From an upscale assisted living center in Seattle, 87-year-old Brendan Wall has some advice for members of Congress eager to repeal the Affordable Care Act: Slow down.
“They haven’t said what they’re going to replace it with or how they’re going to replace it,” said Wall, who taught philosophy and religion for more than 30 years.
“I think it’s a major crisis, and I hope to God they take enough time to think about it and act on it so that the thing will work.”
Wall lives at Merrill Gardens, a complex near downtown Seattle where anxiety runs high over the transition to a new administration in Washington, D.C. And while the evolving drama may not affect him directly, he and other seniors here fret about the Donald Trump administration’s vow to repeal and replace the Affordable Care Act and what it will mean for their children and grandchildren.
Wall and five other residents responded to a Kaiser Health News request for area seniors willing to share their views about health care as Trump takes over and pressure mounts on Capitol Hill to repeal the Affordable Care Act. In a news conference, Trump again called the health law “a complete and total disaster,” and said he intends to move quickly to replace it with something “far less expensive and far better,” though he offered no specifics.
The view from Merrill Gardens offers a snapshot of a larger national debate about the successes and failures of President Barack Obama’s signature legislation. Its residents live in liberal King County, where less than 22 percent of voters chose Trump. But only 125 miles away, in a rural district that voted for Trump, Republican Rep. Jaime Herrera Beutler says seniors’ anxieties over repeal of the Affordable Care Act are misplaced.
“Seniors are right to be concerned about the future of ACA, but not because of congressional Republicans’ plans,” spokeswoman Amy Pennington said in an email. “The law’s fundamental flaws, phony finances and broken promises will cause it to collapse on its own — Medicaid expansion, exchanges and all.”
At Merrill Gardens, residents are more politically engaged than in many parts of the country. They avidly follow the news through local newspapers, TV, the internet and radio.
The group that showed up for an open meeting in the complex’s private dining room ranged in age from early 70s to late-80s. They included retired education, business and health professionals. Loree Wagner, a center spokeswoman, said the organizers did not ask for political affiliation.
“I find this moment especially challenging,” said Dick Kirkendall, 88, a retired University of Washington history professor who specialized in the presidency of Harry S. Truman. “I have a hard time seeing what’s ahead, a harder time than I’ve ever had. I have a harder time knowing what my president is going to do.”
Everyone in the room said they had few complaints about their existing health insurance coverage through Medicare, Medicare supplements, private pensions and Veterans Affairs programs.
But they said they fear that proposed changes — including plans to privatize Medicare and revamp Medicaid and Social Security — will mean less care for their families and the poor.
“My opinion is not to touch Medicare or Medicaid,” said Terry Doucette, 76, a former admitting department manager for a local hospital. “I mean, people are dependent upon it and there needs to be a warning time and coming together in a real thoughtful way, making everything work together, especially for the least fortunate.”
Herrera Beutler said she supports plans to protect Medicare and Social Security for seniors in the future.
In addition to Wall, Kirkendall and Doucette, the group included John Ball, 73, a former developer, Sandra Wiatr, 80, a former school nurse in the Chicago public school system and Dr. Harold Ellner, 89, a retired urologist.
Overall, they sympathized with the frustrations of those who criticized the ACA, which created online health exchanges that expanded coverage to millions, but also saw sharp rises in costs and, in some cases, limited coverage choices.
“The Obama thing had been moving out of control, particularly for middle-class people whose insurance premiums have gone up and their deductibles are unbelievable,” Wall said. “They’re out of this world. I think they had to do something.”
But they also echoed the views of a recent Kaiser Family Foundation tracking poll that found that while one in five Americans support repeal alone, three-quarters either oppose repeal entirely or want to wait until details of a replacement plan are complete. (KHN is an editorially independent program of the foundation.)
The answer is not to scrap the plan that expanded insurance to 20 million people while offering no alternative, said Ball, who only obtained regular insurance when he qualified for Medicare eight years ago. He still lives with consequences of untreated injuries, including a broken clavicle that healed badly after a rugby injury years ago.
