Navigating healthcare is a challenge. The market has responded by bringing together an array of tools to guide consumers. This is a fictionalized account of one patient’s journey.
So I wiped out on the bike today in the strangest possible way. I was training for this year’s NYC Five Boro Bike Tour when I got distracted by a man on a unicycle juggling bagels and lost control. I can’t believe it! Only in New York. My bike is okay but I’m out of commission. I hopped over to the sidewalk and called an Uber back home. My right knee looks pointed inwards and the Internet says that could mean a torn ACL. I’m going to ice my knee, take some Advil, and hope I’m wrong.
It’s been three days now and I still can’t use my knee in any way. So I bit the bullet and took an Uber to the ER. I’m getting sick of sitting around in my apartment. Now I’m lying here in bed waiting for the nurse to come back and fit me with a brace. The doctor told me I was right about the torn ACL and that I should go home and schedule surgery for two weeks from now. I’m so scared about the idea of surgery and I don’t even know how I’ll be able to pay for it.
I tried searching for an Orthopedic Surgeon through my insurance portal and more than 800 doctors popped up. How am I supposed to know which one is the best for ACL surgery? Too frustrated to even write about it.
I tweeted out to the cycling community that I got my NYC Five Boro Bike Tour prize early and asked for a recommendation for a surgeon. Of course I got about 100 different names, which only made me more confused. Then Anna from work suggested I use MD Insider, which my company provides. I narrowed the list to about 30 doctors who specialize in ACL surgery and were on my plan. I sorted by quality scores and then called the top three to see who had the best schedule. I feel better already just having an easy, logical way to find a doctor. Surgery in 12 days!
I got a bill from the ER for $1,300 and literally fell out of my chair when I opened the envelope. That’s a month of rent! And all the ER did was confirm what I had found online—nothing special. In the future, I’ll definitely go to urgent care. I just had NO IDEA how crazy expensive the ER is.
After laying on the floor and moaning for a while, I remembered our company also provides a service called “Health Advocate.” I wasn’t sure that was, but it sounded like something I needed! So I made a phone call, and guess what? My advocate was a real human, not a robot! She helped me negotiate down the cost of the visit to just $450. I can’t believe I’m even saying “just,” but it obviously could have been worse. Lesson learned.
The surgery yesterday went well but I was too groggy to form coherent sentences until today. My surgeon was fantastic and put all my fears to rest. She was in my plan’s network so my out-of-pocket portion was more manageable than I had anticipated. If all goes well I should be back on my bike in a month. Plenty of time to get ready for next year’s Five Boro Tour!
Think I was being overly optimistic. Now it’s a week later and I’m still in a lot of pain from surgery. My health advocate called me to check up on me a couple of days ago and I told her I was fine, because I still had pain meds then. I took my last pill last night and still need more. My cyclist friend Lia offered me her leftover topical lidocaine (how can she have anything leftover??) and I said no because I figured my surgeon gave me a one week dose for a reason. I’m also scared of becoming an opioid addict, because addiction runs in my family. It sounds preposterous now that I’ve written it down, but gimme a break, my knee hurts! I just want to bike.
The pain is getting better. I’m glad I decided to wait it out instead of grabbing Lia’s leftover meds. Today I went for a quick spin on my bike. I made sure to bike on flat terrain and the ride went well! I’m a little poorer now—though it could be worse—but at least now I’ll have a good story to tell at the post-race party next year. Still can’t believe the guy was juggling perfectly good bagels.
Despite last week’s cold snap, the bloom of cherry blossoms along Washington DC’s Tidal Basin is now under way – a peaceful sight that belies this stormy moment in Congress, where new healthcare legislation is being debated and the headlines seem to shift from moment to moment. However, one thing is for sure: any legislation affecting the US healthcare system must consider the impact on employer-sponsored health insurance – the source of coverage for 177 million Americans, 16 times the number enrolled in public exchanges.
