Since 2017 states have had the ability to get a 1332 waiver to opt out of many provisions of the Affordable Care Act – as long as they come up with another way of meeting the cost and coverage goals.
Originally, the provision was written with Vermont and Oregon in mind – both of which at the time seemed likely to try to create a state-based single payer system, which is not happening in the foreseeable future. Instead, some more conservative states, notably Arkansas, are looking into 1332s as a way of innovating with coverage under their own rules.
The final rules for states haven’t been written as of mid-2015, and states would have to get serious about the waivers soon if they are going to get federal approval and implement such ambitious state-based programs in 2017. Conservatives hope that if a Republican is elected president in 2016, the rules will be modified to give states a lot more leeway, and not bind them so tightly to the current conditions spelled out in the ACA.
90-day grace period
The Affordable Care Act includes a 90-day grace period for people who are getting subsidized coverage through the exchanges. Originally it was designed to help smooth the transition for newly insured people, who were getting used to having coverage and may have needed some time to get used to making their share of the monthly premium payments. If someone doesn’t make the payment, insurers would have to pay claims for the first month. They could put claims for the second and third months on hold. If the beneficiary doesn’t catch up with premium payments, the policy could be cancelled and the health plan wouldn’t have to pay.
"Across state lines"
Conservatives, including then-President Trump, taking up a GOP idea that has circulated for many years, have suggested that allowing health insurers to sell across states lines would increase competition, reduce the burden of excessive state mandates, offer consumers broader choice, and make coverage more affordable.
Critics, including the research arm of the National Association of Insurance Commissioners, who regulate health insurance at the state level, disagree on all points. They say interstate sales would create a race to the bottom. It would allow insurers to choose their regulators, making insurance financially riskier and less accountable. It would weaken consumer protection. People in excellent health may find cheaper coverage; everyone else would find it more costly. And while the big national carriers may have fairly extensive cross-state provider networks, smaller and more geographically limited ones do not, making this option impractical for them. Related tip sheet.
Accountable Care Organization (ACO)
There is no single agreed-upon definition for an ACO; models are evolving, and even Medicare has introduced variants. (i.e. Pioneers, Medicare Shared Savings Programs.) But, basically, an ACO is an organization that links (physically or virtually) physicians, hospitals and other providers, and provides more coordinated and integrated care. An ACO is supposed to emphasize primary care, use evidence-based medicine, electronic medical records and a team approach that promotes better communication between health care providers, and between the providers and the patient. The organization is, as the name states, supposed to be accountable for the cost and the quality of care - and the quality criteria must be measurable and transparent.
In Medicare, an ACO that saves money (compared to what "normal" non-ACO care for a similar patient population would have cost) gets to split the savings with Medicare. But other ACOs may get a capitated (per patient) or global payment from a private insurer, or perhaps from a large employer contracting with the ACO to care for the workers and dependents. A variety of financial arrangements can exist between the hospitals and the doctors (staff, or various kinds of contractual arrangements). Interestingly, the initial expectation was the hospitals would form most of the ACOs but in fact many are led by physician groups.
ACOs do have some traits in common with the HMOs of the 1990s in the sense that they are supposed to "manage" care. But there are important differences - notably the emphasis on quality and outcomes, not just shaving costs. In Medicare, Quality measurement pertains to Caregiver Experience, Care Coordination/Patient Safety, Preventive Health, and At-Risk Population. In addition, in the current,early Medicare models, patients are free to choose their own doctor, see specialists without a "gatekeeper" referral, or go outside the ACO network altogether.
Actuarial value is a confusing term, but a deceptively simple idea. Think of it as the amount of the health expenses that the insurer would pay – that's the actuarial value. (The policy-holder or beneficiary would pay the rest through deductibles, copays, etc.) The term applies to covered benefits – not to health services that aren't part of the health plan. And it doesn't guarantee that the health plan would pay that proportion of costs of every individual; the concept applies to a covered population. In the health exchanges in 2014, the different plans – "Gold," "Silver" etc. – would cover the same essential benefits but have different actuarial values.
Acute vs. chronic condition
An acute condition is severe – and sudden. It can range from a broken arm to a heart attack.
A chronic condition usually develops more gradually – but it can cause an acute episode. Asthma, for instance, is a chronic condition but a severe asthma attack is an acute episode. Cardiovascular disease is chronic – a heart attack or stroke is acute.
The National Center for Health Statistics defines a chronic disease as lasting three months or more – and they usually last much longer. They can be managed but not all of them can be cured.
Chronic diseases generally cannot be prevented by vaccines or cured by medication, nor do they just disappear. Older Americans often live with several chronic diseases. Common ones include arthritis, cancer, diabetes and cardiovascular conditions such a hypertension or congestive heart failure.
The CDC says four behaviors are heavy contributors to chronic disease: lack of physical activity, poor nutrition, tobacco use and excessive alcohol consumption.
Advanceable Tax Credit
Lower- and middle-income people who are getting subsidies to help them pay for their insurance in the new health exchanges in 2014 and beyond aren’t getting a check. They are actually getting a tax credit – or rather, an advanceable tax credit, which means they get it up front, when their health insurance premium is due. They don’t have to wait to file their tax return the next year. (A tax credit isn’t the same as a tax deduction. It’s more valuable because it slices off the amount of taxes owed, rather than reducing the income on which taxes are owed)
These credits are only available in the exchanges, not for policies purchased outside the exchange, even if the off-exchange policy meets ACA standards. The credit is paid directly to the insurer on behalf of the eligible individual, which is much simpler for the consumer. However, with all the ongoing problems with the ‘back end' of the exchanges, it can be problematic for the health plans. In addition, for people who are eligible on the basis of their income for additional cost-sharing reduction (such as reduced co-pays), it takes place at the point of service. In other words, individuals don't have to pay and then try to get reimbursed. They will get the medical service, and CMS works it out with insurers. (See Cost sharing subsidy.)
AMA report provides baseline to assess the effects of the Competitive Health Insurance Reform Act
In 2020, both houses of Congress passed the Competitive Health Insurance Reform Act (CHIRA) to repeal the federal antitrust immunity that health and dental insurers enjoyed under the McCarran-Ferguson Act of 1945. How much the law will affect health insurance competition is unknown until the federal Department of Justice (DOJ), the Federal Trade Commission or aggrieved parties (such as other insurers) bring legal action against insurers that seek to limit competition by acquiring or merging with other insurers.
For journalists covering health insurance markets and mergers, one of the best data sources is the American Medical Association’s 2021 edition of its annual report, “Competition in Health Insurance: A comprehensive study of U.S. markets.” Published in September, the 75-page report showed that most U.S. health insurance markets are highly concentrated, limiting choice for consumers seeking affordable health coverage.
AMA researchers analyzed market concentration and health insurer market shares in 384 metropolitan statistical areas (MSAs), the 50 states and the District of Columbia. Among those MSAs, 73% (280) were highly concentrated under the federal Herfindahl-Hirschman Index standard, and 46% (178) of markets had one insurer with a share of 50% or more, the report noted. From 2014 through 2020, the share of highly concentrated markets rose from 71% to 73%, the AMA noted.
Reporters also will find the AMA report useful because it shows market concentration in each state and for each form of health insurance, including health maintenance and preferred provider organizations. In addition, the report lists the 10 states with the least competitive PPO and exchange markets and the 10 states with the least competitive health insurance markets overall. Those states are Alabama (1), Michigan (2), Louisiana (3), South Carolina (4), Hawaii (5), Kentucky (6), Alaska (7), Illinois (8), North Dakota (9) and Oklahoma (10).
