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January 12, 2015

Washington Health Policy Week in Review Archive 797f5276-cb12-4d67-bc47-283fc8bf06dc

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Insurance Costs Take Toll on Consumers Despite Slower Premium Growth, Study Finds

By Kerry Young, CQ HealthBeat Associate Editor

January 8, 2014 -- While medical inflation has slowed in recent years, many consumers are spending more out of pocket on employer-sponsored health care, according to a report from The Commonwealth Fund.

The average per-person deductible exceeded $1,000 in 2013 in all but three states and the District of Columbia, a situation not found in any state in 2003, the researchers found.

"This report shows that national patterns of growing health cost burdens on workers are mirrored in every state," said David Blumenthal, president of The Commonwealth Fund, said in a statement. "Out-of-pocket costs are up in most states and incomes are not keeping pace. This is of concern, since research shows that high health care cost burdens relative to income may lead people to avoid seeking needed health care."

The report found those living in Southern states, where median incomes are lower than elsewhere in the U.S., face the highest cost burdens.

The authors noted that there has been some "good news" in health costs, with the annual average growth rates for certain employee plans slowing since the enactment of the 2010 health law. The rate dropped to about 4.1 percent from 2010 to 2013, down from an average 5.1 percent from 2003 to 2010.

"Growth in employer premiums and deductibles slowed in many states after passage of the Affordable Care Act," said Sara Collins, vice resident for health care coverage and access at The Commonwealth Fund and a coauthor of the report. "However, slow wage growth means working families in every state are being squeezed by health care costs."

Workers' 2013 contributions to their health insurance premiums in every state amount to a higher share of state median income than they did a decade earlier, the report found. In 15 states, employees' annual payment for their share of premiums rose by 100 percent or more. Workers' out-of-pocket costs for premium contributions and deductibles in 2013 also accounted for a higher percentage of median income in all states compared to 2003.

With premium growth still outpacing income growth, insurance costs amounted to 20 percent or more of the median income in all but 13 states and the District of Columbia in 2013. Ten years earlier, that was the case in only two states, New Mexico and West Virginia.

Average premiums were 25 percent to 28 percent of median income in seven states: Alaska, Arkansas, Kentucky, Nevada, New Mexico, Texas, and West Virginia.

Researchers said both the public and private sector will need to keep premium growth in check without eroding benefits. They urged policymakers to "pursue reforms that improve the quality of health care, rein in cost growth, and ensure that savings are shared with patients and families across the income spectrum."

The health law is a "platform" from which to work toward a more affordable future, the researchers stated. Analysis projects from groups such as the Medicare Payment Advisory Commission (MedPAC) "indicate that such initiatives should focus on prices paid by private insurers, as well as incentives to reorganize the delivery system to improve care experiences and outcomes," the authors wrote.

MedPAC members will meet this month to discuss a new set of recommendations to Congress. The panel has been a strong advocate for moving away from the current fee-for-service model for Medicare toward a more coordinated model in which savings may be found, while improving care. With annual spending of about $600 billion, Medicare holds great sway on domestic health policy, influencing decisions that can extend even beyond the care of the disabled and elderly.

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Tennessee Releases More Details About Medicaid Expansion Plan

By Rebecca Adams, CQ HealthBeat Associate Editor

January 8, 2014 -- On the eve of a visit from President Barack Obama, Tennessee GOP Gov. Bill Haslam released more details of his plan to expand the state's Medicaid program. The governor said he would devote a special legislative session in February to debate the proposal.

About 200,000 Tennesseans would gain coverage through the expansion, according to an 11-page waiver request that Haslam released last week.

Under the plan, Medicaid recipients who are 21 to 64 years old would have a choice of two options. One, known as the Healthy Incentives plan, is essentially regular Medicaid benefits with new cost-sharing requirements and a health reimbursement-type account that rewards people for healthy behavior. The option would be available to people who are considered medically frail.

The state would provide some money for the health reimbursement-type account and enrollees could earn more by participating in activities such as health risk assessments.

People with income below the poverty level could use the accounts to pay for copayments and would not have premiums. People with income above the poverty level would have to pay premiums of roughly $20 per month and copays that vary by the type of service.

