Employers Want Lawmakers to Curb Rising Pharma Costs

Has the cost of pharmaceuticals caused an increase in your health care costs? Find out how other employers are trying to combat rising costs in the great article from Employee Benefits News by Nick Otto.

A majority of employers say they were relieved to see the GOP’s repeal and replace plan fizzle out last month, and instead have their own ideas on how to best reform healthcare and how to rein in costs.

In a poll conducted by Mercer days following the crumbling of the American Health Care Act, more than half who invest in employer-sponsored healthcare said they were happy to see the GOP plan fail.

Nearly a quarter (24%) of employers told the consulting firm they “very relieved” of the legislation’s failure, while 32% said they were “relieved.”

Meanwhile, 16% said they were disappointed the legislation didn’t pass, 5% were “very disappointed” it didn’t pass, and the remainder of employers had no opinion. A planned vote on the ACHA was scrapped in late March at President Donald Trump’s request after a number of Republicans said they opposed the bill.

With more than 61% of covered Americans getting health coverage through employer plans, Mercer says businesses should help play a key role in recognizing and addressing the underlying cost concerns plaguing the healthcare market.

“Cost-shifting does not address the underlying causes of healthcare cost growth, and increasing burdens on employers will simply make it harder for them to provide affordable coverage to their employees,” Mercer says.

So what do employers say are the top issues lawmakers should address?

Topping the employer wish list, according to the Mercer poll, is help with controlling the climbing cost of pharmaceuticals with a score of 4.4/5 (employers ranked policymaker priorities 1-5, 5 being “top priority).

The following improvements also made the list of employer desires: improving price transparency (4.1), stabilizing the individual markets (4), maintaining Medicaid funding (4) and investing more in population health and education (3.7).

While neither the ACA nor the AHCA had any significant impact to how employers offer healthcare, there are aspects of both legislations that would still influence some employer plans.

Maintaining Medicaid funding and having a stabilized individual market will lower hikes to private payers by allowing people not in employer-sponsored plans have access to affordable coverage and avoid a rise in the number of uninsured.

See the original article Here.

Source:

Otto N. (2017 April 9). Employers want lawmakers to curb rising pharma costs [Web blog post]. Retrieved from address https://www.benefitnews.com/news/employers-want-lawmakers-to-curb-rising-pharma-costs?brief=00000152-14a7-d1cc-a5fa-7cffccf00000

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Understanding the Evolution of Health Insurance in a Post-ACA World

With the fall of the AHCA, are you wondering where you are left standing with healthcare? Check out this great article from Benefits Pro on what the fall of the AHCA means for employers and how to proceed with healthcare from here by Eric Helman.

While much has been written about specific aspects of the ACA and how repeal, replace and repair will affect certain populations, the impact on employer-sponsored benefits is more convoluted.

In the world of employee benefits, to properly understand the post ACA world, we must reflect on the confluence of how five separate constituents react to the new health insurance landscape.

The issues and priorities of these five groups: government, carriers, employers, employees, and brokers/consultants, and how they relate to each other will dictate the evolution of health insurance in the post-ACA world.

These insights will illuminate what to expect in a post-ACA climate as the health insurance landscape continues to evolve under President Trump.

Government compliance issues ease

While we all may be a bit weary from the focus on Washington, the fact remains the federal government continues to be the single biggest catalyst for changes in the health insurance and benefits landscape.

For benefits professionals, it is important to recognize that for all the politicization around ACA, there is very little focus on the employer-provided benefits space, especially outside of the realm of small employers. The priority for government involvement in repeal-replace-repair is the individual market and Medicaid expansion.

Having said this, if the Republicans choose to use reconciliation to repeal the ACA with a simple majority, many aspects of the employer-provided system will be affected. Unfortunately, this will perpetuate the preoccupation with compliance in the employer space, continuing the trend of non-value add expenditure of resources that has plagued the industry for the last five years.

Carrier mandates relax

Perhaps surprisingly, the second area of significant change in the post-ACA era will be in the domain of the carriers. Against the backdrop of the Department of Justice opinions on the two proposed mega-mergers, we expect the greatest impact of repeal-replace-repair will manifest itself in the proliferation of new products which were “non-compliant” under the ACA.

Whether correct or not, one of the indictments of the ACA is increased mandates do more to destroy markets in terms of access and affordability than they do to advance these objectives.

Look for the relaxation of these mandates and the commensurate acceleration of new product development which will inevitably follow. Combined with the return of premium reimbursement plans in the small market, we expect the further commoditization of major medical insurance as low risk consumers choose less coverage for less premium.

Employers reallocate benefits compensation

Second only to the carriers, the employers have been the biggest victims of the ACA era. While many have applauded the decline in the rate of health care inflation, the reality is that benefits costs continue to grow more than inflation, placing an ever-increasing burden on total compensation planning.

Add to this the increased cost of compliance in an environment where employers are trying to reduce administrative costs in the face of a slow growth economy and you can understand the “ACA fatigue” many employers report.

Repeal-replace-repair, while it will bring uncertainty in the near term, is likely to lower the burden on employers and allow more strategic thinking about how they allocate compensation to benefits.

The increasing age diversity of their employees will force them to consider altering this allocation in favor of financial wellness (retirement and student debt) perhaps at the expense of traditional health benefits. The war for new talent precipitated by near full employment in skilled professions will only exacerbate this tension.

Employees wise up on benefit choices

For employees, the impact of the politicization of health care will continue to cloud their perception of their role in choosing and consuming the benefit programs offered by their employers.

While much has been written about the promise of “consumerism” to change the hyper-inflationary nature of fee-for-service health care, it is apparent that the deadly combination of employee illiteracy and entitlement about employer-provided health insurance is a greater impediment to real reform in the way health care is consumed in this country.

With the potential deregulation on mandated benefits and the increasing availability of retail health care alternatives, it will be incumbent on all the constituents to accelerate the employees’ education and appreciation for employee benefit choices customized to their informed perception of need and risk mitigation.

