Modest premium hikes as ‘Obamacare’ stabilizes
Millions of people covered under the Affordable Care Act will see only modest premium increases next year, and some will get price cuts. That’s the conclusion from an exclusive analysis of the besieged but resilient program, which still sparks deep divisions heading into this year’s midterm elections. The Associated Press and the consulting firm Avalere Health crunched available state data and found that “Obamacare’s” health insurance marketplaces seem to be stabilizing after two years of sharp premium hikes. And the exodus of insurers from the program has halted, even reversed somewhat, with more consumer choices for 2019. The analysis found a 3.6 percent average increase in proposed or approved premiums across 47 states and Washington, D.C., for next year. This year the average increase nationally was about 30 percent. The average total premium for an individual covered under the health law is now close to $600 a month before subsidies. For next year, premiums are expected either to drop or increase by less than 10 percent in 41 states with about 9 million customers. Eleven of those states are expected to see a drop in average premiums. In six other states, plus Washington, D.C., premiums are projected to rise between 10 percent and 18 percent. Insurers also are starting to come back. Nineteen states will either see new insurers enter or current ones expand into more areas. There are no bare counties lacking a willing insurer. Even so, Chris Sloan, an Avalere director, says, “This is still a market that’s unaffordable for many people who aren’t eligible for subsidies.” Nearly 9 in 10 ACA customers get government subsidies based on income, shielding most from premium increases. But people with higher incomes, who don’t qualify for financial aid, have dropped out in droves. It’s too early to say if the ACA’s turnabout will be fleeting or a more permanent shift. Either way, next year’s numbers are at odds with the political rhetoric around the ACA, still heated even after President Donald Trump and congressional Republicans failed to repeal the law last year. Trump regularly calls “Obamacare” a “disaster” and time again has declared it “dead.” The GOP tax-cut bill repealed the ACA requirement that Americans have health insurance or risk fines, effective next year. But other key elements remain, including subsidies and protection for people with pre-existing conditions. Democrats, meanwhile, accuse Trump of “sabotage,” driving up premiums and threatening coverage. The moderating market trend “takes the issue away from Republican candidates” in the midterm elections, said Mark Hall, a health law and policy expert at Wake Forest University in North Carolina. “Part of the mess is now their fault, and the facts really don’t support the narrative that things are getting worse.” Market stability also appears to undercut Democrats’ charge that Trump is undermining the program. But Democrats disagree, saying the ACA is in danger while Republicans control Washington, and that premiums would have been even lower but for the administration’s hostility. “Voters won’t think that the Trump threat to the ACA has passed at all, unless Democrats get at least the House in 2018,” said Bill Carrick, a strategist for Sen. Dianne Feinstein, D-Calif., whose re-election ads emphasize her support for the health law. As if seconding Democrats’ argument, the Trump administration has said it won’t defend the ACA’s protections for pre-existing conditions in a federal case in Texas that could go to the Supreme Court. A new Kaiser Family Foundation poll found that Americans regardless of partisan identification said those protections should remain the law of the land. In solidly Republican Arkansas, Democratic state legislator and cancer survivor Clarke Tucker is using the ACA in his campaign to try to flip a U.S. House seat from red to blue. Tucker, 37, says part of what made him want to run is the House vote to repeal the ACA last year and images of Trump and GOP lawmakers celebrating at the White House. Business analysts say the relatively good news for 2019 is partly the result of previous premium increases, which allowed insurers to return to profitability after losing hundreds of millions of dollars. “They can price better, and they can manage this population better, which is why they can actually make some money,” said Deep Banerjee of Standard & Poor’s. Repeal of the ACA’s requirement to carry insurance doesn’t seem to have had a major impact yet, but Banerjee said there’s “a cloud of uncertainty” around the Trump administration’s potential policy shifts. Yet some administration actions have also helped settle the markets, such as continuing a premium stabilization program. April Box of Spokane Valley, Washington, lives in a state where premiums could rise substantially since insurers have proposed an 18 percent increase. In states expecting double-digit increases, the reasons reflect local market conditions. Proposed increases may ultimately get revised downward. Box is self-employed as a personal advocate helping patients navigate the health care system. She has an ACA plan, but even with a subsidy her premiums are expensive and a high deductible means she’s essentially covered only for catastrophic illness. “I’m choosing not to go to the doctor, and I’m saying to myself I’m not sick enough to go to the doctors,” Box said. “We need to figure out how to make it better and lower the price.” Now in her 50s, Box was born with dislocated hips. She worries she could be uninsurable if insurers are allowed to go back to denying coverage for pre-existing conditions. She might need another hip surgery. “It needs to be a level playing field for everybody,” said Box. “We need to have universal coverage — that is really the only answer.” Tennessee is a prime example of the ACA’s flipped fortunes. Last year, the state struggled to secure at least one insurer in every county. But approved rates for 2019 reflect an 11 percent average decrease. Two new insurers — Bright Health and Celtic— have entered its marketplace, and two others —Cigna and Oscar— will expand into new counties. Tennessee Republican
Lower costs, fewer benefits in new Trump administration health insurance option
