+1 800.648.4807

Presidential “Politics” Update

Presidential “Politics” Update

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

Health Care and the Democratic Presidential Candidates

  • After the most recent Democratic Presidential Primary debates, I couldn’t help but think the following: I believe Former Vice President Biden will win the Democratic Presidential nomination. Why? 3 words: The Labor Unions. Ironically, on Monday, I read the news article embedded in the title above, and I feel more confident than I did last week about my prediction.
    • Analysis: Why?  Because – for right-or-wrong – Former Vice President Biden is the only leading Democratic Presidential Candidate that does NOT fully support Medicare-for-All. As you know, Candidate Biden wants to build on the ACA and incorporate a “public option” into the “individual” market. As you also know, Candidate Biden has NOT said a lot of good things about Medicare-for-All. Actually, Candidate Biden has gone so far as to say that pursuing the enactment of Medicare-for-All is going to get President Trump re-elected. Candidate Biden justifies his statement by saying, “Are you really going to kick 100+ people off or their employer plan?” And this is where the Labor Unions come in. It is important to emphasize that the health plans sponsored by Labor Unions are considered “employer plans.” And, the vast majority of Labor Union health plans are self-insured employer plans. Meaning, the Labor Union does NOT contract with an insurance carrier, rather, the Labor Union sets up a Trust and acts as the plan’s third-party administrator (TPA). The Labor Union then manages the health risks of the union workers covered under the plan by incorporating value-based care strategies into their benefits offering that range from reference-based pricing to entering into a negotiated agreement with primary care health clinics (for example, see this article in Modern Healthcare). Now, I get that Labor Unions are not what they used to be. What I mean is, I think we all can agree that Labor Unions don’t have the same “political muscle” they once had. And, we know that fewer workers are joining a Labor Union these days. BUT, that is NOT at all to say that there are not hundreds of thousands of workers who are Union members. There indeed are. And, the Labor Unions still have some “pull” from a political perspective. Now, I think we can also all agree to this: One the most attractive features for joining a Labor Union is that the Union negotiates the health benefits the Union workers receive from their employer. And – for right-or-wrong – these negotiated benefits are in exchange for wages that the employer would otherwise pay these Union workers. And based on this, Union workers are typically offered a “rich” health benefits package because the amount of money an employer spends on health benefits is more valuable than the money an employer spends on wages (because health benefits are NOT taxable to both the Union worker as well as the employer). Now, I tell you all of that to say this: Due to the fact that Union workers have heath benefit plans that are typically “richer” than even an employer plan offered by a non-Unionized Fortune 500 company, I do NOT believe that Union workers are about to give up these “rich” health benefits to get coverage through a government-run program that no Democratic Presidential Candidate – even Sen. Bernie Sanders (who wrote the damn bill) – has fully explained. Look, I am NOT trying to be flip – or disrespectful – here. What I am trying to say is this: Unless a Democratic Presidential Candidate can fully explain to Union workers that coverage under a government-run program is going to be as good – if not better than – the current “rich” health benefits that most Union workers receive, I CANNOT see many Union workers supporting a Democratic Candidate that wants some form of Medicare-for-All. Hence, my belief that Union workers will support Candidate Biden. Last comment: Many of the Democratic Candidates that support Medicare-for-All recently told a crowd of Union workers that they will see a bigger paycheck because their employers will NO longer need to negotiate health benefits on their behalf. BUT, can you really say that? Especially if ALL employers are going to be taxed in some way to pay for Medicare-for-All? It is reasonable to believe that employers will NOT have the money to increase wages because instead of spending money on the Union workers’ health benefits, the employer will instead be spending that money to fund a government-run health care program. One that is unlikely to be able to offer the same “rich” benefits most – but admittedly not all – Union members enjoy today. Now, maybe in the end, the Labor Union vote won’t mean anything because they might get out-voted by the more progressive-leaning Democratic voters. Or, maybe in the end, I am totally off-base, and Union workers do indeed want a government-run system. It won’t be the first – or the last – time that I am wrong.

The Democratic Presidential Candidates and Health Care (cont.)