Brokers/consultants rise to the challenges

And now, the elephant in the room, the impact on brokers and consultants. One of my early mentors said, “There is profit in confusion.” For the skilled practitioners, I think they would agree that the net effect of the ACA was increased opportunity. It is important to note however, that this opportunity required focus on new disciplines.

No longer were the skills of customer relationship management, procurement management and vendor management sufficient to satisfy the needs of their clients. The best players were forced to develop expertise in compliance, regulatory impact, benefits technology and internal human resources processes that their predecessors could ignore. This, the low cost of money and the aging workforce of benefit producers has contributed to the continued wave of firm consolidation which changes the nature of competition.

Additionally, the widely publicized fall of market disruptors will have a chilling effect on innovation for the near term. In the post-ACA era, benefits professionals will be challenged to balance revenue, client retention and cost-of-service pressures in an environment where the future is uncertain.

The post-ACA era promises to be as exciting as the last five years. To paraphrase Richard Epstein on a separate topic, the real dilemma is that the people working on the problem lack the technical expertise and the political agnostic orientation necessary for real change.

In the meantime, successful participants in this marketplace will be forced to be both diplomats and opportunists, acutely aware of the issues and priorities facing all of the important constituents and balancing these to the most optimum outcome. I, personally, am comforted that we have some of the most creative people I know working on this challenge.

See the original article Here.

Source:

Helman E. (2017 April 7). Understanding the evolution of health insurance in a post-ACA world [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/04/07/understanding-the-evolution-of-health-insurance-in?t=core-group&page_all=1

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What Marketplace Health Insurance Plans Cover

Do you know what is covered in your marketplace health insurance plan? Find out more about your health insurance plan and everything it covers in this article by HealthCare.Gov.

All plans offered in the Marketplace cover the same set of essential health benefits.

Every health plan must cover the following services:

  • Ambulatory patient services (outpatient care you get without being admitted to a hospital)
  • Emergency services
  • Hospitalization (like surgery and overnight stays)
  • Pregnancy, maternity, and newborn care (both before and after birth)
  • Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
  • Prescription drugs
  • Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)

Additional benefits

Plans must also include the following benefits:

Essential health benefits are minimum requirements for all Marketplace plans. Specific services covered in each broad benefit category can vary based on your state’s requirements. Plans may offer additional benefits, including:

When comparing plans, you’ll see exactly what each plan offers.

See the original article Here.

Source:

Author (Date). What marketplace health insurance plans cover [Web blog post]. Retrieved from address https://www.healthcare.gov/coverage/what-marketplace-plans-cover/

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Are Healthcare Cost-Shifting Efforts at a Tipping Point?

Are you having trouble controlling your healthcare cost? Take a look at this interesting article from Employee Benefits Advisor on how rising healthcare costs are affecting employers by Bruce Shutan.

With the fate of healthcare reform in limbo, new research suggests employers are moving forward with a host of incremental changes to their health and wellness plans in hopes of curtailing costs on their own.

Kim Buckey, VP of client services at DirectPath, an employee engagement and healthcare compliance technology company, has noticed a slowdown in adoption of high-deductible health plans and cost-shifting strategies that aren’t quite living up to expectations. DirectPath’s 2017 Medical Plan Trends and Observations Report, based on an analysis of about 975 employee benefit health plans, found employers applying creative methods for cost control.

Buckey noted greater use of health savings accounts, wellness incentives, price transparency tools and alternative care options.

Slightly more than half of the employers studied by DirectPath offer a price transparency tool, while another 18% plan to do so in the next three years. Price-comparison services were found to save employees and employers alike an average of $173 and $409, respectively, per procedure.

In an effort to reduce costs and the administrative burden of tracking coverage for dependents, surcharges on spouses who can elect coverage elsewhere soared more than 40% within the past year to $152 per month.

The number of plans that offer wellness incentives rose to 58% from 50% between 2016 and 2017. Rewards included paycheck contributions, plan premium discounts, contributions to HSAs and health reimbursement arrangements and reduced co-pays for office visits. HSAs were far more popular than employee-funded HRAs (67% vs. 15% of employers examined), while employer contributions to HSAs increased nearly 10%.

Barriers to care and cost containment
A separate survey conducted by CEB, a technology company that monitors corporate performance, noted that although as many as one-third of organizations offer telemedicine, more than 55% of employees aren’t even aware of their availability and nearly 60% believe they’re difficult to access.

DirectPath and CEB both found that the average cost of specialty drugs increased by more than 30%. This reflects research conducted by the National Business Group on Health. Nearly one-third of NBGH members said the category was their highest driver of healthcare costs last year.

The pursuit of a panacea for rising group health costs has been meandering. When Buckey’s career began, she recalls how indemnity plans gave way to HMOs and managed care, then HDHPs, consumer-directed plans and private exchanges. “There is no one silver bullet that’s going to solve this problem,” she explains, “and I think employers and their advisers are starting to understand that it’s got to be a combination of things.”

More employers are now realizing that cost-shifting isn’t a viable long-term solution and that “whatever changes are put in place will require a well thought-out, year-round and robust communication plan,” she says.

There’s also a serious need to improve healthcare literacy, with Buckey noting that many employees still struggle to understand basic concepts such as co-pays, deductibles and HSAs. Consequently, she says it’s no wonder why they often “just shut down and do whatever their doctor tells them.

“So I think anything that advisers and brokers can do to support their employers in explaining these plans, or whatever changes they choose to implement,” she continues, will help raise understanding and eventually have a positive influence on behavior change. This, in turn, will help lower employee healthcare costs.”

See the original article Here.

Source:

Shutan B. (2017 April 5). Are healthcare cost-shifting efforts at a tipping point? [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/are-healthcare-cost-shifting-efforts-at-a-tipping-point

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How Employers Should Proceed After the AHCA’s Collapse

Take a look at the great article from Employee Benefits Advisor on what employers need to know about healthcare with the collapse of the AHCA by Alden J. Bianchi and Edward A. Lenz.

