Tagged Cost and Quality

Podcast: ‘What The Health?’ Is Health Care Spending Still The Hungry, Hungry Hippo?

Congress is trying to wrap up its work for the year, but unsettled questions remain about the Children’s Health Insurance Program, the fate of the individual mandate insurance requirement from the Affordable Care Act and other health issues. Meanwhile, outside Washington, major mergers are happening within the health care system and the federal government reports that the rate of increase in health spending slowed in 2016.

This week’s “What the Health?” guests are:

Julie Rovner of Kaiser Health News
Stephanie Armour of The Wall Street Journal
Alice Ollstein of Talking Points Memo
Margot Sanger Katz of The New York Times

They discuss these topics and other health news of the week, including the state of open enrollment for 2018 health insurance.

Among the takeaways from this week’s podcast:

  • The iron-clad promises on health care that Sen. Susan Collins (R-Maine) secured for her vote for the tax bill may be splintering.
  • Although a number of health programs could see funding cut as a result of the tax bill, lawmakers promise that they will protect Medicare.
  • Former Obama administration officials are worried that last-minute insurance enrollment on the federal marketplace could be anemic this year, because the Trump administration has not promoted the law.
  • The merger mania of the past week highlights insurers’ interest in having a piece of the action in other parts of the health care system.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.

Julie Rovner: Tonic.Vice.com’s “Why Do People Hate Obamacare, Anyway,” by Julie Rovner

Stephanie Armour: The New York Times’ “Millions Pay The Obamacare Penalty Instead Of Buying Insurance. Who Are They?” by K.K. Rebecca Lai and Alicia Parlapiano

Alice Ollstein: The Washington Post’s “Rep. Trent Franks Of Arizona, Who Asked Staffers If They Would Bear His Child As A Surrogate, Says He Will Resign,” by Mike DeBonis and Michelle Ye Hee Lee.

Margot Sanger Katz: Vox.com’s “Emergency Rooms Are Monopolies. Patients Pay The Price,” by Sarah Kliff.

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcher or Google Play.

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Cost and Quality Health Care Costs Insurance Medicare Multimedia The Health Law

Podcast: ‘What The Health?’ Is Health Care Spending Still The Hungry, Hungry Hippo?

Congress is trying to wrap up its work for the year, but unsettled questions remain about the Children’s Health Insurance Program, the fate of the individual mandate insurance requirement from the Affordable Care Act and other health issues. Meanwhile, outside Washington, major mergers are happening within the health care system and the federal government reports that the rate of increase in health spending slowed in 2016.

This week’s “What the Health?” guests are:

Julie Rovner of Kaiser Health News
Stephanie Armour of The Wall Street Journal
Alice Ollstein of Talking Points Memo
Margot Sanger Katz of The New York Times

They discuss these topics and other health news of the week, including the state of open enrollment for 2018 health insurance.

Among the takeaways from this week’s podcast:

  • The iron-clad promises on health care that Sen. Susan Collins (R-Maine) secured for her vote for the tax bill may be splintering.
  • Although a number of health programs could see funding cut as a result of the tax bill, lawmakers promise that they will protect Medicare.
  • Former Obama administration officials are worried that last-minute insurance enrollment on the federal marketplace could be anemic this year, because the Trump administration has not promoted the law.
  • The merger mania of the past week highlights insurers’ interest in having a piece of the action in other parts of the health care system.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.

Julie Rovner: Tonic.Vice.com’s “Why Do People Hate Obamacare, Anyway,” by Julie Rovner

Stephanie Armour: The New York Times’ “Millions Pay The Obamacare Penalty Instead Of Buying Insurance. Who Are They?” by K.K. Rebecca Lai and Alicia Parlapiano

Alice Ollstein: The Washington Post’s “Rep. Trent Franks Of Arizona, Who Asked Staffers If They Would Bear His Child As A Surrogate, Says He Will Resign,” by Mike DeBonis and Michelle Ye Hee Lee.

Margot Sanger Katz: Vox.com’s “Emergency Rooms Are Monopolies. Patients Pay The Price,” by Sarah Kliff.

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcher or Google Play.

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Cost and Quality Health Care Costs Insurance Medicare Multimedia The Health Law

Brokers Tout Mix-And-Match Coverage To Avoid High-Cost ACA Plans

Health insurance a la carte?

As the Affordable Care Act open-enrollment season moves into its final weeks, some consumers looking for lower-cost alternatives are considering a patchwork approach to health insurance. The products may secure some basic protection but leave patients on the hook for high medical bills.

The idea involves mixing and matching several types of insurance products originally designed to cover the deductibles and other gaps in traditional coverage.

“We have several carriers” from which clients can choose “prescription coverage from one and accident coverage from another and critical illness care from someone else,” said Eric Jans, a Nashville, Tenn., broker.

An entire package, he added, usually costs $900 to $1,000 a month for a family.

Though not new, the tactic is gaining momentum and interest with consumers — particularly in regions of the country with high ACA plan premiums.

And it’s gone national with the online firm eHealth, which launched a set of packages Nov. 1 and promotes them on its website to people who “can’t afford Obamacare.”

The packages won’t exempt people from the IRS penalty under the ACA, experts warn.

And consumer advocates caution the concept falls far short of full coverage.

“We’re seeing increased marketing of these over the past year. It’s a very risky proposition for consumers,” said Betsy Imholz, special projects director for Consumers Union. “Proceed with extreme caution.”

The packages cobble together “fixed-benefit indemnity” plans, also known as “gap coverage” plans, with other types of policies.

Most such “gap coverage” plans are underwritten, meaning they ask about applicants’ health and can exclude people with medical problems, or exempt those conditions from coverage.

These plans pay an often-small per-day or per-service amount toward hospital care, doctor visits and lab tests — for example, $65 for a primary care appointment or $175 for an advanced imaging test.

The packages usually include a prescription drug discount card.

Many also feature a “critical illness policy” that pays a lump sum of between $5,000 to as much as $50,000 if the policyholder is diagnosed with a qualifying illness, such as a heart attack, cancer or stroke. Some also incorporate short-term medical policies, which must be renewed every 90 days.

None provides comprehensive major medical coverage.

The effort to reinvigorate sales of such policies comes as premiums for some ACA plans are rising rapidly, fueled by that ban on rejecting people who are sick, the inability of Congress to agree on efforts to stabilize the market and Trump administration actions that undermine the federal health law.

In some markets, families now face ACA premiums that exceed $20,000 a year.

“There are entrepreneurs all over the insurance industry looking at the fact that people can’t access insurance they can afford,” said Robert Laszewski, an industry consultant based near Washington, D.C.

Detailing The Coverage

The IHC Group, which offers the type of hospital indemnity coverage often included in such packages, provides a hypothetical example of how its plan works. A person in the hospital with pneumonia for five days, two of them in intensive care, would receive a flat payment of $12,250 in total toward that hospital bill.

While that may sound like a lot, the hospital bill, “if you’re on a ventilator and getting antibiotics, could be $12,000 a day,” said Missy Conley, director of consumer claims at Roanoke-based Medliminal, a firm that helps consumers sort out their medical bills.

“And that’s just the nursing staff and the room,” she said. “It doesn’t include the physician who pops in or the respiratory therapists.”

Most people have no clue how much big-ticket items like hospital care, chemotherapy or surgery can cost. And it’s hard to get medical providers to disclose their charges. Still, the average cost of a three-day stay in the hospital is $30,000, according to the federal government’s health website, healthcare.gov.

Even with those limitations, some consumers are now eyeing the packages for their sole coverage.

“With [these products], we try to put together carriers that provide something [as] close to major medical as we could get,” said Nate Purpura, eHealth’s vice president of marketing.

Prices vary by carrier, level of coverage and the age and gender of the applicant.

Even with lower premiums, a package might not end up being less expensive than an ACA plan if the consumer has a medical issue or two during the year.

The materials eHealth uses to explain its plans illustrates that point.

It starts by warning consumers that medical insurance packages “may not be the best option” if they have job-based insurance or can afford an ACA plan.

But then it highlights Jane, a hypothetical 28-year-old who says she can’t afford the $350 a month an ACA plan would cost her.

Instead, she gets an eHealth package plan for $230 a month, saving $1,440 in premium for the year.

Unfortunately, Jane has a bike accident, breaks a bone and then a month later needs new glasses.

The example shows that her package of plans paid a total of $17,000 toward the ambulance ride, the hospital costs, her pain medicine and her new glasses. Jane saved $17,000 off total costs incurred of $21,550, the brochure says.

But, what it doesn’t spell out is that she still had to pay about $4,550 for her share of the rest of the tab.

Certainly, she’s better off financially than being uninsured. But, in reality, her package plan cost her $3,110 more than if she had gone with the seemingly more expensive ACA coverage.

“Every dollar you don’t spend on premiums looks like a savings,” said Michael Lujan, co-founder of employer benefit firm Limelight Health in San Francisco, and a board member of the Silicon Valley Association of Health Underwriters. “But let’s say you end up in the hospital with surgery or whatever, you need to weigh that and consider ‘What would my costs be?’”

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Cost and Quality Insurance The Health Law

Pace Of U.S. Health Spending Slows In 2016

U.S. health spending rose to $3.3 trillion in 2016, but the pace slowed compared to the previous two years as demand for drugs, hospital care and physician services weakened, according to a federal study released Wednesday.

The analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) showed a shift from the dramatic escalation in health spending that accompanied the coverage gains in 2014 and 2015 as millions of Americans found insurance under the Affordable Care Act.

The rate at which spending grew last year was lower across many measures — including figures for Medicare, Medicaid, private insurance, prescription drugs and hospitals — than in the previous two years.

Micah Hartman, a statistician in the Office of the Actuary at CMS and the lead author of the study, said he could not recall the last time that happened.

The slow down was more than federal officials had predicted in a report earlier this year.

Health spending was up 4.3 percent in 2016. In 2014 and 2015, spending increased 5.1 percent and 5.8 percent, respectively, as the ACA provided subsidies to help people get private coverage and most states expanded Medicaid.

In effect, national health spending has returned to the moderate growth levels that followed the 2007-2009 recession.