  • Medicare-for-All vs. Former Vice President’s plan to build on the ACA has dominated the news, and the recent debates. And, despite all of the talk about shifting to Medicare-for-All in 4 years (which is Sen. Bernie Sanders’s plan), or shifting to Medicare-for-All in 10 years with some semblance of private insurance like Medicare Advantage (which is Sen. Kamala Harris’s plan), or keeping the ACA intact and adding a “public option” to the “individual” market (which is Former Vice President Biden’s plan), to me, they all end the same way: Some form of a government-run system.
    • Analysis: In prior updates, you have heard me suggest this: Even if we only see a “public option” incorporated into the “individual” market, this “shade” of single-payer will likely put us on a road toward some form of Medicare-for-All at some point in the future. But don’t take my word for it, Vox (what many would call a left-leaning media outlet) essentially said this same thing when rating the “winners” and “losers” in the recent Democratic debates:
      • Winner: Single-Payer Activists – Even if Joe Biden, the frontrunner and leading anti-single-payer candidate, wins, the single-payer movement will have done its job. Biden has embraced a kind of aggressive public option that was not at all the Democratic consensus before this cycle. In the health care fight of 2009-’10, a “public option” meant a government plan accessible to the 3.6 percent of non-elderly Americans buying insurance on the exchanges, not the overwhelming majority getting insurance through their employers.But Biden’s version goes far beyond the plan he and Obama pushed a decade ago, and enables people to leave their employer coverage and join Medicare if they want to. As my colleague Matt Yglesias has said, “This public option, in short, would not just ‘build on’ Obamacare but potentially transcend it over time.” It would create a pathway toward the government being the default insurer of most Americans. And to sweeten the deal, Biden would dramatically increase federal tax credits above Obamacare levels. That’s a big deal — and I don’t think Biden, honestly, deserves most of the credit for the move. The single-payer movement has been outrageously successful at pushing the party left on the issue, to the point where the “moderate” squishy position is to merely gradually transition America to Medicare-for-all through a buy-in program, rather than moving it all at once. That was not at all the case in 2007, when Biden ran on a modest Medicare-buy-in only for 55- to 64-years, and an expanded State Children’s Health Insurance Program. Again, that was Vox reporting. NOT my words. But here are my words: Remember when I told you about my friend and former boss, Mark Prater (former Chief Tax Counsel to the Senate Finance Committee). I told you that he would always tell me how late-Sen. Kennedy (D-MA) always ended up winning by taking a little bit here, and taking a little bit there, and viola, late-Sen. Kennedy would ultimately get what he wanted. Not all at once, but over time. To me, this is what it feels like with the Medicare-for-All debate. I feel that – like the Vox article said – single-payer advocates are purposefully pushing the envelope on talking about Medicare-for-All while in their heart-of-hearts they know that, even with a Democratic President in 2020, they are NOT going to see Medicare-for-All by 2024. BUT, I do believe that they believe that the slow-drip of Medicare-for-All – and the planting of the idea of Medicare-for-All in the minds of a majority of the American public – is good enough for them. And even better for them is a Democratic President (even Former Vice President Biden) that starts the process of incorporating various “shades” of single-payer into our health care system. Thus allowing Medicare-for-All advocates to win in the end, in late-Sen. Kennedy fashion.

The Democratic Presidential Candidates and Health Care (cont.)