The stunning failure of the U.S. House of Representatives to pass the American Health Care Act has political and policy implications that cannot be forecasted. Nor is it clear whether or when the Trump administration and Congress will make another effort to repeal and replace, or whether Republicans will seek Democratic support in an effort to “repair,” the Affordable Care Act. Similarly, we were unable to predict whether and to what extent the AHCA’s provisions can be achieved through executive rulemaking or policy guidance.

Here are some ways the AHCA’s failure could impact employers in the near term.

Immediate impact on employers
Employers were not a major focus of the architects of the ACA, nor were they a major focus of those who crafted the AHCA. This is not surprising. These laws address healthcare systems and structures, especially healthcare financing. Rightly or wrongly, employers have not been viewed by policymakers as major stakeholders on those issues.

In a blog post published at the end of 2014, we made the following observations:

The ACA sits atop a major tectonic plate of the U.S. economy, nearly 18% of which is healthcare-related. Healthcare providers, commercial insurance carriers, and the vast Medicare/Medicaid complex are the law’s primary stakeholders. They, and their local communities, have much to lose or gain depending on how healthcare financing is regulated. The ACA is the way it is largely because of them. Far more than any other circumstance, including which political party controls which branch of government, it is the interests of the ACA’s major stakeholders that determine the law’s future. And there is no indication whatsoever that, from the perspective of these entities, the calculus that drove the ACA’s enactment has changed. U.S. employers, even the largest employers among them, are bit players in this drama. They have little leverage, so they are relegated to complying and grumbling (not necessarily in that order).

With the AHCA’s collapse, the ACA remains the law of the land for the foreseeable future. The AHCA would have zeroed out the penalties on “applicable large” employers that fail to make qualified offers of health coverage, but the bill’s failure leaves the ACA’s “play or pay” rules in full force and effect. The ACA’s reporting rules, which the AHCA would not have changed, also remain in effect. This means, among other things, that many employers, especially those with large numbers of part-time, seasonal, and temporary workers that face unique compliance challenges, will continue to be in the position of “complying and grumbling.”

This does not mean that nothing has changed. The leadership of the Departments of Health and Human Services, Labor and Treasury has changed, and these agencies are now likely to be more employer-friendly. Thus, even though the ACA is still the law, the regulatory tone and tenor may well be different. For example, although the current complex employer reporting rules will remain in effect, the Treasury and IRS might find administrative ways to simplify them. Similarly, any regulations issued under the ACA’s non-discrimination provisions applicable to insured health plans (assuming they are issued at all) likely will be more favorable to employers than those issued under the previous administration.

There are also unanticipated consequences of the AHCA’s failure that employers might applaud. We can think of at least two.
1. Stemming the anticipated tide of new state “play or pay” laws
The continuation of the ACA’s employer mandate likely will put on hold consideration by state and local governments of their own “play or pay” laws.

In anticipation of the repeal of the ACA’s employer mandate, the Governor of Massachusetts recently introduced a budget proposal that would reinstate mandated employer contributions to help cover the costs of increased enrollment in the Medicaid and Children’s Health Insurance Program, known as MassHealth. Under the proposal, employers with 11 or more full-time equivalent employees would have to offer full-time employees a minimum of $4,950 toward the cost of an employer group health plan, or make an annual contribution in lieu of coverage of $2,000 per full-time equivalent employee. While the Governor’s proposal is not explicitly conditioned on repeal of the ACA’s employer mandate, the ACA’s survival may prompt a reconsideration of that approach.

California lawmakers were also considering ACA replacement proposals, including a single-payer bill introduced last month by Democratic state senators Ricardo Lara and Toni Atkins. Had the ACA’s employer mandate been repealed, those proposals were likely just the tip of an iceberg. When the ACA was enacted in 2010, Hawaii, Massachusetts, and San Francisco were the only jurisdictions with their own healthcare mandates on the books. But in the prior two-year period, before President Obama was elected and made healthcare reform his top domestic priority, more than two dozen states had introduced various “fair share” health care reform bills aimed at employers.

Most of the state and local “play or pay” proposals would have required employers to pay a specified percentage of their payroll, or a specified dollar amount, for health care coverage. Some required employers to pay employees a supplemental hourly “health care” wage in addition to their regular wages or provide health benefits of at least equal value. California, Illinois, Pennsylvania, and Wisconsin considered single-payer proposals.

To be sure, any state or local “play or pay” mandates would be subject to challenge based on Federal preemption under the Employee Retirement Income Security Act (ERISA). While some previous “play or pay” laws were invalidated under ERISA (e.g., Maryland), others (i.e., San Francisco) were not. In sum, given the failure of the AHCA, there would appear to be no rationale, at least for now, for any new state or local “play or pay” laws to go forward.

2. Avoiding upward pressure on employer premiums as a result of Medicaid reforms
The AHCA proposed to reform Medicaid by giving greater power to the states to administer the Medicaid program. Under an approach that caps Medicaid spending, the law would have provided for “per capita allotments” and “block grants.” Under either approach, the Congressional Budget Office, in its scoring of the AHCA, predicted that far fewer individuals would be eligible for Medicaid.

According to the CBO: CBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017 to 2026 periods. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA’s subsidies for non-group health insurance.

While employers rarely pay attention to Medicaid, the AHCA gave them a reason to do so. Fewer Medicaid-eligible individuals would mean more uncompensated care — a significant portion of the costs of which would likely be passed on to employers in the form of higher premiums. As long as the ACA’s expanded Medicaid coverage provisions remain in place, premium pressure on employers will to that extent be avoided.