“I’m distressed at the proposal that we chuck out the baby with the bath water,” he said. “I’ve seen the backside of no insurance and living with something you hoped wouldn’t be considered a pre-existing condition. I have a pretty strong identification with those people who didn’t have insurance and were suddenly brought into the fold of Obamacare.”
In her work as a school nurse, Wiatr saw many students with asthma whose families couldn’t afford medication inhalers to control the potentially life-threatening disease. When she managed a family practice clinic, she saw people try to cut medical costs at the expense of health.
“There were people who didn’t do lab tests, who took only half of their medication because they couldn’t afford it,” she said. “I am very upset because I think our politicians don’t have a clue how difficult it is for people to receive medication and adequate health care.”
Ellner, the urologist, worked for a local Planned Parenthood clinic after he retired and flatly said he supports a universal, single-payer health system.
“Obamacare seems to have been a way station on the way to universal health care and now it’s not only being challenged, it’s being threatened,” he said.
The situation now calls for compromise and compassion from political leaders, said Doucette. “What I want to do is simply get the hard-headed guys from both parties to meet and really want to do this instead of wanting to win,” she said. “Now, we’ll see what Trump does. He has all these ideas and he thinks everyone else is on a lower level. I would like to see them work together.”
KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation. This report is made available by Kaiser Health News under a Creative Commons License.
Republican governors who turned down billions in federal dollars from an expansion of Medicaid under President Barack Obama’s health care law now have their hands out in hopes the GOP-controlled Congress comes up with a new formula to provide insurance for low-income Americans.
The other GOP governors, such as Ohio Gov. John Kasich, who agreed to expand state-run services in exchange for federal help — more than a dozen out of the 31 states — are adamant that Congress maintain the financing that has allowed them to add millions of low-income people to the health insurance rolls.
With Congress starting to consider plans for annulling and reshaping Obama’s overhaul, Republican governors and lieutenant governors from 10 states met privately for more than two hours last week with GOP members of the Senate Finance Committee and raised concerns about how lawmakers will reshape Medicaid.
“They’re worried about how it all works out,” Finance panel chairman Orrin Hatch, R-Utah, said after the session in a Senate office building.
GOP senators and governors stressed the need for giving states more flexibility to shape their Medicaid programs. That’s a change that worries Democrats, who say some states would inevitably end up covering fewer people or offering skimpier benefits.
Arkansas Gov. Asa Hutchinson said governors could find savings by being allowed to impose “work incentives” for some beneficiaries.
Kasich suggested shifting people who earn just above the poverty level from Medicaid to the online exchanges that Obama’s law created for buying coverage.
“I think they understand this is not simple and I think they know they have to get it right,” Kasich said.
A chief worry by governors was whether states that accepted extra federal money to expand Medicaid to more people would lose that extended coverage.
Sen. John Cornyn, R-Texas, said afterward that “it ain’t going to happen,” though he did not detail how.
In a letter he carried to Capitol Hill, Kasich warned that repealing Obama’s law without an alternative in place could interrupt health care coverage for hundreds of thousands in Ohio and urged he “be granted the flexibility to retain the adult Medicaid coverage expansion.”
Ohio has added roughly 700,000 recipients to the program since the law took effect in 2013.
Unlike Kasich, 19 Republican governors — including Scott Walker of Wisconsin — defied the Affordable Care Act’s mandate that states open up Medicaid to more people.
It was a major expansion of the state-federal health insurance system whose primary purpose has grown in its 52 years from backstop medical assistance for the poor to the go-to program for closing gaps in private health insurance system.
In the three years since the Affordable Care Act went into effect, Medicaid enrollment has grown by about 18 million people, to roughly 75 million, according to the federal Centers for Medicare and Medicaid Services.
Walker, seeking to win over conservative voters for his failed presidential bid, notably turned down more than $500 million for his state.
