The 21st Century Cures Act

Oh goody!  Another bill to repeal and replace the ACA!  <Insert Buzzer Noise> nope, wrong. This is one of the last bills that President Omaba signed into law before leaving office.  The 21st Century Cures Act is packed with investments for improved healthcare. 

The Act includes some great programs to address the heroin and prescription opioid epidemic; improve mental health; improve the timing on drug trials within the FDA; and accelerate cancer research discoveries.

It also includes a program that allows employers to provide a tax free bank account for employees to use to shop for their health insurance plans in the individual state marketplace or exchange.

For many years, brokers have been using Health Reimbursement Arrangements (HRA) coupled with a high-deductible plan.  An employer would establish a plan with a $4000 deductible for hospital care, for example, with copays for medication and doctor visits.  Employers would have a lower monthly premium cost for implementing a higher deductible plan for hospital care.  They could use that savings to offset the deductible costs for employees and only use that money through an HRA account,  if an employee had a charge that was applied to the deductible.  On average, about 20% - 30% of employees actually have charges that will enter the deductible so most employers realized savings year over year.  The money was not taxable money to the employee if they used it.

Some employers also used these accounts to allow employees to purchase individual health plans to give employees a choice and not administer benefits.  These were also known as Premium Reimbursement Accounts (PRA). The ACA actually did away with this program as they did not want employers to cherry pick sick or older employees who could drive up claim costs, by putting them into the individual market and keeping the healthy employees in their group plan.   This could adversely affect the individual marketplace and cause it to implode with more sick people than healthy people.  The government also did not want employees who could get a subsidy in the marketplace to use that subsidy and receive tax free money from their employer.  

The new bill allows an HRA stand alone account to pay for premiums for employers with less than 50 employees.  With some new mandates, the bill can curb some of the abuse that the government felt could occur under the original model.  If an employer decides to offer this, the employer must offer it to all its employees (no discrimination).  They are NOT allowed to offer a group product next to this reimbursement program (to protect the risk in the group market), and employees must identify they have this reimbursement if they shop in the marketplace and get an advance premium tax credit (APTC).  The APTC subsidizes someone, based on their annual income, for their monthly insurance premium.  You can either get the tax credit when filing your taxes, or, if you need to, you could request the APTC in order to lower your monthly premium costs.  The APTC would be reduced dollar by dollar so there is no double dipping.  The maximum amounts that employers could provide to employees would be $4,950 for employee-only coverage, and $10,000 for employee/spouse, employee/child or full family coverage.  

The goal of this was to get more small group employers to participate in offering group coverage.  It would also increase and strengthen the individual market by adding more individuals to the risk pool.  The reality is, though, this might be a fix that is a little too late.  The individual markets in many states have been hit hard with carriers dropping out, rates increasing due to the medical loss ratios (claims paid versus premiums received) running higher than expected, and an overall lack of choice in the individual marketplace.  Most individual plans sold in the marketplace or by private insurance companies cover in network providers (hospitals and doctors) - they have no coverage for medical services outside of the carrier’s network, unless it is an emergency.  Also,  the networks are usually regional and somewhat smaller than what you would expect from an employer sponsored program.  

Group coverage offered through an employer is still going to provide larger network access, more carrier offerings and in most cases, lower group rates.  

While the 21st Century Cures Act looked good on paper, it is not going to be enough to breathe life back into the individual market without incentives for more competition and a leveling off of rates.  The individual market needs both the state and the federal governments to come together to work on a better program for those that don't fall into Medicaid or Medicare or have employer-based coverage.  Why don't we get a discussion about this going and work on fixing one piece of the market at a time?  That is how we really could provide a safe and thoughtful way to enhance and adjust our current state of the ACA.

You think you are going to touch my MOTHER'S Original Medicare? Have you met my Mom? Didn't think so. . . .

Original Medicare, as I introduced it in my post Turning Alternative Facts to Actual Facts, was rolled out in 1965.  We have Part A for hospital coverage, Part B for outpatient and doctor care.  Most Medicare participants also choose to enroll in either a supplement plan or a Medicare Advantage Plan.  that will pay for some costs that Original Medicare does not cover. Supplement coverage (sometimes called MediGap) has no insurance carrier network, but the doctors/hospitals have to accept Original Medicare.  The supplement will cover the gaps in coinsurance (percentage of coverage by Medicare versus what you would be responsible for) and deductibles (first dollar costs that you are responsible for. Under a Medicare Advantage Plan, the insurance carrier will take on the risk and you are normally going to navigate within a local or regional network, sometimes with coverage for doctors who do not participate in the network.  You would normally have copays if you are staying within the network.

Paul Ryan (R-WI), the Speaker of the House, has put forth a plan to privatize Original Medicare.  Speaker Ryan would replace the current program with vouchers.  It's interesting to see how so many people are talking about 'vouchers' to replace what we have today.  The healthcare industry, as you can tell from my previous posts, is not easy to navigate.  It takes someone with the time and background to really figure out how to make the system work for them.  So, instead of providing more ease of use, the voucher system would make seniors, in this case, more entangled in their healthcare payment process.  Why do you need to upend a system that has worked for seniors and replace it with a privatized program?  

The answer that we are given is that Medicare is on its last legs.  It is on life-support and we have to do something before it collapses and leaves Granny Nan & PePa out in the cold.   

Quick reality check:  Medicare' has IMPROVED in the last couple of years, not gotten worse.  As a matter of fact, it is funded through 2029 and 79% funded through 2040, which can be made up without privatization.    Medicare Trustees Report (page 29).  

Medicare is one of the programs that will find a hard time getting approval to change it, under the current Administration.  It is also NOT tied to the ACA issues.  Remember, Medicare has been around since 1965.  The current Administration ran on a platform promising not to touch Medicare.  

One might argue that Medicare is an entitlement, but I disagree.  An entitlement is having a right to something or the belief that one is inherently deserving of privileges or special treatment.  We all pay into Medicare while we work, and once we retire we have to pay into Part B Premiums.    2017 Part B Premiums

Seniors have a very strong voice and membership association in AARP (American Association of Retired Persons).  They are 38 million members strong and they have the resources to fire up their base.  And let me tell you, don't screw around with their healthcare, golf tee time or cruise ship schedule.  Trust me, my mom would be the first to tell me that!  So let's not pull Part A & B away from our loved ones, let's find ways to enhance the program to make it easier to gain access to incentives for better outcomes within the healthcare delivery system.