Long-term impact on employers
As we conceded at the beginning, it’s not clear how the Republican Congress and the Administration will react to the AHCA’s failure. If the elected representatives of both political parties are inclined to try to make the current system work, however, we can think of no better place that the prescriptions contained in a report by the American Academy of Actuaries, entitled “An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes.”

The actuaries’ report does not address, much less resolve, the major policy differences between the ACA and the AHCA over the role of government — in particular, the extent to which taxpayers should be called on to fund the health care costs of low-and moderate-income individuals, and whether U.S. citizens should be required to maintain health coverage or pay a penalty. And even if lawmakers can reach consensus on those contentious issues, they still would have to agree on the proper implementing mechanisms.

But whatever the outcome, employers are unlikely to play a major role.

See the original article Here.

Source:

Bianchi A. & Lenz E. (2017 April 6). How employers should proceed after the AHCA's collapse [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/how-employers-should-proceed-after-the-ahcas-collapse

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HSAs to see explosive growth

Are you using HSAs to help save money on your healthcare cost? Find out from this article by Employee Benefit News on how the market for HSAs is set to grow exponentially over the next few years by Kathryn Mayer.

It’s about time for health savings accounts to take the spotlight. And that’s going to be a good thing for employees, industry experts say: Not only will HSAs help workers with their healthcare expenses, but the savings vehicles also will put them on a better track for retirement planning.

“The market is going to blow up,” American Retirement Association CEO Brian Graff said this week during the NAPA 401k Summit in Las Vegas, citing new healthcare reform proposals — including the GOP’s American Health Care Act — as well as a better understand of HSAs as reasons for the predicted growth.

The ACHA, which doubles HSA contributions, “dramatically increases the incentive for employers to offer high-deductible health plans,” he said. The GOP plan expands the allowable size of healthcare savings accounts that can be coupled with high-deductible insurance plans, up to $6,550 for an individual or $13,100 for a family. It also expands qualifying expenses to include health insurance premiums, over-the-counter medications and preventive health costs.

By 2018, there will be 27 million HSA accounts and more than $50 billion in HSA assets, according to estimates from the Kaiser Family Foundation cited by Graff. Currently, there are 18 million accounts and $34.7 billion in assets.

Those statistics — and proposed healthcare reforms — are catching the eye of the retirement industry: The accounts have the potential to become “more compelling than a 401(k),” due to tax-deductible and tax-deferred incentives, Graff said.

“We have to think about what this means for our industry,” he said.

In a live poll during a conference keynote, three-quarters of retirement advisers noted they do not offer HSA advisory services. That number, Graff predicts, will change radically over the next two years.

Current proposals are positioning HSAs a hybrid of medical and retirement savings, Graff said. “It’s not just a health account, it’s a savings account.” Healthcare expenses are a major concern for retirees and often cause employees to push back plans for retirement. If HSA funds are not needed for medical expenses, the money can be withdrawn after age 65 and taxed as ordinary income.

Graff says plan sponsors and retirement advisers should encourage employees to first max out their HSAs and then match their 401(k)s.

The HSA is “the nexus between healthcare and retirement,” Daniel Bryant, an advisor with Sheridan Road, said during a standing-room only panel on HSAs Monday.

Meanwhile, added panelist Ryan Tiernan, a national accounts manager with American Funds, “it’s the biggest jump ball no one has cared to jump to. HSAs are probably the most efficient way to save and invest for your biggest expense in retirement.”

See the original article Here.

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Late Move To Dump ‘Essential’ Benefits Could Strand Chronically Ill

Are you worried about your health benefits will change with the passing of the AHCA? Take a look at this article by Jay Hancock from Kaiser Health News and find out how your 'essential' benefits could be cut with the passing of the AHCA.

A last-minute attempt by conservative Republicans to dump standards for health benefitsin plans sold to individuals would probably lower the average consumer’s upfront insurance costs, such as premiums and deductibles, said experts on both sides of the debate to repeal and replace the Affordable Care Act.

But, they add, it will likely also induce insurers to offer much skimpier plans, potentially excluding the gravely ill, and putting consumers at greater financial risk if they need care.

For example, a woman who had elected not to have maternity coverage could face financial ruin from an unintended pregnancy. A healthy young man who didn’t buy drug coverage could be bankrupted if diagnosed with cancer requiring expensive prescription medicine. Someone needing emergency treatment at a non-network hospital might not be covered.

What might be desirable for business would leave patients vulnerable.

“What you don’t want if you’re an insurer is only sick people buying whatever product you have,” said Christopher Koller, president of the Milbank Memorial Fund and a former Rhode Island insurance commissioner. “So the way to get healthy people is to offer cheaper products designed for the healthy people.”

Such a change could give carriers wide room to do that by eliminating or shrinking “essential health benefits” including hospitalization, prescription drugs, mental health treatment and lab services from plan requirements — especially if state regulators don’t step in to fill the void, analysts said.

As part of the push by House GOP leaders to gain more support for their plan, they amended the bill Thursday  to allow states to decide, starting next year, what if any benefits  insurers must provide on the individual market, rather than requiring health plans to include the law’s essential health benefits, according to House Ways and Means Chairman Kevin Brady (R-Texas).

The Affordable Care Act requires companies selling coverage to individuals and families through online marketplaces to offer 10 essential benefits, which also include maternity, wellness and preventive services — plus emergency room treatment at all hospitals. Small-group plans offered by many small employers also must carry such benefits.

Conservative House Republicans want to exclude the rule from any replacement, arguing it drives up cost and stifles consumer choice.

On Thursday, President Donald Trump agreed after meeting with members of the conservative Freedom Caucus to leave it out of the measure under consideration, said White House Press Secretary Sean Spicer. “Part of the reason that premiums have spiked out of control is because under Obamacare, there were these mandated services that had to be included,” Spicer told reporters.