The second option, known as the Volunteer Plan, would be a premium assistance plan. The state would subsidize insurance for the working poor, which in the first year would be limited to employer-provided insurance. Employers must cover at least half of the premium cost.

People who are 19 and 20 years old would get coverage through the regular Medicaid program because they are still considered children.

The proposal includes a commitment from the state's hospitals to pitch in with a higher provider tax if needed to ensure that the state does not have to contribute any money to the effort.

The governor said the special session would begin on Feb. 2.

"There are few challenges facing us today as great as those presented by our broken health care system," Haslam said. "The Insure Tennessee plan is a conservative approach that introduces market principles to Medicaid, provides health care coverage to more Tennesseans at no additional cost to taxpayers, and leverages a payment reform initiative that is working to control health care costs and improve the quality of care. I believe this plan is a critical first step to fundamentally changing health care in Tennessee."

The administration applauded the announcement.

"The department has had productive discussions with Governor Haslam, and we look forward to the state submitting its plan to give low-income Tennesseans new options for health coverage," said U.S. Department of Health and Humans Services spokesman Ben Wakana.

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GOP Majority Has 'Menu of Options' for Attacking Health Law

By Melissa Attias, CQ Roll Call

January 6, 2014 -- Republicans plan to use their House and Senate majorities to take targeted swipes at the health care overhaul, cognizant that full repeal is out of reach as long as President Barack Obama is in the White House.

Many of the expected attacks will be familiar to House members, who took up numerous bills to repeal or tweak provisions after Republicans won control of the chamber in the 112th and 113th Congresses. But for the first time since the enactment of the 2010 law, the Senate is also in Republican hands, increasing the odds that some measures may land on Obama's desk.

"We won't have a chance realistically to repeal the law until January of 2017 at the very first if everything would go our way," says Pennsylvania Republican Joe Pitts, chairman of the House Energy and Commerce Health Subcommittee. "What we're going to have to do is take a piecemeal approach."

That doesn't mean a vote on full repeal is off the table. Newly elected members who ran on the issue as well as returning conservatives will be anxious to go on the record showing they want to scrap the entire law, and GOP leaders have little to lose by obliging them. Some would also like Republicans to use the budget reconciliation process to advance a repeal measure, though that is less certain.

But taking action on individual provisions could be seen as fixing the law by the most conservative lawmakers, prompting resistance. While most targeted health care bills received solid GOP support in the past, Pitts's 2013 legislation to move money from the law's prevention fund to shore up high-risk insurance pools for individuals with preexisting conditions had to be pulled from the House floor when necessary support didn't materialize.

First up on the piecemeal agenda could be legislation to change the law's definition of a full-time employee from one who works 30 hours a week to 40 hours. The benchmark is used to determine whether employers have to provide their workers with health coverage or face penalties. Republicans say the current threshold incentivizes businesses to cut their employees' hours below the 30-hour mark, because the mandate applies to employers with 50 or more full-time workers.

In a Wall Street Journal op-ed the day after the midterm elections, Speaker John A. Boehner, R-Ohio, and incoming Senate Majority Leader Mitch McConnell, R-Ky., said an early priority is legislation to "restore the traditional 40-hour definition of full-time employment, removing an arbitrary and destructive government barrier to more hours and better pay created by the Affordable Care Act of 2010."

The House voted on stand-alone legislation in April to move the threshold to 40 hours, drawing support from 18 Democrats. But the Democrats who oppose the change cite its cost and say that more workers will be at risk of having their hours cut if 40 hours becomes the new standard.

Another target often cited by McConnell is the law's 2.3 percent excise tax on medical devices, which opponents say squelches innovation and costs jobs. Like changing the 30-hour definition, the tax would cost money to repeal, has some bipartisan opposition and has already been voted on in the House. Seventy-nine senators also voted in favor of repealing it as part of a nonbinding vote on a fiscal 2014 budget resolution.

