Health Affairs

In the May Health Affairs Narrative Matters essay, two graduate students describe their fight with the bureaucracy to gain coverage for their son under the Children’s Health Insurance Program, and they express the hope that provisions of the Affordable Care Act will cut the red tape. The article, “To Cover Their Child, One Couple Navigates A Health Insurance Maze In Pennsylvania, is by Ari Friedman, a fifth-year medical-doctoral student in health economics at the University of Pennsylvania’s Perelman School of Medicine and Wharton School, and Tara Mendola is a sixth-year graduate student in comparative literature at New York University.

Tens of millions of uninsured people will soon have the ability to gain health coverage as the first enrollment period under the Affordable Care Act (ACA) begins on October 1, 2013, with actual coverage starting in January 2014. New marketplaces will be established for the purchase of private insurance, pre-existing coverage exclusions and discriminatory premiums will end, and comprehensive benefits will be included in health plans.

Most significantly for the vast majority of uninsured Americans, the ACA offers unprecedented financial assistance (in the form of a tax credit) to make private health plan premiums more affordable and, in many states, expanded Medicaid coverage.

The ACA represents a truly historic series of improvements – a legislative triumph that eluded many presidents before Barack Obama. As noteworthy as this achievement is, however, substantial coverage expansion will only occur if uninsured families learn about these new opportunities and actually get enrolled in private or public health coverage.

Enroll America was formed in 2011 with that goal of educating consumers about the new law and helping them to enroll in the plan that is right for them. There remains an enormous amount of work to do and challenges to overcome to make sure the ACA lives up to its potential.

In a publication released in numerous states as well as a JAMA Forum article and a recent list of ten supposed “myths” about Medicaid expansion, the Heritage Foundation repeatedly cites our paper for the proposition that “40 of 50 states are projected to see increases in costs due to the Medicaid expansion,” and that expansion would force such states “to dig deep into their already overstretched budgets.” Even in the 10 remaining states, according to Heritage, the budget gains we projected to result from expansion were speculative and uncertain, since they supposedly relied on states cutting payments for hospital uncompensated care.

These claims distort our work. We identified 10 states in which Medicaid expansion would yield net savings based on just one factor—namely, unusually generous prior Medicaid coverage, for which states could claim enhanced federal matching funds. The modest additional gains resulting from uncompensated care savings did not tip any state from the red into the black.

Medicaid Expansion Offers Budget Savings, Revenue, and Economic Gains to States

More importantly, Heritage ignored our explanation that, because we were limited to “data available for all 50 states and the District of Columbia, we were unable to estimate several potential sources of state fiscal gain;” and that if additional, state-specific factors were considered, “many more states could realize net fiscal gains.” Nor did Heritage acknowledge that all states must pay for national health reform but only those that expand Medicaid will receive large, offsetting allotments of federal Medicaid dollars, with resulting economic activity, jobs, and state revenue.

As a longtime physician, I know that having access to stable, affordable health coverage is a critical step in achieving better health outcomes.

That view is underscored in a study that appeared in today’s (May 2) New England Journal of Medicine (NEJM) on the effects of Medicaid coverage on individuals’ health and finances. Led by researchers at Harvard and MIT, the study—the Oregon Health Insurance Study—offers a good snapshot of how being insured can help low-income Americans.

Here’s the background: In 2008, Oregon officials created a lottery giving uninsured, low-income adults a chance to apply for Medicaid. Nearly 90,000 people signed up, and approximately 30,000 were selected. By randomly providing health insurance to some, but not all, Oregon effectively established both treatment and control groups, presenting a unique opportunity to analyze the effects of having public health insurance.

The study in NEJM highlighted the latest data from the experiment. It showed that enrollment in Medicaid, after about two years, profoundly increased patients’ use of needed medical services, and vastly reduced the financial strain that previously limited their care.

April 2013 has been a quiet month for new Affordable Care Act rules and guidance. Activity to implement the ACA, of course, is moving full speed ahead at the federal level as efforts continue to implement the federal exchange and to gear up for federal enforcement of the market reforms in a number of states. The Centers for Medicare and Medicaid Services (CMS) is in the process of holding stakeholder calls in every state where a federal exchange (now called a “marketplace”) will be established. It is also locating navigator programs, signing up insurers, and preparing for the October 1, 2013 beginning of open enrollment. The states have also been very active, either trying to implement their own state exchanges and the 2014 ACA market reforms or doing everything they can dream up to keep implementation from moving ahead.