Pushed by Trump, House Republican leaders agreed late Thursday to a Friday vote on the bill but were still trying to line up support. “Tomorrow we will show the American people that we will repeal and replace this broken law because it’s collapsing and it’s failing families,” said House Speaker Paul Ryan (R-Wis.). “And tomorrow we’re proceeding.” When asked if he had the votes, Ryan didn’t answer and walked briskly away from the press corps.

But axing essential benefits could bring back the pre-ACA days when insurers avoided expensive patients by excluding services they needed, said Gary Claxton, a vice president and insurance expert at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

“They’re not going to offer benefits that attract people with chronic illness if they can help it,” said Claxton, whose collection of old insurance policies shows what the market looked like before.

One Aetna plan didn’t cover most mental health or addiction services — important to moderate Republicans as well as Democrats concerned about fighting the opioid crisis. Another Aetna plan didn’t cover any mental health treatment. A HealthNet plan didn’t cover outpatient rehabilitative services.

Before the ACA most individual plans didn’t include maternity coverage, either.

The House replacement bill could make individual coverage for the chronically ill even more scarce than a few years ago because it retains an ACA rule that forces plans to accept members with preexisting illness, analysts said.

Before President Barack Obama’s health overhaul, insurers could reject sick applicants or charge them higher premiums.

Lacking that ability under a Republican law but newly able to shrink benefits, insurers might be more tempted than ever to avoid covering expensive conditions. That way the sickest consumers wouldn’t even bother to apply.

“You could see even worse holes in the insurance package” than before the ACA, said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University. “If we’re going into a world where a carrier is going to have to accept all comers and they can’t charge them based on their health status, the benefit design becomes a much bigger deal” in how insurers keep the sick out of their plans, she said.

Michael Cannon, an analyst at the libertarian Cato Institute and a longtime Obamacare opponent, also believes dumping essential benefits while forcing insurers to accept all applicants at one “community” price would weaken coverage for chronically ill people.

“Getting rid of the essential health benefits in a community-rated market would cause coverage for the sick to get even worse than it is under current law,” he said. Republicans “are shooting themselves in the foot if they the offer this proposal.”

Cannon favors full repeal of the ACA, allowing insurers to charge higher premiums for more expensive patients and helping consumers pay for plans with tax-favored health savings accounts.

In an absence of federal requirements for benefits, existing state standards would become more important. Some states might move to upgrade required benefits in line with the ACA rules but others probably won’t, according to analysts.

“You’re going to have a lot of insurers in states trying to understand what existing laws they have in place,” Koller said. “It’s going to be really critical to see how quickly the states react. There are going to be some states that will not.”

See the original article Here.

Source:

Hancok J. (2017 March 24). Late move to dump 'essential' benefits could strand chronically ill [Web blog post]. Retrieved from address https://khn.org/news/late-move-to-dump-essential-benefits-could-strand-chronically-ill/

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ACA repeal bill nixed: What’s next for healthcare reform, employers?

With the fall of the AHCA find out what is next for employers in terms of healthcare from the great article at HR Morning by Christian Schappel.

The Republican’s best attempt to repeal the Affordable Care Act (ACA) to date has been axed. Where does that leave employers, and what can they expect next? 

For starters, it leaves employers with the ACA and everything that comes with it … the employer mandate … the reporting requirements … the whole enchilada.

In other words, any organizations that relaxed their ACA compliance efforts — believing the Republican’s American Health Care Act would repeal and replace Obamacare — could be exposing themselves to non-compliance penalties.

The more complicated question is: What happens next?

A piecemeal approach?

With this appearing to be the GOP’s best shot at repealing and replacing Obamacare (or at least parts of it) in one stroke, and the party failing to push its legislation through Congress, President Trump and House Speaker Paul Ryan (R-WI) appear resigned to the fact that the ACA will remain in place indefinitely.

“We’re going to be living with Obamacare for the foreseeable future,” Ryan said after announcing the GOP bill would not be voted on in the House.

Trump has even indicated that after this loss for the GOP, he wants the party to focus on other issues, like tax reform.

But that doesn’t mean health reform will be on the back burner.

It now appears that Republicans’ best course of action to implement reform changes would be to attempt to “fix” parts of the ACA that are deemed to not be working. And it could do that by including small healthcare provisions in other pieces of legislation, like future tax reform bills.

Trump and his fellow Republicans could also seek to offer concessions to Democrats in future legislation as a means to get members of the left to agree to include certain provisions of the American Health Care Act in future bills.

Example, Republicans are still expected to push hard for a rollback of the ACA’s expansion of Medicaid, and members of the GOP could seek to include rollback provisions in future tax reform legislation in exchange for proposing a tax reform plan Democrats would find more palatable.

How did we get here?

So why did the American Health Care Act fail, despite Republicans controlling the House, Senate and White House?

The answer starts with the fact that the GOP didn’t have the 60 seats in the Senate to avoid a filibuster by the Democrats. In other words, despite being the majority party, it didn’t have enough votes to pass a broad ACA repeal bill outright.

As a result, Senate Republicans had to use a process known as reconciliation to attempt to reshape the ACA. Reconciliation is a process that allows for the passage of budget bills with 51 votes instead of 60. So the GOP could vote on budgetary pieces of the health law, without giving the Democrats a chance to filibuster.

The problem for Republicans was reconciliation severely limited the extent to which they could reshape the law — and it’s a big reason the why American Health Care Act looked, at least to some, like “Obamacare Lite.”

Ultimately, what caused Trump and Ryan to decide to pull the bill before the House had a chance to vote on it was that so many House Republicans voiced displeasure with the bill and said they wouldn’t vote for it.

Specifically, here are some of what conservatives didn’t like about the American Health Care Act:

  • it largely left a lot of the ACA’s “entitlements” intact — like government aid for purchasing insurance
  • it didn’t do enough to curtail the ACA’s expansion of Medicaid
  • too many of the ACA’s insurance coverage mandates would remain in place
  • the Congressional Budget Office estimated that the bill would result in some 24 million Americans losing insurance within the next decade, and
  • it didn’t do enough to drive down the cost of insurance coverage in general.