Other targeted strikes could be directed at a Medicare cost-cutting board that has yet to be appointed; the mandate that employers cover their workers; the requirement that most individuals obtain coverage or pay a penalty; an annual tax on health insurance companies; and a provision in the law designed to limit insurers' financial losses, known as the "risk corridor" program, which critics have labeled a bailout. Most have been the subject of past House votes.

Less certain is whether Republicans decide it's beneficial to advance legislation to replace the law as long as repeal is impossible. On the one hand, some think the exercise is important because it could demonstrate what the party stands for. But there's concern that moving a replacement plan without a repeal simply opens the GOP to attacks from the left.

"I don't see any real advantage, to be honest with you, because all we do is create reasons why the other side says it won't work," says Rep. John Fleming of Louisiana, incoming co-chairman of the GOP Doctors Caucus. "I think the best thing to do is to hold it, ready to go when that moment in history comes."

Pitts says he foresees Republicans introducing a "menu of options" in the new Congress that allows lawmakers to go on the record about their preferences. "Some members might have a little heartburn about one thing or another—a menu of options gives them a little bit more flexibility," he says.

None of the replace plans the GOP has introduced has advanced, though incoming Ways and Means Chairman Paul D. Ryan is working on a new one. According to a spokesman, the Wisconsin Republican has spoken to Sen. Marco Rubio, R-Fla., and others, and conversations about how to proceed are ongoing.

Meanwhile, a Supreme Court challenge to the law's subsidies that help some residents in 37 states buy coverage could prompt a shift in the overall GOP strategy. If justices side with plaintiffs arguing that the law doesn't allow subsidies in states using the federal exchange, Republicans may have to decide whether to step in with legislation or allow individuals to lose the financial help.

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House Passes Bill Changing Health Law Workweek Standard

By Melissa Attias, CQ Roll Call

January 8, 2014 -- One of Republicans' early efforts to weaken the 2010 health care law is on its way to the Senate after the House endorsed legislation last week that would change the statute's definition of full-time from a 30-hour to a 40-hour workweek.

The bill (HR 30), which would ease health coverage requirements for some employers, passed 252-172 with the support of all Republicans voting and 12 Democrats, despite a White House veto threat. Eighteen Democrats—seven of whom did not return this Congress—joined Republicans to advance a similar measure last year before it stalled in the Democratic-led Senate.

With Republicans now in control of both chambers, the House bill or a similar Senate measure (S 30) introduced by Maine Republican Susan Collins and Indiana Democrat Joe Donnelly are expected to be taken up. Majority Leader Mitch McConnell, R-Ky., said that he thinks there is "almost no chance" that the Senate won't be voting on the issue, despite Congressional Budget Office (CBO) estimates it would add billions to the deficit. The Health, Education, Labor and Pensions (HELP) Committee is expected to hold a hearing on it Jan. 22, according to a spokeswoman.

The question will be whether Republicans can pick up enough Democratic defections to get the measure to President Barack Obama's desk. Patty Murray of Washington, the top Democrat on the HELP Committee, called the proposal unacceptable in a statement this week, and the administration said Obama would veto the measure because it "would shift costs to taxpayers, put workers' hours at risk, and disrupt health insurance coverage."

"I'm willing to work with anyone on commonsense changes that would make health care more affordable and expand access for families, but this costly, harmful Republican legislation—which even some conservatives have openly opposed—is a big step backwards for workers who need health care and economic security," Murray said.

A score released last week by CBO and the Joint Committee on Taxation (JCT) bolstered that argument, projecting that the legislation would raise budget deficits by $53.2 billion from fiscal 2015 to 2025. That's because the bill would decrease the number of employers who have to pay penalties under the employer mandate and lower the penalties for some businesses by raising the full-time workweek threshold.

The health law generally requires businesses with 50 or more full-time workers to provide health coverage or pay penalties. The requirement kicks in for employers with at least 100 full-time workers this year, expanding to those with at least 50 employees next year.

Changes in sources of workers' coverage would also contribute to the bill's cost. CBO and JCT estimated that about 1 million fewer people would receive employment-based coverage, between 500,000 and 1 million more people would be covered under Medicaid, the Children's Health Insurance Plan or the health law's insurance exchanges, and less than 500,000 people would join the ranks of the uninsured.

