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How Will Election Results Affect the Healthcare Agenda?

On Saturday, November 7, four days following Election Day, the presidential race was called with Joe Biden becoming the 46th president of the U.S. The ‘blue wave’ of Democrats taking more seats in Congress did not happen, which will likely limit President-Elect Joe Biden from taking bold action on his key healthcare policies.

Below are a few thoughts on how the Biden presidency may affect healthcare policy for at least the next election cycle.

General Overview

With Georgia’s senate runoff on January 5, President Biden will most likely be contending with a divided Congress or a laser-thin majority for Senate Democrats. Biden would likely need to rely on the regulatory system to drive a bulk of his aggressive healthcare agenda. The Supreme Court could play a large role in Biden’s ability to put his agenda into practice. In addition to the Supreme Court’s new 6-3 conservative majority, there are far more conservative appeals court judges now than during Obama’s administration.

The COVID-19 pandemic and the eventual ruling by the Supreme Court on the Affordable Care Act will be on top of the immediate healthcare agenda. The federal government may take a more active role in responding to the pandemic and rely less on states to manage it.

COVID-19

Though lawmakers failed to pass another major stimulus package after months of negotiations before the election, talks are likely to resume. Biden will attempt to de-politicize the Centers for Disease Control, which was the world’s leading public health institution. Additionally, Biden could work to reconstruct international cooperation on fighting pandemics, something that has been missing since COVID-19 began. Providing consistent and evidence-based guidance to states and the public on how to mitigate the COVID-19 epidemic will also be extremely important.

Affordable Care Act (ACA)

The Supreme Court (SCOTUS) heard oral arguments yesterday, November 10, on California v. Texas. The decision may not come until next June, but the case will determine the fate of the Affordable Care Act. There are so many legal tentacles to this case that it will be difficult to predict the final outcome. Yet, despite SCOTUS’ conservative leanings, many are led to believe it will be unlikely the country’s highest court will strike down the ACA in its entirety. There are at least two key issues relating to any SCOTUS decision:

  1. MANDATE: Republican attorneys general challenging the law argue that, by zeroing out the individual mandate’s tax penalty, Congress has invalidated the law.
  2. SEVERABILITY: The key question is whether the mandate can be severed from the law if the mandate is no longer valid. If the justices rule it is not severable, the whole ACA would be invalidated.

Public Option

Given the likelihood congress will remain divided, primarily with the Senate leaning Republican, there’s no chance of passing Biden’s platform proposals for expanding health insurance coverage. Senate Republicans have zero interest in a public option for insurance exchanges or lowering the age for Medicare eligibility to age 60.

Depending on the outcome of the SCOTUS’ decision on the ACA, Biden may attempt to enroll more people in health coverage under the ACA marketplaces, by possibly creating a special enrollment period for uninsured people to sign up for coverage as well as increase spending on marketplace advertising and outreach. Allowing family members of people with low incomes to get marketplace subsidies is on Biden’s wish-list.

Market Concentration

The Democratic platform calls for a retroactive review of some mergers and acquisitions approved by the Trump Administration. Without needing congressional approval, the Biden administration can influence past M&A activity. Candidate Biden has pledged to aggressively use antitrust authority to tackle market consolidation in healthcare and scrutinize future acquisitions based on impacts to prices and competition, in addition to labor markets, low-income communities and racial equity. States, however, still have significant discretion over which deals are approved. This will be one area to watch under the Biden Administration.

Drug Prices

Both parties seem to be in agreement that skyrocketing drug costs of specialty drugs and new drugs coming on the market threaten to bankrupt the system. Yet pharmaceutical companies and their powerful lobbying efforts have a proven track record in preventing bold measures to address high drug prices. With a divided Congress, the work of lobbyists will probably be less demanding.

Price Transparency Rules

Regarding Trump’s transparency agenda, it is uncertain whether Biden would concur with the hospital and insurer executive orders. One possibility would be to let the lawsuits by the hospital groups and potential insurer lawsuits play out in the courts. Perhaps the deadlines for hospitals and insurers to adhere to transparency requirements could be extended into the future.

Summary

Having a divided government will greatly temper any aggressive healthcare initiatives a Biden Administration will have in the next two-to-four years. SCOTUS’ eventual decision on the ACA will greatly determine health policy direction in the years ahead.

Finally, for all veterans of all branches: Thank you for your sacrifice, your bravery, and the example you set for our country.

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Senate GOP Healthcare Plan – Comparing Two Iowa Counties’ Health Insurance Premiums

The 2017 blizzard continues this summer, not with blowing snow, but with political maneuvering taking place in Washington on ‘healthcare reform.’ For the record, it is really not ‘healthcare’ that is being addressed by the Republicans, but a ‘health insurance’ makeover – specifically for non-employer coverage purchased by individuals and Medicaid (for low-income Americans).

Real ‘healthcare’ reform would aggressively attack the root causes that make insurance grossly expensive. Instead, the political insanity continues by focusing on the symptoms of the core problems – the exorbitant health insurance premiums we pay. In lieu of reducing the enormous waste built into American healthcare (waste that is an unnecessary cost to many of us but an entitled revenue to entrenched players in the healthcare arena) we continue to confront the never-ending battle downstream of “who should pay and how much?” This problem will continue to persist because of the unwillingness to confront the brutal facts about waste. Einstein’s definition of insanity fits this issue remarkably well.

But I digress…

After Senate Republicans test-launched their trial balloon on June 22, also known as the Better Care Reconciliation Act (BCRA), we now have a better understanding of the impact it will have on each state regarding insurance premiums, the number of those who will be insured and uninsured, and, to a lesser extent, the financial tension on state budgets. Additionally, insurance companies, health providers and other stakeholders have watched with bated breath on how their business world will be impacted by political alterations to health coverage.