Final rules have been issued governing the exchanges, the 2014 market reforms, the premium tax credits, and the premium stabilization programs, while guidance has been issued on the federal exchanges and the navigator program. Final rules on Medicaid eligibility and appeals are expected shortly. A public hearing was held on April 23, 2013 regarding the proposed employer responsibility regulations, while another will be held on May 29, 2013 reviewing proposed individual responsibility regulations. Final rules will follow in due course. In sum, implementation is progressing, although a lot of ground must be covered between now and 2014.

A belated nod to the latest Health Wonk Review, posted last week by Louise Norris at Colorado Health Insurance Insider. Louise has assembled a number of great posts, including Peter Neumann and James Chambers’ Health Affairs Blog post on Medicare’s reset of its “coverage with evidence development” policy.

Mark Grube, Kenneth Kaufman and Robert York’s analysis of the decline in hospital utilization rates leads the Health Affairs Blog most-read list for March. Also on the top-ten list are articles on: the human face of hospital readmissions by Risa Lavizzo-Mourey; the impact of the Affordable Care Act by Kathleen Sebelius; the health care workforce by Thomas Daschle; and physician payment reform by Bill Frist and Steven Schroeder.

The most-read list also includes David Muhlestein’s survey of the accountable care organization landscape; Diane Archer’s discussion of the effects of concentration in the health care market, and Jesse Singer’s look at the use of electronic health records by the New York City Primary Care Information Project. Also among the top ten are Tim Jost’s article about the role of federally facilitated and partnership exchanges; and an article by Sara Rosenbaum and Joel Teitelbaum on the impact of the Essential Health Benefits rule on persons with disabilities.

On April 5, 2013, the Department of Health and Human Services released its final Letter to Issuers on Federally Facilitated and State Partnership Exchanges. This letter lays down guidelines for insurers that will sell qualified health plans on the federal exchanges in 2014. A proposed version of this letter was published for comment on March 1, 2013, which I blogged about here. The final issuer letter tracks the proposed letter with few significant changes. In part because I am supposed to be on vacation in France and in part because of limited access to technology, I am not going to review the issuer letter in depth, but rather refer the reader to my earlier post, providing here only a brief overview of the final letter that highlights the respects in which it differs from the proposed rule discussed in my earlier post.

In his post “Why don’t Republicans Have a Vision for Health Reform” (April 2, 2013) John Goodman offers interesting comments on my earlier post “Reflections on The Federal Budget Resolutions” (March 21, 2013). I thank him for the comments.

My post was focused strictly on the vision for U.S. health care that Democrats and Republicans on Capitol Hill now project through the Senate budget resolution and the House budget resolution. Goodman, on the other hand, builds from my post a bridge to the vision some Republicans – including Goodman himself – have in the past projected for U.S. health care.

I can understand why Goodman used the well-known technique of the bridge, because he believes that Republicans currently do not have vision for health care. On this point, however, I beg to differ. There actually is a current Republican vision. It has been expressed through the House budget resolution.

You are invited to join us on Wednesday, April 11, when Health Affairs will hold a briefing to discuss its April 2013 issue, “Triple Aim Goes Global.”

The April issue examines how all high-income countries are struggling to pursue better health, better care, and lower cost – and to bring all of these goals into alignment. The issue received funding support from The Commonwealth Fund, the Nuffield Trust, and Imperial College London.

The briefing will take place at the Barbara Jordan Conference Center at the Kaiser Family Foundation, 1330 G Street, NW, in Washington, DC, on Thursday, April 11, 2013, 8:00 a.m. – 12:30 p.m.

Medicare is poised to revise its “coverage with evidence development” (CED) policy, which has important implications for beneficiaries’ access to new medical technology as well as manufacturers’ reimbursement for their products.

For years, Medicare has employed CED, under which the program provides conditional coverage for new technology while it collects additional evidence on the technology’s effectiveness. The concept has great intuitive appeal in that it promises to provide access to promising technology for which the evidence base may be immature. As Medicare officials and other experts have argued, by linking coverage of new technologies to requirements that patients participate in registries or clinical trials, CED can help identify the circumstances in which patients are most likely to benefit and potentially accelerate access to innovations.

