Life Science Compliance Update

June 12, 2017

Alliance for Health Reform: Briefing on Individual Health Care Market

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On Friday, May 5, 2017, the Alliance for Health Reform held a briefing “The Individual Market at a Crossroads: Health Insurance in 2017 and Beyond.” During the briefing, a panel of experts discussed the history of the individual (non-group) healthcare market, its current state, and how to promote future stability.

Experts who spoke at the briefing included Deep Banerjee of S&P Global, Karen Pollitz of the Kaiser Family Foundation, Cori Uccello of American Academy of Actuaries, and Brian Webb of the National Association of Insurance Commissioners (NAIC). Somehow, the briefing largely avoided discussion of the recently-passed House of Representatives health reform bill, allowing participants to focus on the individual market under current law.

Panel Presentations

The panel presentations touched on themes such as the background of the individual market, the changes the market has seen under the Affordable Care Act (ACA), the state of the current market, and possible strategies to ensure a stable marketplace moving forward.

Karen Pollitz

In her presentation, Ms. Pollitz compared the difference between the individual market before and after the ACA. She said prior to the implementation of the ACA, the individual market was varied, allowed for medical underwriting and coverage denials, was unsubsidized, and did not limit insurer profit. She noted that low premiums, issues with ACA premium stabilization programs, technical glitches, and low competition in certain areas affected the rollout of the individual market post-ACA.

Deep Banerjee

Mr. Banerjee noted that during the first few years after implementation of the ACA, the individual market was somewhat operational: insurers had higher than expected claims payouts, but there were signs that the market was improving and stabilizing as insurers got a better sense of the risk pool. He said in the coming years, insurers would still likely report breaking even or single digit profit margin. He believes that the new markets need time to stabilize and that uncertainty from the government continues to make it difficult for insurers to price products and may actually increase premiums to include an “uncertainty buffer.”

Brian Webb 

During his presentation, Mr. Webb highlighted the importance of addressing challenges with the individual market at the local level. He said that while the market was not working in some areas, the market was actually working well in others. He further impressed the importance of engaging with state regulators to determine where the problems were and what fixes may be available to legislators. He and Ms. Uccello both agreed with Mr. Banjeree’s assessment that an “uncertainty buffer” is increasingly likely as the uncertainty continues to loom overhead.

Panel Discussion

Uncertainty Buffer

A hot topic of the entire meeting was the uncertainty buffer. Mr. Banerjee noted that high premium increases, often as high as 25 percent, could be expected to go down to single digits or the low teens for 2018. Mr. Banerjee also mentioned that the current ACA premium subsidy was designed to grow if insurance costs in a market grew, and that therefore, premium increases were intended to have a relatively small impact on consumers.

Mr. Webb mentioned the need for regulatory flexibility to account for issues unique to certain local markets.

High Risk Pools

A hot topic in healthcare reform, high risk pools, were also given much attention. Ms. Uccello said that high risk pools could be funded and designed many ways. She noted that current proposals to reform the financing of health care for high-cost individuals were unclear with respect to implementation. Mr. Banerjee noted that another strategy to offset risk of high cost beneficiaries is the idea of reinsurance, which he believes works better. Ms. Uccello pointed out that reinsurers were also risk-averse insurance companies, which are not required to sell policies to everyone, and they would likely stop insuring high-cost individuals once it became clear who they were.

May 08, 2017

The ACHA Passes the House

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On Thursday, May 5, 2017, House Republicans finally got what they have been asking for, and campaigning on, for several years. They held a successful floor vote on the American Health Care Act (AHCA), approving the bill by a narrow 217-213.

Following the vote, President Donald Trump hosted Republicans at the White House for a celebratory press conference, saying that he was “so confident” that the House version would be taken up and passed in the Senate. Senate Republicans quickly made it clear that they would not use the House-passed AHCA as a starting point, and would instead create their own package that could then be reconciled with what was passed in the House. This next step could take weeks, or even months, as Senate Republicans navigate their own ideological divides and ensure that any legislation conforms with budget reconciliation rules.

The Bill

While many are happy that the bill repealed Obamacare to a certain extent, others are concerned that the bill will hurt healthcare for many. The bill will likely lower premiums for younger, healthier, people and raise premiums for older and less healthy payors. Young people can still remain on their parents’ health insurance until age 26. The bill also does away with the individual mandate, meaning no one will be forced to pay a penalty if they go without health insurance for more than a short period of time, but does provide for different incentives for people to maintain their coverage.

A quick google search can provide readers with pros and cons that align with individual political beliefs, so we will not delve into those much here. To get a jump start on talking points, however, an article from Money on the bill can be found here.

Next Step: To the Senate!

Both moderate and conservative senators have started to discuss their vision for the healthcare bill, with Senator Shelley Moore Capito of West Virginia saying she “absolutely” had concerns with the AHCA’s Medicaid cuts and Senator Rand Paul of Kentucky saying that the conservative changes did make the legislation “less bad,” but that it still has “fundamental problems.” With a much smaller majority than in the House, Senate Republicans can only afford two defections and still advance legislation.

Industry Reaction

Many Republicans acknowledge that the bill is not perfect, and most – if not all Democrats – have come out against the bill and have started campaigns against it. A variety of medical associations and organizations have been closely tracking this bill and below is a sampling of some statements that have been published by various groups.

