Federal Update: So Many Moving Parts
A number of proposals working their way through Congress and the White House could threaten health insurance coverage for millions of Americans including here in Vermont. VAHHS and the American Hospital Association oppose efforts to weaken the Affordable Care Act or repeal its individual mandate, which helps stabilize the risk pool by keeping healthy people in the system. Included in the House tax bill is another troubling provision that would make it harder for nonprofit hospitals to secure bonds to invest in their facilities and communities.
This time last year, health care leaders and policy analysts were already mourning the death of the Affordable Care Act. Despite serious drama over the past many months, the ACA still stands and is thriving: early open-enrollment numbers show big increases over the number of people who signed up for health coverage during the same period last year. Unfortunately, the ACA has been undermined by continued executive orders and rulemaking, including just in the past few months:
- Association and short-term plans. Agencies have been directed to increase flexibility for consumers to purchase association health plans and short-term health plans, including purchasing plans across state lines. These plans often only offer partial coverage of health care services and will have reduced or very little consumer protections.
- Relaxing regulatory oversight of insurance plans. Proposed rules would allow flexibility on essential health benefits, greater state oversight of consumer protections, and would allow a waiver to the 80% medical loss ratio requirement. This means that insurance companies could spend less money on medical costs and more money on overhead and salaries. This will likely not affect Vermont, which has very strong consumer protections in place and oversight by the Green Mountain Care Board. One positive aspect to these rules is that they would continue to allow Vermonters in small group plans to enroll directly with their insurance company.
- Refusal to fund cost sharing reductions. Cost sharing reductions subsidize out-of-pocket costs for low-income and mid-income households to make health care coverage more affordable. Cutting off these payments will force health insurance plans to cover the payments. Ironically, this measure will actually cost the federal government money because they will have to subsidize the premium increases. Although this action goes into effect for 2018, rates in Vermont will not change this year (sign up for your plan today!). Premium costs will rise significantly next year without congressional action. Congress is trying to address this issue through the Alexander-Murray bill, which would fix the cost sharing reduction issue for 2018 and 2019 and would provide funding for greater consumer outreach and flexibility to states to change health care coverage through a waiver, making lower-cost and lower-coverage “copper” plans available to consumers. Although there is currently a majority to pass the bill, Congress does not want to move on it until it has a guarantee that President Trump will sign it.
The ACA is also finding its way into the proposed tax bill in Congress. Some legislators are talking about putting the Alexander-Murray bill into the tax bill to help manage the cost sharing reduction issue. Sen. Rand Paul (R-Ky.) recently proposed repealing the individual mandate in the tax bill. This proposal would likely result in a lower insured rate and higher premiums as healthy individuals leave plans.
The current proposed tax bill also limits tax-exempt financing. This will seriously affect non-profit hospitals’ ability to affordably finance IT projects and building improvements. The provision will also impact affordable housing. With a vital link between housing and good health, it is easy to see the negative health effects from this proposal.
Along with the ACA, Medicaid is also under threat. Funding for the Children’s Health Insurance Program (CHIP), typically a bi-partisan program that passes easily, expired back in October. Since then, the House and the Senate have proposed bills, but have not voted them out.
A few weeks ago, the Trump administration announced that it would allow states to use work requirements as a condition of Medicaid eligibility. The states that have already requested a work requirement are Maine, Kentucky, Arkansas, Arizona, Indiana, Utah, and Wisconsin. Advocates are not only concerned about how a work requirement may affect the health of some individuals, but also the administration’s focus on including “able-bodied” individuals in the requirement without addressing those suffering from mental illness.
Prescription Drug Reimbursement Cuts
Earlier this month, the Center for Medicare and Medicaid Services released a final rule cutting reimbursement to hospitals under a prescription drug program by nearly 30%. This program was set up to help hospitals stretch limited resources and is one of the strongest tools hospitals have to battle against rising prescription drug costs. This cut will not affect Critical Access Hospitals or Sole Community Hospitals.
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