Health Care Reform Articles - October 29, 2016

Donald Trump Says ‘Obamacare Is Just Blowing Up,’ Citing Rate Increases

by Patrick Healy and Abby Goodnough - NYT

Donald J. Trump, desperate for a winning political issue in the final two weeks of the presidential race, mounted a new offensive Tuesday, tying Hillary Clinton to sharp premium increases that will hit some Americans covered under the Affordable Care Act, the signature program of her closest ally, President Obama.

“It’s over for Obamacare,” Mr. Trump declared on Monday night at a rally in Tampa, Fla.

On Tuesday morning in Miami, he proclaimed that “this election is going to be about Obamacare.” And he said, “Obamacare is just blowing up” — a message his advisers said he would hammer at two rallies and in interviews through the day.

The Department of Health and Human Services reported Monday that premiums for midlevel health plans on the health law’s federal insurance exchange would rise by an average of 25 percent, but in some cities and states, premium increases will be considerably higher. Mr. Trump asserted that rates would go up “60, 70, 80 percent” — apparently referring to exorbitant jumps in select markets.

Those increases, however, will be cushioned for most people on the exchanges by government subsidies that will rise with the premiums.

The higher premiums pose an 11th-hour test for both Mr. Trump and Mrs. Clinton in a campaign that, since starting in the spring of 2015, has not revolved around policy issues to any great extent. Mr. Trump has repeatedly struggled to prosecute a political case against Mrs. Clinton in a sustained way, most notably failing to focus this summer on the scathing Federal Bureau of Investigation report on her State Department email.

Whether he can make Mrs. Clinton pay a political price for supporting the Affordable Care Act, and more broadly for championing Mr. Obama’s presidency, will reveal his ability to turn a policy issue into a political weapon at this late stage of the race.

For Mrs. Clinton, the problems with the Affordable Care Act could force a reckoning that she had hoped to avoid. As a candidate, she has linked herself more closely to Mr. Obama than any nominee has done with a sitting president in modern times, defending his economic record and praising him for pushing the health law through a sharply divided Congress. Republicans had hoped that their nominee would force Mrs. Clinton to own the health care law, politically speaking, or at least be forced to defend it, but she has mostly skated past its flaws in cost and coverage.

In fact, parts of the health law are politically popular. The United States has the lowest percentage of uninsured citizens in its history. Because of the Affordable Care Act, insurers cannot deny coverage for a pre-existing medical condition and cannot cap lifetime coverage. Children can remain on their parents’ policies until age 26.

Mrs. Clinton wants to improve the law, she says, by increasing the subsidies that help cover premium amounts and by allowing more Americans to get government help. She also wants to add a government-run insurance option, which she says would increase competition and choice in the marketplaces created under the health law. And she has proposed allowing people younger than 65 to buy in to Medicare.

A Clinton campaign aide, Jennifer Palmieri, talking to reporters aboard the Clinton campaign plane, did not shy from the topic.

“The choice in the election is: Are you going to repeal the Affordable Care Act, kick 20 million people off of insurance, go back to putting health insurers in control of whether or not pre-existing conditions are covered?” she said. “Or are you going to improve upon it?”

Mr. Trump says he wants to repeal the health law and take more of a free-market approach. He would reduce federal regulation and coverage requirements so insurance would cost — and cover — less. He would not require Americans to have health insurance, as the Affordable Care Act does.

“By failing to denounce it, Hillary Clinton owns it,” Kellyanne Conway, Mr. Trump’s campaign manager, said of the health care act in an interview on Tuesday. “She is in an impossible spot: extol and expand the features of a program that millions of Americans see as having reduced quality, choice and access, or lurch leftward to embrace a Senator Sanders-type single-payer plan in the hopes of embracing Sanders voters.”

That political attack will not necessarily resonate.

While the problems in the individual insurance market are real, they affect only a small fraction of Americans. In 2015, 49 percent of Americans got health insurance through a job, 34 percent got it through Medicare or Medicaid, and 7 percent got it through the individual market, according to the Kaiser Family Foundation, a nonpartisan research group. Of the 10.5 million Americans who get health insurance through the Affordable Care Act marketplaces, about 85 percent receive income-based subsidies to defray the cost.

That leaves seven million people buying insurance on their own without subsidies, either because their income is too high or they are not aware of the option — a significant number but not a huge voting base.

Still, some Republicans said on Tuesday that the premium rises were an unexpected political gift. “It needs to be the principal message — you can’t dilute the attack by all the other stuff Trump talks about everyday,” said Ed Rollins, a veteran Republican strategist. “The hour is late and the time is short.”

Mr. Trump has already stumbled in that effort. Speaking to scores of his own workers at his Miami golf course Tuesday, he said that “all of my employees are having a tremendous problem with Obamacare” — suggesting that his company doesn’t provide health insurance or else misunderstanding the health law. Moments later, he said of his employees, “They’re not worried about their health care because we take great care of people.”

After finishing, Mr. Trump left it to the resort’s general manager to talk to reporters about the confusion and confirm that only a few employees may be insured through the Affordable Care Act.

Steve Elmendorf, a Democratic strategist and lobbyist, argued that Mr. Obama’s job approval rating was strong enough – 54 percent, according to the latest Gallup tracking poll data – that Mrs. Clinton did not need to rethink her dual strategy of championing his leadership and proposing changes to the health law.

“Trump has shown no ability to ride any substantive issue with any consistency, and Obama’s numbers are going up, not down,” Mr. Elmendorf said.

Elaine C. Kamarck, director of the Center for Effective Public Management at the Brookings Institution, said that Mrs. Clinton stood a chance of brokering a deal to fix the health care program if elected president, and that she was skeptical Mr. Trump could get much traction on the issue.

Ms. Kamarck, a domestic policy adviser in Mr. Clinton’s White House, said the problems with the health law had been apparent for some time. Neither the law’s subsidies nor its penalties for those who refuse to buy insurance have persuaded enough young, healthy people to go into the insurance marketplaces it created. That has left a pool of customers in some parts of the country that is too sick and too small. Because so many marketplace customers have needed expensive medical care, some insurers have spent more on claims than they have earned in premiums. And the federal government’s strategies for protecting insurance companies from large losses have not been as effective as hoped.

While benchmark premiums are going up an average of 25 percent, rates are set to increase much more in some places. For a 27-year-old in Phoenix, the average monthly premium for a benchmark plan will rise next year by 145 percent, to $417 from $170, according to the Department of Health and Human Services. But subsidy amounts will keep pace with rate increases, so people who qualify for assistance may not face nearly that much of a price rise.

Another reason for the volatility in the marketplaces is political. The Obama administration, blocked by Republican opponents in Congress, has paid out only a fraction of the $2.5 billion it owes insurers under a provision of the health law that was supposed to protect them from unexpectedly large losses during their first few years in the marketplaces. Several insurers cited the minimal payments as one of the main reasons they raised rates or abandoned the marketplaces.

On Tuesday, Republicans zeroed in on the Phoenix rate increase to press their case in the new battleground of Arizona.

“I can’t imagine Arizona voting for Democrats,” said Hugh Hewitt, a conservative talk show host, said during an interview with Mr. Trump’s running mate, Gov. Mike Pence of Indiana.

“Yeah, it really is incredible,” Mr. Pence said. “Isn’t it amazing that you had Barack Obama a week ago literally celebrating the launch of Obamacare, and then we find out from his own H.H.S. in the last 24 hours that premiums are going to go up 25 percent across the board?”

http://www.nytimes.com/2016/10/26/us/politics/hillary-clinton-donald-trump-affordable-care-act.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

Affordable Care Act: imploding and beyond repair

By John Geyman

Our experience with the first six and a half years of the Affordable Care Act already tells us whether it will work.

