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Health Care Reform Hinges on Waiver Criteria in Rumored White House Bill

April 4, 2017

Consumer Power Report #541

A revision of the American Health Care Act (AHCA), the bill House Republican leaders advocated before canceling a vote on it due to inadequate support, is rumored to dilute two more Obamacare mandates objected to by a group of three-dozen conservative House members.

House Freedom Caucus Chair Rep. Mark Meadows (R-NC) said he expects the White House to release a compromise bill on April 4, The Washington Examiner reported.

The compromise bill is rumored to propose letting states apply for a federal waiver exempting them from compliance with the mandates-if states qualify: “[S]tates would have to get a waiver to opt out of either regulation, and it remains unclear what that waiver would entail,” according to the Examiner.

In a compromise bill set up this way, the waiver criteria will prove all-important. Overly stringent criteria would deter some states from pursing exemptions from the mandates. More adventurous states would bend over backward, imposing new regulations and distorting markets and state budgets to obtain waivers. Neither scenario would improve upon the Affordable Care Act (ACA), but states, instead of Congress, would get blamed for this failure.

Newly added to the chopping block – partially – are two mandates partly responsible for the high cost of health insurance for most people in the individual market: 10 essential health benefits (EHBs) and community rating. Presumably, these changes would be added to the repeal of ACA’s individual and employer mandates, proposed by the version of AHCA House leaders pulled from consideration on March 24.

“The compromise would allow states to opt out of forcing insurers to cover 10 essential health benefits in plans, including maternity care and hospitalization,” The Washington Examiner reported on April 3. “The states could also opt out of forcing insurers to comply with a community rating mandate, which today requires them to offer the same rate to an entire geographic area, and bars them from charging sicker people much more.”

Obamacare’s EHB mandate requires insurers to cover services and conditions for which many insurance shoppers would not buy coverage, were Congress to give them the option. Some of these 10 EHBs have zero or slight chances of “benefitting” the owners of these insurance policies, such as maternity care, newborn care, and substance abuse disorder services.

The ACA community rating mandate prohibits insurers from charging people who live in the same geographic region different prices for health insurance for any reason other than their age and whether they smoke. This is one of ACA’s mechanisms for preventing insurers from charging relatively sick individuals more for insurance than relatively healthy individuals. Without this mandate, many or most people would be able to buy health insurance for far less than they now can.

Creating a waiver system for states to opt out of complying with these ACA mandates would slide the compromise legislation toward full Obamacare repeal, which congressional Republicans and President Donald Trump promised on the campaign trail, without swinging the pendulum all the way.

But a waiver system could prove enough to swing Freedom Caucus members, especially if Meadows and Rep. Jim Jordan (R-OH) are persuaded. Meadows fingered Obamacare’s EHB and community rating mandates on March 31 as the linchpin of continuing Freedom Caucus resistance to AHCA.

For this reason, meaningful federal health care reform could hinge on the conditions required for states to obtain waivers. Passing a compromise bill with exceedingly stringent criteria could prove devastating to genuine health care reform, which even some Democrats may soon admit is necessary as Obamacare continues to implode.

If a new bill passes waiver criteria too strict, the mandates will remain in full force without being widely recognized as mandates. States will either refuse to obtain the waivers, or states will agree to micromanage and possibly subsidize their insurance markets so much that the federal mandates may as well have stayed put.

Either scenario could enable Congress and Trump to check the box of “ACA repeal and replacement” without truly repealing the mandates. Any state declining to obtain a waiver-in-name-only would be cast as freely choosing to keep Obamacare’s mandates. Similarly, any state obtaining a waiver-in-name-only would get blamed, instead of Congress, for failing to improve upon Obamacare’s mandates.

– Michael T. Hamilton (mhamilton@heartland.org, @MikeFreeMarket) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.


IN THIS ISSUE:


AVIK ROY: GOP CENTRISTS, NOT FREEDOM CAUCUS, ARE BLOCKING DEAL TO REPLACE OBAMACARE

The conventional wisdom – repeated by President Trump – is that the right-wing House Freedom Caucus is singlehandedly blocking Republican attempts to repeal and replace Obamacare. In fact, Freedom Caucus members have been reaching out to the larger bloc of “no” votes – GOP moderates – to find a path forward. Moderates are rebuffing them. Here’s why.

