Tagged Uninsured

Senate And House Take Different Plans To Scrap Individual Mandate

Update: This story was originally published March 21, 2017. It was updated on June 26, 2017 with details of the Senate health care bill.

The Affordable Care Act’s tax penalty for people who opt out of health insurance is one of the most loathed parts of the law, so it is no surprise that Republicans are keen to abolish it. But the penalty, called the individual mandate, plays a vital function: nudging healthy people into the insurance markets where their premiums help pay for the cost of care for the sick. That has required Republican lawmakers to come up with alternatives, which were included in the House bill that passed in May and updates to the Senate draft bill released Monday.

The GOP approach is called a “continuous coverage”  or “creditable coverage” penalty. It would apply to people who buy insurance if they have gone 63 consecutive days without a policy during the past 12 months. In the Senate bill, they would have to wait six months before they could buy insurance. The bill that passed the House took a different tack: it did not include a waiting period but required insurers to increase  premiums by 30 percent, and that surcharge would last for a year. While the ACA assesses a fine for each year people don’t buy insurance, the GOP plan would punish those who decide to purchase it after not being in the market.

Much is at stake. If the GOP’s approach fails to prod enough healthy people into buying insurance, rates for everyone else in the insurance pool will rise, destabilizing promises by President Donald Trump and GOP leaders to make their Obamacare replacement more affordable. The nonpartisan Congressional Budget Office projects that millions fewer people will buy insurance if the individual mandate is repealed and replaced with a continuous coverage surcharge as the House proposed.

The budget office expects that the Senate’s six-month waiting period would “slightly increase the number of people with insurance. ” Nonetheless, CBO projects that at least 22 million people will lose insurance under either the House or Senate bill because both proposals scale back government assistance to people buying insurance and limit Medicaid coverage.

Why do people allow their insurance to lapse?

Some simply can’t afford the premiums, like Sheila Swartz. She and her husband, Don, who has a heart condition, dropped their policy in December after learning monthly premiums were going to increase by about $140 to $530. “You can’t get blood out of a turnip,” said Swartz, who lives outside Nashville, Tenn., and works as a house cleaner. “If you can’t afford that premium, you can’t afford that premium.”

Others stop paying premiums when they lose a job or are hit with unexpected costs in other areas, such as major home or car repairs. “If you have to pay rent or health insurance, you are probably not going to choose health insurance,” said Bruce Jugan, a health insurance broker in Montebello, Calif.

Some people try to game the system, taking the calculated risk of going without insurance until they get sick or know they need expensive medical care, such as for maternity or an elective surgery.

Both the Affordable Care Act and the GOP proposal include a deterrent by limiting people from enrolling anytime they want. People must wait for annual enrollment periods, usually in the final weeks of the year, meaning that some people might have to wait months before getting coverage. (People still can get insurance during special enrollment periods if they lose a job, get divorced or have another specified major life change.)

How tough is the GOP penalty compared with the individual mandate?

Under the ACA, the average individual mandate penalty in 2015 was $442, according to the Internal Revenue Service.  The House penalty would vary based on cost of premiums but generally would be more expensive than paying the mandate’s penalty. A 40-year-old with annual premiums of $4,328 would pay an extra $1,298 because of the House surcharge.

“It’s got teeth,” said Cheryl Damberg, a Rand Corp. economist. “In some ways, it’s a more punishing penalty, and it’s going to hit people who are least capable of financially affording it.”

Seth Chandler, a law professor at the University of Houston Law Center who has been critical of the Affordable Care Act’s insurance markets, said he is skeptical the House surcharge is high enough to make people enroll. “I am concerned that the Republicans are succumbing to the same softness of heart as the Democrats succumbed too when they set the individual mandate [fine],” he said. “If you start to see insurance companies object or drop out of the markets, that’s a sign this thing is miscalculated.”

Two conservative economists at the American Enterprise Institute, Joseph Antos and James Capretta, argue the penalty is “far too small” to be effective. “Healthy consumers are likely to take their chances,” they wrote. “With the repeal of the individual mandate, and the retention of the ACA’s insurance rules, the overall effect would be significant market turbulence, starting immediately in 2017.”