Despite the law’s goals of containing costs and making health care affordable, it’s proven to be too expensive to be sustainable, overly complex and bureaucratic, and a gift to the private health insurance industry and other corporate stakeholders in the medical-industrial complex.

To be fair, the ACA has brought some kind of coverage to about 20 million Americans, in good part through the expansion of Medicaid in 32 states (including D.C.) and the subsidized exchanges. But its negative results far outweigh its gains, as shown by these data points:

• We still have 29 million uninsured Americans (compared to 48 million at the start), plus tens of millions underinsured.

• Insurance plan deductibles and co-pays have sharply increased, deterring people from seeking necessary care. A brand new market is opening up, “gap insurance,” to cover what is not covered in today’s market – insurance for those who have insurance.

• Narrowed networks under the ACA have forced many millions of patients to change their desired physicians and hospitals.

• The ACA has accelerated a national trend of corporate consolidation of insurers and hospitals, with growing market and political power.

• The ACA’s regulation of health insurers has been lax, leaving insurers many ways to game the system (e.g. by overstating the health risks of their enrollees) in their self-interest.

• Expanding hospital systems, facing less competition, are free to charge much higher prices, by up 40 percent to 50 percent.

• Pharmaceutical drug prices have been sharply increasing, often shockingly so. A one-year course of cancer drugs often exceeds $200,000, forcing many patients to choose between bankruptcy and treatment.

• The costs of insurance and health care now exceed $25,000 for a family of four covered by an average employer-sponsored PPO plan.

• Overpayments to privatized Medicaid plans are endemic in more than 30 states, often involving unnecessary and duplicative payments.

• The ACA’s accountable care organizations have failed to contain costs and improve quality of care.

• Most of the nonprofit co-ops established under the ACA have failed.

• Sign-ups for ACA coverage on the exchanges have fallen far short of expectations – just 11 million this year compared to 24 million forecasted, with many people unable to afford even subsidized coverage.

• Premium increases of 50 percent or more for 2017 are being reported in a number of states, including Minnesota, while many insurers are exiting their markets.

Given this dysfunctional reality under the ACA, it’s remarkable that neither major political party has a plan to truly fix the situation.

If elected, Hillary Clinton proposes to bring on the public option (which can’t possibly succeed against the overwhelming market share of a subsidized insurance industry), increase subsidies, add new tax credits for deductibles and co-payments, and lower the age for Medicare eligibility to age 55. These tweaks would not reverse the huge private bureaucracy bent on increasing profits in markets subsidized by taxpayers.

Given the opportunity, Republicans would repeal the ACA with no credible plan for replacement – relying on such long-discredited approaches as consumer-directed health care, health savings accounts, high risk pools, selling insurance across state lines, and giving states more leeway with block grants.

We should have learned by now that segmented risk pools designed for profits by private health insurers will never provide universal access to affordable health care in this country.

Virtually all advanced countries around the world learned this long ago with one or another form of universal health insurance.

Multiple studies have demonstrated that in the U.S. we could save about $500 billion a year by enacting a nonprofit single-payer national health program that streamlines administration. Those savings would be sufficient to guarantee everyone high-quality care, with no cost sharing, on a sustainable basis. The system could also negotiate lower drug prices.

Studies over the past two decades have shown 3 of 5 Americans supporting an improved version of Medicare for all. Support for single payer is also growing among doctors and other health care professionals. Yet the Expanded and Improved Medicare for All Act, H.R. 676 (Rep. John Conyers’ bill), with 62 co-sponsors, sits neglected in a House committee.

Until we recognize that the largest possible risk pool is required to implement universal coverage in the public interest, and that the private health insurance industry is on a death march, we cannot make necessary health care available to all Americans.

Can’t we get to real health care reform on a nonpartisan, win-win basis?

John Geyman, M.D., is professor emeritus of family medicine at the University of Washington, Seattle, and author of “The Human Face of ObamaCare: Promises vs. Reality and What Comes Next.” He is past president of Physicians for a National Health Program.

http://thehill.com/blogs/congress-blog/healthcare/301988-affordable-care-act-imploding-and-beyond-repair

Obamacare Hits a Pothole

by Paul Krugman - NYT

For advocates of health reform, the story of the Affordable Care Act, a.k.a. Obamacare, has been a wild roller-coaster ride.

First there was the legislative drama, with reform seemingly on the edge of collapse right up to the moment of passage. Then there was the initial mess with the website — followed by incredibly good news on enrollment and costs. Now reform has hit a pothole: After several years of coming in far below predictions, premiums on covered plans have shot up by more than 20 percent.

So how bad is the picture?

The people who have been claiming all along that reform couldn’t work, and have been wrong every step of the way, are, of course, claiming vindication. But they’re wrong again. The bad news is real. But so are reform’s accomplishments, which won’t go away even if nothing is done to fix the problems now appearing. And technically, if not politically, those problems are quite easy to fix.

Health reform had two big goals: to cover the uninsured and to rein in the overall growth of health care costs — to “bend the curve,” in the jargon of health policy wonks. Sure enough, the fraction of Americans without health insurance has declined to its lowest level in history, while health cost growth has plunged: Since Obamacare passed Congress, private insurance costs have risen less than half as fast as they did in the previous decade, and Medicare costs have risen less than a fifth as fast.

But if health costs are looking good, what’s with the spike in premiums? It only applies to one piece of the health care system — the “exchanges,” the insurance markets Obamacare established for people who aren’t covered either by their employers or by government programs, mainly Medicare and Medicaid.

The way the exchanges were supposed to work was that both healthy and less-healthy people would sign up, providing insurers with a good mix of risks that let them offer reasonably priced policies. Broad participation was supposed to happen because the law requires everyone to have insurance — the “mandate” — or face a penalty. Buying insurance was supposed to remain affordable because the law provides subsidies for middle- and lower-income families, ensuring that health costs don’t become too large a share of income.

Many insurers entered the market in the belief that the system would work as advertised. After all, conceptually similar systems work in other countries, like Switzerland; Massachusetts has had a system along the same lines since 2006 (which is why some of us call it ObamaRomneycare); and even now it’s working O.K. in California, which has managed the program well.

In many states, however, not enough healthy people signed up — and now insurers are either pulling out or hiking their premiums to reflect the not-so-good risk pool. Since premiums have until now been well below projections, this only brings them back up to expected levels. But it’s clearly not good news.

How many people are hurt by these premium hikes? Not as many as you may think.

If you are covered by your employer, Medicare or Medicaid, this isn’t about you. Even if you buy a policy on the exchanges, you’re protected if your income is low enough — $97,200 for a family of four — to make you eligible for subsidies. So we’re talking about a fraction of a fraction of the population (which admittedly may still be several million people).

Oh, and bear in mind that many of those affected by the rate hikes have pre-existing conditions, which means that without Obamacare they wouldn’t be insured at all.

Even if the direct effects of this year’s hike aren’t that big, could it mean that Obamacare is about to unravel? No. Most people on the exchanges receive subsidies, which means that the rate hikes won’t induce them to drop out; people talking about a “death spiral” haven’t done their homework.

So the news is bad, but its badness is limited. Still, the architects of Obamacare had hoped to create a system that would eventually cover almost everyone.

Can the current problems be fixed?

