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Health Care Policy Update

Health Care Policy Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

Depending on the Outcome of the Mid-Terms, We Could Have an ACA “Repeal and Replace” Redux or We Could Have an In-Depth Debate on “Medicare-For-All”

  • One thing we all learned in the wake of the Nov. 2016 election is that “polling” is not always reliable when it comes to predicting election results. Polling experts, however, argue that 2016 was an anomaly, and they further argue that – 8 times out of 10 – “polling” is accurate. While we should all take these arguments with a grain of salt, it may indeed be true that 8 times out 10 “polling” is indeed representative of the final election results. But for the upcoming mid-terms, maybe we will see – for a second time – “polling” missing the mark.
    • Analysis: While it is way too difficult to predict the outcome of the mid-terms, I will suggest to you what I think we could see coming out of Congress if (1) the Democrats win the majority in the House or (2) the Republicans hold onto the majority in the House. I will note, I am limiting my below suggestions to the election outcome in the House. In my opinion, even if the Democrats can take back the Senate, Democrats will not be able to make significant health care policy changes with a Republican in the White House. And my belief does not change in the crazy event our current President is no longer our President. A Republican will always be in the White House, at least until we hear the results of the 2020 Presidential election.
      • Democrats Win the House Majority: If the Democrats win back the majority in the House, we have already been told that the House Committees with jurisdiction over health care (e.g., the Energy and Commerce, Ways and Means, and Education and the Workforce Committees) will hold a bunch of hearings examining all of the actions taken by the Trump Administration over the past 2 years. This will include examining actions like reducing funding for marketing and advertising during the 2018 “open enrollment” period, and also reducing funding for the ACA Navigators. While I do not foresee hearings on the cancellation of the “cost-sharing” subsidies – other than to highlight the fact that cancelling the “cost-sharing” subsidies increased the premium subsidies for consumers – I could see hearings on the ACA’s “risk corridor” payments and the “risk adjustment” program. Lastly, I could see hearings on how Congress can help State-based Exchanges continue their regulation of the “individual” market, and how HHS should move Healthcare.gov back to a much more regulatory body and away from relying on agents and brokers. The Democratic House majority will also hold hearings on the Trump Administration’s changes to short-term health plans, painting these arrangements as “evil.” I do not believe the Democrats will come down as hard against “association health plans” (AHPs), but I believe that you can count on hearings that will re-tell – in horrific detail – the various insolvencies and fraudulent AHPs of the past, and there will be testimony heralding the ACA’s reformed “small group” market as a success. BTW, I hope I can serve as an objective voice on these last 2 points, but I am not holding my breath. What else will House Democrats do? With all of the talk about “Medicare-For-All” on the campaign trail, the new Democratic majority will feel that they were given a “mandate” to pursue such a sweeping policy change. Soooo, expect a number of Democrats to introduce formal legislation calling for some “shade” of single-payer, and expect the House Committees of jurisdiction to hold hearings and “mark-ups” on said legislation. As part of the “Medicare-For-All” debate will be a discussion of adding a “public option” to the ACA’s “individual” market. I think there is a 99% chance that the House Democrats will actually pass legislation that would add a “public option” to the “individual” market.  Obviously this legislation will go nowhere in the Senate (if Republican) and nowhere with the White House (if a Democratic Senate). A deeper examination of a “Medicaid buy-in” will for sure ensue. And House Democrats will examine ways to “expand the safety net” (i.e., expand eligibility for Medicaid) and to also expand eligibility for the ACA Exchange subsidies (by, for example, allowing undocumented individuals to access to the premium subsidies, similar to efforts taken by States like California in this area).
      • Republicans Hold Onto the House Majority: If Republicans somehow hold onto the majority in the House, they too will feel they were given a “mandate” to pursue Republican health care policy changes. This, of course, includes ACA “repeal and replace.” In my opinion, if we were ever to see another ACA “repeal and replace” exercise, it would likely take the form of the Graham-Cassidy approach, where Congress would block-grant all of the ACA’s Federal funds and give the funds to the States (with certain conditions that must be met by the States before they can access the Federal funds). Query whether there would be any Medicaid reforms? I would think Republicans would have learned their lesson from last year’s ACA “repeal and replace” exercise. But, it feels to me that Republicans won’t be able to resist an attempt to at least make some Medicaid reforms (maybe codifying “work” requirements and playing around with Medicaid eligibility for able-bodied individuals with no children). Note, ACA “repeal and replace” would once again be pursued through the Senate’s “reconciliation” process, so there is only so much that can be done through this constrained process. But, the Senate would only need 51 votes, and if Republicans happen to pick up 1, 2, or 3 seats in the mid-terms, getting to 51 will be that much easier than last year. I am not saying they will get 51, but they might. Republicans will also pursue HSA policy changes. These changes will definitely include all of the HSA provisions that the House passed in July of this year (see my attached update on these House-passed HSA provisions). The only problem here is that some of the House-passed HSA provisions are unlikely to get 60 votes in the Senate. However, all of these HSA policy changes could be included in a “reconciliation” bill, which only requires 51 votes. An argument can be made that because HSA policy changes impact “revenue” (i.e., taxes), these policy changes would not get bounced by the Senate Parliamentarian. It’s never a sure bet though. Republicans will also try to repeal the employer mandate, the medical device tax, and the annual excise tax on insurance carriers. Note that I did not include the PHARMA fee or the Cadillac Tax. Why? Because if Republicans repealed the PHARMA fee, Democrats would be quick to label Republicans as “selling out to the drug makers.” But, if there are prescription drug policy changes like increased transparency of drug prices or limits on drug pricing practices, then maybe there is a “horse-trade” that results in repeal of the PHARMA fee. With respect to the Cadillac Tax, while there is political support for repealing the Cadillac Tax among conservatives and rank-and-file Republican House members, I believe full repeal of the Cadillac Tax will continue to be viewed as costing too much. However, Republicans will use repeal of the Cadillac Tax to try to extract concessions from the Democrats on certain things. So, I could foresee Cadillac Tax repeal coming in the form of a “horse-trade” for a Republican priority. But, I believe this “priority” would have to a very important for Republicans to relinquish their using the Cadillac Tax as a political football.