The broad scope of the report make it a potentially effective way to measure what influence, if any, CHIRA will have on mergers and acquisitions among health and dental insurers. When former President Trump signed CHIRA into law on Jan. 13, 2020, the DOJ announced that the act would limit insurers’ conduct that previously was exempt from antitrust law under McCarran-Ferguson and would strengthen the DOJ’s ability to investigate and prosecute anticompetitive behavior.
Since 1945, courts have interpreted McCarran-Ferguson to allow some harmful, anticompetitive conduct among health insurers, the DOJ noted. But CHIRA narrows this defense and clarifies that, except for certain activities that improve health insurance for consumers, the conduct of health insurers is now subject to the federal antitrust laws, the DOJ said.
Note, however, that in an analysis of a similar law in 2009, the Congressional Budget Office showed that repealing the antitrust exemption for health insurers would have no significant effect on the federal budget or the premiums that health insurers charge.
Association health plans
AHPs allow groups – say a trade association, or small businesses – to band together as an association through which they can purchase health insurance for their members. The idea circulated among Republicans for many years, and President Trump gave it a boost in an executive order in the fall of 2017. The rules were subsequently finalized, and about three dozen AHPs hit the market in early 2019 – only to have a federal judge rule against them, putting their future in doubt. The ruling is being appealed – but AHPs are not an option the Biden administration is likely to favor or promote.
The health plans are exempt from certain regulations in the Affordable Care Act, and can be structured so that people could buy insurance “across state lines” – another Republican priority. They are generally be cheaper than ACA plans because they don’t have to include all the benefits and consumer protections (though many did offer broader benefits than critics had anticipated.). So it’s potentially a good deal for anyone who is healthy – and remains healthy. But by appealing to people who are generally healthy, it could peel away that segment of the population from the ACA risk pool, meaning those ACA compliant health plans become even more expensive
This is the amount that a consumer can be billed, when a health plan doesn’t cover all of an expense. It’s become highly controversial in the first few year of ACA implementation because patients are getting unexpected – and sometimes very high – bills even when they make every effort to stay in network, but may end up getting care in an in-network hospital from an out of network physician – an emergency physician, a surgeon, an anesthesiologist for instance. Legislation to end “surprise billing” enacted in late 2020 should alleviate the worst of balanced billing, although it doesn’t abolish all out of network or out of pocket costs.
Basic health plan
Basic health plans are a state option under the ACA for people whose income falls between 133 to 200 percent of the federal poverty level. These are people who are above the threshold for Medicaid expansion but still low-income. Instead of having them in the exchange, states can create a “Basic Health Plan” which would be outside the state exchanges but would fulfill the essential benefit requirements and have low cost-sharing. The federal government will give states 95 percent of what it would have paid to subsidize them in the exchange. Few states, however, have used this option.
Under the Affordable Care Act, the FDA created a new approval pathway for biosimilars (also called biologic follow-ons). These can be thought of as akin to “generic” biologics -- but unlike traditional generics that we’re all used to biosimilars are not exact copies of the original biologic. They aren’t expected to save as much money either –they’ll be cheaper than the biologic, but the price gap won’t be as deep. There is also a lot of ongoing debate about approval, prescription substitution (when a biosimilar can be substituted for a biologic). While the drug approval process is set at the federal level, some of the prescribing and interchangabilty issues will be decided by the states, particularly as they debate how to lower drug costs.
The approval pathway falls under a section of the ACA known as the Biologics Price Competition and Innovation Act (BPCI Act) The FDA says the biosimilar must have no “no clinically meaningful differences in terms of safety and effectiveness from ithe reference product.” The first biosimilar to get US approval was Sandoz’s Zarxio (filgrastim-sndz), which competes with Amgen Neupogen (filgrastim), licensed back in 1991 and is used in conjunction with certain cancer treatments. A year later another biosimilar (used in Crohn’s and other diseases) was approved.
Bundling, or bundled payment
The Obama administration moved aggressively to push providers away from the traditional “fee-for-service” model that has dominated U.S. health care for decades. The Trump administration gave mixed signals about its future pace and intensity and has already rolled back some “bundled payment” programs. As of early 2021, it’s too soon to know whether this will be a central, or peripheral, part of the Biden administration’s reform agenda.
Under Obama, the Centers for Medicare and Medicaid Services (CMS) oversaw years of voluntary pilot programs to encourage “bundled payments,” in which providers are paid one fee for all services related to a specific treatment or condition over a period of time. Medicare first began testing bundled payments in 2013.
In the final weeks of Obama’s presidency, CMS finalized plans to move forward with new mandatory programs that require hospitals in 98 markets to use bundled payments for cardiac and orthopedic care. That would put hospitals on the hook for the cost and quality of all procedures related to bypass and heart surgeries, which officials say will help reduce costs and improve patient care.
During Tom Price’s brief tenure as HHS secretary under Donald Trump, he ended the mandatory Comprehensive Care for Joint Replacement Model, for hip and knee replacements, and cardiac care for after a heart attack. The department allowed limited voluntary programs to continue.
A tax on high-cost health insurance, known as the Cadillac Tax, was scheduled to take effect in 2018. But on a bipartisan basis, it was repeatedly delayed—and finally repealed. It never went into effect.
The tax, part of the Affordable Care Act financing, was supposed to have imposed a 40-percent tax over a threshold set at $10,200 for individual coverage, and $27,500 for family coverage. For example, with an $11,200 individual plan, the tax would apply to that $1000 above the threshold.
But the tax was more than a revenue raiser for the ACA. It was also supposed to tamp down the growth of overall health care spending. Many policy analysts who support the tax (Democrats and Republicans) believe the tax would curb overutilization of health care and help make health-related tax breaks more fair. But the tax has always caused political controversy. On the left, there was concern because generous union-negotiated plans would be hit. Critics on the political right consider the tax an unfair burden on certain businesses, and resented that it would help pay for coverage expansion under the ACA. Adding to the controversy, the tax would affect more and more middle class people and businesses over the years as the cost of insurance increases.
Some businesses had already begun to modify employee coverage, in part by raising deductibles and other out-of-pocket costs to bring the cost of the health plan under the threshold. Some of those trends may continue – even as the Cadillac tax drives off into the distance.
This kind of health plan traditionally has covered only big, serious expenses. Some also could have annual or lifetime limits to how much they covered even then. The new catastrophic option in the ACA health insurance markets does include additional coverage and consumer protections. It covers three primary care visits a year, and certain recommended preventive services. Then the beneficiary pays bills out of pocket. In the event of a serious illness or accident, the beneficiary must meet the deductible, which is usually high. But out-of-pocket annual expenses are limited to $6,350 for an individual and $12,700 for a qualified health plan. People who qualify for federal subsidies on the exchange – tax credits toward paying for insurance – can’t use them for a catastrophic policy – one reason that most people are better off getting a Bronze plan on the exchange.
This term refers to what happens when people’s income – and their eligibility for various health programs – changes. It’s especially common among lower-income people. In the context of the health law, it means that people could bounce back and forth from Medicaid eligibility to the subsidized exchange plans. A 2012 report from the Robert Wood Johnson Foundation estimated nearly 30 million people would experience it. It can create confusion, potential gaps in coverage and, potentially, disruptive changes if people have to change doctors and clinics repeatedly (particularly in the absence of interoperable electronic medical records). Minimizing churn is one of the arguments made by states that want to put the Medicaid expansion population in private health plans in the exchanges: It may create more continuity of coverage and care.