Still, health spending continues to outpace overall spending on goods and services, which increased 2.8 percent in 2016.

“Costs remain reasonably under control but are still [rising] at a rate that is too rapid to be affordable for society,” said Paul Ginsburg, a health policy professor at the University of Southern California.

Health care consumes nearly one-fifth of the U.S. economy, according to the new data.

Amid calls for the Trump administration to do something about rising drug prices, the report found national spending for prescriptions rose just 1.3 percent in 2016, compared to 12 percent in 2014 and 9 percent in 2015.

The report attributed the deceleration in spending to falling prices and the introduction of fewer new drugs. It also noted a decline in  spending for hepatitis C drugs. Their arrival in 2013 sparked a national debate on prices when the first one — Sovaldi — was being sold for $1,000 a pill, or $84,000 for the 12-week course of treatment.

The $329 billion spent on prescription medications in 2016 represents 10 percent of overall health spending. The report noted that share was similar to 2009’s.

Hospital spending — which makes up the highest share of health expenditures — increased by 4.7 percent last year, a full percentage point lower than in 2015, the report said. Slower growth was due to a leveling in the number of people gaining health coverage last year, according to the researchers.

Spending on Medicaid, the federal-state health insurance program for low-income people, rose by 3.9 percent last year, compared to 9.5 percent in 2015 and 11.5 percent in 2014. Republicans in Congress have tried unsuccessfully to cap federal Medicaid spending to states to help control growth in the program, an effort opposed by Democrats and advocates for the poor. The report noted that Medicaid’s costs per enrollee grew less than 1 percent in 2016.

“This is evidence that states are doing a pretty good job at controlling Medicaid spending,” Ginsburg said.

This study will also appear in the January 2018 issue of Health Affairs but was published online Wednesday.

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

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Cost and Quality Medicaid Medicare The Health Law

Your Plumber Offers A Money-Back Guarantee. Should Your Doctor?

Linda Radach has had six hip replacement operations since 2006, three on each side. Osteoarthritis was the reason she needed surgery in the first place, but replacing her hips in some ways only worsened her troubles.

Following two of the procedures, the implanted metal socket didn’t integrate with the bone of her own hip socket and was loose, causing excruciating pain. Most recently, the titanium metal ball in her hip corroded.

The surgical complications were bad enough, but after one of the operations, Radach, 63, also developed cellulitis, a bacterial skin infection that if left untreated can turn deadly.

Having to pay for medical mistakes added insult to injury, said Radach, who explained that each surgery typically cost her about $5,000 out-of-pocket.

“Nobody should come out of the hospital with an infection,” she said. “Why does any patient pay for a medical error like that? … Because that’s the way the system is set up.”

Now Radach, who lives in Seattle, is trying to change that system. She is a patient advocate with the Dr. Robert Bree Collaborative, a program established by the state Legislature to improve the quality and cost-effectiveness of care.

One recommendation is that patients shouldn’t have to pay for their care if they experience certain avoidable complications up to 90 days after surgery. A participating hospital would guarantee its work, or patients would be off the hook for the copayment or would get that money back.

“I think the warranty is something that really resonates with patients,” said Ginny Weir, program director for the Bree Collaborative. “They think, ‘If something goes wrong in the hospital, I know that I’d be taken care of financially if any of these things happened.”

Guarantees Rare In Medicine 

You wouldn’t pay a mechanic for a faulty muffler or a restaurant for spoiled food. If you did, you would expect a refund. But the same arrangement between buyer and seller hasn’t historically existed in medical care.

Some argue that maybe it should. “Medicine is certainly not like making widgets, but there is a production process to it,” said Dr. Ezekiel Emanuel, chairman of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. He advocated for the government to test a 90-day money-back guarantee in the Medicare program in his 2014 book, “Reinventing American Health Care.”

“There are things you can do that are in your control that reduce the error rate and improve quality,” he added. “A guarantee makes people [more motivated to adopt] this kind of process.”

Examples of health care systems offering money-back guarantees are thin. The one notable exception is Geisinger Health System in central Pennsylvania, which pioneered health care warranties. Since Geisinger offered its first 90-day warranty in 2006 for coronary artery bypass graft surgery, the ProvenCare program has added other procedures, including hip and knee replacement and lumbar spine surgery.

ProvenCare aims to ensure that providers use evidence-based best practices to improve patient outcomes and reduce avoidable hospital readmissions. In the past five years, for example, the health system’s 30-day readmission rate for coronary artery bypass graft surgery has declined from 10.2 percent to 4.4 percent, according to Geisinger figures.

Under ProvenCare, if patients are hospitalized or need other follow-up care for complications that could have been avoided in that 90-day window, Geisinger absorbs the cost to both patient and health insurer.

Two years ago, the health system expanded its money-back promise to include customer satisfaction measures related to care. The new program, ProvenExperience, deals with patient complaints about poor staff communication, difficulty making appointments, a long wait to be seen in the emergency department, bad food or construction noise, for example.

“I thought, what if we put it all together?” said Dr. David Feinberg, Geisinger’s president and CEO. “I know we’re really good at anticoagulation, but are we really good at transitions of care? Are we really good at the phones?”

So far, ProvenExperience has returned about $1 million to consumers, he said.

When Kim Walsh, 52, had her thyroid removed at a Geisinger facility in Wilkes-Barre in 2015, the surgery went extremely well. Her hospital stay, not so much. Assigned to a room without a bathroom, Walsh had to hike down three hallways in her hospital gown to a restroom located just off a public hallway. When she got there, there was no toilet paper and there was urine on the seat.

“I was so angry,” she said. After she complained, a patient advocate came to her room and told her to call her when she got the bill. Walsh was never charged her $785 copayment.

Misplaced Priorities? 

Although no one would argue that paying attention to quality is a mistake, some believe that “mint-on-the-pillow” efforts could distract people from focusing on what really matters: The quality of the medical care they receive.

“We start to emphasize parking, nice meals, but we’re not really paying attention to how good the care is,” said Arthur Caplan, director of the division of medical ethics at New York University.

Others argue that focusing on patient experiences helps capture the caring dimension of health care.

“These kinds of things matter a lot to feeling you’ve gotten health care that’s personalized for you, and that your experiences and interactions are taken seriously,” said Rachel Grob, director of national initiatives at the University of Wisconsin’s Center for Patient Partnerships.

In Washington, the Bree Collaborative warranty is one element in a larger effort to reform how doctors and hospitals get paid. The group recommends “bundled payments” for some surgeries that cover a whole “episode of care,” from preoperative doctor visits through postoperative rehabilitation. The collaborative recommends bundled payments and warranties for five types of surgery: total knee and total hip replacements, lumbar fusion operations, coronary artery bypass and bariatric surgery.

To date, though, there have been no warranty claims under the Bree program. Participation by employers and hospitals in the bundled payment and warranty model is voluntary. The first contract that includes a financial warranty started in January and covers public employees who receive a total hip or total knee replacement at Virginia Mason Medical Center in Seattle, Weir said.

In addition to its Bree work, Virginia Mason incorporates bundled payments with limited warranties for some of its larger, more progressive employer clients, said Dr. Robert Mecklenburg, medical director at the Virginia Mason Center for Health Care Solutions.

The motive behind the Bree Collaborative is to reduce avoidable hospital readmissions by aligning payment for care with quality rather than the number of services provided, Weir said. These themes have cropped up with growing frequency in health care, adopted to varying degrees by health care providers, employers and government health care programs like Medicare.

The Bree warranty covers very specific complications that are considered directly related to the operation. For hip and knee replacements, for example, hospitals that participate would agree to hold patients and health plans harmless financially if the patients got pneumonia, sepsis or had a heart attack within seven days of the surgery. Within 30 days, the warranty would cover wound infections, surgical site bleeding and pulmonary embolisms. Patients and insurers would be protected for up to 90 days if they develop an infection around the artificial joint or if the joint suffers a mechanical failure.

If a complication arises during the warranty time frame that is directly attributable to the initial procedure, the Bree warranty recommends that there would be no charge for hospitalization related to that care, even if care extended beyond the warranty period, Weir said.

The collaborative is revising its current recommendations, Weir said. One change will be to eliminate “death” from the list of 30-day complications under the warranty.

“You can’t really warranty against death,” she said.

Had a hip replacement warranty been in place when Radach had her surgeries, she would likely have saved a lot of money.

Radach believes that surgical warranties should be even more comprehensive than Bree recommends, holding manufacturers responsible for the production of safe and effective devices. For now, she said, the current warranty is reasonable.

“Starting with a warranty for the procedure itself and the hospital care is a good start,” she said.

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Cost and Quality Health Care Costs Health Industry

Facebook Live: A Status Check On Obamacare Enrollment

As of today, Dec. 5, only 10 more shopping days remain for consumers who buy their own Affordable Care Act health insurance on the federal exchange and in most state marketplaces. So how is it going? What are the numbers so far? What are the market trends? And how has the enrollment experience been for consumers? This live chat features KHN senior correspondent Julie Appleby answering these and other questions.

For more in-depth conversations with KHN reporters, check out our Facebook video archive.

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Cost and Quality Insurance Multimedia The Health Law

Dangling A Carrot For Patients To Take Healthy Steps: Does It Work?

Patricia Alexander knew she needed a mammogram but just couldn’t find the time.

“Every time I made an appointment, something would come up,” said Alexander, 53, who lives in Moreno Valley, Calif.

Over the summer, her doctor’s office, part of Vantage Medical Group, promised her a $25 Target gift card if she got the exam. Alexander, who’s insured through Medi-Cal, California’s version of the Medicaid program for lower-income people, said that helped motivate her to make a new appointment — and keep it.

Health plans, medical practices and some Medicaid programs are increasingly offering financial incentives to motivate Medicaid patients to engage in more preventive care and make healthier lifestyle choices.

They are following the lead of private insurers and employers that have long rewarded people for healthy behavior such as quitting smoking or maintaining weight loss. Such changes in health-related behavior can lower the cost of care in the long run.

“We’ve seen incentive programs be quite popular in the insurance market, and now we are seeing those ramp up in the Medicaid space as well,” said Robert Saunders, research director at the Margolis Center for Health Policy at Duke University.

