Friday, March 24, 2017
GOP pulls the AHCA - what is next
The Repeal and Replace of the ACA has been pulled from the floor of the House. While the bill looks like it is dead, the conversation is not. NOW is the time we need to come together now and find ways to adjust and fix this. More to come. . . .
If Essential Benefits go, what do I have to fall back on
As we look at the possibility of the Essential Health Benefits being taken out of the repeal and replace option in the AHCA, what exactly would be mandated?
You can find a comprehensive list, by state here ===> CMS. See sample below: scroll down, find your state and then click the 2nd bullet point (State-required benefits (PDF) to find what your state already considers mandated benefits.
You can find a comprehensive list, by state here ===> CMS. See sample below: scroll down, find your state and then click the 2nd bullet point (State-required benefits (PDF) to find what your state already considers mandated benefits.
With all cards on the table, is this Pay or Play 2.0?
The House postponed the AHCA vote on Thursday, March 24th. The White House responded with the message of either bring the bill to the floor on Friday or keep the ACA as it is.
Where do we stand now?
New changes in the last 24 hours were made among them:
1. Repeal the 10 essential health benefits mandate (Conservative Caucus)
2. Add an addition $15B into a flexibility fund (for states to manage Medicaid) (Coverage Caucus - side note here - Senator Cassidy R-LA - who worked with Senator Collins R-ME on a separate bill is heading the coverage caucus as they are working to keep coverage in the Medicaid programs)
3. Keep the .9% Medicare tax for high-income earners making over $200,000 filing single for six more years - this would be to keep bringing in new revenue (This was originally in the bill to sunset as of 2018, then adjusted to sunset this year but looks to be sunsetted in 6 years)
What else did I miss?
Earlier this week, additional changes were made to the bill as it was attempted to garner enough votes to pass on the floor of the House. Most of these are changes in implementation dates to appeal to different parts of the House GOP.
1. Moving the repeal of the Tanning & Medical Device tax from 2018 to 2017
2. Moving the repeal of the business tax cap for executives in health insurance companies from 2018 to 2017
3. Sunset new Medicaid expansion for states that have not expanded from 2020 to 2017 (Kansas is currently trying to expand Medicaid as we speak)
4. NY Representatives add an amendment to move $2.3B Medicaid costs from local (county - excluding large metropolises like NYC) to the State Budget
5. Lower the medical expense deduction from 7.5% under the original bill now to a new low of 5.8% and to move up implementation from 2018 to 2017
6. Delay Cadillac tax from 2025 now pushed out to 2026
7. Repeal the maximums and over the counter medication bans on Flexible Spending Accounts from 2018 to 2017
8. Increase the HSA limits to maximum out of pocket costs from 2018 to 2017
What does this all mean? Well, to be absolutely frank - not much, if they don't have the votes today. What does it mean in the future, though, EVERYTHING.
I don't think you will find someone who doesn't think we have work to do on the ACA. I am the first to say it. I also think that we have to get a bi-partisan committee to work together with consumer groups; AARP; AHIP; AHA; AMA and the healthcare consulting (i.e. the broker) community. We are in the battle on a daily basis. We know what can work and what should work and this needs to be done right and it needs to be done soon.
There are good ideas out there and we have to approach this on a more macro level and look at the outside forces that are affecting the current delivery system, i.e. lowering the cost of pharmaceuticals by introducing competition; providing incentives for smaller companies to do more development on generic alternatives; banning pharmaceutical companies from shelving generic patents when they become available; more efficient medical record data sharing; cutting out redundancy; providing affordable medical malpractice insurance programs to incent OBGYNs and other speciality providers who want to provide care but can't afford the malpractice premiums; identifying high-cost chronic conditions and look at possibly pooling them into a national program such as Medicare, as we do with End Stage Renal Disease; providing TRANSPARENCY to the consumer by giving them the means to shop for a procedure with outcomes and cost as easily as they can today with houses; technology and cars; getting more funding and education to fight the opioid epidemic.
We cannot continue to kick the can down the road, adjust the programs to suit a small group of interest. The health of this country is at stake; the health of its citizens are at stake and millions of jobs are at stake. We need to pull this out of the halls of Congress and get the experts, who manage this, at the table now before it is too late.
There are solutions, there is a way - but we have to do this together with experts and support it as a country. This is one thing neither party should own but every party should want to see succeed.
Where do we stand now?
New changes in the last 24 hours were made among them:
1. Repeal the 10 essential health benefits mandate (Conservative Caucus)
2. Add an addition $15B into a flexibility fund (for states to manage Medicaid) (Coverage Caucus - side note here - Senator Cassidy R-LA - who worked with Senator Collins R-ME on a separate bill is heading the coverage caucus as they are working to keep coverage in the Medicaid programs)
3. Keep the .9% Medicare tax for high-income earners making over $200,000 filing single for six more years - this would be to keep bringing in new revenue (This was originally in the bill to sunset as of 2018, then adjusted to sunset this year but looks to be sunsetted in 6 years)
What else did I miss?