As Eliza Collins and Herb Jackson of USA Today have reported, members of the House Freedom Caucus reached out to the Tuesday Group to see if the two blocs of “no” votes could come to an agreement that they could then take to House leadership to fix the GOP replacement bill, the American Health Care Act.

But Rep. Collins was having none of it, telling the USA Today reporters that the Tuesday Group had “unequivocally” rejected the offer to meet with their hard-line counterparts. “It’s not changing the opinions in our conference,” Collins added. “We’ve moved on. We have to move on to tax reform. … I truly believe health care has moved on and won’t be dealt with until 2019, if then.”

Rep. Charlie Dent (R., Pa.), co-chairman of the Tuesday Group, added, “I am not negotiating with anyone … I’ve seen stories that there are discussions about certain negotiations between the Tuesday Group and the Freedom Caucus. That’s not the case … Do I talk to other members? Absolutely. Am I negotiating with anyone about the bill that was just put aside? No.”

It seems strange, on the surface. Moderate Republicans campaigned on repealing Obamacare as much as conservatives did. But they are much more fearful of how repeal may affect those in their districts that benefit from the Affordable Care Act’s expansion of Medicaid and subsidized insurance exchanges.

That’s the key to this story. Moderates are stuck between a rock and a hard place. They campaigned on repeal, but when push comes to shove, it’s not clear that they really want to repeal the law and face constituents who lost their coverage as a result.

House Speaker Paul Ryan’s decision to pull the AHCA from the floor benefited moderates more than anyone else. Those moderates can still say that they support repeal, while avoiding a vote that defunds Obamacare and throws their constituents off their coverage.

That’s why another co-chairman of the Tuesday Group, Rep. Tom MacArthur (R., N.J.), expressed opposition to negotiating with the Freedom Caucus. “When side groups start to negotiate,” he said, “the risk is upsetting other people who are not part of the process.”

Really? Rep. MacArthur feels that negotiations should involve every GOP member of Congress, such that no group would be offended or excluded? Congress has rarely, if ever, used such an unwieldy negotiating process in any other bill. …

SOURCE: Avik Roy, Forbes


KANSAS HOUSE UPHOLDS GOVERNOR’S VETO OF MEDICAID EXPANSION

The Republican-controlled Kansas House of Representatives voted narrowly on Monday to uphold Gov. Sam Brownback’s veto of a bill to expand Medicaid, ending a quest that came improbably close to succeeding in this deep red state despite Mr. Brownback’s unyielding opposition.

In spite of a torrent of phone calls and in-person pleas from constituents over the weekend, and last-minute lobbying by hospital leaders who said that expanding Medicaid would help save a number of rural hospitals from closing, the vote was 81 to 44, three short of the two-thirds majority needed for an override.

The effort to expand Medicaid to cover 150,000 additional low-income people in Kansas had been closely watched nationally, in part because it came just after President Trump and Republicans in Congress tried and failed to repeal the Affordable Care Act. Success might have provided momentum in some of the other 18 states that have not yet expanded Medicaid under the health law to cover far more low-income adults.

While two Republican lawmakers who had originally voted against expanding Medicaid switched sides and voted to override, two others who had supported the expansion bill when it passed the House in February voted to sustain the veto.

One of them, Representative Clay Aurand, a Republican from Belleville, said he hoped Kansas could find a way to expand Medicaid in “a more fiscal-neutral way.” …

Opponents of expansion questioned whether Kansas could afford it, expressed doubts about whether the federal government would continue to pay for most of it if the health care law eventually is repealed, and suggested the promised benefits to rural hospitals were overstated.

Mr. Brownback vetoed the measure almost as soon as it reached his desk on Thursday, saying that the cost to the state would be “irresponsible and unsustainable,” and that it would be “unwise” to expand Medicaid while President Trump and Congress were still vowing to repeal the Affordable Care Act.