The Trump administration Tuesday rolled out a health insurance option for small businesses and self-employed people that could lead to lower premiums but may also cover fewer benefits than current plans. Labor Secretary Alex Acosta said the new “association health plans” will allow small business to pool their purchasing power, gaining access to some of the advantages that large employers have in the health insurance market. “Today the Trump administration helps level the playing field between large companies and small businesses,” Acosta said. “This expansion will offer millions of Americans more affordable health care options. The new plans would retain the same protections for people with pre-existing conditions, older workers, and women, that large company plans now have, Acosta added. Details were expected later Tuesday. The plans could be marketed across state lines within a geographic region to businesses in a given industry — auto repair shops, for example. Or a local chamber of commerce could sponsor one in a given community. The plans could be sold to self-employed people, like musicians. Allowing interstate marketing within a geographic region represents a shift from the original concept that the plans would be offered nationwide. President Donald Trump has long asserted that promoting the sale of health insurance across state lines can bring down premiums without sacrificing quality. But many experts weren’t convinced, because medical costs vary greatly according to geography. Ultimately, the idea’s success depends on buy-in from plan sponsors, consumers, insurers and state regulators. No major consequences are expected for people covered by large employers. Acosta cited enrollment estimates that predict a modest impact: about 4 million people covered by the plans within a few years, including 400,000 who would have been uninsured. Compare that to the total number of about 160 million covered by job-based insurance. After Republicans hit a dead end trying to repeal the Affordable Care Act, the Trump administration has pushed regulatory actions to loosen ACA requirements and try to lower premiums for individuals and small businesses, which now reflect the cost of comprehensive coverage. Another major initiative is expected later this summer when the administration eases rules for short-term health plans lasting less than a full year that could be purchased by individuals. Those plans wouldn’t have to cover people with pre-existing conditions, but would offer healthy people much lower premiums. Critics say the administration’s approach will draw healthy people away from the Obama health law’s insurance markets, raising the cost of coverage, which is subsidized by taxpayers. About 11 million people are covered by HealthCare.gov and state markets, but the administration’s priority is to try to lower premiums for another 7 million or so who buy their coverage directly and don’t get any help from the government. “To the extent that these plans develop and serve as a parallel market, that could have a destabilizing effect,” said Karen Pollitz of the nonpartisan Kaiser Family Foundation, an expert on individual health insurance. Pollitz also served as a consumer protection regulator in the Obama administration. “People who think they can get by without those (comprehensive) benefits will look for cheaper premiums,” she added. State insurance regulators have been concerned about association health plans because similar plans in the past had problems with financial solvency and fraud. Administration officials said Tuesday that states and the federal government would share regulatory oversight of the plans, with states retaining their current authority. The new plans will be phased in, starting in September. A small business group called Job Creators Network welcomed the Trump administration move. Group president Alfredo Ortiz said it “will create more options, more competition, and lower costs for Main Street small businesses.” Republished with the permission of the Associated Press.
Jim Carnes: Expanding Medicaid would improve Alabama’s health, budgets and economy
Imagine being an Alabama leader and having a tool at your disposal that could help families, strengthen the workforce, save rural hospitals, fight opioid addiction, improve the state’s health status and grow the economy. The only catch: It was created by members of another political party. That’s the dilemma that has kept Alabama from expanding Medicaid for the last eight years. We’re a different country now than we were in 2010, when a Democratic Congress passed and President Barack Obama signed the Affordable Care Act (ACA), making Medicaid expansion possible. With so much water under the bridge – and the ACA still standing – maybe it’s time to seize one of the law’s more durable provisions and take credit for the good it brings. A new Urban Institute study offers a fresh look at just how much Alabama stands to gain from closing the coverage gap for low-income adults. The ACA created two major new avenues for affordable health coverage. First, states would raise their income limits on Medicaid to make coverage available to adults earning up to 138 percent of the federal poverty level ($28,676 a year for a family of three). And second, the Health Insurance Marketplace would offer discounted premiums for private coverage to people with incomes above the poverty level ($20,780 for a family of three). With expansion, each state would be responsible for a small fraction of associated costs, topping out at 10 percent in 2020, with the federal government paying the rest. Even after a 2012 U.S. Supreme Court ruling declared that Medicaid expansion was optional for states, 31 states and the District of Columbia seized the opportunity to improve lives, improve communities and improve their budgets for a dime on the dollar. But Alabama and 18 others have stayed behind. Hundreds of thousands of uninsured Alabama workers are paying the price for that inaction. Under the state’s current rules, adults under age 65 and without a disability can receive Medicaid coverage only if they have a dependent child and earn less than 18 percent of the poverty level ($3,744 a year for a family of three). In other words, it’s impossible to work a minimum-wage job and receive Medicaid in Alabama. The flip side of this predicament is that coverage remains