Earlier this week, additional changes were made to the bill as it was attempted to garner enough votes to pass on the floor of the House. Most of these are changes in implementation dates to appeal to different parts of the House GOP.
1. Moving the repeal of the Tanning & Medical Device tax from 2018 to 2017
2. Moving the repeal of the business tax cap for executives in health insurance companies from 2018 to 2017
3. Sunset new Medicaid expansion for states that have not expanded from 2020 to 2017 (Kansas is currently trying to expand Medicaid as we speak)
4. NY Representatives add an amendment to move $2.3B Medicaid costs from local (county - excluding large metropolises like NYC) to the State Budget
5. Lower the medical expense deduction from 7.5% under the original bill now to a new low of 5.8% and to move up implementation from 2018 to 2017
6. Delay Cadillac tax from 2025 now pushed out to 2026
7. Repeal the maximums and over the counter medication bans on Flexible Spending Accounts from 2018 to 2017
8. Increase the HSA limits to maximum out of pocket costs from 2018 to 2017
What does this all mean? Well, to be absolutely frank - not much, if they don't have the votes today. What does it mean in the future, though, EVERYTHING.
I don't think you will find someone who doesn't think we have work to do on the ACA. I am the first to say it. I also think that we have to get a bi-partisan committee to work together with consumer groups; AARP; AHIP; AHA; AMA and the healthcare consulting (i.e. the broker) community. We are in the battle on a daily basis. We know what can work and what should work and this needs to be done right and it needs to be done soon.
There are good ideas out there and we have to approach this on a more macro level and look at the outside forces that are affecting the current delivery system, i.e. lowering the cost of pharmaceuticals by introducing competition; providing incentives for smaller companies to do more development on generic alternatives; banning pharmaceutical companies from shelving generic patents when they become available; more efficient medical record data sharing; cutting out redundancy; providing affordable medical malpractice insurance programs to incent OBGYNs and other speciality providers who want to provide care but can't afford the malpractice premiums; identifying high-cost chronic conditions and look at possibly pooling them into a national program such as Medicare, as we do with End Stage Renal Disease; providing TRANSPARENCY to the consumer by giving them the means to shop for a procedure with outcomes and cost as easily as they can today with houses; technology and cars; getting more funding and education to fight the opioid epidemic.
We cannot continue to kick the can down the road, adjust the programs to suit a small group of interest. The health of this country is at stake; the health of its citizens are at stake and millions of jobs are at stake. We need to pull this out of the halls of Congress and get the experts, who manage this, at the table now before it is too late.
There are solutions, there is a way - but we have to do this together with experts and support it as a country. This is one thing neither party should own but every party should want to see succeed.
Tuesday, March 14, 2017
Looking further into the AHCA: What stays; market reforms; premium credits and tax changes
As the Northeast is being hit with Stella, I thought it a good time to outline, in greater detail, the American Health Care Act, which is set to replace the Affordable Care Act (ACA).
Let's start with the things that are not being impacted by the bill:
1. Out of Pocket Maximums - the maximum you pay in copays; deductibles and coinsurance before your coverage bumps to 100% and you pay no more out of pocket (2017 Maximums: $7,150 for single/$14,300 for family) on plans that offer Essential Health Benefits (EHB)
2. Prohibition on lifetime maximums on plans that offer Essential Health Benefits (EHB)
3. Requirements to cover pre-existing conditions
4. Coverage for adult children up to age 26
5. Guaranteed availability and renewability of coverage
Repealing the Employer and Individual Mandates
The ACA currently requires an employer with more than 50 full-time eligible employees to pay or play (the employer mandate) and an individual mandate. The mandates would still exist under the AHCA; the bill would just reduce the penalties to zero - retroactively back to January 1, 2017.
The AHCA would impose a new surcharge in the market, effective for open enrollment for 2019 for individuals, called the "Continuous Coverage Incentive." In an attempt to limit adverse selection, this "incentive" would allow insurance carriers to add a 30 percent late-enrollment surcharge to the premiums of anyone who allowed their coverage to lapse for more than 63 days, in the past 12 months. So, instead of barring someone who develops an illness during the year, who decided not to enroll during open enrollment, it would allow them into the pool, if they paid 30% more on their premium for that given policy year. The surcharge would drop at their annual open enrollment.
This change could hurt the risk pool, by allowing individuals to leave the risk pool and only join when they have an illness and cause the cost of care to skyrocket faster than premium receipts, thereby causing premiums to soar the following year. It could also cause insurance carriers to totally exit the individual market and consumers could end up with no choices in certain counties across the country.
Tax Credits instead of Subsidies
Currently, anyone who shops in the individual state exchange could be eligible for premium tax credits and cost-sharing reductions, based on their income. The AHCA would repeal these subsidies in 2020.
They would be replaced with transferable, monthly tax credits to all individuals who purchase insurance in the individual market and unsubsidized COBRA coverage.
