ACA Enrollment By The Numbers! Administration’s attempts to stall the ACA At Work?
By: Christopher Aguiar, Esq.
With headlines focused on collusion, corruption, impeachment, and a wall being erected in Colorado, much of the political discourse in 2019 has avoided Healthcare Reform. In contrast, 2017 and 2018 featured many headlines with the current Administration doing everything within Its power to make good on a touchstone of Its 2016 campaign platform; President Trump and the Republican Party pushed for repeal and replacement of Barak Obama’s crowning achievement, the Affordable Care Act. When they were unable to garner the votes, the President utilized powers outside the control of Congress to weaken key parts of the Law designed to ensure the viability of the Insurance Marketplace, as well as keeping the American public in the dark regarding enrollment by virtually defunding marketing efforts. Many feared these tactics would encourage disengagement of the young and healthy, demographics crucial to maintaining a balanced risk pool covered by the Marketplace. Did it work?
It all came to a head when, in rather theatrical fashion, the late Senator John McCain stood on the Senate floor and casted his vote with a momentous thumbs down, as though he was a dictator in Ancient Rome deciding the fate of a gladiator on the heels of a losing battle. This iconic moment marked the end of a legislative war of words, highlighted to that point by Twitter attacks from the President, himself, where the Republican Party was unable to garner the 50 votes necessary under the Budget Reconciliation Act to pass the Better Care Reconciliation Act. What followed was a tactical maneuvering by President Trump to undermine of key features of the ACA through his control of federal agencies and national purse strings.
First came a backhanded legislative maneuver wherein the Administration built Reform provisions into a tax bill. In December of 2017, President Trump signed the Tax Cuts and Jobs Act (“TCJA”). Among many other provisions, the Bill effectively directed the Internal Revenue Service to cease enforcing the Individual Mandate. In so doing, the Government would no longer penalize Americans who chose not to purchase health insurance. So, even though the Affordable Care Act was still the Law of the Land, one of the key provisions intended to protect the health of the risk pool by ensuring it was balanced and included not only the old and sick but also the young and healthy, now had no teeth. Many posited this lack of enforcement could hamstring the Law by encouraging the very malady it was designed to avoid, adverse selection. Without the tax to be levied upon non-compliant Americans, another important challenge to the Law was also set in motion, Its constitutionality.
When now Chief Justice Roberts upheld the constitutionality of the Affordable Care Act in an historic 2012 Supreme Court decision, it was upon enforcement of this provision that he relied. Specifically, Roberts held in National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012) that the Law was constitutional because the Federal Government was empowered to generate revenue. This penalty, as it was initially labeled, to be levied against Americans who chose not to purchase health insurance, then, was actually a tax, a permissible exercise of the Government’s power of taxation. So, too, was the Affordable Care Act considered constitutional. With the Administration’s removal of enforcement of this tax, without repealing the Law or provision itself, the constitutionality of the Affordable Care Act is again called into question because where no revenue is generated, the Individual Mandate is now arguably invalid. Such is the question to be answered by The Supreme Court when it issues a ruling Texas v. US, 809 F. 3d 134 (2015). Though oral arguments took place in July of 2019, no ruling has been issued.
The final act taken by the Administration was an exercise of the Executive Branch’s control of money. Specifically, it is within the power of the president to control how certain federal funds are spent, a power which allowed President Trump to slash the Affordable Care Act’s marketing budget by 90%. The fear? With significantly less advertising of open enrollment, would American’s be aware of the Open Enrollment period and how they could go about purchasing coverage on the Exchange?
Though not significant, the efforts may have had some impact on the enrollment which occurred from November 1 through December 15, 2018. According to Kaiser Family Foundation as well as the Centers for Medicare & Medicaid Services (“CMS”), enrollment through Healthcare.gov was down 4% in 2018 as compared to 2017. Overall, enrollment was down 3% in 2018 as compared to 2017. Those numbers seem insignificant when you consider the significant budgetary limitations that were placed on advertising, but perhaps the more telling and concerning data lies in the decline of new enrollees and percentage of those who qualified for subsidies. With respect to enrollees, 39% of enrollees were new in 2016. That number in 2017 had fallen to 31%, and even further in 2018 to 24%.