After scoring the BCRA, the most notable news coming from the Congressional Budget Office (CBO) report was the projection that 22 million people would lose health insurance by 2026, in addition to millions more seeing increased out-of-pocket costs. (The Urban Institute projects that Iowa will have 232,000 more uninsured by 2022.) The national increase in the number of uninsured equates to the combined populations of Kansas, New Mexico, Nebraska, West Virginia, Idaho, Hawaii, New Hampshire, Maine, Rhode Island, Montana, Delaware, South Dakota, North Dakota, Arkansas, Vermont, Wyoming and the District of Columbia. Given the recent backlash to the CBO score, Senate Republicans have delayed their vote on this legislation until sometime after the holiday break.

A new Kaiser Family Foundation map compares county-level projections of premiums and tax credits for marketplace enrollees under the Affordable Care Act (ACA) in 2020 with estimates for the BCRA. Both the ACA and BCRA include tax credits that factor in family income, local cost of insurance and age. Eligible enrollees pay a certain percentage of income towards the cost of a benchmark plan, while tax credits cover the remainder of the premium. Further assumptions of the map are explained in the Kaiser link above.

Using the Kaiser map, the following slides suggest that coverage losses would be borne disproportionately by people with low-and-moderate incomes and by older people who purchase their own coverage – prior to becoming eligible for Medicare.

As an example, under the ACA, a 60-year-old enrolled in a silver-level marketplace plan in Polk County with an income of $20,000 has an average premium of $8,600. His tax credit covers all but $950 of his costs. Under the BCRA, the premium for this same person would be almost $3,000 higher than it is under the ACA. And, even after receiving the tax credit, he would be paying $2,340 – an increase of 246 percent over the ACA plan. If he lived in Appanoose County, he would be paying $3,520 more under the BCRA plan versus the ACA plan – an increase of 371 percent.

Below are two other summaries of how people compare based on age (27, 40 and 60), income ($40,000 vs $60,000) and location (Polk and Appanoose counties). Generally speaking, the comparisons suggest that as income increases, the younger people will pay less premium under the BCRA when compared to being enrolled in the ACA. Older enrollees, especially those in higher-cost counties, will pay more under the BCRA plan.

Below is the comparison for individuals earning $40,000.

Below is the comparison for individuals earning $60,000.

As the summer continues to heat up, so too will the blizzard of activity toward fixing the symptoms of a much bigger problem.

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Diving into the High-Risk Pool

R-I-S-K is a four-letter word that we experience in our daily lives with nearly every decision we make – whether it be driving a vehicle, eating unhealthy food, using tobacco products or boarding an airplane. Often, we don’t even think of these activities as being linked to safety or well-being risks.

High-Risk Pools

One key element to repealing and replacing the Affordable Care Act (ACA) is also related to risk – covering people with pre-existing medical conditions. In the days, weeks and months ahead, chances are you will be learning more about high-risk pools and how they can help mitigate the impact of high-need, high-cost individuals enrolled in the non-group health insurance market. High-risk pools are typically created by state legislatures with regulatory oversight by state insurance departments. They provide a safety net for the “medically uninsurable” population who have been denied health insurance coverage due to a pre-existing health condition.

The recently-passed Republican House bill known as the American Health Care Act (AHCA), was designed to dismantle the Affordable Care Act (ACA) and shift power to states to set important health insurance rules. One contentious provision of the bill allows for states to obtain a waiver to let insurers return to their pre-ACA practice of charging more to customers with pre-existing medical problems.

It is important to note that population healthcare is highly concentrated. In the U.S., the healthiest 50 percent of the population accounts for less than three percent of total health costs, while the sickest 10 percent account for about two-thirds of population health spending.

In December 2016, the Kaiser Family Foundation estimated that 27 percent of adult Americans under age 65 have health problems that would likely make them uninsurable in an individual market lacking the ACA’s protection. Many of these individuals have access to employer-sponsored plans (or Medicaid) that provide protection to pre-existing conditions. However, for those who don’t have access to these plans, finding coverage at an affordable cost is similar to finding a unicorn in a reputable zoo.

Avalere recently projected that 2.2 million enrollees in the individual market today have some form of pre-existing condition. The AHCA allocated $23 billion ($15 billion over nine years and $8 billion over five years) to assist individuals with pre-existing conditions through high-risk pools. Avalere projects this amount will only cover about 110,000 individuals with pre-existing conditions, about five percent of those eligible.

The AHCA created another $100 billion over the next nine years, beginning in 2019, for the Patient and State Stability Fund – a program designed to provide flexibility to states to ensure stability within the insurance markets. This amount attempts to entice insurance plans to participate and offer lower premiums. However, according to Avalere, if this money was allocated to exclusively cover individuals with pre-existing conditions, only 600,000 individuals would be covered (27 percent of the 2.2 million enrollees with health problems). Most high-risk pools around the country have historically suffered financial hardships because the funding is often insufficient or poorly operated.

Before the ACA became law in 2010, high-risk pools existed in 35 states, and enrollees paid 150% to 200% above the standard non-group premiums. Additionally, according to Kaiser, 33 states with these pools included lifetime limits that capped the exposure of insurance carriers, with most limits in the $1 million to $2 million range. To ensure financial ‘integrity,’ many states also imposed waiting periods in these programs before insurance would cover medical claims considered to be pre-existing.

The Republicans in the U.S. Senate are now center-stage in this healthcare reform spectacle, making preparations to craft their own solution to repeal, replace or repair the ACA. They, too, will need to confront the high-risk component that is inherent in the insurance market. With this high-risk issue, will we find the high-reward results desired by many?

This discussion will continue to play out in the next weeks and months ahead…

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