By Melissa Attias, CQ Roll Call

September 9, 2015 -- House Energy and Commerce members signaled interest Wednesday in a bipartisan plan that would amend the Affordable Care Act (ACA) to keep employers with 51 to 100 workers from having to comply with more stringent insurance coverage requirements.

The bill (HR 1624), with 40 Democrats among its 215 cosponsors, drew a warmer response from Energy and Commerce Health Subcommittee Democrats than past efforts targeting the 2010 overhaul. Frank Pallone Jr. of New Jersey, the ranking member of the full committee, called the hearing a "turning point" in the debate, though he added the legislation could be premature.

"As opposed to using the ACA as a political football through repeated, futile attempts to repeal or defund the law, Republicans and Democrats have come together in a bipartisan fashion to improve and strengthen the ACA," Pallone said. "I'm hopeful this spirit can continue."

Under the law, businesses with 51 to 100 workers are categorized as small employers. State regulators, however, have the option of designating them as large employers until 2016, meaning they can offer health coverage through the large group market that does not have to cover specified benefits and meet other requirements that apply to smaller groups.

To prevent midsized employers from being forced to change coverage and possibly absorb premium increases, the bill would automatically place businesses with 51 to 100 workers into the large employer category, while still allowing states to treat them as small employers if they choose. Monica Lindeen, president of the National Association of Insurance Commissioners, said her group endorsed the bill because it would allow states to continue to have control over the small-group market and ensure stability.

Although the effects would vary by state, Lindeen warned of premium increases and reduced flexibility to tailor benefits for the firms in question if the legislation is not passed. Employers with younger and healthier workers could self-insure to avoid fallout from the change.

Kurt Giesa, a partner at the management consultant Oliver Wyman, said his analysis found that 64 percent of midsized employers would see their premiums rise in 2016, with an average boost of 18 percent. After firms with younger, healthier workers leave the market, he estimated that premiums for small businesses in the new combined market could go up 3 to 5 percent.

But Washington State Insurance Commissioner Mike Kreidler testified against the legislation, saying insurers are counting on an expanded risk pool to keep requested premium decreases. Making the change "so late in the game will be very disruptive to the market in the state of Washington," he said.

Kreidler also noted that employees would not have access to the guaranteed benefits under the health care law and suggested that lawmakers could postpone the change rather than remove the requirement. "The jump is a good one for health care reform and for the small group market," he said.

North Carolina Republican Renee Ellmers questioned why Kreidler opposed the measure when a state could opt out of the definition change. But Kreidler said Washington state law sets its coverage limit at 50 employees, meaning he would have to gain legislative approval—the odds of which he put at "zero to none" given the link to the health law.

Lindeen noted that the Obama administration has offered a transition policy that could allow relief for mid-sized employers in participating states until October 2017, but she said her group thinks the legislation is necessary to preserve coverage options and for future stability. She also dismissed the notion that consumers would have fewer protections under the bill and said that the requirement for plans to offer certain benefits wasn't needed for the large-group market.

"It's important not to deny the small businesses that are currently utilizing a product that works for them to be able to continue to do that," Lindeen said.

Jennifer Sherman, spokeswoman for bill sponsor Brett Guthrie, R-Ky., said a preliminary estimate from the Congressional Budget Office found that the legislation would save $400 million over a decade. That should insulate the measure from the offset concerns that dogged other efforts to change that health law that garnered bipartisan support.

By Jad Chamseddine, CQ Roll Call

September 23, 2015 -- Senate Democrats are concerned that mergers among the five largest health insurers will narrow choices for consumers, a charge that the CEOs of the acquiring companies are downplaying as they try to focus on potential savings to policyholders.

The Senate Judiciary Antitrust, Competition Policy and Consumer Rights Subcommittee is investigating whether Aetna Inc.'s acquisition of Humana Inc. and Anthem Inc.'s purchase of Cigna Corp. would have harmful effects on an industry that has been consolidating for the past five years. Amy Klobuchar of Minnesota, the ranking Democrat, said in a hearing Tuesday that the U.S. "values competition" and referred to the Sherman Act of 1890 that prohibits anti-competitive actions by companies as the "Magna Carta of free enterprise."

