ACA Update
ACA Update
by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
- Okay, so I am no political strategist, nor do I want to be. But, I think I have political acumen based on my background and what I currently do. And I gotta say to Republicans: Come on people, REALLY!? Do you REALLY want to lose the Senate and the White House in 2020?!? In my opinion, Republicans have a “winning” issue with Medicare-for-All. Democratic Presidential Candidates are on record saying that they want to eliminate all private insurance, which includes employer plans that millions of people generally like. That has freaked most of the American public out. Republicans have seen the survey data on Medicare-for-All: Support for Medicare-for-All plummets when John and Jane Q. Public are told that their taxes will go up and/or they will lose their current health plan. Medicare-for-All is a “gift” – with a capital G – that Republicans have been waiting for for the past 2 years (after they embarrassed themselves by failing to make good on their 7-year long promise of “repealing and replacing” the ACA, and then getting out-maneuvered in the 2018 mid-terms because they were too slow in responding to the Democrats pounding them over pre-existing condition protections).
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- Analysis: In my opinion, most Republicans “got the memo.” They did “seize the day,” and they started successfully “messaging” that Medicare-for-All is not the right way to go. And, a majority of the American public responded positively to that “messaging.” BUT NOW, I believe that the incremental success that Republicans achieved on health care will be obliterated. Actually, I believe Republicans will once again lose significant ground on the issue of health care as they move into an extremely pivotal 2020 election season. I gotta say this to Democrats: I hope you are sleeping off an all-night bender after you partied like 1999 after you heard that the Trump Administration wants to strike down the ENTIRE ACA, not just the pre-existing condition protections and guarantee issue. You partied hard because the Republicans just gave you another “gift” that trumps (pun intended) the “gift” the Democratic progressives gave to Republicans only a few short weeks ago. Speaker Pelosi can now look at the progressive wing of the House Democratic Caucus and say: Do you really want to run on Medicare-for-All, which has shown signs of being a losing issue with the a majority of the American public?? That is a fool’s errand. NOW, the Republicans just gave us even more ammunition so we can once again pound them on the pre-existing protection issue. Soooo, let’s ALL get behind our ACA “improvement” bill that we are about to bring to the House floor for a vote. Let’s repeat over-and-over again that Republicans want to take away pre-existing condition protections, that Republicans want to take away government subsidies to help low-income people purchase health insurance, and Republicans want to take away Medicaid from the most vulnerable people in our society. Then, once we win back the Senate and the White House in 2020, we can start talking about Medicare-for-All or enacting various “shades” of single-payer. So cool your jets until we hold ALL of the power. Then we can be “transformative.” Look, I know Republicans are saying to themselves: Don’t worry, if the ACA is struck down in its entirety, we will write new legislation that preserves some aspects of the current law that we think works well (e.g., the pre-existing condition protections, as well as some of the Medicare payment reforms (e.g., ACOs), and also provisions relating to drug pricing), and we will come up with consumer- and market-friendly ideas that will make health care less costly for certain populations of the American public, especially those populations who are “losers” under the ACA. BUT, the problem is that Republicans are ONLY saying this to themselves. They are NOT communicating anything – NADA – to the American public. Actually, what the Republicans are successfully doing is creating a vacuum that Democrats can fill, and have filled (the 2018 mid-term elections is a case-in-point). It’s a Ronald Reagan-Walter Mondale moment of – “there you go again” – for Republicans. It’s very perplexing to me.
House Democrats Introduce ACA “Improvement” Legislation
- I have been telling you since October of last year that if the Democrats win back the House, we can expect legislation designed to “improve” the ACA. You have also heard me discuss how House Democratic Leadership and many of the House Committee Chairs do NOT want to pursue Medicare-for-All legislation, or even legislation on various “shades” of single-payer. Rather, Democratic Leadership wants to remain laser-focused on what led to their re-taking the House, which was the ACA and protecting people with pre-existing conditions.