Medicaid patients who agree to be screened for cancer, attend health-related classes or complete health risk surveys can get gift cards, cash, gym memberships, pedometers or other rewards. They may also get discounts on their out-of-pocket health care costs or bonus benefits such as dental care.

Under the Affordable Care Act, 10 states received grants totaling $85 million to test the use of financial rewards as a way to reduce the risk of chronic disease among their Medicaid populations. During the five-year demonstration, states used the incentives to encourage people to enroll in diabetes prevention, weight management, smoking cessation and other preventive programs. The states participating were California, Connecticut, Hawaii, Minnesota, Montana, Nevada, New Hampshire, New York, Texas and Wisconsin.

Medi-Cal, for example, offered gift cards and nicotine replacement therapy to people who called the state’s smoking cessation line. Minnesota’s Medicaid program handed out cash to people who attended a diabetes prevention class and completed bloodwork.

An evaluation of these programs, released in April, showed that incentives help persuade Medicaid beneficiaries to take part in such preventive activities. Participants said gift cards and other rewards also helped them achieve their health goals. But the evaluators weren’t able to show that the programs prevented chronic disease or saved Medicaid money. That’s in part because those benefits could take years to manifest, according to the evaluation.

Overall, research on the effectiveness of financial incentives for the Medicaid population has been mixed. A report this year by the Center on Budget and Policy Priorities found that they can induce people to keep an appointment or attend a class but are less likely to yield long-term behavior changes, such as weight loss. And in some cases, the report said, incentives are given to people to get exams they would have gotten anyway.

The center’s report also found that penalties, including ones that limit coverage for people who don’t engage in healthful behaviors, were not effective. Instead, they can result in increased use of emergency rooms by restricting access to other forms of care, the report said.

Some of the biggest factors preventing Medicaid patients from adopting healthful behaviors are related not to medical care but to their circumstances, said Charlene Wong, a pediatrician and health policy researcher at Duke University.

That makes administering incentive programs more complicated. Even recruiting and enrolling participants has been a challenge for some states that received grants through the Affordable Care Act.

“The thing that is most likely to help Medicaid beneficiaries utilize care appropriately is actually just giving them access to that care — and that includes providing transportation and child care,” said Hannah Katch, one of the authors of the report by the Center on Budget and Policy Priorities. Another barrier is being able to take time off work to go to the doctor.

But health plans are eager to offer patients financial incentives because it can bring their quality scores up and attract more enrollees. And medical groups, which may receive fixed payments per patient, know they can reduce their costs — and increase their profits — if their patients are healthier.

Providing incentives to plans and medical groups has created a business opportunity for some companies. Gift Card Partners has been selling gift cards to Medicaid health plans for about five years, said CEO Deb Merkin. She said health insurers that serve Medicaid patients want to improve their quality metrics, and they can do that by giving incentives and getting patients to the doctor.

“It is things like that that are so important to get them to do the right thing so that it saves money in the long run,” she said.

Agilon Health, based in Long Beach, Calif., runs incentive programs and other services for several California medical groups that care for Medi-Cal patients. The medical groups contract with the company, which provides gift cards to patients who get mammograms, cervical cancer exams or childhood immunizations. People with diabetes also receive gift cards if they get their eyes examined or blood sugar checked. And the company offers bonuses to doctors if their Medicaid patients embrace healthier behaviors.

The incentives for patients are “massively important for the Medicaid population, because the gaps in care are historically so prevalent,” said Ron Kuerbitz, CEO of Agilon. Those gaps are a big factor pushing up costs for Medicaid patients, because if they don’t get preventive services, they may be more likely to need costlier specialty care later, Kuerbitz said.

Emma Alcanter, who lives in Temecula, Calif., received a gift card from her doctor’s office after getting a mammogram late this summer. Alcanter, 56, had noticed a lump in her breast but waited about two years before getting it checked, despite reminders from her doctor’s office. “I was scared they were going to find cancer,” she said.

Alcanter finally decided to get screened after her first grandchild was born. The gift card was an added bonus, and Alcanter said it showed her doctors cared about her. Her mammogram revealed that the lump wasn’t cancer, and she plans to use the gift card to buy a present for her grandson.

KHN’s coverage in California is supported in part by Blue Shield of California Foundation.

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Cost and Quality Medicaid

Language Barriers, Aversion To Credit Stall Coverage For Some Vietnamese

ARLINGTON, Texas — Bích-Thu “Lisa” Pham has become a familiar face at this Vietnamese community center, setting out her Affordable Care Act insurance materials in a small office several afternoons each week. She also holds enrollment sessions at local Vietnamese shopping centers and near Vietnamese-owned nail salons, and every Sunday morning she assists members of her own Vietnamese congregation in Fort Worth who want to sign up for coverage.

Lisa Pham, a Vietnamese-speaking health insurance marketplace navigator, helps fellow Vietnamese-Americans sort through not only their ACA options, but also whether they qualify for other public health programs, such as Medicaid. (Laura Buckman for KHN)

She’s a “rock star” in her ability to get Vietnamese residents in the greater Fort Worth area insured, said Daniel Bouton, who directs health services at Community Council of Greater Dallas, the nonprofit organization that receives federal funding to assist northeast-central Texas consumers sign up for ACA coverage.

It’s an important mission in Texas, where the Vietnamese uninsured rate runs nearly twice the national rate. Dallas-Fort Worth is home to the fourth-largest Vietnamese population in the U.S., with nearly 72,000 residents, and the Houston area ranks third, with nearly 104,000 residents, according to a Census Bureau analysis of 2010 data.

Nationally, 7.7 percent of Vietnamese residents were uninsured as of 2016 versus nearly 20 percent in 2010 prior to the ACA, according to an analysis of Census Bureau data by the Asian & Pacific Islander American Health Forum, a nonprofit advocacy organization. (Among all Americans, the uninsured rate last year was 8.8 percent.)

But the rate among Vietnamese Texans is 14.2 percent, although that is a steep drop from 27.4 percent in 2010.

In California, which has the nation’s two largest metropolitan Vietnamese communities, the rate was 16.6 percent in 2010 and 4.2 percent last year.

Along with sometimes limited English-speaking proficiency, signing up Vietnamese-Americans can involve other challenges, including in some cases a lack of credit history, said Cathy Phan, who has worked on ACA enrollment in the Houston area for the Asian American Health Coalition-Hope Clinic. Part of the ACA’s verification process includes running a check with a credit reporting agency, she said.

“We see that a lot — especially with newly immigrated Vietnamese community members,” Phan said. “Over in Vietnam, everybody still uses cash. I think the general cultural mentality is you don’t really want to go into debt — you want to avoid it as much as possible.”

‘It’s My Duty’

Throughout the year, Pham makes the Vietnamese community center east of Fort Worth one of her regular stops. The center, which offers meals, a game room and prayer rooms, serves as a hub for resources about local services. People have learned to seek her out there, said Pham, an ACA navigator since 2013.

The 67-year-old Pham, who moved to the United States in 1975, jokes that her husband is lobbying her to follow in his footsteps and retire. She’s held various jobs through the years, including as a software engineer and a translator at a local hospital, along with raising three children. To work as a federal navigator, a paid full-time position, she completes certification training annually.

In that role, she signs up uninsured residents across Fort Worth and Arlington. She particularly enjoys using her bilingual skills to help fellow Vietnamese-Americans sort through not only their ACA options, but also whether they qualify for other public health programs, such as Medicaid.

“I see a lot of people, they don’t speak English and they don’t know what’s going on,” Pham said. “I feel like it’s my duty to share [information] with them.”

On a recent November afternoon before her appointments began, Pham gave a short spiel to potential clients about the federal health law, including this year’s condensed sign-up period.

One of her appointments was with Mua Thi Nguyen, a 61-year-old thyroid cancer survivor. Nguyen had been reluctant to switch from her individual private insurance policy, worried that she wouldn’t have sufficient access to cancer specialists if the malignancy returned. But her income dropped and her premium reached slightly more than $1,000 each month, Nguyen explained, speaking some English and some Vietnamese.

After running the numbers, Pham showed Nguyen that she qualified for significant federal subsidies that would bring her monthly premiums to $422 for a “gold”-tier plan and $73 a month for a “silver” plan that included no deductible. Nguyen, uncertain about which policy to select, opted to go home and mull over her options.

Pham (left) speaks with client Mua Thi Nguyen at the Vietnamese community center in Pantego, Texas, on Nov. 8, 2017. (Laura Buckman for KHN)

Signs Of Funding Strain

The Trump administration severely reduced federal funding for outreach and navigator services this year. Bouton’s group took an 18 percent cut, receiving $1.8 million compared with $2.2 million last year to serve the 56-county region, which stretches east to the Louisiana border and north to Oklahoma.

The choice was made to retain as many navigators as possible, and slash the marketing budget, Bouton said. So, this year, the operation has 35 navigators, including two new Vietnamese speakers, compared with a total of 40 previously. There’s no radio advertising for the 2018 enrollment season, and no ads in local movie theaters, he said. Thus, Vietnamese-targeted marketing has been eliminated as well, including advertising in a local newspaper and printing new promotional placards in Vietnamese.

Another funding casualty has been the Fort Worth ACA enrollment office, which closed this fall. That worries Pham. Some of her Vietnamese clients had become accustomed to going there and might not have transportation options to reach other sites such as the community center, she said.

Pham and other Texas navigators have only six weeks, through Dec. 15, to sign up people through the federal ACA exchange.

Their counterparts serving the more sizable Vietnamese communities in California aren’t facing similar constraints. California operates its own state exchange and enrollment there stretches through Jan. 31, which was the deadline for the federal exchange last year.

Leaders at two California-based groups providing health services to Asian communities said they were concerned that recent reports in San Francisco and other areas about detention and deportations by U.S. immigration officials of Vietnamese and Cambodian immigrants might have a chilling effect.

“We’re still at the very beginning of this sign-up, so we’ll see how it plays out,” said Thu Quach, director of community health and research at Asian Health Services in Oakland, Calif. “But we know from the past, that anytime there’s concern that there are policies that target immigrants, it’s caused a lot of impact in the community around signing up for anything.”

They don’t speak English and they don’t know what’s going on. I feel like it’s my duty to share [information] with them.