But with Republicans, backed by President-elect Donald Trump, pursuing repeal of the law, Walker and other GOP governors now are asking specifically for the Medicaid money and fewer rules for spending it.
On average, the federal government’s contribution accounts for 56 percent of a state’s Medicaid budget, making the financing terms under the health care law much more generous.
Republicans have long sought block grants or lump-sum payments for health care. The money has helped them maintain their budgets, while the relative lack of heavy regulation has allowed governors freedom to experiment with social services policy.
“Now that Barack Obama is no longer going to be at the White House, it is going to be much more palatable for Republican governors to seek additional funding,” said Ron Pollack of Families USA, a leading advocate for Obama’s law.
All Democratic governors in office when the law took effect in 2013 agreed to the expansion. Even Republican governors in 11 states agreed to expand Medicaid, some with specific waivers that still allowed them to claim the federal reimbursement.
Now, Republican leaders in states aren’t just asking for money they turned down. They’re asking to change the formula to get back what they lost.
The federal Medicaid formula is based in part on how many enrollees a state had as of 2016. By last year, Michigan, for instance, had added 630,000 recipients since accepting the Medicaid expansion.
But Medicaid in Kansas grew at a far slower rate, given Gov. Sam Brownback’s opposition to the federal law. Now, he wants Congress to change the formula to benefit his state.
The Affordable Care Act of course affected premiums and insurance purchasing. It guaranteed people with pre-existing conditions could buy health coverage and allowed children to stay on parents’ plans until age 26. But the roughly 2,000-page bill also included a host of other provisions that affect the health-related choices of nearly every American.
Some of these measures are evident every day. Some enjoy broad support, even though people often don’t always realize they spring from the statute.
In other words, the outcome of the repeal-and-replace debate could affect more than you might think, depending on exactly how the GOP congressional majority pursues its goal to do away with Obamacare.
No one knows how far the effort will reach, but here’s a sampling of sleeper provisions that could land on the cutting-room floor:
CALORIE COUNTS AT RESTAURANTS AND FAST FOOD CHAINS
Feeling hungry? The law tries to give you more information about what that burger or muffin will cost you in terms of calories, part of an effort to combat the ongoing obesity epidemic. Under the ACA, most restaurants and fast food chains with at least 20 stores must post calorie counts of their menu items. Several states, including New York, already had similar rules before the law. Although there was some pushback, the rule had industry support, possibly because posting calories was seen as less onerous than such things as taxes on sugary foods or beverages. The final rule went into effect in December after a one-year delay. One thing that is still unclear: Does simply seeing that a particular muffin has more than 400 calories cause consumers to choose carrot sticks instead? Results are mixed. One large meta-analysis done before the law went into effect didn’t show a significant reduction in calorie consumption, although the authors concluded that menu labeling is “a relatively low-cost education strategy that may lead consumers to purchase slightly fewer calories.”
PRIVACY PLEASE: WORKPLACE REQUIREMENTS FOR BREAST-FEEDING ROOMS
Breast feeding, but going back to work? The law requires employers to provide women break time to express milk for up to a year after giving birth and provide someplace — other than a bathroom — to do so in private. In addition, most health plans must offer breastfeeding support and equipment, such as pumps, without a patient co-payment.
LIMITS ON SURPRISE MEDICAL COSTS FROM HOSPITAL EMERGENCY ROOM VISITS
If you find yourself in an emergency room, short on cash, uninsured or not sure if your insurance covers costs at that hospital, the law provides some limited assistance. If you are in a hospital that is not part of your insurer’s network, the Affordable Care Act requires all health plans to charge consumers the same co-payments or co-insurance for out-of-network emergency care as they do for hospitals within their networks. Still, the hospital could “balance bill” you for its costs — including ER care — that exceed what your insurer reimburses it.
If it’s a non-profit hospital — and about 78 percent of all hospitals are — the law requires it to post online a written financial assistance policy, spelling out whether it offers free or discounted care and the eligibility requirements for such programs. While not prescribing any particular set of eligibility requirements, the law requires hospitals to charge lower rates to patients who are eligible for their financial assistance programs. That’s compared with their gross charges, also known as chargemaster rates.