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- Analysis: Making good on this strategy Democratic Leadership unveiled a comprehensive piece of legislation designed to “improve” the ACA. On Wednesday, the House Energy and Commerce (E&C) Committee will be “marking up” a number of pieces of stand-alone bills, which will show up in the larger ACA “improvement” bill. With respect to timing, we could see this ACA “improvement” bill on the House floor between now and Easter recess, which is mid-April. What’s in the legislation? The legislation will include the bills that I reported on in my last update: (1) Federal funds for State-based reinsurance programs, (2) Federal funds for Navigators, and (3) Federal funds to pay for “start-up” costs so States can set up their own State-based Exchange. The E&C Committee also talked about invalidating HHS’s recent ACA Section 1332 guidance that provides more flexibility for complying with Section 1332’s 4 Guardrails. The bill would also make the premium subsidies available to ALL individuals, regardless of income (i.e., the 400% of Federal Poverty Limit (FPL) will be eliminated). In my opinion, this is a smart political play by the Democrats because they know the Senate is NEVER going to take up this ACA “improvement” bill, AND, the Democrats know that eliminating the 400% FPL limit will cost a whole-heck-of-a-lot of money. BUT, the Democrats don’t care because this particular provision – and arguably the entire ACA “improvement” bill – is a “messaging” exercise, and the House Democrats can loudly say: Like Republicans, we want to help people struggling in the “unsubsidized” individual market, but we do NOT want to provide this help through short-term health plans or “association health plans” (AHPs), rather we want to give more people more money to afford a comprehensive ACA-compliant plan, no matter your income. The legislation would also increase the subsidy amounts for lower-income individuals. This is intended to not only help lower-income individuals with health conditions, but it is also intended to attract more younger/healthier individuals into the current unbalanced “individual” market. The legislation would also NOT fund the “cost-sharing” subsidies. This also makes a lot of sense, and – at least in my opinion – is a smart political play. Why? Because as I have told you multiple times, “silver-loading” actually helps most consumers who are purchasing an ACA Exchange plan. And, if the Democrats funded the “cost-sharing” subsidies, many of these consumers would be disadvantaged because the premium subsidy amount would correspondingly be reduced by the level of funding for the “cost-sharing” subsidies. Sooooo, why disadvantage people when you are trying to enact legislation that is solely intended to “help” people, especially if you know that this ACA “improvement” legislation – in its entirety – will NEVER be enacted. Again, it is a “messaging” exercise, and there is NO need for the Democrats to open themselves up to criticism, especially from ACA supporters who have come to realize that the cancellation of the “cost-sharing” subsidies is actually a good thing. Speaking of short-term health plans, the legislation would include a provision that would invalidate the Trump Administration’s short-term health plan regulations. To me, it is not a surprise that this policy change is being pursued by Democrats. Of particular note is the fact that we do NOT see a provision that would invalidate the final AHP regulations. A significant development in my opinion. BUT, Democratic staff may simply be waiting for the District Court to rule on whether the final AHP regulations are valid or not. And they may be saying to themselves, why bother with an AHP provision now when the Court may strike them down. Let’s wait and see what the Court says, and then determine if we want to shoot at the AHP regs too. In my opinion, we should see a District Court ruling very soon. Now, I have indicated a number of times above that I do NOT see this ACA “improvement” legislation seeing the light of day. I have also indicated that the Democrats know this, so they are using this ACA “improvement” bill for “messaging” purposes. HOWEVER, might some of the provisions included in the larger bill get enacted? It’s a long shot, but if Democrats and Republicans can resolve their differences over abortion funding, we could see Federal dollars for State-based reinsurance programs. BUT, that is a very BIG if (because Democrats and Republicans could not resolve their differences in the past when we were arguably in a less political environment). ALSO, maybe we could see funding for the State-based Exchanges. As I lamented in my prior update, between 2011 and 2014 there was so much money wasted on establishing State-based Exchanges that I would rather not see Congress throw more money at State-based Exchanges. HOWEVER, I believe if any new money is given to State-based Exchanges, there should be conditions placed on how the money is spent. I believe that both Democrats and Republicans can compromise on how any “start-up” funds for State-based Exchanges should be spent. It is important to remember that the idea of a State-based Exchange shares bi-partisan support. Where things break down is how a State-based Exchange is structured (e.g., primarily government-run vs. primarily privately-run). Because the Democrats want to see more State-based Exchanges as a way of promoting the ACA, and because Republicans would like to see State-based Exchanges as a way of promoting a more market-based health care system, there is DEFINITELY room for a meeting-of-the-minds on promoting State-based Exchanges through new Federal “start-up” money. Stay tuned.
