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Today's Topic
What from your perspective will be the impact and implications of President Trump’s recent executive order on healthcare choice and competition?"
 
Amy Donovan
 Amy Donovan

Amy Donovan
Vice President
Legislative and Regulatory Affairs
Keenan
  As with all potential changes in the health insurance system, President Trump’s executive order presents both risks and opportunities in the marketplace for consumers, agents and brokers, as well as carriers. And, of course, the health insurance market is not a monolith, split as it is into large group, small group and individual coverage, over 50 states. So the impact felt in the individual market in California will be a great deal different than that felt in the individual or large group market in Kansas.
 
The executive order also only presents the barest outline of a policy intent. It is up to the three federal regulatory agencies (HHS, DOL and Treasury) to set the rules that could have an enormous impact on choice and competition. Their first task will be promulgating rules that would promote the formation of association health plans. Association plans can help smaller employers lower costs by gaining access to a large employer-type marketplace. This can be a win for choice and competition. However, it remains to be seen whether the rules that will association plans will make them an attractive option for employers.
 
The Executive Order also directs regulators to consider proposing rules that would increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees and allow HRAs to be used in conjunction with nongroup coverage. This rule has the potential to disrupt the group marketplace, if large numbers of employers decide to use HRAs and send employees to the individual market. Moreover, the individual market varies widely by state in terms of competition and choice. An employer’s choice of an HRA in some states could result in an employee having a choice of only one or two carriers on the individual market.
 
Finally, the Executive Order seeks revised guidance from federal regulators, expanding the availability and length of short-term coverage. Depending on how these regulations are drafted, this might introduce more competition and the choice of a different kind of product in the individual market.
 
Amy Donovan, J.D., is Keenan's Vice President of Legislative and Regulatory Affairs, authoring the firm's Briefings and position papers on legislation, regulation and litigation that have an impact on the firm and its clients.
      
William Demarco
 William J. Demarco

William J. Demarco
President
Pendulum Health Care Development Corp.
  It is important to bear in mind that executive orders are not law and that such proposals need to be vetted by committees, researched to see what other laws may be affected by such a proposal, and them brought back to committee before being sent to both Senate and House for a vote. In other words, despite the media frenzy, it will take time to turn this executive order into reality.

However, as most of us are seeing the Cost Sharing Reduction Payments (CSR) a vital funding of subsidies for the exchanges, has gone from a bipartisan Murphy Alexander bill to extend the subsidies for two years, to a position by the President to support such a bill, to now where the President does not support the bill. This bill represents a means to stabilize the market for individual coverage which is very important to maintaining enrollment in the exchanges.

The alternative to losing this subsidy is that hospitals and physicians will have thousands of patients no longer being able to pay for care because they have lost their coverage under the exchange. CBO reports the uninsured rate will climb by 18 million people the first year and up to 32 million by 2026. This would be caused in part by a 20 to 25 percent increase in premiums and partly the Mandate fees would be dropped thereby making the funding of the program unsustainable. These newly uninsured patients combined with current insured patients are going to affect Insurers, Hospitals, Physicians and others connected to the health care delivery and financing system while adding to the deficit.

Insurers will have a loss of subsidy but under the proposed plan will pick up new subscribers as the executive order calls for stripped down, so called “skinny” insurance plans that the ACA had eliminated under the minimum benefit and essential benefit clause of the law. These are very limited plans that insurance commissioners and state attorneys generally are concerned about because it opens the door to potential fraud by having unregulated products sold to consumers who think they have coverage but may not. What insures are not thinking about is that their full coverage customers may suddenly see a reason to buy the skinnier plan at a lower premium thereby seeing an exodus of full pay customers to the cheaper product that creates less income for the insurer.

For hospitals and physicians this may be a nightmare of more uninsured patients as well as many who will buy skinny plans and think they have coverage but actually do not, forcing hospitals and physicians to collect the care service charges or write off the charges at their own expense.

As far as Medicaid goes, states with plans for the elderly and Medicaid populations that are working (Iowa and Minnesota come to mind) may not be affected as much, but in states like Illinois, where there is no money to experiment with Medicaid, there is much consternation with Medicaid offices now scoring elderly and poor based upon their ability to return to a normal “quality of life” and also restricting some benefits that are overused, such as emergency care, or underused, such as mental health. This means that again the burden of delivering care without payment falls on the providers. We are witnessing several states, such as Georgia, where their rural hospitals are closing, especially critical access hospitals that were being given a break under Medicare reimbursement and are now having this slowly slip away.

In short affordability and access will suffer and the burden will go to providers and consumers and some states will dramatically need to change their delivery system to accommodate fixed price capitation payments versus open ended budgets.
 