See the original article Here.

Source:

Schappel C. (2017 March 29). ACA repeal bill nixed: what's next for healthcare reform, employers? [Web blog post]. Retrieved from address https://www.hrmorning.com/aca-repeal-bill-nixed-whats-next-for-healthcare-reform/

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How Affordable Care Act Repeal and Replace Plans Might Shift Health Insurance Tax Credits

Find out how your health insurance tax credits will be impacted with the repeal of the ACA in this great article by Kaiser Family Foundation.

An important part of the repeal and replacement discussions around the Affordable Care Act (ACA) will involve the type and amount of subsidies that people get to help them afford health insurance.  This is particularly important for lower and moderate income individuals who do not have access to coverage at work and must purchase coverage directly.

The ACA provides three types of financial assistance to help people afford health coverage: Medicaid expansion for those with incomes below 138% of poverty (the Supreme Court later ruled this to be at state option); refundable premium tax credits for people with incomes from 100% to 400% of the poverty level who purchase coverage through federal or state marketplaces; cost-sharing subsidies for people with incomes from 100% to 250% of poverty to provide lower deductibles and copays when purchasing silver plans in a marketplace.

This analysis focuses on alternative ways to provide premium assistance for people purchasing individual market coverage, explaining how they work, providing examples of how they’re calculated, and presenting estimates of how assistance overall would change for current ACA marketplace enrollees.  Issues relating to changing Medicaid or methods of subsidizing cost-sharing will be addressed in other analyses.

Premium Tax Credits Under the ACA and Current Replacement Proposals

The ACA and leading replacement proposals rely on refundable tax credits to help individual market enrollees pay for premiums, although the credit amounts are set quite differently.  The House Leadership proposal released on March 6, the American Health Care Act, proposes refundable tax credits which vary with age (with a phase-out for high-income enrollees) and grow annually with inflation.  The tax credits under the ACA vary with family income and the cost of insurance where people live, as well as age, and grow annually if premiums increase.

These various tax credit approaches can have quite different implications for different groups of individual market purchasers.  For example, the tax credits under the ACA are higher for people with lower incomes than for people with higher incomes, and no credit is provided for individuals with incomes over 400% of poverty.  The current replacement proposal, in contrast, is flat for incomes up to $75,000 for an individual and $150,000 for a married couple, and so would provide relatively more assistance to people with upper-middle incomes.  Similarly, the ACA tax credits are relatively higher in areas with higher premiums (like many rural areas), while the replacement proposal credits do not vary by location.  If premiums grow more rapidly than inflation over time (which they generally have), the replacement proposal tax credits will grow more slowly than those provided under the ACA.

What is a Tax Credit, and How is it Different from a Deduction?

A tax credit is an amount by which a taxpayer can reduce the amount they owe in federal income tax; for example, if a person had a federal tax bill of $2,500 and a tax credit of $1,000, their tax liability would be reduced to $1,500.  A refundable tax credit means that if the amount of the tax credit is greater than the amount of taxes owed, the taxpayer receives a refund of the difference; for example, if a person had a federal tax bill of $1000 and a tax credit of $1,500, they would receive a refund of $500.  Making the credit refundable is important if a goal is to assist lower-income families, many of whom may not owe federal income tax. An advanceable tax credit is made available at the time a premium payment is owed (which similarly benefits lower-income families so that they can receive the financial assistance upfront). The ACA and a number of replacement proposals allow for advance payment of credits.

A tax credit is different from a tax deduction.  A deduction reduces the amount of income that is taxed, while a credit reduces the amount of tax itself.  For example, if a person has taxable income of $30,000, a $500 deduction reduces the amount of taxable income to $29,500.  If the person’s marginal tax rate is 15%, the deduction reduces the person’s taxes by 15% of $500, or $75. Because people with lower incomes have lower marginal tax rates than people with higher incomes – and, typically don’t itemize their deductions – tax credits are generally more beneficial to lower income people than deductions.

The next section describes the differing tax credit approaches in more detail and draws out some of the implications for different types of purchasers.

How the Different Tax Credits Are Calculated

The ACA provides tax credits for individuals with family incomes from 100% to 400% of poverty ($11,880 to $47,520 for a single individual in 2017) if they are not eligible for employer-provided or public coverage and if they purchase individual market coverage in the federal or a state marketplace.  The tax credit amounts are calculated based on the family income of eligible individuals and the cost of coverage in the area where the live. More specifically, the ACA tax credit for an eligible individual is the difference between a specified percentage of his or her income (Table 1) and the premium of the second-lowest-cost silver plan (referred to as the benchmark premium) available in the area in which they live.  There is no tax credit available if the benchmark premium is less than the specified percentage of premium (which can occur for younger purchasers with relatively higher incomes) or if family income falls outside of the 100% to 400% of poverty range.  For families, the premiums for family members are added together (including up to 3 children) and compared to specified income percentages. ACA tax credits are made available in advance, based on income information provided to the marketplace, and reconciled based on actual income when a person files income taxes the following.

Take, for example, a person age 40 with income of $30,000, which is 253% of poverty.  At this income, the person’s specified percentage of income is 8.28% in 2017, which means that the person receives a tax credit if he or she has to pay more than 8.28% of income (or $2,485 annually) for the second-lowest-cost silver premium where he or she lives.  If we assume a premium of $4,328 (the national average benchmark premium for a person age 40 in 2017), the person’s tax credit would be the difference between the benchmark premium and the specified percentage of income, or $4,328 – $2,485 = $1,843 (or $154 per month).