Surprise Medical Billing Update
- Employer groups and the insurance industry have collectively banded together to make their views known on the “surprise medical billing” issue. In my opinion, this is a significant development because their views are in contrast to the provider community’s view on how Congress should solve the surprise billing problem. Also in my opinion, the letter these groups sent to Congressional Leadership and the sponsors of bi-partisan legislation on the issue is well-timed, as we are all expecting the formal introduction of a “surprise medical billing” piece of legislation from Sen. Cassidy (R-LA) and his bi-partisan group in the coming days or weeks. A couple of months back, I gave you my thoughts on the “surprise medical billing” issue, with some suggestions on how this growing problem could be addressed. I am re-posting that post below because much of what I said back then is in line with the positions taken by employers and insurance carriers.
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- From My Mid-January Update: You have heard me – and many others – suggest that if any health care-related legislation could get enacted this year, legislation to curb the “surprise medical billing” problem could very well reach the President’s desk. Why? Because protecting patients from “surprise medical bills” shares bi-partisan support, evidenced by a bi-partisan group of Senators – led by Sen. Cassidy (R-LA) and including the new Chairman of the Senate Finance Committee, Sen. Grassley (R-IA) – who introduced “surprise medical bill” legislation last Congress. Now, the White House is getting involved. Adding to the mix here is Cong. Doggett (D-TX), who is Chairman of the Ways and Means Health Subcommittee, and who introduced his own version of “surprise medical bill” legislation last year. At this point, I see 2 separate instances where the problem of “surprise medical bills” arise: (1) In cases where a patient is treated at an in-network hospital by an out-of-network provider and (2) In cases where, for no fault of the patient or the medical provider, the patient is treated in an emergency situation at an out-of-network hospital.
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- Out-Of-Network Hospital Emergency Situation: Let me start talking about this situation with the following example: Let’s say my neighbor has a heart attack, and I rush my neighbor to the closest hospital for treatment. My neighbor gets the necessary emergency services, and is fine. BUT, there is a problem. The hospital I rushed my neighbor to is not in their health plan’s network. It wasn’t my neighbor’s fault that they had a heart attack. It also wasn’t the hospital’s fault for being out of my neighbor’s network. In this situation, my neighbor’s health plan will typically pay this out-of-network hospital amounts equal to the plan’s in-network rates for the medical services rendered. BUT, this out-of-network hospital will typically charge much more than the in-network rates, thereby producing a “balance bill” that must be paid by my neighbor. Both Democrats and Republicans believe that my neighbor – the patient – should NOT be required to pay this “surprise medical bill.” BUT, most policymakers will tell you that “someone has to pay” the bill, which – BTW – is a position that I can’t quite disagree with. BUT, who is this “someone” who has to pay the bill? Answer: I believe it will be the employer sponsoring a self-insured plan and the insurance carrier in the case of a fully-insured plan. In my opinion, however, neither the employer nor the carrier should be required to pay the FULL “balance bill.” Instead – in my opinion – this out-of-network hospital should only be paid “reasonable compensation” for the medical services rendered. BUT, what is “reasonable compensation”? I would suggest that “reasonable compensation” should be based on various Federally-developed “benchmarks.” One “benchmark” that could be considered is a percentage of Medicare prices (e.g., 150% – or maybe even 180% – of Medicare). After all, Medicare-based payment standards are widely used among self-insured and fully-insured plans in setting in-network rates or settling payment disputes. In addition, the national nature of Medicare pricing – and its geographic and provider-specific applicability – provides uniformity, while also reflecting geographic differences in the cost of medical services. However, some stakeholders have argued that if you use Medicare as a “benchmark,” this is a slippery-slope, where you are one-step closer to “single-payer” and price controls. I do not disagree with this argument. I can see how using a percentage of government-approved rates could creep into pricing practices in the future, especially if the politics shift in 2020 and we truly see a concerted effort to enact some “shade” of single-payer. BUT, if we were to use other benchmarks – like say FAIR Health’s national database – I believe you are going to unnecessarily over-pay providers. From what I believe I know, I believe FAIR Health prices are artificially inflated, and I believe they can be manipulated by the amount providers in a particular geographic area may charge for the same medical services. In lieu of a Medicare “benchmark” – or in cases where Medicare rates are not reliable (e.g., in cases where a medical service rendered is not covered by Medicare) – could “reasonable compensation” be determined by looking to an appropriate benchmark widely available and consistently used within the industry (e.g., a percentage of cost-to-charge ratio for a particular medical service)? Maybe not, because I know that other stakeholders do NOT like using a cost-to-charge ratio as a “benchmark.” The bottom-line is that employers and the carriers should NOT be required to pay more than “reasonable compensation.” And sooooo, the big fight is going to be over what is the right “benchmark” for determining “reasonable compensation.” Many say it cannot be a percentage of Medicare. Others say it cannot be a percentage of cost-to-charge ratio. And others – like me – say it cannot be FAIR Health. It will be interesting to see how this all shakes out.