This new tax credit would be refundable or could be used in advance. The credits would have an additional qualifier, outside of income, they would also be based on age.
In a nutshell, the credits would work as follows:
Income: if you file taxes as a single, the maximum income is $75,000 and jointly it is $150,000 - after these thresholds, the credits phase out.
Tax Credit Thresholds (per year) and capped at $14,000 per family:
The AHCA would also repeal the ACA's small business tax credit program that is in place for smaller businesses to incent them to offer coverage, as the Employer Mandate was for large group employers only.
Premium Ratios to adversely affect older Americans
The bill also changes the ratio of premiums for older Americans. Currently, rates, are either a 1:1 ratio (rates are the same regardless of age) or they have a ratio rating model. That ratio rating maximum is capped at a 3:1 ratio, so, for example, Plan A costs - $300 for a 22-year-old, then that same plan cannot cost more than $900 for a 63-year-old. Under the new bill, this ratio would rise to 5:1 so the premium would be $1,500 for that same 63-year-old.
Taxation (this is a long one folks)
Some of the good stuff -
Cadillac Tax: the ACA had built in an excise tax of 40% on high-cost employer sponsored health coverage effective in 2025 (note, this was already pushed off from an original implementation of 2018 to 2020). Data showed that 26% of all employers would have been affected by this tax and in 2015, there was a bipartisan support to repeal this. It was never repealed and is still being kicked down the road, with hardly any support from either side of the isle.
Over the Counter Medications (OTC medications): the ACA limited tax-advantaged products, such as Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) from paying for medications that were not filled with a prescription. This ban on OTC medications would be repealed as of 2018.
Spending Limits on FSAs: The ACA capped the amount of money an employee could put aside on a tax-free basis at $2,500. The AHCA would repeal this as of 1/1/2018.
Health Savings Accounts Enhancements: Increase the maximum HSA contribution limit to the maximum out of pocket maximums; allow the account to cover charges that occur 60 days before the account being opened.
Some of the 'huh why would you do this' stuff -
Additional Medicare Tax: The ACA, to increasing funding for Medicare, implemented an additional .9 percent tax in 2013, on individuals who's wages were more than $200,000 a year. (this is adjusted based on filing jointly or married). The AHCA would repeal this tax as of 2018. Let's just look at this for a moment.
If I made $250,000 a year, I would be paying an additional $2,250 a year in Medicare tax. If I were in this situation, I would be happy to pay an additional $187.50 a month to fund Medicare, which is currently insuring my mother. The IRS website shows that in 2014, approximately 6.4% of filed returns were over $200,000 a year.
Some of the 'What the heck' stuff -
Other tax repeals or changes: in 2018, the AHCA would repeal the tanning bed tax (10%); the medical device tax (2.3%); the tax on certain brand pharmaceutical manufacturers and it would LIFT the limit on the business deduction for insurance company salaries. Currently, that business deduction is capped at $500,000 in salary, and it would be removed.
As you can see, I have only touched on the market reform and taxation portions of the bill. There is a huge piece of the bill, and that is the 'Modernizing Medicaid.' It is essentially rolling back the Medicaid expansion provided through the ACA, and offered in 32 states, and replacing it with block grant funding. There is a good blog that outlines the details of this Keeping an Eye on Affordable Healthcare.
As you can see, there are a huge amount of moving pieces and many stakeholders demanding their voices be heard. The most important voice, I feel in this chorus, is you, the consumer. We need to understand what the ACA offered and balanced that with a thoughtful program that will not throw millions off of their healthcare coverage, make care more affordable and balance that with the costs to deliver care. And it starts with facts and education.
Now, back to that blizzard - has anyone seen my car? Hell, anyone knows where my street went?
1. Out of Pocket Maximums - the maximum you pay in copays; deductibles and coinsurance before your coverage bumps to 100% and you pay no more out of pocket (2017 Maximums: $7,150 for single/$14,300 for family) on plans that offer Essential Health Benefits (EHB)
2. Prohibition on lifetime maximums on plans that offer Essential Health Benefits (EHB)
3. Requirements to cover pre-existing conditions
4. Coverage for adult children up to age 26
5. Guaranteed availability and renewability of coverage
Repealing the Employer and Individual Mandates
The ACA currently requires an employer with more than 50 full-time eligible employees to pay or play (the employer mandate) and an individual mandate. The mandates would still exist under the AHCA; the bill would just reduce the penalties to zero - retroactively back to January 1, 2017.
The AHCA would impose a new surcharge in the market, effective for open enrollment for 2019 for individuals, called the "Continuous Coverage Incentive." In an attempt to limit adverse selection, this "incentive" would allow insurance carriers to add a 30 percent late-enrollment surcharge to the premiums of anyone who allowed their coverage to lapse for more than 63 days, in the past 12 months. So, instead of barring someone who develops an illness during the year, who decided not to enroll during open enrollment, it would allow them into the pool, if they paid 30% more on their premium for that given policy year. The surcharge would drop at their annual open enrollment.
