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H. R. 1628 – “Better Care Reconciliation Act of 2017”

U.S. Senate, June 2017

Title II

SEC. 205. MEDICAL LOSS RATIO DETERMINED BY THE STATE.

Section 2718(b) of the Public Health Service Act (42 U.S.C. 300gg–18(b)) is amended by adding at the end the following:

“(4) SUNSET.—Paragraphs (1) through (3) shall not apply for plan years beginning on or after January 1, 2019, and after such date any reference in law to such paragraphs shall have no force or effect.

“(5) MEDICAL LOSS RATIO DETERMINED BY THE STATE.—For plan years beginning on or after 24 January 1, 2019, each State shall—

“(A) set the ratio of the amount of premium revenue a health insurance issuer offering group or individual health insurance coverage may expend on non-claims costs to the total amount of premium revenue; and

“(B) determine the amount of any annual rebate required to be paid to enrollees under such coverage if the ratio of the amount of premium revenue expended by the issuer on non-claims costs to the total amount of premium revenue exceeds the ratio set by the State under subparagraph (A).”.

https://www.budget.senate.gov…

42 U.S.C. 300gg–18(b):
https://www.law.cornell.edu…

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Comment:

By Don McCanne, M.D.

By now you likely know that the current Senate proposal to modify the Affordable Care Act (ACA) would sharply reduce spending for the Medicaid program and would result in higher insurance premiums for plans that provide less financial protection, while reducing taxes for the wealthy. The proposal has been appropriately labeled as being “mean.” But to get a feeling of the flawed policy process behind their proposal, let’s look at just one small example: the medical loss ratio.

Under ACA, all insurers, not just the insurers offering exchange plans, must spend a minimum percentage of their premium revenue on health care benefits – 80 percent for individual and small group plans and 85 percent for large group plans. Spending money on health care is considered a loss to the insurers and thus the percentage spent is known as the medical loss ratio. If they spend more than 20 percent or 15 percent, respectively, on administrative costs or profits, then they must provide rebates to the enrollees.

When ACA was crafted, it was acknowledged that the U.S. health care system wasted tremendous resources in administrative excesses. It was not uncommon for some private insurers to keep 30 percent or even more of the premiums for their own administrative costs and profits. By placing limits on the administrative costs, a dent could be made in reducing this waste. It is important to note that only a small fraction of the total waste in our system is recovered by establishing medical loss ratio minimums – only a tiny portion of what would be recovered if we switched to a single payer national health program. But it was a start.

Sec. 205 of Title II of the Better Care Reconciliation Act – the Republican bill – sunsets 42 U.S.C. 300gg–18(b) – the ACA medical loss ratio provisions (link above), eliminating the 80 and 85 percent federal ratio requirements. It transfers the responsibility to the states. This sounds like no big deal, but when we observe how many of the states are heartlessly refusing to expand their Medicaid coverage, it does not take much imagination that some states will establish policies that will enable private insurers to divert more of the premium dollars to investors and executives, at a cost to plan beneficiaries. After all, as many have reported, this entire scheme has been designed to take health care from the masses and give the monetary gains to the wealthy.

Former Congressman Henry Waxman, a leader in crafting the House version of ACA, states it well in a Los Angeles Times op-ed (June 22, 2017):

“Legislation needs to pass sufficient public scrutiny or it’s unworthy of becoming law. If monumental, transformative legislation can be written in the dark and enacted in a rush— and children’s lives are compromised or ruined so that billionaires can get tax cuts they don’t need — it would rank among the worst scandals in U.S. history. Americans of conscience must mobilize now to stop this from happening.”

The real scandal is that we continue to dink around with the most expensive and least efficient model of financing care – our dysfunctional, fragmented system composed of a multitude of private and public plans –  when what we really need is to fix Medicare and then include everyone. Under that more enlightened system money spent on health care is not considered a loss but rather a benefit for the health of each of us and the health of the nation at large.

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Senate Health Care Bill Includes Deep Cuts to Medicaid

By Robert Pear and Thomas Kaplan
The New York Times, June 22, 2017

Senate Republicans, who have promised a repeal of the Affordable Care Act for seven years, took a major step on Thursday toward that goal, unveiling a bill to cut Medicaid deeply and end the health law’s mandate that most Americans have health insurance.

The 142-page bill would create a new system of federal tax credits to help people buy health insurance, while offering states the ability to drop many of the benefits required by the Affordable Care Act, like maternity care, emergency services and mental health treatment.

The Senate bill — once promised as a top-to-bottom revamp of the health bill passed by the House last month — instead maintains its structure, with modest adjustments. The Senate version is, in some respects, more moderate than the House bill, offering more financial assistance to some lower-income people to help them defray the rapidly rising cost of private health insurance.