Comparative effectiveness research/Patient-Centered Outcomes Research
The 2010 health law expanded federally funded comparative effectiveness research and set up a new federal organization to shape the research. A lot of the research will focus on comparing different drugs, therapies or treatments and figuring out which ones are more effective than alternatives. The institute is not a part of the government; it is an independent, non-profit, non-governmental organization. By law, it will not make cost-benefit analysis (although insurers, health plans, physician, researchers and patients can all use the data to make their own more informed decisions.)
The mission of PCORI is broader than that, however. The center is not just looking at drugs and procedures but at what works and doesn’t in the health care system itself, including how to improve health care for patients with multiple chronic conditions, health IT and deploying the health care workforce. It is also addressing health care communication, how to disseminate information, shared decisionmaking, and disparities.
A model for health care management and delivery that employs technology to help provide health care services remotely, and facilitate communication and insights that drive better, more integrated health care services. Also known as technology-enabled care, connected health encompasses programs in telehealth, remote care (such as home care) and disease and lifestyle management. This model leverages existing technologies like connected devices using cellular networks and is associated with efforts to improve chronic care.
Empowering patients to self-manage their health and wellness
Achieving clinical workflow efficiencies and minimizing disruption from new programs
Ensuring regulatory and privacy compliance
Consumer assistance program grants
Under the health reform law, about $30 million was made available in grants to states to help people understand what their insurance is supposed to provide, or protect them from abuses or bad practices. States and territories have developed a variety of approaches.
Consumer Driven (or Consumer Directed) Health Plan
This refers to a high-deductible health plan that is paired with a tax-preferred health savings account. People (or their employers) put pre-tax dollars into the special account, which is then available for health expenses. The high-deductible insurance plan means the beneficiary will have to pay a large deductible before the health plan kicks in. The money in the health savings account could be available. Advocates say it will make consumers smarter and more cost-conscious consumers of health services; critics say it leaves people at risk of unaffordable health bills and discourages preventive care, particularly for lower-income groups.
Consumer Operated and Oriented Plans
The collapse of the Obamacare co-ops was one of the big story lines of the early years of ACA implementation. By early 2021, only three of the original 23 nonprofit plans remained. The plans were at a disadvantage in competing against insurers with established networks, and rules about how they could market themselves and government policies on how they were cushioned against risk prevented them from ever getting on solid ground. One key policy about payments to them was later reversed by the courts -- but too late for moribund coops.
Copay assistance rule struck down
U.S. District Court Judge Carl Nichols ruled in May 2022 that the federal Department of Health and Human Services overstepped its authority when it issued a rule in December 2020 designed to ensure that when drug companies offer financial assistance to consumers (called copay assistance) for high-priced drugs, the financial assistance does not go to health insurers. In his ruling, Nichols sided with the drug-industry trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), according to Reuters. PhRMA said the decision would benefit consumers and blamed health insurers for siphoning away patient assistance funds, reporter Brendan Pierson wrote. The rule was scheduled to go into effect in January 2023. Under the rule, the federal Centers for Medicare and Medicaid Services would have required drugmakers to pay higher rebates to state Medicaid programs unless the drug companies could ensure that patients were allowed to keep all financial assistance for themselves, Pierson explained. The case is PhRMA versus Xavier Becerra, et. al.
These are the costs that the patient, not the insurer, has to pay. This includes the deductible, the copay (and any additional charges if the doctor, hospital, or other provider is out of network). The deductible is what the patient starts to pay before the plan kicks in – i.e., if there’s a $1,000 deductible, and the doctor’s bill is $200, that will go toward the deductible. (Preventive care or other specified services in the health plan are covered and don’t count toward the deductible.) But it’s a one-time fee – it’s a deductible for the patient’s entire year, not for each medical service. The copay, let’s say something like $25 per office visit (usually more for specialists) is each visit – each time a patient gets care, they pay it. Sometimes there is co-insurance: instead of a flat fee copay, there is a percentage, say 20 percent of the charge. This is often the payment arrangement for out-of-network care – a flat copay for the in-network provider, a percentage for out-of-network care. The structure of these payments varies from plan to plan and some services (again, certain preventive care) have no copay. The term "cost-sharing" usually doesn’t encompass the premiums, certain out-of-network costs or the cost of any service that the health plan doesn’t cover.
Cost sharing subsidy (or cost sharing reduction)
In addition to offering tax credits for buying insurance, the Affordable Care Act also offers subsidies to help offset out-of-pocket costs, like deductibles and copayments. Individuals or families qualify for the cost-sharing subsidies if their incomes are under 250 percent of the federal poverty level. It’s important to note the insurers must make these payments – people are entitled to the subsidies under the law –whether or not the federal government continues to make its payments to insurers. Uncertainty about the subsidies under the Trump administration is one reason many insurers pulled out of the ACA markets for 2018, and why premiums went up for plans that stayed in.
More than half of Obamacare exchange customers receive the subsidies, which are available on a sliding scale for people purchasing silver-tier plans on the exchanges. A silver plan would normally cover about 70 percent of health costs, but these subsidies could bring it as high as 94 percent for the lowest income brackets.
But these subsidies were caught up in a legal fight between the House of Representatives and the Obama White House – and although the Trump administration kept paying them for several months the White House announced in October 2017 that they would stop immediately. It immediately looked like a big step forward for Trump’s effort to kill or at least undermine the ACA.
Then something unexpected happened. The administration wasn’t paying insurers – but the insurers were still on the hook to subsidize these costs for low-income beneficiaries. So they came up with something that became known as "silver loading." They raised the price of the silver plans in the exchange – the ones that are used to set the tax credits the government pays to subsidize premiums. Higher price means higher tax credit payments – which went to the insurers, which used the money to offset those cost-sharing costs. Many consumers were better off – and it actually cost the government more. And it didn’t kill Obamacare.
Culture of Health
Promoted largely by the Robert Wood Johnson Foundation, the idea of a “Culture of Health” attempts to go beyond the idea of equating health with access to insurance (though that’s part of good health) and drawing connections between health and other social issues. There’s no set, commonly-accepted definition – and it can vary from one community to another – but it generally involves collaboration between health departments and community organizations, an emphasis on health in the workplace, access to good, nutritious food, safe sidewalks and play areas, affordable housing, and access to preschool. Some of the health care delivery experiments sparked by the ACA are beginning to look at ways of bridging health and broader social services.
The data hub was the part of the online health care exchange/marketplace that experts worried about the most, and ironically, it was one of the parts of HealthCare.gov that didn’t melt down in the fall of 2013. The hub is very complicated, drawing data from the Department of Health and Human Services, Social Security, the Department of Homeland Security, the Internal Revenue Service and the U.S. Treasury. All these departments had their own privacy systems, so the hub has to be able to interact securely with all of them. The hub isn’t a database – it doesn’t keep all that information. It sort of darts in and out of the various agencies, getting the information that it needs but not storing it in the federal exchange apparatus.
Democrats, Biden administration aim to close the Medicaid coverage gap
Under the Affordable Care Act, all states can get more federal funding by allowing more residents to enroll in Medicaid, but as of September 2021, only 38 states and the District of Columbia had done so. The other 12 states have not, creating what health policy experts call the Medicaid coverage gap.
Medicaid eligibility for adults in the 12 nonexpansion states (Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin and Wyoming) remains strictly limited. The median income limit for parents in these states is just 41% of the FPL, or an annual income of $8,905 for a family of three in 2020, the report showed. Adults without children also are ineligible.