NONPROFIT HOSPITALS’ COMMUNITY HEALTH ASSESSMENTS
The health law also requires non-profit hospitals to justify the billions of dollars in tax exemptions they receive by demonstrating how they go about trying to improve the health of the community around them.
Every three years, these hospitals have to perform a community needs assessment for the area the hospital serves. They also have to develop — and update annually — strategies to meet these needs. The hospitals then must provide documentation as part of their annual reporting to the Internal Revenue Service. Failure to comply could leave them liable for a $50,000 penalty.
A WOMAN’S RIGHT TO CHOOSE … HER OB/GYN
Most insurance plans must allow women to seek care from an obstetrician/gynecologist without having to get a referral from a primary care physician. While the majority of states already had such protections in place, those laws did not apply to self-insured plans, which are often offered by large employers. The health law extended the rules to all new plans. Proponents say direct access makes it easier for women to seek not only reproductive health care, but also related screenings for such things as high blood pressure or cholesterol.
AND WHAT ABOUT THOSE THERAPY COVERAGE ASSURANCES FOR FAMILIES WHO HAVE KIDS WITH AUTISM?
Advocates for children with autism and people with degenerative diseases argued that many insurance plans did not provide care their families needed. That’s because insurers would cover rehabilitation to help people regain functions they had lost, such as walking again after a stroke, but not care needed to either gain functions patients never had, such speech therapy for a child who never learned how to talk, or to maintain a patient’s current level of function. The law requires plans to offer coverage for such treatments, dubbed habilitative care, as part of the essential health benefits in plans sold to individuals and small groups.
Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation. This story from HKN is published under a Creative Commons license.
Here’s the idea: Swiftly pass a repeal of President Barack Obama’s health care law, perhaps soon enough for Donald Trump to sign it the day he takes the presidential oath.
Then approve legislation restructuring the nation’s huge and convoluted health care system — despite Republican divisions, Democratic opposition and millions of jittery constituents.
What could go wrong?
With Republicans controlling the White House and Congress in January, they’re faced with delivering on their long-time promise to repeal and replace “Obamacare.”
Here are hurdles they’ll face:
SPEED VS DELIBERATION
Trump and congressional Republicans will be under intense pressure from their core conservative supporters to repeal Obama’s 2010 health care law — and fast. After all, Congress already sent Obama a repeal bill last January, which he vetoed, and many GOP voters will see no reason for delays this time.
But there probably won’t be anything fast about Congress’ effort to replace Obama’s law, which is likely to take many months.
While the replacement effort is underway, Republicans will risk aggravating up to 30 million people who are covered by the law or buy policies with prices affected by its insurance marketplace. Democrats will be sure to accuse the GOP of threatening the health care of millions.
Nothing’s been decided, but here’s one likely scenario:
The new Congress, which convenes Jan. 3, tries to quickly approve legislation repealing Obama’s health care law, maybe completing it by Trump’s Jan. 20 inauguration or soon after. But the repeal would not take effect until the future, perhaps a year later, to give lawmakers time to fashion a replacement. The version Obama vetoed had a two-year delay.
Seemingly acknowledging that two-step process, Vice President-elect Mike Pence said Sunday on “Fox News Sunday” that Trump “wants to focus out of the gate on repealing Obamacare and beginning the process of replacing Obamacare.”
Because Republicans will control the Senate by just 52-48, Congress will first have to approve special budget procedures to prevent Democrats from stopping repeal legislation by filibuster. Bill-killing filibusters require 60 votes to end.
But those special rules would apply only to items that affect the federal budget. Republicans, for example, would need a simple Senate majority to end IRS penalties against people who don’t buy insurance but would still need 60 votes — requiring Democratic support — for other changes such as raising limits on older people’s premiums.