But the Senate measure, like the House bill, would phase out the extra money that the federal government has provided to states as an incentive to expand eligibility for Medicaid. And like the House measure, it would put the entire Medicaid program on a budget, ending the open-ended entitlement that now exists.

It would also repeal virtually all the tax increases imposed by the Affordable Care Act to pay for itself, in effect handing a broad tax cut to the affluent, paid for by billions of dollars sliced from Medicaid, a health care program that serves one in five Americans, not only the poor but almost two-thirds of those in nursing homes. The bill, drafted in secret, is likely to come to the Senate floor next week, and could come to a vote after 20 hours of debate.

https://www.nytimes.com…

H.R. 1628 – “Better Care Reconciliation Act of 2017”:
https://www.budget.senate.gov…

Senate Budget Committee overview of H.R. 1628 (highly deceptive rhetoric):
https://www.budget.senate.gov/bettercare

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Comment:

By Don McCanne, M.D.

No surprises. The discussion draft of the Senate repeal and replace legislation reveals that the legislators would reverse some of the beneficial features of the Affordable Care Act (ACA), which we knew, but the most important measure is the deep reduction in Medicaid funding, allowing them to repeal the tax increases that have paid for the expanded benefits of ACA.

At this point it does not seem that they have the votes to pass this legislation primarily because it does not repeal the fundamental structure of ACA, though negotiations are still taking place. The intent is to vote on it next week. That is a very short time to resolve deeply held ideological differences within the Republican caucus.

If the bill were to pass and be signed into law, it would open the floodgates of activism on behalf of Medicare for all. The Republicans surely do not want that. Yet a loss with the defeat of this legislation would equate to a phenomenal victory for the Republicans because it would have distracted us from following through on the surge of support for single payer reform that has been escalating this past year.

Even if the bill fails, the numbers who remain uninsured, the financial hardships that even many of the insured are facing, and the expensive and wasteful dysfunction of our fragmented health care financing system should still drive us to demand an improved Medicare for all. We cannot walk away from this pretending that a defeat of the Better Care Reconciliation Act of 2017 would equate to a victory for us. Real victory would be in finally achieving health care justice for all.

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The Effects of Premiums and Cost Sharing on Low-Income Populations: Updated Review of Research Findings

By Samantha Artiga, Petry Ubri, and Julia Zur
Kaiser Family Foundation, June 1, 2017

Key Findings

Recently, there has been increased interest at the federal and state level to expand the use of premiums and cost sharing in Medicaid as a way to promote personal responsibility, prepare beneficiaries to transition to commercial and private insurance, and support consumers in making value-conscious health decisions. This brief reviews research from 65 papers published between 2000 and March 2017 on the effects of premiums and cost sharing on low-income populations in Medicaid and CHIP. This research has primarily focused on how premiums and cost sharing affect coverage and access to and use of care; some studies also have examined effects on safety net providers and state savings. The effects on individuals, providers, and state costs reflect varied implementation of premiums and cost sharing across states as well as differing premium and cost sharing amounts. Together, the research finds:

* Premiums serve as a barrier to obtaining and maintaining Medicaid and CHIP coverage among low-income individuals. These effects are largest among those with the lowest incomes, particularly among individuals with incomes below poverty. Some individuals losing Medicaid or CHIP coverage move to other coverage, but others become uninsured, especially those with lower incomes. Individuals who become uninsured face increased barriers to accessing care, greater unmet health needs, and increased financial burdens.

* Even relatively small levels of cost sharing in the range of $1 to $5 are associated with reduced use of care, including necessary services. Research also finds that cost sharing can result in unintended consequences, such as increased use of the emergency room, and that cost sharing negatively affects access to care and health outcomes. For example, studies find that increases in cost sharing are associated with increased rates of uncontrolled hypertension and hypercholesterolemia and reduced treatment for children with asthma. Additionally, research finds that cost sharing increases financial burdens for families, causing some to cut back on necessities or borrow money to pay for care.

* State savings from premiums and cost sharing in Medicaid and CHIP are limited. Research shows that potential revenue gains from premiums and cost sharing are offset by increased disenrollment; increased use of more expensive services, such as emergency room care; increased costs in other areas, such as resources for uninsured individuals; and administrative expenses. Studies also show that raising premiums and cost sharing in Medicaid and CHIP increases pressures on safety net providers, such as community health centers and hospitals.

Conclusion

Recently, there has been increased interest at the federal and state levels to expand the use of premiums and cost sharing in Medicaid as a way to promote personal responsibility, prepare beneficiaries to transition to commercial and private insurance, and support consumers in making value-conscious health decisions. Current rules limit premiums and cost sharing in Medicaid to facilitate access to coverage and care for the low-income population served by the program, who have limited resources to spend on out-of-pocket costs. This review of a wide body of research provides insight into the potential effects of increasing premiums and cost sharing for Medicaid enrollees. It shows that premiums serve as a barrier to obtaining and maintaining coverage for low-income individuals, particularly those with the most limited incomes, and that even relatively small levels of cost sharing reduce utilization of services. As such, increases in premiums and cost sharing result in increased barriers to coverage and care, greater unmet health needs, and increased financial burdens for families. Further, the research suggests that state savings from premiums and cost sharing in Medicaid and CHIP are limited and that increases in premiums and cost sharing in Medicaid and CHIP can increase pressures on safety-net providers.

http://www.kff.org…

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Republicans see Medicaid as welfare. Most Americans don’t.