  • One of the issues that flared up during the Democratic debates was the issue of “deductibles.” The Democratic Candidates spared with each other over (1) the notion that deductibles would be eliminated under a Medicare-for-All-type program, while (2) maintaining private insurance (such as the employer-sponsored system and even ACA-compliant “individual” market plans) would preserve the sky-high deductibles that most workers and “individual” market planholders are currently struggling with. During this back-and-forth, Former Vice President Biden posited that even if there are NO deductibles under Medicare-for-All, “there still will be a deductible…a deductible out of your paycheck”…to pay for the cost of funding a government-run program.
    • Analysis: I am NOT trying to seem like I am shilling for Former Vice President Biden, but some of the things Candidate Biden is saying are similar to things I have said in the past, which are: Yes, under some versions of Medicare-for-All, the health coverage is free (i.e., there are NO premiums, deductibles, and co-pays). And, for many people, this will be a welcome change because a large percentage of their income is currently being used to pay for premiums, deductibles, and co-pays.  BUT, it would appear – under some of the Medicare-for-All proposals under consideration – that middle-class families will be shifting the percentage of their income that they are currently paying for health care to, instead, pay taxes (to fund a health care program that eliminates premiums, deductibles, and co-pays). For example, it appears that Candidate Harris’s plan would shield families with incomes below $100,000 from paying any taxes for at least the first 10 years as her plan is being set up. BUT, for families with incomes above $100,000 who WILL be paying more in taxes, what will the trade-off be between taxes and no premiums, deductibles, or co-pays? For some middle-class families, they will likely be better off. That is, they will probably pay less out of their own income for taxes, and benefit from health care coverage that requires NO premiums, deductibles, and co-pays. BUT, there will likely be other middle-income families where they would be paying the same amount on taxes as they are currently paying for premiums, deductibles, and co-pays. Or, they may end up paying more in taxes than they are paying under the current health care system. I think most would agree that higher-income families will be paying more in taxes than they currently pay for health care coverage. And remember, employers will ALSO be paying taxes, which will depress the amount of money an employer can re-deploy into their employees’ paychecks when the employer is NO longer paying for an employer health plan. Which is what I believe Candidate Biden was trying to say, which is: Yes, people covered under Medicare-for-All (or some version of it) will be better off from the perspective of NOT having to pay for their health care coverage. BUT, people are still going to have to pay. And if you couple this notion of “still paying” with the notion that people will be losing their employer plan/“individual” market plan, that could be a bridge to far for a majority of voters who just want the ever-increasing cost of health care to go down.


Employer Update

The LA Times and High-Deductible Health Plans

  • The above conversation about deductibles and the ever-increasing cost of health care leads me to talk about this: The LA Times recently released another article highlighting the many struggles that workers covered under a high-deductible health plan (HDHP) face.
    • Analysis: I am not sure that I need to go into great detail about what the article highlighted, but I can say this: HDHPs are NOT turning out to be an effective tool to control health care costs. In some cases they are, and in other cases they are not. In addition, for many workers, HDHPs are burdening them with hefty health care bills that eat up a significant percentage of these workers’ income. BUT, what the LA Times is NOT telling their readers is that if these same workers were offered coverage with lower deductibles (or even no deductibles), the premiums these workers would be paying would be extremely high…so high that the same – or even a higher – percentage of income they are paying toward their deductibles would be used to pay for the cost of the plan. What is clear to me – and others – is this: The LA Times is trying to highlight the failures of employer plans/“individual” market plans to ultimately lead people to ask: Is Medicare-for-All better for me than what I currently have today? As I have said previously, everyone has the right to their own opinion, and I 100% think it is reasonable to ask the above stated question. But, in my opinion, if you are going to lead people to ask this question, shouldn’t you have some good answers? Maybe the LA Times will have a future series of articles that explain what people could get under some form of Medicare-for-All? Look, I have said it before and I will say it again: HDHPs are NOT for everyone. And, back in the day, I drank the kool-aid, and I was an HDHP enthusiast. But NOW, I definitely see many of the problems that HDHPs present, and I have tempered my enthusiasm. The LA Times didn’t have to convince me. So what can be done? As I have said before, I am not sure. But in my opinion, employer-sponsors are doing everything they can. Yes, you can chastise these employer-sponsors for continually shifting the ever-increasing cost of health care onto their employees all you want. But the fact-of-the-matter is that the only way for employer-sponsors to keep premiums relatively low for their employees is to increase the out-of-pocket exposure under the health plan. As stated above, if you go the other way, you find yourself in the situation where the health coverage is “unaffordable,” which would likely force people to go without coverage. Look, I desperately want to help workers who are struggling with their employer-sponsored HDHP. BUT, is shifting to some form of Medicare-for-All the answer? Should we try to come up with policy changes like allowing HDHP-planholders to pay for services to manage their chronic disease before the deductible is met? Or by placing caps that are lower than the ACA’s out-of-pocket maximum limits on health plans for certain low-income employees and individuals? Or, giving these low-income employees and individuals a government subsidy through some type of funding mechanism (call it “Your Money Account,” I don’t care) to pay for out-of-pocket costs? Also, mandating that providers take on more “risk” in a value-based care contracting approach? I would argue that these solutions should be given a try. Although I know that others would disagree with me.