Though Medicare has experimented with conditional coverage policies since the 1990s, the formal CED designation and its characterization date to two guidances the Centers for Medicare and Medicaid Services (CMS) issued in 2005 and 2006. CMS has used CED in 19 cases over the years on diverse technologies, including lung volume reduction surgery, implantable cardioverter defibrillators (ICDs), and positron emission tomography (PET) for cancer. (See Table 1 at the end of the post, click twice to enlarge.) The CED policies have varied in their data collection requirements, with some featuring randomized controlled trials and others relying on patient registries or other data collection strategies

On Good Friday, March 29, 2013, the Department of Health and Human Services released a final rule regarding increased federal Medicaid percentage changes under the Affordable Care Act for covering adults who are newly eligible under the ACA’s Medicaid expansions. HHS published the original proposed rule on this topic in August of 2011 as part of a larger rule on the ACA’s Medicaid changes. Other parts of this rule dealing with Medicaid eligibility were finalized in March of 2012, but the parts of the proposed rule dealing with federal financial assistance were not included at that time. Because the final rule contains significantly more detail than the proposed rule, HHS is publishing the rule as final, but soliciting further comment on parts of the rule. HHS also released on March 29, 2013, a series of Frequently Asked Questions, explaining its approach to the expansion of Medicaid through the use of Medicaid funds to purchase private insurance for Medicaid recipients in the exchange, the approach that Arkansas and possibly other states are proposing. This FAQ is discussed at the end of this post.

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation discusses the Multi-State Plan Program created under the Affordable Care Act. Under the program, at least two health insurance plans choosing to participate will offer coverage through every state-run, federally facilitated, and partnership exchange created under the law. Insurance companies meeting the eligibility criteria have until March 29, 2013, to submit applications to participate in 2014.

The program was created to enhance competition among health plans within the new exchanges. It will be administered by the federal Office of Personnel Management, or OPM, which also administers the Federal Employees Health Benefits program offering coverage through a variety of health plans.

A Health Affairs Web First article released today describes the new rapid-cycle approach to program evaluation at the recently established Center for Medicare and Medicaid Innovation. The Affordable Care Act created the Innovation Center within the Centers for Medicare and Medicaid Services (CMS) to test payments and service delivery models, reduce costs in Medicare and Medicaid, and improve quality.

As the Innovation Center moves ahead with innovative payment and service delivery models, the Rapid Cycle Evaluation Group at the center delivers frequent feedback to providers while evaluating the outcomes of each model tested. When a model is considered for testing, staff from the Rapid Cycle Evaluation Group and CMS’ Office of the Actuary are immediately assigned to help create the model. The Office of the Actuary provides timely and impartial actuarial, economic, and statistical estimates–and monitors Innovation Center initiatives once testing has begun. This group’s rigorous and speedy assessment and evaluation is driven by performance metrics and robust new methodologies.

Researchers from the evaluation group have also been organized into “affinity groups” and use CMS data to answer critical policy questions that may shape future payment and service delivery models. The Innovation Center also plans to identify and promote population health metrics–measures of the functional status, healthy behavior, and health outcomes of a population–to promote disease prevention and achieve a more accountable, equitable, and coordinated health care system. All these efforts will contribute to the Innovation Center’s success in carrying out its mission of improving the quality of care combined with the slowing spending growth.

According to a process laid out in the Budget Act of 1974, the budget resolutions put forth by the House of Representatives and the Senate emerge as modifications, sometimes substantial, of the budget to be submitted by the first Monday in February by the President of the United States.

Alas, for governance, the President has missed that deadline for fiscal 2014 (starting in October 1, 2013). He is likely to submit a budget only by early April – two months late. In the meantime, both chambers have worked up their own budget resolutions, without the President’s budget as a starting point. It shows, because the tax- and spending numbers in these two budgets, and the visions for America they reflect, differ so starkly that it is hard to imagine the emergence of a joint conference report reconciling the two budgets in one that could pass both chambers.

But all is not lost. At least the American people now have before them the visions the two parties have for our country, especially in regard to health policy.

