Blog Home

Archive for the 'Insurance' Category




Four Words Or 17 Syllables: Predicting King v. Burwell In Haiku


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost, Grace-Marie Turner, Sara Rosenbaum, and others.

The resolution of King v. Burwell boils down to a simple point. A majority of the Supreme Court is willing to interpret the language of the Affordable Care Act. It is unwilling to rewrite that language.

It is all about four words: Whether “established by the state” in one section of the ponderously long, hastily passed health reform law renders low-income residents of states that have not created their own insurance exchanges but participate in federal exchanges ineligible for federal tax credits. If this is indeed the law, many middle-class families will be unable to afford coverage, residents of states that rely on federal exchanges will pay billions to the IRS for the benefit of those living elsewhere, premiums in those exchanges will rise as enrollment of healthy individuals drops, and the ACA will be unable to achieve its undisputed core purpose of health insurance for all Americans.

In contrast to the media cacophony leading up to yesterday’s hearing in the Supreme Court, the oral arguments themselves were clear and lawyerly. They were also undramatic. Most of the Justices knew where they stood, forcing plaintiff’s counsel Michael Carvin – who spoke first – to hear answers from the bench more often than he was asked actual questions. The Court’s willingness to listen had increased by the time Solicitor General Donald Verrilli took the podium on behalf of the government, and he proved himself an organized and articulate presenter. The only jurists not revealing their positions were Justice Kennedy, who challenged both lawyers on several points, and Chief Justice Roberts, who said little except to maintain order and decorum. (Justice Thomas famously refrains from participating in oral argument, but usually votes with Justice Scalia.)

Read the rest of this entry »

King v Burwell: The NFIB Medicaid Coercion Argument Returns


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost, Grace-Marie Turner, and others.

The March 4, 2015 oral argument in King v Burwell, which will determine whether millions of low- and moderate-income Americans will continue to have access to affordable health insurance coverage, revealed a United States Supreme Court very much in play.  In this climate, observers inevitably are paying heightened attention to each of the many parries and thrusts that unfolded over more than an hour of rapid give-and-take between the Justices and the lawyers, as they battled over the meaning of 4 words in a 1000-page statute.

Perhaps no exchange will receive more attention than the one between Justice Anthony Kennedy and Michael Carvin (representing the challengers) that took place approximately 5 minutes into his argument.  It was Justice Sotomayor who actually kicked things off with the following observation:

The choice the state had was to establish [an] Exchange or let the Federal government establish it. . . .That was the choice.  If we read [the statute] the way you’re saying, then we’re going to read a statute as intruding on the Federal-State relationship, because then the States are going to be coerced into establishing their own Exchanges. . . Tell me how that is not coercive in an unconstitutional way?  And if it is coercive in an unconstitutional way [isn’t there] a primary statutory command that we read a statute in a way where we don’t impinge on the basic Federal-State relationship?

Read the rest of this entry »

King v. Burwell: Finding A Path Forward After An Executive Overreach


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts on King v. Burwell and the Supreme Court oral arguments in the case by Tim Jost and others.

The Supreme Court justices had a lively discussion today during arguments in King v. Burwell about who Congress intended to get health insurance subsidies and under what conditions.

The central question is whether the Internal Revenue Service had the authority to write a rule authorizing subsidies to go to millions of people in the 37 states now operating under federal exchanges.

The plaintiffs say the language of the law is clear:  Subsidies are allowed in “an Exchange established by the State under [section] 1311of the Patient Protection and Affordable Care Act.” It doesn’t just say this once, but nine times in various linguistic forms.

Read the rest of this entry »

King v. Burwell: Unpacking The Supreme Court Oral Arguments


March 5th, 2015

Editor’s note: Watch Health Affairs Blog for more posts by Grace-Marie Turner and others on King v. Burwell and the Supreme Court oral arguments in the case.

One March 4, 2015, the United States Supreme Court heard oral arguments in King v. Burwell.  As every reader of this Blog knows, the issue in the case is whether the Internal Revenue Service rule that allows the federally facilitated marketplaces to grant premium tax credits is valid.

If it is not, millions of individuals in the 34 states served by the FFMs will lose their tax credits.  Without the credits, they will no longer be able to afford health insurance.  The cost of insurance to those remaining in the nongroup market will rise precipitously, causing even more Americans to lose coverage.  As the number of uninsured increases, providers will bear an increased burden of uncompensated care.  A decision for the plaintiffs, that is, will be disaster for the American health care system.