unaffordable for low-wage Alabama workers who don’t have employer health plans and don’t earn enough to qualify for Marketplace subsidies. This coverage gap is exactly the problem Medicaid expansion is designed to solve. The new Urban Institute report estimates that 314,000 Alabamians would enroll in Medicaid if Alabama extended eligibility to low-income workers. That would mean an additional $1.54 billion in federal funding surging into Alabama’s economy each year under the 9-to-1 federal match rate. It also would mean rural hospitals – like the one in Jacksonville that announced in May that it plans to close – would no longer be bleeding red ink through services to uninsured patients. Expanding Medicaid would strengthen our state’s budgets as well. Expansion would increase Alabama’s Medicaid enrollment by 33.8 percent, but the increase in state costs would be just 5.7 percent, according to the Urban Institute. That translates to $97 million more in state Medicaid funding each year. That increase would be more than offset by savings in mental health care, corrections and other services – not to mention the gains from fewer uncontrolled chronic illnesses, fewer premature births and improved worker productivity. A 2017 report in Health Affairs found “no significant increases in spending from state funds as a result of the expansion” in any of the states that expanded Medicaid. For Montana – which has less than a quarter of Alabama’s population – another study identified between $350 million and $400 million in new economic activity resulting from Medicaid expansion, supporting 5,000 jobs and $280 million in personal income each year. In any other industry, the prospect of such gains would have political candidates of all stripes blowing trumpets and leading parades. And those other economic development plans wouldn’t have the added advantage that this one brings: giving people a new lease on life by helping them get the health care they need. Isn’t it time we broke the partisan gridlock on the coverage gap? Isn’t it time we demanded that anyone seeking to lead our state offer a vision of a healthier Alabama – and a path to getting there? ••• Jim Carnes is policy director of Alabama Arise, a nonprofit, nonpartisan coalition of congregations, organizations and individuals promoting public policies to improve the lives of low-income Alabamians. Email: jim@alarise.org.
Survey: US uninsured up 3.5M this year; expected to rise
The number of U.S. adults without health insurance is up nearly 3.5 million this year, as rising premiums and political turmoil over “Obamacare” undermine coverage gains that drove the nation’s uninsured rate to a historic low. That finding is based on the latest installment of a major survey, released Friday. The Gallup-Sharecare Well-Being Index asks a random sample of 500 people each day whether they have health insurance. The survey found that the uninsured rate among adults was 12.3 percent during the period from July 1-Sept. 30, an increase of 1.4 percentage points since the end of last year. The increase in the number of uninsured is more striking because it comes at a time of economic growth and low unemployment. The annual sign-up season for subsidized private insurance plans under the Affordable Care Act starts Nov. 1, but it may not make much of a difference. President Donald Trump has stopped federal payments that reimburse insurers for lower copays and deductibles that the Obama-era law requires them to provide to people with modest incomes. His administration slashed the advertising budget for 2018 sign-ups, cut the length of open enrollment in half, and sharply reduced federal grants to groups that help consumers navigate the process. “The number of uninsured Americans likely will continue to rise,” the Gallup-Sharecare analysis noted, unless Trump and Congress take steps to stabilize insurance markets. A bipartisan bill to restart the canceled insurer payments faces opposition from conservatives and Trump has sent mixed signals. While “Obamacare” remains politically divisive, its coverage expansion helped about 20 million people get health insurance, bringing the uninsured rate to a historic low. Continued progress seems unlikely now. Next year’s premiums for plans sold on the health law’s marketplaces are expected to increase significantly in many communities, and insurer participation is down sharply, with about half of U.S. counties having only one carrier. Although consumers who are eligible for ACA subsidies are shielded from price hikes, many who buy individual plans get no financial assistance from the government. All told, more than 17 million people purchase their own policies. Independent experts who reviewed the Gallup-Sharecare findings said they appear to confirm other available evidence. “The results make sense and they track with the results of other rapid surveys,” said Matthew Buettgens, a senior research analyst with the Urban Institute health policy center. “No one is expecting this open-enrollment period to increase enrollment.” GOP health economist Gail Wilensky said the overall direction of the Gallup-Sharecare results seems reasonable, but she’ll await confirmation from government surveys that take longer to produce results, but dig deeper. “The only thing most Republicans in Congress seem to agree on is that they don’t like the ACA,” she said. “Hard to build an alternative legislative package without a sounder basis for policy and with the very narrow majority in the Senate.” Except for seniors covered by Medicare, the Gallup-Sharecare survey found that the uninsured rate increased among all major demographic groups. The loss of coverage was concentrated among middle-aged adults, with the uninsured rate rising by 1.8 percentage points among those 35-64 since the end of 2016. Households making less than $36,000 a year saw their uninsured rate go up by 1.7 percentage points. Among Hispanics, the rate increased by 1.6 percentage points, and among blacks the increase was 1.5 percentage points. The Gallup-Sharecare results are based on telephone interviews conducted July 1-Sept. 30, with a random sample of 45,743 adults, aged 18 and older, living in all 50 states and Washington, D.C. The margin of error is plus or minus 1 percentage point. Republished with permission from the Associated Press.