This change could hurt the risk pool, by allowing individuals to leave the risk pool and only join when they have an illness and cause the cost of care to skyrocket faster than premium receipts, thereby causing premiums to soar the following year. It could also cause insurance carriers to totally exit the individual market and consumers could end up with no choices in certain counties across the country.
Tax Credits instead of Subsidies
Currently, anyone who shops in the individual state exchange could be eligible for premium tax credits and cost-sharing reductions, based on their income. The AHCA would repeal these subsidies in 2020.
They would be replaced with transferable, monthly tax credits to all individuals who purchase insurance in the individual market and unsubsidized COBRA coverage.
This new tax credit would be refundable or could be used in advance. The credits would have an additional qualifier, outside of income, they would also be based on age.
In a nutshell, the credits would work as follows:
Income: if you file taxes as a single, the maximum income is $75,000 and jointly it is $150,000 - after these thresholds, the credits phase out.
Tax Credit Thresholds (per year) and capped at $14,000 per family:
- Under age 30: $2,000
- Between 30 and 39: $2,500
- Between 40 and 49: $3,000
- Between 50 and 59: $3,500
- Over age 60: $4,000
The AHCA would also repeal the ACA's small business tax credit program that is in place for smaller businesses to incent them to offer coverage, as the Employer Mandate was for large group employers only.
Premium Ratios to adversely affect older Americans
The bill also changes the ratio of premiums for older Americans. Currently, rates, are either a 1:1 ratio (rates are the same regardless of age) or they have a ratio rating model. That ratio rating maximum is capped at a 3:1 ratio, so, for example, Plan A costs - $300 for a 22-year-old, then that same plan cannot cost more than $900 for a 63-year-old. Under the new bill, this ratio would rise to 5:1 so the premium would be $1,500 for that same 63-year-old.
Taxation (this is a long one folks)
Some of the good stuff -
Cadillac Tax: the ACA had built in an excise tax of 40% on high-cost employer sponsored health coverage effective in 2025 (note, this was already pushed off from an original implementation of 2018 to 2020). Data showed that 26% of all employers would have been affected by this tax and in 2015, there was a bipartisan support to repeal this. It was never repealed and is still being kicked down the road, with hardly any support from either side of the isle.
Over the Counter Medications (OTC medications): the ACA limited tax-advantaged products, such as Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) from paying for medications that were not filled with a prescription. This ban on OTC medications would be repealed as of 2018.
Spending Limits on FSAs: The ACA capped the amount of money an employee could put aside on a tax-free basis at $2,500. The AHCA would repeal this as of 1/1/2018.
Health Savings Accounts Enhancements: Increase the maximum HSA contribution limit to the maximum out of pocket maximums; allow the account to cover charges that occur 60 days before the account being opened.
Some of the 'huh why would you do this' stuff -
Additional Medicare Tax: The ACA, to increasing funding for Medicare, implemented an additional .9 percent tax in 2013, on individuals who's wages were more than $200,000 a year. (this is adjusted based on filing jointly or married). The AHCA would repeal this tax as of 2018. Let's just look at this for a moment.
If I made $250,000 a year, I would be paying an additional $2,250 a year in Medicare tax. If I were in this situation, I would be happy to pay an additional $187.50 a month to fund Medicare, which is currently insuring my mother. The IRS website shows that in 2014, approximately 6.4% of filed returns were over $200,000 a year.
Some of the 'What the heck' stuff -
Other tax repeals or changes: in 2018, the AHCA would repeal the tanning bed tax (10%); the medical device tax (2.3%); the tax on certain brand pharmaceutical manufacturers and it would LIFT the limit on the business deduction for insurance company salaries. Currently, that business deduction is capped at $500,000 in salary, and it would be removed.
As you can see, I have only touched on the market reform and taxation portions of the bill. There is a huge piece of the bill, and that is the 'Modernizing Medicaid.' It is essentially rolling back the Medicaid expansion provided through the ACA, and offered in 32 states, and replacing it with block grant funding. There is a good blog that outlines the details of this Keeping an Eye on Affordable Healthcare.
As you can see, there are a huge amount of moving pieces and many stakeholders demanding their voices be heard. The most important voice, I feel in this chorus, is you, the consumer. We need to understand what the ACA offered and balanced that with a thoughtful program that will not throw millions off of their healthcare coverage, make care more affordable and balance that with the costs to deliver care. And it starts with facts and education.
Now, back to that blizzard - has anyone seen my car? Hell, anyone knows where my street went?
Monday, March 13, 2017
Congressional Budget Office - Scoring on AHCA is out!
Hot off the press, the Congressional Budget Office scoring of the American Health Care Act has just been released and you can find it Congressional Budget Office Scoring of the American Health Care Act.
More details and a breakdown of the scoring to come.
More details and a breakdown of the scoring to come.
What is insurance again and why do we have to participate?