Perhaps the most concerning data point, however, is the percentage of new enrollees who qualify for premium subsides/tax credits. Those who qualify for these subsidies do so because they are individuals or families with low to moderate income levels. In 2017, 83% of new enrollees qualified for these subsidies. In 2018, that number grew to 87%. This indicates that lower income individuals and families are flocking to the health insurance exchanges at significantly higher rates than their wealthier (and perhaps, healthier) counterparts. Historically, data suggests that lower income individuals also tend to be less healthy. Accordingly, it appears the fear of adverse selection may indeed be manifesting itself as the young and healthy seem to be avoiding entering the Marketplace, either due to obtaining benefits through employee sponsored plans, or their willingness to gamble on their youth to save a buck.
It is difficult to ascertain with certainty whether the policy decisions made by the current Administration truly have a causal link to the drop indicated above, or if the connection is simply correlative. The numbers themselves speak to a very ominous reality. The number of new enrollees is declining each year. Additionally, the Marketplace appears to be obtaining a higher rate of enrollees annually in the low to moderate income demographic. Finally, 1/3 of new enrollees, annually, appear to be over the age of 55 and 64% are over the age of 35. As we head into 2020 and what should be another year of significant reform rhetoric, a Supreme Court decision that could leave the Country without a healthcare system on the books, and Healthcare once again top of mind in a presidential election cycle, the Administration will continue to attempt to repeal the Affordable Care Act, or endeavor to limit its efficacy. If adverse selection is in fact coming to fruition as the data seems to support, the Affordable Care Act may be headed for its demise either organically or though direct legislative attacks. It will certainly not be aided by an administration that will actively undermine the parts of a healthcare system that were intended to ensure its success; a flawed system that often leaves Americans footing a significant bill. Even with these attempts, the Republican Party has failed to clearly put forth a viable replacement. Be it with the ACA in some form, a Republican alternative, or the “Medicare for All” approach being touted by the large contingent Democratic candidates, Healthcare discussion is here to stay.
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ACA Round-Up for 2020: Items Affecting Employer-Sponsored Group Health Plans
By: Corrie Cripps
During this open enrollment season, plan sponsors of group health plans should be aware of any Affordable Care Act (ACA) changes that may affect the design and administration of their plans.
The case Texas v. United States1 is the ongoing litigation challenging the constitutionality of the ACA. A decision on this case is expected at any time from the Fifth Circuit Court of Appeals (“Fifth Circuit”). Any decision appears likely to be appealed to the Supreme Court. Whether or not the Supreme Court will take the case depends on how the Fifth Circuit rules. If the Supreme Court does not take the case, the Fifth Circuit’s decision will remain the law; however, the agencies will most likely need to issue regulatory guidance on how they interpret the decision.
As of the date of this article, the Trump administration is continuing to enforce the ACA. As such, plans will need to ensure they are maintaining compliance with the ACA provisions. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2020.
ACA Contraceptive Mandate
Update on the Obama-Era Rules
On June 5, 2019, U.S. District Judge Reed O’Conner of the Northern District of Texas issued a nationwide injunction2 against the Affordable Care Act’s (ACA’s) contraceptive mandate and its accommodation process, stating the mandate can no longer be enforced against employers who object to contraceptive coverage as it violates the Religious Freedom Restoration Act (RFRA). The injunction applies to all employers and individuals who object to contraceptive coverage based on sincerely held religious beliefs.