The challengers argue that this is a result Congress intended.  They contend that the subsection of the Affordable Care Act dealing with the calculation of premium tax credits limits the credits to individuals enrolled in an “Exchange established by the State.”  The government argues that this is a term of art — that Congress intended this phrase to include the federally facilitated exchanges that the ACA requires the Department of Health and Human Services to create as a fallback where the states elect not to operate their own exchange.  Dozens of other provisions of the ACA support the government’s position.

Read the rest of this entry »

The Latest Health Wonk Review


March 4th, 2015

David Williams has the tenth anniversary edition of the Health Wonk Review up at Health Business Blog. David’s interesting review includes Tim Jost’s series of Health Affairs Blog posts unpacking the final 2016 Notice of Benefit and Payment Parameters rule and final 2016 Letter to Issuers in the federal exchange.

Read the rest of this entry »

Health Affairs’ March Issue: The Benefits And Limitations Of Information


March 2nd, 2015

The March issue of Health Affairs contains papers focusing on the benefits—and the limitations—of information-gathering processes as a way to solve health system problems. Studies in this variety issue examine US hospital rating systems, disclaimers on dietary supplements, state prescription drug monitoring programs, the value of US versus Western European cancer care and other topics.

National hospital rating systems show little agreement — what’s a consumer to do?

Matt Austin of Johns Hopkins Medicine and coauthors compared four well-known national hospital rating systems designed for use by US consumers: U.S. News & World Report’s Best Hospitals; HealthGrades’ America’s 100 Best Hospitals; Leapfrog’s Hospital Safety Score; and Consumer Reports’ Health Safety Score. They analyzed ratings covering the time period from July 2012 to July 2013.

Read the rest of this entry »

How Many Americans Will Lose Coverage If The Supreme Court Kills The ACA Tax Credits?


March 2nd, 2015

In March, the U.S. Supreme Court is slated to hear King v. Burwell, a case that challenges the authority of the federal government to provide tax credits and other financial assistance to people who buy Affordable Care Act (ACA) coverage through the federal health insurance marketplace. The federal government runs the health insurance marketplace in 34 states where states chose not to set up a state-based exchange.

Estimates on how many people could lose tax credits in these 34 states vary widely from 4.5 million to 13 million. After talking to executives and lobbyists for health care related entities in 20 of the 34 states affected, I believe that about 6.5 million people who have tax credits in 2015 will lose them. The difference in these numbers will be important to policymakers, since politicians are likely to make decisions on how to respond to a Court ruling based on the actual number of their constituents who are receiving tax credits or other support.

In addition, the impact of a Court ruling will be affected by state action. Some observers have questioned whether states will set up exchanges if the Court eliminates tax credits from the federal exchange. These observers have said that establishing a state exchange is costly and time consuming and that most federal exchange states will not take this step. I argue in the following post that setting up a state exchange could be easy and inexpensive if the federal exchange operations are used.

Read the rest of this entry »

New Health Policy Brief: Risk Corridors (Updated)


February 26th, 2015

The latest Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) provides an update to an earlier brief on the Affordable Care Act (ACA)’s risk corridor program, which allows the Department of Health and Human Services (HHS) to collect and make payments to qualified health plans. As the brief explains, a recent amendment to federal appropriations raises questions as to whether insurers will receive their full risk corridor payments for 2014.

While the Consolidated and Further Continuing Appropriations Act of 2015, which funded the government for the 2015 fiscal year, did give HHS the authority to collect user fees, an amendment was included that specifically prohibited HHS from transferring money from either trust fund.

The amendment did not eliminate the risk corridor program, nor did it prevent HHS from using payments received from insurers to pay out claims under the program (that is, user fees), but it effectively made the risk corridor program budget neutral unless HHS can find another source of funding. As a result, insurers expecting payments from HHS may not receive the full amount due.

Read the rest of this entry »

State Expectations: Setting The Record Straight In King v. Burwell


February 25th, 2015

On Wednesday, March 4th, the Supreme Court will hear the latest attack on the Affordable Care Act (ACA): the case King v. Burwell. The King petitioners allege that the Internal Revenue Service overstepped its authority by issuing regulations authorizing residents of states with federally run exchanges to access premium tax credits. The petitioners claim that Congress intentionally limited access to premium tax credits to residents of state-based exchanges as a way to encourage states to run their own exchanges.