Insurance: the practice or arrangement by which a company or government agency provides a guarantee of compensation for a specified loss, damage, illness or death in return for payment of a premium.
Spreading Risk: the extent in which an insurance company by selecting DIVERSIFIED and INDEPENDENT risks that are fairly uniform in size and sufficiently large in number, can predict the losses thereon with reasonable accuracy by the law of averages.
History: the concept of insurance can be traced back to Mesopotamia and the Code of Hammurabi c. 1750 BC (a code of laws). It was a Babylonian practice that was used by merchants who delivered goods on boats. A merchant would purchase a shipment and pay an additional sum of money in order to guarantee the loan would be canceled, should the shipment be lost at sea.
As we continue this journey of the repeal and replacement of the Affordable Care Act, we need to keep in mind, the way insurance works is when EVERYONE is involved in the risk, not a specific subset of people. When comments are made that it is not fair for a young person to pay into a system to subsidies for someone who is older and perhaps sicker, we are missing the point. It is insurance and it is there should someone encounter a loss and it is there to protect you from financial ruin should that loss be catastrophic.
Spreading Risk: the extent in which an insurance company by selecting DIVERSIFIED and INDEPENDENT risks that are fairly uniform in size and sufficiently large in number, can predict the losses thereon with reasonable accuracy by the law of averages.
History: the concept of insurance can be traced back to Mesopotamia and the Code of Hammurabi c. 1750 BC (a code of laws). It was a Babylonian practice that was used by merchants who delivered goods on boats. A merchant would purchase a shipment and pay an additional sum of money in order to guarantee the loan would be canceled, should the shipment be lost at sea.
As we continue this journey of the repeal and replacement of the Affordable Care Act, we need to keep in mind, the way insurance works is when EVERYONE is involved in the risk, not a specific subset of people. When comments are made that it is not fair for a young person to pay into a system to subsidies for someone who is older and perhaps sicker, we are missing the point. It is insurance and it is there should someone encounter a loss and it is there to protect you from financial ruin should that loss be catastrophic.
Thursday, March 9, 2017
I want the same healthcare as Congress, or do I?
As the fight heats up in the Capital on the Repeal and Replace of the ACA, there are articles stating that we should get what members of Congress get.
Well, would you be surprised to know that members of Congress, shop in the exchange, just like all other Americans now?
A brief history......
The Federal Employees Health Benefits (FEHB) Program started back in 1960. Five years PRIOR to Medicaid being enacted, as a matter of fact. The FEHB was a program that offered over 250 plans in 2010, and about 20 of them offered coverage on a national basis, as opposed to a local or regional HMO. All employees of the Federal Government were eligible for these programs.
As of 2014 - members of Congress and their staff were no longer eligible to enroll into the FEHB, they had to enroll into an exchange program, like all other Americans. A more detailed list of benefits available to Members of Congress can be found here.
The Federal Government still contributes to the program as their employer, but members must enroll into the Washington DC Exchange Program, DC Health Link. The average employer contribution is approximately 72%. But you only get this contribution, if you enroll into the DC Health Link, as part of your federal employment service. If a member enrolled in any other exchange, in their home state, for example, they get no employer contribution at all.
The DC Health Link program offers coverage, based on age banding - so it costs more as you get older. For example: I am 47 - a Gold HMO plan for me would cost $589 a month with a total out of pocket maximum of $3500. If I were 27, the same plan would cost me $376 a month.
Members of Congress who are over 65 are still eligible for exchange enrollment, unlike all other Americans, or they can purchase Medicare Part B (Outpatient Coverage) and enroll into a Medigap policy in the private market, along with Part D, for prescription coverage.
If you really want get into the Federal Employee Health Benefit program, then demand to get the same coverage all federal employees get EXCEPT members of Congress.
Well, would you be surprised to know that members of Congress, shop in the exchange, just like all other Americans now?
A brief history......
The Federal Employees Health Benefits (FEHB) Program started back in 1960. Five years PRIOR to Medicaid being enacted, as a matter of fact. The FEHB was a program that offered over 250 plans in 2010, and about 20 of them offered coverage on a national basis, as opposed to a local or regional HMO. All employees of the Federal Government were eligible for these programs.
As of 2014 - members of Congress and their staff were no longer eligible to enroll into the FEHB, they had to enroll into an exchange program, like all other Americans. A more detailed list of benefits available to Members of Congress can be found here.
The Federal Government still contributes to the program as their employer, but members must enroll into the Washington DC Exchange Program, DC Health Link. The average employer contribution is approximately 72%. But you only get this contribution, if you enroll into the DC Health Link, as part of your federal employment service. If a member enrolled in any other exchange, in their home state, for example, they get no employer contribution at all.
The DC Health Link program offers coverage, based on age banding - so it costs more as you get older. For example: I am 47 - a Gold HMO plan for me would cost $589 a month with a total out of pocket maximum of $3500. If I were 27, the same plan would cost me $376 a month.