By Drew Altman
Axios, June 21, 2017

Republicans want to roll back the Medicaid expansion, cap federal Medicaid spending increases, and add work requirements, drug testing, time limits, copays and premiums to some state Medicaid programs. But almost no one else wants to do these things. One poll finding goes a long way toward explaining why: Republicans view Medicaid as a form of welfare, and pretty much everyone else views it as a government insurance program.

Why it matters: Welfare remains unpopular in our country; it’s always popular to limit or cut “welfare”. Whether it should be, and what this says about us, is a different question.

Perceptions of Medicaid as welfare don’t seem bothered much by facts, such as, for example, that two thirds of Medicaid spending goes for the low income elderly and disabled who don’t fit the Ronald Reagan era image of the welfare king or queen. But it’s not the majority view in any case. A little less than a third of voters identify as Republicans today, and about half of them see Medicaid as welfare.

https://www.axios.com…

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Comment:

By Don McCanne, M.D.

Tomorrow the Republicans in the Senate are expected to release their proposal to repeal and replace the Affordable Care Act. Although there will likely be some modest detrimental changes recommended for the individual market insurance exchanges, the largest impact will likely be in changes recommended for the Medicaid program. Today’s message explains why that would be a grievous mistake.

Medicaid is the largest insurance program in the United States, serving over 74 million people. These are low-income individuals who do not have assets that could pay for their proportionate share of America’s health care bill. Most of us consider Medicaid to be an essential insurance program for these individuals and families (in the absence of a single payer system). However, new poll results by Kaiser Foundation show that one-half of Republicans (Republicans being one-third of the population) consider Medicaid to be predominantly a welfare program, and those Republicans now control our government. The political representatives of one-sixth of our population are about to take a budget ax to this crucial program, because, after all, it is merely a welfare program and one that we can no longer afford to maintain (Republican view).

The consequences of the various policies under consideration are dire. They are considering allowing states to impose premiums that would create a barrier to Medicaid coverage, leaving those vulnerable without insurance. They are considering allowing the states to use cost sharing to make Medicaid beneficiaries better health care shoppers, but it has been shown that even small out-of-pocket costs create barriers to care for this population. They likely will dramatically reduce over time the federal contribution to the state Medicaid programs which may cause even more states to limit eligibility, keeping out individuals who may be impoverished but still have barely enough income to have a cellphone (as if cellphone fees were enough that they could be used instead to purchase health plans in the individual market).

What we will see tomorrow will be legislative recommendations to the Republicans in the Senate. It remains to be seen whether or not they will conveniently fail to find the votes to pass their proposal so that they will not all be labeled as having stone-cold hearts.

Even if Medicaid does get a reprieve, we still cannot relax. It will continue to be vulnerable to attacks by those who consider it to be welfare and thus a tool to reduce budget deficits. Medicaid must be replaced by a program that provides access to comprehensive health care benefits while removing financial barriers to care – not just for lower-income individuals, but for all of us. Regardless of the Republican replacement proposal we need to intensify our advocacy for replacement with an improved Medicare for all.

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Payer prior authorization requirements on physicians continue rapid escalation: increasing practice overhead and delaying patient care

MGMA Poll, May 16, 2017

Medical practice leaders say that the burden of submitting prior authorization requests and supporting documentation to health plans is getting worse.

A May 16 MGMA Stat poll found 86% of respondents saying that prior authorization requests have increased in the past year, while 3% report those requests decreasing and another 11% saying they’ve stayed the same in the past year.

Agreements between health plans and their participating physicians routinely include a statement that the insurer has the right to determine the medical necessity of surgery, imaging studies, medication and many other procedures. Physician practices then devote clinical and administrative staff time and resources to submit preauthorization requests for each service, increasing overhead and often delaying patient care.

“Health plan demands for prior approval for physician-ordered medical tests, clinical procedures, medications, and medical devices ceaselessly question the judgement of physicians, resulting in less time to treat patients and needlessly driving up administrative costs for medical groups,” said Halee Fischer-Wright, MD, MMM, FAAP, CMPE, MGMA President and CEO.

http://www.mgma.com…

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Comment:

By Don McCanne, M.D.

Prior authorization requirements have always been a pain, and now, according to this poll, they’re getting worse. Not only do they add to our profound administrative waste in health care, they also may interfere with patient care by delaying or even preventing the delivery of appropriate services. They also waste valuable time of physicians and their staffs.