House Budget Committee Chairman Tom Price, R-Ga., says that will restrain Republicans’ ability to ram a “lock, stock and barrel” repeal through Congress.
One GOP danger: Congress and Trump might repeal Obama’s law, but while they’re laboring on a replacement, nervous insurance companies begin pulling out of markets and raising premiums. Insurers have been doing that under Obama, but now it would occur under a Republican government.
Another hazard: Congress’ work could spill into the 2018 campaign season, when the entire House and a third of the Senate face re-election. Republicans will grow increasingly timid about anything that might anger voters.
“We want to be the rescue party instead of the party that pushes millions of Americans who are hanging by the edge of their fingernails over the cliff,” says Sen. Lamar Alexander, R-Tenn., who chairs the Senate Health committee.
Virtually all Republicans want to get rid of the health law’s mandates that individuals buy coverage or risk IRS fines, and that large employers insure workers.
They also want to erase taxes on higher-earning people and the health care sector. And they’d like to retain parts of the law guaranteeing coverage for people with pre-existing medical problems and keeping children under age 26 on family plans.
Unifying Republicans much beyond that is a work in progress.
Trump’s health care views have varied and lack detail. His campaign website touts tax deductions for health insurance premiums and permitting policies to be sold across state lines. He’d also revamp Medicaid, which subsidizes health coverage for low-income people, directing fixed amounts of money to states and letting them structure benefits.
House Speaker Paul Ryan, R-Wis., last summer unveiled an outline of the House GOP’s solution, though it lacked cost estimates and details. It would provide tax credits, impose taxes on the most generous employer-provided health care plans, revamp Medicaid and let Medicare beneficiaries pick private plans instead of today’s fee-for-service coverage.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, has also advanced a framework relying heavily on tax credits.
Thirty-one states — including Pence’s Indiana, where he is governor — plus the District of Columbia have expanded Medicaid coverage to 9 million additional people under Obama’s law. Curtailing that program will divide Republicans.
Taxing the value of some employer-provided health plans, aimed at curbing the growth of costs, is “a political land mine,” says GOP economist Douglas Holtz-Eakin. Republicans have long resisted tax increases.
Obama’s law mandates coverage for individuals because without that requirement many healthy people would forgo policies, driving up costs for everyone else and destabilizing insurance markets. Ryan has proposed shielding people from higher premiums if they’ve had “continuous coverage,” allowing higher rates for people who have not had policies, but Republicans have yet to decide how to keep insurance markets viable.
Hillary Clinton has been involved in the nation’s health care debate for more than 20 years and, as her campaign likes to say, she has the scars to prove it.
The Democratic presidential candidate failed in her 1990s effort to steer her husband’s universal coverage program through Congress, as the complex plan collapsed for lack of political support. Since then, she has tacked sometimes to the right on health care, and sometimes to the left.
Clinton is campaigning as the candidate of continuity and would leave all major health care programs in place. She has a long list of tweaks and adjustments that reflect her familiarity with policy and would expand the government’s role in health care.
Donald Trump calls President Barack Obama’s health care law “a disaster,” and vows to repeal it. He’d provide a new tax deduction for health insurance premiums, but also limit federal support for Medicaid, which covers low-income people. An independent analysis recently estimated his seven-point plan would cause 20 million people to lose coverage.
Trump’s ideas on health care have shifted over time, and his latest plan hews to basic GOP talking points. He’s expressed a belief that an economically advanced country like the United States can’t have people “dying in the street” for lack of medical care.
Here is a summary of their proposals:
The government’s premier health insurance program covers about 57 million people, including 48 million seniors and 9 million disabled people under age 65. It enjoys strong support from voters across the political spectrum, although its long-term financial outlook is uncertain.
CLINTON: She would authorize Medicare to negotiate drug prices with pharmaceutical companies, and she supports allowing patients to import lower-cost prescriptions from abroad. Medicare beneficiaries represent a big share of the market for medications.
Clinton would also allow people ages 55-64 to buy into Medicare, although her campaign has not released much detail on how that would work.