The Arthritis Foundation released a statement, noting,

The health reform replacement bill passed today threatens coverage and affordability of care for so many of our patients. The Arthritis Foundation, one of the largest patient advocacy organizations, is concerned that the legislation will not provide adequate protections to people with pre-existing conditions, could limit access to Essential Health Benefits and cut benefits for Medicaid. Our patients are already faced with managing a chronic disease and it’s unfair that they may also be faced with paying more for insurance with fewer guaranteed benefits including out-of-pocket medication protections. People with arthritis and other chronic conditions need coverage the most and regular access to affordable care, so they can stay healthy.

Our goal is to continue our work with Congress to ensure health reform replacement legislation provides a more seamless and transparent health care system, insurance protocols that are not overly burdensome and allow patients to remain stable on a drug, policies that ensure out-of-pocket costs for prescription drugs are more reasonable and an emphasis on outcomes-based contracting and value-based insurance design.

The American Medical Association released a statement, clearly unhappy with the passage of the bill:

The bill passed by the House today will result in millions of Americans losing access to quality, affordable health insurance and those with pre-existing health conditions face the possibility of going back to the time when insurers could charge them premiums that made access to coverage out of the question. Action is needed, however, to improve the current health care insurance system. The AMA urges the Senate and the Administration to work with physician, patient, hospital and other provider groups to craft bipartisan solutions so all American families can access affordable and meaningful coverage, while preserving the safety net for vulnerable populations.

Seema Verma, Centers for Medicare & Medicaid Services (CMS) Administrator, released a statement on its passage, stating,

Today is the first of what I am confident will be many historic days ahead as we move toward patient–centered healthcare instead of government–centered healthcare.

I have worked in the field of Medicaid for 20 years and have heard from many mothers like myself who have shared their struggles and their hopes for a more affordable, more sustainable healthcare system. It is important that our most vulnerable citizens, the aged, the infirm, the blind and the disabled have more choices, greater access and peace of mind when it comes to their healthcare.

The bill that was passed in the House is a great first step achieving this goal.

April 12, 2017

AHCA Failed…Now What?

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Moments before a scheduled vote on the bill, Republican House leaders announced that they were pulling the American Health Care Act (AHCA) from consideration. Such a move, made because of a shortage of votes needed to pass the bill, has thrown the political arena into disarray and uncertainty. As of right now, it looks like President Donald Trump is going to leave the Affordable Care Act (ACA) in place and move onto other priorities of his, such as tax reform. Even still, there are other options out there with respect to health care and what may happen next.

The Administration’s authority to make changes in the health arena is extremely broad. It includes: executive orders, rules, or other executive guidance based on the extensive body of statutes governing federal health care programs; pre-ACA demonstration and waiver authority; and demonstration authority given to the Center for Medicare & Medicaid Innovation (CMMI) under the ACA. The Trump Administration also has broad opportunities to aggressively interpret these authorities with minimal chance that its actions will be overridden by Congress.

Further, courts review executive actions with deference, thereby limiting actions subject to judicial modification.

Congress

For example, with respect to legislative possibilities, it is possible that key Senate leaders, such as Senator Lamar Alexander of Tennessee, could take a role in brokering an agreement that could pass the Senate with 60 votes. Under such a scenario, major changes would be likely to the House approach on Medicaid expansion, tax credits, and insurance reforms. Moreover, per-capita caps would be unlikely to pass bipartisan muster. Such efforts could be characterized as an attempt to “fix” the ACA, or could end up being a rebranding exercise altogether – even something to the tune of “Trumpcare,” perhaps. But significant challenges would exist in reconciling such a package with Republican promises to “repeal and replace” the ACA. It is also possible that Republicans could seek to pass a “clean” repeal of the ACA – something they have done before, which was vetoed by President Obama in Jan. 2016 – without any agreement on how to replace it.

Administrative Agencies

While the ACA remains in place, it is likely that Health and Human Services (HHS) Secretary Tom Price will look to his regulatory toolbox to provide “relief” from ACA regulations and reverse Obama administration regulations in general.

Additionally, the Trump administration has indicated they will seek to facilitate expedited approval of Medicaid waiver applications to reshape the program for the poor and disabled. Specifically, Secretary Price and CMS Administrator Seema Verma have suggested that states may consider policies imposing work requirements for able-bodies adults, “Health Savings Account-like features,” and various cost-sharing policies common in commercial insurance, like premium payments and emergency room copayments.

Executive Branch

Within hours of his inauguration, President Trump signed an Executive Order (EO) signaling his Administration’s policy of seeking “prompt repeal” of the ACA through wide-ranging executive action. The EO lays the groundwork for federal agencies’ efforts to take intermediate regulatory steps to unravel parts of the ACA, although no specific policies are implemented via the order itself.

The order says HHS and other ACA implementing agencies, such as the Internal Revenue Service (IRS) and Department of Labor (DOL), shall “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement” of the ACA to the maximum extent permitted by law.”

The order identifies burdens on states and taxes and penalties on individuals, insurers, providers, or drug and device manufacturers and encourages flexibility for states as well as action to promote a “free and open market in interstate commerce,” including for health insurance.

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