   
Timothy J. Murphy
 Timothy J. Murphy

Timothy J. Murphy
Epstein Becker & Green, P.C.
 

As a gating issue it is important to understand that the Executive Order does not make any changes to the current law. What the Order does do is instruct the agencies to review and if possible change various regulations and guidance to achieve the Order’s policy goals. The implementation process will likely take months and may ultimately face legal challenges from stakeholders.
 
That being said, if the agencies are able to implement the Order it is likely to increase health insurance options available to healthy individuals in the small group and individual markets, while increasing the cost of health insurance for those with greater health care needs in those markets. Fully implemented the Order would expand access to association health plans and short-term, limited duration insurance products. These plans or products do not have to comply with several ACA mandates, which would allow them to offer lower cost, less generous coverage which would appeal to younger healthier individuals. This could further segment the individual and small group markets by removing the younger healthier individuals who choose these alternatives from the risk pool, ultimately driving up premiums for the older less healthy individuals that remain.
 
Additionally, if fully implemented it will be hard to pinpoint the effect of the Order’s policies amid the myriad of other actions taken by the Trump administration which appear to be designed to exacerbate the risk pool diluting effects of the Order.
 

Lindsay R. Resnick
 Lindsay Resnick

Lindsay R. Resnick
Senior Strategic Advisor
Wunderman Health
  Open a can of worms…an expression that means an attempt to solve one problem, or take action to address a complicated situation, that creates a whole litany of other problems that were not there in the first place. In other words, Trump’s Executive Order on Healthcare Choice and Competition.

The Executive Order was signed October 12, 2017 with a Presidential promise that millions of Americans “…will get such low prices for such great care…great, great health care”. Since that time, healthcare policy (and politics) has remained front page news. Will there be a bipartisan agreement on stabilizing the Affordable Care Act (ACA)? What else will the Administration do to undermine Obamacare? Why can’t/won’t Congress reauthorize the Children’s Health Insurance Program to restore health coverage to 9 million American children?

For 155+ million people covered by employer-based group insurance, the market remains stable. Most at risk is the small group market with the introduction of Association Group plans having a long history of inadequate benefits, insolvency, fraud and abuse. Additionally, the concept of selling health insurance across state lines to lower premiums is not the silver bullet America is being peddled. Barriers to entry, while in part regulatory, are truly financial, actuarial, and provider network or contract related…because the key driver of health insurance premiums are local costs of health care.

Short-term, for approximately 60 million Medicare beneficiaries expect a growth market. As 3.5+ million Americans turn age 65 every year, popularity of Medicare Advantage, Part D Prescription Drug and Medigap policies will continue. Expect new market entrants and geographic expansion among the existing competitive set. And, while traditionally Washington is afraid to touch off a Boomer revolution by tampering with Medicare, current budget and tax proposals include $473 billion in Medicare cuts over next 10-years. Time will tell.

The individual medical insurance market (estimated at 16 million) and Medicaid (70 million recipients) are both at risk. The 2018 proposed federal budget includes $1 trillion in Medicaid cuts over 10-years along with pushing financial obligations to States under a block grant gambit. Of course, the Administration’s blatant sabotaging of the ACA will also take its toll. With the uninsured rate already climbing after years of record lows, it’s estimated that at least 1 million fewer people will sign-up for coverage during this years Open Enrollment Period, in part due to slashing ACA advertising by 90% compared to last year.

With much of Trump’s Executive Order implementation left to HHS and other government agencies, go-forward rules and guidance can only be categorized as ‘known unknowns’ at this juncture. Many insurers are either in decision paralysis, exiting markets, or aggressively reengineering risk management and pricing models. Providers of care are huddled in Board rooms anticipating an uptick in uncompensated care and strategizing around compressed payment rates and narrowing networks.

What about health insurance consumers? The prevalence of high deductible health plans (HDHPs) has created an out-of-pocket healthcare ecosystem. HDHPs now represent over 40% of employer coverage and almost all of individual health plans – 43% insured adults report difficulty paying their plan deductible. This, combined with the increasing number of alternative sites of care, from hospital-owned physician groups to retail outlets to telemedicine tools, means navigating complexities of our health care system is more onerous than ever. Consumers are confused and uncertain about the future of their healthcare. However this means there’s a big opportunity for payers and providers to step-up and emerge as trusted resources helping their members and patients take ownership of their health by making smart, value-based financial and clinical choices.

This can change overnight as new strategies emerge, political winds shift, or ‘art of the deal’ negotiations change…

Add fuel to the fire...an expression used when one does or says something to worsen an already bad situation by further incensing an already angry or threatened person or group of people. In other words, Trump’s next Executive Order…or Tweet.
     
 

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