"I want to make sure that these deals do not harm consumers by increasing premiums or reducing benefits," Klobuchar said.

Aetna CEO Mark T. Bertolini said his company would only supply 8 percent of the U.S. population with health care after completing its acquisition of Humana. He also rejected the notion that the health insurance market should scrutinized on a national level, saying "all health care is local, just like politics." Insurers have fought for years to keep regulation at the state, rather than federal, level.

Anthem CEO Joseph Swedish stressed that there has been a stream of new industry entrants and that health care, in general, is "locally consumed, and locally sold."

But Sen. Richard Blumenthal, D-Conn., a critic of the mergers, countered that "there is national politics and there is a national health care market, and that market is profoundly important for the Justice Department to review. My hope is that the Department of Justice will look at the national market and not just the local market, because insurance is not just local."

Bertolini and Swedish, who are usually rivals, both pushed back against lawmakers exploring the effectiveness of current regulation of the insurance industry. The executives painted a picture of a competitive industry, and their view on market concentration clashed with some of the witnesses.

American Hospital Association President Richard Pollack said the mergers should be of "extreme concern to consumers" and said 97 percent of the market for private Medicare coverage was concentrated. Leemore Dafny, a professor at the Northwestern University Kellogg School of Management and former Federal Trade Commission economist, said that "concentration is generally higher within local markets than in the nation as a whole."

George Slover, the policy counsel at Consumers Union, said the market concentration stems from high barriers of entry in the industry. "You need good provider networks to attract consumers, and you need a large pool of consumers to attract providers," Slover said, calling it a chicken-and-egg problem.

This conflicted with Bertolini's characterization that consumers had an average of 10 insurance plans to choose from and 28 competitors have entered the market in the past year.

Blumenthal also laid the blame on high barriers to enter the health insurance market. "There are powerful barriers to entry," he said. "I can't just start an insurance company that will have any hope of competing with the combined entity."

This skepticism over a competitive health insurance marketplace was shared by Sen. Al Franken, D-Minn., who questioned both CEOs on whether the savings announced as part of the merger would flow to consumers.

Republicans were less critical. Subcommittee Chairman Mike Lee, R-Utah, said "post-acquisition levels of concentration raise strong competitive concerns." But he steered away from blaming the merging parties, saying he was more interested in finding out why there was "rapid consolidation" in the health care industry. Lee, like Republican colleagues in the House Judiciary Committee, also questioned whether the 2010 health care law spurred the deals.

The merger is currently being reviewed by the Department of Justice, which on Sept. 18 issued a second request to Aetna and Humana over their combination, asking for more information to be provided and preventing them from merging their assets. These requests are rare and typically signal that the government is concerned about competition in a particular industry. Blumenthal asked the Justice Department in a letter this year, and again at the hearing, to review both Aetna's acquisition of Humana alongside Anthem's purchase of Cigna.

By Kerry Young, CQ Roll Call

September 22, 2015 -- Some employers already are making changes to the health plans they offer ahead of the looming Cadillac tax, which is slated to start in 2018, according to a wide-ranging annual survey of medical insurance coverage.

Thirteen percent of large firms that offer health benefits reported making changes to their plans to avoid reaching the tax thresholds set in the 2010 health law, said the Kaiser Family Foundation and Health Research & Educational Trust in a summary of their 17th annual survey on medical benefits.

The excise tax was intended to curb subsidies above a certain amount in order to control what some policy experts consider overly generous benefits. The first year's threshold is $10,200 for self coverage and $27,500 for family coverage. 

In its survey, Kaiser found that 8 percent of large firms, or those with more than 200 workers, said they switched to a lower-cost plan. Other changes tied to the tax were plans to limit the number of doctors and other health providers that patients could use.

