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September 8, 2014

Washington Health Policy Week in Review Archive 96bfaa56-1548-4005-b101-0bf0d2911ca0

Newsletter Article


Study Forecasts Premium Drops for Benchmark Exchange Plan

By John Reichard, CQ HealthBeat Editor

September 5, 2014 -- Based on the limited data available so far, 2015 health law insurance exchange premiums aren't shaping up to be much of a campaign issue for Republicans this fall–and Democrats may even be inclined to drop their customary reticence about the issue.

A new study by the Kaiser Family Foundation finds premiums for a key type of health plan sold in exchanges may actually drop slightly, providing potential savings not only for buyers but also for taxpayers footing the bill for the subsidies.

Premiums for the second-lowest-cost silver plan sold on the exchanges will fall an average of 0.8 percent in big cities in 15 states and in the District of Columbia, the study finds. That type of plan is significant because it's the benchmark that helps determine how much assistance eligible individuals receive, Kaiser analysts note.

"If early trends hold and average premiums for the benchmark silver plans decline across the country, the federal government could end up paying out less than expected in tax credit subsidies overall for 2015," according to a Kaiser summary of the findings.

The foundation's president, Drew Altman, said though there is variation, so far premium increases are generally modest. "Double digit premium increases in this market were not uncommon in the past," Altman said.

But there's still plenty of uncertainty about what rates will actually be when the 2015 open enrollment period begins Nov. 15. The study looks at rates in a big city in each the 15 states, not the entire state. And it's unclear what rates will look like in states that were not studied.

The overall appearance of favorable rates could furthermore be a mirage if consumers don't shop carefully, the Kaiser analysts warn.

Even people who get subsidies may face large premium hikes if they simply re-enroll in the plan they have this year, they said. In many cases, the lower-cost plans in 2014 will no longer fit that definition in 2015.

"Consumers should go into the open enrollment period prepared to shop for the best dal all over again," said Kaiser Senior Vice President Larry Levitt.

The steepest average drop in premiums for benchmark plans among the cities studied is in Denver, where the decline is 15.6 percent. In Nashville, that type of coverage will cost an average of 8.7 percent more, underscoring the need to avoid assumptions about rates.

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Newsletter Article


Medical Spending Projected to Rise in 2014 and Beyond, Report Says

By Kerry Young, CQ Roll Call

September 3, 2014 -- With major components of the health care law taking effect and the economy gaining steam, the United States is hitting a turning point in medical spending.

Growth in national health expenditures is projected to rise 5.6 percent this year to $3.06 trillion, according to a federal report released last week. That marks a rebound after the sluggish economy kept medical inflation at near-historic lows in recent years.

If the Centers for Medicare and Medicaid Services' (CMS) number crunchers are proven right, 2014 will mark the first time in six years that the growth rate for national health expenditures tops 4 percent. The 2013 rate is estimated at 3.6 percent.

The widely cited annual estimate is likely to stir a new round of debate about the Affordable Care Act (PL 111-148, PL 111-152). Republican opponents of the law have questioned administration claims that it is helping bend the medical cost curve downward.

In their recent paper published in Health Affairs, CMS researchers say that the share of the national economy dedicated to health care, measured in terms of gross domestic product, will rise from 17.2 percent in 2012 to 19.3 percent in 2023.

Yet, while health spending is set to grow faster than it has in recent years, it still may rise more slowly than it did in the years before the overhaul took effect. The average growth rate for national health expenses was 7.2 percent in the period of 1990 to 2008, but could be 6 percent in the period of 2015 to 2023.

Multiple Factors

CMS researchers cite three factors behind the projected rise: More people are expected to gain access to health coverage under the law; the economy will strengthen; and the U.S. population, particularly baby boomers, will age and thus need more medical services.

CMS stressed that its projections remain subject to uncertainty, reflecting both the normal variability in estimating economic trends and the current shifts happening within the health care system.

The massive enrollment of Americans in private insurance plans and Medicaid through federal health exchanges in recent months is the most visible change occurring under the law. The measure also is spurring broader tests of new methods for practicing medicine, and the fiscal effects may not be know for many years.