Daniel Sutter: Good Samaritans and health insurance
The Affordable Care Act (ACA) taxes Americans without health insurance. The unpopular individual mandate violates personal freedom and was targeted by Congressional Republicans in their recent “Obamacare” repeal efforts. The health insurance mandate addresses a conundrum known as the Samaritan’s Dilemma, which arises frequently in public policy. A strong case exists for the individual mandate even though it infringes on personal freedom. In the Biblical parable, the Good Samaritan stopped to assist a traveler who had been beaten by robbers after several other travelers passed by. The tale teaches us to treat people, even strangers, with compassion. Economist James Buchanan first explained the Samaritan’s Dilemma, which concerns an implication of compassion. Knowledge that a Good Samaritan will be there to assist if needed leads people to take risky actions, like say traveling the road from Jerusalem to Jericho through bandit territory. Such interactions occur frequently. For instance, availability of a search and rescue team can induce hikers to try longer, more difficult trails, increasing the number of hikers needing rescue. The presence of a lifeguard can lead weak swimmers to venture farther out into the water. Today we often have government to assist our fellow citizens instead of waiting on a Good Samaritan. The Samaritan’s Dilemma plagues government as well. Politicians face enormous pressure to assist persons in distress due to natural disasters or illness. This assistance undermines the incentive for personal responsibility. The challenge for Good Samaritans is strategic: How to keep the increased demand for help from overwhelming our resources? A wealthy Samaritan cannot care for everyone if they all need help. As individuals, we frequently help friends and relatives whom we know well; we can consequently evaluate if their distress is truly due to circumstances beyond their control. Government programs typically are designed to help anyone, especially strangers. We can sometimes manage the dilemma by charging for help, like with ambulance rides or wilderness rescues. Charges limit the incentive of people to take advantage of compassionate taxpayers, but the inability of some persons needing assistance to pay a charge limits this mechanism’s usefulness. Governments also manage the Samaritan’s Dilemma by limiting our freedom, as with the ACA’s individual insurance purchase mandate. Let’s see how this works. Debates over health care sometimes imply that the uninsured do not receive life-saving emergency care. This is not true in America; the uninsured get treated in emergency rooms, with costs shifted to patients able to pay their bills. People can take advantage of our willingness to provide life-saving medical care regardless of whether people can pay. I think that we can say that everyone who can afford it has a responsibility to purchase health insurance to avoid burdening others. But we are not going to withhold care when needed. So this responsibility must be enforced by a law. Social Security addresses a form of the dilemma arising from people outliving their savings. If we will have the government support any retiree who runs out of savings, fewer people will save for retirement. Forcing savings through Social Security or employer-provided pension plans reduces the need for assistance to retirees. Disaster assistance also faces the Samaritan’s Dilemma since it makes living in flood zones attractive. We can limit the dilemma by forcing flood zone residents to buy flood insurance. Or government can restrict freedom even further and prohibit living in flood zones altogether. Does the Samaritan’s Dilemma justify restricting freedom? Personally I do not think so. We should simply accept that helping anyone, regardless of how they wound up in distress, will be really costly. Restricting freedom, however, is a natural reaction for taxpayers frustrated about paying for others’ possibly irresponsible acts. Freedom and compassion are virtues, but often conflict in the design of government policy, and quite often this leads to restrictions on freedom, like the ACA’s individual mandate. A third virtue, namely responsibility, could avoid this conflict, but is also undermined by government compassion. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Aetna pullout shows Obamacare on life support
While Republicans rewrite the Affordable Care Act in Washington, the immediate future of the law has grown hazier with the nation’s third-largest health insurer saying that it will completely divorce itself from state-based insurance exchanges. Aetna says it won’t sell individual coverage in Nebraska and Delaware next year after projecting a $200 million loss this year. The insurer had already pulled out of several states after losing about $450 million in 2016. The exchanges are a pillar of the federal law because they allow millions of people to buy coverage with help from income-based tax credits. But insurers like Humana, and now Aetna, have been fleeing that market. Others like the Blue Cross-Blue Shield carrier Anthem say they are wary of returning without guarantees of at least one key financial support. Every exchange had at least one insurer offering coverage for 2017, but a growing number were down to only one. Insurance experts expect holes to develop in 2018 with the coverage growing so thin. Customers may be able to find individual insurance coverage off the exchanges, but those marketplaces offer the only way for people to get tax credits to help pay the premium. About 12 million people bought coverage through the exchanges for this year. Most used tax credits to help buy coverage. Among the states in trouble for next year is Iowa. Aside from Aetna, Wellmark Blue Cross and Blue Shield also said it will leave that state’s individual market after only a year on it. Another insurer, Medica, said earlier this month that its “ability to stay in the Iowa insurance market in any capacity is in question at this point.” Earlier this year, Humana’s decision to leave the exchanges temporarily left 16 Tennessee counties with no on-exchange coverage options for 2018. But BlueCross BlueShield of Tennessee recently said it would fill that void. Insurers are in the middle of figuring out their prices and coverage plans for 2018. The departure of competitors from a market could play a role in their decisions because that may swamp them with a wave of new customers, some of whom likely have expensive medical conditions. The ACA prevents insurers from rejecting patients based on their health. “All it takes is one insurance company to exit, and that can create panic for other insurers and they pull out too,” said Cynthia Cox, a health insurance expert for the nonprofit Kaiser Family Foundation, which studies health care. “Insurers don’t want to be the last one holding the bag.” But she also noted that an insurer doesn’t have to worry as much about pricing too high and losing business if it has no competitors in a market. Republished with permission of The Associated Press.