The CBO predicted that there would be a brief increase in the number of people holding insurance in 2018, as roughly 1 million people buy coverage to avoid the surcharge. In most years afterward, however, about 2 million fewer people would buy policies, either because of the surcharge or because of the requirement they provide documentation proving they had been insured. The CBO said healthy people in particular would be more likely to avoid buying policies.

The House plan has some parallels to Medicare’s late enrollment penalty, which is applied to premiums for people who did not sign up upon turning 65. But Christopher Koller, a former Rhode Island health insurance commissioner, doubts the GOP penalty would be as effective. “Medicare is an entitlement with the force of government behind it,” said Koller, now president of the Milbank Memorial Fund, a foundation in New York that focuses on healthy populations. “You get lots of notices about what your obligations are as you approach that age.”

What about people who can’t afford premiums?

The House surcharge contains no hardship exemptions, unlike the individual mandate, which allowed people to escape paying a penalty if premiums would have eaten up too much of their income (8.16 percent in 2017).

In 2015, 5.6 million people paid the individual mandate penalty, but another 11 million claimed a hardship exemption, according to the IRS.

Lower-income people are going to have even more trouble buying — and keeping — coverage under either of the GOP plans, experts said. The ACA’s premium subsidies are based on income, and millions of people on the poorer end of the spectrum do not have to pay anything for premiums if they choose the cheapest plan. The House plan would offer a flat tax credit that adjusts only for age. The penalties would make some even more reluctant to buy insurance — especially if they are relatively healthy. The Senate plan retained income-based subsidies, but they are smaller than those under the ACA and are tied to plans with higher co-payments and deductibles.

“I think we would just end up with a lot more uninsured people, and they would clearly be the type of people who are less able to navigate and less able to afford insurance,” said Geoffrey Joyce, director of health policy for the University of Southern California Schaeffer Center for Health Policy & Economics.

Republican lawmakers say their plan rightly places the responsibility on individuals. It is a view shared by some health insurance brokers like Helena Ruffin, a broker in Playa Vista, Calif. She said that a continuous coverage requirement like the one proposed by the House would “limit those people who are not playing by the rules.”

“I am favor of the penalties,” she said. “Whether or not people are going to pay attention is another story.”

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

Categories: Health Industry, Insurance, Repeal And Replace Watch, The Health Law, Uninsured

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Texas Hospitals Fear Losing $6.2B Medicaid Deal 

Texas rejected billions in federal aid to expand Medicaid under the Affordable Care Act, calling the program “broken.” But now it’s asking the Trump administration to renew a deal that’s brought the state an additional $6.2 billion a year under Medicaid to help care for the poor.

Half the money is used to help hospitals finance care for the uninsured, and the rest goes to hospitals and other providers to test regional programs to improve care and access, such as opening school-based health clinics to steer people away from expensive emergency room visits.

State officials are hoping to win a 21-month extension of an agreement that began in 2011 and will expire in December.

The Trump administration signed off on a similar pact with Florida in April, increasing extra Medicaid funds to that state from $600 million a year to $1.5 billion annually. In December, the Obama administration extended a pact with Tennessee to 2021. It is worth at least $500 million a year to the state.

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Several states receive such funds but Texas’ allocation is the highest. To put Texas’ request in perspective, $6.2 billion represents more than a third of what the federal government now contributes to the state’s Medicaid program annually. Texas kicks in the balance to pay for its $29 billion Medicaid program, which covers nearly 4.8 million people.

Hospitals are counting on the cash to absorb the costs of uncompensated care, which they say has escalated even as the state’s uninsured rate fell from 20 percent in 2013 to 16 percent in 2015, according to the Kaiser Family Foundation’s estimates. (Kaiser Health News is an editorially independent program of the foundation.)

Without the money, programs and services to the poor will have to be cut, including many new health clinics opened to expand access, hospitals say.

“Absent the dollars from the waiver, we would have to start to close the clinics and cut back on the manpower,” said George Masi, CEO of Harris Health System, a large public health system based in Houston.

The uninsured rate has fallen in Houston, but surrounding Harris County still has more than 1 million people without health insurance.