The case, DeOtte v. Azar3, was filed in October 2018 on the grounds that the plaintiffs (two Christian couples and one business whose owner is a Christian [Braidwood Management Inc.]) are forced to choose between purchasing health insurance that includes contraceptive coverage or not having insurance. The basis of the claim is having to choose between covering contraceptives under its group health plan, complying with the accommodation process of the contraceptive mandate, or paying a penalty for noncompliance. The court ruled that requiring employers with religious objections to use the contraceptive mandate’s accommodation violates RFRA, as does requiring individuals to obtain coverage with contraceptives.
This decision will apply to all employers that object to the contraceptive mandate, based on sincerely held religious beliefs, regardless of size or status as a nonprofit or for-profit entity. Since these employers are now exempt from the accommodation process, employees under these employer group health plans will no longer have coverage for some or all contraceptive services.
As for individuals, this decision allows individuals who object to some or all contraceptive services based on sincerely held religious beliefs to “…purchase or obtain health insurance that excludes coverage or payments for some or all contraceptive services from a health insurance issuer, or from a plan sponsor of a group plan, who is willing to offer a separate benefit package option, or a separate policy, certificate, or contract of insurance that excludes coverage or payments for some or all contraceptive services.” Based on this injunction, it is not clear if self-funded plans will need to offer a separate plan that does not include contraceptive coverage for employees who are religious objectors.
There is a safe harbor for officials who enforce the contraceptive mandate. Under the safe harbor, the federal government can ask whether an employer or individual that fails to comply with the contraceptive mandate is a sincere religious objector and file notice in court “…if the defendants reasonably and in good faith doubt the sincerity of that employer or individual’s asserted religious objections”. Federal regulators can also enforce the mandate against those who are found by a court to not be sincere religious objectors.
Update on the Trump Administration Rules
There are at least three lawsuits—brought in California, Massachusetts, and Pennsylvania—challenging the Trump administration’s final rules on religious and moral objections to the contraceptive mandate.4,5 Those rules were set to go into effect in January 2019 until they were enjoined by federal district court judges in Pennsylvania and California.
The rulings in Pennsylvania and California do not permanently block the new rules on the contraceptive coverage exemptions; however, the rulings stop the rules from going into effect while legal challenges are pursued.
Those employers who are potentially eligible for the expanded exemptions of the Trump administration’s final rules and wish to utilize an exemption in the future will need to closely monitor the latest developments.
Out-of-Pocket Limits for Non-Grandfathered Plans
2020 Out-of-Pocket Maximums
For non-HDHPs:
The Health and Human Services Department issued a Final Rule on its Notice of Benefit and Payment Parameters for 2020 (2020 NBPP Final Rule).6 The ACA 2020 maximum annual limitation on cost-sharing is $8,150 for individual coverage and $16,300 cumulative for family coverage. (Note that the ACA’s embedded self-only limitation is $8,150 for family plans).
For HSA-compatible HDHPs:
In Revenue Procedure 2019-25, the Internal Revenue Service (IRS) provided the inflation-adjusted Health Savings Account (HSA) contribution limits effective for calendar year 2020, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs are coupled with.7 For HDHP self-only coverage, the minimum deductible amount cannot be less than $1,400. The 2020 maximum out-of-pocket expense amount for self-only coverage is $6,900. For 2020 family coverage, the minimum deductible amount is $2,800 and the out-of-expense maximum is $13,800. (Note that the ACA’s embedded self-only limitation is $8,150 for family plans).
Drug Manufacturer Coupons
Per the 2020 NBPP Final Rule, health plans are not required to count drug manufacturer coupons toward the annual limit on cost-sharing when a medically appropriate generic equivalent is available.
On August 26, 2019, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, “the Departments”) issued a joint FAQ regarding limitations on cost-sharing under the ACA.8 Specifically, the FAQ addresses whether non-grandfathered group health plans must count drug manufacturers’ coupons toward the annual cost-sharing/out-of-pocket limits under the ACA.