TRUMP: He promises not to cut Medicare, and has suggested that other Republicans like House Speaker Paul Ryan made a political mistake by calling for major changes. But it remains unclear how Trump’s proposed repeal of “Obamacare” would affect its improvements to Medicare benefits, including closing the prescription drug coverage gap known as the “doughnut hole.”
Earlier, Trump spoke approvingly of giving Medicare legal authority to negotiate prescription drug prices, but that idea currently is not mentioned in his health care plan. Instead, he also supports allowing drug importation.
The federal-state program for low-income individuals covers more than 70 million people, from pregnant women and children to elderly nursing home residents. Under Obama’s health care law, states can expand the program to include more low-income adults. Medicaid has sometimes carried a social stigma, but polls show the program has a solid base of public support.
CLINTON: She’d work to expand Medicaid in the 19 states that have yet to take advantage of the health law. She’s proposing three years of full federal funding for those states, the same deal given to states that embraced the law right away.
TRUMP: In 2015 Trump told an interviewer: “I’m not going to cut Social Security like every other Republican. And I’m not going to cut Medicare or Medicaid. Every other Republican’s going to cut.”
But his campaign plan would convert Medicaid into a block grant, ending the open-ended federal entitlement and capping funding from Washington. Over time, such an approach is likely to result in a big cut.
About 177 million people under age 65 have private health insurance, with nearly 9 in 10 getting their coverage through an employer. Rising out-of-pocket costs such as insurance deductibles and copayments are a sore point with consumers.
CLINTON: She has proposed a new tax credit of up to $5,000 per family, or $2,500 for an individual, for households that face “excessive” out-of-pocket costs. The credit would be refundable, meaning that people who don’t owe income tax could still get money back. An independent analysis of her plan defined “excessive” costs as exceeding 5 percent of household income.
Clinton would also require insurers to cover three sick visits to the doctor each year without patients needing first to meet their plan’s deductible, the annual amount patients pay before their insurance kicks in.
TRUMP: He has no similar proposals on out-of-pocket expenses but has called for requiring hospitals, clinics and doctors to disclose prices so patients can shop around to reduce costs. And he would expand the use of tax-sheltered health savings accounts, used to pay for medical expenses not covered by insurance.
More than half of U.S. adults take prescription drugs, and according to a recent Kaiser Family Foundation poll most of those patients report no major problems affording their own medications.
But consumers have been alarmed by the introduction of breakthrough drugs costing tens of thousands of dollars a year, along with a spate of seemingly random price hikes for older medications. More than 3 out of 4 say the cost of prescription drugs is unreasonable. A majority favors government action to curb costs.
CLINTON: She has several proposals, including a new government board with the power to penalize drug companies for “unjustified, outlier price increases,” a monthly limit of $250 on patients’ copayments for prescription drugs, lowering the period of protection from generic competition for biologic drugs from 12 years to 7 years, and requiring drug companies to provide rebates for medications used by low-income Medicare recipients.
Those ideas are on top of Medicare negotiations and allowing patients to import lower-cost prescription drugs from abroad.
TRUMP: In addition to backing drug importation, he also has called on Congress to remove barriers to competition from lower-price, equally effective medications.
The 2010 Affordable Care Act expanded coverage for the uninsured and made carrying health insurance a legal obligation for most people. It offers subsidized private insurance for people who don’t have access to a job-based plan, along with a state option to expand Medicaid.
About 11 million people are covered through the law’s private insurance markets, while the Medicaid expansion has added at least 9 million to that program. It’s unclear if all those people were previously uninsured, but experts say the law deserves most of the credit for 21 million gaining coverage since its passage. Americans, however, remain deeply divided over “Obamacare.”
CLINTON: She wants to strengthen Obama’s signature law. Clinton would resolve a “family glitch” that denies health insurance subsidies to some dependents, sweeten subsidies for people buying coverage on the health law’s markets, and offer a new government-sponsored insurance plan to compete with private companies.