He also said the bill was unacceptable because it did not include a work requirement for beneficiaries of the Medicaid expansion. While the federal government has never allowed states to require that people have jobs in order to receive Medicaid, the Trump administration has hinted that it may. Some Republican-led states are considering asking for changes to their Medicaid programs that could reduce recipients, including work requirements, premiums and even lifetime limits on Medicaid coverage. …

SOURCE: Abby Goodnough and Mitch Smith, The New York Times


STUDY: INSURERS CHARGE PATIENTS STICKER PRICE FOR DISCOUNTED BRAND-NAME MEDICINES

More than half of commercially-insured patients’ out-of-pocket spending for brand medicines is based on the full list price, according to a new analysis from Amundsen Consulting, a division of QuintilesIMS. The data also show cost-sharing for nearly one in five brand prescriptions is based on the list price.

Robust negotiations between biopharmaceutical companies and payers have resulted in significant rebates and discounts on medicine prices, but unlike care received at an in-network hospital or physician’s office, health plans continue to require patients with high deductibles or coinsurance to pay cost sharing based on the undiscounted list price, rather than the discounted price.

“While biopharmaceutical companies set the list prices for their medicines, it is the health plan that ultimately determines how much a patient pays out-of-pocket,” said Stephen J. Ubl, president and chief executive officer of the Pharmaceutical Research and Manufacturers of America, or PhRMA, the organization that commissioned the analysis. “Even though more than a third of the list price is rebated back to payers and the supply chain, health plans do not pass along these discounts to patients with high deductibles and coinsurance.”

Patients with high deductibles or coinsurance are less likely to take medicines as prescribed, putting them at higher risk for expensive emergency room visits, avoidable hospitalizations and poorer health outcomes. The analysis also found prescriptions subject to a deductible were more than twice as likely to be abandoned at the pharmacy.

Payers have recognized asking patients to pay cost sharing based on undiscounted list prices can be problematic. Recent statements from two of the largest pharmacy benefit managers (PBMs) acknowledged high deductibles for medicines put patients in a “very difficult position” and that passing along discounts and rebates to patients should be considered as a “best practice.” …

SOURCE: PhRMA


ACP, ABIM IN TALKS TO LESSEN MAINTENANCE OF CERTIFICATION BURDEN

If they get their way, internists seeking to maintain their board certification may soon have a third option beyond the often-dreaded 10-year American Board of Internal Medicine exam or the board’s two-year Knowledge Check-In that starts next year.

In a nutshell, officials with the American College of Physicians say their home educational learning tool, called MKSAP, or Medical Knowledge Self Assessment Program, is a great foundation for a better way, and could become an acceptable alternative to what the ABIM now requires for maintenance of certification (MOC), said Thomas Tape, MD, immediate past chair of the ACP’s Board of Regents.

“The ABIM would deem the ACP’s pathway as meeting its requirements,” Tape said. Despite rumors and hallway talk circulating during last week’s annual ACP meeting, it is not the ACP’s plan to have the ACP determine if the doctor meets criteria, he emphasized.

With the ABIM process today, “you have to go somewhere else [besides the ABIM] to learn the material. Whether it’s journals or conferences, board review courses, or use the ACP’s MKSAP, you’re on your own to figure out how to learn. And then the ABIM tells you whether you’ve learned enough. The ACP’s conceptualization is to bring the learning and assessment together into one piece.”

Updated for some 50 years, the MKSAP is used by about 66,000 physicians, according to the ACP. …

Also unclear is how the money would flow. Would internists continue to pay the ABIM fees that can top $200 per year per board, even if MKSAP is their chosen way of proving knowledge – while also paying the ACP to take the MKSAP?

But the idea that the ABIM is willing to consider further options in what it requires for doctors to become re-certified is significant.

Three years ago, many specialty groups covered by the ABIM’s criteria expressed extreme frustration and outrage, with some even threatening mutiny at the ABIM’s new requirement that they would have to complete “continuous learning” segments, in addition to the traditional 10-year exam.

One doctor, Paul Teirstein, MD, of San Diego, leads an effort to set up an alternative certification board.

The ABIM also removed “certification for life” that had been granted for older doctors who passed their first ABIM exam prior to 1990, forcing them to take the exam within 10 years. …

SOURCE: Cheryl Clark, MedPage Today

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Michael Hamilton is a Heartland research fellow and managing editor of Health Care News. Michael writes and edits at the intersection of liberty, language, and learning.
mhamilton@heartland.org