Repeal in doubt, what Donald Trump alone can do on ‘Obamacare’
With prospects in doubt for repealing “Obamacare,” some Republicans say the Trump administration can rewrite regulations and take other actions to undo much of the health care law on its own. Some of those moves could disrupt life for millions of people, many in states that the new president carried. And then there’s the risk of court challenges. Remember the White House travel ban? “In a world where Obamacare is not going to be repealed and replaced, do you work to try to make it succeed, or do you take steps to undermine it in order to continue blaming President Obama and the Democrats for the dysfunction of the health care system?” asked Nicholas Bagley, a University of Michigan law professor who’s analyzed the administration’s leeway to make changes. “Right now we don’t know the answer, and we are getting conflicting signals from the administration.” The nonpartisan Congressional Budget Office recently concluded that insurance markets would probably be stable “in most areas” under the Obama-era Affordable Care Act, or ACA. But President Donald Trump has said “it’s imploding, and soon will explode.” GOP congressional leaders, who had to pull their repeal bill, describe a multi-pronged attack on “Obamacare” that includes administration action. Democrats warn of “sabotage.” Enduring political turmoil is seen as contributing to insurers’ worries about returning to the health law’s markets next year. Here’s a look at the pros and cons of some actions Trump could order: STOP COST-SHARING SUBSIDIES In addition to subsidized insurance premiums, the ACA provides financial assistance for deductibles and copayments to consumers with modest incomes. House Republicans have challenged the constitutionality of aid payments, estimated at $7 billion this year. A U.S. district judge in Washington agreed, finding that the law does not explicitly authorize such expenditures. The case is on hold by mutual consent of the House and the Trump administration. Insurers, who are legally obligated to provide assistance to qualifying customers, continue to be reimbursed by the government. That could end unless the legal issue is resolved. Pro: For opponents of the ACA, stopping the cost-sharing payments would be the boldest step they could take short of outright repeal. Con: Insurers would bail out or jack up premiums to make up for the loss of government payments. A market “death spiral” could begin in short order. “There’s a tension here for the White House between avoiding a crisis in the insurance markets and facilitating the collapse of a program they bitterly oppose,” said Larry Levitt of the nonpartisan Kaiser Family Foundation. Officials won’t comment on pending litigation, but there doesn’t appear to be any policy change in the new administration. ___ TWEAK INSURANCE BENEFITS The ACA requires insurers to cover ten categories of “essential health benefits,” from prevention to prescriptions, maternity to mental health. While broad categories are written into law, key specifics are spelled out in regulations and guidance. The administration could propose changes. Pro: It could bring down premiums for consumers who are comfortable buying less-than-comprehensive policies. That might entice more people into the market. “Every American ought to be able to purchase the kind of coverage that they want,” Health and Human Services Secretary Tom Price told Congress. Con: Patient advocacy groups battled for the ACA’s required benefits and they’ll fight changes seen as harmful. “Essential health benefits are critical to assure access to what most people think is basic care,” said Mara Youdelman of the National Health Law Program. “If the administration attempts to get around the four corners of the law, we would certainly explore options for litigation.” ___ REMAKE MEDICAID Alongside subsidized private insurance for people who don’t have job-based coverage, the ACA expanded Medicaid to serve millions more low-income adults. With the repeal effort stalled, some of the 19 states that have refused the expansion may come forward. That gives the Trump administration an opportunity to steer an important program in a different direction. Price and Seema Verma, Trump’s new head of Medicare and Medicaid, have told governors they are willing to consider a broad range of new Medicaid approaches, including work requirements. Verma also says she wants to improve health, not just treat disease. Pro: States may gain more authority over a program that consumes major resources. The whole country could learn from individual state experiments. More low-income people may gain coverage. Con: New requirements may discourage some from signing up. “The majority of people are working,” said Judy Solomon of the Center on Budget and Policy Priorities, which advocates for the poor. “For those who aren’t, it’s because of illness or caring for someone.” ___ WINK ON INSURANCE PENALTY Tax penalties on people who remain uninsured are the most unpopular part of the Obama-era law. The Trump administration has already eased enforcement. The IRS scrapped a plan to hold up tax returns of people who fail to indicate if they have coverage. Pro: If the tax man looks the other way altogether, it could win points for a president elected on a populist message. Some of those paying the fine are young people trying to get traction in life. Con: Policy experts say the insurance penalty is essential for nudging healthy people into the market. And it remains the law. ___ Trump’s next move is uncertain. But a recent AP-NORC poll found that 6 in 10 Americans disapproved of his handling of health care. Blaming the Obama administration may not be a viable option much longer. “If somebody can’t pay for their cancer medicine, they don’t want to hear you fulminate about how had Obamacare is,” said Bagley. Republished with permission of The Associated Press.