That’s why the leadership of MMC companies Mercer and Oliver Wyman created a health policy group to help formulate MMC’s views on ACA repeal-and-replace legislation. Our efforts led to the issue of a policy paper that showcased original Mercer research on changing the tax treatment of employer-sponsored coverage.
Last month, we took this research to the US House of Representatives to meet with policymakers actively working on the newly proposed American Health Care Act, or AHCA. We demonstrated that the excise tax on high-cost plans, currently law under the ACA, is not an effective method of penalizing rich “Cadillac” plans because plan design is only one factor affecting plan cost and often less important than location and employee demographics.
This would also be true of a cap on the employee individual tax exclusion for employer-provided health benefits, a provision included in an early draft of the AHCA and favored by powerful voices such as House Speaker Paul Ryan (R-WI), House Ways and Means Chair Kevin Brady (R-TX) and new HHS head Tom Price. Mercer had also modeled the impact such a cap would have on the effective tax rates of Americans based on their income. The hardest hit, by far, would be lower-paid workers with families. Some staffers faced with this information for the first time were visibly struck.
When the bill was released for mark-up, the cap on the exclusion was not included, and the Cadillac tax was delayed until 2025 (and possibly 2026). But while we were pleased with this outcome, we also knew the bill was a long way from becoming law and the cap could easily resurface.
It was my privilege to meet last week with Senators Rob Portman (R-OH) and Tom Carper (D-DE), both members of the Finance Committee; Senator John Cornyn (R-TX), Majority Whip and Member of the Finance Committee; and Senator Orrin Hatch (R-UT), Chairman of the Finance Committee. I urged them, first and foremost, to preserve the health benefit tax exclusion, and secondly, to liberalize HSA rules. I also discussed the potential impact of proposed cuts to the Medicaid program, and our concern that a surge in uncompensated care would cause providers to shift cost to private group plans – making it harder for employers to continue to provide adequate coverage to their workers.
Our work is far from done. I look forward to returning to Washington as the legislative debate continues – to advance the goal of preserving and enhancing the employer-sponsored healthcare system that is a stable source of good health coverage for approximately half of all Americans.
Join me on LinkedIn to continue the conversation. How will changes in healthcare policy have an impact on your organizations and people?
One possible fix for the public exchanges? Repeal the ACA provision expanding dependent coverage. Allowing young adults up to age 26 to be covered under their parents’ plans has been one of the law’s most popular provisions, especially since it went into effect at a time when many young people were struggling to find full-time work in the wake of the recession. But it also took these same people out of the potential pool of enrollees when the exchanges opened in 2013. While many factors have contributed to premium spikes in exchange coverage in some states, one quoted across the board has been that fewer young people than expected signed up for coverage. Had young adults not been able get coverage through their parents’ plans, it’s possible a portion of them would have signed up for exchange coverage. And having these younger, and generally healthier (i.e., lower risk) individuals in the pool might have helped to keep the premiums down.
Leading up to Thursday’s vote in the House on the AHCA, the GOP’s repeal and replace bill, lowering the dependent eligibility age to 23 was on the list of possible amendments but then withdrawn. As acknowledged in thisPolitico article, repealing the provision would be political suicide for anyone that proposes it; people don’t react well to losing a benefit they’ve gotten used to having. Yet the upsides for removing this provision are, in principle, aligned with GOP repeal and replace goals, namely, removing additional costs imposed through the ACA and helping to stabilize the individual market.
One approach might be to phase out this provision, or grandfather individuals born before a certain date, so that families have time to prepare and plan for alternative coverage for their older children. Of course, this only works if there’s an affordable health care option for these young adults on the exchanges. If the current subsidies are reduced to the levels proposed under the AHCA (an individual under 30 would only receive $2,000 towards health coverage per year regardless of income or location beginning in 2020), then leaving these individuals to the mercy of the individual market may not be wise; it could create a “black hole” of coverage from age 26 perhaps until the age when people are starting their families and see an absolute need for care. So while employers as well as the individual market could benefit from a rollback of this provision, adequate subsidies on the exchanges would need to be in place to help these individuals purchase and maintain continuous coverage.