In support, some state officials claim that they interpreted the law in this manner and that it impacted their state’s decision not to operate a state-run exchange. These assertions, like their analysis of the statutory language, fall flat under any serious scrutiny, however.

Between October 2012 and March 2013, with the support of the Commonwealth Fund, the Center on Health Insurance Reforms (CHIR) conducted a comprehensive review of publicly available information in 50 states pertaining to their decisions to operate either a state or federally run exchange.

Read the rest of this entry »

Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News (Updated)


February 24th, 2015

The Cadillac high-cost health plan excise tax, which goes into effect in 2018, is one of the last-to-be-implemented provisions of the Affordable Care Act (ACA). It was one of the most controversial provisions of the ACA, which contributed to its delayed effective date. But 2018 is now getting closer, and the Internal Revenue Services (IRS) is beginning a discussion about implementation of the Cadillac plan tax.

The Cadillac plan provision of the ACA will impose a 40 percent excise tax on the cost of employer-sponsored health plans when that cost exceeds certain thresholds. It is projected to be one of the biggest sources of revenue under the ACA; the Congressional Budget Office (CBO) in its 2015 Budget and Economic Outlook Report estimated that it would account for $149 billion in revenue between 2018 and 2225. Of this, however, only one quarter will come from the tax itself, while three quarters will come from increases in taxes on income as employers shift compensation from health benefits to taxable wages.

While the tax will affect few plans initially, it is likely to affect many more plans over time as the cost of health care continues to grow faster than inflation generally. The tax is expected to reduce health care expenditures by individuals, as it will drive employers to increase employee cost sharing as they cut the cost of coverage, and employees are likely to spend less on health care if they have to purchase it out-of-pocket rather than drawing on insurance coverage.

Read the rest of this entry »

Implementing Health Reform: Final 2016 Letter To Federal Exchange Issuers


February 22nd, 2015

Each year the Centers for Medicare and Medicaid Services (CMS) releases a letter to issuers (insurers) in the federally facilitated marketplace (FFM) setting out the ground rules for coverage through the FFM for the coming year.  A draft letter is published for comments, followed by the final letter.  The letter addresses insurers that issue qualified health plans (QHPs) in the FFM, including stand-alone dental plans (SADPs), and covers the small business (FF-SHOP) marketplace as well as the individual marketplace.

On December 19, 2014, CMS  published the draft 2016 letter which I covered here.  On February 20, 2015, CMS published the final letter to issuers in the federally facilitated marketplace.  Not surprisingly, since it  covers the third year of operation of the marketplace, the 2016 letter is quite similar to those of preceding years.   The letter is based on previously published rules governing QHPs and the marketplaces, as well as on the final 2016 Benefit and Payment Parameters Rule, covered here (CITE) and here (CITE), from which it incorporates many provisions.

Read the rest of this entry »

Implementing Health Reform: 2016 Benefit And Payment Final Rule, Insurance Provisions


February 22nd, 2015

On November 21, 2014, the Centers on Medicare and Medicaid Services of the Department of Health and Human Services released its final 2016 Benefit and Payment Parameter (BPP) Rule.  (Fact sheet here.)  My first post examined the provisions of this rule that relate to consumers and providers.  This post will analyze the parts of the rule that deal with the insurance market reforms; the reinsurance, risk adjustment, and risk corridor programs; health insurance rate review; and the individual and SHOP exchanges.

New Definitions Of ‘Plan’ And ‘State’

The regulation begins with a modified definition of the term “plan.”   The new definition defines a “plan” as the pairing of a set of health insurance benefits under a “product” with a particular cost-sharing structure, provider network, and service area.  A “product” is a set of plans sharing a network type (HMO, PPO, etc.), package of benefits, and service area.  Under this new definition, plans that differ in their cost-sharing structure (deductibles, copayments, or coinsurance) or provider networks are different plans, even if they are offered at the same metal tier.  Plan variations for different cost-sharing subsidy levels are not different plans under this definition.

Read the rest of this entry »

Implementing Health Reform: 2016 Benefit And Payment Final Rule, Consumer & Provider Provisions


February 22nd, 2015

On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services published its massive Notice of Benefit and Payment Parameters (BPP rule) for 2016 Final Rule, accompanied by a fact sheet.  This rule addresses a host of issues involving the continuing implementation of the Affordable Care Act for 2016.  A few provisions, however, affect the 2015 year as well and a number of provisions will not be implemented until 2017.