Where Might There Be Bi-partisanship?

  • Regardless of the outcome of the mid-terms, might there be some areas of bi-partisanship on health care policy?
    • Analysis: Possibly. Prescription drug pricing continues to be a hot topic. The Trump Administration is taking some actions, which many on both sides of the aisle appear to support. Congress has the ability to not only build on some of these regulatory changes, but Congress can go further by changing the statute to protect consumers and promote – or require – specific behavior on the part of prescription drug manufacturers.There will also likely be bi-partisan action on “surprise medical bills.” BUT, as I suggested a couple of weeks back (see my attached update), the bi-partisan Senate “surprise medical bill” legislation arguably needs some tweaking. Why? Because a strong argument can be made that the “surprise medical bill” problem is a provider problem, not an employer plan problem (and therefore, employer plans should not be regulated, but rather the provider should). We shall see how this debate shakes out next year. I could also see things like eliminating the ACA’s “family glitch,” and I could also see limited HSA policy changes. As stated above, some of the House-passed HSA policy changes won’t be able to get 60 votes. But, some changes like allowing HDHP-plan holders to maintain their eligibility to contribute to an HSA even though the HDHP provides first-dollar coverage for certain chronic care services could get through. Same with maintaining HSA eligibility even if the employer negotiates direct payments for access to “primary care” doctors. First-dollar payments for tele-medicine consults and medical treatment at on-site medical clinics also share bi-partisan support.


ACA Update

Premiums for the Second-Lowest Cost “Silver” Plan for a 27-Year Old Non-Smoker Are Going Down

  • If you were to ask me back in the Spring whether premiums in the ACA’s “individual” market would be a campaign issue – and a problem for Republicans – I would have said resoundingly, YES. But, much to my surprise – and to the surprise of many others – premium increases are NOT a political liability for Republicans. Interestingly, the issue of ACA premiums is actually a net positive for Republicans, or at least it is being “spun” that way.  At a minimum, any attacks from Democrats over the ACA and premiums have been effectively neutralized. That is why you see you Democrats and ACA supporters pivoting to “pre-existing condition” protections, and hammering on this issue in campaign ads, etc.
    • Analysis: Ever since the ACA went into effect back in 2014, premiums in the ACA’s “individual” market have been a political issue. Early on, Democrats and ACA supporters released studies arguing that premiums in the ACA’s newly reformed “individual” market were actually lower than pre-ACA premium levels. Coupled with this point was the argument that people were also getting “better” health coverage under the ACA due to the pre-ex protections, no under-writing based on health status, and new minimum standards in the form of the “essential health benefits” and “actuarial value” requirements.  But in 2016, “individual” market premiums started to tick upwards. Why? In my opinion, the ACA’s new requirements – coupled with various implementation decisions made by the previous Administration – were responsible for the premium increases (see my testimony in front of the Ways and Means Committee on this). However, Congressional Republicans did not help matters by tying HHS’s hands on the “risk corridor” payments. Then, come 2017 and 2018, insurance carriers jacked up premiums significantly. Primarily to recoup all of their losses they sustained in 2014 through 2016.  In 2018, the uncertainty created by the ACA “repeal and replace” exercise was also baked into the premiums. So I cannot disagree with Democrats and ACA supporters when they blame Republicans for the 2018 premium increases. BUT, the systemic problems with the ACA itself – along with the continued effects of the previous Administration’s implementation decisions – were still significant drivers to the 2018 increases. Now onto 2019 premiums: After the “individual mandate” penalty tax was zeroed out, every single Democrat and ACA supporter contended that premiums in the “individual” market would sky-rocket. They weren’t alone.  The Congressional Budget Office (CBO) also said premiums would go up by 10% to 15%.  As you know, I have consistently argued that repeal of the “individual mandate” would NOT have such a material impact. My argument was based on my observation that the “individual mandate” was NOT having its intended effect of encouraging people to buy health insurance, and thus entering the ACA’s newly reformed risk pool. Others disagreed. I feel a bit vindicated because it now appears that the insurance carriers do NOT believe that repeal of the “individual mandate” is a big deal. This appears to be the case because premium increases on account of no “individual mandate” amounted to 0% up to maybe a 5% increase, depending on the market. Other factors that many Democrats and ACA supporters thought would increase premiums – for example, the cancellation of the “cost-sharing” subsidies, issues with “risk adjustment,” and additional uncertainty due to the introduction of short-term health plans and AHPs – also do NOT appear to be having the material impact that everyone initially thought.  How do we know? Because as stated above, at least for those 38+ States using the Federal Exchange, premiums for the second-lowest cost “silver” plan actually went down. That is NOT to say that premiums at the other “metal” levels – like “gold” and “bronze” – went down. But it is nonetheless important that we are seeing a premium reduction, especially because everyone-and-their-mother were predicting double-digit increases.