Members of Congress who are over 65 are still eligible for exchange enrollment, unlike all other Americans, or they can purchase Medicare Part B (Outpatient Coverage) and enroll into a Medigap policy in the private market, along with Part D, for prescription coverage.
If you really want get into the Federal Employee Health Benefit program, then demand to get the same coverage all federal employees get EXCEPT members of Congress.
Wednesday, March 8, 2017
Who knew healthcare was so complicated. . . . A deeper dive into the plan
As the American Health Care Act (AHCA), released on Monday, March 5, 2017, is further reviewed, there will be markups done by the committees (House Ways & Means and Energy & Commerce) and negotiation will begin on certain aspects of the reconciliation bill.
The Congressional Budget Office also will score the bill, meaning they will provide an estimate of the cost of the bill. This cost estimate's intent is to ensure the members of the House and Senate are informed of the budgetary consequences of enacting the specific legislation. The process of reconciliation allows the consideration of a budget bill to be debated no longer than 20 hours under Senate rules, and these bills are not subject to filibuster. While there is reconciliation in the House of Representatives, the House passes more rules to limit debate.
Already, one of the largest associations in the country has come out opposing the bill: AARP. formerly know as the American Association of Retired Persons. AARP represents over 37M members in the United States. AARP is against the premium increases for older Americans, the fact that nothing has been done to address drug costs and the potential cuts to Medicaid. You can find their press release here.
The AHCA does not repeal the Cadillac Tax, just pushes it off to 2025 - which is just an excise tax that neither party has much support behind. Also missing from this bill is the ability for consumers to purchase insurance across state lines, which was talked about by both the White House and the Republican Congress during the election.
Peck Madigan Jones has put together a Repeal & Replace Summary below, that also includes links to both the Ways and Means & the Energy and Commerce pieces of the bill.
The Congressional Budget Office also will score the bill, meaning they will provide an estimate of the cost of the bill. This cost estimate's intent is to ensure the members of the House and Senate are informed of the budgetary consequences of enacting the specific legislation. The process of reconciliation allows the consideration of a budget bill to be debated no longer than 20 hours under Senate rules, and these bills are not subject to filibuster. While there is reconciliation in the House of Representatives, the House passes more rules to limit debate.
Already, one of the largest associations in the country has come out opposing the bill: AARP. formerly know as the American Association of Retired Persons. AARP represents over 37M members in the United States. AARP is against the premium increases for older Americans, the fact that nothing has been done to address drug costs and the potential cuts to Medicaid. You can find their press release here.
The AHCA does not repeal the Cadillac Tax, just pushes it off to 2025 - which is just an excise tax that neither party has much support behind. Also missing from this bill is the ability for consumers to purchase insurance across state lines, which was talked about by both the White House and the Republican Congress during the election.
Peck Madigan Jones has put together a Repeal & Replace Summary below, that also includes links to both the Ways and Means & the Energy and Commerce pieces of the bill.
You can find a summary from Chairman of the Ways and Means Committee Kevin Brady R-TX here and a summary from the Energy & Commerce Committee here.
Stay tuned for more details to come out and changes, probably on a daily basis. The goal is to get this bill on the floor to vote by the end of April - however, I have seen this industry change twice in my career now, and it doesn't happen overnight.
Tuesday, March 7, 2017
Breaking News: GOP releases Replacement Bill: "The American Health Care Act"
I will be diving into The American Health Care Act, but wanted to provide everyone with some basic taking points.
Some immediate things that come to the surface:
1. Drops the individual mandate - which is currently spreading the costs of the sick and healthy in the risk pool
2. Drops the subsidies and replaces with tax credits based on age and income
3. Freezes Medicaid Expansion in 2020, based on income
4. Drops the Employer Mandate
5. Expands Health Savings Accounts
6. Defunds Planned Parenthood for 1 year
7. Keeps pre-existing protections
8. Keeps children to age 26
This bill has not been scored by the Congressional Budget Office (CBO), who provides nonpartisan analysis for budget and economics. This is leaving some Republican law makers nervous about signing on to the bill, without seeing the costs associated with it.
What happens now? The Energy and Commerce Committee and the Ways and Means committee will review each part, perhaps make changes, if necessary.
They will then send it to The Budget Committee & the Rules Committee and once it leaves there, it goes to the House of Representatives.
It is also important to note, there are Republican senators who are voicing concerns, specifically about the Medicaid changes: Rob Portman (R-OH), Shelly Moore Capito (R- WV), and Bill Cassidy (R-LA). If you remember, Moore Capito and Cassidy were supporters of the Collins/Cassidy Bill.
More to come as we dive deeper into the details. Just a side note - the ACA/Omabacare regulations were 10,535 pages long; the final ACA statute, known at the Patient Protection Affordable Care Act (PPACA) was 906 pages long. The American Health Care Act (AHCA??) is 123 pages long.