"Those changes likely will shift costs to workers, but exactly how and how much will vary for individual workers," said study lead author Gary Claxton, a Kaiser Family Foundation vice president and director of the Health Care Marketplace Project, in a statement.

The tax remains one of the more contentious provisions of the 2010 health law and efforts are underway to repeal it. In addition to strong GOP opposition that's common to many of the health law's provisions, the so-called Cadillac tax also is unpopular with unions and other groups that traditionally have strong links to Democrats. Rep. Joe Courtney, D-Conn., has drawn 14 Republicans and 135 Democrats as backers of his repeal bill (HR 2050). Another repeal measure (S 2045) by Sen. Dean Heller, R-Nev., has one Democratic and 14 Republican cosponsors.

Drew Altman, the president and chief executive officer of the nonpartisan Kaiser Family Foundation, said on a call with reporters that it's unclear exactly what will happen with the Cadillac tax.

"It may be modified. It may go into effect," Altman said. "We don't know."

The debate over the Cadillac tax is part of a possible pivot toward a serious discussion of the drivers of health costs. With the Obama administration having scored legal victories in defending the 2010 law, Altman predicted lawmakers may move to a closer examination of the factors underlying increases in the cost of medical care.

"Many politicians will be looking for a less partisan post-ACA agenda," Altman said, citing rising deductibles and drug costs as topics likely to dominate future debates.

Looking at the most recent survey results, Altman and foundation researchers on the Tuesday call noted that relatively good news about slower growth in premiums likely has been overshadowed for many consumers. Single and family premiums for employer-sponsored health insurance increased an average of 4 percent in 2015. Since 2005, premiums have grown an average of 5 percent each year, compared to 11 percent annually between 1999 and 2005.

But consumers are paying more out of their pockets for medical care through deductibles.

The researchers said that charting only the increase in deductible amounts over time doesn't convey the full impact because of a rapid expansion in the use of this cost-shifting measure by companies. The number of people facing deductibles grew from 55 percent of covered workers in 2006 to 81 percent in 2015. After accounting for the increased prevalence in their calculations, researchers found that the average deductible for all covered workers in 2015 is $1,077, up 67 percent from $646 in 2010 and 255 percent from $303 in 2006.

Wages also have grown more slowly than costs such as deductibles.

"If wages were keeping up with the growth in cost-sharing it wouldn't be as big a deal for people, but the pain level is significant," Altman said. "It really affects family budgets because their wages aren't rising at the same time."

Other key findings from the Kaiser/Health Research & Educational Trust poll include:

• The average annual premium for single coverage is $6,251, of which workers on average pay $1,071. The average family premium is $17,545, with workers on average contributing $4,955.
• About 81 percent of covered workers are in plans with a general annual deductible, which average $1,318 for single coverage this year. Workers in smaller firms, with three to 199 workers, faced an average deductible of $1,836 this year, while those at larger firms, those with at least 200 workers, had an $1,105 average deductible.

The survey included responses from 1,997 firms that employ at least three workers.

By Melanie Zanona, CQ Roll Call

September 14, 2015 -- Growing concern over the cost of prescription drugs—articulated on the presidential campaign trail and in Congress—could force authors of a Senate biomedical innovation package to address the topic later this fall.

With a quarter of Americans saying they cannot afford their prescription medications and prices up an average of 12.6 percent in 2014, drug affordability is coming under greater scrutiny just as the Senate begins crafting bipartisan legislation to spur medical innovation.

The issue began to crest after the House passed its own biomedical overhaul bill (HR 6) in July with overwhelming bipartisan support, according to a Senate Democratic aide. The House measure would revamp the drug approval process at the Food and Drug Administration and designate $8.75 billion for the National Institutes of Health, but would not address the cost of medicine.

That's not to say drug affordability didn't crop up during debate. Democratic Rep. Jan Schakowsky of Illinois proposed, but then withdrew, an amendment requiring drug makers to disclose research and development costs in order to shed light on pricing.