"The impacts of reform on the behavior of consumers, insurers, employers and providers will continue to unfold throughout the projection period and beyond," the CMS researchers said in the paper.

But the health care law isn't the only federal statute affecting health spending.

The sequester cuts arising from the 2011 Budget Control Act (PL 112-25) affect Medicare, by slowing growth outlays for the federal health program for the elderly and disabled to 3.3 percent from 4.8 percent, according to CMS.

The agency's researchers also drilled beyond the general condition of the economy and the sequester to find causes for the recent slowdown in health spending. The expiration of patent protection in recent years of several blockbuster drugs contributed, the authors noted, without naming any products. Among the drugs facing new generic competition during the health cost slowdown was Pfizer Inc.'s Lipitor cholesterol pill, once the world's best-selling drug.

Conversely, "expensive new hepatitis C treatments" will contribute to the acceleration in growth in 2014, the report says. Such products include Gilead Sciences Inc.'s Sovaldi, which has a wholesale price of $1,000 a pill.

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Newsletter Article


Court Grants Rehearing of Case Limiting Health Law Subsidies

By John Reichard, CQ Roll Call

September 4, 2014 – Last week the full U.S. Court of Appeals for the District of Columbia granted an Obama administration petition to rehear a case that threw into doubt the legality of subsidies for millions of Americans buying insurance coverage on the federal website

The decision vacated an order by a three-judge panel on the court that struck down an Internal Revenue Service regulation allowing subsidies in all states, regardless of whether they create their own insurance exchanges or rely on the federal marketplace.

Plaintiffs in the case pressed by the libertarian Cato Institute, Halbig v Burwell, argued that the text of the health care law (PL 111-148, PL 111-152) only permits subsidies in the 16 states plus the District of Columbia that have established their own exchanges, not in the 34 that use

The order, approved by the majority of the 11 judges on the D.C. Circuit, scheduled oral arguments for the full "en banc" review for Dec. 17, which sets the stage for a ruling upholding the subsidies nationwide next winter or spring.

The majority of the 11 judges on the full panel were appointed by Democratic presidents. That has led analysts to predict the full court will overturn the three-judge panel's earlier ruling and erase a split with another circuit court on the legality of the law's insurance subsidies. The differing rulings raised the possibility that the U.S. Supreme Court would take up the issue.

Supreme Court review remains a possibility, however. Michael A. Carvin of the law firm, Jones Day, also the lead plaintiffs' attorney in the Halbig case, petitioned the Supreme Court July 31 to overturn a ruling by a panel of the 4th Circuit Court of Appeals in Richmond, Va., that upheld subsidies nationally.

That petition in King v. Burwell says it "is the only vehicle that would allow [the Supreme Court] to resolve this matter within the October 2014 term."  If the Supreme Court does grant certiorari in that case, a final ruling resolving the fate of the subsidies could come as soon as early next summer.

Both the Halbig and King challenges are funded by the Competitive Enterprise Institute.

Cato Institute analyst Michael Cannon said that the order for en banc review "is unwise and unfortunate. It has the appearance of a political decision, and will likely only delay Supreme Court review."

Cannon said that administration's strategy is to delay "this litigation as long as possible, which would tend to prejudice the courts because delay further entrenches the subsidies that the Halbig ruling declared illegal, and increases the disruption that will be caused by eliminating those subsidies."

"The D.C. Circuit rarely grants en banc review," said Washington and Lee Law School professor Timothy Jost, a health law supporter. "The fact they did here is testimony to the devastating effect this misguided decision would have had on millions of Americans and the fact that the decision is wrong on the law."

Jost added that "this also means the Supreme Court is very unlikely to grant certiorari in the companion 4th Circuit King decision, since there is no longer a split of decisions among the circuits."

The case is Halbig v Burwell (No. 14-5018).

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Newsletter Article


Hospitals Report Financial Gains in States That Expanded Medicaid

By Rebecca Adams, CQ HealthBeat Associate Editor

September 3, 2014 -- Hospitals in states that expanded Medicaid under the health care law are seeing financial benefits as patients gain coverage, according to a PricewaterhouseCoopers analysis of financial data from the nation's five largest for-profit health systems.