Adults who fall into the coverage gap have incomes above their state’s eligibility level for Medicaid but below the federal poverty level (FPL), which is the minimum income that allows a family to apply for tax credits on the ACA marketplace, according to a report in January 2021 from the Kaiser Family Foundation, “The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid.”
The Medicaid gap was an unintended consequence when members of Congress were drafting the ACA. Those members did not include financial assistance for Americans below the FPL because they envisioned that low-income Americans would receive coverage through Medicaid. Before the law became effective, however, the U.S. Supreme Court issued a ruling in NFIB v. Sebelius, that upheld the individual mandate in the law but allowed states to opt out of the requirement to allow more residents to be come eligible for Medicaid, as the Congressional Research Services explained in a memo.
Health policy experts estimate that more than 2.2 million Americans fall into the Medicaid coverage gap, but there may be many more than that number. A report from the Center on Budget and Policy Priorities showed that in this population, income volatility is common, causing many to lose their health insurance. Income volatility is especially high in Black and Latino households and than the average household, the CBPP added.
The 2003 Medicare prescription drug law included a gap in coverage that became known as the “doughnut hole.” Seniors receive help paying for drugs only up to their yearly limit, then have to cover the costs themselves, on top of their monthly premiums. Medicare starts paying for medications again once the costs reached another higher “catastrophic” level. The Affordable Care Act began phasing out the “doughnut hole” and Congress sped that up even more. It ended in 2020 (though people still pay some out of pocket costs for their drugs.)
The health reform legislation created a special office within CMS to address their needs, and the cost. This includes developing new ways of providing care coordination, addressing some of the perverse incentives that contribute to fragmentation, poor care and cost-shifting. It also helps states identify and overcome barriers to more efficient and more seamless care. The new office also works closely with Medicare and Medicaid Innovation Center.
The health reform law requires that all health plans, inside and outside of the state-based insurance exchanges, offer a comprehensive set of benefits starting in 2014.
The law defines essential health benefits to "include at least the following general categories and the items and services covered within the categories:"
ambulatory patient services
maternity and newborn care
mental health and substance use disorder services, including behavioral health treatment
rehabilitative and habilitative services and devices
preventive and wellness services and chronic disease management
pediatric services, including oral and vision care.
The federal department of Health and Human Services will define, and can review and update, the basic benefits but it will draw on outside advice including from the independent Institute of Medicine, which often provides scientific advice to the government.
Federally facilitated exchanges
The Affordable Care Act, as written, anticipated that states would run their own new health insurance marketplaces called exchanges. But most states decided not to establish exchanges, meaning the federal government is running them and in most cases will do so indefinitely. These federally facilitated exchanges are still state-based in the sense that people across the country will not shop in one big national insurance pool. Each state has its own, with the federal government doing much of the work in creating and running them in these states. However, state officials still play a significant role in regulating the insurers who participate. The state exchanges are accessed through the federal portal HealthCare.gov.
Consumers may not detect much difference between state and federal exchanges – they are able to purchase similar insurance plans and federal subsidies are available on a sliding scale.
Grandfathered health plans
Partly because of the political promise to allow people to “keep your health care if you like it,” some health plans that existed when the health law was signed on March 23, 2010 are “grandfathered.” That means they don’t have to offer all certain consumer protections that other plans now have to include under the new law. But if the health plan makes significant changes – changes that reduce benefits or boost the costs for health care services – it loses its “grandfathered” status and must comply with all provisions from that point on. Increases in premiums don’t strip a plan of its grandfathered status
Some of the consumer protections in the law – such as coverage for young adults – apply to all plans, grandfathered or not. For instance, plans can’t retroactively cancel coverage (rescissions) and they can’t impose lifetime limits on health benefits. The rules are slightly different for the individual market and the employer-related group market. For more information, see this document from HHS' Center for Consumer Information and Insurance Oversight (PDF).
This is the technical term for the requirement to cover pre-existing conditions -- probably the most popular provision in the ACA. That very popularity across party lines is a big reason the GOP failed to repeal the legislation even when it controlled the presidency and both the House and the Senate.
Guaranteed issue means that a health insurer must cover someone even if they have a "pre-existing condition" or a high-risk medical history. However, states that tested this requirement before the ACA without other comprehensive market reforms and regulations found that insurance premiums rise. And without consumer protections and health reform policies, guaranteed "issue" doesn't mean guaranteed "affordability." Pre-ACA, if an insurance company had to offer a policy under state law it could still underwrite, or charge a lot more to someone likely to run up health costs. The Affordable Care Act introduced guaranteed issue (and guaranteed renewal for existing coverage as of Jan. 1, 2014. Even after the mandate penalty was eliminated, the law had evolved so that the protections survived without the plans imploding.
In addition to the basic affordability exemptions to the individual mandate, people can also be exempt because of specific hardships (and exempt people may qualify for catastrophic coverage). Examples of hardship exemptions include: Being homeless or facing eviction/ foreclosure or having had serious property damage because of fire flood or other disaster; having had your utilities shut off; being a victim of domestic violence; in bankruptcy; having had medical expenses you couldn’t pay in the last two years (including arising from family caregiving). People who would be eligible for expanded Medicaid – but can’t get it because their state didn’t expand – are also exempt.
However – this became moot after Congress eliminated the penalty for the individual mandate starting with the 2019 plan year. There is no punishment for not getting covered, so there is no need for an exemption. Technically the mandate is still on the books – only the penalty was X-ed out. So in theory, if Congress reinstated a penalty, either lawmakers or regulators would have to re-visit the hardship exemptions.
Health Insurance Exchanges/Marketplaces
The health insurance exchanges (the Obama administration preferred to call them “marketplaces”) were established by the Affordable Care Act. They were supposed to be run by the states, with a federal exchange serving as a backup or transitional bridge to state exchanges. As it turned out, roughly two-thirds of the states opted for a federal exchange (or variants known as partnerships). Only a few have gone in the other direction, from federal- to state-run. The federal exchange is now likely to be a permanent and large fixture – not a transitional entity. Conservative states largely opted out of state exchanges on ideological grounds; some other states, particularly smaller ones, found creating a state exchange too technically daunting, costly, or impractical. The exchanges began enrolling people in late 2013 and began coverage on Jan. 1, 2014.
The exchanges are supposed to create a more organized, regulated, and competitive market for buying health insurance. They offer a choice of different health plans (with some states having more competitive markets than others), certifying plans that participate and providing information to help consumers better understand their options.
The exchanges primarily serve individuals buying insurance on their own. There is a parallel exchange for small businesses.
Health reimbursement accounts
The Trump administration in 2019 finalized its rule on Health Reimbursement Arrangements, or HRAs. These allow small- and mid-sized employers to help workers pay for Obamacare plans. (They cannot be used to buy noncompliant off-exchange plans and, unlike a health savings account the employer – not the employee – owns the account so the worker can’t take the balance to his or her next job.) The White House said at the time that 11.4 million people could be helped – including about 800,000 who are uninsured. If those projections are correct – and some experts think they are too rosy – it could be an ironic Trump-propelled boost to the ACA markets.
Even though the HRA rule prohibits the funds from going to short-term plans, it does authorize “excepted benefit” HRAs, which could be used for far less comprehensive plans – and that could potentially damage the ACA markets. It will take some time to learn how much take-up there is of this option — and to see how the Biden administration may modify or roll back these arrangements.