HSA-Eligible HDHPs Can Pay First-Dollar for Certain Chronic Care Services

  • Speaking of HDHPs and first-dollar coverage for certain chronic care services, Treasury and the IRS finally did it!! They finally issued guidance that would allow an HDHP-planholder to maintain their HSA-eligibility even though the HDHP pays for certain prescription drugs and other treatments to manage certain chronic diseases before the deductible is met. I – and many others – have been talking about this issue for a number of years now.
    • Analysis: I explained the following in a prior update: Under the HSA rules, if an HDHP planholder is covered by another health care arrangement that pays for “medical care” before the HDHP’s deductible is met, the planholder is NOT eligible to contribute to an HSA. Also, if a planholder’s HDHP pays first-dollar coverage for certain medical services that are NOT considered “preventive care,” the planholder is NOT eligible to contribute to an HSA. This “eligibility rigidity” (as I refer to it) currently limits an employer’s ability to offer their employees benefits that pay for things like specified chronic care services – either through a separate plan or the HDHP itself – before the HDHP deductible is met. In addition, this rigidity prevents an employer from adopting value-based care strategies and other cost-containment benefit offerings that pay for “medical care” before the HDHP deductible is met (like telehealth or direct primary care services). I also explained in a prior update: To fix this “eligibility rigidity” – especially as it relates to coverage for chronic care – Congress could modify the HSA rules under the Internal Revenue Code (i.e., Code section 223) OR Treasury and the IRS could issue guidance modifying the HSA rules by including in the “preventive care” exception (discussed above) certain chronic care management services that could be paid first-dollar (as a payment for “preventive care”). Since Congress is NOT about to modify the HSA rules any time soon (especially due to the shift in politics in the House of Representatives), it was left to Treasury and the IRS to make this fix. One of the main reasons it took this long for Treasury and the IRS to issue this guidance is because Treasury/IRS was NOT too keen on making this change in the first place. One of the continued sticking points was this: Treasury/IRS continued to ask, how do we allow HDHPs to pay first-dollar coverage for chronic care services without opening up the flood-gates to increased spending under an HDHP? Do we develop a set of guardrails – or conditions – that must be met as a way of limiting the number of chronic care services that could qualify as “preventive care” under the HSA rules? Do we limit things even further by developing a finite “list” of permissible services and treatments? On the first point, there was legitimate concern that if Treasury/IRS merely came up with guardrails or conditions, these guardrails/conditions could be abused, and in the end, you would NO longer have an HDHP…you would simply have a health plan that pays for lots of medical services before the deductible is met. On the second point, NO policymaker likes “lists.” What I mean is, as a policymaker, when you are writing legislation or a regulation or even guidance, if you develop a “list,” you open yourself up to a bunch of interest groups that are going to continually come in and “lobby” to get their “issue” on your “list.” No policymaker wants to subject themselves to this type of lobbying-frenzy. Soooo, for a very long time, there was not only resistance to the guardrails/conditions approach (mentioned above), there was considerable resistance to developing a “list.”


HSA-Eligible HDHPs Can Pay First-Dollar for Certain Chronic Care Services (cont.)