Are the Premium Increases Due to the Trump Administration, or Just a Market Correction?

  • Now that we know there is a premium reduction for 2019 – even if the reduction is only 1.5% – a number of ACA supporters are arguing that the decrease in premiums is simply due to a “market correction.” I do not disagree with this assessment. But politically, this is a positive result for Republicans, and I do not think I am going out on a limb by saying that if the Democrats were responsible for this same 1.5% premium reduction, they would be touting the premium reduction too…market correction or no market correction.
    • Analysis: Democrats and ACA supporters further argue that if the Trump Administration would not have reduced funding for marketing and outreach and also for the Navigators – and if the Trump Administration would not have introduced short-term health plans and AHPs into the 2019 markets – this 1.5% reduction would be much greater (maybe a 10%+ reduction). I also do not disagree with this assessment. BUT, the bottom-line is that the insurance carriers obviously did NOT think that short-term health plans and AHPs were going to have a significant impact on premiums. And, it appears that the insurance carriers are seeing a much more stable regulatory environment, along with a reduction in utilization. In my opinion, these latter 2 points – a stable regulatory environment and a reduction in utilization – are the key drivers to the premium reduction.  And – believe it or not – I think the Trump Administration can rightly take credit for the stable regulatory environment. Yes, that certainly conflicts with all of the “noise” out there on “sabotage.” But, if you actually look closely at what HHS is doing, it’s actually the opposite of “sabotage.”  What do I mean? Well, HHS gave Idaho the Heisman on selling non-ACA-compliant plans. HHS has also been encouraging States – dating back to February 2017 – to submit a 1332 Waiver request for a State-based reinsurance program. And while there were some fits-and-starts last year when it came to approving some 1332 Waiver requests, HHS is on a hot-streak when it comes to approving the establishment of State-based reinsurance programs (most recently WI, NJ, and MD).  HHS is also faithfully developing and promulgating the annual Notice of Benefit and Payment Parameters, which sets forth guidelines and various changes to the ACA’s “individual” and “small group” markets, along with the “risk adjustment” program. Is this “sabotage”? To add to this, insurance carriers do not seem to be phased by the reduction in marketing and outreach funding, or phased by the funding reductions for Navigators. Actually, insurance carriers are very excited about HHS’s work on “enhanced direct enrollment,” which is a new, streamlined way insurance carriers and agents/brokers can “directly enroll” consumers in an ACA Exchange plan.  I know I am not the smartest person, but you cannot call efforts to increase enrollment in the ACA Exchanges – through this enhanced direct enrollment program – “sabotage.” Look, I am NOT suggesting that the Trump Administration – and some of the Administration’s actions – have NOT had a negative impact on premiums. They have.  But what I am saying is this: HHS has been doing a pretty good job of continuing to implement the ACA, and attempting to make the law work. And I do attribute the premium reductions – in part – to HHS’s actions. Yes, because the carriers increased premiums so significantly in 2017 and 2018, the carriers had no where to go but down, which is another reason for the premium reductions. Last comment: In my opinion, the real test is the upcoming 2019 “open enrollment” period (starting in less than 3 weeks on Nov. 1st).  Believe or it not, I think the results of the 2019 “open enrollment” period will be positive.  Not positive in like a 20% increase in Exchange enrollment. I would actually call “open enrollment” a success even if enrollment stays flat, with a modest 1% to 3% increase. Based on my belief here, I further believe that premiums for 2020 will go down. Stay tuned.