Since then, Democratic presidential candidates Hillary Rodham Clinton and Sen. Bernard Sanders, I-Vt., have each vowed to address medication costs. Sanders said last week that he hears about the topic "all the time." An August Kaiser Family Foundation poll found that 72 percent of Americans find drug costs unreasonable.

The Senate efforts to write a bill are spearheaded by Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., and ranking member Patty Murray, D-Wash., but on a slow-moving timeline. A legislative draft is expected to drop later this fall and could be marked up before the end of the year, although it isn't likely to receive floor consideration until 2016.

An Alexander aide said no decisions have yet been made about what will be in the package but indicated that drug costs could be addressed more broadly.

"The average cost to get a single drug from the laboratory through the approval process to the medicine cabinet is, according to some estimates, about $1 billion," the aide said. "Through its innovation initiative, the Senate health committee is working to make this process more efficient, which the committee hopes will help in reducing the cost of developing the drugs and devices that help keep Americans healthy."

Partisan Split

Despite widespread concern over drug costs, proposed remedies more often than not divide Republicans and Democrats.

Sanders, a perennial champion for lower drug prices, unveiled a wide-ranging plan (S 2023) Thursday with Democratic Rep. Elijah E. Cummings of Maryland. Part of their legislation would allow the government to negotiate directly with pharmaceutical companies on behalf of Medicare—a policy that has long sparked concern among conservatives, who contend it would hinder beneficiaries' access to drugs and discourage innovation.

"If the government says [drug companies] can have access to the Medicare market but they're only going to get X price, and if they look at the numbers and say it doesn't begin to cover the cost of investment, then they're going to take the drug out of the system, which is not good for patients," said Robert E. Moffit, a senior fellow at the Heritage Foundation, who noted that similar proposals have been floated for years. "It's like putting a gun to their head."

But there are a few components of Sanders' plan that have some Republican support and could provide fodder for authors of the innovation bill. A crackdown on "pay-for-delay" deals, which allow brand-name drugmakers to pay other manufacturers to keep cheaper generic versions of their products off the market, has the support of Senate Judiciary Chairman Charles E. Grassley, R-Iowa, who reintroduced legislation Wednesday to prohibit such deals.

John McCain, R-Ariz., is also a strong proponent of terminating patent exclusivity periods for companies that commit fraud and for allowing prescription medications to be imported from Canada, where they often sell for less because of government controls. Both proposals are in Sanders' legislation.

"You cannot with a straight face say that 'I believe in free trade, and isn't it wonderful we're bringing lettuce and tomatoes from small farms in Mexico,' but somehow you cannot bring brand-name drugs from multi-billion dollar companies from Canada across the border," Sanders said.

By Kerry Young, CQ Roll Call

September 21, 2015 -- Premiums for insurer-run Medicare Advantage plans will be stable next year, and thus may attract more customers to an approach to managing health services for the elderly and disabled that can cost taxpayers more than the traditional Medicare program.

The average monthly premium for Medicare Advantage plans will drop by 31 cents to $32.60 next year from $32.91 for this year, the Centers for Medicare and Medicaid Services (CMS) said Monday. More than half—about 59 percent—of participants in the plans will not see any increase in their premiums. The flat premiums show that people on Medicare are "benefiting from a transparent and competitive marketplace," said Sean Cavanaugh, CMS deputy administrator, in a statement. 

Many plans offer dental, vision and hearing benefits that traditional Medicare does not provide, and some insurer-run plans don't charge a monthly premium at all.

By next year, almost a third of Medicare's population, or 17.4 million people, may be enrolled in Advantage plans, CMS said. Participation in Advantage plans is booming. Enrollment rose by about 9 percent in 2014, to almost 16 million, according to the Medicare Payment Advisory Commission (MedPAC).

The growth has proven something of a surprise, as the 2010 health law included measures intended to bring payments for Medicare Advantage plans closer to the cost of caring for people in traditional Medicare. That could have made the plans less enticing for insurers, as the profits were predicted to shrink in the Medicare Advantage industry, which cost taxpayers about $159 billion last year. 