As a technical matter, the answer is clearly yes. Strengthen the mandate; expand the subsidies; close the loopholes that have allowed some insurers to bypass the exchanges; take a more active role in setting standards and reaching out to families to make them aware of their options. Some states are doing much better than others, and it wouldn’t take a lot of money to expand best practices to the nation as a whole.

The trouble is that Congress would have to vote to spend that money. So unless Democrats manage to take the House (unlikely) or Republicans are willing to cooperate in the public interest (even more unlikely), the easy fix that’s clearly in sight will have to wait for a while.

So, is the latest health care news disappointing? Yes. Is it catastrophic? Not at all.

http://www.nytimes.com/2016/10/28/opinion/obamacare-hits-a-pothole.html?&moduleDetail=section-news-2&action=click&contentCollection=Opinion&region=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&pgtype=article

Editor's Note: Paul Krugman must want a cabinet-level position in the Hillary administration pretty badly!

-SPC

Get the Insurance Companies the Hell Out' of Healthcare System

Premium spikes for Obamacare plans are just latest example of backward for-profit system

by

Jon Queally - Common Dreams

Right-wingers like Charles Krauthammer don't "think anybody should buy it"—and too many Democrats actually don't want to talk about it—but that doesn't mean advocates for a single-payer or 'Medicare for All' healthcare system aren't responding to news about rising insurance premiums for the Affordable Care Act (ACA) with renewed demands.

Just weeks away from national elections, the U.S. Department of Health and Human Services (HHS) made financial and political news late Monday by announcing the average premiums for plans under the ACA (aka Obamacare) will rise significantly for many consumers in 2017

And while Republicans predictably seized on the development as an easy opportunity to again use Obamacare as an electoral cudgel, backers of the legislation—including many Democrats who voted for it—were left trying to defend a healthcare system that has enriched (and emboldened) the private health industry since its passage in 2010. Though progressives have been able to champion specific positive impacts of the law—including Medicaid expansion, the use of pre-existing conditions to prohibit coverage, and expanding the number of insured people—there remain significant shortcomings that critics say cannot be ignored. 

According to Jean Ross, co-president of the National Nurses United, which has longed organized for a single-payer system, the premium increases announced Monday are "outrageous" and just the most recent "sign of a broken, dysfunctional healthcare system."

In its report on Monday, HHS explained that for consumers who have Obamacare mid-level plans purchased on the federal exchange, premiums will increase an average of 25 percent next year. While some states will see larger increases, others will be less than that. And while the Obama administration pointed out that many people who use these plans receive government subsidies to pay for them, the Associated Press reports how an "estimated 5 million to 7 million people are either not eligible for the income-based assistance, or they buy individual policies outside of the health law’s markets, where the subsidies are not available."

Additionally, as some major insurers have withdrawn from the federal exchange, as well as certain state-level exchanges, AP notes that about 1 in 5 consumers will only have plans from a single insurer to pick from during the 3-month enrollment period which begins on November 1.

Despite those numbers, HHS Secretary Sylvia Burwell said that 72 percent of those enrolled in an Obamacare plan should be able to find a plan with a premium of less than $75 per month. "Our nation has made historic progress under the ACA," Burwell said in a statement, "and now we want to build on that progress to further improve affordability, access, and quality."

But while the White House and DHHS tried to alleviate consumer concerns, critics like Ross remain unconvinced that a system so fundamentally flawed can be salvaged with incremental reforms.

"The excuses being offered by the Obama administration are far from reassuring: give more public money to profiteering insurance corporations, or switch to a cheaper plan with much higher out-of-pocket costs and more restrictions on access to the doctors and hospitals of your choice. Nurses know there is only one permanent fix—stepping up work for enactment of a humane health care system based on patient need not private profits that guarantees universal health care for all through an expanded and updated Medicare for All—the same approach that works in virtually every other country on earth."

Earlier this year, more than 2,000 doctors put forth a plan arguing the political moment was once again right to put single payer back on the table as a serious and necessary policy proposal.

"Our nation is at a crossroads," said Dr. Adam Gaffney, a Boston-based pulmonary disease and critical care specialist who co-chaired the working group that produced the proposal. "Despite the passage of the Affordable Care Act six years ago, 30 million Americans remain uninsured, an even greater number are underinsured, financial barriers to care like co-pays and deductibles are rising, bureaucracy is growing, provider networks are narrowing, and medical costs are continuing to climb."

And during his radio show on Wednesday, journalist and commentator Bill Press said the latest Obamacare news only proves that "Bernie [Sanders] was right" when he said "let's just go all the with single-payer and get the insurance companies the hell out of the business."

He continued, "This is one place where Obama really did let progressives down, because there was such a hunger for universal healthcare in this country—and this was the moment when we could do it. Democrats were in charge of the congress. President Obama had every opportunity. This was the opportunity to get the insurance companies out of the business, to free people from being basically held hostage by [them], and come up with a plan like western Europe has and like Canada has, where every American gets healthcare coverage as a birthright."

But that's not what happened. "No, no, no," Press lamented. "We didn't go there. We went into this mess called Obamacare."

http://www.commondreams.org/news/2016/10/25/get-insurance-companies-hell-out-healthcare-system

A Quick Guide to Rising Obamacare Rates

by Reed Abelson and Margot Sanger-Katz - NYT

The Obama administration released the prices for many Obamacare health plans on Monday, and they showed big increases in many parts of the country. Obamacare customers will begin shopping for new plans next week, just a few days before the presidential election.

The news fanned political interest in the health law — both presidential campaigns were talking about the topic on Tuesday — and whether its structure of private insurance markets is sustainable. The health law will almost certainly stay on the minds of politicians in the next administration: Both Hillary Clinton and Donald J. Trump have proposed substantial changes to it.

If you’re just catching up now, here’s our quick guide to what’s happening and who will be affected. If you’re in a hurry, you can just read the sentences in bold.

Obamacare rates are going way up. The latest estimate from the federal government is that the average midlevel Obamacare plan, the most popular choice, will cost about 22 percent more in 2017 than it did in 2016. This is based on data from 39 states where people sign up through the HealthCare.gov website and some preliminary data from four other states and the District of Columbia.

There is big variation nationwide. Customers in Phoenix are looking at a premium increase of 145 percent, while customers in Providence, R.I., are looking at a 14 percent decrease, according to a Kaiser Family Foundation analysis.

This is not a huge surprise. There have been signs for months that insurance rates for people who buy individual policies would rise more next year than they have in previous years. There are a number of reasons, including the fact that some of the programs meant to keep rates lower are ending at the end of this year.

Many insurers also mispriced their plans in the early years of the law and have either left the market or have had to raise their prices sharply to cover the cost of providing coverage. The insurers say they need higher rates to pay for the expensive medical care that so many people are receiving under the law.

We didn’t know the exact amount of the increases until now. But Charles Gaba, a blogger who has scrutinized state insurer filings, has been forecasting increases in this range for some time.

The 2017 premiums are actually a pretty good match for what the Congressional Budget Office forecast back before the Affordable Care Act passed in 2009. The big question now is whether this is a one-time jump in the rates — or the start of ugly increases from now on.

These increases really matter only for those who buy their own insurance. Most people are unaffected by the rate increases because they get their insurance through an employer or are covered through government programs like Medicare, Medicaid or the Department of Veterans Affairs.

Only a small fraction of Americans who have insurance buy individual policies. There are about 10 million people in the Obamacare markets and around an additional seven million who buy health plans outside the marketplace, according to Obama administration estimates. The published rate increases apply only to people who shop in the markets, but premiums are expected to go up sharply for the other plans as well.

