 hat
from your perspective will be the impact and implications of
President Trump’s recent executive order on healthcare choice
and competition?"
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Amy
Donovan
Vice
President
Legislative and Regulatory Affairs
Keenan |
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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.
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William J.
Demarco
President
Pendulum Health Care Development Corp. |
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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.
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Timothy J.
Murphy
Epstein Becker & Green, P.C. |
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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.
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Lindsay R. Resnick
Senior Strategic Advisor
Wunderman Health |
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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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