This is the consumer portal to the health exchanges. Most are being run all or in part by the federal government in states that cannot or would not run the exchanges by themselves. Its debut was an epic mess – and that haunted the program long after the worst flaws were repaired in late fall of 2013. It is working smoothly now for consumers.
The website isn’t simply an e-commerce tool selling insurance. It does that – but it also must do more than confirm identities, display plan options and take a credit card. Its “data hub” must link sensitive information from multiple federal agencies – the IRS, the INS and others – to both verify eligibility and calculate premium subsidies for those people who are eligible. When everything works right, it is supposed to figure out whether someone goes into the exchange or Medicaid – or whether different family members go into different kinds of coverage – Mom into exchange, kid into Children’s Health Insurance Program for instance. AND when all that’s done – it has to send the enrollment information securely and accurately to the health plans. When subsidies are available, the government pays directly to the insurer – and the covered person or family pays the balance.
States running their own exchanges STILL have to interact with the federal exchange – specifically the hub – as do insurers or e-brokers selling exchange plans directly to consumers. They rely on the data hub to verify eligibility, subsidies etc.
The Affordable Care Act created Pre-Existing Condition Insurance Plans (PCIP) as a temporary way to offer coverage to high-risk, hard-to-insure people until the new state exchanges, consumer protections, and subsidies were available in 2014. They were phased out after the ACA expansion began. Some states still had their own high risk pools, which predate the health law and were a way of helping some “uninsurable” people with pre-existing conditions. Most have been shut down or absorbed into the ACA exchange.
The “individual mandate” was one of the most contentious aspects of the 2010 health reform law, even though it was upheld as constitutional by the Supreme Court in 2012. Even though it became moot for all practical purposes after Congress eliminated the penalty in the 2017 tax law (effective in the 2019 coverage year) it is still part of the political warfare over the ACA. It’s the linchpin of the Supreme Court case, brought by conservative states to kill the ACA, pending in the Supreme Court in early 2021.
The mandate, which went into effect in 2014, requires that people have "minimum essential health insurance coverage" or pay a penalty. This can mean purchasing insurance (with or without a government subsidy), or getting it on the job, or through a public program like Medicaid or Medicaid. Some people had hardship exemptions but that never quelled the political warfare.
Job loss and coverage in 2014 and later
If you have coverage on your job and you lose or leave your job, (or if you are covered through a spouse or partner who loses the job) there have been more options since the full-coverage provisions of the Affordable Care Act kicked in Jan 1, 2014:
In some cases there is another employer-sponsored option (i.e. getting on a spouse/partner’s plan).
COBRA (Consolidated Omnibus Budget Reconciliation Act) will continue to exist as an option even after 2014. That means if you lose your job, you can continue your employer-sponsored coverage – but you pay the whole thing, without the employer subsidy, plus a surcharge. There will be people who make this choice (for various reasons they may not want to change plans or doctors at that time, or the exchange options are not more affordable for them). It’s also time-limited – usually 18 months. But most people will have other options. (Congress added temporary subsidies for COBRA as part of the American Recovery Plan, one of the coronavirus stimulus packages.
The exchanges or marketplaces: Normally there are “open-enrollment periods” but in the case of a job change, you can buy a plan through the exchange at any time. Some people will qualify for tax credits or for Medicaid or the Children’s Health Insurance Program (CHIP).
There still will be health plans outside the exchanges, but government subsidies will not be available for them.
Medicaid block grant
A block grant is a lump sum given to a state or local government for a specific purpose. There can be requirements attached to the grant, but in Medicaid debated which have cropped up repeatedly in Congress, the basic idea championed by the Republicans is to give the money to the states with few strings attached. That would give the governors great flexibility in who to cover, and what benefits to offer. That dramatically changes the very nature of the Medicaid entitlement. Jointly funded by the state and federal governments and largely administered by the states, Medicaid was established in 1965. It provides health care for certain low-income and disabled people. It also covers long term care, such as nursing homes, for low-income elderly.
The Republican block grant proposals generally would mean federal spending would be predictable - and lower than it would otherwise be. (The federal government, on average, pays 57 cents of each Medicaid dollar for traditional Medicaid, higher in poor states, lower in wealthier ones and it varies a bit over the years. It paid 100 percent of Medicaid expansion for three years (2014-16) and over the next few years phases down to 90 percent.) Block grant advocates argue that if freed of the federal bureaucracy, governors could come up with more creative, innovative and efficient ways of covering people in need. But critics, including most congressional Democrats, say the grants would grow so slowly that they would not be able to keep up with the needs - and that states would either have to pick up the tab, or slash already low provider payments - or cut benefits or beneficiaries
An alternative that some Republicans have suggested is a per capita cap. Instead of a lump sum that will follow a certain trajectory over the years, states would get a fixed annual allotment each year based on the number of people covered. This would allow greater flexibility for instance during an economic downturn, when enrollment tends to rise. But it isn’t a guarantee that states would get more money overall than under a block grant; it depends on how much they’d get per person and how spending tracked over the years. The first state to get approval for a form of block grant, right at the end of the Trump administration, was Tennessee.
Medicaid "bump" payment
Medicaid is a notoriously low payer – and many doctors won’t take Medicaid patients. Yet the Affordable Care Act relies on Medicaid for much of the coverage expansion. In order to encourage physicians to take more low-income patients, the authors of the ACA decided they needed to “bump up” payment at least for 2013-14. During those two years Medicaid had to pay primary care physicians and a limited number of primary care subspecialists the same rates as Medicare, with the federal government absorbing the cost. Whether the bump made more doctors accept Medicaid is unclear – some research shows it did not (although the temporary nature of the bump might have been a factor).
Medical home (or patient-centered medical home)
This is a type of delivery system reform being encouraged by the Affordable Care Act as well as by private payers interested in improving how we get our care. The medical home is a team-based approach, and generally emphasizes primary care and care coordination. The idea began decades ago as a way of serving seriously ill children and their families but it has evolved to be a way of ensuring a coordinated team approach – with the patient part of the process.
Mental health parity
In 2008 the Mental Health Parity and Addiction Equity Act required large group health plans that cover behavioral health care to give equal treatment to medical and surgical care. In other words, mental health care cannot have more limits and hurdles than physical health care. They must have parity. The Department of Labor explained that the law “requires group health plans and health insurance issuers to ensure that financial requirements (such as co-pays, deductibles) and treatment limitations (such as visit limits) applicable to mental health or substance use disorder (MH/SUD) benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits.”
The Affordable Care Act took parity further. It required all individual and small-group plans to cover mental health as well as substance abuse disorders. It’s considered an essential benefit. These services were not always covered before, particularly in the individual market, but now, they must have parity. These protections are also being extended to Medicaid managed care and CHIP. See Parity.
The Affordable Care Act requires that chain restaurants and certain other businesses that serve food list the calorie count. The details got caught up in years of haggling and lobbying but the rules finally went into effect in 2018.
Multistate plans were supposed to be the watered-down backup for the “public option” that progressives championed but did not manage to include in the 2010 health law. In a multistate plan, the Office of Personnel Management – which oversees the health program for federal workers – was supposed to see that nonprofit plans were offered in all 50 states, whether they have a state or federal exchange. The idea was to boost competition and consumer choice, particularly in states where one or two private insurers dominate. But the program was not implemented as foreseen and they have not become a major force in the marketplaces.