Before the ACA, many self-employed individuals found it challenging to find a health plan on the individual market that met their needs, let alone to pay for it. Post ACA, the ability to obtain affordable coverage not tied to an employer has givenentrepreneurs in the growing ‘gig’ economy the flexibility to pursue their goals without having to worry about maintaining health coverage. These days may be coming to an end if the new GOP health care bill passes, however. Under theAmerican Health Care Act or AHCA, subsidies are dependent on age, as opposed to income (like under the ACA), and are not adjusted for geography, even though health costs vary widely depending on where you live. This could mean big changes in the amount of assistance an individual would receive under the AHCA compared to under the ACA. As cited in the article, a 40 year-old in San Francisco making $30,000 a year would receive $800 less a year under the new plan, and a 40 year-old living in Santa Cruz County, CA would see a $2,490 less per year -- potentially putting coverage out of reach.
A study published by the McKinsey Global Institute estimates that U.S. has between 54 million and 68 million ‘independent workers’, with some working independently full-time and others using independent/freelance work to supplement their primary income. With the proposed changes under the AHCA, some individuals may try to seek traditional employment for the purpose of healthcare coverage, or they may just choose to go without coverage completely. While critics of ACA subsidies have said they discourage people from seeking employment or advancing their careers since an increase in income would result in a decrease in subsidies, this new plan could have the same discouraging impact on the next generation of entrepreneurs.
Today is the seven-year anniversary of the signing of the ACA, and we spent it with our eyes glued on the House, waiting for a vote to repeal the law. It looks like the vote is delayed, so too soon to call if it’s lucky number seven for the Republicans or the Democrats.
Meanwhile, there’s no question that the ACA has had a big impact on the US healthcare system -- particularly for the relatively small segment of the pre-65 population that doesn’t have access to care through an employer-sponsored plan. Many millions of people have gained insurance because of the law, which was its primary goal.
But the ACA has had an impact on employers, too, and it’s less clear what that has accomplished in that arena. A look at our survey data is a reminder of the hoops we’ve jumped through since the law was passed. Two big ones:
- In 2013, nearly one-third of employers did not offer coverage to all employees working 30+ hours per week. By 2016, virtually all of them had taken steps to make the offer of coverage to their formerly part-time workers, and all employers were tracking and reporting employee hours to demonstrate compliance. At the end of the day, all this administrative effort appears to have resulted in little benefit -- enrollment levels overall barely budged.
- Administrative burden is one thing -- the Cadillac tax is another. We can’t say it enough: the tax is not an effective method of penalizing rich plans because plan design is only one factor affecting plan cost and often less important than location and plan-member demographics. We initially projected that 33% of employers were at risk of being taxed in the first year, a number that would increase every year as benefit cost rose faster than the threshold amounts. Many employers responded by implementing and steering employees into consumer-directed health plans. While such a move might have been a sound strategy in any case, unfortunately about a third of employers have said they have made changes they would not have made in the absence of the tax, such as unbundling medical and dental/vision coverage, raising deductibles and other cost-sharing provisions, and eliminating healthcare FSAs.
Yet all along, employers have continually reaffirmed their commitment to offering health insurance. In 2010, just 6% of large employers said they were likely to terminate coverage within five years. By 2016, that already small number had shrunk to just 2%. In other words, the vast majority of employers really didn’t need a law to get them to offer coverage.
Whenever the vote and whatever the result, we’ll continue working with employers and policymakers on making a better, more efficient healthcare system for all.
In an effort to garner more support for their ACA repeal legislation, House Republican leaders revealed changes to the legislation on Monday night pending the Rules Committee vote before going to the House for their vote. Of greatest interest to employer plan sponsors is the delay in the Cadillac Tax from 2025 to 2026. The bill’s amendment repeals some of the other ACA taxes retroactively to the beginning of 2017 instead of 2018 as originally proposed. Other changes include additional funding to increase tax credits for older Americans and some Medicaid revisions.