Companies may be using risk scores, measures meant to reflect the health of the insured population, to blunt the other reductions, according to the most recent report from the trustees of the Medicare program.

Separately, MedPAC has estimated that Medicare will spend about $8 billion more this year for people enrolled in Advantage plans than they would have if these people remained in the traditional program.

But customers in the plans also benefited from an estimated $3 billion in efficiencies delivered by plans, MedPAC said in its March report to Congress. Medicare Advantage giant Humana Inc., for example, has worked to recruit people who suffer from common difficult-to-manage conditions, such as diabetes and congestive heart failure, into a special chronic care program meant to provide them with extra help to address social and basic needs, as well as medical ones.

Enrollment in this group rose by more than 20 percent in the first six months of this year to 512,00 Medicare Advantage members, Humana said in a regulatory filing.

"These increases reflect enhanced predictive modeling capabilities and focus on proactive clinical outreach and member engagement," the Louisville, Kentucky–based company said. "We believe these initiatives lead to better health outcomes for our members and lower health care costs."

By Melissa Attias, CQ Roll Call

September 16, 2015 -- The share of Americans without insurance fell to 10.4 percent during the first full year of the health care law's coverage expansion in 2014, nearly a 3 percentage point decrease from the previous year, according to a Census report released September 16. The decline represented the biggest year-to-year drop since 2008, when the bureau began tracking such data.

In 2014, 33 million people lacked health coverage for the entire year, compared to 41.8 million people in 2013. 

The figures track with other estimates showing a similar decline in the uninsured rate since the implementation of the health law. A Centers for Disease Control and Prevention report released last month found the number of Americans without coverage fell by one-third since 2013, after which the most significant coverage expansions under the law took effect.

The Census Bureau report, based on information from two surveys that use different methodologies, states the drop in the uninsured rate is consistent with the intent of the 2010 overhaul.

Expansions of private and government health coverage were responsible for the growth of the population with coverage, according to the report. The private coverage rate rose by 1.8 percentage points between 2013 and 2014, while the government coverage rate went up by 2 percentage points.

The biggest changes came from the growth of Medicaid and insurance individuals buy directly from an insurer or through new insurance exchanges created by the law. The direct purchase of insurance covered 14.6 percent of the population for all or part of 2014 compared to 11.4 percent in 2013. The portion of people covered by Medicaid, the federal and state program for the low-income, for all or part of 2014 rose to 19.5 percent, up from 17.5 percent in 2013.

Health Law Connection

Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, said the sizable increases in those two areas are clearly connected to the health law. The overhaul allowed states to expand their Medicaid programs and provided subsidies for some low- and middle-income Americans to buy coverage through the exchanges beginning in 2014. The law also required most individuals to purchase coverage or face penalties.

Park also said the new data showed a widening difference in uninsured rates between states that chose to expand Medicaid and those that have not.

The White House highlighted the issue in a blog post, noting that states that expanded Medicaid saw a 3.4 percentage point drop in their uninsured rate, compared to the 2.3 percentage point reduction in states that did not.

"The causal effect of Medicaid expansion on state uninsured rates is likely even larger since non-expansion states had higher uninsured rates prior to 2014, and states with more uninsured tended to see larger coverage gains during 2014," wrote Council of Economic Advisers Chairman Jason Furman, Council member Sandra Black, and Chief Economist Matt Fiedler.

Heritage Foundation senior research fellow Ed Haislmaier said that government data about the number of people who gained coverage through new marketplace insurance or Medicaid is a better measure of the health care law than the Census statistics.

"What the Census data misses the mark on is that almost all the health insurance enrollment growth in 2014 occurred in Medicaid and there was relatively little net growth in the number of people with private health insurance coverage," Haislmaier said in a statement.

The report also found that every state and the District of Columbia saw a drop in their uninsured rate from 2013 to 2014 while the portion of people without coverage decreased for every age under 65. Although 19- to 64-year-olds had the lowest coverage rate compared to children and older adults, the portion with coverage rose by 4.2 percentage points during that window.