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Today’s Perspective from DMSG’s Washington Analyst, Mara Baer

Today’s Perspective from DMSG’s Washington Analyst, Mara Baer

Mara Baer
DMSG’s Washington Analyst

 

Today’s Perspective from DMSG’s Washington Analyst, Mara Baer

May 2, 2017

 

NOTE: This discussion was originally conducted in an interview with Mara by Imagine Health at www.imaginehealth.com and published on their web site today.  Imagine Health’s mission is to help employers forge relationships with health systems. In the interview below, Mara shares her latest perspectives on the current climate in DC. 

1. So, it’s been a quiet start to the year on the healthcare reform front, right?  What’s your take on all the recent activity, or lack thereof?

Oh yes, it’s been so quiet that I’ve been taking a nap since January.  No but really, after having spent fourteen years in D.C. one thing I can say for certain is the District is anything but quiet.  The health debate since the election came fast and furious.  It started with the President signing an Executive Order directing federal agencies to take action to minimize the economic burden of the Affordable Care Act (ACA).  Then Congressional leaders tried to advance a repeal bill (the American health Care Act or AHCA), but politics within the Republican party prevented a vote from ever reaching the House floor.  Moderate and conservative Republicans are far apart in their thinking about health care.  This is where progress on the bill broke down.

The House did advance a few health-related measures since the repeal bill died including passage of the Small Business Health Fairness Act (H.R. 1101), allowing small employers to band together to buy health coverage through certified associations.  A stop-loss bill has also passed the House and workplace wellness-incentive legislation is moving through that body. These bills still have big hurdles to overcome in the Senate so don’t expect them to become law any time soon.

2. With uncertainty at the state level around Medicaid and the ACA’s exchanges, what should multi-state employers be monitoring at both the state and federal level as it relates to their benefit strategies?

It is definitely challenging for employers trying to plan for the future while there is little certainty on the health policy front.  I think it is important to remember that states have traditionally been the primary regulators of insurance and despite a new federal oversight role Republican leaders would like to shift greater authority back to the states.  So it is important for employers to monitor, evaluate, and advocate for their health care priorities at the state level.  The employer voice often gets lost among the strong health care stakeholder voices in the states and it is important to change this dynamic so purchasers are driving the conversation in state legislatures.

Beyond state activity, many national associations representing large employers are laser-focused on ACA’s taxes, the employer mandate, and preserving the ERISA pre-emption.  Some believe that expanded state waiver flexibility would not be good for ERISA plans.   Also, while the AHCA did not touch the employer tax exclusion for health benefits it is important to keep an eye on this as the health reform debate continues and tax reform unfolds.  We’ll cover more of what to watch for federally in Question 4 below.

3. Are ACOs going to make it? 

I don’t have a crystal ball (wouldn’t that be nice) but I would have to say some form of the ACO model will likely make it, although perhaps not exactly as what we are experiencing today.   We know public and private purchasers want to buy health care in new ways and that demand is increasing.  The ACA made significant investments in new models like ACOs and there are about 850 of them in place today.  Almost half of these ACOs are in Medicare and it remains to be seen how the current Administration and Congress will act on these initiatives.  There is broad bipartisan support for new models of care but there is also a trade off Republicans will be looking to make that may lead us to strict cost-cutting measures.  Again, that crystal ball would be helpful.

While I do think ACOs will make it in some form, shifting from the entrenched and fragmented fee-for-service system is slow and not producing results as quickly as purchasers would hope.   I think the future lies in primary care physicians driving ACO models rather than hospital-driven approaches which is really the tail wagging the dog.  We need better investments in models that have primary care at the forefront.  We also need technology to advance more quickly so ACOs and others can innovate in a truly interoperable environment.  These are all big challenges.

4. What should employers, both small and large, be on the lookout for from a legislative perspective in the coming months and years?

What to expect in the coming years, now that is a tough question.  Given politics drive the agenda in Washington what happens down the road will be dependent on the make up of the House and Senate.  Once the 2018 mid-term elections happen we’ll have a better sense of what is possible on the legislative front.  If Democrats win back one of the two chambers it is a whole different ball game.  At that point there would be more potential for consensus-driven policy but this last election cycle was so divisive Democrats may not want to give the President any wins.  If health care market trends are very bad, Congress will feel pressure to address the problems or lose their seats and go home.