If you get a subsidy, and you’re willing to switch plans, you won’t have to pay these big increases. More than 80 percent of Obamacare customers get subsidies that help them pay the cost of their premiums. Those people do not pay the full cost of insurance out of their pockets, and they will not feel the full brunt of these increases, as long as there is a less expensive plan available in their market and they are willing to switch.

People who don’t get subsidies will be the ones hardest hit by the increases.

Customers may have to switch plans to save money, and switching health plans can be a big deal. Obamacare plans tend to cover a narrow group of doctors and hospitals, so people who change their plans may also have to find new health care providers. For healthy people, that may not matter, and they may just want to find the cheapest policy. But patients with complex health needs may have a hard time abandoning a hospital or doctor and starting over with new ones.

That means that the sickest patients are most likely to be squeezed. They’ll either have to suffer the inconvenience of switching all their doctors and records around, or they’ll have to stomach the biggest increases.

Despite the burdens for these people, annual switching is a feature, not a bug, of Obamacare. The law relies on market competition to keep premiums as low as possible. If customers aren’t willing to change into the cheapest plans, the insurance companies won’t have any incentive to compete on price.

If you get insurance through work, you don’t have to worry too much about this news. The health law is much bigger than just the Obamacare exchanges, and many of the new rules offer protections against having coverage that is too skimpy. Your health plan must cover basic services, like drugs and hospitalization; basic preventive services provided by your doctor, like a checkup, a flu shot or a mammogram, can be free.

But while you may feel as if you’re paying more for your medical care, premiums for employer-based insurance have been increasing at historically low rates. Premiums for the average single person in the employer market are the same this year as they were in 2015, according to a large survey of employers from the Kaiser Family Foundation; prices for most family plans are rising by 3 percent.

What has probably changed is the size of your deductible, which has been going up steadily. Employers have been shifting costs to their workers, a trend that began long before Obamacare went into effect.

Of course, federal tax dollars pay for the subsidies for low-income people who buy insurance in Obamacare markets — about $32 billion this year, according to the Congressional Budget Office. If premiums go up by more than 20 percent every year, that will put pressure on the federal budget.

People buying their own insurance should shop around for the best deal.Average numbers aren’t that useful to a person buying insurance in a particular place. If you already have Obamacare insurance or are buying it for the first time, you need to go to your state exchange website and look at the choices available to you. If you are eligible for a subsidy and willing to switch plans, your costs might actually go down.

If you’re not eligible for a subsidy and live in one of the places with big price spikes, finding affordable coverage may be more of a struggle. Wherever you are, if you’re on a budget, it pays to look at all the options and see whether there’s a plan that’s similar to yours and has a better price.

Even if you don’t want to shop, you may have to. Several large insurance carriers, like UnitedHealth Group and Aetna, have decided to exit many of the places where they had been offering policies.

Some markets are not functioning well. Because what is happening varies around the country, it’s hard to generalize about whether Obamacare is “working” everywhere. But the combination of insurer exits and sharp price increases is a sign that the markets are in trouble in at least a few parts of the country. There are many places where customers have only one insurer offering plans and where prices have risen sharply. That’s a bad sign for a system built around choice and market competition.

Fixing what ails the markets is complicated. There are a number of policy proposals out there to help stabilize the Obamacare marketplaces. But experts have not coalesced around one simple fix that by itself can solve the problems. Some of the suggested changes involve complex regulatory changes, but most are legislative. The ideas include increasing penalties for remaining uninsured so that more healthy people will join the insurance pool, and extending safety-net payments for insurers who end up with very sick, very expensive patients.

As for the candidates, Mrs. Clinton has said that she’d like to introduce the public option, a government-run insurer, in markets with limited competition. She has also discussed an option for middle-aged Americans to buy Medicare instead of marketplace coverage if they want it. She wants to expand subsidies so that more middle-income people will have help buying insurance.

Mr. Trump says he wants to repeal the Affordable Care Act, which would mean eliminating the new markets altogether. Rather than adjusting the markets, he proposes starting over with a new system for buying and selling health insurance.

http://www.nytimes.com/2016/10/26/upshot/rising-obamacare-rates-what-you-need-to-know.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0

The U.S. Is Standing in the Way of Cheaper Drugs for the Poor

by Jason Cone and Raymond C. Offenheiser - NYT

Every few months, a drug company gets caught cranking up prices. Most recently, Mylan, the maker of EpiPen, took its turn in the hot seat for raising the price of a lifesaving allergy treatment by 500 percent. Congress was rightly enraged and opened yet another inquiry into pharmaceutical price gouging. Mylan offered discount coupons.

The story will soon fade from the headlines — until the next pricing scandal.

In the United States, companies have raised prices on many drugs over the past five years, mostly with little public notice or scandal. Pfizer alone raised the prices of more than 100 drugs in one year. Drug prices have seen double-digit inflation over the past three years, at a time of relatively low inflation in the rest of the economy. Recent research suggests that cancer patients may be delaying use of lifesaving drugs, while there are reports that prisoners are rationed access to hepatitis C treatments — all because of high prices.

But this problem is also international. In poorer countries across the world where our organizations work, millions of people are priced out of medicines that could save lives and relieve suffering. For example, a recent World Health Organization study found that in some 30 countries, hepatitis C medicines were unaffordable for much of the population.

Pharmaceutical companies simply charge whatever they want — or can. They have big budgets to counter image problems from bad press and congressional hearings. And while they claim that high prices are necessary to develop new drugs, it’s just not true. Public funding and subsidies pay for much of today’s pharmaceutical innovation.

Many world leaders recognize that high drug prices are a public-health crisis. Earlier this year, Ban Ki-moon, the secretary general of the United Nations, commissioned a panel of industry, government, academic and civil society experts, including Oxfam International’s executive director, to recommend ways to bring drug prices down to affordable levels and to improve research and development of new medicines in order to fulfill the human right to health.

The panel’s report, released last month, found that today’s system is failing. Pharmaceutical monopolies reap huge profits from high prices, while medicines are unaffordable for too many people. The report called for more transparency and competition in the drug industry and for preserving and implementing existing policies that help reduce prices.

Shamefully, the American government sought to obstruct and oppose the panel, even denying the premise that high drug prices undermine public health.

The Obama administration’s response to the report’s release called the panel’s work “deeply flawed” and accused it of recommending “divisive policies,” which it warned ominously “could have significant unintended negative consequences.” In other words, if we want new medicines and innovations, we must continue to support a system in which the pharmaceutical industry has unlimited power to set prices. Considering alternative pathways is apparently off limits.

These scare tactics not only contradict the United States’ stated global and domestic health priorities, they are also an offense to people unable to afford critical treatment. Worse yet, the American government actively exports this approach to other countries through trade agreements like the Trans-Pacific Partnership, which, if allowed to take effect, will lock in and extend global monopoly protections and high medicine prices for years to come.

This can’t be allowed to happen. High prices and monopolies are not delivering innovation that responds to people’s needs. In fact, many public health issues are being neglected by the pharmaceutical industry because the market for the needed medicines is not sufficiently profitable.

A clear example is the emergence of drug-resistant bacteria, which turn once-treatable infections deadly. Drug-resistant infections already kill 23,000 people each year in the United States and 700,000 people globally. Yet it has been more than 30 years since a new class of antibiotics has been introduced, and the pipeline for critically needed new antibiotics is nearly dry.

There are alternative means to stimulate innovation that do not rely on monopolies and high prices. Grants, prizes and other research incentives could go a long way. The Drugs for Neglected Diseases initiative, a public-private partnership that Doctors Without Borders helped to found, was able to develop therapies to treat malaria, sleeping sickness, kala azar and Chagas’ disease — illnesses long ignored by the pharmaceutical industry.