Several million people are still being covered in the individual market outside of the exchange. Most of these plans meet the new ACA rules, and more will over time as plans lose their grandfathered status, or are no longer offered. (States have the option of allowing plans that were to have been cancelled to remain on the market for up to three more years.) Subsidies are only available on the exchanges, so the off-exchange population tends to be higher income. They are not included in the federal exchange enrollment reports but both on and off the exchange enrollees count in an insurers’ risk pool. Because they probably skew younger and healthier, they may keep the markets and premiums more stable.
In 2008 the Mental Health Parity and Addiction Equity Act required large group health plans that cover behavioral health care to give equal treatment to medical and surgical care. In other words, mental health care cannot have more limits and hurdles than physical health care. They must have parity. The Department of Labor explained that the law “requires group health plans and health insurance issuers to ensure that financial requirements (such as co-pays, deductibles) and treatment limitations (such as visit limits) applicable to mental health or substance use disorder (MH/SUD) benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits.”
The Affordable Care Act took parity further. It required all individual and small-group plans to cover mental health as well as substance abuse disorders. It’s considered an essential benefit. These services were not always covered before, particularly in the individual market, but now, they must have parity. These protections are also being extended to Medicaid managed care and CHIP. See Mental health parity.
Per capita cap (Medicaid)
For years House Republicans (and some in the Senate) have favored changing Medicaid from an open-ended entitlement to a block grant to states, which would both limit funds and free the states from many national Medicaid rules and coverage requirements. Now the House GOP, in its proposed budget blueprint and its Obamacare replacement white paper back giving states a choice of a block grant, or a per capita payment per Medicaid beneficiary (an idea that has been promoted by Sen. Bill Cassidy of Louisiana). Basically the per capita cap means the state would get a fixed amount based on the number of beneficiaries. Changes would reflect year to year enrollment fluctuation (often tied to the ups and downs of the economy), but the payments would be less than the current trajectory. There are still many unanswered questions about precisely how it would work, some of which presumably would be spelled out should legislation ever be enacted.
Proposal to give people a voucher or coupon to help pay for health insurance. In the last few years, it's most often been used in the context of Medicare. There are several variants of premium support. Some would make it an alternative to traditional Medicare, some would make it a substitute for traditional Medicare. Premium support lets the federal government cap its Medicare spending, but the costs could get shifted to individuals.
Premium support has been in the news in recent years because Rep. Paul Ryan (R-WI) has pushed the idea of turning Medicare into a "premium support" program. It's not a totally new idea: House Republicans, including former Speaker Newt Gingrich and former House Ways and Means chairman Bill Thomas, had somewhat similar ideas that began circulating in the mid-1990s. But the Ryan idea is starker - or bolder, depending on your perspective. (Ryan included premium support in the GOP House budget when he was Budget chairman. He has indicated he may concentrate more on tax reform after becoming House Ways and Means chairman in early 2015, but it’s not likely to disappear from the Congressional debate).
Basically, premium support is like a coupon or voucher. Instead of having a federal Medicare program pay your doctors and hospitals, etc. - drawing on tax revenue and the premiums beneficiaries pay - people on Medicare would get a voucher. (Ryan shuns the word "voucher." He prefers the word "subsidy"). The voucher would go up in value each year - but not as fast as health care costs rise. Critics say this means that the federal government will save money but the elderly and the disabled will pay more and more each year. Ryan says it will mean cost savings, but his critics say it means cost-shifting to a relatively poor slice of the population that can't bear the cost. Plans accepting those vouchers and covering Medicare-age people would have to operate in a health insurance exchange of some type, and meet some requirements and government regulations under Ryan's plan. Details would have to be hashed out by Congress.
Under traditional Medicaid, states could allow health care providers to “presume” that a patient is eligible for Medicaid. The provider could get reimbursed until eligibility was determined by the state. The ACA expands presumptive eligibility in Medicaid. If it appears hospital patients fit the Medicaid income requirements, the hospital will be able to get reimbursed and the patient can also get follow-up care. Eventually, the goal is to have data systems good enough to determine eligibility almost instantly. In the meantime, this will help hospitals get paid, and patients will be connected with coverage.
This term is used all the time in health policy, but it's worth taking a look at precisely what it means. An oft-cited definition was put forth by the Institute of Medicine back in 1996. "The provision of integrated, accessible health care services by clinicians who are accountable for addressing a large majority of personal health care needs, developing a sustained partnership with patients, and practicing in the context of family and community." Of course, in today's system, with fragmented care, harried primary care practiioners, specialization and subspecialization – not to mention access problems, particularly for the uninsured, underinsured, and people in underserved rural and inner city areas – there is quite a gap between the classic definition and the patient experience.
The health reform law contains a few programs designed to encourage more primary care; In 2010, the federal government invested $250 million from the health law's Prevention and Public Health Fund into professional training for primary care. The goal is to encourage more medical students to make a career out of primary care; now only about one in four have that goal, and some medical groups forecasts that it will keep dropping. But good primary care – whether given by physicians or by physicians working with nurse practitioners and physician assistants – is going to be necessary to carry through on some of the elements of the health legislation, including more stress on prevention, "population health," avoiding unnecessary care, improving coordination and restraining costs. Primary care will be the fulcrum for some of the new delivery systems including medical homes, and accountable care.
Primary care encompasses general and family practitioners, internists, pediatricians and geriatricians. (Some consider OB-GYNs part of the primary care workforce, as many women use them as their main health care provider, but they aren't usually counted in primary care stats).
Primary versus specialist is one big divide in health care, but another way of thinking about it may be "cognitive" versus "proceduralist." Primary care is a "cognitivie" practice – as are certain specialties. Proceduralists do more – and get paid more in the fee-for-service system. An example: a neurologist may be largely "cognitive" but the neurosurgeon is a "proceduralist."
Private insurance exchanges
There’s a growing interest among large employers in “private insurance exchanges,” which are distinct from the state-based ones created by the Affordable Care Act for individuals and small businesses. These exchanges, run by benefits/human resources companies, allow employers to shift from a defined benefit model to defined contribution – they give workers a set amount or contribution toward health coverage. The employee would use that cash plus his/her own payment to choose from a number of options on the private exchanges. Once the employer mandate goes into effect in 2015, the coverage would have to meet ACA standards of coverage and affordability. (The tax treatment of the payments would be the same as traditional employer-sponsored coverage.) Aon Hewitt, Mercer and Towers Watson are all players in the emerging private exchange market.
So far these exchanges are very small, but there’s growing interest in the human resources and employee benefits fields. Backers of the idea say costs will be more predictable for employers, consumers will have more health plan choices, and the larger market will restrain costs by encouraging insurance competition.
A way of paying hospitals or other providers at fixed rates that are established in advance for a defined time period – such as a year. This payment doesn’t change even if the hospital incurs higher costs. The idea is aimed at constraining costs and encouraging efficiency. In Medicare prospective payments replaced the original Medicare payment system in which a hospital was reimbursed for what it spent – a system that did not encourage the hospital to spend wisely.
Back during the debate about the health reform legislation, there was a great deal of discussion about how “bending the curve” of health care spending could bring down –or at least slow the growth of – health care costs. Less attention was focused on the power that state or federal government has to limit big premium increases.
The state powers vary widely; Rhode Island, for instance, in August 2011 used its power to reject several proposed premium hikes. But, as of December 2010, fewer than half the states had such powers. Other states can demand and publicize information – and the publicity can exert pressure on the health plan to tamp down the proposed increase, as has sometimes happened in California. The federal law gave the states or Washington more power to have independent review of proposed rate increases that exceed 10 percent, but not to directly approve or reject them. Legislation has been introduced, but not enacted, that would expand rate regulation powers of the federal government as a fallback if the states lack such authority.