The American Health Care Act takes a simpler approach and specifies the actual dollar amounts for a new refundable tax credit that could be used to purchase individual market coverage.  The amounts vary only with age up until an income of $75,000 for a single individual, at which point they begin to phase out. Tax credits range from $2,000 for people under age 30, to $2,500 for people ages 30 to 39, $3,000 for people age 40 to 49, $3,500 for people age 50 to 59, and $4,000 for people age 60 and over starting in 2020. Eligibility for the tax credit phases out starting at income above $75,000 for single individuals (the credit is reduced, but not below zero, by 10 cents for every dollar of income above this threshold, reaching zero at an income of $95,000 for single individuals up to age 29 or $115,000 for individuals age 60 and older). For joint filers, credits begin to phase out at an income of $150,000 (the tax credit is reduced to zero at an income of $190,000 for couples up to age 29; it is reduced to zero at income $230,000 for couples age 60 or older; and it is reduced to zero at income of $290,000 for couples claiming the maximum family credit amount). People who sign up for public programs such as Medicare, Medicaid, public employee health benefit programs, would not be eligible for a tax credit. The proposal further limits eligibility for tax credits to people who do not have an offer available for employer-provided health benefits.

Table 2 shows how projected ACA tax credits in 2020 compare to what would be provided under the American Health Care Act for people at various incomes, ages, and geographic areas. To show the ACA amounts in 2020, we inflated all 2017 premiums based on projections for direct purchase spending per enrollee from the National Health Expenditure Accounts. This method applies the same premium growth across all ages and geographic locations.  Note that the table does not include cost-sharing assistance under the ACA that lowers deductibles and copayments for low-income marketplace enrollees. For example, in 2016, people making between 100 – 150% of poverty enrolled in a silver plan on healthcare.gov received cost-sharing assistance worth $1,440; those with incomes between 150 – 200% of poverty received $1,068 on average; and those with incomes between 200 – 250% of poverty received $144 on average.

Under the ACA in 2020, we project that a typical 40-year-old making $20,000 per year would be eligible for $4,143 in premium tax credits (not including the additional cost-sharing subsidies to lower his or her deductibles and copayments), while under the American Health Care Act, this person would be eligible $3,000. For context, we project that the average ACA premium for a 40-year-old in 2020 would be $5,101 annually (meaning the tax credit in the ACA would cover 81% of the total premium) for a benchmark silver plan with comprehensive benefits and reduced cost-sharing. A $3,000 tax credit for this same individual under the American Health Care Act would represent 59% of the average 40-year-old benchmark silver premium under the ACA.

Generally, the ACA has higher tax credit amounts than the replacement plan for lower-income people – especially for those who are older and live in higher-cost areas – and lower credits for those with higher incomes. Unlike the ACA, the replacement plan provides tax credits to people over 400% percent of the poverty level (phasing out around 900% of poverty for a single person), as well as to people current buying individual market coverage outside of the marketplaces (not included in this analysis).

While replacement plan tax credits vary by age – by a factor of 2 to 1 for older adults relative to younger ones – the variation is substantially less than under the ACA. The big differences in ACA tax credits at different ages is due to the fact that premiums for older adults can be three times the level of premiums for younger adults under the ACA, but all people at a given income level are expected to pay the same percentage of their income towards a benchmark plan. The tax credit fills in the difference, and this amount is much higher for older adults. These differences by age would be even further magnified under the American Health Care Act (which permits premiums to vary by a factor of 5 to 1 due to age). Before the ACA, premiums for older adults were typically four or five times the premiums charged to younger adults.

The tax credits in the ACA vary significantly with premium costs in an area (see Table 2 and Figure 2). At a given income level and age, people receive bigger tax credits in a higher premium area like Mobile, Alabama and smaller tax credits in a lower premium area like Reno, Nevada. Under the ACA in 2017, premiums in Mobile, Alabama and Reno, Nevada approximately represent the 75th and 25th percentile, respectively.

The disparities between the ACA tax credits and those in the American Health Care Act will therefore vary noticeably across the country. For more on geographic differences between the ACA and the replacement plan, see Tax Credits under the Affordable Care Act vs. the American Health Care Act: An Interactive Map.

The same general pattern can be seen for families as individuals, with lower-income families – and particularly lower-income families in higher-cost areas – receiving larger tax credits under the ACA, while middle-income families in lower-cost areas would receive larger tax credits under the American Health Care Act (Figure 3).

Figure 4 below shows how tax credits under the ACA differ from those in the American Health Care Act for a couple in their 60’s with no children. In this scenario, because premiums for older adults are higher and the ACA ties tax credits to the cost of premiums, a 60-year-old couple would receive larger tax credits under the ACA than the American Health Care Act at lower and middle incomes, but would receive a larger tax credit under the American Health Care Act at higher incomes.

Estimates of Tax Credits Under the ACA and the American Health Care Act Over Time

We estimated the average tax credits that current ACA marketplace enrollees are receiving under the ACA and what they would qualify for if the American Health Care Act were in place.

The average estimated tax credit received by ACA marketplace enrollees in 2017 is $3,617 on an annual basis, and that this amount will rise to $4,615 by 2020 based on projected growth rates from the Congressional Budget Office. This includes the 81% who receive premium subsidies as well as the 19% who do not.

We estimate – based on the age distribution of marketplace enrollees – that current enrollees would receive an average tax credit under the American Health Care Act of $2,957 in 2020, or 36% less than under the ACA (see Table 3 and Figure 3). While many people would receive lower tax credits under the Affordable Health Care Act, some would receive more assistance, notably the 19% of current marketplace enrollees who do not qualify for ACA subsidies.

While ACA tax credits grow as premiums increase over time, the tax credits in the American Health Care Act are indexed to inflation plus 1 percentage point. Based on CBO’s projections of ACA tax credit increases and inflation, the disparity between the average credits under the ACA and the two replacement plans would widen over time. The average tax credit current marketplace enrollees would receive under the American Health Care Act would be 41% lower than under the ACA in 2022 and 44% lower in 2027.