The report documented a major shift away from uninsured patient admissions for the nation's three largest chains: HCA Holdings, Tenet Healthcare and Community Health Systems. In states that expanded Medicaid, the number of hospitalized patients who had Medicaid coverage jumped by 10 percent at Community Health Systems, more than 20 percent at Tenet and 32 percent at HCA. At the same time, the number of hospital patients who lacked coverage and had to pay their bills fell by 46 to 48 percent among the three systems.

A total of 28 states have opted to expand their Medicaid programs under the law (PL 111-148, PL 111-152).

As more revenues flowed in from Medicaid, Tenet officials reported that their hospitals posted a $78 million decline in unpaid medical care. Community Health Systems reported $40 million to $45 million less uncompensated care, adding it expects similar results next year. HCA officials did not quantify the effect over the past year from the Medicaid expansion alone, but the chain updated its earnings to account for higher revenues than expected.

The report also examined the finances of two other major chains–LifePoint Hospitals and Universal Health Services. LifePoint reported a $13 million gain from the expanded Medicaid coverage. Its second-quarter earnings increased almost 36 percent over the same time period in 2013, according to the report.

Universal Health Services said its second-quarter adjusted net income rose 30 percent when compared to the same timeframe the year before.

"In states that have expanded Medicaid, an influx of newly insured patients has helped reverse long-running hospital trends such as declining admissions and a rise in uncompensated care," found the report.

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Newsletter Article


CMS Approves Special Enrollment for Wisconsin Residents Who Lost Coverage

By John Reichard, CQ HealthBeat Editor

September 4, 2014 -- Federals official have announced they'll give Wisconsinites who lost health coverage because of changes in the state's Medicaid program until Nov. 2 to obtain insurance on the federal marketplace.'s regular open enrollment period isn't scheduled to reopen until Nov 15.

"Coverage options are now available to the limited number of people who are no longer eligible for BadgerCare, after the state made changes to its Medicaid program earlier this year," Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner said in a statement.

Special enrollment periods are available in the case of certain "life events," such as the loss of a job or a divorce. The CMS statement cited "unique circumstances" to justify special enrollment for the Wisconsin residents who were affected.

Sen. Tammy Baldwin, D-Wis., had written to CMS last week to request the special sign-up opportunity.

Last year, Republican Gov. Scott Walker and GOP legislators opted for partial expansion of BadgerCare rather than full expansion under the health law (PL 111-148, PL 111-152), according to reports. Walker said the federal government couldn't be counted on to stick with federal funding levels in the health law for a full expansion.
The partial expansion plan led some people to lose coverage.

According to Baldwin, Walker contended that 90 percent of former BadgerCare recipients would be able to line up coverage on the federal exchange.

"However, this promise was not kept for 60 percent, almost 38,000 individuals, of those terminated from BadgerCare coverage by Walker," Baldwin said in the press release.

Baldwin, who said Walker saw no need for the special enrollment period, said she hoped Walker would work to help those affected get coverage on the federal exchange.

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Newsletter Article


MedPAC Spiffs Up Its Media Tools, Joins Twitter

By CQ Staff

September 2, 2014 -- Payment recommendations in 140 characters or less? That's not likely, but the Medicare Payment Advisory Commission (MedPAC) announced last week it's going on Twitter and blogging, too.

The notion of MedPAC getting faster and more informal with its media strategy may seem at odds with its reputation for lengthy and meticulous wordsmithing of recommendations on changes in Medicare policy.

But what MedPAC says can be a powerful way to fortify lobbying efforts in Congress, and stakeholders are eager to know what the commission has to say on many issues. That's going to get easier, said MedPAC Assistant Director Arielle Mir in an email.

"With the start of a new season of commission meetings upon us, we are proud to unveil a whole new set of ways to share the commission's work with the Congress and the world," Mir wrote. She said the organization's website,, has a new look and a new and more powerful search engine and includes a blog, located at, which will feature MedPAC's work in a quicker and less formal format than its traditional reports to Congress.

Mir added that MedPAC will be tweeting commission news and updates using the handle @medicarepayment. The website will also feature social media tools, she said, to make it easier for people to share MedPAC publications.

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