The Affordable Care Act did set new “medical loss ratio” rules that require health plans to spend more money on actual care, not administration, marketing and profit.
Several states are considering creating "reinsurance" programs to stabilize their ACA markets. Reinsurance was a program within the ACA from 2014-16. Unlike some other risk mitigation programs in the health law, it was only supposed to last for three years, it wasn't designed as permanent. However collection fell short of the $25 billion that had been anticipated. And the markets going into the 2018 enrollment season are less stable than hoped – for both policy, marketing and political reasons.
Basically reinsurance creates a pool of money to reimburse insurers that experience very high health claims from individuals with specified conditions. It is supposed to stabilize insurance markets and make coverage more affordable.
Several states, seeing rising premiums and falling competition in their exchanges, are trying to create reinsurance programs of their own, via the ACA 1332 waiver process. Alaska was the first to get a waiver to do this in July 2017. The Alaska program has been credited with keeping the only insurer in the exchanges participating in 2018, and for bringing premiums sharply down. About a half dozen similar waivers are pending as of autumn 2017. More approvals are likely – and more states may submit their own.
Federal efforts to reform the drug-pricing system have proceeded slowly in recent years under former President Trump and now under the Biden administration as this report, “The Case for Drug-Pricing Reform—The Cost of Inaction,” from the Commonwealth Fund explains. To speed-up that process, some states are reforming at least one part of the pharmaceutical delivery system by revising how they assess the costs and benefits of pharmacy benefit managers (PBMs) when those contracts come up for renewal.
As the name implies, PBMs manage prescription drug benefits for health insurers, self-insured employers, union health plans, government purchasers, Medicare Part D drug plans and other payers. Under complex contracts, these intermediaries act as brokers between drug manufacturers and insurers (who represent patients), and they pay pharmacies for dispensing drugs to workers and their family members.
Three states—Colorado, Louisiana and Minnesota—passed laws in 2021 allowing their state purchasing agents to conduct reverse auctions with PBMs for their state employee health plans. States and large cities and towns frequently use reverse auctions when seeking to cut costs under large public contracts. Waste haulers and fuel buyers also use reverse auctions to force contractors to compete by offering lower prices over multiple rounds of bidding.
Reverse auctions allow states and other large purchasers to assess PBMs on what they charge, which is difficult to do otherwise because, as middlemen, PBMs influence which drugs consumers can purchase, how much insurers and other purchasers pay for drugs and how much pharmacies are paid, according to this report on PBMs from Health Affairs. In addition, most of the nation’s largest health insurers own PBMs. Cigna owns Express Scripts, for example, and UnitedHealthcare owns OptumRx. CVS, a former chain of pharmacies, is now CVS Health, which owns Aetna, a health insurer, and CVS Caremark, a PBM.
Behind the scenes, PBMs have a significant and controversial role in how much consumers pay for medications because they use their leverage as volume purchasers to negotiate rebates from drug companies and share a portion of those rebates with their insurance-company owners and customers and retain a portion as revenue. The rebates are based on a percentage of a drug’s list price, leading critics to charge that PBMs have an incentive to place high-priced drugs on their formularies over drugs that may be more cost-effective.
Using a reverse auction, states design their own drug formularies for state employees and require the PBMs to agree to the terms of the state’s drug benefit plan, according to a report from the National Academy for State Health Policy (NASHP). “This eliminates the need for states to compare bids based on specific services provided and instead allows states to focus solely on price,” NASHP explained.
In 2017, New Jersey became the first state to use a reverse auction to choose a PBM to manage benefits for 800,000 state workers. The reverse auction cut pharmacy costs for state and local governments by over 25%, and school employees saw their premiums drop in 2019 by 1.1%, versus an increase of 13% in 2018, state officials said.
In its report, NASHP noted that New Jersey expects to save $2 billion over five years without cutting drug benefits for enrollees. In 2019, Maryland officials asked the state’s Prescription Drug Affordability Board to evaluate using a reverse auction for pharmacy benefits, and New Hampshire also is considering this approach, NASHP reported.
Scope of practice AKA "Practicing to the top of a license
The debate over the health care workforce has led to renewed attention to the role of nurse practitioners (also known as advance practice nurses), physician assistants, and other health care providers who are not physicians, sometimes called “physician extenders.” Traditionally many physician groups have insisted on restricting other health providers’ scope of practice – what they can or cannot do, except under the direct supervision of the physician. This has led to all sorts of battles in legislatures and in the courts – including last year’s Supreme Court case over who is allowed to whiten teeth in North Carolina – an epic fight between dentists and hygienists that may change how state medical boards operate in the future.
Some of the old rivalries persist – but in a number of states, barriers have come down. NPs are allowed to practice and prescribe in about half the states now; PAs can do more complex care than in the past. Some of this comes from changes in state laws or through lawsuits, but some is also evolving with less conflict as the health law and changing payment models encourage new team-based models of care that are broadening old roles and creating new ones. The need to expand health care capacity in underserved areas is also allowing more flexibility in scope of pract
There are still many barriers or outdated rules including some imposed by Medicare that limits, for instance, who can certify a patient for home care, or order even simple durable medical equipment, say special shoes for a diabetic patient who has had several toes amputated. The VA, under fire for waiting lists and inadequate access to care, has recently broadened its own policies toward expanding the roles of NPs and PAs.
Section 1115 waivers
Critics of Medicaid often call it a “one-size fits all” program; in fact it varies widely state by state. Waivers add another layer of state variation (and can serve as incubators for ideas that may work in other states). There are several kinds of waivers, but the ones that the governors are often talking about when they talk about Medicaid reform or coverage expansion are the Section 1115 waivers. They allow HHS to approve assorted experiments. They are typically five year programs (often renewable for three more years) and they must be budget-neutral – i.e. they can’t add costs. According to HHS, the three main purposes are
Expanding eligibility to individuals who are not otherwise Medicaid or CHIP eligible
Providing services not typically covered by Medicaid
Using innovative service delivery systems that improve care, increase efficiency, and reduce costs.
The Trump administration and CMS administrator Seema Verma have made clear from the start that they are going to let states have a lot more leeway to promote new conservative ideas through 1115 waivers — including work requirements, more out-of-pocket costs for beneficiaries, and possibly life-time limits on how long someone can receive Medicaid. Work requirements had been approved in three states as of early spring of 2018, and more waivers are pending. CMS is also considering several states requests to allow partial expansion of Medicaid – up to 100 percent of poverty, not 138. And at least one state (Wisconsin) wants permission to drug test Medicaid applicants.
Shared decision making encourages collaboration between patients and doctors to make health care decisions together. The goal is to use both the best evidence, as well as the patient’s value and preferences. It’s an increasingly popular concept, trying to strike a balance between the old-fashioned “doctor knows best” approach at one and, and a total patient autonomy approach at the other. The former ignored the patient’s wishes; the latter often left the patient without confidence or guides in complex decision-making. The Affordable Care Act contained several provisions to encourage broader use of shared decision making and development of patient decision-making aids.
Short-term health insurance
These health insurance plans, also known as short-term, limited-duration insurance, do not meet the minimum essential coverage requirements – the basic benefits – under the Affordable Care Act. There is no longer an individual mandate penalty for people who choose this option. The Obama administration did allow people to have them for temporary coverage through gaps – but the Trump administration allowed them to be renewed for up to three years. These plans are not comprehensive coverage – far from it. And they can exclude pre-existing conditions – but they are a cheaper option for people who can’t afford or don’t want ACA exchange plans but do want at least some limited coverage. ACA subsidies cannot be used to purchase these plans.