Per this new FAQ, it came to the attention of the Departments that the drug manufacturer coupon provision of the 2020 NBPP Final Rule could create a conflict with the IRS regulations pertaining to HDHPs. Specifically, Q&A 9 of IRS Notice 2004-50 provides that the provision of drug discounts will not disqualify an individual from being eligible (for the HDHP) if the individual is responsible for paying the costs of the drugs (considering the discount) until the deductible is met.9 This Q&A requires the HDHP to disregard the drug assistance when determining whether the minimum deductible for an HDHP had been satisfied by only allowing amounts actually paid by the individual to be taken into account for that purposes.
The 2020 NBPP Final Rule, layered with the existing IRS Q&A, creates conflicting policy. As a result, the Departments, as stated in this August 2019 FAQ, realize this “ambiguity” and intend to undertake future rulemaking for 2021. In addition, until 2021, the Departments will not initiate an enforcement action if a group excludes the value of drug assistance from the annual limitation on cost sharing, including in circumstances in which there is no medically appropriate generic available.
Plans, however, when implementing or utilizing such a provision should be cognizant that this does not conflict with the existing Q&A for HDHPs.
Prior to adopting such a provision, the plan, employer, and all related entities should ensure they understand the impact for the participants and the plan.
New (or Modified) Preventive Care Recommendations for Non-Grandfathered Health Plans
The Affordable Care Act’s (ACA) preventive services mandate for non-grandfathered plans requires certain preventive services be covered in-network without cost-sharing for plan participants. The ACA uses the following when determining the preventive services that must be covered:
The final preventive services regulations, issued in July 2015, contain guidelines for when plans must incorporate any modified recommendations.10
The following are new or modified preventive care recommendations that become effective in 2020:
1. Skin Cancer Prevention (Date Issued: March 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The USPSTF updated its 2012 recommendation on skin cancer prevention. In this updated recommendation, the USPSTF expanded the age range for behavioral counseling interventions to include persons aged 6 months to 24 years with fair skin types (the previous recommendation applied to persons aged 10 to 24 years, based on the evidence available at that time).11
2. Screening for Osteoporosis to Prevent Fractures (Date Issued: June 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The USPSTF recommends osteoporosis screening for postmenopausal women younger than 65 years at increased risk of osteoporosis (created from prior osteoporosis screening mandates, this requirement clarifies the population for screening, introduces reference to menopause, and references clinical risk assessment for determining increased risk).12
3. Spinal muscular atrophy screening for newborns (Date Issued: July 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The Uniform Panel of the Discretionary Advisory Committee on Heritable Disorders in Newborns and Children (an HRSA task force) added newborn screening for certain kinds of spinal muscular atrophy.13
4. Interventions to Prevent Obesity-Related Morbidity and Mortality in Adults (Date Issued: September 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The USPSTF updated its previous 2012 recommendation statement on screening for obesity in adults. While it is still a “B” recommendation, the USPSTF expanded the description of behavioral counseling interventions. As with the 2012 recommendation, the 2018 recommendation is that clinicians offer or refer adults with a body mass index (BMI) of 30 or higher (calculated as weight in kilograms divided by height in meters squared) to intensive, multicomponent behavioral interventions.14 The only update to the recommendation is the expansion of the type of behavioral counseling interventions.
5. Screening for Intimate Partner Violence, Elder Abuse, and Abuse of Vulnerable Adults (Date Issued: October 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
This USPSTF recommendation incorporates new evidence since 2013 and provides additional information about the types of ongoing support services that appear to be associated with positive outcomes.15
ACA Reporting
Both the Employer Shared Responsibility Mandate (“Employer Mandate”) and the Individual Shared Responsibility Mandate (“Individual Mandate”) of the ACA continue to apply. As such, Applicable Large Employers (ALEs) will need to ensure they file the applicable forms for Internal Revenue Code (IRC) §§ 6055 and 6056 reporting in early 2020.