Daniel Sutter: Coverage mandates and the cost of health insurance
The Republican effort to repeal and replace the Affordable Care Act (ACA) has stalled for now. The ACA’s effects on the insurance market include over ten categories of essential health benefit mandates. States impose numerous additional mandates on health insurance. How do mandates affect the cost of health insurance? Mandates require all policies to cover specified procedures and treatments. One example is the ACA’s mandatory coverage of all FDA approved methods of contraception without a co-pay or deductible. Eligibility for Federal subsidies provided the legal lever for ACA mandates, while states impose mandates as part of insurance regulation. Once imposed, mandates incur costs as policyholders receive covered treatments. These costs are covered by premiums charged to all policyholders. Premiums must also cover insurers’ administrative costs. Are the ACA’s mandated benefits a good or bad thing? The services clearly provide value to patients. But I think that asking if the benefits are good is like asking if minivans are good or bad. The relevant question is whether a minivan provides for a given family’s transportation needs. Families should compare the value offered by different vehicles with the list prices. Insurance differs from buying a car, because at the time of purchase we do not know which illnesses and injuries we will face. Consequently, we buy coverage for categories of treatments, so consumers should compare the value of coverage categories to the cost. People who use a mandated service are better off. For example, smokers might eventually use smoking cessation coverage. Nonsmokers will probably not want to pay higher premiums for smoking cessation coverage. If only smokers buy this coverage, the cost is not much different from paying out of pocket. All insurance buyers share the cost of each mandated services and so shift costs. Women pay less for contraceptives, while smokers pay less to try to quit. Mandates allow politicians to deliver lower costs to users of these services without imposing taxes to pay for the coverage. Mandates drive up the cost of health insurance without producing offsetting value. Federal and state mandates amount to ordering every optional feature on a car. A Chevrolet with enough options can cost as much as a Cadillac. The mandates force individuals to purchase and let businesses offer employees only Cadillac-priced health insurance. Bundling many mandates makes for a less attractive package. Women pay less contraceptives, but they must also pay for smoking cessation and other services they may never use. Costs rise for a second reason. Health insurance involves third party payment, meaning by the insurance company (the first two parties are the patient and the doctor). When a third party pays the bill, neither the patient nor doctor – the two people in the room discussing treatment options – has an incentive to consider cost. For some elements of medical care, we probably want to ignore cost. Many of us would consider it unacceptable to make someone endure pain to spare the expense of hip replacement surgery, or use a less costly and less effective cancer treatment. Few of us would want to purchase a health insurance policy that shortchanged us like this. We would willingly pay more for better coverage. On elements of care with more modest benefits we want to consider cost. Prenatal care is obviously important, but should a pregnant woman see an obstetrician every week, or daily? Deductibles and co-pays provide patients an incentive to think about cost and thus help manage third party payment problems. But mandates often rule out co-pays and deductibles. We should only incur the cost of third party payment when patients face a life or quality of life threatening illness or injury. Frequently mandates make us bear third party payment costs for less important treatments. All goods and services are costly, including medical care. We need to balance the benefits and costs. Mandates force all Americans to buy Cadillac coverage when many would prefer a more affordable Chevy. Republicans can make health insurance more affordable and yet not less valuable by pruning back coverage mandates. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Some Democratic lawmakers seek to protect Planned Parenthood, abortion coverage
Even with the Republican failure to repeal Barack Obama‘s health care law, Democratic lawmakers in some states are pressing ahead with efforts to protect birth control access, Planned Parenthood funding and abortion coverage in case they are jeopardized in the future. Republicans in the U.S. House of Representatives withdrew a bill last week that would have repealed Obama’s Affordable Care Act. It would have halted federal funding for Planned Parenthood and curtailed the ability of many low-income women to obtain affordable birth control. Despite that setback for the GOP, several Republicans said Congress might revisit health care in the future, and anti-abortion leaders have stressed they will not abandon their campaign to defund Planned Parenthood. The group is the No. 1 abortion provider in the U.S. but also offers extensive birth control and health-screening services. In Nevada, state lawmakers and health advocates say they will continue to promote bills that would allow women to access 12-month supplies of birth control and require all health insurers to cover contraceptives at no extra charge, regardless of religious objections. Another Nevada proposal seeks to provide alternative funding to help organizations such as Planned Parenthood. Some government-run clinics that rely on federal grants and are on the brink of closure also would benefit. “Nevadans need these protections regardless of what’s happening in Congress,” said Elisa Cafferata, president of Nevada Advocates for Planned Parenthood Affiliates. “Family planning and preventive health care are still very much threatened.” Democratic state Sen. Julia Ratti said it was important to establish protections in state law “so that, regardless of what future federal provisions come through, we know we’re doing the right thing in Nevada.” It’s unclear whether Gov. Brian Sandoval, a Republican, will sign