When the Trump administration halted cost-sharing reduction subsidies in the fall of 2017, insurers were still on the hook under the health law to pay them – they just weren’t going to get reimbursed by the government. They could have just passed on the cost to consumers, and some did. But many states opted for “silver-loading” – adding all the anticipated cost sharing reduction losses onto the most popular plans, the silver tier. That did make premium go up – but the tax credits that subsidize premiums are tied to silver plans, so the subsidies went up too. Subsidized consumers didn’t feel the hit – in fact, with the richer subsides some were better off, able to find less expensive plans. (People buying insurance without subsidies did feel the price hike.)
Small group market
Small business is usually defined as 50 or fewer workers, and that’s the case for the employer mandate in the Affordable Care Act. The law, as originally written, was going to expand the market to businesses with up to 100 workers. That would have subjected them to new regulations and probably have raised premiums. In a rare bipartisan move on the ACA, Congress, in the fall of 2015, decided to let states decide whether to enlarge the small group market or not.
Social Determinants of Health
This refers to all the factors other than ”health care” and “medicine” per se that affect our health – our social environment; our physical environment; the neighborhoods in which we live, work, and play in; our access to recreation, our educational level, our income and socio-economic status and discrimination based on racial and ethnic factors.
Specialty drugs and biologics
Health reform has expanded access to drugs – both by expanding health insurance coverage and by filling the “doughnut hole” in Medicare. But it also comes amid rising concern about drug costs – particularly specialty drugs. These drugs are innovative and new – and they are changing how we treat diseases like cancer, HIV, MS, and autoimmune diseases like rheumatoid arthritis. Some are “biologics” derived from lab cultured living cells, and they are more complicated to produce (and ship and store – and monitor) than traditional “small molecule” medications They are often (not always) infused or self-injected. But they cost thousands of dollars --sometimes hundreds of thousands of dollars -- per patient each year. Right now only about 2 percent of patients use these drugs – but that number is expected to rise rapidly, and according to Pew, specialty drugs are projected to account for more than half of all drug spending by 2020.
Health plans often require prior review before a patient can use these drugs, or step therapy (meaning try something cheaper first – ie a patient might have to try something like a generic statin to control cholesterol before going on one of the new roughly $14,000 a year PCSK9 inhibitors).
Note that there is no uniform definition of specialty drugs; Some define them as xxx molecule drugs .Others just by cost. Medicare for instance calls any drugs that costs $600 a month or more a specialty drug. (Pew Charitable Trusts has good nonpartisan information on specialty drugs pricing and prescribing trends. Health Affairs has an issue brief that gives a clear overview of specialty drugs, but some of the pricing data is out of date because it’s from 2013.)
Tax credits for small business
Individuals can get subsidies in the ACA exchanges, whereas businesses in the SHOP exchange generally cannot. However, employers with fewer than 25 employees whose average annual earnings are $50,000 are an exception. They can get a tax credit to help pay for coverage. Through 2013, it was up to 35 percent of the employer costs. In 2014, it rose to a 50 percent credit for two years.
Medicare’s Hospital Value-Based Purchasing program was created by the Affordable Care Act, building on earlier initiatives that rewarded doctors and hospitals that reported on quality. Starting in October 2012, Medicare will pay hospitals partly based on how well they perform on specific quality measures, not just for the amount of services they provide. The first year 1 percent of Medicare payments were at stake; it rises to 2 percent for fiscal year 2017. There are four domains measured: clinical processes, patient satisfaction, efficiency and outcomes. (Outcomes weren’t measured the first year, while clinical processes were the most important factor. By 2017, outcomes are the biggest factor.)
New research shows volume-based payment continues to dominate
When the Affordable Care Act became effective in 2014, public and commercial insurers began to redesign how they paid hospitals, physicians and other providers to promote quality and reduce spending. The insurers added what they call value-based payment and alternative payment models to shift away from payment for volume. Under fee-for-service, which has long been the predominant form of payment in the United States, hospitals, physicians and other providers are paid for each encounter with patients. Fee-for-service payment tends to drive up all health care spending because it provides an incentive for all providers to do more for patients whether more care is needed or not.
In a study published January 28, 2022, in JAMA Health Forum, researchers from the RAND Center of Excellence on Health System Performance found that despite the rapid growth in value-based payment arrangements, health systems continue to provide incentives to physicians to maximize volume, thereby boosting health system revenue.
For the study, “Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems,” the researchers studied the efforts of health systems to promote the implementation of evidence-based medicine into routine medical practice to lower costs and to improve quality and patient outcomes. After studying 31 physician organizations affiliated with 22 health systems, they found that volume-based payment was a component of almost 84% of compensation for primary care physicians and for more than 93% of compensation for specialist physicians.
“While most primary care and specialist compensation arrangements included performance-based incentives, they averaged less than 10% of compensation,” the researchers noted.
In a press release from RAND, Rachel O. Reid, M.D., the study's lead author and a physician policy researcher at RAND, said, “Despite growth in value-based programs and the need to improve value in health care, physician compensation arrangements in health systems do not currently emphasize value. The payment systems most often in place are designed to maximize health system revenue by incentivizing providers within the system to deliver more services.”
Special enrollment period
People can sign up for health insurance outside the standard open enrollment season when they have a “qualifying life event,” such as a birth, marriage or divorce, job change, or a move to a new state. This is true in both the private sector and the new health exchanges. (For coverage in 2021, the regular enrollment season runs from Nov. 1- Dec. 15, 2020)
In addition, the Department of Health and Human Services has the power to create other special enrollment periods. They did that in April 2014 , when they accommodated some people who had problems signing up for the federal exchange by the March 31 deadline after all the problems that first year with Healthcare.gov. ) President Donald Trump was urged to create a special enrollment period in 2020 amid the huge job losses caused by the coronavirus pandemic but did not.
There is no enrollment season or deadline for Medicaid or CHIP application. People can apply at any time if they are eligible.
The health care law contains incentives for people to participate in programs intended to improve health and fitness, through the workplace or, less often, directly through the insurers. People can get discounts on their health premiums. The programs are typically directed at things like smokinge cessation, diabetes management, weight loss and preventive health screenings.
“Participatory wellness programs,” are what they sound like – they are based on participation, not on the person’s health status before and after. “Health-contingent wellness programs” measure outcomes such as lowering cholesterol or quitting smoking. Those have been more controversial but under the final HHS rules, the measurements are supposed to account for people’s medical condition – some people cannot achieve certain goals as easily as other, healthier, people.
Women’s Preventive Health Care
Few provisions of the Affordable Health Care law have generated as much controversy as the requirement, effective Aug. 1 2012, that health plans cover contraceptives as not charge. But that provision is part of a larger set of preventive health services for women that will become available to what HHS estimates is about 47 million women. The eight new prevention-related services are:
Gestational diabetes screening for pregnant women.
Domestic violence screening and counseling.
FDA-approved contraceptive methods, and contraceptive education and counseling.
Breastfeeding support, supplies, and counseling.
HPV DNA testing, for women 30 or older.
STD counseling for sexually-active women.
HIV screening and counseling for sexually-active women.
These are in addition to the general preventive care provisions in the law for services like cholesterol screenings and flu shots. They were developed based on recommendations from the Institute of Medicine.