George Masi, CEO of Harris Health System in Houston, meets with staff at one of the system’s health centers. (Courtesy of Harris Health System)

Between population growth and demand from undocumented immigrants, “there is growing need for more uncompensated care,” Masi said. Undocumented individuals are ineligible for Medicaid but cannot be refused emergency care.

When the Obama administration first approved Texas’ Medicaid waiver — and billions in extra Medicaid dollars to go with it — federal officials viewed the action as a glide path toward a formal Medicaid expansion starting in 2014, which the Affordable Care Act encouraged states to undertake. The law required the federal government to fully pay the extra costs of bringing more people onto Medicaid rolls for the first three years in every state that took the offer. Thirty-one states, plus the District of Columbia, did so.

Obamacare Medicaid funding would have added 1 million Texans to the program.

But after the U.S. Supreme Court made the Medicaid expansion optional for states, Texas lawmakers bristled at having anything to do with Obamacare or expanding government health coverage. That left the state’s hospitals in a tough financial spot since they lost some federal funding under the law without gaining patients covered by a Medicaid expansion. Texas hospitals are eager to keep the federal waiver in place as the turmoil in Congress over repealing and replacing Obamacare only increases their jitters.

Last year, the Obama administration was reluctant to promise to maintain extra funding levels to states that did not expand Medicaid and left their hospitals on the hook for treating uninsured people who would have been covered under the law. The Centers for Medicare & Medicaid Services told Texas to expect its Medicaid waiver funding to be cut by billions starting in 2018.

Anne Dunkelberg, associate director of the Center for Public Policy Priorities in Texas, a left-leaning think tank, said Texans would be better served by expanding Medicaid but, since that isn’t politically possible, the waiver money is vital to help hospitals care for the uninsured. “The hospitals still have tons of uncompensated care and it will be painful for them without this money,” she said.

Texas set up 21 regional health programs to oversee hundreds of pilot programs paid for by the waiver money intended to improve care to the poor. The demonstration projects paid for by the waiver money probably could not continue without the federal funds, according to an evaluation report released last month by Texas Department of Health and Human Services. The report concluded some projects did help improve patient outcomes, but it’s too soon to determine if they can help lower hospitals’ costs of uncompensated care.

At Baylor Scott & White Health, based in Dallas with facilities in north and central Texas, the waiver money has provided more than $200 million in funding over the past five years for uncompensated care and another $132 million for health projects. “This money allows us to care for uninsured folks that otherwise might not get care,” said Bill Galinsky, vice president for government finance at the health system.

Baylor Scott & White has participated in 37 health projects funded by the waiver to develop ways to treat more than 100,000 low-income people. Other efforts included placing 10 social workers in primary care clinics to provide one-stop care for patients with mental health and physical health needs. The system has also worked with community agencies to increase providing healthy meals to families. “We are cautiously optimistic” that the waiver money will continue, Galinsky said.

Harris Health used part of its $350 million a year in Medicaid waiver dollars to open six primary care clinics with integrated mental health services. “Before the waiver, the primary care doctors could treat the backache or strep throat but would struggle to deal with the depression or bipolar,” Masi said.

Adding psychiatrists and psychologists to work alongside primary care doctors has helped reduce demand for inpatient mental health care, he said.

Without continued federal funding, most of the new positions would disappear, according to Masi.

Memorial Hermann, one of the state’s largest hospital systems, which is also in Houston, also allocated a portion of its waiver money — $150 million a year — to do more than care for the uninsured, said Dr. Benjamin Chu, the former CEO, who was interviewed before his resignation was announced June 19.

The hospital system opened crisis prevention units and school-based health clinics. Other funds paid for a team that manages mental health patients after discharge from hospitals, connecting them with follow-up services to reduce repeated visits to an emergency room.

“This money is very important,” Chu said.

Categories: Medicaid, The Health Law, Uninsured

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Deep Cuts To Medicaid Put Rural Hospitals In The Crosshairs

For the hundreds of rural U.S. hospitals struggling to stay in business, health policy decisions made in Washington, D.C., this summer could make survival a lot tougher.