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation discusses the Consumer Operated and Oriented Plan (CO-OP) program, a provision of the Affordable Care Act. Starting in October, many Americans will be able to enroll in health plans through the health insurance exchanges in their states. Recognizing that in some states a person’s options for insurance plans may be limited, the CO-OP program was designed to increase competition among health plans and improve consumer choice by creating new, nonprofit insurance plans governed by consumers. The federal government has awarded nearly $2 billion in loans to help create 24 new CO-OPs in 24 different states.

This policy brief describes the rationale for creating the CO-OP program and the way the program will be structured. It also lists some of the plans approved thus far. Other topics include:

The march toward 2014 continues, as the Department of Health and Human Services issued on February 20, 2013 a final regulation covering the essential health benefits, actuarial value, and accreditation requirements of the Affordable Care Act. (See a fact sheet on the rule here.)

The ACA requires non-grandfathered health plans in the individual and small group market to cover ten categories of essential health benefits (EHBs). The EHB requirement is intended both to ensure that consumers in these markets have adequate coverage and to improve competition among health plans by standardizing coverage choices. Most of the EHBs are services already covered by most health plans, such as hospitalization or pharmaceuticals, but some, such as habilitative services or pediatric oral and dental care, are not commonly covered and thus represent a coverage expansion. The EHB requirement will also improve mental health coverage in the individual and small group market, as noted in a separate issue brief released with the final rule.

The proposed regulation now finalized was published on November 26, 2012, and was discussed in an earlier post.

Americans remain deeply divided over health care. Liberals emphasize the goal of comprehensive, lifelong health insurance for every citizen. Conservatives emphasize the goal of a more competitive free market in health care, without government getting between doctors and their patients. Everyone shares the goal of reducing the runaway costs of health care in the United States, which are the highest in the world.

Many doubt whether the Affordable Care Act, aka ObamaCare, can achieve any of these goals adequately. One widely held goal it clearly cannot achieve is to improve the global competiveness of American companies by removing, from employers, the costly burden of providing health insurance for employees. What shall be argued here is that national health insurance achieves every one of these goals, but only in a form much like that outlined below, incorporating ten features.

Now that the Obama Administration has secured a second term, health reform is a “go”. Yet, gaps and questions remain, some of them potentially far more substantial than originally anticipated. While the mandate on individuals to purchase health insurance has survived as a “tax,” states will have much more flexibility to opt in or out of expanded Medicaid coverage without losing all of their federal Medicaid funding. And there is always the possibility of further cuts.

In the meantime, “wait and see” is no longer an option. With a “cup half full” vision, health reform can be viewed as a basic platform from which gaps can be filled. How can we make the most of this platform? How can we connect the people to the coverage offered by the exchanges and persuade people to buy it? How can we connect the people who buy coverage to the care they will need? And how can we do so in a way that doesn’t break the bank?

Some answers to these questions are offered below. I also invite you to join us on February 13-14, 2013 in Washington, D.C. at the Health Care Industry Access Initiative’s Access Summit where you can hear more from our experts in a variety of panel discussions about what will and won’t work to achieve access, and how health industry efforts are key to access and, in turn, the success of health reform.

Throughout the 2012 Presidential campaign, Republican contenders criticized the Affordable Care Act (ACA) as a “federal take-over of health care” for its promotion of national uniformity in health coverage and access. Yet long before passage, the architects of the ACA quickly rejected a federal single payor system, or even a federal public plan to complement the private sector plans due to forceful opposition to national reform. Instead, they traveled the only politically viable road to reform: maintaining the fragmented and complex system of health care coverage, where federal and state governments as well as the private sector play pivotal roles. The ACA’s expansion of coverage is accomplished by continuing and even increasing state oversight, reinforcing the private market, and involving both employers and individuals. As enacted, therefore, the ACA’s fragmented approach to health reform is clearly not a federal take-over.

As implementation unfolds, however, the ACA’s impact on the roles of federal, state, and private actors is uncertain. Given the statute’s ambitions and complexity, uncertainty may be inevitable. Nevertheless, recent developments demonstrate that implementation may bring surprising results which, at least in some instances, are both unintended and problematic. We address two that pose particular challenges to achieving the ACA’s goals of expanding and harmonizing coverage among and between states: 1) the establishment of state exchanges, and 2) the determination of essential health benefits. We will leave the related topic of legal challenges to the so-called “employer mandate” for future discussion.