Lisa Pham

Bilingual Outreach

Bilingual navigators, such as Pham, can bridge a critical communication divide. Nationally, 46 percent of Vietnamese have limited English proficiency, meaning they speak the language less than “very well,” according to Census data analyzed by the Asian & Pacific Islander American Health Forum.

An individual’s comfort level with English also can influence which ACA plan he or she selects. In the Houston area, Vietnamese residents sometimes are willing to pay higher premiums for access to more Vietnamese-speaking physicians, said Phan, with the Hope Clinic.

At the Vietnamese community center here earlier this month, a 61-year-old woman walked in asking about ACA coverage. Hong Vu, who spoke very little English, told Pham that she’d been insured until a few months before, when her husband had suffered a stroke and she quit her job to care for him.

Vu passed her Social Security card and other paperwork across the desk. But since Vu didn’t have a credit history, Pham couldn’t immediately establish an account. Instead, she took photos of Vu’s documents to forward to federal officials.

Several days later, after Vu’s identity had been verified, she returned to the community center to discuss insurance plans, Pham said.

Vu qualified for “bronze” plan coverage for herself, which after subsidies would cost $115 a month. Unsure whether she could afford the premium, Vu decided to talk it over with her husband.

Vu did end up getting the coverage, meeting Pham at another enrollment session at a Vietnamese shopping plaza. “She worried about if she gets sick in the future,” Pham said, “so that’s why she said she wanted to have the peace of mind.”

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CVS-Aetna Merger A Bid To Bring Down Costs, Gain Competitive Edge

What A CVS-Aetna Merger Could Mean For Customers

Chad Terhune, a senior correspondent for California Healthline, joined KPCC’s Take Two on Dec. 4, 2017, to explain what this deal may mean for consumers and the health care industry.

Can’t see the audio player? Click here to download.

Consumers might start to see some dramatic changes inside their neighborhood pharmacy.

CVS Health Corp. announced that it has agreed to buy health insurance giant Aetna Inc. for $69 billion. The combined companies aim to put the retailer’s nearly 10,000 stores to better use delivering medical care that’s more convenient than what’s available from many doctors’ offices and hospitals.

Aetna’s chief executive, Mark Bertolini, has noted that many people see their pharmacist more than their doctor, and argues that those visits are a missed opportunity to address patients’ chronic conditions, such as diabetes and asthma, and keep more people out of the hospital. Consumers have seen a glimpse of this at CVS’ MinuteClinics, where nurse practitioners treat infections, sprains and handle other preventive care such as immunizations.

Many health insurers and employers encourage people to use those clinics, in some cases waiving copayments. Under this deal, the companies also have hinted at offering lab tests, dialysis, medical equipment and discharge planning after a hospital stay.

By teaming up, CVS and Aetna vow to improve people’s health and drive down the crushing cost of U.S. health care. However, the prospect of further industry consolidation alarms some consumer advocates, who say cost savings from a big merger rarely get passed on to the average customer. Federal antitrust officials are sure to scrutinize this deal closely in the months ahead.

This merger also comes in response to pressure from competitors — new and old. Online retailer Amazon is eyeing the pharmacy business, and there were reports last week about the company exploring potential deals with makers of generic drugs to speed its entry into the market.

CVS and Aetna also have another huge competitor on their minds: UnitedHealth Group. The nation’s largest health insurer has successfully diversified and extended its reach deep into America’s medicine cabinets, operating rooms and doctors’ offices through several acquisitions.

What remains to be seen is whether this deal passes muster with a Trump administration and if it triggers more mega-mergers in the health care sector.

Chad Terhune, a senior correspondent at California Healthline and Kaiser Health News, appeared Monday on KPCC’s “Take Two” show to discuss with host A Martinez what this deal may mean for consumers and the health care industry.

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

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Middle-Class Earners Weigh Love And Money To Curb Obamacare Premiums

Anne Cornwell considered two drastic strategies in her quest to get affordable health insurance premiums last year for herself and her retired husband.

One was divorce. Another was taking a 30 percent pay cut. She chose the latter.

That maneuver slashed the Chattanooga, Tenn., couple’s premiums from exorbitant to economical. Instead of $2,100 a month — the amount she had been quoted for 2017 — their premiums are just $87 monthly, her lost income more than compensated for by qualifying for insurance subsides.

Cornwell’s solution — completely legal — reflects how a growing number of Americans are incorporating strategies for affording health insurance into financial planning, adapting money and salaries to yield better choices — much as people place money into 401(k) plans to save for retirement while reducing their tax

Her solution and others like it may resonate with other Americans who are now buying 2018 health plans on the individual market, through the Affordable Care Act’s online marketplaces or outside them. Double-digit premium price hikes are forecast for many plans, a trend that has accelerated since President Donald Trump announced his administration would not pay some ACA subsidies to insurers.

Open enrollment in the 39 states using the federal marketplace started Nov. 1 and ends Dec. 15 for coverage that starts Jan. 1. Enrollment dates vary in other states.

The vast majority of enrollees in Obamacare plans will not pay the higher premiums, since modest incomes make them eligible for another type of government-paid subsidy that will hold their premiums flat or close to it.

But upper-middle-class people like Cornwell and her husband are expected to pay full price, feeling the blunt force of what experts and health economists agree are unbearable escalations.

Some people may qualify for ACA subsidies through less extreme measures than those taken by Cornwell, such as shifting money into tax-preferred savings account, such as a 401(k), and lowering their taxable incomes, said Frank Caccavale, an accountant from Staten Island, N.Y. But when that is not sufficient, he counsels clients to do what Cornwell did: “This is your only option. You have to take a pay decrease.”

Cornwell hit upon her solution on her own after a month of poring over spreadsheets.

“When I saw what the premium was going to be in 2017, I had to sit down. I was shocked,” Cornwell said of the $2,100-a-month figure — for a plan that didn’t even cover care until they’d each spent a $6,500 deductible. The couple simply couldn’t afford it.

Cornwell, 62, made $80,000 a year as a project manager for a small consulting firm that doesn’t offer health insurance. Her husband, Donald Donart, 63 and a cancer survivor, receives Social Security and a small pension, bringing their pretax household income to $92,000. Finding insurance required radical action.

Between 5 and 7 percent of Americans with insurance — about 17.6 million — buy it on the individual market. Of those, 7.5 million, or nearly half, don’t get subsidies, according to insurance industry consultant Robert Laszewski. Many in this latter group are professionals who work for small companies or have jobs where they work solo, for themselves.

When Cornwell saw that premiums for 2017 would rise by hundreds of dollars a month — double what they’d paid in 2015 — the couple looked hard at the options:

Should they get divorced and file taxes separately so Donart’s lower income would qualify him for cheaper insurance? Too impractical because of Tennessee’s legal requirements, Cornwell decided.

Should they form a business that paid Cornwell a lower salary than she was making? That would have taken too long.

Donart was ready to go without insurance for a year until they could figure out something else. But Cornwell worried about his cancer history, and both have chronic health conditions.

Under Obamacare, subsidies are available for people whose annual incomes are from 100 percent to about 400 percent of the federal poverty line. For 2017, that was $16,020 to $64,080 for a family of two.

So, Cornwell sat down to figure out how to reduce their income to qualify.

Four spreadsheets later, Cornwell asked her boss to reduce her hours by 30 percent, dropping her pay by $24,000 a year. She became a part-time hourly employee — at $56,000 a year. The couple now qualified for a $27,000 subsidy that made up for Cornwell’s lost income.

Their subsidized premium was so low that they upgraded to a better silver-level plan, which carried a lower deductible than the bronze plan they had passed up.

Katy Votava, president of goodcare.com, a consulting firm that advises people about health care costs, suggests people use a financial planner for taxes and health care. “The anxiety, the uncertainty and the culture is so high, it gets in the way of people making solid decisions,” she said.

She generally doesn’t recommend the radical approach of drastically cutting salaries, although that may work in some cases. Instead, she tells clients to contribute as much pretax money as the IRS allows — and as they can afford — each year into tax-advantaged retirement and health savings accounts. That reduces taxable income, which determines whether someone qualifies for a subsidy and how much.

In 2018, people can contribute up to $18,500 a year to a 401(k) retirement account. If they are older than 50, they can put in $6,000 more — a total of $24,500 annually. Health savings accounts, which can be used to pay eligible medical and dental expenses, provide a similar tax break. Neither was an option for Cornwell, whose small employer doesn’t offer those kinds of benefits.

Cornwell and her husband were satisfied with the subsidized plan they had this year. But she is deeply frustrated by the system and the somersaults she had to turn to make it financially viable. “This is when I should be maximizing income and putting it away … but we’re going the other way,” Cornwell said.

She said that she and her husband are looking ahead, running down the clock until they turn 65 and qualify for Medicare.

They intend to keep the same health plan in 2018 and are approaching this year’s open-enrollment event with anticipation instead of dread. Their insurer has told them to expect much higher premiums. But, according to healthcare.gov’s calculator, they’ll also get a much higher subsidy.

That will drop their monthly premium to zero.

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States — And 9M Kids — ‘In A Bind’ As Congress Dawdles On CHIP Funding

Last week, Colorado became the first state to notify families that children who receive health insurance through the Children’s Health Insurance Program are in danger of losing their coverage.

Nearly 9 million children are insured through CHIP, which covers mostly working-class families. The program has bipartisan support in both the House and Senate, but Congress let federal funding for CHIP expire in September.

The National Governors Association weighed in Wednesday, urging Congress to reauthorize the program this year because states are starting to run out of money.

In Virginia, Linda Nablo, an official with the Department of Medical Assistance Services, is drafting a letter for parents of the 66,000 Virginia children enrolled in CHIP.

“We’ve never had to do this before,” she said. “How do you write the very best letter saying, ‘Your child might lose coverage, but it’s not certain yet. But in the meantime, these are some things you need to think about’?”

Children may be able to enroll in Medicaid, get added to a family plan on the Affordable Care Act’s health exchange or be put on an employer health plan. But the options vary by state and could turn out to be very expensive.

If Congress reauthorizes CHIP funding, states are in the clear. But they can’t bank on it yet, and states have to prepare to shut down if the funding doesn’t come through. Virginia would have to do so on Jan. 31.