Her proposals would expand coverage to about 9 million more uninsured people, according to a recent study by the Commonwealth Fund and the RAND Corporation.
But Clinton would repeal the law’s tax on high-cost insurance, known as the “Cadillac Tax.” Many economists are critical, saying repeal of the tax would eliminate a brake on costs.
TRUMP: He would completely repeal the 2010 law and start over again. Trump has proposed a tax deduction for health insurance premiums, and also allowing insurers to sell policies across state lines, a longstanding GOP idea.
Critics say a deduction, usually claimed after the end of the tax year, wouldn’t do much to help lower-income people squeezed to pay premiums.
And the idea of selling across state lines has been opposed in the past by state insurance commissioners and attorneys general, who warned that it would undercut consumer protections. The insurance industry is divided, with smaller companies fearing it would favor major insurers.
Retail titan Walmart uses its market dominance to inflict “ruthless,” “brutal” and “relentless” pressure on prices charged by suppliers, business writers frequently report.
What if huge health insurance companies could push down prices charged by hospitals and doctors in the same way?
The idea is getting new attention as already painful health costs accelerate and major medical insurers seek to merge into three enormous firms.
Now that hospitals have themselves combined, in many cases, into companies that dominate their communities, insurance executives argue the only way to fight bigness is bigness.
No. 2 health insurer Anthem’s proposed marriage to No. 6 Cigna would let the combined company “manage the cost drivers that negatively impact affordability for consumers,” Anthem CEO Joseph Swedish told Congress last year. The bigger company could “negotiate better reimbursement rates” with medical providers, says Anthem spokeswoman Jill Becher.
In metro areas with only a few big insurers, hospital and doctor bills tend to be lower than what economists would otherwise expect. If only one or two insurers are bidding to include providers in their networks, hospitals and doctors must submit to the offered deal or risk getting shut out of a huge piece of business.
“There’s some literature out there that does show that when you have relatively concentrated insurance markets, they tend to keep actual hospital costs down,” said Yevgeniy Feyman, a researcher at Harvard’s T.H. Chan School of Public Health and a fellow with the Manhattan Institute.
The American Hospital Association as well as the American Medical Association, trade groups for hospitals and doctors respectively, have long worried that insurance mergers do just that. Now that Anthem is trying to buy Cigna, and No. 3 health insurer Aetna wants to buy No. 5 Humana, they’re even more concerned.
Both deals “have the very real potential to reduce competition substantially” and “diminish the insurers’ willingness to be innovative partners with providers and consumers,” AHA lawyer Melinda Reid Hatton wrote to antitrust authorities after the combos were announced.
But hospitals have built their own market power through numerous mergers, giving them broad ability to raise prices paid by employers, taxpayers and consumers beyond what a competitive market would allow, economists argue.
Hospitals “are much more concentrated than insurance markets,” said Glenn Melnick, a health care economist at the University of Southern California who has researched the matter. “They face a lot less competition than the [health] plans do.”
Why not give hospital giants somebody their own size to negotiate with?
For one thing, insurers might just pocket higher profits from low provider prices instead of passing the savings to consumers and employers.
“I don’t find any evidence that reduction in provider payment leads to reduction in insurance premiums, and I don’t know of any study that does,” said Leemore Dafny, an expert in insurance markets and an economist at Harvard Business School.
Feyman suggests requiring insurers in concentrated areas to spend 90 percent of their revenue on medical care. That might reduce their ability to boost profits with premium increases while preserving their ability to hold down hospital and doctor costs, he said.
But he sees such a measure as only a “worst-case scenario” for the most monopolized insurance markets, not a recipe to allow the Anthem and Aetna deals to go through.
Antitrust regulators are siding with the hospitals and doctors.
Late last month the Justice Department sued to block both insurance mergers, arguing that competition is important to keep premiums down and that the deals “would leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies.”
They also rejected the Walmart argument, which is related to what economists call “monopsony.”
