HealthCare Roundtable e-News – Feb. 10, 2017

Trump Looking to Stabilize Exchanges Before ACA Repeal

The Trump administration, even as it plans to dismantle the Patient Protection and Affordable Care Act (ACA), is reportedly seeking to stabilize the health insurance exchanges created by the law.

The ACA, which was passed in 2010, created state-level exchanges that were launched in 2014 in which people who do not have access to affordable group coverage can buy insurance, in many cases using income-dependent tax credits. States were not required to establish exchanges, but the federal government created one in any state that did not.

President Donald Trump and congressional Republicans have vowed to repeal and replace the ACA, but have not yet developed a plan to do so. In the meantime, uncertainty about the law’s future could lead to insurers withdrawing from the exchanges, threatening the coverage of millions of Americans.

The administration is considering implementing several measures requested by the insurance industry to encourage insurers to continue participating in the exchanges in the short-term, Politico reported.

“The success of the Exchanges depends heavily upon the existence of a dynamic, competitive market, making issuer participation critical,” an administration document obtained by Politicostated. “Without such a market, consumers face high premiums and few choices, potentially resulting in disruptions to care as consumers must change providers because they must select plans with more restrictive networks, or must forego coverage altogether.”

The measures reportedly could include:

  • Allowing insurers to charge older customers up to 3.49 times as much as younger ones. The law limits the ratio to 3:1, but the administration will reportedly argue that, since 3.49 rounds down to 3, it complies with the rule.
  • Cutting the open enrollment period for 2018 in half, so it would run from Nov. 1 to Dec. 15 of this year.
  • Further restricting the ability of consumers to sign up for coverage outside the open enrollment period.
  • Reducing the percentage of medical expenses that an insurer who participates in the exchanges must cover.
  • Limiting the use of a 90-day grace period for exchange consumers who fail to pay premiums.

Insurers will start submitting bids for 2018 to state regulators in April, so the administration faces a short timeline for increasing confidence among those companies.

Politico reported that, with the exchanges already having had some difficulty retaining insurers and with premiums in the individual market that they serve increasing sharply, the Obama administration had been considering some of the requests that were made by the industry.

During the 2017 open enrollment period, which ended Jan. 31, 9.2 million people signed up for coverage in the 39 federally-run exchanges, a 4 percent decline from 9.63 million a year ago.

Soon after being inaugurated, Trump signed an executive order directing federal agencies to take actions aimed at “minimizing the economic burden” of the ACA. In addition, the administration scaled back advertising for the exchanges during the last few days of this year’s enrollment period.

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HHS Nominee Confirmed on Party-Line Vote

President Donald Trump’s nominee to take over the Department of Health and Human Services (HHS) has been confirmed by the Senate.

Tom Price had been serving as a seven-term Republican congressman from Georgia when he was selected by Trump to be the next HHS secretary. On Feb. 10, Price was confirmed by a 52-47 party-line vote. He was sworn in to the position the same day.

As a member of the House of Representatives, Price, an orthopedic surgeon, was a leading opponent of the Patient Protection and Affordable Care Act (ACA).

“Having Dr. Tom Price at the helm of HHS gives us a committed ally in our work to repeal and replace Obamacare,” Speaker of the House Paul Ryan, R-Wisc., said.

Democrats were united in their opposition to Price, criticizing his opposition to the ACA, his advocacy of making major changes to Medicare – in a 2009 column in Politico, Price stated, “Nothing has had a greater negative effect on the delivery of health care than the federal government’s intrusion into medicine through Medicare” – and his controversial dealings in health care stocks while serving in Congress.

“Buying and selling health care stocks as a member of Congress while you’re voting and helping those companies, that’s bad enough,” Sen. Sherrod Brown, D-Ohio, said. “But what he wants to do to maybe the greatest program in American history, Medicare, is much, much worse.”

Vice President Mike Pence said that Price will help the administration implement “a health care system that works for everybody.”

Congressional Republicans and the Trump administration, after long vowing to repeal and replace the ACA, have not yet developed a plan to accomplish this. In 2015, Price proposed the “Empowering Patients First Act” (H.R. 2300) as a replacement for the ACA. The bill, in addition to repealing the law, would provide tax credits to subsidize the purchase of health insurance and would make some of the value of employer-provided insurance subject to federal income taxes.