“We’re essentially doing everything we would need to shut down the program at the end of January,” Nablo said. “We’ve got a work group going with all the different components of this agency, and there are many.”

For example, they will need to reprogram their enrollment systems, inform pediatricians and hospitals, and train staff to deal with an onslaught of confused families.

Joan Alker, who runs the Georgetown University Center for Children and Families, said most states need to give families 30 days’ notice.

“But [state officials] are hearing rumors that Congress might get this done in the next couple of weeks, and they don’t want to scare families,” she said. “States are really in a bind here. It’s very tough to know what to do.”

Colorado was the first to send out a notice, and other states are close behind. There are a handful that are starting to run out of money in December, Alker said, such as Oregon, Minnesota and the District of Columbia.

The exact deadline for when CHIP funding runs out in each state is tricky to calculate, because the amount of money each has depends on how fast a state spends it — and how much stopgap help the federal government gives them.

Some states are getting creative. Oregon just announced it will spend state money to keep CHIP running, said Alker, “and they’re assuming that Congress will pass it and they’re get reimbursed retroactively. That’s what they’re hoping.”

Texas is set to run out of CHIP funds a lot sooner than was expected just a few months ago. And there’s a big reason for that: Hurricane Harvey, said Laura Guerra-Cardus with the Children’s Defense Fund in Austin.

“Natural disasters are often a way that individuals that never had to rely on programs like Medicaid and CHIP need them for the first time,” she said.

Guerra-Cardus said that after Harvey a lot of new families enrolled in CHIP and that there was also a higher demand for services. “When there is such a traumatic event, health care needs also rise. There’s been a lot of post-traumatic stress in children,” she said.

And to help those families out, Texas officials also waived fees they usually have to pay to join CHIP. So, lately there’s been less money coming in and more money going out. Like Virginia, without reauthorization, Texas would have to shutter CHIP by the end of January.

For Amy Ellis in Alpine, Texas, that’s something she’s dreading. “Losing a lot of sleep,” she said. “Still losing a lot of sleep.”

Ellis has an 8-year-old daughter who has been on CHIP since she was born. The girl has asthma and allergies, Ellis said, and health insurance is really important because her family doesn’t make a lot of money. Her daughter’s allergy medicine is expensive.

Ellis lives in rural West Texas, nearly four hours southeast of El Paso and “three hours from the closest city,” she said.

The isolation means that Ellis doesn’t have many options other than CHIP, she said. One would be enrolling her daughter in the insurance plan she and her husband have through the Affordable Care Act marketplace, but Ellis said that would be expensive.

“It would cost $300 to $400 a month for us to add her to our plan, which would be a huge chunk of our income,” she said. “That’s our grocery money and our gas money.”

A lot of families in Texas could find themselves in the same situation if Congress doesn’t act soon, said Guerra-Cardus. “Kids with chronic or special health care needs, this is going to turn their lives absolutely upside down.”

Roughly 450,000 children are covered by CHIP in Texas. Officials say they are asking the federal government to give them money that will keep CHIP alive through February.

But because officials must give families 30 days’ notice if the program will end, families in Texas could get letters right around Christmas that say their children are losing their health insurance.

This story is part of a reporting partnership with NPR, local member stations and Kaiser Health News. Selena Simmons-Duffin is a producer at NPR’s All Things Considered, currently on an exchange with Washington, D.C. member station WAMU.

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California Winces At Trump’s Turn Back To ‘Bad Old Days’ Of Health Plan Associations

Just a few decades ago, small businesses in California often banded together to buy health insurance on the premise that a bigger pool of enrollees would get them a better deal.

California’s dairy farmers did it; so did car dealers and accountants.

But after a string of these “association health plans” went belly up, sometimes in the wake of fraud, state lawmakers passed sweeping changes in the 1990s that consigned them to near extinction.

Now, President Donald Trump wants to promote a renaissance of these health plans and make it easier for them to operate across state lines — with less regulation. In a recent executive order, Trump directed the Department of Labor to look into ways to “allow more small businesses to avoid many of the [Affordable Care Act’s] costly requirements.”

Because the plans would do business in more than one state, they could “figure out a way to pull back some authority states have,” said Kevin Lucia, senior research professor at Georgetown University’s Center on Health Insurance Reforms.

That does not sit well in California, where key state policymakers warn that weaker regulation of these plans could destabilize the small-employer and individual markets, which have gained important consumer protections under the ACA and state health laws — including minimum benefit levels.

“President Trump is trying to loosen those rules, and return us to the bad old days” that were disastrous for consumers, said California Insurance Commissioner Dave Jones. Tens of thousands of consumers were “left in the lurch” without insurance when their associations folded, and millions of dollars in medical claims went unpaid, he said.

In the 1980s and 1990s, association plan failures hit a number of small businesses, affecting employees across industries. Thousands of farmworkers suffered when a plan created by Sherman Oaks-based Sunkist Growers collapsed. When Irvine-based Rubell-Helms Insurance Services went out of business, it reportedly left $10 million in medical claims unpaid.

In 1995, California banned a common form of health care associations known as multiple employer welfare arrangements, or MEWAs, in which small businesses jointly purchased health coverage in the same way Trump is now proposing. The plans that already existed at the time could remain in business as long as they met certain financial requirements.

That ban followed “decades of bad experience,” said Jones.

But some business groups say that these plans offer companies flexibility in the face of state regulations that add cost and administrative burdens.

“Small-business owners are being pummeled,” said Tom Scott, California director of the National Federation of Independent Business. The looser regulations could save businesses thousands of dollars a year, he said.

Still, California lawmakers said they will do everything they can to prevent these plans from bypassing state regulations.

State Sen. Ed Hernandez (D-West Covina), chairman of the Senate Health Committee, said he will consider legislation to ban the sale of policies that don’t meet minimum benefit requirements.

“I’m committed to do everything I can to make sure we don’t go backward to having skinny plans in the state,” he said. Consumers need to be guaranteed coverage with robust health benefits and a cap on out-of-pocket expenses, he added.

Policy experts say the impact of Trump’s plan will depend on the precise details, which are still being considered by the Department of Labor. But Trump has suggested he wants the association plans to be treated the same as large-employer insurance, which would free them from regulations that govern the benefits they offer.

Supporters of the idea argue that the greater flexibility on benefits, plus the bargaining clout that comes with size, would lower the cost of these plans, providing relief to small employers hit by rising health care costs and state taxes.

“It’s very, very easy and it’s very competitive,” said Jack Stoughton, CEO of Los Angeles-based Stoughton Printing Co., which produces 12-inch record jackets for vinyl records by bands such as Led Zeppelin and Wilco.

His workers receive health benefits through one of the few remaining MEWAs in California.

The plan “saves me money; it certainly saves me time,” he said.

Printing plates are switched at Stoughton Printing Co. in City of Industry, Calif., in 2014. Stoughton, one of the largest printers of jackets for vinyl LPs, offers workers health insurance through one of the few remaining multiple employer welfare arrangements, or MEWAs, in California. (Jay L. Clendenin/Los Angeles Times)

But Beth Capell, a longtime health care consumer lobbyist, said these cheaper plans compromise the quality of health coverage for small-business employees and individuals.

“There was a fairly concerted outcry” to get rid of association health plans in the 1990s, and they should not be resurrected, Capell said. “They were a bad idea then; they are a bad idea now. It [feels] like déjà vu all over again.”

Deborah Kelch, director of the Insure the Uninsured Project in Sacramento, said state officials banned new MEWAs in the 1990s because they feared the associations would siphon off healthy people, leaving many small businesses with sicker and costlier enrollees — and higher premiums. The legislative changes from the 1990s helped ensure that the remaining MEWAs stayed afloat, she said.

Today, only four MEWAs remain in California, covering about 150,000 employees and their dependents. The enrollees say the model works.

Stoughton’s employees have received health benefits through a MEWA since the mid-1990s.

His roughly 50 workers have a choice of three insurance carriers — Kaiser Permanente, Health Net and Blue Shield — and the association acts as an intermediary between the employees and the insurers. (Kaiser Health News is not affiliated with Kaiser Permanente.)

The Printing Industries Association Inc. of Southern California, a trade association for printers, administers the insurance for Stoughton’s business. That allows him to limit his human resources staff to half of a full-time employee, he said.

“We want to be able to concentrate on what we do. We don’t want to shop around” for health insurance, he said.

The greatest number of association health plan members in California are in agriculture. Two farm trade groups, UnitedAg and Western Growers, offer farmers health care that they say caters to their unique workforce, which includes a large number of Spanish-speaking immigrants.

Kirti Mutatkar, CEO of UnitedAg, which covers 700 agricultural businesses and 43,000 members through its association, says her company doesn’t offer “cookie-cutter” health coverage.

UnitedAg offers free telemedicine and 10 free clinic visits in some of its plans, she said. It has bilingual customer support services and a network of doctors in Mexico. The members of the board include UnitedAg health plan enrollees, who have a say in what their health coverage looks like.

“This model works unbelievably well for us,” said A.J. Cisney, general manager of Rancho Guadalupe, which grows fruit and broccoli on California’s Central Coast. “If UnitedAg could take their brand of administering health care to other areas, I can’t see the downside.”

But that would be anathema to actuaries and health insurers, who worry about competing with more lightly regulated plans. They say the proliferation of such plans could undermine consumer protections and increase the potential for the kind of health insurance fraud that plagued many of the old association plans.

But Scott, of the National Federation of Independent Business, does not believe past is necessarily prologue.

“Times change, business models change,” he said.

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

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Congress Isn’t Really Done With Health Care — Just Look At What’s In The Tax Bills

Having failed to repeal and replace the Affordable Care Act, Congress is now working on a tax overhaul. But it turns out the tax bills in the House and Senate also aim to reshape health care.

Here are five big ways the tax bill could affect health policy:

1. Repeal the requirement for most people to have health insurance or pay a tax penalty.

Republicans tried and failed to end the so-called individual mandate this year when they attempted to advance their health overhaul legislation. Now the idea is back, at least in the Senate’s version of the tax bill. The measure would not technically remove the requirement for people to have insurance, but it would eliminate the fine people would face if they choose to remain uninsured.

