CSR payments through a 1332 Waiver, under this scenario California would have to pay $750 million in CSR payments, but it would receive $976 million from the Federal government in lost APTC payments—payments California would have otherwise received without waiver—ending up with a total net profit of $226 million! California could use the profit to create a reinsurance program to bolster its health exchange, to increase payments to providers, or it could spend the excess on non-health related projects like fixing potholes and infrastructure because there is no restriction on the usage of the excess pass-through funding.

Even without a lengthy legal analysis, it is obvious this waiver satisfies all the statutory constraints: (1) since the waiver does not modify the Essential Health Benefits or any coverage requirements, it meets the comprehensiveness test; (2) since the waiver would lower premiums and out-of-pocket costs, it would actually improve affordability; (3) since the waiver would improve affordability, it is expected to increase scope of coverage; and finally (4) the numbers show that the waiver will not increase the Federal deficit. In fact, it should be intuitive why this proposal would meet the requirements of the ACA — it was built to be part of the ACA to begin with.

While the Administration isn’t obligated to approve any waiver applications, a 1332 Waiver application that creates a State-operated CSR payment mechanism—and uses the excess pass-through funding to finance a State reinsurance program—is conceptually consistent with the Administration’s emphasis on enhanced State flexibility and empowerment. The first executive order by the Administration, for example, promised to provide greater flexibility to the States under the ACA. Moreover, the Secretary of Health and Human Services recently sent a letter to State governors encouraging the application of 1332 Waivers and even provided a checklist to help expedite the process.

Given the cost-saving advantages of CSR payments, it is puzzling that the Federal government would consider terminating this effective subsidy. In addition to the money the Federal government would save, forcing States to spend the time and expense to develop and administer separate CSR operations also argue against ending Federal CSR payments. Indeed, even Republican members of Congress have begun to warm to the idea of continuing CSR payments. However, should the Federal government decide against it, States have a viable, and potentially profitable, means of administering CSR payments to stabilize their insurance markets.

 

Insurers Jacking Up Premiums Ahead of End of CSRs

An article in Healthcare Finance News.com on Friday, said that insurers are factoring in the end of the cost-sharing reduction payments into their rate increases from 2 to 23 percent, according to a report from the Kaiser Family Foundation.

The article states the following:

“Insurers in 20 states and the District of Columbia have filed premium rate requests for the federal exchange ahead of an August 16 deadline, many on the assumption that cost-sharing reduction payments will not be paid and that the individual mandate will either not be enforced or weakly enforced, according to a Kaiser Family Foundation report released Thursday.”

According to Kaiser, silver premiums would have to increase by 19 percent on average to compensate for the loss of CSR payments.

Susan Moore, the Associate Editor for Healthcare Finance News.com, also said that insurers are building uncertainty into their rates, filing under multiple scenarios involving CSRs and the individual mandate.

The threat from the POTUS to Mitch McConnell to push him to repeal and replace the ACA means that if POTUS does get his way, CSR’s would end and so would the individual and employer mandates. Also, the health insurance tax return in 2018 will add 3 percent to premiums.

You can read the rest of the article yourselves, but consider this. Isn’t time to end this nonsense of charging people insurance premiums that are constantly rising just so that a bunch of greedy health insurance companies and their Wall Street investors profit from people’s health?

When are we going to wise up and put and end to this game of playing with people’s health and forcing many into bankruptcy because they have severe medical issues?

When are we going to realize that health care is a human right, and not a commodity that can be marketed like consumer goods?

Medicare for All will end this constant round of rate increases and shenanigans the health insurers perpetrate on the American people.

Another Scheme to Delay the Inevitable, part 2

Last week, I reported on an effort to create payer-provider partnerships, and said that it was another scheme to delay the inevitable move towards a Medicare for All, single-payer system.

Thanks again to Dr. Don McCanne for this week’s article from Modern Healthcare, on yet again another delaying tactic. This time it is from Congress, and while it purports to be “bipartisan”, it really isn’t, because they are very partisan in Congress today; partisan to the health care industry’s profit-making off of sick people.

Without further ado, here is the article in full:

http://www.modernhealthcare.com/article/20170803/NEWS/170809957

IT IS HIGH TIME TO STOP WASTING TIME, WASTING ENERGY AND THE PATIENCE OF THE AMERICAN PEOPLE WITH “SOLUTIONS” THAT ONLY MAKE THINGS WORSE, NOT BETTER. IT IS TIME TO EXPAND MEDICARE TO EVERYONE, WITH NO BUY-IN, AND BE DONE WITH IT.