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GOP Senator Reiterates Insistence on Repeal

A key Republican senator who recently indicated that he might be willing to consider taking a “repair” – rather than “repeal and replace” – approach to the Patient Protection and Affordable Care Act (ACA), appears to have hardened his stance.

The GOP-controlled House of Representatives voted dozens of times during the Obama administration to repeal all or part of the ACA. With Republicans controlling both the House and Senate and with Donald Trump in the White House, that goal is now within reach. However, the GOP does not have a replacement plan ready, and many Republican lawmakers are wary of enacting legislation that will result in 18 million people losing health insurance within the first year, with that number climbing to 32 million within a decade, according to the Congressional Budget Office.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, said on Feb. 2 that he “could stand either” replacing or repairing the law, saying, “Anything that will improve the system, I’m for.”

Four days after those comments were reported, though, Hatch went to the Senate floor to insist that, “Republicans are united in our desire to repeal and replace Obamacare,” and to bemoan that, “there seems to be an obsession with advancing a narrative of a deeply divided Republican majority.”

“Let me make clear what my position is, just so there’s no confusion on these points,” Hatch said. “I believe that we should repeal Obamacare – including the taxes – and provide for a stable transition period. I believe that the work to replace Obamacare should also begin immediately, meaning that our repeal bill should include as many Obamacare replacement policies as procedures allow. A more complete replacement can and should be crafted in the coming months as we work through some of the more complicated issues.

Hatch’s committee is expected to have a major role in crafting the Republican plan to replace the ACA.

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Employer Groups Seek ‘Cadillac Tax’ Repeal

More than two dozen employer groups are urging the Trump administration to repeal the tax on high-value health care plans and to ensure that employer-provided insurance continues to be a tax-free benefit.

The 2010 Patient Protection and Affordable Care Act included a provision that will impose an excise tax – informally known as a “Cadillac tax” – of 40 percent on the cost of employer-provided insurance plans that exceed certain thresholds. The tax was to go into effect in 2018, but in December 2015, Congress passed, and then-President Barack Obama signed, legislation that postponed the effective date for two years. The baseline thresholds for the tax, which are subject to annual revision based on inflation, are $10,200 for employee-only coverage and $27,500 for family coverage. The tax is projected to raise $93 billion over the first 10 years, largely resulting from the presumption that employers will increase wages – which are taxable – to offset decreases in health benefits – which, apart from the new excise tax, are exempt from taxation.

Members of Congress, business groups, and advocacy organizations, including the Public Sector HealthCare Roundtable, have supported repealing the tax.

Twenty-seven employer groups wrote a letter to National Economic Council Director Gary Cohn on Feb. 13 “calling for full and permanent repeal of the 40 percent ‘Cadillac Tax’ on health benefits.”

Some proposals to replace the ACA would replace the revenue lost by eliminating the Cadillac tax by capping the income-tax exclusion for employer-provided health insurance benefits. The groups warned, though, that this “would be a direct tax increase on middle class Americans and their families, as well as on the businesses Americans are counting on to create jobs.”

“Taxing health benefits by capping the individual tax exclusion constitutes a tax increase that will drive up out-of-pocket costs for employees and their families, risking disruption to the stable, employer-based system, and threatening the benefits working families enjoy and want to keep,” the letter stated. “This policy would discourage lower-wage workers from enrolling in employer-provided insurance, potentially leaving them vulnerable and uninsured or in unstable individual market plans. American voters want lower-cost and high quality health care; they do not want more taxes.”

The groups signing the letter included the American Benefits Council, the U.S. Chamber of Commerce, and trade associations representing several economic sectors, among others.

Some of the same groups are members of the anti-Cadillac tax advocacy group Alliance to Fight the 40, which sent a letter to President Donald Trump the same day that made similar arguments.

The Cadillac tax “is particularly pernicious because it disproportionately taxes employer-sponsored health plans that may be expensive solely because they cover large numbers of older or disabled Americans, women, families suffering catastrophic health events or chronic conditions, or those who live in high cost areas,” the letter stated. “Workers that protect our safety like firefighters and police officers are also disproportionately affected.”

In addition, the letter warned that, “Taxing workers by placing a cap on the current tax treatment of health care coverage could be the largest income tax increase on the lowest quartile earners ever signed by an American president.”

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