or veto the bills if they reach his desk. Majority Democrats in the Maryland Legislature, with backing from some Republicans, plan to continue work on a bill that would maintain family planning services provided by Planned Parenthood if the group ever lost federal funding. The measure, which has cleared the House of Delegates and is now pending in the Senate, would direct $2 million from Maryland’s Medicaid budget to family planning, as well as $700,000 from the state’s general fund. The bill’s chief sponsor, state Delegate Shane Pendergrass, said Maryland would be unwise to assume that congressional Republicans were finished with efforts to repeal the Affordable Care Act. “Could this come back in six months? Maybe,” she said. “Do we want to make sure we’re prepared if something happens? You bet we do.” In Oregon, Democratic state Rep. Jeff Barker said deliberations would continue on a bill he is sponsoring that would require health insurers to cover a full range of services, drugs and products related to reproductive health, including contraceptives, with no co-pay or deductible. It also would ban any government interference in a woman’s choice to have an abortion. “It will be contentious, but I believe it will pass,” Barker said. “We want to be sure that women have all their reproductive health needs taken care of.” The bill, which is awaiting referral to a House committee, could be up for a floor vote sometime next month. “Our plan is to still move it forward,” said House Speaker Tina Kotek, a Democrat. “It’s really important to a lot of people on this particular area of health care.” Kotek also expressed no interest in tweaking the bill’s language to the liking of Providence Health Plans, a Catholic-sponsored organization currently covering 260,000 Oregonians. Last week, Providence threatened to pull out of the Oregon insurance market if the abortion proposal passes. At the national level, Planned Parenthood celebrated the collapse of the GOP health care overhaul effort, yet acknowledged that it will remain a target of the anti-abortion movement and its allies. “We know this is the beginning, not the end,” said Planned Parenthood’s president, Cecile Richards. Federal law already prohibits federal money from being used to pay for most abortions, but the now-abandoned GOP health overhaul would have cut off more than $400 million in Medicaid reimbursements and other federal funding to Planned Parenthood for non-abortion services. That includes birth control provided to about 2 million women annually. Kristi Hamrick of Americans United for Life, in an email, said the push to defund Planned Parenthood would continue. “Too early to say how this might play out,” she wrote. Republished with permission of The Associated Press.
New Congress, all-GOP, same political divisions
With control of the White House and Senate and a commanding majority in the House, Republicans were supposed to brush off any challenge from the hardline Freedom Caucus and work their will with impunity. But something happened on the way to governing. Now, House Republican leaders are struggling with the same divisions that plagued them under President Barack Obama. The House Freedom Caucus consists of about 30 of the most conservative members, many of whom were elected in the tea party wave of 2010 that surged in opposition to Obama’s Affordable Care Act. In their repeated challenges to GOP leadership, they helped drive former Rep. John Boehner from the speakership. Now they hold the fate of President Donald Trump‘s agenda in their hands. The House was scheduled to vote Thursday on a bill that would repeal and replace Obama’s health law. But House leaders delayed the vote because critics from the left and right were reluctant to support it. Some conservatives, including the Freedom Caucus, say the bill looks too much like Obama’s health law, with the federal government mandating the kinds of coverage that insurance companies must provide. More moderate Republicans are concerned that many of their constituents would lose coverage, and that older taxpayers would face higher premiums. The Freedom Caucus is headed by Rep. Mark Meadows, an affable Republican from North Carolina. After rejecting Trump’s latest offer on the bill, he pledged to work with the president to reach an agreement. “We’re committing to stay as long as it takes to get this done because the president has promised this to the people, we’ve promised it to the American people,” Meadows said. “So whether the vote is tonight, tomorrow or five days from here, the president will get a victory because I believe we all want to negotiate in good faith and deliver on the promise for the president.” If the Freedom Caucus falls in line, it can help hand Trump a major victory on health care, boosting the president’s standing to take on other tough issues. If it stands defiant, it can kill the Republican heath care bill while raising fundamental questions about the GOP’s ability to govern in Washington, even with a 237-193 House majority (there are five vacancies). If Republicans can’t agree on repealing and replacing a health care law they loathe, what can they agree on? “In my view this is the first real test of whether we’re a governing party — and it’s a pretty big test,” said Kevin Cramer, R-N.D., who supports the bill. The measure would repeal major parts of Obama’s health law, capping future funding for Medicaid and cutting tax increases for high-income families, health insurance companies and drug makers. The bill repeals tax credits that people can use to purchase health insurance and replaces them with a new tax credit that is less generous for most. Trump has taken the lead in lobbying the Freedom Caucus, inviting members to the White House multiple times this week. At a meeting Thursday, a White House official posted a picture on Twitter saying the Freedom Caucus gave Trump a standing ovation when he entered the room. One member of the caucus, Rep. Mo Brooks, R-Ala., isn’t likely to fall in line. He called the health bill “the biggest Republican welfare plan in the history of the party.” It’s not. That honor falls to the Medicare Part D prescription drug plan passed under President George W. Bush. Republished with permission of The Associated Press.