The Congressional Budget Office has estimated that dropping the requirement would result in 13 million fewer people having insurance over 10 years.

It also estimates that premiums would rise 10 percent more per year than they would without this change. That is because healthier people would be most likely to drop insurance in the absence of a fine, so insurers would have to raise premiums to compensate for a sicker group of customers. Those consumers, in turn, would be left with fewer affordable choices, according to the CBO.

State insurance officials are concerned that insurers will drop out of the individual market entirely if there is no requirement for healthy people to sign up, but they still have to sell to people who know they will need medical care.

Ironically, the states most likely to see this kind of insurance-market disruption are those that are reliably Republican. An analysis by the Los Angeles Times suggested that the states with the fewest insurers and the highest premiums — including Alaska, Iowa, Missouri, Nebraska, Nevada, and Wyoming — would be the ones left with either no coverage options or options too expensive for most consumers in the individual market.

2. Repeal the medical expense deduction.

The House-passed tax bill, although not the Senate’s, would eliminate taxpayers’ ability to deduct medical expenses that exceed 10 percent of their adjusted gross income.

The medical expense deduction is not widely used — just under 9 million tax filers took it on their 2015 tax returns, according to the Internal Revenue Service. But those who do use it generally have very high medical expenses, often for a disabled child, a serious chronic illness or expensive long-term care not covered by health insurance.

Among those most vehemently against getting rid of the deduction is the senior advocacy group AARP. Eliminating the deduction, the group said in a statement, “amounts to a health tax on millions of Americans with high medical costs — especially middle income seniors.”

3. Trigger major cuts to the Medicare program.

The tax bills include no specific Medicare changes, but budget analysts point out that passing it in its current form would trigger another law to kick in. That measure requires cuts to federal programs if the federal budget deficit is increased.

Because the tax bills in both the House and Senate would add an additional $1.5 trillion to the deficit over the next 10 years, both would result in automatic cuts under the Statutory Pay-As-You-Go Act of 2010, known as PAYGO. According to the CBO, if Congress passes the tax bill and does not waive the PAYGO law, federal officials “would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by the resultant total of $136 billion.”

Cuts to Medicare are limited under the PAYGO law, so the Medicare reduction would be limited to 4 percent of program spending, which is roughly $25 billion of that total. Cuts of a similar size would be required in future years. Most of that would likely come from payments to providers.

4. Change tax treatment for graduate students and those paying back student loans.

The House bill, though not the Senate’s, would for the first time require graduate students to pay tax on the value of tuition that universities do not require them to pay.

Currently, graduate students in many fields, including science, often are paid a small stipend for teaching while they pursue advanced degrees. Many are technically charged tuition, but it is “waived” as long as they are working for the university.

The House tax bill would eliminate that waiver and require them to pay taxes on the full value of the tuition they don’t have to pay, which would result in many students with fairly low incomes seeing very large tax bills.

At the same time, the House tax bill would eliminate the deduction for interest paid on student loans. This would disproportionately affect young doctors.

According to the Association of American Medical Colleges, 75 percent of the medical school class of 2017 graduated with student loan debt, with nearly half owing $200,000 or more.

5. Change or eliminate the tax credit that encourages pharmaceutical companies to develop drugs for rare diseases.

Congress created the so-called Orphan Drug Credit in 1983, as part of a package of incentives intended to entice drugmakers to study and develop drugs to treat rare diseases, defined as those affecting fewer than 200,000 people. With such a small potential market, it does not otherwise make financial sense for the companies to spend the millions of dollars necessary to develop treatments for such ailments.
To date, about 500 drugs have come to market using the incentives, although in some cases drugmakers have manipulated the credit for extra financial gain.

The House tax bill would eliminate the tax credit; the Senate bill would scale it back. Sen. Orrin Hatch (R-Utah), chairman of the tax-writing Finance Committee, is one of the original sponsors of the orphan drug law.

The drug industry has been relatively quiet about the potential loss of the credit, but the National Organization for Rare Disorders called the change “wholly unacceptable” and said it “would directly result in 33 percent fewer orphan drugs coming to market.“

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Desperate For Coverage: Are Short-Term Plans Better Than None At All?

When one of Cindy Holtzman’s clients told the Woodstock, Ga., broker he was considering dropping his Affordable Care Act plan because next year’s cost approached $23,000 for his family of four, she suggested a new option: a back-to-back set of four, 90-day short-term plans, which would effectively give them a modicum of medical coverage for 2018.

An Obama administration rule limited short-term coverage to three months at a time because it was meant as a stopgap between more substantial policies. But several insurers, including big players Golden Rule and National General, now are sidestepping that rule by packaging three or four consecutive 90-day plans, with a one-time medical review upfront.

“I’m not pitching this to replace Obamacare, but when you’re telling me you’re going to get nothing,” Holtzman said, “I want to throw this into the arena.”

As premiums rise and some middle-class families feel they can’t bear the costs of a more secure Obamacare plan with its coverage guarantees, brokers and agencies have unveiled a slew of alternatives.

Interest has grown after the Trump administration stopped paying insurers subsidies they use to lower deductibles for lower-income ACA policyholders, which caused premiums to rise. The administration has also signaled it will soon loosen restrictions for alternative coverage, including ending the rule that limits short-term plans to 90 days.

But advocates warn shoppers to carefully read the fine print and understand what they’re buying. The plans might not cover what you think.

Most short-term coverage requires answering a string of medical questions, and insurers can reject applicants with preexisting medical problems, which ACA plans cannot do.

Because short-term plans fall short of ACA standards, policyholders are considered uninsured and face an IRS tax penalty, which could be hundreds of dollars for an individual or thousands for a family.

“If you absolutely cannot afford [an ACA-compliant plan] — and you are sure you are healthy — look at other plans. But they all come with the caveat that if you get sick, they won’t give you much coverage,” said Joel Ario, a former Pennsylvania insurance commissioner and now a managing director at Manatt Health Solutions, a consulting firm.

To keep premium costs low, the policies set annual and lifetime caps on benefits. Many don’t cover prescription drugs, and most exclude coverage for maternity care, preventive care, mental health services or substance abuse treatment.

Also not covered are preexisting conditions, defined as anything treated — or for which a “prudent person” should have sought treatment — during the previous 12 months to five years, depending on the insurer.

Insurers can also bar coverage for any condition a patient develops after their initial enrollment period, even if they want to sign up again for another term with the same insurer.

Broker Kelly Rector in O’Fallon, Mo., cautions consumers: “Even if they’re healthy enough to get on the plan now, but have a heart attack in a month, they won’t be able to reapply and will be out of coverage for the rest of the year,” until the next ACA open enrollment.

Sold by a wide range of insurers, the plans usually pay a percentage of the cost for medical care, after the policyholder pays a deductible, which can range from $1,000 to $10,000 or more per contract term.

Already, insurers have begun offering plans that seem to anticipate that the Trump administration will restore the ability to hold short-term plans for 364 days.

National General’s package, for example, guarantees “eligibility for three more consecutive plans.” However, on those packages and similar ones offered by other insurers, the deductible resets every 90 days, so the patient would be on the hook for that amount every three months. That means a $5,000 deductible could grow to $20,000 if the policy were kept for the full year.

Premiums vary by insurer and other factors, including age, the deductible and how much coverage the plan provides.

Holtzman says a National General plan for her 46-year-old client, his wife and two children in Georgia with a $2,500 deductible every 90 days would cost $1,348 a month.

That’s appealing when compared with his current ACA plan, Holtzman said, for which the premium would be about $1,900 a month next year, with a $3,000 annual deductible.

Still, if the family enrolled in a different ACA plan than his current coverage, the differences narrow.

The least expensive ACA plan in his area would cost his family $1,335 a month, according to government website healthcare.gov, which is about the same as the short-term plan by National. The ACA plan has a bigger annual deductible — $13,600 for his family — but the gap dwindles if someone falls ill and the family ends up meeting the deductible under the short-term plan in each of the four consecutive terms.

Consumer advocates say an ACA plan would cost the family more upfront but would include benefits for any preexisting conditions and would cover more, noting the short-term plan does not include coverage for prescription drugs and excludes benefits for chronic pain, congenital conditions and immunodeficiency disorders.

“People should be aware,” said Sabrina Corlette, a research professor at Georgetown University’s Health Policy Institute. “There’s a huge variety of plans out there — from true bottom feeders that are going to take your money and don’t provide any protection to legitimate products that are designed to meet a short-term need.”

Her advice: Find a reputable broker, read the fine print “and look for caps on amounts that they will pay per service, which can leave you holding the financial bag if you have to go to the hospital.”

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Patients With Rare Diseases And Congress Square Off Over Orphan Drug Tax Credits

As President Donald Trump talked tax reform on Capitol Hill Tuesday, Arkansas patient advocate Andrea Taylor was also meeting with lawmakers and asking them to save a corporate tax credit for rare disease drug companies.

Taking the credit away, Taylor said, “eliminates the possibility for my child to have a bright and happy future.”

Taylor, whose 9-year-old son, Aiden, has a rare connective tissue disorder, spoke as part of a small rally thrown together this week by the National Organization for Rare Disorders (NORD) — the nation’s largest advocacy group for patients with rare diseases.

NORD advocate Andrea Taylor holds a picture of her sons, Aiden, 9, and Aaron, 11. Aiden has the rare connective-tissue disorder arterial tortuosity syndrome, which causes symptoms such as aneurysms and congestive heart failure. The syndrome has no treatment. Taylor says Congress is sending a message “that my child’s life does not matter” if the orphan drug tax credit is eliminated or reduced. (Sarah Jane Tribble/KHN)

Earlier this month, House Republicans proposed eliminating the orphan drug tax credits, which Congress passed as part of a basket of financial incentives for drugmakers in the 1983 Orphan Drug Act. The law, intended to spur development of medicines for rare diseases, also gives seven years of market exclusivity for drugs that treat a specific condition that affects fewer than 200,000 people.