In the short term, House members will attempt to push through an updated version of the AHCA including an amendment which is meant to address some of the concerns conservatives had with the last version of the bill.  The new version allows states to decide if they want to waive some of the ACA’s rules.  This is meant to help reduce coverage costs but there are concerns that sicker individuals will essentially be priced out of coverage and lose consumer protections.   The AHCA repeals a host of ACA provisions but even if it passes the House it has an uphill battle in the Senate where procedural rules will create roadblocks.   Other items on the horizon include a package of “extender” bills for Medicare, the Children’s Health Insurance Program (CHIP), plus prescription drug and medical device user fee reauthorizations.

5. What’s next, and who is driving it?

State deadlines for insurers to file their rates are around the corner and what insurance commissioners do will be important.  This is where the rubber hits the road and where we will really see how all this uncertainty plays out across the country.  Some have already pushed back their deadlines to June, while others are keeping them in May.  A big question is, for those insurers that remain in their markets, what rate increases will states approve?  If the majority of markets wind up with no insurers, there will be immense pressure on the Administration and Congress to step in and resolve it.

On the Congressional front, now that a spending bill to fund the government is approved eyes turn to a possible ACA repeal bill vote in the House.   Leaders are counting votes now and it is very close.  If the House gets the bill passed, the Senate will modify that version to appease moderates and address the procedural rules I mentioned earlier.  If they pass it the two Chambers go to conference committee for closed-door negotiations.  If they get this far the deal is likely done and the President will be signing a repeal bill.

And finally don’t count out what the Trump Administration may do if Congress can’t get a health care deal.  It is important to keep in mind that the Administration can make a lot of changes to the ACA through regulation and guidance without Congress.  The Obama Administration used its authority broadly and we should expect the same from the Trump team.

Like I said earlier, it is generally not quiet in Washington and if it is, watch out because it is likely just the calm before the storm.

For more information about Mara’s interview with Imagine Health, go to:

 

http://www.imaginehealth.com/blog-1/2017/5/2/5-questions-with-mara-baer

 

 

 

 

 

 

What Will Congress Repeal in the ACA? The 2015 Budget Reconciliation is the Blueprint.

What Will Congress Repeal in the ACA? The 2015 Budget Reconciliation is the Blueprint.

The Washington Report is provided courtesy of Mara Baer

Congressional Republicans intend to come out of the gate early next year with measures to repeal key elements of the Affordable Care Act (ACA).   The Senate majority will hold the tightest of margins requiring bipartisanship to pass legislation, however the budget reconciliation process requires only a simply majority. This is important to understand because it is the planned route for repeal of many ACA provisions.

A budget reconciliation was passed in 2015 but was vetoed by President Obama.  This legislation is the blueprint for where Republicans begin to build their repeal legislation. Key provisions include:

  • Individual Mandate – The current mandate requires individuals carry coverage or face a penalty. Insurers are concerned that a continued ban on pre-existing condition exclusions absent a mandate will result in much sicker risk pools, driving up rates. Some fear this will dismantle the individual market both on and off the exchanges. Many Republicans have signaled their intent to provide a transition period so the mandate will stay in place until a replacement plan is passed.
  • Tax Credits/Cost-Sharing Subsidies – The reconciliation bill provides a 2-year phase out period for the ACA’s premium tax credit and cost-sharing reductions (CSRs) for those 250% below the Federal Poverty Level (FPL). Under the ACA, insurers reduce cost sharing for low-income people and are later reimbursed by the government. Opponents are concerned that eliminating credits and subsidies will drive low-income individuals from the exchange market.

    The Administration could eliminate the CSR provision by dropping a court case appeal filed by the current Administration. That case found the authority to implement CSRs without an appropriation from Congress was lacking. Insurers will likely press the new Administration to forgo lifting the appeal while a replacement is developed in order to preserve the individual market.

  • Tax Repeals – The package includes numerous tax repeals including the “Cadillac tax” on high cost employer-sponsored coverage, medical device excise tax, and taxes on health savings accounts. It also eliminates the annual fee on health insurers. Some of these taxes would be repealed immediately while others have a 2-year transition period. Republicans will have to identify alternative funding sources for their replacement policies and debate is already heating up around their interest in placing a cap on the current tax exclusion for employer-sponsored benefits.
  • Medicaid – The bill eliminates the expansion of coverage for low-income adults with incomes below 133% of the federal poverty level (FPL). Children age 6 and older from 100% to 133% of FPL would also no longer be eligible for Medicaid. Republicans intend to pursue reforms in Medicaid that shift more authority to the states in designing their programs. Consumer advocates are concerned that these policies will result in cost-shift to poor individuals. While Congress sorts out its replacement approach, the new Administration can use its 1115 waiver authority to provide more flexibility to states in running their Medicaid programs.