The BPP rule amends and updates existing rules; thus, it must be read in tandem with rules that have been promulgated earlier, which are catalogued in the preface to the rule.

CMS released also on February 20 its Final 2016 Letter to Issuers (Insurers) in the Federally-Facilitated Marketplace (FFM).   This letter sets the ground rules for insurer participation in the FFM for 2016 and covers many of the same topics covered by the BPP rule.

These documents are very lengthy and will be covered in three posts over the next few days.  This first post will focus on issues in the BPP rule that directly affect consumers.  The second post will focus more on issues that affect health plans.  The third post will examine the letter to issuers.

Read the rest of this entry »

Implementing Health Reform: Multi-State Plan Program; Benefits And Payment Rule, Letter To Issuers To Follow


February 20th, 2015

Late in the day on February 20, 2015, HHS issued its 476 page final 2016 Benefit and Payment Parameters Rule.   It also issued a lengthy final 2016 Letter to Issuers  and a fact sheet on the BPP rule.  These will govern health insurance coverage and the premium stabilization programs, as well as participation in the federally facilitated marketplace, for 2016.

More specifically, the BBP governs the premium stabilization programs; the cost-sharing reduction payment program; user fees for the Federally-facilitated Exchanges; the open enrollment period; the essential health benefits; qualified health plans; network adequacy; quality improvement strategies for qualified health plans; the SHOP program; guaranteed availability and renewability; minimum coverage; rate review; the medical loss ratio program; and other issues. The letter to issuers governs participation in the federally facilitated marketplace for 2016.

I will be reviewing the BPP rule and Letter to Issuers over the next few days and providing a series of posts on them; this post covers the amended Multi-State Plan Program (MSPP) rules issued earlier in the day.

Read the rest of this entry »

Implementing Health Reform: New Enrollment Opportunity For Those Subject To 2014 Penalty


February 20th, 2015

In our Health Affairs Blog post of November 7, 2014, Brian Haile and I recommended that the Department of Health and Human Services (HHS) create a special enrollment period to allow individuals who had to pay the individual responsibility penalty for being uninsured for 2014 to enroll in coverage for 2015 so that they would not have to pay a higher penalty for being uninsured for 2015. Other advocates subsequently joined in this call. On February 20, 2015, HHS announced that it is creating such a special enrollment period.

The special enrollment period will run from March 15 to April 30, 2015 and will allow individuals who live in states served by the federally facilitated marketplace website, Healthcare.gov, to enroll in coverage for 2015 if they:

  • Are not currently enrolled in coverage through the Federally Facilitated Marketplace (FFM) for 2015;
  • Attest that when they filed their 2014 tax return they paid the fee for not having coverage in 2014; and
  • Attest that “they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2014) in connection with preparing their 2014 taxes.”

Coverage will be effective on the first day of May for those who enroll by April 15 and the first day of June for those who enroll thereafter. Individuals who apply will have to pay the penalty for months they were uninsured in 2015 unless they otherwise qualify for an exemption. Centers for Medicare and Medicaid Services (CMS) has also launched a new online tool to help consumers determine who might otherwise be subject to the penalty to see if they are covered by another exemption.

Read the rest of this entry »

HHS Proposed Policy On Non-Discrimination: Does It Adequately Protect Children?


February 19th, 2015

On November 26, 2014, the United States Department of Health and Human Services (HHS) published a proposed 2016 Notice of Benefits and Payment Parameters, an omnibus regulation published annually that sets “rules of the road” for the administration of federally regulated insurance plans. Among other matters, this year’s Notice contained a discussion of non-discrimination in coverage.

The concept of non-discrimination in coverage is a basic tenet health plans subject to the Affordable Care Act (ACA)’s “essential health benefit” requirements applicable to non-grandfathered health plans sold in the individual and small group markets (42 U.S.C. §18022, added by PPACA §1302). The non-discrimination standard is a watershed in U.S. law that extends the reach of prior federal civil rights laws and regulates the design, content, and administration of health insurance including Section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act, Title VI and VII of the Civil Rights Act of 1964, and the Age Discrimination Act of 1975.