The Senate Finance Committee, led by Sen. Orrin Hatch (R-Utah), put the tax credit back into the tax legislation. After some negotiations, the committee settled on reducing the credit to 27.5 percent of the costs of preapproved clinical research, compared with the current 50 percent. The committee also restored a provision that would have eliminated any credits for drugmakers who repurpose a mass-market drug as an orphan.

“As with any major reform, tough choices have to be made,” a Hatch spokesperson wrote in an emailed statement, adding that the senator will continue to work “to make the appropriate policy decisions” to deliver a comprehensive tax overhaul.

Hatch, a member of a rare-disease congressional caucus, received $102,600 in campaign contributions from pharmaceutical and related trade group political action committees in the first half of 2017, making him the top recipient of pharmaceutical cash in the Senate.

If the Senate provision remains untouched, reducing the tax credit would save the federal government nearly $30 billion over a decade, according to a markup of the bill released late last week.

Orphan drug development has become big business in recent years and advocates as well as critics of the industry say tax credits have been an important motivation for companies. Orphan drugs accounted for 7.9 percent of total U.S. drug sales last year, according to a report released by QuintilesIMS and NORD.

Because patient populations for rare-disease drugs are relatively small, companies often charge premium prices for the medicines. EvaluatePharma, a company that analyzes the drug industry, estimates that among the top 100 drugs in the U.S. the average annual cost per patient for an orphan drug last year was $140,443. Giant pharmaceutical companies such as Celgene, Roche, Novartis, AbbVie and Johnson & Johnson have led worldwide sales in the orphan market, according to EvaluatePharma’s 2017 Orphan Drug Report.

Jonathan Gardner, the U.S. news editor for EvaluatePharma, said the orphan drug tax credit is “probably the most important incentive for developing an orphan drug.” Cutting the credit will force even the large companies to question development of drugs for rare diseases, Gardner said.

Dr. Aaron Kesselheim, an associate professor of medicine at Harvard Medical School, has been critical of the Orphan Drug Act’s incentives and of companies taking advantage of the law’s financial incentives for profit. But he warned against rushing to eliminate the tax credit.

“We need to think about ways we can improve the Orphan Drug Act and stop people from gaming the system and exploiting it,” Kesselheim said. But there “are a lot of rare diseases that don’t have treatments. So, we need to be careful in making changes.”

The battle over the tax credit is the latest controversy for the Food and Drug Administration’s orphan drug program. FDA Commissioner Scott Gottlieb announced a “modernization” plan for the agency this summer, closing a pediatric testing loophole and eliminating a backlog of corporate applications for orphan drug status. And, this week, the agency confirmed that Dr. Gayatri Rao, director for the Office of Orphan Products Development, is leaving.

Meanwhile, the Government Accountability Office confirmed this month that it recently launched an investigation of the orphan drug program. The GAO’s review was sparked by a letter from top Republican Sens. Hatch, Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.), asking the agency to investigate whether drugmakers “might be taking advantage” of the drug approval process.

When the 1983 Orphan Drug Act was passed, the law described an orphan drug as one that affects so few people that drugmakers might lose money after covering the cost of developing a drug. Congress added the 200,000-patient limit in 1984.

Today, many orphan medicines treat more than one condition and often come with astronomical prices. Many of the medicines aren’t entirely new, either. A Kaiser Health News investigation, which was also aired and published by NPR, found that more than 70 of the roughly 450 individual drugs given orphan status were first approved for mass-market use, including cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin and rheumatoid arthritis drug Humira, which for years was the best-selling medicine in the world.

More than 80 other orphans won FDA approval for more than one rare disease and, in some cases, multiple rare diseases, the KHN investigation showed.

The pharmaceutical industry has had a muted response to the tax bill, which includes a corporate tax cut. The powerful industry lobbying group PhRMA said it is pleased Congress is looking at overhauling the tax code but “encourages policymakers to maintain incentives” for rare diseases. BIO, the Biotechnology Innovation Organization that represents biomedical companies, said it was “gratified” the Senate committee chose to partially retain the credit but would prefer to keep the existing incentive.

The group that rallied Tuesday — wearing bright-orange shirts that read “Save the Orphan Drug Tax Credit” — planned to meet with a couple of dozen lawmakers, including Grassley, who is a member of the Senate Finance Committee.

Peter Saltonstall, president of the National Organization of Rare Disorders, speaks at a small rally Tuesday in support of tax credits for rare-disease drug companies. (Sarah Jane Tribble/KHN)

NORD, like many patient advocacy groups, receives funding from pharmaceutical companies, but the organization’s leaders say the industry does not have members on the board and does not dictate how general donations are spent.

On Tuesday, NORD leaders said they are open to discussions about the tax credit and whether the overall law is working as intended.

“We’re here to have that conversation, we’re ready to have that conversation,” said Paul Melmeyer, director of federal policy for NORD. “Sadly, that’s not the conversation we are having today.”

Abbey Meyers, a founder of NORD and the leading advocate behind passing the initial 1983 law, said she fears the high cost of the drugs will make it impossible to sustain the orphan drug program. Now retired, Meyers said she has followed the law’s success over the years and believes the tax credit should not be changed.

“There are other things that have happened since the law was passed where there wasn’t any logic to what they did,” Meyers said, adding “because somebody went to a senator and they put into the law.”

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation. Kesselheim’s work is also supported by the foundation.

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The Ratcheting Cost Of The Pneumococcal Vaccine: What Gives?

Every November, like clockwork, she gets the same letter, said Dr. Lindsay Irvin, a pediatrician in San Antonio.

It’s from the drug company Pfizer Inc., and it informs her that the price tag for the pneumococcal vaccine Prevnar 13 is going up. Again.

And it makes her angry.

“They’re the only ones who make it,” she said. “It’s like buying gas in a hurricane — or Coke in an airport. They charge what they want to.”

The Advisory Committee on Immunization Practices (ACIP), a consultatory panel to the federal Centers for Disease Control and Prevention, recommends Prevnar 13 for all children younger than 2 — given at 2, 4, 6 and 15 months — as well as for adults 65 and older.

It protects against pneumonia as well as ear and other infections. Many states require proof that children have received the vaccine in order to attend school.

The vaccine’s formulation has remained mostly unchanged since its 2010 federal approval, but its price continues creeping up, increasing by about 5 or 6 percent most years. In just eight years, its cost has climbed by more than 50 percent.

It is among the most expensive vaccines Irvin provides her young patients.

Doctors and clinics purchase the vaccine and then, once they inject patients, they typically recoup the cost through patients’ insurance coverage. In most cases there are no out-of-pocket costs.

But the steady rise in prices for branded drugs contributes indirectly to rises in premiums, deductibles and government health spending, analysts say.

A full pediatric course of the vaccine typically involves four shots. In 2010, a single shot cost about $109, according to pricing archives kept by the CDC. It currently costs about $170, according to those archives. Next year, Pfizer says, a shot will cost almost $180.

“Pfizer and other drug companies are raising their prices because they can,” said Gerard Anderson, a health policy professor at Johns Hopkins University who studies drug pricing. “They have a patent, and they have a CDC recommendation, which is a double whammy — and a strong incentive for price increases.”

The company disagrees — arguing vaccine pricing supports research for new immunizations, along with ongoing efforts to keep products safe and to improve effectiveness. For instance, Prevnar 13’s shelf life was extended from two years to three years this year. Pricing also doesn’t affect access.

“Thanks to comprehensive health authority guidelines, Prevnar 13 is one of the most widely available public health interventions, supported by broad insurance coverage and innovative federal programs that guarantee access to vulnerable populations,” Pfizer spokeswoman Sally Beatty said in an email.

But such arguments don’t justify the pattern of “consistent price increases,” suggested Ameet Sarpatwari, an epidemiologist and lawyer at Harvard Medical School, who studies drug policy.

“Does that explain what’s going on? Probably not,” he said. “The onus should be on them to show us why this is needed.”

Consumers are not likely to feel a pinch from these increases directly. The Affordable Care Act requires that ACIP-recommended vaccines are covered by insurance, with no cost sharing.

There are other implications, though.

Higher vaccine prices make it harder for physicians to stock up, noted Michael Munger, a family doctor in Overland Park, Kan., and president of the American Academy of Family Physicians.

They have to buy immunizations in advance to provide them for patients. Insurance will eventually reimburse them — typically at cost — but it can take months for that to come through, which is an especially tough proposition for small practices on tight budgets.

“You’ve got to keep track of your inventory, and make sure you don’t have any waste, and are going to get adequate reimbursement,” he said. “The cost of vaccines is definitely something in primary care we worry about, because we’re on thin margins. … You don’t want to provide a service you lose money on, even if it’s as important as immunization.”

Gardasil, the HPV vaccine, has also seen its price climbing. And, in a similar response, OB-GYNs are providing it in smaller numbers.

A vaccine like Prevnar 13 is harder to make than older vaccines that are much cheaper, said William Moss, a professor at Johns Hopkins Bloomberg School of Public Health who specializes in vaccines and global children’s health. It provides immunization for 13 different variations of pneumococcal infection. That makes it a more effective vaccine, but also one that requires greater investment.

Critics, however, note that those investments were made by another company, Wyeth Pharmaceuticals. Pfizer bought Wyeth in 2009, along with the rights to the vaccine.

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

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Heated And Deep-Pocketed Battle Erupts Over 340B Drug Discount Program

A 25-year-old federal drug discount program has grown so big and controversial that it faces a fight for survival as federal officials and lawmakers furiously debate the program’s reach.

The program, known as 340B, requires pharmaceutical companies to give steep discounts to hospitals and clinics that serve high volumes of low-income patients.

The Centers for Medicare & Medicaid Services struck a blow to the program this month announcing a final rule to cut Medicare payments for hospitals enrolled in the program by 28 percent, or about $1.6 billion. The American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals and others filed suit on Nov. 13, arguing that the agency lacks the authority to slash the payments and that the rule undermines the intent Congress had when creating the program.

Several federal reports in recent years from the Medicare advisory board, as well as the Government Accountability Office and the Office of Inspector General, have evaluated 340B’s explosive growth. About 40 percent of the hospitals in the U.S. now buy drugs through the program, according to the 2015 GAO report.

Richard Sorian, of the hospital lobbying group 340B Health, said that for some small, rural hospitals the funding cut “could actually be the difference between staying open and closing.”