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- In-Network Hospital and an Out-Of-Network Provider: The second situation where a “surprise medical bill” is generated is in cases where a patient is treated at an in-network hospital by an out-of-network provider. In short, it is well-understood that some medical professionals choose to remain outside a particular health plan’s network. This decision is primarily driven by the understanding that the medical professional can charge more than a plan’s in-network rates, “balance bill” the patient, and ultimately receive higher payments than they would have otherwise received as an in-network provider. A strong argument can be made that those medical professionals that choose to remain outside a particular health plan’s network should not be rewarded for choosing to be an out-of-network provider. Instead – it is argued – these out-of-network providers should be required to accept in-network payment rates. Personally, I do not disagree with the above stated argument (i.e., I agree that out-of-network providers in these instances should be required to accept in-network payment rates). However, provider groups have pushed back hard on this idea. They argue that at a minimum, they too should be paid “reasonable compensation” based on the Federally-developed benchmarks used to pay out-of-network providers in an emergency situation (discussed above). My response: Requiring an employer sponsoring a self-insured plan or an insurance carrier in the case of a fully-insured plan to pay out-of-network providers who choose to stay outside a health plan’s network anything more than the in-network rates is incentivizing bad behavior. Behavior that is simply increasing health care spending. Congress and the Administration (regardless of political party) are continually trying to find ways to reduce health care spending. Yet, requiring an employer or a carrier to pay more than in-network rates in this situation will – at least in my opinion – continue to lead our health care system down the path of unnecessary, excess spending.
“Shades” of Single-Player Update
“Government-Run System/Price Controls” vs. “Private Insurance/Value-Based Health Care System”
- I don’t think my update would be complete without commenting on Medicare-for-All, due to the continued attention surrounding the issue, and especially in light of new entrants in the Democratic Presidential Primary.
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- Analysis: I know that minds differ on things. And, I know that people look at things through different lenses. I can’t help but continue to look at things through this lens: I truly believe that the only way to reduce (or at least control) the ever-increasing cost of the health care is through (1) a “government-run system/price controls” OR (2) a “private-based/value-based health care system.” I really think it is that black and white. Now, I do think that – in the end – we will see “shades” of single-payer OR “shades” of value-based care, so I am realistic enough to know that there are no absolutes. BUT, we as a country have to decide: Which direction do we want to go in? And which “shades” do we think are best for our own health care, as well as our own economic security. Depending on your ideology, and depending on your financial situation, only you – personally – can decide which direction you want our country to go in. To me, that is what the upcoming Presidential election campaign debate should be about. Democratic Candidates calling for a “government-run system/price controls,” knowing deep-down they are only going to get “shades” of single-payer. And Republican Candidates calling for a “private-based/value-based health care system,” knowing all-the-while that they are only going to get “shades” of value-based care. PLEASE NOTE, I am NOT trying to “stereotype” the politics surrounding “value-based care.” There a great number of Democrats that support a “private-based/value-based health care system.” BUT, the reality is that these Democratic-leaning voices on “value-based care” are getting drowned out by the full-throated, peddle-to-the-meddle support for a “government-run system” – or at a minimum “shades” of single-payer – among a growing majority in the Democratic party. And my point here is that we know for sure that the Democratic Presidential Candidates will call for a “government-run system” and various “shades” of single-payer. They already are (so it is not my opinion, it is fact). My overall point here is this: Either Democratic Challengers that are just now entering the Presidential Primary, or President Trump (should he seek re-election) or any Republican Challenger that may try to win the Republican nomination over President Trump, should counter the calls for a “government-run system” with reasons why our country should go down the path of “private-based/value-based health care system” instead. Then, a well-informed American public can decide.