  • Interestingly – in the end – Treasury/IRS decided to go with BOTH approaches. That is, Treasury/IRS developed 3 guardrails – or conditions – that must be met before any chronic care-related service can be paid by an HSA-eligible HDHP on a first-dollar basis.  In addition, Treasury/IRS developed a finite “list.”
    • Analysis: The guardrails/conditions are (1) The service or item MUST be low-cost, (2) There MUST be medical evidence supporting high cost efficiency (a large expected impact) of preventing exacerbation of the chronic condition or the development of a secondary condition, and (3) There MUST be a strong likelihood, documented by clinical evidence, that with respect to the class of individuals prescribed the item or service, the specific service or use of the item will prevent the exacerbation of the chronic condition or the development of a secondary condition that requires significantly higher cost treatments. Treasury/IRS explained that the prescription drugs and treatments that have found their way onto the initial “list” already meet the 3 guardrails/conditions. Treasury/IRS also explained that in order to get on the “list” in the future, the prescription drug and/or treatments MUST meet the 3 guardrails/conditions. Treasury/IRS further stated that the “list” will only be updated every 5 or 10 years. Treasury/IRS also emphasized that if you are NOT on the initial “list,” you are NOT on the “list.” Meaning, even if a particular prescription drug and/or treatment could meet the 3 guardrails/conditions, they CANNOT get on the “list” unless Treasury/IRS says so.  In other words, this “list” CANNOT be expanded without Treasury’s/IRS’s permission. Lastly, this particular guidance – and the “list” for HSA-eligible HDHPs – has NOTHING to do with how Public Health Service Act (PHSA) section 2713 works.  In other words, the rules for determining what preventive services must be covered with NO cost-sharing (i.e., the rules under PHSA section 2713) were in NO way changed by this guidance. AND, this guidance in NO way adds to the “list” that is used to determine what preventive services must be covered with NO cost-sharing (under ACA section 2713). Instead, the “list” for HSA-eligible HDHPs may ONLY be used for determining if an HSA-eligible HDHP can pay first-dollar coverage for the services that fall onto the “list.” Again, if a particular prescription drug and/or treatment does NOT fall on the “list,” the drug and/or treatment CANNOT be paid on a first-dollar basis by the HDHP.


“Surprise Medical Billing”:  A Recent Compromise Includes an “Arbitration” Process

  • When I last talked about the “surprise medical billing” issue, I noted that at first, the employer and insurance communities were winning. What I meant was, the employer and insurance communities successfully got what they wanted in the House Energy and Commerce (E&C) and Senate HELP bills, which was: For purposes of determining how much money an employer or insurer has to pay a provider in a “balance bill” situation, a “benchmark” rate equal to the median negotiated rate for a particular medical service in a geographic area would be used. An “arbitration” process was specifically excluded.
    • Analysis: BUT, I explained that the provider community was making some serious head-way through their lobbying efforts, and I suggested that we would likely see a compromise proposal where a “benchmark” rate is used up to a specified dollar amount, and then the provider and the employer/insurer would have to go to “arbitration” if the cost of a particular medical service was above that specified dollar amount. Well, I was right. A week before the House recessed for 6-weeks, the House E&C Committee changed the E&C’s original proposal to this compromise approach of (1) a “benchmark” rate and then (2) “arbitration” if the cost of the medical service exceeded a specified dollar amount. My naivete seems to know no bounds because I had previously suggested that this specified dollar amount could be like $10,000. Admittedly, I was exaggerating a bit, and arbitrarily picking a high dollar amount. BUT, I did honestly think that any compromise would contemplate a fairly high dollar amount (maybe $5,000). BUT, the agreed upon dollar amount is ONLY $1,250. And, it is my understanding that the provider community wants to lower this number even further to say $600. So, the $600 question is: When Congress comes back from recess after Labor Day, will BOTH the House and Senate agree to the E&C compromise? AND, if BOTH the House and Senate do agree to the compromise, what will the specified dollar amount be? Will it be $1,250? Will it be $600?  Will it be $750, which is the number that showed up in the Senate HELP Committee’s discussion draft of its “surprise billing” proposal? Last comment: To me, the “surprise billing” issue too difficult to predict. The provider community has A LOT of muscle, and I can see them prevailing in the end. But here is a consideration that not a lot of people are talking about:  The Congressional Budget Office (CBO) has indicated that the E&C’s original “benchmark” rate proposal (which is STILL the lead proposal in the Senate HELP bill) saves between $20 and $25 billion. As a former Committee staffer who was responsible for finding legislative changes that produced savings, I can tell you that that $20 to $25 billion is a HUGE amount of savings that both Republican and Democratic Leaderships would LOVE to use to offset other priorities. An “arbitration” approach, on the other hand, will NOT save this much money (I currently don’t know how much the compromise proposal will save, but it will no doubt save LESS money than the “benchmark” rate approach). What I am driving at is this:  The BIG savings that comes from the “benchmark” approach could carry-the-day in the end, and despite the significant lobbying on the part of the providers, we could see the “arbitration” process jettisoned. HOWEVER, I believe the compromise will stay intact. And, the $1,250 could very well be “dialed up” to a higher amount so as to achieve the greatest amount of savings as possible. Or, we could see $600 because the providers are so powerful. We will all just have to wait and see.