Since 2010, at least 79 rural hospitals have closed across the country, and nearly 700 more are at risk of closing. These hospitals serve a largely older, poorer and sicker population than most hospitals, making them particularly vulnerable to changes made to Medicaid funding.

“A lot of hospitals like [ours] could get hurt,” says Kerry Noble, CEO of Pemiscot Memorial Health Systems, which runs the public hospital in Pemiscot County, one of the poorest in Missouri.

The GOP’s repeal of the Affordable Care Act calls for deep cuts to Medicaid — the public insurance program for many low-income families, children and elderly Americans, as well as people with disabilities. The House version of the repeal law cuts Medicaid by $834 billion over 10 years, and the Senate revision of that bill cuts the program even more on a different timetable. The Congressional Budget Office has not yet scored the Senate version of the bill, but it said the House version would result in 23 million more people being uninsured in the next 10 years.

Loss of coverage is a problem for small rural hospitals like Pemiscot Memorial, which depend on Medicaid. The hospital serves an agricultural county that ranks worst in Missouri for most health indicators, including premature deaths, quality of life and adult smoking rates. Closing the county’s hospital could make those much worse.

And a rural hospital closure goes beyond people losing health care. Jobs, property values and even schools can suffer. Pemiscot County already has the state’s highest unemployment rate. Losing the hospital would mean losing the county’s largest employer.

“It would be devastating economically,” Noble said. “Our annual payrolls are around $20 million a year.”

All of that weighs on Noble’s mind when he ponders the hospital’s future. Pemiscot’s story is a lesson in how decisions made by state and federal lawmakers have put these small hospitals on the edge of collapse.

Back in 2005, things were very different. The hospital was doing well, and Noble commissioned a $16 million plan to completely overhaul the facility, which was built in 1951.

“We were going to pay for the first phase of that in cash. We didn’t even need to borrow any money for it,” Noble said, while thumbing through the old blueprints in his office at the hospital.

But those renovations never happened. In 2005, the Missouri legislature passed sweeping cuts to Medicaid. More than 100,000 Missourians lost their health coverage, and this had an immediate impact on Pemiscot Memorial’s bottom line. About 40 percent of their patients were enrolled in Medicaid at the time, and nearly half of them lost their insurance in the cuts.

Pemiscot Memorial had plans for expansion and improvements that the county hospital was ready to make — and pay for — in 2005, before the state legislature slashed Medicaid rolls. (Bram Sable-Smith/Side Effects Public Media)

Those now-uninsured patients still needed care, though, and as a public hospital, Pemiscot Memorial had to take them in.

“So we’re still providing care, but we’re no longer being compensated,” Noble said.

And as the cost of treating the uninsured went up, the hospital’s already slim margins shrunk, and it went into survival mode.

The Affordable Care Act was supposed to help with the problem of uncompensated care. It offered rural hospitals a potential lifeline by giving states the option to expand Medicaid to a larger segment of their populations. In Missouri, that would have covered about 300,000 people.

“It was the fundamental building block [of the ACA] that was supposed to cover low-income Americans,” said Sidney Watson, a St. Louis University health law professor.

In Missouri, Kerry Noble and Pemiscot Memorial became the poster children for Medicaid expansion. In 2013, Noble went to the state Capitol to make the case for expansion on behalf of the hospital.

“Our facility will no longer be in existence if this expansion does not occur,” Noble told a crowd at a press conference.

“Medicaid cuts are always hard to rural hospitals,” Watson said. “People have less employer-sponsored coverage in rural areas and people are relying more on Medicaid and on Medicare.”

But the Missouri legislature voted against expansion.

For now, the doors of Pemiscot Memorial are still open. The hospital has cut some costly programs — like obstetrics — outsourced its ambulance service and has skipped upgrades.

“People might look at us and say, ‘See, you didn’t need Medicaid expansion. You’re still there,’” Noble said. “But how long are we going to be here if we don’t get some relief?”

This story is part of a partnership that includes KBIA, NPR and Kaiser Health News.

The Association of Health Care Journalists and The Commonwealth Fund are supporting a yearlong series of stories on rural health care by Side Effects Public Media and KBIA.

Categories: Cost and Quality, Medicaid, Repeal And Replace Watch, States, The Health Law, Uninsured

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