Conclusion
For plans and TPAs, being well-informed on regulatory developments is always of the upmost importance. Plan sponsors should review their plan documents as well as their plan administration procedures to ensure they are compliant.
1Texas v. United States, Partial Summary Judgment, https://www.documentcloud.org/documents/5629711-Texas-v-US-Partial-Summary-Judgment.html, (Last visited October 1, 2019).
2DeOtte v. Azar, Summary Judgment Order, https://affordablecareactlitigation.files.wordpress.com/2019/06/deotte-summary-judgment-order.pdf, (Last visited October 1, 2019).
3DeOtte v. Azar, Plaintiffs’ Class-Action Complaint, https://affordablecareactlitigation.files.wordpress.com/2019/05/deotte-complaint.pdf, (Last visited October 1, 2019).
4Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21851.pdf, (last visited October 1, 2019).
5Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21852.pdf, (last visited October 1, 2019).
6Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020, 45 CFR Parts 146, 147, 148, 153, 155, and 156, April 25, 2019, https://www.govinfo.gov/content/pkg/FR-2019-04-25/pdf/2019-08017.pdf, (last visited October 1, 2019).
7Internal Revenue Bulletin: 2019-22, Rev. Proc. 2019-25, May 28, 2019, https://www.irs.gov/irb/2019-22_IRB#REV-PROC-2019-25, (Last visited October 1, 2019).
8Employee Benefits Security Administration, Frequently Asked Questions (FAQs) about Affordable Care Act (ACA) Implementation Part 40, August 26, 2019, https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-40, (Last visited October 1, 2019).
9Internal Revenue Bulletin No. 2004-33, August 16, 2004, https://www.irs.gov/pub/irs-irbs/irb04-33.pdf, (Last visited October 1, 2019).
10Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Parts 2510 and 2590, 45 CFR Part 147, July 14, 2015, https://www.govinfo.gov/content/pkg/FR-2015-07-14/pdf/2015-17076.pdf, (Last visited October 1, 2019).
11U.S. Preventive Services Task Force, Skin Cancer Prevention: Behavioral Counseling, March 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/skin-cancer-counseling2, (Last visited October 1, 2019).
12U.S. Preventive Services Task Force, Osteoporosis to Prevent Fractures: Screening, June 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/osteoporosis-screening1?ds=1&s=osteoporosis, (Last visited October 1, 2019).
13Health Resources & Services Administration, Recommendations to HHS Secretary with Responses: Spinal Muscular Atrophy (SMA), https://www.hrsa.gov/advisory-committees/heritable-disorders/recommendations-reports/index.html, (Last visited October 1, 2019).
14U.S. Preventive Services Task Force, Weight Loss to Prevent Obesity-Related Morbidity and Mortality in Adults: Behavioral Interventions, September 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/obesity-in-adults-interventions1, (Last visited October 1, 2019).
15U.S. Preventive Services Task Force, Intimate Partner Violence, Elder Abuse, and Abuse of Vulnerable Adults: Screening, October 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/intimate-partner-violence-and-abuse-of-elderly-and-vulnerable-adults-screening1?ds=1&s=violence, (Last visited October 1, 2019).
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The Tower of Babel – Talking Heads Talking Past Each Other
By: Ron E. Peck, Esq.
As the 2020 Presidential Election draws closer, the topic of healthcare continues to dominate the airwaves. Be it media or debate, this is one of the (if not the) issue about which everyone is talking; but pay close attention and you’ll notice they aren’t all speaking the same language.
Access vs. Care vs. Insurance
One word everyone can agree upon is “affordability.” The issue, however, is that depending upon whom you ask, what it is that ought to be “affordable” differs. Some people throw the term “access” around, while others seek affordable “care,” whilst still others focus (candidly) on affordable insurance.