While these are some of the provisions on the table for the 2017 budget reconciliation, the question remains how the transition periods may be laid out to allow time for Republicans to develop, reach consensus, and pass an alternative to the ACA.   Some are now suggesting a 3-year period is on the table and that would kick “replace” down the curb until 2020. This time may be needed to attempt to bring eight Democrats in the Senate along to pass a bill which will not benefit from the budget’s 51 vote threshold, requiring 60 votes to end a filibuster.

Discussions are already underway and this process will be highly charged. ACA advocates are urging Republicans to not pursue repeal efforts unless they are married to replacement plans, fearing major market disruption. The incoming Congress and Administration feel their election victory compels them to act swiftly and send a message that ACA as we have come to know it is at its end. What the future holds remains uncertain.

A Crystal Ball or Magic 8 Ball for Health Care Policy Action in 2017

A Crystal Ball or Magic 8 Ball for Health Care Policy Action in 2017

washington-reportThe Washington Report is provided courtesy of Mara Baer

Earlier this week I had the opportunity to do a presentation to a large group of employers and innovators on the political outlook and its impact on the future health care agenda.  I suggested to the audience that we look into a crystal ball and try to see the future.  Perhaps I should have suggested we rely on the Magic 8 ball.  The feedback from the audience was that this election brings great uncertainty and angst (It is decidedly so).  Being prepared for a range of scenarios can mitigate some of these concerns and is something that large health care entities are doing now.

Cost increases in the individual market have employers on edge about potential spillover effect to their markets.  Innovators are concerned that new payment models aren’t moving quickly enough to meet the pace of the digital health boom.   These issues are also top of mind for policymakers as they sprint to November.

While we can’t be certain what the political environment will bring after this election season ends (reply hazy try again), there are some expectations health care market players and business owners should consider when planning for the future:

 

Continued divided government is likely (Ask again, later)Most Washington insiders anticipate the House will remain controlled by Republicans and that the Senate is in reach of Democrats.   The party that runs the Senate will hold the narrowest of margins, requiring consensus to move legislation.  Irrespective of who runs the White House, divided government should be anticipated.  This will result in incremental reform on health care so do not expect sweeping changes to the ACA.

 

Market forces will drive policy action (Without a doubt).  Today’s market forces drive next year’s positioning on policy.   Key trends policymakers are watching include: exchange withdrawals resulting in 1/3rd of rating regions having only one choice of carrier, large rate increases on the individual market and related trends towards self-funding by small employers, escalating drug costs, and market consolidations.

 

Action on ACA will be incremental (Signs point to “yes”). 

Both Presidential candidates have outlined their health policy platforms – Hillary Clinton with specificity, Donald Trump more broadly.  Secretary Clinton hopes to build on ACA’s successes and make improvements where needed and has the backing of her party by most accounts.  Mr. Trump has promised to push towards repeal of ACA but many Republicans are shifting towards incremental steps.

Should Democrats win the White House and regain the Senate, expect significant action to boost young and healthy enrollments through new subsidies and relief from out-of-pocket costs.  Enhancing risk programs in support of exchange carriers will be a priority and a public insurance option will also have its place in debate.

Should Hillary Clinton become President and the Congress remain Republican controlled, we should anticipate little consensus on ACA.  Congress will push to eliminate the employer and individual mandates but will have no traction at the White House.  Clinton will use her regulatory authority to improve the ACA.  Republicans will be calling the Administration to testify – exerting its oversight authority.  For example, expect hearings on CMS’ Innovation Center where most payment and delivery reform activities are housed.

A Republican sweep provides less certainty given lack of detail in the Presidential candidate’s health care proposal.  The best place to start evaluating the possibilities is the Republican White Paper released earlier this year.  In addition to mandate repeals, cross state lines and advancing consumer-directed plans are priorities.

Both parties have expressed interest in addressing the excise tax on high-cost employer plans and the health insurer tax.  How incrementally these are addressed depends on a variety of factors but I would anticipate delays rather than repeals (As I see it, yes).

 

Legislative vehicles are essential for policy action (Concentrate and ask again)

While we can anticipate possible scenarios for health care activity based on the November outcome, any action will rely on larger legislative vehicles moving through Congress that have some tie to the reforms that are sought.  Some potential vehicles are the budget/debt ceiling, tax reform, and reauthorization of FDA’s user fee programs.

Like the Magic 8 ball’s answer key icosahedron shape (having 20 sides), the policy environment can play out in a variety of scenarios.  The question is- would your organization prefer to sit out and wait to see where the future takes us or use strategy tools to anticipate what is most likely and develop approaches to excel?  It is certain that pursuing the latter in support for your business goals is the favorable approach.  Can you meet your goals without it? – Don’t count on it.