These approaches, which do not depend entirely on the pharmaceutical industry alone to fund research, show that it is possible to separate the cost of developing drugs from their final product price, ensuring both innovation and affordability.

Yet to really transform how drugs are developed, governments must lead the charge. There are hopeful signs this might happen. In September, world leaders agreed to address antibiotic resistance in part, by committing to develop new drugs through such new research and development models.

The United Nations panel recommendations, which the Obama administration has tried to attack and discredit, are precisely designed to open new paths to medical innovation that benefit us all. Access to existing and new medicines and treatments should not depend on how much money you have, where you were born or whom you know.

The United States government, especially the next president, must stop defending industry profits and work to reform how we pay for medical research to ensure that all patients’ needs are addressed. High prices of medicines are not inevitable; they are a choice the American government has made. Many lives and livelihoods hang in the balance until that choice changes.

http://www.nytimes.com/2016/10/28/opinion/the-us-is-standing-in-the-way-of-cheaper-drugs-for-the-poor.html?emc=edit_tnt_20161027&nlid=1311158&tntemail0=y

THE NEW OBAMACARE ECONOMY

By E. Tammy Kim

 , JULY 21, 2016

The employees of Hope Haven, a nonprofit organization in Burlington, Iowa, provide services to some five hundred people with intellectual and physical disabilities, often in their clients’ homes. Depending on the day, they can be called upon to work as companions, cleaners, readers, personal shoppers, cooks, or bathers. “We have situations where we support people twenty-four hours a day,” Bob Bartles, Hope Haven’s executive director, told me. His staff members perform intimate labors of compassion, yet, as low-wage workers, they, too, are a vulnerable class. “Our entry wage is $11.25 per hour,” Bartles said. “We’re about ninety-per-cent funded by the government. Most of that is Medicaid, and Medicaid doesn’t set rates that allow us to pay much more.”

Bartles has also struggled to offer a decent health-care plan to his workers, in compliance with the Affordable Care Act’s employer mandate. The best he could find, given Hope Haven’s financial constraints, came with co-pays and a high deductible, plus extra fees for vision, dental, and family coverage. Even then, it cost the organization nearly eight thousand dollars per person per year. So Bartles took note in 2014, when Iowa joined a slim majority of states that expanded Medicaid, under the A.C.A. Suddenly, Medicaid was available to a larger segment of the working poor—those with incomes up to a hundred and thirty-eight per cent of the federal poverty level, or about thirty-three thousand dollars for a family of four.

Around the same time, Bartles heard about BeneStream, a company founded in 2011, in New York City, that specializes in transferring eligible employees onto government health insurance. For a fee, BeneStream would screen interested staff members, analyzing their household earnings, assets, and family composition. Workers who qualified for Medicaid would have no co-pays, no premiums, and full coverage for the entire family—an option far superior to what Hope Haven could offer. The nonprofit, for its part, would save tens of thousands of dollars, freeing up the budget for new hires. Since Hope Haven signed up with BeneStream a few years ago, Bartles said, his staff has increased by fifty per cent, while the organization’s health-care costs have remained steady. “The agency wins. The employee wins. No one loses.”

BeneStream was founded by Benjamin Geyerhahn, a former health-care consultant. After the Affordable Care Act was enacted, in 2010, he glimpsed a startup opportunity in Medicaid expansion, which at the time was mandatory for every state. (A 2012 Supreme Court decision made it optional.) Ideally, low-income people would apply for Medicaid on their own, but the process is complicated, involving tedious paperwork, pay stubs for the entire household, and in-person renewals—a challenge for low-income families who often face irregular working hours and do not have paid leave. “The people we find who are most in need don’t know they’re entitled to these benefits,” Geyerhahn said. Those who qualify are concentrated in low-wage sectors, such as retail, hospitality, food manufacturing, and home-health and long-term care, and are often among the forty-three million Americans burdened with medical debt.

A BeneStream representative told me that the company has helped nearly nine thousand people obtain government health insurance in the thirty-one states, plus Washington, D.C., now availing themselves of Medicaid expansion. It expects to earn three million dollars in revenue next year, and intends to grow by doing business with large unions that are eager to reduce costs and improve their members’ coverage. Darwin Camacho, a thirty-one-year-old garage attendant and Teamsters Local 272 member from New York, told me that he switched to Medicaid this spring with BeneStream’s help. Camacho, who is married and has a three-year-old son, earns eleven dollars per hour. He had long been on the health plan offered by his union, but, he told me, there were too many co-payments. “Everybody is struggling in this country at the moment,” he said. “Only rich people can feel they are very fine.”

Camacho’s comments speak to BeneStream’s peculiar position in the ideological battle over public health care. It is a for-profit company whose business model shifts costs onto taxpayers. But, by enlarging the population enrolled in government plans, it highlights the inadequacy of private-sector insurance. Geyerhahn markets BeneStream as a social enterprise that advocates for employers, employees, and Medicaid alike. Employers, he said, “ought not to have to bear the cost of health insurance.” This moderate view has helped BeneStream draw support from both venture capitalists and philanthropists. The Ford Foundation was an early funder, and Andy Stern, a former president of the two-million-member Service Employees International Union (S.E.I.U.), sits on the company’s advisory board.

BeneStream is also part of an emergent “Obamacare economy.” Larry Levitt, a senior vice-president at the Kaiser Family Foundation, told me that health-care-software and consulting firms such as GetInsured, Manatt Health Solutions, and McKinsey are doing brisk business advising employers on how to take optimal advantage of the A.C.A. marketplace and insurance subsidies. Like these companies, BeneStream and its rival Med Enroll, which focus on the Medicaid-expansion provision, are profit-driven. But, should they succeed in moving tens of thousands of low-wage workers onto Medicaid, they could influence the long-standing debate over public and private approaches to health care.

Nearly a century ago, corporations like Eastman Kodak and Sears, Roebuck established a tradition of welfare capitalism in the U.S., by providing doctor’s visits, time off, and recreation to loyal, lifelong workers. Around the same time, reformers attuned to the needs of the poor, unemployed, and elderly began the call for a national health system—a cause that various Presidents took up in the decades that followed. Their opponents, including the American Medical Association, have fought back in remarkably consistent terms. As Jill Lepore wrote in a 2012 feature for the magazine, after President Harry Truman proposed a federal health program funded by a payroll tax, an operative hired by the A.M.A. told a group of doctors, “Hitler and Stalin and the socialist government of Great Britain all have used the opiate of socialized medicine to deaden the pain of lost liberty . . . compulsory health insurance, if allowed to spread to our New World, will mark the beginning of the end of free institutions in America.”

Nevertheless, by 1965, Medicaid and Medicare had been signed into law. Retirees and households living in poverty were given a public option, but employer-derived benefits had long since become the norm. American liberals, resigned to something far short of a single-payer system, pivoted to argue that employers should pay a living wage and provide affordable benefit plans to their employees. Recent worker campaigns, including OUR Walmart and Fight for 15, have invoked this responsibility as a talking point, broadcasting sympathetic tales of full-time McDonald’s workers subsisting on charitable donations and food stamps. No gainfully employed adult should have to rely on public assistance, the logic goes.