Interestingly, for many, the term they use (access versus healthcare) matters little, as – once their position is better defined – a shrewd listener will note that the goal is ultimately the same; make insurance cheaper. They seem to believe that insurance is healthcare, and cheaper insurance is thereby cheaper healthcare. Further, they believe that the only “cost” of healthcare, incurred by an insured person is their premium, co-pay, coinsurance, and deductible.
This, then, is one misconception that continues to dominate political, regulatory, and economic discourse; that by attacking the cost of insurance for the general populace (i.e. premiums/contributions, co-pays, coinsurance, and deductibles), you somehow fix the problem of limited access and/or the high cost of healthcare.
Health Insurance is Not Healthcare
I’ve written in the past, and continue to argue today, that health insurance is not healthcare. Health insurance is one means by which the risk of payment for healthcare is shifted from the consumer of healthcare to a third-party payer. Changing who pays for healthcare doesn’t (on its own) address how much the healthcare costs. For instance, before you argue that Congress should establish a funding mechanism to support the “cost of caring” for those with significant medical needs, ask first what it means to pay for care. Are you referring to the cost of insurance, or the cost of the “actual” health care for which insurance pays?
Some might argue, however, that when a “new” payer is designated, (be it insurance, a self-funded plan, or the government), if they are large enough and possess enough clout, they can strongarm the provider into accepting lower prices for care – thereby reducing the actual cost of care. Thus, while making insurance more affordable doesn’t in and of itself reduce the cost of care, by providing more lives (and this negotiation power) to the payer, those payers in turn are provided with more “power” to force providers into accepting lower prices. Indeed, a single-payer would hold all the cards, and thus name their own price.
In a vacuum it makes sense, and if we were purchasing potatoes or tires it may work (in a truly free-market environment), however, in healthcare some features apply that are unique to this industry.
A Non-Market Market
In any other market, a vendor of goods or services can set any price for those goods or services. Supply, demand, and competition will then force the vendor to increase or reduce their price or fail. This allows the “free market” to naturally set prices at a level both the seller and buyer can live with. In healthcare, however, providers leverage things like technology, reputation, rankings, and sponsorships to compete for “customers” (a/k/a patients), rather than the price. Providers compete for these other things; if and when price is a matter over which there is competition between vendors (providers), it’s a competition to see who can charge the most. Indeed, one of the big pushbacks against transparent pricing in healthcare is that some providers will see that other providers “get away” with charging higher prices for the same services … and will increase their rates to match. Imagine if that same argument applied to every other industry; that the cost of bananas couldn’t be transparent, because grocers will compete to raise prices faster than the competition. Welcome to a world where the consumer has no skin in the game, and no price-based incentive to pick the lower cost options exists.
In healthcare, where patients don’t know, or (they think) pay the price of healthcare (at the time the care is consumed), and the consumer doesn’t appreciate the impact of higher healthcare prices on insurance costs, providers are able to freely raise prices without the negative repercussions vendors in other industries would immediately suffer. Additionally, even if patients know the price, if they (at least in their mind) don’t think they are the ones paying the price, then higher prices will – at best – not dissuade them from consuming care, and – at worst – will steer them away from reasonably priced care to higher cost providers, thanks to an (inaccurate) assumption that higher price equates to higher quality.
Quantum Meruit
At the same time, contract law states that a customer who agrees to pay a certain price for a service or product has entered into a contract with the vendor. This preemptive agreement between the customer and vendor, regarding what will be paid, and what will be received by the customer, is titled a “meeting of the minds.” If the customer later fails to pay the amount to which they’d previously agreed, this would be deemed a breach of contract. Even if objectively, one could argue the agreed upon price is excessive, assuming the customer had the requisite capacity to enter into such a deal, the contract is binding. If, however, someone receives a good or service but there was no meeting of the minds (agreement about what would be provided, and a specific price for said goods or services), the customer will be forced to pay an objectively reasonable price – determined by an objective third party, using objective pricing parameters – and NOT whatever price the vendor chooses to collect. This concept, called Quantum Meruit, ensures vendors are adequately compensated based upon objectively reasonable parameters, and customers are not unjustly enriched (don’t “get something for nothing”) but also aren’t forced to pay a price they never agreed to (and which is excessive by all reasonable, objective measurements).