In accordance with its provisions, the HHS Secretary is barred from “mak[ing] coverage decisions, determin[ing] reimbursement rates, establish[ing] incentive programs, or design[ing] benefits that discriminate against individuals because of their age, disability, or expected length of life,” (42 U.S.C. §18022(b)(4)(B)). The provision further requires the Secretary to “take into account” the health needs of “diverse segments of the population including women, children, persons with disabilities, and other groups,” (42 U.S.C. §18022(b)(4)(C)).

Read the rest of this entry »

Implementing Health Reform: Preliminary 2015 Enrollment Numbers; Guidances


February 19th, 2015

As probably every reader of this blog knows by now, the Department of Health and Human Services released preliminary totals for plan selection for the 2015 open enrollment period on February 18, 2015. Over 1 million individuals enrolled through the federally facilitated marketplace in the final week, bringing the total enrolled in the FFM to 8.8 million, and the total enrolled through all marketplaces, federally facilitated and state-operated, to 11.4 million. Florida had by far the most enrollees in the FFM with 1.6 million, although Texas also had over a million enrollees.

The 11.4 million number includes up to 200,000 individuals who are being dropped from the rolls because they have not provided adequate documentation of immigration or citizenship status, but does not include up to 150,000 individuals who were “in line” when enrollment closed and who have up to February 22 to enroll. Although there will be some attrition over the next weeks of individuals who do not pay their premiums or find other coverage, HHS seems to have met its goal of 9.1 to 9.9 million effectuated enrollments.

Premium payment arrangements. The Internal Revenue Service continues to struggle with the question of how the Affordable Care Act affects various arrangements through which employers attempt to pay premiums for employees to purchase health insurance coverage in the individual market. The federal agencies have already issued four guidances on this issue over the past two years in January of 2013September of 2013November of 2014, and December of 2014.  On February 18, 2015, it released yet another guidance on this issue, this one focused on small employers.

Read the rest of this entry »

Engaging Health Care Consumers: The Lowe’s Experience


February 18th, 2015

Time will tell, but it appears that employers are not giving up on providing health insurance to their employees — even with the availability of health care exchanges. That’s at least what the results of a new study sponsored by the National Business Coalition on Health (NBCH) suggest.

Brian Klepper, CEO of the NBCH, speculated in his recent Health Affairs Blog post: “…there is an alternative view of what is possible in health care, and that self-funding and a willingness to continue trying to control the health care value monster remains alive and vibrant.”

As self-funded employers strive for a value-based health care marketplace, they’re looking at ways to drive value at an individual level — through strategies to engage employees as better consumers and managers of their own health care.

Read the rest of this entry »

Implementing Health Reform: Open Enrollment Closes, But Doors Remain Ajar


February 16th, 2015

The 2015 open enrollment period is now closed, but the marketplace doors are still cracked open.  On February 15 and 16 the Centers for Medicare and Medicaid Services offered additional assistance for those not enrolled before February 16.

CMS has first addressed a very specific issue.  For a period of time on Saturday, February 14, some individuals applying for coverage at the federally facilitated marketplace (FFM) were unable to submit their applications because the FFM could not verify their income with the Internal Revenue Service.  This problem was promptly resolved, but CMS is reportedly reaching out to individuals who were unable to enroll during the period that enrollment was not possible and encouraging them to come back to the FFM and enroll.

The second guidance creates a special enrollment period for consumers “in line” on February 15, 2015.  The guidance acknowledges more generally that “certain circumstances across consumer enrollment channels (such as HealthCare.gov and the Marketplace call center) leading up to the February 15, 2015 deadline have kept some consumers from completing the enrollment process despite their efforts to meet the deadline.”

Read the rest of this entry »

Implementing Health Reform: Excepted Benefits, Employer Mandate, And Cost-Sharing Reduction Payments


February 15th, 2015

Three developments in the second week in February, 2015, remind us that implementation of the Affordable Care Act is a multi-department effort.

Supplemental Excepted Benefits

The first of these is a new guidance on “excepted benefits.”  The Affordable Care Act does not regulate excepted benefits — various categories of health-related benefits that are not traditional medical coverage.  Excepted benefits were excepted from the requirements of the 1996 Health Insurance Portability and Accountability under ERISA, the Internal Revenue Code, and the Public Health Services Act and continue to be excepted from the requirements of the Affordable Care Act.  The agencies that administer these laws, however, must define the scope of excepted benefits to clarify the benefits not subject to the ACA.  To that extent, therefore, they regulate those benefits.

Read the rest of this entry »

Click here to email us a new post.