In light of the changes, the House Freedom Caucus has indicated they won’t oppose the legislation, but they may still have enough “no” votes to kill the bill. President Trump went to the Hill on Tuesday to help the House Leaders secure support for the bill. In the meantime, the CBO is analyzing the changes and is expected to issue a new CBO score before Thursday’s House vote. The Brookings Institution doesn’t expect a meaningful improvement in the score.
What happens to the ACA has serious implications for employers. In response to the recent introduction of the American Health Care Act, which seeks to repeal much of the ACA and replace it with new policies, we’ve prepared a very brief survey to gauge employer response and ensure your voice is heard.
You can access the survey here. Your response will be kept strictly confidential.
The survey will close Wednesday, March 22. If you provide us with an e-mail address, we’ll send you the results. You’ll also be invited to register for a free webcast about the AHCA which will include a discussion of the survey findings.
The Congressional Budget Office (CBO) estimates that House Republicans' legislation repeal and replace much of the Affordable Care Act (ACA) will reduce federal deficits by $337 billion and increase the number of uninsured by 24 million -- for a total of 52 million uninsured people -- by 2026.
While most of the projected coverage losses are in the individual market and under Medicaid, CBO projects that fewer people -- 2 million in 2020 and 7 million in 2026 – would enroll in employer coverage under the bill as a result of eliminating individual and employer mandate penalties while making tax credits available to a wider range of people (e.g., people with higher incomes). The GOP bill’s tax credits would only be available if an individual does not have an offer of health coverage from their employer or elsewhere. While these changes might cause some employers to offer coverage to fewer employees, CBO said employers may adapt slowly to the legislation given the uncertainties.
The projected coverage losses are heightening concerns by moderate Republicans - particularly in the Senate - about the House bill, while conservatives are demanding changes that could further increase the number of uninsured. Congressional GOP leaders and President Trump are discussing potential revisions to the bill ahead of a House vote that could happen within weeks, and the CBO is expected to issue new projections as the legislation changes.
On Monday the CBO released its much-anticipated score of the American Health Care Act, the Republican legislation to repeal and replace the ACA. The CBO projection shows a loss in healthcare coverage for 24 million Americans over the next decade, accompanied by a reduction in the federal deficit of $337 billion. The state Medicaid programs are taking the biggest hit, with a decrease in funding of $880 billion during the same time period. In the short term, the CBO projects that health insurance premiums in the individual market will increase 15-20% and 14 million fewer Americans will have coverage as soon as next year.
None of this bodes well for employer-sponsored medical plans. At the time the CBO score was released, I was speaking at the Society for Human Resource Management's 2017 Employment Law & Legislative Conference. We asked the employers in the audience to respond to a polling question – “If healthcare reform were to occur this year, what are your concerns?” Overwhelmingly, the top concern was that a rise in the number of uninsured will lead to cost shifting by providers to employer-sponsored plans.
That was the theme of a recent article I co-authored with Terry Stone from Oliver Wyman. We argued that cost-shifting fails to address the underlying causes of cost growth – it may even worsen it. Moreover, increasing the cost burden on employers will simply make it harder for them to provide affordable coverage to the many millions of health consumers – 177 million, to be precise – who receive benefits through work. You can read more about our recommendations from health reform in this report.
This article discusses the tax conundrum Republicans are facing as they try to repeal portions of the ACA. In short, legislation passed through reconciliation cannot increase the deficit beyond the budget window. With the proposed repeal of most of the ACA taxes, Republicans are using the Cadillac Tax to “smooth over the budget math.” The Cadillac Tax is disliked on both sides of the aisle so there’s still hope for a full repeal before the 2025 effective date. In the meantime, employer groups like the Alliance to Fight the 40, American Benefits Council, and ERIC continue to oppose the tax.