Some immediate things that come to the surface:
1. Drops the individual mandate - which is currently spreading the costs of the sick and healthy in the risk pool
2. Drops the subsidies and replaces with tax credits based on age and income
3. Freezes Medicaid Expansion in 2020, based on income
4. Drops the Employer Mandate
5. Expands Health Savings Accounts
6. Defunds Planned Parenthood for 1 year
7. Keeps pre-existing protections
8. Keeps children to age 26
This bill has not been scored by the Congressional Budget Office (CBO), who provides nonpartisan analysis for budget and economics. This is leaving some Republican law makers nervous about signing on to the bill, without seeing the costs associated with it.
What happens now? The Energy and Commerce Committee and the Ways and Means committee will review each part, perhaps make changes, if necessary.
They will then send it to The Budget Committee & the Rules Committee and once it leaves there, it goes to the House of Representatives.
It is also important to note, there are Republican senators who are voicing concerns, specifically about the Medicaid changes: Rob Portman (R-OH), Shelly Moore Capito (R- WV), and Bill Cassidy (R-LA). If you remember, Moore Capito and Cassidy were supporters of the Collins/Cassidy Bill.
More to come as we dive deeper into the details. Just a side note - the ACA/Omabacare regulations were 10,535 pages long; the final ACA statute, known at the Patient Protection Affordable Care Act (PPACA) was 906 pages long. The American Health Care Act (AHCA??) is 123 pages long.
Thursday, March 2, 2017
New Jersey doubles down on their budget and it is not happening in Atlantic City
I have been trying to keep my blog focused on the national issues as we are embarking on Affordable Care Act (ACA) 2.0. However, some really concerning news stories have occurred around the country and I feel they are important to mention.
I find that once a state makes a move (such as doubling down on a 12 in blackjack - anyone who knows blackjack knows you don't do that - unless it is me at O'Sheas in Vegas, on a Thursday afternoon, well drinks flowing and $1 chips flying - with my friend Scott), other states will also start to drop chips and attempt the same bet.
Insurance carriers are regulated by their state department of insurance. Each state regulates and requires an insurance company to set up a reserve. A reserve is basically an account where money is held to use in time of a disaster. For example, if there were a natural disaster or a huge flu outbreak that affected a large population of members enrolled into a carrier, you want your insurance carrier to be able to have that cash flow to continue to pay claims.
It is a safety net provided to members who get their insurance from the individual market, the employer sponsored market or Medicaid. It also protects doctors, hospitals and members, should an insurance carrier cease to do business and there are claims for services rendered that have to be paid. (unfortunately, this doesn't always work out as planned, as evidenced in recent state co-op failures around the country - more on that in a future post).
How much an insurance carrier is required to put into reserves depends on the state, the size of the carrier, total membership and other factors. The reserve money comes from premiums paid by customers after claim payment.
So back to New Jersey. . . for those who don't know, Chris Christie (R), is the Governor of NJ, the state I grew up in. In his recent budget address on February 28 - Governor Christie , asked Horizon Blue Cross Blue Shield (Horizon BCBS) to use some of their reserves to fund NJ state programs that assist residents of NJ in need, such as social programs for the needy and financially vulnerable.
In essence, he categorized the reserves a surplus for Horizon BCBS, when in fact, this is NOT a surplus but a safety net should a catastrophic situation occur that Horizon needs the funds to pay additional or excess claims. Horizon BCBS pushed back and told Governor Christie no and outlined the ways they contribute to the State of NJ - i.e. paying $1B a year in taxes; providing over $50M in grants and having over 700 employees who logged over 35,000 in volunteer hours to communities statewide.
Discussing this issue with a colleague at the office, he mentioned this sounded like what was starting to occur in the banking industry - something called a Bail-In. While somewhat different, it carries a theme that we should be very concerned about.
We cannot allow state governments to "demand" any insurance carrier (for profit or not for profit) to release these reserves to them to fund programs that the state cannot fund themselves through state budgetary means. We are in an era of uncertainty with the repeal and replace the ACA. Undermining the financial stability of the insurance carriers who already juggle financial regulations that change on a daily basis, is a threat to the system itself. Horizon BCBS is one of the few carriers in NJ that chose to stay in the individual marketplace and offer individual plans - they cover over a quarter of a million NJ residents in the individual market.
I don't normally take the stance to defend the industry we are in, but fiscally - we have to be thoughtful in what we are doing and take a stand - and this demand from a sitting Governor to spend reserves paid in by the Horizon BCBS customers enrolled into their programs is putting the system at risk for ALL residents in NJ - regardless of how they get their coverage, or from whom. This is a 2017 version of Robin Hood and we will all lose the bet, along with everything else, whether we double down or not.
Oh and by the way, Scott and I cleaned up at O'Sheas that day - the pit boss was not too happy with us, having the dealer call out "doubling down on 12" every 2 minutes and checking our cards. I have not doubled down on a 12 since.
Dismantling the employer option . . . and then there were none
There is a well known English nursery rhyme by Mother Goose, about an egg that sat on a wall and had a great fall. All the king's horses and the all king's men could not put that poor egg back together again.