Monopsony is the opposite of monopoly: Instead of using market dominance to raise prices for consumers, huge buyers force down prices from suppliers. Walmart is often described as holding monopsony-like power.
But critics of the insurance deals say monopsony can go too far. If the buyer pushes prices too low, suppliers stop producing, making needed goods and services unavailable.
“As a result of the merger, Anthem likely would reduce the rates that … providers earn by providing medical care to their patients,” the Justice Department argued. “This reduction in reimbursement rates likely would lead to a reduction in consumers’ access to medical care.”
Accepting Walmart logic for health care might bolster arguments for an even bigger, more powerful buyer of medical services: the government.
A “single-payer,” government health system, of the type advocated by Democratic presidential candidate Bernie Sanders, would be the ultimate monopsony: one buyer, negotiating or dictating prices for everybody.
Neither the hospitals nor the insurance companies want that.
This report was published by Kaiser Health News and ran on NPR. KHN is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.
Six years after promising a plan to “repeal and replace” the federal health law, House Republicans are finally ready to deliver.
The 37-page white paper, called “A Better Way,” includes virtually every idea on health care proposed by Republicans going back at least two decades.
It would bring back “high risk pools” for people with very high medical expenses, end open-ended funding for the Medicaid program and encourage small businesses to band together to get better bargaining power in “Association Health Plans.”
What the plan does not include, however, is any idea of how much it would cost, or how it would be financed.
“It’s a framework,” a senior House Republican leadership aide said on a conference call with reporters on June 21, with the specifics to be determined next year by congressional committees, assuming the GOP maintains its majority. He likened the document to the white paper issued just after President Barack Obama’s election by then-Senate Finance Committee Chairman Max Baucus, a Democrat. That document foreshadowed many of the key elements of the Affordable Care Act.
The plan starts with repeal of the health law and its requirements and taxes, but it would then put back many of its most popular elements: Allowing young adults to stay on their parents’ health plan to age 26; banning insurers from charging people with pre-existing health problems higher premiums; and forbidding insurers from dropping coverage if a policyholder gets sick.
It would repeal the current scheme of exchanges where consumers buy insurance and government tax credits to help moderate-income Americans pay their premiums if they don’t have an employer to help. Instead, everyone buying policies in the individual market would receive tax credits. Older people charged more by insurers would receive larger credits, though the House Republicans don’t specify how much.
But the GOP plan also would likely make insurance more expensive for older people by proposing a broader range for premiums based on age. Current premiums can vary only three-fold based on age, which is “driving out younger and healthier patients” who can’t afford them, the GOP aide said.
Under the plan, insurance companies could not charge higher rates to people with pre-existing conditions so long as they maintain continuous coverage, whether from an employer or in a policy they purchase themselves. The new high-risk pools would be available for those who have a break in coverage, or who fail to purchase during a one-time open enrollment under the plan.
The plan would get rid of most of the coverage requirements under the Medicaid program for the poor, so states could make them more or less generous than they are currently. It would also limit funding. States could opt for either a per-person cap or a block grant to spend much as they wish.
On Medicare, the proposal would encourage the existing movement of patients from the program’s traditional fee-for-service program to managed care plans, and would transition from the existing financing structure based on benefits to a controversial structure called “premium support” that puts cost-controlling responsibilities more on private insurance companies. That change has been pushed by House Speaker Paul Ryan for nearly a decade.
Backers of the existing health law were quick to criticize the GOP outline.
“Make no mistake, Ryan’s approach is not a better way forward, but a bitter path backward that returns us to the bad old days when vast swaths of Americans were left to the tender mercies of the insurance industry and could not afford needed care,” said Families USA Executive Director Ron Pollack, who pushed hard for passage of the Affordable Care Act.
“While House Republicans continue their efforts to repeal and undermine the Affordable Care Act, Democrats will work to defend the ACA so that every American has access to affordable and quality health care,” said House Minority Whip Steny Hoyer (D-Md.).
Published from Kaiser Health News, a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation, under a creative commons license.