Discussion

Like the ACA itself, the American Health Care Act includes refundable tax credits to help make premiums more affordable for people buying their own insurance. This might seem like an area where a replacement plan could preserve a key element of the ACA. However, the tax credits are, in fact, structured quite differently, with important implications for affordability and which groups may be winners or losers if the ACA is repealed and replaced.

For current marketplace enrollees, the American Health Care Act would provide substantially lower tax credits overall than the ACA on average. People who are lower income, older, or live in high premium areas would be particularly disadvantaged under the American Health Care Act. People with incomes over 400% of the poverty level – including those buying individual market insurance outside of the marketplaces – do not get any financial assistance under the ACA but many would receive tax credits under the replacement proposal.

The underlying details of health reform proposals, such as the size and structure of health insurance tax credits, matter crucially in determining who benefits and who is disadvantaged

See the original article Here.

Source:

Cox C., Claxton G., Levitt L. (2017 March 10). How affordable care act repeal and replace plans might shift health insurance tax credits [Web blog post]. Retrieved from address https://www.kff.org/health-reform/issue-brief/how-affordable-care-act-repeal-and-replace-plans-might-shift-health-insurance-tax-credits/

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Get The Best of Both Worlds

OSMA's Health Benefits Plan: Frequently Asked Questions & Answers

In response to the changes brought about by the Affordable Care Act (ACA), the Ohio State Medical Association (OSMA) plans to offer a Health Benefits Plan (HBP). The OSMA HBP will be a self-funded multiple employer welfare arrangement developed for Ohio physician practices. The HBP is currently pending approval by the Ohio Department of Insurance. If approved, it would be an innovative alternative to the ACA.

Q. How is the OSMA's HPB different from the ACA?

A. Unlike the current ACAstructure, the OSMA HBP
• Will be a self funded plan for small physician practices.
• Will offer a variety of plan designs that meet the minimum essential coverage requirement, including:
• Eight different options with deductibles ranging from $ 500 to $6,350 for single coverage (2x for family
coverage)
• Several plans with copays and prescription drug cards
• Will allow for the continued use of Health Reimbursement Accounts (HRA) and Health Saving Accounts (HSA).
• May be less expensive than many comparable options under the ACA.
• Will allow for changes in benefits and contribution roles al renewal without being "locked in" by the grandfathered status, and no monthly administrative billing fee.

Q. Will my current plan rates go up under the ACA?

A. The ACA premium will be dependent on a variety of factors and specific to each group. Our in-house insurance agent will help you understand your options and will be in a position to help you get the most affordable benefit option available.
Q. Do I have to switch doctors?

A. The OSMA HBP utilizes the SuperMed Plus network from Medical Mutual of Ohio, one of the largest networks of providers and facilities in the state. You should, however, always check to make sure your doctor is in network prior to any service. (https://providersearch.medmutual.com/NetworkRealignment.aspx)

Q. Does the OSMA HBP provide the employer with a Summary Plan Description (SPD)?

A. Yes. We provide each employer with an SPDfor the OSMA HBP that meets ERISA compliance regulations. (All employers are responsible for providing SPD's for all of their health and welfare benefits.)
Q. What is the cost to me for joining the OSMA HBP?

A. Each group will have a monthly funding rate based on a variety of factors including but not limited to:

• Number of CoveredEmployees
• Medical History
• Gender
• Tobacco Usage
• Location

Q. Why should I change plans now?

A. Due to the constant policy evolution of the ACA and the uncertainty of future year premiums, many groups will be able to experience a competitive rate that may not be available from Ohio's ACA Marketplace. The OSMA Insurance Agency will provide an easy to understand comparison between the ACA plans and the HBP.

Q. If I leave my current plan (including an ACA plan) will I be subject to preexisting conditions limitations?

A. No. The coverage will be offered on a guarantee issue basis with no preexisting condition exclusion.

Q. What happens if I decide to leave the OSMA HBP in the future?

A. Members may elect to withdraw from participation in the Plan at the end of a calendar month by giving written notice to the Plan at least thirty (30) days prior to the end of such month.
Q.Is there a fee to be part of the OSMA HB Plan?

A. No. There is no fee to join the OSMA Health Benefit Plan but at least one insured must be an active member of the Ohio State Medical Association.

Q. Is the OSMA HBP permitted by the ACA?

A. Yes. The OSMA HBP is a self-fund ed option allowed under the ACA. The OSMA Insurance Agency is authorized to offer health insurance plans as a Federally-facilitated Marketplace Certified agent and Certified Patient Protection and Affordable Care Act (PPACA) Professional.
Q. What is the OSMA Health Benefit Plan's legal structure?

A. The OSMA HBP is technically known as a multiple employer welfare arrangement (MEWA). A MEWA provides health and welfare benefits to employees of two or more employers who pool their contributions, enabling them to offer health insurance rates and benefits typically available only to larger groups.
Q. How secure is the OSMA's HBP?

A. The Ohio Department of Insurance and several federal government agencies coordinate the oversight and regulation of the OSMA HBP. This multi-jurisdiction gives the State of Ohio's Department of Insurance primary responsibility for overseeing the financial soundness the OSMA HBP, while the U.S. Department of Labor provides oversight for employee benefit plans and the Internal Revenue Service ensures the nonprofit tax status of the OSMA HBP.

Q. Is there a situation when my practice should use the ACA's marketplace options?

A. The Ohio Department of Insurance and several federal government agencies coordinate the oversight and regulation of the OSMA HBP. This multi-jurisdiction gives the State of Ohio's Department of Insurance primary responsibility for overseeing the financial soundness the OSMA HBP, while the U.S. Department of Labor provides oversight for employee benefit plans and the Internal Revenue Service ensures the nonprofit tax status of the OSMA HBP.

Q. How do I learn more about the OSMA Health Benefit Plan?

A. Contact Saxon' s Expert at jcharlton@gosaxon.com or visit our website at https://gosaxon.com/get-the-best-of-both-worlds-with-osma/

For the full download click Here.

Learn more about OSMA Here.

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