Robert Bentley, lawmakers head to DC ahead of health care vote
Gov. Robert Bentley and other state leaders are starting the week in Washington, D.C. ahead of the expected House vote on the American Health Care Act. Joining Bentley are state House Speaker Mac McCutcheon, state Sens. Greg Reed and Tripp Pittman, and Alabama Medicaid Commissioner Stephanie Azar. During the trip, the officials plan to meet with Health and Human Services Secretary Tom Price as well as congressional leaders to discuss the potential impact the Republican-backed bill, as well as the repeal of the Affordable Care Act, could have on Alabama’s Medicaid system. “As a Physician and as Alabama’s Governor, I have stood in opposition to the Affordable Care Act from day one. It’s not about health care of patients, and it’s certainly anything but affordable,” Bentley said in a statement Monday. “Alabama stood strong against the expansion of Medicaid because we simply cannot afford it. Now that a Repeal of the ACA appears imminent, we want to insure Alabama’s Medicaid system will be supported, and states given broad flexibility in any efforts to replace this unworkable and expensive law. We want to insure Alabama’s needs are known and clearly understood before a vote takes place.” Tuesday, Bentley and the officials plan to meet with members of the Alabama congressional delegation as well as White House administrators before returning Tuesday evening. “We have a strong Alabama team in Congress, and we have stayed in close contact throughout the effort to pass a new healthcare law,” Bentley said. “One size does not fit all when it comes to sovereign states and their needs. I am confident our Alabama delegation will always do what’s in the best interest of our people.” The trip follows a series of meetings between Bentley and other non-expansion state governors and the Alabama Republican Party Executive Committee addressing states’ concerns with the repeal and replacement of the Affordable Care Act.
2 GOP senators would let states keep Obama health care law
Two Republican senators said Monday that they’ll propose legislation that lets states keep former President Barack Obama‘s health care overhaul or opt for a new program providing trimmed-down coverage. The plan by Sens. Bill Cassidy of Louisiana and Susan Collins of Maine would retreat from years of GOP cries to repeal Obama’s law and replace it with a still undefined Republican alternative. It comes as GOP lawmakers face pressure from President Donald Trump to quickly void and replace the health law and as Republicans continue hunting for a proposal that would unite them. “It has been a Republican principle that power is best held by individuals and states, not the federal government,” Cassidy told reporters. Trump has said he wants to keep some of the Obama overhaul’s consumer protections, like requiring insurers to cover people with pre-existing medical problems. Collins and Cassidy said their bill preserves many of those. But Trump and congressional GOP leaders have not suggested letting states retain the entire statute. Such a proposal could dismay conservative voters who for years have viewed Republican calls to repeal the law as a top-tier promise and goal. Cassidy said he’s discussed the proposal with Senate Majority Leader Mitch McConnell, R-Ky., who he said is “waiting to see how this plays out.” Cassidy described the senators’ proposal as a way to help Republicans overcome a key obstacle: To enact a full replacement for Obama’s law, they will need 60 Senate votes in a chamber they control by just 52-48. “If you can say to a blue-state senator who’s really invested in supporting Obamacare, you can keep Obamacare but why force it upon us, we think that helps us get to 60,” Cassidy said, using the law’s nickname. Collins said the bill is still being written but would protect families and give insurers time to transition to new programs. She said if Republicans don’t advance legislation and start the health care debate, “Then we will fail the American people.” Senate Minority Leader Chuck Schumer, D-N.Y., said the GOP measure would reduce care and drive up medical costs for consumers. “Ultimately, this proposal is an empty facade that would create chaos — not care — for millions of Americans,” he said. If states decide against keeping Obama’s statute, the senators’ proposal would let them adopt a program that charges consumers a high deductible and helps cover some basic medical services like emergency care and prescriptions. Insurers would not be allowed to refuse coverage to people with pre-existing medical problems, and money states would get under existing law would instead go to patients in the form of a tax-advantaged health savings account they’d use to pay for care. States could also design their own programs but would receive no federal payments if they did. Congressional leaders of both parties met with Trump on Monday at the White House, with participants saying they discussed health care and other issues, including infrastructure. No. 2 Senate GOP leader John Cornyn of Texas said Trump told them he intended to enact an alternative that is “better and more affordable” than Obama’s overhaul. Cornyn said that prompted pushback from Congress’ two top Democrats, House Minority Leader Nancy Pelosi of California and Senate Minority Leader Chuck Schumer of New York, but he and others said the conversation was not specific. House Speaker Paul Ryan, R-Wis., met with administration officials later in the Capitol, with Vice President Mike Pence saying, “Good progress tonight.” Later this week, congressional Republicans will stage a retreat in Philadelphia at which health care will be a chief topic. Also late Monday, a memo prepared for Tuesday’s Senate Finance Committee hearing on Trump’s nomination of Rep. Tom Price, R-Ga., to become health secretary said that in financial disclosure forms he’s filed, Price undervalued around 400,000 shares of stock he purchased last August in an Australian drug company. The bipartisan staff memo, obtained by The Associated Press, said Price reported the shares were worth $50,000 to $100,000, based on the purchase price then. Those shares were worth up to $250,000 when he filed his forms to the Finance committee in December, the report said. The shares are in Innate Immunotherapeutics Ltd., which Democrats have accused Price of purchasing based on insider information. Price has denied that. The memo said Price had omitted from submitted forms any mention of a 2010 House Ethics Committee investigation into his campaign fundraising that was later dropped, as well as late tax payments and improper deductions involving rental properties. Republished with permission of The Associated Press.