As we have been following the repeal and replace of the Affordable Care Act (ACA) or aka - Obamacare, the elimination or capping of the employer tax-exclusion on employer sponsored benefit programs, has been brought up again. This idea has been floating around for the last couple of years as a way to increase revenue and now looked at as one potential revenue funding option in a replacement to the current Affordable Care Act (ACA).
So what is the employer tax - exclusion? Currently employees are NOT taxed on the employer paid portion of their benefits for income and payroll tax purposes. Under this new regulation, the employer paid portion of premiums could end up being considered taxable income. In addition, the employer could face higher FICA (Federal Insurance Contributions Act) matches, which would be an added financial burden to the employer.
FICA is made up of the employer and employee both contributing equal shares of Social Security Tax (6.2%); Medicare Tax (1.45%) for a total of 12.4% and 2.9% respectively. Currently there is a cap on Social Security, so once you have paid this tax on $127,200, you no longer pay the 6.2% Social Security tax. You can find more information on this and additional taxes HERE.
We are sitting in a precarious situation if we start to look changing or altering the current employer model, as part of the repeal and replace. The Kaiser Foundation has data showing 156 million Americans covered through employer based plans through the end of 2015. As of 2017, approximately 175 million Americans receive healthcare through the employer based model.
Remember the risk pools? The employer based market is heavily involved in helping to balance risk pools by spreading out the costs of the healthy and unhealthy covered employees.
If the employer has no incentive to offer these benefits to their employees, or they end up costing both the employee and the employer more money, the employer could easily have their employees go to the individual marketplace to purchase their coverage by offering a salary increase to the employee to offset some of the costs. This would mean higher income taxes to the employee. The costs in the individual market are higher; the choices are lower and employees would lose the benefit of having their employer advocate in coverage disputes.
If Congress decided, instead, to cap the employer-tax exclusion, this would in turn, cause the employer to look at providing less rich benefit to employees, to stay underneath the maximum premium cap so not to trigger a tax. This would push employees to higher out of pocket costs and possibly shift the cost of the premium from the employer to the employee at a faster rate then we are seeing today.
The employer-sponsored health insurance is a valuable benefit and a keystone to the American worker and a financial foundation for the healthcare system today. If we attempt to upset this model, while undergoing additional repeal and replacement options, we run the risk of the entire system breaking, just like that egg. And there is not a king nor a horse strong or powerful enough to be able to pick it up, once the system has fallen off the wall.
As we have been following the repeal and replace of the Affordable Care Act (ACA) or aka - Obamacare, the elimination or capping of the employer tax-exclusion on employer sponsored benefit programs, has been brought up again. This idea has been floating around for the last couple of years as a way to increase revenue and now looked at as one potential revenue funding option in a replacement to the current Affordable Care Act (ACA).
So what is the employer tax - exclusion? Currently employees are NOT taxed on the employer paid portion of their benefits for income and payroll tax purposes. Under this new regulation, the employer paid portion of premiums could end up being considered taxable income. In addition, the employer could face higher FICA (Federal Insurance Contributions Act) matches, which would be an added financial burden to the employer.
FICA is made up of the employer and employee both contributing equal shares of Social Security Tax (6.2%); Medicare Tax (1.45%) for a total of 12.4% and 2.9% respectively. Currently there is a cap on Social Security, so once you have paid this tax on $127,200, you no longer pay the 6.2% Social Security tax. You can find more information on this and additional taxes HERE.
We are sitting in a precarious situation if we start to look changing or altering the current employer model, as part of the repeal and replace. The Kaiser Foundation has data showing 156 million Americans covered through employer based plans through the end of 2015. As of 2017, approximately 175 million Americans receive healthcare through the employer based model.
Remember the risk pools? The employer based market is heavily involved in helping to balance risk pools by spreading out the costs of the healthy and unhealthy covered employees.
If the employer has no incentive to offer these benefits to their employees, or they end up costing both the employee and the employer more money, the employer could easily have their employees go to the individual marketplace to purchase their coverage by offering a salary increase to the employee to offset some of the costs. This would mean higher income taxes to the employee. The costs in the individual market are higher; the choices are lower and employees would lose the benefit of having their employer advocate in coverage disputes.
If Congress decided, instead, to cap the employer-tax exclusion, this would in turn, cause the employer to look at providing less rich benefit to employees, to stay underneath the maximum premium cap so not to trigger a tax. This would push employees to higher out of pocket costs and possibly shift the cost of the premium from the employer to the employee at a faster rate then we are seeing today.
The employer-sponsored health insurance is a valuable benefit and a keystone to the American worker and a financial foundation for the healthcare system today. If we attempt to upset this model, while undergoing additional repeal and replacement options, we run the risk of the entire system breaking, just like that egg. And there is not a king nor a horse strong or powerful enough to be able to pick it up, once the system has fallen off the wall.
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