Employers recognize the important role of healthy communities in employee well-being. The government plays an important role in creating healthier communities through the support and funding of public health initiatives. That’s why we found The American Health Care Act’s repeal of the Prevention and Public Health Fund concerning. The fund provides money to the CDC to support disease prevention programs. The loss of funding is likely to impact:
- The federal vaccines program which ensures healthcare providers receive the vaccination doses they need and mobilizes responses to disease outbreaks.
- Public health programs aimed at preventing and reducing the risk of heart disease.
- Programs to reduce the risk of healthcare-associated infections. One-hundred percent of the money the CDC uses for this effort comes from this fund established under the ACA.
Prevention and public health funding addresses community health, and communities are where employees live. Well-being is linked to improved productivity, absenteeism, presenteeism and healthcare utilization – all factors that can impact a business's bottom line. For individuals, health and well-being affects both financial security and quality of life.
Just FYI. Since the ACA was enacted, there has been a succession of repeal and replace proposals coming out of Washington, culminating in this week’s House Republican bill. The Kaiser Family Foundation makes it easier to compare and contrast the proposed changes to specific ACA provisions with an interactive tool posted on their website. Click on a provision, for example, “Premium subsidies for individual,” to see how subsidies are currently handled under the ACA and how that changes in the proposed American Health Care Act. Take it a click further to see this same provision in any of five other proposals, including HHS leader Tom Price’s “Empower Patients First” Act from 2015. Given predictions that the AHCA will have a tough time getting to the President’s desk as currently written, you may want to bookmark this page.
Last week’s flurry of activity in DC has turned into a full blizzard following the release of the Republican bills to repeal and replace the ACA. It’s proving challenging to see through this political storm, so I thought I’d share what we know so far.
Two bills collectively named The American Health Care Act included some surprises for employers -- the biggest of those being the delay, not repeal, of the Cadillac Tax from 2020 to 2025. The cap on the employee tax exclusion included in a “leaked” version of the bill was not included.
The proposed legislation repeals much of the ACA by 2020. In addition to the Cadillac tax, key provisions of interest to employers are:
- Employer and individual mandate penalties eliminated for 2016 and later years. Individuals or small groups with coverage gaps would pay a 30% premium surcharge to their insurers beginning as earlier as 2018.
- Age-based tax credits starting in 2020. Credits begin to phase out for those making more than $75,000 per year ($150,000 joint filers). Credits won’t be available to those with access to employer coverage, but can be used for unsubsidized COBRA coverage.
- Most, but not all, ACA taxes, assessments, and fees eliminated
- Several changes would affect account-based plans, including increasing HSA limits to the maximum deductible/out-of-pocket limits for HDHPs ($6,550 single/$13,100 family for 2018).
- Medicaid expansion eliminated after 2019
The bill leaves intact most of the ACA’s plan design mandates, such as the ban on lifetime and annual dollar limits, plan eligibility to age 26, the ban on insurers’ charging more or denying coverage based on pre-existing conditions, caps on out-of-pocket expenditures, and essential benefit provisions.
The employer shared responsibility reporting can’t be repealed through the reconciliation process and continues for now. Employers can expect new W-2 reporting in 2020 which will help the IRS administer the restructured premium tax credits for individuals.
The Republican leaders’ goal is to pass the bill out of the house the week of March 20 and – less feasibly -- out of the Senate by April 7. But the timeline, and the language of the bills, could change. The Congressional Budget Office hasn’t yet scored the bill to determine any future impact on the deficit. The bills have also met stiff opposition from some Congressional Republicans, governors, medical groups and the AARP. Despite the opposition, Republicans pushed legislation through the House Ways and Means Committee in the wee hours of Thursday morning and the House Energy and Commerce Committee Thursday afternoon. Meanwhile, Speaker Paul Ryan is giving the hard sell and President Trump is negotiating.