Northeast Ohio’s largest safety-net hospital, MetroHealth System in Cleveland, said it would see an $8 million cut in Medicare reimbursements.

In trying to explain the importance of that funding, Dr. Benjamin Li, a MetroHealth cancer surgeon, said that if the 340B program were to disappear “some of our cancer patients will not be able to have lifesaving care.”

In contrast, those supporting the cut, including drugmakers, argue that the program has grown beyond its original intent because hospitals have pocketed the discounts to pad profits — not to help indigent patients.

Stephen Ubl, president of the drug industry group PhRMA, said the program “needs fundamental reform” and that the latest rule change is merely a good first step. His group, which has deep pockets and an advertising campaign geared at pinpointing the program’s flaws, has a list of changes that Congress and the Trump administration could tackle. Those include limiting which hospitals should be eligible for 340B price breaks and making sure needy patients benefit when hospitals buy discounted drugs.

The day after the hospital groups filed suit, Joe Grogan, director of health programs at the White House’s Office of Management and Budget, called 340B “really screwed up,” according to Politico, and said the Trump administration isn’t afraid to take on the program. “We are not wimps.” Grogan led a White House task force last summer that proposed scaling back the program.

The hospitals — often the biggest employers in a congressional district — are ready for a fight. The American Hospital Association launched an advertising campaign. And hundreds of members of Congress signed a letter defending the program. On Nov. 14, two House lawmakers introduced a bill that would prevent CMS from implementing the proposed rule.

Under 340B, named after the section of the Public Health Service Act that authorizes it, eligible hospitals buy drugs at a discount from the pharmaceutical companies and then are reimbursed for those purchases from Medicare. The drugs are purchased under the Part B program, which covers expensive chemotherapy and other treatments in a hospital, doctor’s office and clinics.

The hospitals make money on the spread, using it to improve the financial stability of the hospital.

In comment letters to federal officials, a range of hospitals from St. Cloud, Minn., to Kalamazoo, Mich., said the new rule would cost them hundreds of thousands of dollars.

Yet, even as concerns arise around the impact of the cuts and a legal battle plays out, Congress has heightened scrutiny of the program. The House Energy and Commerce Committee held two hearings over the past few months, examining how hospitals use money made on 340B drugs. A key question for lawmakers was how much the patients benefited.

The new rule, according to CMS Administrator Seema Verma, addressed that concern — albeit indirectly.

While the actual price of drugs will not be lower under the rule, Verma said beneficiaries will save an estimated $320 million a year on copayments. Medicare patients typically are responsible for a percentage of coinsurance on their prescriptions. The lowered Medicare reimbursement means that an enrollee’s coinsurance would be lower at 340B hospitals because Medicare would pay hospitals less for the drug.

In one example the administration provided, if Medicare reimburses a participating hospital $2,000 a month for an individual drug, a beneficiary would save over $100 on their out-of-pocket share.

Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York, agreed.

“If Medicare reduces the reimbursement amount, that will directly reduce what the patients pay,” Bach said. “Patients will see lower prices.”

Allan Coukell, senior director for health programs at the Pew Charitable Trusts, said the change in how Medicare spends its money may have broader, unintended consequences for the health care system. Patients may change providers, seeking lower copays. Or, conversely, hospitals may drop out of the program because of lower reimbursements.

“The long-term impact of such a shift is unknown,” Coukell said, adding that one thing is certain: Fewer hospitals participating in the program simply “transfers the 340B revenue from the provider to the manufacturer.”

The 340B program wasn’t always so controversial. The bill, signed by Republican President George H.W. Bush in 1992, once had bipartisan support.

“Everyone loved the program. That’s why Congress expanded it on three separate occasions,” recalled William von Oehsen, who helped lobby for the initial law and is a founder of the hospital group 340BHealth. Most recently, the program was expanded under the Affordable Care Act in 2010.

“There was never any concern about its size until, basically, pharma decided it had gotten too big and started investing in a public relations and lobbying campaign to reform it,” von Oehsen said, adding, “We just don’t have the money they have, and it’s kind of discouraging.”

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

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Putting Money Where Its Mouthpiece Is: Calif. Outspends U.S. To Market Obamacare

The marketing blitz is on.

Californians are getting barraged with online pop-up ads, radio spots and television commercials, all aimed at persuading them to sign up for Affordable Care Act health plans during this year’s open-enrollment season.

Covered California, the state’s Obamacare exchange, is wielding a monster marketing budget that devotes $45 million to ads, including $18 million for TV and $8 million for radio. The agency is so flush with marketing dollars that it also spent $100,000 for a dozen freshly painted murals across the state, most of which have nothing directly to do with health insurance enrollment.

Covered California’s marketing riches contrast starkly with the advertising budget for the federal health insurance exchange, healthcare.gov. The feds have slashed ad dollars to $10 million, down from $100 million last year.

The huge discrepancy reflects conflicting attitudes toward the ACA, commonly known as Obamacare, said Gerald Kominski, director at the University of California-Los Angeles Center for Health Policy Research.

“A $10 million advertising budget for healthcare.gov, which supports exchanges in 30-something states, is … in keeping with the goal of this administration to destroy the ACA,” he said. “California’s budget reflects a different approach to the ACA, which is that it is an important source of insurance.”

Other health care experts say marketing is not the best use of money now that the exchanges are a known commodity, especially in California. They suggest the dollars could be better used for things like reducing premiums.

“It’s a waste of taxpayer money,” said Sally Pipes, the president and CEO of the Pacific Research Institute in San Francisco, which advocates for free-market policies.

“All of this money being used on murals and bus tours and TV ads, etc., it’s not going to change the number of enrollees that much. It would be better to save money and reduce taxes so that people have lower tax burden.”

California is one of 11 states, plus the District of Columbia, that operate their own health insurance exchanges. The remaining 39 states use the federal healthcare.gov site.

In addition to cutting its ad budget, the federal government reduced grants for “navigators,” individuals and organizations that help people enroll, to $37 million, down from $63 million last year. Covered California will devote $6.5 million to navigators. It’s not a perfect measure, but judging purely by population, these investments in navigators do not seem significantly different.

Altogether, Covered California plans to spend $111.5 million on marketing in 2017-18, which includes navigators, ads, staff salaries and more.

Covered California leaders and consumer health advocates say the agency’s sizable marketing budget is necessary because of recent federal moves to undercut the Affordable Care Act. The Trump administration shortened the enrollment period to 45 days in most states and stopped paying insurers to provide a subsidy that helps many low-income consumers with their out-of-pocket medical costs.

“It sounds like a lot … but it’s a very legitimate expenditure,” said Betsy Imholz, director of special projects for Consumers Union.

The federal government’s $10 million investment in advertising is “ridiculously inadequate” by comparison, she said. Covered California will spend that amount on online ads alone.

There have been so many policy flip-flops in Washington, D.C., and so much misinformation that some people may be confused about whether the law is even in place anymore, she said.

Their confusion is magnified by the fact that consumers nationwide may be served by different Obamacare exchanges with different rules.

For instance, Californians who purchase their individual insurance through Covered California or on the open market will continue to have three months, until Jan. 31, 2018, to enroll in plans for next year. People who purchase their plans through healthcare.gov have until Dec. 15.

Ed Haislmaier, a senior research fellow at the conservative Heritage Foundation, said the feds’ advertising cuts simply reflect the needed transition from promoting the exchange as a new option to maintaining it as an established program.

“Growing awareness is not going to magically get desired people to enroll,” he said.

The U.S. Department of Health and Human Services (HHS), which runs the federal exchange, explained that it cut advertising in part because it did not seem to be working to boost first-time enrollment. For 2017 plans, first-time enrollment declined by 42 percent and total enrollment fell by 500,000 people to 12.2 million. Covered California has about 1.4 million enrollees.

HHS plans to use its smaller budget on digital media promotion like YouTube videos and targeted ads on search engines, called search advertising. It will also focus on emailing and calling healthcare.gov consumers directly to remind them of the Dec. 15 deadline.

So far, neither the confusion nor the smaller advertising investment seems to have stopped people from signing up. About 1.5 million people had selected healthcare.gov plans as of Nov. 11, which represents a stronger start than last year, when about 1 million people picked plans during the first 12 days.

In California, 48,000 new consumers had signed up for exchange plans as of Nov. 14, slightly ahead of the same period last year, when 39,000 consumers picked plans. These figures don’t include existing enrollees who renewed their plans.

Kathy Hempstead, a senior adviser at the Robert Wood Johnson Foundation, said Covered California usually performs better than others in enrollment, which probably has something to do with its marketing efforts. “Covered California has become a brand,” she said. “Healthcare.gov hasn’t.”

Peter Lee, Covered California’s executive director, said he believes that spreading the word about open enrollment creates a risk pool that includes both healthy and sick people.

“Yes, marketing costs money, but marketing means more people sign up, and the people that sign up are healthier and help lower premiums,” he said.

Covered California commissioned this Sacramento mural as part of its marketing and outreach efforts to promote the open-enrollment period for 2018 coverage. (Ana B. Ibarra/California Healthline)

Advertising likely helped lower premiums by 6 to 8 percent in 2015 and 2016 because it helped create a more balanced risk pool, according to a recent marketing report produced by Covered California.

Covered California’s $111.5 million marketing budget is nothing new. Last year, it spent $99 million on marketing, and $122 million the year before that.

This year, as in some previous years, Lee paraded across the state in a colorful charter bus promoting the start of open enrollment. He touted the 12 new murals, and echoed the primary message of Covered California’s ads: Life can change in an instant due to unexpected injuries, such as falling off a ladder.

One mural painted outside an AltaMed clinic in East Los Angeles features people dancing, running and exercising around a doctor. A mural painted outside La Familia Counseling Center in Sacramento shows a woman holding a bowl above her head, out of which flow children riding bikes and a basketball player.

How much the murals, the tour bus or the television ads will help cut through the confusion, let alone increase enrollment, is unclear.

“I don’t know if marketing will be able to address how complex this open enrollment will be,” said Kevin Knauss, an insurance agent in the Sacramento area.

Kaiser Health News senior correspondent Anna Gorman contributed to this report.

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

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