In this light, the Affordable Care Act’s move to extend Medicaid to families living above the poverty line represented an important step toward the public model. Geyerhahn wouldn’t tell me whether he supported a national single-payer system, but he did say that advocates of “Medicare for All,” as Bernie Sanders has it, should celebrate what BeneStream does. “If companies are counting on food stamps and Medicaid as part of their business plan, it means that you will have powerful interests in favor of those programs,” he said. And Stern, the BeneStream adviser and former S.E.I.U. president, told me that workers in the so-called 1099 economy could offer further support. “Obamacare and the expansion of Medicaid represent an incredible shift toward separating benefits from employers,” he said. “For freelancers and Uber workers, this becomes a much more compelling question moving forward.”

Six years after the Affordable Care Act was enacted, there is evidence that support for Medicaid expansion is growing. Conservative Louisiana came around just this year, after John Bel Edwards, a Democrat, succeeded Republican Bobby Jindal as the state’s governor. On July 1st, Edwards raised the state’s Medicaid income limit, embracing three hundred and seventy-five thousand previously uninsured residents and saving the state six hundred and seventy-seven million dollars over the next five years. “I don’t look at this as some revolutionary thing,” he said. “This is just the right thing to do.” President Obama echoed this point last week, in an article published, ironically, in the Journal of the American Medical Association, that longtime foe of public health care. “The nation typically reaches its greatest heights when we find common ground between the public and private good and adjust along the way,” he wrote. “That was my approach with the ACA.” It’s BeneStream’s approach as well.

http://www.newyorker.com/business/currency/the-new-obamacare-economy

THREE WAYS TO FIX OBAMACARE

by John Cassidy - New yorker

It has long been clear that many of the health-insurance companies offering policies through the public exchanges set up under the Affordable Care Act of 2010 were losing money. Some big operators, including Aetna, Humana, and United Health Care, have withdrawn from a number of the exchanges, and those insurers that remain have been indicating their intention to raise prices sharply for 2017. “The reality is the Affordable Care Act is no longer affordable,” Mark Dayton, the Democratic governor of Minnesota, said earlier this month. So it shouldn’t have come as a surprise when the Obama Administration this week formally acknowledged that prices will go up for plans purchased on the exchanges.

But this is an election season, and Donald Trump and other Republicans used Monday’s news as an opportunity to denounce Obamacare as a hopeless failure. “It is blowing up,” Trump told Fox News. “It is out of control. It can’t be saved.” As usual, the G.O.P. candidate was exaggerating greatly.

In some ways, the Affordable Care Act is working as planned. Figures from the Census Bureau show that between the start of 2014, when the major provisions of the law went into effect, and the end of 2015, the percentage of Americans without insurance fell from 14.2 per cent to 9.1 per cent. That drop of 5.1 percentage points is the largest on record. Among groups that the Affordable Care Act particularly targeted, such as poor families and non-elderly adults, the numbers have been even more dramatic.

Since the Affordable Care Act’s expansion of Medicaid, the government insurance program that serves the poor, more than fifteen million Americans have joined its rolls. If Republicans in nineteen states hadn’t refused to go along with the expansion, this number would be considerably higher. Other elements of the law, such as forcing insurers to cover people with preëxisting conditions and allowing young people to stay on the their parents’ plans until the age of twenty-six, have proved enormously popular.

The issue is the publicly-run exchanges, where people who don’t receive health insurance through their jobs can buy plans on an individual basis. Even here, it isn’t all bad news. The exchanges will have about ten million people enrolled on them at the end of this year, according to government estimates, and officials expect enrollment to increase by about nine per cent next year. For individuals and families who qualify for subsidies, the federal government will cover at least part of the rise in premiums for 2017. “Obama administration officials said three-fourths of consumers would still be able to find plans for less than $100 a month with the help of federal subsidies,” the Times reported.

Still, real problems exist. For people who don’t qualify for subsidies, the costs of buying insurance through the exchanges can be very high. Take a family of four living in Brooklyn and making a hundred thousand dollars a year. Since their income is more than four times the federal poverty threshold, they wouldn’t qualify for any subsidies. On healthpocket.com, a Web site that lists the insurance policies offered on the New York state exchange (and others), the cheapest “silver”—that is, mid-level—2017 family plan I could find for such a family was from EmblemHealth, and it cost $1,432.78 a month, or $17,193.36 for the year. The family deductible was $11,600, as was the out-of-pocket maximum.

Figures like these are disturbing. Until policy-holders have covered their deductibles, they have to pay for the full cost of most of the medical services they receive. “I can’t afford to get sick after paying for the health insurance,” Laura Schlett, a forty-four-year-old woman from Brandon, Mississippi, told the Times’s Robert Pear this week. Many people feel the same way.

So, what can be done? Despite their bluster, Trump and the Republicans don’t really have a plan to fix Obamacare. They want to repeal it and rely on the market. A recent analysis by experts at the RAND Corporation showed where the Trump strategy could lead: by 2018, it estimated, about twenty million fewer Americans would have health coverage, and people buying policies in the individual insurance market would face higher out-of-pocket costs, on average.

Setting this non-option aside, there are numerous possible ways to proceed. In a piece for the Wall Street Journal a while back, the economist Robert Litan discussed four of them. Drawing partly on Litan’s analysis, I will confine myself to three:

1. Patch things up: Since affordability is a big issue, the federal government could spend more money to bring down the costs that individuals and families face. This could be done directly by raising the level of subsidies available for plans purchased on the exchanges, or raising the income thresholds at which the subsidies phase out—or both. Alternatively, the government could offer more generous subsidies to insurance companies, particularly those serving high-risk populations, in which case they wouldn’t have to raise prices as much, or impose such large deductibles.

Lack of competition is now a big problem—according to the Obama Administration, about twenty per cent of the users of the federal exchange, HealthCare.gov, will now find only one insurer offering coverage. One way to tackle this issue would be to subsidize insurers that enter these markets.

Some of Hillary Clinton’s health-care proposals fall in this category. To address the issue of excessive deductibles and out-of-pocket costs, Clinton wants to require all insurance plans to offer three doctor visits a year that don’t count toward a deductible. For families whose out-of-pocket costs come to more than five per cent of their income, she would also provide a new, refundable tax credit of up to five thousand dollars.

2. Apply some force: One of the big problems that insurers are facing is that too few healthy people, and too many sick people, are signing up for the plans sold through the exchanges. For insurers, that changes everything. Faced with higher claims per enrollee than they expected, they seek to raise their prices, which makes healthy people, especially young healthy people, even less likely to sign up the following year. If unchecked, this process could lead to a spiral of rising prices and falling enrollment.

An obvious way to address this problem would be to drastically raise the fines that people face if they don’t purchase insurance. Under the terms of the Affordable Care Act, getting enrolled wasn’t meant to be a choice—it was a legal obligation. For political reasons, however, the penalty for flouting this “individual mandate” was set at a very low initial level, which is supposed to grow gradually. In 2015, the fines started at three hundred and twenty-five dollars per adult. This year, they started at six hundred and ninety-five dollars. (The actual figure is set by formula that takes into account a person’s income.) Since the annual cost of an insurance plan can reach four or five thousand dollars, many individuals—particularly young and healthy ones—may well be tempted to forego insurance, accept the penalty, and hope they don’t get sick. And actually, they may not end up paying anything. If an individual doesn’t pay the fine voluntary, the only way the government (in this case, the I.R.S., which oversees the system) can extract payment is by subtracting the amount due from a federal-income-tax refund. If the person isn’t due a refund, he or she doesn’t pay anything.

Generally speaking, private insurance markets only work well when there is a large and diversified risk pool. If we are going to rely on them to provide universal, or near-universal coverage, the individual mandate will have to be enforced. That means raising the penalties for non-compliance and enforcing them effectively.