In healthcare, however, rarely can we say there is truly a meeting of the minds. It is rare indeed to see a provider (the vendor) and patient (the consumer) agree upon a price prior to the provision of services. Yet, despite this, Quantum Meruit – applicable to other commercial exchanges – has no place in healthcare, and rather, the provider is allowed to balance bill the patient whatever amount it wants – usually the amount that exists between the provider’s “charge master” price, and what it already received from the applicable carrier or benefit plan. Note that the only prohibition on this billing practice is the prior existence of a contract between a payer and the provider, by whose terms the provider agrees to accept the payer’s payment as payment in full. This agreement, many argue, is the greatest value a network offers.
Given that the law protects a provider’s right to charge whatever they wish – with no limits based in reasonableness, meeting of the minds, or Quantum Meruit – and limited only by pre-negotiated contracts, payers generally negotiate from a weak position.
As such, simply ensuring everyone has insurance will not drastically reduce the cost of healthcare itself. Further, people – whether they are insured or not – will pay the cost when healthcare is too expensive. Be it balance bills for the uninsured, or rising premiums and deductibles for the insured – the money needs to come from somewhere.
Compounding the issue further is that fact that Americans generally suffer from a lack of long-term vision. We are, as a society, driven by a need for instant gratification. People use credit cards to buy things now, that they can’t afford later. People purchase homes and take out mortgages now, that they can’t afford later. Likewise, people obtain healthcare now that they can’t afford later. Make no mistake; even those with insurance pay the cost later, in the form of higher premiums, co-pays, deductibles, and co-insurance. Therein lies the rub – people are quick to target out of pocket expenses at the time care is received, and the cost of insurance in general, but they do so without asking why insurance is expensive or addressing that root cause.
Until people understand that – with or without insurance – patients will ultimately be responsible for the actual cost of care, then the issue will not be resolved. In other words, focusing on the rising out of pocket expenses, such as premiums, co-pays, and deductibles – without also focusing on why these expenses are increasing – addresses a symptom without diagnosing the disease.
What Does This Mean for Us?
Many candidates and their supporters are proponents of the so-called “Medicare for All” plan, yet even many who support those candidates are beginning to hesitate, worrying that under Medicare payment rates (forced down providers’ throats by a single payer monopoly), some hospitals struggling to stay open might close. Here, then, we see the opposite issue – ushered in when a monopoly is in place. A single payer with too much power can force opposition into accepting unduly low, unfair rates.
Is there a happy medium? Some have argued that a so-called “public option” may be one such “middle ground,” but this idea cannot live in harmony with private benefits for long … resulting in the demise of private plans, and eventual monopoly that is a single payer, and which (as already discussed) most agree needs to be avoided.
Consider as “Exhibit A” the State of Washington. Washington is set to become the first state to enter the private health insurance market with a so-called “public option,” at rates supporters say will be 10% cheaper than comparable private insurance. Almost as if the lawmakers read my article above (before I even wrote it), they claim these savings will be achieved thanks to a cap on rates paid to providers.
Without going into too much detail regarding the pricing model (spoiler alert – it’s a percentage of Medicare), if this public option is indeed available to all residents, and if they can “force” providers to accept these payments as payment in full (thereby preventing balance billing), why would anyone sign up for a private plan? If, then, all private plan members are steered by sheer common sense to this public option, private plans will cease to exist and – in this way – a single payer emerges from the exchange.
It was this threat that caused a public option to be removed from the proposed PPACA legislation, but now it’s back, at the State level as well as in proposals presented by Democratic candidates for the Presidency.
In the end, unless private plans and providers can achieve a meeting of the minds … and make healthcare affordable long term … this may be the future sooner than we think.