This report states, “Agreements between health plans and their participating physicians routinely include a statement that the insurer has the right to determine the medical necessity of surgery, imaging studies, medication and many other procedures.” Really? Insurers and other intermediaries have the right to determine medical necessity? Doesn’t that right belong to the patients in consultation with their health care professionals? Sure, insurers make payment decisions, and prior authorization may prevent retroactive denial of coverage. But how can they have to gall to usurp clinical judgment?

But suppose the services are unnecessary. Wouldn’t it be better to identify outliers and then attempt to educate them, reserving penalties for those remaining refractory to educational efforts? Taiwan has shown that that can work with a single payer system.

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Even the Insured Often Can’t Afford Their Medical Bills

By Helaine Olen
The Atlantic, June 18, 2017

The current debate over the future of the Affordable Care Act is obscuring a more pedestrian reality. Just because a person is insured, it doesn’t mean he or she can actually afford their doctor, hospital, pharmaceutical, and other medical bills. The point of insurance is to protect patients’ finances from the costs of everything from hospitalizations to prescription drugs, but out-of-pocket spending for people even with employer-provided health insurance has increased by more than 50 percent since 2010, according to human resources consultant Aon Hewitt.

Even a gold-plated insurance plan with a low deductible and generous reimbursements often has its holes. Many people have separate—and often hard-to-understand—in-network and out-of-network deductibles, or lack out-of-network coverage altogether. While many plans cap out-of-pocket spending, that cap can often be quite high—in 2017, it’s $14,300 for a family plan purchased on the ACA exchanges, for example. Depending on the plan, medical care received from a provider not participating in a particular insurer’s network might not count toward any deductible or cap at all.

The fact is that nearly any illness or injury can lead to unexpected bills, and few are able to absorb those shocks without difficulty. Yet, despite the commonness of such problems, there is little in the way of a system for helping people out through these times.

(The article discusses a multitude of funds with a mission to assist patients in paying their medical bills. The following comments are typical about many of these funds.)

The evidence is clear when you visit the websites of the funds. The Patient Advocate Foundation’s chronic pain fund? Its aid is limited to $1,500 and you need to apply when it’s taking applications. “Effective 01/18/2017, we are unable to process applications that are pending or accept new or renewal applications at this time. Should additional funding for Chronic Pain Fund applicants become available in the future, it will be necessary to re-apply if assistance is still needed.” The Patient Advocate Foundation’s multiple-sclerosis and renal-cell-carcinoma funds have been closed to new applicants since 2016.

And even when medical supplicants find programs, they are not guaranteed aid even if they meet all the eligibility requirements. “Then you call these services, not just for medical help, but any help. They tell you, ‘Oh, you have to hit us on this date,’ or ‘We get funding every month, but our funding is gone by the fifth of the month.’”

As for hospital-based charity, it can vary widely. Most studies find for-profit hospitals provide less charity care than nonprofit medical centers. But getting aid from a non-profit hospital isn’t exactly a gimme. A paper published by the Brookings Institution in 2015 pointed out that the non-profit hospitals with the most funds that could be devoted to charity care—that is, covering or forgiving medical bills of those who cannot pay full—are not located in the geographic areas where the need is greatest.

In an effort to cut down on uncollectable bills, a number of hospitals are now teaming up with financial services firms like Commerce Bank to offer time-limited interest free loans to patients something that, while helpful to some, most certainly is not charity.

Little wonder, then, that an increasing number of patients turn to crowdfunding even before they investigate more established charitable giving programs.

Yet for all the attention paid to crowdfunding, the limited evidence we have shows that for most people, the hype is better than the actual results.

(Ethan Austin, the co-founder of Give Forward) spoke to a group of students at New York University’s Stern School of Business about his (crowdfunding) site. He was blunt about one of the reasons he believed this segment of the online fundraising world had taken off so dramatically. “Our health-care system is shit and it’s trending shittier,” he told the group.

But there is more than simple embarrassment arguing against this system. It’s the equivalent of taping a few bandages over a gaping wound and hoping for the best. The cost of medical care is so high, and the personal finances of many Americans so tight,  it’s all but impossible for any organization—or all of them—to keep up, and that’s whether or not the charitable contributions they accept are part of the problem or the solution.

https://www.theatlantic.com…

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Comment:

By Don McCanne, M.D.

You really don’t need a long article like this to understand that our current health care financing system falls far short of preventing financial hardship for many with health care needs, insured or not, and that our various charitable resources hardly make a dent in the need.

We need a health care financing system that ensures access for all while eliminating financial barriers to care. Patches to the current fragmented system will do neither. A well designed single payer system – an improved Medicare for all – would fix the system so it works well for all of us. That’s what the people want. So let’s do it.

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