3. The Public Option: The rising cost of health care is an issue all over the world. The way most countries have dealt with it is by enrolling the entire population, or almost all of it, in a single-payer system, and using the bargaining leverage that creates (usually coupled with administrative fiat) to keep down costs. So far, the American political system, which is highly vulnerable to capture by powerful interest groups, such as doctors, hospitals, and pharmaceutical companies, has resisted going down this route. But this may be changing.

In addition to trying to patch up the private exchanges, Clinton has proposed to expand Medicaid further, and to lower the minimum enrollment age for Medicare, the government-run insurance system for the elderly, to fifty-five. She has also reaffirmed her support for establishing a public option—a government-run insurance plan—which would compete with private insurance plans offered through the public exchanges. Finally, Clinton has adopted a proposal, initially put forward by Senator Bernie Sanders, to provide more federal financing for low-cost, locally-run community health-care centers.

To be sure, none of these proposals amounts to suggesting that the United States should abolish the Affordable Care Act and adopt a British or Canadian system. Such a change would require another enormous political battle and a substantial tax hike. But in expanding Medicaid and Medicare, a Clinton Administration could begin a pincer movement around the private exchanges that would eventually see a considerably larger proportion of the population enrolled in government-run insurance programs. And in pressing for a public option on the exchanges, it would challenge the private insurers on their own turf.

Which of these approaches will be adopted? My guess is we’ll probably end up with elements of all three.

http://www.newyorker.com/news/john-cassidy/three-ways-to-fix-obamacare?mbid=nl_TNY%20Template%20-%20With%20Photo%20(1)&CNDID=22403094&spMailingID=9762775&spUserID=MTMzMTc5ODMwNTI4S0&spJobID=1022077645&spReportId=MTAyMjA3NzY0NQS2

Affordable Care Act Premium Increases Are a Fixable Problem

by the NYT editorial board

The Affordable Care Act has improved and expanded health insurance to cover millions more Americans. But it is far from perfect, and the sharp increase in premiums for plans sold under the program shows some of the problems that the next president and Congress need to fix.

Premiums will increase by 25 percent on average for midlevel plans next year, according to the Department of Health and Human Services, but most Americans will be largely insulated from price increases by federal subsidies. About 85 percent of the 10.5 million people who bought insurance through the online health exchanges this year received subsidies; that proportion is likely to increase in 2017 as premiums rise.

Premiums are going up because many insurers underpriced plans when they started selling policies in 2013; not enough healthy, younger people signed up; and those who did used more medical care than the insurers had anticipated. As a result, companies like UnitedHealth and Aetna have stopped selling health plans in many parts of the country and the providers that remain have raised prices. Premiums have gone up most in states like Alabama, Arizona, Oklahoma and Tennessee that have three or fewer insurers selling Affordable Care Act plans.

Premiums are rising much more modestly in states where there is more robust competition among insurers. For example, the average cost of the second-lowest “Silver” level plan, the benchmark used by federal officials to analyze the market, will increase by 7 percent in California, 5 percent in New Jersey and 2 percent in Ohio.

Even with the big premium increases, health experts say that plans on the exchanges generally cost less and provide access to more medical care than the plans that they replaced. All told, the law has helped 20 million people gain coverage, including those who became eligible for Medicaid and young adults allowed to stay on their parents’ policies, pushing the portion of the population without insurance to less than 10 percent for the first time in history. (About 150 million people are insured through employer plans.)

With open enrollment starting on Nov. 1and ending on Jan. 31, the federal and state governments ought to make every effort to increase enrollment to spread the insurance risk over a larger population. For instance, of the 27.2 million people who still do not have health insurance, about 5.3 million are eligible for federal tax subsidies and may not realize it, according to a recent report by the Kaiser Family Foundation. People without health insurance will have a tax penalty of about $700 a year in 2017, up from about $400 in 2016. One way to lift enrollment would be to increase the penalty.

Congress and the next president could further strengthen the health care law by offering subsidies to middle-income families who currently receive little or no help. Lawmakers should also consider applying to the health care exchanges the kind of reinsurance program Congress has used to encourage insurers to participate in Medicare’s Part D prescription drug benefit program. The Affordable Care Act’s flaws are fixable, but only if politicians from both parties work together in good faith.

http://www.nytimes.com/2016/10/26/opinion/the-acas-premium-increases-are-a-fixable-problem.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

Health Law Tax Penalty? I’ll Take It, Millions Say

by Robert pear - NYT

WASHINGTON — The architects of the Affordable Care Act thought they had a blunt instrument to force people — even young and healthy ones — to buy insurance through the law’s online marketplaces: a tax penalty for those who remain uninsured.

It has not worked all that well, and that is at least partly to blame for soaring premiums next year on some of the health law’s insurance exchanges.

The full weight of the penalty will not be felt until April, when those who have avoided buying insurance will face penalties of around $700 a person or more. But even then that might not be enough: For the young and healthy who are badly needed to make the exchanges work, it is sometimes cheaper to pay the Internal Revenue Service than an insurance company charging large premiums, with huge deductibles.

“In my experience, the penalty has not been large enough to motivate people to sign up for insurance,” said Christine Speidel, a tax lawyer at Vermont Legal Aid.

Some people do sign up, especially those with low incomes who receive the most generous subsidies, Ms. Speidel said. But others, she said, find that they cannot afford insurance, even with subsidies, so “they grudgingly take the penalty.”

The I.R.S. says that 8.1 million returns included penalty payments for people who went without insurance in 2014, the first year in which most people were required to have coverage. A preliminary report on the latest tax-filing season, tabulating data through April, said that 5.6 million returns included penalties averaging $442 a return for people uninsured in 2015.

With the health law’s fourth open-enrollment season beginning Tuesday, consumers are anxiously weighing their options.

William H. Weber, 51, a business consultant in Atlanta, said he paid $1,400 a month this year for a Humana health plan that covered him and his wife and two children. Premiums will increase 60 percent next year, Mr. Weber said, and he does not see alternative policies that would be less expensive. So he said he was seriously considering dropping insurance and paying the penalty.

“We may roll the dice next year, go without insurance and hope we have no major medical emergencies,” Mr. Weber said. “The penalty would be less than two months of premiums.” (He said that he did not qualify for a subsidy because his income was too high, but that his son, a 20-year-old barista in New York City, had a great plan with a subsidy.)

Iris I. Burnell, the manager of a Jackson Hewitt Tax Service office on Capitol Hill, said she met this week with a client in his late 50s who has several part-time jobs and wants to buy insurance on the exchanges. But, she said, “he’s finding that the costs are prohibitive on a monthly basis, so he has resigned himself to the fact that he will have to suffer the penalty.”

When Congress was writing the Affordable Care Act in 2009 and 2010, lawmakers tried to balance carrots and sticks: subsidies to induce people to buy insurance and tax penalties “to ensure compliance,” in the words of the Senate Finance Committee.

But the requirement for people to carry insurance is one of the most unpopular provisions of the health law, and the Obama administration has been cautious in enforcing it. The I.R.S. portrays the decision to go without insurance as a permissible option, not as a violation of federal law.

The law “requires you and each member of your family to have qualifying health care coverage (called minimum essential coverage), qualify for a coverage exemption, or make an individual shared responsibility payment when you file your federal income tax return,” the tax agency says on its website.

Some consumers who buy insurance on the exchanges still feel vulnerable. Deductibles are so high, they say, that the insurance seems useless. So some think that whether they send hundreds of dollars to the I.R.S. or thousands to an insurance company, they are essentially paying something for nothing.