But proponents of the legislation, including big business lobbies, say the change is necessary to restore the traditional 40-hour workweek. In a letter announcing that votes on the bill may be included in its annual scorecard, the U.S. Chamber of Commerce said the current 30-hour threshold encourages employers to reduce their workers' hours to avoid triggering the mandate.

"As a result, employees are losing wages and hours of work, and employers are losing the ability to offer jobs and structure their workforce in a way that best serves their business," wrote R. Bruce Josten, the chamber's executive vice president for government affairs.

Other supporters include the National Retail Federation, National Association of Manufacturers, American Hotel & Lodging Association, and American Benefits Council, as well as insurers. "This is a common sense, bipartisan solution that provides employers with flexibility to offer benefits and coverage that best meets the health and financial needs of their employees," Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a statement.

Opponents counter that there is little evidence that employers are cutting workers' hours as a result of the 30-hour definition and that raising the threshold to 40 hours would actually be more harmful. Robert Greenstein, president of the Center on Budget and Policy Priorities, said in a blog post that 7 percent of U.S. employees work between 30 and 34 hours a week, compared to 44 percent who work 40 hours a week, with several percent more working between 40 and 44 hours per week.

"As a result, it's the Republican leaders' proposal that would weaken the traditional 40-hour work week by placing far more workers at risk that employers will cut their hours to push them below the threshold," Greenstein wrote.

The House bill, sponsored by Indiana Republican Todd Young, has six Democrats among its 150 cosponsors. West Virginia Democrat Joe Manchin III and Donnelly are the two Democrats currently signed onto the Senate bill, which has 27 cosponsors.

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Hatch Eyes Medical Device Tax Repeal for Quick Action

By Alan K. Ota, CQ Roll Call

January 8, 2014 -- Finance Chairman Orrin G. Hatch says he is considering moving some standalone tax measures early in the 114th Congress before acting on a tax overhaul, including repeal of the medical device tax without offsets.

The Utah Republican recently said the proposal to repeal the 2.3 percent excise tax on medical devices—a contentious piece of the 2010 health care overhaul (PL 111-148, PL 111-152)—may be the first tax bill to be marked up in Finance.

"It's likely to be, it may not be the first," Hatch said. "We're going to have to put out the medical device bill....It will be up to the leadership. But we intend to get it out of committee, is my point. Then it will be put where the leadership decides to put it."

Hatch said he did not plan to combine the proposal to erase the medical device tax with any spending cuts or revenue-raising measures. The cost of repeal has crashed other attempts to eliminate a tax that many Democrats and Republicans oppose.

A similar proposal in the last Congress was projected to cost about $30 billion over 10 years. But supporters say the new proposal is like to carry a somewhat smaller price tag because excise tax collections have fallen below earlier projections. Deficits, meanwhile, have declined sharply, draining away some of the urgency to stay away from red ink. 

"I don't think you have to have offsets for that....We've never had offsets," he said.

Hatch said he was weighing whether to move other modest tax measures in the session's first months. "There are a lot of smaller bills that we may come up with. But we may also try to solve it in an overall tax reform bill, which I'd like to do," he said.

Several other tax writers in both parties said they were unaware of any plans to move specific bipartisan tax measures, besides the repeal of the medical device tax repeal. But some members offered suggestions for items that could be considered, such as parts of the recent one-year tax extenders law (PL 113-295), which expired at the end of 2014.  

"I would love to do standalone clean-energy legislation, tax incentives. There's things I'd love to do stand alone. We'll just have to see,'' said Sen. Debbie Stabenow, D-Mich., a senior tax writer.

Sen. Rob Portman, R-Ohio, said some standalone tax cut extensions could draw bipartisan support. For example, he said permanent continuation of the research and development tax credit could move on its own.  "It could. I would need to think about other things," Portman said.

But Sen. Bill Nelson, D-Fla., said repeal of the medical device tax is uncertain because it is tied to the health care law—the revenues is intended to pay for expansion of the health care coverage—and so the action would become a magnet for contentious amendments related to the health care law and to the income tax. "It gets complicated," Nelson said.

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