Obama administration officials say that perception is wrong. Even people with high deductibles have protection against catastrophic costs, they say, and many insurance plans cover common health care services before consumers meet their deductibles. In addition, even when consumers pay most or all of a hospital bill, they often get the benefit of discounts negotiated by their insurers.

The health law authorized certain exemptions from the coverage requirement, and the Obama administration has expanded that list through rules and policy directives. More than 12 million taxpayers claimed one or more coverage exemptions last year because, for instance, they were homeless, had received a shut-off notice from a utility company or were experiencing other hardships.

“The penalty for violating the individual mandate has not been very effective,” said Joseph J. Thorndike, the director of the tax history project at Tax Analysts, a nonprofit publisher of tax information. “If it were effective, we would have higher enrollment, and the population buying policies in the insurance exchange would be healthier and younger.”

Americans have decades of experience with tax deductions and other tax breaks aimed at encouraging various types of behavior, as well as “sin taxes” intended to discourage other kinds of behavior, Mr. Thorndike said. But, he said: “It is highly unusual for the federal government to use tax penalties to encourage affirmative behavior. That’s a hard sell.”

The maximum penalty has been increasing gradually since 2014. Federal officials and insurance counselors who advise consumers have been speaking more explicitly about the penalties, so they could still prove effective.

Many health policy experts say the penalties would be more effective if they were tougher. That argument alarms consumer advocates.

“If you make the penalties tougher, you need to make financial assistance broader and deeper,” said Michael Miller, the policy director of Community Catalyst, a consumer group seeking health care for all.

http://www.nytimes.com/2016/10/27/us/obamacare-affordable-care-act-tax-penalties.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

California Today: The Drug Industry Has Spent $109 Million to Kill Prop 61. Here’s Why.

by Mike mcphate - california today

The pharmaceutical industry has contributed $109 million to defeat Proposition 61, the most money raised for or against any of the 17 statewide ballot initiatives this year.

The measure, which comes at a time of heightened public concern over drug pricing, would prohibit the state government from paying a higher price for a drug than the federal Department of Veterans Affairs, which gets big mandatory discounts and can negotiate with drug makers for even steeper ones.

If approved, Proposition 61 could mean savings for California’s public employees and retirees, its prison system and part of Medi-Cal, the state’s Medicaid program. But the size of savings is unclear, and could range from “relatively little” to “significant,” according to the nonpartisan state legislative analyst.

One reason for the uncertainty is whether state agencies will be able to determine what Veterans Affairs pays for certain drugs. Another reason is that pharmaceutical companies might try to offset Proposition 61 by charging higher prices to other customers, including the V.A. Advertisements opposing Proposition 61 that now saturate the airwaves often feature veterans saying the measure would raise prices for them and others.

Still, the drug manufacturers paying for these commercials are probably worried less about the mechanics of Proposition 61 than the precedent its approval would set for more government control of prices. Other states may try similar measures. And Medicaid programs in all states might have to be offered the lower prices paid by California agencies.

Supporters of the initiative say the threat of countervailing price increases is an empty one and that it is time to stand up to the pharmaceutical industry. Almost all of the more than $14.7 million contributed to support the measure comes from its sponsor, the AIDS Healthcare Foundation, which runs pharmacies and treatment centers for people with H.I.V.

Other supporters include the California Nurses Association and the state branch of AARP. Senator Bernie Sanders of Vermont has held rallies in California to campaign for the measure, which he said would be “a real blow against this greedy industry that will reverberate all over America.”

Despite the pharmaceutical industry war chest, the measure was comfortably ahead in some polls conducted in September. California newspapers generally oppose the measure because of its specifics, while acknowledging the temptation for a protest vote against high drug prices.

http://www.nytimes.com/2016/10/27/us/california-today-drug-industry-proposition-61.html?em_pos=large&emc=edit_ca_20161027&nl=california-today&nlid=1311158&ref=headline&te=1

Neighborhood Health Plan stops taking MassHealth members

By Priyanka Dayal McCluskey Globe Staff

Neighborhood Health Plan has stopped accepting new Medicaid members after losing $241 million since 2014, a troubling sign of how hard it is to serve low-income residents in a state with some of the highest health care costs in the country.

Neighborhood, a subsidiary of Partners HealthCare and the largest Medicaid insurer in Massachusetts, said it temporarily froze enrollment as part of a “corrective action plan” developed with state health officials.

The unusual move means low-income families who qualify for Medicaid — a joint federal-state program called MassHealth in Massachusetts — will have fewer insurance options. Neighborhood is the only MassHealth plan that provides its members access to the state’s most renowned teaching hospitals, Massachusetts General and Brigham and Women’s, which are also owned by Partners.

Neighborhood has more than 300,000 MassHealth members. That’s an increase of about 30 percent from just two years ago. Existing members will not be affected by the changes, Neighborhood said.

“Despite making progress in controlling total medical expenses, Neighborhood Health Plan continues to experience material losses in the MassHealth program,” spokeswoman Pam Jonah said in a statement. “We evaluated many options to address our financial challenges with the MassHealth program and determined that the temporary enrollment freeze would ensure the least disruption.”

Neighborhood is one of six insurers that the state pays to manage care for residents on MassHealth.

About 858,000 people are members of these plans, but many other MassHealth members access services directly without signing up for a health plan.

Those people still will have access to Partners and other hospitals.

Health care providers that serve MassHealth members, including Boston’s South End Community Health Center, were surprised to learn of the enrollment freeze, which took effect last week.

“It appears that economically, it’s untenable for many organizations to care for the poor, and this is a problem that we need to deal with as a Commonwealth,” said Bill Walczak, chief executive of the South End health center.

Neighborhood has suffered heavy financial losses in recent years, which company officials have attributed to issues with their MassHealth business: higher-than-expected drug and medical costs, spikes in membership, and low payments from the state. The insurer lost $110 million on operations in the fiscal year that ended Sept. 30, 2014, prompting Partners to consider selling it off, and $75 million in fiscal year 2015. In the nine-month period ending June 30, it lost $56 million more.

State health officials said Neighborhood pays hospitals “significantly higher” than the benchmark set in the contract between the health plan and the state

The temporary freeze in enrollment is meant to help Neighborhood correct the problem by giving it time to renegotiate the rates it pays hospitals. Neighborhood declined to name the hospitals with which it would seek renegotiations.

State officials said they will evaluate the plan’s progress in February to decide whether to continue the enrollment freeze.

The insurer already has taken some unpopular steps to control spending.

Earlier this year, Neighborhood made it more difficult for members to see specialists at Boston Children’s Hospital, a prestigious but high-priced hospital. 

Neighborhood has traditionally been a plan primarily for MassHealth members, whose health costs are entirely covered by the state.

But the company, which was acquired by Partners in 2012, has been trying to boost its roster of premium-paying commercial members, a more profitable line of business. It even launched an ad campaign last year to shed its image as “cheap,” in an effort to attract employers and premium-paying customers.

The plan said it has about 152,000 commercial members, an increase of almost 79 percent in two years.

Neighborhood is popular on the state’s Health Connector, the exchange where individuals can buy insurance. But it is raising rates for those individuals by an average of 21 percent next year, which could disrupt many members.

Neighborhood’s business is still predominantly in MassHealth. It has far more MassHealth members than any other health plan; the next biggest is Tufts Health Plan, which has about 219,000 members, and Boston Medical Center HealthNet Plan, with 188,000 members, according to state figures.

Neighborhood said its “30-year commitment to the MassHealth program remains strong.”

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